elitejets
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Stuart
Here is a good article that helps explain a bit about fakies (and why the trend is better)
Stuart
Here is a good article that helps explain a bit about fakies (and why the trend is better)
TraderNumber7
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I'm going to jump in here because if somebody does not straighten this out, some newbie is going to get ripped and I care about newbies, because when I was one of them, I got precious little help - at all.
Trading Inside Bars:
Does it work? Of course, it does. But, that is not the question. The question about IB is the exact same question about any trading method: Does it work consistently enough to produce routine profits long-term? That's the question and the answer is not always yes.
Principle #1:
In order to profit, price must continue along the path of expectation for a pre-designated distance.
Principle #2:
The Trader him/her self is the only one qualified to determine (for themselves) what is profitable to THEM.
Principle #3:
The Trader is wise, when FIRST build a Revenue Model and THEN wrap their trading system/methodology around that Model. Why? Because if the market you are contemplating cannot produce the revenue necessary to satisfy YOUR specific economic goals, then you are wasting your time and spinning your wheels.
These are "some" of the most important underlying philosophical distinctions that the Newbie should spend time pondering - or you will waste a ton of time and money.
The author writes:
(paraphrasing) "If IB is present AND Trend is Long, Enter Long on BO."
Well, the problem is that the underlying qualifier is something that in reality, does not exist. When one forum member in this thread said: Define Trend? - people jumped down his throat. Well, guess what folks? Define Trend - is a very important point, here?
There is no such thing as Trend in price models that are based in four (4) dimensions. How on earth could there be! (LOL) The current model is bases on: Open, High, Low and Close. All of which (in the currency markets) are figments of our imagination anyway! In the Forex, the only real price is Last and it is composed of derivative (virtual) components called the Bid/Ask. The Forex has no central clearing, folks. All the "bars of data" that we explore and use in our technical models is all make believe framework. Hello?
Now, having stipulated this, let's dig into the so-called Trend itself. What is that thing people call "Trend" anyway?
Trends are composed of Price Deltas. Let me repeat that: Trends are composed of Price Deltas. They are non-linear by definition. A Price Delta is simply the distance in unit magnitude between Price Point "A" and Price Point "B." But, "Price" itself does not have to take a prescribed path in order to form the Price Delta Range A:B. One might say: Yes it does - if "B" is higher than "A" then Price had to move UP, causing the Trend to be UP. WRONG!
Why?
Because inside the larger]/b] Price Delta Range A:B, were a multitude of smaller Price Delta Range components, each having their own unique set of A:B relationships where there were many instances of the A:B pattern being REVERSED into the B:A pattern. This is what comprises the so-called Trend and this is precisely causes the Whipsaw.
Crack That Whip!
[youtube]ogqZgyPssVI[/youtube]
What is it with Cute Girls and Whips...I will never know! I just know they love to crack'em!
Back to the mythical Trend. Eyes off the girls and back to trading, please. I digress.
So, recalling Principle #1 above, the larger A:B pattern must have enough continuance without too much decaying interest from the underlying (smaller) B:A reversal patterns. But, how do you know that the smaller B:A patterns are about to overtake the larger A:B pattern that you have just place a bet on continuing? The answer is found not in the Trend, but in the Trajectory. The Trajectory is composed of smaller A:B to B:A composite patterns and they are the best indicator of the health of the overlying Trend, or the Dominant Trajectory.
So, you have Subordinate Trajectories and one Dominant Trajectory for each Bar of data you observe. These Trajectories (A:B to B:A patterns) are what define the Structure of Price itself. The locate the High and Low of every single Bar of data you observe. Trade against the Dominant Trajectory and you will lose every single time - 100% guaranteed loss of some capital. Trade with the Dominant Trajectory an you will net capital gains 100% of the time, guaranteed. Why? Because the only way to get from Point "A" to Point "B" or from Point "B" to Point "A" - is by the creation of the Price Delta which forms the Length and Span of the Trajectory. This is called going inside the Trend and it is the only to understand what Price is actually doing.
The ATR (my calculation is different and it is called 'Omega' in my system) contains all smaller Trajectories for any given Bar of data (all Trajectories smaller than the time-interval of the Bar itself). Here is the problem with placing too much emphasis on simply trading the Inside Bar. While the Current Price may be above the Bar's Open Price for the day (as an example), the underlying Subordinate Trajectories could have very well already changed directions without the Trader knowing it, causing a high probability for severe whiplash upon entry into the IB break-out position. The inability to see inside the Trend causes this to be an all too familiar theme among Newbie Traders.
Proposed Solution for the Newbie:
Stop thinking in terms of Trends that don't exist and start developing a consciousness of Price Structure Stop thinking of "Price" as some singular value and develop an understanding that Price is stretched across a region of space and time. This requires a complete paradigm shift in your understanding of Price, from a singular fixed point, to a living, breathing, organism with Structure and Lifespan, continuously on the move.
Trends don't exist. The only thing real in the market place is movement from one location to another. Price moves as a complete Structure with its shape and form continuously variable. If you learn to look at the Shape of Price alone, that will do more to tell you the "Direction" of so-called "Price," more than any so-called "Trend Indicator" ever could. Price has shape, form, contour, boundary layer, structure, length, height and even width - not to mention Personality, Attitude, Traits and Behavior Characteristics.
"Price" is Alive and well, thank you very much. It has a heartbeat, a respiratory rate and an appetite for Newbies that fail to respect its right to exist as a fully sentient (make no mistake about it) non-corporal being.
Price was never what you thought it was.
You've just been given an extremely brief introduction to Price Structure.
Trading Inside Bars:
Does it work? Of course, it does. But, that is not the question. The question about IB is the exact same question about any trading method: Does it work consistently enough to produce routine profits long-term? That's the question and the answer is not always yes.
Principle #1:
In order to profit, price must continue along the path of expectation for a pre-designated distance.
Principle #2:
The Trader him/her self is the only one qualified to determine (for themselves) what is profitable to THEM.
Principle #3:
The Trader is wise, when FIRST build a Revenue Model and THEN wrap their trading system/methodology around that Model. Why? Because if the market you are contemplating cannot produce the revenue necessary to satisfy YOUR specific economic goals, then you are wasting your time and spinning your wheels.
These are "some" of the most important underlying philosophical distinctions that the Newbie should spend time pondering - or you will waste a ton of time and money.
The author writes:
(paraphrasing) "If IB is present AND Trend is Long, Enter Long on BO."
Well, the problem is that the underlying qualifier is something that in reality, does not exist. When one forum member in this thread said: Define Trend? - people jumped down his throat. Well, guess what folks? Define Trend - is a very important point, here?
There is no such thing as Trend in price models that are based in four (4) dimensions. How on earth could there be! (LOL) The current model is bases on: Open, High, Low and Close. All of which (in the currency markets) are figments of our imagination anyway! In the Forex, the only real price is Last and it is composed of derivative (virtual) components called the Bid/Ask. The Forex has no central clearing, folks. All the "bars of data" that we explore and use in our technical models is all make believe framework. Hello?
Now, having stipulated this, let's dig into the so-called Trend itself. What is that thing people call "Trend" anyway?
Trends are composed of Price Deltas. Let me repeat that: Trends are composed of Price Deltas. They are non-linear by definition. A Price Delta is simply the distance in unit magnitude between Price Point "A" and Price Point "B." But, "Price" itself does not have to take a prescribed path in order to form the Price Delta Range A:B. One might say: Yes it does - if "B" is higher than "A" then Price had to move UP, causing the Trend to be UP. WRONG!
Why?
Because inside the larger]/b] Price Delta Range A:B, were a multitude of smaller Price Delta Range components, each having their own unique set of A:B relationships where there were many instances of the A:B pattern being REVERSED into the B:A pattern. This is what comprises the so-called Trend and this is precisely causes the Whipsaw.
Crack That Whip!
[youtube]ogqZgyPssVI[/youtube]
What is it with Cute Girls and Whips...I will never know! I just know they love to crack'em!
Back to the mythical Trend. Eyes off the girls and back to trading, please. I digress.
So, recalling Principle #1 above, the larger A:B pattern must have enough continuance without too much decaying interest from the underlying (smaller) B:A reversal patterns. But, how do you know that the smaller B:A patterns are about to overtake the larger A:B pattern that you have just place a bet on continuing? The answer is found not in the Trend, but in the Trajectory. The Trajectory is composed of smaller A:B to B:A composite patterns and they are the best indicator of the health of the overlying Trend, or the Dominant Trajectory.
So, you have Subordinate Trajectories and one Dominant Trajectory for each Bar of data you observe. These Trajectories (A:B to B:A patterns) are what define the Structure of Price itself. The locate the High and Low of every single Bar of data you observe. Trade against the Dominant Trajectory and you will lose every single time - 100% guaranteed loss of some capital. Trade with the Dominant Trajectory an you will net capital gains 100% of the time, guaranteed. Why? Because the only way to get from Point "A" to Point "B" or from Point "B" to Point "A" - is by the creation of the Price Delta which forms the Length and Span of the Trajectory. This is called going inside the Trend and it is the only to understand what Price is actually doing.
The ATR (my calculation is different and it is called 'Omega' in my system) contains all smaller Trajectories for any given Bar of data (all Trajectories smaller than the time-interval of the Bar itself). Here is the problem with placing too much emphasis on simply trading the Inside Bar. While the Current Price may be above the Bar's Open Price for the day (as an example), the underlying Subordinate Trajectories could have very well already changed directions without the Trader knowing it, causing a high probability for severe whiplash upon entry into the IB break-out position. The inability to see inside the Trend causes this to be an all too familiar theme among Newbie Traders.
Proposed Solution for the Newbie:
Stop thinking in terms of Trends that don't exist and start developing a consciousness of Price Structure Stop thinking of "Price" as some singular value and develop an understanding that Price is stretched across a region of space and time. This requires a complete paradigm shift in your understanding of Price, from a singular fixed point, to a living, breathing, organism with Structure and Lifespan, continuously on the move.
Trends don't exist. The only thing real in the market place is movement from one location to another. Price moves as a complete Structure with its shape and form continuously variable. If you learn to look at the Shape of Price alone, that will do more to tell you the "Direction" of so-called "Price," more than any so-called "Trend Indicator" ever could. Price has shape, form, contour, boundary layer, structure, length, height and even width - not to mention Personality, Attitude, Traits and Behavior Characteristics.
"Price" is Alive and well, thank you very much. It has a heartbeat, a respiratory rate and an appetite for Newbies that fail to respect its right to exist as a fully sentient (make no mistake about it) non-corporal being.
Price was never what you thought it was.
You've just been given an extremely brief introduction to Price Structure.
Such a good post. You must let the market behaviour dictate your strategy. And yet, maket behaviour comprises trends upon trends in a fractal kind of manner. And they do exist. Just not on a random timescale chosen by the trader for their reward horizon, nor the exchange for their convenient business hours.
elitejets
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Agree. I read it and I'm too fried on Friday nights.
elitejets
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I get up at 1:30am for the London open every day ...
oildaytrader
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If trends don't exist ,why do they all talk about and sell books on trend trading?
Trend is your friend , but trend does not exist in reality, hence 95% lose.
Trend indicators are based on price , so why should shape of price tell you any different?
I'm going to jump in here because if somebody does not straighten this out, some newbie is going to get ripped and I care about newbies, because when I was one of them, I got precious little help - at all.
Trading Inside Bars:
Does it work? Of course, it does. But, that is not the question. The question about IB is the exact same question about any trading method: Does it work consistently enough to produce routine profits long-term? That's the question and the answer is not always yes.
Principle #1:
In order to profit, price must continue along the path of expectation for a pre-designated distance.
Principle #2:
The Trader him/her self is the only one qualified to determine (for themselves) what is profitable to THEM.
Principle #3:
The Trader is wise, when FIRST build a Revenue Model and THEN wrap their trading system/methodology around that Model. Why? Because if the market you are contemplating cannot produce the revenue necessary to satisfy YOUR specific economic goals, then you are wasting your time and spinning your wheels.
These are "some" of the most important underlying philosophical distinctions that the Newbie should spend time pondering - or you will waste a ton of time and money.
The author writes:
(paraphrasing) "If IB is present AND Trend is Long, Enter Long on BO."
Well, the problem is that the underlying qualifier is something that in reality, does not exist. When one forum member in this thread said: Define Trend? - people jumped down his throat. Well, guess what folks? Define Trend - is a very important point, here?
There is no such thing as Trend in price models that are based in four (4) dimensions. How on earth could there be! (LOL) The current model is bases on: Open, High, Low and Close. All of which (in the currency markets) are figments of our imagination anyway! In the Forex, the only real price is Last and it is composed of derivative (virtual) components called the Bid/Ask. The Forex has no central clearing, folks. All the "bars of data" that we explore and use in our technical models is all make believe framework. Hello?
Now, having stipulated this, let's dig into the so-called Trend itself. What is that thing people call "Trend" anyway?
Trends are composed of Price Deltas. Let me repeat that: Trends are composed of Price Deltas. They are non-linear by definition. A Price Delta is simply the distance in unit magnitude between Price Point "A" and Price Point "B." But, "Price" itself does not have to take a prescribed path in order to form the Price Delta Range A:B. One might say: Yes it does - if "B" is higher than "A" then Price had to move UP, causing the Trend to be UP. WRONG!
Why?
Because inside the larger]/b] Price Delta Range A:B, were a multitude of smaller Price Delta Range components, each having their own unique set of A:B relationships where there were many instances of the A:B pattern being REVERSED into the B:A pattern. This is what comprises the so-called Trend and this is precisely causes the Whipsaw.
Crack That Whip!
[youtube]ogqZgyPssVI[/youtube]
What is it with Cute Girls and Whips...I will never know! I just know they love to crack'em!
Back to the mythical Trend. Eyes off the girls and back to trading, please. I digress.
So, recalling Principle #1 above, the larger A:B pattern must have enough continuance without too much decaying interest from the underlying (smaller) B:A reversal patterns. But, how do you know that the smaller B:A patterns are about to overtake the larger A:B pattern that you have just place a bet on continuing? The answer is found not in the Trend, but in the Trajectory. The Trajectory is composed of smaller A:B to B:A composite patterns and they are the best indicator of the health of the overlying Trend, or the Dominant Trajectory.
So, you have Subordinate Trajectories and one Dominant Trajectory for each Bar of data you observe. These Trajectories (A:B to B:A patterns) are what define the Structure of Price itself. The locate the High and Low of every single Bar of data you observe. Trade against the Dominant Trajectory and you will lose every single time - 100% guaranteed loss of some capital. Trade with the Dominant Trajectory an you will net capital gains 100% of the time, guaranteed. Why? Because the only way to get from Point "A" to Point "B" or from Point "B" to Point "A" - is by the creation of the Price Delta which forms the Length and Span of the Trajectory. This is called going inside the Trend and it is the only to understand what Price is actually doing.
The ATR (my calculation is different and it is called 'Omega' in my system) contains all smaller Trajectories for any given Bar of data (all Trajectories smaller than the time-interval of the Bar itself). Here is the problem with placing too much emphasis on simply trading the Inside Bar. While the Current Price may be above the Bar's Open Price for the day (as an example), the underlying Subordinate Trajectories could have very well already changed directions without the Trader knowing it, causing a high probability for severe whiplash upon entry into the IB break-out position. The inability to see inside the Trend causes this to be an all too familiar theme among Newbie Traders.
Proposed Solution for the Newbie:
Stop thinking in terms of Trends that don't exist and start developing a consciousness of Price Structure Stop thinking of "Price" as some singular value and develop an understanding that Price is stretched across a region of space and time. This requires a complete paradigm shift in your understanding of Price, from a singular fixed point, to a living, breathing, organism with Structure and Lifespan, continuously on the move.
Trends don't exist. The only thing real in the market place is movement from one location to another. Price moves as a complete Structure with its shape and form continuously variable. If you learn to look at the Shape of Price alone, that will do more to tell you the "Direction" of so-called "Price," more than any so-called "Trend Indicator" ever could. Price has shape, form, contour, boundary layer, structure, length, height and even width - not to mention Personality, Attitude, Traits and Behavior Characteristics.
"Price" is Alive and well, thank you very much. It has a heartbeat, a respiratory rate and an appetite for Newbies that fail to respect its right to exist as a fully sentient (make no mistake about it) non-corporal being.
Price was never what you thought it was.
You've just been given an extremely brief introduction to Price Structure.
excellent post.
so now your saying trends don't exist after you produced that little chart with pretty lines saying only trade in one direction. the reality is the masses are not going to be educated or told how to succeed. you are a case in point.
oildaytrader
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so now your saying trends don't exist after you produced that little chart with pretty lines saying only trade in one direction. the reality is the masses are not going to be educated or told how to succeed. you are a case in point.
I was just repeating trader no 7's words
You underestimate people, all my automated systems work on price and direction, so I was there before most of you. I am here trying to learn manual trend trading or improve on my manual price shape trading.
Many people actually make a good living from trading trends and trend lines.
O D T
oildaytrader
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so now your saying trends don't exist after you produced that little chart with pretty lines saying only trade in one direction. the reality is the masses are not going to be educated or told how to succeed. you are a case in point.
Those pretty line made a load of money for many traders, see where they ended.It proves trends exist.
Those who talk about counter trend probably missed the risk reward ratio of 5 yesterday.
Good example, but it only shows that you should draw a line wherever you think is right.
It shows a trend only in hindsight and shows a new trend the same way. Lines are nothing more than a point where the drawer has decided on entry. That is the type of entry that I happen to use, but because it may be a pullback leading to higher prices, or a reversal to lower ones.
Same idea---different reasons. Who's right and who's wrong? There are only two possibilities and, as TRO pointed out in his lengthy thread, it is fairly obvious as to where the stops should be.
Last edited:
oildaytrader
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Respectfully ,I have to disagree . Trend-lines become evident on the lower time frames much earlier.Trendlines break and price returns to the orignal trendline.Most amateur traders haven't got a clue which trend lines to enter,price goes to the trendline and they buy or sell at the trendline.The pros know which trend lines to use and not use.
It is all about knowing high probability trend lines entries from fake entries.
Trendlines, IMO, are only a guide to the trader. As long as he is on the right side he is fine. Get on the wrong side and, in the beginning, it is a warning that momentum on the price is not the same.
Decisions on that? I draw a line and do what I have decided to do if the price reaches it.
I don't think that there is any more to trend lines, or any other lines and averages, than that. Sorry, mate, but my belief in the probability of anything giving valid clues about future direction is nil. The closeness of my stops would give testimony to that.
TraderNumber7 – I am a little confused here. Are you saying that the smaller trajectory can take over the larger? E.g. daily subordinate can take over the weekly dominant and thus converting to dominant in both timeframes. I was under the impression that larger timeframes are in “charge” since they have larger Omegas to fill. I can certainly see the case you’re describing above, but I am not sure if it’s a case of exception or the norm.
Do you think you can give us an example using your terminology i.e. Omega, TCDs?
npn
A limited backtest exercise on the FTSE and Dow to correlate IBs with prevailing trend, using EOD charts.
This suggests IBs alone will have only a 50% win rate, playing the break-out from the IB High or Low. But interesting that this win rate is not improved by ignoring counter-trend trades.
A far better win rate looks achievable when the IB follows a mother day that is itself counter-trend. It seems possible to rationalise this as a period of congestion following a trending move: the congestion itself is charatcterised by a one-day reaction against the trend which fails to either follow through or be neutralised on the second day. The market builds tension and on the third day breaks out.
This suggests IBs alone will have only a 50% win rate, playing the break-out from the IB High or Low. But interesting that this win rate is not improved by ignoring counter-trend trades.
A far better win rate looks achievable when the IB follows a mother day that is itself counter-trend. It seems possible to rationalise this as a period of congestion following a trending move: the congestion itself is charatcterised by a one-day reaction against the trend which fails to either follow through or be neutralised on the second day. The market builds tension and on the third day breaks out.
oildaytrader
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Indices are not highly trending , if one sector like industrials is down ,healthcare or utilities is up.Try it on highly trending instruments , the results will be different.
A load strategies on indices stop working when the instruments start trending.Traders using strategies/systems on indices , gain bad trading habits, blow out with using same strategies on trending instruments.
How did you define counter trend ,on what time frame?
Nobody will agree on what a trend is but as I mainly do swing trading, I used trend direction as traced between swing highs and swing lows as per the three-day rule from Rivalland. Even then, strictly speaking, the direction of the individual swing leg isn't a trend in itself, but it suffices for a limited backtest.
Yes, indices don't trend like some instruments but they don't get hit by OPEC decisions or currency devaluations or Chairman's eccentric comments.
Incidentally, I am highly encouraged by the little test's identification of the three-day congestion pattern - if this performs so well on a poorly trending instrument, when I am ignoring the full picture as to trend direction and taking all trades indiscriminately, and on a r:r of only 1 - seems like fertile ground for further study.
Yes, indices don't trend like some instruments but they don't get hit by OPEC decisions or currency devaluations or Chairman's eccentric comments.
Incidentally, I am highly encouraged by the little test's identification of the three-day congestion pattern - if this performs so well on a poorly trending instrument, when I am ignoring the full picture as to trend direction and taking all trades indiscriminately, and on a r:r of only 1 - seems like fertile ground for further study.
