Gaucho and Nelson
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Tenterfield Saddler
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Gaucho and Nelson
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i suspect tommy thomas thornton went through a lot of pain waiting for the sage of omaha contrarian call to trigger.....hmmmm....made on the 23rd jan.....eek, a member of the deadbroke fraternity :whistling
Joules MM1
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that call by PitBull has legs......i've followed the whole game with ops exp and the fit is pretty good.......the ops open cry pit if massive and theyre very smart players......
when i say the call is pretty good, depending on the levels, the counter plays have worked very well and has a side benefit of re-invigorating the trend, so to speak
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mr.marcus said:
you said that a long time ago
and from my recent effort
youre right, my mistake
i was attempting to teach....
Joules MM1
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Joules MM1
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Joules MM1
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Joules MM1
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Joules MM1
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speaking of decent equity curves ....
https://twitter.com/#!/Fx_Day_Trader
https://twimg0-a.akamaihd.net/profile_images/1888468827/statement.jpg
goog: Geoff Fx_Day_Trader
https://twitter.com/#!/Fx_Day_Trader
https://twimg0-a.akamaihd.net/profile_images/1888468827/statement.jpg
goog: Geoff Fx_Day_Trader
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this has nothing to do with being in an auction and everything to do with being in an auction, especially futures.....
Dan Gilbert on our mistaken expectations | Video on TED.com
Dan Gilbert on our mistaken expectations | Video on TED.com
Gaucho and Nelson
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Joules MM1
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hat tip, Walter Murphy
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Joules MM1
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it's not the good trades, stupid!
....discovering style of trade not by the percentage of gains or number of wins, rather, expedient management or repair of bad decisions and the effort and input to create a repetition of that management
making mistakes is normal, amygdala spikes are normal.....
repetition of them is not normal to a successful trader as repetition denotes the lack of self worth to input enough energy into fixing, finding resources, or, a tutor who can supplant ignorance, or habit, with knowledge and procedure.....these things are a long way from having understanding or correctly interpreting or framing trade activity, mostly, any auction regardless of liquidity, yet, these same traders tend to persist in reaching and rushing into trades that have a gaping hole of self-procedure or self-knowledge
even though mistakes are made, from mundane to milestone, a trader can still acquire an equity curve, no matter the slope, if he/she takes on the truth that with all mistakes it is the ratio of loss to win that makes the difference....note i am defensive in the view of trading, rather seeing that the mistakes are what determine success not the wins, determining and managing mistakes allows the win rate to take care of itself
if a trader runs at a loss rate of 70% with only two run-away wins in the other 30% then he/she should expect that the equity curve consists mostly of those two runs.....this is not totally accurate because the perception of the curve, of it's construction is just as important if not more so than the calculation of the curve.....once the wins/losses are printed in the curve theyre instantly history, serve as a hint to the trader the work required
what's important here is that the trader takes on that an auction enforces "mistakes" onto a trader by its construct as a vehicle of liquidity, money making money, money losing money, there is no way a trader can run at 100% win rate and a trader needs to work on agreeing to first accept this truth and manage a loss and loss rate to the extent that it allows the a win and win rate to take care of themselves
the idea of knowing all there is to know when entering a trade is close to stupidity, especially if it is to reach a zero loss rate or level of zero mistake as we simply cannot know all there is to know within the confines of that pesky thing: the future!
sting like a bee and focus, stupid!
rather than seeing mistakes think of them as part of procedure to raise the equity curve......focus on this......focus on whatever it takes to make the equity curve the sole reason to take a trade, to make the curve the sole purpose of risk, be rid of the self-focus where ego sits lurking with all it's history .....focus on the curve so hard that even if you only have a tiny idea of trade execution you'll sit and wait for that pattern or action to re-occur and you'll take the trade and manage it well if it deteriorates or allow it to run to the extent you management only a few steps away....you may only have a few weapons in your bag of tricks, so what! Keep your eye on the curve and take those that best fit the knowledge you have and use the knowledge to further the curve
tautology, stupid!
the difference between chasing the dragon of trading for the sake of itself and a business procedure is the difference between a sunday arvo footy in the park and impress a partner to taking a penalty in the Premier league
the challenge for most traders is not the extent of their knowledge as an absolute effort over the trade, rather, their focus based upon the initial purpose of entering the auction process.....refocusing that effort to and for the health and maintenance of the equity curve goes a long way to surviving volatility of the self within volatility of an auction, eventually flourishing as a trader while increasing understanding and infusing that other pesky beast: experience.
i think this applies to both discretionary and systems traders......
julian ct
....discovering style of trade not by the percentage of gains or number of wins, rather, expedient management or repair of bad decisions and the effort and input to create a repetition of that management
making mistakes is normal, amygdala spikes are normal.....
repetition of them is not normal to a successful trader as repetition denotes the lack of self worth to input enough energy into fixing, finding resources, or, a tutor who can supplant ignorance, or habit, with knowledge and procedure.....these things are a long way from having understanding or correctly interpreting or framing trade activity, mostly, any auction regardless of liquidity, yet, these same traders tend to persist in reaching and rushing into trades that have a gaping hole of self-procedure or self-knowledge
even though mistakes are made, from mundane to milestone, a trader can still acquire an equity curve, no matter the slope, if he/she takes on the truth that with all mistakes it is the ratio of loss to win that makes the difference....note i am defensive in the view of trading, rather seeing that the mistakes are what determine success not the wins, determining and managing mistakes allows the win rate to take care of itself
if a trader runs at a loss rate of 70% with only two run-away wins in the other 30% then he/she should expect that the equity curve consists mostly of those two runs.....this is not totally accurate because the perception of the curve, of it's construction is just as important if not more so than the calculation of the curve.....once the wins/losses are printed in the curve theyre instantly history, serve as a hint to the trader the work required
what's important here is that the trader takes on that an auction enforces "mistakes" onto a trader by its construct as a vehicle of liquidity, money making money, money losing money, there is no way a trader can run at 100% win rate and a trader needs to work on agreeing to first accept this truth and manage a loss and loss rate to the extent that it allows the a win and win rate to take care of themselves
the idea of knowing all there is to know when entering a trade is close to stupidity, especially if it is to reach a zero loss rate or level of zero mistake as we simply cannot know all there is to know within the confines of that pesky thing: the future!
sting like a bee and focus, stupid!
rather than seeing mistakes think of them as part of procedure to raise the equity curve......focus on this......focus on whatever it takes to make the equity curve the sole reason to take a trade, to make the curve the sole purpose of risk, be rid of the self-focus where ego sits lurking with all it's history .....focus on the curve so hard that even if you only have a tiny idea of trade execution you'll sit and wait for that pattern or action to re-occur and you'll take the trade and manage it well if it deteriorates or allow it to run to the extent you management only a few steps away....you may only have a few weapons in your bag of tricks, so what! Keep your eye on the curve and take those that best fit the knowledge you have and use the knowledge to further the curve
tautology, stupid!
the difference between chasing the dragon of trading for the sake of itself and a business procedure is the difference between a sunday arvo footy in the park and impress a partner to taking a penalty in the Premier league
the challenge for most traders is not the extent of their knowledge as an absolute effort over the trade, rather, their focus based upon the initial purpose of entering the auction process.....refocusing that effort to and for the health and maintenance of the equity curve goes a long way to surviving volatility of the self within volatility of an auction, eventually flourishing as a trader while increasing understanding and infusing that other pesky beast: experience.
i think this applies to both discretionary and systems traders......
julian ct
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in my "ok, that's interesting, thanks" walk around today i came across a post that was interesting because of it's regularity in so many chat sites......
as a point of reference the numbers quoted were incorrect and not fibonacci, again, this is typical across most chat sites.....
my reply:
that sounds like your opine, actually, your own theory.....
firstly, the ratios you've cited are as generic as a Fib tech can get and usually the most thrashed by bigger accounts because they know retailers will be using them or trying to hide behind or to be aggressive with....secondly all metrics or measures are relative to the whole larger move theyre in, so, how you put them into context is vital and different to a mediocre or singular trip....there is no such thing Fibonacci theory, the measures are simply calculations of relationships in price or time or both, they simply an echo of previous events plotted forward, the voracity lays within the application of them...if someone presents a theory that include Fibs, well, that's their theory not a universal standard as youre implying....while it's cooler to bag something when the bulk of mouths around are doing the same thing, the work involved to correctly apply the measures is actually hard work and requires diligence....
the most common mistake traders make, that is, the holy grail stabbers, is to apply the ratios as they see most talking heads apply them, theyre aping incorrect application in good faith....this is kinda like an apprentice mechanic talking like he's on clarkson island....look across the interlube and you'll quickly find those ratios you've quoted above, frankly, placed in hope than any cross-referential or practiced efficacy, again, most oft without any alternate probability of action....
one thing that is true is that if you hindsight, there's a swag of magic to be found, which is nice.....you trade in foresight and there are the same massive number of targets to be met to seen and the art of conducting business on those un-hit targets is, well, an art, of course, you'll not know from a random or mediocre guess as to which series may or may not be active or what the precursers are for the next action that YOU need to take because the measures cannot take action for you, they are mearely measures or probability, that is, do not treat the measures as a door way, merely an application that needs to be interpreted to be overlayed on a dynamic price....of course, what i've just is a little self defeating, egg first chicken first...nevertherless when driving at speed you still check your speedometer - youre the driver not the speedometer.....so the measures are merely used in context with how youre interpreting the dynamism at the time youre applying....when coming off the A1 motorway into sidestreet your speed goes from whatever to whatever, you look at the speedometer for confirmation, you dont get booked or pulled over, again, relative and contextual.......all these swooping retracement levels like the ones you've cited mean nothing when chop begins, the context is different, a new set of dynamics has begun and size of swings within swings and when a series of chop swings finishes so to, more often than not, the previous measures become redundant as the dynamism is different coming out of that previous set-up.....what you havent cited is that these mathematics merely hint at levels for you to be aware of where convergence of traders may take place, you still provide the context yourself, the when-and-where.....the measures are always subserviant just like volume, price comes first.....what most traders and newbies do is to first rudely apply the ratios randomly on very large swings and they do this well before they can actually trade well, that is, their attempts to define patterns and trends merely reflect their thirst to trade, not to understand but to trade...."well, that doesnt work and all the people say so so it must be true".....Fibs are merely an adjunct to correct analysis, allowing finer focus....
yes, all the lulz people think that ratios and mathematics are rubbish, these are the same people who can quickly tell if a spread is widening that volume volatility has changed but can't get their heads around price dynamics as a measure of those changes....so, does that mean the measures themselves are defunct? of course not......if you are dedicated to the idea of randomness in pricing then, true, you wont get price measures as evidence, as those two things are incongruent, yet many lulz people think that bigger traders than themselves are actively at work rigging prices, or, that at certain times of the day the mutual funds are active, at the open and closes the pros are busy at work and the commercial hedgers cause this to happen and that to happen.....but how does random pricing fit with all that preconcieved activity? the point is, you simply have to know all there is to know about a regime such as Fibs to know where and when they are of any utility, you have to commit to the idea that you'll find out the truth of that utility for yourself, then and only then, can you define what "works" and how best you can fit it into your trade management and price interpretation.....
you know how you often see traders put up the hindsights and highlight how price moved tot that level and the reaction, cherry picked of course, but if you put up a chart and say, well, i applied a fibonacci and it failed...do you have any idea how dumb that would sound? of course that's why people dont do that because they dont want to sound dumb.....seriously, was the fib wrong or did it fail or was it invalid? or was it really a failure on the part of the trader who randomly applied the measure without consideration to all the surrounding evidence that a measure was required just not in the way it was applied, you know, when-and-where, in context of size, in context of the dynamism of new players who come in and add to the dynamic...you might argue that that is the randomness within, but, really, an auction is a single environment that requires knowledge unlike any other activity, so requires trader nouse, enough observation or trade experience shows that repetition of price zones is not random and only a stupid person would apply the same measures in a fast trend as they do to a chopping zone, or worse apply the same measure to #GOLD as they do to the #SPX or #AAPL or #F as some measures mark the "personality" of (even the geography) of the auction or that the price is about it's smaller group of traders with different technical interruptions, for instance, the #SPX has an affinity to extensions of 161.8 or 127.2 whereas gold has an affinity to 100 or 78.6 and these measures are merely a sign of the characteristic of the traders and their size at the time and zones or plays they are most active in......in Australia the #XJO has an affinity to 70 or 100 in extensions and equality of moves, again the #HSI has it's own bias or measures depending where and when we are looking at trend or distribution/accummulation zones.....
there is no such thing as a trend being predisposed to anything......trend is not a thing predisposed or otherwise, trend is a reflection of price value and the urgency for a group to own or disown that instrument, so, it's the group think, the measures merely allow you to shape a story for that group think when-and-where they are active opening or closing, someones buying what's being sold and measures merely allow you to summise termination within the confines of recent activity and project that forward or use it to manage a trade, being protective of capital....
what is true is that if you wait long enough you'll find ratios that work perfectly only you simply cannot know they'll work perfectly until after theyve completed, which, i agree, does make them random and useless, that is, if you study them randomly, which the bulk of traders do, then cannot use them as an adjunct because they do not know how to, where to, when to and what the context or relative size of the move is.....again, many measures are specific or inate to each auction and the players who drive prices in given periods....
here's the thing; fibonacci ratios and the ones i've cited are resultant of price activity, ratios are resultant of supply and demand within prices, that being true, there must be measures that avail themselves for use......understanding the when-and-where is the part you need to understand first before employing them at which point you'll also understand their real use and how often is appropriate to look for them......it is where mechanics meet flow in your own thinking
and some people get em and some people dont and some people want to get em and some people dont .......so what....
that sort of thing
as a point of reference the numbers quoted were incorrect and not fibonacci, again, this is typical across most chat sites.....
my reply:
that sounds like your opine, actually, your own theory.....
firstly, the ratios you've cited are as generic as a Fib tech can get and usually the most thrashed by bigger accounts because they know retailers will be using them or trying to hide behind or to be aggressive with....secondly all metrics or measures are relative to the whole larger move theyre in, so, how you put them into context is vital and different to a mediocre or singular trip....there is no such thing Fibonacci theory, the measures are simply calculations of relationships in price or time or both, they simply an echo of previous events plotted forward, the voracity lays within the application of them...if someone presents a theory that include Fibs, well, that's their theory not a universal standard as youre implying....while it's cooler to bag something when the bulk of mouths around are doing the same thing, the work involved to correctly apply the measures is actually hard work and requires diligence....
the most common mistake traders make, that is, the holy grail stabbers, is to apply the ratios as they see most talking heads apply them, theyre aping incorrect application in good faith....this is kinda like an apprentice mechanic talking like he's on clarkson island....look across the interlube and you'll quickly find those ratios you've quoted above, frankly, placed in hope than any cross-referential or practiced efficacy, again, most oft without any alternate probability of action....
one thing that is true is that if you hindsight, there's a swag of magic to be found, which is nice.....you trade in foresight and there are the same massive number of targets to be met to seen and the art of conducting business on those un-hit targets is, well, an art, of course, you'll not know from a random or mediocre guess as to which series may or may not be active or what the precursers are for the next action that YOU need to take because the measures cannot take action for you, they are mearely measures or probability, that is, do not treat the measures as a door way, merely an application that needs to be interpreted to be overlayed on a dynamic price....of course, what i've just is a little self defeating, egg first chicken first...nevertherless when driving at speed you still check your speedometer - youre the driver not the speedometer.....so the measures are merely used in context with how youre interpreting the dynamism at the time youre applying....when coming off the A1 motorway into sidestreet your speed goes from whatever to whatever, you look at the speedometer for confirmation, you dont get booked or pulled over, again, relative and contextual.......all these swooping retracement levels like the ones you've cited mean nothing when chop begins, the context is different, a new set of dynamics has begun and size of swings within swings and when a series of chop swings finishes so to, more often than not, the previous measures become redundant as the dynamism is different coming out of that previous set-up.....what you havent cited is that these mathematics merely hint at levels for you to be aware of where convergence of traders may take place, you still provide the context yourself, the when-and-where.....the measures are always subserviant just like volume, price comes first.....what most traders and newbies do is to first rudely apply the ratios randomly on very large swings and they do this well before they can actually trade well, that is, their attempts to define patterns and trends merely reflect their thirst to trade, not to understand but to trade...."well, that doesnt work and all the people say so so it must be true".....Fibs are merely an adjunct to correct analysis, allowing finer focus....
yes, all the lulz people think that ratios and mathematics are rubbish, these are the same people who can quickly tell if a spread is widening that volume volatility has changed but can't get their heads around price dynamics as a measure of those changes....so, does that mean the measures themselves are defunct? of course not......if you are dedicated to the idea of randomness in pricing then, true, you wont get price measures as evidence, as those two things are incongruent, yet many lulz people think that bigger traders than themselves are actively at work rigging prices, or, that at certain times of the day the mutual funds are active, at the open and closes the pros are busy at work and the commercial hedgers cause this to happen and that to happen.....but how does random pricing fit with all that preconcieved activity? the point is, you simply have to know all there is to know about a regime such as Fibs to know where and when they are of any utility, you have to commit to the idea that you'll find out the truth of that utility for yourself, then and only then, can you define what "works" and how best you can fit it into your trade management and price interpretation.....
you know how you often see traders put up the hindsights and highlight how price moved tot that level and the reaction, cherry picked of course, but if you put up a chart and say, well, i applied a fibonacci and it failed...do you have any idea how dumb that would sound? of course that's why people dont do that because they dont want to sound dumb.....seriously, was the fib wrong or did it fail or was it invalid? or was it really a failure on the part of the trader who randomly applied the measure without consideration to all the surrounding evidence that a measure was required just not in the way it was applied, you know, when-and-where, in context of size, in context of the dynamism of new players who come in and add to the dynamic...you might argue that that is the randomness within, but, really, an auction is a single environment that requires knowledge unlike any other activity, so requires trader nouse, enough observation or trade experience shows that repetition of price zones is not random and only a stupid person would apply the same measures in a fast trend as they do to a chopping zone, or worse apply the same measure to #GOLD as they do to the #SPX or #AAPL or #F as some measures mark the "personality" of (even the geography) of the auction or that the price is about it's smaller group of traders with different technical interruptions, for instance, the #SPX has an affinity to extensions of 161.8 or 127.2 whereas gold has an affinity to 100 or 78.6 and these measures are merely a sign of the characteristic of the traders and their size at the time and zones or plays they are most active in......in Australia the #XJO has an affinity to 70 or 100 in extensions and equality of moves, again the #HSI has it's own bias or measures depending where and when we are looking at trend or distribution/accummulation zones.....
there is no such thing as a trend being predisposed to anything......trend is not a thing predisposed or otherwise, trend is a reflection of price value and the urgency for a group to own or disown that instrument, so, it's the group think, the measures merely allow you to shape a story for that group think when-and-where they are active opening or closing, someones buying what's being sold and measures merely allow you to summise termination within the confines of recent activity and project that forward or use it to manage a trade, being protective of capital....
what is true is that if you wait long enough you'll find ratios that work perfectly only you simply cannot know they'll work perfectly until after theyve completed, which, i agree, does make them random and useless, that is, if you study them randomly, which the bulk of traders do, then cannot use them as an adjunct because they do not know how to, where to, when to and what the context or relative size of the move is.....again, many measures are specific or inate to each auction and the players who drive prices in given periods....
here's the thing; fibonacci ratios and the ones i've cited are resultant of price activity, ratios are resultant of supply and demand within prices, that being true, there must be measures that avail themselves for use......understanding the when-and-where is the part you need to understand first before employing them at which point you'll also understand their real use and how often is appropriate to look for them......it is where mechanics meet flow in your own thinking
and some people get em and some people dont and some people want to get em and some people dont .......so what....
Last edited:
Joules MM1
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part ii
i thought i would complete this journey of thinking on ratios with an actual trade set-up which is partially complete (a sell to open) on spot gold
there are several reasons to run Fibs and various ratios on instruments,
mostly for defense, to define risk and importantly they come after all
the other thought processes are exhausted, they simply add to the
technical frame work....even though the levels are specific, use as
an entrance or exit is not always based on direct hits as the surrounding
price action might denote that even though the target is hit the surrounding evidence
says that was i am expecting maybe better interpreted as a head-fake or
a continuation action in the same direction rather than a clear reversal
signal, again, what supports my original context, keeping thinking fluid
with what the larger traders are causing price to ...well...do!
i come back to acknowledge that while all ratios are active at all times and
are mostly selected randomly by most traders (especially retail) that does
not take away that if all auctions call certain characteristics of action then
it stands to fair reason that some auctions have endogenous ratios and this
simply pares the list of ratios that are active or dominant even though those ratios
maybe a ratio within a ratio, so to speak, for example, the 78.6 is a
sqr of 61.8 and 127.2 is the sqr of (the extension) 161.8...that simply means
if you look for one ratio and get it wrong then the ratio is only partly or
partially applied correctly....this highlights the constant need to bare the
greatest weight on my interpretation of the landscape before any application...
i think this is the vital difference in longevity, assists in maintaining capital, finding
runs that can be run as far as the ratio allows and can act as a
contrary warning sign that things are not as i thought they were, in other
words if the landscape changes the ratios are likely to hint to me as an
adjunct to what i think i am seeing at that time
i think it important to stress that any ratio work be a subjugate to how a
trader understands the auction they are seeing, not all auctions bring the
same trade size at the same time and these things precede any ratio work
...the when-and-where part is critical.....
again, you can argue that if these things
are already understood then ratios are mute, well, truth in that, yet,
not all things are known in advance and i say that any markers that can map
price advance is a useful tool which has everything to do with probability,
as defense, allowing the offensive side to take care of itself
.....and of course not all trade ideas suit all traders and not all traders who do place ratios
are ever going to research them thoroughly enough to prove efficacy and
not all traders are going to effort understanding of the auction process
.....most traders are their own double-edged sword....
some points to consider:
first the numbers are specific 38.2 and 61.8 not 38 and 68 if you get this
basic tenet incorrect you are on a journey that has nothing to do with trading
second the basics of correct numbers is vital even tho they may appear
close to other sequentials or calculations by other protagonists the specific
set of ratios and sequences are especial to Fibonacci and the difference is that while a trader might
employ different sequences in a regime that trader should
know exactly when and where and which ratios carry the heaviest weight or are likely to have the
greatest evidence for the next phase of price activity....this is important and requires observation
third you are going to find that not all charts or auctions adhere to or even governed by a single set of
ratios and that all ratios are active at all times and that because they are active at all time a traders needs to
correctly interpret the when and where of that activity which neatly brings me to point
four, this incessant placement of ratios in hindsight especially in large scale charts is the very reason most traders fail to
employ (any) ratio correctly
five, singular measures of and by themselves are meaningless unless
you place them into context, even if that context if a reasoning of
the time of day of price activity and better still a
confirmative measure where that measure builds a picture for the trader from previous price zones,
this would display a structure inline with the trade
period, in other words, mathematical context as that is precisely what you
are looking to accomplish, to find evidence of price extent......
you are simply looking to paint a picture of likely
progress of price based same-trade recent activity and that's
another reason that large scale
ratios fail, rather, it is the failure of the trader to appropriately
apply the ratios and formulate for themselves the evidence, to
think within the
confines of trader activity rather than just plaster a series of
numbers on their screen and abdicate responsibility of thought......
for example, the strength of a larger reverse swing or
turnaround on
a single (degree of) trend carries a higher probability
when two measures (or more) meet at the same juncture than
just one measure even if that
single ratio might be applied to a daily or weekly chart, what you
are actually doing is randomly applying a ratio in the hope it might
procure a
result in your favour and when it doesnt the cry-foul response is
to say
that Fibs (in toto) dont work, which is pretty dumb
it is incumbent on the trader to accept responsibility for the
when-and-where of their ratios, to accept the fallibility of ones own interpretation of the ratio and the
limiting prowess of any
formula especially where the trader does not have reasonable
trade routine already, in other words, if you do not already
have a strong plan
for trading and a strong sense of the auction process then
likely the
ratio application is going to be random and cause the opposite
effect youre looking for
let's first look at this spot chart, here's a termination ratio:
i have left out all the incline trades, the point of this exercise is to demonstrate convergence of evidence by the use of ratios, all other ideas are not involved in this post
http://youtu.be/V4LWeqjYrr4
in the video you can see i've included a time perspective that controls a
ratio calling for an exact terminal point which sits just prior to the first
jpeg in this post, if nothing else it merely adds to the clustering of resistance,
if you like, it wears down price advancement in that direction, you can see
price does attempt further highs and runs directly into several
higher-time-frame ratios...what is important which cannot be seen is that
(live) the action or character of price action immediately changes, that is,
the rate of change shrinks and clearly some traders will have left the game but
no real selling comes in thus i am not looking to add to the position, i am
looking to defend what is open and mentally trail the stop....this is important
to understand: in mhe as soon as the termination of that triangle ratio hits
price often swings off that level so i am looking to defend off the next level
of the higher time frame peak ratio thus giving price one more stab at a
slightly higher high and look to see if any exhaustion hits and it does so at
the secondary high which carry the higher probability of halting price in
that direction...
so why not wait until that second level of ratios is hit? the reason is that i
want to play the zone and not miss the turn even though i am risking more
to get the turn what i am doing is securing the risk width once the second
turn is made without missing the move and being forced to chase price and
it gives me time to observe the action rather than be concerned with
executing price...there's no avoiding risk.....
what you do not see here is the referral to different time scales for
further evidence in different measures adding to the total view for the
swing as shown here.....
in this last jpeg i am alluding to Silver's 1 to 1 ratio which took some
time to finally confirm Gold's decline and as i type this Silver is looking
weak and appears as though it is going to fail the ratio and keep declining....
but i would not get to heavy on that idea until an actual break of the low and there is
stronger surrounding evidence of capitulation by more money managers....
as price stands right now the odds of lower lows are pretty good given that
both metals have made and are continuing to make choppy interruptions
to the minor downtrend.....ratios simply allow a navigate of time frames and
add weight to the bigger picture
i hope this is of some use to you
joules mm1
i thought i would complete this journey of thinking on ratios with an actual trade set-up which is partially complete (a sell to open) on spot gold
there are several reasons to run Fibs and various ratios on instruments,
mostly for defense, to define risk and importantly they come after all
the other thought processes are exhausted, they simply add to the
technical frame work....even though the levels are specific, use as
an entrance or exit is not always based on direct hits as the surrounding
price action might denote that even though the target is hit the surrounding evidence
says that was i am expecting maybe better interpreted as a head-fake or
a continuation action in the same direction rather than a clear reversal
signal, again, what supports my original context, keeping thinking fluid
with what the larger traders are causing price to ...well...do!
i come back to acknowledge that while all ratios are active at all times and
are mostly selected randomly by most traders (especially retail) that does
not take away that if all auctions call certain characteristics of action then
it stands to fair reason that some auctions have endogenous ratios and this
simply pares the list of ratios that are active or dominant even though those ratios
maybe a ratio within a ratio, so to speak, for example, the 78.6 is a
sqr of 61.8 and 127.2 is the sqr of (the extension) 161.8...that simply means
if you look for one ratio and get it wrong then the ratio is only partly or
partially applied correctly....this highlights the constant need to bare the
greatest weight on my interpretation of the landscape before any application...
i think this is the vital difference in longevity, assists in maintaining capital, finding
runs that can be run as far as the ratio allows and can act as a
contrary warning sign that things are not as i thought they were, in other
words if the landscape changes the ratios are likely to hint to me as an
adjunct to what i think i am seeing at that time
i think it important to stress that any ratio work be a subjugate to how a
trader understands the auction they are seeing, not all auctions bring the
same trade size at the same time and these things precede any ratio work
...the when-and-where part is critical.....
again, you can argue that if these things
are already understood then ratios are mute, well, truth in that, yet,
not all things are known in advance and i say that any markers that can map
price advance is a useful tool which has everything to do with probability,
as defense, allowing the offensive side to take care of itself
.....and of course not all trade ideas suit all traders and not all traders who do place ratios
are ever going to research them thoroughly enough to prove efficacy and
not all traders are going to effort understanding of the auction process
.....most traders are their own double-edged sword....
some points to consider:
first the numbers are specific 38.2 and 61.8 not 38 and 68 if you get this
basic tenet incorrect you are on a journey that has nothing to do with trading
second the basics of correct numbers is vital even tho they may appear
close to other sequentials or calculations by other protagonists the specific
set of ratios and sequences are especial to Fibonacci and the difference is that while a trader might
employ different sequences in a regime that trader should
know exactly when and where and which ratios carry the heaviest weight or are likely to have the
greatest evidence for the next phase of price activity....this is important and requires observation
third you are going to find that not all charts or auctions adhere to or even governed by a single set of
ratios and that all ratios are active at all times and that because they are active at all time a traders needs to
correctly interpret the when and where of that activity which neatly brings me to point
four, this incessant placement of ratios in hindsight especially in large scale charts is the very reason most traders fail to
employ (any) ratio correctly
five, singular measures of and by themselves are meaningless unless
you place them into context, even if that context if a reasoning of
the time of day of price activity and better still a
confirmative measure where that measure builds a picture for the trader from previous price zones,
this would display a structure inline with the trade
period, in other words, mathematical context as that is precisely what you
are looking to accomplish, to find evidence of price extent......
you are simply looking to paint a picture of likely
progress of price based same-trade recent activity and that's
another reason that large scale
ratios fail, rather, it is the failure of the trader to appropriately
apply the ratios and formulate for themselves the evidence, to
think within the
confines of trader activity rather than just plaster a series of
numbers on their screen and abdicate responsibility of thought......
for example, the strength of a larger reverse swing or
turnaround on
a single (degree of) trend carries a higher probability
when two measures (or more) meet at the same juncture than
just one measure even if that
single ratio might be applied to a daily or weekly chart, what you
are actually doing is randomly applying a ratio in the hope it might
procure a
result in your favour and when it doesnt the cry-foul response is
to say
that Fibs (in toto) dont work, which is pretty dumb
it is incumbent on the trader to accept responsibility for the
when-and-where of their ratios, to accept the fallibility of ones own interpretation of the ratio and the
limiting prowess of any
formula especially where the trader does not have reasonable
trade routine already, in other words, if you do not already
have a strong plan
for trading and a strong sense of the auction process then
likely the
ratio application is going to be random and cause the opposite
effect youre looking for
let's first look at this spot chart, here's a termination ratio:
i have left out all the incline trades, the point of this exercise is to demonstrate convergence of evidence by the use of ratios, all other ideas are not involved in this post
http://youtu.be/V4LWeqjYrr4
in the video you can see i've included a time perspective that controls a
ratio calling for an exact terminal point which sits just prior to the first
jpeg in this post, if nothing else it merely adds to the clustering of resistance,
if you like, it wears down price advancement in that direction, you can see
price does attempt further highs and runs directly into several
higher-time-frame ratios...what is important which cannot be seen is that
(live) the action or character of price action immediately changes, that is,
the rate of change shrinks and clearly some traders will have left the game but
no real selling comes in thus i am not looking to add to the position, i am
looking to defend what is open and mentally trail the stop....this is important
to understand: in mhe as soon as the termination of that triangle ratio hits
price often swings off that level so i am looking to defend off the next level
of the higher time frame peak ratio thus giving price one more stab at a
slightly higher high and look to see if any exhaustion hits and it does so at
the secondary high which carry the higher probability of halting price in
that direction...
so why not wait until that second level of ratios is hit? the reason is that i
want to play the zone and not miss the turn even though i am risking more
to get the turn what i am doing is securing the risk width once the second
turn is made without missing the move and being forced to chase price and
it gives me time to observe the action rather than be concerned with
executing price...there's no avoiding risk.....
what you do not see here is the referral to different time scales for
further evidence in different measures adding to the total view for the
swing as shown here.....
in this last jpeg i am alluding to Silver's 1 to 1 ratio which took some
time to finally confirm Gold's decline and as i type this Silver is looking
weak and appears as though it is going to fail the ratio and keep declining....
but i would not get to heavy on that idea until an actual break of the low and there is
stronger surrounding evidence of capitulation by more money managers....
as price stands right now the odds of lower lows are pretty good given that
both metals have made and are continuing to make choppy interruptions
to the minor downtrend.....ratios simply allow a navigate of time frames and
add weight to the bigger picture
i hope this is of some use to you
joules mm1
Joules MM1
Established member
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part iii
this post is simply trades based partially on ratios...
sell to open HSI 22650 , stop 22677
XJO 4684's , stop 4678
spot GOLD 1662's, stop 1689 cfd
HSI had 3 x 1.272 extention lifts, overlapping, suggesting exhaustion and needs a pause....no target set this
spot i'm allowing a lot of room to (fill in the blank) news spike
XJO made a strong case of a bull incline with very small rotation and lots of money coming into all sectors and even the lagging XSO (small ordinarys) has confirmed the XJO rise over the last few session, however, in thins instance a small brick wall saw some climax buying today as it ran into a 1.272 extension inversion, thus for it to also take a pause in the uptrend.....having already broken typical support levels in the overnights the lowest of the next two becomes an important construct and any heavy moves on the SPX are likely to be amplified for the local bourse to the downside
this post is simply trades based partially on ratios...
sell to open HSI 22650 , stop 22677
XJO 4684's , stop 4678
spot GOLD 1662's, stop 1689 cfd
HSI had 3 x 1.272 extention lifts, overlapping, suggesting exhaustion and needs a pause....no target set this
spot i'm allowing a lot of room to (fill in the blank) news spike
XJO made a strong case of a bull incline with very small rotation and lots of money coming into all sectors and even the lagging XSO (small ordinarys) has confirmed the XJO rise over the last few session, however, in thins instance a small brick wall saw some climax buying today as it ran into a 1.272 extension inversion, thus for it to also take a pause in the uptrend.....having already broken typical support levels in the overnights the lowest of the next two becomes an important construct and any heavy moves on the SPX are likely to be amplified for the local bourse to the downside
