The Edge Trading System

[ronfalcone]

<Ron - I've gone my own way most of the time I've been using TA. I fully identify with the 'money no object' bit, once over I'd have perhaps insisted that as I'd spent $500 on something then it MUST work, not these days <g> Stick with it>

thanx. I will sure try

 

[SOCRATES]

I suppose some flit butterfly like from idea to idea, and never settle down to work in earnest, which would of course be a disastrous way to go about it.

Yes, precisely. I cannot remember who said it, so I cannot off the top of my head attribute the quote, but it may bave been Rousseau who said :~

"........like a butterfly that meanders aimlessly and crosses fields and gardens and in and out through windows and doors....of houses......without the slightest idea...it is traversing...strange latitudes".

 

[DaveJB]

That's why, quick glances of entire charts can be treacherous when---and I emphasize this point---when ONLY used to the exclusion of practicing in real time.

Yes, but (unusually) leaping to Soc's defence here -
RT chart watching does seem to suggest pressure, I watch 1 minute bars for actual trading (I use esignal andI have 3min, 60min and daily charts for the Dow on the screens - the 1 and 3 are larger than the 60/D charts, and I have a grid carrying things like price, volume, flag for news releases, tick direction for the Dow itself, SP500, Nasdaq composite, and the 30 DJIA stocks). While watching the 1 min mostly, I find I've time to work out where the current bar seems to be going, and what this means for the range of charts - perhaps I'll decide the 1 min bar closing near here will create a new peak on the hourly chart or something.... I find I have time to scan to check if Dow/SP/Nas are in step or not, I often have time to look briefly at whether individual stocks have moved recently.

I don't find myself rushing, it's a bit like a 'cockpit scan' where you don't really read all the instruments, what you do is get so used to it that you almost instantly notice when something changes. I'm usually saying something to myself like 'if this bar carries on down it'll create a new turnpoint' or 'if it keeps dropping at this rate the candle will be a hammer' or similar. If you have a good idea, preferably in detail, of what the chart has done for some time back then when you see an indecisive candle at a point the chart previously turned then you are well placed to jump in should that repeat.

My experience may well be odd, I don't know how others feel about this, but I never feel things are running away from me while I dither. In my 'play with ideas using a small real pot' (losing real money, even small amounts, sharpens the wits in my experience) my significant losses tend to occur due to outside events - the Dow dropped 30 pts on me a week or two ago while my wife was busy telling me her life story (something like that, I wasn't really listening). I would have exited manually had I been watching it at the time, I will never trade if I expect to be disturbed like this, but non-trading partners seem to think you just sit down, go 'what a pretty pattern' and press the 'give me money' button. Interrupting the vicious reality doesn't seem to strike them as an issue <g>

 

[jsp326]

The only potential advantage would be that The Edge (or any countertrend method) would put you in the long-term trend's direction earlier than an MA crossover, since you're entering at a reversal point. But perhaps an MA or breakout system would be more reliable since you're actually waiting for the short-term trend to return to the longer-term trend's direction. You'd have to test both to see which is more profitable.

Speaking of testing, I wonder if anyone has ever compared divergence signals from different momentum oscillators (RSI, MACD, CCI, Stochs, etc.)? I know Bette swears by her settings, just as Woodie & Co. swear by the CCI, and others like the standard MACD. My hunch is that there wouldn't be much difference in overall performance, since momentum oscillators are all in the same "family" are are constructed similarly. But it would be intereresting to see if certain settings or combinations perform better. My guess is that long-term trend filters and possibly divergence filters (i.e., looking for divergence in mutliple time frames) are probably more important than choosing a certain oscillator.

so trading with the trend yielded more positive results? This seems to be the malady affecting many systems; seems as though anyone can have a better shot trading with the trend. In fact, that doesn't seem to elicit much more inspiration than trading a vanilla fudge moving average system.

 

[DaveJB]

Personally I think they're all limited,
you've only got price and volume, and from that you have to determine the intentions of the market participants.... there are confusing factors to account for, a price may rise because there are institutions buying, because individuals are collectively buying, because the market makers are letting the price drift up to see if they can attract some shorters, or it may be that 'good figures' are expected to come out in the near future - doubtless there are others to consider.

An indicator will treat all types of price rise equally, it's imperfect understanding of why the price is moving will limit it's ability to be right all the time.

The question here is 'does this system of indicators get enough right often enough', and even if that turns out to be a 'yes' result it won't stop me watching candles and volume.

 

[SOCRATES]

my significant losses tend to occur due to outside events - the Dow dropped 30 pts on me a week or two ago while my wife was busy telling me her life story (something like that, I wasn't really listening). I would have exited manually had I been watching it at the time, I will never trade if I expect to be disturbed like this, but non-trading partners seem to think you just sit down, go 'what a pretty pattern' and press the 'give me money' button. Interrupting the vicious reality doesn't seem to strike them as an issue <g>

Hello Dave,

When I finished my studies, I did a stint at the M.O.D.

There was a perimeter fence and a restricted area. You are familiar with this sort of environment.

Outside a building was a red plaque with bold white lettering that read:

OUT OF BOUNDS
TO
VISITING UNITS

In all these years I have never forgotten the signifiance of that sign, so clear, so blunt and so much to the point.

I have had it replicated, out of nostalgia and practicality.

It is displayed outside my office. It serves to discourage visitors.

Also, outside my office there is a small red LED light, with a warning:~

DO NOT APPROACH WHEN RED LIGHT IS ON

Additionally anyone who rings in the middle of an op, gets barked at. "Not now ! " and the phone is slammed on the caller.

Everyone who knows me and has been here has to accept that these are my requirements.

This includes my wife.

But my wife, used to do to me what your wife did to you.

They don't mean any harm. They have no intention of causing any grief.

But their frame of reference is inadequate, the same for visitors or callers.

They all have to be TRAINED.

They don't know, they don't understand, and they don't realilse.

They need to be TRAINED . YOU have to do the TRAINING.

They cannot TRAIN THEMSELVES, otherwise they would become traders, like you are.

You have to TRAIN THEM not to INTERRRUPT.

You have to put in EFFORT into this TRAINING that YOU MUST DO, until the REASON FOR THE TRAINING is finally ACCEPTED ~ UNDERSTOOD and ACCEPTED..........and ......

ADHERED TO !

Otherwise you make a rod for your own back by trying to please everyone but screwing your own self up for nonsense.

Having said that, it is a different matter if the interruption is warranted by something really important or urgent that cannot wait.

But you are ultimately responsible, not her, therefore you must take precautions that the excercise you describe is not repeated. You must put in place your own model for PREVENTION OF UNNECESSARY INTERRUPTION to that which ought not to and can not be tolerated to be INTERRUPTED.

This is my constructive and sincere advice to you. I promise you that it works.

 

[SOCRATES]

Personally I think they're all limited,
you've only got price and volume, and from that you have to determine the intentions of the market participants.... there are confusing factors to account for, a price may rise because there are institutions buying, because individuals are collectively buying, because the market makers are letting the price drift up to see if they can attract some shorters, or it may be that 'good figures' are expected to come out in the near future - doubtless there are others to consider.

An indicator will treat all types of price rise equally, it's imperfect understanding of why the price is moving will limit it's ability to be right all the time.

The question here is 'does this system of indicators get enough right often enough', and even if that turns out to be a 'yes' result it won't stop me watching candles and volume.

That is correct. It is a matter of understanding and not a matter of mechanical indications, for anyone to rely on, without checking, or even understanding in the first place.

 

[fxmarkets]

Re wives Soc, I can see a few ding dongs happening around the UK. on that one.. let me know what techniques you use DaveJB and I'll rerun it by Mrs FX......

 

[SOCRATES]

Re wives Soc, I can see a few ding dongs happening around the UK. on that one.. let me know what techniques you use DaveJB and I'll rerun it by Mrs FX......

You have to do it. You have responsiblity for your trading, you yourself, not anyone else.

You must have total control of what you are doing, without interruption, however well intended.

You cannot afford ANY distractions that are neither necessary nor desireable.

Therefore it is no good being worried about bells, it is the possiblity of dropping real clangers that can cost a lot of grief that should be the concern, and nothing else. Therefore you cannot shrink from it, just act as is required.

If you do that, and you do it early, you can avoid untold grief in the future.

If you shrink from it, and don't do it, you are certain to have plenty of grief.

The lesser grief is better than the greater grief.

 

[fxmarkets]

hmm yes agree, and I do I am 100 % not now. I need to observe wait for that moment and then act with total focus..... my wife is a medical professional and I run the role play of her having to resasitate a human with me popping up saying, can you get my socks please I cant find them.........

she gets confused as to sometimes, I'm just kicking back being leisurely for an hour or 2 maybe half the day then locked up apparently doing nothing..... for hours....... lordy.... but she does spend more time at home these days... might be a part of it...

 

[SOCRATES]

Re wives Soc, I can see a few ding dongs happening around the UK. on that one.. let me know what techniques you use DaveJB and I'll rerun it by Mrs FX......

About techniques, yes, sorry, here goes.

For example, create a make believe situation.

Sit the lady in front of the screen.

Give her a huge hypothetical responsibility.

For example, cause her to imagine that what is exposed is equivalent to the contents of your home.

Now explain, that if she is right, all is safe, but if she is not, all the furniture, carpets, paintings, all the kitchen stuff, pots and pans, cooker, fridge, dishwasher, and crockery would sort of be taken away by bailliffs. Get her to realistically imagine that.

Now get her to guess three times what prices are going to do.

Make every point worth an item of favourite furniture.

Show her the principle of using a stop to limit possible losses of equivalent items.

Show her the consequence of responsibility in a framework she can relate to and accept and understand.

Now put her through this mincer, and see what happens.

And then, regardless of the outcome, explain all of this requires your undivided attention
"without interruption" and the reasons why.

And now make a point of training her to leave you alone when you are in front of a screen, whether you are running a position or not.

Remind her of the furntiure, or even the car, if necessary, and that will give her a frame of reference to understand it is to do with REAL MONEY and not a screen game.

See how this pans out.

If the message does not land, PERSIST until it DOES.

 

[fxmarkets]

hmm, yes, ive never actually put her through it from that aspect of it practical hands on.. thought the talking concepts would be enough.... maybe it doesn't hit home or force the point strongly enough..

 

[SOCRATES]

hmm yes agree, and I do I am 100 % not now. I need to observe wait for that moment and then act with total focus..... my wife is a medical professional and I run the role play of her having to resasitate a human with me popping up saying, can you get my socks please I cant find them.........

she gets confused as to sometimes, I'm just kicking back being leisurely for an hour or 2 maybe half the day then locked up apparently doing nothing..... for hours....... lordy.... but she does spend more time at home these days... might be a part of it...

Yes, I can see where you are coming from, but that analogy may not always work.

Go and visit the casualty department of the nearest hospital.

There you will see people waiting to be treated, some for injuries.

They are made to WAIT REGARDLESS unless the situation is really life threatening.

Life threatening situations arrive by ambulance, in the care of paramedics.

All other patients have to wait. This to us as patients or visitors seems apalling. But it is not appalling to medical professionals who have orders of priority in dealing with cases.

Now transpose this to your dilemma.

She is not likely to have a proper reality on your problem.This is not her fault, it is yours because the model you are using to DRIVE HOME the message to you seems reasonable, but it does not carry the CLOUT you think it has.

You must make it BRUTALLY CLEAR so that the importance attached to it is CLEARLY MANIFEST, sorry, but I am trying to help you.

When I answer the phone, I do not whisper "not now please"....I yell " NOT NOW ! "

Regular callers are accustomed to this response and as a consequence are OBLIGATED TO RESPECT IT.

Now, as I advise you above, you have to make it MEANINGFUL in terms of MATERIAL POSSESSIONS for it to land, and not in terms of anything else, because any other comparisons do not carry sufficient reality within the context of MATERIAL VALUE for it to land.

 

[SOCRATES]

hmm, yes, ive never actually put her through it from that aspect of it practical hands on.. thought the talking concepts would be enough.... maybe it doesn't hit home or force the point strongly enough..

FX, you are doing your best. I can see that. But you are doing your best ACCORDING TO YOUR FRAME OF REFERENCE which is NOT HERS.

And you are not AWARE of this

You must deal with the problem according to HER FRAME OF REFERENCE EXCLUSIVELY for the message to land properly.

Now,TALKING CONCEPTS ARE ENOUGH but they have to be the RIGHT ONES and MEANINGFUL to her according to HER FRAME OF REFERENCE for it to WORK the way YOU NEED IT TO WORK.

Otherwise, you are led to think it has been understood and accepted, because according to your frame of reference it looks like it, but in reality it has not landed at all, and you remain oblivious of the fact that you are under a FALSE PREMISE as a consequence of making AN ASSUMPTION, which is not the correct one. Now does that explain it ? Hope it helps.

This is the difference between the perspective of a trader and a non trader, and, in addition, because men and women percieve things differently, it can lead to a lot of grief if not handled properly so that there is no room left for doubt, EVER.

 

[DaveJB]

Crikey,
I might imagine that working Soc, but I'd wake up next day to find my softer bits on the pillow next to me I think. My wife is already fairly good at spotting and responding to the frosty replies by clearing off, and if asked would concede I am a bit of a hedgehog - approach with caution, prickly when disturbed. The point is taken, but I figure I have to meet her halfway - as I mentioned earlier when I'm aware things might interfere I simply stay out. Imperfect yes, I think a sign up to suggest I'm busy might well be a suitable compromise between divorce and quitting. It's really not a case of training, but education - I'm working on getting her to stop talking just for the heck of it.

After all, retirement will be completely intolerable when it occurs if I have to answer stupid damn questions all day long. 'Are my keys in the back door' I asked, 'which keys' came the reply - how the **** my car keys would end up in a door instead of my house keys I'm still trying to work out. To continue my 'Les Dawson routine' (sorry, but I'm in that sort of mood) why do they always say things like 'oooh you shouldn't have done that, I bet that hurt' when you have an accident?

'Answer the phone' - I'm one up on you there... I let it ring until either somebody else answers or the answerphone picks it up, I don't care who it is or why they are phoning - they obviously want something from me, let them figure out how to attract my attention.

 

[fxmarkets]

Makes sense, hmm I could let her trade a mini lot to aid focus..

Thanks for your advice Soc.

I'm sure its relevant to many members now or what they may face in the future.

 

[fxmarkets]

Crikey,
- I'm working on getting her to stop talking just for the heck of it.

LOL. Absolutely no chance mate. good luck..

 

[SOCRATES]

Crikey,
I might imagine that working Soc, but I'd wake up next day to find my softer bits on the pillow next to me I think. My wife is already fairly good at spotting and responding to the frosty replies by clearing off, and if asked would concede I am a bit of a hedgehog - approach with caution, prickly when disturbed. The point is taken, but I figure I have to meet her halfway - as I mentioned earlier when I'm aware things might interfere I simply stay out. Imperfect yes, I think a sign up to suggest I'm busy might well be a suitable compromise between divorce and quitting. It's really not a case of training, but education - I'm working on getting her to stop talking just for the heck of it.

After all, retirement will be completely intolerable when it occurs if I have to answer stupid damn questions all day long. 'Are my keys in the back door' I asked, 'which keys' came the reply - how the **** my car keys would end up in a door instead of my house keys I'm still trying to work out. To continue my 'Les Dawson routine' (sorry, but I'm in that sort of mood) why do they always say things like 'oooh you shouldn't have done that, I bet that hurt' when you have an accident?

'Answer the phone' - I'm one up on you there... I let it ring until either somebody else answers or the answerphone picks it up, I don't care who it is or why they are phoning - they obviously want something from me, let them figure out how to attract my attention.[/QUOTE

]Dave, men and women percieve things differently. What I am saying that that you may be saying one thing and she is understanding another, don't laugh. It can be very serious, and very detrimental to your trading. You have to deal with it, but as I explained to FX it is no use you trying to deal with it according to your frame of reference, because it is not hers. You must deal with it according to HER frame of reference, and not YOURS. Only then does it land and remain LANDED.

There is no question of compromise, of meetings half way. YOU are in charge of your trading.YOU have the ultimate responsibility for pressing buttons and managing positions.

YOU have to be allowed to DISCHRGE THAT VERY HEAVY RESPONSIBILITY CORRECTLY.

You have to ensure that this is the NORM and not the EXCEPTION.

Therefore, you have to put in place the CORRECT PROTOCOLS to absolutely ENSURE that you can ALWAYS be guaranteed that your space is respected when you are in front of a screen, whether you are running a position or not, that is the point I make, ignore it at your peril, because you need to put YOUR FULL ATTENTION on what it is you are doing and are responsible for, without having to battle for not being interrupted, do you see ?

You must not "imagine" that working, you have to make it a PRACTICAL REALITY instead.

 

[SOCRATES]

Makes sense, hmm I could let her trade a mini lot to aid focus..

Thanks for your advice Soc.

I'm sure its relevant to many members now or what they may face in the future.

Yes, that is probably a very good idea, for her to get a reality on what it is you are doing because by allowing her to trade one lot (of course under your strict supervision) it is about real money and not about a concept she would have difficulty relating to.

BUT

Make sure you tie in the idea that this is real money and for every tick substitute an item of furniture or kitchen equipment or even her car. This will make it more real for her.

If you do not do that, then she could very easily just be mesmerised by the numbers,
WITHOUT NECESSARILY attaching a TANGIBLE VALUE to the outcome.

We all have to do this at some stage in our trading careers if we trade from home, the sooner it is done, the better. It then becomes a habit for the spouse not to interrupt, which is the desired state. OK ?

 

[fxmarkets]

Yes . very o.k. cheers.