Grey1

I once told an ignorent that the probability of throwing a coin is 50/50 and he told me look FACT ,, I just threw the coin 3 times and i got 3 heads so it cannot be 50/50 I did not continue the argument Grey1

Agree,,,the main time frame for tweezers formation or exhaustion is 1 minute,, the 30 and 60 time frames are only to meausre the OB/OS levels using any available oscillator such as RSI or CCI .. if you was position trading trading then the best time frame to meausre OB/OS would be daily /weekly /monthly or any proven S/R Grey1

The tweezers formation ( double exhaustion ) is best when it either hits 3 Over bought levels/Oversold levels or hits S/R... 10 , 30 , and 60 min are the time frames for intra day trading. As soon as these levels are reached look either for tweezers or shooting star . These are high probabality reversal pattern. Now,, in extreme trending market the retest of exhaustion levels( tweezers levels) is very possible ,, so if your entry is not spot on then the price might go your way first to come back to haunt you before eventually going your way ,, one Further point :- if tweezers are formed against the strong trend ( this is what most traders do and is in correct ) then this is counter trend trading and over a long period the reward does not justify the risk as statistically not more than Reward/Risk= 1 is attain able. How ever if the tweezers are formed in the direction of trend then this is where the major wins are and trader should take a Full postion ( against 1/2 position if anti trade trending ) Grey1

A new trend is born when the reward to previous trend diminishes.. If you use Multi time frame analysis the use of multi time frame analysis can shed light to the end of the previous trend and birth of the new one ,, For example if Index ( any index is good enough as they are all as efficient of each other) in 10 min and 30 min and 60 min time frame is OB then the risk is to up side Hence the chances are that a new trend should born ,, In pro environment where i used to trade we did not trade any particular trend but only pull the trigger based on the correlation between Risk /Reward at any given time and that is basically using Multi time frame ,, ( We how ever do not use oscillators we use Neural net work to identify the R/R in various time frames) Any way for traders who are after simple trend reversal R/R system the use of MLT is a stepping stone ,, The basic strategy for reversal detection is as follow short if 1) INDEX IS OB in 3 time frames and 2) Price exhausts in the form of either shooting star or spike and immediate sell in the next bar Grey1

Excellent,,,,,,,,,,,,,,,,,,,

Market is a counter initiative mechanism and human use their initiative to trade it,, Through out your life you have been told to use your intuitive to do things right way and suddenly you are facing a mechanism that punishes you for using your initiative,,, strange hey ,, what is the solution ? open a position lets say with 3 contracts close 2 contracts as soon as you have moved 0.5 unit of volatility in your favour with stop to break even point and walk away and I mean away from the PC for the rest of the day ,,, your position does not need your round a clock analysis and all it needs is to walk away and let your position run and run ,, I totally understand this is not a very clever strategy but it works best with those who are loaded with millions of confused strategies and their initiative works against them by finding an excuse to close a perfectly sound trade instead of letting it to run and run ,, I also like to add a note on stop loss.. instead of continuously thinking where to stop loss I think you must spend more time on TREND identification and not where to put that stop,, The trick in stop loss is not to stop at this or that level,, the trick is to reduce your position size and have a wider stop based on the instruments volatility and instead let the profit run ,, this is the back bone of risk analysis and traders should concentrate on putting less pressure on their CAPITAL than having a larger pos size and tighter stop loss. Grey1

One object( particle) can be in two different places ( on moon and on earth ) at the exact same time ... sounds flawed logic but it is not,, it just looks and sounds flawed to ignorant Millions of ways of pulling the trigger to buy or sell but only very few ways of having risk adjusted returns and most trader here do not understand or have the knowledge of risk based trading models.. This is why 90% of traders lose ,, this is why they deserve to lose ... Grey1

The main reason for supports/ resistance not holding is the pattern recognition algo's used by block traders... These algo's once confirm a trending down / up in a major index then no longer use their oscillator based module to trade and hence support or resistance becomes far far less effective in their exit strategy . ( hence going through support ) There was a very strong support on GS @ 160 but there was over 12 block trades ranging from 1.2mil to 5 mil last past two trading days to cut through the 160 level like hot knife through the butter,,, hope this makes sense Grey1

Institutions use VWAP as bench market to enter or exit . They have their own algo to execute @ VWAP how ever some large block traders ( non institution) use Brokers such as IB to execute their order.. It is important not to trade against block orders hence the importance of this vital bench marke.. How ever if you donot know and donot want to know and happy with what you doing and making loads of $$$$$ then Good on you,, http://www.interactivebrokers.com/en/trading/orders/vwap.php grey1

.....................

Some indicators such as VWAP line is bench market for block trading .. This indicator is a must for stock traders ,,,, Other indicators which are close to price action and designed to eliminate noise are very good too ... Most commercial indicators are of no or very little value though .. Grey1

To become a profitable trader you must realise 1) Classical TA on its own is power less in market forecast, 2) Understand the concept of risk and how to diversify risk 3) learn modern TA and not stick to classical TA specially how Block trades are moved intra day ( vwap execution ) A profitable Trader is not blind to news even though most news are priced in , A profitable Trader understands risk .. Hence he concentrates on entry than exit.. A profitable Trader understand volatility and exhaustion theories in modern TA,,, I used to trade for a bank for years and in 5 years did not see a single soul trading charts and classical TA to make a dime over the long period,, ( I have seen traders to have a lucky run though for few days ) ALL above IMHO ofcourse Grey1

Wishing all traders an awesome holiday ... Hopefully This time next year you all be millionaires Grey1

The market seems to have now discounted the DUBAI's problem and getting ready to continue its previous up trend ,, I feel the up trend move should exhaust in around 4 weeks time with a spike in DOW to above and a sell off from high . The market will then look for a catalyst to retrace to below 10000...( IMHO ) .. The equity market is trading well above its VWAP and most institutional traders know this ,, as a result they will be selling / reducing their long position by selling into the spike... Grey1

I have now read many of the internal over night reports from ( JPM .Goldman .MLynch ) and the problem is not as big as an average trader thinks , of course the spill over effect within UAE is not some thing one could over look but I doubt if this is going to be a next leg down ,, I feel fear element is un warranted and the market should soon continue the move to upside, ( as early as mid next week ) ...I am thinking of going LONG few top quality stocks such as AAPL ,AMZN ,BUCY mid week and hold them till End of DEC.. Program Trading :-- Most program trading use neural net ( dynamic pattern recognition ) and they are dumb in a way, they don't understand the reason for the move but still the move is seen as a down ward sell off and a sell off from highs, is very bearish ( even if we assume the sell off from high is bearish the market has to come back to near the previous high for Double top formation before major correction ) , As a result most intra day activity for the next few days will be on the short side but the fundamental reason for continuation of the previous trend should prevail and we should be above 10500 by xmas,, ( all in my opinion ) ,. FA explains the reason behind a move TA is blind to the reason and only sees the move,,, don't bet your farm on TA only because if you do then you are setting your farm on fire ,, ( IMHO ) of course Grey1 IMHO this will not be any where near the subprime bust

well said such a word of wisdom my man

Market goes through cycle ( foundation of TA ) and an adaptive indicator ( not an static one ) can be extremely useful ,, in fact the heart of automation and program trading is the use of indicators very close to the price action using noise reduction analysis ,, There are many advantages in using adaptive indicators 1) noise elimination ( only a very trained eye can see the difference between a trend and the noise) 2) Analytical models are easier to construct.. 3) Risk can be defined in terms of dynamic settings of the indicator Hence better RIsk management Disadvantages 1) most trader use indicators with the same settings every time under all market conditions at all times.. This is dangerous and misleading and most traders spend majority of their fund and trading life to realise that their indicator is not working not knowing why it does not work . 2) Trend following indicators such as MACD , SMA or EMA ( not noise controlled MA's) are laggers ( the correct use of these indicators need an emotionless human to let the profit run after realising many losses ) 3) oscillator based indicators ( RSI ,CCI) don't lead the market but they can be a window or an INDICATION to future price projection ..These tools are often used in correctly for Anti Trend trading ,, ( very dangerous game to play ) ,,, Price action Advantages 1) A trained eye is all what is needed 2) Most of advanced TA theories such as exhaustion theories only use Price action Price action Disadvantages Difficult to Model for automation ( Best tool would be Genetic Neural pattern recognition technology ) IMHO no matter what strategy or tools you use for intra day trading the RISKS are extremely high and majority of successful traders use a combination of FA and TA ( avoiding high frequency scalping ) on a longer time frame using RISK ANALYSIS AS THE CORE ENGINE of their analysis .. IMHO a trader with little understanding of risk analysis will eventually get wiped . Only those who understand the RISK survive the market.. Grey1

please email me to arrange a date as it says you donot accept private message on this site tgafar@btinternet.com thanks

Hi I hope you have developed your risk based engine and happy with it,,, LOTE_TREE was here in my house and he is on his way to develope his own code..We spent 9 hours to gether and it was mostly about risk management... Let me know if you have any problem then perhaps we can meet here for a full day of live trading.. grey1

Grey1 will not be trading any more to day ,,hence this the final P/L Final P/L + $1430 I am including all trades and the price filled .. I doubt posting P/L will help any 1 to learn trading hence I wont post any more and instead will be posting on various advanced Risk analysis,statistical arb , pair trading , program trading ,modern chart analysis ( pattern recognition using gentic NN, fuzzy analysis, expert systems and various AI techniques ) as we go along ,, this way I am sure my expertise will benefit some soul . Muachs Gracias

Round 2 LONG XOM the entry for the stock was perfect ( automated entry ) .. LONG 725 which profit was taken on 544 when it hit its first target with 181 to run ,,, the last lot was closed resulting in a total of $1083 profit for the day. Grey1

GREY1 closed his over night BTU long Trade with $828 profit as seen ,, Round1 Grey1 wins Mr Market lose,, Grey1

Only GOD knows it all ,, I have expressed an opnion about the foundation of education in financial engneering which is risk analysis which you hate it,,, fair enough .. I have expressed my view on RISK first Reward Last ,,I have also expressed to encourage traders to concentrate on money flow based on FA than PURE TA.. This is some thing you are thought if you worked for a BANK , now if you donot like it then I understandand ... People say there are many ways to make $$$ from market but you forget to recognise those methodologies that are not risk based will lose in long term even though could work in short term ,, Grey1

I suggest you paper trade for 2 years.. Get yourself a piece of paper and check the following ( if you donot know the answer then you are not going to make it ) 1) How do I reduce systematic risk intra day 2) How can I adjust pos size to reduce risk to capital 3) How can I diversify over different instruments 4) Is it enough if i Use TA ONLY to become profitable( This is a very important question and you should speak to winners of stock market to tell you the truth ) 5) what style of trading is less riskier( intra day ( avoid it if you can ) , swing few days using TA or swing using FA ( I encourage you to do the last) 6) DO I need to Watch CNBC 7) what is the first step and where should I start( I give you a hint start with NO1 if you insist on day trading ) Think of the risk ,,, you will be eventually rewarded for excellence Grey1