The Markets, Trading & Charts Thread

[Scopedog]

kevsta,

As cute as your avatar is I believe your charts are indistinguishable from numerology or pareidolia. I look forward to your long-term net gain/loss reports when you start investing your own money in these gambles. I predict that the house will always win. Am I eligible for the million dollar challenge?

 

[kevsta]

kevsta,

As cute as your avatar is I believe your charts are indistinguishable from numerology or pareidolia. I look forward to your long-term net gain/loss reports when you start investing your own money in these gambles. I predict that the house will always win. Am I eligible for the million dollar challenge?

I have been asking the same question all the way through in fact.

if I say I am psychic instead and can perform better than chance, (50/50) on next turn level and direction, surely the $mill is mine?

 

[kevsta]

Translation, please?

I already explained this once and am beginning to think nobody reads anything I write anyway now.

taking a zero instead of a loss when trading, means that you don't have to make it up again with the next half, or third (whatever your risk reward) of a win.

so it has a numerical value to you, ie the full value of a win, divided by your risk reward ratio.

so if you are trading at 2:1 risk reward, and lose €20 when you lose, and win €40 when you win, if you take a zero instead of a loss, the next win is all yours. so zero = +€20 effectively.

and then as I split up the position, buying lower with the bigger slices, the biggest slice should get to the overall 2:1 ratio (say +2%, for 1% risked) and I close it out and leave the other 2 smaller slices live,but move their stoploss levels to zero so I cannot lose, and have locked in a minimum 2;1 win at worst case.

so if they come back and hit me at zero again, not bothered, really.

this is how its all supposed to work in the ideal world, but is not possible on super tiny high leverage accounts, the understanding of which is actually the only positive thing out of this thread thus far in fact.

 

[Fast Eddie B]

so if you are trading at 2:1 risk reward, and lose €20 when you lose, and win €40 when you win, if you take a zero instead of a loss, the next win is all yours. so zero = +€20 effectively.

Does "take a zero" mean to move into and out of a position with no net gain or loss?

As far as, "the next win is all yours", that seems reflective of the Gambler's Fallacy. It's all very familiar, and people have tried it with all sorts of schemes before. The next coin flip or roulette spin or up or down move in a commodity is in no way affected by your historic betting pattern.

After you "take a zero"', how is a future win in any way related? Or a future loss?

I know you think you're saying something different, but, like I said, it all seems very, very familiar.

 

[kevsta]

Does "take a zero" mean to move into and out of a position with no net gain or loss?

sorry, yes, take the trade, it runs into profit far enough that you move the stoploss to zero, and it then comes back and takes you out at even.

As far as, "the next win is all yours", that seems reflective of the Gambler's Fallacy. It's all very familiar, and people have tried it with all sorts of schemes before. The next coin flip or roulette spin or up or down move in a commodity is in no way affected by your historic betting pattern.

After you "take a zero"', how is a future win in any way related? Or a future loss?

I know you think you're saying something different, but, like I said, it all seems very, very familiar.

another fallacy Im not familiar with, but I would have thought capital preservation was obviously desirable? it is after all much better to play and not lose, than to play and lose?

if you play and lose, half of the next win is required to cover that?

I know what you are saying about "how are they related?" too, but mathematically..

-20 +40 -20 +40 = 40 ..or..

-20 +40 - 0 + 40 = 60 ?

so zero = 20, round here, anyway

and one might have thought Mr Stolper would have grasped this basic fact by now -3.5% lol

 

[psionl0]

-20 +40 -20 +40 = 40 ..or..

-20 +40 - 0 + 40 = 60 ?

There would be more zeros in the second sequence so the total should be the same in both cases. In fact, the second sequence should result in a lower total because you are giving your trade less time for the odds to work in your favour.

Explanation: If you move your stop-limit up to zero then there is a bigger chance that you will sell before the price has had time to hit the +40 level.

 

[Fast Eddie B]

if you play and lose, half of the next win is required to cover that?

That is typical "gambler talk".

In real life, if you play and lose, you have a net loss of a certain amount.

And you enter the next play, you're starting fresh - past history is of no influence or consequence. You will win or lose based on the new bet, not by imagining it "covers" anything.

Please Google "Gambler's Fallacy". I think it's echoed in your thought processes.

Many gambling systems use similar strategies, varying future bet sizes to "cover" prior losing bets. Like the Martindale. None of them work effectively, so far as I know.

 

[Fast Eddie B]

...but mathematically..

-20 +40 -20 +40 = 40 ..or..

-20 +40 - 0 + 40 = 60 ?

so zero = 20, round here, anyway

1) That seems to be crazy talk. Or maybe I just don't see what you're getting at.

In any case, zero is not equal to 20. Is it?

2) Who is Mr. Stolper?

 

[psionl0]

That is typical "gambler talk".

In real life, if you play and lose, you have a net loss of a certain amount.

And you enter the next play, you're starting fresh - past history is of no influence or consequence. You will win or lose based on the new bet, not by imagining it "covers" anything.

Please Google "Gambler's Fallacy". I think it's echoed in your thought processes.

Many gambling systems use similar strategies, varying future bet sizes to "cover" prior losing bets. Like the Martindale. None of them work effectively, so far as I know.

If the odds are in your favour then betting systems work. That is why casinos love gamblers who use systems (the casino is playing the same system in reverse). They know that the gambler will transfer his money to the casino all that much faster.

 

[AdMan]

1) That seems to be crazy talk. Or maybe I just don't see what you're getting at.

That's pretty much all we've had from kevsta in this thread.

 

[kevsta]

That is typical "gambler talk".

In real life, if you play and lose, you have a net loss of a certain amount.

And you enter the next play, you're starting fresh - past history is of no influence or consequence. You will win or lose based on the new bet, not by imagining it "covers" anything.

yes, but.. if I am going make 10 trades in a week, and can win 50% of them? which is all I've actually ever claimed I needed to?

then we will have a series of -1% + 2% results. surely you can see that substituting a few zeros for -1%'s has a positive effect on the numbers?

Please Google "Gambler's Fallacy". I think it's echoed in your thought processes.

While a run of five heads is only 1⁄32 = 0.03125, it is only that before the coin is first tossed. After the first four tosses the results are no longer unknown, so their probabilities are 1. Reasoning that it is more likely that the next toss will be a tail than a head due to the past tosses, that a run of luck in the past somehow influences the odds in the future, is the fallacy.

ok I did, and I don't see how this applies to what I am talking about. I am not doubling up overall position size, it remains constant at (say) 1% per trade, but just split into tranches to separate out portions of individual risk / reward rather than the whole trade being a full size win or loss necessarily.

Many gambling systems use similar strategies, varying future bet sizes to "cover" prior losing bets. Like the Martindale. None of them work effectively, so far as I know.

there is no variation in future bet sizes, just the same split position entry as always. all I am talking about is the difference between taking a loss, and coming out at zero instead of a loss. which is €+20. fact.

2) Who is Mr. Stolper?

are you kidding me? I have been talking about him and his fantastic 100% wrong record and taking the opposite trades to his recommendations now since 01 July here

as everybody here is keen on exact predictions, here's one we can watch

http://www.zerohedge.com/news/2013-0...-128-stop-loss

From Goldman Sach's legendary Thomas Stolper:

Go long EUR/$ with a 1.35 target and a 1.28 stop loss, on better growth in the periphery and large BBoP differential

Quote:
The Euro area PMI numbers over the last two months point to notable improvement in the periphery. Spain’s manufacturing PMI has risen to 50, which would be consistent with marginally positive growth. In turn, this creates upside risks to 2013 consensus growth expectations, which remain very low at around -1.6% yoy. The Italian PMI also improved. Stabilising growth in both countries could lead to further sovereign spread compression, which has been a positive factor for the EUR in the past.
EURUSD is currently 1.30059

Goldman Sachs (muppet dept) advise buying EURUSD

Zerohedge..
Quote:
Trading FX without a Tom Stolper reco to fade is complicated: there is always the risk of losing money. Luckily, that risk is now gone and for all those unsure which pair to short, the man with the 0.001 batting average has just come out with his latest piece of muppet-slaying "research", according to which it is now time to go long the EURUSD, with a 1.35 target and a 1.28 stop loss. You know what to do.
(short it)

who will be right?

I spent a whole week talking you through the 3 cycles down that followed after he called a EURO long. and all the GBPNOK analysis above follows on from his latest trade recommendation. (which he obviously lost)

interestingly Stolper's public calls result in GS clients losing money (100% of them), which GS the Marketmaker automatically assumes the other side of GS's client's positions.

and "Adman" your name appears to be missing the "S" from the front.

you claim to be a "professional" you claim to be "doing this with real money" yet can contribute nothing but lame snide comments. you are ABSOLUTELY full of it and yet have not the faintest idea what you are are looking at or talking about.

the perpetual derailers here are an utter joke, please either stick to the subject matter or accept you are utterly clueless and stop reading it.

 

[kevsta]

There would be more zeros in the second sequence so the total should be the same in both cases.

assume 10 trades per week, with only one loss/zero difference between the 2 sequences, what is the overall effect?

In fact, the second sequence should result in a lower total because you are giving your trade less time for the odds to work in your favour.

Explanation: If you move your stop-limit up to zero then there is a bigger chance that you will sell before the price has had time to hit the +40 level.
[qimg]http://i44.tinypic.com/ajl20i.gif[/qimg]

Click! somebody is starting to think correctly yes, absolutely, this is indeed true, if you remove yourself at zero, you remove the possibility of that win, and so do break the overall risk reward maths by doing this.

however, on taking a trade, one of 2 things will happen:

a) it will start to move in your favour, hopefully quickly, but not always
b) it will run back against you and stop you out.

only one of those 2 things can happen. so if we get option a) and it starts to move into profit, there comes a point at which (I use 23 pip profit as a general Forex guideline but might adjust slightly depending on individual setup, HPM lines etc) ..if it comes all that way back to your entry point, it is very likely to keep going and stop you out.

so rather than go from being into a 1:1 risk reward win situation into a full loss, many traders elect to just cancel the trade at zero and try again, rather than hope it doesn't stop you out and turns again in your favor.

sometimes it might do that and still be a 2% win, but if it starts to go, and then comes back again it's highly probable you are looking at a 1% loss.

After a certain point, I personally would rather take the zero (and occasionally watch it turn 2 pips above my line and run into big profits) but have the saved 1% with which to look for the next and hopefully correct setup. more often than not if it half goes, and then comes back, you will take the loss.

this is a subjective trader level decision and will depend on your own plan and trading style.

but given that if I have 60% of the position (at the best price) run into profit, ideally I will have cashed that out before the last parts turn and run back to zero, I should still come out ahead.

like so. the blue arrows show the ability to reduce overall stoploss yet still place it outside the previous ones, with the biggest slice bought at the best price, and so into profit first, and largest (60%)

the overall trade risk remains 1%, all I have done is spread out the range in which I need the price to turn, and taken all my eggs out of one basket.

 

[psionl0]

assume 10 trades per week, with only one loss/zero difference between the 2 sequences, what is the overall effect?

You either remove -20 or +40 from the sequence. Since this is a 50/50 proposition, the average removed is +10 so your 10 trades will have 10 less profit per week.

 

[kevsta]

You either remove -20 or +40 from the sequence. Since this is a 50/50 proposition, the average removed is +10 so your 10 trades will have 10 less profit per week.

hmm. ok, yes.

however, in real life there is a big difference between an "opportunity cost" ie money not made, and an actual loss, and it is well understood by most traders that not going backwards if at all possible, and taking small losses quickly, admitting you were wrong and waiting for next time is the way forwards.

because while it is irritating to watch a winner run having been taken out at zero, it is definitely not as irritating as watching a once profitable trade turn back into a loss. and especially if you are in the middle of the range, (I never should be) where anything is always possible, (like 70 pip spikes in either direction and back to the middle again once a week or so)

if say you have hit it with a short right from the very top of a potential 3 push cycle down, I would generally not move the stop until the second push starts, and then after that the stop follows the trade along at a discreet distance (one whole push behind generally)

 

[Fast Eddie B]

yes, but.. if I am going make 10 trades in a week, and can win 50% of them? which is all I've actually ever claimed I needed to?

Just curious...

...would this same betting strategy work with coin flips?

As far as me not knowing, or remembering who Stolper is, in spite of him being brought up before...

...is that hugely different from you not knowing the Gambler's Fallacy, in spite of it being brought up before?

Again, when you talk of the gains of the next bet "covering" the losses on the last one, you combine the two individual bets into a whole that is not there - as does the series of 5 trades you list - hence the analogy with the Gamblers Falacy - which, BTW, does not imply a doubling of bet size.

Back to Stolper, I find his allegedly flawed strategy trivial. I would point to anyone attempting to call markets from charts and assume they're doomed long term as my default position. Your pointing to others failing in their efforts hardly helps your case.

 

[kevsta]

Just curious...

...would this same betting strategy work with coin flips?

no, clearly not, as I cannot apportion 10% 30% and 60% at better and better odds individually, on a coin toss, can I?

As far as me not knowing, or remembering who Stolper is, in spite of him being brought up before...

...is that hugely different from you not knowing the Gambler's Fallacy, in spite of it being brought up before?

in this instance yes, because I have mentioned it in the Abenomics thread, and traded 3 separate trades down the 3 perfect pushes against him over the course of a week, detailing with precision exactly what would happen next, and where the Euro would likely turn (it did) on a line 300 pips lower than where we started that had been there all the way through

I again mentioned this in this thread about 5 pages ago. I really might have hoped some of it would have gone in and stayed in, but apparently none it means anything at all anyway lol.

so if you had been precisely describing to me the gamblers fallacy, and laid it out in detailed fashion over about 3 threads and 8 weeks, yea Im betting I might have known what it was.

Again, when you talk of the gains of the next bet "covering" the losses on the last one, you combine the two individual bets into a whole that is not there - as does the series of 5 trades you list - hence the analogy with the Gamblers Falacy - which, BTW, does not imply a doubling of bet size.

how is a whole week's trading not combined into one whole net + / - number at the end of every week?

Back to Stolper, I find his allegedly flawed strategy trivial. I would point to anyone attempting to call markets from charts and assume they're doomed long term as my default position. Your pointing to others failing in their efforts hardly helps your case.

it certainly does when I laughed at it on the day and then shorted the 3 perfect cycles down with precision accuracy and reversed off the VERY bottom though, doesn't it.

no? there's that denial again. I have been consistently correct on the Nikkei's movement publicly here. I have been consistently correct on the S&P publicly since I said long at 1631 in the Hindenberg thread.

meanwhile Stopler is either a clown, or marketmaker muppetbait, make your own minds up on that.

so people's non acceptance or non-understanding of what they have been shown, does not change the facts, that I, an 18-month in numpty noob have a better than average grasp of the likely next short and intermediate direction of almost whatever I look at, or put another way, .. understand HOW markets move.

NOR does my own personal ability to be in the right place at the right time to take the perfect system trade have ANYTHING to do with the system.

 

[The Central Scrutinizer]

are you kidding me? I have been talking about him and his fantastic 100% wrong record and taking the opposite trades to his recommendations now since 01 July here

I spent a whole week talking you through the 3 cycles down that followed after he called a EURO long.

That moment when you realize no one is actually reading your posts....

 

[kevsta]

That moment when you realize no one is actually reading your posts....

yes indeed. but prepared to try and argue anyway

I expect you're all very proud of your intellectual prowess too aren't you.

 

[psionl0]

however, in real life there is a big difference between an "opportunity cost" ie money not made, and an actual loss, and it is well understood by most traders that not going backwards if at all possible, and taking small losses quickly, admitting you were wrong and waiting for next time is the way forwards.

That's not quite true. If you end up with more money in your bank account then it makes no difference if it was due to extra income or reduced expenditure. Similarly, if you end up with less money in your bank account then it makes no difference whether you suffered a loss or missed out on a profit.

The real question is, "if the price heads back to zero after temporarily heading in the right direction then can you still get 2:1 odds on your trade"? If the answer is "no" (because the 3-push cycle has been broken) then it is right to bail. Otherwise, you are just demonstrating a lack of faith in your own system.

 

[kevsta]

That's not quite true. If you end up with more money in your bank account then it makes no difference if it was due to extra income or reduced expenditure. Similarly, if you end up with less money in your bank account then it makes no difference whether you suffered a loss or missed out on a profit.

and this is exactly where trader psychology starts to mess with your head, and people feel better not having lost money generally

The real question is, "if the price heads back to zero after temporarily heading in the right direction then can you still get 2:1 odds on your trade"? If the answer is "no" (because the 3-push cycle has been broken) then it is right to bail. Otherwise, you are just demonstrating a lack of faith in your own system.

there's never anything to say you got the final stoprun at the perfect point anyway until it has run, at which point you could declare that, but random events can always blow cycle out temporarily anyway as per that monster spike on EURGBP in the post a couple above, at any point, and although these are all just factored into " losses", it must make sense to take as fewer losses as possible IMO.

taken to the theoretical extreme, if you could never take any losses at all, even if you never got any wins either, you'd still be away ahead of the other 90%.

A lot of the decision is also subjective and based on experience, the more used you are to watching the live market action, the more you can get a feel for whether its running the usual kind of rhythm, and if it goes from running nicely up the trendlines as it usually does to overly large red bars down in a few seconds, from being into decent profit heading fast towards zero, it's more than likely one more nasty spike lower, and if so, I want to be out at zero and looking to take it again from the real setup in another 15 or 30 mins time.

or, obviously I could also be wrong and it just keep going down, at which point I'm obviously happy I only lost nothing.