THT
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Posts posted by THT
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11 hours ago, HMB said:
I absolutely agree - however, about how a plan looks precisely, which components, etc., I may have at this stage not (yet?) exactly the same idea as most participants in this forum who shared their views on this (for which I am very grateful - I believe one learns a lot from discussions, guess Dalio would call that "thoughtful disagreement"). I need to plan better what to do when a trade doesn't work - which I think in my case should always mean an immediate, extensive break to become aware of my emotional state and then make conscious decisions about if/how to react (again loosely quoting Shull). Also, at this stage, I need to find more/better ways to avoid behaviors that impede my abilities (if any...). I can't every day deliberately drive in rush hour traffic for hours just to distract my urge to trade before my planned/scheduled trading time...
More general: one big issue of mine (among many others) is the inability to execute even the simplest plan - I need a plan to improve that...
Plan to write a plan!
It's not easy, but its also not hard once you have clarity of mind and know what the market is likely to give
for example - a lot of my trade plan is
- Trade EVERY opportunity - If opportunity does not show do not trade!
- Risk 2% of my account per trade
- Enter at X - determined by method
- Stop will be X pts
- Target is X pts - determined by method
- Once up X pts move stop to breakeven + 1pt
- Then once up 50% of the range from entry to target protect x% of open profits
- Accept most of the time this will work out perfectly but there will be times when it doesn't and
the hard part is working out the X parts - because we'd love 1000000000 points from the market, but if it only gives 100 points building a method/strategy for 1000000000 pts ain't going to be much good
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11 hours ago, HMB said:
and those probabilities are typically subjective, IMHO
Depends on your trading style/method
you never ever know for certain what return you're going to make on any 1 trade hence the need for exacting rules
All my methods have exact rules, target levels - if the market fails to meet those target levels then its up to me to have a back-up plan to get some profit out rather than none
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On 08/09/2020 at 21:36, HMB said:
...funny how one gets conditioned by the market... exorbitant valuations in NDX were obvious, barely explainable by low rates and massive Fed printing... yes more profitable than 1990, but still obviously extremely highly priced... now that was before Covid... then the Covid crash, then the Fed prints more... and all recovers till June 8... but Dax, RTY, NKY etc. stop then, move sideways and eventually slightly higher, but NDX adds another 30%... because Apple has suddenly invented the iphone? and Microsoft released Windows? Or Tesla built an electric car..? Oh yes, Amazon - we all buy a second kindle now and order every book twice because of the pandemic..
But no, I didn't get it. The conditioning had already happened. NDX must rebound after a 5% drop... because then it would have only outperformed the rest of the world by 20% in two months.... exactly the amount of time it took me to believe the craziness...
The markets aren't doing what you've been taught, learned / conditioned to think - They are doing something and until that point balances out they will defy all logic, analysis and common opinion
I might do a post on this, If you're looking rationally at the markets, it WILL make sense to you, If your mind is not open to seeing things in a new light then you'll not get it or see it clearly
Back in 2010 I went on a quest to work out why no one knew what the hell the markets were doing and most importantly were markets predictable
I said in a public forum way back in 2015 that the stock markets events over the next 20 years will cause people to question its logic - It's going much higher in terms of price over the next 14 years, all that is happening now is the building phase - markets do this in a UP, correct, pause, UP, pause, correct, UP sequence and as most people only look at the last 12 months price data on a chart, they fail to see the journey over 15 years or so and it's by analysing these long term sections that you see the bigger picture
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10 hours ago, HMB said:
very interesting! - the time aspect contradicts somewhat a saying which I believe to have seen confirmed repeatedly: "stocks go up on the escalator, and down in the elevator" (don't know the source) - think for cryptos it's the opposite...
Yeah thats in reference to a gradual bull climb such as 2003-07 and then 2 years to retrace it back to starting level (taking the elevator) - Think is originated in the fund management industry
During a bull climb you'll get varying price corrections along the route, as you can see in the chart, those corrections won't be severe, until it ends - that's what Gann was referring to and to be fair 100 years ago price movements were a bit more clearer and crisper than today, but today's markets still work on the exact same lines as back then, just at a higher energy
Take the 2018 correction - that ended the previous up bull climb, corrected at a higher price % level and time zone that any of the minor corrections in the uptrend, that signalled the next up bull phase, then we had the 2020 correction followed by another bull section, now its correcting - the question is - Is it the start of a new correction or a temp pullback
Trying to predict the next move is futile, you'll win some, lose others and you then through yourself into the prediction game and once you make a call your mind moves into prove it mode, which causes total irrational thinking if the move fails to support that mindset and is detrimental to a trader
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Also WD Gann said over 100 years ago - "watch for corrections greater in price and time than any correction in the preceding trend - as it indicates a potential change of trend"
As we can see, the recent correction is greater in price but not time
So we have another mixed message!
Also this analysis is not 100% accurate as I've found over the years that sometimes its spot on, other times way off - so we are back to our personal outlook and the law of probabilistic returns
Then if we look at the WEEKLY chart the picture becomes even more blurred!
"IF" the Indicators run their full cycle to the OS zone then price HAS to fall or flat line at best
This gives you an idea of what price could do - It's not certain that price will oblige though, this is the problem with using Indicators
That being said using an Indicator when price plunged in march down into the 50-75% retracement zone became a very high probability trading opportunity on the weekly chart and the Indicators confirmed the result
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Remember trading is not 100% certain - we are working on probabilities
People massively misuse Indicators - If you use Indicators properly they can serve a few purposes
1 of which is that they can identify cycle tops and bottoms
The BIG question is, is this cycle bottom a swing low to a continuing uptrend or a temporary swing low followed by a LOWER swing high which then goes on to form a new swing low?
The answer to that NO-ONE knows - hence why you have to trade smart, to a plan and execute everything to that plan/strategy
Because of all the Ifs/buts and maybes you HAVE to trade according to your outlook
This could be the start of a new bear phase, or it could be simply a correction in the uptrend and continue onwards
My analysis is its mixed - the highest probability is that this is just a correction though - What we need to SEE is price action over the next few days as taking out the swing low is bearish if closed below
The Indicators "IF" they do a full cycle (OS up to OB zones) should see price rises - If the Indicators do that but price is flat then that is bearish
the chart is the DAILY chart
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Dance and Trance for the past 12 years (Kid of the 90's club scene the music never leaves you!)
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1 minute ago, jlz said:
No problem, let's try something out. Think about that we have a demo platform where you can execute anything I will code, so there won't be any harm to try it out.
OK thanks - It might be a week or so - I'll message you
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34 minutes ago, jlz said:
I personally don't use any technical analysis but I listened the other day to a professional trader that uses Fibonacci patterns and she claims that indicators are getting more important these days exactly because there are developers trying to code algorithms. Since coding needs an exact value to enter and exit a trade, an indicator gives them the exact values they are looking for.
Every trade i make there is a exact entry level, an exact stop, a Target 1 exact level which when hit moves the stop, then I have a trailing stop for live trades and a Target 2 price level - This could be automated, but I am just so adapt and used to setting these levels along with the alarms that accompanying them that I think I'd miss them if my method was automated - that being said I could then be away from the screen and still get in the position!
Every method out there works to some degree
Using an Indicator allows you to pin point turns to within 1-2 bars or the high/low so for precision traders Indicators are very useful
I have absolutely zero knowledge of coding or even using PRT's idiot proof system of automation
I might give you a scenario to code/test of which you're free to use yourself
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4 minutes ago, dmedin said:
Yep, you're the same as all the rest.
The point is to prove that you don't need a method or system to win in the markets, you don't need to be smart, clever, intelligent or have a great method - I published it as an educational tool that a few people will "get"
The markets offer many more times the possible % returns that the new moon method could return so why would you trade it! Even if it won every month/trade it would not make sense trading it compared to what is on offer by the markets - which is also why I was quite happy to publish it
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1 hour ago, HMB said:
Read your posts on the new moon strategy - very interesting! I get your point about risk and money management, and how powerful a simple strategy can be with discipline in both. As you pointed out, the strategy also exploits the upward bias of equities (Buffet attributes this bias to retained earnings, others would likely add ever easier monetary policy and rising government debt).
Thanks - I don't trade it - the point is a semi random method with half decent money management works, people who aren't achieving near it's returns needs to be asking questions about how good their method really is because there's a lot of methods touted out there that just do not work in the real world of trading.
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Not that I'm aware of, you need to draw yourself using the fib tool - If you use PRT then you can contact them direct and they'll build you a scanner if they've not got one already in their library
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8 hours ago, HMB said:
...for the sake of completeness: sure most of you know, but same effect can come from dummy portfolios. I have (only) one on a public platform (real prices of course, long only stocks and ETFs + options (index puts/calls)) - since inception late 2013 it's up 126%, it's also up over 5 years, 3 years, 1 year, 6 months, 3 months, 1 month and YTD. 1 year Sharpe ratio is 1.6, average annual return 12.8%, maximum drawdown 25.5%. so forget your dummy portfolio performance ! it's meaningless - and in the worst case makes you dangerously overconfident. wish I had crashed that to 0 in the first month.
Yep trading can be really hard due to all the aspects going on
Keep everything simple - A major signal that you're not ready to trade is that you chase every possible trading out there thinking its the holy grail - It doesn't help that most of the methods touted out there work fine on paper but not in the real line of fire
I'm publishing on here a monthly dummy trade - THT NEW MOON Method - to prove that you can make money and sometimes beat all the pro fund managers out there by a semi-random method
The method WILL beat most fund managers most years and the point of it is to show people you don't need to know anything about trading/Investing to make money apart from having a decent handle on risk, risk control and money management - I 1st learned of this years ago and I paper traded it - the eye-opener came when it beat the highly coveted trading method I'd created and invested months in tweaking and trying to perfect!
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Every trader has been in that zone and made most trading mistakes - it's why only 5% survive the journey
Discipline I'm afraid - rules, stick to them, read them, apply them
Another aspect is because of your qualifications and work (I used to be a Financial Adviser) you'll think you know what the markets going to do and you'll be fighting that subconsciously with proving yourself right
Everything comes into the mix - the keys to success is not a method although that does help, it's managing emotions, controlling things you can manage and being absolutely disciplined and ruthless in your execution of trades etc
Thanks for sharing your story - it will be applicable to others, I just hope that you rectify the issues and start to win
One method for keeping yourself in check is to withdraw 50-70% of winnings shove them in another non-trading/Investment account and leave them, so you're growing an account slowly
Wishing you all the best for your future
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50 minutes ago, Kodiak said:
They say that stocks take the staircase up and elevator down
Lets see how fast the elevator can go when the time is right?
I guess puts are going to be expensive?
https://sentimentrader.com/blog/massive-surge-in-speculative-trading-again/
Depends how much it falls PUT option wise whether it's worth while taking the punt - Until I'm proved wrong or my research is proved wrong, EVERY correction/plunge until 2034 should be easily recovered - bear markets like 2000-03 2007-09 should not happen again during this phase (a 1987 type crash should though!) - which throws the odds to the long side for traders/Investors
the market to watch is the Nasdaq100 the rest will do their own thing in a similar fashion
Gary Smith (How I trade for a Living) used a lot of sentiment indicators to trade very successfully in the 90's - it stopped working in the 2000's though, I've never re-looked to see if it's changed since
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8 minutes ago, dmedin said:
It's also mentioned in this DailyFX article in relation to Gartley. Did Elliot Wave come before or after this?
Around the same time RN Elliott was around in the same era 1930's onwards
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9 hours ago, RANZ said:
It's great, I was also working on these lines to find the historical patterns and trade according to these patterns, I worked on the following graph to find the patterns:
I wrote this to a friend last year:
We entered the UP phase in Dec 2016
The beauty of all this comes once you know the Internals because they just repeat in generic form/shape but specifically in TIME
The plunge of Feb 2020 didn't happen out of the blue - I'd published the date years in advance (see yellow box on the chart below) but more specifically, the plunge is DIRECTLY linked by sequence to the 1987 crash shown above - Markets grow and evolve, but the Time Cycles that are present at every major turn and crash remain the same
If you run the TC shown in the chart below from the 1981 UP start date on the 2nd date/hit it lands directly onto 1987! - In the chart below the Mar 2020 date is the 1st hit - the next time it hits "could" cause another 1987 type event, unless march 2020 was it (there is no way of knowing until it arrives)
I might publish in the future a series on Time Cycles, because once you understand the Internals and big TC's it debunks every economic and Investing theory out there and you understand why the markets do what they do - Elliott Wave have been calling for the mother of all market crashes since 1986! It's not going to happen no matter how much they label and relabel their charts to justify their thinking
EVERY market has it's OWN TC's that determine its growth and decay - So what works for the stock market will not be the exact same numbers for other markets.
Picture the above chart in 3D (I've mentioned that before too) The flat sections are base building - happened in 1897-1915 / 1932-1949 / above 1966-1992 and 2000-2016
In the chart below it refers to a low - that does not mean an all time low, it will be the turning point which creates a swing low - on the chart above the last time this happened was in late 1994 which created a low point and then whoosh
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Absolutely - I view things a bit differently to others which for me makes 100% sense of the markets, so periods of "irrationality" for me can easily be explained.
Elliott Wave in 1999 published "Conquer the Crash" - the emphasis was on a deflating economy (USA) in the true sense of credit deflation for their expected ultra massive stock market crash they expected in 2000 - Low Int rates and QE were touted as possible weapons to be deployed - EW were though touting the end of the world stock market wise, that did not happen, but the Fed did launch the deflationary missiles - which they will say saved the markets
How I look at this differently covers a couple of aspects - some of which I'm not expanding on:
- Interest Rates just as the Stock Market work out in cycles - The last time Int Rates were low was 1930-1951 - this was a period of 21 years give or take, the 2000 crash brought low but not ultra low Int rates which have remained as per the 1930-51 period, the 21 years are up next year, so IF rates return to normality after that the cycle is tracking that of the 1930-51 cycle - We shall have to wait to see if that happens or not
- I don't agree with the markets not working normally - For me they are doing exactly what is expected - The Stock Market follows a 15-19 year cycle, I know this for a fact as I've plotted it since the Dow came into trading in May 1792, the cycle is UP then DOWN/FLAT sequence then UP again etc- just as in 1929 the DOWN/FLAT cycle was due so was the same repeat in 2000 (hence a possible cause for the current QE/Int Rate cycle) - These UP/DOWN sequences link in with periods of stock market, credit and wealth Inflation followed by deflation in those items, how much the stock market declines is depending on where the cycle is - there's a Fibonacci calculation to determine this but it's not something I'm disclosing - It's the reason WHY the stock market crash of 1929 looks very similar to the 2000 crash - you have to look at and work with the speculators market at the time, in 1929 it was the DOW, now its the Nasdaq100
Now for the past 10 years I'm 100% convinced that the stock market follows that 15-19 year cycle sequence - I've done enough research to satisfy myself - All that has happened is that the current Nasdaq100 has increased its energy - I'll admit without knowing all the causes of the cycles it might sound a little bit far-fetched - below is a screen grab of a website from 5 or so years ago - the DATES aren't exact to my cycles but you can get the picture and someone else is confirming the UP/DOWN sequence too - the sequence is:
1899-1915 / 1915-1932, 1932-1949, 1949-1966, 1966,1982, 1982-2000, 2000-2016, 2016-2034
The markets have for the past 228 years followed cycle expectation - I don't see them moving away from it ever - You just have to look at the markets in the right context which I admit very few people do - But when you understand the cycle and its internals, puts everything into perspective
My estimation of this cycle is that plunges will only be corrections with the emphasis upwards - for the USA markets
I first became aware of cycles in 2010, had perfected them by 2012 and since 2012 the market has been virtually spot on
It's up to every trader out there as to how they view data, the markets and form their expectations - for me cycles tell me what to expect for the coming years, which for me has worked the best of all the methods I've researched and used to Trade/Invest
Obviously I don't have a crystal ball, but I'll be very surprised if the low of 4th November 2016 in the Nasdaq100 is exceeded before 2034 (the low that kicks off the 15-19 year UP cycle has never been hit during the UP cycle phase in 228 years) always a 1st time for everything but probability says it's very low to happen
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The zigzag Indicator is the holy grail of Indicators/lines if you fathom out how to use it correctly - A zigzag Indicator highlights vectors and points of Instantaneous Balance Stability - The clue was given in my How to Win thread which showed them on some charts - Keep referring to W D Gann for some reason!
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17 minutes ago, dmedin said:
Don't even need to win 50% of trades to be profitable
Yep Turtles did it on 30-40% win rate
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and because every trade is a gamble every trade is bound by the rules of probabilistic returns which is covered exceptionally well by Van Tharp, which is where risk, risk management and expectancy etc all come into the mix
It's exactly why I'm running the "NEW MOON" thread - to prove that a pre-set, semi-random method can not only beat the market in most years but can win in the trading game, simply by having the right risk to reward
Which is what Van Tharp is all about
You could set up a trading system that trades every Wednesday and with the correct risk and risk management would be successful to some degree
Throw in TA and you start to shove the odds of success well into your favour
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4 hours ago, jlz said:
There is one and only one reason behind those videos and is to make you trade with a behaviour. If your behaviour is predictable groups with more buying power than you can profit from it. TA main goal is to convert a supposedly random market into a static cloud of retail traders. TA would be a fantastic tool if there wasn't a whale expecting you to be at a certain position, if you ignore all market participants you are at the mercy of their institutional moves. The reason why TA doesn't work is because it is used by many people at the same time and creates a cloud of positions. I could agree with using your own indicators out of a proper risk management system, that would give me confidence. Using what is provided by the platform will lead you to trade with many others at the very same place. It is easy to understand that your profit has to come from others loses, if your position is with the majority, in order to make a win who is loosing that amount? I am sure that using well known TA is the main cause of many traders' loses. If you ignore whales and praise your indicators it won't go well in the long run.
Just add my 2 pence worth as I trade using TA - BUT and its a big but, I use my own (well Gann's) style and it works exceptionally well - Peter Brandt wrote a book around 10 ish years ago and he traded the traditional TA formations returning low to mid double digit % returns, so it does work.
I think the typical trader on here is likely to break virtually every rule in the keys to success I mentioned in my how to win post - jumping from one method to the next, without realising the holy grail is sat there right in front of them on every chart they look at
I agree that traditional TA does not work as well as its touted, but it does still work - Obviously it depends on how you're defining TA - I personally class TA as trading off a chart, not trading Edward & Mcghees definitions
I don't look at youtube
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4 hours ago, jlz said:
If there is anything related to risk management is what I will read, the rest will be ignored.
That's the whole point of the book and is the critical part the rest is just faff
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This is how option writers work out options - if interested
One of the easiest and most useful formulas is the following:
Price Change = Current Price x Historical Volatility x Square Root of days left to
expiration all divided by Square Root of the number of trading days in a year.
Trading days in a year is used as a constant number (252). The Square Root of this is 15.875.
Historical Volatility = (52-week high - 52 week Low) / (52-week high + 52-week low)/2
Lets take a hypothetical stock XYZ. We look at the chart over the past year (52-weeks) and find the highest high and the lowest low within this time period. Don't go back further than 1 year. Lets assume that XYZ had a 52-week high of $125 and a 52-week low of $83. This gives us a historical volatility of: (125 - 83) / (125 + 83)/2 or simply (42) / (104), which = 0.404 for historical volatility.
Now, lets assume that the current price of XYZ = $90 and we are looking at options that will all expire in the next 30-days. We just plug these numbers into the Price Change formula and get:
Price Change = $90 x 0.404 x Sqrt(30) / 15.875. Calculating the square root of 30, this gives us ($90 x 0.404 x 5.48) / 15.875 = 12.55 for our price change calculation. This means that there is approximately a 70% chance that the market (XYZ in this example) will stay within +/- $12.55 of its current price. This means that the 102.5 (90 +12.55) Call options and the 77.50 (90 -12.55) Put options have a 70% chance of being worthless by expiration. The greater the price move from this price change of 12.55, the greater the odds are that the option will expire completely worthless. For example, if you double the 12.55 to 25-dollars, you will increase the probability to 95%. In other words, the $115 Call option (90 +25) and the $65 Put option (90 -25) have a 95% chance of being worthless in the next 30-days (expiration date). If you multiply the Price change by 1.5, you get approximately 80% probabilities Multiplying by 1.75, will give around 87% probabilities.
NDX
in Indices and Macro Events
Posted
whatever suits your style
Interesting you use the 50% Level - I'm just writing up a post on the 50% level as a trading method - as we speak - for my "How to Win" page
Only thing I'll say is whatever method you design/use make sure you test it to oblivion and back - a huge amount of methods work fine on paper but in the real world of live trading fail