Get started

Count

TLT nearing bottom Still in line with my previous analysis. I approach this from an Elliot Wave perspective with Fibonacci relationship. To me this looks like a macro ABC with final leg down reaching extremes. We are likely in a bullish divergence territory on a Weekly Chart. The chart above is Daily for easier wave count to pin point where C might end. The support box is in gray; this is an area where a price could react with a strong bounce or reversal. As you can see we are already there so support could be found very soon. Another fib support coming up in the 90-96 range where I feel there is a strong possibility for a bottom (not guaranteed, hunting bottoms is a dangerous game). If we take a trend line in wave C from ii to iv and measure the trajectory of where v should end, it also points at a region of 90-96. If the market presents this opportunity it has a number of supports coming together all in that particular area. This bottom could mark the top in US10Y and other treasury bonds since they move inverse to TLT. Also the dollar index is hinting at a top and pushing extremes so I expect a reversal or a top in Sep-Oct timeframe. The month of September / October (2022) might come with fire works! Not a financial advice. Cheers,
NASDAQ:TLT
by Elliot618
2
The Secrets to Forex & the Boydian Theory of CompetitionI'm assuming if you got this far, you might be smarter than the average Yahoo commentator. No need to rejoice, dear Gulliver, we're still in the tutorial. I have specifically designed this article to be long and heavy, hopefully to demoralize you out of intra-day trading. However, I know that for those who live outside the expected plot, demoralization doesn't work. It's expected that dumb people will make dumb decisions. But oftentimes, smart people make the dumbest decisions. So here it is, a guide on how to make that dumbest decision a bit more survivable. Fortunately, we have the lessons of millions of losers to draw from. Corpses that tell a story. ------------------------------------------- Intra-day is a horror many glimpse but few manage to survive. The chaotic, turbulent, uncertain darkness of the lowest levels of the market are, to be honest, not for everyone. The vast majority of you reading this should not be intra-day trading. Why? Because I don't want to see your net worth (and lifeworth), sucked dry by the vampires in the hellscape. It is the hardest difficulty a retail trader can play the forex game on. You need to sink 1000s of hours into the craft, often as a fruitless exercise in geometry and color. There is no decisive path through this battlefield, this eternal competition. All edges decay. But there is a silver bullet. Just one. And if you know how to polish it, no amount of sulfur will get in your way. Part 1: It's Strictly Business The US military is a big organization, arguably the wealthiest and most powerful out there, as far as we know. A lot of people are paid to think about strange problems or prevent unfavorable events that probably wouldn't happen anyway. They are also paid to figure out how to make things cheaper, more efficient, more interoperable, more redundant, more lethal, more accurate, etc. It's not so different from your typical US30 business. You just trade the profit motive for organized violence (not-in-minecraft kind) and the shareholders for citizens. Powerful men who are responsible for other people are rarely different, despite what the movies and media might tell you. The front of the shop might look different, but don't be naive Kay, the survival motive is the same. So what risk management or market lessons can we learn from this controversial type of big business? What about those guys that think about strange problems? Every once in a while, someone comes up with an interesting idea. And no, I'm not talking about what you or your fellow estronauts think about on discord. Part 2: Patterns of Conflict Col. John Boyd developed the OODA loop theory from a basic white paper called: 'Destruction and Creation' and various presentation decks like: 'Patterns of Conflict.' And while I have an autistic tendency to make military-to-market analogies, it's not important to dive too far into these. Basically: risk and strategy development are cutting edge in the military domain, where the stakes and budgets are highest. And then, oftentimes, it trickles down into lower stakes arenas, like markets or sports. I could write a book on it, but alas, I have better ways to make money. Now, his works were publically obscure but privately influential, eventually their reach extended from military strategy to business and market strategy and even to cybersecurity and legal strategy. Boyd's cycle time management, his observe-orient-decide-act or OODA loop, in particular. It is a simple concept at first. It's so simple it doesn't really seem like an 'invented' idea. It's like processing power in a computer, or latency with an internet connection. If we can do things faster... our process of development, that is making mistakes and correcting them to 'get better,' also speeds up . An AI running a neural net is similar, it makes a lot of mistakes, maybe more than a human would, but because it plays so many games at once or a single game extremely fast, it eventually evolves to defeat humans in the form of competition. If it gets fast enough and far enough ahead or interferes with the processing speed of the opponent, something magical happens. It makes moves we see as 'chaotic' or 'confusing,' which usually end up as traps or baits to draw in the opponent, in retrospect. OpenAI and AlphaGO did this all the time. Eventually the faster equation of mistakes and successes will overcome the equivalent slower equation utilized by our competitor. Three options. /1/ You can make your process faster through technology or intellect, /2/ you can slow the opponent's process down through confusion or force, or /3/ you can do both according to Boyd's theory. The first option is our limit as traders. As far as retail FX trading is concerned, that is as much of the theory that can be applied due to the lack of boutique data feeds from prime brokers and the nature of the market (and law) itself. As an institution, you can go further. You can load up on computational resources, get closer to the source of the exchanges/interbank transactions to reduce latency, scalp top talent away from competitors, produce FUD in the media (the purpose of CNBC), etc. In fact, in other markets with other tools, by applying the OODA loop you could abuse the order book and confuse and bait the HF algo strategies. Do this well enough and you just might start a flash crash. Front-running, spoofing, layering, and others were second-order techniques of applied OODA loop strategy (those 'overpowered' methods are now banned). It was a trillion-dollar lessons-learned exercise. Part 3: A Strategy for the Weak But the idea is too widespread and too evasive to be killed off by a few unethical and abusive strategies. It's like the scientific method reformatted into a competitive/survival environment. You could argue its two or more scientific methods in contest with each other, with a game theory like logic balancing outcomes. A competitive decision cycle. Virtually every successful business uses a derivative or parallel version of cycle time management. A parallel version of it was developed as the Shewhart cycle, and inspired production theory in Japan that would eventually revolutionize manufacturing for a globalized, value-added world. And of course, it wasn't just tested in the field of profit, but in the field of battle, where competition and risk management is a matter of life and death; which are very expensive affairs. It would underpin the design logic of all future combat aircraft. It led to the swift and decisive victory in Gulf War I (the only swift and decisive victory any conventional military had after WWII). It was built and inspired by the central lessons of thousands of years of warfare 'upsets.' It's success, its value, is self-evident by it's wide adoption in competitive fields and by competitive entities. It's now synonymous with the idea of a "lean victory." When we talk about the resource called Time and the resource called Information, the OODA loop is about managing these to competitive excellence while disrupting your opponent's management of those resources. So why wouldn't we also apply it to trading? Part 4: Fast Transients Personally, what I like the most about this theory applied to markets is its crossover with technology. Competition normally happens at the speed of thought, and technology is a type of thought machine (it translates thoughts). Technology is inherently synergistic precisely because it improves calculation time, observation time, and the overall speed of the cycle itself. Technology is always improving these things, so the theory gets stronger over time. This is also why, for your intra-day future, you need to have time and/or money set aside for R&D, so you will be on top of new indicators or trading technologies. It's also why, in the long run, using algos to assist in your trading efforts will likely be very important, primarily for intra-day. I use a comprehensive algo-run dashboard to manage my intra-day positions. I spend a lot of time on counterparty analysis*, it's the 'unit of analysis' in a market competition from a scientific perspective. It's what shapes my broader market theories that manage my portfolio beyond forex. Reducing it down to something simple, how the human mind works in a competitive environment, the psychology of profit-seeking. Is what I have been mentioning throughout the entire series. Who is buying this shit, why is someone selling me this shit, what are these boomers thinking, how are they making money, what is influencing their decision-making... Etc. But technology changes that. It's another brain, another filter. The market war is far less human than it once was, but the biases from humans are still plugged in, the humans in the loop. Or, are they? *(and if you followed GME, you would see the idea of punishing siloed short counterparties independent of absolute stock valuation has become popular in the retail world) Today, just like your social media, the market is filled with less-than-human entities, monsters... vampires. Not just because of technology doing the thinking and trading, but because of how it influences the human mind to favor commodifying everything and thereby justifying dehumanization. It is a very dangerous process at the forefront of our increasingly unsatisfactory and disenfranchising materialism-driven world. I'll talk a little about that in the last article where I explain the Pigovian-like risk you inherit as a trader. Part 5: Entity List Now, unfortunately, because trading is a many many player game, and most of the biggest players have fiduciary responsibilities (on paper, which isn't worth much these days), it is hard to take full advantage of Boyd's method unless you have access to higher market-level data and access to massive resources like a corporate entity. For the rest of you, you will have to translate the competitive environment into units of analysis or battlefields to survive. Sessions become battlefields, newsflows become battlefields, pairs become battlefields, etc. You will compete against entities in these battlefields. The moment you enter into the market, this plane of materialism, you are in competition with these entities, both real monsters (other real players), and synthetic monsters (algos, AI, MM). Risk management is impossible without accepting this truth, that you will always be in competition in the market, no matter how large or small or where you positon may lie. You can't hide from the fight, you can't wish it away, you can't pray its fangs are small. You can only prepare for limited certainty and adapt to unlimited risk in the long run. That way, when you do get scared, it'll be over the size of your new house instead of a strange French accent over the phone. Intra-day is the application of everything laid out so far, with the addition of the Boydian time cycle method and important psychological revelations about sessions and open interest. This method pushes your trading timeframe into as short of a unit of time as reasonable, or fast enough to be competitive against your peers. The better application of your time resources. It also demands the observation/gathering of information resources as widely and as quickly as possible (Boyd's rapidity and variety). And ultimately the processing of these two resources synergistically. This is the rapid transient mindset. It's increasing your initiative as a capability. You wouldn't spec a character in a turn-based game that gets fewer turns. You want more turns per encounter. In this sense, the familiar forex conclusion is something like a fractal. Where you are looking for a similar occurrence but on a smaller timeframe, allowing you to act earlier and more often on information. But that isn't entirely accurate. I used the classical mechanics vs quantum mechanics example in the 3rd article. Classical is more structured and stable, while quantum lives and dies many times before producing something significant (or maybe its really a matter of frame of reference). The point of intra-day is similar, you want to take advantage of the uncertainty, the volatility, as possible preparation for a long-term outcome. You want to think of these timeframes (15m, 5m, 1m, seconds) as FASTER, not smaller or lower. Think faster. Everything is faster, and that includes you. If it sounds hard, it's because it is. You're only human after all. Part 6: Entropy Investments You are looking for the possible start of a CPG/EX/FLOW/SEA event, AS EARLY AS POSSIBLE. That is, on the higher timeframe the process will play out, but the purpose of moving to faster timeframes is to jump in on these 'potential beginnings' because if you jump in the potentials as early as possible your risk/reward is highly dysgenic. In other words, you will have a lot of losers, which is a good thing. Remember, openAI plays more games and has many more stupid lost games than a normal player would. Let me explain this in a way where risk management meets my energy ecosystem concept from the prior articles. With an equilibrium system, you will have a higher loser frequency of trades (the number of trades) with small individual account loses, while earning a lower winner frequency of trades, but the ones that win will win big. In equilibrium, it will all balance out to a net account zero before fees and commissions between traders with edge and those without. However, markets allow competitive systems within the master ecosystem. With competitive edge, you will have a high loser frequency of trades, with even smaller losses, while maintaining a few very big winners, similar to the 90/10 rule in boomer investing. In other words, your trading system must facilitate an environment where you can lose many of your trades while still capturing significant moves on the few upside wins you entertain. That is the endstate I have found to be most valuable for intra-day trading. It's the silver bullet of return patterns. You can have a small account size, your downside risk is smaller (compared to long-term trading), and your upside potential tracks daily volatility more effectively than long-term trading ( we will talk about specific RR ratios and RoR based on Monte-Carlo simulations in the next article). The closer your trading system tracks volatility, generally the more profit you will make IF your strategy is competitive. Inversely, what is more predictable = is less competitive, and the potential for edge generation is harder to fulfill. Remember, the Ecosystem Tycoon stands still and dips his hand into the flow of cash transactions. You will profit most where the flow is strongest (the most volatile and liquid). For instance, if USDJPY starts the week at 110.00 and ends the week at 108.00, it moved 200 pips on your competitive long-term tradng strategy. But with intra-day, it may have moved from 110 to 111 on Tuesday and then down to 108 by Friday. That volatility (400 pips worth) can be turned into more profit, AND, with proper risk management, involves lower account risk per trade. Despite the pair pip movement outcome being the same as the weekly long-term strategy (IE, where it started on Mon and ended on Fri). Note that the long-term account risk differential with intra-day can be reduced with currency options and futures, which we will visit in the next article, but it is hard to replicate the gross available pip totals from intra-day trading because European options were designed for multi-day strategies, along with other issues. Capitalizing on volatility sounds nice, and operating on faster timeframes to capture that volatility sounds nice, but how do you analyze any of this? How do you find the optimal (competitive) periods of volatility, how do you track the swings for more pips, etc? You could try some thinking on your own, or you could keep outsourcing your thinking to me. It's okay, most people do it, just look at Reddit. Part 7: Openly Interested I have found through my own research that session psychology is just another way of classifying structured open interest and volume behaviors. I mentioned prior that counterparty analysis was important to understanding the market from a scientific and competitive standpoint. Open interest behavior is a component of counterparty analysis. It is the magic to intra-day that carry interest is to multi-day. Problem. Technically open interest isn't measured by most brokers in the FX market, but it does exist somewhere because forex is a derivatives market with a futures and commodity market. To understand open interest: it is a measurement for the occurrence of multiple investors or entities converting cash into new market contracts or settling those contracts back into cash. In other words, it's how many contracts have been created via cash. It's like going to the casino and converting your money into house chips for gambling. When those chips are 'created' open interest is created. So if players created 100 house chips for the day, then the open interest is 100 for that day. They will all have to be settled by close of business (brought down to 0, because chips cannot usually leave the casino). When those chips exchange hands between players, volume occurs (the occurance of transactions between players). So all the instances of one player losing chips to another player during poker count towards the volume total (which will usually be greater than open interest). Keep this explanation in mind (and refer back to the Ecosystem Tycoon article) when I explain sessions from a human psychology standpoint. Part 8: Session Psychology Each session has a psychology, this is one of the 'secrets' to forex I find to be significant and relatively underexploited despite being self-evident in the trading universe. Entities within the NA session, entities within the EU session, entities with the ASIA session; they all possess patterns of behavior that result in price action outcomes that are consistently predictable. In my review of the topics, these patterns come from psychological biases tied to civilizations and institutions. With civilizations, the majority of consumption/import nations exist in NA and EU (current account deficit bias), and the majority of saving/foreign investment/export nations exist in Asia (current account surplus bias). (Keep in mind that this is changing a bit with AUD as a vassal currency for CNH/CNY, but not just yet.) This impacts the flow of money and risk-taking behavior at the market macro level. It creates a market-driven partially by psychology at the highest level. Momentum patterns are more common during the EU/NA overlap, while ASIA is correctional (mean reversion) but often overcorrects (or anticipates) and withdraws to wait for EU to start. EU (mainly through London) fills large positions and take substantial bets on the overall market outcomes for the day (which occurs when NA comes online, or if they receive enough information about global macro to preempt NA coming online). It's like buying at par value and hoping to sell at premium. If the bet is correct, the forex pair will have a significant (usually 70-110 pip move for the day), if the EU bet is incorrect, there will be sharp reversals until NA produces enough information clarity. It's important to think in terms of cash flow as open interest and vice versa. When the NA markets open, the stock market and other major asset markets open as well, these need cash to facilitate transactions. Credit, risk, leverage, and other major financial currents move during the business day. The financial economy operates under somewhat traditional office hours and this includes the release of performance reports or audits which will influence valuation, legal events, and dealmaking. Most importantly, Jerome Powell and the rest of the Federal Reserve are awake and plotting the death of the US dollar. As a result, the movement of these markets more accurately tracks the overall economy, the underlying, and the biggest demand economy in the world. As a result, currency directional bias will usually become clearer and more stable as it now has a reliable reference point from these flows. This is partly why you see stable and smooth trends during this period. The NA session isn't just another session with its own quirks, it's the demand session of the global market 24 hour cycle. Most price action up to that session is just prediction or anticipation of how the demand session will interpret global macro events. Of course, there is still plenty of money to made during that price action\ prior to the NA session. It is important to understand that it's not as simple as LONDON BREAKOUT, though this the right line of thinking. Trading strategies need to match each session's behavior. And from a higher standpoint, that the opportunities to enter long term trend-based trades are found in the NA/EU overlap, while reversals and compressions are found in the ASIA and LON session periods. Both at the intra-day level and for your multi-day strategies. In addition, during ASIA/LON, the center of price gravity and its extremes will be more valuable; but FLOW and SEA will be more valuable for NA/EU overlap. So your momentum/breakout trading will work better during EU and especially with the NA/EU overlapped session, while your reversal or DCA etc strategy will perform better during ASIA and into LON. Now, you want to think of the transition between sessions as decision points, where the behavior of the upcoming session will have to summon the collective decision-making of market participants to decide on the course of action. So if you run a reversal strategy from ASIA/LON you can expect to hold (usually 8-12) until a decision is made on whether the price will return to the center of price gravity or if a NA/EU trend will begin (these are the 150-300% ADR events usually driven by huge macro stories like CBs/stimulus/brexit/tariffs that ride a lot of newsflow). Thus you need to be abreast of outside influence on the minds of market actors to evaluate if you close your position in that 8-12 window or if you hold for a huge reversal opportunity during NA/EU (a reversal due to the start of a new major trend). Normally, the ASIA/LON period will contain a correction related to the prior day's NA/EU session or will have a mini-move and subsequent correction before 8. In this decade, there will be new economic challenges for the eurozone and the ECB, so the EU standalone market session may develop new behaviors and we might see more volatility. It's important to understand the shifting behaviors of these sessions as macro and geopolitics shapes hearts and minds. All this surface area can be hard to follow, so here is a summary below. Part 9: Execsum The endstate is finding and translating forex order flow into patterns, and then generating edge by reading and reacting to those order flows faster than the tail end of losers. It is pit sentiment or floor dynamics as best represented on a chart, a type of 2D battlefield. The endstate goal is an operationalized effort drawn from the Ecosystem Tycoon analogy. Here are the major themes and connected key concepts within that endstate: Open interest demand mechanics = vol & compression regime mechanics Open interest is created by outside 'viral' vectors grabbing the attention of investors (people with cash interested in the market) and when sentiment is shifted within that cohort (who are now interested in opening long contracts or short contracts) Open interest can break a compression regime by spoiling a careful equilibrium between traders currently in the market. They were formally in a balanced position until new cash tipped the scale. Open interest can create strange PA behavior resulting in new trading performance risks from high ATR and vol. OI is understandable only through the lens of newsflow and macro research related to the viral vector influencing investors; thereby making it a significant threat to technical systems dependent on historical PA information. However, at the start or end of the business day (regardless of rollover), open interest is commonly settled and the contracts are closed and converted into cash. That money or energy leaves the price discovery system and the instrument usually returns to lower volume after finding an equilibrium. These cycles are predictable and occur within the session unit of analysis. They also have different behaviors by session. These mental frameworks are necessary for effective vol capture, especially at intra-day resolutions. Tailoring or selecting technical systems to match session behavior and the open interest driver maximizes potential vol capture. Now, there are few more important tools and methods you need to have to stay true to a Boydian trading strategy at the intra-day level. Part 10: The Crafts There are other important points, particularly regarding technology and how to improve your trading speed. Follow these crafts and at the very least, you will have a chart checkered with good and bad outcomes. Instead of just all bad, like your default life setting. VPS, and a backup instance of your broker on your phone (with a data subscription). This is insurance that pays off in the long run. Now, it won't matter too much unless your intra-day strategy is fully automated (which I don't recommend anyway). Either way, phone backup is useful. Position management and style is also key from a Boyd perspective. Particularly, the importance of splitting a position up into multiple entries. AT LEAST 2; a conservative TP and an aggressive TP. Personally, I like to use a statistically derived TP (like a common ATR/momentum hit dependent on the pair, IE 9 pips on the EN versus 4 pips on the EU), I like to use a covariant-like technical target (S/R level, psychological level, the center of price gravity, etc; in other words, a combination of technical targets with similar natures) and I like to use a TIME based target (closing towards the end of a session or after a scheduled event occurs). I recommend a combination of all or at least 2 of the three. In addition, utilizing order implementation algos can go a long way in this effort. Not as important for the multi-day traders, algos increase your entry and exit optimization with technology (Boydian considerations) for intra-day trading. In fact, this was the original inspiration and justification for algos, to assit in the efficient use of bid/ask (pit dynamics) for the heavy bags of wall street. Your SL should be consistent with the session, strategy, and pair. Ideally based on ATR, but I would recommend an SL at least twice as large as your conservative TP. I will explain the risk logic of this in the next article and how it can be more profitable than the inverse. Finally, you need to be willing to use MARKET orders. There is no reason to not use market orders in the most liquid market on Earth. Unless you are trading 30 lots or more in a single order entry, you will not influence price unfavorably. In addition, if price slides or moves.. this is good, this behavior is good for your strategy, which should be based on volatility tracking and capture. Speed is paramount, you can't wait around for hours to have an order fill at your dream price level. As such, LIMIT has less value depending on your strategy, but it can serve a purpose with forward planning a large position. STOP orders make sense for SL exits but not for initial entry. If you don't want to manually close your orders or you have way to many orders to manage manually, you will need an algo dashboard or a trailing algo SL. Remember, that a third party algo is effectively a system that creates virtual orders, they are not a broker order like a market or limit until the final step of the process. You are solely liable for the operation of the algo. Other order types are irrelevant without prime broker access and are really only useful in the share market or markets with low volume and hidden LPs. Leverage should be used as a exponential for conviction. Meaning, the better your system or prediction, the more money you should be willing to risk. This will be discussed in greater detail in the next chapter, but forget everything you have heard from the webinar retail salesmen and their 2% margin religion. Leverage is favorable in forex because retail traders (and common people in general) cannot get leverage of a similar degree for other assets , or to be honest, anything else. This is very important from an investment standpoint. Your principle goal as an investor is to increase your purchasing power, and leverage is one of the best tools to achieve this. However, you must never forget the other ancient boomer wisdom. "Only 3 things can ruin an honest man: ladies, liquor and leverage." I would also note that they all start with an 'L' Part 11: Newsflow Again As mentioned in a previous article, news trading might be best achieved with binary options, but otherwise, you want to open prior and close after. At least TWO minutes of distance both ways. If the news is a surpise, price can move forcefully for the next 4 hours or until the end of the session. I would also recommend opening a LONG and SHORT position of equal sizes instead of utilizing a stop loss (if your account supports this capability). The idea being you would close them each in profit during the volatility spikes in price action or simply close at a later point at a net zero result if volatility does not occur. That would be the Boydian approach. IF this isn't an option due to some FIFO issue with your broker (you can always bypass this with multiple brokers), just use a smaller position size than you normally would, and increase your SL to something substantial (80 for low ATR pairs, and 120+ for high ATR pairs). I don't recommend this final option unless you are accomplished in reading and understanding the global macro eventspace. As mentioned in the Happening Default Swaps article, news trading really only makes sense for taking profit and/or exiting an older position. It is rarely wise to use it to open new positions, despite the volatility potential. You don't want to be all flow and no balance. Data feeds matter. Information processing speed, etc. You need the fastest sources of info, you need it processed (ideally by specialized experts). Processing it yourself is fine if you are very familiar with the content. You may have to pay money for this, but it will generally be worth it (especially in time-sensitive intra-day) from a risk management perspective. It's like hiring an expert. You aren't a corp, but you can get the 'consulting' value from these experts (at a much cheaper price). Dont go chasing sources that are repeating other sources, it can present added value of knowledge but it's really just disguised as redundent information. Just go directly to the source. And not the one at the center of the galaxy. Part 12: Outsourcing research A psychological edge you need to have is the willpower to conduct your own 'capex' or development on a consistent schedule. The more you do, and the higher quality it is, the greater edge you will generate in market capture knowledge. Your ability to dip your hand into the flow of cash. While this isn't limited to intra-day, intra-day is where the market evolves FIRST, and often at the fastest rate. Thus you need to mindful. Always looking for better versions of indicators you possess. Or ways to set SL more efficiently and accurately. Or selecting better data feeds or newsflow sources. Most of what we've covered so far is more abstract than the average fluoride brain would hope for. That there must be a signal service, or an indicator, or some universal function that can be realized into a specific technical system. The reality is more of a mindset and an assumption that you need to spend more resources on upgrading your 'technology' and your 'time-management.' And that the sessions themselves are excellent units of analysis to apply the time-management and decision-making initiative because of open interest dynamics. How do you study or gather information about the current or upcoming session more efficiently? How do you execute orders more efficiently? How do you become faster? The more information you have and the faster you react to it, the more money you can withdraw from the trillion-dollar liquid market bank account. To explain it in factor investing terms, the Boydian mindset is the key to vol tracking and vol capture, which is what intra-day offers. You want to ride high volatility profitably or at least react favorably to high volatility better than your competitors. To summarize the rest: sessions have vol behaviors, predictable, but not predictable enough that they aren't also competitive. Driven by vast macro psychological and market influences, these patterns will occur again and again. You can build a strategy to match each session if you trade intra-day, but you must be faster in action and faster in information processing. Your positions will live and die many times before a long term position may exist in the market, so adjust your risk management accordingly. You can use your intra-day strategy to leverage into a long term position. It's really that simple. I offered the behavior/psychological solution (the assumptions about session behavior), and a few other specific solutions to make your time and decision intersect more efficient. But there is always something better on the horizon. And you need to chase it if you want to stay competitive, and therefore maintain edge; which is your career margin of safety. You shouldn't get too greedy, because hogs get slaughtered. Unless of course, we're talking Orwell's farm. Part 13: Silver is for monsters Listen, little Helsing, intra-day trading is all about surviving the flood of spectral horrors in the night. It is the true nightmare difficulty of this market game. These vampiric entities in the market are monsters both in scale and in appetite. They operate on attrition and superior firepower; a strategy you can never replicate or use against them as a retailet. They are immortal in that regard. Some are soulless institutions, others are lifeless algorithms. And, even if your spirit is strong, your flesh is still weak. They will take everything from you, without even recognizing your face, your effort, or your dreams. Though some, I presume, are good people. I want you to remember on your intra-day journey, if you eat, eventually you get eaten. That's the rule. Ultimately, this kind of flat and shrouded market takes what would normally make someone regret or question his behavior, and removes it from the equation, masking it as invisible and out of the way. It's a distortion. It's a spiral of dehumanization. It makes it easier to ruin people, who could be as relatable as your brother or your neighbor. That is the tragedy of this efficient flat competition. You will be on the recieving end of this story more often than not. That is why I arming you as best as possible, so that, at minimum, you can defend yourself against these vampires. Your silver bullet is the applied OODA loop, the market-realized outcome of maneuver warfare, the competitive management of time, information, and decision making. In essence, it is a strategy for the weak to win against the strong. In the first place I would never recommend/promote a battle like that. I have a nonzero responsibility for your success or failure. But off the record, if you choose to play on this difficulty, I strongly recommend you wait for my final article where I discuss benchmarks and 'grand strategy' before you go all in. No need to be impatient, trust me. The monsters on the other side of the screen will wait for you.
INDEX:BDIEducation
by CountofCoins
2
The Secrets to Forex & The Chrysopoeia MarketThe original article will be short and basic, like what you see in the mirror. It's just the supplementary reading to the prior article on technicals, it's the part seven point five. The emphasis is on what TO AVOID when conducting research or pursuing a technical indicator catalogue. There are thousands of dead end indicators, many of which are borderline timescams. These snake oilers will get the rope (in minecraft). Verily, as Jupiter smite Carthage, so shall Jupiter smite charlatans. Saving you money has always been the goal of this series, it's about paying the right price, if you have to pay at all. That's the essence of risk management in markets, and real life. And just look around you, risk management becomes a more useful skill everyday. Part 1: Arcanum Capitalismus Alchemists were obsessed with transmuting generic metals into precious metals, like gold. The ideal panacea to cure any disease, the potion to immortality... As with any 'perfect' solution oriented business, the offering always seems to perfectly meet the demand. This 'convenient certainty', is only certain insofar as it transmutes wealth and time out of your possession and into theirs. Today, these alchemists are in the business of translating the unprofitable into the profitable. You see them everyday. Their alchemical signs and circles and symbols, are on every screen and every wall of any geometry. Some people even wear them. Some low test people practically worship them. All designed to summon something from your wallet, as far as you understand it. Not much has changed, except that there are more alchemists or magicians than ever before. They never managed to profitably turn lead into gold, but they found a much better method somewhere along the way. Part 2: The Most Dangerous Predator Not every product is a predator in disguise. But how do you tell the difference? If it looks to good to be true, it usually is. Remember, 'convenient certainty' is far too convenient in this uncertain world and it's market. And that the most dangerous predator always camouflages itself to its prey (something a very large portion of the western world comically fails to realize). This is true in the real world just as it is in the market world. And it is just as overlooked in the real world as it is here. This is the too-good-to-be-true threat vector I will be discussing in this article. I touched on wealth gurus in a prior article, but this covers a more comprehensive explanation, particularly with regards to common indicators or technical systems that present false certainty (many of them, coincidentally, originated as commercial systems). Now, I should note that these are not necessarily designed for fraud, but often accompany fraudulent strategies, strategies with false or impossible claims. Sometimes the hoodwink is admitted in the footnote, almost Snopesian in the duplicity: "there is some repaint with XYZ, true, but considering 'our editorialized context' of the trading strategy, the system/indicator overall does not affect the trading decisions" etc. So how does this fit into the article series? Not using deceptive and dangerous indicators will save you retail initiates more money than almost any other risk management tool. As a friend from out of town once told me: "There are so many electrons out there, you just can't trust them all." Part 3: Race to the Bottom This isn't everything to watch out for, but let's start with the basics. 1. Anything that repaints or recalculates beyond 2 - 3 bars or calculates on higher timeframes EXCEPT regressions.. These are the MiniTrue indicators, erasing history to satisfy the present; fashionably 2020. Zigzags, TMAs, fractals, etc. Notably, divergence and trend line indicators can repaint, but are occasionally valuable if you time them with macro or geopolitical events, which we will talk about in point 3. Others can be hard to determine at times. Backtesting or strategy tester simulations DO NOT always identify repainting behaviors. Look for indicators made by retail coding legends like mladen or MrTools to avoid this issue. Or, if using TV, be mindful of comments about pinescript issues, which can cause recalculation. In the early days of TV, back when you could have all the features for free, there were far fewer community indicators available, and many subtle repainters nestled below the top ranked Chris Moody productions. While ranking and upvote systems can prevent the repainters from becoming overly visible, those systems do not always exist elsewhere on the internet (like telegram, instagram, or youtube). The veblen class of hylic automatons are always 'dancing' and 'singing' some profit or praise on those sites; be especially wary of their signal system or technical indicator offerings. They are an embarrassing class of alchemist. Which is why, unless you have several years of seasoning behind your trading you should avoid: Anything being sold to you on telegram. Anything being sold to you on instagram. Anything being sold to you on youtube. Any MT4 algo expert that ISN'T designed for basic alerts or order management. Sold means cash value, but free is not much better. A free indicator can cost you more money in loses than a paid indicator that fails less. We will talk about the real market value of time and intellectual resources in the last article. 2. Gann Angles/Elliot Waves/Harmonics/etc.. The issue here is competitive edge, if you see a clear-cut pattern on a higher timeframe like 4h, the setup has been built across several weeks. As a result, 10s of thousands of other traders and algos have seen it as well. This reduces the edge potential and introduces a lot of price action variability at the 'precise' entry point that many of these shape systems require. Thus, instead of getting your ideal entry, you might find yourself down 40 pips because a whale shorted your obvious setup. Your stop loss is chased and hit, and at some arbitrary point later, the pattern completes itself as predicted, just without any of the implied precision that drew you to the pattern system in the first place. Autochartist data shows that a return to a commonly hit level has the highest probability of occurring, a slightly tautological realization but useful nevertheless. In other words, returning to a major resistance or support level (even if it was broken before), is the ultimate 'pattern' setup. This is not too far off from /CPG/, since this level will usually be near a large whole number. This is effectively the simplest pattern, and one you should prioritize if you want to add patterns to your /CPG/ analysis. 3. Double Tops/Head and Shoulders/etc.. More compelling than the above, but suffer in different ways. These patterns will principally attract the greediest of retail traders. It's good to be in the company of the greedy if they have evidence of success (thick pockets), but greedy beggars are not the leaders you want to follow. The perfect entry (from an /EX/) into the start of a mean reversion trend (/FLOW/ into /CPG/) is obviously attractive at first. But the higher the timeframe, the more obvious, and the better the opportunity for the Davosian men and women to add to their long-term positions. You cannot rely on chasing better fitting setups without running into the risk of losing edge potential (because other competitors will see it) and because your available pool of setups decreases (your overall gross income drops & you have to freeze capital during the setup scan phase). Meanwhile, the risk of trading a fake top into a trend continuation remains the same without applying non-technical analysis. The net takeaway here is that, while those pattern setups may result in a greater than 50% chance of predicting a new trend genesis, they don't guarantee an advantageous money management outcome; and thus, they don't add much to your chances of becoming a professional trader. You may think: "well if I just reach for a further TP, it will offset the downsides" (cost of few setups, frozen capital for setup scan phase, and volatility at obvious pattern completion). You have no way of knowing how far the new trend will go, nor do the patterns necessitate or facilitate the length of the trend (in pips). The only way to offset the insured downside risk is by selecting for macro or geopolitical events. In those cases, even if the setups are obvious from a technical standpoint, other factors outside the market will insure your edge against traditional competitive factors. This is because macro/geo events draw in tactical open interest bumps from newly enfranchised investors who break prior market ecosystem paradigms and generate new trends. We will talk more about that in the next article on intra-day, because open interest is the magic to intra-day trading that carry/dividend is to multi-day trading. 4. Signals.. Most signals or basic arrow technicals have a low winrate (in the 40s or 50s) and a rate of return that doesn't include fees/spread (these have a higher 'operating cost' with lower 'profit margins'), while running without stop loss OR/AND with substantial drawdown (which means their rate of return has an expectancy of literally anything if they don't specify your necessary account size and position risked amount, IE your risk of ruin, which we will talk about later). Those that are held multi-day do not account for carry conditions and fees (which add up significantly if your signal is one of those -7 to +7% a month color carnivals). They don't account for event risk, usually. And worst of all, they provide little investor guidance. Legally speaking, they are not money managers, so they have almost zero explicit liability nor any implicit requirement to deliver research and forward looking information about the operation of the signal and how it can affect your funds. Communication is a form of commerce and you aren't getting your fair share. As a result, most people just take their cash out or cancel the signal after a losing streak (even if the hypothetical system would go on to perform well in the long run). For the record, the best would run on high ATR pairs, run only at certain times of day, and take advantage of currency correlation, but generally you should just avoid. 5. Moving Average Crosses/Convergence divergence.. There are thousands of these, in many different styles. They will suffer from low ATR periods and whipsaw issues, where you win during a week long market regime but lose during another. They tend to be overfitted from backtesting, resulting in the rapid dropoff of edge unexpectedly. Ehler's Optimal Filter or VWAPs will rarely suffer these issues comparatively, but you can't use them to enter trades without considering /CPG//EX//SEA/ comprehensively anyway. 6. Discount VaR.. VaR gives percentage risk, which can help with planning very long-term trades in response to client needs. But not in forex. Remember that black swan and event risk is true volatility, (often called tail risk) which is not properly measured in VaR, which is why VaR is just an introductory tool for technical trading in forex (unlike in options or stocks). VaR, despite being commonly discussed online, is slowly being replaced with other methods like 'expected shortfall' (in part due to regulation updates from banking risk groups like the Basel Committee). You can use it, but you need to use it sparingly. Some people will find this very controversial. It's not just reddit Dunning-Krugerists giving me fluoride stares right now, even people with successful backgrounds in trading or investing will take issue with this. Let me explain. Or you can skip the following 2 paragraphs if you have a 3 star or lower rated brain. VAR doesn't make as much sense in forex, mainly because you should be using stop losses, and because upside/downside risk is unlimited in exposure . Forex, unlike most other assets, has uniform directional risk biases (unprejudiced bidirectional behavior in theory). For instance, a short on a stock will always have a slightly higher risk than a long, because a short leaves you exposed to unlimited risk while a long leaves you exposed to current price over 0 (the market cap represents the full current possible risk value expressed in dollars for all longs in that outstanding share universe). IE, on a 100$ dollar stock, you can only lose 100 per share (so long as you own the stock), you aren't liable for things you don't own when you trade real assets instead of derivatives. Forex is technically a futures product or commodity market but usually exists as a contract for difference, a cut and dry derivative. There is no theoretical zero (before calculating broker entanglement), so you are exposed to unlimited risk on both sides of any trade, which is the first reason why VaR may not be useful. The second is due to the continuous rollover component of currency exchange combined with the above. Once the biggest trading orders are filled, there may be substantial jumps in price to find the next area of demand on the market profile. Orders that were placed but not filled weeks or months ago. In other words, under special circumstances, the nearest next area of demand could be extremely distant. This occurs during interest rate decisions or major estimation errors, where price will jump 5-6-7 standard deviations away from the safety area of the normal distribution, far more than any other major asset class. It's like using VaR to manage risk on a penny stock. "But a POINT OH OH OH OH OH ONE chance of something happening is irrelevant.." Now imagine trading 6 hours a day for 30 years as a career. A normal distribution is like a hill, in forex, the actual distribution is more like a hill with pillars on both ends, it doesn't fit the formal logic that stats require of it to be conventionally useful. Most investors plan for 2nd or 3nd deviation movements at best, 6 or 7 would require unreasonably exponential increases in account size (billions or trillions of dollars). VaR is often derived from historical models. In other words, all previous market data. Now, I recommended utilizing historical models in prior articles, but only as a component of /EX/ in support of /CPG/. You need a more expanded interpretation to manage those 'pillars.' That's what I introduced with the /EX/ technicals and their dependence on fundamental approaches. Keep in mind that what VaR does, what it really does, is demonstrate the fallibility of all portfolios or firms as a numerical figure. It proves that they can lose. And lose big. Therein lies its more useful function. Nothing is fully risk-free. You either learn this now, or you learn it the hard way. I have several 'delta-neutral' cross market strategies that exploit FCF theories to result in outcomes that seem broken, overpowered, or even unethical, but even they are at risk to tax changes, stagflation, and politics. Ultimately, adaptability is the only investment product that always wins. 7. Fibonacci.. As a friend of Fibonacci, it pains me to pan this popular tool. It can help, on higher time frames with clear highs and lows or with a daily calculation, but generally you are just mistaking the 61 or the 50 for the VWAP or Major Moving Average /CPG/. Fibonacci in basic support of other indicators is the only viable use. It's often a redundant tool. 8. Tick volumes.. Technically these are "volumes," though they are not real in the sense they do not capture open interest behavior in the same way volume from a centralized exchange would (one with little counter-party risk). It's not necessary to get too deep into this, just assume your tick volume is broker siloed and not necessarily a proper estimation of the broader population of forex transations. I could continue here with an iterative approach and probably hit 20 or 30 points, but this covers many of the biggest villains. The rest can be clustered as /EX/ problems. Part 4: Implicate to Explicate? /EX/ fitness is a potentially catastrophic problem that undercurrents most of the remaining subprime technicals. While technicals for finding /EX/ from my designated list can be effective intra-daily or within a week at least, most others will not. And the best tools for extremes will come from macro and geopolitical sentiment and events anyway. In other words, they will show if your technical /EX/ levels will hold. They will show you your turning points. Give them priority over finding the perfect /EX/ technical. Use them in conjunction with seasonality and historical models and you will have connected the past with the present, securing you the future. Doesn't guarantee edge, we haven't gotten that far yet, but it does protect your downside. Finding all this data is no easy task though, and will usually come at the cost of your R&D budget. In other words, be prepared to fork out a few monthly subscriptions to get it. The vast majority of traders that made it for a living had to spend some to get some. 'The past writes the rules, the present tries to break them' is a good thought framework to understanding /EX/. Speaking of rules. Part 5: ONE, NOTHING WRONG WITH ME Also, one of my prior articles on fundamentals (Happening Default Swaps) was censored by the jannies for very hurt feelings. Amongst all that is woeful in this world, the Tragedy of the Jannie remains indestructible. I will set up a contingency so new readers can see all articles in a clear and organized fashion. Let's wrap this up Normans. Part 6: Real Magic Money is the real magic in this world. At least, for the most part. If you have learned anything in this series, it's that the conventional system of trading (the charts, indicators, buttons, and lights) are a small part of the game. That the 'indicators' exist all around us, as symbols, as people, as words, as ideas. Transmuting or translating all of these lines and angles and feelings and geometries is your chief effort before dipping your hand into the flow of wealth and energy we call a market. This means you are a researcher first and foremost. A philosopher. A critic. A survivor. And especially, a competitor. "But instragram trader BigBooba69 dropped out of community college, and has a lambo, and has great PSD thumbnails; he's the last person I would consider a researcher.." You aren't trying to solve the mysteries of the world, you're just trying to solve the mysteries of your shrinking networth. Comparatively speaking, your research project is easy. But it's still research, and curiosity and experimentation, nevertheless. You didn't think it was all towers and textbooks? Part 7: The Plane of Materialism Price is a type of spell, drawn by the alchemists of materialism, to summon your 'energy and nutrient flows' into a pattern of behavior that has some kind of effect on or in the greater ecosystem. Which is why, in the words of Buffet, "You are what you eat" or actually it was: "price is what you pay, and value is what you get." Be careful of the price you pay, it is often too high; and sometimes, suspiciously too low. The 'great work' of risk management is an ongoing process, it unfortunately means you part with your money at a time and place of choosing. Make sure its (you) making the choice. ------------------------------------------------------ This is repost of the technical list from the last article, but without the editing issues. In addition, at the bottom, I have some forward guidance provided for the articles yet to come. Part 9: Technical List Major Round Numbers /CPG+EX/: A big psychological supplement, measured in increments of 100 pips. Important that the round level has a 25+/- Pip attractor, so keep that in mind when adding round numbers to your measurement. It is easier to remember round numbers and they are more often repeated/identified in financial news (bloomberg feeds and reuters feeds, etc) from sources used by commercial/institutions/major funds. As far as this numerology is concerned, always remember to checkem. Random Walk /FLOW/: A major identifier of pattern flow. This indicator is the purest example that the market is, in fact, very inefficient for meaningful periods of time. It's inefficient because it should remain near or at the /CPG/. Historical Models/Seasonality /CPG+EX+SEA/: VaR limitations considered, I recommend using historical models loosely, simply because they offer some predictive explanation and a visual guide. They should not be used or expected to measure or anticipate black swans. Many of these are paywalled, but you can find free services via google. Since it is a major source of seasonality assessment, this is strongly recommended. Most give a daily open or close level, and a minimum and maximum price level for the day. These models are not useful for intra-day trading, but become more useful the longer-term your position is planned to be... keep that in mind. If you have a programming/statistics background, there is significant opportunity in developing historical models for retail and NNW clients (non-rich people). The granularity of historical models tends to be limited, like that of seasonal values (which tend to be multi-daily at best, but usually weekly or monthly). Find a way to make it intra-daily or even per session and you could print some serious money. How do I know this? Because it would be my money paying you. Major Moving Averages /CPG/: The most important indicator for determining /CPG/ due to the 'market players making markets' rule. HAS TO BE THESE VALUES: 50/100/200 at 1h, the 50/100/200 at 4h, and the 50 or 55/100/200 at D; those are the most important that every trader should use. These are integral to determining /CPG/, mainly because of their psychological value and relevancy, and when combined with round numbers, offer the strongest psychological technical representation in the market outside of seasonality and COT sentiment. They are usually insufficient for /FLOW/ since they are lagging (from high periods), but serve as gravitational levels individually, and also when viewed compositionally. That is, the full range between the highest and lowest can offer a likely zone for current /CPG/. You can refine that zone further with round numbers, VWAP, a regression, and so on. ADR/ATR /EX/: The most important indicator for determining extremes; it is loosely derived from VaR and historical modelling ideals; but exists in many different forms and is often graphed to the daily timeframe. It is additionally powerful in a session format, that is, as an NYC session ADR/ATR and so on. You should at least be using ATR to calculate daily extremes (ADR), weekly extremes, and monthly extremes. These levels effectively represent the pip range possibility of any pair. Conversely it demonstrates the total range a pair can move based on the traditional influence of market supply and demand. It's like knowing 'how much' money is flowing through your pair, which is important because there is a limited amount of money available and willing to be used for trading, thus implying a degree of certainty in the limit of price action (its range). You can think of this cash like energy/nutrient flows; there is a limited amount contained within an ecosystem (sans supply from the Sun) so you know that the ecosystem can only grow so large based on the limited supply of energy available for transfer. ATR+ADR is one of the best measures of volatility. It's the closest thing to true VOLUME you will get without getting privileged access to prime brokers or settlements providers like the CLS Group. What this range measurement enables is a PREDICTION with DECENT CERTAINTY of how far the price could move within a day, within a week, and within a month. Remember, artifacts of certainty are highly desirable in risk management because so much of trading is based on delusion. It is an approximation of total influence on the market that an event can cause. Regression /CPG+EX+FLOW/: This is more effective than a basic channel. Use this for additional visualization guidance; can help determine the angular change in price, a useful measure for detecting the development of new patterns, similar to VWAP. (especially if you have many iterations of regressions running, visualizing shifts in 'angular frequency') VWAP /CPG+FLOW/: A resource heavy computation, look for weekly and daily VWAPs.. we will talk more about vwaps in the intra-day section, because they have important overlap with session psychology due to institution order implementation strategies. This is one of the most powerful /CPG/ measuring tools to reach a precise price value, though it is detached from the psychological influences more common to major moving averages or round numbers. You should generally be wary of a precise /CPG/ value, like 133.845 and instead look for a range: 133.80-134.00. Market Profile /CPG+EX/: Similar to the other tools, but can be structured to view just the prior day, current day, prior week, etc; it's really just another visualization tool for VaR, which can help you pinpoint likely order areas. That said, it's okay to swipe left on this one. Pivots /CPG+EX/: Pivot points are technically ATR related but the visualization can help. The opening level of the day/week/month in particular; they can be used to find opening zones which often act as return targets across uncertain sessions. You need to use common calculation with pivots for psychological value. No Waddah Attar Pivots, unfortunately, because institutions aren't looking at those. Lageurre/Sine /CPG+FLOW/: This is not an indicator in itself, but a way for other indicators to calculate or process some market information, a filter. Technically also an Elhers invention. If you have the option to use Lageurre /CPG/ or Sine /FLOW/ based filters/calculations, then I strongly recommend it. The Lageurre method fits the ecosystem approach by modeling the market center of price gravity (what they call attraction zones) with a root-finding algorithm (at least when represented by a single indicator). I have found through substantial live & backtesting that Lageurre is one of the most accurate filters in forex for /CPG/. Sine is cycle based. You can find sine based indicators on TV. Turns out it's not hip to be square. Ehlers Cycle Capture /FLOW/: This includes a basket of indicators. Somewhat similar in concept to Boyd and Shewhart cycle theories, which we will discuss in the intra-day article; both inspired by radio science and physics. Ehlers has a complicated explanation on his reasoning behind its technical utility, involving what he calls Maximum Entropy Spectral Analysis. While I am no expert on wave equation science or radio engineering (not enough money in it), rest assured, his MESA theory is nearly synonymous with the concept of /FLOW/ that I explained earlier. It covers most of /FLOW/, unlike /CPG/, which needs many indicators unfortunately. You might think of this as the ultimate trend following tool. But remember, the /FLOW/ is 'a pattern of patterns.' In some cases, the trend may be very disjointed, a series of HHs and LLs could constitute a trend of 'increasing momentum and volatility.' You will need Random Walk and a Regression to smooth those issues over. Currency Correlation & Strength /CPG/EX/FLOW/: Very comprehensive, but can be hard to read. I will talk more about this for the intra-day article. Suffice to say, instead of comparing EUR pairs to AUD pairs, you should compare AUD pairs to the smoothed average AUD position (looking for an AUD pair that is operating well outside the average behavior zone for other AUD pairs at the time); this helps you identify events through what a normie trader would call arbitrage. Especially useful for taking profit. There are many indicators that can do this. Be warned though, sometimes these events are just the initial move inspired by a major sentiment shift in fundamental or geopolitical event volatility. This risk can be overcome with currency options, which are as underrated as carry conditions. I will also talk about them in one of the last articles. Bollinger /CPG/EX/: It is very important that you only recognize the utility of bollinger on WEEKLY and DAILY period charts and at a 20 period calculation. If price action breaks the bands on the daily period, you will want to wait for the start of the next week to consider that /EX/ event valid. That is, valid for entering a position or closing a position. This is the most useful setup for bollinger. The weekly period bollinger allows you to see the long-term /CPG/ bias. Is it shifting up or down? Though major moving averages should be your first preference to check. On-Balance Volume /EX/: Useful for finding 'fake' tops and bottoms. Though I generally do not advocate double-top or double-bot style trading, it can help show exhaustion and the likely shift of /FLOW/ from accumulation momentum into a distribution regime. You will want to use this measurement on intra-day extremes. That is, comparing two moves that happened within the same day, otherwise it will not work correctly. Do not compare two extremes within the same week or across multiple days with this tool. You can only use OBV otherwise on assets with real volume available. ------------------------------------------------------ Forward guidance: This should put you in a better place to construct an orderly chart to find that resilient value, one of the goals identified back in article 3. You will be better able to manage risk in real-time from a visual standpoint by creating these '2D battlefields.' That said, the primary article on calculating risk is yet to come and while the sum of all prior articles will generate edge for your trading outcomes (compared to your prior performance), you still do not have the sufficient conditions to become a professional trader (someone that can live off market earnings consistently year over year). The last three or four articles are more challenging than their predecessors. We are switching into "metacognative" thinking, "self-regulated learning." We will move from looking at the market from a homogeneous 'science' and 'convention' standpoint and into a heterogenetic 'survival' and 'competition' concept. One of the ironies and difficulties in defense and security theories is the tragic distinction between survival and competition. Survival is the just act of one agent in a punishingly scarce environment, while the unjust acts of competition automatically emerge from many agents trying to survive in that same environment. There is no pre-existing order or rulebook, it's whatever is written by the agents themselves. This is the "history is written by the winners" meme. You write the story and the delusion becomes the convention, and sometimes even the science itself. It's a self-replicating, self-fulfilling, and self-evolving prophecy. As I said in article one, the market is whatever the 'big' money wants it to be. And yet, sometimes the little guy manages to pull off the big win. The odds aren't in your favor, which is why I saved it for the later part of the series, but why do the odds even exist in the first place? What's the underlying logic that supports 'upsets' in the market competition? Is there something the market secretly recognizes as more valuable than money itself? If you have a little money but a lot of that could you beat someone who only has a lot of money? So we will look at how competition throughout history inspired a science of survival that applies to business, markets, and just about everything.
Education
by CountofCoins
1