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Intraday FX Player
- Thread starter CFerret
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THOUGHT FOR THE DAY: DEALING WITH CHAOS
Few years back I spent a week in Woodies room, reading his manual, examining his "CCI leads the market" claims and testing his signals against mine. My objective was not to become a Woodie Trader, but to see if there was anything I could absorb that would add to and improve my current signals. Something I hope you are doing with this thread.
Chaos represents opportunity because it is full of energy, but if you can't harness that energy it will devour you. Trading and marketing are related and strategies have evolved to solve the mystery.
A very simple one is to try something that works outside of chaos and establish excellent feedback loops. Then amplify the positives while adjusting the negatives to see if they can be redeemed. In fact negatives are where the real gold lies because other market participants frequently fail to put enough effort in to turn negatives into positives.
So how did I fair with Woodie's CCI? Woodie claimed to trade the market without looking at "stinking prices" and that "CCI leads the market". I found Woodie wanted to wait for his "safe zone" which was way behind market turns and as such likely to suffer from a pullback that stops out the trader. CCI usually does lead the market, but Woodie failed to take the trade. I decided that Woodie was not for me, but I took some ideas from CCI and developed them.
I've been watching with amusement the latest JH bashing thread: it amazes me that "traders" could have so much spare capacity! It throws up how almost all traders have no idea how to mine chaos for gold. For e.g. to say that a 5 min channel is useless because the bar could close way off the channel is to look at structure and have no idea what it represents.
Take the 1 hr chart I posted yesterday. If you traded the channel using a 1 Hr close I'd think you were mad. I use the 1 min and the biggest you should use is the 5 min. Trading a JH 5 min channel signal means taking the 1 min trade. However JH fails my due diligence simply because it requires too much fiddling with channel lines and... if CF lost 24% over any timeframe using an "always in 3 X daily range" method I'd try to put the brakes on him immediately!
-24% draw down does not make sense for a method claiming precision. I wouldn't even let CF paper trade. It requires a complete relearning of every technique and the trading mindset. No excuses; no exceptions.
Here's the truth: always in is an easier and safer way to trade IF you understand a few basic principles. You've seen how I use a game plan based on the 1 Hr... looking for signals, structure, energy and adding clock-watching. Money for old rope when you understand it. Most days there is zero chaos on the 1 Hr so it's a great framework to use.
When the 1 hr goes into chaos, it's a goldmine trading that size of chop in the 5 or 1 min charts.
Now that we have tend direction we want to look for tradable swings starting on the 5 min and learning how to see the same on the 1 min.
Once we get to grips with the 1 min we can easily see when the bars overlap into mush indicating we should be trend/pattern trading... sitting in the trade for long periods.
Soon we see how easy chop is to trade on the 1 min. It's not chaos that murders you but gold. Goinglite and I have chop parties - it's the easiest thing to trade and that's why "always in" is easy, safe and very profitable... if you learn to read the 1 hr and how to trade within it. You have now got a bag of PA signals that are visible, proven and give repeatable results.
Clear reversal signals on good S&R or quality PA in any TF works. Most traders don't know how to read them, or how to see structure, can't trade chop, can't read market changes like chop to trend nor understand the difference between swing trend and mushy sit-in trends.
All that we have done so far is trading basics. Learn it and you'll be profitable.
Few years back I spent a week in Woodies room, reading his manual, examining his "CCI leads the market" claims and testing his signals against mine. My objective was not to become a Woodie Trader, but to see if there was anything I could absorb that would add to and improve my current signals. Something I hope you are doing with this thread.
Chaos represents opportunity because it is full of energy, but if you can't harness that energy it will devour you. Trading and marketing are related and strategies have evolved to solve the mystery.
A very simple one is to try something that works outside of chaos and establish excellent feedback loops. Then amplify the positives while adjusting the negatives to see if they can be redeemed. In fact negatives are where the real gold lies because other market participants frequently fail to put enough effort in to turn negatives into positives.
So how did I fair with Woodie's CCI? Woodie claimed to trade the market without looking at "stinking prices" and that "CCI leads the market". I found Woodie wanted to wait for his "safe zone" which was way behind market turns and as such likely to suffer from a pullback that stops out the trader. CCI usually does lead the market, but Woodie failed to take the trade. I decided that Woodie was not for me, but I took some ideas from CCI and developed them.
I've been watching with amusement the latest JH bashing thread: it amazes me that "traders" could have so much spare capacity! It throws up how almost all traders have no idea how to mine chaos for gold. For e.g. to say that a 5 min channel is useless because the bar could close way off the channel is to look at structure and have no idea what it represents.
Take the 1 hr chart I posted yesterday. If you traded the channel using a 1 Hr close I'd think you were mad. I use the 1 min and the biggest you should use is the 5 min. Trading a JH 5 min channel signal means taking the 1 min trade. However JH fails my due diligence simply because it requires too much fiddling with channel lines and... if CF lost 24% over any timeframe using an "always in 3 X daily range" method I'd try to put the brakes on him immediately!
-24% draw down does not make sense for a method claiming precision. I wouldn't even let CF paper trade. It requires a complete relearning of every technique and the trading mindset. No excuses; no exceptions.
Here's the truth: always in is an easier and safer way to trade IF you understand a few basic principles. You've seen how I use a game plan based on the 1 Hr... looking for signals, structure, energy and adding clock-watching. Money for old rope when you understand it. Most days there is zero chaos on the 1 Hr so it's a great framework to use.
When the 1 hr goes into chaos, it's a goldmine trading that size of chop in the 5 or 1 min charts.
Now that we have tend direction we want to look for tradable swings starting on the 5 min and learning how to see the same on the 1 min.
Once we get to grips with the 1 min we can easily see when the bars overlap into mush indicating we should be trend/pattern trading... sitting in the trade for long periods.
Soon we see how easy chop is to trade on the 1 min. It's not chaos that murders you but gold. Goinglite and I have chop parties - it's the easiest thing to trade and that's why "always in" is easy, safe and very profitable... if you learn to read the 1 hr and how to trade within it. You have now got a bag of PA signals that are visible, proven and give repeatable results.
Clear reversal signals on good S&R or quality PA in any TF works. Most traders don't know how to read them, or how to see structure, can't trade chop, can't read market changes like chop to trend nor understand the difference between swing trend and mushy sit-in trends.
All that we have done so far is trading basics. Learn it and you'll be profitable.
Quick look at oil monthly. Structure is visible in repeatable horizontals and angular channels with in-between detail added by TL's from 1986.
Oil can pullback and close this month at 118.6 and still be in support. Nothing very radical in this chart - lots could come up with similar - but taking the most aggressive trades on the daily or 1 min? Converting general information into trading power is easy... when you know your A-B-C's.
Structure is in every TF and every market. Some markets are more structured than others and we are in a good one with the EurUsd.
Oil can pullback and close this month at 118.6 and still be in support. Nothing very radical in this chart - lots could come up with similar - but taking the most aggressive trades on the daily or 1 min? Converting general information into trading power is easy... when you know your A-B-C's.
Structure is in every TF and every market. Some markets are more structured than others and we are in a good one with the EurUsd.
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Morning guys!
Yoohoo,
Excellent post (that big one)... Interesting that I also visited Woodie's seminar (in 2006) and spent some time studying JH methods, didn't stop on any of those, but instead took something from each (and not only those, but a dozen of other approaches as well)...
And of course 24% DD is something I'd not let happen. Because I am very risk averse and try to trade just the highest probability trades. And if I had like 12 losers in a row, it would mean something is definetely wrong with my "high probability" trades and the read of the market.
Cause trading is NOT directly the same as gambling and bets are NOT distributed by chance only, but are always within some CONTEXT which if read responsibly increases the probability very seriously and makes the risk of insane drawdown very low...
Yoohoo,
Excellent post (that big one)... Interesting that I also visited Woodie's seminar (in 2006) and spent some time studying JH methods, didn't stop on any of those, but instead took something from each (and not only those, but a dozen of other approaches as well)...
And of course 24% DD is something I'd not let happen. Because I am very risk averse and try to trade just the highest probability trades. And if I had like 12 losers in a row, it would mean something is definetely wrong with my "high probability" trades and the read of the market.
Cause trading is NOT directly the same as gambling and bets are NOT distributed by chance only, but are always within some CONTEXT which if read responsibly increases the probability very seriously and makes the risk of insane drawdown very low...
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