Thread: Zhus Forex Thoughts

Do not fight with the gaming urges; ride with them, manage them.

You don't stop a fast moving ball by standing in its own way. You simply take the momentum out of it by simply moving with it in the way it's moving.

Once the impulse to have a transaction comes up, respect it and take it on board. Make it undergo a checklist that is pre-defined and position the transaction idea.

Is it a tier 1 or tier 2 or tier 5 trade?

Alright, now you know how much size you can risk.

Now put on 1/5 of the size.

And nothing more until it indicates that it works.

Exit quickly as it doesn't. Don't hesitate to try again.

When your trades are ranked, and your risk is defined and you also scale in and out appropriately based on market arrangement, there's nothing you cannot wager on.

Trading is supposed to be fun.

The further you activate your intuition while investing, the more you can improve your intuition.

If we keep trying to exchange based on strict rules and disregard that which we FEEL is likely to occur, our intuition won't ever improve.

The best way to cultivate your common sense is to make use of it longer. The longer you use it, the more times it fucks up, the more times it's possible to learn and sharpen it. When we rely on theories and systems to make all the decisions for us, if high pressure situations pop up, we'll be HELPLESS. We will revert to our default condition and use our common sense. But since we never bothered to work on our common sense, how can we expect the choices to be good?

Do you ride a bike by believing about physics equations and figuring out what angle to use the force in and what degree to turn the pub handle to or do you just ride ?

Since trading poses high pressure situations all of the time, the goal then would be to make trading instant nature. And the only way to do so is to maintain tripping your natural personality and decision making mechanisms and reshaping them always to match the market.

We call a spade a spade. If something quacks like a duck...

If it looks like a duck, swims like a duck, and quacks like a duck, then it's a duck.

If price finds service, starts making HL,HH, and breaks also retains above key construction, then it probably is in an uptrend.

If price finds resistance, makes LH/LLbreaks also retains below crucial construction, then it probably is in a downtrend.

Newton's 1st Law: If something is in motion, it will keep in motion until a force acts upon it.

Market's 1st Law: Trends exist.

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Trading is all about pattern recognition

Here is an exercise to the initiated.

Go into the 1 minute chart and search for an up move that turned into a larger up move on a greater timeframe, perhaps a 40-50 pip move. Then search for an move that collapsed after say 10-20 pips.

Evaluate the two. What are differences and the similarities between these?

Razor

Occam's Razor: Among competing hypotheses, the one with the fewest assumptions should be chosen.

Market's Razor: Assume you are wrong until you are proven right.

The Holy Grail
a.k.a. It is okay to trade based on feelings.

Feel like moving long a mega downtrend to ch the floor?

Check the greater time period trends.
Check for amounts.

Well. Nothing. Everything is contrary to a long trade.

This transaction sucks.

Place it on anyway. Risk 1/5 of their your tier 1 transaction size.

Stops below the low.

Oh it didn't work...

Nevermind. Try again? Sure.

And it fails ...

Document the outcomes. Go make a trading diary and label your own trades. Tier 1 EUR/USD, feeling.

One time it can even work.

It begins working and the tendency begins to change. You tighten stops and add more. And it works superbly and you're up to a complete tier 1 place.

Winner!

The market doesn't care what you believe or why you put on a commerce. It does what it does. Your primary hunch or trade notion doesn't make a difference. If it turns, it turns.

At the end of the month, check your own stats. Just how much did you lose or make from such feeling trades?

Your results will persuade you to improve your methodology (or adhere to it). If you're making money with them, seem to amplify them. If they are losing you money, discard them.

The real holy grail:

1. Market-structure established position sizing and scaling-in and scaling out give you freedom to communicate your own ideas, make mistakes and learn from them. .
2. What you step, you enhance. Start documenting everything. Journal more and record your stats down.
3. Trading is primarily based upon TESTING; not theory. Forget the armchair doctrine which goes on about that forum.
4. Amplify your strengths and discard your weaknesses. Through enough repetitions, you will eventually become your very best trader.

Think about what this means for trading, Component 2

Imagine two urns full of countless chips. In among the urns, 70 percent of the chips are reddish and 30% are gloomy. At another, the ratio is reversed, therefore we have 70% blue and 30 percent chips. Suppose one of the urns is selected randomly along with a dozen chips are drawn from iteight red chips and four blue chips. What are the chances that the chips came from the urn with mostly red chips? (Give your answer as a percentage.)

If you are like most people, you have probably only stated a figure between 70 and 80 percent. Surprisingly, the right response is actually a whopping 97 percent. To arrive at this response you would have to apply Bayes Theorem, a comparatively simple formula which shows how the probability that a theory is true is affected by a new item of evidence. However, not many people solve this issue correctly. They end up being overly conservative.

I submitted this sooner. Time to revisit it.

Coming into the market each day, we make assumptions.

We consider historical prices and we visit a series of Lower highs and lower lows. We thus hypothesize that we're in a downtrend. We presume our urn is reddish, and we do this with a high degree of confidence because of what we have observed.

But the market begins moving and it begins stalling at a reduced and makes a Higher low and high high. It's beginning to churn chips out.

Key lesson number 1: Account for your past, but always overweigh the present on the market.

Essential lesson number 2: It does not require that lots of blue chips to tilt the odds are overwhelmingly in favour of a blue urn. It requires fewer clues than you think to indicate you that a fashion has shifted.

But Key lesson number 3: given the past history, if only 1 clue doesn't lineup, it's probably the trend hasn't changed.

These indicate the following:

When clues start appearing, get competitive in cutting edge shorts and shifting to longs. The further clues that appear, the more you pile .

But if only ONE THING doesn't line up, you get the fuck out and wait to see what happens again.

It's counter-intuitive.

No one said trading was simple.

Think about what this means for trading, Part 3

What many novices wind up doing is the following:

They see a downtrend and they begin to buy even if price has not revealed any hints it wants to reverse.

So since they don't use stops that they endure a drawdown, and then some even average down.

The individuals who average down will endure 95% of their time but the 5 percent of the time when trends don't stop going they'll drop all their cash.

Then when price return to break-even they exit, they are too emotional to think about the truth that price could have made a HH/HL already and might travel higher. Even if they don't escape, they are usually too fearful to increase the transaction by this stage after suffering the tremendous drawdown. And if they increase the trade, often it makes another move lower to form a LH. A move which will frighten them.

Then now price starts going higher, and they think, NOW IS THE TIME to short. But usually they are way too early and price has not made any indications that it will go back down.

SO they suffer another drawdown.

Then when they finally hit out of this transaction, price reverses, fails in a key juncture along with the downtrend reasserts itself. They try to get and it fails.

...

So yeah.

Rather, what traders should do is to WAIT.

Wait for price to begin showing signs of bounce. Then get in with a small size with extremely tight stops.

When it starts to work, add more.

When it starts to fail, get out and try back again later. Do not be afraid to put on a trade in a worse price later if price recovers. The small pips you lose on a tight position is NOTHING compared to the potential movements you can ch along with the moves against you that can wipe you out in the event that you decide to hold on to a losing trade.

***

Caveat: The above example is when You're fading a lower TF tendency to get into the direction of a HTF fashion. God bless you when you are fading a HTF fad because 95% of the time that's suicide.

The way I tap into intuition the Art of Play

For entries: The initial 1/5 of my position could be based off nearly anything. I have a record of 10 things I am searching for. I am in, if any among the 10 triggers. Intuition is one of them.

The rest 4/5 is quite specific and based upon price arrangement.

For exits: whenever the trend is mixed or price is ranging, my intuition tends to work better to identify favourable exits and place where I need to reverse. When the trend is one-sided I generally ignore everything and just focus on particular price action signs to exit.

I think that it's extremely important that we incorporate the freedom for creativity into our trading approaches. Research as shown that performance is improved when we are motivated by:

1. Perform: the action itself is pleasurable
2. Goal: performing the action helps achieve a value.
3. Possible: performing the action helps to achieve a value indirectly

and our operation is reduced when we are motivated by:

1. Emotional pressure: anxiety, anxiety, shame, guilt, and ego
2. Economic pressure: monetary reward or other outside incentives.
3. Inertia: unwillingness to budge the status quo -- only do the exact same thing without thinking.

It is no wonder that most traders fail because traders put their self to the market and place themselves under stressful circumstances and focus heavily on the monetary reward.

How can you create trading more enjoyable in itself? How can trading help you achieve personal growth and advancement? Why do you trade?