Zhus Forex Thoughts
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Thread: Zhus Forex Thoughts

  1. #1
    The purpose of this thread is two-fold.

    1. To share what I have learned from trading FX in precisely the same spirit as people who have taught me about markets and life. If you are willing to listen, this is for you.

    2. To gather feedback, especially constructive and critical opinions, on my thoughts, theories, ideas, hypotheses, whatever I post . I enjoy disagreement and I think I want to listen to more of it to get my trading growing in various directions.

    For a side objective I'm also hoping to improve my writing and eventually become clearer with the way I communicate thoughts. So if you think I'm unsure, please allow me to know and I will try to rephrase so that you could understand.


    The posts here will be of no particular order. I will pop in thoughts in my mind or new insights I encounter from trading. Finally I could compile everything into a neat Table of Contents for simple reference.

    FF might not be the ideal platform for this but I do expect for debate and I do hope the wide audience signifies that more can utilize this as inspiration or simply food for thought in their own journeys in the world of FX trading.


    The self dilemma and the nature of impermanence.

    I must first admit that I'm still a developing trader and still failing on many fronts. But I have experienced success to a degree and although I do feature a significant percentage of it to chance, I think there is a skill involved and it's a sport that someone may get better at over time. Of course we have to trust this don't we? But believing it in an intellectual level is not enough. One has to actually experience it. For years I've felt helpless and stuck as no matter what I tried, nothing seemed to work. However, at times over the years I'd feel that I have made it or have finally cracked the code of the market only to have the market show me wrong. The market has a way of teaching us items.

    So I am very reluctant to come back here and type these items. Afraid because history has shown that it is simple for ego to get in the way. Whenever we put our own reputation and ego on the line, we suddenly have more to lose and it will become a lot harder to make changes or to acknowledge that our rankings or methodology isn't right. Being conscious of this will not make it easier to steer clear of the ego trap. It is plogical. Our plogy does not follow logic.

    The very nature of markets make matters worse for the egoistic trader. Impermanence. That's the way of the world and that's the way the markets are. Price is always shifting; market constructions are always developing and changing; systems are always evolving. Nothing stays the same for long. The urge to admit one is wrong and that one can never beat the market is required to stay on top of this game. We can not beat the market; we could simply beat different traders playing the same game.

    So why am I still here and doing this? Sounds incredibly cheesy but I followed my heart and instinct. I think there's a lot of good in all of us and that there's a lot we could share about our adventures and through nurturing a win-win circumstance and surroundings everybody can benefit. Sure, only a handful can win at this game in the financial/monetary dimension, but that just means that I want to keep improving and becoming better, and not by clinging on to what I know. On the personal development and religious dimensions, I think trading has the potential to gain over just a handful of people. If you give your best and don't make it as one of the top of the area, I don't think the journey was a waste. The lessons that you glow from this may be implemented in so many different things. But do not use that as an excuse not to succeed. Try as hard as possible to succeed, while fully understanding that the journey and the change it brings you is exactly what truly matters in the long term.

    So I want to end of this brief post with a careful reminder to myself and all: we are all learning and the only thing we could do is to try to be better today than yesterday. My views and thoughts are only as valid as my experience and experience is something that I have that some of you reading do not. Hopefully you'll find some of my experiences and lessons I've drawn out of them valuable to your journey.

  2. #2
    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.

  3. #3
    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.

  4. #4
    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.

  5. #5

  6. #6
    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?

  7. #7

    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.

  8. #8
    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.


    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.

  9. #9
    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.

  10. #10
    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.

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