# Dutchie's Trading Tips



## dutchie (1 January 2012)

This is one of my 2012 resolutions!
In the spirit of giving back I would like to start this thread to help all new traders in their journey.
Each week I will submit a tip. These will not be in any particular order.
I am not, by any stretch of the imagination, an expert in this subject but have spent some time in this business. I hope that other traders add to the weekly topic (whether agreeing or disagreeing). 
I would appreciate it, though, if comments were only made on the current tip and not to go off on tangents or their own tips (start another thread if you want to). Hopefully this will enable this thread to flow better. 
Cheers 
Dutchie


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## dutchie (2 January 2012)

TIP NO. 1
I am going to call everyone a trader in the trading business whether you are trading or investing on a intraday basis, daily, weekly or yearly, whether its shares, options, CFD’s, Forex etc. i.e. any activity in the “market”.
Treat this activity as a business and/or profession. 
Don’t expect to become an expert overnight or after you have read one book or attended one course. You would not expect to become a brain surgeon after one lecture or reading a book about anatomy.
Be in this business for the long haul and be prepared to put in the time and effort to become an expert  (this can and usually does take years – just like it does getting a degree). Don’t be discouraged.
The importance of treating this as a business is that at some stage you will have to put up some capital (that which you have worked hard to earn and accumulate). 
You need to protect your capital very carefully because if you lose it your out of business!
That's why it’s important to learn how to trade before you commit any capital (hoping for good luck is not an option).
Don’t rush in because you believe:-   the market is at a bottom, you have got a hot tip from the taxi driver, you’re going to miss the next big thing, a great mining report etc.
There will *always* be opportunities in the market whenever you start but only if you have done the time in learning the profession and how to run the business properly.


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## tech/a (2 January 2012)

dutchie said:


> TIP NO. 1
> I am going to call everyone a trader in the trading business whether you are trading or investing on a intraday basis, daily, weekly or yearly, whether its shares, options, CFD’s, Forex etc. i.e. any activity in the “market”.
> Treat this activity as a business and/or profession.
> Don’t expect to become an expert overnight or after you have read one book or attended one course. You would not expect to become a brain surgeon after one lecture or reading a book about anatomy.
> ...




We often here this
* Treat trading like a business *

But what do you actually do to ensure it's run like a business?
What are the key ingredients ---- what do you have to put in place?
Many have no concept of " business ".


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## alocineel (2 January 2012)

tech/a said:


> We often here this
> * Treat trading like a business *
> 
> But what do you actually do to ensure it's run like a business?
> ...




One key ingredient in any business (I would have thought)is to ensure or plan that your incomings are more than your outgoings. Other way around & it's goodnight nurse!!


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## tech/a (2 January 2012)

alocineel said:


> One key ingredient in any business (I would have thought)is to ensure or plan that *your incomings are more than your outgoings.*Other way around & it's goodnight nurse!!




I would argue that less than 5% would have such a plan
Most have a plan but not that in black.


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## tech/a (2 January 2012)

Is that all you need?


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## tech/a (5 January 2012)

tech/a said:


> Is that all you need?




*Disappointing*
Thread started and no follow up by the author.

What's the point of making statements with no content.
How's that help posters?

I didn't want to reply as I have in this post but a good idea is left wanting!
Well in my not so humble opinion.

Other things to consider when trading like a business.

(1) Identify your market no point in investing or trading in a deminishing or falling market--- poor business
(2) undercapitalization is a common business error. No different in this business.
(3) Diversification spread your net to capture a larger market share.
(4) keep emotions out of business.
(5) keep overheads down--- if your a trader minimize loss and trading costs( brokerage).
(6) Without a tested method which returns a positive expectancy your trading hope and hypothesis. There is a good chance your gambling. Understand how to skew your " gambling" toward profit.
(7) always pay yourself.
(8) always make YOUR own business decisions-- seek advice but--- be decisive and responsible for your business.
(9) review your business and it's performance blueprint regularly. You'll have a blueprint if you have a PROVEN positive expectancy trading or investing methodology.


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## 5oclock (5 January 2012)

There is a great deal to learn and heaps of info on ASF, I am sure TECH would agree a lot of how NOT to trade is featured on the PEN thread!!!!!!!


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## tech/a (5 January 2012)

5oclock said:


> There is a great deal to learn and heaps of info on ASF, I am sure TECH would agree a lot of how NOT to trade is featured on the PEN thread!!!!!!!




Cant disagree -----  RED thread is also becoming interesting.
It is interesting how people handle a 50% reversal in a holding.
Quite differently to a 50% reversal in a business Im noticing.

I question how they would react if SOMEONE ELSE was in control of their holdings and did as they did!

But *the point I'm making* here is Dutchie and others who start threads and go silent--should become pro active in their threads.


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## pixel (5 January 2012)

tech/a said:


> I would argue that less than 5% would have such a plan
> Most have a plan but not that in black.



 That's one reason why I for one would encourage dutchie to keep posting his tips. 
Even if he's increasing that ratio to 5.01%, he's done a great job.



> I would appreciate it, though, if comments were only made on the current  tip and not to go off on tangents or their own tips (start another  thread if you want to).




So let's not hijack his attempt with daily ifs and buts. The plan is one tip per week


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## dutchie (5 January 2012)

Thanks for your support pixel.



pixel said:


> That's one reason why I for one would encourage dutchie to keep posting his tips.
> Even if he's increasing that ratio to 5.01%, he's done a great job.
> 
> 
> ...




That was my initial intention hoping that anyone starting out would do further investigations themselves and that other posters would fill in some of the gaps (as tech/a did).

Thanks for your support too tech/a.



tech/a said:


> *Disappointing*
> Thread started and no follow up by the author.
> 
> What's the point of making statements with no content.
> ...




I stand chastised. I see your point. (but I would like to retain the right to be as active/inactive as I want and people can take it or leave it)


To run a business you need a plan.
Some of the questions/ items that should be in your plan are (in no order):-
1. What is my business? What am I trying to do – Invest money to make more money.
2. How much capital do I need to start the business – where can I source more and is it sensible/economical to borrow?
3. What is my market? Shares/CFD’s/options/futures/Forex.  National and/or international markets?
4. Where can I obtain information about trading these.
5. Who should be my broker and what are the conditions of trading.
6. What equipment/software do I need. What data feed do I need. 
7. What are the `legal and taxation aspects I should look at?
8. Test/ monitor how the business is going. When will I decide the business is not viable anymore?
9. How can I make the business more efficient/grow i.e. employ people, get more/better equipment etc.
10. Where will I run my business from ?  – home, office, work
11. What hours will I be open/active?
12. What weekly income do I need to run the business properly (including some for me)
13. How do I develop an actual trading plan(s) (as distinct from this business plan). 

As you can see there are many different aspects to developing a business plan. This short list is not all encompassing nor limited.
I would recommend that people wanting to set up a business do research on this aspect.
Use a plan as shown in this link and use/adapt it to your specific needs.
If in doubt ask someone!

http://www.business.gov.au/Documents/Startingyourbusinesschecklist.pdf


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## pixel (5 January 2012)

*First Step: A Trading Plan*

When it comes to *Trading Plan*s, the ones I've read about and compiled myself can't be very easily summed up in a few words.
Sure, my *intention* is to trade profitably. Nobody else owes me a living or volunteers to support me. But that's hardly a "Plan".

The *Trading Method* that I employ and that makes up my *Trading Plan,* comprises several steps:


Identify stocks that have a high probability of breaking to the upside.
Calculate the start position size in such a way that a failure to perform does not hurt more than I can afford.
Estimate a target zone, but keep a close eye on the stock regardless.
Have the unemotional mind to realise signs of reversal, and the discipline to stop out in time.
Don't lose sight of the individual properties of a stock - its "DNA"  - and the specific price and time range that I bought it for.
  There are scores of sub-points and gotchas that I won't mention here. Just a few additional pointers:
The basic theory underlying point 1. is the "Trinity  Approach". Applied with discipline, it gives me a better than 80% chance  of not losing once I entered. 
Side issues to consider under point 2. include the general composition  of my portfolio: Do I have too many eggs in one basket? Is my portfolio  spread widely enough across the Market? 
Point 3. deals mainly with risk:reward ratios and ranking stocks against one another, which also influences the position size. 
Point 4. is simply capital management, avoiding nonsense like "a paper  loss isn't really a loss", or "I know better. The Market is wrong!"  while 
point 5. slaps my wrist when I'm tempted to fudge some figures - usually  stop-losses - by changing the planning horizon for a trade. As in_ "I  hope it keeps going, so let's widen the stop criteria and give it some  more room to fall; it'll catch up next week - won't it?"_
That does NOT mean I can't trade the same stock in several positions:  Intraday scalp, quick swing, and long-term holding. But I need a really  sound and *positively proven* reason to move a short-termer across  to a longer-term position. Being aware of the implication such a  transfer would have on the overall composition of the target portfolio  is only one point that needs to be considered.

So, there you have it: The framework of *Pixel's Trading Plan *in a nutshell.


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## dutchie (5 January 2012)

I see your using the KISS system, pixel. Always a good sign.


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## tech/a (5 January 2012)

Pixel

Your " Plan " is *EXACTLY* what I'm talking about.
Just  like 99 % of traders who "*THINK*" they have what they need as far as a plan is concerned.

*ALL YOU HAVE IS A TRADING HYPOTHESIS

NOTHING MORE!!!!!*

Your missing the key to a successful plan.


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## pixel (5 January 2012)

tech/a said:


> Pixel
> 
> Your " Plan " is *EXACTLY* what I'm talking about.
> Just  like 99 % of traders who "*THINK*" they have what they need as far as a plan is concerned.
> ...



 Criticising is easy, tech/a

If you're so much wiser, why not enlighten us with some positives? *As I told you when I supported your own attempts at t/a tips: I'm always interested in studying other successful people's ideas. *

But please tone it down and DON'T SHOUT. People are more inclined to listen to reason. Loudmouths and badmouths are far less appreciated.

Maybe Joe can reduce some of the clutter and let us start over, leaving only Dutchie's posts? He made a genuine and well-intentioned start, for which he deserves to be commended. If my comments are deleted in the process, no problem. I know where to find them.


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## tech/a (5 January 2012)

pixel said:


> Criticising is easy, tech/a
> 
> If you're so much wiser, why not enlighten us with some positives? *As I told you when I supported your own attempts at t/a tips: I'm always interested in studying other successful people's ideas. *
> 
> ...




Pixel
Its all on topic well 95% of it is.

What 99% of people miss is the *BLUEPRINT*.
If you have a plan you had better know how it is supposed to perform.
Your Blueprint will arm you with a host of information which shows not only your positive expectancy.

But things like

Maximum D/D both initial and Peak to Valley.
Maximum chain of loses.
Effect of outlier wins OR losses.
Return / dollar invested.
Reward to risk.
You'll also know if a fixed fractional position sizing or a fixed % or $ amount is best for you.
These are but a few things a Blueprint will tell you.
Without having one to compare your live trading with you wont be able to recognise a change in market conditions which could be catastrophic to your plan.

Infact without it you DONT KNOW if your plan actually returns a positive expectancy over a range of conditions.
all it is is a logical arrangement of trading ideas which you THINK---you dont know-- gives you an edge.

After reading Dutchies plan I also believe he is in your boat as well.

Whats the point of a plan if you have no idea if it has a hope in haddies of returning a long term profit.

*Apparently 99% of traders feel it not necessary!*


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## dutchie (5 January 2012)

tech/a said:


> After reading Dutchies plan I also believe he is in your boat as well.




I outlined a business plan - which is different to a trading plan (see item 13 of *business* plan).

I agree that you do need a trading plan which should contain all the (and other) items you mentioned tech/a.
No doubt it will be covered in a tip later on.


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## 5oclock (5 January 2012)

Good on DUTCHIE for starting this thread. Of all the forums I have read this forum is a big stand-out for a number of reasons, mainly the number of members who go out of their way to help others(sometimes the readers take the advice/observations a bit personal). Anyway I for one have learnt as much from threads on ASF as I have from all the trading books, and a bit of "discusion" only helps sharpen your focus!


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## tech/a (5 January 2012)

dutchie said:


> I outlined a business plan - which is different to a trading plan (see item 13 of *business* plan).
> 
> I agree that you do need a trading plan which should contain all the (and other) items you mentioned tech/a.
> No doubt it will be covered in a tip later on.




You can and should have a BLUEPRINT for any business plan.
Why is it any different?

How many go into business without one?---most
How many would not go ahead with their business had they found out their blueprint?---few
How many would have increased their chances of success if they had one initially---most

Rather than a list of logically sounding Business ideas.

Just like a trading plan a business plan WITHOUT a proven and track able positive expectancy* isnt worth* the pixels its written with.


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## dutchie (5 January 2012)

tech/a said:


> You can and should have a BLUEPRINT for any business plan.
> Why is it any different?
> 
> How many go into business without one?---most
> ...




So are you saying that you need to have a working and tested trading plan before you worry about a business plan?


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## pixel (5 January 2012)

5oclock said:


> Good on DUTCHIE for starting this thread. Of all the forums I have read this forum is a big stand-out for a number of reasons, mainly the number of members who go out of their way to help others(sometimes the readers take the advice/observations a bit personal). Anyway I for one have learnt as much from threads on ASF as I have from all the trading books, and a bit of "discusion" only helps sharpen your focus!



 +1

If I may ask Dutchie's indulgence *just this one more time*, then I'll shut up:
I take his title "tips" as the guide. Not the complete guide to guaranteed success, but as a collection of what the Germans call "Denkanstoss" = things that kick your mind into gear.

Whether any collection of guidelines, including my "nutshell", be called "Method", "Plan", or "List of Good Intentions" is semantics. IMO it's also semantically equivalent whether I quote a theoretical expectancy or a *backtested *ratio of winning vs losing trades. One may be more scientific, the other more broadly understood. 

The only thing nobody can ever expect in the context of this Forum: A sure-fire recipe that guides a newcomer to instant success, effortlessly bypassing the need for his/her own studies and learning curve.
Like Dutchie and tech/a, I'm willing to share my experience, honestly and with as little jargon as I can muster; if I don't at every stage add the full extent of decades of learning, I trust members will accept that.


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## Julia (5 January 2012)

Good on you, Dutchie, for having the goodwill to try to help others by starting your own thread.

It's sadly predictable that it has gone the way it has.

People have different approaches to all aspects of life, including how to assess the validity or otherwise of a plan for trading/investing.

Hope you'll not be deterred, Dutchie.  
All the best.

Julia


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## tech/a (5 January 2012)

dutchie said:


> So are you saying that you need to have a working and tested trading plan before you worry about a business plan?




A plan is just a plan without a tested methodology.
If I dropped you in LA without a map and told you to get to Denver I'll guarantee you'll find a tried and true method to get there.


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## wayneL (5 January 2012)

Anyone tested Elliott Wave? How about Wyckoff style methods (tradeguider etc)?

Just wonderin'


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## peter2 (5 January 2012)

In support of Dutchie's good intentions to contribute.
-------------------------------------------------------------------------

*Trading Business Plan* (SFund)

Main business activity: To use the ASX market to increase the size of the fund for the members' retirement. This involves the buying and selling of ASX stocks and the SPI futures contract which is done in accordance with the business trading plans.

Business Goals: To increase the fund size 20% pa (average) with a max draw down of -10%. 

Business Risks:  (plans for backup, alternatives ...)
(a) Equipment breakdown (computer, ISP, data backup ... )
(b) Broker breakdown (eg MFGlobal, access to ETrade, over zealous exits by MM)
(c) Market (volatility, news, trading suspensions etc)
(d) Financial (portfolio heat, individual trade risk, pay pensions, business costs, cash flow ... )
(e) Trustee/trader (health, mindset, style drift ...)

Business Trading Plans: 
(a) Creation and back testing of trading plans to be used in business
	(i) fitness for purpose (W%, AW/AL, edge, frequency, max and average consecutive wins/losses )
	(ii) Identifying best market conditions (implementing plans for the right market conditions)

(b) Investigation of appropriate money management models to comply with goals.
	     (i) max/min portfolio heat
	     (ii) position sizing models (FF, equal size, other ...)

(c) Detailed trading plans (including scans, stock selection, trading plan checklists, trade risks, position sizing ... )
	(1) ASX trading plans
		(i) Break outs (Darvas, horizontal resistance, asc tri ...)
		(ii) Trend following (buying dips)
	(2) SPI hedging (offset for down trends)

(d) Forward testing of trading plans to confirm suitability of resources for implementation.

Routine Business Activities (implementation of all processes (plans) of the business)

Performance monitoring:
(a) Annual audit and tax preparation (goals attained?)
(b) Performance of trustee/trader in following trading plans (continual)
(c) Performance of trading plans (compared to back testing stats, real time monitoring)

Business quality improvement process
(a) for trustee/trader 
(b) for trading plans
(c) research new trading plans


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## dutchie (5 January 2012)

Nice post peter2  

Thanks for words of encouragement, Julia. Not deterred at all.

All posts welcome. As always each member will get different things out of the thread. At the least, hopefully, it will make them think about what they are doing.


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## tech/a (5 January 2012)

wayneL said:


> Anyone tested Elliott Wave? How about Wyckoff style methods (tradeguider etc)?
> 
> Just wonderin'




Elliot evidently has been tested by those at esignal but I haven't.
Kris the PHD and I are working through VSA.
We will publish the results when we have verified the many many variants and combinations.
No it won't be free.


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## motorway (5 January 2012)

wayneL said:


> Anyone tested Elliott Wave? How about Wyckoff style methods (tradeguider etc)?
> 
> Just wonderin'




Just  as food for thought !

Any real Scientific Method
of recognizing Accumulation and Distribution
is real
= it works

Wyckoff is a name given to such method.

It's like chosing to use gravity to roll down a hill.

It just is going to work.

Everything else  ?.. What most people do proverbial 99% of them ?

Maybe Needs a Blue print (long time since  I really used them and then really didn't )
Why ? Because all such methods are NON OPTIMIZED derivatives ..

I mean momentum , trend following & Oscillation Indicators.

They are all Non optimized derivatives of averages of price volume and/or  time

When what matters in  the actual traded Prices , Volumes and Times.

They are non optimized in regards to the accumulation and distribution that matters.

That is that in the process of being.

Supply and Demand.

These need to be identified and measured.

Not the artifacts they throw up and leave behind.

Plato's cave anyone ?



> Plato lets Socrates describe a group of people who have lived chained to the wall of a cave all of their lives, facing a blank wall. The people watch shadows projected on the wall by things passing in front of a fire behind them, and begin to ascribe forms to these shadows. According to Plato's Socrates, the shadows are as close as the prisoners get to viewing reality.
> 
> He then explains how the philosopher is like a prisoner who is freed from the cave and comes to understand that the shadows on the wall do not make up reality at all, as he can perceive the true form of reality rather than the mere shadows seen by the prisoners.




Shadows need Blueprints

Reality Does not. It just works !

Motorway


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## wayneL (5 January 2012)

motorway said:


> Just  as food for thought !
> 
> Any real Scientific Method
> of recognizing Accumulation and Distribution
> ...




Most of your posts are a bit opaque and esoteric for me. This one perfectly clear.

Agree.


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## tech/a (5 January 2012)

Motor way

It just works until something changes
Even gravity
Oxygen
Night and day as we know it
Works until something changes
We need to know as early as we can that a change is on the cards
Without a blue print we cannot see the change occurring.

So see your point but think your using a blueprint even if you don't think you are.


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## motorway (5 January 2012)

tech/a said:


> Motor way
> but think your using a blueprint even if you don't think you are.




Yes..  







> It just works until something changes



 Yes this is important.
But it is  all the factors that are important.

Some time VOLUME
some time time
*Often time the way price hunts for volume.. without finding it *

So conditions change
markets trend and churn

A wonderful   Study 
That Probably never ends 



But still a big difference between what I call Shadows and Reality.

Motorway


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## tech/a (5 January 2012)

> A wonderful Study
> That Probably never ends




*EVOLUTION*

Everything has it.
From Planets to People to* PRICE*


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## Joe Blow (6 January 2012)

OK, we're only two pages into Dutchie's thread and although it clearly hasn't gone to plan so far I don't think there's any need to start removing posts as there's some useful discussion emerging already. Lets keep it intact and just move forward from here.

I would ask everyone to keep in mind that this is Dutchie's thread and he will contribute to it at his own pace. He is under no obligation to post any more frequently than he would like to.

Lets keep the discussion constructive, civil and centred around Dutchie's discussion points as mentioned in the thread's initial post.

Thank you all for your co-operation.


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## dutchie (8 January 2012)

TIP02

The market(s) is manipulated.

There are people, syndicates, fund managers  et al  (*the smart money*),out there with big wads of money who have knowledge of the market and are able to use their resources to manipulate the market to their advantage.

That's what the retail trader (you) are up against.
It’s like turning up to poker game with $500 and only a rough idea about the rules of poker and on the other side of the table sits a seasoned poker player who knows all the tricks and has a kitty of $5 million. Who do you think is going to lose all their money?? 

Most peoples’ money runs out before their mistakes do.

It is impossible to beat these people your only hope is to ride the market with them.
There are statistics out there that say 80%-90% of traders fail.

Do you want to risk your hard earned capital at those sort of odds?

You may think “Oh, I am smart, I am definitely in that top 10%-20% and therefore I can’t fail.”
I don’t want to discourage you but…….no you’re not (I have a 4 out 5 chance of being right).
I thought that once too and boy did I get smacked around.

Their method is fairly simple: buy off the people who are selling (sometimes in a panic) because there is bad news; accumulate at low prices; then sell to people who are buying (sometimes in a frenzy) because there is good news, at higher prices.  Do this over and over again – and they do!

So you need to sell on good news and buy on bad news ( an oversimplification I know and you still need to use other skills as well). Don’t forget for every seller there is a buyer and for every buyer there is a seller. Why are they buying when everyone is selling? Why are they selling when everybody else is buying?

The markets are also manipulated because the *news* is manipulated.
Headlines -  “Economy is improving as oil prices rise”.  Next day “Manufacturers suffer under higher oil prices”  - so what is it good news or bad news – neither – its manipulation.

A typical example of manipulation – say the smart money wants to accumulate some shares in XYZ. During the morning auction they will *sell*  XYZ  to make the price go down. During the first hour of trading they will continue to *sell* XYZ (taking out stops that they can see sitting there) till the price goes down say 50c. They may have used *$250,000 *to do this. For the rest of the day they slowly start *buying*  XYZ (this of course slowly raises the price). By the end of the day the price has risen 50c to where it started but there has been *$5 million* in turnover.  (i.e. lost $250,000 to gain $5million at cheaper prices).

There are lots of other ways that the market is manipulated  - inside trading, lies, rumours etc etc.

How do the 10% - 20% succeed in beating this manipulation? 
 The short ,simple answer is - *education*, watching  and learning, maybe for 3-5 yars, to “get it”. 
More on that later.


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## joea (8 January 2012)

dutchie said:


> TIP02
> 
> How do the 10% - 20% succeed in beating this manipulation?
> The short ,simple answer is - *education*, watching  and learning, maybe for 3-5 years, to “get it”.
> More on that later.




dutchie
Do you really believe that it will take 3 - 5 years to get it.
With VSA, books on "price action" that have just come out, software availability etc.
books that explain VSA are now readily available. With more to come out this year!
So I think people will learn quickly(those that can grasp it). Traders need and "edge" to be more successful, and that is probably why this forum has such a high guest viewing.
Those "guest" probably view several forums to look at stock tipping and the new posts. So I would think people are learning quickly due to the works of people like Joe Blow and his team. The people who want to learn, will learn quickly. just a point!
All the best with your thread.
joea


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## Gringotts Bank (8 January 2012)

There's a few very easy ways around the manipulations you describe dutchie.

1. stick to very small cap and low priced stocks.  Funds won't go near them for 2 very obvious reasons.
2. trade stocks that can't be short sold (again, this is the small end of town, with a few exceptions).
3.  Avoid lies and fudging of the books by relying on T.A. as opposed the fundamental data.  Charts rarely lie.  Boards do, especially in stocks outside the top 200.
4.  not sure about syndicates.  I've often thought how incredibly hard and risky it would be to take a stock and make it run hard for a day completely off your own funds (even if you had 10 traders with 10 million).  So I don't think syndicates are a problem.


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## tminus (8 January 2012)

joea said:


> dutchie
> With VSA, books on "price action" that have just come out, software availability etc.
> books that explain VSA are now readily available. With more to come out this year!
> joea




Do you have any recommendation for VSA books?


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## joea (8 January 2012)

tminus said:


> Do you have any recommendation for VSA books?




tminus
If it is under the VSA banner, the books that I have seen are:
Master The Markets (free download)
Trading in the Shadow of Smart Money, and it's supplement books to show the setups.
The supplement books only describe the setups in words as far as I know.
Basically the tradeguider software is a requirement. its explained in MTM.
joea


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## tech/a (8 January 2012)

While I do have a great deal of respect for Volume Spread Analysis and I have seen manipulation in the Index Futures I feel the notion of Market Manipulation has been popularized by Tradeguider--- in particular Gavin Holmes and his massive relentless marketing machine.

Frankly in these markets just like everyone else the " SMART " money isn't that smart.
I'm not seeing too many outperforming the market.
Not only that but every time you see a change in significant buying or selling of shares you'd expect these " smart " people would be rewarded with a rising or falling stock.
Truth is it rarely happens like that

Just check a few announcements in the past and see the price action.
All of us including " Smart " money look really smart in a trending market.

The common notion is that very high volume in either direction is " Smart " money either entering or leaving a stock.
Yet you'll also be told that very large holders will leave or add to a holding over a long period of time and not in one fell swoop.----- which is it?

I have been doing a great deal of work testing  VSA and many of the arguments given to those disappointed at poor results when taking what they believe to be VSA signals.
( one would be told to look at past history ---- as one example).
Don't be so sure that all results are poor or tha t VSA or indeed any form of analysis is the holy grail--- or even the/an " EDGE".

When we are finished this study it will be available ----- on the open market.

As for " getting " it.
I often see this argument targeted at those who can't see the value of Gann / Elliot / Point and Figure / Market Profile and now VSA.

I like most who are sure  "They Get it" have my own definition of what it is you NEED to get--- to get it.
Interested in Dutchie expansion on " Experience "
And others who like me believe we understand what it is we get.


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## joea (8 January 2012)

Dutchie
In the world of trading there is a term "market master" and it covers your ability to trade.
The following site talks about the modes of competence. That would be needed to match the manipulator.

http://www.marketmasters.com.au/37.0.html

In "Charting the Stock Market", the writer refers to the buying and selling of a stock as a "campaign". These guys have it pretty well rehearsed, but it is there to be absorbed by upcoming traders. i.e. how to do it profitably.
joea


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## So_Cynical (8 January 2012)

dutchie said:


> TIP02
> 
> The market(s) is manipulated.
> 
> ...




Smart Money  I've seen institutional money do some pretty stupid things, look at some of the cap raising's, then consider the resulting SP falling to under the cap raising issue price and staying there....time and time again.

When smart money is very smart it can be spectacular, but that's the exception not the norm..i don't think its fair to call inside money smart money...insiders are in a position to cheat cos they know what's going to happen.

Smart moneys a bit of a fantasy i reckon.

-----------------------------------

Now this is smart money 



joea said:


> Dutchie
> In the world of trading there is a term "market master" and it covers your ability to trade.
> The following site talks about the modes of competence. That would be needed to match the manipulator.
> 
> ...




All these little education sites and financial blogs etc that seem to be getting very popular... that's smart money, doing the modern equivalent of selling picks, shovels and maps to the miners....selling "education and information" to the needy.


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## pixel (9 January 2012)

Where did VSA come in? I can't recall Dutchie mentioning it. But it does tie in with his assertion that the game is rigged and Markets in general manipulated. IMHO, even way beyond the share market itself, extending into the accessories and training industries.

VSA may well turn out to be a fad, like Elliot Waves, Gann Cycles, Options, and loads of other "Secrets" of their time. At the crest of their popularity, educators spring up by the truck loads, making money by the truckloads, from the early adaptors, who must have the latest and greatest tools money can buy. Or the most loudly spruiked cribsheets...

When they find out that it takes scull sweat and dedication, most of all a good "nose" as to what works and under what circumstances it doesn't - they switch to the next fad.

However, there are always a few, who don't pay exorbitant fees; who don't fall for the hype; who wait until there is a body of evidence freely available in Cyberspace; and who the undertake their own studies, digging into the theories behind it all. They will find out why it works sometimes (assuming it does at all) and under what kind of conditions. And then they apply this new system as part of their trading routine and beat the starry-eyed early disciples at their own game. 

The "Market Masters" know about all those popular fads, past and present; they also know that lots of "believers" are out there, who can be led into a certain behaviour - buying or selling - when one of their "signals" is (artificially) triggered. The money that these believers lose is definitely not "smart" - until it bolsters the coffers of the MMs.

Hat tip to the quiet achievers, who know the rules and can distinguish fact and fiction. They may not be completely immune to being duped, but they're not one-trick ponies. They're far more likely to recognise what "smart money" is doing and know when to join the herd and when to do the opposite.


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## wayneL (9 January 2012)

pixel said:


> VSA may well turn out to be a fad, like Elliot Waves, Gann Cycles, *Options*, and loads of other "Secrets" of their time.




Options are a fad?

I don't think so.


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## tech/a (9 January 2012)

> Where did VSA come in?




VSA is touted as the leading method in spotting " smart money ".

Elliot also has some spectacular results.
If you want to spend the time going through the XJO thread at the time of the 2007/8 correction you'll seebit for yourself in action.
Boggo has also posted much well before the result is known.

I would argue ths application of analysis is lacking in most traders tool box.
It's one thong to think you understand and quite another to apply it profitably.


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## joea (9 January 2012)

So_Cynical said:


> Smart Money :
> 
> 
> All these little education sites and financial blogs etc that seem to be getting very popular... that's smart money, doing the modern equivalent of selling picks, shovels and maps to the miners....selling "education and information" to the needy.




s_c
I did not suggest he purchase the program.
My reference was to the competence of traders, and especially "unconscious competence" who Dutchie maybe referring to.
Go to "Tradeguider", there you will see the smart money you probably refer to!!
Back to you Dutchie.
joea


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## pixel (9 January 2012)

wayneL said:


> Options are a fad?
> 
> I don't think so.



 The key to my comment lies in the next sentence:







> At the crest of their popularity, educators spring up



Add a few letters, even entire "concepts", and you'll get closer to what I was hinting at.

Nor did I deny that all these tools have their place; but they're not the panacea they're spruiked (and sold) up to be.


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## tech/a (9 January 2012)

pixel said:


> The key to my comment lies in the next sentence:
> Add a few letters, even entire "concepts", and you'll get closer to what I was hinting at.
> 
> Nor did I deny that all these tools have their place; but they're not the panacea they're spruiked (and sold) up to be.




I dont know about that ---they can be in the right hands.


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## wayneL (9 January 2012)

pixel said:


> The key to my comment lies in the next sentence:
> Add a few letters, even entire "concepts", and you'll get closer to what I was hinting at.
> 
> Nor did I deny that all these tools have their place; but they're not the panacea they're spruiked (and sold) up to be.




I think you'll find that the 'educators' preponderate in, and at the peak of, bull markets. In that case, the market itself is a fad.

Option volumes are still MASSIVE (in the US at least) and a mainstream tool for traders and investors. 

Though I do agree that most 'educators' sell unrealistic expectations.

<ETA> Sorry Dutchie this is taking the thread off course again... I'll stf up now and so should others unless relevent.


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## peter2 (9 January 2012)

I agree that the markets are manipulated at many levels (governments, regulators, large corporates) and that this makes things tougher for the retail trader. Are the odds of success so high (probability low) because of this manipulation or is it something else? IMO it's not the blatant manipulation that makes it difficult to profit as there are enough large price trends that a retail trader can use to create a profit. 

I think that the 80-90% that fail to make a consistent profit do so because they can't deal with the uncertainty not the manipulation. Most people don't think in probabilities and the few times we do the probabilities are extremely small. We drive cars and use planes knowing there is a probability of a mechanical failure or accident but we do so as the probabilities are so small and we choose to ignore them. We are taught to control ourselves and to control our circumstances. We know the consequences of our actions. 

We buy with the expectation of selling at a higher price in the future, but there is no certainty that we will. 

I don't have to beat the manipulation to be profitable. I choose to ignore the systemic manipulation and sometimes use the obvious patterns created by the manipulators (Note: fake out reversals are reliable signals). 

My aim is to develop and refine the skills to interact with the market to create a consistent profit. Developing the right mindset to act my own best interests is for me "getting it".


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## Ryozuken (9 January 2012)

Hello, I'm new in this forum...

Let me follow this trading tips for my information..


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## dutchie (9 January 2012)

Welcome Ryozuken.

There is lots of good information on this Forum. Have fun!


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## motorway (10 January 2012)

"As for " getting " it.
I often see this argument targeted at those who can't see the value of Gann / Elliot / Point and Figure / Market Profile and now VSA.

I like most who are sure  "They Get it" have my own definition of what it is you NEED to get--- to get it.
Interested in Dutchie expansion on " Experience "
And others who like me believe we understand what it is we get."

You mention a few GOOD methods there tech

J. Peter Steidlmayer: In step with the markets==>

http://www.trading-naked.com/in-step-with-markets.htm

"The evolving nature of markets 

In the 60s Steidlmayer noticed that markets tended to form bell-shaped curves each day as they found an efficient price by the closing bell. He profited from selling daily highs and buying daily lows in anticipation of an intraday trend reversal.

However, this "responsive" behavior shifted in the late 60s as commodity funds formed and their managers began buying high and (hopefully) selling higher in anticipation of a continuing trend. Steidlmayer altered his trading style to adapt to the changing environment, a shift that taught him to focus on the present tense as opposed to using historical patterns to predict the future.

Steidlmayer says today markets don't actively form profiles each day because "imbalances," or directional moves, are now so overwhelming the market can't integrate them and form an efficient price by day's end as it did 40 years ago.

"The market's basically changed to where we have selling followed by buying," he says. According to Steidlmayer, the market used to move sideways to integrate the imbalances (as it formed a bell-shaped curve), but it now moves down and back up in two separate phases. This means the basic tenets of Market Profile such as the five daily classifications and the four steps of market activity don't work as well as they did in the past."

If your strategies don't measure Time -  - you don't have much of a chance.
AT: Similar to the way point-and-figure charts shift toward market time as opposed to chronological time?

JPS: Yes. When I started trading, point-and-figure charts were my introduction to Market Profile. It's an outgrowth of (that methodology). Point-and-figure charts can move a trader forward in terms of understanding the market - not necessarily in terms of making trading decisions. Instead of making mechanical decisions based on pure technical analysis, if you use point and figure, you've gained a better understanding of the market. This wakes up your brain a little bit vs. other chart styles.

AT: How do you compare Market Profile to traditional price based technical analysis?

JPS: Market Profile does not use chronological time. And if time is your biggest cost, you'd better have a "market time." Everyone else uses chronological time and price-to-price relationships. Price has very little or no value as a data point.

AT: Why? 

JPS: Because there's a buyer and seller at each price. Time only defines price in the past tense. Assume a new contract began trading at 10. There's nothing you can say about it. But you'll have some reference if it traded at 4 last month.

Take a look at the trading industry. It's not using the database as an asset, and it's toiling instead of working. Technical analysis uses price against price, and price itself is not a data point. Moving averages don't exist in the real world.

Market Profile has survived even though the market's changed dramatically in terms of how it's used. It differs from technical analysis because you are now closer to being a part of the market rather than just making observations. There's a big difference there.

AT: What's wrong with back testing trading ideas against historical price data? Doesn't that have some value?

JPS: Well, the markets have changed a lot so you're comparing apples to oranges. First, you don't have a constant. If you're not testing the market, what are you really testing?

AT: The probability of whether a trade idea might be profitable.

JPS: No, you're testing how your tolerance works. Back-tests miss all the ingredients that may have been good.

AT: Such as?

JPS: When you look to the past for references, you're going to be late (making trading decisions) because you don't know a high or low has occurred until it's in the past. So you're looking for one scenario and the market's doing something else. Market Profile, however, shows development that you won't see in a back-test; they only show how good your external parameters are and these (variables) dominate the results. "

*Manipulation is a valid concept*

But The ''They call it VSA"'s  Smart Money is not the same as Wyckoff's COMPOSITE MAN.  It Explains why the "Smart money" maybe is not always smart.. The composite man outsmarts every particular everybody because he is EVERYBODY.

Also note J. Peter Steidlmayer on the subject of back testing in the above .

Keep going Dutchie 





> Not only that but every time you see a change in significant buying or selling of shares you'd expect these " smart " people would be rewarded with a rising or falling stock
> Truth is it rarely happens like that............................................ The common notion is that very high volume in either direction is " Smart " money either entering or leaving a stock. Yet you'll also be told that very large holders will leave or add to a holding over a long period of time and not in one fell swoop.----- which is it?





_Money is only smart if after they have finished buying PRICES go UP and
after they have finished selling PRICES go DOWN._
_
Now where did I put that P&F chart !_


we can measure cause to infer effect YES

But we can also  measure the effect and hence qualify the cause.

IE was the money SMART

If not --> Do you want to be there !

 A good trend will make all the money look smart as it proceeds


How ever Anyone measures or identifies  
A CAUSE to benefit from-->  a (possible) EFFECT !

Just as important imo is Using the actual EFFECTs to Qualify and judge the preceding CAUSEs.



> every time you see a change in significant buying or selling of shares you'd expect these " smart " people would be rewarded with a rising or falling stock
> Truth is it rarely happens like that




Divergence between . Effect and Cause ...  Was it Accumulation . Distribution or Nothing... What is the pattern  and at different resolutions .

In a large Bull move . It takes very little cause to drive a trend. Because the Population of interest keeps increasing and diversifying its information.
In Mean Reversal .. Any amount of Cause will still not produce a Trend. Markets just Stop and Reverse ..Population of Interests are static and are using the same information sets.

A P&F chart especially will  







> shift (a trader ) toward market time



 and  especially 







> move a trader forward in terms of understanding the market



.

imo

Motorway


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## tech/a (10 January 2012)

howardbandy said:


> Hi Jetson --
> *
> 
> *
> ...



*
The silence from your reply is deafening.
*


> The correct position size for a system that is broken is zero.



*
Here in lies the problem.
99% of punters ----Punt!
*
Their and/or others Ideas and plans look great and logical on paper.
*
Do they work---are they broken?---Dont know!
Do they have the facilities to varify other than
jumpinh straight in?---Generally no.
Many spend their whole lives designing broken methods!
*
Pity!
*
Boggo.---Dont know about that----







> paper trade a few commonsense entry and exit scenarios.



*
Thats the main problem in my view.


> Many spend their whole lives designing/trialing broken methods/ideas!



*

*
*
*
*


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## explod (10 January 2012)

tech/a said:


> *
> The silence from your reply is deafening.




Yep, its a bit like me stirring the dogs on the "short the market thread", I don't know the answer, I just think its wrong but asking the question does help *a bit*.

And we just think its right, we see the signals but because they do not comply with what we would like/think then they are ignored.

The markets do their own thing and we have to learn to follow, *but aha, we know better *and want to shine as individuals even if only to oursleves. 

Its a hard long road,* to listen and follow*.


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## wayneL (10 January 2012)

explod said:


> Yep, its a bit like me stirring the dogs on the "short the market thread", I don't know the answer, I just think its wrong but asking the question does help *a bit*.
> 
> And we just think its right, we see the signals but because they do not comply with what we would like/think then they are ignored.
> 
> ...




Having another obnoxious attack Mr Plod?

Go have another look in the thread instead polluting Dutchie's thread with crap, you will see that it is your silence that is indeed deafening. 

See you there for your answers to the questions asked of you.


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## dutchie (21 January 2014)

TIP03

Holy Moly!  TIP03 coming over two years after TIP02! 

What a slack bastard I am (especially after promising 1 a week! – I’m only about 206 tips behind)

OK so here we go again – no promises of the number of tips per week etc.  nor in the quality or context.

I just reread this thread and really enjoyed the contributions made by others.

Lets see if I can get the brain ticking in the right direction.

Where are we now – we have discussed having a plan (business and/or trading).
We have also discussed the manipulation of the market. Does it exist, where does it exist and how you might identify it and ultimately use it to your advantage.

Lets skip over the ins and outs of having a business/trading plan. 

We will ultimately need a trading plan. This could be based on fundamental analysis and/or technical analysis.
I’ll introduce one that is based on technical analysis.

Trading plan: BUY when the price passes up through the 50 day moving average
                   SELL when the price passes down through the 50 day moving average.

Now that’s simple and should make us a motza!

*Really????*

See TIP04


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## >Apocalypto< (22 January 2014)

wayneL said:


> Options are a fad?
> 
> I don't think so.




must be one of those real quiet long lasting ones we never here about...


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## dutchie (19 March 2015)

TIP04

The different ways of making money in the market:
1.	Learn fundamental analysis
2.	Learn technical analysis
3.	Use 1 or 2 or 1 + 2 to develop a trading plan
4.	Subscribe to a tipster/educator

Either way - EDUCATE YOURSELF BEFORE TRADING


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## dutchie (19 March 2015)

dutchie said:


> Each week I will submit a tip.




Yeah - in your dreams.


(I would like to retract that statement)


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