Dutchie's Trading Tips

[So_Cynical]

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.

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

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

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.

 

[pixel]

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.

 

[wayneL]

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.

 

[tech/a]

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.

 

[joea]

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

 

[pixel]

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.

 

[tech/a]

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.

 

[wayneL]

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.

 

[peter2]

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".

 

[Ryozuken]

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

Let me follow this trading tips for my information..

 

[dutchie]

Welcome Ryozuken.

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

 

[motorway]

"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

 

[tech/a]

Hi Jetson --
*

*
The correct position size for a system that is broken is zero.
*
----------------------
*
A word of caution when reading Dr Tharp's "Definitive Guide to Position Sizing."* All of the examples are over simplified and most of them are unrealistic.* In the text, he talks about trading systems that have system quality numbers above 3, and suggests that people designing systems expect to be able to find systems with SQNs of 10.* SQN is t-score.*
*
t-score can be applied to any metric, but it is commonly applied to geometric profit per trade.* A t-score associated with a set of trades is a measure of the degree of confidence that the mean of the gains of the set is higher than zero.* A very high quality system will have a t-score (or SQN) of 2.* Assume there is a set of 60 trades that have a t-score of 2.00.* Referring to a table of t-scores, with 97.5% confidence the mean is greater than 0.*
*
Try this.* Use my tools to:
1.* Generate a set of trades with whatever performance you want to test.* Say one with a t-score of 2.00.* Taylor the set to reflect your preferred trading style -- whether that is trend following with low percentage winning trades and high ratio of gain to loss, or short holding periods with higher percentage of winning trades and lower ratio of gain to loss.* The tool works equally well with either or any other.
2.* Analyze the distribution of profit and drawdown that can be expected over the next, say, 100 trades.
3.* Decide on your personal risk tolerance.
4.* Determine the position size appropriate for this system and your risk tolerance -- they go together.
5.* Estimate the future performance, particularly the equity curve, final wealth, and maximum drawdown, for the next 100 trades.
*
If the system has a t-score of 2.0 throughout the 100 trade period, you will become unbelievably wealthy.* Higher t-scores (or SQNs) are neither necessary nor achievable.* Do not let perfect become the enemy of good.
*
There are several threads in ASF containing thoughts on position sizing, Dr Tharp's ideas, and my comments.* Please read them before tilting at windmills.
*
-------------------*
*
Thanks for listening,
Howard

*
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!

*

*
*
*
*

 

[explod]

*
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.

 

[wayneL]

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.

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.

 

[dutchie]

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

 

[>Apocalypto<]

Options are a fad?

I don't think so.

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

 

[dutchie]

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

 

[dutchie]

Each week I will submit a tip.

Yeah - in your dreams.


(I would like to retract that statement)