Comment by Peter jcp on June 24, 2011 at 11:52pm

Hi Mauro - I like reading your blogs and find them very interesting and informative. I have also looked on your website which made me want to comment on your style after reading the following comments - statistic and probability trading - and you admit that your system does not rely on fundamental analysis.
Now I too take really no notice of the fundamentals - mainly because over 80% of my trades last no more than 15 minutes. However with you forecasting predictions for days,weeks and even years - then surely the fundamentals will play a massive part and could tip any longer term chart prediction to then go totally the other way? For example some large banks have gone out of business in the last few years - after 150 years of success!
Also in terms of statistics and probabilities the success percentage rate of any forex trade will always have an higher bias in the shorter term - due to less factors influencing the outcome. Therefore to try and predict a longer term ( even based on historical data) is really weighed down by a lower success percentage from the outset. Saying that - you still may be 100% correct with your forecast - meanwhile I look forward to future charts and prediction and thank you for sharing.

Comment by mcapitalmarkets on June 25, 2011 at 12:16am

Peter,

 

Thanks for your words. One thing that I rarely mention on my posts are horizontal support and resistance levels. While I have 4 different computers in front of me, and only one assistant, it's kind of hard to post everything I see in one day. I will keep trying to do as best as I can. I will try to make a post, or a few, on the importance they have.

 

Now, regarding the long term forecast, as I have stated in many of my previous posts, I do NONE of my trading based on fortune telling. I tend to say that we are not in the fortune telling business. We are trying to suck as much blood as we can from dealers.

 

The long term analysis are good exercise for the brain. To tell you the truth, I don't really care if the BUCK s going up or down. I want to be on the right side of the market during the swings. And I have been fairly successful with the system I presently have and jumping on the right boat 50% of the time on intraday positions. 

 

Therefore, all these long term forecasts can be wrong, but if you ask me if I will trade that HUGE diamond on EURO monthly charts, you bet I will. I have every ingredient to take such a trade with very, very small stops. Therefore making its R:R convincingly enough to make me take the "risk".

 

Sometimes people get afraid of making long term forecast, because they are afraid of having people pointing their fingers to them as to suggest: "See, you were wrong..".  Well, I am not really concerned about that, since all this is just an experiment with no actual money involved. 

 

What I like to provoke is 'educated' discussions about things.

 

Now if you ask me if by having a mind in favor of the dollar valuation makes me take wrong trades? Absolutely not. This week I had a few trades against the buck.

 

I would love to have your inputs often in order to increment some really thoughtful ideas.

Thanks Peter.

 

Keep posting.

 

Comment by Aldi Urban on June 25, 2011 at 2:00am

just quick and short question bro...
You said that it gonna drop if cross the lower line 1026pips then i saw ur chart and i realized that ur price is 5digits not 4digits (exp. 1,41890 instead 1,4189). so if u said it will drop 1026 and it's 4digits, it will drop from 1,4189 to 1,3163. Then I saw again ur chart and the below price is 1.39000. I cant find 1,31000. But if it's 5digits, it will drop from 1,41890 to 1,40864 or 1,4086(4digits).

So i think what u wanna say here 100pips instead 1000pips...am I right? Please let me know if i was wrong...

BTW i like ur analysis and thanks for sharing

Comment by mcapitalmarkets on June 25, 2011 at 2:12am

Hi Aldi,

 

No I mean exactly 1026 pips at least. If you draw a vertical line from the top of the diamond formation on 04/05/2011 to that violet line, you will get the measured objective target. So whenever price breaks that violet line, just clone this line from the violet line down. like this,you will get the target level.

 

And I truly believe it won't just stop there.

 

Regards.

Comment by mcapitalmarkets on June 25, 2011 at 2:34am

Peter,

I forgot to mention that regardless of the future outcome, we still have the chance to have a beer in the future and perhaps laugh about all this...

Regards.

Comment by Peter jcp on June 25, 2011 at 8:59am

Cheers Mauro - that's good that you do not allow any longer term view or bias effect your daily trading and that your are equally happy to trade both ways. I look forward to discussing many other forex ideas etc, especially with you mentioning you like exercising the brain.

I too have many views and ideas that would not normally fit into with the standard forex methods of trading. In some cases i would be embarrassed to share them in the fear of being mocked by the traditionalists. One easy one to start off with is that popular myth that the "trend is your friend" and stay with the "trend".

Well my view here is that the "trend is purely your time frame", As I mentioned previously majority of my trades are based on the idea hitting a "sweet spot" and achieving a trade of 10 to 25 pips within a maximum 15 minutes time slot. This might be classed as scalping but too me its very different as I am not just after 2 or 3 pips and I am not taking 10's of numbers of trades within a session. I therefore micro manage down from a one hr frame all the way to entering and exiting from a tick chart. My trade trend bias is therefore only for that period of time and the daily and 4 hr trends are less significant  - as are the fundamentals. The results are very high probability trades - many with very tight stops allowing high R :R  and an excellent way of achieving 2% + capital growth in short periods of time - and as we know time is also money

So what do you think - we can all trade successfully hundreds of different ways - but is it the "trend" or your "time frame" that leads to greater success ??

Comment by mcapitalmarkets on June 25, 2011 at 11:02am

Yes Peter,

 

I do use the short-mid term trend in my favor for smaller time frames.

 

Do an experiment on your charts:

 

Lets say that all pairs and assets, for that matter, complete a certain number of points during certain periods of time. For instance during one day it's expected that EURUSD will move at least X amount of pips, for a week it is expected to move Y amount of pips, for a month it's expected to move Z amount of pips and so forth.

 

Now lets say that hypothetically today is a thursday, Europe session, and price have made higher highs ans higher lows during the previous days of the week. Like I told you before, price usually covers X amount of pips for a day and Y for a week. Now lets say that today, price has already covered 67% (of X) of  amount of pips for the present day and 80% (of y) for the week.

 

Now draw a blue line where price would reach 100% of Y to the north of where price currently is and a red line where price would reach 100% of Y to the south.

 

Do the same for X.

 

Now, lets also say that yesterdays (tuesday) closing price ended up being close to the high of the day.

 

Just by visual observation, without doing any probabilistic calculation, do you think the odds are better that price completes its expected X & Y ranges towards the blue lines or towards the red lines? 

 

Now talking about time frames, smaller time frames can tell you the very short term trend, or how I call it, intentions of the market. If you could be able to paint your bars in different colors for the different trading days (from 21 gmt to 21 gmt) it would be easier for you to understand qhat I am saying. You can have a bullish day, a second bullish day, than a very bearish day and another bullish day... All these 3-5 day moves can be observed in the 15-30 min time frames, and yes, in those smaller time frames you can tell that for those last 3-5 days, the market is bullish or bearish. or even for a day in the 5 min time frame.

 

The extreme points in a day represent significance, all the rest in between (apart from the high and lows of other sessions (ie FAR EAST, ASIA, EUROPE)) are just market noise, at least is what I think.

 

Do these observations and tell me what you think.

 

 

Comment by Peter jcp on June 25, 2011 at 12:36pm

Will do  - the answer to the visual question might be the easy bit  - but i will need time to come back and try and explain how the simple experiment you have mentioned can then be taken further leading to maybe a completely different answer ? Enjoy your weekend cheers

Comment by mcapitalmarkets on June 25, 2011 at 2:39pm

Ok Peter,

 

While you are at it a few more physics/probabilistic experiments:

 

Two cars that will achieve/accelerate at equal speeds and are 50km from point A. Which car will get to point A first?

 

Two cars that will achieve different/accelerate at different speeds. Car A is 30 km from Point X. Car B is 50km from the same point X. Which car will get to point X first?

 

Two cars that will achieve different speeds. Car A will move at 60 km/h. Car B will move at 30 km/h. Both cars are at a 50 km distance from point X. Which car will get there first?

 

 Two cars that will achieve different speeds. Car A will move at 70km/h and an car B will move at 30 km/h. Car A is at a 80 km distance from point X. Car B is at a 30 km distance from point X. Which car will get to point X first?

 

Now, do these experiments and think of the distance as being the range and the acceleration/speed being a combination of trend and time of higher activity during the trading day.

 

When you find the best combination for this, you will have the highest probability trades.

 

;-)

Comment by ADEEB SARTAWI on June 25, 2011 at 9:15pm

Very interesting Mauro...

I am new to FX world. I have noticed that most analysis are based on fundamentals that are reached at by geometric diagrams so far. I am interested into quantitative analysis that could analyse the affecting factors , the constants and be able to produce a formula or formulas that could be used as mathematical indicators for traders. May be there is something like that but I am not aware of. I think Mauro arguments are stimulating the brain..I am pleased to read more of your researches. Thanks.

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