Everyone has a story, trading, shares


I’ve been off the air for a while and playing another interesting little game (Eminis)… I don’t know how this one escaped my notice given that its been around since 1997… but for anyone who has a preparedness to focus and who can comprehend probability (in the form of charts and graphs), I highly recommend it between casino visits… the odd thing is that I was introduced to it by a person who overheard me discussing roulette with a friend in a local cafe… he said words to the effect… “if you guys are into beating the system, then pick something simple that has virtually no house limit, study Eminis and charting”… since that fateful day in July 2008… I have been fully focused on this ‘amazing game’… Best of luck to all and Mike enjoy your time away from the game…



Technincal analysis is total nonsense. Financial securities is not a random game (no more than a stoplight is random to someone who does not understand how it works). Futures contracts represent real assets, and the only way to trade them profitably is to evaluate those real assets by thorough understanding of the physical markets where they create real wealth.

Financial companies make no money on predicting prices, because they cannot. Only entrepreneurs with many years of experience of a specific physical business can do that, to some degree. The financial companies make all their money by taking transaction fees from clients. It doesn’t matter for them if prices go up or down. They have their fees paid anyway. Finance is actually the one and only industry in which price prediction doesn’t matter. A car manufacturer, however, is somewhat dependant on predicting for example oil prices.

Some arbitrage might still exist, but are all eliminated within a millisecond by the billion dollar computer systems of the very largest banks. An arbitrage opportunity on a $10 million dollar bond can today give at most $100 profit to the arbitrageur.


you sound like you’ve been hurt… that’s a shame… and if it is as you say then I must be doing something very wrong because I am making verrryy significant gains from the comfort of my home… only 3 possibilities… up, down or sideways and as you know Rollo you make money either up or down… sideways eventually breaks out one way or the other. As for your comments about technical analysis… Rollo do the stats.

Have fun

PJ, i agree. But its a discussion there always will be between fundamental analysts and technical analysts. As long as traders reacts on overbought, oversold situations and support lines, there are sometimes one are far better off selling rather than buying. Simply because a lot of traders react on these levels.
If RSI is moved up in the 92 level and stochastic is at 85, i wouldn`t buy into a stock until it had lost some value. Thers a pretty good chance you would start out losing money right away. If that particular stock is in a uptrend, it could very well be in the top of the up channel, and should be bought after next down move where it might have been in the bottom of this channel.

But always an eye on the index and the news ticker. If the “tide” is falling because of bad news or a falling index, your stock will follow the tide, so to speak.

Hello Kelly, I will add your observation (RSI >91, Stochs >84) to my ever expanding technical analysis repertoire (sorry Rollo) and keep an eye on the stats for that one. Personally I only trade the S&P Index, its where I started and where I feel the stats are on my side. I don’t do specific stocks, although at times I have been tempted. I enjoy the volatility of the S&P and have been very successful scalping through the night. That’s the biggest problem with being downunder a few hundred miles south of Forester. However roulette is still a passion and I absolutely love the challenges it poses.

Cheers amd best regards

Well, actually the benchmarks for RSI are 30 and 70 and for Stochastich 20 and 80. Usually i don`t do anything before the change direction when above or below these values. Recently BAC finished the day at 98 on RSI and i sold out at 91 because i had never seen a value higher than that. Actually, BAC gained from i think 5.7 to 5.95 in the last 5 minutes of trading, resulting in an RSI of 98 on the 2 minute chart. So one should never say never, they are lagging indicators and basicly anything might happen.

I also trade the SP500 from time to time, but these days its extremely volatile. In Denmark we have a special situation 1.5 hours before end of trading, because that is when US opens up. If we are able to find out how US is going to finish, positive or negative, we have the liberty to keep a stock overnight because Denmark usually starts out same way as the US finished. So a little smarts and one could sit with a “gap up” that pays well off tomorrow. Well, the market usually follows the SP500 futures, the DAX or Eurostoxx 50 futures.

Bull, it isn’t even a matter of empirical analysis (although all academic time wasted on such, also consistently proofs TA to be utterly useless).

Sure you can use prices as a random number generator and hope for luck, if you don’t know anything about economics or the physical markets which those prices represent. But the way to BEAT THE SYSTEM, i.e. to be an “advantage player” in the context of buying and selling yourself to wealth, is to either:

  1. to be an investor, which means that you predict future prices based on your superior knowledge (over the trader who you obviously hope will erroneously sell to you too cheap, and buy from you to expensively, because he’s less informed than you about the soy bean harvest or steel market in China or whatever you are dabbling in), or

  2. to be a risk manager, which means that you don’t make any price predictions at all, but instead make some assumptions about market neutral volatility in prices. That is mostly based on long term historic data, analyzed with REAL STATISTICAL METHODS, not “momentums” such as the RSI, or primitive sum-and-divide like moving averages.

There is no logic at all to the very concept that prices in passed time could contain any information about future prices.

We could argue about this forever, its being done all over the world everyday with the exact same arguments. I would never consider myself to be better than any analyst, but if you daytrade a stock its not long term parameters but momentums on a daily basis which are the triggers. If you buy a stock when the RSI is high in the 5 min chart, you will almost 100% sure lose money very soon after. You might recover within a couple of hours, but you would have gone nowhere profit wise. Backtesting proves it.

But thats hardly what this thread is about.

PJ it is ok when people changed subject, you did not noticed, but i split the thread.

Now we have

Everyone has a story, how did you found myrulet.com

Everyone has a story, trading, shares

Your last post i moved to Everyone has a story, how did you found myrulet.com

Okey, I’ll try to be productive for you TA believers here:

Trend/resistance lines, patterns, momentums, averages and even the Elliot Waves “Theory”… They are all variations of the very same thing. They basically assume that prices move in a regular sinus wave (and sinus waves overlaid on each other). Try your TA tools on a sinus wave, and after tuning the “signals” according to the period length and amplitude of the sinus wave, you’ll have perfect trades all the time!

The more prices look like a sinus wave, or a set of sinus waves, with or without some underlying linear trend, and the better you tune in on the periodicity of those waves, the better all technical analysis will work. The less prices move like a sinus wave, the worse result they’ll give. If one thinks that TA works, then one don’t need any TA tool. One can actually see it with bare eyes on the raw price chart directly! If the sinus pattern isn’t clear enough for you to see it intuitively, then TA calculations won’t work either.

Nor those simple calculations of momentums and averages (which can be made in many unimportant variations), nor those strange “head-and-shoulder”-patterns et cetera, add anything magical. They are just formalizations of the assumption that prices will move somewhat like a sinus curve. Your brain intuitively sees such patterns much easier than those formulas do, so if you want to TA, look and feel, don’t calculate. That’d only give you false confidence and remove you from understanding what’s going on.

When applied on a sinus wave, the moving averages and momentums will be sinus waves too! Only, they’ll be offset backwards and forwards in time respectively. From that comes the interpretation of them, such as there being a sell signal when prices cross moving average from above. Now imagine that prices are moving as a sinus curve, that they’ve just peaked and started to go down:

Moving averages will be lower than the price, since most recent prices on which they average have been lower than current price, but it will be rising because new high prices are substituted into its calculation while older lower prices are removed from it. The price will therefor cut down across the still rising moving average. That is why this phenomena is interpreted as a sell signal.

Momentum will be at its highest when prices rise the most steepest. When prices are at the top of their sinus wave, momentum will already be on its way down. That is why momentum falling down from a high level is interpreted as a sell signal.

What parameters to choose for the TA indicators (such as 14 days or 200 days), depend on your assumption of the periodicity of the sinus wave in the prices. 1/4 of the period length probably gives the best signals.

Betting that an existing trend will continue is such an obvious and simple concept that I wouldn’t even call it TA. TA is to bet that the existing wave pattern will continue. It’s as simple as that.

If you want to play around with TA, then at least try to understand what they actually represent. Don’t let a black box tell you how to spend your money! (The only catch with TA is that prices don’t move much like sinus waves at all…)

I think you are putting a lot more in the basket than i am. The only indicators i use is RSI, Parabolich Sar and ADX (DMI)

The only reason i believe in support in some areas and breakthrough in other areas is if there is a lot of buying volume in a area, then there will also be a lot of stop losses in that area. If those stop losses are triggered, there will be a great volume of selling in a very short time and the buyers will step back because they know it will be cheap very soon which again will trigger a steep drop. It means i dont try to catch a falling knife especially when the stock breaks such an area. If you backtest Vestas (VWS) and do some tape reading, you will see that it can be traded quite predictably. I cant do it on any other stock, but this one is doing great.

If you take a stock like Vestas and apply Parabolich Sar on a 15 minute chart, then that is roughly the what i have made of profits in the last 6 months on that stock. The beta value for Vestas is quite high and the swings are great, there are times when i get whipsawed but usually there are plenty more good swings than whipsaw periods. I don`t pretend to know where its going on Tuesday, its a lot simpler than that, but im in a long position taken at 276, currently 277, and will remain long until the trailing stop cuts me out.

Guys its not particularly hard to grab 3 points per day (per contract) and add another contract each time you have increased your bank $1500. Its very very easy generating significant gains day in day out… Just let your bank geometrically progress…

PJ ::slight_smile:
“Keep a close eye on those divergences on multiple time frames”

Multiple timeframes is essential. On the long term trades i use 3 timeframes Daily, 4 hour and 1 hour. On the daytrading i use 30 minutes and 5 minutes.

I don’t use ‘time’ I prefer ‘ticks’ and short, medium and long term charts… medium = 3 x short and long = 3 x medium. I must have confirmation on all… yes it is a game of patience… but your patience is always well rewarded… I just love it…


As said in previous post i had Vestas in a long position from 276
Vestas finished today in 299.5 which gave me 8800 Dkr or some 1200 Euro. (400 shares)
Trailing stop moved up to 297 and trading at the 5 minutes chart with Parabolich Sar settings at 0.01 and 0.01
ADX indicating a very weak trend in the end of the day, so tomorrow it might be shorting time.
RSI at 53 so basicly tomorrow can be either a “boy or a girl”.
The 300 area has been the resistance area for quite some time now. 310 has been the peak, apparently 300 - 310 is the maximum of what people wanna pay for this stock. I would expect to short it for a day or 2 if it hits the 305 - 310 area, if all indicators are pointing in that direction. On the other hand, i will let the long position run for as long as the Parabolich Sar and ADX allows me to also if its past 310.

See what tomorrow brings.