(See beginning of this article under name Forex Secret. Forex Literature As A 90-95% Of The Traders Loose Their Deposit. (Part I)
B. Williams quotes 5 bullets killing a trend, whereas I exemplify their insufficiency and I add up 11 more thereto, not denying the above 5 of them.
B. Williams idealizes the Elliott wave theory, whereas I show that the combination of fives and threes is none the idealizable, otherwise a mankind 100-year development project could have long been elaborated on the basis of Elliott waves pattern, leading to exasperation at the fact that humanity progress does not follow Elliott and Williams. The other thing is that nowadays brokers have mastered the job of manufacturing more waves out of the 5 initially.
The aforesaid is applicable to each of the 20 problems of Forex.
A portion of my live Forex trading methods are to be found in this book, while the other portion thereof is forwarded upon request. Those eager to continue training under my supervision as well as to trade live, please, feel free to contact me on my e-mail address below.
It all could be funny unless it were sad. But IT IS sad, because the above examples are scaring in number. Bearing it in mind, do, go again through excerpts from distinguished scholars books:
- Awesome Oscillator (AO) serves us keys from the Wonderland;
- Accelerator Oscillator (AC) gives us with significant superiority over other traders;
- using AO is similar to reading tomorrow’s “Wall Street Journal”, while using AC is reading of the day-after-tomorrow’s issue thereof;
- by using AO solely, one may attain profits even without any knowledge of current rate; should the oscillator turn down, one may merely ring one’s broker and say: “Sell at the market price!”.
As You have guessed, these are extracts from B. Williams’s “New aspects of Exchange Trade”. Have You read the thing? And now, please, give a glance to the a foregoing figure, depicting the way, the vaunted Williams’s indicators may entail an abyss of losses.
But what truly makes my blood boil is as follows. B. Williams is a professional psycho therapist and his narrative style is none of an incidental one. This is a suggestive method by virtue whereof he attempts to demonstrate the exclusive, correct and faultless nature of his trading technique. The “faultlessness” is to be discussed in an individual chapter, and my only claim here is that I can easily draw hundreds of examples, where one can bump into loss by way of following Williams’s indicators.
By myself, I am an advocate of theory of chaos. But this theory is disclosed by Williams in a very primitive and a superficial manner, which fact results in his blind follower losses. As to the author, he resorts to propaganda methods instead of providing a clearcut distinction between the cases, where the above theory is 100% effective and those, where it is not.
Williams could have explained to his admirers directly, that in these certain instances the theory is to be relied upon, while in these instances it is not to. The difference is in this, this and this. In the former instances one should necessarily enter, whereas in the latter instances one should abstain from entry. But the guy haven’t done the job (due to either not being desirous or to not having sufficient knowledge).
I was a success in finding out distinct operability criteria of the Williams’s technique. To achieve this, I had to improve the Alligator, by virtue whereof I enabled my students to easily pinpoint the difference between the Williams No.1 option (a trend, encouraging profits) and No.2 option (a flat, inflictive of losses).
By the by, it is supportive of the chaos theory methodological correctness and of imperfect Williams’s method structure, plotted on the basis thereof. Instead of acting upon the trader’s consciousness Williams resorts to forbidden subconscious programming procedures, thus stimulating man’s inherent and acquired instincts as if saying: “If You wanna get rich, follow me! My method empowers one to trade without a single glance at a price! The Awesome Oscillator constitutes a key from a Kingdom!” Etc., etc., etc…
Hence, only 1 of 20 Williams’s followers exhibits Forex-earning capabilities in a most favorable environment. Thus, under this statistics, B. Williams is better not to be idolized, the way he has been by the crowd of his admirers. On the other hand, other Forex maestros’ trading techniques are far worse than that of B. Williams. So, let’s continue illustrating Forex truisms being erroneous in live trading.
- The “Theory of Chaos” of B. Williams. The author has not advised what should be added up thereto. A separate chapter here is dedicated to the issue.
- Trader’s psychological problems. I haven’t found any revelations pertaining to THE WAYS OF ELIMINATING THESE PROBLEMS.
- The issue of a stop-loss order is certainly important: even under trend hedging is an indispensable protective shield against market surprise. But is the problem too far complicated to require a dozen pages’ elucidation? Has the author beheld any secret? Wah! He hasn’t noticed anything but he still has repeated all that wanders from book to book on Forex.
Once I was stunned by a question put forward by one of my students after having read B. Williams’s “Trading Chaos”: what’s the use of giving so much attention to the stop-loss problem and above all what’s the good of chewing over the role of safety cushions in the automobile industry as though readers are down with minority?
Doubtlessly, it’s funny reading that Williams has never violated traffic regulations, priding himself on the occasion. Any psychiatrist could tell a hell lot about such a personality type, although, I should admit that Williams is American, not Russian.
Drawing picturesque, memorizing examples, each scholar is right to insist on protective barrier placement as a loss killer. But there is hardly anyone to introduce certain novelty into the issue and to disclose the secret as to what there should be in the trader’s store besides a stop-loss to insure against his deposit melting and extra losses. A separate chapter here is targeted at the issue.
I have shortly come across an aphorism: “Genius is not to the effect, that nothing can be added thereto, but it is to the effect that nothing can be deleted there from”.
If You go through numerous books on Forex at this aspect angle, You are sure to surprisingly find out that 90-100% of their contents may be subject to withdrawal. WHY?
BECAUSE nothing new and 100% correct is offered therein. Instead, reiteration is going on of what is familiar to any professional, since everyone is itching to exhibit one’s originality by way of retelling: a paramount authority of FA over Forex exchange rates; continuation and reversal patterns; a stop-loss importance; a divergence being a component of a trend reversal, etc., i.e. book-to-book travelers.
“An outstanding Forex trading techniques” and “a genius scholar”, etc., making their appearance in books’ abstracts and annotations are off springs of 1% originality added up by an author to 99% of common knowledge.
Sale is publisher’s primary target, giving birth to “genius” mediocrities and plagiarism. Standing separately among these books are opuses by B. Williams, being admired and scrutinized regularly by the majority of scholars and by myself. But EVEN HE cannot be qualified as “genius” with account to the above formula. He is rather “eccentric” than “genius”.
The thing is not, that his technique is addenda-allowing (this fact backs the correct Williams’s choice of the chaos theory to be applied to Forex) and I easily managed to add 11 trend-assassinating bullets to the 5 of Williams. The thing is that a number of Williams’s postulates ARE WRONG and thus loss- inflictive. These can be and should be subject to removal.
CONCLUSION: I guess, it’s understandable by now, that script-writing has turned to be business for scholars, incorporating additional advertising and additional charges for their students. However, the above is not worth millions Forex losers sacrifice.
Much more respect-triggering is Warren Buffet, having made a minimum of USD40 bn at the stock market without writing any books on his trading tactics. W. Buffet is the world’s second-rich man after Bill Gates, although this fact being thoroughly doubtable. B. Gates is supposed to declare the whole of his income obtainable from the Microsoft Corporation, whereas W. Buffet, being a trader, is sure to deem himself entitled to show the Inland Revenue what he really wants to.
The difference is fairly evident. The profit obtained from US companies, constituting the Gates official fortune major portion, may be kept track of, as well as the offshore profits may sometimes be properly checked. But Buffet’s profits attractable at all. Do You expect a man, lending his own daughter a sum of USD20 against a receipt, to allow ALL of his profits to be taxable by state? Or a moderate portion of profits is sufficient, yeah? It is entirely his job, whereas we are to learn to gain at least a spoonful of what he has acquired during 40 years of his activity at the stock exchange.
Thus, to cut it short: a classical Forex literature exhibits but an anti-scientific unsystematic nature, constituting a “crise de genre” and triggering losses among 90% of beginners, abandoning Forex market.
In what does science differ from a philistine and amateur effort? In a systematic and objective nature, in a methodology perspective. In there any of the above to be found with scholar literature on Forex? No, but instead there is in abundance:
A. Tautology and absence of new approaches. From book to book world-distinguished scholars feed traders (as if the latter were silly little chaps) with stories about R&S levels importance, technical indicators, continuation and reversal patterns, etc., which is as interesting and instructive for a professional trader as ABC reading is for a professor of philology.
B. Absence of integrity. Individually, it is all clear: Elliot waves, Fibonacci levels, resistance levels, reversal patterns, etc. But what’s the way it all is interconnected and integrated? In what way it is influential over each other? What is primary and what is secondary? Imagine a doctor diagnoses and cures patients without a slightest idea of interaction of digestive, cardio-vascular and other systems.
This is what exactly happens to Forex beginners. They are sure to have learnt something, but they are being muddleheaded instead of having a systematic knowledge. Medical students undergo a course of anatomy. Geologists and military men make use of topographic maps. And what do Forex beginners have to this end? You are free to interrogate any scientist if he has knowledge of parts of science without having knowledge of the whole. Guess, what he’s gonna answer? And now give consideration to what is being currently published on Forex and being accessible to anyone. Thereafter You will easily “evaluate” the “outstanding contribution” made by each of Forex scholars.
4. Methodology and techniques subjectivism and absence of objectivity. See live scholar, Th. Demark’s “Technical Analysis As An Emerging Science” recommending to manually draw R&S lines from the right to the left instead of so previously doing from the left to the right. The book’s preface qualifies it to be “refined techniques built during a quarter of a century of a laborious scrutiny of market tendencies and projecting methods”. And thereinafter: “Demark’s empiric-data strictly scientific approaches are in striking difference from an artistic intuitive one thus constituting a rational basis for dynamic systems, mechanically outputting market signals.” But, with having not disclosed his system’s essence, is Demark aware that his subjective Forex trading suggestions may happen to entail severe mistakes. Yeah, he substantiates his viewpoint in chapter “Why price projections may not go into effect”: “…due to no technique being perfect”. Good a science with “no technique being perfect”!
Demark is looking rather a philosopher, than a trader with his tirade being nothing but a sophism, made use of as back as in ancient Greece to provide grounds and protection for any kind of absurd.
In accordance to Demark, “a mistake becomes obvious the next day as soon, as the first deal price is registered”. I am itching to ask the scholar: “How many points may a currency travel in a wrong direction during an earth day?” I am answering myself: 100 pts or 200 pts or more. Demark diagnoses: “This instance evidences a breach, indicative of a new opposite tendency”. Well, I’ve got it.
Once there is loss, one should loss-close and enter oppositely.
Take a look at the picture below:
Fig.10. EURUSD H1 chart as of March, 22 – April, 18, 2005 manifesting a month-long flat. (See Note below)
How many days should one per-Demark loss-close with the rate repeatedly swiveling as though to Demark’s ill luck? The scholar has to be asked, how large should a trader’s deposit be to survive Demark’s experiments, being ranked “refined techniques” and “strictly scientific approaches”, “cardinally different from others’ “, less scientific ones, as I can guess.
The opus author will again fall soothing upon You: “One oughtn’t to expect herein outlined technical methods and indicators to offer profits and not to entail losses. Forex trading involves both: a profit opportunity and a loss risk. Preceding results are in no way guarantor of perspective success”. Further on, with greater cynicism and hypocrisy: “Should You be seeking a trading panacea, put this book aside: it’s in no way helpful to You”. Well, what’s the use of buying the book at such price?
Demark, by the way, gives the interpretation of his book’s objective to be “fuelling readers with methodology, encouraging one to systematize various TA techniques”. Great! I thought, it were a new discovery of Forex regularities to be delivered to traders. But it looks, like the scholar has plunged himself into systematizing earlier 50%-correct discoveries without taking any pertinent responsibility.
Hence, no avail to purchase the book and to litter one’s brain therewith, since Forex rates enjoy 50/50 up-down travel chance, even under the probability theory.
Thus, not too much understandable, where Demark’s scientific approach manifestation is to be searched, whereas the essence of things is incomprehensible once the reversal results come evident after an earth day only with no reference to his book.
John G. Murphy, another Forex scholar, outlines in the preface, that the “less art – more science” slogan is specially topical now that greater entities begin taking interest in this area.
As to myself, I have truly appreciated the preface writer Murphy joke as being filled with subtleness and tristesse.
Now, pertaining to science-to-practice correlation and theoretical conclusions implementation… How many scholars of those hundreds referred hereto resort to live examples while teaching long and short entries and close ups thereof? Very few of them:
- B. Williams “Trading Chaos”, “New aspects of Exchange Trading”;
- J. Murphy “TA of Futures Markets”
- S. Nisson “Japanese candlesticks. Financial markets graphic analysis”
- A. Elder “Basics of Exchange Trading”
- L. Williams. “Long-Term Secrets of Short Term Trade”
- Ch. Lebo, D. Lukas “Computer Analysis of Futures Markets”
- D. Swagger “TA, Comprehensive Course”
… and hardly few more.
Disappointing enough, but it is fairly lucid why 90% of beginners mutate into failures and abandon Forex.
By way of getting familiar with the SYSTEM, one will suddenly realize how smooth are Forex artifacts to get apparent one from another, e.g.: M5 Elliott waves constituting M15 wave I, this wave being but H1 and H4 corrective within certain Fibonacci levels.
One gets clear vision of what all the Forex-traded currencies are doing now and what they are going to in half a day. Williams did have grounds to claim, he needs several tens of minutes to analyze tens of charts. He DID have understood Forex as a system, though he has offered but the system components portrayal in his books. Depending on where utilized, the Alligator may appear to be responsible either for a profit or for a loss. But Williams has not even taken pains to present a differentiation between the Alligator being a profit assistant and the Alligator being a loss bringer.
The above is conditioned by the Williams Alligator being a great TA tool, but pertaining to a certain AREA OF Forex only. Other areas require other TA facilities. I will do my best to teach You to effect proper estimation of long-term and super short-term entries being appropriate for the moment.
I will also dwell on why it is not difficult to add extra 11 trend-killing bullets to the 5 of Williams’s; why it is easy to build up a currency travel vector daily projection. The whole thing is minimized to several criteria, being constantly effective irrespective of currency intentions. As a result, You will not have to monthly pay quacking mountebanks’ impotent daily forecasts.
But now let’s move on with Forex scientific criteria. Stagnation and dogmatism are alternative attributes of Forex folios’ anti-scientific substance. Have You ever come across a criticism of any Forex-oriented theory? I mean a weighed objective criticism, assigning credits to the author for elaborating a revolutionary theory, which has by now got obsolete due to a number of objective reasons and thus requires improvement, i.e. replacement.
For instance, I have found nothing of the kind in relation to the 100-year old Dow theory, originally incorporative of benign principles. But life goes on, and there seems no reason to head-hammer life-rectified Dow’s postulates:
- a long-term trend (primary, basic as per Dow) being several years long. Curious enough to spot a currency pair to stand open for so a long period;
- a medium-term trend (intermediate tendency) being several months long. As per Dow, the MTT is opposite (corrective) to the basic trend;
- a short-term trend, not exceeding 3 weeks and incarnating minor fluctuations within the intermediate tendency;
- intraday trend being per-Dow midget ripples, not worth paying attention to.
You are now welcome to take a close look at the figures below, as of October, 2004 through March, 2005.
Fig.11. EURUSD D1 chart. (See Note below)
Fig.12. GBPUSD D1 chart. (See Note below)
CONCLUSION: This theory of Dow’s might be deemed effective rather till late 80s, than presently.
Nowadays, with 3 pips spread, 50-200 pips pullbacks and trends not exceeding a week, the Dow theory
MUST BE recognized as being despairingly obsolete and trader-hostile, since, under a 3-pip spread, it is, certainly, top of recklessness and stupidity to stand open for months or years. A different trend classification is to be called for, meeting updated Forex environment standards.
I guess there’s no need to continue being proponent of the fact that presently Forex theories are obsolete in their majority, with this sort of methodology being requisite for analysts rather than for traders. As opposed, I hold it more appropriate to forward my entry and exit technique to traders willing to conduct successful and loss-safe trading.
By way of prompting: please, attempt to view Forex as a system inclusive of components being familiar to You: Elliott waves, reversal patterns, Fibonacci levels, MAs, ally currencies, etc. All the above staff is integrally intercommunicative rather than existing individually, the way, each organ is in the human body.
I DID have understood it, and I realized the way B. Williams is able to analyze tens of currencies within tens of minutes in order to execute correct long and short entries.
It may look surprising to someone, but a qualified doctor is capable to diagnose Your body hazards after a short examination and talking to You. The doctor has actually examined but several organs, but his knowledge system has empowered him to jump at wider conclusions, as Williams at Forex.
GROSS TOTAL. Steady and regular Forex profits are real opportunity. There is hardly another area which enables one to knock up a fortune without having rich aged relatives abroad, without having to join one’s native country’s throughout corruptible authorities or else. If You have discovered THAT ANOTHER area, You are free to get engaged therein. Then, Forex is not likely to be requisite.