karelk

Forex being an exception, of course

Saying "Let's say you are unlucky" is not a very good argument. I can counter by "Let's say I am lucky and I catch a LONG BLACK SWAN in my direction and then catch a SHORT BLACK SWAN in my direction. I win big 2 times. But if I only traded one way, I would have got caught by one of them." That doesn't lead anywhere. And as they are unpredictable, we can't say which way they'll go. So we can't say whether long or short wold be better at avoiding them. What we can say is that by using a stop loss, the loss caused by a Black Swan wouldn't be big, but just one more normal loss. However, if we catch one in our direction, the win is very likely to be BIG. In which case we should welcome them. Or can you tell which way they'll go?

Thank you for the reply. I do not see 1 and 2 related as I cannot see why the Black Swan should fly with my chosen direction. After all, Black Swans are by definition totally unpredictable. Say I go long USD/JPY and there is a Black Swan at the bottom of the ocean and it contemplates emerging and stomping on Tokyo or New York. It's unlikely to take into consideration my trade. But maybe I am missing someething?

This seems incomplete. Within PA are patterns that can be used to predict future price movement with a probablity greater than chance - how else would rats get their cheese?

I have two questions for TRO (or anyone else who has the answer)... 1. Say I become a green rat because the close was within 20 pips of daily low and then the reversal trade got triggered. Price then shot up and eventually closed within 20 pips of daily high - and then I see green candle, then a red candle passing the green candle's low ... why should I not switch team and become a red rat? 2. Cannot understand the Black Swan reason for trading only in one direction. Say I keep switching between red and green rat and a Black Swan happen to fly by. It seems to me that as I cannot predict which way the Swan will fly I have a 50/50 chance of profit/loss from it regardless of what colour I am. TIA