The Thin Line II

BarroMetrics Views: The Thin Line II

Let’s recap the context:

  • We have a diverse results from the application of a rule based discretionary method. We are talking about divergence in positive expectancy i.e. one group had a negative expectancy and another strongly positive. 
  • Both groups can be said to have executed their trading and money management rules on a consistent basis.
  • Most of the students trade FX. Ultimate has a process for trading the pair with one strong instrument and a one weak one. For this reason, many of the trades were of the same instruments. 
  • Most traded end-of-day.

In short, we have a proven robust method and the usual culprits for the wide ranging results, method, timeframe, instruments, position sizing, consistent execution etc have been taken out of the equation.

Why did I care about the difference?

One of my goals is to make a difference. I felt that if the usual culprits out of the equation, the reason may provide an important stimulus for trading success. If true, the insight may ramifications for each trader. And so, for the reason, the difference and its reasons was also important for you the reader.

Before I start the discussion….one more piece of context.

Ultimate is based on the Wyckoff Model with Barros Swings defining the timeframes. Market Profile ideas add value when in a mark up or mark down phase; the Ray Wave provides a roadmap to the developing structure – this helps identify when the end of a trend or correction is probable.

But above all, Ultimate is based on the Wyckoff idea that the principles behind price action are more important than the model or its patterns. The principles allow us to change the model when conditions dictate; and this principle, in this QE environment, had allowed me to make the changes to my plan to successfully trade the stock market indices.

Monday, I’ll complete the series; and in the blog, reply generically to the questions raised in the emails rather  than provide individual replies.

8 thoughts on “The Thin Line II”

  1. Hi Ray, The suspense is killing me ! lol
    But we have a clue, the “clear thought process” thanks to Sorin. And today you mention Wyckoff, Baros Swings, Ray Wave. So my new guess is Context ie the top down approach.
    In any case, I am looking to the answer, its a fascinating puzzle, all things being equal yet differing results. (a bit like my football team)
    cheers Baz

  2. Hi Ray, I like Aussie rules, Adelaide Crows.but i have played all codes. The board just sacked the coach who had the highest win rate of all the previous coaches yet for second year didnt make the finals. A bit like Forex, his win rate was high but the expectancy formula wasnt positive.
    Have a great weekend cheers Baz

  3. Hi Ray, Now this is getting more like Hitchcock thriller. whodunit sort of a thing. Since yesterday i must have checked your blog atleast 10 times for the update.

    currently reading power of habit by Charles Duhigg. Just a small request can you periodically update what you are reading currently.


  4. Both groups can be said to have executed their trading and money management rules on a consistent basis
    – but their market views are not consistent with each other because of the past emotional luggage, bias, mental state, understanding of Market Profile …

  5. Just curious:
    For a given pair of currencies, using the same broker for spot Forex trading, if Ray see 10 entry signals in a month, do both groups identify exactly the same 10 entry signals?

  6. Each Ultimate graduate must have his/her own trading journal.

    Keeping journal without the ability/skills to review, analyse and solve any trading issues/problems is meaningless.

    To show/prove that Ultimate graduates are/will be/continue to be successful traders, the reasons for the great difference of both groups, would be answered by the graduates themselves.

    May their answers be consistent with Ray’s answers!

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