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  #3346  
Old Nov 1, 2010 5:47pm
pipEASY's Avatar
crede quod habes, et habes
 
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Good morning, all

It has been some time since my last post in this thread. I pray that everyone is safe and sound.

Apologies for my abrupt absence as it was an unscheduled event.

I have read most posts after my last correspondence and my sincerest gratitude to the contributors who continued on. A special thank you to VEEFX. It is a honour to be part of a community of individuals with intellect and aptitude.

SO where to from now?

I would like to continue on where we left off. Im sure many readers have forgotten some of the important points in trading hence please allow me to 'briefly' reiterate for the benefit of all.

There are only 3 core elements to successful trading;

1. Participation
2. Low-risk entries
3. Growth

It can be further enhanced to explain that

"since I dont know which direction market will go, I will enter at a low risk opportunity and let the market either take me out for a small loss/BE or reward me"

The above sentence is a broad/general common logic behind successful trading. I understand that the above sentence alone cannot make a trader profitable. However, it is the required mindset to be successful.

Successful trading starts from the re-conditioned trading approach and not new set of fandangled eas or indicators.

To know that your current approach does not work requires first to fail. Unfortunately, you will not know the sweet taste of success to its full extent until you first taste the sourness of failure first. Until then you will continue on looking at new eas, new indicators, new ideas.

Just before my absence, we were watching VEEFX trade and the side talk about statistics. Before we go there let us all slowly come back to our open minded learning mode before we press on.

Till then this is 3 trades that I took yesterday just to also start me off slowly as well. (eur/usd 4hr)

For now Im looking for at least 100 pip intraweek opportunities with intentions to holding onto half of the positions.

3 trades. 2 @ 100 TP

All positions moved to BE, current realized loss is -31 pips. Average 10 pip loss per position.



However, Im ready to take buy positions very soon if the current stall develops into momentum



Im planning to spend this week catching up on personal matters as well as the work on this forum.

Please understand if I dont reply as quick as before but will gradually press on as before.

Sincerely,

Graeme

Last edited Nov 1, 2010 6:16pm
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  #3351  
Old Nov 1, 2010 8:39pm
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Quote:
Originally Posted by hubbahubba View Post
Good to see Graeme back,

Unfortunately I feel the need to be a bit of a downer. I take full responsibility for my results. No blame on anyone but myself and I have not given up as the math still makes sense to me.

I have been trading this system since Graeme started the thread. I have used very conservative money management the whole time. I never trade more than 0.5% of my capital on any one trade. I use very similar entry techniques to Graeme. Price action and candles. My entry success is pretty good. 70% survive long enough for me to...
Good morning, Hubbahubba

Thank you for your question and others for their warm remark.

I feel obliged to answer your question with great depth as this is the question that rages in most of the readers.

How come Graeme finds long term approach successful but i dont?

I have thought about this question for a long time whilst I was i was away and glad to see that you have brought it up as my answer will also answer as to why I started the project with VEEFX and the last side talk on statistics.

I will answer earnestly and honestly for all but need everyone to think about what Im saying on their own terms. Im not forcing my thoughts onto anyone.

The 200ema project I have run with VEEFX had a final surprise. VEEFX chose the r:r of 1:4 which I explained that I have something important to explain later on. Unfortunately, due to my abrupt absence we didnt get to the part where I explain the surprise.

The surprise was that after 10 or 20 trades and some time after it will show that his trades that were closed for profit would have been far more if he has not closed them.

The reason?

This is eur/usd 4hr zoomed out to the max. It shows roughly 9 months of movement. There are almost 4 months of ranging period where the price does not exceed more than 200/300 pips (highlighted in red).



But, there are areas just around the 200ema break where the price extends 1000+ pips. Really?

Aqua highlights area that went 1000+ pips.



You might think to yourself, 'ah geez, out of 9 months I only have 6 weeks of good trading opportunity?'

Yes.

Is it worthwhile?

Definitely. And it requires very little time. What more do we need to ask for?

If we are trading 200ema breaks then most of 9 months period we are not even staring at our computer screen. Setup alerts to your phone so when price nears the ema by 50-100 pips you know its time to watch again.

If we take low-risk entries towards the direction of 200ema breaks and control our risk/intention/greed. Yes, you will suffer a short term drawdown but at the end of it all you will reap greater.

WAIT.

I want to re-focus on my last sentence in purple.

This is where there are personal difference in between each trader.

"..you will suffer a short term drawdown.." What do you personally consider as a short term? For me, its 3-4 months.

"..but at the end of it all you will reap greater.." What do you personally consider as reaping greatly? For me, its at least 1000 pips no less.

This is the parameter which differs from each trader. But you are not born with certain limits and tolerance. Tolerance is built and changes over time.

Now, it is your responsibility to manage your loss during range sessions. If it is 30% drawdown with 0.5% per trade, can I assume that is 60 losses? (unless you change your lot size as you fluctuate up and down your capital balance)

Lets stop here and look back at first chart. The red area that denotes ranging period. Its almost 4 months. What do you think you will honestly lose in that period? 30-50 times? Hopefully at least a quarter of them breakevens

It has never cost me 1000 pips to make 1000 pips.

I know that there are some traders looking for instant fulfilments when it comes to profit taking. Making 1000 pips over 9 months with 4 months of range might not tickle most traders fancy. That amuses me as this is still an excellent return. Please humble yourself by saying aloud you cant drive that new Ferrari Italia by end of this year or write a nasty resignation letter with derogatory comments to your employer. Not yet and not in the next 2-3 years.

Lets say you missed most of the optimum 6 weeks of trading and only managed to place 2 positions that went to +1000 pips each.

Lets say you have lost 1000 pips to get these 2 positions (which is quiet extreme!)

So after 9 months, +1000 pip net profit. That is +27 net pips profit per week.

As we all know I currently have roughly +30 net pips growth per week.

And this is almost guaranteed result but the requirements is that you control your risk and tolerance. Not many will even try to do it.

I do not know which direction the next 100 or 200 pips might go but I do know for a fact that market will move up or down by thousands of pips in the months/years ahead. That is a fact.

The above 2 charts was from 2007. Trend wasnt that great.

In a real trending period (and I would say about 1 in every 3 or 4 years)

Look at eur/usd of Nov 2009 9 months.



Another 6 weeks of optimum trading area. All would be +1000 at least.

How many positions do you think you can have in a gap of week? 2 per week at swing low or swing high?

What if you adhere to do the above and after 9 months, you have 6 positions that are +1000 pips each. You close 5 of them and keep 1. Just for luck because you are already up by few thousand pips profit anyway. Imagine 5 years later that 1 position is still alive. This hasnt happened to me yet but I still have bundles of positions that are 2 years old. (and yes Geoff, it was around 200ema)

Some might say, thats not enough excitement for the efforts required. Trust me when it is far more exciting to watch your positions grow then to place a trade aiming for the next 50 pips and fret with worry when it goes against you by 20 pips. And then you scoff at the idea of mere 27+ pips per week per position..

Hubbahubba, if you can have 50% of your positions moved to BE you are way ahead of most. What do you aim for? 1000+ pips? There will only be 2.4 months of 1 year that will happen. That is statistics for you. Unfortunately that 2 months is not together but spread out.

There are so many side related info I could provide to the above but I think this post is enough for now.

Good day all.

Sincerely,

Graeme

Last edited Nov 1, 2010 9:08pm
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  #3352  
Old Nov 1, 2010 9:16pm
pipEASY's Avatar
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Just before I head out. I saw a setup on eurusd.

I took it but I dont have the time to see what is going to happen.

Moved SL so if the new 3 positions are taken out I lose -18 pips in total. What a bargain..

4hr chart



5min chart



Current realized loss for 6 positions @ -31 pips. Average -5 pips per position. I wont care less to lose all 6 positions. My mentality is that Im happy to pay 31 pips for the potential reward of much more than what I paid for.

What can you tell about my price interpretation on 5 min chart?

Sincerely,

Graeme
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  #3355  
Old Nov 1, 2010 11:43pm
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Hubbahubba,

You will need to study your statistics.

Over a period of 100 trades, how much realized loss is suffered before you hit 300 pip profit? Perhaps with this calculation you can create your own threshold.

Personally my threshold is much higher than most. I do not worry about -400 pips over the course of 4 months as I have done my homework and know that my 1000+ pip opportuntiy is closer and approaching.

You must finish what you started in a constant parameter.

Now a little update on eur/usd

I have 7 positions. 3 sell and 4 buys. It cost me -51 pips in realized loss. Average -7 pips per position. Discount price.



which means,



I was waiting for volatile breakout up when... (roughly 4 minutes ago)



Placing myself in this scenario... In between my positions.



Whats my next intention?

I dont know. But if the current upward movement stops and reverses I will let it hit the stop losses (which is currently BE or below 6 pips) and then reconsider entering again on the open of the 4hr candle but most likely down.



You may wonder, Graeme your trading method has changed?

No, my trading approach has not changed. Only the scale has changed so I can show all what I do on higher timeframe but on lower timeframe to hasten things up.

I have said it many times. Everything is all relative. And if it works on higher timeframe it will also work on lower timeframe.

Let us watch.

Sincerely,

Graeme
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  #3358  
Old Nov 2, 2010 1:34am
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Hubbahubba - Please look into taking tighter trades. I take trades off 5min chart when Im looking at tight entries. Do you know how to interpret price action? Have you practiced entries before?

Most times when I enter price moves to my direction by at least few pips very soon. If it doesnt then I time my exit so I lose very few pips.

You do not need to take entries off 5min however, with your approach of 100 SL for 1000 TP it will not work out unless... you learn when to trade... and when not to. Timing. That will be your 1 Thing

Midknight - Thank you for your kind words. I mentioned briefly not long ago how I note myself mentally to judge whether im performing tight entries on 5min. And for myself I simply add how much I have lost whilst building current number of positions. From yesterday I have 7 positions. I took entries off 5min chart. I suffered few minor losses and breakevens and the total loss is -51 pips. I then divide the total realized loss to the number of current positions remaining (this is my potential profit) which gives me an average of -7.3 pips per position established. What does this mean?

It means it has costed me 7.3 pips on average to establish 1 position. I aim to have less than -15 pips of realized loss per position established. This simple calculation tells me whether im currently performing tight entries or not. Most often it will cost me just around -15 pips per position established on pairs except jpy cross which then I allow -20 to -25 pips of realized loss per position.

Update; 1 out of 3 sell positions have closed on BE. Remaining 2 is just about to close out on BE as well. However, I now have 6 buy positions (added 2 more) all growing. I have stopped adding buy positions and let it play out until the current up movement dies down and then I will start adding sell positions.

Current realized loss is -72 pips. 8 positions establised which gives me an average loss of -9 pips per position established. Still within my limits so im happy with that.

As you can see, I was selling yesterday but it is foolish to hold onto such beliefs/sentiments in trading. Today is up? Then buy. Today is down? Then sell. Yesterday is past. Very simple.

Currently, eur/usd 4hr



Last set of buy positions. Can you see where I might be taking the trades on the 5min chart?



Sincerely,

Graeme

Last edited Nov 2, 2010 3:04am | Reason: minor calculations
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  #3361  
Old Nov 2, 2010 2:17am
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Midknight - This is for you.

Price action lesson #1

Learning when not to trade.

At the moment eur/usd is at the moment of 'dont trade'



Can you see why and when I might have taken the buy positions of today?

Taking tight entries across multiple pairs is very hard, unless you know 'when to trade.'

I use alerts when a price reaches certain area that I know will have a better probability of profitability for myself.

Do you know when to trade?

Please answer for me.

Asian session too slow? I assure you, that is a wrong myth. I take trades any session when I know it is time to trade. And that can happen on any session including asian.

Why take both long and short?

You will see why. But it is also because I dont know which direction eur/usd is heading for this week. Do you? Or does anyone?

Please do not take of the above in a serious tone. Im trying to explain something to you.

Look forward to your answers, Midknight.

Sincerely,

Graeme
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  #3362  
Old Nov 2, 2010 2:21am
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Before you answer, Midknight.

Look at the chart I posted 10 minutes ago and now.



It is definitely a pennant.

Do I know which direction it will breakout?

No i dont. I have interest in both directions so I dont care which side it breaks out to.
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  #3363  
Old Nov 2, 2010 2:54am
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So it does breakout of that pennant and it goes up.



As I mentioned before I wouldnt open any buy positions now because there are only 30minutes till end of this 4hr candle and most candles have some retrace. If I open a position now it will have more chance of closing out on BE.

However I open one now for all to see.



But I close out as soon as the 5minute candle is complete as it is a pin bar. I look for volatile breakouts only.



And so on.

Sincerely,

Graeme
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  #3365  
Old Nov 2, 2010 3:14am
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If the next 4hr candle is going to be up then where is the best place to enter which will have higher probability of surviving the next few candles?

It is at the open of the candle.

Im very interested in the price action at open of 4hr candle. There must be momentum.



That makes 7 buy positions now and zero sell positions. The last bundle of sell positions in the previous charts all died on BE. My realized loss is now at -75 pips.

I dont like having all my eggs in one basket.

When this uptrend dies down with buyers cashing out and general fear is in the market. I will start another bundle of sell positions

And so on.
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  #3367  
Old Nov 2, 2010 5:41am
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Very good questions and thoughts.

Midknight - Thank you for your detailed response. Look at daily chart of eur/usd. There will be often candles that has less than 10 pip retrace but ends up bold candle. And most of these no retrace bold candles are the beginning of large trends. I find no difference in my profits when I focus on london session or asian session. Personally I think asian session sets the game whilst london walks in and finishes it. You will find that at least 1 out of 5 days in a week there are good setups during asian session. I will never ignore this. It is one of my bread and butter.

VEEFX - First of all my heartiest gratitude for your efforts. Your results are not negative. You have done well and I wish I could have been present to direct you. Your findings are spot on. VEEFX, I will send you a detailed PM little later on.

Update: For a moment I thought the new 4hr candle would turn out to be a down candle.

A volatile breakout as soon as candle opened. I took it and placed sell positions.



My buy positions started dying on BE. I didnt mind as I have no control on such happenings.. However..



However.. It was a fakeout and it took out few of my buy positions that I have established before. Waited for a correct volatile breakout and added 7 more buy positions which totals 10 buy positions.



Currently,

10 buys positions, 0 sell positions. All buy positions SL moved to BE and TP @ 100 pips each, except for 1 position with no TP.

Looks like it will hit my TP soon.



My current realized loss from yesterday is at -124 pips. The fakeout above cost me little bit but I know I will get it back by many folds. Average -12.4 pips loss per position. Still within limits.

Im now currently looking for sell opportunities..

Sincerely,

Graeme
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  #3369  
Old Nov 2, 2010 2:11pm
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Good morning, all

Its early morning here in Sydney. Woke up to check on my progress.

I had 10 buy positions before I went to sleep.

9 hit TP of +100 each

Kept 1 position for free. SL @ BE.

My total realized loss for this endeavour was -124 pips before TP was hit.

Total net profit +776 pips for the last 2 days



Im currently looking at sell opportuntities.

Will continue to update

I also reset my realized loss counter and starting afresh in my mind.

Sincerely,

Graeme
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  #3371  
Old Nov 2, 2010 2:48pm
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Good morning, VEEFX

I have read your detailed post few times.

I promised to send you a PM but I thought I will post it into the forum.

Your post comprises of much thought and it seems you had few enlightenment with the project we did.

Your results are impressive.

Taking that many trades for only -13% on account equity.

The main goal I wished to show all was that positions must be held for growth.

Most of positions that I still hold from months or year ago was around 200 ema. Once you choose your profiting ground as 200ema then you are aiming for large reward hence that much of a bigger number of losses.

When a trader chooses 5ema/10ema crossover as their main profiting ground they are choosing to profit on a smaller scale.

A good volatile breakout on 5ema/10ema may go few hundred pips however good volatile breakout on 200ema will go many thousand pips and will be the change of a new major trend.

There was a post that I put up yesterday which replies to member: hubbahubba about this. Please re-read for me.

http://www.forexfactory.com/showpost...postcount=3351

Now, I completely understand your risk tolerance. How most people cannot stomach a few hundred pip loss now for a potential few thousand pips later which might happen next week, next month of even few months after.

If that is the case, you can adjust your profiting ground to a smaller version.

The problem with that is your potential reward that you can skillfully extract on the new profiting ground might not cover your usual drawdown.

Im currently showing all live trading on eur/usd intraweek. My profiting ground is based on 5/10ema so my TP is around 100 to justify that. Most traders lose money because they then use very large stop losses or drawdowns to establish this mission statement of hitting 100 TP. This type of trading is almost scalping for me but Im here to prove a point to everyone. As we all know I build positions and I choose my profiting ground on 200ema as my tolerance is very high.

My tolerance is not high because I have much capital. It is high because I know what to expect with a greater degree of certainty than most traders.

Alot of traders do not know what to expect.

VEEFX, you need to choose your profiting ground. It can be ema or sma or certain timeframe. The bigger profiting ground you select the bigger potential reward is out there.

Problem is some traders choose very large profiting ground and then dont have the necessary patience/persistence to follow it through. Once they abandon they notice something large does eventually come up. Everyone guilty?

Another problem is some traders are little bit more cautious and choose smaller profiting ground and then have very large drawdowns/losses/careless entries so even when they do finally profit appropriately, it just doesnt cover enough and they most likely breakeven at best. Everyone guilty?

Hence the price action interpretation is very very important to save you. Preventing a loss is also same as securing a larger net profit at the end. I wonder how everyone is doing with x3 20 TP exercise. It is because of that exercise, Im able to do what I can do currently.

Some might think, Graeme has changed his trading style. No, my trading style remains the same except I have just selected a smaller profiting ground for a faster progress to show all.

I wonder if my new showings will fuel more confusion than clarity.

Sometimes I just dont know how to answer one question earnestly without spawning another 2. I dont mind the questions however am I providing the right direction as my intention?

Sincerely,

Graeme

Good morning, Chips

Apologies to address you in the same post with VEEFX.

Im just trying to keep this thread from growing too large.

Chips, you said a golden sentence.

"Graeme, if I understand you correctly your advice is WAIT for confirmation of the higher TF( 1H, 4H) then use PA on the 5min to enter."

I would also add in price action/confirmation.

Sincerely,

Graeme

P.S Thank you for your kind words, cam
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  #3372  
Old Nov 2, 2010 3:14pm
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A trade I just took.

eur/usd 4hr



Why did I take it there?

Cause I took hindsight/price action not from 4hr chart this time but from 1hr.

eur/usd 1hr



eur/usd 5min. Pennant forming. Which way will it break?

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  #3373  
Old Nov 2, 2010 3:18pm
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While its playing out. I flick through other timeframes. 30min and 15min. I want to see evidence that supports my claim.

eur/usd 30min. Descending wicks, good



eur/usd 15min. Descending wicks, good



So far, it is looking down. But it can change anytime. And if it does change I will carefully time my exit to save myself from bigger loss
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