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-   -   Build an Equity Millipede with the filtered Flying Buddha (https://www.forexfactory.com/showthread.php?t=339192)

rgrace Feb 24, 2012 9:29am | Post# 61

Absolutely. And Graeme mentions that in the PDF. The FB is just another indicator as to what might happen next. Like you say, no matter how we get on the horse, we just want to ride it all the way.

One good run (like the U/J right now hopefully ) will take care of all the false entries and then some.

Looks like GBP/USD is setting up right now as well, has been ranging a while, looks like we will get a cross today if it closes anywhere near the top, would you trade a pair like this in a range?

I mean it eventually has to break out right?

spyderman Feb 24, 2012 9:37am | Post# 62

Looks like GBP/USD is setting up right now as well, has been ranging a while, looks like we will get a cross today if it closes anywhere near the top, would you trade a pair like this in a range?

I mean it eventually has to break out right?
I've actually been in and out of the G/U in both directions the last couple of weeks. Been stopped out of all my trades, some at BE some at small loss.

I have a FB to the up side on yesterday's candle and a cross already today. I'm debating pulling the trigger. Since there's been so much price movement upwards today, I may use today's low as my stop if I enter.

rgrace Feb 24, 2012 9:42am | Post# 63

I've actually been in and out of the G/U in both directions the last couple of weeks. Been stopped out of all my trades, some at BE some at small loss.

I have a FB to the up side on yesterday's candle and a cross already today. I'm debating pulling the trigger. Since there's been so much price movement upwards today, I may use today's low as my stop if I enter.
It has crossed, I was under the impression you waited for the close though?

BatmanXXL Feb 24, 2012 10:41am | Post# 64

Huuuh...Spyder you millipede is going to explode soon . It stretching legs like giraffe... My congratulations. Now you only need to rise lot size to 10 .
Hehe..just kidding..

spyderman Feb 24, 2012 2:24pm | Post# 65

It has crossed, I was under the impression you waited for the close though?
No I just look at price action.

Even though we're not tracking the G/U pair right now I did enter earlier and have moved my stop to BE +3. I'm up 39 pips right now.

Nice catch on that one rgrace.

spyderman Feb 24, 2012 2:30pm | Post# 66

Huuuh...Spyder you millipede is going to explode soon . It stretching legs like giraffe... My congratulations. Now you only need to rise lot size to 10 .
Hehe..just kidding..
Funny you should bring up lot size. I've been thinking how best to tweak that. Perhaps we'll discuss that this weekend when the markets are closed.

geoffrod Feb 24, 2012 3:11pm | Post# 67

lot size
 
Hi Spyderman,
you got my spiddie senses tingling with this.
fwiw,
i spoke to graeme about this very subject some time ago, and he urged me to think very seriously about uping my lot size too soon, its all great whist this are marching along like right now today, but might take more of a toll on the mental side of things when things turn a bit ugly.
i see to recall in his thread he talked about trading more pairs was myabe a better way to roll.
anyway this will be your descission, i just wanted to firstly say g'day and secondly say well done so far on your journal, i am enjoying watching you, and thirdly, just warn you on making a hasty descission, which i am sure you wont.
good luck sir.

cheers
geoff

Funny you should bring up lot size. I've been thinking how best to tweak that. Perhaps we'll discuss that this weekend when the markets are closed.

maaj Feb 24, 2012 3:28pm | Post# 68

Hi Spyderman,
you got my spiddie senses tingling with this.
fwiw,
i spoke to graeme about this very subject some time ago, and he urged me to think very seriously about uping my lot size too soon, its all great whist this are marching along like right now today, but might take more of a toll on the mental side of things when things turn a bit ugly.
i see to recall in his thread he talked about trading more pairs was myabe a better way to roll.
anyway this will be your descission, i just wanted to firstly say g'day and secondly say well done so...
I am completely agree with geoff. Graeme talked about lot size more than once on his thread.

spyderman Feb 24, 2012 3:46pm | Post# 69

Lot sizes
 
Okay, the markets are winding down for the week so let's wind up some discussion about lot sizes.

There are many schools of thought on how to do this in general and then we have to tweak it to the strategy we're employing. Many, if not most, employ some form of percentage of account size that they want to be at risk. That would certainly work for this strategy in principle, as our risk exposure (stop loss) is a known factor going into each position.

My original idea on this was that whatever lot size I would use for the initial entry into a pair, then I would use that same lot size for the whole sequence. But then I got to thinking, why should that be the case. What would be wrong with having different lot sizes geared to the different risk levels on those positions.

Let's say I want to risk 1 or 2 percent of my account equity for each position. Well my initial entry, being on the Daily, might have a stop loss of 75. So let's say that put me at a 1.5 % risk at a lot size of .10

But now when I stack on the H4, there are times when my stop loss might be 25 pips or less. It seems to me it might be better to adjust my lot size to maintain the same risk of 1.5% (remember my first order is now at BE +) so I could raise my lot size to .30

This would have the advantage of keeping my risk consistent when I loose, and allowing greater growth potential when I win (especially since the majority of my stacks will be on H4 and therefore logically smaller stop losses).

I could see many places on this U/J trend where I would have higher position sizes so instead of having .9 lots currently I might have quite a higher number but still having only risked 1.5% (obviously if I'm stopped out for a loss then I would have another 1.5% upon reentry)

What are your thoughts on this all. Depending on what I hear for feedback I may make the switch next week.

rgrace Feb 24, 2012 3:54pm | Post# 70

I was thinking about that as well. The problem is the first couple of entries you would be taking before the trend has proven itself. So you would be upping your risk before the trend is well underway. Now it would pay off in spades after the trend takes off. Would the increased drawdown for the bad entries, the ones that go for 100 pips or so, be worth it? Looking at your trades it appears that you have had a 40% drawdown at some point in the account. Would this additional risk have put you at 70% or margin call? Could be rather scary imo.

EDIT: I went back and reread this post and realized I did not clarify. It is the same risk as your initial entry, you stated earlier that 75% of the initial entries get to B/E. I would guess that less of your stacking attempts get to break even. So it seems like you would be taking larger losses on the bulk of the trade, when it would make sense to take smaller losses. Just my 2 cents though.

rgrace Feb 24, 2012 3:57pm | Post# 71

No I just look at price action.

Even though we're not tracking the G/U pair right now I did enter earlier and have moved my stop to BE +3. I'm up 39 pips right now.

Nice catch on that one rgrace.

Kind of wish I had taken it live oh well, I did catch an easy 20 pips on the 3x20 exercise from it though.

spyderman Feb 24, 2012 4:08pm | Post# 72


EDIT: I went back and reread this post and realized I did not clarify. It is the same risk as your initial entry, you stated earlier that 75% of the initial entries get to B/E. I would guess that less of your stacking attempts get to break even. So it seems like you would be taking larger losses on the bulk of the trade, when it would make sense to take smaller losses. Just my 2 cents though.
But again, they wouldn't be larger losses...they would all be the same. 1.5 % or whatever you decided to risk. So the real question is am I willing to risk the same amount on a close stop loss vs. a further away stop loss. I'll have to mull that over.

rgrace Feb 24, 2012 4:16pm | Post# 73

But again, they wouldn't be larger losses...they would all be the same. 1.5 % or whatever you decided to risk. So the real question is am I willing to risk the same amount on a close stop loss vs. a further away stop loss. I'll have to mull that over.

It would be a larger loss than you usually take on a stacking trade is what I was getting at. And presumably you lose a lot more of those at stop loss than you do initial entries.

I am not trying to say not to do it, just want to make sure you see the other side of the coin . Personally I would trade this for a few more cycles before making the decision, or at least make the decision during the losing time and not when you are making 40%+ gains a week.

spyderman Feb 24, 2012 4:23pm | Post# 74

Looking at your trades it appears that you have had a 40% drawdown at some point in the account. Would this additional risk have put you at 70% or margin call? Could be rather scary imo.
Good question and I'm glad you brought up the initial drawdown. There are a couple of reasons for the bad start on this.

Firstly, I did not have my entry strategy in place accurately. If you go back (not sure if you guys can see each order or not) you can see some of the entries made no sense. That has tightened up a lot.

Secondly, I think anyone that employs this strategy can expect an initial drawdown. The whole idea of the stacking is to make up for the many small losses and then some. Unless you're lucky right out of the chute (which I wasn't) you're going to draw down until you start cashing in on those legs.

Right now I have 5 series going...
U/J which we're following is up 1962 pips
G/U which I just reentered (thanks rgrace) up 61 pips
E/G is up 182 pips
E/A is up 403 pips
E/Cad is up 732 pips


My hope is that the drawdown won't be significant going forward (who doesn't hope that )

rgrace Feb 24, 2012 4:28pm | Post# 75

Good question and I'm glad you brought up the initial drawdown. There are a couple of reasons for the bad start on this.

Firstly, I did not have my entry strategy in place accurately. If you go back (not sure if you guys can see each order or not) you can see some of the entries made no sense. That has tightened up a lot.

Secondly, I think anyone that employs this strategy can expect an initial drawdown. The whole idea of the stacking is to make up for the many small losses and then some. Unless you're lucky right out of the chute (which...
Your drawdowns will be easier to handle, but when all the pairs are ranging for extended periods you will have dry spells. And drawdown , then a massive profit explosion. Not sure if they will be as large as the initial one, they could be larger as well, you will not know for sure until you trade this for a few years

spyderman Feb 24, 2012 4:28pm | Post# 76

It would be a larger loss than you usually take on a stacking trade is what I was getting at. And presumably you lose a lot more of those at stop loss than you do initial entries.

I am not trying to say not to do it, just want to make sure you see the other side of the coin . Personally I would trade this for a few more cycles before making the decision, or at least make the decision during the losing time and not when you are making 40%+ gains a week.

Lol, Yeah I can see what you're saying. Don't go grocery shopping when you're starving...

In fairness, I think it's obvious that the tighter H4 stacks are going to hit their stops easier.

Maybe I'll come up with a way to leverage in once the trends under way, but I want this to be as duplicatable as possible.

spyderman Feb 24, 2012 4:30pm | Post# 77

I gotta shove off for a while. I'll catch up to any comments when I get back.

Thanks for all your support this week and have a great week end.

BatmanXXL Feb 24, 2012 7:25pm | Post# 78

As Graeme suggested....double your lot size every time your capital is trebled
For example...

3000$ ....use 0.1lot
after 9000$(3x3000)....use 0.2
after 27000$...use 0.4
after 81000$...use 0.8
maybe after 100K...use 1lot
maybe after 175K ... 1.5lots
250K...2lots
750K...4lots ...and so on...

...after that your millipede becoming Giraffe in Que....and its all relative.

You can use more aggressive increasing of lot size but we should to see how we will survive ranges, fake-outs, change of trends and starting of following of market down way...Will happened sooner or letter.

However our aggressiveness is already built in stacking of positions one after another while the trend is intact (Joe method). I think Graeme suggest those rules up for only 4 positions opened...and not what we are doing. But, we are protected by BE, and we waiting first reversal on D1 to close half of positions(diversification). Right? We are not trying to be too brave...and keep positions for next 2 years. It can happened but probably wont. Our base is FB-Joe method with some PA Graeme wisdom.

We can only hope that Monday morning will not arrive one Big Daddy reversal candle which will close all Buys on your U/J for example. Probably only Greamy would be able to catch reversal with 63 sell positions one after another.

As well we will try to stack more aggressive on pairs where our positions surviving and try to ignore ranges and ignore pairs with wicks all around.

Your U/J trades are example of riding of trend with amplifying positions. Really nice trades. Lets wait now first range . I think all is going to be ok...we just have to continue to follow the market..

rgrace Feb 25, 2012 8:07am | Post# 79


We can only hope that Monday morning will not arrive one Big Daddy reversal candle which will close all Buys on your U/J for example. Probably only Greamy would be able to catch reversal with 63 sell positions one after another.

That would be one mother of a candle, I know it could happen but not real likely. Of course there could be a candle the same size to the up on Monday, we never know .

spyderman Feb 25, 2012 4:10pm | Post# 80

As Graeme suggested....double your lot size every time your capital is trebled
For example...

3000$ ....use 0.1lot
after 9000$(3x3000)....use 0.2
after 27000$...use 0.4
after 81000$...use 0.8
maybe after 100K...use 1lot
maybe after 175K ... 1.5lots
250K...2lots
750K...4lots ...and so on...
Yeah I wasn't fond of that idea when I first read it and I'm still not liking it. It just takes to big a jump all at once. I mean one day you're tooling along and the next day you double your risk.

I'd rather use something that gradually goes up with the increase in equity.


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