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Why your broker is your friend and your enemy 4 replies

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Is The Trend Really Your Friend?

Quoting Kurka Fund
I trade against the trend and I trade allot. two things that every book says not to do. but it works for me. Find something that works for you, devolop a system and stick with it. every strategy will have bad days, just like women.
Hi Kurka Fund,

Do you trade eur/usd ???

.
Just watch a swan swimming upstream.............tell me which would be easiest, upstream or downstream ?
Quoting hilmy83
i treat a trend like a b*tch that it is...I will take advantage of every trade opportunity it presents me until it can't give out trades anymore..

Quoting luqmanz
Thanks for the compliment. I have long way to go. I have learned a lot from you and newbietrader. Thank you very much I owe you a lot.
Hey, dude
Thanks for the comp but I am sure that my addition to your knowlege is not very big. Thanks anyway
Quoting jacko
Hi Kurka Fund,

Do you trade eur/usd ???

.
Yep.
Keep it simple stoopid....
Quoting dragon77
Just watch a swan swimming upstream.............tell me which would be easiest, upstream or downstream ?
Maybe there's lots more food upstream.

Or, maybe the swan just thinks there is....
Quoting Kurka Fund
I trade against the trend and I trade allot. two things that every book says not to do. but it works for me. Find something that works for you, devolop a system and stick with it. every strategy will have bad days, just like women.
Hi Kurka Fund,

I trade only with the trend (except on VERY, VERY rare occasions).

However, I am always looking for trading techniques to add to my knowledge base.

Can you show me how you consistantly and profitably "short" trade against the trend in the eur/usd ?

.
Quoting jacko
The Forexmarkets are arguably the most "trendy" market there is, especially the Euro.

Once a trend is in place, it takes a lot of power to reverse it. Take a look at the weekly charts. This current "long" started back in early Dec 2005 at approx 1.1650. (nearly 1700 pips from where it is now) It had a relatively "minor" correction from approx 1.3000 to 1.2500 before continuing on to where it is today.

Even more strong evidence for the power of the trend is that the above "long" is part of an even stronger "long" from 0.8363 from July 2001.

Buy on dips and hold (Euros, GBP etc)...

And use the Jacko hedging method if it goes against you in the short term.
http://www.forexfactory.com/forexfor...721#post132721

(It works brilliantly)

And the trend just keeps on going....

Market at 1.3430...will obviously dip back....but anyone who "shorts" this market has suicidal tendencies.

.
Hiya Jacko

Depends on where you start from and at what time, no?
I was long and am still holding a long EURUSD today, but still there are times when going long will just have you get headaches for weeks on end. December 2006 / January 2007 was one of those periods.
Sure you could just as easily have taken long trades and made profit, but with a lot more struggle and most likely most off of smaller timeframes.
And since you asked for examples I'll attach a chart

I agree that EURUSD is in an uptrend. I agree that trading long is adviseable.

Just wanted to point out there can be a month where trying to go long even if the trend is long can be a test of patience.

Also - you said yourself it will dip back. How to know when to close for profit and when to hold on? I've been reading your posts with great interest, you know what you're doing
Just wish you'd elaborate a lot more on the details so people could "get" it (when is it time to do what e.g.).
That is including me

Take care,

SeekingLight
Attached Image
Trust price. Know yourself.
Quoting jacko
And the trend just keeps on going....

Market at 1.3430...will obviously dip back....but anyone who "shorts" this market has suicidal tendencies.

.
Yep, I got a long position at 1.3330.
Hi Jacko,

I have to agree with seekinglight. I also have been following this thread with interest and have even tried manually backtesting this using my understanding of your hedging strategy. I'm just not clear on a few points.

Looking at the daily charts I would only be considering longs after the low of feb 2006 after it makes a new higher low. But at that point i don't really know the trend is over because we don;t have any higher highs until April 2006. Is that how you see it?

Now regarding an entry. I am now looking to buy dips. So what constitutes a dip? I know you mention the 50% fib and round numbers. I'd love to know how you use these to actually enter trades. Looking at the chart the uptrend only becomes clear after the break of the January high. There is very little retracement after that until June. If I try to wait for a 50% entry I never get in.

Either I have to get in much earlier when I am guessing the downtrend is over or I wait for the break then enter on a retracement to the horizontal line or 2300. If i get in at 2300 with a 50 pip stop, i avoid getting stopped out and can ride the move quite a way - depending on how i manage the trailing stop. If i am good I could ride the trade and maybe get stopped out around 2700. At that point what do i do? If I set buy limits at the round numbers with 50 pip stops I can use your hedging strategy and take several losses down to 2500 then ride it back up, cover the losses and maybe get out around 2700 again. From that point on i am pretty much breaking even as I keep buying at the round numbers, taking 50 pip losses then finally getting in on the bigger runs when the trend re-exerts itself.

Perhaps i am overcomplicating things. I just want to keep this as simple and objective as possible.

To me the trend is clearly upand we should be buying dips and "jacko-hedging" the losses.

I'd really like to hear you ideas on how you time your entries, manage trailing stops and add positions.

I have tested just blindly buying retracements to the double zeros and hedging the losses and I can achieve an average gain of around 40%. I am sure I could do better than that if I had a more objective approach and had some way of adding positions on the way up.

The thing is I am not really gaining anything by hedging over just holding one position and letting it ride - except that pshychologically it'd be easier to handle. Unless I add positions during the shorter bull trends.

Also defining the start and end of trends is a bit of a challenge. i am just using trendlines and the progression of highs and lows.

I'd love some more specific pointers if you would be willing.

I may be way off track here. Please excuse me if I am. I am only trying to learn here.

Thanks, Wiz.
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  • Post #92
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  • Edited 10:52am Apr 6, 2007 10:32am | Edited 10:52am
I did a little bit of analysis on jacko's live trading. It seems to me most of his longs were entered at the bottom of a big move. People say "don't pick market bottom" but jacko seems to be able to pick 5-20 pips away from the bottom. Reading the journal is like watching a stunt movie. Huge long positions (30-100 lots) were being traded at levels near the bottom of long rallies. Great job.

By following his advice (buying at dips) I was able to enter EUR/USD at 1.3330 on Wed 4/4/2007 (that's 12 pips away from the bottom on Wed).

On Friday's NFP, market dropped and my trailing stop got hit at 1.3390. That's 60 pips profit for a short 2 days rally, Not bad for me.

To Seekinglight and The Wizard of Oz,
I used to share the same opinion with you. By taking only long position, we may have some difficulties at times (for some people, "to sit and wait" is very difficult). But let's remember, in hindsight, almost everything looks beautiful or ugly. In real time trading, we never know what's going happen. By looking for only long position, I protected myself from bad trades as well.

My approach to finding the dips is slightly different from jacko's, but the idea is the same (buy at support level).

Here's the scenario to consider.
Assume market is moving uptrend. Price moving up is more likely than moving down (obviously lol).
1) Risk 4% per trade trading both bear(low probability setup) and bull side (high probability setup).
2) Risk 8% per trade trading only the bull side (high probability setup).
I'm currently doing #2 because I choose to sit and wait when the bear is controlling. Which one do you prefer ?
Quoting Kurka Fund
I trade against the trend and I trade allot. two things that every book says not to do. but it works for me. Find something that works for you, devolop a system and stick with it. every strategy will have bad days, just like women.
If this works for you, that is all that really matters...However, to me trading against the trend is like stepping over one dollar to pick up a dime.
I believe the same amount of effort (perhaps even less) spent on trading with the trend would give more $$$ due to the mathmatical advantages of going with the trend.
But if it works for you...Great!
Stan
Dear Mr. JacKo:
I have read your Alternative to Hedging system, and would like your input, if I am understanding it correctly.

I understand when you diss. the trend up or down.
You mention that mostly you take trades in the trend and at a 50% Fib retrace.

I have a day job so I cant day trade, I was looking at swing, by looking at daily or weekly charts. I see myself as a trend trader too, but I dont have the money coushion take take big stop loss, 150/175 pips would be my limit.

So my question is if I trade the Eur/Usd, and I know the tend is up, where is my entry point if I want to go long?
While I am wrting the euro is at 1.3625, since the trend is up, do I wait for a 50% retrace from the previous lows:

The high being 1.3625

50% from low= 1.3339 is 1.3510
50% from low= 1.3071 is 1.3376
50% from low = 1.2864 is 1.3281

So do I have three different entries? I am looking for your advice on how to entry, at what point. am incorrect in my thinking.

So lets say I took a Long(trend being up) trade at 1.3510 50% retrace from H=1.3625 & L=1.3339,

Then my initial SL will be 40 pips, which will put it at 1.3299 correct?
the market goes against me and goes to let say 1.3200, and I am still in the trade with a loss of 139 pips,

Then according to your system I would place a buylimit at 1.3299 as it comes back up? correct this is where I need to know if I understand.

OK but whatif the market in this case keeps going down, at what point do you get out? what is the minimum risk you take?

I would greatly appreciate if you could advice me, if I understood your system, and where I was incorrect.

Thanks
Regards
zarir
Quoting luqmanz
I did a little bit of analysis on jacko's live trading. It seems to me most of his longs were entered at the bottom of a big move. People say "don't pick market bottom" but jacko seems to be able to pick 5-20 pips away from the bottom. Reading the journal is like watching a stunt movie. Huge long positions (30-100 lots) were being traded at levels near the bottom of long rallies. Great job.

By following his advice (buying at dips) I was able to enter EUR/USD at 1.3330 on Wed 4/4/2007 (that's 12 pips away from the bottom on Wed).

On Friday's NFP, market dropped and my trailing stop got hit at 1.3390. That's 60 pips profit for a short 2 days rally, Not bad for me.

To Seekinglight and The Wizard of Oz,
I used to share the same opinion with you. By taking only long position, we may have some difficulties at times (for some people, "to sit and wait" is very difficult). But let's remember, in hindsight, almost everything looks beautiful or ugly. In real time trading, we never know what's going happen. By looking for only long position, I protected myself from bad trades as well.

My approach to finding the dips is slightly different from jacko's, but the idea is the same (buy at support level).

Here's the scenario to consider.
Assume market is moving uptrend. Price moving up is more likely than moving down (obviously lol).
1) Risk 4% per trade trading both bear(low probability setup) and bull side (high probability setup).
2) Risk 8% per trade trading only the bull side (high probability setup).
I'm currently doing #2 because I choose to sit and wait when the bear is controlling. Which one do you prefer ?
Hi luqmanz,

Like to learn from you abt Trailing Stop. I am very new to FX and learning daily.

1) How does Trailing Stop works?
2) How do I set it up?

Impressed to see you make 60pips wth Trailing Stop.

Hear from you soon.

Thanks.

If anyone know, pls do help explain too.
Quoting CYMAN
Hi luqmanz,

Like to learn from you abt Trailing Stop. I am very new to FX and learning daily.

1) How does Trailing Stop works?
2) How do I set it up?

Impressed to see you make 60pips wth Trailing Stop.

Hear from you soon.

Thanks.

If anyone know, pls do help explain too.
If you set your trail stop at 20 pips for your long position, your stop loss will go up 20 pips when price go up 20 pips. Your stop loss will never move down.
Like most newbees I spent way to much time trying to predict long term reversals.
In fact when I promised myself I would only trade with the trend I still found myself looking for reversals. Now I have a simple rule that keeps me on the right track.
I only trade with the 62 ema at my back, regardless of the timeframe or the system I am using.
Quoting randomlight
Like most newbees I spent way to much time trying to predict long term reversals.
In fact when I promised myself I would only trade with the trend I still found myself looking for reversals. Now I have a simple rule that keeps me on the right track.
I only trade with the 62 ema at my back, regardless of the timeframe or the system I am using.
That's a very idea to make sure you dont trade counter-trend. I don't think it's enough, but it's certainly a beginning. I follow a similar approach myself too.
Quoting randomlight
Like most newbees I spent way to much time trying to predict long term reversals.
In fact when I promised myself I would only trade with the trend I still found myself looking for reversals. Now I have a simple rule that keeps me on the right track.
I only trade with the 62 ema at my back, regardless of the timeframe or the system I am using.
random, why the 62 in particular? backtested and verified? Or something special about it? Also, if you're looking at the trend, doesn't the EMA give too much bias towards recent bars and throw things off? In other words, a SMA would seem to be better if a true trend is to be determined. Also, isn't a 62 period a bit too noisy? Or do you do mostly short-term trading? Sorry for all the questions, just trying to get myself educated here :-)
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Multi-Millionaire (as of 1/1/2012)

Josh,
I don't know how to tell you this my friend, but unfortunately for you, that is the year the Mayan's calender expires. I believe it expires in December, so you get 12 months to enjoy your wealth. Oh, well. Enjoy.
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