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Building an equity millipede

  • #6,441
  • Apr 6, 2014 10:08am Apr 6, 2014 10:08am
Quoting 60minuteman
{quote} nice post Cam... The 2 strongest fears are 'fear of missing out' and 'fear of regret' most trading decisions we make are pampering too these strong urges. In testing you generally make more profit the longer you hold and leave your stops where they originally were.... Having that expectancy helps a lot.
I like to think that a strategy of taking partial profit along the way and re-entering is even more profitable - but thats just me.
  • #6,442
  • Apr 6, 2014 10:27am Apr 6, 2014 10:27am
Quoting stewrigh
{quote} I like to think that a strategy of taking partial profit along the way and re-entering is even more profitable - but thats just me.
High Stew.... what I mean to say is that in general a hard and fast rule of holding for 10 weeks will generally be more profitable than holding for 5 - given a large enough sample of data. That is not to say hold everything forever, but we should avoid taking profit early.

I diversify by moving up the timeframes and saving the extremes - extreme of the day, extreme of the week, extreme of the month... and so on, so a retrace of most of the previous period will be required to kill our survivors.

Chiba made an important point about taking profit when you need to withdraw - In my mind that translates to mange your money as necessary and as the market dictates. Looking for certainties tends to be futile, you should accept you will learn it as a skill through experience and intuition, you will make good and bad decisions along the way, but essentially this is what being a trader is.
tradewith60
  • #6,443
  • Apr 6, 2014 10:48am Apr 6, 2014 10:48am
Quoting stewrigh
{quote} Of course the other problem I see with hedging is the opportunity cost of tying all that capital up for what is effectively a flat position. And the carry costs are gonna mount up as well, although they should more or less balance over time.
Hence G used further filters like a "NEVER EXIT a position unless the position is AT LEAST 500 pips" and later "AT LEAST 1000 pips" when he decided to trade less for more.

This will ensure he closes some decent profits from the bigger surviving positions. If a position gets stopped out before even reaching 500 pips in profits, from G's perspective, it was a weak probe to begin with. How you define a strong/weak probe is also subjective to the trader.

If you have stacks of BUY positions surviving in huge profits but surviving sell positions start to stack up, that would be the time when G will consider closing some of the latter positions either greater than 500 or 1000 pips in size. Doing so will replenish the losses from stopouts, give some growth to balance and smoothen the equity curve.

Of course there is no "one size fits all" personality approach to how to manage positions.
  • #6,444
  • Apr 6, 2014 3:09pm Apr 6, 2014 3:09pm
Quoting chiba_san
{quote} Edit: Based on this post (which was one of Graeme's last ones) and Peter Crowns 41 posts (a trader Graeme has made reference to in the past)... I have come to the following conclusion: Enter 2 positions. Exit half at 1:1 or 2:1 or 3:1 NEVER change the Stop Loss Let the other position run forever or until it gets stopped out AT the SL originally set for it. No "diversification" whatsoever (Graeme initially talked about this and so many hours and questions revolved around this, but in the end, he admitted this could be abandoned). You don't...
here's a recent example of using the 2 entry system Chiba.... It's really an excellent idea, I'm surprised it isn't used more, but traders do seem drawn to the crapiest ideas and disguard the best

EA H4
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tradewith60
  • #6,445
  • Apr 6, 2014 3:10pm Apr 6, 2014 3:10pm
Quoting stewrigh
{quote} ... someone once said that trading is 95% psychological and until I can get my head around hedging I'll leave it out of my MO.
I would rather not call it 'hedging' if you are referring to the trading method presented in this thread. It is simply building positions in accordance to where the market seems to be heading. Notice: 'seems' ... there are no absolutes.

Either way, if you wish to trade like presented in this thread, building positions on both sides of the perceived trend is important ... besides, the only accurate way to see what the market is doing, is to participate. If your buy positions are losing and your sell positions are winning, the market is going down ... (true in reverse as well).

You say 95% is psychological (whatever that means), I say the hardest part in trading is to believe ... in yourself, even after many losses in a row. To have faith that even if everything is confusing and dark currently, there is light at the end of the tunnel if you do not give up ... it might take 10 years, but it's completely worth it if you can retire 20 years before the normal age.

Of utmost importance is to trade small enough until you become profitable ... it is important to 'get it' before you invest 'real size' and blow up your account. Like driving, initially all fearful and slow ... later on much faster.

Cam
  • #6,446
  • Apr 6, 2014 4:57pm Apr 6, 2014 4:57pm
Quoting 60minuteman
{quote} here's a recent example of using the 2 entry system Chiba.... It's really an excellent idea, I'm surprised it isn't used more, but traders do seem drawn to the crapiest ideas and disguard the best EA H4 {image}
Not sure I understand the double entry 60 - isn't it just 2 legs of a millipede?
  • #6,447
  • Apr 6, 2014 5:19pm Apr 6, 2014 5:19pm
Quoting cameron1st
{quote} I would rather not call it 'hedging' if you are referring to the trading method presented in this thread. It is simply building positions in accordance to where the market seems to be heading. Notice: 'seems' ... there are no absolutes. Either way, if you wish to trade like presented in this thread, building positions on both sides of the perceived trend is important ... besides, the only accurate way to see what the market is doing, is to participate. If your buy positions are losing and your sell positions are winning, the market is going...
I would rather not call it 'hedging' The way it's described here is having positions in both directions at the same time , to me that is hedging, but I can understand that it's slightly different in that it's not a direct 1to1 relationship, but its still hedging surely. Yes I know we are building millipedes in both directions but the net effect of that is to hedge your other millipede

the hardest part in trading is to believe ... in yourself - isn't that psychological?

Taking it a bit further - if you have 10 positions short and and 10 positions long - if you leave those in situ for 20 years your equity will not move one iota, it'll be exactly the same. Not sure how that improves the equity curve.

Think I'm still missing something here.
  • #6,448
  • Apr 6, 2014 5:35pm Apr 6, 2014 5:35pm
Quoting stewrigh
The way it's described here is having positions in both directions at the same time , to me that is hedging, but I can understand that it's slightly different in that it's not a direct 1to1 relationship, but its still hedging surely. Yes I know we are building millipedes in both directions but the net effect of that is to hedge your other millipede.
Depends on your definition and understanding ... for me hedging is something that farmers do on the futures markets to protect the price of their crop. That's the problem with saying 'hedging', it means too many things.

Quoting stewrigh
the hardest part in trading is to believe ... in yourself - isn't that psychological?
I am actually a student of Psychology ... faith is not part of the curriculum. It's irrelevant either way ... I wonder why you brought it up, are you more interested in trading ... or semantics ?

Quoting stewrigh
Taking it a bit further - if you have 10 positions short and and 10 positions long - if you leave those in situ for 20 years your equity will not move one iota, it'll be exactly the same. Not sure how that improves the equity curve. Think I'm still missing something here.
The topic of the equity curve has been described in quite a few details by the thread starter, please re-read those posts. For me personally, the shape of the equity curve is not much of a concern, as long as the account grows consistently, I'm happy ;-)

Cam
  • #6,449
  • Apr 6, 2014 6:04pm Apr 6, 2014 6:04pm
Quoting cameron1st
{quote} Depends on your definition and understanding ... for me hedging is something that farmers do on the futures markets to protect the price of their crop. That's the problem with saying 'hedging', it means too many things. {quote} I am actually a student of Psychology ... faith is not part of the curriculum. It's irrelevant either way ... I wonder why you brought it up, are you more interested in trading ... or semantics ? {quote} The topic of the equity curve has been described in quite a few details by the thread starter, please re-read those...
My reference to psychology refers only to my inability to trade both ways at the same time and I believe thats a 'psychological' hangup I have and need to manage. basically trading is all about managing your emotions and having confidence and 'belief'' in your trading method imho.

Think ur right about re-reading Graemes posts abt this tho
  • #6,450
  • Apr 7, 2014 1:37am Apr 7, 2014 1:37am
Quoting cameron1st
{quote} Depends on your definition and understanding ... for me hedging is something that farmers do on the futures markets to protect the price of their crop. That's the problem with saying 'hedging', it means too many things. {quote} I am actually a student of Psychology ... faith is not part of the curriculum. It's irrelevant either way ... I wonder why you brought it up, are you more interested in trading ... or semantics ? {quote} The topic of the equity curve has been described in quite a few details by the thread starter, please re-read those...
are you more interested in trading ... or semantics ? Missed this comment last night - it seems that you are the one more interested in semantics - I don't care what word you use, just seems to me hedging is a better one.
  • #6,451
  • Apr 7, 2014 7:47am Apr 7, 2014 7:47am
I have read all 323 pages over the past week and I like this strategy. Obviously this strategy needs trends to occur with some good volatility so that price does not retrace back to the entry position.
My question is that does anyone attempt this on Gold or other commodities? Gold can move 2000 pips in a day on average and with my broker I can enter as small a lot size as $0.01 so it is cheap to send probes, also looking at the monthly on gold it often goes in long trends. Also does anyone use this on any "exotic" currencies since the spread really should not be an issue if you are looking at a min of 500 pips on a investment.
  • #6,452
  • Apr 7, 2014 7:53am Apr 7, 2014 7:53am
Quoting stewrigh
{quote} Not sure I understand the double entry 60 - isn't it just 2 legs of a millipede?
Opening 2 positions to close 1 at fixed R:R to cover losses and ad little to equity. Position 2 has no TP and is kept open until it's time for diversification
Don’t ever let someone tell you that you can’t do something.
  • #6,453
  • Apr 7, 2014 9:30am Apr 7, 2014 9:30am
Quoting Armacom
{quote} Opening 2 positions to close 1 at fixed R:R to cover losses and ad little to equity. Position 2 has no TP and is kept open until it's time for diversification
LOL I am sure someone may regard that a hedging strategy as well because the small profits from the first position covers the small loss from your second if it doesnt survive the trend.
  • #6,454
  • Apr 8, 2014 8:03am Apr 8, 2014 8:03am
1500 up on my EA position, not gonna get those returns trading 30pip SD zones, amazes me so many people choose to lose that way...

No analysis, just risk management and money management...

Most of those high win SD strategies give no mention of money management at all, just a lot of shouting about how clever they are to pick a turning point....

would like to see a new low made this week or I will diversify and leave the monthly extreme for my long term position.

short > medium > long

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tradewith60
  • #6,455
  • Apr 8, 2014 8:13am Apr 8, 2014 8:13am
Quoting Sherpa
I have read all 323 pages over the past week and I like this strategy. Obviously this strategy needs trends to occur with some good volatility so that price does not retrace back to the entry position. My question is that does anyone attempt this on Gold or other commodities? Gold can move 2000 pips in a day on average and with my broker I can enter as small a lot size as $0.01 so it is cheap to send probes, also looking at the monthly on gold it often goes in long trends. Also does anyone use this on any "exotic" currencies since the spread really...
I trade gold, I posted some charts a few pages back... obviously you want something prone to trending with a good range...

Pair selection is often overlooked but maybe one of our easiest ways to improve performance.
tradewith60
  • #6,456
  • Apr 10, 2014 8:44am Apr 10, 2014 8:44am
Quoting chiba_san
{quote} Edit: Based on this post (which was one of Graeme's last ones) and Peter Crowns 41 posts (a trader Graeme has made reference to in the past)... I have come to the following conclusion: Enter 2 positions. Exit half at 1:1 or 2:1 or 3:1 NEVER change the Stop Loss Let the other position run forever or until it gets stopped out AT the SL originally set for it. No "diversification" whatsoever (Graeme initially talked about this and so many hours and questions revolved around this, but in the end, he admitted this could be abandoned). You don't...
The style of writing and thought process of PC and G were similar or even the same. I was wondering if they are the same person. Both thread help a lot in my quest to become a successful trader.

Edd
  • #6,457
  • Apr 10, 2014 9:49am Apr 10, 2014 9:49am
Quoting Edd Ganuelas
{quote} The style of writing and thought process of PC and G were similar or even the same. I was wondering if they are the same person. Both thread help a lot in my quest to become a successful trader. Edd
G's trading framework used to primarily revolve around:

1. PC - stacking positions in lieu with the trend to amplify profits

2. JR (aka TheRealthing) - Power of long tails

3. GW - Identifying trending/compelling momentum to piggy back off other traders

Infact G told me that JR's 30 posts or so were his most important read in his whole trading career. To add the icing to the cake, he has the screentime experience and found a way to trade his personality. This added the icing to the cake. He further stated that he wished he could get the message across by posting less just like the way PC and JR did here.

Nowdays he trades much less and spends much less screen time, by looking for opportunities after taking note of current price 1 hour after london open.
  • #6,458
  • Apr 10, 2014 10:15am Apr 10, 2014 10:15am
Quoting yonseo
{quote} G's trading framework used to primarily revolve around: 1. PC - stacking positions in lieu with the trend to amplify profits 2. JR (aka TheRealthing) - Power of long tails 3. GW - Identifying trending/compelling momentum to piggy back off other traders Infact G told me that JR's 30 posts or so were his most important read in his whole trading career. To add the icing to the cake, he has the screentime experience and found a way to trade his personality. This added the icing to the cake. He further stated that he wished he could get the message...
Hay Yonseo, I am interested in PC, G, JR, writings -- If possible could you provide a link to some of what you are quoteing

Just trying to learn what I can Thank for your time
Live today like theres no tomorrow-- Prioritize like you will die today
  • #6,459
  • Apr 10, 2014 10:20am Apr 10, 2014 10:20am
Quoting iamsovereign
{quote} Hay Yonseo, I am interested in PC, G, JR, writings -- If possible could you provide a link to some of what you are quoteing Just trying to learn what I can Thank for your time
Hi IAS

Sure.

http://www.forexfactory.com/petercrowns
http://www.forexfactory.com/therealthing
http://www.forexfactory.com/gregwilson
  • #6,460
  • Apr 11, 2014 4:35am Apr 11, 2014 4:35am
I have also come to the conclusion that for this to work, price MUST move. And because you lose time, it can be fairly devastating to your trading career if the following were to happen:

a currency is at 1 dollar. In 6 months time, it moves 1000 pips in your favor. Next 6 months, it moves back to 1 dollar. Next six months it moves 1000 pips in your favor. Next 6 months, it moves back to the start point. Two years have elapsed. Trading this method, no matter how you trade it, would not be profitable. The last legs you added in the last 6 months of this set would not have been able to compensate your small losses. Don't forget, you are not increasing lot sizes. They are remaining the same. In addition, the base lot size needs to be relatively small. Not all, but certain types of sideways zigzagging markets will negate the benefits of this style.

One thing with extremely long strategies, where the results of 30 years are equal to that of 30 "tries" is that it can change anytime, but it takes a year for one "try" to elapse. if after 30 hands of baccarat (but it's not 2 minutes per hand, it's one year before each hand is revealed) Banker wins 22/30 times, this does not mean in the next 30 tries (30 years) Player cannot win 20 of the next 30.

For this reason, to me, Peter Crowns original ideas are far superior.

For most, "trading the breakout" is the only way to make money. It might work, it might fail, but it's the only way. That's why I believe he doesn't take engulfing candles; only inside bars. He doesn't take any "resumption of the trend" trades as many like. He lives and dies by the breakout.

SL being tight is key for him. Because although he never mentioned it, in my opinion, the man must be going ALL OUT on every trade. You can't go all out if you have a large SL. 12 losses with 10-15 pip stop losses will be way overcompensated by one 300 pip run. You don't require a "trend" for that to happen. A breakout trade is enough to see any instrument move that much. The MAIN aspect of his strategy is the ridiculously tight SL which no one has mentioned. It permits ALL OUT trading. He mentioned he traded only 4 currencies and decided which trade to take depending on the trend situation of that currency. This must mean he only takes one trade when he sees it and goes all out.

He probably used 72sma and 90sma directly off a 1H chart to exit if price goes through both in one candle instead of a 20sma where he would need to flip to a Day chart.

Some people trade between 1m-5m/trade. With Graeme's philosophies.... I think I would have to drop down to 50k or 100k per trade to feel comfortable, since I would have trades left, right and center across many, many currencies.
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