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  • #41
  • Quote
  • Aug 3, 2005 10:39pm Aug 3, 2005 10:39pm
Quoting diallist
WHAT? WHAT?????

I don't get what Jim caught that was reversed in your post. Could one of you please clarify, because now i AM confused.
the stoch is 9,3,3 the sar is .02 which is usually the default anyway
  • #42
  • Quote
  • Aug 3, 2005 11:38pm Aug 3, 2005 11:38pm
Quoting james16
the stoch is 9,3,3 the sar is .02 which is usually the default anyway
Oh.

Why is it that I feel so stupid when someone points out the obvious?

Thanks Jim! (for the correction, not for me feeling stupid)
sxaxlxvxaxtxixoxnxbxyxgxrxaxcxexdxoxtxoxrxgx
  • #43
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  • Edited 4:07am Aug 4, 2005 4:06am | Edited 4:07am
Thanks MB for sharing your system. It's very generous of you to give such a detailed account of just how you trade it. Always nice to add a fresh look at something and so I'll be a-lookin' at it!

As far as too many people trading the same system, I used to think that's a recipe for disaster. But consider this; Take ten people trading the same system with the same rules. I bet you anything there'll be ten different entries, ten different exits and ten different profit/loss. Each trader interprets the information differently and each one will see different triggers on their charts. Heck, even if they all had the same identical entry point, I dare say the exits would be totally different, some ending in profit while some end in loss. The other factor is trading style. Some are conservative while others are aggressive, all contributing to how different the same system can be traded. And no one ever breaks their own trading plan rules and decides for some unknown reason to wing it! Yeh, right! Okay, you didn't see my hand go up on that one, did you?! Didn't think so.

Thanks again MB
candy
  • #44
  • Quote
  • Aug 4, 2005 9:04am Aug 4, 2005 9:04am
Exactly what I think as well. The other remaining factor is personal risk tolerance. How much of a negative would you allow the position to go before caving and closing out?

I'll be the first to admit that I've held positions during break outs and economic releases that have sent me 50-74 in the hole even on the 30 minute chart. Which pratically reversed the trend. But I consider each one seperately and weigh the potential of a complete reversal b efore closing. Yes, the -74 position turned around during the London open and acutally built into a very nice postion that I decided to follow on the hourly instead, for about +125. Since I'm only playing with a 50:1 leverage, I can withstand more of a swing than others risking 200:1 or even 400:1. Once I feel that I've traded long enough and can "graduate" to a higher leverage, I will lower my personal risk tolerance in conjunction.
Capital Preservation is key to long term wealth accumulation
  • #45
  • Quote
  • Aug 4, 2005 11:31am Aug 4, 2005 11:31am
Yes, definitely risk management is crucial, besides being able to feel the market pulse. And therein lies the skill of the trader, knowing when to hold them and when to fold them. That brings up another reason why the same system would be traded differently; the skill set of the trader. I'm sure if we try we could come up with at least a dozen more reasons!
  • #46
  • Quote
  • Aug 4, 2005 11:49am Aug 4, 2005 11:49am
MB, I just want to say thank you again. I just picked up 50 pips on the eur/usd, 20 and aud and I'm still sitting on the eur/chf. Your system definately works!! I'm sure you know that but this is for those that haven't tried it yet.

One question, today the eur/usd had the 15 moving lower 30 and hourly going up. I went with the longer term. Is that how you handle it or do you wait for them both to cross the EMA's?

For me taking profit is a hard thing to figure out what to do, when to do. Any suggestions with your system?

Thanks again!! Pipmon
LETS PLAY HOCKEY!
  • #47
  • Quote
  • Edited 9:23am Aug 5, 2005 9:13am | Edited 9:23am
Well, this falls into the macro/micro category. Like I described in a previous post, the faster charts are a microscopic look into what is happening on a smaller level. The hourly or daily chart may be in a strong uptrend, but within its' core will contain many 1,5,and 15 minute swings. This is where discretion can be useful. The system describes exiting the trade when the pair price has crossed through the EMA's. But let's say for instance this is but a short rally and was large enough to move the hourly or 30 minute charts but will ultimately end short lived. This is where I feel jetheat had hit on with using personal discretion and calling the ball as you see it.

Personally, If I am in a position and it goes very well, I often transition it to the slower charts, especially if I'm +50 pips in. IF the hourly also goes into a favorable position then I make the transition. But I watch the faster charts like a hawk for possible reversal. Reversal starts on the 1 minute and trickles down to the 5,10,15,30, and so on. Once the reversal has made its way to the 15 or 30, the 1 minute may be in a small whipsaw back by that time.

View it like ripples in a pond. Your position is going good and everything is great, then the stone of reversal is thrown into the middle of the pond sending ripples towards the shoreline. If the ripples are strong enough, they'll make it to the shore - if not, they'll give up the ghost and fade into the whole. Often in a violatile market, your system may fail you or short your profits because no system can forcast the endless possiblities of the currecy market. This is where your own experience and intuition step in.

"Ghostrider, you're at 3/4 of a mile, call the ball."

"Roger ball."
Attached Image
Capital Preservation is key to long term wealth accumulation
  • #48
  • Quote
  • Aug 5, 2005 10:20am Aug 5, 2005 10:20am
Oh, one more thing, pipmon, I'm really happy it has worked out so well for you.

Be sure not to enter early thinking the indicators will definitely cross. Wait for them to do their job. Otherwise, you'll burn yourself.
Capital Preservation is key to long term wealth accumulation
  • #49
  • Quote
  • Aug 5, 2005 10:44am Aug 5, 2005 10:44am
Quoting MuddBuddha
Oh, one more thing, pipmon, I'm really happy it has worked out so well for you.

Be sure not to enter early thinking the indicators will definitely cross. Wait for them to do their job. Otherwise, you'll burn yourself.
mudd you should move your ideas over to a new thread with the first post being a complete description of your strategy. give the thread a name so people will know its your system. this is totally up to you of course i thought it would make it easier for you and others and you could have your own thread. . jim
  • #50
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  • Aug 5, 2005 10:49am Aug 5, 2005 10:49am
Thanks MB, I'll make sure of the crosses. Amazing how you can tell I got in early on one of them. It sure seems like with this you have to have a little "feel" to play it. I have been playing with them from 1 minute to daily and if you following the crosses it's like clockwork. Speaking of which the eur just crossed on a daily. Do you ever play them long term?
LETS PLAY HOCKEY!
  • #51
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  • Aug 5, 2005 11:48am Aug 5, 2005 11:48am
I've been eyeing that same chart for about an hour. The EURO is dropping right at the moment, so it wouldn't be a good idea to enter now, but I thought I'd watch it till late today and see if it still looks promising. Then perhaps, I'd enter on Sunday.
Capital Preservation is key to long term wealth accumulation
  • #52
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  • Aug 5, 2005 12:41pm Aug 5, 2005 12:41pm
Quoting MuddBuddha
I'll tell you my super techincal system which is similar to your own.

I use a 10,25,and 50 EMA on a 30 minute chart with a Parabolic SAR at 9,3 (3).


When the 10 crosses (completely) the 25/50 with the SAR on the entering side, enter the position. I use the Stocahstics as some indicator as to the trend length and strength. There is more detail about it at www.TIER-7.com under Personal Trading Books.

one.
Mr. MuddBuddha,

Could you perhaps explain a little what you mean by the "SAR on the entering side"? I'm not very sure what that means. Doesn't the SAR usually trail behind the price? Thanks for any clarification here.
Don Life is expensive, but includes a free trip around the sun.
  • #53
  • Quote
  • Aug 5, 2005 1:08pm Aug 5, 2005 1:08pm
The Parabolic SAR would be on the supporting side of your entry. So, for a shorting position, the SAR should be on the topside of the currency price prior to entry, and on the bottom side if you were looking to go long. Always open with the support of the Parabolic SAR, never against it. If you trade the 1 hour charts, make sure you have the same SAR support as the 15 minute charts so you aren't opening during a minor whipsaw or possibly a reversal.

Hope that cleared it up for you.
Capital Preservation is key to long term wealth accumulation
  • #54
  • Quote
  • Aug 5, 2005 1:47pm Aug 5, 2005 1:47pm
Yes. It's what I thought but wasn't quite sure.....

Sounds like you probably do not make a havit of trading pullbacks...


Thanks for your reply.
Don Life is expensive, but includes a free trip around the sun.
  • #55
  • Quote
  • Aug 5, 2005 1:53pm Aug 5, 2005 1:53pm
Well, I do trade pullbacks using the candle charts with Stochastics, but if you open with a system, you should close with that same system. To compromise yourself based on oppurtunity will just lead to further compromises that could eventaully burn you badly.

Make sense?
Capital Preservation is key to long term wealth accumulation
  • #56
  • Quote
  • Aug 5, 2005 2:25pm Aug 5, 2005 2:25pm
Quoting MuddBuddha
I had heard of systems that people claimed that the more poeple that utilized the system, the less effective it was. I don't quite understand this as I presume the market has no conceivable consciousness, therefore it has no freakin clue what type of system I or any number of people utilize. It may respond in turn to a number of people entering the market at relatively the same time period - but isn't that part of what drives the market anyway?
I was actually talking with my cousin last night, who has been a professional trader for 7 years. He has always traded financials through the CBOT. He was telling me that those markets are in a bad way right now. One reason he cited was that it's so easy now to screen trade that you've got too many people doing the exact same thing.

The volume is a third of last year's, most traders he knows aren't making the profits they used to, the markets themselves are very tight, etc. He said it's pushing a lot of pros out.

The reason we were talking about this is that I am in graduate school but absolutely hate it. I have always wanted to trade, but he has now warned me off of doing what he does. However, I figure that even if some markets are down, there are always opportunities to be had. I started looking and my search led me to this forum.

Forex sounds exciting and challenging. I want to start learning and preparing to enter the market. Is there a comprehensive newbies guide on this forum? I've been absorbing all of the recommendations and knowledge that I can, but I am going to need more, much more. You all seem very knowledgable and willing to help, so I'm just wondering where to get the right information.
  • #57
  • Quote
  • Aug 5, 2005 4:50pm Aug 5, 2005 4:50pm
Quoting Far From Average
I was actually talking with my cousin last night, who has been a professional trader for 7 years. He has always traded financials through the CBOT. He was telling me that those markets are in a bad way right now. One reason he cited was that it's so easy now to screen trade that you've got too many people doing the exact same thing.

The volume is a third of last year's, most traders he knows aren't making the profits they used to, the markets themselves are very tight, etc. He said it's pushing a lot of pros out.

The reason we were talking about this is that I am in graduate school but absolutely hate it. I have always wanted to trade, but he has now warned me off of doing what he does. However, I figure that even if some markets are down, there are always opportunities to be had. I started looking and my search led me to this forum.

Forex sounds exciting and challenging. I want to start learning and preparing to enter the market. Is there a comprehensive newbies guide on this forum? I've been absorbing all of the recommendations and knowledge that I can, but I am going to need more, much more. You all seem very knowledgable and willing to help, so I'm just wondering where to get the right information.
hello ffa, glad to have you here. i was a bit suprised with your post because i have been trading financials thru cbot longer than seven years and my opinion would be that volume has been fine especially on the mini dow. also screen traders all doing the same thing are what i always considered to be an answer to prayer. maybe its just the way i trade. anyway welcome to the forum and there a lot of people here that can and will help you. forex is relativly new to me also and this forum is the best on the net. jim
  • #58
  • Quote
  • Aug 5, 2005 7:18pm Aug 5, 2005 7:18pm
[quote=ivenger]
Quote
"The more people trade the less efective a systme becomes". Is this saying true. Here are some thoughts on the matter.
If many people use the same method then the MMs and large players will play eventually against you.

This can be true but it is not a rule. Think like a large trader for a minute. Two problems large traders have that most, if not all, small traders have is that they are faced with the prospect of giving money back on their entries and exits. If you place a large buy in a market where your entry or exit represents a sizeable portion of the volume at that time, your order is going to push the price whenever it significantly unbalances the ratio of buyers and sellers before your order was executed. Now lets say you are looking for places to enter and exit and, through various means, you discover that there are nice little ralleys or selloffs occuring with some consistency around certain areas. If you want to unload an order and you think a ralley is likely at a certain point you'll have your order ready to sell into it. That, in itself could destroy the ralley if your order happened to unload more money than was being bought. However it got you a much better exit price than if you'd unloaded into a flat or selling market. This is one example where large traders against your system if there are enough people trading the system to change the market in a noticeable and predictable way. Clearly the less liquid the market the more this may apply.

Quote
This means that using some system changes the market itself - specificially against that system. For an efficient market the randomness should be perfect.
I don't see how efficient market implies randomness. Couldn't it be just as easily argued that inefficient markets are random or that inefficiency causes randomness? Efficient markets are markets where everything is priced what it is worth all the time. Therefore a major disaster in a country would cause an immediate drop of that currency to reflect the exact change in that country's loss of equity as the disaster occurred. As each piece of property was destroyed the price of that currency would drop to reflect any loss in that country's equity. If one was monitoring the disaster they could predict with some certainty whether the damage was following a predictable path of destruction and therefore forecast the trend of the currency sell off. However the result would be that they would not profit from the sell off because in an efficient market the value of the currency would be a perfectly equitable exchange when the trade was done and all goods and services on the planet would perfectly reflect the change in currency values. Efficiency and randomness may have some relationship but they are not the same thing. Random implies unpredictable. It could be argued quite effectively that in a perfectly efficient market all values would also be completely predictable.

Quote
However, the market is not at its utmost efficiency, mostly as it seems to me, because the ampunt of players is large, but finite. This is why mechanical systems work.

What does that mean? Would infinite players make the market more efficient? Seems more like inefficiency could just as easily be infinite with infinite players. Are you saying that mechanical systems work because of inefficiency or because the players are finite or because they are large?

Quote
However, the correction to a player (a stratgy) that all the time drains money from the market would soon be made. A counter-strategy would develop in a short while. This is why I think that any system works only for some period of time. The more money you've made using the system, the more chances there are that the market will change. The more players play the same strategy - the more money they make. Hence a distribution of system among many players haunts its longevity and efficiency.
However, I think that all this isn't really relevant while all who use a certain system is a small amount of players.
This makes sense. Any pattern of buying and selling that creates noticeable and consistent imbalances will be noticed and exploited. Sometimes it is because thousands of people have noticed the inefficiencies and have created systems that capitalize on them. They may have all created different systems but the inefficiences have been spotted and people are gunning for them. It is not only a single system that can change the markets but a thousand systems that are gunning, in different ways, for the same load of profits. Sure there are variations from system to system but the systems need only be gunning for roughly the same opportunities to disrupt them.

Quote
Here's a simple calculation. 10 players play among them say at most 10(lots/per player)*10(players) = 100 lots (which corresponds to ~100 million $) which is ~4 orders of magnitude less than goes daily on the forex spot market (~1*10^12). That means that our 10 players play only 0.01% of the total equity of the market. However, when you increase the amount of players to say 1000 you start to account for ~10% of the total turnover on the market. Remember that all our players use only one strategy. Hence it would be very efficient to come up with a strategy that would play against 10% of the market at once. Hence such a strategy is developed by someone (or some institution) and it eventually changes the structure of the market such that it is not beneficial anymore to play our devised strategy.

I have a friend who develops robotic systems. He works very closely with his market maker to find out the liquidity of the markets so that he can make sure that his trade sizes do not noticeably unbalance the market. His systems, because of the lareg trade sizes they execute, are monitored to determine the impact the orders are having on the market so that he does not destroy his own systems by trading too large of a size. The size of trades he'd like to execute are genearlly measured in hundreds of lots and for auto-execution his MM also puts restrictions on his systems or they cannot guarantee price of execution.

FT
  • #59
  • Quote
  • Edited 8:43pm Aug 7, 2005 8:36pm | Edited 8:43pm
For anyone who has been following this thread, I've added another trading book, "Simple Forex; Fibbonacci Revision". This utilizes a similiar method as the original but with fibbonacci EMAs and an alternate exit strategy. It tested very well and is now in pratical use. Hopefully you can benefit from it in whole or in part.

This method attempts to get you safely into the trade at the soonest possible moment and utlizes an exit strategy to maximize profit.

As with any system, test the system out yourself thoroughly before going live.
Capital Preservation is key to long term wealth accumulation
  • #60
  • Quote
  • Aug 8, 2005 1:46pm Aug 8, 2005 1:46pm
Quoting MuddBuddha
For anyone who has been following this thread, I've added another trading book, "Simple Forex; Fibbonacci Revision". This utilizes a similiar method as the original but with fibbonacci EMAs and an alternate exit strategy. It tested very well and is now in pratical use. Hopefully you can benefit from it in whole or in part.

This method attempts to get you safely into the trade at the soonest possible moment and utlizes an exit strategy to maximize profit.

As with any system, test the system out yourself thoroughly before going live.
Thanks again Muddbuddha for the real simple but powerful systems. Even a drugged monkey can make money with them! Your systems have helped me out alot. Again thanks
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