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Attachments: Minimizing Drawdown Exposure for FXTreadPro's Semi Martingale
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Minimizing Drawdown Exposure for FXTreadPro's Semi Martingale

  • Post #1
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  • First Post: Edited Aug 20, 2007 3:07am Aug 19, 2007 5:32pm | Edited Aug 20, 2007 3:07am
I am working a a method, which I awkwardly described in post #52 and you responded to on post #55, that will hopefully describe in a tabular format how by liquidating on the retracement back to the original entry price instead of the SL position(leapfrog for lack of a better terminology), one would lessen the drawdown risk.

I may be off base on my thinking, but stay tuned...

http://www.forexfactory.com/showthread.php?t=43221
Quoting jones247
I am working a a method, which I awkwardly described in post #52 and you responded to on post #55, that will hopefully describe in a tabular format how by liquidating on the retracement back to the original entry price instead of the SL position(leapfrog for lack of a better terminology), one would lessen the drawdown risk.

I may be off base on my thinking, but stay tuned...

That sounds potentially interesting....BUT perhaps you should Post that in a separate Thread so that other Traders do not get confused.

Dan
I'm pretty new to forex trading. I'm not sophisticated enough to confuse most members. I believe my suggested amendment that I'll post may take this model to the next level, unless I'm wrong about certain fundamentals. I think the idea I have, when plugged into this model, will enable someone to disengage from the sequence without risking a material loss. In effect, I believe the loss will be the aproximate amount of potential profit at the given trade. If my assumption is right, then the maximum risk is only the potential profit margin at each trade level, which would make this model absolutely worthwhile. For example, imagine if your potential profit is $1500 (as with trade #23), but instead of potentially losing $24,600, you are at risk for only $2,000 loss. In such a scenario you could win 60% of the time and still double your money annually. Once I'm done with the table, I'll gladly post it for the critique of all members.
This is the table with the amended approach... the major drawback is that it requires large amounts of cash deposits. It's based on a 20 spread against the trader between buy and sell. I started with a standard lot, instead of a mini lot. This example is for a 400:1 margin. By the 11th entry, your risk is only $1,400; however, your potential gain is $4,080. I guess there are several adjustments I can make to reduce the cash requirement and/or extend the entry points.

Please "tear it apart", if you may... Let me know if my logic is flawed...
Attached File(s)
File Type: doc Proposed Amendment to Semi-Martingale.doc   23 KB | 1,106 downloads
I revised the attachment to include a potential loss at the 11th entry point. Based upon my understanding the potential loss would be $1750. The potential profit would still be $4080.
Attached File(s)
File Type: doc Proposed Amendment to Semi-Martingale.doc   23 KB | 985 downloads
Logically, perhaps I may have overstated the "gains", "loss", & "net" by erronously quadruplying the amounts. If that's the case, then the potential profit would only be $1,020. Given the probablity behind this method, which should yield a break-out more than 90% of the time, with $1,750 risk for each loss, this is still a phenomenal strategy... Unless my logic is flawed!
Quoting jones247
I revised the attachment to include a potential loss at the 11th entry point. Based upon my understanding the potential loss would be $1750. The potential profit would still be $4080.

Jones247,

I apologize but I am not understanding what you are proposing at all. Can you give a clearer explanation regarding the mechanics of your Sequence? I admit I am a bit lost here...

Dan
I'm sorry for the muddled information. I tried to convey it as best I could. Nonetheless, the fundamental premise of my amendment to your strategy is to exit when the price retraces back to my original entry price. This way I would avoid the continual build-up of losses. To ensure a profit I then, acquire the new entry point at a lot differential to accomodate the fact that the losing position on the prior entry point will be 20 pips more than the winning position.

Hopefully this helps...
my exit strategy for each entry point would be in lieu of a SL...
Quoting jones247
I'm sorry for the muddled information. I tried to convey it as best I could. Nonetheless, the fundamental premise of my amendment to your strategy is to exit when the price retraces back to my original entry price. This way I would avoid the continual build-up of losses. To ensure a profit I then, acquire the new entry point at a lot differential to accomodate the fact that the losing position on the prior entry point will be 20 pips more than the winning position.

Hopefully this helps...
I am still not following - perhaps it is me. What do you do if price does not "retrace to your original entry price"?

Anyway, I am still concerned that your Posting of modifications to the Strategy I am presenting in this Thread is going to be highly confusing to Traders trying to understand what I am doing. I still feel that your idea's would best be served by working on that in a separate Thread. Could you possibly remove the last few Posts and attachments and put them in a new Thread?

I appreciate your contribution but since I am having trouble grasping what you are saying, I feel strongly that this serves to dilute the concept I have presented.

Dan
I'm sorry Dan, I don't mean to hurt your thread... I was only trying to help. If it does not retrace, then great... you win with the break-out & profit in accordance with my attachment (1/4 of the profit amount stated)...

Please be kind enough to allow me until tomorrow to remove my posts, as I have a friend who is an expert with tremendous insight on various strategies. Please allow me to confer with him, he is currently on vacation; however, once he returns I believe he may be able to better describe this concept, which I believe integrates well with your strategy.

Thanks,

Walt
Why are you trying to oversmart the market ? beleive me sooner or later you're going to blow up your account I tried a similar stategy on a demo account in my earlier days and it made good profits till it finally blew up I even thought of and tried many more advanced stratgies than the one you propose-that I spent countless hours to develop-but they all ended up the same
plz dnt misunderstand me I'm not here to critisize, I actually congratulate you for your out of the box thinking but beleive me trading the old way cutting your losses and keeping your profits run is the only way to go
just my 2 cents
Quoting jones247
I'm sorry Dan, I don't mean to hurt your thread... I was only trying to help. If it does not retrace, then great... you win with the break-out & profit in accordance with my attachment (1/4 of the profit amount stated)...

Please be kind enough to allow me until tomorrow to remove my posts, as I have a friend who is an expert with tremendous insight on various strategies. Please allow me to confer with him, he is currently on vacation; however, once he returns I believe he may be able to better describe this concept, which I believe integrates well with your strategy.

Thanks,

Walt
OK Walt....As I stated my only concern is that I do not want anyone who is trying to understand my method to be confused by something new, before understanding the original concepts.

Dan
Quoting Mina
Why are you trying to oversmart the market ? beleive me sooner or later you're going to blow up your account I tried a similar stategy on a demo account in my earlier days and it made good profits till it finally blew up I even thought of and tried many more advanced stratgies than the one you propose-that I spent countless hours to develop but they all ended up the same
plz dnt misunderstand me I'm not here to critisize, I actually congratulate you for this out of the box thinking but beleive me trading the old way cutting your losses and keeping your profits run is the only way to go
just my 2 cents
Thanks Mina.......All opinions are appreciated. Many seem to say they have tried similar ideas and I am just presenting that which has worked consistently for me. I agree that sooner or later I MAY blow up an Account, however, if that happened tomorrow, I would still be way ahead of the game profit-wise.

Dan
Hi Walt,

I agree with Dan. This is his post and he's been working with his strategy with success. If it ain't broke why trying to integrate something that is untested. I've read your proposal couple times and I'm confused about what you're trying to advocate.

Thanks.
Hi Jones,

I believe I understood your idea.....
So what's going on now....stopped trading or stopped thinking ?????
Non licet omnibus adire Corinthum
hi jones,

you can elaborate alittle bit on your idea for better understanding
I always knew that someday I would make it big
It's really the concept of apply proper MM and patience. Wait on the market to reverse, as opposed to closing out the trade. Many traders are bound to lose with tight SL and gearing too high...

Walt
Quoting javajames
Hi Jones,

I believe I understood your idea.....
So what's going on now....stopped trading or stopped thinking ?????
Hi JAVAJAMES & Jones,

Can you please elaborate Jones' idea by using an example, ie start with a position at a rate like : long 1 lot Eur/Usd at 1.5600, then...............?

Hope you don't mind as I'm interested to study various ideas/ways of handling trade. Thank You.
  • Post #20
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  • Last Post: Aug 18, 2009 12:42am Aug 18, 2009 12:42am
Hi Dan,
I do not see you here for a while already, and hope everything is ok with you. I would be interested in getting your EA to do some demo testing. Please advise how to get it.
I am still unable to send you private message as I am only a junior member.

thanks

emeded
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