Menu
Sister Sites

Options

Bookmark Thread

First Page First Unread Last Page Last Post

Print Thread

Similar Threads

Swing high / Swing low indictator+alert? 20 replies

How to trade using swing methods/daily-hour charts? 3 replies

Swing highs and swing lows 3 replies

swing high/swing low indicator and volume tic history 13 replies

I am confused about all the different Tunnel methods out there...Clarificatio n please 3 replies

My experiment hurts my opinion of tunnel/swing methods

  • Post #1
  • Quote
  • First Post: May 17, 2006 2:35am May 17, 2006 2:35am
While waiting for VWB reversals, I got a whim to start a system on Collective2 that just runs with the trend on all 10 pairs tracked by default on C2. I started it a couple days before the end of last month. I called the system "Monthly Position."

I kept track of everything on a spreadsheet. The system, if I would not have set any stoplosses, would have been up 30% by now. The system I actually followed, which includes stops, is only (only?!) up 10% or so. That's 10% in less than a month, and from the beginning it went against the advice of the tunnel methods. During this time I lost money doing short-term breakouts and price action but gained money simply by following the trend.

I've found this to be true over and over again: Always follow the trend. The GBPUSD position has been the flagship of Monthly Position and has earned over 800 pips in this brief time period.

On the other hand, I truly feel the anti-dollar trend is wrong, that it has already started to reverse, and that I don't want to have all my positions stuck either for or against the dollar. It sucks that I'm putting my money on crap I don't believe in, but it's making me more money.

Is swing trading purely psychological, or is long-term trading a time-management technique that sacrifices short-term profit?
BTW, the only position that would have been a loser if I had carried it from month to month would be the long on EURJPY. I would have made a lot more money on all the other pairs if I hadn't let them stop out. The negative $3000 on EURJPY more than pays for not stopping the other positions.
So you would've made more money without a stoploss. Big deal.

Remember, you're in it for the long haul. 10% a month, consistently is nothing to scoff at if you can pull it off. Pro's do 120%+ a year.

It's all about consistency.

Re: the trend. Heh, I don't need to give you my opinion on that... it should be quite evident.

Re: the dollar. Who cares where it goes... if you follow the trend, you can ride it wherever it feels like going. While all the fundamentalists are going whacky trying to second guess it, you're sitting back thinking, "Who cares where it goes -- I'm making stacks of cash even if it crashes..."

People (I'm not talking about you, mind you) who get wrapped up in the, "It HAS to turn around!" game are trying to predict.

Predicting will kill you.

...and so will tape reading, but that's for another thread... heh heh...
Mr. Trend
Quoting Mr Trend
So you would've made more money without a stoploss. Big deal.
This only serves as evidence in favor of blindly following the trend versus attempting to stop losses.
Quoting Mr Trend
Remember, you're in it for the long haul. 10% a month, consistently is nothing to scoff at if you can pull it off. Pro's do 120%+ a year.

It's all about consistency.

Re: the trend. Heh, I don't need to give you my opinion on that... it should be quite evident.
If this system is simply carrying positions on all major pairs in favor of the current trend, I don't think you need to look up past statistics to confirm anything. Everyone knows the trend is your friend, right?
Quoting Mr Trend
Re: the dollar. Who cares where it goes... if you follow the trend, you can ride it wherever it feels like going. While all the fundamentalists are going whacky trying to second guess it, you're sitting back thinking, "Who cares where it goes -- I'm making stacks of cash even if it crashes..."
I care because I'm interested in trading global currencies, not just the dollar. I live in the USA, I trade the dollar every day. I hate that I can't trade USDCAD without worring about what's going on with AUDUSD. It doesn't make sense. They have almost nothing to do with each other, yet their prices seem to somehow magically match. Screw the dollar, let's sink it into the ground so the other currencies can take over. Of course, I know it's reversing, so I'm going to put my money on it soon Also, we could learn how to be like some other countries that devalue their own currencies for the sake of exporting. The trade defecit is a big problem when the GDP mainly consists of interest on domestic borrowed money, mainly home equity loans and credit cards.

So you see I've been tempted by the statistical stuff, but knowing the fundamental stuff shows me why the trends are happeming. I still don't necessarily agree.
Quoting Mr Trend
People (I'm not talking about you, mind you) who get wrapped up in the, "It HAS to turn around!" game are trying to predict.

Predicting will kill you.

...and so will tape reading, but that's for another thread... heh heh...
I've been doing a lot of this, and it's hurt me, as I think I've mentioned. It prompted me to consider abandioning the tunnel methods, as I mentiioned, in favor of mindless trend-following. In fact, that's what my post was about: Headline: Mindless trend-following system beats the ass of complicated fibo MA stuff.
"I care because I'm interested in trading global currencies, not just the dollar. I live in the USA, I trade the dollar every day. I hate that I can't trade USDCAD without worring about what's going on with AUDUSD. It doesn't make sense. They have almost nothing to do with each other, yet their prices seem to somehow magically match. Screw the dollar, let's sink it into the ground so the other currencies can take over. Of course, I know it's reversing, so I'm going to put my money on it soon Also, we could learn how to be like some other countries that devalue their own currencies for the sake of exporting. The trade defecit is a big problem when the GDP mainly consists of interest on domestic borrowed money, mainly home equity loans and credit cards."

Small word of advice....take it for what it's worth. You're getting too emotional about this. It's great that you have feelings about politics and the general condition of the US economy, but they should never enter your trading room. Work out these issues outside of trading and come in with a clear and concentrated mind.

You're correct that trend trading in a heavy trend is very profittable. If I remember correclty, vegas said a few days ago that the system may not perform as well in heavy trends. I can understand this since he and I share many of the same ideas. I don't use his system, but I understand the concept and how it would fail in such a situation. But who's fault is that? Not vegas'. To rely on one system in a changing market trend is financial suicide. At the very least, modify the sytem to adapt to the change rather than abandoning it at the first hint of failure.

This is why I have become very hesitant to talk about how I trade in general. When you freely share a system that makes money, they love you. When the system fails due to market change, they hate you.

Traders are fickle. They flock to every new messiah and then crucify him when times get tough.

Vegas made an excellent point when he said he had waited for someone to email him stating they had modified or adapted or "thought outside of the box". (paraphrasing)

These are the signs of a true trader. The ability to adapt and change. Take the best of systems you come across and make them your own.

I know exactly how he feels. I faced the exact same situation when the trend took hold and several bashed me rather than adapted or even attempted to adapt. I don't freely share my systems at all now. I respect vegas for his resilience. I could no longer put up with the frustration and grief. I trade to make a living...not inflate my ego.

I'm not stating these points to attack or offend, just trying to let you see things from the other side.

Sometimes the generousity of sharing a system isn't all it's cut out to be.

Vegas has given you a excellent tool. Now it's up to you to determine when and how to implement that tool. Don't use a hammer to cut down a tree; and dont use a saw to hammer a nail. Some things are just common sense.

Your comment about the CAD/USD not being related or linked to the AUD is completely in error. This is a GLOBAL economy. Think about what this means. It sinks in deeper if you figure it out on your own rather than being told.
Capital Preservation is key to long term wealth accumulation
Good post Mudd. One point of minor disagreement I have on sharing systems would be that of setting expectations of the user at the start to ensure that they are under no illusions of getting a "holy grail" or "all purpose" system. Making sure that it is emphasised throughout the description.

It would be a shame if people like yourselves or Vegas stopped sharing ideas simply because some people just want an "out of the box" solution without having to do any further work themselves.

As with any activity don't let the attitudes of the minority spoil the greater good...keep sharing!!!
Quoting Isotonic
It would be a shame if people like yourselves or Vegas stopped sharing ideas simply because some people just want an "out of the box" solution without having to do any further work themselves.

As with any activity don't let the attitudes of the minority spoil the greater good...keep sharing!!!
Amen brother! Suffice to say that after seeing your charts in charts thread I am now testing a new and simple system based on your ideas. Thanks.

-soso
-soso
Iso's right.. share the love...

Even if you give someone a great system, if he cannot stay with it through thick and thin, he will eventually fail and will just switch to another (just as the tides start to turn on the system he used first), never making any consistency.

Anyway, I do hope you reconsider about sharing your system.
Let the trader decide for him/herself if he/she wants to be successful or not..
Some will stick, and some will not. Anything new?

Anyway, as of the moment I am still a student so I really have no idea how hard/frustrating/fun teaching is. But thought I'd chime in.

Again, just my two old rusty cents..

East
Hello Mudd, Sound like your feeling bruised or at least perplexed that people have been ' biting the hand that feeds them' This is the sad reality of human nature. Whilst I don't chase people to help them, I have always helped anybody who has needed it or asked me in various 'walks of life'. Over the years I used to be saddened by how ungrateful or even sometimes resentful people can be afterwards, until somebody (without getting spititual about it !) told me that my mistake was that unwittingly I looked for something back directly from each assistance whereas in fact there is a balancing at a macro level over time as positves flow back from other sources without direct one to -one reciprocity. I relate to this now and it has helped me to keep a postive outward-facing attitude.

Of more direct relevance to the main thrust of the thread your 'Simple Fibbonacci EMA System' if applied systematically would have proved the recipient of your personal generousity of spirit with a boat load of pips
during the last six weeks as the USD has trended downwards across the board.

I want to thank you for your goodwill in providing the above and your constructive inputs to a number of threads/forums. I have done well for quite a long time trading the e-mini's( ES/YM) and have recently ventured into Forex where I luckily ( or through a balancing if you accept the above !) came across Forex Factory+ Vegas+ Dial,Jim,Figi et al + your work and this has helped me enormously. I have majored on the Knife version of the Vegas 4H Tunnel but am still unsure about which longer term trend parameters to use. I am also experimenting with amalgamating your Fib EMA system with the Knife as I look to finalise a front line Forex system.

Bramhall17
Your first paragraph is well stated. And most likely true.

Like Jim, Diallist, Fiji, and Vegas, I spend an enourmous amount of time thinking about trading, the market, patterns, possiblites, etc. That's how all great and good systems are born and mastered. This is a point I think most take for granted when they hop on the new system bandwagon.

I'm sure that when Vegas first started his ideas, blending them from other systems, personal ideas, etc., that he was a bit aprehensive about it's possible success.
Jim probably didn't master price action over night and had many kicks in the arse before the lights turned on.
The same can be said for Diallist and Fiji. Great systems take time and thought. They also take a great deal of confidence and bravery to share amongst those that may absolutely blow themselves outta the water by not minding the rules.

Most systems are adapt to one market condition but not another. Most new traders are completely unaware of varying market aspects and view it in a very micro environment. Never really seeing the big picture or attempting to understand market behavior. Not just technicals and fundamentals...those are catalysts to movement, but not the true behavior.

The "Simple System" was just that....simple. It was just a combination of indicators that I slung together that seemed to work well together and were easy to understand.

The "Net" was a more complex system requiring strict adherence and discpline. The system was concieved when a friend of mine who is 100% a technical trader, whether he knows it or not, said to me, "The planes not making any money sitting on the runway."

That got me thinking and thinking and soon I had Post-It notes all over my desk and all the dry erase boards at the office were filled with drawings and equations that mimic'd a scene from "A Beautiful Mind". (I don't care much for computer backtesting and prefer to do thought experiments and dry erase boards)
The first day I moved funds from Oanda to FXsol and set up my positions, I was scared as hell that what I was about to do was financial suicide; but I was confident in the system because the principals are sound. The theory makes complete sense and is so simplistic that it seemed too logical.
Well, the system worked....and worked well. OF course, as I stated earlier, I had made an error in the lot size calculation and didn't realize it for several weeks as I had pushed that portion of it to the back of my head. I've modified the system in parts and tried new stuff to realize that the origianl concept is still the best as long as it's done right. The draw down should always be 0%. The risk should always be minimal. The profit should always be high. So far so good.

So, when reading Vegas' post about the hundreds of emails, I had a moment of connection where I realized he had to feel the same way when you've put hundreds of hours of thought, worry, design, talk among friends, running ideas by your wife, etc., to make sure this is a sound theory and then gone to the length of risking your own capital to make it a reality....everyone feels offended when they get bashed.

I have friends that I share the second system with...those I trust to help me with ideas and testing; and I owe them great gratitude (since I know they'll read this post!), as they have tolerated my rantings and babble about "What if..." and "You know what?!...we could try...."

So, while your correct, it is my own mistake, I should acknowledge those who always have been there through failure and success!
Capital Preservation is key to long term wealth accumulation
Great words of wisdom MB. Once again, thanks for sharing them.
Totally humbling..
Agreed.good warning and guide too.speak of reality on the market. .I love this forum
Quoting Mike Jolley
I've found this to be true over and over again: Always follow the trend. The GBPUSD position has been the flagship of Monthly Position and has earned over 800 pips in this brief time period.

On the other hand, I truly feel the anti-dollar trend is wrong, that it has already started to reverse, and that I don't want to have all my positions stuck either for or against the dollar. It sucks that I'm putting my money on crap I don't believe in, but it's making me more money.
So, because your system outperformed Vegas' over a THREE WEEK PERIOD, it's suddenly better? Really, listen to yourself. Every system has weaknesses, and here's your system's achilles heel:

This is not how the market behaves all the time. Most people will tell you the market ranges somewhere like 80% of the time. So, when the market is ranging, your trend following system will take it in the behind while Vegas' prospers. So, you've either got to stick with it and take your drawdown, modify it to decrease drawdown like Mudd suggests, or you will have to develop a way of determining when we're trending and ranging and trade differently for each condition.

In this case, it was easy to tell this trend was coming. I'll post some charts if I can.
Quoting Far From Average
So, because your system outperformed Vegas' over a THREE WEEK PERIOD, it's suddenly better? Really, listen to yourself. Every system has weaknesses, and here's your system's achilles heel:

This is not how the market behaves all the time. Most people will tell you the market ranges somewhere like 80% of the time. So, when the market is ranging, your trend following system will take it in the behind while Vegas' prospers. So, you've either got to stick with it and take your drawdown, modify it to decrease drawdown like Mudd suggests, or you will have to develop a way of determining when we're trending and ranging and trade differently for each condition.

In this case, it was easy to tell this trend was coming. I'll post some charts if I can.
I don't think Jolley said his system was better than VWB, nor do I think he was saying anything negative for Vegas' system. I think he took Vegas' comments to heart and thought a little outside the box. He came to the realization that he could profit in trending markets and switched systems in order to take advantage of the heavy trend rather than trying to peg Vegas' system as the absolute "holy grail", so to speak.

Why is it bad for someone to switch systems once he has identified an exploitation that another system doesn't take advantage of?

You're probably right about the tendency to trend, although suspect it's less than 80% of the time unless you're looking at really long time frames (weeks, perhaps).

This anti-dollar uptrend has been going on for a long time (8 weeks, perhaps), and for him to be very profitable with another system for only 3 of those weeks tells me he expended quite a bit of time trying to figure out why VWB wasn't doing so well and tried something else. I don't see a foul here...if what you're doing isn't working in the moment...why would you stick with it?
Quoting mrmikal
I don't think Jolley said his system was better than VWB, nor do I think he was saying anything negative for Vegas' system.
Well, the title of the post was "My experiment hurts my opinion of tunnel methods." He goes on to make remarks that seem pretty pejorative to me. I was trying to get him to think on both sides of it.
The above posts have been insightful and a pleasant read : - )

Mike, your comment on the concept of trading without "any stoploss" reminded me of my recent read & reread of B W I L C, certainly not for the faint of heart! I'm now experimenting with a more "catastrophic" stoploss setting if i enter what should be the continuation of a defined trend...time will tell, but for myself, allowing the currency a bit more breathing room than my prior "close-set" SL has been profitable over the past few weeks since incorporating some of the ideas in the book (i'm still working out the MM details in my model, and they are a priority, and majority of concepts gleened from Fiji in the PF).

As for the "Tunnel" system? I was one of those "Tinkerers". It's just a part of my personality. I feel a greater since of confidence even if i add just a pinch of my own thought to a given idea/concept/system/gadget. I've done this as long as i can recall. I instantly fell in luv with what Vegas had shared in his original 4hr model and took it to shorter time frame charts to begin learning how price action often plays about the tunnel and fib# extensions. . . and have then added a good dose of PA as James16 teaches in the PF.

Mudd, your website and "educational" info is fantastic. Many of us here have benefited from your generocity. While i can heartily agree with your delima on to-share/not-to-share, just remember You Have Been A Blessing for many, many traders!

MrTrend, how true 10% a month? That would put anyone up with the elite group of traders. I was teethed on FX with the idea of 5 pips a day at 5% risk making one a millionaire in less than 4 years...while i no longer hold to the hype, I now, as Dirk states in his book, try to take some profit each day as; "A profit a day keeps the bailif away"! I'm also utilizing (many) ideas gained from the J16gPF on brining SL up to BE asap, and this simple act has increased my profits and confidence (i'm now also not affraid of pushing the "hedge" button on my tradestation during a retracement if i'm in a longer trade and still confident in the "trend"...but i realize this statement might line up with your "It HAS to turn around!" statement, so not for everyone.)

Iso, good post on the need to put the disclaimer up front and in their face right out of the gate! And just a kudos to you, I've gained much from your thoughts/insights you've shared...so you keep'em comin' ok?

Bramhall, i haven't seen many of your posts? Where you been hangin' out? Very interesting take on the "spiritual" side of things as they may relate to our relationships w/one another. The "Balancing at a macro level over time" i can attest to in my life. Good stuff : - )

And East? Yup, your comment on the benefits of sticking with one system long enough "through thick and thin" is something i've posted on my computer monitor over the last few weeks as i'm in the (longer than i thought would be needed!) process of writing down my model before beginning any type of "Challenge" thread at the PF. (PS:East, the AccreteCamp is georgeous right now, all the trees in bloom and birds a signin' got your site all ready for your visit ; - )

Cheers to all,
Thom
Quoting accrete
And East? Yup, your comment on the benefits of sticking with one system long enough "through thick and thin" is something i've posted on my computer monitor over the last few weeks as i'm in the (longer than i thought would be needed!) process of writing down my model before beginning any type of "Challenge" thread at the PF. (PS:East, the AccreteCamp is georgeous right now, all the trees in bloom and birds a signin' got your site all ready for your visit ; - )

Cheers to all,
Thom
Wow Thom,

You've got a lot of time on your hand right now..
Well, that "through thick and thin" is kinda exaggerated.. We know that there are possibilities for a system to go haywire and and when they do, well, we've got to adapt.. Okay, I'm plain swamped right now and got to hit the sack..

Man, you got a pic of AccreteCamp? I gotta see it..

Regards,
East
Quoting Far From Average
Well, the title of the post was "My experiment hurts my opinion of tunnel methods." He goes on to make remarks that seem pretty pejorative to me. I was trying to get him to think on both sides of it.
I suppose I wouldn't have been inclined to write title that attacks a system, myself...but perhaps he should have qualified his statement a bit better. I see where you would have come to the conclusion. If I didn't know Jolley any better, I would have probably come to the same conclusion, but reading a lot of his other posts, he is definitely more experimental than most...so I understood off the bat what he was he trying to say and almost completely disregarded the title...

Of course, that doesn't absolve anyone from sticking with something that isn't work for longer than they should because of some inherent loyalty, agreed?

I believe VWB is an excellent system for most markets these, but even Vegas, himself, copped to flaws within his system and urged others to look for alternatives during markets such as the ones we are experiencing. No system is perfect, and for that matter, I would venture to say that no SET of systems is perfect, BUT I believe that modifying your approach during different market conditions (with a smooth transition, of course) is a lot like diversifying your portfolio...obviously in easily identifiable trending situations, a trend following system will net you excellent profits while a range-trading system would get killed...however, if you can combine your efforts and re-balance your "portfolio" of systems you'll be able to catch trends when they come, and range trade during the more appropriate time while reducing your risk.

I think Jolley's "experiment" is merely an extension of that...and I'm hoping he has come to the same realization.
Quoting mrmikal
I suppose I wouldn't have been inclined to write title that attacks a system, myself...but perhaps he should have qualified his statement a bit better.
Actually, I don't care if he attacks VWB or not. I just thought it was foolish that he did it over 3 weeks or so of data.
Quoting Far From Average
Actually, I don't care if he attacks VWB or not. I just thought it was foolish that he did it over 3 weeks or so of data.
Again, you're assuming he was actually "attacking" Vegas' system. It is true that VWB is a tunnel-based system...and you have every right to come to that conclusion...

Let's just ask him:

Mike, are you saying your system is explicitly better than VWB? and if so, why do you think that? furthermore, how well does your system handle range-bound markets? Were you able to get positive backtest results? Any input you provide would be most helpful. Thank you.
0 traders viewing now