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The Big secret to trading success

  • #81
  • Apr 24, 2016 10:31am Apr 24, 2016 10:31am
Quoting 4xPIPAHOLIC
{quote} https://www.trendfollowing.com/2012/...appears-at-85/
That's Bruce Kovner's net worth.

I can see how one could make the mistake looking at the page layout.

I speculate that Ed's net worth is probably an order of magnitude greater than that.
  • #82
  • Apr 24, 2016 10:39am Apr 24, 2016 10:39am
Quoting Atokys
{quote} That's Bruce Kovner's net worth. I can see how one could make the mistake looking at the page layout. I speculate that Ed's net worth is probably an order of magnitude greater than that.
Yes , It was my mistake, this was the page layout I got :

https://www.google.ca/search?q=ed+se...hrome&ie=UTF-8

but my point was the proof of the amount of money they made not who made what from them

Thanks for pointing that out

And here something about Richard Dennis from wikepidia:

Dennis managed pools of capital for others in the markets for a while, but withdrew from such management in the spring of 1988 after his clients suffered heavy losses. In the Black Monday stock market crash of 1987, he reportedly lost $10 million,[8] with a total of $50 million reportedly lost in 1987–1988.[2] In 1990 his firm settled investor complaints of his failure to follow his own rules, for over $2.5 million, without admitting or denying any wrongdoing.[9] He also managed funds for some time in the mid and late 1990s, closing these operations after losses in the summer of 2000.

4x
  • #83
  • Apr 24, 2016 10:43am Apr 24, 2016 10:43am
some interesting success stories incl Seykota and Kovner here.

These 11 Traders Went From “Rags” To Riches In Real Success Stories
  • #84
  • Apr 24, 2016 12:25pm Apr 24, 2016 12:25pm
I recommend trading 4H/Day structure, not trend. Structure is a hybrid of FA and TA, and provides a narrative of what is going on in the market. Trends within structure are important, but market tendencies, and the effect of tendencies on PA, are just as important. Put another way, trading trend is a good idea, until the trend is overwhelmed by market tendencies. With a proper read of structure, you can anticipate (that is, be prepared for, not necessarily trade) the end of a trend and the possible beginning of a new trend, or, the end of a leg and the beginning of a retracement, etc.
  • #85
  • Apr 24, 2016 12:36pm Apr 24, 2016 12:36pm
Interesting point of view.

My take is even if you run with the pack sometimes you will only be running your own individual path anyway!
  • #86
  • Apr 24, 2016 1:50pm Apr 24, 2016 1:50pm
Pure mechanical (technical) trend following does not work people. Sooner or later you will understand this! Especially when applied in a systematic way.
The only way to make it work, is to use discretionary method in combination with fundamentals/news.

Your "arguments" mean nothing, just words! The facts show that most people chase trends, and most people lose their money.
And I on the other side have real evidence.
Please, test the EA as long as you want. Use different settings, different time frames.... and you will see that the expectation per trade always stays close to zero minus the transaction cost.
I can give you another trend following EA based on moving averages, or based on any indicator ( your choice). But is doesnt matter! I can guarantee you the results are always the same!

The way you make real money in trading is by buying low and selling high. Not by chasing "trends".
Buy undervalued markets, sell overvalued markets.
The only time when trend following makes sense, is when the crowd is on the other side. (during market panic, or stop run).
Also during the formation of market bubble. But all bubbles are supported by fundametals, not by technicals.

This is how the "legendary' traders made it. They were just lucky enough to be on the correct side of a market bubble. But you cannot get lucky more then a few times. That's why most of these "gurus" eventually suffered heavy losses!

Also we should make some distinction between momentum trading and trend trading. Because it is not the same. For example it's a great strategy to trade against the retail stops. They often provide good momentum. Sometimes you can scalp 100 or more pips in just a few minutes. But if you try to trade it like a trend and you hold on for more (until the trend is over)....9 out of 10 times it doesnt work and the reversal will take you out.

I personally find that the "hit and run" approach works best in FX. Thats why is scalp.
The longer you hold on to your trades, the more you are exposed to randomness.
And I don't like to bet my money on randomness. When i put on a trade a have to be sure that there is at least 70-80% chance that I will be able to get out flat or with profit. But not with a loss.
  • #87
  • Apr 24, 2016 3:27pm Apr 24, 2016 3:27pm
With Trending or target trading a few solid objectives are achieved

1)Greater analysis of every trade position (Monthly weekly daily 4hr)
2)This then help with avoiding the biggest problem of being on the wrong side of the trade
3)It becomes much clearer where the target of the market maker is - likely 30-100 pips away if there is a day trading move on or like last friday which was a weekly/monthly move which is typically 100-500 for most pairs.
4)So you are now left with one challenge to control lot size
5)One way of doing this is called sending out a scout:

Use a lot size 1/3 the size of your per trade risk capital, say .10, this will then allow you to set a bigger stop loss allowing you to sleep like a baby without babying the trade. If or when the trade moves in your direction like 100 pips you simple move your stop up so there is break even or small profit then add the second lot size using the same 100pip stop.
This can be done easily on a pair like the current GBPAUD pair which is currently (Apr 24/2016) at 1.87 but should be heading to 1.82 in a matter of days.....80% probability.

Happy Trading
  • #88
  • Edited 3:56pm Apr 24, 2016 3:44pm | Edited 3:56pm
Quoting alphaomega
Pure mechanical (technical) trend following does not work people. Sooner or later you will understand this! Especially when applied in a systematic way. The only way to make it work, is to use discretionary method in combination with fundamentals/news. Your "arguments" mean nothing, just words! The facts show that most people chase trends, and most people lose their money. And I on the other side have real evidence. Please, test the EA as long as you want. Use different settings, different time frames.... and you will see that the expectation per...
Aplhaomega,

I just want to make clear that this is not to go against you (cause you are free to believe what you want and in other occasions I would not even answer) but to only direct the newbies in the right direction, witch is not to avoid the trend cause that is a very big mistake.
It is clear that you are not a professional trader or has not been around any in institutions or banks. If you are going to use indicators to trade the trend you have to know how to use them correct, witch 99% do not know, yes you read that correct, 99% use them like newbies, like "it is meant` to be used. So all the EA`S you create if you used the indicator or crosses like everyone then they are garbage... that is the proof.... garbage cause they are not used correct.
To create correct EA`S you have to know how to trade first and suddenly everything will work(like the banks).
So ``I can guarantee you the results are always the same too ! ``

Not by chasing "trends". - Yes you are correct.... let me give you a hint.... on a buy you enter when everyone sells (but at the correct area of course) but in the direction of the trend for sure.... cause the swings are bigger on that side..... it is that simple and please do not use indicators conventionally

This is how the "legendary' traders made it. - Please do not even go there.... read some more about the legends.... and the legends that got killed some times where the ones that where using fundamentals too(like Robertson).... but NON of there returns where based on luck, yes traders get lucky but not for 20 years straight.
Warren Buffet answered the ``some where lucky statement`` in a great way in the book ``More money than God`` when he answered a university student about luck.

All the other statements I am not even going to answer because to me they just show me that you have not really dig deeper, but please do not try to teach what you do not know to newbies. Give them a chance to experiment and learn and to not throw away there biggest friend, the trend.
Of course you are entitled to your opinion and what we believe is where we go in the end.
My opinion 80% of the 5% traders(that make money) will make money trading the trend the right way. The rest will make money trading all other ways....

Of course money management is a big part of that trend trading plan too, it is a plan, so some discretion here is in but it can still be programmed.

PLEASE NEWBIES Never forget the trend, like marked in my status always .... dig deeper and you will see... it is not easy and for some it might even take over 10 years, the rest believe in the flying donkeys and when years go by and you searched in the wrong direction you will remember me....

I never answer but misleading info should be answered.

​Like I said alphaomega. I have nothing against you, please do not take personal, I even liked most of what you post but this is far off.

4x
  • #89
  • Apr 24, 2016 4:39pm Apr 24, 2016 4:39pm
I dont get, how there can be such diversity in opinion about this.
My beginnings in trading demonstrated me in the rough way, that you MUST respect the bigger trends.
The moment i figured out, that i should only take trades in low time frames which fit the direction of price development in higher time frames, i started not to lose money anymore.
But this was in my case just the first step.
I dont think its possible to explain how this process really works, because you have to make this learning experience for yourself.
A good way to get better is to look back at your trades at the weekend, when the "live-trading-emotions" settled down.
After some time you can miss out the "bad" trades better and better.
And with the gain of self-confidence you kinda do better overall.

Its hard to give exact instructions to others on getting profitable. Its just screen time and allowing yourself to make mistakes because you cant do it without them.
  • #90
  • Apr 24, 2016 4:45pm Apr 24, 2016 4:45pm
Quoting alphaomega
Pure mechanical (technical) trend following does not work people. Sooner or later you will understand this! Especially when applied in a systematic way. The only way to make it work, is to use discretionary method in combination with fundamentals/news.

Bullshit!

Market always knows the news before you do.

Discretionary trades = Yes.

Combination with fundamentals = No!
Money Can't Buy Happiness. Poverty Can't Buy SHIT! You Choose!
  • #91
  • Apr 24, 2016 4:53pm Apr 24, 2016 4:53pm
Quoting Nala66
It is hard to believe anything written on the Internet without personal proof. I don't believe 9/11 ever happened because I wasn't there and anyway Donald Trump said it was 7/11 so who can I believe. Here in the Forex Factory we seek the truth and every single opinion I have seen thus far has had the opposite view chucked at it until an argument ensues. Really what does it matter which way produces the more pips or points these are only the chart increments it is what we do with them that counts as far as trading is concerned. One can develop a...

Nice post. We are here to learn yet "we" don't trust anybody.
  • #92
  • Apr 24, 2016 5:04pm Apr 24, 2016 5:04pm
Quoting 4xPIPAHOLIC
{quote} Aplhaomega, I just want to make clear that this is not to go against you (cause you are free to believe what you want and in other occasions I would not even answer) but to only direct the newbies in the right direction, witch is not to avoid the trend cause that is a very big mistake. It is clear that you are not a professional trader or has not been around any in institutions or banks. If you are going to use indicators to trade the trend you have to know how to use them correct, witch 99% do not know, yes you read that correct, 99% use...
Of course nothing here is personal! I'm just trying to make a point so we can get the truth out. Let's be clear.

According to the classic trend following concept like the one described and used by the turtles, Richard Dennis, Ed Seykota and all other famous trend followers..it says that the correct way to trade the trend is to buy high and sell higher, or sell low and buy lower.

The problem is that this methodology no longer works! The markets have changed. What use to work in the past is now useless.
You see, back in 70's and 80's the markets were a lot more "trendy" and smoother.
The markets today are alot more choppy and rough. A lot more volatile and with many false breakouts. Also the fundamentals today are completely different. Because of electronic trading prices today move alot faster. When the news comes out, the price reacts almost instantly. What was trend 30-40 years ago, now is just a 5 second spike which is impossible to trade. The rest of the time we see a lot of ranging action, and no clear direction. (and this is very bad for the trend following strategies).

All I'm trying to say is that it doesn't matter if you follow the major trend or you go against it, it is still best to buy lows and sell highs.
Attached Image (click to enlarge)
Click to Enlarge Name: Trend.PNG Size: 41 KB

Attached Image (click to enlarge)
Click to Enlarge Name: Range.PNG Size: 42 KB

From your observations, do you think the market spends more time in range, or in trend?
Because to me, it is clear that today ranges represent at least 75% of the price action.
And the strategies which are optimized for ranging markets are alot more robust and consistent.
  • #93
  • Apr 24, 2016 5:58pm Apr 24, 2016 5:58pm
Quoting Xumm
{quote} Oh really? Let me show you some long trends that occurred well after the 80s, and tell me if they are a lie: Gold from 270 in 2001 to 1923 in 2011, increased in price 7-fold. {image} USD/ZAR from 6.60 in 2011 to 17.81 in 2016, increased in price +170% {image} NASDAQ100 index from 1,040 in 2009 to 4,740 in 2015, +355% {image} and I have many more examples to show, if you want.. {quote} More than 75% of the time markets are not trending, but you don't have to use trend following on a random instrument, you have to select the few ones...
Yeah right!

This is classic example of "Cherry picking" (in hindsight) and it's very common cognitive bias among traders. https://en.wikipedia.org/wiki/Cherry_picking

Of course there are persistent trends from time to time. But you never know how long the trend will continue. You never know when it starts or ends.....Almost all trends fail and the price reverts to the mean. So from classic trend following strategies you can expect very low win % and deep drawdowns. Deep drowdowns mean that you have to trade small size, because otherwise you will blow your account. (And this is exactly what happens to most traders).

And what is the point of showing these multi year trends anyway? We are traders here not buy and hold investors. So your examples are irrelevant.

Maybe I forgot to mention that I rarely hold open trades longer then 60 min.
About 85% of my trades last under 10 min.
What is the point to hold for days with low leverage, when you can hold for minutes with high leverage? Same risk, but you get 100 times more opportunities.
  • #94
  • Apr 24, 2016 6:01pm Apr 24, 2016 6:01pm
Quoting Xumm
{quote} Oh really? Let me show you some long trends that occurred well after the 80s, and tell me if they are a lie: Gold from 270 in 2001 to 1923 in 2011, increased in price 7-fold. {image} USD/ZAR from 6.60 in 2011 to 17.81 in 2016, increased in price +170% {image} NASDAQ100 index from 1,040 in 2009 to 4,740 in 2015, +355% {image} and I have many more examples to show, if you want.. {quote} More than 75% of the time markets are not trending, but you don't have to use trend following on a random instrument, you have to select the few ones...
Xumm...You are correct in that there are always trends....trends that exist in many timeframes. Trend is defined as a "general inclination or tendency"

I think what is the most likely cause for those that swear that you cannot follow a trend and make money...is very simply that they have not figured out how to do it , so therefore it cannot be done.
As for having rules and one step further, mechanical trading systems, it is clearly evident that there is no basis in truth for what is being said about the non existence of such things. They do exist at every level of trading from the small retail guy who supplements his 401k to institutional traders at the world most renowned MM firms.
Those who are trying to get people to believe that the GS and DB's of the world generate BILLIONS of trading profits via a bunch of discretionary traders with no rules or guidelines by which to adhere...well quite simply. they are wrong
Plan, Prepare, Execute, Repeat
  • #95
  • Apr 24, 2016 6:07pm Apr 24, 2016 6:07pm
Quoting alphaomega
{quote} Of course nothing here is personal! I'm just trying to make a point so we can get the truth out. Let's be clear. According to the classic trend following concept like the one described and used by the turtles, Richard Dennis, Ed Seykota and all other famous trend followers..it says that the correct way to trade the trend is to buy high and sell higher, or sell low and buy lower. The problem is that this methodology no longer works! The markets have changed. What use to work in the past is now useless. You see, back in 70's and 80's the...
I will agree with you that the turtles system does not work anymore, but I am sure that some have found ways to modify some rules and
are making money on it, but yes it does not work.
And yes there are more spikes and it is a lot more choppier than they used to be but it does matter if you follow the trend cause you have a bigger chance to
get a larger move, since the trend is in your favor. But why make it worst by trading against the trend?
Now Ed Seykota was and is a master when it comes to putting the edge in his favor....
I played around with that and realized that for some strategies your edge can be only a small percentage points.
Now on some trend trading strategies my R:R is 1:1, the edge here is that most of the times I will hit the profit very fast instead of chopping around,
while if I was counter trend I might have chopped more or my hit rate would drop(the entry and the MM plays a big role here) since the trend traders would have turned it around towards the trend..... why should I swim against the sea tide? why should I drop my odds?
Having the slightest odd will make you profitable... like casinos.... what are there odds ?
Some would say why only 1:1 but that is what keep my hit rate so high and I manage to flip the capital faster.
On other occasions I have a R:R of 1:3... or even more... a lot more.... I would ride the trend(partials)... till I see weakness.....I am a swing trader by nature...

Markets do range 65-70% of the time... but when they trend...one good trend can make you a killing with a lot less stress...
There are range traders that make money and all the power to them. I am a trader that thinks nothing is impossible so if you create an edge
counter trend good for you, but you cannot discard something so powerful like the trend, this edge is God given.
About consistency sorry but it all depends on your system, but overall trend is trend like the sea....like the river... like the boat with the sails... when the tide comes I want to be there so it can take me with it and like I said it is a lot easier to ride the big waves than the small ones.
In a small wave the chance of getting caught in a big wave against me is big...put the odds against me and not with me? Why should I go against the avalanche?
You are going to tell me to take 40 pips instead of 80....why?

One thing is sure.... trend trading by nature is superior..... by nature....
  • #96
  • Apr 24, 2016 6:35pm Apr 24, 2016 6:35pm
Quoting alphaomega
{quote} Of course nothing here is personal! I'm just trying to make a point so we can get the truth out. Let's be clear. According to the classic trend following concept like the one described and used by the turtles, Richard Dennis, Ed Seykota and all other famous trend followers..it says that the correct way to trade the trend is to buy high and sell higher, or sell low and buy lower. The problem is that this methodology no longer works! The markets have changed. What use to work in the past is now useless. You see, back in 70's and 80's the...

Hey AO

We are generally much better off not dividing ourselves based on our years of experience at this trading thing as it easily reduce our chance of learning more rapidly.

There is a general mindset toward "the trend" that creates a cloud about the whole trend idea.

I prefer to call the whole price movement a range. So when the market moves the price within a monthly or weekly range like 100-500pips it is regarded as a trend by the day trader. The market does this on average twice per month especially with the crosses like GBPAUD.

The whole point of the so call trend is just to help determine the direction the market is ranging in whether its daily/weekly/monthly or even quarterly ranging such as the USDJPY just finished.

I believe this approach is way more insightful than to be overly concerned with how to use indicators or whether or not to use them.

From my observation of the charts it is clear the market makers use mainly PSR FIBS and Trendlines for the 70% daily ranging that is done on the charts. The midrange or longer term ranging is done mainly due to fundamental changes such as interest rate changes or general election or events impacting economic growth and development such as China slowdown or major recession.

If or when traders lose it is mainly because we refuse to close out losing trades early or we use incorrect lot size relative to the size of the account.

If we can get over the idea of trending/ranging we will put most of the focus on controlling the timing of entering and exiting a trade and the lot size. This is the real meaty stuff of trading. The rest is really gravy.

Happy trading everyone!
  • #97
  • Apr 24, 2016 7:29pm Apr 24, 2016 7:29pm
Quoting DonFF
If we can get over the idea of trending/ranging we will put most of the focus on controlling the timing of entering and exiting a trade and the lot size. This is the real meaty stuff of trading.

Trade the relevant session!!

Money Can't Buy Happiness. Poverty Can't Buy SHIT! You Choose!
  • #98
  • Apr 24, 2016 9:20pm Apr 24, 2016 9:20pm
just came by to say I love this thread
  • #99
  • Apr 24, 2016 10:11pm Apr 24, 2016 10:11pm
Quoting Capelli
just came by to say I love this thread

It does seem to have sparked some interest.

What I always believed was the secret was the ability, within the time frame you choose to trade
was the fact you need three simple things.

Direction
Momentum
Timing


Anything other than that is moot.

Roy
Polishing my crystal ball
  • #100
  • Apr 24, 2016 10:46pm Apr 24, 2016 10:46pm
Quoting 30XTCi
{quote} It does seem to have sparked some interest. What I always believed was the secret was the ability, within the time frame you choose to trade was the fact you need three simple things. Direction Momentum Timing Anything other than that is moot. Roy
However all three of these can only be see after the fact.
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