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Attachments: Trend Trading
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Trend Trading

Ric, I agree that it's almost impossible to know a good setup from a bad one. People who claim to have some secret mysterious method are just full of crap. Usually they are trying to sell something or they just like the attention. We all must take our lumps with bad trades, but we can limit losses so just a few bad trades in a row can't bust our account. In the end, we are just risk managers. We take on a bit of market risk and if we manage it well we are rewarded. Best success. - G
Thank goodness there's something sensible to read on this website once again.

As far as diversification and trading a portfolio goes I don't. My goal as a trader is to manage risk and to get the largest possible rewards for the smallest possible risk.
I look for the market(among the four majors) that is primed to move and that is the only market I trade. I do the opposite of diversify,I concentrate and add to my winning positions as long as they keep going my direction.

All setups are not the same. It makes sense to take all the setups until you determine statistically which of your setups have the most edge....and only trade those setups.To do this however means you must have a robust,objective method that can be backtested.eg would you risk 0.5% on both setups where one setup had 5-10% more edge than a similar setup?

Risk management is what matters to me.Once you have a robust method that can work into the future your future gains will be determined by the level of risk you are willing to take.That to me is the secret to large gains in trading.Risking 0.5% vs 1% per trade can mean a difference in gains of millions of dollars over a long enough time period especially when you factor compounding.

This is a business and the bottom line really is how much money you make.
@Graviton -- excellent, excellent thread...

I don't have anything to add -- I just wanted to thank you.

I've read through most of the posts and have learned a lot. And your thread has given me a new perspective. It seems many (most) traders have been programmed for one perspective and heaven-forbid if anyone or anything should dare question it. I like to consider a new perspective as a new tool, which I can add to my tool box.

My preference is algorithmic trading and I've developed many indicators and EAs. Your thread has given me new ideas and I'll enjoy (attempting) to incorporate some of them into indicators and EAs.
Quoting robots4me
@Graviton -- excellent, excellent thread... I don't have anything to add -- I just wanted to thank you. I've read through most of the posts and have learned a lot. And your thread has given me a new perspective. It seems many (most) traders have been programmed for one perspective and heaven-forbid if anyone or anything should dare question it. I like to consider a new perspective as a new tool, which I can add to my tool box. My preference is algorithmic trading and I've developed many indicators and EAs. Your thread has given me new ideas and...
Thanks so much for your kind review of my work here. I'm very interested to hear feedback from anyone attempting to implement any of the ideas we've discussed. As always, consider this thread a buffet of possibilities. Not everything will be appropriate for everyone. Take what helps you and agrees with your personal trading style and leave the rest. I've yet to meet any two successful traders that trade exactly alike. Feel free to post comments, questions, complaints, etc. I'll check back here from time to time and attempt to clarify or add anything important I may have missed. Best success. - G
I would like to start by saying thank you to Graviton for creating this thread and very unselfishly sharing his strategies with us. I do have a question for graviton, I always wondered whether trading breakouts on the weekly time frame was "better" then trading them on a lower time frame like say the 4-Hour. I guess I really have an issue with opportunity cost. For example, would it make more sense to wait for a significant breakout on the weekly time frame and trade with that versus trying to get into the trend earlier using a lower time frame. Any answer to this question would be much appreciated sir. Again, thank you for your generosity.
use Weekly time frame for trend direction in the middle of the weekdays,use monthly tf in the begigning of the weekly Tf for trend direction.I don't use anything lower than 1HTF,i start from monthly to weekly to daily to 4h ,then entry on 1h if it is good until 4htf.
Quoting PoetLaureate
I would like to start by saying thank you to Graviton for creating this thread and very unselfishly sharing his strategies with us. I do have a question for graviton, I always wondered whether trading breakouts on the weekly time frame was "better" then trading them on a lower time frame like say the 4-Hour. I guess I really have an issue with opportunity cost. For example, would it make more sense to wait for a significant breakout on the weekly time frame and trade with that versus trying to get into the trend earlier using a lower time frame....
There are a few things to consider here. First, I'd be careful of attributing too much value to opportunity cost. Everyday I miss hundreds of great trades in markets all over the world. I don't attribute a missed opportunity cost to all those missed trades.
It really doesn't matter much when you enter a trade, early, middle, or late in the trend, as long as your method allows you a profitable exit more often than not. Perhaps it's a trade off. The earlier you enter in the trend, the less reliable it is, and the later you enter the less time it has to run on average. This decision on whether to enter a trade off the 1H, 4H or longer timeframes is also related to trade duration. I don't know as there is a perfect time frame or trade duration. I've seen traders profit from trades that last from very short periods to very long ones. You probably already have some opinions on just what setups you want to take, so I'd suggest you test those out with back testing and then in demo. It's likely you'll find a sweet spot where your particular entry and exit criteria are the most productive. Best success. - G
Always trade with the trend. That’s rule number one!
Quoting Forexkongs
Always trade with the trend. That’s rule number one!
Hey Forexkongs,

I think its more like that is one rule more than it is the number one rule. I have some colleagues that only trade counter trend and make a good return doing so. I myself am a swing trader on the daily charts. I do not always trade with the trend. Of course I have no idea when the trend will change. All I know is what is happening now.

- Ric
Be humble or get humbled
Quoting tashkent
{quote} Good post but no matter how many names you can call a specific concept, this does not change the meaning much. Predicting, guessing, anticipating, forecasting are all simply saying/declaring about an event before it happens. some negligible differences between the words but overall the same meaning. I do not think this is even worth discussing.
I call all trading S.W.A.G. (Scientific Wild A$$ Guess)



- Ric
Be humble or get humbled
  • Post #591
  • Quote
  • Edited Jan 23, 2019 12:32am Jan 22, 2019 6:51pm | Edited Jan 23, 2019 12:32am
Quoting Nivad
Thank goodness there's something sensible to read on this website once again. As far as diversification and trading a portfolio goes I don't. My goal as a trader is to manage risk and to get the largest possible rewards for the smallest possible risk. I look for the market(among the four majors) that is primed to move and that is the only market I trade. I do the opposite of diversify,I concentrate and add to my winning positions as long as they keep going my direction. All setups are not the same. It makes sense to take all the setups until you...
Hey Nivad,

I think maybe the statement "setup" may be viewed differently by different people. What is your definition? However, I would like to understand how you decide what makes a bad, good or great setup in your mind? Does it differ much than my statement of exceptions,

"1) If a candle is too large do to News or some unknown variant. My discretion on what "too large" is.

2) Starting a trade on Friday candle. Especially in today's political climate.

3) Trade triggered by a price gap."

or is it some other way? Are you willing to forgo opportunities and wait for conditions that proved profitable in the past, but knowing it may fail anyway? I am trying to understand this concept that I hear and read time and again but I just do not see how it works any different than taking most setups that meet an individuals trading criteria nor have I seen any mathematical proof to prove such a concept makes any real world difference.

As a trader by profession and a value driven investor, if there are ways to save money, reduce loss percentages and or make more money I am interested. However it seems on most forums and threads, when I question someone it seems ego kicks in and a fight ensues. I am not interested in ego or fighting. I just want an honest answer if you have one.

Thanks,

- Ric
Be humble or get humbled
I'll comment on my setups and leave it to others to comment on theirs. For me a setup is a golden cross across multiple time frames and it's very deterministic and definitive. It either crossed or it didn't. I take all setups that I see and let the market sort them out. For me, whether a setup was good or bad can only be judged in hindsight on whether it produced a good trade or not. I like that arrangement because it takes all my subjective judgment out of the entry and reduces the number of places I can make a mistake. I know others have setups that have varying degrees of perfect, good, average, poor, etc. and I'll have to leave it to them to discuss theirs. I will point out that in my experience, the most important element in trading is position sizing. Just a few mistakes there can wipe out an account. Next is probably exit method as that is where the money is made or lost. Entry setups and the very fine details of entries are probably the least important elements of trading, in my own humble opinion. Of course, I could be wrong. - G
riclater211.....Trading is all about probabilities.I wait for a trend to show itself before I even consider taking a trade.(That's how I save money,reduce loss percentages and make more money as you put it.)Then I wait for a pause and trade the ensuing breakout.There are only good,bad and great setups in hindsight.You can't know beforehand if a setup is going to fail or not even if it has a greater edge than another similar looking setup.

So if I'm trend trading wouldn't setups I take have a higher probability of working out if there is a trend present as opposed to taking the same setups in a choppy market?Would you risk the same on a trade in chop as you would in a trending market? The best thing you can do is backtest and determine the edge on your trades then apply the correct position size to the trades with the highest edges.Good trading.
Quoting Nivad
riclater211.....Trading is all about probabilities.I wait for a trend to show itself before I even consider taking a trade.(That's how I save money,reduce loss percentages and make more money as you put it.)Then I wait for a pause and trade the ensuing breakout.There are only good,bad and great setups in hindsight.You can't know beforehand if a setup is going to fail or not even if it has a greater edge than another similar looking setup. So if I'm trend trading wouldn't setups I take have a higher probability of working out if there is a trend...
Hey Nivad,

Thanks for the reply. Now I understand where you are coming from. As long it works for you, great. There is no wrong way to trade as long as you are happy with the results. Keep learning and perfecting a working strategy with sound money management and anyone can do well in the market.

Personally, my risk profile stays the same no matter the trade. In my experience, each trade has the same risk of failure at onset. Of course my definition of failure may differ from others. I am always sure to take fundamentals , both upcoming and recent, into account before a trade as well during a trade for proper management. Fundamentals have the ability to shatter any technical analysis, cause huge corrections in a trend or even change the trend.

I agree that back testing has it's place. Checking how a certain idea may work in past market conditions is imperative. However, I would not take too much stock in results of the back test. Curve fitting, intentional or otherwise, is rampant in such testing. Real world, live cash, forward testing is the only real way to prove a system works in the "wild".

As always these are just my opinions and experience. People may or may not agree with my statements and that is OK.



- Ric
Be humble or get humbled
I agree that money management and position sizing are critical. A simple example is suppose our strategy is so good we will make 3 to 1 reward to risk on an average win and we win half our trades. Then, if we risk 1% of our account, half the time we'll make 3% and half the time we'll lose 1%. We could pretty much trade indefinitely with very low risk of ruin and make a good living over a very long period of time. If we get greedy and trade 10% of our balance to make 10 times as much on the winners, all it takes is 10 losers in a row to wipe out an account. If we are trading 4 trades a day, a complete wipe out becomes probable in about a year. Half of the traders will be wiped out much sooner than that. So, as you noted, it's a game of probabilities and position sizing. Of course we have to find a way to shift probabilities in our favor to win long term, but that's not enough by itself. Even with probabilities shifted into our favor, we can be wiped out rather quickly with poor money management. - G
very rewarding once you thread above. I was greatly helped in understanding forex trading. I hope, we can succeed together. Thank you
Quoting RambertBenja
very rewarding once you thread above. I was greatly helped in understanding forex trading. I hope, we can succeed together. Thank you
Glad you got something out of it Benja. Remember, "Be fearful when others are greedy. Be greedy when others are fearful." Best success. -G
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I see your chart there Squiggles, but I'm not sure of your point?
Quoting Squiggles
{image}
Indeed, what is your point? That the EURUSD is range bound? Yes it is. The EURUSD is in a flat trend? Yes it is. Something else?

- Ric
Be humble or get humbled
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