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M1 Countertrend Scalping Strategy

  • #801
  • Dec 28, 2022 3:25pm Dec 28, 2022 3:25pm
Quoting Abade
{quote} Well, that's debatable, while the different TF's may be artificial constructs (inventions) that don't represent the true nature of the market (which is better represented by tick movements, as you point out) there is still a difference in information quality that the indicators get for their calculations (higher TF's = Less closing prices used for calculations = mode "noise" reduction), so I'd say they still do matter in that regard The original strategy doesn't use the 100 EMA, but if we asume that the strategy works in every timeframe,...
If your'e going to trade M1 reversals, its best to create an MA near its frequency, then add an ATR band to find trades.
Its frequency is the point where 50% of the time price its bullish and 50% of the times price is bearish (Easily backtested by an EA)
If you must use an EMA which is the wrong moving average to use, you will find 38 is adequate in offering many trade wins with low draw downs.

Many experenced traders I trade Forex with do trade somewhat like I just explained. Any MA somewhere around the 38 to 60 and any band that creates a channel will work. There is no need for multiple MA's in my opinion, pointless.

I'll sneak out now
Trading thin liquidity at the boundary of the charts
  • #802
  • Edited 3:59pm Dec 28, 2022 3:45pm | Edited 3:59pm
Quoting RickM
{quote} If your'e going to trade M1 reversals, its best to create an MA near its frequency, then add an ATR band to find trades. Its frequency is the point where 50% of the time price its bullish and 50% of the times price is bearish (Easily backtested by an EA) If you must use an EMA which is the wrong moving average to use, you will find 38 is adequate in offering many trade wins with low draw downs. Many experenced traders I trade Forex with do trade somewhat like I just explained. Any MA somewhere around the 38 to 60 and any band that creates...
Hi RickM! Thanks for sharing.

I am actually improving my original interpretation a bit and adding a custom built (faster) bollinger band which applies standard deviation of a fast EMA line to trigger the entries (along with other mechanical filters to ensure I don't catch "falling knives"), will post a few examples soon.

The slower EMA's are not pointless, you can use them to:

1) Confirm a change in the overall trend.
2) Anticipate breakouts.
3) Exit a position that went deeper than anticipated using market information instead of your own account equity or a grid (if you watch the original KoF strategy you'll know why this is important).

You cannot do all of that with a single moving average. Also, I am against using optimization or EA's within this strategy, I want to keep it as discretional as possible for now, and don't wait it to become a curve-fitting project for sure (i.e Testing a thousand averaging methods, periods and deviations, a process that has its own pitfalls).
  • #803
  • Dec 28, 2022 5:24pm Dec 28, 2022 5:24pm
Be good to hear from some people how they protect their capital?

How many positions will you add and much DD in a strong trend before pulling the plug?

Abade Cpleger Charli Rick etc

be good to hear you style?
  • #804
  • Dec 28, 2022 6:00pm Dec 28, 2022 6:00pm
Thursday Trades...
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  • #805
  • Dec 28, 2022 6:31pm Dec 28, 2022 6:31pm
Quoting RieseP
Be good to hear from some people how they protect their capital? How many positions will you add and much DD in a strong trend before pulling the plug? Abade Cpleger Charli Rick etc be good to hear you style?

Probably won't like this answer, but I feel it out. If I am getting up to half a dozen cost averaged trades in and price seems like it is going to keep trending I hit the freak out button and place a large hedge trade for a total of all of my other orders plus one extra. I am prepared to close these hedge trades at their Break Even Point if it retracts quickly. Then I temporarily lock in the loss and watch for it to climb to a point that seems like a reversal with all of the entry signs we are using and cash out my hedges and place another order in the original direction. If a return to that original profit zone feels too far away I place some extra orders in to reel in the distance to Break Even or a little profit to just get me out of bad situation.

KOF: "Remember it's an art."
  • #806
  • Dec 28, 2022 6:56pm Dec 28, 2022 6:56pm
Quoting RieseP
Be good to hear from some people how they protect their capital? How many positions will you add and much DD in a strong trend before pulling the plug? Abade Cpleger Charli Rick etc be good to hear you style?
the best way to learn is to throw yourself in the deep end and work your way out of it (on a demo of course), enter a tough trend and find your style of working out of it, "trade each situation accordingly"!

it all depends on your risk tolerance and management plan, you must give every trade its full potential, leave adequate gaps between orders, the longer it runs against you, the bigger the gaps, mind your number of orders and potential drawdown against free margin and keep it healthy

in a very strong trend where margin call is becoming a risk, start working off your profitable orders to offset some of your losing ones and close them to reduce your risk and increase margin, ALWAYS STAY ON TOP OF IT TO THE END and you will be fine, this is where you earn your money, picking entries and exits is the easy part!

an example from last yesterday:
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every minute matters!
  • #807
  • Dec 28, 2022 6:56pm Dec 28, 2022 6:56pm
josh1111,
there is no right or wrong answer as each Trader has his / her own methodology.
I risk up to 50% (very very rare to get to this value) of my wifes small weekly account (less than 250 usd) and up to 30% of my account.
I have a very high risk tolerance.
cpfleger
  • #808
  • Dec 28, 2022 7:06pm Dec 28, 2022 7:06pm
Quoting RieseP
Be good to hear from some people how they protect their capital? How many positions will you add and much DD in a strong trend before pulling the plug? Abade Cpleger Charli Rick etc be good to hear you style?
Max DD:

- Small account (2,000-5,000-10,000) = 40% max DD before pulling out.
- Bigger account (i.e. 100,000) = 25-30% max DD before pulling out.

Position management:

- Number of trades = No preset limit. If I am opening too many positions or get out of margin I reconsider changing my instrument picks, position sizing and entry logic.

- Time limit = Flat at the end of session (just as KoF does). I wait until a "sizeable" bounce happens (near BE), then close everything and rest.

- Market action limit = The 200 EMA is always the final/last resort target (just as KoF does most of the time), I close everything regardless of my P/L once price arrives to this level. I avoid instruments that don't touch the 200 EMA regularly, as I consider them riskier (no GBPJPY or metals for me).

Note: If there are several unprofitable 200 EMA touches then I realize something needs tweaking: Instrument picks, recovery trades, first entry logic, etc.
  • #809
  • Dec 28, 2022 7:07pm Dec 28, 2022 7:07pm
Quoting cpfleger
josh1111, there is no right or wrong answer as each Trader has his / her own methodology. I risk up to 50% (very very rare to get to this value) of my wifes small weekly account (less than 250 usd) and up to 30% of my account. I have a very high risk tolerance. cpfleger
Wow. Some Risk. You and your wife trade the same or completely different.

here goes me!

I trade by entering my first open position and if price gains traction I add position.

so I will only average UP - once. After that I will add position every 10 pips averaging down. Using BRN. I will max open 6 average down positions and if price reaches the 7th close all positions. Or if reaches 3% of my capital.

I am backtesting on individual pairs but always looking to hear people advice in ways to improve.

Futhermore- my recovery trades are designed to B/E nothing more. Many times prices get to area and drops again. Going through the emotions over again
  • #810
  • Dec 28, 2022 7:07pm Dec 28, 2022 7:07pm
Done for the night...
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  • #811
  • Dec 28, 2022 7:09pm Dec 28, 2022 7:09pm
Quoting josh1111
{quote} Probably won't like this answer, but I feel it out. If I am getting up to half a dozen cost averaged trades in and price seems like it is going to keep trending I hit the freak out button and place a large hedge trade for a total of all of my other orders plus one extra. I am prepared to close these hedge trades at their Break Even Point if it retracts quickly. Then I temporarily lock in the loss and watch for it to climb to a point that seems like a reversal with all of the entry signs we are using and cash out my hedges and place another...
Also KoF: DAT's What AM TALKING ABOUT TRADERS! JUST AS I PRIDICTED
  • #812
  • Dec 28, 2022 7:14pm Dec 28, 2022 7:14pm
Quoting Abade
{quote} Max DD: - Small account (2,000-5,000-10,000) = 40% max DD before pulling out. - Bigger account (i.e. 100,000) = 25-30% max DD before pulling out. Position management: - Number of trades = No preset limit. If I am opening too many positions or get out of margin I reconsider changing my instrument picks, position sizing and entry logic. - Time limit = Flat at the end of session (just as KoF does). I wait until a "sizeable" bounce happens (near BE), then close everything and rest. - Market action limit = The 200 EMA is always the final/last...
Wow I couldn’t handle that level of DD. I’m quite a cautious trader. I’m more of a fearful trader than led by greed. Futhermore my leverage is 30:1.

I really do respect traders that are aggressive. With the correct leverage and correct opportunity you could make good money each day with 1-2 trades a day
  • #813
  • Dec 28, 2022 7:14pm Dec 28, 2022 7:14pm
Quoting niks
{quote} the best way to learn is to throw yourself in the deep end and work your way out of it (on a demo of course), enter a tough trend and find your style of working out of it, "trade each situation accordingly"! it all depends on your risk tolerance and management plan, you must give every trade its full potential, leave adequate gaps between orders, the longer it runs against you, the bigger the gaps, mind your number of orders and potential drawdown against free margin and keep it healthy in a very strong trend where margin call is becoming...
Woah Niks! That's one high skyscraper.

I notice that you can prevent some of these breakouts if you wait for 50 EMA to fully cross the 200 EMA before entering a new trade, and then wait for a price pullback back to the 20 or 50 as proof that there is some pressure on your side for future trades. You may lose a lot of entries this way, but the DD reduction is worth it.

You stomached really well though!
  • #814
  • Dec 28, 2022 7:20pm Dec 28, 2022 7:20pm
Quoting Abade
{quote} Woah Niks! That's one high skyscraper. I notice that you can prevent some of these breakouts if you wait for 50 EMA to fully cross the 200 EMA before entering a new trade, and then wait for a price pullback back to the 20 or 50 as proof that there is some pressure on your side for future trades. You may lose a lot of entries this way, but the DD reduction is worth it. You stomached really well though!
Abade could show us image highlighting what you have said? Be interesting to see your findings
  • #815
  • Edited 7:35pm Dec 28, 2022 7:21pm | Edited 7:35pm
Quoting RieseP
{quote} Wow I couldn’t handle that level of DD. I’m quite a cautious trader. I’m more of a fearful trader than led by greed. Futhermore my leverage is 30:1. I really do respect traders that are aggressive. With the correct leverage and correct opportunity you could make good money each day with 1-2 trades a day
I think this is a wise thing to do, so you shouldn't feel bad about it, a 100k account is a serious responsibility.

I am not sure about the low leverage, as it limits the number of new entries you can make and won't reduce drawdown by itself, unless something makes you enter a lot of simultaneous trades by accident or big lot sizes, in this case it would act as extra protection.

Quoting RieseP
{quote} Abade could show us image highlighting what you have said? Be interesting to see your findings
Sure my friend, it's still under testing but it seems to reduce the number of runaways of some predictable breakouts.

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I am also testing other type of mechanical filters such as counting bars of impulsive moves to time entries better, but that's still too fresh.

Hope this helps.
  • #816
  • Dec 28, 2022 7:39pm Dec 28, 2022 7:39pm
Quoting Abade
{quote} Sure my friend, it's still under testing but it seems to reduce the number of runaways of some predictable breakouts. {image} I am also testing other type of mechanical filters such as counting bars of impulsive moves to time entries better, but that's still too fresh. Hope this helps.
pivot points and RSI for trade entries. Works a dream
  • #817
  • Dec 28, 2022 7:45pm Dec 28, 2022 7:45pm
I’m on my Phone atm.

RSI - overbought
Resistance Daily Pivot
Resistance 200 ema

However not best time to trade
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  • #818
  • Dec 28, 2022 7:50pm Dec 28, 2022 7:50pm
Quoting RieseP
{quote} pivot points and RSI for trade entries. Works a dream
Yes my friend! You can combine this mechanical rule with RSI and Pivot Points, they won't bring contradicting information.

Here is another example where it would have delayed early entries. You could still have bad entries afterwards, but at least the 200 EMA has a better "catch-up", and there are no new entries in the next aggresive downturn:

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  • #819
  • Dec 28, 2022 7:56pm Dec 28, 2022 7:56pm
Quoting Abade
{quote} Woah Niks! That's one high skyscraper. I notice that you can prevent some of these breakouts if you wait for 50 EMA to fully cross the 200 EMA before entering a new trade, and then wait for a price pullback back to the 20 or 50 as proof that there is some pressure on your side for future trades. You may lose a lot of entries this way, but the DD reduction is worth it. You stomached really well though!
thanks for the tip Abade...

unfortunately, when entering every opportunity, these skyscrapers or pits of hell are inevitable, and as hard as one tries to filter them out, they will still be encountered, the more you go through, the better you get at them, i personally find it pointless trying to avoid them, in fact, they often provide the biggest windfalls, losses, however should be avoided at all costs

the only rule in my plan restricting entries aside from KoF's rule of not trading at the end and start of each trading day is to not sell when a pair is bouncing off an all time low or buy when bouncing off an all time high, the chance of returning to these record levels is minimal

regarding leverage, i too am restricted to 30:1 making it very tough to manage these situations with very limited number of orders using KoF's lot sizing recommendation, so when times get tough, additional orders are placed at smaller lot sizes

at the end of the day, the capital your are trading with must be disposable without affecting your life, and treating it this way will make it easier to manage without fear, don't give it away without a fight to the end
every minute matters!
  • #820
  • Dec 28, 2022 8:02pm Dec 28, 2022 8:02pm
Quoting RieseP
Be good to hear from some people how they protect their capital? How many positions will you add and much DD in a strong trend before pulling the plug? Abade Cpleger Charli Rick etc be good to hear you style?
Hi RieseP

I trade with 5 or 6 Forex Factory members in a group for the past 3 years where we are trading M1 reversal strategy's during the London & New York Sessions. The traders that have survive this period and are nicely profitable normally will cut their positions when they are around 3% to 5% in draw down.
The Max, draw down would be 10% but that's it.

The idea here is you can't trade large and average down, it's a stupid trade management idea.
Its best to trade large but cut at 0.50% draw down, move on to the next trade setup.
The idea daily goal is +0.50% to 1% increase in equity per day. If you can do that, your broker will be ringing you up and big money will find you.
Trading thin liquidity at the boundary of the charts
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