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Set it and Forget it, Dollar Cost Averaging

  • #161
  • Aug 22, 2012 9:36pm Aug 22, 2012 9:36pm
Quoting jaws810
I've been looking at posts and trying for solve the issue with huge runs and massive DD and here is what I came up with.

I think I found a way to not only survive, but thrive through a hellish death spiral. Trade in both directions, use multiple limit orders (200+ pips out) to catch big moves and use a 150 pip from average Sl to close all positions and limit losses during a big move. Then when you get a huge move like that September 2008 you make a killing on the winning side and losses are minimal as long as you set up enough limit orders to cover...
My personal opinion is that you should pay some attention to FA & PA.

It is the major trend that kills you and you can use FA & PA to help you spot them. And then just stay out of the market.

Fundamentally, these major movements that wipe you out are due to some sort of major world event like a war, 9/11, the financial meltdown of 2008 or the failure of the greeks to form a government back in May. Don't use a ranging strategy when the something big is happening.

As for PA...the key to understanding a trend is that there is relentless pressure in one direction. This means that volatility is low as each time it tries to pull back it is met by new sellers desperate to unload before the price goes even lower.
Kill the ego, or it will kill the mission.
  • #162
  • Aug 23, 2012 3:38am Aug 23, 2012 3:38am
Quoting spyderman
But again, why would that be a bad thing. If price moved steadily down, down, down, your daily buy orders (in drawdown) would be offset by your daily sell orders. Meanwhile, you'd be making your profits on the extra interday sells, no?
That is why I like the both side deal, they still won't offset having positions down -1000 -900 -800 -700, cause you'd of only taken 50 from a position, but down short term hopefully upto 1000 fairly easily,
Nothing to it, but to do it!!! Stick to the plan FOOL!!!!
  • #163
  • Aug 23, 2012 9:13pm Aug 23, 2012 9:13pm
Quoting spyderman
If we place a buy and sell at the beginning of the day and then price moves 150 pips north in a day we would have hopefully had three additional buy positions opened. But if we closed each of those at 50 pips profit, we'd still be at a BE scenario. 3 buys closed at 50 pips each and 1 sell open at -150 pips.So we have to let those winners run to be profitable. If we were able to hold those positions open then we would be sitting at +150 pips: 1 buy +150 buy +100 1 buy +50 1 sell -150
this is a different strategy altogether. you place pending orders every 50 pips and at the end of the day you close any triggered trades, hopefully at a profit.

no use then to open other trades long and short at the start of the day.
although they hedge each other, who wants to have 200 trades long and 200 trades short after 200 trading days?!?
and they would be not useful for your strategy anyway.
  • #164
  • Mar 4, 2013 11:08am Mar 4, 2013 11:08am
This thread has been opened several year by now. I am interesting to know what will be the result now. Is the system works in recent year?
Looking forward to thread owner to provide the answer.
  • #165
  • Aug 12, 2013 12:27am Aug 12, 2013 12:27am
I enjoyed reading the threads in this discussion. I trade same way using 0.01 on crude oil. I only keep buying the full round number, 100 ticks or every 200 tick drop. Oil is a fast market, it can make you or break you. Jaws test this strategy on oil, you can make more than you make on EU. I aim for 50 to 200 pips per trade.
Prince M. Golds
  • #166
  • Edited 5:33am Jan 17, 2021 5:11am | Edited 5:33am
Quoting Mingary
{quote} I am anyone and I have an idea. Having no SL is ok as long as the position is small and you don't continue to buy when the price goes down or continue to sell when the price goes up. IMHO, the key is to manage the losers as well the winners in such a way that you segregate your trades between winners and losers. stop adding to the losers and use every reversal to reduce position until loser is gone and at the same time manage the winners to profitable conclusion.
Yes. This method will end up with nice win/loss ratio because you will only close profitable trades and leave losing trades floating for a long time until they turn profitable and close it. Since there is no SL, you will end up with huge DD and will be risking MC if there are spikes due to flash crashes. In the end you are forced to live with the huge DD. Its a question how to manage this DD. Ultimately if its a long drawn, do an equity injection to keep the margins manageable. Otherwise do rescue projects at major support and resistance level for reversal trades. Remember, this will test how good you are as a trader by recovering a losing Ac.
  • #167
  • Edited 6:30am Nov 4, 2021 5:18am | Edited 6:30am
Hope to revive a very quiet thread here: I've used forex factory for a while and never felt the need to be a member, I wanted to make a new post but it doesn't let you. So I think here is the best place to post.

I recently came across Dollar cost averaging and then across value averaging. I've looked around a lot and there is varying views on using this in Forex on a long term basis. But, I was wondering if you could implement value averaging on the 1 minute timeframe (so for those like myself who trade daily). I thought of this as I often get bored waiting for setups as I only trade GU, EU, UJ and GBPJPY and occasionally gold, I usually get 2 setups a day and it only really takes about 10 mins of my time but its enough to make me money to do it daily and not work a full time job.

ANYWAY, value averaging as a scalping strategy: I so far have 2 ideas/sets of rules for this work and I've only tested this on GBPUSD so far so all rules are for this as it relies on pip movement.

My first idea is that any time price moves more than 15 pips in a direction is to take a position against the market and continue to add slightly larger positions every 2.5 pips until price moves your way. The exit strategy being on the 100ema, and then entry being determined that price must move 15 pips without closing at any point within the 9ema, signifying a strong move.
So effectively you will always catch the top/bottom of the move and it will be with your largest position, then price will retrace down to the 100ema at which point all positions are closed, with the largest positions having the furthest to retrace and therefore covering the 1st and 2nd positions and then some, which usually take a small loss. I've only tried it on about 15 different scenarios but all of them are profitable, resulting in maximum 5% risk per scenario and around 10-15% gain. So the idea if done daily (usually find this works about twice per day) would result in a 20-30% account gain daily, which seems rather absurd, hence why I would like others opinions.

The 2nd idea/improved on the first, is to increase the risk management to stop massive losing positions which are eventual, but if you could find a way to avoid this then the strategy could prove useful.

Firstly never trade more than 2 hours after NY open as if a move starts during this time it is unlikely to have enough volume by the time the move has ended to retrace enough to make you profitable and you would end up having to close all positions in a likely LARGE loss.
Secondly, to mark up 15m or 1h support and resistance zones (I've yet to determine which is best) and start buying/selling when price approaches this zone and carry on with the strategy as normal adding larger positions the close it gets to the zone. Other entry confirmations must add up and exit strategy is the same, no need to be greedy.
Third, NEVER use this when approaching 4h/daily zones which are on the third hit as price often smashes through these zones, for example if you tried this on the 28th September 2021, you'd be screwed and likely blow your account.
Finally, never trade near news as this is just a guarantee to ruin your account. But by using this on a 1m timeframe and having all positons closed within 2-3hours maximum, this is easy to avoid.

I think the basis of this strategy would work 95+% of the time, however, the 5% of the time when it doesn't work could result in a blown account. Hence the third and final rule as an attempt to stop this happening. I'd appreciate others opinions, but for the mean time I'm going to demo trade this and continue to see if I can add rules to improve the risk management.

EDIT: Below is a couple of rough ideas of how this would work in GBPUSD movement (some of the lines aren't precisely 2.5 pips from each other but it gets super fiddly and if they aren't perfect they are only 0.1/0.2 out). Dependent on risk appetite you could either increase a buy to every 2 pips or decrease to every 3 pips, or add a larger/smaller position instead, so the 2nd entry could be $3 instead of 2, and the 3rd entry at $5 instead of 3 and so on. Or $1.5 for 2nd entry instead of 2, and $2 for 3rd entry instead of 3. These variables are dependent on person and wouldn't have an affect on the strategy itself.
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  • #168
  • Nov 4, 2021 9:58am Nov 4, 2021 9:58am
Quoting CrackCrackrJ
Hope to revive a very quiet thread here: I've used forex factory for a while and never felt the need to be a member, I wanted to make a new post but it doesn't let you. So I think here is the best place to post. I recently came across Dollar cost averaging and then across value averaging. I've looked around a lot and there is varying views on using this in Forex on a long term basis. But, I was wondering if you could implement value averaging on the 1 minute timeframe (so for those like myself who trade daily). I thought of this as I often get bored...
You need to think about wort case scenario when price moves against you 50, 100 or more pips.
In case like that with your strategy you will just blown your account. Isn't it?
  • #169
  • Edited 11:37am Nov 4, 2021 10:57am | Edited 11:37am
Quoting Merka
{quote} You need to think about wort case scenario when price moves against you 50, 100 or more pips. In case like that with your strategy you will just blown your account. Isn't it?
Hi,

Yes I completely agree it would, I'm actually going through these worst scenarios right now to see if there is anyway to mitigate losses/still profit from buying in a strong bear trend and vice versa. As mentioned above one of the days I'm looking at is 28th Sept. So if you weren't to note that you were approaching a daily support zone which has been used twice, as noted in one of the rules (first indication of why you wouldn't try this strategy on this day), but I am only human and hypothetically lets say I didn't notice or just assumed it may be a small push down, the latter being very possible. Hence why yes, its important to prepare the worst case.

The day would result in a horrible loss if you followed the rules I laid out above, probably getting margin called and wanting to cry... however, if I could mitigate losses to even a 2-3% loss I would consider this acceptable as this would be what I would be willing to lose on a given scenario, provided the 'normal days' are profitable, I can't win all the time unfortunately

So to try and mitigate this I'm considering adding in a rule that if 10 or more positions are added you should close at the 20ema as its likely you're in a very strong push and you need to exit as soon as possible, as most of the time when trying this out you have 7/8 positions for a usual push down/up and not a massive one like 28th Sept.
So following what's laid out above, if you were to do it like this on the 28th Sept, you would have 7 positions close in a negative for a total of minus $156.8, however, as you are adding larger positions each time the final 4 positions actually total plus $223.2 equalling $66.4 profit despite buying in a strong downtrend. You'd have negative 56.7 pips and only 22.6 positive pips, but still end up profiting due to adding large positions the further you go down.

I do have a secondary method to try and resolve the issue if what's noted above doesn't work on other days, as cool it would work on 28th Sept, but doesn't mean it would work on other large push days.

I intend to find more horrific scenarios to try this new rule out on, as I am obviously making this up as I go, so of course the strategy could end up being a pile of rubbish, but hey, I'll never know unless I test it and constantly try to improve upon this. If people are interested I will update the thread as I find out more.

EDIT: Below is the second push on the day on 28th Sept - My maths may be a tiny bit off and as mentioned earlier I'm aware some of the lines aren't perfectly 2.5 from each other, its surprisingly difficult. The new rule seems to work, my main concern so far would be the ability to hold through the MASSIVE DD, as the psychological factor would be painful, hence why this is going to be tested a lot more so if the system is robust I can happily hold through all this.

So this totals $972 in drawdown. Closing for a total of minus $176.4 which is the first 7 positions. Closing for a total of plus $513.1, which is the latter six positions
End a total of $336.7 positive.
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  • #170
  • Nov 4, 2021 1:26pm Nov 4, 2021 1:26pm
Quoting CrackCrackrJ
{quote} Hi, Yes I completely agree it would, I'm actually going through these worst scenarios right now to see if there is anyway to mitigate losses/still profit from buying in a strong bear trend and vice versa. As mentioned above one of the days I'm looking at is 28th Sept. So if you weren't to note that you were approaching a daily support zone which has been used twice, as noted in one of the rules (first indication of why you wouldn't try this strategy on this day), but I am only human and hypothetically lets say I didn't notice or just assumed...
Let see if you will be the one succeeding because I failed in the past trying something similar.
If it's used manually around key turning point can work but in automatic way with EAs I'm sure it won't work.
To test you have to code an EA and test it over long runs.
Good luck bro
  • #171
  • Nov 4, 2021 2:40pm Nov 4, 2021 2:40pm
Quoting Merka
{quote} Let see if you will be the one succeeding because I failed in the past trying something similar. If it's used manually around key turning point can work but in automatic way with EAs I'm sure it won't work. To test you have to code an EA and test it over long runs. Good luck bro
I hope so, it seems in theory it would work so far with closing on 20ema for big trends, 29th October being another example of a strong downtrend day where you would still profit nicely despite buying in a sell market. But with a DD of 12%, $261.4 closed negative and $550.9 closed positive = $289 positive

I don't think I'd ever use an EA for it, firstly because I'm not good with programming and secondly I wouldn't trust it even if I could, and as I spend the majority of the day at my computer regardless I wouldn't see the need for it.

Out of curiosity and maybe to improve what I've got so far, how did you try this in the past?

Thanks for the luck, think if I ever tried this my by brain would need it during the drawdown, adding more positions to an already large losing position takes ALOT of trust in the strategy, and who knows there could always be a day when the EMA 20 isn't touched, perhaps a cut off at around 15% in worst scenarios would be required as so far I've seen maximum 12% drawdown - once again needs more testing. Also, if these large moves only happen 1/2 a month, is a 15% loss tolerable if you can make anywhere from 10-15% on the other 18 trading days of the month? Largely dependent on risk appetite I suppose, personally, I'm not sure I could handle a 15% loss, but maybe someone could.
  • #172
  • Nov 4, 2021 3:04pm Nov 4, 2021 3:04pm
Something I've kind of been aware off but not done so far as I was always sceptical about is that price would never retrace to the 200ema which is why I suggested the 100ema at first, in screenshots you may have noticed I have the 50ema and 200ema on but have made no mention of them, but I've been looking at them as well as another potential exit. However, in all but one scenario I've tested price has returned to the 200ema, so perhaps there is potential to be patient and wait for the 200ema as this would massively improve profits margins and majority of the time not even result in 1 losing position. I think for the day I am done now, but tomorrow may continue using the 20ema as an exit for long trends but look at the possiblity of 200ema as an exit for 'normal days'. Means testing everything again, but who knows, this could be the next strategy I use till I find something better.
  • #173
  • Nov 4, 2021 3:16pm Nov 4, 2021 3:16pm
I everybody folks i don t want to be rude or unpolite but i Guess essentially this strategy Is doing the opposite of what the 'nature ' in the nature does..goes against the flow.the main Word Is adaptation.as mister crucial point said there are several market dimensioni six and Is It true.now once that we know that we have to find One strategy that satisfy all of that.personally i Discover that exist One strategy that cover/satisfy at least four of six toghether and another that satisfy the rest of two.but till now i didn't Discover something that it complete all toghether.the person that arrived more closest at the solution It s been the guy Who 'invent ' line in the sand method in confession of a secret thread.
First strategy that cover four market condition(low volatility or High volatility without strong diretionality:
- open buy and sell position at the same time any time and any level set take profit on both side.once that One reach take profit reopen immidiatly other Two position. if It was a buy that were closed than reopen at the same time another buy and sell in defense of the profit.than wait for retracement.the most the price retrace the most the profit Is big.
-second strategy that cover the other Two market condition/dimention(High volatility with High diretionality):
Open One trade if the price goes against our position after X pips stop and reverse or open another opposite position (hedging)with double size (there are many hedging strategy on you tube more or less with the same Logic by the way)
The main problem Is that no One can predict in wich tipe of market we are till the market itself decide to show us .ergo as an alchemist do we should transform One strategy in another.how?switching the direction of our bet.
Example:
Take One our chart drag on it 200 ma.wait till the price start to approach the ma.the price start to zig Zag up and down on the 200ma the l only thing we have to do Is switch the direction of our trade till the price Will chose It s own direction than wait to cover the basis cost and reach profit.often the price Will retest the zone were crossing the 200ma.(the higher Is the time frame used Minus Is the time that we have to adapt our trade so It means less basis cost and more profit)
Any commen Is apreciate.
Ciao from Italy.
  • #174
  • Nov 7, 2021 2:30pm Nov 7, 2021 2:30pm
Hi Crackr,
Consider this:
Reverse Labouchere system.
Read information introduction here:
https://en.wikipedia.org/wiki/Labouch%C3%A8re_system
There are a few YouTube videos showing Labouchere system.
These will help understand.

YouTube explains Reverse Labouchere system:
Inserted Video


Youtube explains Labouchere system:
Inserted Video



Forex, and trading in general, is 50%/50% probability but with a bias.
Your strategy is using the bias to win.
Labouchere is designed to win at for 50/50 probability games.
Labouchere system sets profit target with risk unbounded.
Reverse Labouchere sets risk limit with profit unbounded.
It would be great to use Reverse Labouchere for money management. Limited risk and unlimited profit.
Adjust the new trade lot size by % won or lost. Bigger lot if win - smaller lot if loss.

All the best,
NW
Perfidious Pips
  • #175
  • Edited 8:35am Feb 15, 2024 8:22am | Edited 8:35am
Hi everyone,

I looked into Dollar Cost Averaging for indexes like the S&P500. So I created an EA that opens a buy position on a specified number of days. No SL, and a TP of 10,000 pips. Why? Well just cause S&P500 futures are calculated different and it seems like a round number.

The idea behind this is not to get rich quick but rather to have some consistent growth to your money. It can be considered as an alternative to people who cannot investing a U.S. brokerage account, although risks still need to be factored in.

So, here are the results on buying S&P500 futures on different number of days. Remember that this simulation does not account for swaps.

Every 10 Days

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Every 15 Days

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Every 20 Days (In my opinion the best option)
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Every 25 Days

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Every 28 Days

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Every 30 Days
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  • #176
  • Feb 15, 2024 3:58pm Feb 15, 2024 3:58pm
Quoting fortyfive20
Hi everyone, I looked into Dollar Cost Averaging for indexes like the S&P500. So I created an EA that opens a buy position on a specified number of days. No SL, and a TP of 10,000 pips. Why? Well just cause S&P500 futures are calculated different and it seems like a round number. The idea behind this is not to get rich quick but rather to have some consistent growth to your money. It can be considered as an alternative to people who cannot investing a U.S. brokerage account, although risks still need to be factored in. So, here are the results on...

where is the EA?
  • #177
  • Feb 15, 2024 5:21pm Feb 15, 2024 5:21pm
Quoting cabscesar
{quote} where is the EA?
On my external hard drive haha. I said I created one, didn't say I was going to make it public. It's just made to show how DCA can work on indexes.
  • #178
  • Feb 15, 2024 5:27pm Feb 15, 2024 5:27pm
Quoting fortyfive20
{quote} On my external hard drive haha. I said I created one, didn't say I was going to make it public. It's just made to show how DCA can work on indexes.
Hahaha are you colombian?
  • #179
  • Mar 1, 2024 12:50pm Mar 1, 2024 12:50pm
First of the month, dollar cost averaging on Nasdaq futures. Close to first TP.
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  • #180
  • Mar 20, 2024 8:39am Mar 20, 2024 8:39am
Dollar cost averaging S&P500 and Nasdaq futures. I buy on the 1st and on the 20th of every month. Placed my new positions at the NY open today.
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