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Trading the Cable swings via averages

  • #9,621
  • May 10, 2024 3:32pm May 10, 2024 3:32pm
Quoting 40PipsAlan
I might just call it a week at +4% seeing as we are sitting right on the daily EMA again.
Looked like a good call to me. No where near 10% a week but getting there slowly.
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  • #9,622
  • May 10, 2024 4:17pm May 10, 2024 4:17pm
Quoting 40PipsAlan
{quote} And if we was as good as Nala then 2% a day is scary. {image}
yeah insane numbers!
Think I'll stick with +5%/month myself.
  • #9,623
  • May 10, 2024 10:06pm May 10, 2024 10:06pm
I think we need a little discussion on profit potentials because it is all very well to plot an annual outcome, but the reality is often quite different.

1) There are many days throughout the year I simply do not trade. I am looking for all the attributes of a trade to be in place if I don't see them, I don't trade. Then there are times when even the best laid plans simply fail to come to full fruition and the inevitable stop out happens. We are not dealing with certainties at all, anyone claiming that is just plain nuts. My job is to keep the math on my side not to envisage huge profits or what could be. If a person makes just 1% a month, then this is far better than what a bank deposit would make especially if it were compounding.

Remember always: Timing, Target, Entry Signals, Money management.

Timing and entry signals seem to be well understood at least by those who take the time to post their trades in this thread

It is the Targets and Money Management that seem to be an issue here. If I don't attempt to make 2% then I never will, nor will I ever be in a position to make much more when the market permits. I can only make what the market permits so annual plans are simply whimsical although they can be a form of encouragement.

2) Over the years I have been trading the market will move some 40 pips or more in a unidirectional manner. This is not the only reason I opt for 40 pips to equate to 2% it also ties in with the money management math's. Another reason for opting for 40 pips is I only have to do the math once because I stick to the same format. This means I can easily make a spreadsheet to compute the size of my current entry based upon the size of the account which is constantly in flux. It must also be understood that the 40 pips are a minimum whereas the 1% stop or 20 pips are a maximum. Once in the trade I reduce that stop accordingly until I have it at BE +1. This is where the two-bar test is used because this tells me where to move the stop to which is a great deal less than a 1% risk.

I have to go shopping now, when I return, I will continue with these explanations. In the meantime, if you have questions post them now so I can fit the answers in.
  • #9,624
  • May 11, 2024 12:59am May 11, 2024 12:59am
Quoting Fantaburk
{quote} yeah insane numbers! Think I'll stick with +5%/month myself.
I hope 10%, but i'm happy with any +% market provide. Now update for my yesterday trade for diary purpose
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At 2, REG DIV bear on M5 --> try short. Exit BE when price reject at M5 because we trade againts trend. Price sideway --> rest and wait for US session

At 3, ? (maybe won't play, big trend still up, don't want go againts trend).

At 4, buy due to M5 HD + H1 DIV bull and put TP around X.
So total is 22 pip, slowly get better
  • #9,625
  • May 11, 2024 1:44am May 11, 2024 1:44am
Quoting Nala66
I think we need a little discussion on profit potentials because it is all very well to plot an annual outcome, but the reality is often quite different. 1) There are many days throughout the year I simply do not trade. I am looking for all the attributes of a trade to be in place if I don't see them, I don't trade. Then there are times when even the best laid plans simply fail to come to full fruition and the inevitable stop out happens. We are not dealing with certainties at all, anyone claiming that is just plain nuts. My job is to keep the math...
Thanks alot for this Alan, I think it is very important and benefical with a minor reality check of expectations.
  • #9,626
  • May 11, 2024 2:59am May 11, 2024 2:59am
Quoting Nala66
I think we need a little discussion on profit potentials because it is all very well to plot an annual outcome, but the reality is often quite different. 1) There are many days throughout the year I simply do not trade. I am looking for all the attributes of a trade to be in place if I don't see them, I don't trade. Then there are times when even the best laid plans simply fail to come to full fruition and the inevitable stop out happens. We are not dealing with certainties at all, anyone claiming that is just plain nuts. My job is to keep the math...
My personal take from this is to get enough bucks per week to survive on and give up my 9-5 dredge. This also means being mostly consistent every week and things are looking up after all this time. This trading method is the one for me and you guys can do it as well. I still have days when I do my review and think “What the hell were you doing that trade for, did you not see that divergence there and there”.
We strive to improve hence reviewing the days action.

A
  • #9,627
  • May 11, 2024 4:05am May 11, 2024 4:05am
OK I am back and see no questions so far.
  • #9,628
  • May 11, 2024 4:38am May 11, 2024 4:38am
Quoting Nala66
I think we need a little discussion on profit potentials because it is all very well to plot an annual outcome, but the reality is often quite different. 1) There are many days throughout the year I simply do not trade. I am looking for all the attributes of a trade to be in place if I don't see them, I don't trade. Then there are times when even the best laid plans simply fail to come to full fruition and the inevitable stop out happens. We are not dealing with certainties at all, anyone claiming that is just plain nuts. My job is to keep the math...
About money management, here is my motto: "it must help me survive until the end of world". My method is simple in good day, i increase risk. Bad day, reduce risk.

For example: my deposit is 1000$. I'm risk 10% and in bad time, i loss all: mean i'm loss 100$ and the remain = 900$, i will reduce my risk again. Another 10% of 900$ and if thing bad, i'm loss all again: mean i'm loss 90$ and remain = 810$. Another new 10% of 810$ and loss all --> mean loss 81$ and remain = 729$ and i can continuous to infinity

For good day, again with example above, i must return to old level before increase risk. From 729$, i must win back level 810$ before increase risk. Similar, 810$ to 900$, and 900$ to 1000$ to increase risk again. From new level here, everytime my profit increase by 15%-20%, i will increase risk. For example 1000$ increase to 1200$, the risk still 10%, mean 120$. And if bad case, i loss 10% --> i reduce risk until i get back level 1200.

I'm not concern about how much percent i will make from market. The only thing i care is which price level i'm stay at and which price level i try to conquest or fail
  • #9,629
  • May 11, 2024 5:15am May 11, 2024 5:15am
3) We need to consider when to trade and when it is wiser to not do so. For example, if price is trading at the EMA of the higher time frames, then it just becomes guesswork as to which way it will move. Break or bounce. Often there is a power struggle going on and we see at the lower time frames all the EMA's begin to bunch up. This is precisely the situation I avoid getting involved with, I want the exact opposite to be happening and see all the EMA's starting to spread apart. Most often we will see the EMA's bunch up during the Asian sessions and the breaks during the London sessions. During the US sessions we may see an about face or a continuance.

In other words, the market changes over the course of a complete day. We have looked at the various ways we can plot a target distance be that an ABCD, AB=CD, a swing high or low average or whatever. If that target is too small, then the risk becomes too high to make our profit and we could end up in a situation where we take two steps forwards and then three steps back again, not worth the hassle.

If the higher timeframe is heading someplace then the lower timeframe will be trending in that same direction. This is where I can take advantage of the 5-minute chart because I can readily see the previous swing high averages or the lows and measure the distances in pips. I have shown many times how if the average is to break a previous average swing, then price will test the next swing average. If the distance exceeds my 40 pips, I have a good chance this will be a winning trade, so I need to look for the entry to take it.

A 40 pip move requires an initial 20 pip stop, my spreadsheet lets me know the entry size I need to place as a maximum to make my 2% profit. If the price target distance is larger, I can risk less and break my entries into individual portions. My stop is moved quickly so I am risking far less than the initial 1%. The killer is always the HOOK which can scare the daylights out of us, but it shouldn't because our risk is now very small.

As the trade progresses, I can use the balance of my account to add more lots until I am all in. This may result in making much more than 2% and we all live for the days when price moves 100 pips or more. Often, we can tell a large move is on offer by the sheer determination of the price action refusing to make any kind of significant pull back. If we can get just one of these in a month then we are rolling in clover.

That is all there is to it really. Simple huh!
  • #9,630
  • May 11, 2024 5:40am May 11, 2024 5:40am
Quoting Nala66
3) Often there is a power struggle going on and we see at the lower time frames all the EMA's begin to bunch up. This is precisely the situation I avoid getting involved with, I want the exact opposite to be happening and see all the EMA's starting to spread apart. Most often we will see the EMA's bunch up during the Asian sessions and the breaks during the London sessions.
Here is where I get a bit lost.
If we wait for the ema's to spread apart on the m5 chart before taking a trade, a big part of the move has already happened.
  • #9,631
  • May 11, 2024 5:57am May 11, 2024 5:57am
Quoting Fantaburk
{quote} Here is where I get a bit lost. If we wait for the ema's to spread apart on the m5 chart before taking a trade, a big part of the move has already happened.
No, we don't wait. We have already waited for the EMA's to bunch up.

We look for the signal to start them spreading again.

If we are wrong, we lose a little bit. If we are correct, we compound the winnings.

We want to see a bear div take it across the EMA and then find bear support to make its run and watch all the EMA's roll over short.
  • #9,632
  • May 11, 2024 6:02am May 11, 2024 6:02am
I say all the EMA's but that is not correct because each EMA corresponds to a different time frame, we may be just testing that time frames average.
  • #9,633
  • May 11, 2024 6:03am May 11, 2024 6:03am
Quoting Nala66
{quote} No, we don't wait. We have already waited for the EMA's to bunch up. We look for the signal to start them spreading again. If we are wrong, we lose a little bit. If we are correct, we compound the winnings. We want to see a bear div take it across the EMA and then find bear support to make its run and watch all the EMA's roll over short.
And if it doesn’t cross the EMA expect a HH. Get to BE at least so no loss trade. The next Bear Div could be the big one.
  • #9,634
  • May 11, 2024 7:11am May 11, 2024 7:11am
Quoting 40PipsAlan
{quote} And if it doesn’t cross the EMA expect a HH. Get to BE at least so no loss trade. The next Bear Div could be the big one.
Kerrect.

I enter with target and stop.
Move stop to just short of the div.
Then move the stop again to BE+1 as price approaches the EMA.
Then start to look for additional entries.
I may extend my target if time permits.
  • #9,635
  • May 11, 2024 7:16am May 11, 2024 7:16am
My initial target is 40 pips and having moved my stop to the div I may be risking just 5 pips or just 0.25%.

Risking 0.25% for a gain of 2% is a risk reward of 1:8

Adding to my trade can compound the trade to 1:20 easily.
  • #9,636
  • May 11, 2024 7:28am May 11, 2024 7:28am
Quoting Nala66
{quote} Kerrect. I enter with target and stop. Move stop to just short of the div. Then move the stop again to BE+1 as price approaches the EMA. Then start to look for additional entries. I may extend my target if time permits.
And there is my problem, letting the trade run. I have tried both ways. Let the trade run to TP or hit my BE. Or Spot the next M5 divergence and close the trade for a few pips to discover the divergence is a fail to cross the EMA and the trade keeps going my way. Then to make things worse I panic and get in again to find the divergence is good and it crosses the EMA. Then instead of closing I believe it’s a M15 EMA bounce and hang on a bit longer. It’s a struggle I need to resolve but something is working as I get pretty good weekly results. Way too many loss recovery trades no doubt.

A
  • #9,637
  • May 11, 2024 7:51am May 11, 2024 7:51am
Quoting eliotjng
{quote} About money management, here is my motto: "it must help me survive until the end of world". My method is simple in good day, i increase risk. Bad day, reduce risk. For example: my deposit is 1000$. I'm risk 10% and in bad time, i loss all: mean i'm loss 100$ and the remain = 900$, i will reduce my risk again. Another 10% of 900$ and if thing bad, i'm loss all again: mean i'm loss 90$ and remain = 810$. Another new 10% of 810$ and loss all --> mean loss 81$ and remain = 729$ and i can continuous to infinity For good day, again with...
Sorry I have been so long, but I cannot find the reference to this in any of my books, I know I have read it in one of them.

You cannot continue to infinity. You can no longer trade when you cannot cover the cost of a lot.

There is stuff missing from the equation. What pip distance represents your 15% to 20% gain? What pip distance represents a 10% loss?

As your account gets smaller so does your ability to buy lots. By the time you get to 50% loss you only have half the money to get back your losses. You now need a 100% gain to get back just to break even. It becomes very difficult to make back $500 at a compounding 50c a pip.

I am not suggesting you are such a poor trader as to fall to that 50% level but it can easily happen, I know plenty of people that it has happened to.


It all depends on the pip distance of the target because this determines the lot size.
  • #9,638
  • May 11, 2024 7:58am May 11, 2024 7:58am
Quoting 40PipsAlan
{quote} And there is my problem, letting the trade run. I have tried both ways. Let the trade run to TP or hit my BE. Or Spot the next M5 divergence and close the trade for a few pips to discover the divergence is a fail to cross the EMA and the trade keeps going my way. Then to make things worse I panic and get in again to find the divergence is good and it crosses the EMA. Then instead of closing I believe it’s a M15 EMA bounce and hang on a bit longer. It’s a struggle I need to resolve but something is working as I get pretty good weekly...
At last, now I can solve your HEDGE problem.

If you are at all worried about the trade stick a HEDGE on it.

If the HEDGE goes on to stop out your original trade the HEDGE wins.

If the original trade turns to stop out your HEDGE then your trade wins.
  • #9,639
  • May 11, 2024 8:02am May 11, 2024 8:02am
Quoting Nala66
{quote} Sorry I have been so long, but I cannot find the reference to this in any of my books, I know I have read it in one of them. You cannot continue to infinity. You can no longer trade when you cannot cover the cost of a lot. There is stuff missing from the equation. What pip distance represents your 15% to 20% gain? What pip distance represents a 10% loss? As your account gets smaller so does your ability to buy lots. By the time you get to 50% loss you only have half the money to get back your losses. You now need a 100% gain to get back...
I concur with this one Nala. I have blown many a demo account over the past 5 years using ideas like this. Stick with the 1% per trade and aim for 2% win for the day. I will post an indi this weekend to show 1% available equity on the chart.

A
  • #9,640
  • May 11, 2024 8:18am May 11, 2024 8:18am
Quoting 40PipsAlan
{quote} I concur with this one Nala. I have blown many a demo account over the past 5 years using ideas like this. Stick with the 1% per trade and aim for 2% win for the day. I will post an indi this weekend to show 1% available equity on the chart. A
Yes, and the 1% loss is a maximum. Mostly it will be something like 0.25% or even BE+1 providing the target distance is a 40 pip plus distance.

Again, though we can only get what the market gives and if we have to settle for a 1% profit then so be it. There is always another day.
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