Soldiers Of Fortune

Only trader-wannabe's will disrespect you in one way or another then, shamelessly, will go on to ask you to provide them with a step-by-step user guide of your trading strategy, sometimes in the same breath and in the same post...

You can never tell whether they're asking a question or making a statement...

And these are people with years of "thread-hopping" experience, who have developed a certain following and have started their own threads about subject matters that will make you think they have finally figured it out...

They show up to your door-step with a sense of entitlement and it's almost like you owe them an explanation: How dare you start a thread if you're not going to baby-sit me through it, Stranger?

They will never dare do something like that in a professional setting but behind usernames...

A good example will be the idiot who just posted "A thread useless. A waste of time."...

Will he tell you why he thinks that?
Will he tell you what he believes a "useful" thread should be like in a full paragraph?

I bet it is because it does not meet his expectations of an Ikea-like How-To manual...
And this is a guy who has already started a thread "teaching" other people how to trade...

Note: Jblanked, the Super trader with a 1,159.1% all-time return and a red leaf attached to his username, happens to "like" the above "post"...
This is the same guy who helps others "99% of the time" and, to my surprise, took off unceremoniously after I asked him a few simple questions about his fake record...

All I am looking for is a few traders (no more than four or five) who are willing to attach an account to Trade Explorer (a demo account is fine but a live one is preferred,) and engage in a sane discussion that will benefit all of us...

I consider Trade Explorer to be a great tool and a wonderful BS-detector...

For God's sake, do not describe your lawn mower to me in some fancy college words...
Show me your damn backyard instead...

If not, I'll be just fine running this thing by myself for a few months...

I'm nobody's teacher and, more importantly, I'm nobody's mother...

Cheers.

Friday, September 6 at 10:18 Eastern...

To those who might still be interested in this experiment:

The above is nothing but a Monte Carlo...

Though the results are so far very promising, they could have easily gone the other way...

For the last few weeks, I have done everything I could to experience a "worst case scenario" while abiding by a certain number of hard rules...
It just didn't take place...

All entries were "strategic" and "random"...

Sofact58, I am surprised by your hostility. This is a public forum for traders to exchange ideas, ask for feedback, learn from each other.

An Accountant, an Engineer and a Fortune-Teller walk into a bar...

Attached Image (click to enlarge)

I truly believe that no sensible strategy is intrinsically "bad"...
To me, position sizing is the single most important part before anything else...

More often than not, a trader gets margin-called for no other reason than poor budgeting...
it is rarely because of the "engineering" part of the strategy...

One should not bite more than he can chew...
One needs to be a decent "financial planner" before even setting foot in the trading arena...

The best Chefs, when not backed, make the worst restaurant owners...

Any strategy that makes a little sense will "work"...

The issue is the meaning that the trader attaches to "work" and how he measures success and failure...

And that's what I set out to prove (to myself before anybody else) by starting this thread.

I actually do use an accounting software to keep track of my "trading business"...


My goal is to achieve a fixed return on my invested capital each month...
I want the earnings to be predictable and consistent...

While it is true that a compounding effect can result in significant growth over time due to the cumulative effect of reinvested profits, it does have its downside which is associated with its unpredictability...

I have noticed that Trade Explorer compounds the previous month's gains into the following month's starting equity and I am not interested in that because of its downside...

I am only interested in generating a consistent monthly income on my initial investment...

And that is why I have decided to change my Trade Explorer Signature to "Return This Year" instead of "Return This Month".

I Like the storyline - An Accountant, an Engineer and a Fortune-Teller walk into a bar...,

all three lost money trading retail spot forex and wanted to drown their sorrows ....

what IF they put their individual skills together , would they have a better chance to make money.

...

emmanuel7788,

"what IF they put their individual skills together , would they have a better chance to make money."

That was my whole point...
I could not have said it any better than you did...

The problem arises when the Fortune-Teller starts believing that he knows better than the other two and starts providing them with unsolicited advice about what he does not fully understand...

"Honesty is a very expensive gift. You wont find it in cheap people."
I love it!

Cheers.

Never confuse "Honesty" with "Hostility"...
Warren Buffett could have said that too...

Accounting 101 as it relates to MT4...
Tuesday, September 10 at 19:05 Eastern...

Assets = Liabilities + Equity
Net Income = Revenues - Expenses

Lately, as I was "checking out" a few traders who reacted to my posts, I was "saddened" to see a few good "Engineers" on this Forum write about phasing in/scaling in, adding to a winner and all the other good stuff while lacking a basic understanding of what follows:

"...MT4 automatically tracks and displays essential accounting elements for traders. Here’s how the key components are reflected:

1. Balance Sheet:
   1. Balance: Your current account balance, which shows your assets without considering any open trades (similar to equity in pure accounting).
   2. Equity: Your balance plus or minus the unrealized profit/loss of open trades. It reflects the actual value of your trading account if all positions were closed.
   3. Margin Used: The amount required to keep your positions open. It's a form of liability.
   4. Free Margin: The difference between your equity and used margin, showing how much margin is available for new trades.

   
   
   
   
   

2. Income Statement:
   1. Profit/Loss (P&L): MT4 shows realized profit/loss on closed trades in the Account History tab. It keeps a running log of all trades and their outcomes (profits or losses) over a period.
   2. Unrealized Profit/Loss: Displayed under Terminal -> Trade, it shows the performance of open positions. Unrealized P&L affects your equity but isn't part of your balance until the trades are closed.

   
   
   
   
   

3. Cash Flow:
   1. Deposits and Withdrawals: These are recorded in the Account History tab. You can see the inflow (deposits) and outflow (withdrawals) of funds in your account, similar to tracking cash flow.
   2. Transaction Costs: MT4 shows commissions and swap rates (overnight fees) that impact your cash balance, providing a full picture of how cash moves in and out..."

   
   
   
   

Ignoring (or forgetting) the above is what makes "adding to a winner" look/feel so hard to most of us...
"Adding to a winner" only makes sense when the risk taken on the second trade comes from the profit made on the first one...

One has to think in terms of "possible outcomes" instead of "win/lose" binary outcomes...

One should never keep something he would not buy at its current price...

I'm still desperately chasing the worst case scenario...

What I know that I don't know and what I don't know that I don't know...
This morning, September 11, at 9:40 Eastern...

The concepts of Known Unknowns and Unknown Unknowns were famously articulated by Donald Rumsfeld in 2002 in the context of the Gulf War...
They apply to various fields like decision-making, risk management, and strategic thinking...

1. Known Unknowns refer to things I am aware that I don't know. These are uncertainties I can identify and plan for even when I don’t have all the information yet. In a business context (like trading!!!), I might know that a market trend is uncertain, but I can factor that uncertainty into my strategy...
2. Unknown Unknowns are the things I don’t know that I don’t know. These are risks or opportunities that are completely unforeseen and often harder to plan for because they lie outside my current knowledge and imagination. These events can have a significant and extreme impact because they are very rare and cannot be anticipated...
   In trading, an unexpected geopolitical event that causes market turmoil would be considered an Unknown Unknown or a Black Swan since it wasn't anticipated (which makes it much harder to plan against.) I believe it was Nassim Nicholas Taleb who named such events "Black Swans" in his bestsellers "fooled By Randomness", "The Black Swan" and "Antifragile".

These concepts are central to risk management...
Addressing Known Unknowns involves mitigation strategies, while Unknown Unknowns often require a flexible, adaptive approach to respond to sudden surprises.

My main mission is to always keep the bottom line (literally) of the above screenshot a Known Unknown under any circumstances...

The Double-Hedged Sword...

September 12 at 20:45 Eastern...

Instruments:
EUR/USD
USD/CHF
Next week, I will focus on the above to try to prove the following point:

While a Unit can have up to 10 Soldiers, I only intend to actively deploy a few of them at any given time. The remaining Soldiers serve as placeholders, reserved for specific market conditions—particularly when the markets are ranging...

These Reserve Soldiers are positioned to be strategically entered later when afforded, ensuring that I can capitalize on potential price movements even within the boundaries of the Unit, allowing for controlled and flexible engagement as the markets evolve.

In other words, I scalp my way into the trend...

While, as the saying goes, the trend is your friend, the markets actually range more than they do trend...

Just like in a brick-and-mortar business, one still has to "pay the bills" even on slow days/weeks/months...

As humans, we tend to second-guess ourselves and over-analyze when we have too much time one our hands...

I am totally convinced that more traders will be profitable if the markets moved faster than they actually do because there would be no time left for second-guessing and over-analyzing...

Again, as I have previously stated:
1. Adding to a winner" only makes sense when the risk taken on the second trade comes from the profit made on the first one...
2. One has to think in terms of "possible outcomes" instead of "win/lose" binary outcomes...
3. One should never keep something he would not buy at its current price...

Structure of a Unit:
1. Participation: 3 Soldiers
2. Long Term: 5 Soldiers
3. DoD (Do-or-Die): 2 Soldiers

The first two sets are self-explanatory and the third one is to force a market decision when necessary...

Performance Review (August 1 – September 14, 2024)

Attached Image (click to enlarge)

Below is the updated performance summary:

1. Starting Balance/Equity (August 1, 2024): $6,346.90
2. Current Balance (September 14, 2024): $7,154.20
3. Current Equity (September 14, 2024): $7,057.17

1. Balance Increase: $807.30 (+12.72%)
2. Equity Increase: $710.27 (+11.19%)

Both balance and equity have shown strong growth over the 1.5-month period...

The above was achieved:
1. Without using a single indicator of any kind...
2. With only "tactical" Soldiers from Group 1...

Structure and Costs
Tuesday, September 17 at 10:23 Eastern...
The equity has grown (effortlessly) by approximately 13.98% in a little over six full weeks...
Please keep in mind that we are still dealing with a Monte Carlo and that results with vary according to some uncontrollable but strategically manageable factors...

As stated in a previous post, I view the trading range through three lenses:
1-Short-Term
2-Mid-term
3-Long-Term

In military terms:
1-Units
2-Companies
3-Divisions

Those who prefer to think in "civilian" terms can still use the same structure since the above breakdown is widely used by most Corporations...

Fractals are intricate geometric patterns that repeat themselves on different scales, often used to describe structures in nature, art, and financial markets...

In trading, fractals represent recurring patterns that appear on different timeframes, from minutes to weeks or months...
This concept aligns with the idea that market movements are self-similar, meaning that smaller patterns mirror larger ones...

It is impossible to tell the timeframe of a chart unless it is explicitly indicated...

Hence the three perspectives...
1. Perspective 1: Hourly
2. Perspective 2: Daily
3. Perspective 3: Monthly

I could add more layers to match every timeframe available on MT4 but that would needlessly complicate the above structure and make it difficult to manage...
The above breakdown allows me to calculate the Maximum Drawdown (UPL) before I even take the very first trade...

It turns it into a "Known Unknown"...
And that is the only "edge" I need...

The rest is just a basic understanding of probabilities...

I find it sad that, for some unknown reason and without any warning, this thread was moved from "Trading Systems" to "Trading Journals" without any notice or justification...

"In trading, strategy refers to a systematic, rule-based approach that guides decision-making for buying and selling financial instruments such as stocks, currencies, or commodities...
A trading strategy is designed to maximize returns while managing risks by following specific methods or principles..."
"Strategy" should never be understood to be a step-by-step guide to be blindly followed without any understanding of the basic principles...

That is why back-testing never works...
Two traders following the same exact How-To guide will have two different results because of the Butterfly Effect...

For God's sake, Trading is not an Assembly Line...

Duration, Path and Outcome...

I am now ready to move on to the next phase of this project:

A) Starting October 1, I will bring an end to the Monte Carlo chapter and reset the starting Balance/Equity to $5,000.00...
B) At the end of every month, I will withdraw $500.00 as a salary for my effort...
C) I will follow every accounting guideline, the ultimate goal being the ability to pay myself the above salary indefinitely...
D) Just like in any other business, I'll close down everything the day I run out of resources (like not being able to pay myself the above salary anymore.)


The Hard Rules

1. Monthly Withdrawal (Salary):
Every month, the trading strategy must allow for a $500.00 withdrawal (10% 0f Total Investment). This is the baseline target that ensures consistent growth and is non-negotiable. The MW drives the overall performance and demands strict adherence to both risk management and profit-taking protocols to achieve it.

2. Soldier Financing:
No Soldier can enter the market unless he is fully financed. This means that each position must have sufficient capital allocated to it, ensuring that no leverage or borrowed funds are used. By fully financing each Soldier, the risk of overextending the account or facing margin calls is minimized.

3. No Overlapping:
Units assigned to different instruments must not overlap. Each Unit is unique to a particular price range and instrument, preventing multiple Units from interfering with each other. This maintains clear boundaries between positions and avoids unnecessary complications or risks associated with simultaneous entries in overlapping price zones.

4. Zero Realized Loss:
The strategy mandates that no losses can be realized on any position. Positions are managed meticulously to either break even or end in profit. This rule requires careful trade management and ensures that closing a position at a loss is not part of the approach. Instead, positions are held, hedged, or restructured to avoid realizing a loss.

5. No Manual Take Profits (TP):
Take profits will be executed based on pre-defined rules or automatic mechanisms, with no manual intervention allowed. This eliminates the emotional component from decision-making, ensuring discipline and consistency in how and when profits are taken.

6. G2's and Support Timing:
Group 2 Soldiers and Support Units cannot be activated or entered until their corresponding @@ Soldier (Soldier #3) is hit at the Unit's P-line (Pivot Line/Central line). This ensures that G2 and Support elements only come into play after key confirmation levels are reached, adding an extra layer of discipline and precision to the strategy.

7. G1 Take Profits:
Group 1 Soldiers are restricted to taking profits only at their assigned lines. This ensures that these positions are managed with specific targets in mind, rather than being closed prematurely. Each Group 1 Soldier has a designated line where its trade is completed, creating consistency in how profits are captured.

8. G2 Entry Restrictions:
Group 2 Soldiers must be entered from within the boundaries of their Unit. This rule ensures that G2 positions can only be initiated under conditions of control, avoiding reckless or unplanned entries. G2 is more strategic and long-term, so entries must be highly selective and within defined parameters.

9. @@ Entry Method:
@@ Soldiers (Soldier #3) must be entered as Sell Limit orders, meaning they are placed at specific levels that the price has not yet reached. These pending orders ensure that @@ positions are triggered only when the market reaches a particular price, making them highly strategic entries.

10. No Merging or Restructuring:
Merging or restructuring of positions is prohibited until at least three Units have been triggered at their respective Pivot lines. This rule ensures that the strategy is allowed time to develop and evolve across multiple Units before any major structural changes are made. It prevents premature adjustments and encourages adherence to the initial plan.