Hi everyone, great thread......and big thanks to Jacko....
Below are some snippets from Jacko's posts that really stood out to me and made a lot of sense.....
Firstly because Jacko has stated not once but many times where he thinks price will eventually go, and why fundamentally...And as yet hasn't been wrong.
Secondly he has provided a very very simple plan to get there.
And thirdly when eventually Jacko is wrong, and the trend does change, one day. It doesn't matter, because you start all over again in the new trend...Sure you will have a few 50 pip losses, that won't be picked up by the AH strategy....but you would have way way way more winners.
Jacko snippets :
“This is my fundamental overview that colours my thinking about the long term USD market.
I definitely believe that the $USD is going to weaken over the next few months. As I have stated before, my long term target over the next 12 months is 1.4500.
As I said in my initial posts (see post 8), I believe that there has been a seismic shift in the "strength" of the US dollar as the worlds primary currency.
This seismic shift moved the USD from 1.2000 to 1.3800.
I now believe the next step in this seismic shift will move the US dollar from its current figure of 1.3400 to 1.4500 within 12 months…”
1. no-one knows at the start when a trend will range and 2. no-one knows how long it will range and 3. no-one knows when it will end).
The issue that then arises is, "How do I catch the trend again when it breaks out of the range?"
The answer is that you place a buy stop order at, say, 1.3750 and let it get picked up on the way out of break out.
You have still missed out on 50 pips ( 1.3750 - 1.3703 assuming that it is breaking out above the current range limit of 1.3703.) However, you are hoping for multiple ranging trades where you are collecting the 50 pips saved by selling at the top of the range. Also, you can bring your order closer to the ranging upper limit but you run the risk of "false break-outs". But that is a decision that you can make based on your risk profile. (Or sense of greed...LOL)
However, remember, very important....you make much, much more money from being in the trend so make sure that you have your orders set in place to buy above the range. Otherwise the market will break quickly and you will miss it. (Then you have all the psychology issues of 1. Kicking yourself for missing the break out and more importantly, 2. Not wanting to get back in because "you could have got in cheaper" )
I am constantly confused by everyone focussing on specific "signals" to enter. Round numbers, Trend lines, and 50% Fib are simply "probabilty-positive" points of resistance or support
It doesn't really matter anymore where I buy (or sell). The anti-hedging strategy is FAR, FAR, FAR more important.
Having said that, the anti hedging strategy is something that I put together as an alternative to "hedging", (which was and is something I never saw as having any benefit).
However, I don't want everyone to get all carried away and thinking that it is anything exceptional. It is basically just two components combined into an action plan. They are:
1. A DEFINITE stop loss position (that is, 50 pips trailing from the highest point after a trade is entered)
2. A DEFINITE action plan to recoup any losses (by buying back in at point of Trailing stop loss...for losing trades ONLY...and after the market has dropped and is now coming back in the correct direction).
As i have said repeatedly, I am not doing anything different from what all the good books say.”
So I thought I will run a little experiment for a few months on a demo account....results so far:
Basically started at the 13th august '07... and placed the first trade on the 17th August '07 @ 3450......then entered more or less every 50 pips, not really paying much attention to the entry and exiting by the trailing stop, and once or twice because I had plenty of pips.....and put in the AH Strategy for every loss.....
So far 6 losses and 18 wins, of which two losses were not picked up by the AH strategy as price did go past 50 pips.. therefore -100 pips (at worse case)
The other 4 losses added up to -135 pips......total losses -235 pips
4 AH strategy trades in profit added up to + 257 pips with 1 AH trade still going...
Up until current time up 803 pips since 13th august.....
At this stage the most that can be lost is 37 pips...
There was some discretion on entry and exit, but the majority of trades were entered at round numbers every 50pips, and exited by the trailing stop.
Basically I was risking 1-2% per trade, and since the trailing stop puts the last trade at break even when the next one is entered......at no time is more than 1-2% at risk.....Unless of course your stops don't get filled.
Many may say entering every 50 pips is crazy, but if you believe price is heading to 1.45, and you use the AH strategy then why not......As long as your risk management can cope....(to me it just makes sense to put on another trade once the other is in profit)
If price stops right now and reverses, will loose 1-2%, but have gained 18-20%.......not bad.
Obviously this experiment needs to run for about 1000 trades, to have a true gauge.........but so far in the last month we have had price go down , sideways and up...so at least some of the trading conditions have been experienced.
Thanks Jacko love your work......Regards, mozzie