Soultrader's Clinic :)

Hi,

Im Soultrader from the UK.

Ive been around the internet trading sites since around 2003 and many of you will know me.

For those who don't here is a brief resume.

I began my trading career on the Dow Jones index coming up to six years ago. I began by spread betting at 10 pence per pip.

During my 'training period' I managed to lose over £4000 with my 10p a pip trades!. Guess that's the price of the first training module!

I moved over to Forex in 2004 and have stayed in that arena ever since.

In 2005 I became a trader for an advisory company based in New York at which time I was trading as much as $15 mio.

I have made a lot of money, but i've also had a serious fall from grace when my major system failed in late 2006. During this time I lost almost 70% of my trading bank and hit the bottom 2 days before Christmas whilst on business in New York.

I learned an enormous amount from the experience and I almost gave up the trading game in sheer frustration and a broken heart.

However since that time I have gone from strength to strength - anyone can lose a lot of money in this game - but only a fool does not learn from the experience and repeats it again and again.

The experience of trading from next to nothing to millions and then back to low limit trades has taught me so much.

Im now back trading decent size, I have my own clients who's money i look after as if it were my own. Im not yet back at the 150 lot trades i used to do but it is getting higher and higher as each month rolls on.

My trading sytle is that of a trend follower. My trades last from hours to weeks and you can watch one of my accounts here if you wish - it's updated hourly.

I trade any instrument that trends and don't care at all about fundamentals apart from i want them to move the market.

I don't know everything nor do I think I ever will, but I do have a lot to share.

This thread is my Clinic and i'm the Doctor i guess

I would like any questions asked by PM unless you are a 1KT member.

I would like my advice to be asked by those who have been in the game for at least two years. I'm afraid I do not suffer fools gladly and expect people to have done at least some of the leg work before asking questions - freeloaders who want everything for no work get nowhere with me and nor do those playing at trading with a few hundred bucks.

Those who are newbies may say - "hey, why can't I ask" - well basically because you are so inexperienced and the first two years will get you on the ladder - at the moment you are swinging a sword in the dark trying to hit something - it takes about two years for the lights to come on - even if you think you are an ace trader - you aren't, trust me.

Some will also say 'how would you know if i was a newbie or not' - Well trust me on this one also, you can tell a newbie mile off by the quality of the question and the attitude of approach. Might as well hang a neon sign around their neck

So that's it, I think this 1KT group thing should work well as long as we can control the spoilers.

Please, come along with respect and you will get the same in return.

.

Welcome to the forum, always good to have another trend , momentum trader.

Soultrader,

I've seen your posts on different forums for the last few years and am glad you're here. I appreciate the brutal honesty about your trading career, and your resilience as a trader.

I have a question--why do you think your trading system failed? Do you think it was curve-fit? Did you have rules that assumed volatility or other parameters would remain constant? (I've seen many systems with rules like "If the GBPUSD moves 50 pips in X hours, buy if Y happens. The trouble is that volatility changes over time. A 50 pip move in 2004 was less significant than a 50-pip move in 2006, for example.)

I'm not asking to be critical, but to help all of us learn what works and what doesn't in the long-term.

soultrader.............

I had to read your first post twice because I found the account to be amazing. Brutally honest....yes. Also, quite inspiring.

I would respectfully like to ask two questions? These are not meant to be rude or insulting; but after having been here at FF for almost two years, certain issues come almost immediately into my mind because of all that I have read and seen happen here.

Why have you decided to solicit 1KT Forum membership and start this thread? I have looked at your blog using the link in your signature; managed trading accounts are promoted there. Is it your intention to pursue self-promotion and/or promotion of your services? Just today a newly anointed 1KT Forum member was banned for two weeks because he failed to heed warnings about self-promotion. To many of us this is reminiscent of others who have come here for the primary purpose of cultivating followers and promoting their services. I hope this will not be the case with you.

I believe you do indeed have much information based on personal experience that would be of great value to other FF members and traders; and I would like to benefit from that sharing. But before I become a regular reader of your posts, I'd like to not only know where you are coming from but also where you are going.

Your candid answers will be much appreciated.

Hi Soul,
Welcome to the FF trading room. I used to be highly entertained by you and Bunnygirl on Moneytec chat a few years ago...and I do remember that you do not suffer fools lightly!
I also reiterate what BB has said in his post (which by the way is a very good post BB so nicely said)
I look forward to your answer to John Pope's post. This is an area that interests me.
Cheers
Antra

Good points BB, I totaly missd that.....

I'm not going to answer soul's question for him of course, but in general: all "strategies" are built around curve fitting. Whenever you come up with some mechanical (or indeed non mechanical) method and scan the charts to look at possible agreements from history, you are curve fitting. The only difference between methods is the duration of time to which you are curve fitting, so if you are curve fitting to daily activity from 3 years you are far more reliable than people who are trying to see whether something worked for the past 2 weeks. Any perceived merit of a "system" comes from measuring it's performance in the past charts, there is no other indication of your correctness or lack of it.. until you actually get to try it out, hence becoming a set of statistics yourself.

Unless you know something about the markets that allows you to trade without *ever* looking at the charts, then you are doing some amount of curve fitting.

I agree, but there are ways to mitigate against this to some extent. First, have a large enough sample of trades. Second, ensure they're from a variety of market conditions (trending, ranging, differering volatility levels, etc.). Finally, do out-of-sample testing to ensure results are reasonably consistent.

Gosh! first time i check my thread and there is a load of replies - nice

Ok, lets see if i can answer them as much as possible and also clarify a little as to what this thread is about.

Firstly the kind of questions i would like to be fielded are about your trading situation and not mine - for example if you are having a problem with discipline or cant seem to make it forward on timing etc etc - this is because Im not able to answer questions on my own current methods due to contractual obligations with my main client. Hope you understand this.

Right then, questions ive had so far:

John asked why i think my system failed.

The system i was referring to was called Grail and you can find a blow by blow account of my opinion why the system failed on my Grail blog here http://grailtrading.blogspot.com/

all systems fail eventually because market conditions come along that we have never seen before in our backtesting - it's a long explaination so please read the blog for the full monty. The key is to be able to recognise when it has failed and dont assume that it wont.

Beachbum asks why i want to do this.

well beachbum I have a history of contributing to the trading community and when i got the email about the 1KT thing I thought it sounded like a good opportunity to get involved again.

Am I touting for business? not really, most people who invest in managed accounts do not hang around trading forums. There is quite a difference between a trader and an investor - I like trading for investors but don't enjoy trading for traders as they question every move, every pip - you close a trade at 300 pips and an investor is happy - a trader asks why you didnt close when it was at 450 pips.

In addition to this most of the programmes that I run or trade for are closed to new investors. I currently only have one which is still open and that is almost full also.

So in short, no i'm not touting. Can i reverse the question and ask why you applied for 1KT? and if your motives are the same as mine why would you assume without any evidence that I'm touting for business? why didnt you ask john his motives as he has a sig link also? Not very respectful really but i'll cut some slack so give me some also and time will tell.

Pluto I agree and disagree. Time has taught me that anything based on backtesting is most probably NOT going to stand the test of time. Experience has taught me that basing a system on any indicator at all is a waste of time and that a trading method should be based around global principals rather than mathematical analysis.

The global principal i use is that trends exist. I use price to then trade this principal belief. This is as far as i will go in discussion of my own methods.

Superdesign asked by PM "Just curious, looking at your statement I must admit it looks like your system is holding its own, but why do you vary so much in lot size from trade to trade? Its just I have read a few money management books and Im curious as to what your strategy is in that department."

I wont go deep into this, however my staking plan is based on an individual trade basis and a consecutive trade by pair basis.

I have a base unit size which i apply fractions to each currency based on their current volatility. EG GBPJPY is a serious mover of around 230 pips per day - my staking on this is based on around 25% of my base unit. EURGBP moves 35 pips a day and therefore if i traded this it would be multiples of my base unit.

Then there is a histroy factor on a per pair basis - my hit rate over history is relatively low at around 40% therefore if the pair I am about to trade has had a bad run I am increasing my stake slightly every time so as to make the most of the run when it does come and when it wins i reduce substantially.

add all this together with the unit vs volatility calculation and then the history staking and you get a robust system of money management.

your staking plan is the number one thing in your trading method - entries do not matter nearly as much as people think - you could toss a coin and make money if your money management is right.

So, there - first post from me, hope it was ok.

From now on please remember to ask questions on generalities rather than on my own methods

good to see you back soultrader... we had plenty of chats on the moneytec chatroom many moons ago.
sorry to hear of your account demise, i am surprised actually as i didnt see you as being somebody who would let it get to such a level, but we are all human.

i look forward to reading more from you, i like the hourly statement concept.

I enjoyed reading the last post of your blog where you explain in detail why and in which fashion your system (Grail) stopped working when market conditions changed. It's an interesting read.

Hello again soultrader..........

Thanks for answering my questions candidly and directly; your explanation is reasonable.


Now for your questions to me: I did not "apply" for 1KT memebership; it was extended to me because I meet the criteria set forth by the Administrators of FF; and other FF members who know of me and my work believed I met the qualifications. These members 'vouched' for me of their own volition, not because I asked them to.

As for any similarities in our motives; it is too early for me to make that determination. My record here at FF speaks for itself. In short, I do not advertise or promote anything of a personal nature.

I thought my first post made it clear why I was asking. Historically it has not been uncommon for someone to use FF membership for self-promotion; and usually the first 'sign' of this has been references and links in early posts to personal commercial activities away from this forum. I should add that based on Private Messages I have received since my first post to you, I am not the only FF member who has similar questions and concerns.

Relative to asking John about his motives: I consider that question to be a diversion; my post was about you and directed to you, and was not meant to be disrespectful. I believe I have a right to ask the questions I did, in the manner that I did.

Thank you for "cutting some slack" and telling me what I wanted to know. As you say: "time will tell".

For now, I'm looking forward to following your thread.

I am also a trend follower and found your first post very inspiring too. You have a very nice "touch" explaining things and the most important: convincing others -well, at least convincing me!-.

It is impressive you decided to expose a real-time account statement here. I am almost sure you have a lot to share here; you are very welcome here!

I am looking forward to this thread and I really do not know if you are here to promote yourself or what -time will tell I guess-.

By the way, count on my vouch!

iiivb

P. S. I really laughed when I read this:

"I like trading for investors but don't enjoy trading for traders as they question every move, every pip - you close a trade at 300 pips and an investor is happy - a trader asks why you didnt close when it was at 450 pips".

OMG OMG THE SOULTRADER!

I learned putting line based s/r from your youtube video

Read your ST / Grailtrading blog..that is I followed it over the months...both the rise and demise...seriously, what a bugger that was...mayyyyyybe a good pointer for MM though, not trying for that 100% efficiency

Sounded like it was a system which would have had quite a resurrection had it just been given the chance to survive long enough...but I digress...

What a phenomenon to have you in the "same room" now...

Sounds like we have a lot in common
Maybe quite a bit smaller, but similiar phenomenon in the first year ;p

Welcome / welcome back(appears you've been here before?)!

And what timing - GBPUSD imho has just resumed trending, in order to coincide and celebrate your coming!

- SL (probably have with the sudden outburst of incoherent joy just now directly qualified myself as superbly noobish in my carrying on hehehe)

Thanks for all your messages of welcome, it's nice to get them.

Please don't overestimate me though.

Sure, I'm a trader looking to make a billion, but happy in the meantime to make a good living from forex while we take this journey together.

Glad you are along for the ride, so many have come and gone but a few stay the course and it's nice to touch base with em again.

Now lets share the journey together. c'mon, what's stopping you progressing at the moment? The clinic is open

Hello Everyone,

my name is Dave, and Im a trendaholic..

I think a nice topic to start discussing is entry..

there are really only two main points you can enter a trend, that being either a pullback or a breakout.. which strategy do you find more logical? The pullback is more appealing to me, because its a lower risk entry point, but if you enter on a breakout you are less likely to miss a large move in the market.

However, no matter what strategy you follow some breakouts are short lived and sometimes a pullback will fail to rally and resume the trend in progress. Which leads to our next topic for discussion: exit strategies.

A good exit strategy should maximize profits and minimize losses. With a good plan under your belt, at any given time you should know what to do when you have a significant amount of profit or start to suffer a loss. No matter what entry strategy you use it is impossible to be a consistent and successful trader if your exit strategy is lacking.

There are a numerous amount of exit strategies, but one of my favorites is the trailing stop. I am a big believer in letting my profits run and if I give the market enough room to breathe and protect myself at the same time, well my profit potential on any given trade are virtually unlimited. But the trailing stop is just one of many strategies that can be employed effectively in trading.. Which one do you favor?

...Discuss

Hi Dave thanks for answering your own question and covering two subjects really quickly. - if you want a discussion Dave i'd suggest starting a thread somewhere dedicated to the subject. This thread is aimed at helping people who have a problem moving forward in their trading.

anyone got one I can bite my teeth into?

if so please ask away giving a brief history of your trading - time spent etc etc

ta.

ahh, i see from a PM i recieved that there is a problem with the title of this thread.

I called it my 'trend following clinic' and unfortunately I cannot edit this title - I wonder could one of the moderators please go back and remove the words 'trend following' from the title as this is confusing.

Although I'm a trend follower the thread is really open to any style of trader in the game for two years ish with a block in their career path that i may be able to help with.

So wether you are a trend follower, mean reversion or just a gut instinct trader i'm interested in helping you get over hurdles you may be experiencing.

Also i'm unable as yet to reply to private messages - i have no idea why but would guess it could have something to do with the number of posts.

Bunton sent me a message by PM as follows:

Soultrader, I was wondering since your a professional if my sentiment of the following pairs is correct with your line of thinking? I'm not a 1kt trader and in fact only been in forex for about 1 month. If what I'm doing here is off track know need to reply. Not sure what your thread is about having read it twice. I'm a trader who only takes signals in the direction of the main trend. So I guess this might qualify as a trend follower. Market Sentiment off the daily charts 9/28/2007

Gbp/cad- bearish but I’d not rule out a retracement. Gbp/chf-Neutral too slightly bearish. Main trend down, but currently trying too change dynamics.Eur/nzd- bottom of range Usd/cad- bearish Chf/jpy- neutral Usd/jpy- ranging sideways Aud/jpy- bullish trend out of base current bias is neutral Cad/chf- top of range waiting for break of range Eur/aud-bearish Eur/chf- neutral needs to pop prior highs Eur/gbp-bullish off longer term chart Eur/jpy- neutral Gbp/usd-bullish off trendline break but entry on orderly p/b only Gbp/jpy- watch for breakout of range Aud/usd-bullish trend but need too gauge p/bUsd/chf-bearish Nzd/usd-bullish Eur/usd-bullish I don’t see much as for set-ups and will be looking closely at gbp/usd and gbp/jpy. Just a reminder I don’t trade counter of the main trend and or pick tops or bottoms. I’ll be updateing this template as the week goes on if necessary.

It's not really in the scope of the thread Bunton and you are a forex newbie - not sure of how long you are a trader though - maybe you can elucidate a little , but in the absence of anything else to type about and a little time to kill here's my answer.

The direction of a trend is wholly dependent on the timeframe you are referring to - the trend on a monthly chart for example may be totally different to the trend on a weekly or daily or 1 hour chart - it's all relative to your chosen period of trading and your comfort zone of time holding and stop size.

so i dont know wether to agree with you or not as i dont know your focus i'm afraid.

If this is the sort of thing you would like to discuss i would suggest a thread in the main forum, you'd have plenty of opinions on the direction of each currency you trade that's for sure - but remember that trend followers do not predict - they follow.

If you start a general thread i'll be happy to join in

http://www.forexfactory.com/customav...tar45757_2.gif bunton
Member
Member Since Aug 2007
Posts: 240


http://www.forexfactory.com/images/icons/icon1.gif Micro managing
Ok, well here has been one of my biggest challenges in forex and stock market. Micro managing, I seem too always play with my stops too make the small pips and often miss the main move. What would you suggest a solution to this?

Ok, this is an interesting one - thanks for the question Bunton.

You know what to do without me telling you - you say youre playing with your stops - so you know that the answer is not to play with your stops

However, knowing the answer isnt enough - smokers know that the smoke is killing them but it doesnt stop thousands dying every year and it doesnt stop millions from continuing to smoke.

What will help you is an explaination of what is causing you to do this, and an attempt to break the pattern.

Firstly, lets talk about stops. Stops are a tool to be used to protect you from unforseen circumstances. They are called a 'stop loss' for a reason - to stop you having a greater loss than you would otherwise have.

Unfortunately most traders use them as a 'close trade' kind of tool. They analyse the market and think "that's where i should get out" OR they set an arbitary trailing stop level of say 30 pips from price OR they say "im willing to take a loss of 50 pips" and out their stop there.

This is the wrong usage of a stop loss. Using a stop in this way not only paints a target on your head for brokers and stop hunters, but you are using a stop to avoid the personal responsibility or closing the trade.

You often hear things like "i was in that move and my stop was taken out right before it went up 200 pips" - read the statement again - it's the stop's fault and not yours in your mind's interpretation of this.

Professional retail traders don't use stops in this way, in fact many don't use stops at all.

Hedge fund managers and the like do use stops in this way but place them miles away from price - the only reason the big players use stops like this is because they have to - it's just about impossible to monitor billions of dollars worth of trades in real time and keep on top of them - therefore they use stops to follow their trades on maybe a weekly basis.

Hedge funds and big players are different though - they play the 'global macro' game and this should not concern you.

Professional retail traders use stops for what they are meant to be for - in the event that some global catastrophy should cause a collapse then it will whip them out of the market. Secondly professional traders use stops for when they have to sleep.

When I take a trade i place an emergency stop around 300 pips from price - this is the window that I personally work in and it is there ONLY for emergency use. Then when i have to go to bed at night I look at the charts and ask myself the question "where would be the place i would exit if this went sour in the next hour" - then i'll add a good 20 to 30 pips to that and that's where i will place stops. When i awake in the morning the first thing i do is check for any stopouts and if the trade is still in then i move the stop back to an emergency position.

Here is what you are doing - you are relying on the stop to take your decision for you. sure you make the decision to place the stop but then you watch every tick as price approaches your stop and then when it hits you think 'damn, bet it goes up now'

in addition to this you are in fear - fear of losing that which the trade has already made you - this is why you are moving your stop up, bit by bit - you look at each candle thinking "is that a support level" and then you move your stop up to there. you follow and follow until you get taken out - mostly by a spike whuich then resumes the move.

So, what to do?

The first thing is to get used to taking the responsibility for your trading decisions. if you are at the computer then get rid of the stop totally. or put it so far back that it would need darth vadar to come down and kidnap George Bush for it to be hit (good news causes spikes too!).

Close your own trades manually and learn to accept responsibility for the trades. Learn the discipline to close out losers when you know it should be done and learn to take profit too.

If you cannot face closing your trades manually then you are avoiding the responsibility and you will never move forwards to become a self sufficient trader.

hope this helps