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Dion's Pyramid

  • #21
  • Dec 22, 2006 10:29pm Dec 22, 2006 10:29pm
maybe i missed it earilier on, but have you estimated any probablities on how likely is is to reach the last level?.. if people have a spare 1k to waste (or 2), and if the probability is decent i.e around 50 to 1 or something like that, then this would actually be worth investigating
  • #22
  • Dec 22, 2006 10:38pm Dec 22, 2006 10:38pm
Quoting Geldschlucker
Why are you so eager to belong to the 95% of people who fail? This so called 'system' is highly hazardous. That's pure gambling, not trading.
dont be so close minded... i think his not stupid, obviously he knows that its highly likely to fail, but thats not the point, it creates a window of oppurtunity so that you can turn 1k to 1mil with some decent odds (much much better then lotto anyway )... that oppurtunity is what the 1k is paying for.. excellent idea, im glad theres still people that try to get rich from the market any way they can instead of been a sheep and following the crowd with futile systems. At the end of the day its just about thhe money, i think alot of people forget that.
  • #23
  • Dec 22, 2006 10:41pm Dec 22, 2006 10:41pm
Quoting tdion
I'd like to point out that a $1000 investment in the pyramid on 11/28/06 would be worth $18,000 today (3 weeks, not too shabby.) This does not include interest gained.

I am not advocating that anyone use my strategy, but it begs the question.... how high will the current pyramid climb? It's already at 5 levels, and needs 6 more to hit the magic million.
Would you have the balls to keep it going after you just made 1800% in 3 weeks? Or would you say, "holy cow I just made 17K in 3 weeks off of 1K, time to get out?"
  • #24
  • Dec 22, 2006 11:34pm Dec 22, 2006 11:34pm
Quoting permanentjaun
Would you have the balls to keep it going after you just made 1800% in 3 weeks? Or would you say, "holy cow I just made 17K in 3 weeks off of 1K, time to get out?"
i would have a clear plan before i begin, the plan could be: If it gets to, for instance, 15k, then split the 15k in to 1k amounts and use them STRICTLY to re-enter 1k at a time until 1 of the 15 eventually hit the jackpot... but i couldnt be able to say that until we get some real odds ratios etc.. i have a background is statistics and probably work it would if i had the details on how it works.
  • #25
  • Edited 5:23am Dec 23, 2006 12:12am | Edited 5:23am
Quoting permanentjaun
Would you have the balls to keep it going after you just made 1800% in 3 weeks? Or would you say, "holy cow I just made 17K in 3 weeks off of 1K, time to get out?"
The nice thing is about being at level 5 ($18,000) is that a margin call still gives you a profitable trade. Your original margin was about $145, so you could lose $855.... however each new 100+ level reach requires more margin for new contracts (which you are paying for with profits from previous legs.) The bottom line: after 400 pips, it becomes profitable even after a margin call. That sweetens the deal some, doesn't it?

PS) Look at the spreadsheet I posted above, and add the margin column up.... that is the net profit of the trade (not including interest)

PSS) NZD/JPY pays 6% interest a year which equals 1 pip profit/day. So let's say you are at day 100 of the trade.... you have just realized an additional level without the price having to move 100!
  • #26
  • Dec 23, 2006 12:13am Dec 23, 2006 12:13am
Quoting syd360
i would have a clear plan before i begin, the plan could be: If it gets to, for instance, 15k, then split the 15k in to 1k amounts and use them STRICTLY to re-enter 1k at a time until 1 of the 15 eventually hit the jackpot... but i couldnt be able to say that until we get some real odds ratios etc.. i have a background is statistics and probably work it would if i had the details on how it works.
If you're up 1800% in 3 weeks then perhaps that is the 1 time you would be able to turn 1000 into 1000000. I don't know how you could make the decision to cut the original winner different than other potential runs. The obvious answer is to use your own trading rules to tell you when to enter and exit the trade under any system. You don't need to always be in with this system. You can win just as much, just as quickly if you risk a huge amount of your account on every trade. There's no point in trying to catch a run of 1000 pips in one shot. What if you went for only 2 500 pip runs, or 10 100 pip runs, etc etc.

The point of the thread is the power of compounding and that it's theoretically possible to get rich quick. All you need to do is bet huge on each trade. I don't see the point in making it all in one run.
  • #27
  • Dec 23, 2006 12:20am Dec 23, 2006 12:20am
Quoting permanentjaun
There's no point in trying to catch a run of 1000 pips in one shot. What if you went for only 2 500 pip runs, or 10 100 pip runs, etc etc.

The point of the thread is the power of compounding and that it's theoretically possible to get rich quick. All you need to do is bet huge on each trade. I don't see the point in making it all in one run.
Well you will have to pay a lot of extra commission every time you close and reopen the trades. When you try for a larger run, you are reaping the profit of ALL legs as the trade progresses.

Example) 10 100 pip gains = 9 pip commission (NZD/JPY) for ALL contracts every 100 pips, where a large run requires commission only on new contracts added that leg.
  • #28
  • Dec 23, 2006 12:23am Dec 23, 2006 12:23am
Quoting permanentjaun
If you're up 1800% in 3 weeks then perhaps that is the 1 time you would be able to turn 1000 into 1000000.
i disagree. The chance of getting to a level where u make 15k is a different ball game to going for the 1mil. Your chances should reduce somewhat exponentially as the levels increase.

by using the method i described you increase your odds dramatically, not not much dramatically to reaching the 1 mil but there is a good chance atleast 1/15 would be another 15k+, to get back where u last finished, see the logic?

i would like to plot some confidence intervals for this once i can estimate the paramaters.
  • #29
  • Dec 23, 2006 12:30am Dec 23, 2006 12:30am
Syd you asked about the likelihood to reach level 11..... I know some people will beat me up over this, but I say it is 50/50 every level. I am a pure fundamentalist. For example, the nosedive the NZD/JPY took in Q1 was because economists were screaming "recession! recession!" in New Zealand. Unemployment was 70%! Then the fed got it down to 30% unemployment and the pair shot right back up.... The chart is a reflection of reality, NOT a repeating pattern. Therefore, IMHO, it is chaos and randomness.
  • #30
  • Dec 23, 2006 12:47am Dec 23, 2006 12:47am
Quoting tdion
Syd you asked about the likelihood to reach level 11..... I know some people will beat me up over this, but I say it is 50/50 every level. I am a pure fundamentalist. For example, the nosedive the NZD/JPY took in Q1 was because economists were screaming "recession! recession!" in New Zealand. Unemployment was 70%! Then the fed got it down to 30% unemployment and the pair shot right back up.... The chart is a reflection of reality, NOT a repeating pattern. Therefore, IMHO, it is chaos and randomness.
i agree to some extent, the markets isnt exactly a roll of the dice, there is obviously bias. if for what ever reason, say, GBP goes on a 2 week rally, there is increased odds that the 2 weeks aftrer that the rally is to continue.

Think of the statistics of weather, if you gather data for vast periods of days you see that after a rainy day its more likely that another rainy day is to follow.. think of a rally as a rainy day, when a rally begins it is less likely to suddenly stop and completly reverse, or else there wouldnt be any 'trends' in the market.

I think the name of this is game is

 

  1. split your collateral in to units of 1k (theres no way your going to get to the 1mil in 1 go)
  2. Try and pinpoint a moment where u think a rally is likely to occur.. this is exactly what someone did with an EA designed to compound on a rally in the mql4 championships and he almost won the damn thing if the competition didnt go for so long. he turned 10k to 40k in 1 month using a simple ea because he was "expecting the euro to go on a rally"

  • #31
  • Dec 23, 2006 12:55am Dec 23, 2006 12:55am
Quoting syd360

  1. split your collateral in to units of 1k (theres no way your going to get to the 1mil in 1 go)

See Post #1.... the trade in Q1 on the chart I posted is a million dollar trade, so it HAS happened in 2006 and might happen again this quarter. Nobody knows.

Thanks for your interest.
  • #32
  • Dec 23, 2006 1:01am Dec 23, 2006 1:01am
Quoting tdion
[/list]See Post #1.... the trade in Q1 on the chart I posted is a million dollar trade, so it HAS happened in 2006 and might happen again this quarter. Nobody knows.

Thanks for your interest.
yeh, sorry 'no way' was the wrong words. maybe 'highly unlikely' is better words. I just feel that it would be wiser not to throw everything in the 1 basket, i guess it just depends if your going for 10k, 100k or 1 mil. I dont mean "just split to units them enter them blindly" i mean "spit the units, and predict each rally, then enter"... its very hard to predict a rally, but its not impossible, especially if you can try 15 times.. the basic consensus was that euro was gonna rally, and look it did
  • #33
  • Dec 23, 2006 1:08am Dec 23, 2006 1:08am
His methods can work, if he can program all complex inputs of variable margin used , stop loss orders on each progressive lots & leverage used.

Alas..it has a season too. Try doing it on weekly & monthly downtrend. The money won't go as quickly as a losing position on a Cable..but will trickle slowly until I can hear jingling of quarter coins in the pocket.
CCI decipherer
  • #34
  • Dec 23, 2006 1:10am Dec 23, 2006 1:10am
I was thinking something similar myself earlier today. Now I will tell you that the NZD/JPY is extremely attractive for doing this because the margin is only 1.67 a microlot (plus 6% on longs) with FXSol.

Anyway if you tried to do this with USD/GBP it wouldn't work as well. Why? Levels would need to be 200 pips because of the volatility. Also, the microlot margin is $4.65!!! That means that the same exact pyramid for the GBP/USD would produce less than half the profit, because you can't squeeze as many contracts into each trade.

I'm sold on NZD/JPY for this strategy.

Other advantages of this system: No concern about slippage... if it slips 3 or 4 pips on the high level, I could care less.... I'd be making money.
  • #35
  • Dec 23, 2006 1:13am Dec 23, 2006 1:13am
Quoting sogt725
His methods can work, if he can program all complex inputs of variable margin used , stop loss orders on each progressive lots & leverage used.

Alas..it has a season too. Try doing it on weekly & monthly downtrend. The money won't go as quickly as a losing position on a Cable..but will trickle slowly until I can hear jingling of quarter coins in the pocket.
Thanks sogt! Now if we can just get DARPA (or the forum readers) to figure out a way to freeze the trade during a correction
  • #36
  • Dec 23, 2006 1:45am Dec 23, 2006 1:45am
Dion , pls do post your Excel file here so we can improvise on its engine.

This thread is similar to a Carry Trade basket suggested by Michael of 'ElectricSavant' over at EliteTrader forum.
Its usually a lot of talks & strategies but in the end, very few traders actually implement this sort of passive & defensive strategy.

Attached is int. rate differential of various currency pairs.
Can be modified to add extra pairs.
Attached File(s)
File Type: zip interest rate differential.zip   6 KB | 754 downloads
CCI decipherer
  • #37
  • Dec 23, 2006 1:47am Dec 23, 2006 1:47am
The market is different things to different people. If this is the way you want to attack the market, or risk $1,000 its up to you and history shows it could work.

The question is: If this position goes positive are you going to be able to see it to the end? I don't have to explain the tension created if that thing goes up in a big way. Probably worse than if a position goes bad. The show "Deal or No Deal" comes to mind.
"Its not where your at, but where your coming from"
  • #38
  • Dec 23, 2006 4:05am Dec 23, 2006 4:05am
Agreed. Micheal and I have talked about his Carry system, although my idea isn't an interest bearing basket. They are similar in their defensive postures.

And "Deal or No Deal" came to mind many times as I looked at this. I guess a margin call at 9 levels would be difficult, even if you still made $50,000. It'd be hard to come so close.... which is why some brilliant person needs to come up with a strategy to keep the trade alive.

I have one method that requires you to put in $10,000.... it can handle one reversal of indefinite magnitude and keep in play, but that just isn't good enough.
Attached File(s)
File Type: zip pyramid.zip   5 KB | 1,503 downloads
  • #39
  • Dec 23, 2006 5:24am Dec 23, 2006 5:24am
Interesting and inspiring strategy, thanks for sharing.

1. which bro.ker has smallest spreads on NZD/JPY?

2. i believe you should work more on entries, especially the first entry - when is the greatest probability to reach a 6,7 or higher level?

3. Mechanics of this system is OK - but I'd rather buy rather bounces from a down trend as it decreases risk - btw what is your SL?

4 do you know how many times in last 5-6 years were pyramids with the 11-th level?

5. maybe it is more reasonable to catch a 5-6 level than 11 as it dramatically increases isk.

6. Almost all systems look OK on charts but in reality you newer know how long will a next move last (see number 2 above - although there are certain forewarning signals - technical and fundamental as well). But it means that this system will put enormous pressure on psyche.

7. have you checked other pairs? as I understand you look for ones with large trends and without frequent reversals and volatility?

Summarizing - my first impression that at this point this system is far too risky. But definitely has a potential, and i believe that its main idea can be applied also to other sys so it's worth studying

Thanks again!

Big Fat Dot.
Quidquid latine dictum sit altum viditur
  • #40
  • Dec 23, 2006 6:12am Dec 23, 2006 6:12am
I am trying to wrap my brain around this system. What about: Start with $2,000, enough for two trades. Place a hedge trade of 83 contracts right at above the margin call limit at every leg. This in essence starts another one in the opposite direction with no drain on margin. Space the hedge trades just like the first. If the market retraces again, the original hedge will go positive, bank the pips and you are on your way. If it continues down, your on your way the second trade while the first gets depleted. I am margin challenged so the figures will have to be cruched. This takes no technicals into account as you never really know when a trade like that will start and which way it will go.
"Its not where your at, but where your coming from"
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