Soultrader's Clinic :) | Page 11 | Forex Factory

Options

Go to
Permalinks
Print Thread

Similar Threads

Question to Soultrader 17 replies

Why can't I post on Soultrader's clinic? 2 replies

Attachments: Soultrader's Clinic :)
Exit Attachments

Soultrader's Clinic :)

  • #201
  • Oct 23, 2007 5:30am Oct 23, 2007 5:30am
Quoting soultrader
Nah, not there yet but getting very close Wolf. and you are right - any one would do.

I'll put you all out of your misery.

Ive had explainations from using them to see where the suckers are selling, to working out the extremes and even someone told me how they use them as a strategy.

All are inside the box thinking and all are asking the indicator to predict price movement.

After this many years and many sleepless nights you realise that you cannot predict price action with any degree of certainty whatsoever. Candle patterns, averages, ocillators, fibs, channels, forks etc - they all amount to the same thing - just another way of looking at price and none offer anything more than a coin toss in reality.

so why do I still have an indicator or two on my chart? if they do not give me an edge in the market what is their use?

when you read this next few paragraphs there are some reading this that will have an 'aha' moment - a paradigm shift. Others will skim over it and not realise what they see. if that's you come back and read it again in 6 months.

when you have something which you cannot predict, your only edge is a price behavioral principle that you stand by and money management - you have to believe in something right or you could never trade?

My price behavioral principle is that 'trends exist'. Once you have this principle that you believe in you need a way of making a decision to enter long or short.

Here's the kicker. The indicators i use do not predict price action - they do not tell me the probability of a trade's success and they do not tell me what will happen next or how much to trade or what my profit target should be.

To me an indicator is .......

(Drumroll)

A discipline tool.

My chosen indicator(s) force me to decide in that direction - right or wrong it merely makes me do what my plan says i should do. The indicator is neither right nor wrong and nor does it pretend to be.

Now think about this - if it's never right or wrong then why would i tinker with it? all it does is say to me - price is going up, buy or price is going down, sell. and i do.

an indicator or even two of them in tandem just make me do what i'm supposed to do. If trends exist which is my principle beleif then i make money - if they do not exist then i will lose.

so far my principle holds over the long run so i stick to my discipline.

I told you it was not rocket science, but the mindshift from thinking of them as predictory tools to thinking of them as merely discipline tools makes all the difference.

Your principle might be different to mine - you may have the principle that prices often retrace from a keltner by 1% or that a moving average cross signals the start of a trend- whatever - then you build tools to build a test for that principle.

but if that set of indicators that you call a 'system' does not make money - it doesnt mean the system is wrong - it means the underlying price behavior principle is wrong and a major shift of thinking may be needed.

If there is one thing i want anyone to take from this thread it is this - trading methods should be built on ideas and principles - not squiggly lines. The lines are there to make you take action to prove or disprove your principle idea - they are not themselves the idea.

Think about this hard ..... It could change your life.

Hope this helps.
Ok. You've cleared my mind.
.
  • #202
  • Oct 23, 2007 6:36am Oct 23, 2007 6:36am
Back to some PM's then.

Be careful what you send me - I might just post it

triphop
Member
Member Since Oct 2007
Posts: 0


http://www.forexfactory.com/images/icons/icon1.gif woah there!
Take a chill pill! No need to close your thread. Sure, people talk *** all the time, but I for one found you entertaining and educational. Kind of like a episode of QI.

You know as well as I do that if you say you trade like X, someone will come along and challenge you and say that you're wrong, and actually trading like Y will make you a millionaire, look at me, I'm berty big bollocks etc etc. (think that was me wasnt it?)

But like you care? You're doing it for a living; more that can be said for most, and you've learnt more than 95% of traders on here. So cool, you've nothing to prove.

Now get back on there are start telling us your thoughts on trailing stops. Or breakout methods. Or different currency personalities (do you really reckon that methods should work across all currencies?). Or tell me to f*ck off - at least I've given I've tried to convince you!

Cheers


F*ck off


No seriously, some good points there - especially trailing stops so i'll start with that.

There are really just two ways of trailing a stop - doing it with brains or doing it like the village idiot.

Im afraid that if you put on a trailing stop at a fixed pip interval then it's time to tell the village your new status

The market does not care if you think that 30 pips is a reasonable amount, it does not care how much of a percentage you want to risk, it does not care how fast you want to get to break even.

The market only cares about one thing - will people keep on buying here or will they sell - namely support and resistance.

IN MY OPINION:

Support and resistance should not only dictate your entries but also your exits and your stop position.

You will hear littered through this forum "i was long but got taken out by my stop" - "my broker went stop hunting and got me" - "damn thing took me out to the pip on my stop"

These statements show someone who fails to take responsibility for a trade's demise. They use a stop to make a decision for them to exit a trade.

Real traders exit their own trades with their own fingers. Stops are there for two reasons - when you need to sleep or go out and play golf, or to protect your capital from unforseen circumstances like an earthquake in canary wharf.

Stops shoudl always be placed further away than you think price will hit. If your assumption is that the market will not go lower than 2.200 on cable then your stop should be at 2.150 at the absolute closest and preferably further than that or not at all in the market.

A stop does not know if there is news in 2 minutes or if news has just happened and those dickheads in london have overreacted before the revision. It does not know that your broker is about to have a false spike of data and take you out. that's what it doesnt do.

here's what it does.

It tells your broker where on your head you have painted the target and also how many other suckers have the same target. It takes away your responsibility for exiting a trade and makes you less of a trader than you could be. It puts you in the 'look what im going to do' club for the market also, because when your broker can see your stops and everyone elsesd it knows where to put it's own stops in the real market - a little before yours - but believe me if theirs is hit, so will yours even if they have to move the price.

Please please learn to exit your own trades - use stops for what they are made - protection in your absence. not as excuses as to why you didnt get 500 pips or as to why you lost so many.

Stops are one of the worst things for taking away your decision making ability.

Personally I close all my trades myself based on my rules OR the computer does it for me - but even then it is not a stop its a close execution. During the daytime if I am at the computer I have no stops at all. Yes you read that right - none at all.

let's face it, half the time your broker will slip you anyway on fast moves - well I can slip myself thank you and i can click myself also thank you.

Don't be idle - close your own trades.

https://linktr.ee/Soultrader
  • #203
  • Oct 26, 2007 9:47am Oct 26, 2007 9:47am
New one for you today then.

triphop
Member
Member Since Oct 2007
Posts: 0


http://www.forexfactory.com/images/icons/icon1.gif currency personalities
And the clinic is back in business. Good man!

Right, well I kind of alluded to this in my last PM, but I'd like to know about currency personalities.

To my mind, the best currencies to trade are the ones where the spread is lowest but the movement is greatest. So GBPUSD open-close pip movt is around 70, and the spread is 3. Compare that to AUDJPY where the spread is 6 for me, and the open-close is around 40 on average, and you've just massively reduced your odds of winning overall haven't you?

What's more, some currencies swing in far more unpredictable ways too. I tested AUDJPY with random signals to work out what the best stop loss would be for day trades, and it's a whopping 120-odd. Compared to GBPUSD where it's about 70.

So surely, with all this in mind,
a) strategies can't all work on all currency pairs can they? Is that even a realistic aim?
b) some pairs are clearly more tradeable and more profitable than others?

Interested as ever. I am, as you probaby guessed, green around the gills.

Cheers

Okee dokee then - this is a good one and i'm sure some more will comment also.

Lets have a look at your points and adress them one by one.

first you say you look for pairs that are for want of a better explaination 'value for money' ie the spread is small but the movement is large. I can understand this and you are just trying to get more bang for your buck.


That's for you to decide and this could be a good discussion alone.

then you ask ..

a) strategies can't all work on all currency pairs can they? Is that even a realistic aim?

Yes they can - a market is a market wether in yen rand or rupees. all markets trend to some extent and all range trade to some extent so why shouldn't a successful method work on any instrument?

Currencies are different from shares because there is a market bias to long - the company concerned want their share price to rise and investors want it to rise. Currencies are different as there is no bias - cable long is dollar short and so on. this is why many technicals that worked on shares do not work on forex.

However, if your trading method is based on a principle rather than a squiggly line or mathmatical formula then that principle should transfer to any currency. Mine as you know is the principle that trend's exist and this holds true on all currency pairs. I have a way that works on all currency pairs. Now the method settings may change from pair to pair as some do indeed have larger swings than others but trading a trend works on any currency whatsoever.

The key then is to make sure you incorporate something in your trading method which changes with the currency itself - an example of this is ATR - on a big swinging currency like GBPJPY for example ATR levels are significantly bigger than on say EURGBP. therefore a method based on something like that will indeed work on any currency.

your second comment was ...

b) some pairs are clearly more tradeable and more profitable than others?

Is this really true? just because eurgbp has a range of 40 pips a day does not make it any less tradable than cable at 100 pips a day.

the Turtles for example worked out that if your base movement was say 100 pips at 1 lot then if something moves on 50 pips a day then trade it with 2 lots - 25 pips 4 lots - 200 pips 1/2 lot - you see what i mean?

It never ceases to amaze me the people who do well on euro and then decide to trade say GBPJPY and blow a months pips because they traded the same amount - crazy!!

Finally in this section i want you to think about this.

I like to try and put myself in the shoes of the big players. The traders with 10 billion under management looking to trade for their clients. They have to get 10 billion in the market just to be flat leveraged - if they want 2:1 they have 20 bil to get in. They couldnt trade a single pair if they wanted to - it would be impossible to get that money in and out of the market fast enough.

so what they do is diversify - their systems simply MUST work on as many instruments as is possible. they mostly have simple systems that follow trends and they need to get money in the market - they trade 10 pairs at a time and then stocks and then bonds and then shares and then tnotes etc etc - what they have has to work across the board.

Now I aint no big dog, But i do have an edge on the big dogs in that i can play a similar system but i can get in and out at wil without having to work the order for a week - that's why they make 30% a year and a good independent can make half that in a month.

I don't care about the nuances of any particular currency - how wild it swings or how it reacts to news - I care if it trends and if i can get enough out of it on my chosen timeframe.

In answer to your question Yes, it is possible and desirable that your method works on anything - but then clearly because of spread or your own time horizon or your own trading personality there will always be instruments that will return more to you than others. But you should always be ready to switch if one of the others starts working better - that's why it's an advantage to make sure your method is multi lingual so to speak.

Hope this helps. - let the discussion begin.
https://linktr.ee/Soultrader
  • #204
  • Oct 27, 2007 4:56am Oct 27, 2007 4:56am
mrxit
Member
Member Since Oct 2007
Posts: 8


http://www.forexfactory.com/images/icons/icon1.gif Hi Soul...........
HI Soul..
I've been following your thread and and monitoring you account. I've learned alot from your discussions. I'm new to Forex, but definantly like the dynamics of this market. I've traded stocks for years, but found too much manipulation to feel like it was a level playing field. I definantly see how the money is made by following trends an by not fighting it.

I blew out a $1500 dollar account a couple weeks ago, it took me all of two weeks to do it, by fighting the trend. Now I set up a mini account with $500.00 and trading very small.

Aside money manag...the biggest problem I was having was being stopped out. For instance ; after reading your comments on this , I thought I saw a favorable trade on GBP/US the other night. I set my stop nearly 75 pts from the buy in. Overnight the MMs ran the price up exactly to the point of my stop, which was well above a recent high, hit my stop on the pip and promptly returned to my buy-in and staying in that range for the next 24
hrs.

I'm not so naive to think they were going after just me, I'm sure others thought this was safe territory also. My long point is, stops even ones that are 3xs what the trading Forex books tell you to use (typically 30-50 pips)are the deathnail for so many trades, particularly if one cannot be glued to the screen.

I've decided to trade small and place my stops so far away the MMs would have to pack a lunch to go get me. I notice your typical stop is often 150-200 pips or more, even with the occasional Sl hit, I would think staying in the market and the chance for a reverse, or the opportunity to close the trade at a smaller loss is the benefit of these distant stops. Well, anyway sorry this is so long, wanted to let you know I'm learning from your experience and Thanks
Greg

This is kind of a perplexing email - i dont understand you at all Greg.

Firstly you say you have learned to trade the trend and then you say price went UP to your stop on cable - well cable is in an uptrend - please explain how you wasnt fighting the trend there?

secondly a stop of 75 pips is woefully small and can be taken out with noise alone as you found out and if you can only commit $500 then you are wasting your time - give it up. absolute minimum in an account in this game is $10,000 and then trading 1 minilot per trade. my guess is you are trading 1 minilot with $500 which equates to a 20:1 leverage - sheer lunacy.

The final thing is what are 'the MM's' as you call them? I have no idea what you are talking about. I'd have a guess at money managers, but your post infers that money managers are out to get you, hunting your stops for their profit. If this is the case then i don't know what you've been reading but throw it on the nearest fire.

Lot to learn yet Greg. lesson 1 - learn to read a trend
https://linktr.ee/Soultrader
  • #205
  • Oct 27, 2007 9:09am Oct 27, 2007 9:09am
Hi, and I am glad that you re-opened this thread.

Quoting soultrader
.... if you can only commit $500 then you are wasting your time - give it up. absolute minimum in an account in this game is $10,000 and then trading 1 minilot per trade. my guess is you are trading 1 minilot with $500 which equates to a 20:1 leverage - sheer lunacy.
I have other questions for you later (after the kids trampolining) but meantime - what is your expected effective leverage on an account. Effective leverage being measured by traded lot-size against capital in your account.

Thanks.
Minesweeper target: 284
  • #206
  • Oct 27, 2007 9:18am Oct 27, 2007 9:18am
Quoting Primate
what is your expected effective leverage on an account. Effective leverage being measured by traded lot-size against capital in your account.

Thanks.
I hope you don't mind me jumping in. Mine usually comes out to around 5:1.

That is account balance vs. margin at 100:1 leverage.
  • #207
  • Oct 27, 2007 10:09am Oct 27, 2007 10:09am
Nice to see you back Soultrader.

When you closed your thread I felt a bit guilty because your closing post came right after my last post...

I believe this thread is finally on track to be as useful as it was conceived to be.

The merit goes to you and your rejuvenated spirit.

I read the posts about indicators, and I agree with what you think. A trader must first find an edge and develop a plan; indicators, oscillators, trendlines, candlesticks, etc...are only triggers to take/exit trades.

For instance, I am a candlestick pattern trader and use no indicators. During my first 1 1/2-2 years I was very engrossed into studying the patterns and learning how to read them very quickly.

Yet, I was barely breaking even. Why? Because I wasn't focusing on the context within which a pattern would appear.

Today - although I still consider myself an inexperienced trader with a long way to go - I am much more focused on the context rather than the patterns.

For instance, one of the most powerful patterns is the white hammer line. However, I've taken many of them only to see them fail within 2mins upon entry.

However, if you see a valid white hammer line appear at strong support and around a level you previously had marked on your charts and you have a bullish bias, then it's a good trigger to get long.

I see there is a nice discussion about stops that could help many traders here.

Fundamentally, I agree that a stop loss is useless if a trader has the opportunity to stay at the screen and follow his positions.

However, I believe it takes a lot of experience and discipline to trade without a stop loss.

The mind can play tricky games sometimes and I see many traders - including myself sporadically - that fail to close a position when it should have been closed or simply because they weren't able to understand price action properly and just let a loser get bigger and bigger.

I am a firm believer that TRADING IS A LOSERS GAME. THE BEST LOSERS HAVE THE BETTER CHANCES FOR SUCCESS IN THIS GAME.

I'll throw an example in here.

Yesterday I did 18 trades. 12 of them were winners and 6 were losers. A decent 66% winning rate, slightly below my average but still decent.

If you take a look at my P&L, it shows a big loss that erased all of my profits for the week.

Late last nite, after cooling down a bit, I dug into the details of my trades and discovered why my day was a really bad day.

Simply, 3 of those 6 losses were HUGE losers that just killed me.

And 10 of those 12 winners were SMALL winners, with only 2 being decent-size winners yet still much smaller than those 3 big losers.

Why did I allow those 3 losing trades to become that big? Probably because yesterday I felt very SLOW in reacting to price action and exited those trades at a much later time than I should have. That killed me.

Had I taken regular stop losses at idiotic swing points, I would have closed the day at BE at least.

What I am trying to say here is that one of the common mistakes traders can make is not being able to cut losses short. I myself fall into that trap sometimes, especially because I have a very high winning% and after a long winning streak I get complacent and fail to accept losses, only to redeem too late and take bigger losses.

Keep in mind I am a daytrader and I work on momentum, so taking small losses is crucial if one wants to be profitable operating in lower timeframes.

After yesterday's dismal performance, my goal for next week is to focus on losses. I know I am gonna win most of my trades, so I am not worried about the winning side. It's the losing side I need to take care of sometimes, especially in those days when my brain isnt up to speed with the markets.

Last but not least, most of my winning trades tend to work out right from the start or shortly after. When a trade takes too long to work out and my position tends to swing around BE for too long, then it might be best to cut it and take the next setup.

I am speaking as a daytrader of course, so probably my thinking doesn't apply to longer-term trading.

Have a good weekend all.
  • #208
  • Oct 27, 2007 10:40am Oct 27, 2007 10:40am
Write it down in a small notebook.

circle your stops and follow this for 30 days as it takes about 21 days to forum a habit.
Check Mate GAME OVER
  • #209
  • Oct 27, 2007 11:58am Oct 27, 2007 11:58am
Quoting philmcgrew
I hope you don't mind me jumping in. Mine usually comes out to around 5:1.

That is account balance vs. margin at 100:1 leverage.
Hi Phil, no I don't mind at all.
I am having a little trouble figuring out your actual numbers, do they mean that if you open a mini-lot position you have $2k to cover that position (as an example)?

From Soultrader's comment it seems like he is suggesting an effecgtive leverage of 1:1, which whilst safe for long-term trend riding may perhaps be overly cautious for shorter term trading.

...and then maybe not?
Minesweeper target: 284
  • #210
  • Edited 4:37pm Oct 27, 2007 12:04pm | Edited 4:37pm
Quoting ItalianSharp
Nice to see you back Soultrader.

...

I'll throw an example in here.

Yesterday I did 18 trades. 12 of them were winners and 6 were losers. A decent 66% winning rate, slightly below my average but still decent.
Now that is exactly my intended question (and thanks Bunton).

My numbers on the month are 69% winning trades, but the losses on the losers are occasionally huge. I watch the slow move in the wrong direction and then, as it accelerates, I close out at a substantial loss.

So what is the missing paradigm?
Cheers.

* * * * *
oops, my memory is letting me down these dayz, it was only 69%.....
Here's my trade list for Oktober #1 account.
There is evidence of panic in some of my cable trades.
The EurJpy position with the slight yellow markings made me stop and ask myself if I really am serious about this, I mean - why did I close that position at that point?
Attached Image (click to enlarge)
Click to Enlarge Name: OktoberTrades.JPG Size: 244 KB
Minesweeper target: 284
  • #211
  • Oct 27, 2007 12:12pm Oct 27, 2007 12:12pm
Quoting Primate
Hi Phil, no I don't mind at all.
I am having a little trouble figuring out your actual numbers, do they mean that if you open a mini-lot position you have $2k to cover that position (as an example)?

From Soultrader's comment it seems like he is suggesting an effecgtive leverage of 1:1, which whilst safe for long-term trend riding may perhaps be overly cautious for shorter term trading.

...and then maybe not?
There are so many terms for leverage that it's hard for us all to get on the same page. First, your broker offers you an amount of leverage. I have 2 accounts. One is 50:1 and one is 100:1.

Using the 100:1 as an example and assuming a $100,000 account, risking 3% on the EURUSD with a 60 pip stop would permit me to trade 5 lots.

Now, 5 lots at 100:1 on the EURUSD requires a margin of $7199 and 1856 pips to a margin call.

The broker loaned me $500,000 and my account is $100,000. That is a true leverage of 5:1. I have a little calculator program that does all of this for me.
  • #212
  • Oct 27, 2007 3:54pm Oct 27, 2007 3:54pm
Quoting philmcgrew
There are so many terms for leverage that it's hard for us all to get on the same page. First, your broker offers you an amount of leverage. I have 2 accounts. One is 50:1 and one is 100:1.

Using the 100:1 as an example and assuming a $100,000 account, risking 3% on the EURUSD with a 60 pip stop would permit me to trade 5 lots.

Now, 5 lots at 100:1 on the EURUSD requires a margin of $7199 and 1856 pips to a margin call.

The broker loaned me $500,000 and my account is $100,000. That is a true leverage of 5:1. I have a little calculator program that does all of this for me.
Thanks, that is my understanding also.
Minesweeper target: 284
  • #213
  • Oct 27, 2007 5:41pm Oct 27, 2007 5:41pm
Primate

I do see a couple of bad losses, yet I don't know what timeframe you use to operate in FX nor do I know the details of your system.

However, if you are a daytrader and you average at least 5 or more trades per day on the same instrument, I believe your losses should never be huge.

Something that just came to mind is this:

Before the highly volatile summer months came around, I used to chat with another emini trader who would never lose once. Seriously, the guy was always winning.

Once he showed me his statement and I was shocked to see so many little winners and no losers.

I asked him how he could keep such a high winning%, he said he uses very large stops and that he likes to add to his - losing - positions until he breaks even for the trade.

Well...July and August came around and I never heard from this guy again.

My guess is he must have been trap in one of those 400-500 pt drop where averaging down just doesn't work and where prices just slice thru support levels like a hot knife thru butter.

This is why I am very focused on the losing side of trading, i.e. keeping my risk in check.

At one point, we all get some winners right? The thing is, we gotta be in good shape when those winners come.

Sometimes the market will frustrate us because it'll just take us out of a position before reversing and spiking in our direction...but that's part of this business and we must accept it.

I personally prefer to keep my losers as small as possible simply because when I am right I usually don't take much heat.

What is better for you as a trader? Take a small loss and see prices eventually go your way, or stay in hoping for prices to go your way and take a gigantic loss?

I prefer to miss the best trade of the month and take a small loss rather than hoping for the best trade of the month to come and take a big loss.

As a daytrader, I usually have 1-2 very good setups per day, so I just have to be patient and wait for my chances. I don't care about missing out on a good opportunity simply because I need to take care of risk first.

Trading is a losers game. We must realize this. I know that we'd all love to win all the time on each single trade, but it's just impossible.

Of course, if you use gigantic stop losses maybe the market will come your way at some point, most of the times prior to your stop loss being hit.

But what happens when that gigantic stop loss is hit? How much does it cost both in terms of money and psychological pain/frustration?

And how big are your winners to justify big losses?

I am not very fond of risk:reward ratio because it can be manipulated and I don't find it realistic.

However, I do believe in the principle that your average winners size should be bigger than your average losers size.
  • #214
  • Oct 28, 2007 3:11pm Oct 28, 2007 3:11pm
wow, busy weekend on this thread - any of you lot got a life???

anyway, some input on your responses - there's a lot of them so this post might be long and the responses i guess even longer - might be wednesday before we get on a new subject!

first off i had a reply from post 204

Let me clarify, when I spoke of my trade on cable I meant I went short hopefully relating that by saying my stop (SL) was hit.

In a very methodical way. It seemed as if the price moved up just to hit those SLs quickly and settled back in to range.

With regards to MMs taking out stops, if I remember correctly you suggested that traders have a target painted on them when SLs are placed.

I'm new to Forex so I'm learning. Sorry if I seem naive, but I'm not a total newbie to trading, just to Forex. And with regard to 10,000 needed, this isn't necessary if trading micro lots. A % loss or gain is just that. whether it be $5.00 or $5000. Anyway, thanks for your time.


Greg

Hi Greg, ok firstly the fact you went short in a clear uptrend is what i was referring to as your first needed lesson - the trend has not been down for a long time now - learn to look for the underlying trend and go with that rather than trading the pullback which is what you were trying to do if you went short.

MM's i guess is Market Makers - sorry about the confusion, most of us call them a broker and yes, they do go for stops, it's not a myth it's just another string to their earnings bow.

the last bit though i have to completely disagree with you - a % win or loss may be just that, however for you to trade effectively the amount you are trading needs to be psychologically worth it. If you are trading micro lots then let's face it, you dont give a toss if you lose 30 cents but would if you lost $300. Micro accounts should be banned as they lead the learner into a false sense of apathy.

if you are going to be happy trading micro lots in the future then fine, but do you really want to earn about a dollar a month?

the amount you stake when traded musty be a comfortable compromise between being small enough to allow the position develop, but large enough so that any win or loss is worth doing. This is very important as you will act differently with 1c a pip on the line as you will with $10 a pip on the line. working on the percentage sounds very scientific and logical however you are not trading how you want to trade in the future so there is little point.

Is this coming across right?

Ok, next.

Quoting Primate
Hi, and I am glad that you re-opened this thread.



I have other questions for you later (after the kids trampolining) but meantime - what is your expected effective leverage on an account. Effective leverage being measured by traded lot-size against capital in your account.

Thanks.
Quoting philmcgrew
I hope you don't mind me jumping in. Mine usually comes out to around 5:1.

That is account balance vs. margin at 100:1 leverage.
Phil, i'm not sure how the account limit of 100:1 has anything to do with the leverage calculation - can you enlighten me as to how you take this into account?

In my book if you have $100,000 in an account and have a trade at say $200,000 (2 lots) then you are 2:1 - this doesnt change whether your broker gives you 100:1 or 400:1

to me all this means is that the broker allows you to get more into the shit with a 400:1 account than a 200:1 account

- am i being thick here and missing something? help an old man out here phil




Quoting ItalianSharp


For instance, one of the most powerful patterns is the white hammer line. However, I've taken many of them only to see them fail within 2mins upon entry.

However, if you see a valid white hammer line appear at strong support and around a level you previously had marked on your charts and you have a bullish bias, then it's a good trigger to get long.
Hi Italian, whew! long post! - dont feel guilty, anyway back now.

reading this bit above back to yourself, did it pass your mind that maybe the 'pattern' didnt matter a toss and it was just a good old support and resistance trade?

This is what i find almost 90% of the time on many forums - someone posts a chart with all kinds of forks, fibs, pivots etc and says - 'wow, look what aperfect setup that was' just a look at the chart usually shows it was just a simple support and resistance trade - all the lines are there just cos the trader drew them - the one thing he didnt draw was the support / resistance because it was there all the time for all to see without a single fib line pivot of shitsu quiggymu line with dark cloud hammer cover and divergence to macd squaggybot!

one thing you will realise as time goes on is that you dont need the lines - everything you need is right there in the price.

Quoting ItalianSharp

I see there is a nice discussion about stops that could help many traders here.

Fundamentally, I agree that a stop loss is useless if a trader has the opportunity to stay at the screen and follow his positions.

However, I believe it takes a lot of experience and discipline to trade without a stop loss.

The mind can play tricky games sometimes and I see many traders - including myself sporadically - that fail to close a position when it should have been closed or simply because they weren't able to understand price action properly and just let a loser get bigger and bigger.
That's nothing to do with not using a stop, that's because the trader didnt close it! just placing a stop there again just moves the responsibility so if it turns around they can say 'i got stopped out' instead of 'i took the decision to close because ...'

a stop is a crutch to a trader just as a cigarette is to an addict.

Quoting ItalianSharp

I am a firm believer that TRADING IS A LOSERS GAME. THE BEST LOSERS HAVE THE BETTER CHANCES FOR SUCCESS IN THIS GAME.

I'll throw an example in here.

Yesterday I did 18 trades. 12 of them were winners and 6 were losers. A decent 66% winning rate, slightly below my average but still decent.

If you take a look at my P&L, it shows a big loss that erased all of my profits for the week.

Late last nite, after cooling down a bit, I dug into the details of my trades and discovered why my day was a really bad day.

Simply, 3 of those 6 losses were HUGE losers that just killed me.

And 10 of those 12 winners were SMALL winners, with only 2 being decent-size winners yet still much smaller than those 3 big losers.

Why did I allow those 3 losing trades to become that big? Probably because yesterday I felt very SLOW in reacting to price action and exited those trades at a much later time than I should have. That killed me.

Had I taken regular stop losses at idiotic swing points, I would have closed the day at BE at least.

What I am trying to say here is that one of the common mistakes traders can make is not being able to cut losses short. I myself fall into that trap sometimes, especially because I have a very high winning% and after a long winning streak I get complacent and fail to accept losses, only to redeem too late and take bigger losses.

Keep in mind I am a daytrader and I work on momentum, so taking small losses is crucial if one wants to be profitable operating in lower timeframes.

After yesterday's dismal performance, my goal for next week is to focus on losses. I know I am gonna win most of my trades, so I am not worried about the winning side. It's the losing side I need to take care of sometimes, especially in those days when my brain isnt up to speed with the markets.

Last but not least, most of my winning trades tend to work out right from the start or shortly after. When a trade takes too long to work out and my position tends to swing around BE for too long, then it might be best to cut it and take the next setup.

I am speaking as a daytrader of course, so probably my thinking doesn't apply to longer-term trading.

Have a good weekend all.
Ok, right, this is a biggie.

I'm sorry italian but ive never heard such tripe in my life.

If you think trading is a game for losers then you just keep on managing your losers - hell someone has to pay my bills!

Your last part of the post just said one thing. "I let my losers run and cut my winners short" because i do this i get 66% winners but dont make any money. but hey, arent i smart getting 66% right!

you are doing what the 90% do and you are doing it very effectively. You are taking profit at a few pips because you fear losing what the position has already made - you are afraid of being wrong.

you let the losers run till they hurt too much because the pain of accepting you were wrong is stronger than the pleasure of proclaiming from the rooftops 'i was right'

there is no right or wrong in this game, my win loss is around 35% so i'm wrong a lot more than im right - i dont give a toss about win / loss i care only about making money and because i let the winners run i do that.

even when you look at the account you delude yourself by saying 'i reacted slowly yesterday' as if to say i was right but not quick enough. it's not the case.

now before someone says you can close winners early and make money let me say that yes you can and you can let the losers run - but only if you are prepared to let them run until the trend is clearly changed against you. The book bird watching in lion country by Dr Forex clearly sanctions this approach but you will note that he trades the trend and only closes a trade when the trend has clearly ended - that's accepting a loss but also allowing a trade to work for you.

you are right of course that you should cut the losers short, but you do have to give them chance to mature into profit before killing them quickly.

sod concentrating on losers, the biggest thing you could learn this week is to let the winners run. if you cut the losers short you still have to get the winners to run otherwise you still will not make money, you'll just break even.

heres what mental trick i used to make sure i did let them run.

if i close a trade it must never be going in my direction - so if you are long you can never close on an upbar for example or even higher than the last swing point.

second if i closed a trade at say 50 pips and it went to +100 before the trend turned then i classed that trade as a 50 pip loss - i conditioned myself to see those trades as losers even though they won 50 pips - because i did not maximise the potential. that's why in august I has a single trade go to over 1500 pips before it reversed and i closed at 1200 odd - yes, i let it retrace by over 300 pips - that's letting a winner run.

also, before you come back and say 'well, that was a longer term trade' let me tell you that there are people on this forum that have seen me in real time chat take a one minute chart trade to over 100 pips in profit for over an hour - letting winners run is universal no matter the timeframe.

One of the most important thing to learn in any business including trading is to recognise when you are in a good position to do business and maximise on it - you do this in trading by recognising a winner and allowing it to win and win and win.

Phew, knackered now and my tea is ready - much more to say from other posts but this is enough for one i think.
https://linktr.ee/Soultrader
  • #215
  • Oct 28, 2007 3:28pm Oct 28, 2007 3:28pm
Quoting soultrader
Phil, i'm not sure how the account limit of 100:1 has anything to do with the leverage calculation - can you enlighten me as to how you take this into account?

In my book if you have $100,000 in an account and have a trade at say $200,000 (2 lots) then you are 2:1 - this doesnt change whether your broker gives you 100:1 or 400:1

to me all this means is that the broker allows you to get more into the shit with a 400:1 account than a 200:1 account
You are correct. I was simply trying to make the distinction (perhaps poorly) that there are different types of leverage and one is not dependent upon the other.
  • #216
  • Oct 28, 2007 4:45pm Oct 28, 2007 4:45pm
Soultrader

Thanks for getting back to me.

A couple of things need to be clarified because I believe you misunderstood them:

"one thing you will realise as time goes on is that you dont need the lines - everything you need is right there in the price."

I actually don't draw any lines on my charts. All I have are candlesticks.

Probably you misinterpreted me when I wrote "white hammer line", which is just a type of candlestick.

" If you think trading is a game for losers then you just keep on managing your losers - hell someone has to pay my bills!"

I say it again, trading is a loser's game. And I truly believe in it. We all are losers at some point, so the best losers are those who'll be able to stay in the game in the long term and take advantage of their winners. There is nothing negative in it, seriously. I just believe that learning how to lose small is very important.

"Your last part of the post just said one thing. "I let my losers run and cut my winners short" because i do this i get 66% winners but dont make any money. but hey, arent i smart getting 66% right!"

Actually, I am not concerned about winning% at all. It's not something I try to achieve and be proud of. There is nothing good to rant about when you win 66% of the time and still end up having a horrible day. I was trying to prove the opposite in fact.

"you let the losers run till they hurt too much because the pain of accepting you were wrong is stronger than the pleasure of proclaiming from the rooftops 'i was right'"

I hope yours are just assumptions, because I didn't write anything like that at all.

In my prior long post, I said that on Friday I was mentally too SLOW. I failed to close my losing trades too late not because of the pain, but because I failed to quickly recognize when my position was wrong.

"even when you look at the account you delude yourself by saying 'i reacted slowly yesterday' as if to say i was right but not quick enough. it's not the case."

How do you know anyways? With all due respect, you have no clue nor idea about what I trade, how much I trade, my trading style, my rules, my edges, nothing whatsoever...yet, how can you be so confident that last Friday my real problem wasn't slowness but something else?

Please, don't jump up on conclusions if you don't know much about someone's trading style. It's irritating indeed. If you ASSUME something, please bother to ask for confirmation and perhaps we can understand each other better.

In all honesty, I believe I know more about the way I trade than you do, so if I say that I was a bit too slow on Friday, that is probably true. I know myself really well and I do 5 to 20 trades per day sitting in front of the screen for 7+ hrs, so I can distinguish when I am quick enough from when I am not up to market speed.

It's clear that besides not liking daytrading much, you don't have many clues about how daytrading differs from long-term trading. Make an effort to understand what daytrading is really about and try to think like a daytrader and not like Soultrader the long-term trader.

That way you could probably understand more about different types of traders and we could probably avoid frequent misunderstandings.

"you are right of course that you should cut the losers short, but you do have to give them chance to mature into profit before killing them quickly."

Agree. We must find a good compromise between managing risk and giving room for a trade to work out.

"sod concentrating on losers, the biggest thing you could learn this week is to let the winners run. if you cut the losers short you still have to get the winners to run otherwise you still will not make money, you'll just break even."

Last week that's all I'd been doing up to Friday. I let my winners run Monday thru Thursday and every single trading day I exceeded my daily goal and was done after 1 hr into the open. It had been a very good and relaxing week up to Friday, when I wasn't able to let any winner run simply because the market was very choppy and I was constantly being shaken out of my positions. Basically, it was very hard to let a winner run on Friday. However, that was not my problem. My problems were those 3 big losers that killed almost all of my profits for the week. Unacceptable.

"also, before you come back and say 'well, that was a longer term trade' let me tell you that there are people on this forum that have seen me in real time chat take a one minute chart trade to over 100 pips in profit for over an hour - letting winners run is universal no matter the timeframe."

Probably you caught a great entry and great volatility. Try to do that everyday different times per day if you can. How can you possibly take a one-time event and use it to make such an important statement? I find that a bit superficial to say the least.

Just because once you might have gotten lucky and caught a bronco ride on a nice trade, that doesn't necessarily mean that you could turn it into some sort of routine.

Heck, I caught a great entry before the last FOMC and made 180 Dow points. That might happen once-twice per year, so I actually could care less as a daytrader.

If you use a 1min chart and look for 100pip moves, you are gonna be broke sooner than you think IMO. It just doesn't make sense to me to use short timeframes and look for the big move.

If you use short timeframes, you are in for the quick profit or quick loss. As simple as that. Of course, when the market proves my position right, I carefully evaluate how far I can let it ride.

"heres what mental trick i used to make sure i did let them run.

if i close a trade it must never be going in my direction - so if you are long you can never close on an upbar for example or even higher than the last swing point."

This is wishful thinking in daytrading. I do the exact opposite. If long, i always close on the uptick when everyone else is trying to get long. Closing on the downtick makes no sense to me because it means the market has already turned against me.

I prefer to pick an area where I believe prices could stop...and look how the market behaves once that area is reached...if I have indications the big boys are unloading their positions - and i do have different instruments to see that - then I unload with them when the late buyers/sellers are still trying to jump on the bandwagon.

Simply, I dont think applying long-term trading rules to short-term trading is a smart thing to do and if there is anything I can tell about you is that you are not a daytrader.

"One of the most important thing to learn in any business including trading is to recognise when you are in a good position to do business and maximise on it - you do this in trading by recognising a winner and allowing it to win and win and win."

Agree. That's the only circumstance when a daytrader can turn into a longer-term trader. Meaning...if you think you may be onto something bigger than expected, don't run away from it but let it play out. Rare opportunities though.

Before I finish this long set of answers, I'd like to bring to your attention the link to a thread here at FF that clearly proves how someone can be very profitable trading off the 5min charts.

http://www.forexfactory.com/showthre...72#post1684072

Isn't this what you'd been looking for?
  • #217
  • Oct 28, 2007 5:46pm Oct 28, 2007 5:46pm
Quoting ItalianSharp
...

Last but not least, most of my winning trades tend to work out right from the start or shortly after. When a trade takes too long to work out and my position tends to swing around BE for too long, then it might be best to cut it and take the next setup.

...
This is the aspect I needed, so a big thankyou for that. Maybe you didn't realise it when you wrote, I didn't even realise it when I read it the first time, but I have been here a lot.
Minesweeper target: 284
  • #218
  • Oct 28, 2007 6:29pm Oct 28, 2007 6:29pm
Quoting Primate
This is the aspect I needed, so a big thankyou for that. Maybe you didn't realise it when you wrote, I didn't even realise it when I read it the first time, but I have been here a lot.
Thanks Primate.

I did realize it as I was writing it. I think it's really important for a daytrader to understand when his odds start to drop below the expected level.

I've been doing a lot of research into my trades, keeping track of all of them and monitoring the stats rigorously.

A pattern I noticed is that if within the first 5mins upon entry the market hasn't yet proved me right, my chances are not as good as when I entered the trade.

The longer you stay in a trade that hasn't been proven correct yet, the more risk you are taking on IMO.

This is why some daytraders like to use time stops to their positions.

For instance, on Friday I went long on a volatility breakout and my plan was: if this trade is not 5pts in the money within the first 2mins upon entry, I am out. I got out at +1 and that was it. I don't care how much higher the market could have gone after my exit. I saw something nice, I thought it had good momentum and good volatility, and those were my conditions to stay in the trade. Conditions weren't met, I got out.

Time is a major factor that is often undervalued by daytraders.
  • #219
  • Oct 28, 2007 6:37pm Oct 28, 2007 6:37pm
Italian good luck with your trading, really.

Talking about assumptions don't assume ive never daytraded - i traded 5 min and 1 min charts for longer than you've been in the game (about 2 1/2 years solid 12 hours a day). my 100 pip trades were not one offs, in fact i regularly made 80-100 pips a day several days a week, there are some old time traders in here that would vouch for that having seen it first hand and live (i think there are some left???)

Please remember before posting that most if not all vet traders have been where you are now and have done exactly what you are doing now - ive done it, phil has done it - wizard has done it, we all have. Nothing is new in this game, whatever you are doing now it's all been done before even if at the time we think it hasn't.

The fact that I nor very very few vets don't short term trade anymore should tell you something. I didn't fail at short term trading - if I did i wouldnt be here now.

somehow i doubt it will get into your head though because it didn't get into mine when the vets told me the same - but good luck anyway on your journey of finding out that you dont have a clue which way it's going (in the end that's what you learn)
https://linktr.ee/Soultrader
  • #220
  • Oct 28, 2007 6:57pm Oct 28, 2007 6:57pm
Quoting soultrader
Italian good luck with your trading, really.

Talking about assumptions don't assume ive never daytraded - i traded 5 min and 1 min charts for longer than you've been in the game (about 2 1/2 years solid 12 hours a day). my 100 pip trades were not one offs, in fact i regularly made 80-100 pips a day several days a week, there are some old time traders in here that would vouch for that having seen it first hand and live (i think there are some left???)

Please remember before posting that most if not all vet traders have been where you are now and have done exactly what you are doing now - ive done it, phil has done it - wizard has done it, we all have. Nothing is new in this game, whatever you are doing now it's all been done before even if at the time we think it hasn't.

The fact that I nor very very few vets don't short term trade anymore should tell you something. I didn't fail at short term trading - if I did i wouldnt be here now.

somehow i doubt it will get into your head though because it didn't get into mine when the vets told me the same - but good luck anyway on your journey of finding out that you dont have a clue which way it's going (in the end that's what you learn)
You are a funny character indeed. You talk like the master of trading and have no humility whatsoever.

I know vet traders whose shoes you could polish that are still daytrading today.

Reminder: Your way doesn't necessarily have to be EVERYONE'S WAY.

The day you stick this concept in your head you'll have more people who respect you, but as long as you think you are the only one in the world who knows it all you just can't expect others to even listen to you.

I myself am done following this thread because you just aren't a good moderator. You got a bit attitude and you are not open to listen to others.

It's either your way or no way.

You are a big bla bla bla with a big ego and by your posts I seriously can't see you are a vet trader. You sound more like a wanna-be veteran than a real veteran.

Good luck with your trading as well, really.
0 traders viewing now