. trade well.
. I think I'll stick to the nibble method that gives me consistent pips -- the most important thing to consider is where the stop should go.....& yes, if possible, trading multi-lots (I like to trade in multiples of 3).
The money managment/adding lots to trade is an interesting question/idea that can only be answered by considering the following:
1. Your risk tolerance
2. How you intend to take profits
3. Results of your testing
4. Your individual trading goals
5. Your individual trading plan
6. Your trading timeline -- how long are you willing to hold the trade? How much time do you have to monitor trade?
With the above in mind -- many trading "gurus" will tell you adding in negatively is a fools game. However, I have found that it is a good way to limit risk and increase profit levels as long as it is included in your trade plan before entering the market. If you study the charts, you will notice that price oscillates during any given candle time. The MACD may indicate a long, but price within that candle may move in the opposite direction before it continues in the prevailing trend direction. For my trade style, I will identify areas on the chart where price will most likely retrace to during the candle period -- market orders may be left at these levels with very tight stops -- or I may enter manually if I am watching the charts live --this reduces the risk on the bulk of the lots and my stop is set at a level where the trade is proven invalid (this really is helpful in trading Cable b/c of the large candles that occur periodically). Phillip discusses how to enter when a candle is large and the fib levels where you can scale in negatively, while leaving your stop at the original level. This essentially will average your risk down and place it in line with your win average. It is also important to determine when you will move your trade to BE -- this is something I don't see often in people's plans.
Pyramiding in positively -- as price moves in your favor is the "gurus" prefered method of adding. However, it is difficult to do this on the 4 hour time frame (exception, Daily trades using 4 hour chart to pinpoint entry levels -- not what 4 hr. MACD method is though). Many trades don't last long enough to add at important price levels. E/U has been trending nicely lately and yes, adding may have added nice profits to your account -- provided you have the staying power in the market. Many of us don't like to hold trades for weeks and we nibble at the market (because we protect profit by moving our stops) -- essentially an adding in strategy done in stages while locking in profits. & scaling out at various TP's isn't advocated by those who pyramid positive (usually longterm trend traders). The scale out negates the profit potential and the win percentage for these type of traders is usually around 30%. The only way you can know if this style is profitable to you is to test it and note your results, documenting your average loss, average win, largest loss and your expectency.
If you have an "edge" that shows the pair is trending, then yes, you would def. add to your position as it moved in your favor, but you wouldn't scale out. & you would look for a long term trend developing (like my 1000 pips cable set-up that started again at the end of september (the third time in the last 12 month period!), and yes, I've been buying at predetermined levels, but I have been scaling out and protecting profits at 2% per day because I don't have the staying power in the market (I've tried and find longer term trades don't fit my personality -- I end up w/all the "old" psychological issues re-emerging).
So the great debate continues
Pips good post and I was thinking about this some more, When I traded the 3min a long time ago I would add using Bill William’s fractal, what this does is pretty much add when the move is in your favor. The reason I bring this up is because it can be done in any market on any time frame and it's pretty much what you are doing when you go from the 4hr to the 1hr, your looking for better fills. Now what if you get in the trade on the 4hr MACD move used the 1hr for a good fill, and ADDED using say the 1hr or 30min fractal breakout? Again I am just looking for ideas before I put in my 30 - 100 hours working through all of this stuff. On this attached chart you would add each time you see a gray up fractal.
***Note, that I have seen trades that start out with 500$ worth of risk end up making over $50,000 in the past with adding.
, I know that adding works well for some (but it has to be included w/one's comfort zone and inner harmony, eh?)...I'd recommend you put your hours in to test and see how it works for you. Happy testing!
Hi Ryanmcd,
You don't need to convince me
More new faces...Welcome all. Yes, this system does work and there is a lot of information in this thread. But, as far as the method goes, it's the same as it has been from day 1. There have been no new indicators added or rule changes. "It is what it is." Yes, it would take a tremendous amount of time to go through every single post. You can save yourself a lot of time, and questions by doing the following. On the website under the Tools link there are two .pdf files of 4hr and 1hr charts for the EURUSD from the beginning of the year until the first week of October with the moving averages and MACD plotted. Download these and print them out after you have gone over Phillip's method several times. Go back to the printouts and make notes on them, study them,...learn them. There's no need to read through almost 8,000 posts. Try to answer your own questions first. Take your time, as Phillip, Ryanmcd, pips4uandme, myself and several others have stated in so many ways...patience, the markets aren't going anywhere, patience, don't force the trade or the learning curve, patience, don't hunt for trades, patience, and oh yeah, patience. I try to update the site with Phillip's .mp3 files at some point over the weekend for the previous week to make things easier to find. Think about it...Is this system successful? Does this work? Is anyone making money???? Almost 8000 posts and 1,000,000 views later...the answer is yes to all of them. Take the time to soak in the 4hr 'rules'. Know what Market Rhythm is and how to 'see' it on the charts, this is critical to the method. Again, there is no need to rush anything. This thread is here to stay.
