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  • #21
  • Nov 27, 2007 4:05pm Nov 27, 2007 4:05pm
RR: Glad to see you have put your plan into action.
Good trading to you.
In trading, there is no bullshit. You either make money or you don't.
  • #22
  • Nov 28, 2007 7:54am Nov 28, 2007 7:54am
Quoting Ronald Raygun
I trade daily charts for now.

Once I reach 50,000/week (Should reach that in 3 months assuming no major disasters), I'll spin off into a weekly strategy, 30 min, 1 hour, 4 hour, and maybe 15 min strategies. All with appropriate amounts of starting capital.

Hi,

I am trading 1hr charts I have dropped the TP to 70pips as I think this might be more realistic, If you place the EA on the Daily chart will it give the the signals on that time frame and if you place it on a 4hr chart will it give the signals on the 4hr chart? Or has the EA been coded to run just on the daily chart? Thanks...
  • #23
  • Nov 28, 2007 8:21am Nov 28, 2007 8:21am
Hi,
I think it is great that you are getting into the market at such a young age. You will have a lifetime to make money once you figure these markets out.
I have been trading for a living for over 15 years and I think I might have a couple of suggestions that will help you out.

As far as the GBP/JPY goes, there is no way you can trade this with a 40 pip stop, unless you are trying to scalp for 10-20 pips, which in itself is a time bomb for your account with this pair. I have traded this pair for years and the average 15 minute bar range is greater than 40 pips right now.

If you are using 500:1 leverage, you WILL blow out your account, and any subsequent accounts that you fund. That is simply a fact.
go read some material on proper MM and you will soon understand that the proper use of leverage is THE KEY to survival in this game.

If you are trading 5 mini lots with a 1K account, it will only have to move against you by about 250 points to blow your account. We have had an hour bar that big this week.

I wish you all the best and I hope you find yur way in this jungle of forex.
Plan, Prepare, Execute, Repeat
  • #24
  • Edited 12:39pm Nov 28, 2007 12:29pm | Edited 12:39pm
morse, it will work for whatever timeframe you use. However, allow me to explain the theory behind this particular system. swingtrade, this applies to you too.


I'm trading the markets with the understanding that the price will move SOMEWHERE over the course of a day. That's why I chose GBPJPY, it has the highest daily volatility that I know of, with a reasonable spread.

Those 40 pip stops are not really just stop losses, but stop-and-reverse orders. That means that if the market moves against me by 40 pips, to me that looks like it will be a down bar, so I adjust the position accordingly. For example, today, I opened a 0.1 lot BUY order at 00:00 GMT at 225.46, I got stopped out at 224.99 and reversed at 244.99 with a SELL order, that got stopped out at 224.99, and replaced with a BUY order at 224.99. Currently, that BUY order is 393 pips in profit.

The way this system works, is that at 40 pips profit, I move the stop loss from 40 pips to BREAKEVEN. That's how I'm able to survive longer. Now, this system, if left alone would probably blow up two days ago because of the incredible whipsawing on Monday. That's why the EA has a maximum of 4 trades per day that it can make. So, my maximum loss per day is 160 pips, or 172.72. I can expect this higher risk because I am trading a relatively small account. However, as the account grows, I'm going to reduce the maximum exposure from 17% to maybe 10% maximum account loss per day, so it'll take two completely awful weeks to wipe me out if I don't use dynamic lot sizing.


Quote
Hi,
I think it is great that you are getting into the market at such a young age. You will have a lifetime to make money once you figure these markets out.
I have been trading for a living for over 15 years and I think I might have a couple of suggestions that will help you out.

As far as the GBP/JPY goes, there is no way you can trade this with a 40 pip stop, unless you are trying to scalp for 10-20 pips, which in itself is a time bomb for your account with this pair. I have traded this pair for years and the average 15 minute bar range is greater than 40 pips right now.

If you are using 500:1 leverage, you WILL blow out your account, and any subsequent accounts that you fund. That is simply a fact.
go read some material on proper MM and you will soon understand that the proper use of leverage is THE KEY to survival in this game.

If you are trading 5 mini lots with a 1K account, it will only have to move against you by about 250 points to blow your account. We have had an hour bar that big this week.

I wish you all the best and I hope you find yur way in this jungle of forex.
You are absolutely right about the stoploss. However, I think you are assuming that I expect the pair to go in a particular direction.

I don't.

All I expect from GBPJPY is that it moves and closes at least 100 pips in either direction (up or down) plus each 40 pip loss sustained that day. For example, today is about 400 pips gain for me. But I had one 40 pips stoploss for today with two stop outs, so I only expect 140 pips I'm nearing a 400 pip profit today so I think that's more than enough.

I did look into money management and here's what I came up with. Do tell me what's wrong and possible solutions to solve it:

  1. Size the trade so I can lose at least 20 times before I am wiped out.
  2. The above is the absolute minimum that I trade with (5% at risk MAXIMUM) I'm currently at 30 losses-to-wipeout (because I haven't moved up to the next tier yet.)
  3. I set a tight stoploss in order to let me determine the direction of the day faster. I move that tight stoploss once my profit pips equals my stoploss pips (in this case, 40). So the market can reverse against me, but I won't lose any account capital just potential profits, which is perfectly ok.
  4. I limit the maximum trades I can make per day to 4. This is to ensure that I avoid the heavy whipsaw days. With the minimum limit of 20 losses until blowup, I can last a week. Looking at the weekly chart of GBPJPY, I don't see too many low range weeks. The smallest I can see in the past 6 months is 196 pips. (Range of High to Low) and the days averaged 150 pips profit. That's still within my profit requirements.

  • #25
  • Nov 28, 2007 12:43pm Nov 28, 2007 12:43pm
Quoting Ronald Raygun
...

allow me to explain the theory behind this particular system. swingtrade, this applies to you too.

..
wish you luck friend... I feel privileged swingtrade65 posts occasionally in my journal.
With his experience (he was shy to say in your thread who he is, and what he trades)..I would only listen and ask questions....

many pips....
  • #26
  • Nov 28, 2007 1:28pm Nov 28, 2007 1:28pm
Quoting Ronald Raygun
morse, it will work for whatever timeframe you use. However, allow me to explain the theory behind this particular system. swingtrade, this applies to you too.


I'm trading the markets with the understanding that the price will move SOMEWHERE over the course of a day. That's why I chose GBPJPY, it has the highest daily volatility that I know of, with a reasonable spread.

Those 40 pip stops are not really just stop losses, but stop-and-reverse orders. That means that if the market moves against me by 40 pips, to me that looks like it will be a down bar, so I adjust the position accordingly. For example, today, I opened a 0.1 lot BUY order at 00:00 GMT at 225.46, I got stopped out at 224.99 and reversed at 244.99 with a SELL order, that got stopped out at 224.99, and replaced with a BUY order at 224.99. Currently, that BUY order is 393 pips in profit.

The way this system works, is that at 40 pips profit, I move the stop loss from 40 pips to BREAKEVEN. That's how I'm able to survive longer. Now, this system, if left alone would probably blow up two days ago because of the incredible whipsawing on Monday. That's why the EA has a maximum of 4 trades per day that it can make. So, my maximum loss per day is 160 pips, or 172.72. I can expect this higher risk because I am trading a relatively small account. However, as the account grows, I'm going to reduce the maximum exposure from 17% to maybe 10% maximum account loss per day, so it'll take two completely awful weeks to wipe me out if I don't use dynamic lot sizing.


You are absolutely right about the stoploss. However, I think you are assuming that I expect the pair to go in a particular direction.

I don't.

All I expect from GBPJPY is that it moves and closes at least 100 pips in either direction (up or down) plus each 40 pip loss sustained that day. For example, today is about 400 pips gain for me. But I had one 40 pips stoploss for today with two stop outs, so I only expect 140 pips I'm nearing a 400 pip profit today so I think that's more than enough.

I did look into money management and here's what I came up with. Do tell me what's wrong and possible solutions to solve it:

  1. Size the trade so I can lose at least 20 times before I am wiped out.
  2. The above is the absolute minimum that I trade with (5% at risk MAXIMUM) I'm currently at 30 losses-to-wipeout (because I haven't moved up to the next tier yet.)
  3. I set a tight stoploss in order to let me determine the direction of the day faster. I move that tight stoploss once my profit pips equals my stoploss pips (in this case, 40). So the market can reverse against me, but I won't lose any account capital just potential profits, which is perfectly ok.
  4. I limit the maximum trades I can make per day to 4. This is to ensure that I avoid the heavy whipsaw days. With the minimum limit of 20 losses until blowup, I can last a week. Looking at the weekly chart of GBPJPY, I don't see too many low range weeks. The smallest I can see in the past 6 months is 196 pips. (Range of High to Low) and the days averaged 150 pips profit. That's still within my profit requirements.

Hi,

I was wondering if you have tested it on all TF's and which one is the best ie. more profitable? Also have you tried it on other Pairs such as the usdjyp?? Keep up the good work....
  • #27
  • Nov 28, 2007 1:41pm Nov 28, 2007 1:41pm
I have a test account running all pairs with a 21 day ATR of greater than 200 pips.

All of them are running the daily chart. That one seems to have the steadiest and most reasonable range, so I'll stick with it.

For now, it looks like GBPJPY is the best, so I'm trading that. I think that the 40 pip stop loss/move to breakeven is optimal for this currency, I'm still trying to find better values. If you'd like to help morse, here's what I need you to do, everyone else can pitch in too, the EA is attached somewhere on this thread, it should be working well.

  1. Open a 10 million dollar demo account.
  2. Pick whatever currency pair is your favorite pair.
  3. Open up as many daily charts as possible, and place the EA on each of them.
  4. Track the profit/loss of each EA (in pips) on each individual chart and optimize the stoploss/max trades/etc until you reach the highest profitability.

The whole point is to forward-test this strategy to death. If we all have google, we can collaborate using google spreadsheets to collect data, so I can use that to find a formula that will work to determine lot size, stoploss, max trades, etc.

I'm purely a quantitative trader, which simply means I look for mathematical relationships in the market. The news doesn't matter too much. (Unless the market for the pair is closed xD). This system is partially based off ATR and if I can derive a formula to easily determine the optimal stoploss for each pair, then it should be fairly easier to make money. Think of this more as an open source project. I'm sure we can use the collaborative efforts of the members of this forum to help optimize this strategy.


Swingtrade: I don't know how I compare to your trading ability, but I'm sure you've seen which days (holidays for example...) are thinly traded. I know thanksgiving is a big one which affects the Japanese Yen, are there others?

  • #28
  • Nov 28, 2007 2:04pm Nov 28, 2007 2:04pm
Quoting Ronald Raygun
I have a test account running all pairs with a 21 day ATR of greater than 200 pips.

All of them are running the daily chart. That one seems to have the steadiest and most reasonable range, so I'll stick with it.

For now, it looks like GBPJPY is the best, so I'm trading that. I think that the 40 pip stop loss/move to breakeven is optimal for this currency, I'm still trying to find better values. If you'd like to help morse, here's what I need you to do, everyone else can pitch in too, the EA is attached somewhere on this thread, it should be working well.

  1. Open a 10 million dollar demo account.
  2. Pick whatever currency pair is your favorite pair.
  3. Open up as many daily charts as possible, and place the EA on each of them.
  4. Track the profit/loss of each EA (in pips) on each individual chart and optimize the stoploss/max trades/etc until you reach the highest profitability.

The whole point is to forward-test this strategy to death. If we all have google, we can collaborate using google spreadsheets to collect data, so I can use that to find a formula that will work to determine lot size, stoploss, max trades, etc.

I'm purely a quantitative trader, which simply means I look for mathematical relationships in the market. The news doesn't matter too much. (Unless the market for the pair is closed xD). This system is partially based off ATR and if I can derive a formula to easily determine the optimal stoploss for each pair, then it should be fairly easier to make money. Think of this more as an open source project. I'm sure we can use the collaborative efforts of the members of this forum to help optimize this strategy.


Swingtrade: I don't know how I compare to your trading ability, but I'm sure you've seen which days (holidays for example...) are thinly traded. I know thanksgiving is a big one which affects the Japanese Yen, are there others?

Hi,

No problem I will open a demo account and let you know, I am using the EA on my live account which is with Fibo at 500-1, I was wondering what leveradge you need on this system?
  • #29
  • Nov 28, 2007 2:29pm Nov 28, 2007 2:29pm
Leverage determines profitability. As many experienced traders will tell you, higher leverage equates to higher chance of blowing up. I don't understand the reasoning behind that, but hey, I'm no experienced trader. As I see it, higher leverage means higher potential returns which means relatively easy short-term money, but certainly not consistent livable profit.

I set up the leverage at 500:1 so that I can play with the minimum amount and still trade with moderate lots. At 500:1 leverage with my very conservative system, (.1 lots per trade on a $1000 account), I can expect a daily 9% return on investment assuming 100 pips closed profit per day.

With a 400:1 leverage account, I would expect 7.2% per day return on investment,

and 1.8% per day with 100:1 leverage all assuming 100 pips net profit per day./
  • #30
  • Nov 28, 2007 2:33pm Nov 28, 2007 2:33pm
Hi,

I have opened a demo with NF as they offer 500-1 I am using $100000 account with 1 whole lot per trade! I am running EURJYP and GBPUSD I will let you know..Unless my computer crashes
  • #31
  • Nov 28, 2007 4:41pm Nov 28, 2007 4:41pm
Mr. Raygun,

I was not intending to say that your system will not work. I don't know the answer to that. What I was intending to say is that you are basing your whole trading plan on the markets as they are trading right now, what with the big ranges and wide swings. I can tell you from experience that WILL NOT always be the case. there will be long periods that last for months on end where the markets go nowhere. there are many such periods in the G/J where the complete range for a 6 onth period is about 350-400 pips. I am merely suggesting that you do a lot of research before make assumptions about the market and how to extract thousands of dollars from it.

70 wins out of a hundred trades means absolutely nothing about the validity of a particular methodology. this can happen within the realm of randomness.
700 wins out of 1000 is starting to be a different story.

I just want you to get started with the notion that 20 or 30 losses in a row cannot happen. It can and will, I have had it happen to me personally trading a methodology that supported my family for over a decade. I am merely trying to help you see the bigger picture, thats all. If it is that easy, everyone would be a millionare and there would be no advantage to having a million dollars.

I wish you only the best of luck and I hope your system turns out well for you.
Plan, Prepare, Execute, Repeat
  • #32
  • Edited 6:49pm Nov 28, 2007 5:36pm | Edited 6:49pm
You know Mr. Swingtrade, you do make a lot more sense than my coworkers on the trading floor.

As for the 20-30 losses in a row, I've seen it happen, and do understand that it can happen. It's a matter of likelihood. True, I am gambling a little bit, but in my bigger picture, it's a very calculated risk.

You're right about the market changing. I can't possibly expect these incredible returns for the next 20 years. Maybe 3-5 years max. However I'm curious, is forex a zero sum game?

I'm obviously still in the learning stage, but as I see it, the net volatility of the forex market as a whole stays relatively uniform. The concentration of volatility is what varies. For example:

  1. In 2000 let's assume that the EURUSD, EURGPY, EURJPY, and EURAUD were all more volatile than the other pairs.
  2. In 2001 all the USD-based currencies were more volatile than the other pairs.
  3. In 2002 all the GBP-based currencies were more volatile than the other pairs.
  4. and so on and so forth.

What I'm saying is: Was at least one currency pair more volatile when compared with the others in your 15+ years of trading? Volatility is pretty much the lifeblood of my system. Without that, I'd be better off investing my money elsewhere.

Quote

  1. Size the trade so I can lose at least 20 times before I am wiped out.
  2. The above is the absolute minimum that I trade with (5% at risk MAXIMUM) I'm currently at 30 losses-to-wipeout (because I haven't moved up to the next tier yet.)
  3. I set a tight stoploss in order to let me determine the direction of the day faster. I move that tight stoploss once my profit pips equals my stoploss pips (in this case, 40). So the market can reverse against me, but I won't lose any account capital just potential profits, which is perfectly ok.
  4. I limit the maximum trades I can make per day to 4. This is to ensure that I avoid the heavy whipsaw days. With the minimum limit of 20 losses until blowup, I can last a week. Looking at the weekly chart of GBPJPY, I don't see too many low range weeks. The smallest I can see in the past 6 months is 196 pips. (Range of High to Low) and the days averaged 150 pips profit. That's still within my profit requirements.

As for my money management quoted above, what can be improved? You clearly know that the 20-30 losses in a row can happen which affects the first two points. What about the last two?
  • #33
  • Dec 6, 2007 5:25pm Dec 6, 2007 5:25pm
jed man hows ur trade going ?

i see the theory behind tkimble and candles. however, open up 1H chart, with period separator, and see that stop-reversal systems can be quiet dangerous.

instead it would be good if u could add timing, like when london opens or asian sessions close, apply tkimble's daily bar method.

i think just timing is very important, as the geppy or eurusd tend to have well known volatility at a specific range of time.

placing market order right on the open of that day is a bit of overkill imo.

anyhow, i am just throwing out suggestion that with some market timing, the system could do very well.

cheers!
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  • #34
  • Dec 6, 2007 5:32pm Dec 6, 2007 5:32pm
Quoting Ronald Raygun
pair more volatile when compared with the others in your 15+ years of trading? Volatility is pretty much the lifeblood of my system. Without that, I'd be better off investing my money elsewhere.


As for my money management quoted above, what can be improved? You clearly know that the 20-30 losses in a row can happen which affects the first two points. What about the last two?

also how about applying increasing exposures to positions?

for instance, on ur first trade, ur max risk exposure is 1%. continue to do this for a week. after a week of success, taht is IF u have a successful week, u may raise the max risk exposure of ur trades to 2%. and so on

so it goes like this

for duration of first week : 1% max risk exposure on each trade (provided u trade one pair)
for duration of next week : 2% on each trade (provided u trade one pair)
keep going until u hit 6% (i think u should never go over this number)

if u trade mroe than 1 pair, than equally divide max risk exposure on each trades to match ur preset risk tolerance.

i doubt one can reach 6% max risk exposure level in 6 weeks. if u do lose in a day, immediately lower back to the previous risk exposure.

ie. trading @ 5%, suffer a loss that day, drop max exposure to 4% next day, and trade @ this 4% for the remainder of the week.

and remember, rare events are more frequent than you think!


for answer to ur volatily, look no further than gbpjpy, gbpchf, and usdjpy.
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  • #35
  • Dec 7, 2007 3:27am Dec 7, 2007 3:27am
Hey John!

I stopped trading after thanksgiving. Volatility dropped off a little too much and I decided to hold onto my money. My account right now is about $18,000 (up from $200) and I have since taken some money out an spun it off into other accounts and strategies. All accounts combined total about $21,000, so not too much to worry about.

One of the sub-accounts blew up and I stopped all live trading activity. I know the holiday season is generally not very pleasant for trading, and I'm looking into something else.

What I'm doing right now is riding out the holidays with demo accounts ti study the change in volatility.

As for your exposure method, mathematically it works, but on a risk level, that's simply not enough risk for me. I'll stick with my 5% for now. Over christmas break I'll print out the statements and go over when trades were stopped out. If I can find a relatively universal reversal point then I'll modify the strategy accordingly.

The way my mm works is that I limit the amount of trades that I make per day. The maximum I can lose in a day is 160 pips. Generally what I see out there is that I lose 40-80 pips before profit and still get stopped out on 4 trades, mainly because I move the stoploss to breakeven at 40 pips profit.

If ever, I need to determine some mathematical relationship to help me develop a dynamic stoploss, lot size and takeprofit. I'm thinking of taking the traditional ATR and just reapply it to the absolute value of the open and close as that's really what I'm going for.


Just to give you an idea, I didn't make any money on the 6th. All were stopped out but I only lost 40 pips total with no profit trade to offset it. Today looks a little more promising, but we'll see.
  • #36
  • Dec 8, 2007 1:14am Dec 8, 2007 1:14am
if u have 21k why further deal with northfinance. i would go with interactive brokers immediately.

anyhow, good stuff man lol. 200 -> 21k is quite a feat.

i see what you mean by volatility. i now use similar methods on geppy except i haven't completely worked out stop and reverse methods. the geppy is violent and scary enough!
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  • #37
  • Dec 9, 2007 7:09am Dec 9, 2007 7:09am
Remember John, I'm 17, and have trouble with other brokers accepting me as their customer. Once I'm 18, then I'll be able to move around, I'll probably pull out half my balance with NF, and move it to something a little more reliable.

to be perfectly honest, I have had no trouble with northfinance to date, and their perks are particularly useful. (Their debit card should make getting money into the country a little easier, but I'll look into the legal issues first.)

As an aside, my sole intention for this trading is for me to learn it. As far as I'm concerned, it's all a game, and the money I made is merely my score. Clearly I got in at a good and highly volatile time which led to my incredible growth. Whether or not I can sustain 10500% return per month is still questionable. (Yes, that is ten THOUSAND five HUNDRED percent).

Frankly, forex as you post on your blog is incredibly risky from a small trader's point of view. However, as I see it, slippage, requotes, spread, etc. is merely the tax I pay to play the game. I don't mind paying those at all. Trading to me follows a very simple concept.


"Three Steps Forward, One Step Back"


I expect to lose, and I don't care how much I lose. As long as I take more steps forward than backward, I can roll with the punches.
  • #38
  • Dec 24, 2007 9:54pm Dec 24, 2007 9:54pm
you wont sustain that kind of return in long run im sure.

anyhow how are u doing these days ?
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  • #39
  • Dec 25, 2007 4:51am Dec 25, 2007 4:51am
All the accounts pretty much leveled out. I'm waiting for the next big push in 2008. I think I'm done trading for this year. The market is simply not volatile enough.

I suspect that the growth of this account is similar to the Turtle Trading System in that there are three or four times per year where the market jumps wildly, and anytime else the account balance dwindle. That simply means I got in at a REALLY good time. A quick perusal of the threads shows that during the time period I made my amazing return, someone else turned 1,000 into 100K in a week so I probably just got lucky.

I'm still trying to figure out a decent volatility metric to use so I can just deploy 50 EAs on separate pairs. I'm working with a professional programmer to try and code in money management (you tell the computer what your maximum percentage at risk is), code in trading based on volatility (so I can put the EA on any pair and it won't trade until the pair reaches a certain threshhold). Completely automated =D
  • #40
  • Jan 6, 2008 6:47pm Jan 6, 2008 6:47pm
Ron

Since you do not specify a TP [TakeProfit], when do you determine to bail out of a position based upon the settings you had specified?

The settings as I have them are (Conservative method):

Overrule Direction: False
Direction Long: True
Entry Time Hour: 0
Exit Time Hour: 23
Max Trades: 20
TrailOnceStop: True
Trailing Stop: False
Lots: .1
Stoploss: 40
Takeprofit: 0
Magic: 1337
Slippage: 5


For a riskier trading system (Riskier method):

Overrule Direction: False
Direction Long: True
Entry Time Hour: 0
Exit Time Hour: 23
Max Trades: 2
TrailOnceStop: True
Trailing Stop: False
Lots: .5
Stoploss: 40
Takeprofit: 0
Magic: 1337
Slippage: 5
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