ATP (Advanced Trading Philosophy) - Positioning For Success

Index:

Prelude to a Pip

1. Post #2

A Common Sense Approach to Money Management

1. Original - Post #3

Preparing your Charts for Financial Success

1. Original - Post #4

Determining Trade Direction - Locating the Trend

1. Original - Post #10

Setting your Stop/Loss and Exit Points

1. Original - Post #22

Managing Your Daily "Open" and "Pending" Orders

1. Original -
2. Current Trade Management Spreadsheet -
   Attached File(s)

   ATP-master.xls   198 KB | 1,287 downloads | Uploaded Mar 4, 2008 9:22pm

FAQ

1. Will this strategy work on lower TF's? - Post #27
2. What time of day do you manage your trades - Post #15

Hello......

I would like to take this opportunity to reveal to you my trading philosophy. I have posted one or two methods around the forum, but thought I would put everything together on one thread. This is no over night task, and I will add more when I get a chance.

My guess is that 99% of you will not even give this method a try. Why?.....because it takes time everyday to place your trades and to manage open positions. In fact if you traded all pairs (listed in post #3 below) you could spend at least 2 hours per night once you've learned what to look for. And guess what.....this has got to be one of the most boring things to do in your life. Night after night spending 2-3 hours preparring for tomorrows trades, but....when I am done, the rest of the time is all for me because there is no in-between monitoring needed. In fact, my nightly encounters with my trades have become in ways therapuetic and indeed have changed my life for the better. Trading? Therapuetic? This guy has got to be nuts.......

What I have done I have mostly taken from others and then modified it (for better or worse) into something that works for me. My biggest thanks go to the books I have read by Bill Williams. His philosophy struck the right chords with me and although I also use his indicators, I use them (for the most part) in an entirely different manner then he did. Other things I have gathered along the way, some from people on this forum and I am eternally greatful for all that they showed me.

For the longest time I bought everything I could get my hands on. Learned everything I could. Read everything that had to do with trading. Last week my best friend called me and showed me an e-mail he had gotten regarding Forex from a company offering good returns and blah, blah, blah. He encouraged me to check them out. After doing some reasearch and talking with this company, I told my friend that I didn't think I needed to do any more purchasing of anything. This was a milestone for me and one of the reasons I decided I was ready to put this all down on paper and share it with all of you.

Trading is a very fluid thing and you should always inject your own personal beliefs, but most importantly remain ready for anything. I as well am looking for ways to make this better, and so you may find that some things may change from time to time as I come to other conclusions. I will of course notify you when anything changes.

With that said, I hope that you enjoy this thread. I am doing this as much for you as I am for me, basically on the premise of what one man said...." when I share knowledge with others I learn it twice".

If you are wondering what my main philosphy is, well here it is: to not lose all my money when the market is ranging and to make a killing when the market is trending.

This system utilizes right now at least 10 different entry points, multiple entry points into the market which can mean thousands to tens of thousands of dollars in profit in a trending market.

So enjoy my thread and I look forward to any comments that you would like to make as we go along. Also, I will eventually hopefully get to the point where I will upload nightly charts and will of course be around to answer any questions that you may have.

Let's have some fun together and make some money.

Money management is a very personal thing and in most cases is driven by fear more than it is driven by common sense. My goal here is to take away your fear to trade and by doing so, you will be able to trade 100% objectively. In a sense, entering and exiting the market without thinking.

I see that there are two basic MM philosophies. I will introduce you as well to a third.

1. Using standard lot sizes and then increasing those lot sizes as your equity increases in value.
2. Using a percentage of your account every trade like 2%.
3. Using standard lot sizes, but choosing 1 or 2 tradings strategies where you would double your normal lot amount.

Which MM strategy works best with ATP?

IMHO.....I feel that 1 & 3 above will work the best and they will also be the easiest to implement. #2 is very unrealistic for ATP because of the mass amounts of trades that you will be entering. There really is no need for it and also using this method makes it harder to re-coup your loses.

So, here is my take on MM especially In regards to ATP.

I recommend that you start with .25 lots for every $10,000 in equity (Some pairs based on daily movement will be less). Notice that I use Equity and not Account Balance for figuring the lot size. Roughly this equates to .01 lots for every $400 in equity. It also means that you can start trading all the currency pairs listed below (at the same time) using the ATP method with only $400 on a mini account.

This means that when you have been on a hot streak and your Account's Equity increases to $10,500 or more you would then raise all new orders by .01 pips, and so on and so forth. Like wise you would decrease by .01 pips if your Equity fell back to say $10,300.

Notice I said "all new orders". I say "all new orders", because as you will see it will be a nearly an impossible task to change pending orders that were placed before the new lot size took affect. Although you are welcome to change these as well, I prefer to leave my "already pending orders" the lot size that they were when I placed them even if my next batch of orders went down .01 lots.

Then comes into play the 3rd MM strategy above. I will take 2 orders and two orders only and double the amount of pips for these 2 orders only. These will be continuation orders once our trade direction has been established. You may choose to use different orders than I do, but I will reveal which orders I double down on when I introduce you to that particular entrace strategy.

Some people reading this might think they will not make any money trading such small lot sizes and all I can tell you is that you have not put ATP to the test nor anything else like it to the test. In fact, many weeks I have increased my Equity by 15% or more in one week by utilizing these small lot size factors.

The best part is that when the market is ranging and you are more apt to losses, your losses will be very small, but when the market is trending and you are adding entry after entry, your profits can sky-rocket

It is indeed a win-win situation when "Riding the Trend" while protecting your assests when the market is ranging.

With that said, the first thing that any trader needs is to find a trading style they are comfortable with. Once you find your comfort zone, you will find a MM strategy that works the best for you. This is just how I prefer to "Manage My Equity".

Here is a list of lot sizes per pair starting with $10,000 in equity on a mini account. You can of course do the math if your Account's Equity is currently above or below 10K:

AU - .25
EU - .25
GU - .25
UCAD - .25
UCHF - .25
UJ - .25
GJ - .10
GCHF - .10
EG - .15
NU - .25
EJ - .15
ECHF - .25
EA - .25
ECAD - .25

You will need to prepare your charts before any trades can be taken. I like to keep things as simple as possible, so you will find that my charts are not overly cluttered and that I only use a few indicators which I have grown to rely upon.

I trust my indicators the way that I have them set-up and use them. For this reason I am able to enter the market on que without a second guessing myself. Completely objectional trading without emotional connection....a winning combination

Oh...and did I mention that it will only take you a few hours each evening to get ready for the next days sesson? ATP will allow you to truly take advantage of the free time that full time trading offers you. So enjoy.....

Charts: Daily

Pairs: Any ones that you want to trade. See post #3 for a list of the pairs that I trade.

Platform: All my trades are based on the MQ4 platform with a Sunday bar.

Indicators:

1. Awesome Oscillator (AO) with default settings. This indicator can be found by clicking Indicators-Bill Williams of your MQ4 platform.
2. Accelerator Oscillator (AC) with default settings. This indicator can be found by clicking Indicators-Bill Williams of your MQ4 platform.
3. Silver Trend Indicator (ST) with default settings. You may however want to change the colors of the dots. To me they were backwards. Please note that this indicator does repaint itself, and so it can be at times hard to pinpoint the exact use of this indicatror. After I am done going over my strategies with you, you will better understand how to effectively use this indicator. SHI_SilverTrendSig.mq4
4. Non Lag indicator (NL) Under settings change "color=1" and "colorbackbar=0". Leave everything else as it is. NonLagMA_v4.mq4
5. Stochastic Oscillator (SO) with settings at 5,3,3. You will also need to identify levels at 91 and 7. Use the Simple Moving Average setting based on the Close/Close. You will want to drag this so it overlays your Accelerator Oscillator. You can do this by going to the "Navigator" section of your platform, find Indicators-Bill Williams-Accelerator Oscillator and "click, hold, drag and release over the Accelerator Oscillator on your chart. A very easy task.

Here is a screen shot example of what a chart should look like:
http://www.forexfactory.com/attachme...1&d=1203830287

How you determine the entry points?

So far you are very clear and precise. Thanks for your efforts to date. For the Stochastic Ocillator though you did not specifically specify the type of moving average method to calculate (SMA, EMA, etc), nor the price field (High/Low, etc).

When you work with these tools everyday it is easy to overlook something that someone will later question.

Good Luck.

Hey neurus...I haven't got to that point yet. Next I will be going over how to determine trend and trade direction.

Noted and corrected in the post above. Thanks for your insight.

when you say "night before" exactly what time are you referring to? I dont know what time zone you live in so I cant determine when you do your analysis and when you trade

This section is very important. Why?????? Because over 90% (rough estimate...it may be higher or lower) of our trades will be made in the direction of the trend. IMHO the trend is where the big money is made. That is why we will do everything humanly possible to locate it as early as possible.

The best part....it isn't as hard as it sounds. In fact, following these instructions will make it very easy for you to find and profit from the trend. So let's get started.......

There are 3 different techniques that we will use to determine the trend and thus trade direction. It is pivotal that you understand these intimitely.The trend is your big-time ticket to success, so why not give it a big hug everyday. It is also safe to say that on a few occassions the trend will define itself in a different order then what is listed below. This does not matter in the least when it comes to placing our trades.
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1. Trend Reversal Indication: This will most likely be your first indication that the trend may be about to reverse and change directions. 3 of 3 things need to happen before we can consider that the trend is about to either change directions or retrace.

Please remember that some times this will give us a false signal and so we need to be very careful here. This is only what we are using to let us know that the trend may be changing directions.

The 1st and 2nd things that need to happen is that the ST will give you a dot of a different color at that close of a bar and the NL will have closed yellow. These do not need to happen at the same time (in fact many times they won't) nor do they need to happen in any particular order. Either could happen first, but both will need to be present (even if a few bars apart) before we verify trend reversal with part #3. Either one on there own really means nothing. Here is a chart that describes this:

Attached Image (click to enlarge)

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You will see that the ST has closed in red and on the next day, the NL has closed in yellow. We now will wait for the 3rd trigger to become true before this Early Reversal is confirmed.

The 3rd indication that the Trend Reversal Indicator is possibly going to give us an early detection of a trend reversal is that any day after both the 1st and 2nd triggers have become true, the price pierces the high/low (in direction) of the set-up day bar. Here is a chart that describes this. In this case it is the next day that the price pierces....:



As you can see, the 1st and 2nd triggers were fulfilled on the same bar in this example. Then on the next day, the price pieced the low (indicated by the blue solid line) which would indicate to us that the trend direction is possibly about to change.
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2. Trend Reversal Confirmation: This is how you will confirm that the trend is indeed about to reverse. It is important to say that just because we get this signal does not mean that we know how far it will go before it reverses again. 3 of 3 things need to happen before we can consider that the trend has indeed reversed.

The 1st and 2nd things that need to happen is that the ST will give you a reversal color dot and the AO has confirmed the direction of that ST dot at the close of the bar. These do not have to happen on the same bar or in any order. Here is a chart that describes this:



As you can see on this chart, the ST has given us a red dot and the AO has recently closed red.

The 3rd thing that needs to happen in order for us to consider that the trend has reversed is that the price of any bar has to pierce the high/low (in direction) of the set-up day bar. Here is a chart that describes this:



As you can see with this chart, both the Trend Reversal Indicator and the Trend Reversal Confirmation gave us the first two triggers on the same bar. The next day you will see that the price pierced the high of the set-up day bar (the solid blue horizontal line) thus indicating that the trend was indeed identified and in this case it is long.
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3. Trend Continuation: This is how you will determine if you had gotten a false reading from either the Trend Reversal Indication or the Trend Reversal Confirmation. 3 of 3 things need to happen for you to consider that the trend is actually going to continue and not reverse as indicated. This will more than likely reveal itself after the Trend Reversal Indication as opposed to the Trend Reversal Confirmation.

The 1st thing that needs to happen is that you need to have a qualified Trend Reversal Indication, Trend Reversal Confirmation or both. Meaning the 3 of 3 items need to be true for one or both. If 3 of 3 items are not true for one or both, then of course we never had a true Trend Reversal Indication in the first place. I will not post a chart on this as they are both described in this same post above.

The 2nd thing that needs to happen is that the AO has to have gone from agreeing with the ST to disagreeing with the ST and a new ST dot has not formed.

The 3rd thing that needs to happen is that the close of any bar after the AO disagrees with the ST closes above/below (based on direction) the ST dot. We will consider that the trend is going to contiune in it's previous direction. Here is a chart that describes this:



Right now I do not have a very good example of this, but it indeed does happen. I will try to explain it using this chart, and you may have to use your imaginary friend to understand it .

As you can see on this chart, we have a Trend Reversal Indication signal. Let's pretend for a minute that from here the market goes into consolidation mode, the AO turns green indicating a Trend Reversal Confirmation, and still the market does not move. Then the AO turns back to red, but the ST does not give us a red dot. If at that time, any bar after the AO has turned red with no reversal dot from the ST, we would consider the market to continue (in this case its downtrend) if any bar were to close below the green ST dot. In this case, when this happens we will consider that the trend is short and all are new trades would be short and we would cancel any trades that are pending long.

This is the best I can do at the moment, and as soon as this situation presents itself I will make an edit on the first post and give you a chart that will show this set-up condition.

4. One very impotant thing to remember: As the ST indicator will repaint itself, you will always use the newest information available at the close of any bar. Old news is just that and should not be relied upon.

So now you have it . Now you know how I determine the trend. At a first glance this may seem difficult to comprehend, but I assure you that determining trend direction using this method takes nothing more than a quick glance each evening for each pair. It really doesn't get any easier than this.

My next post will deal with S/L settings and exiting the market. Stay tuned as you can see the time it takes me to write this is much harder then it will be for anyone to actually trade this method.

Until next time be well, and as always if you have any questions I will be around to help you as best I can.

Hi damonl,

My sincere thanks for your effort and posts thus far. I have subscribed to this thread and look forward to following along as the thread develops, which I am sure it will. Being a position trader, I have found it to be very interesting so far.

K

Ok Damonl

You have my attention...let's see where this one goes.

Awesome, with what I've read so far DamonL...

Hi Damonl

Thanks for sharing this approach so far - makes for very interesting reading.....I know I'll have to apply myself seriously to take it all in.....have been following your inside bar thread with interest and mixed fortunes trading (I am a relative newbie and trading for pence on Oanda while I build up my confidence and skills).

Since I use MT4 charts, the close of my trading day is 6PM CST. I am usually managing my trades anywhere between 4:30PM CST and 8PM CST.

Thanks Kristo....I hope to be able to post more information soon.

Glad to have you following along. I hope to be able to able post more soon.

Thanks Aad.....you will find that for very little additional effort the ATP will be able to add many additional pips above and beyond what you are getting with OzFx.

Cheers

Thanks Attictrader,

The Inside Bar Technique is indeed one of the entry strategies that make up ATP. After I get everything down on paper here I am then hoping to have some time to take one currency pair where I can upload the chart everynight and go through the trades with that pair.

This way, over time whatever is unclear will be very easy to see, use and implement.

You put together a lot of good reading stuff. I will definitely try to get this all into my bold head and hope it leads the way to better trading for me. Wishing all here EXITO