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4 Hour Strategy (MACD)

  • #14,741
  • May 13, 2008 5:21am May 13, 2008 5:21am
I took a chance on G/U, from backtesting I know that usually there are good moves in situations like this. Anyway I'm happy with my 25 pips.
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  • #14,742
  • May 13, 2008 5:23am May 13, 2008 5:23am
Actually, i think trading two lots for people new to the system or who are not trading real money is a big task.And i dont really know why they are doing it. It is not necessary to be successful and is a challenge in itself. Ok it maximises the system but that can come later.

The least risky trade would be;

Stage1. Stoploss 25,TP +25. Possible loss of -25, or whatever your SL is.

This way you get to either keep the gains or lose 25.

Stage2. SL 25, TP +25, enter new lot at the close of last and leave as a runner.

This way you could lose -25,or keep 25 plus the runner, or lose your +25 from the first. This is the next step to be taken in your mind, as to whether you potentially want make +25 and then see it disappear.

Stage3. Sl 25, Two lots, TP +25 leave one as a runner.

This way you accept possible total loss of -50, but get to keep +25 plus runner, or accept losing the +25 you gained.

This is the next stage of the emotional and psychological training. Losing -50.......

Stage4. SL 25, Two lots, TP on both for +25. Enter a runner at close of the last two.

That way accepting possible loss of -50 or gaining +50 and runner. Or coming away with +25 if the runner takes out its stop.

And so it goes on. The last scenario is quite a beneficial one because even if the runner takes out its stop of say 25, if you have taken +50 already then you get to keep +25....you win.

I hope that is clear, but suggests differant stages of trading risk and progression according to ones ability to handle risk and also to build confidence by actually holding onto regular gains, which is very very important.
  • #14,743
  • May 13, 2008 5:27am May 13, 2008 5:27am
Quoting ira
I took a chance on G/U, from backtesting I know that usually there are good moves in situations like this. Anyway I'm happy with my 25 pips.

Your a nugget Ira, well done!
  • #14,744
  • May 13, 2008 5:35am May 13, 2008 5:35am
Quoting ira
I took a chance on G/U, from backtesting I know that usually there are good moves in situations like this. Anyway I'm happy with my 25 pips.
That situation was putting the odds in your favour. If 10 such situations occur I think that 8 of them will work out.

Well done.
  • #14,745
  • May 13, 2008 5:46am May 13, 2008 5:46am
Quoting Phillip Nel
That situation was putting the odds in your favour. If 10 such situations occur I think that 8 of them will work out.

Well done.
Yup. Looking at that situation, i considered a re entry at the close of the 4-8am bar was on given the fierceness of the down move. Perhaps one for the future.
  • #14,746
  • May 13, 2008 5:52am May 13, 2008 5:52am
Quoting Phillip Nel
That situation was putting the odds in your favour. If 10 such situations occur I think that 8 of them will work out.

Well done.
For all the hrd work in that system i listen to half the mp3 s and read quite a lot i took some real tades (since i trade alredy 5 years)with the system and i like it a lot it gives breathin room ,overview,takes out a lot of stress thanks for that!!
Very profound and so u like a inventer ,Edison , what is your acent ? where are u from?
I am from Ireland I also like to know if there is a trading room or a email subscription for this threat thanks again for the pips
Carlo
  • #14,747
  • May 13, 2008 5:54am May 13, 2008 5:54am
I want to put my two cents on the entry point discussion. This question bothers me for quite a long time already. If you trade with one lot there are no problems as you calculate your trade on R:R basis, as soon as you start using two lots you have to face a dilemma.

In profit you close your lot at +25, and I like it, as I already have some pips in the pocket, and as Phillip has pointed out you can also use it as SL for the second lot to come to b/e if price turns against you, to give your position a chance (I started to use this technique too, and find it very useful).

On the other hand if you lose, you'll face a double stop. What I have noticed is that I was often closed at +25. So if I have 4 winning trades in a row I earn +100. And then comes one loss and I lose -72 (let's say -36 on one lot and -36 on the second). You see my point here, I have 3 winning trades and one loss to take them out. Not good MM. The only way out here I see to have much more winning trades than losses, let's say 8 out of ten (Phillip's winning % is even better), but for newbies it's hard to achive.

Then I started to test, 1st lot +25 SL -25, the other lot as usual, and found that not very good too. There is no use to put SL in the middle of the candle, as there are no boundaries for price. Often price would run -25, taking your SL on first lot and then go all the way back. You would still have profit on the second, but less as you have already faced SL.

Lately I have come to much better entry managment. If I can put small SL (there are some boundaries above or below which I can use to hide SL) I open two lots. If SL is big (more than 30) I open 1 lot.

Reading the above posts I have found many interstting ideas as to the entry managment, I need to think about it.
  • #14,748
  • May 13, 2008 6:03am May 13, 2008 6:03am
Hey Ira, i was waiting for your sensible 2 cents, thanks for that.

It certainly is an interesting discussion. But i wanted to make one last point and that is that it is psychologically and emotionally very very important not only to have consistant gains but to keep them, more important than maxing out the system. The next step is making consistant gains and then accepting that they may be taken away which is a hard lesson in itself, because we dont wish to lose what we have gained.

However, from my own point of view, if i can achieve consistancy and increase my stake this is worth more at the moment that maxing out the system with more lots - unless i can get better at recognising better set ups and putting more on, like Ryan does.

A great dicsussion though.
  • #14,749
  • May 13, 2008 6:16am May 13, 2008 6:16am
Quoting ira
I want to put my two cents on the entry point discussion. This question bothers me for quite a long time already. If you trade with one lot there are no problems as you calculate your trade on R:R basis, as soon as you start using two lots you have to face a dilemma.

In profit you close your lot at +25, and I like it, as I already have some pips in the pocket, and as Phillip has pointed out you can also use it as SL for the second lot to come to b/e if price turns against you, to give your position a chance (I started to use this technique too, and find it very useful).

On the other hand if you lose, you'll face a double stop. What I have noticed is that I was often closed at +25. So if I have 4 winning trades in a row I earn +100. And then comes one loss and I lose -72 (let's say -36 on one lot and -36 on the second). You see my point here, I have 3 winning trades and one loss to take them out. Not good MM. The only way out here I see to have much more winning trades than losses, let's say 8 out of ten (Phillip's winning % is even better), but for newbies it's hard to achive.

Then I started to test, 1st lot +25 SL -25, the other lot as usual, and found that not very good too. There is no use to put SL in the middle of the candle, as there are no boundaries for price. Often price would run -25, taking your SL on first lot and then go all the way back. You would still have profit on the second, but less as you have already faced SL.

Lately I have come to much better entry managment. If I can put small SL (there are some boundaries above or below which I can use to hide SL) I open two lots. If SL is big (more than 30) I open 1 lot.

Reading the above posts I have found many interstting ideas as to the entry managment, I need to think about it.
I like the one if your stoploss will be small due to smaller candles you enter with 2 lots.
  • #14,750
  • May 13, 2008 8:00am May 13, 2008 8:00am
Quoting napeharm
Hey Ira, i was waiting for your sensible 2 cents, thanks for that.

It certainly is an interesting discussion. But i wanted to make one last point and that is that it is psychologically and emotionally very very important not only to have consistant gains but to keep them, more important than maxing out the system. The next step is making consistant gains and then accepting that they may be taken away which is a hard lesson in itself, because we dont wish to lose what we have gained.

However, from my own point of view, if i can achieve consistancy and increase my stake this is worth more at the moment that maxing out the system with more lots - unless i can get better at recognising better set ups and putting more on, like Ryan does.

A great dicsussion though.

Yes, you are right. But I started to trade two lots not because I wanted more gain, but because too often I found myself in a situation when my full SL was hit, and I had those bad moments, you know. With two lots I feel more confident and comfortable psychologically, as I have already some pips in the pocket, and give a chance for other lot to run ,what is also very important. My trade is protected and managed better than with one lot. But again it's not for newcomers.
  • #14,751
  • May 13, 2008 8:07am May 13, 2008 8:07am
I think if it goes up from this support area it can easily go through 89. BOZ may give us a chance to prepare for breakout. Anyway we are still in a down trend, so it may go all the way down. Just think loudly.
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  • #14,752
  • May 13, 2008 8:09am May 13, 2008 8:09am
I read a post once by someone who was some sort of computer expert or something. He reckoned the markets were all about algorithms or somesuch and somehow they could be reduced to this and he could make some black box system to trade automatically...........so he could spend more time in the pub..........yeah right!

The great thing about trading is that everyday is a challenge. Everyday there is something new to learn and what we already know is being pushed to its limit. Their is no room for complacency here, and above all we learn about ourselves because trading, like much of life, is a mirror in which we see our selves.
  • #14,753
  • Edited 8:38am May 13, 2008 8:17am | Edited 8:38am
So, we have an idea to close 50% of a trade at about +20..25 pips. So we are speaking about 1 trade or position and closing a part of it with a minor profit. What does that give? This makes % of profit trades higher (or % of losses lower), and at the same time it makes average profit (pips/1lot) smaller. You all must know a simple formula that describes the expectation (E) of a trading system: E = %profits*av.profit - %losses*av.loss. Parts marked green become "better" and with red - "worse". In fact, without knowing those values (%profits etc) for specific system we can't say if such a method will improve its results or make them worse. I'm gathering some statistics and in a few days hope to return to this question with maybe some numbers.

But besides the maths above there are several other things about this system of position handling:
- for me doing like Phillip showed (closing 50% at about 20 pips) is psychologically more convenient (which sometimes may mean more than bigger profit in the end);
- as this first small target is not "hanging in the air" but usually near some barrier at which price may turn around it becomes even more reasonable.

P.S. I thought about the mentioned formula a bit more and understood that closing half of a position with a minor profit, in fact, not obligatory should make average profit smaller - it may remain the same or even become bigger (for example, if it's common for the system to have some bigger profit than 20..25 pips but it's not fixed and price often goes back and position is closed at BE)
  • #14,754
  • May 13, 2008 8:21am May 13, 2008 8:21am
Quoting Yorik
So, we have an idea to close 50% of a trade at about +20..25 pips. So we are speaking about 1 trade or position and closing a part of it with a minor profit. What does that give? This makes % of profit trades higher (or % of losses lower), and at the same time it makes average profit (pips/1lot) smaller. You all must know a simple formula that describes the expectation (E) of a trading system: E = %profits*av.profit - %losses*av.loss. Parts marked green become "better" and with red - "worse". In fact, without knowing those values (%profits etc) for specific system we can't say if such a method will improve its results or make them worse. I'm gathering some statistics and in a few days hope to return to this question with maybe some numbers.

But besides the maths above there are several other things about this system of position handling:
- for me doing like Phillip showed (closing 50% at about 20 pips) is psychologically more convenient (which sometimes may mean more than bigger profit in the end);
- as this first small target is not "hanging in the air" but usually near some barrier at which price may turn around it becomes even more reasonable.
Stats would be great. I hope someone can provide illustrations for this so we can compare, like a menu and we can choose which ever suits us etc. Other than trading only one lot, i rather like the idea of opening two and taking profit on both at +25 for +50 and opening a third one after closing the other two as a runner. Even if that takes out its stop of 25 your are still ahead and so on.
  • #14,755
  • May 13, 2008 8:24am May 13, 2008 8:24am
Quoting napeharm
... The great thing about trading is that everyday is a challenge. Everyday there is something new to learn and what we already know is being pushed to its limit. Their is no room for complacency here, and above all we learn about ourselves because trading, like much of life, is a mirror in which we see our selves.
Totally agree! I must say that just 2 months ago my learning was quite different - it was mastering more specific systems, their rules etc. And with this MACD system I started seeing the marked itself not the trading system and I really feel that I learn something every day - from you, people, and from marked itself (often my mistakes on it but nevertheless). And that's now that I understand how little I know and why to become a good trader it needs several yeers. Phillip and all other members of this thread, thank you a lot again!
  • #14,756
  • May 13, 2008 8:36am May 13, 2008 8:36am
I use a money management system based on % risk.
I'm conservative with my risk so for now it's 1% for each trade.
So if I put in $1,000, my risk is $10.
If the stop loss for the specific trade is 50 pips, the pip value is 20 cents, the equivalent of 2 micro lots.
If the stop loss for the specific trade is 30 pips, the pip value is 33 cents, the equivalent of 3.33 micro lots.
When I can manage a reasonably small stop loss based on price action, I'm rewarded with a larger position and thus bigger profits, while keeping the risk always to 1%. (and with practice maybe increasing it to 2%, and/or increasing capital)

So that way I'm not concerned about having a position I can't manage emotionally, as on every trade my risk is always 1%.

Still the problem of when and how to take partial profits remains, like ira said, as the stop loss will be hit with the full weight of the position, whereas taking partial profit means that the impact of profits become less compared to the stop loss.
  • #14,757
  • May 13, 2008 9:59am May 13, 2008 9:59am
Now heading towards 21 EMA.
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PIPS AND PIPS ONLY... + OF COURSE
  • #14,758
  • Edited 10:50am May 13, 2008 10:14am | Edited 10:50am
i think this is an early entry base on H1.i will watch 200sma on H1 closley.
edit:closed +30 and waiting for a retrace to 4490 level for reenter
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  • #14,759
  • Edited 11:47am May 13, 2008 11:31am | Edited 11:47am
Quoting islandtrader
I use a money management system based on % risk.
I'm conservative with my risk so for now it's 1% for each trade.
So if I put in $1,000, my risk is $10.
If the stop loss for the specific trade is 50 pips, the pip value is 20 cents, the equivalent of 2 micro lots.
If the stop loss for the specific trade is 30 pips, the pip value is 33 cents, the equivalent of 3.33 micro lots.
When I can manage a reasonably small stop loss based on price action, I'm rewarded with a larger position and thus bigger profits, while keeping the risk always to 1%. (and with practice maybe increasing it to 2%, and/or increasing capital)

So that way I'm not concerned about having a position I can't manage emotionally, as on every trade my risk is always 1%.

Still the problem of when and how to take partial profits remains, like ira said, as the stop loss will be hit with the full weight of the position, whereas taking partial profit means that the impact of profits become less compared to the stop loss.
That is ideal. Very well done. If you stick to that you will never lose your account totally. There will be times of drawdown and bad patches but your risk of 1% will give you the chance to gain back again.

If 1% of capital is risk on each trade you can have 27 wrong deals in a row and still have 75% of your account left.

What I however have found is that a lot of people does not trade that way and the reason being the advertisements going around of how easy it is to trade the Forex market. With that together with the fact that easy money can be made according to the people selling all these strategies and systems people are putting there hard work savings on the line and lose it within the first 3to6 months. According to a certain person(he was an executive of an institutional bank in Europe and the head of their Forex department) he claims that 80% of all new Forex accounts are lost within the first 3to6 months.

That was my main drive to start this thread. To teach people the ins and outs of what I know and what I have learned the hard way.

But what I have found hosting this thread for 15months is that people will read what you say but many still go out and do totally something esle. When a huge part of their money is gone they will return to this thread but then it is about impossible to recover the losses. They then have to add to their account to have sufficient funds to start again. The problem then is that bad habbits have been learned and it take real effort to get rid of it.

I hope that all new people to forex will read this and study all about money management and risk size before entering the arena of trading
Thanks for your post
Phillip


Look at this advertisement I got. I get these on a daily bases. Is it really that simple. If yes why arent we all rich.

Hi Traders,
Are you making money trading on the Forex Markets? I mean real
money. The kind of money those "select few" forex traders seem to
make every single week. Or does your strategy involve jumping in
head first and losing trades more often than not?

If you don't know the first thing about trading Forex...

If the words "software" and "method" don't even ring a bell...

If you're not using a software... then I'm not really sure why
you're still trading money on the Forex Markets, because...I
promise your 'strategy' is only going to lead to you losing more
money.
  • #14,760
  • Edited 12:15pm May 13, 2008 11:57am | Edited 12:15pm
I used to read the Financial Times. In it one day was an article about day trading. There was a guy who ran a mobile phone business. He had decided to start.............day trading during the Tech boom of the late 1990's. He claimed that the business he ran, which made good money was dull or boring. He obviously found the buzz of trading exciting and some days he made +£14000 etc. However, he had lost............£300,000!!!!!!!!!!!!........You can guess as well as me then that he knew absolutely nothing what so ever about trading. Thats a no brainer. So, what did he do........he sold half his business so he could pay off his debt and............continue trading!.............

Some months later the newspaper printed another article, about the same guy. There was a photograph of him, looking somewhat sheepish. The article said he traded on and lost...............another £300,000.............the whole value of his business...........Wowww............some people really do have to learn the hard way, assuming he learned anything at all that is. He admitted that though his phone business was boring at least it was safe.

My question to him would be, if you knew nothing about trading to the extent of losing £600,000 why didnt you learn first?, and why did you lose so much before even thinking about learning............. They say in trading that those who lose alot of money fastest in trading are those who inherit their wealth. Why? Because they dont 'feel' the value of it.
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