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  • #261
  • May 19, 2008 3:15am May 19, 2008 3:15am
If you are long on a position, then you should never ADD on a dip. That's probably the worst thing you can do.

If the price is heading up, you should think buy. If the price is heading down, you should think sell. If you are doing the opposite of that, you aren't thinking.

If you are in a short short short timeframe, then you should enter full position, and exit full position.

If you are in a short timeframe, you should enter with a full position first and then remove parts as you are wrong.

If you are in a long/longer timeframe, you should enter a position, pre-estimate your max (Sigma) position size, and add to it.


Now, "regular" modeling says that you keep adding to your position.

Cocaine Distribution Model says you keep adding positions.

And I'm not talking about just English differences here; If you don't know the difference between the two.. well.. study harder. But make sure you know which model you are following.

Perhaps I am the only person on the cocaine distribution model, but whatever model you use, make sure you understand why you are using it and how it is effected by pre-positions, and what kind of exit strategies best work for it.
google:
  • #262
  • May 19, 2008 4:10am May 19, 2008 4:10am
Quoting twoblink
If you are long on a position, then you should never ADD on a dip. That's probably the worst thing you can do.

If the price is heading up, you should think buy. If the price is heading down, you should think sell. If you are doing the opposite of that, you aren't thinking.

If you are in a short short short timeframe, then you should enter full position, and exit full position.

If you are in a short timeframe, you should enter with a full position first and then remove parts as you are wrong.

If you are in a long/longer timeframe, you should enter a position, pre-estimate your max (Sigma) position size, and add to it.


Now, "regular" modeling says that you keep adding to your position.

Cocaine Distribution Model says you keep adding positions.

And I'm not talking about just English differences here; If you don't know the difference between the two.. well.. study harder. But make sure you know which model you are following.

Perhaps I am the only person on the cocaine distribution model, but whatever model you use, make sure you understand why you are using it and how it is effected by pre-positions, and what kind of exit strategies best work for it.
There he goes talking in code again.
Have to admit Ive never TRADED cocaine before...hehe,
Yes, well adding on dips if you followed what I said would really be after a dip and a new high, so after a trend continuation signal of some kind like the break of a 123, or a two bar high or something like that. I find adding tricky you know that Albert...very curious about your cocaine distribution model, a quick search on google didnt come up with anything to do with trading...

The pharmacokinetics of cocaine were studied in five subjects with histories of drug abuse who were otherwise healthy. A two-compartment system was used to model the distribution kinetics of the drug. The steady-state volume of distribution averaged 131.8 L or 1.96 L/kg, elimination clearance was 2.10 L/min, and the t 1/2 was 48 minutes. Cocaine concentrations in a hypothetic biophase were estimated to correlate the chronotropic effects of this drug with its pharmacokinetics. The experimentally determined kinetic parameters indicate that the peak chronotropic effect would occur 7.3 minutes after intravenous bolus injection of cocaine, and that biophase cocaine concentrations would initially accelerate the heart rate by 0.3 bpm for each 1 ng/ml. The kinetic analysis also demonstrated that the chronotropic effects of cocaine decline more rapidly than either plasma levels or biophase concentrations. This progressive attenuation in intensity of the chronotropic effect of a given biophase cocaine concentration could be modeled as a first-order process and is compatible with either the intervention of homeostatic reflex mechanisms or the phenomenon of acute tolerance.

How are your fist and gravy train doing btw, take care, Raz
Never say never.
  • #263
  • May 19, 2008 6:11am May 19, 2008 6:11am
Two blink is your man, but hes a bit like the Wizard of Oz, he pops in here every month or so to give me a cryptic telling off and then disappears lol, so you might want to send him a pm...very clever fellow, if anyone can help you, he can, speak soon, Raz
Never say never.
  • #264
  • May 19, 2008 8:16pm May 19, 2008 8:16pm
Quoting razldazl
Hi 4x,
You know what I pretty well tried it all and my conclusion is that Jacko is right in the end, its just a complication...however that said, it depends how much time you have and how much you energy you are willing to put into each trade...I know a lot of traders scale in and out of positions and it does work, its just complicated mathwise. Putting it into practice for example, you would say take off 2.1 positions once your position goes against you by 28 pips, but remember you have to change your stop when that happens or you can end up with a stop order larger than your position which puts you in short if you dont watch etc etc...Im telling you its complex, you have to have time to watch and change orders and basically baby the trade. My problem with this is if I have a larger stop it means I have to take a smaller position, and Im trying to build up my account, so for me personally I would rather decide what Im willing to risk, look for the best entry possible, use the 50 sl and AH it if it doesnt work, and this has given me the kind of results I wanted...still would be interested in hearing how you get along with it, and still hoping to find a way to add successfully...from my own experience the only way to add is to add on dips, but you have to have balls of steel to do that, and again its all mathematical, I would never add randomly say when we hit plus 200 or plus 100 it would have to be after a dip and the trend is re-established...and when are we sure that has happened when we break a high or make a new high or when exactly?...its difficult and something I think has to be left to those lucky weeks we have when we have made some profit and have something extra to play with. For now Im playing it safe, trying to hold on to my profits and build them up so I can start taking on decent sized positions and start paying some bills with my trading profits (preferably shopping bills hehe) Keep in touch and let me know your thoughts, Raz
I know twoblink seemed to say here recently that just scaling out is for short time frames. Why? And for sure it can get complicated quickly. Nevertheless I think I'll give it a simplified go using this Pascal stuff. I'm buying 2.1 positions with a SL 84. At the same time I'm buying 1.5 positions with a SL 56. Trailing stops for both. No, I don't understand the math, but it does "feel" right as my compromise between Jacko and you.

In at 1.5500 actually. We'll see what happens.

Wheels
  • #265
  • May 20, 2008 2:43am May 20, 2008 2:43am
Quoting razldazl
Two blink is your man, but hes a bit like the Wizard of Oz, he pops in here every month or so to give me a cryptic telling off and then disappears lol, so you might want to send him a pm...very clever fellow, if anyone can help you, he can, speak soon, Raz
Hi Raz,

I've just deleted my post which was meant to be a PM to Twoblink but somehow it got posted in your journal ! I must have been half asleep when I posted it. LOL.

Regards,
Bakuli
  • #266
  • Edited 3:19am May 20, 2008 3:18am | Edited 3:19am
Quoting 4xWheels
I know twoblink seemed to say here recently that just scaling out is for short time frames. Why? And for sure it can get complicated quickly. Nevertheless I think I'll give it a simplified go using this Pascal stuff. I'm buying 2.1 positions with a SL 84. At the same time I'm buying 1.5 positions with a SL 56. Trailing stops for both. No, I don't understand the math, but it does "feel" right as my compromise between Jacko and you.

In at 1.5500 actually. We'll see what happens.

Wheels
OK,
not sure what you are doing here (maybe you are doing it right and I do it wrong?) So you are in 3.6 lots and trailing one by 56 pips and the other by 84? You got in with the same amount but your exit is different for each ...ok lets see how that works...what I was doing was getting in with 2.8 and stop at 84 pips, then reducing or adding depending which way it went, so if it went against me by 28 pips right away I would reduce my position by 2.1 and if it went in the green by 28 I would add 2.1 and my stop moved up to -56...what I meant to say about the stop changing was you have to watch that you change the size of your position on your stop as your position reduces, so if you close 2.1 lots remember to change the position size on your stop as well, otherwise you will hit the stop and reverse with whatever is left over...hope you understand what Im saying (yes it has happened to me in fact if there is a trading mistake conceivable I have made it at some point or other) take care, Raz
ah, Im in at 5500 as well
Never say never.
  • #267
  • May 20, 2008 9:16pm May 20, 2008 9:16pm
Quoting razldazl
OK,
So you are in 3.6 lots and trailing one by 56 pips and the other by 84? You got in with the same amount but your exit is different for each ...ok lets see how that works...
Some confusion here apparently. It may be my terminology. And it probably doesn't matter to anyone but me, but I said I was buying 2.1 and 1.5 "positions." According to my money management I will buy a multiple (or a fraction) of 2.1 and 1.5 "lots." The 2.1 multiple then has a TSL of 84 and the 1.5 multiple has a TSL of 56. I buy them both at the same price and time.

For example, say I want to risk 5% on a $10K account- $500
Buy 4.2 (2 x 2.1) mini lots SL 84 = risk 353
At the same time...
Buy 3 (2 x 1.5) mini lots SL 56 = risk 168
Total 7.2 lots total risk 521 (not exact but close enough for our example)

I admit I was confused by your method. I tried to make mine simple enough to put to use and walk away. I end up sleeping through most of the London session so I can't baby a trade all the way.

Wheels
  • #268
  • May 21, 2008 1:27am May 21, 2008 1:27am
Quoting 4xWheels
Some confusion here apparently. It may be my terminology. And it probably doesn't matter to anyone but me, but I said I was buying 2.1 and 1.5 "positions." According to my money management I will buy a multiple (or a fraction) of 2.1 and 1.5 "lots." The 2.1 multiple then has a TSL of 84 and the 1.5 multiple has a TSL of 56. I buy them both at the same price and time.

For example, say I want to risk 5% on a $10K account- $500
Buy 4.2 (2 x 2.1) mini lots SL 84 = risk 353
At the same time...
Buy 3 (2 x 1.5) mini lots SL 56 = risk 168
Total 7.2 lots total risk 521 (not exact but close enough for our example)

I admit I was confused by your method. I tried to make mine simple enough to put to use and walk away. I end up sleeping through most of the London session so I can't baby a trade all the way.

Wheels
The most important thing to understand about using Pascal for mm is that as we add we are also reducing risk on each earlier position, so getting in with all of it at once isnt fulfilling that condition, (whatever the size you are using) but I guess what you are doing is taking profit earlier on one ...I would really like to hear Twoblinks comments here because he is the genius and is always willing to tell me how wrong Im going about things LOL, I will send him a pm and ask him to comment...speak soon and stay tuned, Raz
Never say never.
  • #269
  • May 26, 2008 10:14pm May 26, 2008 10:14pm
I thought I might compare the results of our 3 methods over the last trade. I base this simplified comparison given we all got into the trade at 1.5500 and strictly followed a TSL method to take profit. And, we all take the same risk, $500.
So for that $500-

Raz, SL 50, buys 10 lots and takes profit at 135 pips. Total 1350

Wheels, SL 84, buy 4.2 lots and takes profit at 229 pips.
and, SL 56, buys 3 lots and takes profit at 129 pips. Total 1349

Jacko, SL 100, buys 5 lots and takes profit at 213 pips. Total 1065.

I realize there are a lot of other variables and discretionary moves available but this kind of spoke to me. That was over 300 pip move. How big a move does it need to be before SL 100 makes more than SL 50?


I sure would also like to hear from Twoblinks concerning my backward application of Pascal Triangle.

Wheels
  • #270
  • May 28, 2008 1:32am May 28, 2008 1:32am
Well this is the trickiest thing about trading and its hard to get it just right every time. Increased volatility has made 50 almost too close but I have taken to moving my stop manually. Your example is interesting, but its just one trade, so we would have to keep track over a period of time...it also comes down to personal style and keeping it as simple as possible is best if you dont want to screenwatch. Definitely keep a record if you can, it will be interesting to see the results...still waiting to see if the Great Oz steps in to share his wisdom, come on Twoblink where are you? Speak soon, Raz
Never say never.
  • #271
  • May 28, 2008 3:00am May 28, 2008 3:00am
Quoting 4xWheels
I know twoblink seemed to say here recently that just scaling out is for short time frames. Why? And for sure it can get complicated quickly. Nevertheless I think I'll give it a simplified go using this Pascal stuff. I'm buying 2.1 positions with a SL 84. At the same time I'm buying 1.5 positions with a SL 56. Trailing stops for both. No, I don't understand the math, but it does "feel" right as my compromise between Jacko and you.

In at 1.5500 actually. We'll see what happens.

Wheels
When you have 2 positions with different SL's, ask yourself, what am I saying about the combination of positions? If the SL hit at 56, then I was wrong, and if I was wrong, shouldn't I get out on ALL my trades??

I find having split SL's to be like having a prenuptial agreement. If you are so sure that the marriage is going to fail that you need an insurance policy on it, why even get married?

If your price dipped to past -56 and you SL out of your 1.5 lots, then your 2.1 lots now has the burden of 3.6 lots, and when that happens, you now have a negative expectancy.. that means, no matter what happens, your system will ALWAYS lose money in the long run.. Your system is equivalent to averaging down.. because you have larger (open) positions when you are wrong..

You don't understand the math? I suggest you do before you begin to trade..
google:
  • #272
  • May 28, 2008 3:16am May 28, 2008 3:16am
Quoting 4xWheels
I thought I might compare the results of our 3 methods over the last trade. I base this simplified comparison given we all got into the trade at 1.5500 and strictly followed a TSL method to take profit. And, we all take the same risk, $500.
So for that $500-

Raz, SL 50, buys 10 lots and takes profit at 135 pips. Total 1350

Wheels, SL 84, buy 4.2 lots and takes profit at 229 pips.
and, SL 56, buys 3 lots and takes profit at 129 pips. Total 1349

Jacko, SL 100, buys 5 lots and takes profit at 213 pips. Total 1065.

I realize there are a lot of other variables and discretionary moves available but this kind of spoke to me. That was over 300 pip move. How big a move does it need to be before SL 100 makes more than SL 50?


I sure would also like to hear from Twoblinks concerning my backward application of Pascal Triangle.

Wheels
I will make attempts to explain why a pyramid is a pyramid, but you should really read "Phantom's Gift" first...

To quote Ed Seykota, "Trading should be like the dollar bill, you pyramid and keep an eye on top of it.."

The reason why is because of streaks ...

I flip a coin 100 times.. and I tell you 50 of them are heads.. sure.. not a problem.. you'd probably believe me. But what if I told you, I flipped a coin 100 times, 50 of them were heads; but it was the first 50 flips that were heads, followed by the last 50 flips were all tails? You'd probably have a hard time believing me on that...

While highs give higher highs (that's why we buy on highs) it eventually will run out of gas. And that is why we pyramid.. If the streaks give me a head, while the odds are still 50/50 for heads and tails, the odds against 50 heads in a row in a fair flip are astronomical..

When you reverse pyramid, you do the incorrect thing.. and you now bet against math..

And so you will LOSE in the long run because your expectancy is (again) negative.. You can't really have a positive expectancy pyramiding backwards..

Also, you keep talking about Total profit.. but you seem to not understand "expectancy" as a whole.

Expectancy =
(%Win * How much I win when I win) -
(%Lose * How much I lose when I lose)

Your version:

(How much I win.....Total).

See the difference? You don't consider anything about percentages..

Fully expanded expectancy:

((%win*W$)-(%loss*L$))^Frequency.

W$ = Win amount of profit when I win
L$ = Lose amount of loss when I lose

I will again suggest that you either learn the math or not trade if you aren't going to learn the math... because paying tuition when you don't have to, is stupid..
google:
  • #273
  • May 30, 2008 3:01am May 30, 2008 3:01am
Quoting twoblink

If your price dipped to past -56 and you SL out of your 1.5 lots, then your 2.1 lots now has the burden of 3.6 lots, and when that happens, you now have a negative expectancy.. that means, no matter what happens, your system will ALWAYS lose money in the long run.. Your system is equivalent to averaging down.. because you have larger (open) positions when you are wrong..

You don't understand the math? I suggest you do before you begin to trade..
Thanks for writing back here, Twoblink. I have huge respect for you and I know you don't think much of stupidity. So I can't believe I'm going to argue a little here with you at least in part for the sake of trying to understand what you are teaching.

If your price dipped to past -56 and you SL out of your 1.5 lots, then your 2.1 lots now has the burden of 3.6 lots That just doesn't make sense to me. Taken to the next step, if the price dips past -84 and I SL my remaining 2.1 lots, then what now "has the burden of 3.6 lots?" I would suggest that selling part of my position early if the market moves against me, in fact lowers the overall initial risk per lot and allows me to put on more lots.

Follow me-
at -25 I'm pretty wrong, but I've still got 3.6 lots in play
at -57 Now I'm more wrong so I've reduced to 2.5 lots in play.
at -84 I'm entirely wrong and will be out of the trade.
How is that equivalent to averaging down.. because you have larger (open) positions when you are wrong..? No I don't. The more wrong I am, the smaller my open positions.

You don't understand the math? I suggest you do before you begin to trade.. I took this as a stiff and undeserved shot. (Good naturedly) I was talking about the math behind the Pascal triangle and all its amazing properties. Like everybody who uses Stochastics or Fibbonacci or whatever, understands the math either. You don't necessarily need to understand to benefit. Besides, here's what you said about this elsewhere-

All of this is quite complex math, with multiple hidden fib ratios, but the pascal triangle takes care of all that complexity for you, and is more of a lookup chart with hidden math.

Thanks for sharing your wisdom.

Wheels
  • #274
  • May 30, 2008 5:43am May 30, 2008 5:43am
has been banned for something he said a year ago (he told me) so you wont get any feedback from him I doubt...which probly isnt a bad thing after you contradicted him How can you contradict a mathematical genius ???? I think what he means when he says your (smaller) position has to hold the weight of the earlier larger position is, that to make up for the loss and actually get a profit, that smaller position has to go a lot farther...but I could be wrong. I doubt twoblink is wrong though, he basically wrote the book on a lot of things...so when he tells me Im wrong I listen
Never say never.
  • #275
  • Jun 4, 2008 10:18am Jun 4, 2008 10:18am
Well.. the little red card is not blinking at me.. so I assume I can post again.. we'll see..
Quote
Follow me-
at -25 I'm pretty wrong, but I've still got 3.6 lots in play
at -57 Now I'm more wrong so I've reduced to 2.5 lots in play.
at -84 I'm entirely wrong and will be out of the trade.
How is that equivalent to averaging down.. because you have larger (open) positions when you are wrong..? No I don't. The more wrong I am, the smaller my open positions.

And Raz was right..

Average up is when your previous position gives you an advantage..

Average down is when a new position would give you a burden.

at -25 I'm pretty wrong, but I've still got 3.6 lots in play
(Max risk = 3.6 x -25 = -90 pips)... burden of breakeven = -90 pips / 3.6 lots = 25 pips per lot.

at -57 Now I'm more wrong so I've reduced to 2.5 lots in play.
(3.6-2.5 = 1.1 lots X -57 pips = -51.8pips/lot guaranteed burden)
2.5 x -57 = -142.5 pips open burden
You now have a combined burden of 77.72 pips per lot.

etc..

that's why it's considered average down... because burden increases, not decreases.. load per lot is increased.

Quote
You don't understand the math? I suggest you do before you begin to trade.. I took this as a stiff and undeserved shot. (Good naturedly) I was talking about the math behind the Pascal triangle and all its amazing properties. Like everybody who uses Stochastics or Fibbonacci or whatever, understands the math either. You don't necessarily need to understand to benefit.

I don't need to know how a lead/acid battery works, but I need to know enough to not screw up connecting the + to the - terminals.

You will get burned if you don't know the math. I have NO IDEA why you are not seeing the importance of the math.. and the need to learn it. Not knowing the math is like knowing the gas pedal on a car, but never learning about the brakes...

and BTW.. again, I keep saying, your system has a negative expectancy... and you keep not understanding that.. so when you lose all your money, don't cry about it.

I'm not trying to be rude, I'm trying to be real. If you want a friend, buy a dog, if you want lies, get a lawyer. If you want everything sugar coated, get an agent. I only hand out the truth..
google:
  • #276
  • Jun 4, 2008 6:53pm Jun 4, 2008 6:53pm
And.. I'm going to go ahead and admit that I was wrong on the post above...and attempt to correct my statements above.

Why was I wrong? I assumed that you weren't going to pyramid back up!

That's a problem on my part! Your system as it stands presented, isn't all that great, but it might just be that it's incomplete.

Quote
"No I don't. The more wrong I am, the smaller my open positions. "

You are not averaging down in there.. but you have not proven that you are averaging up.

If it went to -58... and then it climbed back to -24, do you buy 1.1 lots more??

If not, then you are averaging down. If so, then you are averaging up, in both directions.

In short time frames, what you are doing is not great, but within some acceptable limits. But it is dependent on the other side. Do you buy more when your position recovers?

I realized all this last night in a dream, that if you were to hold true to what you said in the reverse direction when it happens, then you would be ok.. well, not ok, but "better".

So my apologies as I assumed you aren't going to pyramid back up. You have not told me what you would do if it went from -83 to +10, would you add, subtract, multiply or divide?

BTW, the problems of pyramiding are incredible. The model is VERY difficult to execute, and that's why I no longer do it like it's taught. I find it too problematic.

While Phantom feels that removal of position when you are wrong is equal to adding to a position when you are right, I don't agree.

The reason I don't agree is because, the difference is, in one case, you are RIGHT, in the other you are WRONG.

More positions when you are right != less positions when you are wrong. The reason is assumptions.

Case A: I _ASSUME_ I'm wrong when I enter, and add only when the market proves me right.

Case B: I _ASSUME_ I'm right and remove when I'm proven wrong.

These are the 2 "average up" scenarios presented by Phantom.. but I don't believe they equate. The reason I __KNOW__ case B to be wrong is this:

Price can go up or down... assuming I don't have inside info, that's 50/50. I pay a bid/ask spread on entry/exit. I am now BELOW 50/50 on any position I enter.

If I assume Case B, then I'm assuming I'm right even though I know the odds to be less than 50%.

Well.. what if your system is great and has a statistical advantage? I'd love for that to happen to you.. But it probably isn't true; because:

1) Your system does not include adding of positions when you are proven right..

2) You place burden of proof on yourself, but once a position is entered, the sphere of control is market side, not in your hands.. (unless you are Warren Buffet or Bill Gates and I just don't know about it, or just have a few billion in your pockets)

I'm an optimist and so I see the world as half full.. But I'm a realist FIRST and so I realize that the cup that is half full, doesn't belong to me, it belongs to the market.

I'm also a realist in that, my chances of being wrong I believe are greater than my chances of being right, that's why I require proof of my correctness, not proof of my incorrectness.

So..

Expectancy will determine your Kelly
Risk of Ruin will determine your Kelly divisor
Burden per unit lot will determine if you are ever going to make money
Positive pyramiding will increase your Expectancy
Negative pyramiding will reduce your Risk
Reverse pyramiding will make your Expectancy Negative

To me, only adding when you are correct, constitutes true averaging up.. it's the only one that reduces burden per unit, and makes you money.

So again, apologies on my previous posts because of my assumptions that is all you plan to do.. You might be planning on pyramiding up but just didn't say so..
google:
  • #277
  • Jun 5, 2008 12:30am Jun 5, 2008 12:30am
...and you say you dreamed this?? My dreams are more simple like I won the lottery, or I went shopping
Never say never.
  • #278
  • Jun 5, 2008 6:57am Jun 5, 2008 6:57am
Quoting razldazl
...and you say you dreamed this?? My dreams are more simple like I won the lottery, or I went shopping
haha no kidding. I had a dream once where I was chased by a goat... what a weird dream that was
  • #279
  • Jun 5, 2008 7:08am Jun 5, 2008 7:08am
Quoting zoopy
haha no kidding. I had a dream once where I was chased by a goat... what a weird dream that was
...if it had been a bull, or a bear I could understand, but a goat???
Never say never.
  • #280
  • Jun 5, 2008 7:13am Jun 5, 2008 7:13am
Quoting razldazl
...if it had been a bull, or a bear I could understand, but a goat???
haha. My brain was confused, couldn't decide on which so sent me a goat instead so I wouldn't trade
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