DislikedIt's not my approach, it's fxtraderx's. But it does sound interesting. I have this ATR indicator. Place on a daily chart, and change the setting to 10 is I think what's he's doing.
Edit: Oh, and it means average true range.Ignored
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DislikedIt's not my approach, it's fxtraderx's. But it does sound interesting. I have this ATR indicator. Place on a daily chart, and change the setting to 10 is I think what's he's doing.
Edit: Oh, and it means average true range.Ignored
DislikedThat's right, I forgot you were on Oanda. I have to download that to see what kind of position sizing you guys are using.Ignored
DislikedI agree with your praise of this method and concern about drawdown.
I have chosen to currently only trade NZD/USD (less volatile). I don't use 200p below price of buydown. (for me I use 1 atr (10) ) drop. Also, I use a 15 pip PT on ALL POSITIONS I OPEN ....ALL....so I never have a dangler. I use a 10 pip gap between PT and buy limit orders when I first begin and as long as I only have one position open my position size remains 1% .Ignored
DislikedEven when price drops, I use 15 pip target on new low position and when PT is hit, I open another new position with a 15 pip PT if no lower position is open and the price is more than 1 atr(10) below average price. This position and buy limits are 1/2 the original positions and Buy limit sizes.Ignored
DislikedThis method completely eliminates danglers and greatly reduces drawdown. Additionally, I use 20% of capital as initial and buy limits and only 10% on the buy down positions and buy limits above the new low 2nd position.... etc. ( for $10,000 account position is $2000 initial and $1000 on buy downs ... and this roughly means 1% oanda position and .5% as described by dreamliner)Ignored
DislikedFurther, when my total exposure equals account balance, I open buy down only when price is 2 x ATR (10) below average price. When total exposure is 2 x my capital, I go to 4 X ATR(10) and I start taking losses from the top positions. This means I open a buy down position and close my very first position only at a loss. (This is greatly reducing my total risk and the loss is small because of previous interest and PT target profits. If my situation of losses taken plus current open position losses exceeds 25% of my total capital, I will close everything and start over.Ignored
DislikedPrice: 7700 PT 7715 BUY LIMIT 7725 PT 7740 BUY LIMIT: 7750 and so on.Ignored
DislikedAt 7625 price (1 atr(10) below average) I open $1000 position with PT +15 and buy limit + 25 (7650) etc.Ignored
DislikedIf overnight first position at 7625 hits PT and only original 7725 position is open and price is 1 ATR(10) below average price, I open new position with PT 15 and new buy limits ( position sizes 1/2 original.
This method should only when hell freezes over have danglers I believe.
I hope this is all clear enough.Ignored
DislikedI agree with your praise of this method and concern about drawdown.
I will not tolerate more than a 25% drawdown PERIOD. If you open a small account that won't wipe you out if it is blown, this can help solve the problem. For example. If you have $100,000 capital, put 25% in a forex account and follow dreamlines rules. If you are wiped out, it's only 25% of your total capital. You would need to get 33% on 75k to go back even at 100k after a wipeout of the forex account. (30% loss requires 43% to get back even. 40% requires 67% to get back even. and so on)
I have chosen to currently only trade NZD/USD (less volatile). I don't use 200p below price of buydown. (for me I use 1 atr (10) ) drop. Also, I use a 15 pip PT on ALL POSITIONS I OPEN ....ALL....so I never have a dangler. I use a 10 pip gap between PT and buy limit orders when I first begin and as long as I only have one position open my position size remains 1% .
Even when price drops, I use 15 pip target on new low position and when PT is hit, I open another new position with a 15 pip PT if no lower position is open and the price is more than 1 atr(10) below average price. This position and buy limits are 1/2 the original positions and Buy limit sizes.
This method completely eliminates danglers and greatly reduces drawdown. Additionally, I use 20% of capital as initial and buy limits and only 10% on the buy down positions and buy limits above the new low 2nd position.... etc. ( for $10,000 account position is $2000 initial and $1000 on buy downs ... and this roughly means 1% oanda position and .5% as described by dreamliner) Further, when my total exposure equals account balance, I open buy down only when price is 2 x ATR (10) below average price. When total exposure is 2 x my capital, I go to 4 X ATR(10) and I start taking losses from the top positions. This means I open a buy down position and close my very first position only at a loss. (This is greatly reducing my total risk and the loss is small because of previous interest and PT target profits. If my situation of losses taken plus current open position losses exceeds 25% of my total capital, I will close everything and start over.
Also, I don't forsee massive unwinds without having some fundamental information that tells us there is a problem. If fundamental situation is changing, I will get out of particular pair. For example...NZ economy starts tanking and NZD interest rate is going to decline, while USD is seen as rising or being stable. I will be out because fundamental is not in line. And because of my conservative buy down strategy and no danglers, I would be out with 10% or so loss at most (wild guess) without considering previous interest and PT gains.
Probably go USD/JPY, USD/CHF in this situation. In any event, I am going to trade the pair or pairs which have steady rising rates on base and steady to falling on secondary currency and will stop trade at profit or loss when this fundamental condition changes. If I were trading GBP/JPY I would use 1/2 or less the position size I use on NZD/USD.
Here is example scenario 10k account:
Open with $2000 position
Price: 7700 PT 7715 BUY LIMIT 7725 PT 7740 BUY LIMIT: 7750 and so on.
Let's say first position PT hit second not;
I now have 1 position at 7725 and current ATR(10) is 100
At 7625 price (1 atr(10) below average) I open $1000 position with PT +15 and buy limit + 25 (7650) etc.
If overnight first position at 7625 hits PT and only original 7725 position is open and price is 1 ATR(10) below average price, I open new position with PT 15 and new buy limits ( position sizes 1/2 original.
This method should only when hell freezes over have danglers I believe.
I hope this is all clear enough.Ignored
DislikedThis has to be the simplest method I've traded in a long time. Very easy to trade and very easy to monitor. It's very similar to the carry grid EA.
I finally downloaded OANDA to see what some of you meant by a lot size of .5% at 50:1. On a 20k account, .5% lot size resulted in a gbpjpy 10 pip win P&L of $2.65. So, on an account other than OANDA that uses regular lot sizes, that's .03 lots on a standard 20k account. A 10 pip win there equals $2.83, so it's very close.
As easy and troublefree as it is though, I'm not seeing a lot of profit. Obviously that's due to the small lot size -- which needs to be small to handle the gbpjpy unwinds.
I think this would be more profitable using higher lot sizes on a less volatile pair(s), or ignoring the positive swap aspect of hit and going both long and short with bigger size.Ignored
DislikedThanks for your thoughts. I'm experimenting with dropping GBP/JPY and sticking with NZD/USD and AUS/USD. That allows more active trading.Ignored
DislikedI'm using a combination of Dirk's Bird Watching system and Dreamliner's system, with unique modifications to make it my own. Currently, I apply it on 3 - 4 currency pairs simultaneously. Ultimatley, it's all about developing your own style/system that's based upon trading fundamentals. These fundamentals include proper money/risk mgmt and following the trend. The big diffuculty is following the trend! However, with good MM one could offset going against the trend for an extended period of time. In my opinion, price action and market fundamentals (economic metrics and news) are the best determining factors for trend.
Then again, timing is everything... fooled by randomness...
WaltIgnored
DislikedIn a "nutshell", we must realize that randomness plays a huge role in the marketplace... especially forex. Dr. Nassim Taleb gives an excellent analysis of this reality. Unfortuneately, many ignore this fact and assume that they can consistently time and/or predict the market, even in the short term. I was attracted to this system because it's built upon the premise that the market can move against your position, but with MM and patience, one can achieve success with this system. That's a powerful edge. To improve the probability of success with this system, I was suggesting that you eliminate the 10 pip ladder aspect, as that is very costly (especially with the gbpjpy). Instead, allow your position to ride 50 - 100 pips before closing the position. This is the essence of Dirk's 4x1 trading strategy. Also, we must respect the impact of the fundamentals... ForexFactory does an excellent job in reporting the outcome and providing benchmarks on the various economic reports that impact the various currencies. Note how yesterday's interest rate reports affected the direction/trend of the euro, gbp, & usd based currencies.
WaltIgnored
DislikedI agree with the extended tps, that's what I've been doing. I've picked up several hundred pips on eurjpy over the last few days.
Which are the pairs you've settled on?Ignored
DislikedCurrently, I'm utilizing 5 pairs (eurjpy, eurusd, gbpjpy, gbpusd, & usdjpy). However, I think that's too many. Once I cycle through these pairs, I'll probably start limiting it to only 2 or 3 pairs. I'm considering refraining from the gbp based pairs because I believe the pound is very likely to lose value in the next couple of months. Since the euro may raise it's interest rates, I believe it may continue to trend upwards. Although the euro is getting perilously high. Once the US economy rebounds, I believe the dollar will strengthen.
It's all "timing randomness"... one never really knows what tomorrow will bring...
WaltIgnored
DislikedHello Dreamliner et al.
I found the thread last Thursday, 29th, read through a couple of times and started placing trades on GBP/JPY Friday, following Dreamliner's rules with the exception of adding my 7 pip spread to all buy/stop orders. As the thread developed I altered some PTs so that some were +10 and some +15 pips and some pull-back buy-ins were given a PT as per ftraderx. I also periodically added to the ladder of buy/stop orders even if I did not open a new averaging position. Not exactly a controlled experiment but good enough to give me an initial feel for it.
If I closed the three remaining open positions now, aggregate of +62 pips, I would have opened and closed (round turn) 51 positions for a net gain of 612 pips, maximum draw-down on highest dangler of 534 pips, 209.30 - 203.96 with a maximum number of 8 danglers open at one time.
Clearly room for improvement in my dangling department but a system worth working on I think, thank you Dreamliner for bringing it to our attention. Did you get any clarification from ftraderx on his modifications to your rules and how to use the ATR by any chance?
Thanks to all for the input so far.Ignored
DislikedHi ftraderx,
I'm interested in your method here. While the profits in my system are outstanding, the drawdown can reach 40%, or more, and I'm interested in eliminating some of this drawdown.
Please see below for questions to your system here:
Yikes, that's a lot to take in! Let me see if I have it clear:
When you say you "open all", do you mean that you manually open each position with market orders, or you mean you set limit orders so they open automatically?
They open automatically. It means I apply a 15 pip profit target to all positions I open. If I am correct, in your method the initial position doesn't have a profit target.....mine does. I check every few hours and if PT was hit and next level buy limit not met, I open a new position and adjust all buy limits and profit targets.
Also, you use ATR, do you use the ATR indicator on Oanda? If so, how exactly do you use that indicator to tell you when to open more orders?
The ATR(10) indicator gives me a number that I use instead of the 200 pips you use. You use an arbitrary 200 pip number to tell you when to buy down. Instead of 200, I use the ATR(10). You have to convert ATR number to pips. For GBP/JPY 1 = 100 so ATR 3.5 = 350 pips. This indicator tells the average true daily price range for the past ten days. I use OANDA ATR(10) If price is more than 1 current atr(10) (multiplied times 100 for JPY pairs and 10,000 for USD pairs) below average price, I open a new position 1/2% with a PT of 15 and buy limits spaced 25 pips with 15 pip profit targets. Instead of the 200 pip figure you use , I use ATR(10) figure.
Ok now see, this is where you totally lost me, of course I get lost easily. Why do you use half the original position and buy limit sizes? Do you just adjust your "preferences" in Oanda to .5% (half of your original 1%)?
I use 1/2 so I don't get a huge drawdown if unwind occurs and price drops like a rock. Yes, I adjust the preference to .5%.
Why do you use 20% initially and then 10% on buydowns?
Because I want to reduce potential drawdown in a big unwind. This is not 20% oanda preferences this is 20% capital and was addressed to a guy asking how to do this in MT4 platform. for OANDA, I use 1% initially because if price is in an uptrend, I get more profit from the 15 pip PTs and I'm not increasing overall position size. On the buy down positions you are increasing overall position size because you add more and more positions. As price continues down, I am using .5% so my overall size and drawdown is less. Eventually, the price reaches average price and I can get out.
Are you using Oanda? If so, do you simply set your initial position to 20%? And any subsequent positions to 10%?
I use OANDA, but I was giving advice to someone who doesn't use OANDA. I use 1% and .5 % in preferences which roughly equals 20% and 10% of account balance respectively for those who don't use oanda..
This is confusing, probably not to you but it is to me. How do you know when price is 2 x ATR (10) below average price, and when it is 4 x ATR (10)
You have to convert the ATR value in to pips by multiplying times 100 for JPY crosses.
GBP/JPY current ATR (10) = 2.2080 x 100 = 220.8 pips. So I would use 221 instead of 200 for buy down criteria. 2 x 221 = 442 (2 x ATR(10)).
Multiply times 10,000 for USD crosses.
NZD/USD current ATR (10) = .0101 x 10,000 = 101 pips. So I would use 101 instead of 200 for buy down criteria.
If you hold the curser on the OANDA platform over the latest price bar, you will see the ATR value in the atr box upper left hand corner. I simply use that value to calculate pips instead just always using 200. I subtract 2xatr(10) (calculated appropriately x 100 or x 10,000) from average price and if current price is less than that a buy is warranted.
Also, I don't forsee massive unwinds without having some fundamental information that tells us there is a problem. If fundamental situation is changing, I will get out of particular pair. For example...NZ economy starts tanking and NZD interest rate is going to decline, while USD is seen as rising or being stable. I will be out because fundamental is not in line. And because of my conservative buy down strategy and no danglers, I would be out with 10% or so loss at most (wild guess) without considering previous interest and PT gains.
Probably go USD/JPY, USD/CHF in this situation. In any event, I am going to trade the pair or pairs which have steady rising rates on base and steady to falling on secondary currency and will stop trade at profit or loss when this fundamental condition changes. If I were trading GBP/JPY I would use 1/2 or less the position size I use on NZD/USD.
Here is example scenario 10k account:
Open with $2000 positionIgnored
DislikedCurrently, I'm utilizing 5 pairs (eurjpy, eurusd, gbpjpy, gbpusd, & usdjpy).
WaltIgnored