Hello,
thanks for your great posts! I read PC's and TRT's posts again and found at TRT's posts two posts from spectre2006 and the answer from TRT:
spectre "line in the sand":
1) pick a S/R level, trade the smallest lot size possible in your acct.
2) stay long above S/R, stay short below S/R.
3) always reverse logging how much its costing you.
4) take profit at twice the cost or till 1% loss in account equity.
What you will find is that volatile markets are the best, and price will make headway in one direction or the other. The goal is to pick a price point that is retraced the least. And a price vector is either positively sloped or negatively sloped to greater degree then flat on a intraday timeframe.
and the continuation:
On 100,000 account, 1% is 1000
USDJPY spread is usually 3 pips.
3 pip spread x 33 reversals x 9.17 dollars/pip = 907 dollars or close to 1%
now take a look at price action and how many times certain points get retraced and when they rarely get retraced. The number of reversals before you hit 1% loss is actually less, since slippage and just the price moving in one direction vs another implies a loss greater then the spread. Lets say your API exits at 1 pip loss so total of 4 pips per reversal implies only 27 attempts before 1% loss limit is hit.
take a look at your chart and when price traverses through the same point 27 times. on a typical day how many times does price traverse a typical point. Thats why it inherently important to only trade this method on volatile days, where price just runs and doesnt look back. And even if it does look back, it looks back less then 5 times. The cost ends up being 183 dollars or 5 x 4 x 9.17. The price needs to slip 40 pips to cover the cost of reversal and make an extra 20 pips on the trade. If you further reduce you cost to ECNS that have minimal spread, your margins are even greater to work with.
And the answer from TRT:
This is, as described, a technique more than a system.
Probably that's why no one has chosen to add to this thread.
Too bad. This technique has some of the greatest value to an "edge" trader that is available.
I use it all the time, and you will see why.
This setup is extremely good because it is useful for those who are diligently trading a system and wish to either have early entry to it or early exits and save or make additional money in the process.
This technique can be made into a system quite easily if you come up with a precise definition of the Support or Resistance points that you would be trading from. This could be as simple as using the "highest high or lowest low of X days."
And then pick out some form of trailing exit for the winners.
Imagine trading this way with a definite concept of trend. Only trade in that direction, making frequent additions to your position by buying breakouts above a serious resistance point. And only staying with the new position in the direction of the trend. And then exiting all of your positions acquired at the point when your major trend indication changes to flat.
Also, by trading through a futures firm with low commissions or a firm like Currenex with miniscule spreads/commissions you can cut the trading costs down to a bare minimum.
The only possible negative trade-offs that I am aware of is the need to be watching the market personally when the opportunities come and the equal need to actually take the trades and the frustrations that result when you get many little losses before the market decides to rumble along in the direction of your trend and reduce the need to be constantly attentive.
What most readers of this forum don't realize is that this is a primary system used by floor traders and institutional traders. They have staffs that can and will watch the market constantly, and their costs are the lowest due to volumes and money under management.
So, could not this technique or system be combined with IB outbreaks? Again TRT: "This technique can be made into a system quite easily if you come up with a precise definition of the Support or Resistance points that you would be trading from. This could be as simple as using the "highest high or lowest low of X days."
"Means not, to take all IBs with this technique, because perhaps not all IBs are "valid" enough for what the technique may cost. But a well choosen IB, looking to SR levels, trendlines, Pivots, fibs, in trend with daily and weekly open, the "strongest" or the "weakest" pair and so on could be such a significant point one could trade several times in case of a small retracement and even if several times stopped. Its not the price "must go in your direction" vs "trade what you see", its to get the entry vs beeing stopped out and half a day later seeing it would have been the entry into a really winning trade. I think, trading DIBS we are talking about outbreaks, that does not mean 10 or 15 pips but trying to come into a longer tail and accumulating the position if possible at least up to 100 or more pips (PC said " hundreds of pips"). To come into the long tails is what PC and TRT repeat several times.
Any opinions about this thoughts?
And another question: taking an IB and a few later beeing stopped out at the other side of the candle, there are - looking back the charts - many really winning trades taking the reversal. This might only be used with a larger IB size, when the technique described above must not be used, because the direction is obviously "wrong". But i am still not shure, if this does not contradict the rules "only long above daily open, only short below". Or is it just "trade what you see"? Reversals where discussed here and some of you do take it.
Any opinions about this?
wish you all "hundreds of pips", Michael
thanks for your great posts! I read PC's and TRT's posts again and found at TRT's posts two posts from spectre2006 and the answer from TRT:
spectre "line in the sand":
1) pick a S/R level, trade the smallest lot size possible in your acct.
2) stay long above S/R, stay short below S/R.
3) always reverse logging how much its costing you.
4) take profit at twice the cost or till 1% loss in account equity.
What you will find is that volatile markets are the best, and price will make headway in one direction or the other. The goal is to pick a price point that is retraced the least. And a price vector is either positively sloped or negatively sloped to greater degree then flat on a intraday timeframe.
and the continuation:
On 100,000 account, 1% is 1000
USDJPY spread is usually 3 pips.
3 pip spread x 33 reversals x 9.17 dollars/pip = 907 dollars or close to 1%
now take a look at price action and how many times certain points get retraced and when they rarely get retraced. The number of reversals before you hit 1% loss is actually less, since slippage and just the price moving in one direction vs another implies a loss greater then the spread. Lets say your API exits at 1 pip loss so total of 4 pips per reversal implies only 27 attempts before 1% loss limit is hit.
take a look at your chart and when price traverses through the same point 27 times. on a typical day how many times does price traverse a typical point. Thats why it inherently important to only trade this method on volatile days, where price just runs and doesnt look back. And even if it does look back, it looks back less then 5 times. The cost ends up being 183 dollars or 5 x 4 x 9.17. The price needs to slip 40 pips to cover the cost of reversal and make an extra 20 pips on the trade. If you further reduce you cost to ECNS that have minimal spread, your margins are even greater to work with.
And the answer from TRT:
This is, as described, a technique more than a system.
Probably that's why no one has chosen to add to this thread.
Too bad. This technique has some of the greatest value to an "edge" trader that is available.
I use it all the time, and you will see why.
This setup is extremely good because it is useful for those who are diligently trading a system and wish to either have early entry to it or early exits and save or make additional money in the process.
This technique can be made into a system quite easily if you come up with a precise definition of the Support or Resistance points that you would be trading from. This could be as simple as using the "highest high or lowest low of X days."
And then pick out some form of trailing exit for the winners.
Imagine trading this way with a definite concept of trend. Only trade in that direction, making frequent additions to your position by buying breakouts above a serious resistance point. And only staying with the new position in the direction of the trend. And then exiting all of your positions acquired at the point when your major trend indication changes to flat.
Also, by trading through a futures firm with low commissions or a firm like Currenex with miniscule spreads/commissions you can cut the trading costs down to a bare minimum.
The only possible negative trade-offs that I am aware of is the need to be watching the market personally when the opportunities come and the equal need to actually take the trades and the frustrations that result when you get many little losses before the market decides to rumble along in the direction of your trend and reduce the need to be constantly attentive.
What most readers of this forum don't realize is that this is a primary system used by floor traders and institutional traders. They have staffs that can and will watch the market constantly, and their costs are the lowest due to volumes and money under management.
So, could not this technique or system be combined with IB outbreaks? Again TRT: "This technique can be made into a system quite easily if you come up with a precise definition of the Support or Resistance points that you would be trading from. This could be as simple as using the "highest high or lowest low of X days."
"Means not, to take all IBs with this technique, because perhaps not all IBs are "valid" enough for what the technique may cost. But a well choosen IB, looking to SR levels, trendlines, Pivots, fibs, in trend with daily and weekly open, the "strongest" or the "weakest" pair and so on could be such a significant point one could trade several times in case of a small retracement and even if several times stopped. Its not the price "must go in your direction" vs "trade what you see", its to get the entry vs beeing stopped out and half a day later seeing it would have been the entry into a really winning trade. I think, trading DIBS we are talking about outbreaks, that does not mean 10 or 15 pips but trying to come into a longer tail and accumulating the position if possible at least up to 100 or more pips (PC said " hundreds of pips"). To come into the long tails is what PC and TRT repeat several times.
Any opinions about this thoughts?
And another question: taking an IB and a few later beeing stopped out at the other side of the candle, there are - looking back the charts - many really winning trades taking the reversal. This might only be used with a larger IB size, when the technique described above must not be used, because the direction is obviously "wrong". But i am still not shure, if this does not contradict the rules "only long above daily open, only short below". Or is it just "trade what you see"? Reversals where discussed here and some of you do take it.
Any opinions about this?
wish you all "hundreds of pips", Michael
) system, will have fewer losses, but when they occur, they will drag your account balance down further.
