StewartR - I want my trading to be boring.

gotta get away from the screen. since entering (and closing my order) price has runnnnnnnnn 70 pips.

poor execution of a solid strategy resulted in me increasing my account by half of what it could have been.

time to go for a walk and put some space between me and the market....also to do some mental rehearsal of how it would have been better to execute next time.

Big outside up candle indicating uptrend may be continuing.
Entered at 1.4109 after price went up there and retraced a little on the 5 min chart.

Entered on break out.
Went +24 pips in the first minute or two.
Closed 60% of the position and moved stop loss to break even.

Looking like I'll get stopped out on the remaining 40% any minute now but I dont mind now. Its a free ride from here and I might get lucky.

the remainder of my position was stopped out at break even

this trade yielded .36% (.36R)

EDIT: patience would have paid handsomely as the position moved several multiples of my risk after I exited

question Stewart.

what happened to:
"
NO scaling out.
NO moving to break even quickly
NO tight trailing stop.
"

your own words

?

ST,
Thank you for your email. I was wondering if anyone would challenge my authenticity of that. I am glad you did.

I have not had a signal (trigger) for my normal entry method since posting that.

However I have seen a number of shorter term, breakout trades that I considered to be low risk, so I took them. But I always saw them as shorter term (ie in and out in the same 1 hour bar or 30 minute bar).

Also, with the holiday season upon us I have thought it prudent to bank pips when I had them, as I did not know what to expect with the lower liquidity of this time of year.

So I had no expectation that these trades would benefit from a trend following exit.

BUT

While that has been my reasoning, I have STILL found that scaling out was: (1) what I emotionally 'wanted' to do and
(2) was not as good as just taking a full profit

When I went back and reviewed these trades I was very pleased with my patience on entry and my ability to select low risk entries. However I was dissappointed with how much money I had cheated myself (and my family) out of.

I was thinking about emailing you again for advice on 'how to stop scaling out' and I decided not to because.......if I am committed to becoming a better trader, I just something I will have to do.

I think this issue is providing a true test of my commitment to being a trader. ie... will I do what 'feels good' or will I trade 'to trade well'.

ST - thanks for questioning me on this issue.

I'll keep posting my live trades and exits.

Aud/Usd up 120 pips so far.
Prior resistance was showing itself to act as support.
Entered in anticipation of the breakout.
In hindsight, I entered a bit too early, but I traded what I saw at the time.
Stop was 40 pips away from entry.

Currently up 120 pips.

I used the profits from last month to take my largest ever position on this trade. Then I went to bed with my risk locked in (-40 pips) and woke up a few hours later to +120 pips. Still have the full position on. And therefore have made more money on this trade than ever before.

Seems to me that my best trades are the ones that I sit around and wait for the ideal entry and then leave the screen after that. Closely watching the trade (after entering) seems to result in me cutting the profit.

Hi Stewart,

Your method seems almost identical to one which I tried in December 2008. With 1%-2% risk per trade, it gave an unbelievable 145% Return On Investment (ROI) in last three weeks of December 2008. I am not sure if it was just a conincidence or an effect of low volatility due to holiday season.

After reading all 13 pages of this thread, I guess my question for you is: Do you think 145% ROI per month is too high? If yes, what % could be considered a reasonable monthly ROI based on your experience?

I take A and B trades on 15 minute charts, trade only EUR/USD, enter on retraces as close to supports as possible, move stop loss first to break-even, then to 1:1 rr and then keep on moving it to every resistance pa breaks to get as many bonus pips as possible. I do not use trailing stops. Divide my 2%r amount into two or three portions. Initially enter with 1/2 or 1/3rd of my allocated 2%r amount, if it works, use remainder 1/2 or 2/3rd on next retrace.

I would highly appreciate your response.

Exited the AUDUSD on gap opening.
I did not scale out.
I closed the position at 4.20 X Risk on the full position.

This was my biggest dollar gain ever. Feels good.

Why did I exit?
1. Price gapped up 50 pips on the open of trade this week. I have no experience in trading gaps, except to say that everyone believes gaps are eventually filled.
2. The AUD is at Heavy Resistance now. Price is just as likely to reverse now and take a breather.

I will be watching the AUD today to see if it forms good s/r again. If resistance fails, a large upmove could be in the wind.

Hi Chicky,

Your method (trend following on short term charts) definitely would have shown unusually good results in December. If you look at a weekly chart of the e/u you will see that December had the highest volatility of any 2 week period in history. So you definitely cannot rely on getting that type of performance on a consistent basis. (At least not from the e/u). But who knows? Maybe the world has changed forever and high volatility is here to stay.

For me, risking 1% per month, I expect to make 5 to 20% per month, on my real money account each month. That return can be supercharged or destroyed by position sizing (betting bigger or smaller). So the METHOD is reliable and consistent. However the RESULTS are determined by how large your bet size is.

What kind of drawdown might I expect? Extreme backtesting showed only one losing month of 4% in almost 4 years of testing on every pair my broker offered. However I have grown to not like the results of backtesting. Trading for real results in different decisions to backtesting. In backtesting I took EVERY trade, and in real life I would have missed some great trades and taken some poor trades etc. This is one reason why I keep a journal of live trades. After months of doing this I now have a record that proves to me that my approach is robust and reliable (for me).

So having said what I expect from my trading, let me share the expectations of two full time traders I know. These are real people. I have spent a bit of time with both of them and can vouch that their results (as outlined below) are consistent.

Trader 1: has been trading the S&P since 1960. He is a lovely gentleman and he trades the 5 and 10 minute charts with the 30/60charts as background. He takes 1 to 2 trades per day. He has a $50,000 trading account and makes between $3000 and $20,000 per week (with most weeks around $10,000). Remember - he's been doing this for 50 years so he is about as good at it as you are going to get. He wins almost 80% of the time and his wins are bigger than his losses. He moves his stop to break even FAST and exits way before the move is over. He does NOT try to let his profits run. He never adds to the account (not for years and years now) and withdraws money every fortnight.

Trader 2: is an american lady who trades forex (the GBP/JPY only). She trades only one market and keeps $10,000 in her account. I dont know what types of returns she makes, but I can tell you that she lives off that $10,000, never adds to the account, withdraws money regularly and recently bought a new house with the proceeds. Again, she has been doing this for 4 or 5 years full-time, watching the 30min, 5min and 1min charts. She trades once per day (or less) and trades the london open. She demo traded for about a year before she started using micro lots. Then after another year she stepped up to mini lots.

These two traders are real people that I have met and spent time with. So it IS possible to make a living from a small account. But these guys are very very disciplined and are totally at peace with their methods. They are both FULL TIME traders and have dedicated themselves to knowing one market only. They MISS LOTS OF GOOD TRADES. They dont look at other markets. Neither of them tries to make a "lot" of money. Both have a core position size (Trader 1 = 10 eminis; Trader 2 = 20 mini lots). And they never go above that core size. They are not trading to make a killing. They trade to make a good living while working from home.

You should also take a look at Jacko's thread if you want to see extreme performance. Jacko has put it on public record that he made over $1,000,000 in profits in his first year of Forex Trading off an initial account of $300,000. Jacko took some large risks with his profits, leveraging his winnings to scale up very quickly. He now trades 200 full lots on each trade (risking $200,000 per trade). His system nets less pips than what you have described, but he has complete faith in his method and himself, and he therefore takes a big swing at each trade. You can learn a lot by reading his thread or joining his group of students (just email him and he'll tell you how to become his student).


So is 100% per month possible. However the traders that make 100%+ each month are probably trading for 'income' off a small account and are not going to make millions per year. If you want to make millions per year...you are going to have to risk your profits and leverage up your position size. This will lead to an equity curve that will test your stomach lining; and you may experience many MONTHS between equity highs. (Trader 1 and Trader 2 make money every week and Trader 1 rarely has a losing day. They never have the multimonth drawdowns of some of the big hitters.)

So the question that we each have to ask is "what do we want?" Do we want income from trading or 'lotsadosh'. The paths to these destinations are usually very different.

I would recommend that you start a journal and note every trade for the open and close and result. You will learn so much about yourself through doing that. And it will give you something that is essential for trading......"belief in your proven system".

For the record, I spent months trying to trade the methods of Trader 1 and Trader 2 and I could not do it. Every trading method has pros and cons and I couldnt handle the cons. That's why its such a good idea to record all your trades and re-read your notes. Eventually your method will evolve before your eyes and then trading gets fun. (No more looking for the grail....instead you just wait for low risk entries to present themselves).

Chicky, I hope my rambling was helpful. Let me know if you have any other questions. I am happy to share my opinions if I think they may help.


BTW - true freedom is when we become free of the 'good opinions' of others.

Best wishes
Stewart

Stewart,

You are a very kind person. I have great respect for you. Thanks alot for responding, rather, taking pain in explaining all I wanted to know plus much more. The most important element is that you gave me great confidence.

I do manage a real account, however, have not tried this method on a real account - wanted few more weeks to test this method in different market conditions.

I will check Jacko's thread.

The only other question I have is that I go both ways i.e. with and against the trend, especially when trend shows a very steep move. However, use lower rr with tight stop losses when I go against the trend. I am not sure if it is right thing to do, but I mostly benefit from major retraces after a break-out.

Thanks again for your help and support.

Chicky,
There's nothing wrong with taking trades against the trend. .

I too take trades that are anti-trend if price is overextended and hitting strong support/resistance.

In trading, nothing is guaranteed and everything affects everything. There is no right or wrong. There is only low risk trades and high risk trades. You sound like you get the idea of what trading is about. Just focus on waiting for low risk trades to present themselves.

The following chart shows a low risk entry that I missed today. For 3 hours the GU tested 1.4490. A break out of the resistance with a stop at under the support area would have yielded a 2:1 reward to risk in approximately 45 minutes. There are enough of these types of trades each week to make you rich.

FYI - there was no opening gap on audusd.

Im guessing that your broker opens late - close on 2/1 was 0.7115 open today (or rather last night) was 0.7118 - i'm guessing you arent talking about a 3 pip gap still in it and still going to plan

ps, if it was a gap up it would have signalled a very strong chance of a very strong up day.

if you are in a trade when it gaps the smart money stays in.

Thanks Stewart,

It is very comforting to have a concurring opinion on going against the trend in certain circumstances.

I am learning. I focus on low risk trades and if there is none, I try to make one! ..... How? I leave a entry order in opposite direction just behind every major resistence pa corsses during the course of a break and its stop loss just across it. These resistences become supports on a major retrace. After break subsides, I decide which entry orders to keep and which ones to delete based on their rr, steepness of the moves and my account margin. However, this distracts attention and therefore I only used it a couple of times on breaks not very much appealing to me.

I indeed want to succeed in this trade, and understand getting a little richer comes with this success.

I highly regard your interest in my questions and your help. Thanks.

ps. I term this method of putting entry orders Anti-Hedge Retrace, a modified use of Jacko's Anti Hedge tactic that I learned from his thread a couple of months ago.

stewartr, thanks for reopening your thread. I was a silent follower of your original postings and liked the way you clearly articulated your trades and reasons for/against (i wasn't a big fan of the MA support/bounce approach though!)

After wating many months looking for X and Y indicator I have come to the conclusion that trading support and resistance is THE way to trade. Looks like you've got it sussed

Keep up the good work and keep posting - gives me some faith that forex can be harnessed for profit.

Jason

Short entry: at 1.3512
Stop 1.3545
Tp around 1.3450....but we'll see how price behaves in the mean time.

Inside bar broken to downside by a bearish bar, at resistance level on 30 minute chart.

Moved s/l to Break Even at +18 pips.
My position size was quite large for me. So 18 pips represents more profit than my largest pip_wins in the past.

So I am still a bit chicken.

Exited when price stalled on 5 minute chart and gave an inside bar and then broke to the upside.

I have been watching the 5 minute charts for so long (8 months) that I am finding it hard to stay with the longer term charts for the exits.

With a large position (for me) I feel like I want to price to move quickly in my favor and provide me with lots of room to handle the inevitable retracement.

15 minutes after exiting, I am glad I exited. Price is heading back up.

30 min chart resistance breached
in uptrend
went long
TP = 2 x SL


edit: result - 58 pips.

was up 38 pips - closed at a loss.

Price moved away from support (which is where the sl now is placed).
Divergence on the 5,3,3, stochastic
Trend up
I put my stop_entry_order 1 pip above the prior high.

Presently down 11 pips but the upside potential on this trade could be massive.

I am 'loaded up' on this one. If this trade gives me 170+ pips it will be my biggest dollar reward ever. If it stops me out, it will be up there with my biggest losses.

This is one trade where I really want to let it run and not move my stop too quick. The daily chart (attached) shows the next resistance is 450 pips away.

edit: have been down as much as 54 pips. Still in the trade but that's a mighty big drawdown my my standards. I'm still in the trade. I'll let it play out.

edit: went as high as +31 pips but stopped out for full loss

I've been watching the EU, AU, and GU and occasionally looking at others.

However it seems to me that the EU has the nicest (smoothest) moves. And it behaves like it knows how the technical traders want to trade it.

This chart shows a break out of s/r and a perfect pull back so the technical traders could enter on the bounce. The euro is perfect at this.....I understand why Jacko just trades the euro and nothing else.

I am contemplating that myself.