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We all need pivots to win..yes or not? 13 replies

The System (Irony included) 1,175 replies

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The System II (Yes with irony)

  • #841
  • Jan 14, 2009 7:13pm Jan 14, 2009 7:13pm
Quoting en0x
it seems for every 1 profitable trade, i get at least 4 whipsaws. Not even time to get out of the trade, gets you in and turns its tail. not having luck so far but will keep at it. Its a demo account so wont break me at least.
I have had that problem also. That's why I was asking the question to find out if there is any way to know if it is a high-probability setup, to keep from getting into those type "fakeout" trades.

What I have seen so far is that there needs to be a strong move in one direction first, before the pullback or consolidation. Like a burst or breakout, etc.

In other words, the market needs to make a move to show you and tell you clearly: WE ARE GOING THIS WAY -- DEFINITELY.

That's why I showed that example.

It may be helpful to use an indicator like Waddah_Attar Explosion or MA Angle to show that there is a strong move occuring first before considering taking a trade. I would like to be able to keep it simple because that is the system, but I don't know if I can clearly see what is happening without some "crutch" to help me. Maybe it will come with time and experience.

So far, I'm just keeping my finger on the trigger expecting it to turn on me any second.

Dave
  • #842
  • Edited 6:38am Jan 15, 2009 6:26am | Edited 6:38am
PistolDave,


You may want to consider trading the first hour before and after the London/NY session(more or less). My experience and Feb has mentioned this also is that when we get strong moves in one direction(eud/usd). Let us remember that we are not trying to go for more than 20 pips with an occasional bigger gain depending on your exit management. I am including the hour before because I believe that sometimes you may see a swing starting right before the opening of a session. Check this out.

Get on your surfboard and wait for continuation of your favorite wave!
Unus pro omnibus, omnes pro uno
  • #843
  • Jan 17, 2009 2:28pm Jan 17, 2009 2:28pm
I need one volunteer for an experiment. Here is the guide:
Place pivot line (only one).
Above pivot look only for long swings>30p.
Under pivot look only for short swings>30p.
If the swing start under the pivot and end above pivot -take it and vice verso.

I think this simple rule will reduce the number of trades during choppy market.
Please respond results.
Remember: do not be greedy.
Only 5% earning per day will make you millionaire within 2 years max.

GL
  • #844
  • Jan 17, 2009 8:25pm Jan 17, 2009 8:25pm
I also had some rough time with those wide ranges that spiked up and down, the noise on the 5min chart has been loud.
Anyway I believe I should have stayed out of the market for most of the time in the last two weeks, particularly during news days ( NFP and interest rate ), I have probably overtraded.
I think that a basic analysis of the trend and major supports and resistance on higher TF is all we need as a filter, i also try to take "the system I" set-ups fine tuned on the 5min if I have another set-up once the breakout on higher TF looks done. If we are in a range, taking a trade on a 5min breakout against the top/bottom of the range will be a low probability trade, but first of all, why should I take a trade against a clear support or resistance? The 5min will give several trade every day on one single pair, but, as Feb remind us, we usually have a few significant swing per day, one or two per session. I think it is not a huge effort to make some raw analisys and recognise the "A" trades.
  • #845
  • Jan 19, 2009 7:10pm Jan 19, 2009 7:10pm
Guys.

I am not posting very often here as , there's nothing on the markets for me. Period. I am not an advocate of hardcore fundamental analysis, but the thing is that big gun investments are dry and out. In order for ALL markets to establish a sense of direction, there's a basic ingredient (I bet the only one) -

Liquidity.


As the lack of fresh funds coming to ALL markets, you're going to have wild spikes. This is one of a few times in human history that the WHOLE world is waiting on a new president to take over. That is affecting ALL markets. I believe, Eisenhower was another president with the same worldwide magnitude impact.

Some people(or institutions) outhere, are just trying to push the market at one direction or another. Unfortunately, none is following suit. This is the culprit on all your wild and fast wings.

I know some of you are trying to make this thing work, at least to make a sustainable living. Unfortunately, this is not a good time.

The credit crunch that started in 2007 is giving birth now. Banks are getting ripped apart. That's another biggie right there.

There's a lot of sealed pockets outhere. None wants to step in. The economy is not fluid, Worldwide. Many of them are waiting for tomorrow.


I never make predictions on what's happening next. But I think I mentioned to someone (maybe in this forum, I don't remember) that I rather wait until the end of January to see what's up. I still stand on that view.


My advice to all of you - stay put. Stop trying to corner the market throwing new stuff here and there. Might work for a while but then, you'll be again in this rollercoaster of looking for the next big thing that never ends. You'll be better of keeping your bling in your pocket. Trust me.
Peace
  • #846
  • Edited 10:31pm Jan 19, 2009 10:06pm | Edited 10:31pm
Quoting PistolDave
Alex, Jflor,

That is the problem I have run into many times too. You end up mostly entering trades that have a risk/reward of 1:2 of say 20 pips SL/ 40 pips TP pips to see them only go into profit by 10 or 15 pips then retrace and stop you out for a loss. That's the example above I show. You better have a very high hitrate if you are taking 20 pip losses and only 10 pip gains.

The key (it would appear) is only taking setups that are more likely to produce the required 1:2 r/r ratio. I thought I understood the rules of how to do that,...
Pistol,

Clearly I am not an expert by any stretch, but I'd like to address your concern about r/r ratio a little differently than has been explained before.

As Feb has described on numerous occasions, he believes the key to this system is the trailing stop. And I agree, because it allows the r/r to change dynamically in your favor. Let me try to explain.

With your approach 20/40 SL/TP is your initial r/r ratio. But in any trade this will change as the trade matures. For example, let's say that the trade goes on average 15 pips in your favor (not the 40 you expected) and then reverses. Let's further assume that 50% of the time you take the profit, and 50% of the time you let it hit your stop.

Your average win would be 15 pips, and your average loss would be 5 pips. This is because, if you are following the system strictly, you should be trailing your stop by 20 pips, not leaving your stop static at 20 pips.

So your r/r is 5:15, or 1:3.

Clearly, this is a simple analysis, but it should illustrate the concept. If you trail your stops, rarely will you take a full 20 pip loss. So on the "loss side" side of the r/r your average loss might be closer to 5 to 10 pips. And on the "win side" of the r/r, your average might be 15 or 20 pips (recognizing that you are not always going to hit your 40 pip target).

Don't know if this helps, but it's worth saying again, I think the key is to take all of the setups, and trail the stops. I don't think the idea (at least of System II) is to try to filter the setups. That would probably be an exercise in frustration.

Doc
  • #847
  • Jan 20, 2009 12:20am Jan 20, 2009 12:20am
Doc,

You are absolutely right. Here are some thoughts: with rule 20/20 or r/r=1 statistically you will have 50% winners. If you decrease r/r for example 20/40 this will decrease the winners %. I believe this rule 20/20 has been working on eur/usd few years ago when the average daily vola has been~120p. This means we are aiming 1/6 from the ADV. Now ADV~240p. In other words for this pair our rule should be ~ 40/40. As per my observations the best now is 35/35. Why that? Because when the market makes a break up it starts to ticking around and our trail is hit. The market breath and we should leave him enough space. What should be the swing amount. My opinion - the same - 30p.
I am working on similar break out system and I follow this thread - it gives me good ideas. Thanks again Feb!
  • #848
  • Edited 1:41am Jan 20, 2009 1:23am | Edited 1:41am
Thanks for those words of wisdom, feb.
I'm looking forward to when you can start trading again and give us the benefit of your experience more often.

It looks like the markets are full of fear at the moment.

Hopefully, the things will be a little more predictable when the big "O" gets settled in and the political/economic climate settles a bit.



Thanks to you other guys too for helping answer those questions I had.

... and I wanted to add one other thought that just came to mind: With the lower liquidity it is the perfect opportunity for the bucketshops to slam the prices up and down at selected times and rip a few more pips from our accounts.
  • #849
  • Jan 20, 2009 5:01am Jan 20, 2009 5:01am
Thanks Doc,

Your explanation not only does it explains the importance of trailing your stops but it encapsulates the spirit of this approach... Feb calls it "wash and rinse" and go for the next setup. He has explained before that this approach is a "high frequency" type of trading where one has to accept that loosing is part of trading. Managing your risks and milking your winning trades by using trailing stops is the winning formula. We know that is not as easy as it sounds and our mental attitude plays a huge role on how we treat each trade but I am convinced that what Feb has shared with us with System I/II gives us a fighting chance to become profitable traders.

Good luck to all,





Quoting DocPMD
Pistol,

Clearly I am not an expert by any stretch, but I'd like to address your concern about r/r ratio a little differently than has been explained before.

As Feb has described on numerous occasions, he believes the key to this system is the trailing stop....
Unus pro omnibus, omnes pro uno
  • #850
  • Edited 6:37am Jan 20, 2009 5:39am | Edited 6:37am
HI FEB & Everyone,

Tks for your latest post & it is on target, but the possible reality is after today not much will change in the US & abroad. Not trying to sound negative, but just being a realist. I would love nothing more than to see markets return to the liquid state pre last half of 2007, but I not sure that is going to happen. You are correct the end of January would be a much better time to reenter as the noise MAY start to settle by then. All countires need leadership to become stable & that is what is missing. Leadership is being replaced by greed on all corners. For the US, it seems to be headed towards the Roosevelt days.

In early 1999 I entered the forex trading arena after over 10 yrs in stocks & this is about as unstable as I have seen the markets since I started. I am no expert by any means, but have learned enough over the yrs to know when to hold them & when to fold them & @ this time I advise if you do trade, trade small, but it would be better to wait for some stability to possibly return.

DOC......nice post with some good trailing stop insight. It is better to lockin than to lose it.

FEB.....tks for your time & views as they are valued & appreciated by all. I look forward to your next visit. Stay well & come back soon.

These are just my views & nothing more. Tks to all that take the time to share there views & trading insights.

GOOD TRADES & A GOOD DAY TO ALL.
_________________________________
  • #851
  • Jan 21, 2009 5:01am Jan 21, 2009 5:01am
Quoting systray
Doc,

You are absolutely right. Here...
The rule of 20 was invented on Cbot, by the time mini's came out. It was initially applied to ES and then was turned over YM (Mini Dow). Then, many markets adopted that rule including E/U mostly.

When I was looking into metatrader, like a year ago, I found this script which I believe could be very useful for you guys.

If you set the money management parameters to = true and establish a fixed percentage of capital, no matter how far/close your stop is, you'll be risking the same.

I think you'll find it very handy.

Thanks to the author. smjones for this wonderful script.
Attached File(s)
File Type: mq4 autobuy.mq4   2 KB | 1,235 downloads
File Type: mq4 autosell.mq4   2 KB | 1,114 downloads
Peace
  • #852
  • Jan 21, 2009 11:28am Jan 21, 2009 11:28am
Quoting feb2865
The rule of 20 was invented on Cbot, by the time mini's came out. It was initially applied to ES and then was turned over YM (Mini Dow). Then, many markets adopted that rule including E/U mostly.

When I was looking into metatrader, like a year ago, I found this script which I believe could be very useful for you guys.

If you set the money management parameters to = true and establish a fixed percentage of capital, no matter how far/close your stop is, you'll be risking the same.

I think you'll find it very handy.

Thanks to the author. smjones...

Great Feb....as always.I am a new reader you of your tread and i want to thank you for the effort that you do on this forum.
Take care.Good karma.
Patience is essential
  • #853
  • Jan 22, 2009 4:16am Jan 22, 2009 4:16am
Feb,

Nice scripts there! I tried to use different EAs to handle risk management, but this is way more easy.

Regards
  • #854
  • Jan 22, 2009 4:27am Jan 22, 2009 4:27am
Feb, thank you
  • #855
  • Jan 26, 2009 3:06am Jan 26, 2009 3:06am
Quoting feb2865
The rule of 20 was invented on Cbot, by the time mini's came out. It was initially applied to ES and then was turned over YM (Mini Dow). Then, many markets adopted that rule including E/U mostly.

When I was looking into metatrader, like a year ago, I found this script which I believe could be very useful for you guys.

If you set the money management parameters to = true and establish a fixed percentage of capital, no matter how far/close your stop is, you'll be risking the same.

I think you'll find it very handy.

Thanks to the author. smjones...
Thanks for the scripts, feb.

I'm learning from using the System II. I'm getting my pips in the bank a lot quicker after the breakout than I did before.

When price starts to slow down and come back, I lock 'em in.

Not always much, but better than before where I waited and waited...

Then sometimes....

PD
  • #856
  • Feb 2, 2009 3:13am Feb 2, 2009 3:13am
Hi guys,

My first post here and my first live trade using this method...

SL hit ((((((((

-16 pips so far

Hope for the best next time

Anybody else still using this ? I follow the thread for about a month or so and there`s not much activity on it... Why is that ? Everibody makin` money with no efort ?

Best of pips to all

Necre
Attached Image
  • #857
  • Feb 2, 2009 5:54am Feb 2, 2009 5:54am
GOOD NEWS - TP HIT

Can someone validate my trade? Was this by the rules ?

Necre
Attached Image (click to enlarge)
Click to Enlarge Name: TP HIT.JPG Size: 50 KB
  • #858
  • Feb 2, 2009 2:30pm Feb 2, 2009 2:30pm
Necre.

This system is consistent over the long run. You''ll have a little bit of everything : good days, so-so days etc. The key is to play the setups everyday no matter what. Be ready for losses and trail your stops as Feb says.

Whenever you see a thread drying out like this, two things are happening 1) the system becomes worthless after people start experiencing drawdowns 2)the system is consistent and people just don't bother posting anymore, as it becomes a distraction. To me (and for many) # 2 is just happening.

By the way, your trade was valid. Seems like you got break-even today. Not bad.

Cheers.
  • #859
  • Feb 2, 2009 7:07pm Feb 2, 2009 7:07pm
Quoting necre
GOOD NEWS - TP HIT

Can someone validate my trade? Was this by the rules ?

Necre
It looks OK, but the recent volatility and lack of liquidity is making things more difficult for scalping like this.
  • #860
  • Feb 2, 2009 7:28pm Feb 2, 2009 7:28pm
Nomoretoxic,

I agree, but would just like to include #3.....If the founder of this thread was able to devote more time to his thread that would surely help keep the flock all together, but I realize he is busy & is doing what he can. When the shepard is away the sheep will stray.

Now your #'s 1 & 2 have much to do with the lack of posting & probably some have been hit with some sizeable drawdowns & strayed because of those drawdowns, but another problem I have seen is some SYSTEMS such as this one are just so simple without the colorful overload of useless indicators that some move on disregarding the system as useless.

Over the yrs I have wondered why traders such as FEB, JACKO & a very few others even bother, but then I guess they are just kind enough to try & help others @ all cost. We & myself included should all be more like those willing to share their hard learned knowledge with those willing to learn.

Anyway tks for posting your views & I agree 100%, but just had to add my humble #3.

FEB......PLEASE don't think I am being disrespectful of you & your willingness to share as I know you are busy & have been in ill health. I am humble to be able to read the knowledge you have shared & I THANK YOU & MAY YOU BE BLESSED WITH GREAT HEALTH IN THE FUTURE.

GOOD TRADES TO ALL & MAY PEACE BE WITH YOU AS WELL.
_______________________

Acetrader
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