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THV system, final edition

  • #3,861
  • Jan 31, 2009 8:34am Jan 31, 2009 8:34am
Quoting doblece
Your own time zone does not enter the calculations. The pivot indicator takes into account the platform's time and the time you want to start the day.

To have exactly the same pivots as Cobra you should be using the same platform that he is using, because prices usually can differ even if by one pip and this will change the results.

However, Cobra uses GMT 00:00 as the start of the day, and I think that IBFX is at GMT (please someone who uses that platform confirm) so the settings would have to be 0,0 in your case IF effectively IBFX time is GMT....

yes IBFX is at 0 GMT
  • #3,862
  • Jan 31, 2009 8:44am Jan 31, 2009 8:44am
Quoting Gofer Pips
sometimes a loss is a good trade
Indeed you raise an important point here.
Every system (paired to the trader him/herself) has an average win/loss which is the result of previous thourough testing. For example, in the case of THV, Cobra stated earlier that the win/loss ratio was around 75/35 somewhat.
This means that, for every 100 trades, you have to be prepared to accept 1/3 of them to be stopped out.

Now: what is a "good trade"? How can a losing or stopped out trade be so?
A good trade is a position that has been taken AS PER THE RULES, the ones of the system itself, AND your own money management rules.

This way, you can have good losing trades, and BAD WINNING ones.
Let's say your MM is "not risking more than 2% on a single trade", plus the system's rules. You suddenly decide to have a go at gambling, and open a position with half the money on your account and enter the trade without waiting for the entry rules to be met. And suddenly you're lucky! It goes in your direction and after a few minutes you close the trade with positive pips. Wow, what a winner!

In fact, NO.
That super-duper "winning" trade is a BAD trade in your books. Because you broke every rule of your trading plan, and doing so you put at risk much more than what your MM says, and finally you didn't execute it with discipline. Next time you happen to do this, who can guarantee you'll be as lucky? And you probably won't be!

Every trade taken by the rules is a GOOD trade.
Every trade that you take breaking the rules and without following your trading plan and discipline, is a BAD trade.
  • #3,863
  • Jan 31, 2009 8:45am Jan 31, 2009 8:45am
Quoting sphinx
yes IBFX is at 0 GMT
Thank you sphinx and GoferPips!
  • #3,864
  • Jan 31, 2009 8:55am Jan 31, 2009 8:55am
Quoting Gofer Pips
No, not wrong impression. Money management is key, and hopefully when a trader goes live the first time they understand this, many rookies do not, they don't understand how sometimes a loss is a good trade when there risk exposure is limited to 1-2% of account equity, not account balance ...
When you lose money in the market, it is probably because you are a victim of the market, or your broker, or adviser or yourself.

MM and Position Sizing ist the most important thing for succes. I donīt want to reapeat it what Ed or doubleCCI said.

But in my opinion, most of the people forget something. If you trade mini accounts than you can take a risk of max. 3 % with an leverage from max 1:500. ( It is high risk -> for gambler -> Kids donīt try it at home).

Maybe your money is rising, than you have to change your thinking, because you will get a victim of your broker or other big boys. (Level II Trading). They want your money !!!. Have you heard something about SL hunting?

Notice: IF YOUR MONEY INCREASE, THEN YOU HAVE TO MINIMIZE YOUR RISK. Dont trade more than 1 % with an leverage between 1:10 and 1:100. The most people think different. They want to win more and more, but dont forget the big boys are watching you. If you begin with an risk of 2% (i.e. leverage 1:200), than you will end with an risk from 1% (leverage between 1:10 -1:100)

There are 2 main reasons: You can use larger SL and your money will rise with small drawdown.

1st)TAKE A LOOK WHAT THE MARKET WILL DO, IF YOU DON`T TRADE.
2nd)TAKE A LOOK WHAT THE MARKET WILL DO, IF YOU PLACE AN ORDER.

FxNobody
  • #3,865
  • Edited 9:32am Jan 31, 2009 9:11am | Edited 9:32am
Quoting FxNobody
When you lose money in the market, it is probably because you are a victim of the market, or your broker, or adviser or yourself.

MM and Position Sizing ist the most important thing for succes. I donīt want to reapeat it what Ed or doubleCCI said.

But in my opinion, most of the people forget something. If you trade mini accounts than you can take a risk of max. 3 % with an leverage from max 1:500. ( It is high risk -> for gambler -> Kids donīt try it at home).

[b]Maybe your money is rising, than you have to change your thinking, because...
The first bold section is an opinion, which means it is neither right nor wrong, it is what you are comfortable with. Risk percentage will not change in relation to leverage. 1 % is always 1% of account equity. I trade currency. If I choose to gamble, I will take money I have no value for and go to a casino, then I can lose money and get free drinks and maybe room!

The second bold section -Never change your thinking as you increase your account. Use the discipline of your original goal to dictate your strategy. Yes , I have heard of SL hunting, but I believe that it appears so because many inexperienced traders place their stops at levels that are very obvious, and the brokers,banks, and "big boys" know these numbers and have access to these same tools. In fact, they created these tools. So when they want the market to move to make their money, they take out these obvious level(s) that speculative traders have placed.

The third section- The market do what the market do, diggity-do!

These happen to be my opinions, based on my comfort zone and experience.
Trust yourself, and thanks for sharing your thoughts
  • #3,866
  • Jan 31, 2009 9:31am Jan 31, 2009 9:31am
[quote=doblece;2506126]No.
Both settings are to calculate the daily pivots according to the session (all-day session) you want to use as start/end of day.

Thanks for your help and patience!
Without vision, the people will perish.
  • #3,867
  • Jan 31, 2009 9:33am Jan 31, 2009 9:33am
Very good point about the definition of good trades and bad trades. I think everyone new to trading looks only at if the trade made or lost money to determine if it was a good trade. Did it meet all the requirements to take the trade and did I risk the appropriate amount. If yes = good trade, if no = bad. Regardless of outcome.

I was curious if the experienced traders in here consistently increase their lot size as their account size increases or do you stick with a set lot number that feels right. I base my lot size of every trade on current account equity, so if I have decided on a 20 pip SL and I have $21,423 in my account I know I can risk no more than $428 and with my SL at 20 I trade exactly 21.42 lots. I have read that deciding on the max risk per trade of say 2% is the most important thing to all but eliminate the risk of ruin but also consistently adjusting lot size to stay within that guideline is important to maximize the slow consistent growth of your account. I think I may be over analyzing. I am just getting into this because forex is the only market where you can have this much control over your position size; my experience with equities and futures has never given me this ability.

Again, I am not trying to get off point so if I am ignore me, I am still learning the THV and I can't contribute much advice on it yet but I can raise some other topics that may help people newer to trading and it gives Gofer something to write about in his boxers.
  • #3,868
  • Jan 31, 2009 9:53am Jan 31, 2009 9:53am
Quoting FxNobody
Maybe your money is rising, than you have to change your thinking, because you will get a victim of your broker or other big boys. (Level II Trading). They want your money !!!. Have you heard something about SL hunting?

Here an excellent article from Darkstar to help you understand the markets (and brokers) a little better:

http://www.forexfactory.com/showthread.php?t=7484

You don't have to place physical stops (unless maybe a disaster stop much wider, just in case of power or connection failures), but you've got to have a fixed number at which you will close the trade manually if it goes against you. And this especially if it is small, because the normal range of the market fluctuation might be greater.

Quote
Notice: IF YOUR MONEY INCREASE, THEN YOU HAVE TO MINIMIZE YOUR RISK. Dont trade more than 1 % with an leverage between 1:10 and 1:100. The most people think different. They want to win more and more, but dont forget the big boys are watching you. If you begin with an risk of 2% (i.e. leverage 1:200), than you will end with an risk from 1% (leverage between 1:10 -1:100)

There are 2 main reasons: You can use larger SL and your money will rise with small drawdown.

1st)TAKE A LOOK WHAT THE MARKET WILL DO, IF YOU DON`T TRADE.
2nd)TAKE A LOOK WHAT...
I really don't think that the Big Boys are after every single trader who opens a position of $1 or even $10 a pip. However it is true that there are certain levels at which everyone and his dog places the stops and that is what they will be hunting, if hunting there is.

Quote
In 2006, retail traders constituted over 2% of the whole FX market volumes
Source

That's a pretty small percentage of the overall picture!

But, leaving the stop hunt paranoia aside, what you are saying is very important indeed.

Seems that this will be an "off-topic" week-end after all (and as we are all awaiting the new THV V2.1 release!) but I'll try to explain a bit about leverage, and what true leverage is.

Usual leverage (as the one your broker allows) can be anything between 1:1 and 1:500. This refers to the margin needed to secure a position, 1:1 would mean that for opening a trade with 1 lot, you need to have at least $100.000 for the margin (or more if the main currency is not the USD) plus the spread*$10, plus your stoploss*$10, plus maybe a little more room just in case. At 1:500, you only will need 0,20% of the value of the lot (or $200 - $300) plus the mentioned additions, to open that same position.

However, true leverage is the proportion of the overall positions size.
Indeed if you open 1 lot with only $300 in your account you are using the full 1:500 true leverage. Now, if you open a position which, including the spread and risk, totals $300, you will be using 1:1 true leverage. That would be for example 300 units (3 nanolots - pip value $0,01 per nanolot).
If you are using microlots (pip value $0,1) you will be using 1:10 true leverage. Should you open more positions, the total added value of your trades will vary the leverage accordingly (3 positions at 1:10 equal a 1:30 true leverage) and it will keep growing (which in fact is also growing your risk) as you keep adding.

When we speak about not risking more than 2% of the account, let's say we want to use 20 pips maximum risk per trade.

On that same $300 account, and using Cobra's handy calculator, you can open a position of 3 microlots (3000 units) at 2% risk with 20 pips stop. This will give you the above mentioned 1:30 true leverage, which is pretty much safe. In any case, and with any amounts, the risk percentage doesn't change (only the required stops and corresponding position sizing should you need more or less than 20 pips). If you are risking 2% of your total equity, you will never lose more than 2% of your total equity, independently of any leverage used.

If you want to raise your stops, let's say you need 60 pips, still at 2% risk, you will only open one microlot. Your position will be then at 1:10 true leverage. But you still will be losing 2% of your account if stops are hit.
Raise your stops to 100 pips, decrease the pōsition to 600 units or 6 nanolots. Your position is now at 1:2 true leverage but you will still be losing 2% of your account if stops are hit. Etc... etc...

Also remember that indeed the calculations have to be made on your accoun'ts equity (thanks Gofer Pips!) and not the balance... you could have several positions open going down and thus your equity decreases, that remaining equity is the really available capital at that moment.
  • #3,869
  • Jan 31, 2009 10:10am Jan 31, 2009 10:10am
Quoting rogueforex
I base my lot size of every trade on current account equity, so if I have decided on a 20 pip SL and I have $21,423 in my account I know I can risk no more than $428 and with my SL at 20 I trade exactly 21.42 lots....
Are you speaking of minilots ($10000) or standard lots ($100000)?
As per your numbers, at $10 a pip per standard lot, 21,42 lots represent 20% (21,42*10*20 pips) (and not 2%!) of your equity. I presume you are using minilots though (hopefully).

You are absolutely right on the adjusting of position size while growing (AND while decreasing as well!) in fact if you maintain the same 2% risk and 20 pips calculation you'll be automatically adding lots (or mini, micro, nanolots) to your position as soon as the proportion allows it. You can also decide to increase the stops instead and keep the original amount of lots, should you want to trade on higher timeframes.
  • #3,870
  • Edited 10:58am Jan 31, 2009 10:43am | Edited 10:58am
...
The second bold section -Never change your thinking as you increase your account. Use the discipline of your original goal to dictate your strategy. Yes , I have heard of SL hunting, but I believe that it appears so because many inexperienced traders place their stops at levels that are very obvious, and the brokers,banks, and "big boys" know these numbers and have access to these same tools. In fact, they created these tools. So when they want the market to move to make their money, they take out these obvious level(s) that speculative traders have placed.
...

Thats right ed, it is only an opinien. It is clear that 1 percent is 1 percent(for ever ). But what I mean the SL sizing is depends of an leverage. If you trade an levergae of 1:200 and will risk 1%you SL are smaller than if you trade an leverrage of 1:100. Right???

What I would to say, that you have to change your leverage, if your money rise.

Bold Part: I dont think so. (it is only my opinien).
If your money increase, than the absolute volume and pip value increase too. I dont want big drawdown. So, if I minimize my riskmanagement, my absolute winning increase althougt. Excuse me for my english. Hope u understnad what I mean
I will give an good example later. I have to go to the supermarket.(my wife
is stressing me)

Okay so far so good.

Later i will study the approved thread from doubleCCI. Thank u

How can u explain this pic?
Attached Image (click to enlarge)
Click to Enlarge Name: IBFX_zwischenhandel.JPG Size: 28 KB
  • #3,871
  • Jan 31, 2009 10:43am Jan 31, 2009 10:43am
Quoting doblece
Are you speaking of minilots ($10000) or standard lots ($100000)?
As per your numbers, at $10 a pip per standard lot, 21,42 lots represent 20% (21,42*10*20 pips) (and not 2%!) of your equity. I presume you are using minilots though (hopefully).

You are absolutely right on the adjusting of position size while growing (AND while decreasing as well!) in fact if you maintain the same 2% risk and 20 pips calculation you'll be automatically adding lots (or mini, micro, nanolots) to your position as soon as the proportion allows it. You can also decide...
DITTO! Great splaining!
I can translate this for us slower people if need be!

And its boxer briefs there Rogue. The boxers tend to get bunched up when I put my Speedo on to go swimming!
  • #3,872
  • Jan 31, 2009 10:56am Jan 31, 2009 10:56am
Quoting FxNobody
. I donīt want to reapeat it what Ed or doubleCCI said.
doblece got a new name

Double CCI, very secure

Great that you all took this very important MM conversation as a theme for this weekend and just keep on if jou want, MM is the very most important part of FF, without it there is no success.

May be someone want to explain also MM during the trade, for excample taking a trade with 4 lots (depending the MM over eqity) and taking profit of 1 lot after first sign of retrace, setting the SL to equal for the remainig ones. Than TP after second wave and setting SL for the remaining 2 to profit short under the first wave etc.
  • #3,873
  • Jan 31, 2009 11:02am Jan 31, 2009 11:02am
Quoting doblece

In fact, NO.
That super-duper "winning" trade is a BAD trade in your books. Because you broke every rule of your trading plan, and doing so you put at risk much more than what your MM says, and finally you didn't execute it with discipline. Next time you happen to do this, who can guarantee you'll be as lucky? And you probably won't be!

Every trade taken by the rules is a GOOD trade.
Every trade that you take breaking the rules and without following your trading plan and discipline, is a BAD trade.

Thanks Doblece.

The market is currently punishing me for exactly this reason. I was so sure the market was going to turn around after Thursday I entered a long trade, no sl and left it over night.

So I threw discipline, money management and my trading plan out the window. Now I pay. I am not even consoled by the fact it was demo money.

Depressing, since I thought to go live soon. Lots to work on still.

Thanks for posting your experience, Gofer. Very valuable reality check.

Regards
  • #3,874
  • Jan 31, 2009 11:19am Jan 31, 2009 11:19am
Quoting FxNobody
...
The second bold section -Never change your thinking as you increase your account. Use the discipline of your original goal to dictate your strategy. Yes , I have heard of SL hunting, but I believe that it appears so because many inexperienced traders place their stops at levels that are very obvious, and the brokers,banks, and "big boys" know these numbers and have access to these same tools. In fact, they created these tools. So when they want the market to move to make their money, they take out these obvious level(s) that speculative...
Thanks for the compliment, but I'm Gofer and Ed is on a shortbus to somewhere today!

What you show is 10 pip spread ( the cost your broker charges you to open a position at your leverage level)

Assume a $10,000 account

1 standard lot(100:1 leverage) controls $100,000 of currency backed by $1000 of your equity. If spread is 2 pips, and you open a 1 lot trade, you have $1000 of equity tied up in margin + $20 spread cost. Every pip that moves against you will cost you $10.

This trade has risked, at open, 10.02% of your equity, every pip against you will add .01% to this risk. The part to use as determining S/L at a 2% risk( which 2% of $10000 being $200) is that little .01%. At $10 per pip, you now are required to close that position at a loss of 20 pips(18 pips + 2 pip spread). At the close of the trade( assuming S/L is hit), you receive your margin back ($1000) minus the 20 pip loss( $200) For a new account balance and equity of $9800.

Your broker has rules that you need to be aware of regarding position size based on account type, and minimum margin level. My broker will close your positions automatically if your margin level reaches 50%

I am not sure I have answered what you were asking, but I do the best I can!
  • #3,875
  • Jan 31, 2009 11:27am Jan 31, 2009 11:27am
Quoting cobraforex
Great that you all took this very important MM conversation as a theme for this weekend and just keep on if jou want, MM is the very most important part of FF, without it there is no success.

May be someone want to explain also MM during the trade, for excample taking a trade with 4 lots (depending the MM over eqity) and taking profit of 1 lot after first sign of retrace, setting the SL to equal for the remainig ones. Than TP after second wave and setting SL for the remaining 2 to profit short under the first wave etc.
I will take a stab at this and Doblece will too I am sure, but Cobra hers always sounds better and is much more thorough. so much so sometimes I feel and can get. But I her work!
  • #3,876
  • Jan 31, 2009 11:52am Jan 31, 2009 11:52am
Quoting Gofer Pips
I will try to simplify as Doblece has very thoroughly discussed this matter ad nauseum, and I can do nothing better as I am simple-minded!

If you will try the settings at...
thanks for the clarification - you guys have been great on explaining this. Have a great weekend!
Without vision, the people will perish.
  • #3,877
  • Edited 12:52pm Jan 31, 2009 11:55am | Edited 12:52pm
Quoting mentos
Hi guys

i am gonna take the next week off cause am having an amazing trip, that i have been waiting for, to luxor ...
i 'll make sure to take tons of pics and put them on my flickr for you to see.

wish you all a happy weekend
Please, please do share as many pics as you can. Give us the site once you have it. Don't forget when you are there to take pictures with your soul as well. The 2 dimensional ones cannot do it proper justice.
  • #3,878
  • Edited 12:08pm Jan 31, 2009 12:06pm | Edited 12:08pm
*Since this is the THV thread, the terminology and system discussed will be based upon that.

*Any applications to any other system will need to be translated by the author of that system


Assumption 1
Using THV rules based on a 5m and 1m TF trade, we are looking for a good point of entry on the 5m chart, always checking back on status of rules being met on 1m also, paying attention to pivots,and whatever trader deems of value in his/her personalized analysis.

Assumption 2
We open a position of X lots when THV criteria on both time frames is met.


How do we manage the trade?

1. We can exit trade on candle color change against us, or fast trix color change, cross of trixi( is that the plural?), or even close of candle on the opposing side of the trade we took. These are all based upon whether you have aggressive view, safe view, or conservative. These are defined with THV2.1

2. We can close part of our position. How?
If, on the time frame we are following trade, we get signal to exit by THV criteria, but a higher time frame shows we can stay in ( watching 5m but 15 m says okay to stay) We can close 25-50% of position, and move our stop/loss to the breakeven point. If trade goes against us we lose nothing and await new signal to pull trigger.

However, if on lower timeframe it shows small retrace, and retrace does not trigger our break even/entry point, we can continue to follow the trade on 5m and 15m. As Price continues favorably in our direction, we can await an exit signal on the 5m time frame. We can close another 25% or complete position based on our analysis. At this point we can move our stop/loss into a profit area we deem somewhat safe from being triggered. If we close the position completely, we can await new signal to pull trigger.

Assuming we have 50% of our trade still open, and have moved our stop/loss into profit, we now have assured that the complete trade will show a profit.
Now we can watch on the 15m and 30m or 1h and await signal to exit. We close another 25% on exit signal on the 15m. We can close the complete position and await new signal to trigger, or set a trailing stop loss and forget about it as long as the trailing stop/loss, if price immediately reverses, will still allow for last portion of trade to be at even or in profit.

If last portion is in profit with trigger of trailing stop loss, you may move on to look for another entry and let that dog run until it tires out!


There are many variations of this philosophy, and there are very good traders in the THV thread that I am sure will share their techniques.

Hope this was helpful!
  • #3,879
  • Jan 31, 2009 12:07pm Jan 31, 2009 12:07pm
Quoting bythepound
thanks for the clarification - you guys have been great on explaining this. Have a great weekend!
Your very welcome!
  • #3,880
  • Jan 31, 2009 12:15pm Jan 31, 2009 12:15pm
Quoting rogueforex
.....I was curious if the experienced traders in here consistently increase their lot size as their account size increases or do you stick with a set lot number that feels right.....
I am a numbers guy so I am always analyzing and reanalyzing this. What I have come up with is increasing lots using squares of the number 2. Following a 1-2% maximum risk rule (usually 1.25-1.5%), I started with 1 microlot (10 cents each) then went 2. After gains supported an increase I went to 4 lots. So then it continues to 8, 16, 32, 64, 128 etc... but ONLY when MM supports it (I won't explain the MM as I think there is now a plethora of info here on that ). This gives me a great way to scale out. For example, on 16 lots I may take 1/2 profit at 10 pips if a countertrend trade, move SL to BE and take another 4 lots profit when M1 trix tells me the trend is turning. This still leaves me with 4 lots. Then when M5 trend starts to turn I may take another 2 lots. Then I still have 2 lots in just in case the trend resumes. I don't always do it exactly this way but I think you get the idea. I tried other numbers but, strangely, when I do I don't seem to do as well. Anyway, I don't expect anyone to copy this technique. The point is to continuously analyze your lots sizes (and your entire trading plan for that matter). Don't ever get complacent about anything in your trading plan.
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