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The System II (Yes with irony)

  • #861
  • Feb 3, 2009 2:34am Feb 3, 2009 2:34am
Hi guys, thanx for the suport.

At the opening of London I took a trade on the EU which got me +18 pips
I didn`t had the guts to go long on GU which had the same setup... Instead I entered later on GU, not following the rules and got me -19 pips .... That`s the Shrek in me...

Hey NOMO, glad to see you on this thread... I must tell you that I still look at the charts using your methods...

Anyway, I`m glad that people still use this method and I hope that we will continue to add value to this thread.

@ Feb - Man, hope your fealing ok - wish you a quick recovery.

NECRE
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  • #862
  • Feb 3, 2009 4:23am Feb 3, 2009 4:23am
Hello, I took this set-up on GU today, closed 50% for +17pips and the rest was stopped by the trailing a +14
I'm also keeping an high on a H'nS on the 1hr chart, if the neck at the round price of 1.4 will break, I will then look for pullbacks on the 5min to renter short.
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  • #863
  • Feb 4, 2009 9:42am Feb 4, 2009 9:42am
Hi guys,

I took another 2 short trades on the EU at London session. Generated 22 green pips.

Anybody else had some fun today ?

Necre
  • #864
  • Feb 4, 2009 3:17pm Feb 4, 2009 3:17pm
Hi Feb and everybody,

I started to read this thread some two months ago and I would like to say that the information here are priceless for me. I am not a beginer , I trade Forex for 4 years exclusively but I am still break even trader for the last several months. And I have found out that what prevents me from being profitable trader is my bad trade management.Simply put I never know when to exit profitable trade (I don't have problems with cutting losses). Profit targets are not for me - I don't feel good watching market and guessing if the target will be hit or missed. But the trailing stop idea that Feb recommends is OK for me when I trail the high of the opposite candle of the direction of the trade. For example - when I am short I trail only highs of the white candles except of the first (entering candle) when I place my initial ST. Before the first entering candle is formed I use 20 pips hard stop and then lower it to the high of entering candle. You can see that on my chart.
But the problem I have is : should I stick to this trailing stop all the time or should I use my own judgement and close profitable trade when I feel the move is over? Sticking to the rules (and be disciplined) means that my 15+ or 20+ profit may be closed at 10 pips or less when trailing stop is triggered. On the other hand when I close a trade with 15 pips profit thinking that the move is over I only see the market going another 20+ pips in my direction.
What shoul I do? Maybe I should use my own brain when exit like I do when I enter a trade on discretion and use trailing stops as a helping tool only? What do you think guys? I would appreciate Feb answer this question. I hope you feel better now.

Regards
Yeti
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  • #865
  • Feb 4, 2009 4:32pm Feb 4, 2009 4:32pm
Guys.

I am so sorry I am not posting here as I used to do. I am currently working on a longer-term framework (as opposed to my daily scalping routine) to precisely get out of the scalping stress. My health requires a low-paced enviroment. Just that I am not ready to retire yet.

As I mentioned many time, I am a scalper. I've been trading like this since I started, many years ago. But scalping requires not only a strong concentration level, but is harmfully stressful. In my situation, I can't have the luxury of been stressed out the whole trading time.

As for the system II, I mentioned few times this is a high-frequency trading routine. Trading is definitely an art of reading numbers in order to be first in line at the rigth side of the market.

But if the market decides to go the other way, I simply play along.

I will tell you what I use for my scalping. It's applicable on any framework/timeframe.

I use a hard stop, just in case of a connection failure or an unforeseen volatility. I never let my stop to get hit...NEVER.

Your job is to cut that loser short, no matter what. Don't worry about how many times you'll have to cut that loser, at the end you'll get a runner.



Let's assume you are bullish, you go long at your signal, and immediately the market goes against your position(A very common situation). What you should do?? How far is too far?? Does it feel like a cat in the headlights?

This is where you make trading an art. I cannot tell you specifically when to cut it short. None will. But I'll give you some pointers, from my experience ( since 1981)

I use as a reference, how was the market behavior at the past session/timeframe/last bar. Then I have some expectancy/time limit on my trade to work out...or I just simple hit the panic button.

Let's say you'll use the last candle as a reference point. Then , you see the market (assuming you're long) retracing back. If I see more than 50% of the move against me, rest assured I'll be ready to hit the panic button. The point is, you don't know how that candle/bar /time frame is going to end. This is where prediction is useless on the markets.

Trade expectancy is simply put, the trade MUST go your way within a resonable time table/rythm/distance...or I just quit.

Trade expectancy is the only thing that will keep your head above the water.

Trade expectancy is the only tool that will bring consistency to your trading.

Money management alone is not sufficient. Having a good entry, is not enough.

You need to go to the basics on what is that you're looking for in trading??

MONEY


Bottom line is all about how many Benjamin's can you pull off the market. If you're not consistent, trading becomes futile and frustrating.

In my life as a trader, I can count how many times I cut a trade short, only to see the market going back my way. It''s cool. But I saved my ass way more times. I made some statistics about it from my journal.

Actually, as I have my risk in check with my money management, in this specific situation mentioned above, I just go back and re-establish my position, even if I have to go market.

If you get stopped or just simply bail off a position, as I said many times before, look at the other side, maybe there's a change of sentiment.

The science of trading is simple: You're either on the profitable side of the market or you're not. In order to get on the right side, you use technical analysis (and have your ear on the ground, of course). Then you pull the trigger based on your signal.....that's it...and it's easy.

But how do you transform that into $$$ consistently?
Cutting that loser short. It's more an art than anything else.

The System I and II or any other "system" I put on a thread, is just a framework for you to trade. But if you don't manage the trade, it becomes useless.

I'll be checking this thread more often, as I know for sure questions will arise as a result of this post.
Peace
  • #866
  • Feb 5, 2009 1:57am Feb 5, 2009 1:57am
Hi Feb good to see you back.

First trade of the day... Trailing stop hit: -10 pips

I took a long on the EU not following the retracement rule... It seemed like a brakeout and i entered.

What do you think about taking these brakeouts ?

Necre
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  • #867
  • Feb 5, 2009 4:01am Feb 5, 2009 4:01am
feb2865... But scalping requires not only a strong concentration level, but is harmfully stressful.

That is why I asked my question - When I pull the trigger and I am already in a trade is it possible to put emotions aside and follow 100% mechanical approache based on trailing stops for example? I know some professional traders use that way of trade management, it is emotionless but requires great discipline - unimaginable for me.

feb2865 ...Trade expectancy is simply put, the trade MUST go your way within a resonable time table/rythm/distance...or I just quit.
Trade expectancy is the only thing that will keep your head above the water.

So I think the only way to get out of trade is to use trade expectancy as a measure of potential profits and limited losses. That's why trading is an art. Every trader should find out his/her unique approache to trade successfully.

Thank you


Yeti
  • #868
  • Feb 5, 2009 4:27am Feb 5, 2009 4:27am
Hi FEB,

That another great load of trading info & thanks again for sharing. Whatever new SYSTEM your working on I hope you will be able to share it & YES scalping take alot of energy & time, so I can't blame you for going to longer time frames. I have traded both & I must say I had more time for other things trading the longer tf's, but I just enjoy the short tf's & have just decided Fridays for the most part is going to be an off day.

For sure keep in touch with this thread & its posters.

What pairs will you focus on using the longer tf's?

Thanks again for SYSTEM I & II as they are loaded with great info.

________________________
  • #869
  • Feb 5, 2009 7:30am Feb 5, 2009 7:30am
Quoting Yeti
feb2865... But scalping requires not only a strong concentration level, but is harmfully stressful.

That is why I asked my question - When I pull the trigger and I am already in a trade is it possible to put emotions aside and follow 100% mechanical approache based on trailing stops for example? I know some professional traders use that way of trade management, it is emotionless but requires great discipline - unimaginable for me.

[i][color=darkred]feb2865 ...Trade expectancy is simply put, [u][b]the trade MUST...
Yeti

Trailing stops is something very useful. The trick is how to set it up in accordance to current market conditions. As everything in trading, there's a drawback: Sometimes your stop will cut off a trade too short. I recommend trailing stops but first you must know the average daily range of the instruments you're trading.

About emotions, lets get real. It's impossible to put aside emotions while trading. I've seen this many times from people saying that in order to be successful you need to be emotionless. Excuse my language but that's bullshit. The trick is not to suppress emotions while trading , but to have them under control to a certain degree. In order to get them on check, is to trade ***live*** using small bets. Risking not just a % ratio, but risking based on YOUR risk tolerance. That will keep your emotions on balance.

It's well know this all-so called 2% rule. You know, I'll tel you a secret...an please don't tell anyone but..

I don't like to risk more than 1 %

This is where my comfort level is. 1% o yeah, I've been risking that for ages.


Trading demo will give you a false sense of security and fear. People get screwed trading demo, well Imagine them trading live?

I had a student who smashed his laptop against the wall because he lost trading on demo. A brand new HP laptop (2006).

It takes time to develop a trading characteristics based on tight emotions. Doesn't come overnight.

Go ahead an open a small **live** account, preferably with Oanda(not a paid endorsement, just the facts). They let you trade on units, which I think is wonderful. Screw metatrader. They have to many toys to entertain traders. Too many indicators, you will develop the habit of jumping to one on one like a monkey on a tree.

As I said before in one of my earliest post, you just need two horizontal lines to trade. That's it.

Could you afford to lose $1.00 a day? or maybe 10 cents??

I mean, it's not a big deal. Meanwhile, your giving yourself a mental workout needed to be a trader. This is where your journey should begin.


Peace
  • #870
  • Feb 5, 2009 7:43am Feb 5, 2009 7:43am
Quoting feb2865
Yeti

Trailing stops is something very useful. The trick is how to set it up in accordance to current market conditions. As everything in trading, there's a drawback: Sometimes your stop will cut off a trade too short. I recommend trailing stops but first you must know the average daily range of the instruments you're trading.

About emotions, lets get real. It's impossible to put aside emotions while trading. I've seen this many times from people saying that in order to be successful you need to be emotionless. Excuse my language but that's...
excellent post my friend.how is your health?
  • #871
  • Feb 5, 2009 7:46am Feb 5, 2009 7:46am
Quoting acetrader
Hi FEB,

That another great load of trading info & thanks again for sharing....

Thanks for the kind words, Ace.

I love to help others. I truly apologize for not keeping up the thread my I am truly working hard to change my trading style. I must do it, no choice. Actually I though about having a thread on my scalping stuff, but I am a tape-reader and I really don't know how to translate that into charts. Anyway, I am moving on to higher pastures LOL.

I am bookmarking this thread on firefox to check it out from time to time.

I would like to trade EUR/USD exclusively. I really don't care about the rest, too much hassle in my opinion. The volatility on the rest well maybe excluding the yen, is too spiky for my taste. Besides, for you guys that trade spot, it's cheaper to trade E/U spreads are lower.

About the system II, there's no much more to say.

I'll keep you posted on my new development.

Thanks.
Peace
  • #872
  • Feb 5, 2009 7:58am Feb 5, 2009 7:58am
Quoting panos69
excellent post my friend.how is your health?
Hey Panos, my friend.

I am getting better every minute. Ready for action.

Regular workout an whole lotta water makes miracles. Also a cold Samuel Adams do the trick nicely...nah! My girlfriend won't let me touch one with a ten foot pole LOL. I wish.
Peace
  • #873
  • Feb 5, 2009 9:32am Feb 5, 2009 9:32am
Quote

feb2865

It's impossible to put aside emotions while trading.

The trick is not to suppress emotions while trading , but to have them under control to a certain degree.

That's what I wanted to hear from Great Pro like you Feb.
Many thanks for your answer.
I wish you good health.http://www.forexfactory.com/images/icons/icon7.gif

Yeti
  • #874
  • Feb 5, 2009 5:59pm Feb 5, 2009 5:59pm
Quoting feb2865
Thanks for the kind words, Ace.

I love to help others. I truly apologize for not keeping up the thread my I am truly working hard to change my trading style. I must do it, no choice. Actually I though about having a thread on my scalping stuff, but I am a tape-reader and I really don't know how to translate that into charts. Anyway, I am moving on to higher pastures LOL.

I am bookmarking this thread on firefox to check it out from time to time.

I would like to trade EUR/USD exclusively. I really don't care about the rest, too much hassle...
Hi feb,

Glad to hear your health is improving.

Keep us posted on your trading strategies and your new developments.

I'm starting to get a better feel for scalping by using your system here, thanks to you and some additional help from Acetrader.

Hoping the markets and the economy get back on track soon,
PD
  • #875
  • Feb 5, 2009 8:18pm Feb 5, 2009 8:18pm
Quoting feb2865
Thanks for the kind words, Ace.

I would like to trade EUR/USD exclusively. I really don't care about the rest, too much hassle in my opinion. The volatility on the rest well maybe excluding the yen, is too spiky for my taste. Besides, for you guys that trade spot, it's cheaper to trade E/U spreads are lower.
I feel the same way but it's hard sticking to it, especially when GBPUSD keeps calling me, hehe...
  • #876
  • Feb 6, 2009 4:26am Feb 6, 2009 4:26am
Hi FEB,

I have read post 865 several x's since you posted it & I keep coming back to this........Trade expectency is simply put, the trade MUST go your way within a reasonable time table/rythm/distance...or I just quit. This info triggered my memory to a conversation I had yrs ago with one of my first mentors. In this conversation he stated "If a trade has not gone in your trade direction with say 30 mins, it most likely will not". He did say this is NOT 100% accurate, but it is something to take into consideration on each trade. He was a short term trader @ that time. Since that conversation I have used that info to keep me out of some losing trades, but it has also cost me some winners by closing too soon. Since I trade the 5M & the 15M tf's I base the 30 Mins on 6 5M candles & at the close of the 6th candle if I'm not in the profits somewhat I close it, but then if I feel the trade direction is correct I will let it run another candle or two. Looking back this has kept me out of some losers, but it is not always correct.

Based on your experience is there a better way to use TRADE EXPECTENCY? Is 30 mins really enough time? Would the pair traded need to be considered? I like your reference to using the last candle as a reference point. I will look into that in the coming days.

Thanks for any additional info as your views are valued.

_________________________________
  • #877
  • Feb 6, 2009 7:07am Feb 6, 2009 7:07am
Dear Feb,

Glad to hear that you are recovering..... I am still trading System I on the 4hr or 3hr with Oanda. Like you have recommended in the past I trade small units and my goal is to establish the discipline of mind/emotions that will turn me into a consistent profitable trader when my capitalization is big enough to make it a living with Fx..... Your longer term strategy at the moment is it similar to System I?

By the way, are you allowed to eat tostones, flan, arroz con pollo, chicharrones? No necessarily the most healthy stuff to eat but boy!... does it taste good!

Salud,






Quoting feb2865
Hey Panos, my friend.

I am getting better every minute. Ready for action.

Regular workout an whole lotta water makes miracles. Also a cold Samuel Adams do the trick nicely...nah! My girlfriend won't let me touch one with a ten foot pole LOL. I wish.
Unus pro omnibus, omnes pro uno
  • #878
  • Feb 6, 2009 7:31am Feb 6, 2009 7:31am
Quoting acetrader
Hi FEB,

I have read post 865 several x's since you posted it & I keep coming back to this........Trade expectency is simply put, the trade MUST go your way within a reasonable time table/rythm/distance...or I just quit. This info triggered my memory to a conversation I had yrs ago with one of my first mentors. In this conversation he stated "If a trade has not gone in your trade direction with say 30 mins, it most likely will not". He did say this is NOT 100% accurate, but it is something to take into consideration...
All markets are comprise of ticks(transactions). These transactions are accumulated in many ways. This is pretty much the foundation of charts. They allow you to visualize what's been happening in x amount of time/ticks/range or volume. The most common are time charts.

The more accumulation of data at any frequency, the most powerful the move should be. If you spot a possible reversal in 30 minutes, I assure you it has more probabilities of keep going than 5 minutes. Sames as tick/volume/range charts.

Using 30 minutes as a reference (could be anything higher ) If you see a bull bar turned into a bear bar at the next period, very likely the market will go the bear route.


Charts were made to make your life easier and for you to adjust your trading to a comfort level. I come from a time that charts were seen as voodoo. Personally, I still scalp on tape.

But charts are good because you can adjust the market on your comfort level. If you're a speed-aholic trader like me, you might be better off trading tick charts. Some people I know prefer trade off daily charts. They want to have a life and don't have the time to have their eyes glued into a screen. That''s cool.

Here's something I disagree with many people.

Having your eyes crossed at many charts is pretty much like reading tea leaves. Besides, they keep you on your toes, a bad way to trade, prone to force you to make mistakes...costly one's.

Why in the world people will look at 1/5/15/30 etc , if all data has been piled up in the highest time frame?? Think about that.

You need to choose what is comfortable for you.

Trading off shorter time frames, has the advantage of spotting early moves and ride with them. But at the cost of fake outs. Trading span is shorter and you could bring the bounty home in a shorter time. You could get a way with a shorter hard-stop and more load.

Longer time frames will make you miss short moves, but reversals/continuations are more powerful and yield more ticks/pips/points. You need a longer hard-stop and your load should be adjusted accordingly. Less stressful, more time to do stuff.

Trade expectancy is the reason why I been on this business for so long. It is an art. I can't teach trade expectancy the way I do it but I can put people in the right track. It becomes pretty much like a finger print.

Long time ago, my mentor made me choose between expectancy or buy(I was trading stocks, it's all about buying there) and hold (and pray will go your way) In both cases, you won't know the outcome of your position. At the beginning I though that holding and praying will give me an edge 'cause I am giving the trade more time/room to go. But then I realized that I felt like a cat in the headlights when the market was turning against me especially on momentum.

Then I realize that, it's better to protect your profits are cut your loses short that this extra leeway you give to the trade *hoping* that will *eventually* go your way.

Oh yeah, you'll miss some moves. But ...do you know the future?

Besides, the market aren't going anywhere, there's always another entry...always.....think about it.
Peace
  • #879
  • Feb 6, 2009 7:43am Feb 6, 2009 7:43am
Quoting moneda
Dear Feb,

Glad to hear that you are recovering..... I am still trading System I on the 4hr or 3hr with Oanda. Like you have recommended in the past I trade small units and my goal is to establish the discipline of mind/emotions that will turn me into a consistent profitable trader when my capitalization is big enough to make it a living with Fx..... Your longer term strategy at the moment is it similar to System I?...
O man...I rather be death than not having Arroz con pollo.....LOL.

Yeah I use the daily charts like system I. I combined both shorter time frames and System I. That way I gives me an extra edge as one position(longer is losing while the other(shorter) is wining. Or the other way around.

I am moving away from scalping. I am contemplating 30 minutes charts for my short time trading.

Glad to see you moneda. I'll be around here more often. Keep your strategy. I looks very promising. I believe you have found your comfort level. Stay focus.
Peace
  • #880
  • Feb 6, 2009 8:04am Feb 6, 2009 8:04am
Quoting feb2865
O man...I rather be death than not having Arroz con pollo.....LOL.

Yeah I use the daily charts like system I. I combined both shorter time frames and System I. That way I gives me an extra edge as one position(longer is losing while the other(shorter) is wining. Or the other way around.

I am moving away from scalping. I am contemplating 30 minutes charts for my short time trading.

Glad to see you moneda. I'll be around here more often. Keep your strategy. I looks very promising. I believe you have found your comfort level. Stay focus.
i have found my comfort level too @ 4h -daily.some times i play breakout trades sometimes i buy during the pullback.i pay attention @round numbers and overall i use alot of discretion

I also have a secret but plz dont tell:i like very much the long tailsand dont misunderstand.Not only the pin bars...
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