Will take more than a few minutes to digest, my son.
the markets moving, time to get in!
- #723
- Feb 25, 2009 2:36am Feb 25, 2009 2:36am
- | Joined Oct 2008 | Status: Trader | 1,080 Posts
Grabbing the bull by the horns!
We probably already know this, but its easy to lose sight of it when the going gets tough:
1. Everyone has different risk appetites. We need to figure out how much in terms of $ value is too much.
- If we can't handle the loss from trading $0.10/lot, then trade $0.01/lot.
- If that is not possible, then look at limiting the levels you are willing to go to (as stated by NanningBob) then CUTTING LOSS (I know I'm guilty of adding more levels thinking that it will retrace after x pips).
- Or increase the distance from the median (as suggested by Paradoxical). This is of course an exercise in balancing profitability.
2. It helps to have a fundamental understanding about the behavior of the pairs we want to trade. i.e. What moves them. This means homework and having a birds eye view.
- Not trading during news time helps, but do we understand the ramifications of the news? i.e. will it cause that pair to start trending? If so should we drop that pair and put it under observation for a few days?
- That said, isn't it wise to be able to pick and choose which pair to trade based on the situation? This of course brings us to discretionary trading
3. Anything can happen, so I don't think we can't always trade mechanically. There will always require discretionary action from you at some stage. eg. in the EUR/JPY situation today where it moved ~400 pips without enough retrace. Once it started moving within that ~70 pip channel, I made the decision to open a 5th level with an increase position (0.5 lot) and TP within that channel, and it paid off with a $300 profit.
Yes, I know it increased the risk. That is one thing I need to get my head around - what position size to use at different levels.
4. So it comes down to this: There is no such thing as an automated money making EA. You need to understand how the system works and work hard on the system when it is required.
5. Trade a breakout system as well to hedge this system. eg. multiplier of the previous day's high and low. Using 0.2 x the previous day's high (I use 8 GMT as the open), I would have taken a position at level 2 (at 122.56). This would have helped when it ran all the way past 125.
Of course, this system has problems with fake breakouts, and I still haven't figured out the position sizing so it can complement 60x90.
As stated before, NanningBob's system is wonderful - like anything else we just need to know how to handle it risk when it goes against us, and practice it until we are confident.
1. Everyone has different risk appetites. We need to figure out how much in terms of $ value is too much.
- If we can't handle the loss from trading $0.10/lot, then trade $0.01/lot.
- If that is not possible, then look at limiting the levels you are willing to go to (as stated by NanningBob) then CUTTING LOSS (I know I'm guilty of adding more levels thinking that it will retrace after x pips).
- Or increase the distance from the median (as suggested by Paradoxical). This is of course an exercise in balancing profitability.
2. It helps to have a fundamental understanding about the behavior of the pairs we want to trade. i.e. What moves them. This means homework and having a birds eye view.
- Not trading during news time helps, but do we understand the ramifications of the news? i.e. will it cause that pair to start trending? If so should we drop that pair and put it under observation for a few days?
- That said, isn't it wise to be able to pick and choose which pair to trade based on the situation? This of course brings us to discretionary trading
3. Anything can happen, so I don't think we can't always trade mechanically. There will always require discretionary action from you at some stage. eg. in the EUR/JPY situation today where it moved ~400 pips without enough retrace. Once it started moving within that ~70 pip channel, I made the decision to open a 5th level with an increase position (0.5 lot) and TP within that channel, and it paid off with a $300 profit.
Yes, I know it increased the risk. That is one thing I need to get my head around - what position size to use at different levels.
4. So it comes down to this: There is no such thing as an automated money making EA. You need to understand how the system works and work hard on the system when it is required.
5. Trade a breakout system as well to hedge this system. eg. multiplier of the previous day's high and low. Using 0.2 x the previous day's high (I use 8 GMT as the open), I would have taken a position at level 2 (at 122.56). This would have helped when it ran all the way past 125.
Of course, this system has problems with fake breakouts, and I still haven't figured out the position sizing so it can complement 60x90.
As stated before, NanningBob's system is wonderful - like anything else we just need to know how to handle it risk when it goes against us, and practice it until we are confident.
Dear Thread,
There seems to be a certain curve-fitting mentality going on right now with the losses incurred by the JPY---this happens in every thread at FF just before the thread goes
dead, i.e. reality meets initial good results. Frankly, that move is no big deal and it is going to happen on any other pair you can think of some time or another. Hence, the quest should rather be how to adjust the MM to survive such moves. Rather than cherry-pick the universe, figure out how to deal with the real risk of this model. Nanningbob's work here is...
