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  • #241
  • Mar 7, 2009 7:40am Mar 7, 2009 7:40am
Quoting mikkom
I have to agree with this, 10% per month is 1.1^12 =3.13842838 per year so 10% per month would mean you would triple your account each year. This is impossible in the long term (it's quite easy to calculate what you have from 2k in 10 years if you triple your money each year).
Ah, the old 'it's impossible because that would make loads of money' argument. Nothing is impossible, improbable, yes, but not impossible. As long as there is fear and greed in the market, the price will move up and down and provide opportunities to profit. Whilst you're making excuses and thinking up reasons why it can't be done, others are out there reaping the harvest and doing what you decree to be impossible. In the long run, we're all dead (kudos to JMK). If we based our decisions upon that we wouldn't bother breathing, yet I assume you still do that.
  • #242
  • Mar 7, 2009 8:00am Mar 7, 2009 8:00am
H.Rearden,

Thank you for sharing.

Do you mind, telling about how you manage a trade, (stop loss, take proit, etc.)

Rgrds,

AT
  • #243
  • Mar 7, 2009 8:21am Mar 7, 2009 8:21am
Quoting macockiner2
Some great advise here. I'm a true believer in the KISS method (Keep It Simple). Proper money management and self discipline are key.

I like to use S/R Lines and Moving Averages and that's about it. I just try to be patient and wait for the best moment to enter and then exit with a proper ROI with-out being greedy.

Cheers
I like S/R too. I've made more than 6% on demo risking just 2% per trade n less than 2 weeks...7.2% to be exact
  • #244
  • Edited 9:45am Mar 7, 2009 9:25am | Edited 9:45am
Quoting birdt
Ah, the old 'it's impossible because that would make loads of money' argument....
You are absolutely correct, it's not impossible just improbable [and quite risky] and no, I'm not making excuses - I'm trading with smaller risk/profit that I'm totally satisfied with.

ps. 10% per month = tripling your account each year would mean 2000 would turn to over 118 million in 10 years.
  • #245
  • Mar 7, 2009 10:37am Mar 7, 2009 10:37am
Quoting mikkom
I have to agree with this, 10% per month is 1.1^12 =3.13842838 per year so 10% per month would mean you would triple your account each year. This is impossible in the long term (it's quite easy to calculate what you have from 2k in 10 years if you triple your money each year).

I personally don't subscribe to the idea that using bigger lots is harder than small lots, it's all matter of perspective.
Your math may be correct, but can't be applied to Rearden's method. While your math includes compounding, part of the function of this method is not compounding. By not compounding, drawdowns and the chance of a total blowout will be limited, as will the return.

On the other hand, if you keep compounding, your dollar amount risked will increase with every winning trade. After 8 or 9 months of successful compounding you could quickly blow your account due to a series of losing trades, resulting in a total loss. Using Rearden's method, a complete blowout after 8 months (Which wouldn't happen using his daily loss limits and weekly readjustment of dollar amount risked) would only cost 80% of the original stake, as you have removed 10% each month up until the blowout. I haven't figured diminishing returns that would occur if the trading method was steadily losing, in which case neither method would save you. In both methods, I'm assuming steady gains up until a series of losers.

This method reduces the chance of blowing out entirely and negates the chance of compounding into a huge amount; That is the tradeoff.

But since the point of the thread is making a living from a small account, I think the idea is valid, if you are trading a method that truly has an edge.

Consider a coin-toss where the coin is weighted slightly in your favor (your edge). If you continue to compound and raise your bets in proportion to growing account size without ever taking profits, at some point you can still run into a series of losing flips that could wipe you out. That's why casinos have limits even though they have an edge.

Using the weighted coin toss again, if you keep your bet size the same, and continually take small profits as they come, at some point you will have taken more than your original stake and your small bet size will keep you alive during random poor spells. Like the casino taking small profits (when the small players blow there bankrolls and go home).

In the end, H.Rearden says he is doing it. If he his truthful, and we have no reason to doubt him, then his method of MM is quite possible.
  • #246
  • Mar 7, 2009 12:15pm Mar 7, 2009 12:15pm
Quoting mikkom
You are absolutely correct, it's not impossible just improbable [and quite risky] and no, I'm not making excuses - I'm trading with smaller risk/profit that I'm totally satisfied with.

ps. 10% per month = tripling your account each year would mean 2000 would turn to over 118 million in 10 years.
Actually, wouldn't that be really low risk? If you lose the entire account, you still lose just $2000. 2000 dollar loss most likely wouldn't bring most people on the street. In my opinion, its worth a try especially because you start with just 1000 or 2000 dollars.

It would be a different story if you start with 20000 or something
  • #247
  • Mar 7, 2009 5:04pm Mar 7, 2009 5:04pm
Quoting billflet
On the other hand, if you keep compounding, your dollar amount risked will increase with every winning trade. After 8 or 9 months of successful compounding you could quickly blow your account due to a series of losing trades, resulting in a total loss.
uh.. no. Because every trade risk should be calculated based on the current sum therefore every trade will risk exactly the same percentage and cannot wipe you out. In other words every losign trade will decrease the amount of dollars to be risked.

It would be total insanity to base your trade risk to amximum amount of dollars you have had at some time.

(and yes you are correct that I was not talking about method as described here - I just wanted to say in numbers what 10% every month would mean if you really could do that)

Quote
Actually, wouldn't that be really low risk? If you lose the entire account, you still lose just $2000. 2000 dollar loss most likely wouldn't bring most people on the street. In my opinion, its worth a try especially because you start with just 1000 or 2000 dollars.
that depends if you want to continue using the same proven method forever [r%] or if you want to gamble your first 2k.
  • #248
  • Mar 7, 2009 5:55pm Mar 7, 2009 5:55pm
H. Rearden

Rabid,

I would of course expect someone with your amount of posts and vouches to know this aspect - then again, the trouble with the forum rules is that you can exclude less experienced members from participating in a thread with a vouch-hurdle - but not the other way round. This thread is intended for the less experienced members and the traders with ample history should have the grace to wait their turn.

I am not sure where the enthusiasm to tell other people how its done in what is not their own thread stems from - but it seems very popular in the forum.

H. Rearden

Do thread "owners" or starters have special privileges? Are there unwritten rules about what one can and cannot post in a thread? As the new kid on the block, I know I need to read more than post for a while and ask questions before taking a false step.
TRO
  • #249
  • Mar 7, 2009 6:00pm Mar 7, 2009 6:00pm
H. Rearden

Dear Rabid,

Contrary to your understanding, I have at no point asked for any wisdom - however you define it; I have offered to convey it, based on my experience - not yours.

I lead this thread, I decide what I want in it and when I want it to be said. If you want to contribute in an orderly manner, you are welcome - otherwise stay out of it. The thread will not be watered down like so many others by untimely verbal outbursts from supposedly experienced wisecracks.

For future reference, I will not go into any discussions about this - the idea is to give newer traders one view (mine) of how markets can be approached.

If anyone does not like my take on things, leave the thread and if you feel the urge to tell people how it's done, do it somewhere else - preferably in your own thread - you will enjoy all the freedom to do so.

H. Rearden

I feel your pain.
TRO
  • #250
  • Mar 7, 2009 6:11pm Mar 7, 2009 6:11pm
Ok folks,

Last post for today. It's about control.

When I started out in trading, I bought the latest equipment in computer technology and kept upgarding - it was vastly more expensive than it is today. Four screens plus 2 laptops when broadband costs were still in the £100 per month. Same for real-time data feeds and the latest chart packages.

Did it give me ultimately more control over where the market would move next? No, it did not. Nowadays, I trade from a laptop - thats all I need to see the market doing what it does - and let it. I control my reactions to whatever it might do. I control the exposure, the risk, the individual position size. In fact, that in my opinion is a lot of control in the traders hands.

In the case where the market does what it does and it doesn't align with your trade belief/idea, you are in control to stop it and adjust - why giving your control away to the market by not reacting (and staring at the screen while the account balance keeps shrinking)? You find yourself driving in the wrong direction on the highway, you react by finding the next best exit and turn or stop to check directions - you don't just drive on until you run out of gas - or do you?

Never lose sight of the things you CAN control - ever. Know that you CAN'T control the market price itself - but you can react objectively - do it!

Have a great evening.

H. Rearden

I have read something similar about getting on the wrong subway train. The longer you stay on, the more it costs when you get off. Great minds think alike.
TRO
  • #251
  • Mar 7, 2009 6:25pm Mar 7, 2009 6:25pm
I didn't read through the thread in it's entirety so I may be redundant.

It is completely possible to make a living starting with small cap. Don't ever let anyone tell you it isn't. It will not take you 3 years to do it either. It is quite reasonable to do it in a very short time frame.

This takes in to account one (big) presupposition you know how to trade( I mean a method not a system).

The key for this is risk reward. The best trades never retrace , hence leaving you with a very agreeable risk reward. You can also break out of that paradigm of "only 1% only 2% per trade".You first learn how to trade then you can set your MM accordingly. This is,if you are looking to grow your account rapidly.

It is completely possible in a controlled risk environment to over double your account in a month. It is a fact.

For this kind of account I would focus solely on break out trades with trend and potentially look for 4/1/15 in chart for tighter entries into higher tf patterns

You do not need any indicators etc. If you are newer to trading one of the most important lessons is that every thing happened in the past dictates what will happen now.Sls targets etc..

All the information you need to define a trade is found on the left side of the chart. The trigger occurs on the right.

Chart looking for flags, pens etc.. then focus on sr and if you can get execution your stop should generally be no more then spread plus a few depending on the chart and as alsways with a great break out trade.. it never even crosses back over its break out point so you can see how you might get a 10.20 40:1 100:1 etc.. trade out of it with some higher tf trade management. Which instrument you choose is your business. For this I would prefer more volatile instruments.

In closing , to repeat , yes, but no if you cant trade. You will need to use sloppy fixed MM and have an aggregious win loss rate. If you are new. I rec looking for a break out pattern and learning it inside and out and then simply only taking that pattern as it sets up.

Be Well.

TK
  • #252
  • Mar 7, 2009 6:34pm Mar 7, 2009 6:34pm
H. Rearden

Hi Bearking,

The problem with limit orders is that they are getting triggered when the market is actually moving against the desired direction of the trade. A difficult scenarion psychologically. This is why I use only market orders and buy/sell stops - to ensure I am with the flow when entering, not against it.

Depending how the market behaves after entry, you have to manage the trade - as mentioned - based on on your risk parameters. If the market goes to take out your stop straight after entry, so be it. Don't compromise your risk strategy - ever!

There will be another chance if you were on the right track - it takes conviction to reenter, I know - but if you plan right, then you should have enough amunition for more than one single shot at a specific setup. The market has a funny way to often behave as we expect, but not in a straight forward manner. It will take our carefull planned stop out just to then run 50 or 100 pips in the desired direction.

By the same token though, don't try too many times. Twice is usually enough to establish that your idea could be wrong.

H. Rearden

Does this happen to you more often than not? I read about something that assumes you stink at trading and calculates your entry 100 pips away from where you want to enter. So if you wanted to enter long at 1.2758, it would tell you to place a limit buy order at 1.2658. To think how much I would have saved if I did that. Live and learn.
TRO
  • #253
  • Mar 7, 2009 6:40pm Mar 7, 2009 6:40pm
H. Rearden

Ok,

The answer to our question works a bit like the dials on a safe:

they all have to be in the right place before you are able to open the door.

That is the reason why I have thrown all the different aspects into the conversation. Each of them represents a dial (or its combination) that will have to be put (in the) right (place) prior to applying the equation which has worked for me over the years.

The good thing for you is that you have a certain freedom in choosing and applying some of the 'dials' and the whole operation will still be a success.

One of the parameters you can choose is the actual method you might want to trade- and there are as I mentioned, plenty around - it is your task to find the one that fits your mentality. Most of them come completely without money-management guidelines. It is your job to apply the MM according to your needs and according to your capital.

It will also be your responsibility to identify which of the methods have the right properties to take from the markets what you need - I can only guide you by pointing out what has, and still does work for me.

It may sound daunting but please realize that most methods/systems/grails are based on the same principles: to get you in and out of the market preferably for a profit each time. (I say this with a little sarcasm attached because in my opinion, many of the methods make it rather more difficult to achieve that goal by being overly complicated)

I will most likely be through with the thread by tomorrow - early next week the latest. That does not mean I won't be answering questions after that - should there be any, of course.

I will as promised be particular about capital requirements, position sizing, money-management stops, compounding and will give some examples of how I personally enter and exit my trades.

H. Rearden

I believe it is by design to make the author of the system look smart to the rest. The more rules the better. The more indicators the better. In most cases, the threads with the most views have complex rules.
TRO
  • #254
  • Mar 7, 2009 6:46pm Mar 7, 2009 6:46pm
Toddfx,

While not knowing anything about you from your profile, I am just not able to see what your point is in your posts here by quoting the author of the thread??

K.
  • #255
  • Mar 7, 2009 6:48pm Mar 7, 2009 6:48pm
H. Rearden
Thanks for the posts people - much appreciated.

One of those ultra-annoying moments just happened where I had written a full post and it disappeared after pressing the 'submit' button.

So, patience please - I will have to re-write now.

H. Rearden

Before pressing SUBMIT, copy all of the text to the clipboard.

<ctrl> A

<ctrl> C

That way, if your post doesn't take, a <ctrl> V will paste it all back.
TRO
  • #256
  • Mar 7, 2009 7:12pm Mar 7, 2009 7:12pm
Quoting kermut
Toddfx,

While not knowing anything about you from your profile, I am just not able to see what your point is in your posts here by quoting the author of the thread??

K.
I was making comments about what he posted. I apologize if that's not permitted.
TRO
  • #257
  • Mar 7, 2009 7:14pm Mar 7, 2009 7:14pm
H. Rearden

Hi all,

Last post.
...

H. Rearden


Thank you, H. Rearden.

I hope you stop back to answer questions.
TRO
  • #258
  • Mar 7, 2009 7:18pm Mar 7, 2009 7:18pm
Quoting skyline
Hi H.Rearden,
since your trading strategy use an mtf stochastic approach you may find usefull some of the thread started by Spudfyre , in particular this one : http://www.forexfactory.com/showthread.php?t=36574

Have a nice weekend
Skyline
That's cool. Thanks for the link.

Attached Image (click to enlarge)
Click to Enlarge Name: toddfx.gif Size: 13 KB
TRO
  • #259
  • Mar 7, 2009 7:53pm Mar 7, 2009 7:53pm
Quoting Toddfx
I was making comments about what he posted. I apologize if that's not permitted.
Do thread "owners" or starters have special privileges? Are there unwritten rules about what one can and cannot post in a thread? As the new kid on the block, I know I need to read more than post for a while and ask questions before taking a false step.

I believe it is by design to make the author of the system look smart to the rest. The more rules the better. The more indicators the better. In most cases, the threads with the most views have complex rules.


It was the above posts by you that made me post what I did, but upon reading them again, I think I may have misunderstood what you were trying to convey. My apologies.

Regards,
K.
  • #260
  • Mar 7, 2009 8:56pm Mar 7, 2009 8:56pm
Quoting ThomKnight
I didn't read through the thread in it's entirety so I may be redundant.

It is completely possible to make a living starting with small cap. Don't ever let anyone tell you it isn't. It will not take you 3 years to do it either. It is quite reasonable to do it in a very short time frame.

This takes in to account one (big) presupposition you know how to trade( I mean a method not a system). ........
TK
Tk, are you successful at trading in this way or is it your intention to do this? (no disrespect intended)

I have found picking break outs in real time much more difficult than it looks in hind sight. I also have found that it is quite rare to get one that does not retrace back to or past your entry point, it often looks like price went straight up or down just looking at the price bars in hindsight, but in real time price can fluctuate a lot prior to the close of that bar.

Again, I am not disputing your claim, but I am interested in your actual experiences to this strategy.

Cam.
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