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Simplify your system

  • #21
  • Mar 30, 2007 9:25am Mar 30, 2007 9:25am
Quoting GirlFlyer
Good advice indeed, and following it is wise. However, another pitfall many make is overinvesting in the trend. You can't just dump the majority of your equity into 1 currency and expect not to take a loss sooner or later that kills your account. If you use leverage (100:1 or 200:1), remember your using 100-200 times your money. Any change in position is multiplied by that much. Follow the trend indeed but make sure your position can take a 300-400 point swing to the bad before returning back on the overall trend. Otherwise, your analysis may be valid, but your position can't handle the natural ups/downs within the trend.

My two cents worth

GirlFlyer

"300-400 point swing to the bad" !!!!!!!!!

GirlFlyer,
you must have a whole lot more money than me.... because I wouldn't hold a losing position like that.
50 pips in the Euro is enough to tell me that I am wwwwwrong.

Besides, there are better ways of minimising damages caused by stop-losses.


.
  • #22
  • Mar 30, 2007 9:38am Mar 30, 2007 9:38am
Quoting luqmanz

Simplify your system. Define when not to trade at all.

If market is A .. long
If market is B .. short
Everything else (C,D,F,G,H....till Z), do nothing.

Just to share what I have learnt from the old guys that I have met.
When I started doing that I improved 100%.

If overall market is not reacting the way I thought (stocks, carries, oil, so forth) I go after information before jumping in.

Made a killing in GJ selloff this week when "Iran striking US carrier rumor" popped up. I found the reason and traded. 90 pips short GJ

Then bought the bottom on overall market about to restart carry trade by the end of Japan FY. 250 pocketed on the way back + UJ quickies.

When the market is starting to act nervously, find the underlying reason first, trade after. You may be seeing just a quick stop hunting that will bring price back in 15.

Jumpping in the first 15M candle you see is asking to be ripped off. Market will attend you promptly.
  • #23
  • Mar 30, 2007 7:01pm Mar 30, 2007 7:01pm
Quoting jacko
"300-400 point swing to the bad" !!!!!!!!!

GirlFlyer,
you must have a whole lot more money than me.... because I wouldn't hold a losing position like that.
50 pips in the Euro is enough to tell me that I am wwwwwrong.

Besides, there are better ways of minimising damages caused by stop-losses.


.
GirlFlyer uses tiny sized lots so she isn't easily chased out of the market. I think that's a great move, maybe not so much for daytraders.
  • #24
  • Mar 30, 2007 9:17pm Mar 30, 2007 9:17pm
Darkstar: Would you explain in more detail what you mean by #4 and what filter you use? Also, if you don't mind what your criteria is for #'s 1 - 3?



Quoting Darkstar
Those system threads you reference get so long and complicated because the average trader is incapable of dealing with losses in a functional manner. Because of this they try to eliminate every loss a system generates. When your trying to establish a rule to eliminate every potential loss, the number of rules eventually grows to be so cumbersome that the system can't be traded.

I think the nature of the advice given out by the "old timers" ( ) is to avoid this destructive process by limiting the number of rules to whatever is critically necessary to capture the trading edge. When you keep it simple, you can focus on executing the system perfectly, which is really what makes the difference between long term success and failure.

Just for reference, my system has 5 rules.

  1. The entry criteria. This is the specific set of market variables which when they occur I place a trade. No if's, and's, or but's.
  2. The stop loss rule. There is only one.
  3. The TP rule. There is only one.
  4. A single filter for eliminating orders that "almost" executed (IE-price came within X pips entry and reversed by >Y pips).
  5. A rules for how I handle open trades going into rollover (which on an institutional platform is a significant event).

  • #25
  • Mar 30, 2007 10:07pm Mar 30, 2007 10:07pm
Quoting eagle4x
Darkstar: Would you explain in more detail what you mean by #4 and what filter you use? Also, if you don't mind what your criteria is for #'s 1 - 3?
It was written as it was for a reason...
  • #26
  • Mar 30, 2007 10:29pm Mar 30, 2007 10:29pm
Ohhh, c'mon DS. Spill the Soy.
  • #27
  • Mar 30, 2007 11:02pm Mar 30, 2007 11:02pm
He won't.
  • #28
  • Mar 30, 2007 11:50pm Mar 30, 2007 11:50pm
Quoting Lou
He won't.
I know Lou and I don't blame him, but I wonder how many readers understood my question.
How familiar are they with the vehicles available for Trade?
  • #29
  • Apr 1, 2007 1:17am Apr 1, 2007 1:17am
Must have already spilled the soy sauce in the Trading vs. Masturbating
thread!

Quoting Bemac
Ohhh, c'mon DS. Spill the Soy.
  • #30
  • Apr 1, 2007 7:34am Apr 1, 2007 7:34am
You sure that was soy sauce??

D.


Quoting eagle4x
Must have already spilled the soy sauce in the Trading vs. Masturbating
thread!
  • #31
  • Apr 1, 2007 10:21am Apr 1, 2007 10:21am
Quoting Darkstar
...Just for reference, my system has 5 rules.

  1. The entry criteria. This is the specific set of market variables which when they occur I place a trade. No if's, and's, or but's.
  2. The stop loss rule. There is only one.
  3. The TP rule. There is only one.
  4. A single filter for eliminating orders that "almost" executed (IE-price came within X pips entry and reversed by >Y pips).
  5. A rules for how I handle open trades going into rollover (which on an institutional platform is a significant event).

This sounds similar to what my mentor taught me. Two simple moving averages, a set of rules to define when the market is tradable and tight entry exit rules.
  • #32
  • Apr 2, 2007 4:11am Apr 2, 2007 4:11am
Quoting amenlo9
did you use anything to confirm the reversal?

no , i think waiting for reversal confirm make our stoploss too wide.
what do you think ?
  • #33
  • Apr 3, 2007 12:02am Apr 3, 2007 12:02am
Give me afavour !!!!

forget the Experts and Automatic Systems and recommendations all of them are RUBISH

Use Clasical Analaysis only ( Trenlines+FIBO+Tops &Buttoms+Candlistick Teqnec) and keep it easy. here are some examples.

http://www.forexfactory.com/showthre...t=13314&page=5

Dont RISK more than 2% of your capital dont enter any position without looking in your SL first ( Should be protected) ......... your SL should be 1:2 from your target be disaplain on that if u want to success.

Run your profit using Candelstick patterns as much as possible ( But you should know why Bears or bulls reverse in this candle to go with big players and try to read there minds and read the Syciological chart pattern using candles caused by Strong SUPORT/ Risistance you can us COT data for more help)

Dont think that you could be rich in 1or 2 years.

the Resonable Profit in forex is between 40 to 60 % Yearly.

I started trading currencies since 1999 and i know what iam saying.

Regarding
  • #34
  • Apr 3, 2007 2:55pm Apr 3, 2007 2:55pm
i agree trading systems should be simple.
I only use one indicator which is my own custom ATR to measure volatility and 'wildness' of markets

My swing trading system consist of

1. entry rule. Yes or No
2. Filter, when 1 doesn't work out, this one plays out until it's no longer valid
3. add positions, pyramid! while protecting profits
4. most important, Stop Loss. This is the ONLY discretionary part of my system. It is because I look at the general behavior of the market and make sure that i don't place my s/l in that area. (it's amazing what 1hr timeframe can tell you).
And I hope that I will get better at #4 with the coming years that even stop hunters like Darkstar can't figure where it is

peace
  • #35
  • Edited 10:23am Apr 25, 2007 10:13am | Edited 10:23am
It is interesting how history repeats itself.

Below is a copy of a thread from DailyFX It is dated EXACTLY one year ago on April 25 2006. See Post 11079

http://www.learncurrencytrading.com/...3666#post92696

Quote
I think that this market is going to go vertical in the next few days...it appears that everyone is just recognising the fundamental shift in the world economy from US dollars to Euros.
Reasons are that interest rates in Europe will be bigger and more frequent than in US...Huge US deficit..etc, etc

I am looking to 1.3666 within 12 months...and then it will continue on higher



It was followed a couple of days later by this post (post 11670).

PLEASE NOTE: This was posted 12 months ago

Quote
I am currently working my trades on the basis that there has been a seismic shift in the perception of the USD.

The Euro currency will soon retrace, but the retracement will not be as big as everyone expects...Everyone still thinks that it (perceptions) will all quickly go back to the way it was a week ago. However...

1. Europe has effectively told the world that it will have more interest rate rises than the US ...and the rises will be bigger....

2. Ben Bernake yesterday just agreed with Europe

3. The Arabs/ Swedes/ etc etc will not sell their massive holdings of Euros that they have just bought (and are still buying) to get back into US dollars.

4. The enormous US deficit will not disappear. China effectively told ole George W last week to get stuffed and that they would not change their currency peg. (Read: China will continue to flood the market with cheap goods and slowly strangle US businesses).

5. After the fall of the communist regimes, Europe is now finally getting its act together

6. The Iraqi war is another Vietnam and will continue to suck money.

Without wanting to be an ass, a couple of days ago (prior to the rapid rise) I said


Quote:
I think that this market is going to go vertical in the next few days...it appears that everyone is just recognising the fundamental shift in the world economy from US dollars to Euros.
Reasons are that interest rates in Europe will be bigger and more frequent than in US...Huge US deficit..etc, etc

I am looking to 1.3666 within 12 months...and then it will continue on higher

I think that we need a new mental shift to a continuing weaker US dollar for at least a couple of years. (This does not mean that every time the Euro drops 100 pips or so, that all the smart asses can say that Jacko got it wrong...it is a general observation on which I am basing my trades for the present)
  • #36
  • Apr 25, 2007 10:48am Apr 25, 2007 10:48am
Quoting jacko
5. A REALLY boring, but very profitable stategy is "Buy on dips and hold" (Euros, GBP etc)...
Yep... buy dips on uptrends, sell rallies on downtrends. And the "hold position" part is something that needs to be emphasized more, as that's the part that makes you "hit the homeruns".
  • #37
  • Apr 25, 2007 4:18pm Apr 25, 2007 4:18pm
Excellent insight Jacko... Also, thanks for that dailyfx thread and the live blog-trading in it... It's a good, educating read.

Johnny

Quoting jacko
It is interesting how history repeats itself.

Below is a copy of a thread from DailyFX It is dated EXACTLY one year ago on April 25 2006. See Post 11079
  • #38
  • Last Post: Apr 26, 2007 9:10pm Apr 26, 2007 9:10pm
Thanks for the great insights, jacko. Let's make $$$$ ...
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