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C4 Scalping

  • #6,361
  • Aug 12, 2009 1:46pm Aug 12, 2009 1:46pm
Quoting Lou G
Great book, (recommended by Edgetrader and for good reason) is on sale at amazon for $30 with free shipping...
There are free PDF versions on the net. I think one is uploaded somewhere on FF.
If you only trade long, then you can't always be wrong.
  • #6,362
  • Aug 12, 2009 2:17pm Aug 12, 2009 2:17pm
I'd like to chime in and reiterate a recommendation to those who are struggling. And this is not new, Edge has said it a thousand times.

1. Forget about profitability of the method - you should be trading demo.

2. Take every signal that comes up for the next 100 trades. Only take one trade at a time, and watch PA very closely both before and after your entry.

3. Stop posting charts. Expect to be a loser. It has already been said that taking this as a mechanical system and taking every signal is a losing proposition.

So why do this? Because after 100 trades you will begin to understand PA. You will get a feel for winners vs. losers. Only then will you be in a position to apply the "75% mental" part of this system.

There have been tons of posts about how people are struggling with choosing the proper entries, and focusing on how many pips you have made in a day. Forget about pips! Just take all of the signals. At the end of those 100 trades, I guarantee you will have a better feeling for PA, and will thus be a better trader.

Trying to randomly pick entries and then judge your success or failure by how many pips you have won or lost is not the way to learn how to trade. Success in this system IMHO has nothing to do with the entries. It has everything to do with understanding PA.

This recommendation made by Edge has been ignored by most, I think it is a huge mistake. You have to learn before you can succeed.

Edit: The other advantage of this mindless exercise is that a better understanding of PA will lead you to understand when to bail out of a trade. In the end, you will hopefully be able to enter the trades with an emergency stop of around 30 pips, and then exit the trade manually (either for profit or loss) manually based upon what you have learned about PA. This will drastically reduce the magnitude of the losses versus just putting in a fixed 20 pip stop loss on all trades. At least this is how it has worked for me.
  • #6,363
  • Aug 12, 2009 2:49pm Aug 12, 2009 2:49pm
Quoting DocPMD
1. Forget about profitability of the method - you should be trading demo.

2. Take every signal that comes up for the next 100 trades. Only take one trade at a time, and watch PA very closely both before and after your entry.

3. Stop posting charts. Expect to be a loser. It has already been said that taking this as a mechanical system and taking every signal is a losing proposition.
Well .. a couple of disagreements. I need to use a micro account where the money is real but I can top it up if necessary. If I trade demo, I can make pips faster than I can count them, but doing the same in a 'real' account ... just doesn't work the same way. Also I lose focus easily in demo. So I need to trade real money.

And .. as to posting losing charts .. I think that is one of the best ways to learn because others can point out what they think you did wrong. Look at the last 10 losing charts posted, in nearly every case people chimed in with observations on how to do it better and this way everyone is learning.

As to #2 .. taking every signal for the next 100 signals ..well that is a way to 'practice, practice, practice' which is the only way to become skilled at this so I agree with that one wholeheartedly.
******************* I'd rather make money than be right.
  • #6,364
  • Aug 12, 2009 3:00pm Aug 12, 2009 3:00pm
Quoting 4xStar
Well .. a couple of disagreements....
4xStar,

Generally, I agree with your comment about demo vs. live account. I used to be in your camp. But for this exercise, if you take every signal as suggested you will definitely lose money. The trader will definitely have to make a commitment to studying the PA in demo, though. This has a lot to do with one's personality. Some can learn on demo, some can't, so your point is a good one.

But I definitely disagree with you on the value of posting charts for losing trades. And that is because being successful has everything to do with Price Action - the key word being action. The intuition I have gained on PA has everything to do with how fast and how far price moves with time. You may be able to gage some of that from looking at a static chart, but you really have to see the price move. A video of the chart would be valuable. So I think looking at static charts has limited value. Again, just commenting based upon how I have learned PA.

Doc
  • #6,365
  • Aug 12, 2009 3:33pm Aug 12, 2009 3:33pm
My first steps on C4 Scalping
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  • #6,366
  • Aug 12, 2009 3:40pm Aug 12, 2009 3:40pm
HI DocPMD:

Quoting DocPMD

1. Forget about profitability of the method - you should be trading demo.
That is a good place to start.

Quote
2. Take every signal that comes up for the next 100 trades. Only take one trade at a time, and watch PA very closely both before and after your entry.
That is called trading. Not taking an entry is part of the "myths". You do not know in advance if the trade will be a win or a loss. The "crystal ball" indicator does not work. Failure to enter may mean you miss out on the biggest run of the day, week, month or year.

Quote
3. Stop posting charts. Expect to be a loser. It has already been said that taking this as a mechanical system and taking every signal is a losing proposition.
May I offer the suggestion of each person starting their own C4 journal thread and post their charts there. This way your fellow traders can watch your progress, offer suggestions and learn from you.

Quote
So why do this? Because after 100 trades you will begin to understand PA. You will get a feel for winners vs. losers. Only then will you be in a position to apply the "75% mental" part of this system.
I disagree because this is counter to the advise of taking the next 100 trades.

Quote
There have been tons of posts about how people are struggling with choosing the proper entries, and focusing on how many pips you have made in a day. Forget about pips! Just take all of the signals. At the end of those 100 trades, I guarantee you will have a better feeling for PA, and will thus be a better trader.
Now you are back to taking all of the signals!!

Quote
Trying to randomly pick entries and then judge your success or failure by how many pips you have won or lost is not the way to learn how to trade. Success in this system IMHO has nothing to do with the entries. It has everything to do with understanding PA.

This recommendation made by Edge has been ignored by most, I think it is a huge mistake. You have to learn before you can succeed.
Now you are on track.
Quote

Edit: The other advantage of this mindless exercise is that a better understanding of PA will lead you to understand when to bail out of a trade. In the end, you will hopefully be able to enter the trades with an emergency stop of around 30 pips, and then exit the trade manually (either for profit or loss) manually based upon what you have learned about PA. This will drastically reduce the magnitude of the losses versus just putting in a fixed 20 pip stop loss on all trades. At least this is how it has worked for me.
Back to the myth. You know that anything can happen in trading. Quit trying to out guess the market. You can't. The rat will beat you if you try. Your job is to keep your losses constant. Let the size of the winners vary and make you profitable. Ignore this at your own peril.
If you only trade long, then you can't always be wrong.
  • #6,367
  • Aug 12, 2009 3:47pm Aug 12, 2009 3:47pm
DOCPMD and 4XStar:

We hear a lot about studying price action, but I, for one, do not know what I'm supposed to be "studying." The price goes up, down or sideways. Please elaborate. Thanks.
  • #6,368
  • Aug 12, 2009 3:52pm Aug 12, 2009 3:52pm
[quote=DocPMD;2950502]4xStar,

Generally, I agree with your comment about demo vs. live account. I used to be in your camp. But for this exercise, if you take every signal as suggested you will definitely lose money. The trader will definitely have to make a commitment to studying the PA in demo, though. This has a lot to do with one's personality. Some can learn on demo, some can't, so your point is a good one.

At one stage I worked with a lot of new traders as well as fairly advanced traders.
I look very closely how a trader " treats " his/her demo account. Does it display a measure of trading discipline and does it reflect adherence to the trading plan as set out? If you have a problem sticking to a trading plan on a demo account, why will it be different with " real money " ??
What do you actually learn with a real account that you cannot learn with a demo account?

What you will learn trading with real money before you have mastered the " basics" on a demo account is that it is very unpleasant to lose money! It is not a skill that you have to master, you already possess the ability to dislike losing money.

Trading is all about focus, commitment and discipline....yes you can acquire these skills but it is difficult....you can certainly test yourself if you are honest enough and before you risk your money by making sure you are up to the task by trading your demo account like it is real money.

I am fully aware that a lot of traders feel that they will learn more by trading real money because somehow it is different, the difference is in the mind only. If you are confident and competent in your trading on a demo account and have mastered ALL of the nuances of forex trading that is required, it should tell you whether you have at least the basic knowledge, discipline and focus that is required to get out of the blocks.

I am not against trading a new method with a real account but only if you are profitable already with your trading in general. If you still have to prove to yourself that you can make the grade in forex trading, nothing wrong with proving it on a demo account, it actually takes a lot of focus and commitment to trade a demo account or monopoly money seriously!

This is just my personal opinion, I am most definitely not having a go at any trader that wants to experiment with real money.
" Never let the past hold the future to ransom "
  • #6,369
  • Aug 12, 2009 3:57pm Aug 12, 2009 3:57pm
Quoting Lou G
Great book, (recommended by Edgetrader and for good reason) is on sale at amazon for $30 with free shipping...
... and as a free download from http://www.forex-book.org/trading-inthe-zone-bymark-douglas-free-download/
  • #6,370
  • Edited 4:42pm Aug 12, 2009 4:24pm | Edited 4:42pm
Quoting FrankenPip
HI DocPMD:



That is a good place to start.

That is called trading....
Frankenpip,

I am very happy that you responded the way that you did. Because I think the main issue that you discuss is a bit murky at the moment.

Edge has stated repeatedly that this system is "25% Mechanical, 75% Mental"

I originally interpreted that statement the exact way that you did. It is consistent with what is discussed in depth in "Trading in the Zone". The bottom line being that even with a pure mechanical trading system (that presumably has a positive expectancy), that traders have an extremely difficult time taking all of the signals. Thus one interpretation of the "75% mental" part. This is how I think you interpret his statement.

But I have come to interpret Edge's statement differently. For one, an EA has been tested that takes all of the signals, presumably the "ideal trader", and has been shown to lose money. So I interpret those results to say that this system, as a purely mechanical system, does not have a positive expectancy, and should not be traded as such. So that has led me to believe that the "75% mental" part of this trading system really has to do with the discretionary aspect of the system. And that the discretion has to do with reading PA to augment the interpretation of the signals. Thus it is not purely mechanical. Clearly a different interpretation than I originally had, and different than the interpretation I think you have now.

My premise, however, is that in order to learn the discretionary aspect of the system, you first have to trade it as a purely mechanical system. Since it will likely lose money during that period, I recommend trading in demo.

I concede that your interpretation of how to trade this system (and my initial interpretation) may be correct. But in my initial test period taking all of the trades turned out the same as the EA - lost money. So there has to be a discretionary element.

I'd love to see Edge's response on this subject.

Thanks,
Doc
  • #6,371
  • Edited 4:47pm Aug 12, 2009 4:31pm | Edited 4:47pm
Quoting prosperfx
Do you have DX's Trix indicator saved in your indicators folder?
Thanks prosperfx...I do have the Trix in the Experts/Indicators folder.....any other ideas welcome!!

freddi
  • #6,372
  • Aug 12, 2009 4:48pm Aug 12, 2009 4:48pm
Quoting DocPMD
Frankenpip,

I am very happy that you responded the way that you did. Because I think the main issue that you discuss is a bit murky at the moment.

Edge has stated repeatedly that this system is "25% Mechanical, 75% Mental"

I originally interpreted that statement the exact way that you did. .... The bottom line being that even with a pure mechanical trading system (that presumably has a positive expectancy), that traders have an extremely difficult time taking all of the signals.... This is clearly how you interpret his statement.

But...
I too first thought that Edge meant one to take all signals, but thought /presumed that the system was profitable provided that one optimised the exit on losses.
Now I am not so sure, because I have seen Edge repeatedly suggest that people begin by only trading in the direction of the trend.

Please Edge, can you be a little more definative. Is there a purpose behind taking trades we expect to be losing ones{edit - in DEMO only, of course}?- Or are we to practice discretion on entries as well as exits?

It seems to me that the few traders posting consistently good results are using a lot of discretion on entries, but are doing so in a consistent way.
It is unfortunate that we have already lost one of them (Lucky Lady).

Ian
  • #6,373
  • Aug 12, 2009 4:49pm Aug 12, 2009 4:49pm
Quoting DocPMD
Frankenpip,

...

Edge has stated repeatedly that this system is "25% Mechanical, 75% Mental"

...
If you haven't read "Trading in the Zone" by Mark Douglas, you will only partially understand Edge's "25% Mechanical, 75% Mental" quote.

The focus of taking 20 or 100 trade signals is a conditioning exercise laid out in the book to help people begin the process of becoming "Consistently Successful Traders".

Without the context of the book you will only have partial knowledge of what Edge is trying to teach us in this thread.

I took the day off from trading today just to finish reading the book and put everything into context. I believe I have a better understanding of the path we are travelling.
4XTrader2
  • #6,374
  • Aug 12, 2009 4:55pm Aug 12, 2009 4:55pm
Quoting DocPMD
Frankenpip,

I am very happy that you responded the way that you did....
Hi DocPMD:

Most people do not have a clue how to backtest with or without an EA. That is just how it is. What "system" has been backtested and shown to have a positive expectancy? If such a system existed, wouldn't we all be trading it?

Do you know why the casinos in Vegas win in the long run? Is it only because they have a positive expectancy or "edge"? Could part of it be because people bet foolishly? Could part of it be because people over gamble or fail to leave while ahead of the game?

C4 was designed to take 5 pips. When do you quit? After 1 win? After 2 wins in a row? After 3 wins in a row? If you don't have an answer then you are doomed.

I trade C4 my way. Though, I guess it is part Renko with the 10 pip train stations. What is most important is I know when to quit and not to over trade that is the discretionary part. The entries are simple and so are the exits and they are purely mechanical and shall remain so.

Do you know why your trades lost money? The only things you could have done differently are:

 

  1. Taken more trades per the entry trigger
  2. Taken less trades per the entry trigger
  3. Waited for more profit
  4. Stopped out sooner.


I will assume you took every "proper" entry - that eliminates 1 and 2. If you waited for more profit then you violate the 5 pip exit rule - that eliminates 3. That leaves 4. What does that tell you? If you had loss less on your losers, would you have come out ahead?

If you only trade long, then you can't always be wrong.
  • #6,375
  • Aug 12, 2009 4:57pm Aug 12, 2009 4:57pm
Quoting 4xtrader2
If you haven't read "Trading in the Zone" by Mark Douglas, you will only partially understand Edge's "25% Mechanical, 75% Mental" quote.

The focus of taking 20 or 100 trade signals is a conditioning exercise laid out in the book to help people begin the process of becoming "Consistently Successful Traders"....
Hi 4xtrader2:

Do not let the rat beat you:

"Look, for example, at this elegant little experiment. A rat was put in a T-shaped maze with a few morsels of food placed on either the far right or left side of the enclosure. The placement of the food is randomly determined, but the dice is rigged: over the long run, the food was placed on the left side sixty per cent of the time. How did the rat respond? It quickly realized that the left side was more rewarding. As a result, it always went to the left, which resulted in a sixty percent success rate. The rat didn't strive for perfection. It didn't search for a Unified Theory of the T-shaped maze, or try to decipher the disorder. Instead, it accepted the inherent uncertainty of the reward and learned to settle for the best possible alternative.

The experiment was then repeated with Yale undergraduates. Unlike the rat, their swollen brains stubbornly searched for the elusive pattern that determined the placement of the reward. They made predictions and then tried to learn from their prediction errors. The problem was that there was nothing to predict: the randomness was real. Because the students refused to settle for a 60 percent success rate, they ended up with a 52 percent success rate. Although most of the students were convinced they were making progress towards identifying the underlying algorithm, they were actually being outsmarted by a rat."

P64 HOW WE DECIDE
If you only trade long, then you can't always be wrong.
  • #6,376
  • Aug 12, 2009 4:58pm Aug 12, 2009 4:58pm
Quoting nsteve
... and as a free download from http://www.forex-book.org/trading-inthe-zone-bymark-douglas-free-download/
The encrypted file is asking for a password.
  • #6,377
  • Aug 12, 2009 5:00pm Aug 12, 2009 5:00pm
Quoting 4xtrader2
If you haven't read "Trading in the Zone" by Mark Douglas, you will only partially understand Edge's "25% Mechanical, 75% Mental" quote.

The focus of taking 20 or 100 trade signals is a conditioning exercise laid out in the book to help people begin the process of becoming "Consistently Successful Traders"....
I have read his book, more than once. I have also read his other book, "The Disciplined Trader". So I do understand the mental aspects of trading as outlined by Mr. Douglas.

But there is clearly confusion here. Some regard C4 as a purely mechanical system - take all signals. Others, such as myself, have learned that there is more to it than that.

Now if I am wrong, I would be thrilled. It is a lot easier (although not easy , i.e. Trading in the Zone) to trade mechanically. I just don't think C4 can be traded that way.

Edge, please clarify.

Doc
  • #6,378
  • Aug 12, 2009 5:03pm Aug 12, 2009 5:03pm
Quoting DocPMD
I have read his book, more than once. I have also read his other book, "The Disciplined Trader"....
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Hi DocPMD:

Pardon my interruption, but if you would clearly state the entry criteria, in your own words, then we can know exactly what you are doing.

Here is my entry criteria:

1) Wait for moving average line to turn from red to green (primer)

2) Wait for green candle (charge) to touch the first hash line it comes to above its open price

3) Enter the trade if the candle is less than 10 pips long (detonate)

4) Exit with 5 pip win or 10 pip loss

5) Quit after hitting goal
If you only trade long, then you can't always be wrong.
  • #6,379
  • Aug 12, 2009 5:06pm Aug 12, 2009 5:06pm
Quoting FrankenPip
Hi DocPMD:

Most people do not have a clue how to backtest with or without an EA....
I'm not sure that I understand your point here. But it really doesn't matter. Either the system can be traded mechanically or it can't.

The only one qualified to answer that question is the one who has traded it for a long time, and since this thread only has a lifetime of a month, that can only be Edge.

So what is the answer? I don't know. I'm waiting.
  • #6,380
  • Aug 12, 2009 5:06pm Aug 12, 2009 5:06pm
Instead of posting screenshots with easy winners, please post some screenshots with losers and your stated opinion as to what you would have done differently to avoid the loss or losses - or ask the C4 experts for that matter. Winners take care of themselves.. if you are winning that's great but you are not alone and so are most members here that have a handle of the concept. We learn from mistakes mostly so I recommend we put this concept to work here too.
If it backtests good run it live!
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