Watch the rise (or fall) of a trader gone naked

Current status, November 25th 2010: I've made it past the first hurdle, or is the 10th...? I've got a profitable system! Can you believe that?! Oh it feels so good!

It's totally technical, no discrete decisions at all, and no fundamentals. Backtested the s**ker for 10 years, and yes, it's got drawdowns, but nothing good old MM can't take care of. Been trading it for a while now, and it has brought 11% to my account.

Naturally, there are no guarantees that it'll continue to be profitable, but the odds are good. It has got a few crucial compontents. It's also simple and straightforward.

I'm also aware that there are more hurdles ahead but they will improve my system.

I won't share it. I've been taught (Thank you so much! You know who you are...) that one has develop as a trader (and as a person) by yourself. It makes findings all that more clear and one achieves a greater understanding for the system and the indicators in it, and how they work on the inside.

But I'm happy to share another "system". I trade it on EU 1H. There's a summary in post 397 in this thread. Please feel free to comment and/or as questions. I've been trading it for nearly two weeks and since then it has added 16% (2% risk) to my account.

Three threads that has been very helpful:

1. Help for Newbies. What can you learn on Forex Factory?
2. CrucialPoint (excerpt from my trading journal over the years)
3. Jacko's Forex House of Pleasure and Pain

The above has been added AFTER this thread was started. Below is the original first post.

Hi *,

I've been trading for two years, give or take a few months. Stocks, stock options, forex, scalping, indicators, this system and that system. Lost approx. 10% on a $15K account, went back to a $2,5K account and lost approx. 75% of that. Got kicked in the a** by volatility. Etc, etc.

However, I just can't believe that I won't eventually succeed. As of July, I changed my strategy (again...) to trading daily charts only. Buying or selling, with the main trend, at the end of retracements. Maybe I will publish this strategy in greater detail later, but I've pretty much got it all from different threads here at FF.

I have to say (although it's a common newbie statement), please bare with my misspelling and bad grammar. English is not my first language.

Anyway, go ahead and learn something, or, more likely it seems, have a good laugh on my behalf. "More likely" as in the "95% will fail" rule...

1. Pro's: Feel free to post constructive criticism.
2. Newbies: Don't repeat my mistakes!

Until later, have a nice day, week and month

Regards,
beam

[quote=beam;2962041]

I guess I'm the first one to see your thread you have started 30 mins ago. I wish you all the best.

The James16 method may suit you. It is done on daily timeframes with price action. MACD is only used for divergence, which is very powerful when combined with supports, resistances, candlestick price action, etc.

Yes, the trend is your friend to the end. Do not risk more than 1% on any one trade no matter how great the setup is. Money management is key. Do not try to take every trade set up, take A+ setups.

Take a deep breath and relax. You are persistent, so your success will come.

All the best,

DW

Before you make your first trade, you should put your strategy here first.
That ensures that you have a strategy.

Trade well. And make lots of money.

Sure, will do. However, I can't guarantee that I can do that before my first trade. Already in my first trade

Take care
beam

It isn't complicated and not extensive. And nothing new. Like I said, I've picked the pieces from the forums here at the factory.

Here's a summary:
1. With the trend.
2. No indicators or trend lines.
3. Daily charts.
4. Look for higher highs/lows and lower highs/lows to determine if a "real" trend is around.
5. Enter immediately after a reversal bar has appeared (or in case of a fast moving continuation, at the previous high/low of the market).
6. Majors (forex, commodities, ...).
7. Stops or trailing stops at previous trend high/low.
8. In case of a loss , take an opposing trade.

When it comes to money management, normally I would risk no more than 2% of the account, but in this little experiment involving only $2K, I will stick with the smallest trades allowed with my broker. It's 0.1 lots.

I've got more thoughts on this that I want to share, but that'll have to be later. Got to go to work now

beam

Thanks DW!

First, I'm pretty sure that no one trades completely without emotions.

BUT, I know I won't "learn" to trade with a cool mind until my trading shows a reasonably steady profit. Maybe this is true for most of us.
To some extent, however, I believe that one can control emotions when trading, even before arriving in profit land.

Although this post doesn't really fit in the Trading Journals forum, I like to share my thoughts on trading. Pure trade posts will come, but I will include the background thinking behind each trade.
If you don't like it, please ignore my thread.

Peace

Hi,

August 13th produced a reversal bar. Therefore I took a long position the day after at 1.4272 with a trailing stop loss starting at the previous low at 1.4086. That first position went down the drain in no time at all and I got slapped in the head at 1.4122, resulting in an initial loss of 150 pips.

When that happened, since I was obviously wrong about market direction, I placed a stop order to sell at 1.4080 (below the previous low) with a TSL starting at previous high at 1.4327. It got hit, and I'm now in a short position which is currently 65 pips the wrong way. The TSL is now at 1.4294.




Reflections

1. I'm not sure about how to decide for the appropriate entry price. Since I've got a day job I can't monitor the 15 minutes chart, for instance. Was thinking about placing the entry order at exactly in the middle of the reversal bar. Or something...
2. I'm not sure if my stops are in line with the current volatility. Have to think more about that.
3. I feel that entering long was right on, given that the market had produced a higher high and a higher low. And of course indicated the end of the retracement with the reversal bar.
4. Have to get better at creating charts with descriptive "points" in it...

You do realise that these two comments are contradictory. If you placed a long trade because you felt the trend was upwards why on earth would you want to go short straight away simply because you took a loss?

What you should do is get straight back and see if your original trend decision was correct. If it was then the next question is; why did I take a loss? Could I have had my stop in the wrong place? Did I pick the wrong candle/bar to enter on? Did I jump the gun and trade on expectation rather than on careful assessment?

Taking a loss is part of this game (as you know). The main problem when starting out is to really analyse why a trade went wrong. Once you have a basic idea of the typical type of mistake you're making you can at least deal with it.

as always very sound advise..i always learn from u pete. i guess the moral is: when the trade is a loss, think about what went wrong and what u could have done to prevent this losing trade, only then can a trader develop and this is the journey one must undergo to become " the trader"

good trading to u buddy beam

Thanks Peter! This is exactly the kind of feedback I was hoping to get. Especially enjoyed the Boorstin quote. Kind of feels that it pretty much describes my "career" so far...

The opposing position part is based on the assumption that the trend has actually changed, meaning my stop is placed right on. And that the market has made a lower high and a lower low (as in this case on the daily).

I will read your thread for sure. Thanks again for the feedback.

beam

Most folks around here the problem is getting me to shut the f**k up!

If you're going to be a trend trader then the first thing is to determine where you get in. For me I look for retracements to S/R. These you'll have to determine for yourself but it isn't hard to work out. Just look for major areas and try not to end up with a chart covered in horizontal lines and trend lines (which I don't care for much, myself).

Learn to take the middle chunk of a range between S & R for now, this will help stop you trying to pick every top and bottom. Once you have a handle on S/R sit back and wait for whatever signal type you normally trade by and trade only when you are as confident as you can be that the retracement is over. It takes a while to get a feel for price action around these points but after a while you'll develop a feel for the rhythm of the bars.

Of course, it will mean your stops will increase as you look for decent S/R areas to hide your stops behind and this is where you're money management skills will improve as well. So, your normal position size will decrease. But if you're keeping to a sensible risk profile (1-2%) then the fact that you aren't getting stopped out so often should balance this all out.

Reading my thread is optional - there are no magic bullets in there! But there is at least one post that will let you see that making mistakes comes with the territory, even if you sound as if you know what you're talking about .

Maybe later...

I won't go blurring my charts again, like I did in the beginning. Man, the charts looked liked a Christmas tree, all blinking in different colors.

So you're not trailing your stops? My gut feeling tells me neither should I, but I've read posts from many a naked trader that trailing stops are "the secret".

I'm not looking for one.

I know. It's all part of the road I have to travel. Wish I knew the E.T.A...

Tricked you!!!

Lost 150 + 218 pips this week.

However, the future is looking bright since I got two excellent advices in this thread!

and

The "adjusted" strategy:

1. With the trend.
2. No indicators or trend lines.
3. Only A+ setups are good enough.
4. Daily charts.
5. Look for higher highs/lows and lower highs/lows to determine if a "real" trend is around.
6. Enter immediately after a reversal bar has appeared (or in case of a fast moving continuation, at the previous high/low of the market).
7. Majors (forex, commodities, ...).
8. Stops or trailing stops at previous trend high/low.
9. After a losing trade, figure out what went wrong before jumping in again.

The bottom line is that I've got to make my trading more boring...

From the daily chart it's easy to tell that the market is heading north. However, there are currently signs of weakness.

I won't do anything until I can see a better and clearer trend, no matter how long it'll take to get there. In the mean time, I would like to search other majors for A+ setups but we've just moved to a new apartment so things are a bit busy.

Regards,
beam

1. With the trend.
2. No indicators whatsoever.
3. Only A+ setups are good enough.
4. Daily charts.
5. Look for higher highs/lows and lower highs/lows to determine if a "real" trend is around.
6. Enter according to price action. Here I will use different tactics and patterns.
7. Majors (forex, commodities, ...).
8. Stops or trailing stops at a good distance from previous trend high/low.
9. After a losing trade, figure out what went wrong before jumping in again.
10. Maximum risk of 5% in any one trade.

Now, I'm waiting for EURUSD to show me the cards...

I'm a bit amused of myself that I'm "adjusting" my strategy all the time instead of trading...

 

1. With the trend.
2. No indicators whatsoever.
3. Only A+ setups are good enough.
4. 1H to 1D charts.
5. Look for higher highs/lows and lower highs/lows to determine if a "real" trend is around.
6. Enter according to trend action. Here I will use different tactics and patterns.
7. Majors (forex, commodities, ...). EURUSD as a starter, though, until I reach the promised land.
8. Stops or trailing stops at a good distance from previous trend high/low.
9. After a losing trade, figure out what went wrong before jumping in again.
10. Maximum risk of 5% in any one trade.

Now, back to trading... I hope...

Hi,

On the attached EURUSD 1H chart I plotted a couple of trend lines. I've also added the primary setup I'm waiting for. The grey line is only a way to connect the current price to the blue line which is what I really want to become real in order to enter long. It has to break 1.4675 and then get back to to the current horizontal resistance. If it breaks through and doesn't go back, it isn't enough A+ for me. And if it goes lower than 1.46 from here, I have to rethink the situation and consider a short trade.

So that's it. 1.4675 or 1.46? That's the question.

beam

That's because you don't have it clear in your mind. It looks OK in the list but if you were that sure of this method you would be trading.

Let's pick this apart, if you don't mind:

1. With the trend. Which trend? Daily, Weekly or Monthly?
2. No indicators whatsoever.This bit I do like.
3. Only A+ setups are good enough.Please specify. Pinbars, Outside Bars, what exactly?
4. 1H to 1D charts.Wrong order, try Daily down to 1H
5. Look for higher highs/lows and lower highs/lows to determine if a "real" trend is around.Again, which series of HH/HL on which chart? I rely on this pattern on the Daily chart and trade the trend until the last significant Low (uptrend) or significant High (downtrend) has at least one Daily close beyond it.
6. Enter according to trend action. Here I will use different tactics and patterns. Here lies the problem. Pick one tactic and stick with it until it becomes second nature or you know it doesn't work in the current market conditions.
7. Majors (forex, commodities, ...). EURUSD as a starter, though, until I reach the promised land. I spent the best part of a year only trading GBPJPY until I lived and breathed S/R and felt I really knew what I was looking at before every trade. Learning to trade one pair for a few months makes learning S/R easier I promise you. EURUSD is as good as any.
8. Stops or trailing stops at a good distance from previous trend high/low. You can trail behind 4-hr S/R if you want to keep things tight or use ATR + 20% as a starting point. With some Pairs it might need to be +50%
9. After a losing trade, figure out what went wrong before jumping in again. Absolutely key to the whole exercise.
10. Maximum risk of 5% in any one trade. Too risky while you're learning a new approach. Just use the smallest lot your b roker offers and simply concentrate on picking the best trades. If you run with 5% you will be too focussed on the account balance rather than learning to trade well.

There I go again. Just when you thought it was safe to start posting again I've ambushed you.

Hi Peter. Good to hear from you. I certainly don't mind you dismounting my posts. I appreciate it, but you already know that.

 

1. Depends on which timeframe I'm trading. Currently 1H, because I can keep the stops from growin to big (in pips), and things are happening at a sufficient rate to keep me alert but not stressed.
2. Good.
3. I'll try to explain. A+ setup for me is how I would like the market to move before I take a position. My post earlier tonight is an example of that.
4. No special order, really. What I meant is that I will not day trade.
5. I'm not sure I fully understand your question. What do you mean with "series"? I want to see, when in a down trend, at least one higher high and a higher low before I can anticipate that the trend has reversed. And also, I wouldn't continue trading a down trend, if there is a higher high or a higher low (or if I can see the market's slowing down).
6. Please see the post earlier tonight. That's what I mean with patterns (well-known).
7. Yeah! That's my plan.
8. Ok. Thanks.
9. As you know, I stole it from you
10. The 5% is more of a long term goal when I get back to trading a large account again. Now, I've got a small account running which I can afford to lose.

Thanks again for your constructive comments, Peter.

beam