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Median Grid Trading

  • #1
  • First Post: Sep 5, 2009 3:31am Sep 5, 2009 3:31am
Hi all,

in this thread I want to discuss my trading approach. It's based on BWILC ("Bird watching in lion country" by Dirk du Toit).

An important thing first: Do not post any links to copyrighted material in this thread!

I discussed some stuff here and there (some got trashed because of those links!) but I think it's a good idea to maintain a thread which contains some of my knowledge and might help for some new traders.

First let me state that this approach isn't for everyone. You will have often floating positions that can go into the red quite deep (how far depends on your leverage) and often wins are smaller than losses even though there are some long runners which compensate bigger losses...

So hang on, I'll edit this first posting always to contain the important stuff or links to important postings. I'm currently short at time so this is still a "captain placeholder".

Feel free to discuss and ask everything BUT DON'T POST LINKS TO THE BWILC EBOOK OR OTHER COPYRIGHTED MATERIAL! Otherwise this thread gets trashed faster than one can... well...
  • #2
  • Sep 5, 2009 3:44am Sep 5, 2009 3:44am
We all look forward to the content you provide. I've been reading your posts for some time now and you have a lot to offer traders.

Thanks.
  • #3
  • Sep 5, 2009 3:53am Sep 5, 2009 3:53am
Nice. Glad to see this.
Don't wish it were easier, wish you were better. ~ Jim Rohn
  • #4
  • Sep 5, 2009 6:28am Sep 5, 2009 6:28am
count me in matethere is always a room to learn more
  • #5
  • Sep 5, 2009 7:30am Sep 5, 2009 7:30am
Hi and Welcome!

What is your profitability with your trading system?

Thanks
  • #6
  • Sep 5, 2009 7:32am Sep 5, 2009 7:32am
Quoting Bobcat2
Hi and Welcome!

What is your profitability with your trading system?

Thanks
Lol, here's is Xaron's journal: http://www.forexfactory.com/showthread.php?t=135796

Just wait Xaron, someone's going to ask for the EA!
  • #7
  • Sep 5, 2009 11:23am Sep 5, 2009 11:23am
lol, yes an EA would be nice indeed. Have to put my brain into it.

As I see this thread has been move to the trading discussion section. Hmm.. Don't know if it's right here we'll see. At least better than the recycle bin.
  • #8
  • Sep 5, 2009 11:34am Sep 5, 2009 11:34am
Dear Xaron,
Thanx for opening the thread.......I have got some place where I can share my thinking about this likely great approach towards the market.....

After finishing the book, I was searching for the pure risk management issues in the book........It was narrated there but I could not understand that time but after some analysis in your journal I could get the core idea of this book......But I have some things to know....

Suppose Xaron,I want to risk total 10% of my total equity and what should be my policy in this methodology?

I know I shall buy in different range within the comfortable zone and median grid but at a time how times gearing I shall use??????????Suppose I shall use 3 times leverage but shall I use it per trade or on whole I shall use 3 times leverage????????My English is bad sorry .........I think I could understand you.......

If you clear it then I shall understand this clearly may be..............

With regards
kawser
  • #9
  • Sep 5, 2009 12:50pm Sep 5, 2009 12:50pm
Looking forward to the thread. Thank you!
  • #10
  • Sep 5, 2009 1:02pm Sep 5, 2009 1:02pm
Quoting Xaron
in this thread I want to discuss my trading approach. It's based on BWILC ("Bird watching in lion country" by Dirk du Toit)
Thanks Xaron, this should be an interesting thread as you obviously make this approach work for you successfully. I read the book a couple of times and although I liked the ideas and they made a lot of sense I could never get my head round them in practical trading terms.

Viel Erfolg!
  • #11
  • Sep 5, 2009 2:31pm Sep 5, 2009 2:31pm
Thanks Xaron for this thread. Actually i read the book
  • #12
  • Sep 5, 2009 5:30pm Sep 5, 2009 5:30pm
I am not a coder .....I just modified some aspects of one of my indicators and I could finish it.
Happy trading.
With regards
kawser
Attached File(s)
File Type: mq4 1mediangrid.mq4   7 KB | 1,657 downloads
  • #13
  • Sep 6, 2009 2:51pm Sep 6, 2009 2:51pm
Ok, you made me curious so I just spend a Sunday afternoon reading the BWILC book. Do you follow all principles or just the median grid trading part?

The reason I ask is because while I see the value of the median grid, his money management rules look .. well ... flawed to me. From what I understand he adds to losing positions with growing position sizes (while price is still in the grid, but sometimes 100 pips below original entry), but starts to take profits when seeing profits of 30-40 pips. Letting a position go against you for 100 pips and more, but taking profits after 40 pips just looks wrong to me.
  • #14
  • Sep 7, 2009 2:25am Sep 7, 2009 2:25am
Quoting kawser
Dear Xaron,
Suppose Xaron,I want to risk total 10% of my total equity and what should be my policy in this methodology?
I'll go in detail soon but if you want to keep your drawdown max at 10% you have to start counter measures (against the drawdown) if it reaches 5% by closing positions or hedging.

Quote
I know I shall buy in different range within the comfortable zone and median grid but at a time how times gearing I shall use??????????Suppose I shall use 3 times leverage but shall I use it per trade or on whole I shall use 3 times leverage????????My English is bad sorry .........I think I could understand you.......

I understand what you mean so your English can't be so bad. The overall leverage you want to use is all dependent on your max drawdown you want to see. I'm comfortable with 20-30% max so I usually use 1:1 up to 5:1 per entry, but more on that comes later.
  • #15
  • Sep 7, 2009 2:25am Sep 7, 2009 2:25am
Quoting kawser
I am not a coder .....I just modified some aspects of one of my indicators and I could finish it.
Happy trading.
With regards
kawser
HA! So does it start. The very first indicator. I'm looking forward to see an EA soon. Thanks anyway.
  • #16
  • Sep 7, 2009 2:30am Sep 7, 2009 2:30am
Quoting Hell7
Ok, you made me curious so I just spend a Sunday afternoon reading the BWILC book. Do you follow all principles or just the median grid trading part?
I can imagine what you think. After reading this book the first time I asked myself, "ok, so where is the system?". What's the main purpose of this book is:
- Use your own brain
- Use low leverage
- Don't be fooled by the randomness (short term) of the market

Quote
The reason I ask is because while I see the value of the median grid, his money management rules look .. well ... flawed to me. From what I understand he adds to losing positions with growing position sizes (while price is still in the grid, but sometimes 100 pips below original entry), but starts to take profits when seeing profits of 30-40 pips. Letting a position go against you for 100 pips and more, but taking profits after 40 pips just looks wrong to me.

Dirk itself says that his book is a bit outdated, especially regarding the fundamentals. Too much has changed. He's currently working on a new edition as far as I know. The book itself is a bit tricky with those 30-40 pips gains and actually it's suicide to trade that way. You always need 1-2 "long runners", some positions who compensate for bigger losers. I'll get more in detail...
  • #17
  • Sep 7, 2009 2:53am Sep 7, 2009 2:53am
Quoting Xaron
I can imagine what you think. After reading this book the first time I asked myself, "ok, so where is the system?". What's the main purpose of this book is:
- Use your own brain
- Use low leverage
- Don't be fooled by the randomness (short term) of the market



Dirk itself says that his book is a bit outdated, especially regarding the fundamentals. Too much has changed. He's currently working on a new edition as far as I know. The book itself is a bit tricky with those 30-40 pips gains and actually it's suicide to trade that way. You always...
As I read the book, I got from it that he was saying he was taking about a 1% profit on a trade; trying to bank one trade per day. It just so happened at the time of his writing the book, that 30 to 40 pips met that criteria based on 3:1 gearing. So I don't think he was married to 30 -40 pips, he wanted a certain percent every day to stay profitable.

He also said he would look to let some of them run longer term, like the 1:1 geared trades and pull the maybe 2:1 trades quicker. So it was multi teared.
  • #18
  • Sep 7, 2009 3:16am Sep 7, 2009 3:16am
Right, smjones! Those 30-40 pips are just those wins to "keep the scoreboard ticking".
  • #19
  • Sep 7, 2009 3:24am Sep 7, 2009 3:24am
His method of describing leverage I find interesting, because it is a way to pick a trade lot size and also maintain the level of maximum risk one wants to take, with out having to know the specific stop loss size in advance of placing the trade. For example,

If I have $10000 and I want a gearing of 3:1 and I am trading a mini account, I would take Account balance / contract size = lot unit size for 1:1 then just times that by 3 or enter averaged in 3 units of that size. Then if I want to contain my risk to say 3%, I can just monitor my trade and as it approaches the 3% loss area, I can choose to close either some or all of the positions. The advantage of this is that if I still believe my trade is with the trend, I can stay in the game. Very interesting way of being able to set the lot size and control risk, with out having to know the stop loss in pips in advance.

In fact, there is no need for a set stop loss, because risk is controlled by a percent of loss factor, accomplishing the same function.
  • #20
  • Sep 7, 2009 3:27am Sep 7, 2009 3:27am
Quoting Xaron
HA! So does it start. The very first indicator. I'm looking forward to see an EA soon. Thanks anyway.
Xaron,
Making EA will not be easy and may be impossible as the methodology uses brain more than tracking price movements ...haha...And I made this indicator(actually it is not any indicator) to just help me what I make every month manually ........It just replace the manual works as I am bored to draw the lines time to time.......And it will make you easy to understand how it behaved in its last crucial part of some currencies..It is may be as I don't know any thing about EA and I am not a coder...............
And you are most welcome........
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