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Median Grid Trading

  • #21
  • Sep 7, 2009 1:34am Sep 7, 2009 1:34am
Xaron, I am confused about one thing, though in the book Dirk states that his fundamental study is about a week out. Then in other parts of the book, he talks about having a long term horizon for getting the trend right based on fundamental factors. Do you have any insight on what he means here?
  • #22
  • Sep 7, 2009 1:48am Sep 7, 2009 1:48am
The foremost two parts of a successful strategy are risk management and taking profit..........

In BWILC the risk management seems to me clear after some conversation with Xaron and restudy the book ...........

And profit taking is still not clear to me............

What I understood from the profit taking strategy is like this:
Bank one percent of your profit..........It is may be not per day strategy.........

Suppose I have $10000 and I have running five trades like -$400, +$100, -50$, -500$ and +90$..........Then my equity is not now 10,000$...........But I shall Bank that 100$ as it is 1% of my 10000$..........Then my balance will be 10100 and after making another profit like 101$ in any trade I shall bank that 101 and my balance will be 10201 and then in next stage I shall bank of 102 dollar when I shall get it..................

And risk management is like that:
Suppose the comfortable zone's spread is: 500 pips............Then I shall start buying from median grid zone of that comfortable zone or a little bit upper range.....Then the risk in my trade is 250-350........So if I enter a trade risking that 250 pips per trade my per trade risk is 5% using 2:1 leverage and if ones take 20% risk in his total balance then he can easily gear up at least 8:1 but if you enter the trade below the median grid like risking 150 pips you can easily gear your trade upto 15 times..............And this is the picture I get.................

And after that 20% in risk in your trade you can go for anti trade to save you from washing out from market or you can close your all trades.............

I am eagerly waiting from Xaron to explain all the things of this system............

With regards
kawser
  • #23
  • Sep 7, 2009 1:51am Sep 7, 2009 1:51am
Quoting smjones
Xaron, I am confused about one thing, though in the book Dirk states that his fundamental study is about a week out. Then in other parts of the book, he talks about having a long term horizon for getting the trend right based on fundamental factors. Do you have any insight on what he means here?
Good question. You have just your long term fundamentals which give you the directional long term bias and the short term impacts which give some ideas for the short term action. It's not that exact and needs some kind of experience.
  • #24
  • Sep 7, 2009 1:58am Sep 7, 2009 1:58am
Quoting Xaron
Good question. You have just your long term fundamentals which give you the directional long term bias and the short term impacts which give some ideas for the short term action. It's not that exact and needs some kind of experience.
Thanks, I think I get it now. but ultimately the short term impacts, are probably where you can get your dip buying from if your directional bias is long, or reversed for short bias.
  • #25
  • Sep 7, 2009 2:01am Sep 7, 2009 2:01am
Quoting smjones
Thanks, I think I get it now. but ultimately the short term impacts, are probably where you can get your dip buying from if your directional bias is long, or reversed for short bias.
Right. The basic approach is to trade only the one direction. The more advanced makes use of hedging and trading both directions which makes sense as the market ranges a lot.
  • #26
  • Sep 7, 2009 2:14am Sep 7, 2009 2:14am
Quoting kawser
And profit taking is still not clear to me............

What I understood from the profit taking strategy is like this:
Bank one percent of your profit..........It is may be not per day strategy.........

Suppose I have $10000 and I have running five trades like -$400, +$100, -50$, -500$ and +90$..........Then my equity is not now 10,000$...........But I shall Bank that 100$ as it is 1% of my 10000$..........Then my balance will be 10100 and after making another profit like 101$ in any trade I shall bank that 101 and my balance will be 10201...
No, no, no. It's not that fix. Don't see it in $ but in number of pips. I have some smaller trades where I take profits around 30-60 pips and some trades where I take profits from 100-300 pips, preferred at supports/resistances.
This "1% per trade" thing was only an example.

Quote
And risk management is like that:
Suppose the comfortable zone's spread is: 500 pips............Then I shall start buying from median grid zone of that comfortable zone or a little bit upper range.....Then the risk in my trade is 250-350........So if I enter a trade risking that 250 pips per trade my per trade risk is 5% using 2:1 leverage and if ones take 20% risk in his total balance then he can easily gear up at least 8:1 but if you enter the trade below the median grid like risking 150 pips you can easily gear your trade upto 15 times..............And...

This gearing up to 15:1 was true during a time where the Euro had a typical daily range of 40 pips. Nowadays 15:1 is just suicide with this approach. The best is to not buy here and there but in the near of a support/resistance.

This approach is one where you need some practice in general.
  • #27
  • Sep 7, 2009 2:28am Sep 7, 2009 2:28am
Quoting Xaron
No, no, no. It's not that fix. Don't see it in $ but in number of pips. I have some smaller trades where I take profits around 30-60 pips and some trades where I take profits from 100-300 pips, preferred at supports/resistances.
This "1% per trade" thing was only an example.



This gearing up to 15:1 was true during a time where the Euro had a typical daily range of 40 pips. Nowadays 15:1 is just suicide with this approach. The best is to not buy here and there but in the near of a support/resistance.

This approach is one where you need some...
hmm.then it needs more and more practice and some modifications has been in the recent time............

Gonna make it more personalized on basis support and resistance.........Seems good to buy in support really in a long uptrend............

Thanx Xaron........Think the idea will be more clarified with the course of time..........Till then I am using my previous trading methodology ..........

thanx Xaron for the effort to explain us.........
Wish you better trading day by day.......
  • #28
  • Sep 7, 2009 2:33am Sep 7, 2009 2:33am
Yes. It's a long learning. Just one example. I just went short in the Aussie and Euro and Long in the USD/CAD (you can follow this in my MT4Stats below). Both Euro and CAD are now at some resistances (in case of the CAD at support). This is all complete out of whack at the moment, the stock market rally will stop soon - the longer it goes the deeper the fall will be. So I guess we will see some Dollar strength again in the next days/weeks. But I also think that the support in the Euro at 1.38 will hold - probably. After all I still stick to my target of 1.50 till the end of this year.
  • #29
  • Sep 7, 2009 2:49am Sep 7, 2009 2:49am
Seems to me that the followers should use his brain and it is more than a trading system..............And the comfortable zone is just telling us about support, resistance,long term trend and bounce backing area...........

Seems interesting to me..haha..............

And I am making a software on where I shall save all the fundamental data and trying to make comparison on some common fundamental indicators of a pair and will try to observe how much slippage is done in pips when the fundamental news comes bad or good in base of percentage and giving emphasis how much the news is important giving them some weighted number like one,two or three...This is totally simple way to predict the fundamental but I did not get any good econometric model in this arena where I can feed my data........So I am developing my own idea in my mathematical sense... ....That will be a journey for me as I like to move with little fundamental...........

Thanx Xaron................
  • #30
  • Sep 7, 2009 6:03am Sep 7, 2009 6:03am
Xaron AUD broke above 85 after a few weeks in the 81 - 84 range. What makes you think it's going down? A pending DOW crash and prehaps USD strength? Surely the primary trend is still up... or is it a top?
grist for the mill
  • #31
  • Sep 7, 2009 6:38am Sep 7, 2009 6:38am
I don't know if it will go down. For me a correction in the stock markets is very likely and that will lead to some Dollar strength. I don't expect a crash...
  • #32
  • Sep 7, 2009 6:48am Sep 7, 2009 6:48am
BWILC in its essence is a way to look at the market(currency pair) and take advantage of past PA and S/R zones, along with an understanding of the fundamentals that move price. Looking at price action above and below major historical areas of S/R and using those areas PLUS knowledge of fundamentals to place trades and take profits.

In Dirk's approach, he want's the trader to be able to understand where, in the larger time frame, price is going to go. And when it hits an historical S/R (median lines) what it might do there.

It is a twofold approach. So far on this thread we have only seen the 'technical side'. There is an equally or more important fundamental side. The fuel that drives Dirk's approach is the trader's knowledge of fundamentals that effects the currency pair in question. I think many traders tend to ignore the fundamental part of the method.

(just an added thought. Although I have not tried it, I have always thought Jacko's anti hedge methods would be a good feature to add to the BWILC methods.)
  • #33
  • Edited 7:55am Sep 7, 2009 7:15am | Edited 7:55am
Quoting Lou
'technical side'. There is an equally or more important fundamental side. The fuel that drives Dirk's approach is the trader's knowledge of fundamentals that effects the currency pair in question. I think many traders tend to ignore the fundamental part of the method.
Are the fundamentals used for longer term trend direction? Outside of news, how much can the fundamentals effect the short term?

Quote
(just an added thought. Although I have not tried it, I have always thought Jacko's anti hedge methods would be a good feature to add to the BWILC methods.)
That is something that should be tested, but I agree I think it makes prefect sense if smaller stops are used. Just get back in where you left off. Nice thinking on that one.
Don't wish it were easier, wish you were better. ~ Jim Rohn
  • #34
  • Edited 8:32am Sep 7, 2009 7:55am | Edited 8:32am
Crash/fall sorry perhaps the term is a bit dramatic for what is "expected" in September. Either way there is room for a USD strength which I thought we just saw and provided the DOW survives September then I think the likely hood of a rate increase in AUD is a big factor hence why I am "hedged" long AUD and short EUR at this moment as both have spot prices at extremes of their respective ranges.

Besides I think Xaron was going to show us _his_ approach and I'm guessing it's not a pure form of an existing method... I look forward to the explanation.
grist for the mill
  • #35
  • Sep 7, 2009 8:30am Sep 7, 2009 8:30am
Quoting LasVahGoose
Are the fundamentals used for longer term trend direction? Outside of news, how much can the fundamentals effect the short term?
IMHO This is not really a short term trading method. It might seem so because of the suggestion to take profit when a position reaches 1% of your trading account or to grab 40 pips and run. However with BWILC the trader most often has several positions open simultaneously on a single pair that were taken at various entry points.
So another facet of trading comes into play. That is, scaling in and out.
  • #36
  • Sep 7, 2009 8:47am Sep 7, 2009 8:47am
Quoting JackJones
Crash/fall sorry perhaps the term is a bit dramatic for what is "expected" in September. Either way there is room for a USD strength which I thought we just saw and provided the DOW survives September then I think the likely hood of a rate increase in AUD is a big factor hence why I am "hedged" long AUD and short EUR at this moment as both have spot prices at extremes of their respective ranges.
The quote above by JackJones is an example of what I am referring to regarding BWILC and fundamental analysis. JJ decided on a certain hypothesis regarding currency pairs. What fundamental proofs does he see that leads him to take the stance he is taking? What is it that supports or refutes his hypothesis? This whole thought process, is the other half of the BWILC method. Dirk has been a student of the markets for many many years. He knows what to look at and what to look for. That aspect of his method cannot be taught in an ebook. Hence the mentoring program.
  • #37
  • Edited 6:28pm Sep 8, 2009 6:11pm | Edited 6:28pm
On His listed Page 215 Dirk published a chart and an explanation of said chart, with numbers signifying trade entries and exits. Below on page 216 he lists the explanations for each of these trades.

I have been having a problem with this and his grid in general, because he is showing trade examples from past history. I don't see how he could have chosen the grid he did without having all of the prices that are listed on the chart he exhibits. This means of course that all of the trades he shows there are hindsight.

This is one of the basic problems I am having with his grid approach. How can you draw a useful grid before you have the data you want to trade from? And when you do have the data to draw the grid, the trades that are apparent are in the past, on the left side of the chart and I can only trade from the right side of the chart. His example chart does not show this. It in fact shows him trading in the past.

This is where I am finding difficulty, because I know he has made his living as a Financial Advisor since the late 90s.

Edit: I cannot post the chart, because it would violate his copyright as he has it written, in the first part of his book.
BTW I have a Official Secured copy of the book from him, so I intend to respect copyrights.
  • #38
  • Sep 8, 2009 7:02pm Sep 8, 2009 7:02pm
Quoting smjones
This is one of the basic problems I am having with his grid approach. How can you draw a useful grid before you have the data you want to trade from?
Fair observation, I just dismissed that part since in writing the book you just look for a good example to share. I can let that slide.

Here is a recreation of a Grid I drew back on July 4th using data (high/low) information from 6/3 to 7/2 (between white lines). Moving forward from 7/4 (none of that data was there at the time the grid was drawn) the grid would probably have to have adjusted in Aug time frame, but would have held up for July.(I used a 4hr just to get the data to fit to today).
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Don't wish it were easier, wish you were better. ~ Jim Rohn
  • #39
  • Edited 7:23pm Sep 8, 2009 7:16pm | Edited 7:23pm
Quoting LasVahGoose
Fair observation, I just dismissed that part since in writing the book you just look for a good example to share. I can let that slide.

Here is a recreation of a Grid I drew back on July 4th using data (high/low) information from 6/3 to 7/2 (between white lines). Moving forward from 7/4 (none of that data was there at the time the grid was drawn) the grid would probably have to have adjusted in Aug time frame, but would have held up for July.(I used a 4hr just to get the data to fit to today).
I appreciate your clarification on this. Could you show me in another chart, how you would have adjusted this for August? I think i would have a clearer understanding then. Also, are you attempting to stay within the 300 pip range he discussed or do you tend to let it float to the chart level?
  • #40
  • Sep 8, 2009 7:18pm Sep 8, 2009 7:18pm
Also, so would you say you are always working from a grid drawn a month or 2 earlier than the current month?
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