Simple trading method

Hi, I too was puzzled initially. It took me a few minutes staring at the diagram to understand. You just need to try and follow the logic behind the numbers.

Split each trade into 3 lots (parts)
Stoploss 50pts
1 lot exit at +50
1 lot exit at +100
1 lot leave to run (looks like +150) from last row.

For next trade
From the previous trade take all your losing lots and multiply by 2
From the previous trade for each winning lot add 1.

Add up the lots

Make it divisible by 3 either by rounding up or down.

Thats the number of lots for the next trade.

You can see from the diagram you can see how the method sort of increases your lots when you lose and decrease your lots when you win.

Note the direction of each trade changes according to 'a' strategy so it isn't an average down kind of strategy.

Just my observations based strictly on the diagram.

You could change targets and stoploss to fit in with your particular strategy. I haven't tested it and it would take a bit of testing to see if there was any more benefit to this compared to a standard all in and all out strategy.

Best regards
Alan

You would trade multiples of 3 contracts (3 or 6 or 9, etc...)

The first contract exits after 50 pip target hit...

The second contract after 100 pip target hit...

The third after a REVERSAL signal issued.... this is how FTP implements exiting the last contract but of course this can be modified.

Stoploss on all 3 contracts is 50 pips, so if you stopped at 50 you would actually take a 150 pip loss if no contracts hit.

The magic of the system is to double the contracts that took a loss on your previous trade. For example, let's say you trade 3 contracts and the 1st hits at 50 but then there is 100 pip swing against you. You gained 50 on the first contract and lost 100 on the other two. The next trade, you would trade 5 contracts (1 X 2 first the 2nd contract, and 1 X 2 for the 3rd contract)

You keep doubling your losing contracts until you have a trade where there are 3 winners (50, 100, and REVERSAL) ... At which point your initial contract sizes will return to their original levels (the number of contracts made on your very first trade)

The result of this: the winner usually makes up for all previous losers.

If you have developed a system that isn't losing more than 4 or 5 times in a row then this system could act like Nitris Oxide to your pip totals. Common sense tells you that drawdown will mount up after a few losses in a row, so your initial trades should be small compared to your capital.

Sharing of this money management strategy is for educational purposes and full details of the system can be found at www.forextrendpointer.com.

I am suspicious about this FXTrend... is this the same guy/group that used the 3 Elliot Wave indicators on the FXCM default charts? People were claiming at the time that they got better results trading in the opposite direction of what the indicators were showing !

Just thought I would ask.

Lou

They don't disclose their trading methodology for generating their signals. They claim their signals are generating from 20+ TA indicators.

The point is to find value in the multiplexor money management strategy. I'm not advocating their signal services. FTP signals are generated from a hidden Intelliscript that is embedded in FXTrek Intellicharts.

Hi,

In past performance http://www.forextrendpointer.com/mul...ance_chart=136
the last 3 trades were taken at a max of 48 lots so going from 20000 to 14000. Basically 4 losers in a row with partial wins and losses beforehand to raise the number of lots.

You would need to translate that into money with compounding before you know the full effect of that kind of win/loss effect.

This multiplexor kind of money management strategy doesn't appear to be kind to your money if you lose several times in a row at the maximum specified lots.

Best regards
Alan

Alan,

Good points. Let's look at the facts... trading FTP this year (since Jan 1) would have yielded 14,000 pips to date. That's pretty darned impressive.

They were trading in the EUR/USD rectangle pattern this past two weeks that resulted in a string of 5 or 6 losses...

If your system is reliable and you can stay out of rectangle trades then the multiplexor is probably a smart move.

That's my two cents.

Tom

Hi, It is good that the multiplexor money management strategy by FTP has ended up with '14,000pips' to date.

However, it went from 20000 to 14000 in 3 trades. 30% DD in 3 trades 'in pips'.

Also pips calculation is only a rough guideline that it 'could' be profitable. I've found in my analysis that all pips are not created equal

Simplistic and stupid but approximate example. If you trade your account with a risk or leverage of 1000pip loss is equal to 50% of your account, then even after an initial 10000 pip gain, a subsequent 1000pip will still lose you 50% of your account even though on paper you have 9000 pip win!

I would need to work through each and every trade on a spreadsheet, working out the trade size for each trade, profit and loss in cash before coming to a proper conclusion on the multiplexor method to see if it is better than the 1 lot method detailed here http://www.forextrendpointer.com/1contract.php

I leave that as an exercise for the reader :

I've learnt from many scenarios that how the pips arrive, when you start trading in the particular strategy and how the drawdown occurs all affects your bottom line.

Best regards
Alan

I'm just not getting it.

If I have $2000 and am trading $1/per pip, then a 1000 pip loss would put me at $1000. ('50% of my account')

So I get a 10000 pip gain ($10000) that puts me at $12000. I then suffer a 1000 pip loss to put me at $11000.

Is this right or am I missing something?

Thanks.

Open a Demo with ATX. They will send you a trial for Intellecharts. You can program alerts that send to your phone or email. If you use Yahoo you can trigger an alert to you Cell from there.

Alertfx.com is another free alert site.

I trade the 4 and 20 EMA on the one hour chart. Over 150 pips from last night to today. You have to watch out for Wipsaw however everytime the lines cross you get a pretty good move. Usually if it does wipsaw the lines crossing again act as your stoploss.

Hi, Apologies for not replying to your post sooner as I missed your reply.

$2000 and $1/pip indicates a ratio of $1/pip for every $2000 you have in your account.

"IF" you are trading at a constant percentage then as your balance increases then you will be increasing your risk to take advantage of compounding.

So when you have $12000 in your account, and IF you are maintaining the ratio you started with then you would be trading with $6/pip and a 1000pip loss would give you $6000 loss, thus half the account with a "running total" of 9000pip gain.

The above does not apply if when your balance increases and you continue to trade at the same size as you started out with, which has the benefit of reducing your risk and leverage but also reduces the benefit of compounding.

Best regards
Alan