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The System III (Oh no!)

  • #201
  • Mar 10, 2010 9:42pm Mar 10, 2010 9:42pm
Lets say you get one of these trades per day. You win 2/3 of them. You win 1.5x what you lose/risk.

Profit factor = (2/3*1.5) / ( 1/3*1) = 3
Expectancy = ( (2/3*1.5) - ( 1/3*1) ) / 1 = 0.667

So if you risk a dollar you get on average 0.66 return.


Without compounding you want 10k per month. So thats close enough to $500 per day.

So, 1 trade giving .667 per dollar risked ... that 500/.667 = $750 risked. So how big an account do you need if that is 2% of your account risked per trade?

Account = 50*750 = $37,500

But allowing a bit for all the problems most will experience along the way the smallest account you'd want to use to seek 10k per month is probably 50k. If all goes well and you can get the results above consistently.
  • #202
  • Mar 10, 2010 9:48pm Mar 10, 2010 9:48pm
Respected Feb,

I have a question Sir, When we watch the level and expecting them as turning points, do we also need to consider the candle shapes, their size, wicks.
Also do we need to see momentum (speed of candles in specific time - rythem)..
But I had noticed that when market reaches to some level, it slows down mostly .. and it can turn back .. and it can go up.. so is momentum need to be considerd?
Please see the chart I had try to mark the candles, which are in hindsight.. looks perfect turning points.. but at that time i did not know..
Attached Image (click to enlarge)
Click to Enlarge Name: candleform.gif Size: 27 KB
  • #203
  • Mar 10, 2010 9:55pm Mar 10, 2010 9:55pm
Quoting redart007
DareXau,
Care to explain how they work and can you post the indi?
Thanks
007
Hi redart007,
... it's simply a constant range bars (candles) ... each candle has a set range ( 5-pips or 10-pips or 15-pips) depends only on your preferences.
The range is eliminating a time-frame issue from a chart, so ... you have only pure price to consider and determine any support/resistance levels.
There is a big advantage over a standard (time-frame) charting ... as it doesn't paints any spikes (tails/wigs)
... easy to see any turning points which translates into important supports and resistances.

The "indy" I'm using is a commercial script (around 200 euro) not a freebie, ... so, I can't post it unfortunately,
but if you interested you will find one on the net, as a hint I can tell you there are older vesion (free) avilable in some forex forums.
  • #204
  • Mar 10, 2010 10:01pm Mar 10, 2010 10:01pm
Ahhh ... redart ... apologies for my comments earlier. I didn't realize which post you were referring to and thought you were just too lazy to have read Feb's earlier threads. Wrong I see.
  • #205
  • Mar 10, 2010 10:22pm Mar 10, 2010 10:22pm
Quoting elizo
Hi Darek,
good to know you are good. Is Renko charts what you mean?
Thanks.
G'day elizo,
Thanks, I'm doing fine. Nice to see you here. How mr. market is treating you?
Renko is an indicator based on ConstantRangeBars and as any "indi" it does some things by itself and with-out your knowledge.
... so, ... I don't like that option and I'm not using Renko.
  • #206
  • Mar 10, 2010 10:22pm Mar 10, 2010 10:22pm
It seems to me that area around 1.3600 +- 30 pips is no man land. For the last two days EURO spent too much time in this region.
  • #207
  • Mar 10, 2010 11:37pm Mar 10, 2010 11:37pm
Quoting kiwi_trader
Lets say you get one of these trades per day. You win 2/3 of them. You win 1.5x what you lose/risk.

Profit factor = (2/3*1.5) / ( 1/3*1) = 3
Expectancy = ( (2/3*1.5) - ( 1/3*1) ) / 1 = 0.667

So if you risk a dollar you get on average 0.66 return.


Without compounding you want 10k per month. So thats close enough to $500 per day.

So, 1 trade giving .667 per dollar risked ... that 500/.667 = $750 risked. So how big an account do you need if that is 2% of your account risked per trade?

Account = 50*750 = $37,500

But allowing a bit...
Hello kiwi_trader
thanks for the math.
i do not understand the 1. sentence about the lose/risk.
Does this not depent on your stoploss and takeprofit strategie?
I never win 2/3 of my trades but the stoploss is very small and i try to hold the winner as long as possible.
Do you, if your daly risk is let say 2%, put the daily risk in only one trade,
and the takeprofit the same size as the stoploss?
  • #208
  • Mar 11, 2010 12:13am Mar 11, 2010 12:13am
Quoting kiwi_trader
So, 1 trade giving .667 per dollar risked ... that 500/.667 = $750 risked. So how big an account do you need if that is 2% of your account risked per trade?

Account = 50*750 = $37,500

But allowing a bit for all the problems most will experience along the way the smallest account you'd want to use to seek 10k per month is probably 50k. If all goes well and you can get the results above consistently.
If you are winning 60% of the time why not to put at least 10%?
According to Kelly formula

http://www.albionresearch.com/kelly/default.php

The odds are in your favor, but read the following carefully:
According to the Kelly criterion your optimal bet is about 33.33% of your capital, or $333.00.
On 60% of similar occasions, you would expect to gain $499.50 in addition to your stake of $333.00 being returned.
  • #209
  • Mar 11, 2010 12:24am Mar 11, 2010 12:24am
Quoting tghfbt8
If you are winning 60% of the time why not to put at least 10%?
According to Kelly formula

http://www.albionresearch.com/kelly/default.php

The odds are in your favor, but read the following carefully:
According to the Kelly criterion your optimal bet is about 33.33% of your capital, or $333.00.
On 60% of similar occasions, you would expect to gain $499.50 in addition to your stake of $333.00 being returned.
Re the first question. That trade and number of trades was hypothetical ... substitute your own numbers to get an account size ... but the main point was that a decent size account is going to be needed.

Re the kelly question. I have been trading as my sole source of income since before 911. If I wanted to join those unfortunates I would make 10% bets. Strangely enough, those of us who've been around a while tend to make bets of 2% or less.
  • #210
  • Mar 11, 2010 12:28am Mar 11, 2010 12:28am
Quoting kiwi_trader
If I wanted to join those unfortunates I would make 10% bets. Strangely enough, those of us who've been around a while tend to make bets of 2% or less.
Is it because all 10% dudes retired long ago on some Hawaii golf fields
  • #211
  • Mar 11, 2010 12:47am Mar 11, 2010 12:47am
Quoting tghfbt8
Is it because all 10% dudes retired long ago on some Hawaii golf fields
Absolutely.

Although the 30% boys got there a lot faster.
  • #212
  • Mar 11, 2010 12:53am Mar 11, 2010 12:53am
Quoting kiwi_trader
Absolutely.

Although the 30% boys got there a lot faster.
Nice one
  • #213
  • Mar 11, 2010 6:20am Mar 11, 2010 6:20am
Quoting 786 trading
Respected Feb,

I have a question Sir, When we watch the level and expecting them as turning points, do we also need to consider the candle shapes, their size, wicks.
Also do we need to see momentum (speed of candles in specific time - rythem)..
But I had noticed that when market reaches to some level, it slows down mostly .. and it can turn back .. and it can go up.. so is momentum need to be considerd?
Please see the chart I had try to mark the candles, which are in hindsight.. looks perfect turning points.. but at that time i did not know..
I personally don't pay attention to candlesticks formations. I must admit, hammers at turning points are definitely significant. This is probably the only candle formation I might consider. I believe the long of the wick is more important than the candle itself. But don't trade on your toes looking for that...if it happens just take it in consideration....that's it.

I think momentum is a better tool for scalping or maybe 5 min time frames etc. That way you have an extra tool to react quickly. I still have mixed emotions about it, but the more I see the less significance I find on momentum at higher grounds.
Peace
  • #214
  • Mar 11, 2010 6:21am Mar 11, 2010 6:21am
Quoting DareXau
Hi redart007,
... it's simply a constant range bars (candles) ... each candle has a set range ( 5-pips or 10-pips or 15-pips) depends only on your preferences.
The range is eliminating a time-frame issue from a chart, so ... you have only pure price to consider and determine any support/resistance levels.
There is a big advantage over a standard (time-frame) charting ... as it doesn't paints any spikes (tails/wigs)
... easy to see any turning points which translates into important supports and resistances.

The "indy" I'm using is a commercial...

welcome Darex!!! feel like home here brother!!
Peace
  • #215
  • Mar 11, 2010 6:32am Mar 11, 2010 6:32am
I see price is rejecting here... seems price may go short ... it is just a probability, market can go anywhere it wants.. but from chart it is looking currently that buyer don't want to take it...
Is my observation correct?
Attached Image (click to enlarge)
Click to Enlarge Name: obs.gif Size: 28 KB
  • #216
  • Mar 11, 2010 6:51am Mar 11, 2010 6:51am
Quoting 786 trading
I see price is rejecting here... seems price may go short ... it is just a probability, market can go anywhere it wants.. but from chart it is looking currently that buyer don't want to take it...
Is my observation correct?
The observation is good. But in my case I would take the first rejection back when you have the first arrow.....now I don't see a defined level on the front...it could work on the way short but is not clear....
Peace
  • #217
  • Mar 11, 2010 6:53am Mar 11, 2010 6:53am
Quoting feb2865
The observation is good. But in my case I would take the first rejection back when you have the first arrow.....now I don't see a defined level on the front...it could work on the way short but is not clear....
talking about the first arrow on top on the way short.....
Peace
  • #218
  • Mar 11, 2010 7:21am Mar 11, 2010 7:21am
Quoting 786 trading
I see price is rejecting here... seems price may go short ... it is just a probability, market can go anywhere it wants.. but from chart it is looking currently that buyer don't want to take it...
Is my observation correct?

Watch the news this morning about 10 minutes from now.
if you'r on a trade check it out

Unemployment Claims and trade balance.
I just believe in... Peace and good Karma!
  • #219
  • Mar 11, 2010 7:38am Mar 11, 2010 7:38am
Quoting feb2865
why??

hello Feb,
i read your yesterday edit in post #1 and i feel sorry for my stupid and dump question
your post #1 from this thread cleared my mind like a reset button
so please exuse this silly question about GU or EU

MJ
  • #220
  • Mar 11, 2010 7:49am Mar 11, 2010 7:49am
Quoting MJurban
hello Feb,
i read your yesterday edit in post #1 and i feel sorry for my stupid and dump question
your post #1 from this thread cleared my mind like a reset button
so please exuse this silly question about GU or EU

MJ
no MJ no need to apologize at all......is just some people who argue to their asses about this and if you think deeply makes no sense at all....I didn't even read your post MJ....

MJ, i know you for some years now and I consider you a dear friend, I would never say something to harm you in any way my brother. But you know my language is harsh sometimes and is because this business is not polite at all. But I do that and people get appreciative in the long run.

I teach hard many times but I do it with love and good karma. I believe in the universe and everything you give you'll get in return...one way or another....
Peace
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