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2% Money Mangement Complications!

  • #21
  • Apr 26, 2010 1:50pm Apr 26, 2010 1:50pm
So loosing those -200 pips was horrribleeeeeeeeeeeeeee. But hey, lesson learned. Loosing Pips > Loosing Equity

yeap i did, but its nice for a confirmation of thoughts.

So I guess my analysis is sound to the most part. I am starting a backtest of my 'method' now, i guess 1000 trades or so should be good. Need to somehow though, incorporate emotions into these tests.
  • #22
  • Edited 2:37pm Apr 26, 2010 1:57pm | Edited 2:37pm
Quoting Tbb

Need to somehow though, incorporate emotions into these tests.
Nooooo, leave emotions at the trading room door, collect them on the way out as you're counting the day's profits

Why get emotional about a trade anyway, win or lose, it's just one in a series of trades which overall will make money. Who cares what happens to one little trade? As long as you've done everything right, planned the trade, traded the plan, limited your loss, then there's nothing more you could have done. If you made a mistake and screwed up then find out why, work out how you're going to prevent it happening again, and move on to the next opportunity a little wiser for the experience.
  • #23
  • Apr 26, 2010 4:55pm Apr 26, 2010 4:55pm
Damn it, that's true.

I just thought, that I would probably get swayed by emotions to an extent in a real trade so i thought of somehow involving it into the backtest too.

But what you said makes absolute sense. Right, so no emotions, but hardcore discipline to execute the trading plan after backtest is over.

I wish I had some concrete method though, such as, a MA crossover or something of the sort, that would just signal me into a trade...rather than relying on my intuition, which undeniably for me, has emotion attached with it, as I am looking for trades more, even using my system. Like..for instance I'll start considering weaker support and resistance lines as a time to scalp. Or weaker highs/lows of candles possibly one wick rather than say if my system said to have a few wicks instead. To be honest, even that is concrete...and doable. But, this 'intuition' has so many variables attached to it to signal me into a trade. It's not like a single variable MA crossover or something.
  • #24
  • Apr 27, 2010 2:27am Apr 27, 2010 2:27am
Quoting Tbb

But, this 'intuition' has so many variables attached to it to signal me into a trade. It's not like a single variable MA crossover or something.
Can't you write some rules for it to make it a bit more mechanical?

As I read it your entries are pretty good, the problem seems to be cutting losing trades, that's where you're losing money. Maybe keep the intuition part which seems to be working and just add the discipline to get out of those trades where losses start mounting up. Backtesting might convince you of the benefits of cutting losses short, check it out.
  • #25
  • Apr 27, 2010 4:02am Apr 27, 2010 4:02am
Quoting Tbb
Although, I think I should seriously consider only worrying about loosing/gaining pips
State education let me down too... or maybe it was my parents.
Living the adventure in my head.
  • #26
  • Apr 27, 2010 7:04am Apr 27, 2010 7:04am
Quoting Tbb
Thanks guys, lemme know if I missed something crucial.

I'd ditch the trendlines and stick with horizontal SR lines and price action otherwise you will just have too many conflicting signals and trendlines are a waste of time imo. Why haven't you used horizontal SR below price especially larger time frame SR?
  • #27
  • Edited 8:57am Apr 27, 2010 8:43am | Edited 8:57am
Quoting pipmutt
Can't you write some rules for it to make it a bit more mechanical?

As I read it your entries are pretty good, the problem seems to be cutting losing trades, that's where you're losing money. Maybe keep the intuition part which seems to be working and just add the discipline to get out of those trades where losses start mounting up. Backtesting might convince you of the benefits of cutting losses short, check it out.

sigh...I've written almost an essay with my 'rules'. In which, some are still very vague! I think more back-testing will be required to squeeze out the mechanical aspects of those vague rules.

Before though, I had a problem of cutting my losses too short. So I ended up taking losses after losses, granted they were small ones, but then it became something like 10 small losses and 1 big win. Result->BE. lol.

Due to that this last trade, I let my loss run...to try that theory out. Because the trades before this last one, I ended up coming out too early with a loss, and then price, going past my stop by a few pips, and then reversing my way after it booted me out of the market.

I need to somehow find a middle area, between letting losses run and cutting too short. Which is why, I wanted a general idea that goes something like 'If EURUSD goes -30 or -40 for you, then chances are it will continue going more negative' or something like 'If GBPJPY goes -50 or -60 for you, then chances are it will continue going more negative'

That kind of rule would help me out to stay somewhere in the middle. But again, I think that will come with backtesting extensively seeing how far price usually goes, before it goes my way.
  • #28
  • Edited 9:01am Apr 27, 2010 8:51am | Edited 9:01am
Quoting Porkpie
I'd ditch the trendlines and stick with horizontal SR lines and price action otherwise you will just have too many conflicting signals and trendlines are a waste of time imo. Why haven't you used horizontal SR below price especially larger time frame SR?
To my experience trendlines have worked nicely for me and a lot of the analysis I do respects the trendlines on my chart. They are a nice signal for me to tell me which way the trends going, so I only trade that way. Well...i try.

However, the idea of just using horizontal SR would make life really simple. Although, when I have tried this in the past, I noticed that I would take any and every bounce, and turn that into an SR..I ended up sometimes having like 10 pips difference between them. I'm exaggerating a bit, but it was similar to that. And due to that, I just couldn't find an entry. What time-frames do you plot your SR on, and how many bounces do you need for it to be a strong, medium or weak line? Also, how much usually 'space' do you have between the lines?

Also, What SR are you talking about on the larger time frame? I didn't quite follow you. Was this on my chart?

Quote
State education let me down too... or maybe it was my parents.
Haha I'll try to be more careful.
  • #29
  • Edited 10:58am Apr 27, 2010 10:22am | Edited 10:58am
and if I hadn't exited the trade...I could have either exited for a much smaller loss or even profit in the time to come. A was the entry, and B was the exit right before the weekend, as I thought it would gap up on weekend open.

Grr.

I should have been watching the market as my justification for exiting the trade was that I would get back on it after it went my way. Back testing had me so busy.

The entry where the break of the support and trendline was a great spot to get back in! I am kicking myself, chair and everything around a 1 meter radius.

EDIT: And I keep watching...as it goes down, and my trade would have been profitable now. We will be hitting 142.00.
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  • #30
  • Edited 4:16pm Apr 27, 2010 3:20pm | Edited 4:16pm
Quoting Tbb

I wanted a general idea that goes something like 'If EURUSD goes -30 or -40 for you, then chances are it will continue going more negative' or something like 'If GBPJPY goes -50 or -60 for you, then chances are it will continue going more negative'

That kind of rule would help me out to stay somewhere in the middle
that kind of rule would be a holy grail as you could trade with a garanteed edge. You will find such statistics from your backtesting but they will be completely useless if used on tomorrows data. you are wasting your time using backtests to find statistics to create rules to trade future price action. I wasted 2 years and 24 pages of sophisticated code. I used to spend hours and hours, week after week, month after month bactesting, mostly manually for nothing, apart from the fact that the statistics are useless going forward, trading is mostly psychological which the bactest does not address at all. there are smarter people with much more money than you or I that have tried to exploit statistical edges based on past data and they also lose money. If such a thing were possible a computer would have gutted the market years sgo and it would no longer exist.I am just trying to save you wasting time. You are sharing yourself completely and honestly and this honesty is your greatest advantage. Facing and accepting the reality of trading you will enable you to survive much better than those less willing to accept the truth
BTC Return This Year: na
  • #31
  • Apr 27, 2010 3:30pm Apr 27, 2010 3:30pm
Quoting Tbb
To my experience trendlines have worked nicely for me and a lot of the analysis I do respects the trendlines on my chart. They are a nice signal for me to tell me which way the trends going, so I only trade that way. Well...i try.

However, the idea of just using horizontal SR would make life really simple. Although, when I have tried this in the past, I noticed that I would take any and every bounce, and turn that into an SR..I ended up sometimes having like 10 pips difference between them. I'm exaggerating a bit, but it was similar to that....
Ok thats good, what works for you. I use 2 types of SR for day trading its similar to yours just using hourly levels and I trade off these on the 15min chart just trading the breakouts and reversals and just following price around basically, very effective I love it (see posts by Sisse who uses a similar method). But I am also looking out for higher level zones (which is where my day method overlaps with my swing method). The SR zones are the pivotal (not pivot points) highs and lows of previous strong movement in price on the 4hour, daily and weekly charts. They keep me out of trouble on the day trades and I use them for swing trade entries.
  • #32
  • Apr 27, 2010 4:02pm Apr 27, 2010 4:02pm
Look at equity instead of pips. Not pips instead of equity. You can make 1000 pips this month and loose 10 next month and your account flatlines.
100% of traders are losers. Just that some win more than they lose!
  • #33
  • Apr 28, 2010 4:02am Apr 28, 2010 4:02am
Quoting Mr demark
Look at equity instead of pips. Not pips instead of equity. You can make 1000 pips this month and loose 10 next month and your account flatlines.
The market moves in pips, the clue is in the name. From a market analysis perspective looking at equity is meaningless.

Look at equity percentages in relation to money management, not analysis.
  • #34
  • Last Post: Apr 28, 2010 4:05am Apr 28, 2010 4:05am
Quoting Tbb
I need to somehow find a middle area, between letting losses run and cutting too short.
Aren't you using technical levels for stops and targets? If not, why not?

As for rules, it should be fairly easy to write a set of basic rules for a S/R strategy.
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