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Silent Service Method

  • #8,961
  • Jun 3, 2010 6:43am Jun 3, 2010 6:43am
Quoting clockwork71
Patience is without a doubt the hardest part in my opinion.
Patience has always been the hardest part of my trading, and it is going to get a good test today and tomorrow.

Last night the market went against me and stopped out two of my trades.

That brings the monthly total to; 1 BE and 3 losses for a total equity draw-down of -5%. For me, this leads to doubt, and I start asking myself a lot of questions, such as;'Did I make stupid trades?', 'Am I over trading?', 'Were there clear signs that these trades would fail?' and so on.

I currently have 2 trades running that are in the profit, so not everything is going badly.

Tomorrow is NFP day, so I expect today to be a narrow range day, thus the need for patience.

Now is not the time for revenge trading or looking for a quick entry to make back my losses. Now is the time to let the market settle, and then react to the NFP report tomorrow, then close, then re-open on Sunday. Then it will be time to look at the charts and wait for a clear entry signal to form. In the meantime I can keep myself busy by analyzing the trades that failed, and reviewing charts to study SR, and entry signals.
  • #8,962
  • Jun 3, 2010 7:19am Jun 3, 2010 7:19am
I finally closed all my EURUSD trades. We are getting a bit of sideways movement that is making me uncomfortable, so I am going to sit on the sidelines for a bit. This could be nothing more than a pause on the way down (I believe Pring calls them "ledges" or "shelves") but I am going to wait and see.

There should be another good breakout entry on the way down to 118 or further, so I am not worried. I pyramided this one from 131.5, so I did well enough that I am not willing to give up any pips in a possible retrace to 125 or 129.
  • #8,963
  • Jun 3, 2010 7:44am Jun 3, 2010 7:44am
Quoting jharvey407
That brings the monthly total to; 1 BE and 3 losses for a total equity draw-down of -5%.
I assume you're referring to May with these numbers?

I would say if you did 4 trades in May, that's certainly not over-trading, however just eyeballing the numbers, it does look like you might be risking too much equity on each trade. For instance assuming $0 P/L on the break-even trade if you had 3-losses lead to a 5% equity drawdown, you're risking 1.66% on every trade -- it sounds like you're not comfortable with that amount of risk, so why not dial back the risk to 1% or even 0.5% on each trade? That way no one trade (or series of trades) can demoralize you.

This part you can skip if you've got position sizing down, but for the new traders reading the thread:
If you're trading w/ OANDA they will tell you before you open any trade what the P/L will be if your take-profit or your stop loss gets hit, that way you know going in what your risk is and you can adjust the size of the trade accordingly. If you're using MT4, Stefx wrote a great program that shows alot of stats for a given pair (spread, $value of a tick, etc). If you know you have a 300pip stop loss and only want to risk $100, you better make sure your pip value is only 33c/pip before you enter the trade.

Once you get into the habit of checking your stop vs. what your target might be, you get a feel for the risk-reward of your trading and a lot of times this will prevent you from taking B-/C+ Setups...

As for draw downs, we've all been there. But that being said, May was a tough month. Some of the best investors in the world had not-so-good Mays...here's an excerpt from a June 1st Bloomberg news story:

(BN) Hedge Funds Post Biggest Monthly Losses Since Lehman Aftershock

June 1 (Bloomberg) -- John Paulson, Louis Bacon and Andreas
Halvorsen navigated the global market turmoil of 2008 with
little or no damage. They weren’t as successful last month as
the Dow Jones Industrial average had its worst May since 1940.
...
Paulson’s Advantage fund dropped 6.9 percent through May
21, dragging it to a year-to-date loss of 3.3 percent, according
to investors with knowledge of the results, who asked not to be
named because the information is private. Halvorsen’s Viking
Global fund fell 3.4 percent in the same span and 2.9 percent
for the year. Bacon’s Moore Global declined 7.7 percent as of
May 20 and 4.8 percent in 2010, investors said.
...
SAC Capital Advisors LLC, the hedge-fund firm run by Steven
Cohen in Stamford, Connecticut, with about $12 billion under
management, lost 2.9 percent last month through May 21 with its
SAC Capital International fund, trimming this year’s gain to
about 4 percent, according to people familiar with the firm.
...
Citadel Investment Group LLC, the $12 billion hedge-fund
firm run by Ken Griffin, lost about 2 percent with its biggest
funds last month through May 21...

...And the list goes on and on. So take heart, you're in good company!
  • #8,964
  • Jun 3, 2010 7:53am Jun 3, 2010 7:53am
Quoting jharvey407
Patience has always been the hardest part of my trading, and it is going to get a good test today and tomorrow.

Last night the market went against me and stopped out two of my trades.

That brings the monthly total to; 1 BE and 3 losses for a total equity draw-down of -5%. For me, this leads to doubt, and I start asking myself a lot of questions, such as;'Did I make stupid trades?', 'Am I over trading?', 'Were there clear signs that these trades would fail?' and so on.

I currently have 2 trades running that are in the profit, so not everything...
I would study what happened, and see if there is anything you can claim as your own mistake. If that's the case, try to learn from it. But sometimes, there is nothing you could have done, and it just goes against you.

I wouldn't be too quick to get into anything else until next week at this point. Good call on that front.
  • #8,965
  • Jun 3, 2010 7:54am Jun 3, 2010 7:54am
Quoting TraderDavo
I finally closed all my EURUSD trades. We are getting a bit of sideways movement that is making me uncomfortable, so I am going to sit on the sidelines for a bit. This could be nothing more than a pause on the way down (I believe Pring calls them "ledges" or "shelves") but I am going to wait and see.

There should be another good breakout entry on the way down to 118 or further, so I am not worried. I pyramided this one from 131.5, so I did well enough that I am not willing to give up any pips in a possible retrace to 125 or 129.
Reasonable thinking. We really are going sideways, and as such....there should be another entry. Good trade.
  • #8,966
  • Jun 3, 2010 7:55am Jun 3, 2010 7:55am
blog updated.
  • #8,967
  • Jun 3, 2010 8:09am Jun 3, 2010 8:09am
Quoting TraderDavo
I finally closed all my EURUSD trades. We are getting a bit of sideways movement that is making me uncomfortable, so I am going to sit on the sidelines for a bit. This could be nothing more than a pause on the way down (I believe Pring calls them "ledges" or "shelves") but I am going to wait and see.

There should be another good breakout entry on the way down to 118 or further, so I am not worried. I pyramided this one from 131.5, so I did well enough that I am not willing to give up any pips in a possible retrace to 125 or 129.
Davo,

Could you clarify the numbers a bit? Do you mean 1.1800 and 1.3150 etc? Or are you talking about a different pair?
  • #8,968
  • Jun 3, 2010 8:27am Jun 3, 2010 8:27am
Quoting InfinitySL
I assume you're referring to May with these numbers?
Kind of... I count trades only once they have closed. Out of the 4 trades that have closed so far this month, only one was opened in June. The others were opened in May.

Quoting InfinitySL
... it does look like you might be risking too much equity on each trade. For instance assuming $0 P/L on the break-even trade if you had 3-losses lead to a 5% equity draw-down, you're risking 1.66% on every trade
My maximum risk per trade is 2%.

Quoting InfinitySL
-- it sounds like you're not comfortable with that amount of risk, so why not dial back the risk to 1% or even 0.5% on each trade? That way no one trade (or series of trades) can demoralize you.
I'm not uncomfortable with the level of risk, especially when I compare it to the level of risk that I used to trade at.

I wouldn't say that I am demoralized, but that I simply want to take a look at the trades and make sure that they were good entry signals. I have a feeling that when I look at the charts I am going to see good entry signals that occurred during the start of an 'accumulation' phase and that I got shaken out during some range bound market action.

That being said, perhaps the lesson here is one on recognizing the beginning of range bound trading, or phases.

Of course one could argue that a range bound market can only be recognized after the fact.

I know that I don't have to worry about being impatient and chasing the market, because those are lessons I have learned in the past.

Quoting InfinitySL
If you're trading w/ OANDA they will tell you before you open any trade what the P/L will be if your take-profit or your stop loss gets hit, that way you know going in what your risk is and you can adjust the size of the trade accordingly. If you're using MT4, Stefx wrote a great program that shows a lot of stats for a given pair (spread, $value of a tick, etc). If you know you have a 300pip stop loss and only want to risk $100, you better make sure your pip value is only 33c/pip before you enter the trade.

Once you get into the habit of checking...
I actually have a spreadsheet that I wrote to calculate P/L etc. I enter my entry and stop-loss, and it calculates what % of capital I am risking. It arranges it in a grid so that I can quickly determine my position size based on pip value.

Quoting InfinitySL
As for draw downs, we've all been there. But that being said, May was a tough month. Some of the best investors in the world had not-so-good Mays
I actually closed May with a 3.8% equity increase. While not huge, it is above my goal of 2%.

Thanks for all of the input. It's nice working with an intelligent, successful, supportive group of traders.
  • #8,969
  • Jun 3, 2010 8:54am Jun 3, 2010 8:54am
Quoting jharvey407
Davo,

Could you clarify the numbers a bit? Do you mean 1.1800 and 1.3150 etc? Or are you talking about a different pair?
Yeah, that is what I meant.
  • #8,970
  • Jun 3, 2010 9:34am Jun 3, 2010 9:34am
Quoting jharvey407
My maximum risk per trade is 2%.
I hear you. Different people have different styles and risk tolerances so I shouldn't suggest smaller trade sizes than what you're comfortable with. However even if you have a system that wins 70% of the time, there's a non-zero probability you could have 3 or 4 or even 5-losses in a row. So having a 5% draw down when you're risking 2%/trade seems pretty normal to me.

Quote
I wouldn't say that I am demoralized, but that I simply want to take a look at the trades and make sure that they were good entry signals.
Just to clarify. I wasn't saying YOU were demoralized. I was simply saying that having a run of losing trades can be demoralizing.

Quote
I actually closed May with a 3.8% equity increase. While not huge, it is above my goal of 2%.
I don't know... I'd say that 3.8%/mo is huge... that works out to about 56%/year. The best hedge funds in the world usually only make 20-30%/year.

Anyway, I'm sure you'll get thru the draw down. If none of us had draw downs we'd all be millionaires by now.
  • #8,971
  • Jun 3, 2010 12:30pm Jun 3, 2010 12:30pm
We were briefly discussing "box" trading yesterday, and I wanted to point out one that I think is at a very interesting point right now: The GJ.

I first want to say that it is more of a "downward channel" than box, but the concepts are all the same. Here is the weekly:

http://i48.tinypic.com/5x0c91.gif


The red lines outline the major "box" or "channel. Purples are my SR and the yellow is a 200 SMA. The teal/aqua line is a "intermediate trendline" that seems to effect price quite often, even though it is not at the extreme. You can see it far better on this daily:

http://i48.tinypic.com/2wovns7.gif

Today's daily bar is shaping up to be a bearish pin. Here are the reasons I LOVE this potential trade:

1) its at a major S/R - 135.
2) Its with the overall trend.
3) Its sitting on a intermediate channel trendline.
4) I think you can get in for at least 2:1 RR, as you have to risk 200 pips for an entry at around 134.5 and I don't think there is much resistance until the 130.5 area. Even if it only trades back down to the bottom of the channel its a 750-800 pip move.

Again, waiting on closure, but this could be a good example of watching "boxes" and "channels". If we get a close below 135 I will definitely be entering at the break of the pin tomorrow.
  • #8,972
  • Jun 3, 2010 12:31pm Jun 3, 2010 12:31pm
Here's an outside the box currency -- The Hungarian Forint (USD/HUF)...

As you can see we printed a weekly pin last week, right at resistance (~230ish). So you would expect this to be bearish, however it looks like it's in the process of invalidating this pin.

Weekly Chart (ignore the "legend" - I think I had my cursor on a random point on the screen when i took the screen shot)
Attached Image (click to enlarge)
Click to Enlarge Name: 2010-06-03_HUF-Weekly.png Size: 48 KB



Daily:
Attached Image (click to enlarge)
Click to Enlarge Name: 2010-06-03_HUF-Daily.png Size: 45 KB


And of course there's always a story that goes along with these things.
http://www.businessweek.com/news/201...s-markets.html

A delicate situation indeed...
  • #8,973
  • Jun 3, 2010 1:58pm Jun 3, 2010 1:58pm
Anybody like that gbp/chf daily chart for a short?

I'm deliberating......not a fan of using the "NFP stoploss".
  • #8,974
  • Jun 3, 2010 2:01pm Jun 3, 2010 2:01pm
Quoting Low
Anybody like that gbp/chf daily chart for a short?

I'm deliberating......not a fan of using the "NFP stoploss".
If I were a bit more risk tolerant I'd rather be thinking about shorting gold. That uptrendline scares the shit out of me though
  • #8,975
  • Jun 3, 2010 2:16pm Jun 3, 2010 2:16pm
Quoting o990l6mh
If I were a bit more risk tolerant I'd rather be thinking about shorting gold. That uptrendline scares the shit out of me though

I put a few TL's on gold and the nearest one (short-term uptrend) looks like it would be hit around $1187, but you would have to put your stop above $1226...not the best RR.

Personally I have no problems shorting gold, I would just want a way-better entry than it's showing presently, and more confidence in a good southbound run.
  • #8,976
  • Jun 3, 2010 2:32pm Jun 3, 2010 2:32pm
Quoting Low
I put a few TL's on gold and the nearest one (short-term uptrend) looks like it would be hit around $1187, but you would have to put your stop above $1226...not the best RR.

Personally I have no problems shorting gold, I would just want a way-better entry than it's showing presently, and more confidence in a good southbound run.
As for the setup, I'm happy with that as it looks right now. I have 1225 as a PPZ and we seem to be forming a big bearish bar bouncing off of that., forming a potential lower high as well.

It's the R:R that I'm not happy about either. I'd prefer it to break and retest the major uptrendline. Until then I'll be a spectator.
  • #8,977
  • Jun 3, 2010 4:26pm Jun 3, 2010 4:26pm
Quoting TraderDavo
We were briefly discussing "box" trading yesterday, and I wanted to point out one that I think is at a very interesting point right now: The GJ.

I first want to say that it is more of a "downward channel" than box, but the concepts are all the same....

Hey Davo,

I like your thinking - although I dunno about you, but I reckon 140 looks better.
Thanks for the heads up, I'll be watching this one from now on

Cheers,
  • #8,978
  • Jun 3, 2010 4:40pm Jun 3, 2010 4:40pm
Quoting TraderDavo
We were briefly discussing "box" trading yesterday, and I wanted to point out one that I think is at a very interesting point right now: The GJ.

I first want to say that it is more of a "downward channel" than box, but the concepts are all the same....
For what it's worth, I believe in channel trading as well. However, for whatever reason - I don't typically trade them. Don't know why.....just haven't. But I see the value in it.

Chris
  • #8,979
  • Jun 4, 2010 5:19am Jun 4, 2010 5:19am
NFP friday, nothing going on...
Position trader - Anything intraweek is just noise...
  • #8,980
  • Jun 4, 2010 6:42am Jun 4, 2010 6:42am
Quoting Arfer Daily
NFP friday, nothing going on...
Doesn't take long for that to change hey

EURNZD going at it again
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