Building an equity millipede

I would be more inclined to agree with you.

Im sure there are successful traders doing well on shorter time frame however we can all do just as well and even better with longer approach.

I dont understand why traders shun the idea of long term trading but it is probably because they are looking for immediate solutions to a riddle that has existed for centuries.

Unfortunately, my method will not be favourable to many new traders with boiling young blood. Hope they are persistent enough to go around the block few times and then re-evaluate. Youth and money dont go along well.

Majority of the readers here unfortunately need a new perspective, not necessarily needs to be mine but hopefully from someone who is genuinely doing well and is here to unconditionally add some new perspective.

Most trading system threads starts off with set of pre-defined entry and exits. My method doesnt and it works very well for me.

I have closed one of my bundle of positions on usd/chf.

I personally called this group uc4s and it is one of the smaller groups that I currently hold on this pair.

I started adding positions into group uc4s around first week of june, from 1.15000. Not all on same day or same week.

From june there has been a very good down trend. I was little hesistent at first because april, may on weekly/monthly chart has been a bull run. BUT I took emotion out and went with the flow. I entered with minimal risk and see what would play out. I kept my bias of the downtrend as usd/chf has been down on monthly chart since 1999!

I had a small group called uc3s that took small profit of the 2 months bull run of april and may. Closed out on 3rd week of june.

Coming back to uc4s, I was adding positions very successfully. I hardly had any loss. It was just straight down. If any traders in the last month decided to intraday trade and had any orders for buy they probably had tough time pulling the rabbit out of the hat.

I exited with 11 positions @ 2 standard lot per position, around 1.05100. Its fair amount of money. I kept 2 of the larger positions and moved them to group uc4b and hope they survive for the next 2 years.

One of the reason I closed was the support around 1.04900 and what I consider to be an exhaustion of sellers.

Get the gist?

Moving on.

thx for sharing your method, sort of reminds me of livermore's approach, he wrote about it in his book that to make big money in the stock markets one has to catch the big swings not jump in and out all day. He also says its a mistake to establish an entire position at one go but rather to pyramid into the position as it proves you correct. There's no question about him being a very very successful trader.

However this is worthwhile only for people with a large a/c. Your positions are very impressive but can i ask how much money you started out with.

thx again.

why is it only for people with big accounts? you can trend trade with a small account if you time your entries right.

regards damien

Good evening all

Thank you for your interest so far. I know there are alot of information from my posts however i find them all relevant. Most likely you are an experienced trader and already know many of the points I illustrate. Hope you will appreciate my efforts at trying to pass on a method that works so well for me in a way that will make you think and adapt to its potential. Im trying to draw a blueprint of my method in your thinking procedure.

My previous post was about my mid term exit on usd/chf. Although I shun the limelight I found it necessary to reveal my exits/profits as this will eventually flow into my next topic: mid term exits.

There is nothing special to mid term exits. You could consider them as locking in the profit or I will consider them 'managing my positions.' Some may even consider as money management but I would like to consider it as position management. To me, position management is simply, managing the set of groups of positions that I control so that I can diversify the reward. Ofcourse I prefer my positions to run 2-3 years for 9000 pips per position for a stupendous return but some weekly trend can change after a year or less. However I can control the flow of the reward and keep the capital balance and equity both increasing.

I exited 11 positions for a large increase in my capital balance and holding 2 of the larger positions to ride the huge monthly trend that started from 1999. This will be my main big group. As you can see Im diversifying my reward.

If the main downtrend continues after correction I will start building again and after an extended period of growth, I will diversify the group by closing few legs to ensure my capital balance keeps growing and moving some legs to the main big group above for a long term growth. This smooths out my equity curve.

I wish I started doing this since 1999 on the usd/chf when the monthly downtrend began. The payout would be in the millions. But its never too late in forex.

Currently I hold $100K+ worth of positions in gbpjpy. I will diversify very soon if price doesnt close below 131.280. But it doesnt matter if it does close below I will most likely still diversify the smaller group for an increase in balance and move any legs to the longer term group in gbpjpy. My main group started mid last year around 159.000 and current price is about 133.500. I will diversify and move remaining legs to this big group. This downtrend of gbpjpy started from mid 2007 and i only joined mid last year. I dont feel missed out in any sense.

$100K+ worth of position is all profit because I was able to diversify earlier this year which covered all my losses. Returns like this is only possible cause I respect and follow the main trend.

Moving on.

Hi. Your point of view is very intersting but I would like to ask You how much does Swap rates affect your trading system..?

My starting capital was 6 figures. However my capital never went -10%.

I can assure you, large capital is not needed. I have a good example on first page of the thread.

What you will realize is that most short term traders aiming at 1-2% increase per week can also be easily done by entering at a low risk and letting the position grow on the trend.

@PipEasy
Can you find one example and show us on the chart, please?

pipeasy, you mentioned diversifying. Do you look at correlation at all? In other words, if you're already in a EURUSD position would you still consider a USDCHF position even though they're negatively correlated? Having positions in both (say log EU and short UC) is really not diversified due to the negative correlation on average.

good question. I will pm you with my reply as I would like to keep the intended flow of my explanation continuous without jumping foward and backwards.

yes i will soon. thank you

Good question and unfortunately this will be last for today as the day has taken its toll on me.

Even though im trading from one large capital pool i treat each pair of currency as individual investment project (in my words). Im well aware of the correlation between pairs of currency however it is something that i will neither focus nor ignore. I follow what the price is telling me and sooner or later the market will justify my actions accordingly. As long as my risk is covered I will let the market be the judge. But yes sometimes i do hold positions concurrently in same direction but are negatively correlated pairs only to find the market will be a fair judge.

When i mention diversifying my positions; I meant the diversification of the already existing groups of positions within that particular currency pair. The sole purpose of the diversification is to smooth out my equity curve.

I have noticed that you have interest in hedging. I dont know where your views stand in hedging however what would you say if i have groups of positions that are both buy and sell on the same currency pair? Will you also advise me that all im doing is offsetting each other?

Please dont take my questions as any form of disrespect as its not but perhaps trying to help you form a different perspective.

Good night all.

Also I would like to mention that the last 4 days definitely has taken its toll on me. I will try and complete my posts relatively soon.

Hello,

You said "I took emotion out and went with the flow". I am asking myself, what flow ? As you said, in april and may it was a bull run, what made you go short beginning of june ?

A five star thread for me!

Hello mlambole and other members of the forum

Good question and my reply will be important.

I cannot predict any 'intraday' movements especially the next 50-70 pips of movement. Certainly not from indicators and not in my focal/thinking capacity. Also I consider myself a bigger person (in a non-egotistical way) than to be sitting in my leatherbound chair and pondering where my next 50 pip opportunity is. My intentions are different and it is important why.

As long as I enter the market and participate, I could be either buying or selling on the same currency pair. I let the market decide my actions.

My job is to enter at minimal risk and let the market show me its intentions. Entering the market is something everyone needs to practice on. It is a quest that you must complete.

For me, I have various entry methods that are now second nature to me. One of my favourite is breakouts. Areas where price needs to breakout. And when it does breakout I will go with the flow of the mass. I request everyone to have a look.

Usd/chf had a bull run in april and may 2010. Around first week of june I started noticing that my newly added legs for the uptrend was struggling for survival. But before I even noticed this I was already entering buy and sell from the 'market action.'

As long as I do my job of entering with minimal risk either buy or sell I will let the market be the fair judge. You will only notice the bigger picture of the market after a period of growth on your positions. As long as you have controlled the risk, let your positions work for you.

From 2nd week of June it was obvious that the trend has changed when support was broken on the daily chart. It doesnt matter if trend didnt change cause I will diversify my holdings around that period of time.

It was group 'uc3s' that held positions on the uptrend of april and may. When I diversified this group, I closed out enough legs to ensure my capital balance has increased from this 'minor' endeavour. My profit was more or less around $22K. Then I moved 3 of the larger legs that I did not close out into a new group that I called uc1b to continue fighting for me incase this 'april, may uptrend' is the start of something huge.

Unfortunately, group uc1b died in action (only recently) with breakeven. They had a good fight but the main monthly downtrend since 1999 was just too much for them. I have no remorse at their departure as I got hundreds more soldiers on the battlefield.

Moving on.

Good day all

Something I appreciate more as I get older is the beautiful weather and how it plays on my garden. Today is one of those days. Just before I head out for a lunch appointment I thought I tell you a story about myself.

Everyone has vice. I dont smoke, drink heavily or chase tail however I do collect comic books. My favourite is superman and Im an avid collector. There has been an occassion where I actually attended an auction house overseas to bid for a prized number in the series. In this trip I befriended a collector who had a wide interest and has been very successful in his field. I welcomed his friendship and attended few of the auctions with him.

What I noticed at the time of the auction was that he was buying quiet a few pieces of antiques. I dont personally see the point of buying a marble head of a roman imperial for $600K even if it was 1800 years old. We were obviously not on the same level in antiques. He looked somewhat disappointed when I bid $5000 for an egyptian jar apparently few thousand years old but I must admit I only bid cause I got carried away. Luckily it went under the hammer for much more. And it wasnt a jar but some important washing bowl..

Anyways, we had few quiet drinks and got to know each other alot more. Our common grounds was that we were both traders. Trading different instruments but traders nonetheless. He continued telling me that his trip was not only about buying but also selling. From what he was showing me, he had sold few millions of antiques the last few months and his trip is just about to conclude. I asked what he considers to be the important aspect of his success and he said it was nothing but just buying at reasonable price and holding cause he knows that antiques of this calibre will only rise in value. Not all of them but most of them and he knows which ones do.

He noticed that I wasnt talking much and he returned the same question to me. I replied, 'wilson, i do the same as you do..'

Are you a trader? Then be a trader. We buy items to hold indefinitely increasing its value. The whole purpose of a trader is to buy something cheap or reasonable and selling it later on for alot more. Thats what I perceive as a trader.

Moving on.

Dear pipEASY,

Your system looks like the Turtle Trading System. A trend following system. In your case you maintain your core long terms positions and countertrade the short terms trade as well. How does the swap rates affect your profits?

hi pipeasy

just thought i would say loving the thread so far lots of good info. im guessing most people round here will call your style of trading investing? keep the good info coming.

regards damien

Hello chonghm & carolco

Swap rates shouldnt hinder you. Swap rate is something that I neither forget nor ignore. What you need to acknowledge is that the numerous positions you hold will grow 'exponentially' for you the longer you let it. You need to grasp this concept.

I can also reassure myself that the bundles of positions that I hold in other curreny pair which rewards with positive swap balances out the small loss I incur in negative swap or the fact that my exponential growth in equity will outshadow any miscellaneous costs involved in the long run. Swap rates remain static however the growth of my equity is growing exponentially. Of course swap will play a vital role for a trader on short term, eroding away on their hard earned small lots of profits. And unfortuantely they will be discouraged to trade such pairs which is quite disheartening to see.

You need to be become a bigger person and not let things like this hinder your actions.

Power of growth starts from your participation in the market. The trend of the market will grow your equity to new dazzling heights. And that is where your focus should be.

Very good question indeed.

P.S Im not aware of a a system/method called turtle. My contributions here are all personal.