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Building an equity millipede

Dear pipEASY,

Thank you for your prompt reply.
I suppose for your counter trend trades, you trade in a different account as the US forex co does not allow hedging.

Do you wake up everyday at the opening candle to watch and trade or do you use an EA. If an EA can you share it?
  • Post #42
  • Quote
  • Edited 3:52am Jul 14, 2010 2:24am | Edited 3:52am
Quoting damosdmf
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
I appreciate the warm remarks. It makes the effort worthwhile.

Yes, I dont mind the notion that im an investor however im also a trader + collector. And I collect healthy positions that will work for me. I collect comic books and collect positions in the market.

Dear all fellow traders

I have spent considerable personal time to relay my thoughts to the general public as concise as possible. Even though it is unfortunate that it is commnuicated through a public forum where the scepticism is naturally high. I request that if you appreciate my efforts to please consider a read from the beginning of the thread as the flow of my explanation was all planned out before starting the thread.

Sincerely,

Graeme
Quoting chonghm
Dear pipEASY,

Thank you for your prompt reply.
I suppose for your counter trend trades, you trade in a different account as the US forex co does not allow hedging.

Do you wake up everyday at the opening candle to watch and trade or do you use an EA. If an EA can you share it?
Excellent question.

Please click my profile for my broker. I believe you cant recommend a broker publically in this forum? My broker allows hedging on same account.

Daily candle open for me is 9am sydney time. Start of asian market. I dont have any ea.

Graeme
  • Post #44
  • Quote
  • Edited 5:15am Jul 14, 2010 2:53am | Edited 5:15am
Welcome all and the newcomers.

So far I have explained in my posts

1. Benefits of long term trading and its potential reward
2. Starting capital
3. Importance of low risk entries and my recommendation on entries
4. Power of participation
5. Entering both buy and sell and how it benefits the trader on the long term
6. Diversifying groups of positions to control the flow of reward

We have come a long way.

Topics left,

1. Required thinking process to be a long term trader
2. Emotion control

As xman has previously requested I will soon organise some charts for a better understanding of my thinking process.

Trading system/method is so much more than just when to enter and when to exit.

It starts from your perspective.

Moving on.
Quoting pipEASY
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...
I've come to believe that hedging isn't for me, though I've met other posters claiming to use it profitably. Mathematically when you fully hedge a position you create a new position with a delta of 0, yet you've also increased your margin use to do it. If you close a position that's not working out, you reduce the margin used and also create a position with delta 0 (i.e. no position).

I'll admit it: I'm not a profitable trader (yet). When I meet a poster who appears to be profitable and has a ring of truth about them I pay attention.

I'm an open minded person so I'd like to hear how hedging fits into your overall strategy. I've changed my mind back and forth over the years on all sorts of issues.
You are in a maze of twisty little passages, all alike.
Pipeasy,

I just want to thank you for taking the time to explain your trading method and experiences. I have just finished reading your posts for the third time and you have certainly changed the way I look at my trading.

I look forward to reading more from you soon.
  • Post #47
  • Quote
  • Edited 10:07am Jul 14, 2010 8:10am | Edited 10:07am
Quoting stevegee58
I've come to believe that hedging isn't for me, though I've met other posters claiming to use it profitably. Mathematically when you fully hedge a position you create a new position with a delta of 0, yet you've also increased your margin use to do it. If you close a position that's not working out, you reduce the margin used and also create a position with delta...
Thank you for your correspondence.

Im glad to hear that you have an open mind. Please keep your open mind for me as I will try and describe something to you.

When you fully hedge 2 equal positions you are offsetting each other and nobody can argue with that fact. I agree that you cannot squeeze water out of a stone. However you can hedge completely when the market goes against you to stun your loss. This is completely different story.

But there are also other sides to the story.

I enter what the market dictates.

January 1st

1. Monday - enter long because price pattern at support. Move sl to BE
2. Tuesday - enter sell after inside bar. Move sl to BE
3. Wednesday - enter sell at compelling momentum. Move sl to BE
4. Thursday - enter long at daily open candle in lieu with weekly trend. Move sl to BE
5. Friday - enter long at pennant breakout. Move sl to BE
6. Monday - enter sell at double top. Move sl to BE
7. Tuesday - enter long at 1hr trendline. Move sl to BE
8. Wednesday - enter long at daily open candle in lieu with weekly trend. Move sl to BE
9. Thursday - enter sell at compelling momentum. Move sl to BE
10 Friday - enter sell at diamond formation breakout. Move sl to BE

This is just example of 2 weeks but illustrates what I do.

Now I will never enter like the above, or be in the market everyday. This is just an example.

Above 2 weeks made me 10 legs.

To establish these 10 legs I made few sloppy entries that cost me a total -300 pips. I will write this down.

Buy positions - 1,4,5,7,8
Sell positions - 2,3,6,9,10

5 buy positions and 5 sell positions. Call this group a10.

Some legs die fast from the price fluctuations. Some legs continue battling out.

I will let this group a10 to settle down for a week or two or more. Basically letting the market decide their fate. Lets just say the main weekly trend has been down for the last 8 months.

1 week later - position 1,4 of buy still alive
position 6,9,10 of sell still alive

**I dont need to look at my capital balance or equity yet

2 week later - position 1 of buy still alive
position 6,9,10 of sell still alive

3 week later - only position 6,9,10 of sell still alive

but.. it doesnt stop here. Cause whilst group a10 has been fighting it out, I was collecting more positions and had another group b10. And this time I was more sloppier with my entries and lost -400 pips to establish group b10.

Now b10 had positions both in buy and sell as well cause all I ever do is just follow the flow of the market.

Fast forwading few weeks, out of the positions in group b10 only 2 positions survived, peach and watermelon.

I will now diversify my groups and add a10 and b10.

I have 6,9,10 from a10 and peach, watermelon from b10. Total 5 positions. Im not surprised to see that the surviving legs are all sell.

I look at my watch and it is now mid february and market has followed the main trend and has moved 1200 points.

If I close all 5 positions now, each position has avg 600 pips. Obviously leg 6 will be the biggest then 9 then 10 then peach then watermelon.

So my total pip if i close all 5 would be 3000. But I dont forget that I lost -700 pips to establish these. I close 3 of the smaller ones; 10, peach and watermelon for a total 1500. So I increase my capital balance by 800 pips. What about 6,9 my bigger ones?

They are now promoted and moved to group godzilla1 where positions, zz, xx, yy already reside and have been for the last 1 year.

Now this is a scenario I conjured in my mind but its exactly what i do but I will do the above in a stretch of longer time frame.

Everything i do is multi-layered and I treat each individual groups of position as completely different entity even though they are from the same currency pair.

Im not technically hedging as you might think i am but alot of the readers categorize me immediately as that i am. When you first asked me how I effectively hedge it was little out of line to what I was trying to describe. Probably due to my poor description but I went ahead and answered and Im glad that I have

Im glad you brought this up stevegee58.
Quoting Someone
Pipeasy,

I just want to thank you for taking the time to explain your trading method and experiences. I have just finished reading your posts for the third time and you have certainly changed the way I look at my trading.

I look forward to reading more from you soon.
Thank you someone. Your feedback is appreciated and it makes my efforts worthwhile. Please keep an open mind and all the best with your trading.

Graeme
This is a great thread, thanks for taking the time to share your knowledge.

How do you decide to close your biggest legs (1+ years)? Is it just based on when you think the monthly trend has changed?
Quoting dexter_FX
This is a great thread, thanks for taking the time to share your knowledge.

How do you decide to close your biggest legs (1+ years)? Is it just based on when you think the monthly trend has changed?
Good evening dexter_fx

Thank you for your question.

I will only consider closing bigger groups when there is a considerable change in the weekly/monthly trend. Weekly trends that has been going for almost a year will not all of a sudden change trend in a week. It will take alot of power to change the main trend. With enough experience you will notice these. Even then I might not close out the large group completely but diversify again.

Do you know what happens when you cut a millipede into two pieces?

It becomes two separate millipedes.

There is a reason I compare my trading style to a millipede.

Sincerely

Graeme
Pipeasy,
Really good explanation of the way you enter and manage your positions

in post 47, thank you so much for taking alot of time to get it across to us . Think I will try this idea starting on monday, would you reccomend
any pair to start with?
Geoff
Quoting pipEASY
1. Monday - enter long because price pattern at support. Move sl to BE
2. Tuesday - enter sell after inside bar. Move sl to BE
3. Wednesday - enter sell at compelling momentum. Move sl to BE
4. Thursday - enter long at daily open candle in lieu with weekly trend. Move sl to BE
5. Friday - enter long at pennant breakout. Move sl to BE

...

To establish these 10 legs I made few sloppy entries that cost me a total -300 pips. I will write this down.
Thanks for that detailed response. I have some questions about the snipped sections above.

On each of the 10 hypothetical entries you have the notation "Move sl to BE". To me that implied that each of those trades move in your favor and you moved the SL to BE and now had 10 effectively risk-free trades. But later you said you'd lost 300 pips from those trades that didn't work out.

How did you decide to close the trades that were losses?
You are in a maze of twisty little passages, all alike.
  • Post #53
  • Quote
  • Edited 11:22am Jul 14, 2010 10:56am | Edited 11:22am
Quoting GEOFFREY62
Really good explanation of the way you enter and manage your positions

in post 47, thank you so much for taking alot of time to get it across to us . Think I will try this idea starting on monday, would you reccomend
any pair to start with?
Geoff
Good evening, Geoff

Thank you for your question.

I have started adding positions on downtrend for eur/gbp this week. Group egbb4

Undoubtedly you wish to know my intentions. I would prefer to keep my speculations personal however I will reveal why this time.

Eur/gbp had a big monthly trend change around september 2009. It failed to make new highs and the uptrend from 2007 was coming to a slow grind. Since february this year there has been compelling movement down and paving way for a new downtrend or a very deep retracement of the 2007 uptrend. Either way I dont focus on the why but focus on how I can participate.

My main group started in march which ended up as a shooting star. Didnt know it will turn out to be a shooting star. For march, I remember clearly that I had continuous low risk setups and all I did naturally is to follow the flow.

I had mixed positions both buy and sell. My bias was the new monthly downtrend but I let the market be the judge.

Soon the market destroyed all my buy positions and confirmed that we are running into a bear market. I had many positions and I diversified twice. The later diversification was only recently when the market went into range.

My biggest group is egbb2 which has 11 positions from 0.90150 and current price is 0.83300 @ 2 standard lot each. And it will grow exponentially from here if this new monthly trend continues for the next 2-3 years.

Current group egbb4 has many buy positions. You will see why if you open eur/gbp daily chart of the last 2 weeks. I just followed the flow. Hope they will be good legs and run but Im noticing that buy is losing pressure. Im not disappointed cause I will follow the flow and add sell positions to this group if given the opportunity. Added one today at market open 0.83749 which is still fighting for me. Moved its sl to be just now. Tomorrow I wont add a position on open of the candle if US market tonight doesnt break yesterdays low. If it doesnt break yesterday low I will watch for a low risk setup formation and enter.

Geoff, I have genuine interest in your trading however you need to know when a good setup is forming for a low risk entry. This is something you need to accomplish first. Position management will come to you when your ready.

Feel free to pm me.

Sincerely,

Graeme
  • Post #54
  • Quote
  • Edited 11:26am Jul 14, 2010 11:14am | Edited 11:26am
Quoting stevegee58
Thanks for that detailed response. I have some questions about the snipped sections above.

On each of the 10 hypothetical entries you have the notation "Move sl to BE". To me that implied that each of those trades move in your favor and you moved the SL to BE and now had 10 effectively risk-free trades. But later you said you'd lost 300 pips from those trades that didn't work out.

How did you decide to close the trades that were losses?

Good evening, stevegee58

After i enter a new position I scan various timeframes for signs that I might be wrong. Some of the price pattern I rely on and breakout setups I favour knows me well and I know them well in return. This came to me from alot of trial and error.

Not all breakouts are the same. I look for specific reaction from the market when it plays out. If I dont see any of the intended reaction from the market unfortunately i close out. On some selected days I dont even have any stop loss. Actually more often than most traders would prefer to do.

In my example -300 pip is just from entries that has failed on me because of above reasons. However in reality it is uncommon for me to lose -300 pips to establish positions on a good daily/weekly trend. But I used worst case scenario for my example.

I hope I can be a better trader with no loss but I consider them as my miscellaneous business expense. When Im ready to diversify I know with a degree of certainty that they are already covered.

If you find that when your diversifying you are closing legs to cover your losses. Then a) better entries are required b) your trying multiple times on one single day to establish positions c) you didnt allow enough time for the market to judge your positions. I have never diversified for a loss. NEVER.

Entries tend to get better the more a trader practices and I urge everyone to find their own edge in entries and not try to emulate someone else's system.

Another good question and hope other readers think about what I say.

Its very late here. Good night all.

Sincerely

Graeme
Quoting pipEASY
Good evening, Geoff

Thank you for your question.

I have started adding positions on downtrend for eur/gbp this week. Group egbb4

Undoubtedly you wish to know my intentions. I would prefer to keep my speculations personal however I will reveal why this time.

[color=black][font=Verdana]Eur/gbp had a big monthly trend change around september 2009. It failed to make new highs...
do you mean if it doesnt break yesterdays low you will look for entries or if it breaks yesterdays low you will look for entries?

regards damien
i pull the trigger when others are fearful---me
Quoting damosdmf
do you mean if it doesnt break yesterdays low you will look for entries or if it breaks yesterdays low you will look for entries?

regards damien
Hello Damien

Good question.

I will always look for entries but would have been very interested if price did break below 0.83156 (or around there) because this is support on daily chart.

When I look at charts I have mini support and resistance everywhere in my focal interpretation. It is one of the ways I guide myself in entering.

Entries are something everyone needs to work on at their own personal discretion. The reason behind is that two traders using same method will have different profits compared. It is not the integrity of the method but each traders individual focal interpretation of entry and exit.

With me, exits dont worry me at all. Please refer to the large example last night. Entries that has a greater chance of survival which is often at open price of daily candle.

If 0.83156 was broken overnight then today i entered on open of new daily candle with no stop loss. This is something that I have managed to upskill through trial and error.

Im aware of an exercise that Joel Rensink (aka TheRealThing in this forum) has recommended but from the replies after it looks like none of the participants never actually tried it.

How certain is a trader when they enter a market to take 1 pip profit.

He requests that you open a small live account on oanda and place $50. Adjust the custom lots to 0.25cents per pip and enter when you believe you can be certain to make 1 pip take profit. If you dont, you cant close out but leave it as it is until the price finally makes you 1 pip or takes all of your $50.

What you will learn from this exercise is some of the inner traits you hold as a trader. It will be an enlightment.

TheRealThing is asking more than a traders' capacity to be able to make 1 pip. It is part of traders self-awakening.

Sincerely,

Graeme
yes i have TheRealThings infinite yield pdf saved to my computer will get around to reading it one day he is a very knowledgeable man.

regards damien
i pull the trigger when others are fearful---me
  • Post #58
  • Quote
  • Edited 8:31pm Jul 14, 2010 8:12pm | Edited 8:31pm
Good morning all

Thank you for coming this far with me. It is greatly appreciated.

I would like to ask everyone on a personal level. I would like you to answer the question outloud in your mind.

How long do you think it will take for a trader to be profitable in trading?

Anything under 6 months or 1 year needs to re-evaluate

Trading system will help a trader to be profitable?

No. It is the trader that makes the system/method profitable

Do I need large capital?

No, unless you are expecting large profits and sipping vintage Krug and scoffing down lobster mornay. If you expect above average or excellent return on your capital then you are on right track.

Is it easy?

No if you are asking the wrong questions and looking for wrong answers. Yes if you have the right perspective first as a 'trader.'

Do you think I can make it?

My friend, everyone can make it when they are ready.


Majority of traders unfortunately underestimate and overexpect. What a predicament.


Please dont take the above as an attack on any of a traders belief. All Im trying to do all this time is to help you form a different perspective as a trader.


Beautiful day everyone. Enjoy your life.


Sincerely,

Graeme
Hi Graeme,
I have read your thread several times with interest. I am what you would probably describe as,"young and hot blooded". I have been trading live for about 3 months. Prior to that I traded on a demo account for 3 months. I am only trading $1.00 per pip at present with a $500 dollar account. My wife and I attended a day trading seminar in November last year. It spoke of learning to read candle formations on hourly charts, trendlines, s&r etc etc.....
I must say that I have really tried to adhere to the principles laid out in that seminar and to be honest It feels like i'm gambling. After 3 months my account reads $572.00!
Don't get me wrong, I am not expecting huge profits straight away. In fact I would be happier with a loss if I knew I was on the right track. But at present I feel like i'm going round in circles.
Your thread has opened my eyes to the power of the long term trend. I will be following your thread and sharing my experiences with you.
Thanks and Regards,
Ben
  • Post #60
  • Quote
  • Edited 3:40am Jul 15, 2010 2:54am | Edited 3:40am
Quoting leggo
Hi Graeme,
I have read your thread several times with interest. I am what you would probably describe as,"young and hot blooded". I have been trading live for about 3 months. Prior to that I traded on a demo account for 3 months. I am only trading $1.00 per pip at present with a $500 dollar account. My wife and I attended a day trading seminar in November last year. It spoke of learning to read candle formations on hourly charts, trendlines, s&r etc etc.....
I must say that I have really tried to adhere to the principles laid out in that seminar...
Hello Ben

Thank you for coming forward.

Allow me to analysis your current progress. Please note I do not know the ins and outs of your current system/method but I hope i can contribute positively.

Below is my personal interpretation and a view of my thought process,

$500 starting capital @ 0.1 lots is realistic and sensible.

Approx. $120 for margin per position. So I wouldnt be looking at holding more than 2 positions at the same time. 3 would be a overkill.

Your progress is very good. That is 5% increase on your capital per month, 60% yearly return. This is outstanding but this is where gravity plays its part.

If, you have completed more than 30 trades in the last 3 months to achieve the above return then you will notice a correction on your equity curve sooner or later.

If, you have achieved this in less than 10 trades in the last 3 months, you are well on track.

If, you have an exit strategy where you exit after certain pips or at the sign of certain moving average crosses or any other 'limiting factors' you are cutting the potential of your profits too short.

If, you have an exit strategy where it is encouraged to hold indefinitely until a big change in the major movement of the currency pair you are on right track.

If your method is based on growing your capital in line with the main trend, you are doing right.

If your method only takes notice of the main trend then you are not reaching your trading potential.

If your method is based on capturing profits at price fluctuations intraday or intraweek, hopefully you hold your positions and let the market be the judge.

Nobody can predict the market. The market has been around centuries and countless people have tried to create a system to make money from it. No doubt this will continue on past our lives and until the end of time.

If nobody can predict or control the market then we traders should inversely allow the market to dictate us. Market is evolving, moving and it is a pure unstoppable force. The indicator/system that we know and cherish cannot sustain such infinite force by placing such parameters to its infinite actions. Nobody can outsmart or outmove the market.

Sincerely,

Graeme
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