Building an equity millipede

The idea is that you are stacking postions so % bet can and should be small IMHO. You can bet 0.5% (what I do) on each bet but as you stack and move SL to BE your r:r goes up considerably compared to someone who bets 2% on individual trades a few times a week. The downside is that you need to be real good at entries because you will be doing a LOT of them and the losses can add up quickly. Even at 0.5%. That's my take on it anyways.

Good afternoon, all

Darren teo - thank you for your continued interest. Your method will save you from doing pinpoint entries however this will result in a massive drawdown which will effect your emotion greatly. No one can stomach a 3000pip drawdown. My initial trade balance would have lost 40% realized loss if I allow such thing.

leggo - Yes, Ben. Momentum usually happens during uk/us sessions. However there are great spurts of momentum usually on jpy cross during asian session. I will try show few more tricks. Im wondering if Im confusing any of the readers by introducing too many new things.

pip_daddy - Thank you for your contribution

Sincerely,

Graeme

Edit: Does all readers understand my blackjack story in the above post? The message behind that story is important for all traders. You cannot profit greatly if you dont maximize the profit taking in a given golden opportunity.

"Market cannot be beaten. Its to be followed"

"Trend is your friend if you allow your positions to grow on it"

"I admit that I cannot predict which way the market will go but I can follow it and still profit"

"Following the flow is simply; entering sell if price is coming down from .00 or entering buy when price is going up from .00"

"To stay with trend; only buy above the open price of the day and only sell below the open price of the day"

"I aim for infinity yield on my positions"

"I enter both buy and sell on same pair of currency cause I dont know what is happening today, tomorrow, next week, next month"

"I enter at every low risk opportunity given by the market. Risk is at entering, profit is allowing it to grow"

"I do not pre-define my entries, exit in anyway. R:R is calculated at the end of the trade"

"Entries are at your own personal discretion. Find out what works for you literally and psychologically"

"You should know your entry method so well you can vouch it with your life"

"You only need 1 or 2 entry methods but your participation in over 10+ pairs of currency. You will be very busy"

"Some positions last years, some positions last few minutes. We keep the ones that last years and we let the positions that die in few minutes rest in peace"

"Some of the most valuable insights I have is earned through practice not learnt by reading"

"20 x3 take profit exercise was my teacher and Im here cause of its related discoveries"

"You do not need to know 200 things in forex to make money. You only need to master just 1 thing"

"Most traders fail cause they dont have this 1 thing. Some think they do but whether they really have it or not is questionable"

"From last 2 years of live entries I can sensibly claim that 80% of my entries on 5min timeframe will at least have SL moved to BE by using momentum. This is my 1 thing"

"I piggyback on other traders when I enter. If there is no participation from other traders then I got no one to piggyback"

"From my stats, I have placed over 4000+ entries over the last 2 years. Thats about 40 positions per week, 8 positions per day. My participation in the market is almost 20 pairs"

"From my stats, my last 14 months have $7 million+ annual growth rate. Most of it largely unrealized. I have easily doubled my trade balance in the last 2 years as realized profit"

"From my stats, 1.7 positions per week have survived for long term growth. Most closed on BE and some closed to capture short/medium term growth through the numerous diversification"

"From my stats, I currently have 194 positions. All positions SL moved to BE"

"From my stats, each position is currently bringing in 37 pips of net profit. Net profit is after losses are settled and accounted for and this includes any swappage"

"Diversification keeps my equity curve growing and smooth. It is traders best interest to stay away from zigzag edged equity curves"

"Diversification settles any losses encountered while trying to establish the current group of legs. After diversification the scoreboard is wiped clean to zero"

"Diversification replaces trade balance to before building the current gorup of legs + adds realized pips/profits into your trade balance + gets it off your mind"

"I have never went below -8% on my initial starting capital in realized loss"

"I will never increase my lot size (2 standard lot). Instead I will increase my exposure in the markets by having more positions in every pair of currency"

"Bundles of positions on every major trend on every possible pair of currency. That is your goal"

"I prefer to work less as the time goes not more or the same"

"If I lose 9 times in a row on entry I know im getting closer"

"You need to be selective on entries and not take every opportuntiy. All you need to do is space out your entries by hours/days. You miss few golden opportunities but you also avoid all/most of ranging periods. Profit will be similar"

"Im an investor-trader"

"If a position was +2000 pips last year but died today on BE; that means we are currently in trend for the last year and should have positions growing as the price came back"

"Forums are more chaotic than markets. At least market doesnt purposely mislead for its own personal agenda"

"You cannot profit greatly if you dont maximize the profit taking in a given golden opportunity"

"Losers log onto forum, winners take the prom queen home. Most important learning is done by yourself through practice on demo"

"Dont stay on demo too long. There are things to that can only be learnt on live"

"Emotional hurdle is when you cant sleep"

"Glass half empty: Anguish over position closing on breakeven. Glass half full: You had chance for infinity growth but unfortunately it closed on breakeven due to controllable market fluctuation. Engineers: Trying to close the position when its only little bit in profit"

"Never use the word 'expect.' Thats a lie. Life and market will never follow to your expectation. Expect the unexpected"

"Your mind only choose what you wish to believe. Keep an open mind to everything. Never have a biased opinion about anything in the market"

"Market is a generic ever-changing dynamic energy. You cannot use indicators to pre-define something that has limitless boundaries"

"It takes tens of thousands of rounds to define an entry system's edge in hard percentage. Some thread openers claim 60% success rate with 1:2 from 4 months of entries. Such claim would make staticians rolling on the floor laughing"

"Thread openers success in the last few months was due to a trend. Watch their posts when market ranges"

"250 pip position is not even a leg for me. 2500 pip position is a leg"

"Most traders have set static growth rate. Some aim at 2% capital increase per week. So for a $5000 USD that is $100. If market moved 300 pips in a given week and you only added 2% then you are not reaching your profit potential. Period"

"Some traders quit the week after reaching a certain percentage of profit. Market doesnt know each individual traders set percentage growth rate for the week and market certainly dont care"

"Dont trade Fridays? Yes, if there are no low risk opportunities. Trade, if there are low risk opportunity"

"Accept what the market gives"

"Market always moves first then indicators. Always move with/after the market moves not after what indicator shows"

"Before indicators is candles. Before candles is wicks"

"Wicks is the earliest warning"

"Biggest surprise that awaits position builders is that at the end of the day there will be more on the table and you wouldnt be bothered wondering why"

Question 1 (cyan):
For me to consider a .00 line as an S/R I require that the price has been very close to the line or even touched it and been slightly through and then gone back. It's not enough for me that price has been there with the upper/lower shadows of candlesticks, but the body should be close as well. IMO the bodies are too far away from the .00 line. This is my intuitive take; I will have to study more charts to see if it's anything worth holding on to.

Question 2 (green):
This is about paying attention to detail. Ironically, I made the mistake myself while drawing the chart Notice that the line I drew S/R on is not a .00, but it's the line of the current price (from the last tick) which blends into the chart with all the .00 lines. So basically it's just a random S/R, it has nothing to do with .00. If I had entered a trade on its breakthrough I would just have been lucky to gain pips. Just pure luck. That S/R has nothing to do with .00 entries.

Someone in earlier post mention a program for becktesting - practice with historical price. I can not find that post. vH.... something


regardes
x

Dear Graeme,

I have been reading (most of) your posts with interest and some hidden admiration. Having worked in in the markets since the 80's in various positions - from trading bonds, currencies futures, interest rate derivatives etc. - I have never held a position for very long. I might be a left-over breed from the time before screen based trading, when we received our quotes through telex and voice box from the brokers.

Personally, this way of exploiting price movements has suited me in the past and will suit me in the future because it matches my personality traits as well as my own beliefs about market structure and price behaviour.

My admiration stems from the knowledge that what you are trying to convey in this thread makes great sense, while you seem at the same time to possess the right ingredients within yourself to translate that into your trading methodology.

I in contrast know myself and my own limitations/differences in my psychological set-up that have proven my attempts to switch my trading style to be futile.

Time is a very complex matter in every part of live and in every endeavour. Besides trading for over 20 years, I have a passion for psychology (3rd year student) and in my studies I came across a book that made 'time' a lot clearer for me in every aspect of life - especially in trading: Prof. Philip Zimbardo's TIME PARADOX.

One of the lines in your last post triggered my posting this:


"250 pip position is not even a leg for me. 2500 pip position is a leg"

The emphasis in the sentence being '...for me...'

My personal trading style is not so different from yours - except for the time I spend being exposed in the market.

I am not writing this as any form of criticism toward your very sensible contributions here - on the contrary - I urge any reader to distil the essence of your words and apply them in the right balance to match their own personality. Traders like me will always struggle with holding positions for the length of time you do - not necessary for reasons that hamper success in trading, but because the concept of time applies to them (and to me) in a different way.

Zimbardo explains in his book the different 'time perspectives' that can manifest themselves in each and every one of us. He explains further how simple awareness of these perspective can help bring them into balance. Don't worry - its not a self-help book - Nassim Taleb (the author of the Black Swan highly recommends it).

In the spirit of the thread I would like to conclude by saying that anyone who might be put off by the either the length of some post or the personal view of the trader of thinking they could never trade in the described fashion, should very much read on. In fact there is so much additional value besides the actual tenor of building long term positions that the thread should stay permanently on the front page.

With great respect,

regards
daytrading

Good evening, daytrading

Thank you for the feedback. It is greatly appreciated.

Just for clarification, I would never impose/force my method to any trader. If any trader feels uncomfortable/uncertain than it is to their discretion to close when they choose to close.

However, I diversify when I feel insecure which captures short/medium term growth for positions that are only few weeks/months old. This diversification is also not imposed but suggested as a means to control ones emotional hurdles.

If you find success to your liking and you are closing your trades earlier then by all means please continue.

When I first started live trading, I too had difficulty keeping positions open for months. It was a difficult emotional hurdle for myself as well. However after a few diversification my trading method evolved on its own. It wasnt a forced implementation but a natural transition.

In the beginning, I was diversifying to only keep 1 leg for long term growth. This soon evolved into keeping half of the bigger legs. Accuracy drops but the reward is so much greater and worthwhile.

I appreciate your constructive feedback but when I mention 'for myself' I should really have mentioned 'to your related discovery' you will notice that you will eventually keep more of your bigger legs as you slowly taste success. Its how pros enter with 10 standard lots without even blinking. It wasnt a forced implementation but a smooth transition for them.

Too many traders fail cause they are underconfident of ones ability and then when a profit does appear they are in a rush to close it to capture it while fearful of losing it. My advice for all is to be a bigger person. In the markets, the bigger person you are the bigger your profits.

Sincerely,

Graeme

Good evening, all

One of the other common myths that is circulating is mechanical trading. Alot of interpretation of mechanical trading is when a trader has set rules with defined entry conditions and exit conditions adhered to everyday of their trading career.

I agree that some systems are very sensible and that good result can be achieved by following the same rules of entry and exit everytime however bigger rewards are available for traders who can trade without such limitations but also mechanically in such approach. Thats whats its meant by mechanical.

It is good to have a sensible entry system to indicate approximately when to enter however such information needs to be used in many different ways to extract more than just the 1:3 80 pip profit traders are aiming for.

I mentioned in my earlier posts about a fellow trader I have befriended last few years. This gentleman is also a very successful trader. He mostly swing trades and rarely holds positions more than a week. His success is above and beyond most traders. With his permission I wish to introduce all to one of his most used entry 'indication.' I do not know why but he calls it the 'flying buddha' but im sure most readers can relate to why.

Dear Graeme,

My apologies for wording it in such a way that you might have misunderstood - I was by no means suggesting that you were imposing on any reader.

While I agree with the confidence part, I personally traded huge size (over $500m a clip when trading IR-swaps/options) and also quite huge size in FX without having any qualms about it. However, when working for institutions (and on the floor as I did), you have to figure in constraints that might not apply for the private retail trader here.

At times I was not allowed to hold positions longer than intraday - but I was allowed to leverage up to $3m on my positions/trades. I also enter in tranches and build positions where the initial first entry level is not as important - but whether it survives is.

Having the freedom to stay in trades for infinite profits so to speak was not possible in the environment I traded - which is now a part of me (I am not a spring chicken, you know) - and I will leave the stage as the actor known for it.

For everyone who has the freedom to acquire the confidence you speak about in their early trading stages, by all means, please take the OP's word for it.

Sincerely and with genuine best wishes,

regards
daytrading

My colleague wishes to remain anonymous however I do have his full permission to share his knowledge for the benefit of all.

Please note that I have mentioned that is it an entry indication.

For the sake of my typing please allow me to call my colleague Joe. Not his real name.

Joe uses 2 indicators.

Orangered - 10 ema close, exponential
Dodgerblue - 5 ema close, exponential

He only uses 4 hour chart.

He does not base his entries on the indicators per se however he does wait for opportunities when the price is 'sticking out.' He does not know the fundamental reasons why but he likes his entry 'indication' cause of the low risk involved.

His winning rate on the initial entry is only marginally better than 40% however it is this winning 40% of the initial entry trades that are so much bigger than the losers with static loss. He makes sure that his winners are stretched out to maximum. That is his '1 thing.'

Good evening,

Thank you for quick response. I also do apologize for my poor wording.

Personally I did not take any misunderstanding from your post but noticed that you had a greater intention in your meaning behind the post.

I rushed to answer yours and could have answered it in better detail.

Thank you for the compliment and Im glad to see ex-pit trader (apologies if this is not the correct title) here with us.

Please feel free to contribute as we are all here to share.

Sincerely,

Graeme

As a messenger in relaying his method I have personally used this entry 'indication' to great results as well.

Joe would only use sells. He never answered me properly why but Im sure if it works very well for sell then it will also obviously work well for buys. I do personally believe that his concentration is so great that he would prefer to focus just on one side of the coin. He still manages to live an outrageous lifestyle with this method so I do not further question why he only takes sell.

Joe waits for a certain candle to finish forming above the 5ema 'without' any of its body or wick touching the 5ema. He calls them flying buddha.

http://img842.imageshack.us/img842/1583/aa1m.png

http://img691.imageshack.us/img691/8122/aa1x.png

http://img294.imageshack.us/img294/9643/aa1i.png

Joe explains that his first advantage in this entry indication is that it is a very low risk most of the times with potential high profits. Very similar to why inside bars are so popular.

Below is a real trade that I took this week which has brought great profits. Its from eur/usd 4hrs.

http://img190.imageshack.us/img190/5286/aa1o.png

The rules are very mechanical.

Joe waits for a flying buddha to finish forming. He would enter sell at the open of the next candle with hard stop loss at the top of the flying buddha with little bit more space.

This is one of the other successful entries.

Eur/usd in May

http://img802.imageshack.us/img802/7070/aa1.png

Joe also describes that some of his flying buddhas are also inside bars occasionally that are positioned for a greater opportunity to be profitable.

Joe is a thrill seeking trader. This is in his own words. Even though his entry method is pre-defined (which is entering just after flying buddhas) he will whet his appetite of risk taking by stacking positions while the flying buddhas are in effect. And he would only stack positions at 50% fib of the 'previous candle' mostly from buy/sell limit orders. Stop loss for the new position is set at above the high of the previous candle (including the wick) with little bit more space.

http://img801.imageshack.us/img801/7070/aa1.png

Circles are entries, lines are his hard stop loss. X is loss from entering 50% fib and hitting the hard stop loss above.

Joe stacks positions very heavily.

Joe would close a portion of his legs at the first sign of reversal which for him is when price closes above the previous down candle open price. He would hold onto the remaining positions and if the price continues down trend will continue stacking positions again at 50% fib of the previous candle. He is scaling in out and out of the market but using multiple positions instead of just one.

I mention again but flying buddhas have only marginally better than 40% win rate on the initial open position. Joe knows this and makes sure every winning opportunity is stretched out as far as possible and then he would go on a holiday.

http://img337.imageshack.us/img337/3140/aa1y.png

He closes some of the larger positions and some of the smaller positions. Joe always tries to keep the larger 2 positions until the very end

Joe has been a live trader for almost 5 years and trading flying buddhas exclusively. He uses 8-10 standard lots per position and his success can only be dreamed by most traders. He has almost 5 years of live statement to boast and it is definitely impressive.

Joe now admits that the main essence of profitable trading is not from taking flying buddhas but from stacking positions whilst the trend is established. He knows that he can enter any low risk entry and still swing the advantage to his side by stacking positions whilst the trend is intact. However to this day he still uses flying buddhas exclusively as he does not wish to start testing out variances to his already proven method.

Personally I also agree that his success is from stacking positions to his side when the market is favouring him with a trend.

Now to show all readers some of the failed flying buddhas.

http://img814.imageshack.us/img814/3397/aa1c.png

http://img841.imageshack.us/img841/4514/aa1a.png

http://img245.imageshack.us/img245/4192/aa1l.png

Please note that one of the strengths of this entry indication is that loss is relatively small and static. Whilst any winning position will lead to a much greater reward without any limit to what it can achieve.

Joe once told me that a flying buddha lasted more than 4 weeks and ended up taking profit in 6 figures (hundres of thousands). Im sure that will cover the next series of unlucky flying buddhas that doesnt work out

See this thread for VHands Trading Simulator
http://www.forexfactory.com/showthread.php?t=60849

cheers scalpz

This thread just keep amazes me, thanks to pipEASY for your generousity, your collegue 'Joe' and everyone else who contributed. Spent 3yrs circling around, this awakens me 'This the way to go'. pipEASY has shared more than just a system, but a complete thought process/concept that can be use for life IMHO. Thank you again.

Already seeing great potentials from backtests, next to pick a few trendy pairs and let the millipede dance. Great weekend to all.

Hi Graeme

In post #837 you've given some examples of flying buddha's not working out. To my eye they look like they did work out? Not on the first flying buddha's but then the second or third.

Are your examlpes showing stops being hit after the first flying buddha?

Cheers
Mark