Building an equity millipede

My performance stats for week1:

Pair: E/J
Hindsight this week: Long
Hindsight next week: Long
Demo Account Starting Balance: US$ 50K
Demo Account Ending Balance: US$ 50,500
Position Size: 40 Microlots (4 mini / 0.4 standard)

Net Realized Profit: $500
Unrealized/Floating Profit: +265 pips ($800) in 3 open positions

Total trades: 40
Total BE and Profitable trades: 18
Total SL trades: 22
Win Rate: 45%

Hi all. Here's how my week went down...

I chose USDCHF as my pair. Hindsight was down, but I expected a bullish retrace to around 50% of previous week's candle and was prepared to look for short opportunities upon completion of the retrace. Well, the retrace never happened. She pretty much dropped like a rock from the get-go and never looked back. Stubbornly waiting for the retrace, I declined to take any trades as the pair went lower and lower. By Tuesday afternoon I had given up all hope that the expected retrace was going to materialize and I was not interested in chasing the pair down further trying to board a train that had already left the station. Oh well, such is life. On to plan B.

So I began looking at other pairs. I noticed that USDCAD had retraced back to the top of previous week's high (previous weekly candle was a long-wicked near-doji), which happened to be an area strong resistance on the weekly chart. Anticipating a bounce, I was able to get three sell positions established and moved to BE in short order, with a 4th stopped out for a 10 pip loss. The 3rd died at BE a short time later, but the other two are still alive at the very tip-top of what are now two consecutive long, weekly wicks. Price has since moved in my favor by over 250 pips and this week's weekly candle has closed well below last week's, which tells me she's likely going lower. After news release this morning I successfully added another positon that is currently resting comfortably at +50 with SL @ BE.

During the week I also took some other miscellaneous trades on various pairs that didn't amount to much, and they're included in the stats below.

Trade Summary:

24 trades total
9 closed for a loss (-89 pips)
12 closed at BE or small gain
Avg pips per closed trade: -4.2
3 still alive with +552 pips floating profit

I'll be sticking with USDCAD for next week's focus. Hindsight is strongly bearish and I'll be looking to add more positions on breakouts and retraces over the course of the week.

All in all, not a bad week considering I had to change my plan mid-stream.

BTW... this is a demo account. I'm getting more and more confident in my ability to get entries to BE and minimize the losses for those that don't. Depending on how next week goes, I may consider trading microlots on my live account the week after. We'll see.

Kevin

Good morning, all

Thank you for sharing your results.

First topic I wish to discuss over this weekend is about hindsight

There are participants who:

1. Correct hindsight, positions entered accordingly
2. Correct hindsight, very few attempts with mostly breakevens
3. Incorrect hindsight, overexposure and bigger drawdown
4. Incorrect hindsight, less exposure and smaller drawdown

I would prefer all traders to be more number '2' then number '1'

If you are number '3' then it is your mentality and slower approach is required.

If you are number '4' (which means you have less than -200 pips drawdown this week) you are doing well and you will find a correct weekly hindsight will pay you back that -200 by few folds at the least.

So, having said the above, today I would like to talk little more about hindsight.

What is hindsight?
It is a certain degree of probability that an intended course of action will happen in the upcoming events.

What does this mean in trading?

It means alot of $$$

I have mentioned few times that many of the starting traders fail because they do not know what to expect in profit terms or losses. If you dont have a target or a goal in profit terms then you have no reasons/answers to justify the drawdowns/losses you have just encountered.

In life/trading/business you need goals. You need few multiple goals all inter-linked together. Especially in business, you have end of week targets to meet, end of month and end of year. And the business managers will push forward little by little but they know which way they are going.

Many traders do not know which way they are going, they are trying very hard to understand all the ins-and-outs of trading however they dont have a goal.

Unfortuantely, to justify their lack of understanding they plough deeper into depths of working out indicators, numbers, methods, systems. Many many threads/posts in this forum tell of an 'aha' moment. There is nothing much to 'aha' moment apart from the fact that you finally throw out all indicators and simply follow the market. Thats it.

Hindsight gives you that goal you require. Hindsight places a trader in the equation where it is now solvable. It is the guiding stars in the dessert.

How much is a hindsight worth?

Some hindsights are not much but still worthwhile.
Some hindsights will pay you for the next few years.

You will never know untill you participate
And how do we participate? Via low-risk entry that agrees with your hindsight
And then you let it do its job and grow

I know I may be reiterating what has been said in the last 40 posts but do all readers completely understand the critical importance that Im trying to relay here. Without hindsight you dont have a map to your destination.

I chose gbp/aud as my project and posted an analysis on Monday and yesterday (Friday)
http://img833.imageshack.us/img833/3397/aa1c.png

My hindsight is working at the moment (for now) and im in good profits. Before the start of the week how much profit did I anticipate? How much is hindsight is worth?

Its an open ended question with no answer.

It can be the next 2 weeks or next 2 months or next 2 years.

http://img193.imageshack.us/img193/2512/aa1ax.png

However the true worth in dollar terms/traders effort is worth more than any previous hindsights that didn’t work out added together. This is a fact.

Using weekly or monthly is swinging with very large bat. It may be heavy to swing and you might miss few balls but once you hit it correct, it will score you a run to the 1st or 2nd base at the very least or a homerun.

If I say just less than 50% of your weekly hindsight will be golden, what will you do? Do you have the patience and the unbending belief to continue on due course for the aim of a home run? Many don’t but I hope you do.

Imagine this for me.

http://img718.imageshack.us/img718/7134/aa2y.png

A trader picks this pair of currency. 4 weeks of nothing. He/she may have captured short burst of profit between the weeks but in the overall long term perspective there is nothing exciting.

And that’s 4 weeks! Not many traders have the patience to even last 4 days let alone 4 weeks.

However this trader has a bigger picture and is holding on. Minimizing his drawdown yet taking all possible low-risk entry. At the end of 4 weeks, he/she may be already -1000 pips.
Then..

The week after shows something.

http://img96.imageshack.us/img96/2467/aa2oa.png

Engulf pattern; no long upper wick, closes past the previous week, descending wick pattern.

This trader is now wondering if this is the opportunity that has been waiting him.

Well.. what do you think?

http://img405.imageshack.us/img405/9854/aa2p.png

I still have positions from the weeks after that engulf still surviving now after a year.

Largest is 3500+ pips whilst most legs are 2200+ pips.

Total unrealized is 20000+ pips so far.

I never knew that the weeks after that engulf bar was start of something huge. However, I continued with unbending belief of the bigger goal intended.

If I look at my largest leg of 3500+ pips and then see the loss from the 4 weeks before the engulf candle which was -1000 pips (roughly). Then that would mean if I close just the biggest leg right now, it would cover the loss of that 4 weeks + almost 8-12 weeks of future unsuccessful weeks? Then if I close out largest leg + few of the middle sized legs now then..

I cover myself for the next 52 weeks (1 year) of unsuccessful weeks?
But, how many golden opportunities will arise from now and the next 52 weeks?

Answer: There will be few more opportunities that will last the next 1-2 years.

So the more time passes, Im virtually trading for free?

Answer: Bingo. I mentioned few times before. “There is a surprise that awaits position builders. There will be so much more on the table and you wouldn’t be bothered wondering why or how.”

Morning All,
I have not got my hard stats for the week yet as my platform does not open on a weekend. Here is my rough approximation,

40 trades
10 be
30 losses

net loss 360 pips

average loss per position 9 pips.

I can hear the cries of," your over exposed" and you may be right. At the end of the day though its like riding a bike for me. The more times you fall off, the quicker you learn. I have learnt far more from loosing 360 pips than I would if I had made 360 pips.
There is no right or wrong in my mind, someone who takes 8 trades a week has a completely different personality than someone who takes 40 trades a week. It does not make them any better or worse.
Its like a sprinter saying to a long distance runner," you will never win running that slow!" That's wrong they can both win if they are good at what they do.
Look forward to next week and implementing the lessons learnt.
All the best
Ben

Week1 - stats from Friday end of week1:
Total Trades: 47
BreakEven or better: 19
Loss Trades: 26
Open Trades at end of week1: 2
Unrealized Pips: +105
Realized Net Pips: -596
Average Loss Pips per losing trade: -30.6

Week2 - only week 2, no week 1 details, end of week:
Total Trades: 26
BreakEven or better: 11
Loss Trades: 15
Open Trades at end of week2(week1 open not included): 2
Unrealized Pips: +292
Realized Net Pips: +20 (yes more than 600+ pips better than week 1)
Average Loss Pips per losing trade: -12.6

Summary - All Weeks (as of end of week2):
Total Trades: 73
BreakEven or better: 32
Loss Trades: 41
Open Trades: 3
Unrealized Pips: +488
Realized Net Pips: -576

NOTES: I'm pretty sure I will see significant improvent these next couple weeks because the new understanding about tieing in the weekly charts with 5 min. Plus, previous volitile breakout that was presented had huge improvement the last 2 days of week2. I think I'm well on my way to reaching the next level in my trading.

KeelRisk
Thanks Graeme!

I'm just curious. What exactly are you doing to make 40trades a week? Are you trading every inside bar you see on 5min? What pairs? I just can't seem to wrap my head around making that many trades. I stared at these charts all week. I got up in the middle of the night and stared at them some more. Down to 5min. I made a few trades but no where near 40. I just didn't see that many opportunities.

SUBSC

Hi Pippdaddy,
I understand what you are saying! I was mainly trading flying buddahs/breakouts on 5 min. You are right there were not that many opportunity's. At least 50% of my losses were from stacking attempts. I know as a professional trader I would have been overexposed. But I also know that to become a professional trader I need good entries and that only comes from practising. Next week I am going to focus more on key areas and implement some of the valuable lessons I have learnt. I might add that I lost 100pips last night on the big spike on the Yen, this has skewed my results somewhat I was trading without a stop but was not on the ball enough.
My biggest stumbling block at the moment is stacking, I would say I get stop to be 50% of the time on the initial trade, but its the stacking were I seem to loose money.
Regards,
Ben

Hi leggo,

Thanks for the reply. What pairs are you mostly watching and trading?

EURUSD: Hindsight was long (and was correct albiet weekly range was only ~250 Pips)

Week1 - stats from Friday end of week1:
Total Trades: 39
BreakEven or better: 10
Loss Trades: 28
Open Trades at end of week1: 1
Unrealized Pips: +52 (entered after NFP)
Realized Net Pips: -202
Average Loss Pips per losing trade: -7.2

I think Graeme wrote his post #1793 just for me (http://www.forexfactory.com/showpost...postcount=1793). Here are my conclusions and self diagnosis based on reflecting regarding this post as well as his other seeds of wisdom.

Taking every FBs - at the beginning of the week I was taking many of the FB entries as I was watching primarily the 5M TF and using the max (Weekly) hindsight only to judge entries. As can be seen in the number of entries with a single survivor, my entries were taken out due to ill placement in the flow of the market.

Aggressive stacking - too many positions with poor awareness of the "stalls" as they occur in the flow signally against continuing to stack.

Stops to Tight - The third symptom I suffer from is I am called off the dance floor far too soon by tight SL. I would have much better unrealized Pips if I remained in positions longer without placing tight stops immediately upon entry.

Price Interpretation - This leads me to my greatest observed impediment, my entries are crap! I will be using a simulator to practice over the weekend using the 3x 20 exercise & breakouts Graeme has demonstrated. Just like the Swedish bloke who could judge the trajectory of the roulette ball, I intend to perfect this "one thing"; a high/remarkable percentage of breakout entries that go to BE without retrace.

As someone else mentioned earlier on Friday, once learned many of these skills can be applied to many different markets and instruments/investments. As I am a US trader and regulations are coming fast and furious here, I feel I must perfect this one skill to enable me to have a strategic advantage and alternatives if Forex becomes an unprofitable/over-regulated way to earn a living.

Graeme, thanks so much for contributing guiding principles for those of us who eagerly want to learn to fish for PIPs (a permanent and transferable skill) and not be spoon fed by the grace and at the will of others.

Hi RD Watkins,
I feel I could have written the above myself. I agree whole heartedly. My entries are crap too, worse than yours looking at the stats. Everything improves with time though.
Cheers
Ben

Good observations, rdwatkins

If market is neutral and universal where the only constant variable is price (of supply/demand) then it is very true that any trading principal that respects the nature of randomness of the market will work.

I apply my trading method to many instruments of investing and it is amazing to see how universal and neutral all markets are. For the interest of all you can 'map' numerical data of median sale price of properties for a selected area for the last 10 years and you will be able to see dips and retraces, volatile breakouts. Yes, there are no specific governing force that controls the demand/supply of properties except the reserve bank increasing/decreasing interest rate but you will also be amazed how insignificant such releases will be to the actual price movement.

A trading method must work on all timeframes but also on any market.

There are very small percentage of elite traders who does have special advantage in trading which is inaccessible to most retail traders and there are special markets that do have somewhat pre-defined supply and demand which ofcourse will be a different story for a different discussion.

It is great to see that you understand how neutral and universal market is and you have confirmed yourself when you can connect your understanding to different investing instruments that are available in this world.

All traders must understand the principal of trading before the specifics on how to trade.

Sincerely,

Graeme

Good afternoon, Ben

Please allow me to step in and explain something for the benefit of all.

I hope the information I provide in this post will be aide as an emotional support as Im well aware how you might perceive or feel.

And this applies to all traders who are currently down.

If you compare, my stats are very similar to yours (or if bigger drawdown). The only difference (for now) is the unrealized profit which can change this week.

The only reason I currently sit on unrealized profit is because the market has moved as anticipated as per my weekly hindsight.

If, the market did not move towards my hindsight, I would be far worse than you.

Market/life does not end with this one opportunity and will continue as long as 2 things still remain intact:

1. Your unbending belief which starts from believing yourself as a trader first.
2. Minimizing your drawdown/losses as per your skill in order to preserve your capital till the golden hindsight does inevitably happens.

I know you can.

Sincerely,

Graeme

Hello Graeme,

Thank you very much for the lesson, it gave me a better understanding of the hindsight concept, so hopefully I will get my hindsight right for the next trading week.

Kindest Regards,

Cam

Total trades: 20+

Losers: 12
Winners: 5

Total realized gain/(loss): +121 from diversification

Active trades:

GBP/USD short 1.55793 +122
USD/CHF short 1.02938 +123
USD/CAD short 1.06349 +241
EUR/USD long 1.27706 +119

Total unrealized gain = +605


Its funny because after reviewing the trades taken during the week, I have a hard time figuring out exactly how many trades I placed with Oanda.

Every trade entered was with 2 lots. If the trade comfortably moved in my favour I realized profit on 1 lot and adjusted the stop loss either to BE or increased SL to give the trade more room to breathe.

I definitely know there's room for improvement especially when it comes to stacking but overall I left very comfortable executing my plans this week.

GBP/USD hindsight DOWN - executed for unrealized gains
EUR/USD hindsignt MIXED - executed for unrealized gains
USD/CHF hindsight DOWN - executed for unrealized gains
USD/CAD hindsight DOWN - executed for unrealized gains

I only traded these currencies this week and I was amazed at the results.

My execution this week felt so easy and looking back at the historical trades on Oanda I feel I achieved my goal of limiting risk at specific areas where I anticipated movement.

Graeme your teachings are really helping me and it feels fantastic.

My results at the end of week one.

live account

Currency pair: AUD USD
25 trades

13 loosers - 138 points
3 breakeven
7 winners closed + 493 points
2 open trades + 175 points

win rate 48%
total points won 531
average points won per trade 59

lets see what next week brings

Cheers, Reverb
p.s. I'm counting break even trades as winners

Since everyone is posting stats... chosen pair was USD/JPY:

Total 9 trades split as:

4 closed at BE
5 closed for a total loss of 111 pips

Cheers,

Cam

Hi Graeme,

I just wanted to put a small case study for discussion and to see your take on the hindsight determination

First attachment is EurJpy monthly Chart. You can see Price moved to 50% fib and started to retrace ( I understand current monthly candle is incomplete).

Ideally from this chart the hindsight is more towards short side. Am I right?

If we look at the second one, which is weekly, we have two consecutive pins with slightly higher close, which might suggest to go long.

I would think this is one of the classic dilemmas

Now for the questions:

1. In this case would you say weekly and monthly are not aligned? Or is it too early to make the determination


2. Would you go with monthly bias as this is the higher TF

3. Skip this pair in favour of other better ones?

4. As usual be prepared to play both sides?


I understand there is a lot of subjectivity involved in this whole thing. Honestly I am not trying to get your view more like a signal service instead looking forward to your thought process on how you would look at it.

Also wanted to see how the team reacts to this.


Many thanks in advance.

Regards,
TradeStar

Unfortunately this week was get to know platform week really for me.

but generally my weekly hinsight was based on eur/jpy reverse long wick candle the previous week. saying that this was likely t go up.

when a pair is about to reverse i realise as i said in my hindsight it needed to push above open to prove the hindsight.

the week started down so i entered and stacked monday at a $ a pip was up $800+ monday


tuesday started choppy then started slowly seeing up move mid week mostly break evens.

friday entered with stop limit order on the long run after news but was stopped by my 10 pip s/l on entry so no trade.

stacked on way down for $260 based on $1 pip entries.

next week i can show stats am getting used to platform.

Was going through me charts an saw this its on all currency pairs i looked at anyone know why or who could make this happen.

Good question, Tradestar

eur/jpy is showing a conflict of interest between monthly and weekly.

It is the conflict of interest that causes a trader to be uncertain of what to expect.

Do they take into consideration of monthly chart?

or

Do they take into consideration of weekly chart?

eur/jpy last month closed below the previous 2 months. This is a good sign. Price currently at 50% fib of last month candle which is nothing special (almost classic). If price retraces any higher than 50% I would be cautious but for now it is DOWN on monthly chart.

eur/jpy last 2 weekly candles has ascending wick pattern and long lower wicks. This shows weakness for sellers. So the correct price interpretation is UP for weekly.

So what do you do?

You know that trends start at any timeframe.

When there is a conflict of interest it is best to only take certain higher probability trades but keep your bias neutral.

The excellent thing about keeping your goals on the higher timeframe is that there are plenty of space.

Imagine the conflict is between 4hr and 1hr. Even if you are a super duper trader who takes both buys/sells you wont be able to catch both conflicts but when your dealing with weekly/monthly where the scale is much bigger there is chance that you can create short bursts of profits on both direction and then keeping the positions that the price finally moves onto.

For now, lets keep it simple and if you choose the weekly hindsight then I personally will choose UP as per my price interpretation. But im sure there are better pairs available than that one at the moment.

Hope this helps.

Kindest Regards,

Graeme