Building an equity millipede

hmmm.... I have 4 live accounts, 20 charts each account going.... on 3 different computers. I have every possible combination going over here. I use Fibs, MA's, BBands, SAR, Stochs, RSI, even the Delta and Daily cycle charts. Oh and lets not forget my "turtle" template . And... also a custom template I use with another group of traders. Which variation would you prefer and TF?? lol

My "main" thing is the 4H chart - watching the highs and lows. I stay out of buying in the high zone and avoid selling on the bottoms. Once I know where we are on the 4H, I will zoom into the 5 M charts. In the middle is a pretty safe place to scalp and play both sides, but once we get to the extreme sides, Im out.

Today- I sold out at the top of the trendline and missed the 65 pip break out (and still going....) That's ok though, I caught the move from the bottom to the top of the trendline.

My hindsight was down though for the week with a little bit of caution since the monthly candle is up. Also, with the new moon, I'm looking for a change in the direction and waiting for confirmation.

Here is something that might help some people timing their trades.
Major Trends often start at the beginning of the week. You can observe similiar
price action on an intraday basis regarding the open of London and New York.
Price likes to reverse at that time.

Flying Buddhas also provided good hindsight at that point.

Hands up if you belive that's just a coincidence.

I stay with small lots. I've learned if a trade stresses me out, it's too big a trade. It takes many small bricks to build an empire and only one bomb to blow it all up.

Hi Graeme,

I have just finished to read the entire thread, and i want to thank you very much, this is pure gold !!!
This will change entirely my trading concept and i will apply soon all i have learnt with you.


I will tell you how i manage with all this.

Good morning, all

Thank you for the continued interest.

Although I am currently bed-striken I keep my word and continue monitoring your progress.

Im looking over the participants of the project and from the input some participants have provided I have noticed few things:

Their weekly hindsight from weekend 2 weeks prior is now well in intended direction and notice that traders are still in drawdown. How do you think this is happening? It is because your very own beliefs were shaken by yourself. Even though I urge all traders to keep a neutral view of the market at all times, the purpose of weekly hindsight is that it gives you a goal/aim to project your trading forward. In trading you are dealing with infinite combination of variations where there is no open/close equation, hence it is very easy to get lost in the 'randomness.' The weekly hindsight is the guiding stars in the dessert and you ruin the whole purpose if you and only yourself neglect its importance/agenda.

There are also traders who got the hindsight correct after a prolonged delay/retrace but the sloppy entries they punted too early has caused a critical dent in both emotional/financial capacity. This needs to be worked on your very own psychological traits. Why are you rushing? Is it the urgency to create money? I assure you, if you try creating profit at your whim you will be disappointed everytime as the market moves slower than traders expectation vs time.

There are also traders who unfortunately got their weekly hindsight wrong. This is just part of trading. The only important thing is to keep/maintain your beliefs/emotion/capital under control. I assure you Warren Buffet, Jessie Livermore also make wrong hindsights which are obviously never publically broadcasted but their winnings are always known. They are both very successful traders (per se) and they also know that the important element in their success is that winnings are maximized (held/added) and losses are minimized. There is nothing new to trading.

If there is nothing new to trading, then why do you think new traders all fail..?

If a trader knows 200 things on how to trade, then why do you think they still fail..?

Perhaps there is no such thing as failure but just the acceptance of loss which is mistaken for a failure? Failure and loss is different. Loss is temperamental whilst failure is permanent.

I have personally met many successful individuals. Many wealthy individuals who command vast commercial empires. They are all different to one another apart from one similarity. They are larger than most individuals. Not the physical attributes but in mental capacity. Or would it be easier to describe them half humourously that they have bigger cajones than most.

Joe is one of the individuals that I admire. He is an actuarian and an avid chess player. Even though I have an edge over most average chess players, I have only won twice against him and one of the occasion was his own personal forfeiture of a rook. At first, I was amazed and confused how the tide of the game drastically improves over time to his advantage. What was he doing that I wasnt? Was I too aggressive or too defensive? Perhaps I was thinking about it in too much detail. Most of the times I do take his knight or bishop first but I still manage to lose.

Then he said the magic phrase. He anticipates the next 5 movements from myself. He anticipates before it happens and when it does happen to his hindsight, he will move his pieces to take advantage of the situation. I was silently stunned at such remark. Its exactly what we do in trading and it was at that moment that once again I acknowledge how everything is all relative. He doesnt care that I have just taken his rook or bishop. That is just a small retrace/loss in the bigger scheme of things for him.

I believe most traders know how to trade. It is the emotional support they require.

Sincerely,

Graeme

Hi Graeme,

Very enthusiastic to have read the new post, and happy to have you around. Wise words, and I think that if we really understand them, not just read, but understand them, it would help tremendously with the emotional struggles.

Kindest Regards,

Cam

Thank you for the kind compliment and your private message yesterday. It is greatly appreciated.

I personally love impressionist/comedians.

I have seen great impressions on Al Pacino, Nicholas Cage and they are all very amusing to watch. It is amazing to see such great impressions done so vividly and accurately.

Just on a lighter side, this is a great impression of Nicholas Cage



I thought it was very funny.

An impressionist does not focus on 'what' the actual actors say.

They focus on 'how' they say it. They step into the thoughts of the actual actors and envision on 'how' they say it.

If you search for any publically broadcasted trades/investments of Warren Buffet or Jessie Livermore, and carefully analysis their thought process. Ask yourself how they trade not why or what.

There is a constant repetition in their trading traits and same trading principals that are always consistent amongst all successful traders. Trading is nothing new.

Sincerely,

Graeme

Thanks Greame and as always your posts are ever delightful. I am working for the past hour on a looong list of questions for you... hopefully I am done within the next 10 mins or so :-

- Vee

Good Morning Graeme,

Hope you are feeling better than yesterday and wish you a speedy recovery. I tried to focus today on Marion's 4H FB strategy and want to share what I learnt. I felt comfortable with this strategy as anything below 15M raised my heartbeat last week :- Unfortunately, I had to take a break from this exercise earlier today and took a few losses which I could have prevented. I would appreciate if you could address a few questions I have either here on this thread or via PM if you prefer. I will quote you from some of your earlier posts and then ask the question...

1. "Joe only takes sells and looks for flying buddhas when 5ema is above 10ema. He is a swing trader.". Does Marion take his first 4H position only after a RED FB is formed? Just curious as I see a lot of green FBs followed by a red FB as in the attached image

2. After taking 1st position on 4H, I zoomed in on 1H TF to stack one more short position on GBPCAD. I also have one survived from 15M TF (which also happened to be near 50% of 1H) . There are over 8 candles on 1H that are ranging and forming inside bars ready for breakout. Would Marion close all his open H1 TF positions in this instance (as price has stalled) or would he wait for a breakout or would he move his SL to the upper range? I want to keep them open and I think Marian would also leave them alone as none have retraced back and close above the close of previous RED candle (except one bar when I was not at my desk). Just curious as to what Marion would do when there is a looong number of ranging bars on 1H or 15M.

3. "Your loss should be forecastable and static while your growth/profit should always be maximized till the opportuntiy dies away. " I understand the philosophy behind this quote but trying to understand how Marion could 'forecast' his loss as there is no way of knowing the size of position's SL and how many could get hit before move SL to BE?

4. This is tied to #3 above and my question relates to Money/Risk Management. Since size of SL is dynamic during Marion's stacking and positions will open on 4H, 1H and 15M, could you please confirm if he would 'NOT' open a lower timeframe position unless higher TF position is moved to BE? Also, there was confusion in my head as I was trying to keep track of each position at different TF as at some point, we have to move SLs etc. Looking at the open positions window, there is no way to know which trade was taken at which TF. Maybe I am overthinking this but I found it quite hard that I had to stick PostIts on my screen to keep my head straight.

5. "Joe scales out by almost halfing the number of positions. If he has 11 positions before the first reversal candle he will close 5 position leaving 6. " In continuation with #4 above, I think Marian will ALWAYS scale out 15M positions first before scaling out 1H positions and then scale out 4H positions. Could you please confirm if this is what he does?

6. "Joe uses same principle to stack on 1 hour (and on 15minutes most times as well). So when that X candle is going up it is also closing out few of his 1 hour positions as well. However, he will continue stacking positions until a 'confirmed' 4 hour candle does close over the open price of the previous candle which in this case it doesnt. So in another words he would have positions when price is coming back down on 1hr chart that does not show on that 4 hour chart." - Could you please confirm if what this quote really means is the following... the 'driver' to start/resume/continue stacking is always the Higher TF. i.e (1) continue stacking in H1 TF as long as 4H candle has not closed above the open price of previous red candle (2) Continue stacking in 15M TF as long as H1 candle has not closed above the open price of previous red candle.

I apologize for such a long post and truly appreciate all your help and support towards us.

Best Regards and Get Well Blessings from all of us,

- Vee

P.S. As a quick reference guide to all, I have these collection of links from Graeme's posts in which he discusses Joe's FB strategy in detail:

[Edit: Links deleted as they do not work]

EDIT:
Here are two more jewels for reference:
How to use Position B's profit to add to SL of Position A:
http://www.forexfactory.com/showpost...postcount=1171
Post on tight Entries:
http://www.forexfactory.com/showpost...postcount=1260

Outstanding post Graeme I play chess all the time and never would have imagined it's connection to trading until now. Thanks again for sharing your life experiences. They all are extremely enlightening. Keep them coming.

Good questions, VEEFX

You have placed alot of effort into the questions so in return I will reply as detailed as possible.

1. Marion starts as soon as FB is formed. He prefers the entry to be closer to the higher price of the flying buddha candle as his stop loss will be tighter however sometimes it will be at the very bottom of the flying buddha if the flying buddha is a down candle. We both prefer volatile breakout to happen after the flying buddha and not a prolonged streak of stall or fluctuations. In the first chart you have posted with 4 circles. I can clearly see 2 or 3 of them with the price not closing above the FBs. There may be wicks that might pierce the high of the flying buddha but most importantly does not close above it. They are all good FBs.

2. Marion is an aggressive stacker. He will stack at every given opportuntiy on 1hr/15minutes as long as the 4hr FB is still in play. Once an engulf candle closes above a down candle, this will signal his half exit on all positions. I have viewed his proft/loss statement and noticed that he has many small -10, -20 pips against few +70, +100 pips. When marion places a trade on 1hr timeframe(or any timeframe) he places a hard stop loss above the previous candle. If price moves up and hits the stop loss, he will stop stacking on 1hr timeframe until a new engulf candle closes below it and will continue on. His/mine focus is on price closing above or below the open price.

3. I have one loss its over rule. He doesnt. Once a FB happens on 4hr timeframe and his position closes on stop loss, he will watch. His stop loss is just above the high of flying buddha. Does price close above the FB? If not, he will attempt again. See how he always only loses one position at a time. But once price moves into his favour he will keep stacking numerous positions whilst its moving into his way.

4. His positions on different timeframes are separate entitity from each other. He treats positions on 4hr timeframe as one group, 1hr timeframe as the other group, and separate group for 15min positions. There are always only 1 position in play in each timeframe. If he adds position at every 50% fib of previous candle on that particular timeframe, there are; 1 position on 4hr, 1 position on 1hr, and 1 position on 15min.

5. He considers 15minutes as just a big gamble and huge addition to his profit if it does happen. And most often few of them do. He always keeps the larger positions of each timeframe 'group' whilst closing out smaller positions from each group but more on 1hr timeframe and less on 4hr/15min. 15min closes often on breakeven or small loss which he doesnt care much. He knows just x1 or x2 positions from 15min timeframe that does survive for the 'duration' of the flying buddha will cover all the losses incurred on all timeframes (but this ofcourse depends on the logetivity of the FB in effect).

6. No. Independent. As long as the 4hr FB is in play he treats each timeframe a separate entity with same rule/principal. If price closes above the previous down candle (of 1hr/15min). He will stop stacking. If price closes above the previous down candle of 4hr, thats a warning that the FB opportunity is due to finish soon. But once the movement resumes on 4hr timeframe he will start again. His exposure increases and increases without any limit until he will cash out one giant profit. There are times when the FB only works for short time and then he would acknowledge his loss and move on. Sometimes few hundred pips. For him loss of few hundred pips is nothing to what he extracts on good opportunities.

I still remember the occasion when a FB opportunity on 4hr timeframe lasted 3 weeks or more. Joe still jokes that all his expenses are covered for the next 2 years.... How many more good FBs will there be in the next gap of 2 years?

Hope my answers help and please feel free to ask me if I have missed something.

Sincerely,

Graeme

Looks like it was worth about 40 pips or so. Is that enough profit for you? Or are you trying to grow legs?

Do you mean most traders know how to click the mouse to enter and exit trades?

Hi Greame,

Thank you so much for your long and elaborated response. Absolutely love your style of writing. If you don't mind, I feel I need a few more clarifications to bake this all in my head.

1. Very interesting. I was focussed on longer upper wick to indicate buyer leaving and sellers taking charge. If a subsequent wick pierces through my entry position's SL at the top of FB, I could always rre-enter. I think that is why Marion is ok with a failed entry or two...makes sense. Thanks !

2. "this will signal his half exit on all positions"… need a little clarification on this quote. Let's say if I have 6 x 2lot positions open at different levels, would he exit 6 x 1lot positions or would he exit 3 x2lot positions? Not sure if I fully understand the bold portion of your quote... " If price moves up and hits the stop loss, he will stop stacking on 1hr timeframe until a new engulf candle closes below it and will continue on." ?

3. Makes sense…. Thanks

4. So this does require separate tracking by each TF as I thought (requiring a open position xls of some kind)… Thanks for clarifying this as I was going crazy this morning with just a few multi-TF trades.

5. I an very intrigued that he would close out more positions from H1 TF 'group' and leave more positions open from 15M 'group' open. It makes perfect sense though depending on where you are in the stacking 'binge drill'… Thanks (edit: rethinking asking #2 question above, I think he would probably exit 3 x2lot instead of 6x1lot )

6. Makes sense…. Thanks

Many thanks again for your help.

Best Regards,

-Vee

He probably means most people subconsciously or intuitively know what would make them money... but the constant battle with fear and greed muddies the water, we lose clarity and screw things up. Once we make a mistake its tricky NOT to enter some kind of downward spiral that throws the whole endeavour out of whack.

VEEFX, I don't know if you had this in mind but, all but the last two links you posted in your post # 2150 link to the came post. The numbers are different but the message is the same. Thanks anyway, know you just wanted to help.

Thanks Stitch for bringing this to my attention. I have fixed the links in my post.

EDIT: I take that back Stitch. The number in the url is some kind of a session id instead of Graeme's accountid. I am deleting all the links from post# 2150 until I figure this out.

Just continuing on with questions from VEEFX.

2. Marion considers the FB is still in effect until an engulf candle completely forms on the 4hr chart against the movement. So we are looking at a bold up candle that has a close price above the previous downcandle open price. Engulf pattern is when a bold candle forms opposite to the previous candle with the close price above the open of the previous down candle or below the open of the previous up candle. That is engulf and it is a strong indication. This price action alone is an alarm for both myself and marion. We do not want to see such action happen especially on higher timeframes against our intended movement.

Marion trades much larger lots than myself. I have restricted my lot size to 2 standard lots while he trades 8-10 standard lots per position. He closes 'one position' as a whole when he is diversifying. He does not reduce lot size. However, we all know everything is all relative and both you and Marion will arrive at same final door of profits with either methods of reducing exposure. He closes his positions out completely for the simplicity of it.

4. Marion stacks exclusively at 50% fib. 50% fib of 4hr candle, 1hr candle, 15min candle. He does it well mentally.

5. This is also at your personal discretion. As long as you are keeping legs on all timeframes to cover all aspects of result, you will still be profitable.

However, Marion has been using this method as a main source of income for the last 2 years so I will place trust/faith in what he is currently doing.

Having mentioned this, he is now reducing his lot size to 3 standard lots and looking at using timeframes daily, 4hr and 1hr with longer periods of growth.

My last correspondence was tuesday night and he is currently in eur/usd after monday FB on daily which happened to have a volatile breakout on the next candle (daily candle). If this week's weekly candle for eur/usd closes as an engulf pattern closing lower than last weeks open price of the weekly candle than he is in the best possible scenario for thousands of pips. Ofcourse this is all at the discretion of the market.

Sincerely,

Graeme

Thank you Ari Gold

Absolutely.

Sincerely,

Graeme