Building an equity millipede

ahhh, well said!

Comparing trading to the coin toss scenario: (something Graeme suggested we all do earlier on - here is my documented coin toss and emotional thinking along with it)

Cost: 10 pips per coin toss
if the coin is heads up, the trade is a winner (+10 pips - Locked in at B/E) If it is tails = -10 pips

1st trade= heads (+10 pips)
2nd trade = heads up again - (+20 pips in first trade/ 10 pips 2nd trade)
3rd trade= heads up again - (+10 in 3rd, +20 in 2nd/ +30 in 3rd)
4th trade = heads again (+10, +20, +30, +40)
5th trade = heads again (+10, +20, +30, +40, +50)
Note: Im thinking, "YAY! Winning Streak! Close it out and quit for the day!"
6th trade = tails - (-10, b/e, +10, +20, +30, +40)
7th trade = tails (-10, b/e, +10, +20, 30)
8th trade = tails (- 10, b/e, +10, +20)
9th trade = tails (-10, b/e, +10)
Note: thinking I need to quit for day and take my remaining 10 pips!
10th trade = tails (-10, b/e)

Total ten trades so far: - 50 pips, one trade left at B/E


11th trade = heads (+10 pips, +10 pips)
12th trade = tails (-10 pips, b/e, b/e)
13th trade = heads (+10, +10, +10)
14th trade = heads (+10, +20, +20)
15th trade = heads (+10, +20, +30, +30)
16th trade = heads (+10, +30, +40 +40)
i'd want to quit for day right here and take the wins
17th trade = tails (-10, b/e, +20, +30, +30)
18th trade = tails (-10, +10, +20, +20)
19th trade = heads (+10, +20, +30, +30)
20th trade = heads (+10, +30, +40, + 40)

total 20 trades: = - 80 with +120 floating profit


21st trade = heads (+10, +20, +40, +50, + 50)
22nd trade= heads (+10, +20, +30, +50, +50, +60)
(right now, I want to take my money and go on...but for the sake of this experiment... I stick with it)
23rd trade = tails (-10, b/e, +10, +20, +40, +40, + 50)
24th trade = heads (+10, +10, +20, +30, +50, +50, +60)
25th trade = tails (-10, b/e, b/e, +10, +20, +40, +40. +50)
26th trade = heads (+10, +10, +10, +20, +30, +50, +50, +60)
(I'm noticing its taking more and more to knock out the "legs" I've established, plus with each trade, I have more legs starting)
27th trade = heads (+10, +20, +20, +20, +30, +40, +60, +60, +70)
(so many going in the right direction now I'm amazed)
28th trade = tails (-10, b/e, +10, +10, +10, +20, +30, +50, +50, +60)
29th trade = heads (+10, +20, +20, +20, +30, +40, +60, +60, +70)
30th trade = tails (-10, b/e, +10, +10, +10, +20, +30, +50, +50, +60)

total 30 trades: -120 pips +240 pips in floating profit

31st trade - tails (-10, b/e, b/e, b/e, +10, +20, +40, +40, +50)
(I want to stop it out now ... but continuing on)
32nd trade - heads (+10, +10, +10, +10, +20, +30, + 50, +50, +60)
33rd trade = heads (+10, +20, +20, +20, +30, +40, +60, +60, +70)
34th trade = tails (-10, b/e, +10, +10, +10, +20, +30, +50, +50, +60)
35th trade = tails (-10, x, , b/e, b/e, b/e,+10, +20, +40, +40, +50)
36th trade = tails (-10, b/e , +10, +30, +30, +40)
37th trade = tails (-10, b/e, +20, +20, +30)
38th trade = heads (+10, +10, +30, +30, +40)
39th trade = heads (+10, +20, +20, +40, +40, +50)
40th trade = tails (-10, b/e, +10, +10, +30, +30, +40)

total 40 trades: -180 pips, +120 pips floating profit
(thinking what a lot of wasted time, this is not working....)


41st trade= tails (-10, b/e, b/e, +20, +20, +30)
42nd trade = heads (+10, +10, +10, +30, +30, +40)
43rd trade = tails (-10, b/e, b/e, b/e, +20, +20, +30)
44th trade = tails (-10, +10, +10, +20)
45th trade = heads (+10, +20, +20,+30)
46th trade=tails (-10, b/e, +10, +10, +20)
(thinking I need a new strategy!)
47th trade = heads (+10, +10, +20, +20, +30)
48th trade = heads (+10, +20, +20, +30, +30, +40)
49th trade = tails (-10, b/e, +10, +10, +20, +20, +30)
50th trade tails (-10, b/e, b/e, +10, +10, +20)

50th trade = -240 pips, +40 pips in floating profit
(thinking seriously... why am I doing this? but will keep on till I get to 100 trades/ tosses just for the sake of this experiment)

51st trade: heads (+10, +10, +10, +20, +20, +30)
52nd trade: tails (-10, b/e, b/e, b/e, +10, +10, +20)
53rd trade: tails (-10, b/e, b/e, +10)
54th trade: heads (+10, +10, +10, +20)
55th trade: heads (+10, +20, +20, +20, +30)
56th trade: heads (+10, +20, +30, +30, +30, +40)
57th trade: tails (-10, b/e, +10, +20, +20, +20, +30)
58th trade: heads (+10, +10, +20, +30, +30, +30, +40)
59th trade: tails (-10, b/e, b/e, +10, +20, +20, +20, +30)
60th trade: heads (+10, +10, +10, +20, +30, +30, +30, +40)

total 60 trades: -280 pips, 180 pips floating profit

61st trade: heads (+10, +20, +20, +20, +30, +40, +40, +40, +50)
62nd trade: heads (+10, +20, +30, +30, +30, +40, +50, +50, +50, +60)
63rd trade: heads (+10, +20, +30, +40, +40, +40, +50, +60, +60, +70)
64th trade: heads (+10, +20, +30, +40, +50, +50, +50, +60, +70, +70, +80)
65th trade: tails (-10, b/e, +10, +20, +30, +40, +40, +40, +50, +60, +60, +70)
66th trade: heads (+10, +10, +20, +30, +40, +50, +50, +50, +60, +70, +70, +80)
67th trade: tails (-10, b/e, b/e, +10, +20, +30, +40, +40, +40, +50, +60, +60, +70)
68th trade: heads (+10, +10, +10, +20, +30, +40, +50, +50, +50, +60, +70, +70. +80)
69th trade: heads (+10, +20, +20, +20, +30, +40, +50, +60, +60, +60, +70, +80, +80, +90)
70th trade: tails (-10, b/e, +10, +10, +10, +20, +30, +40, +50, +50, +50, +60, +70, +70, +80)

70 trades total: -310 pips, 550 pips profit

71st trade: tails (-10, 3 b/e, +10, +20, +30, +40, +40, +40, +50, +60, +60, +70)
72nd trade: heads (+10, +10, +10, +10, +20, +30, +40, +50, +50, +50, +60, +70, +70, +80)
73rd trade: tails (-10, 4 b/e, +10, +20, +30, +40, +40, +40
+50, +60, +60. +80)
74th trade: heads (+10, +10, +10, +10, +10, +10, +20, +30, +40, +50, +50, +50, 70, +70, +90)
75th trade: tails (-10, 6 b/e, +10, +20, +30, +40, +40, +40, +60, +60, +80)
76th trade: heads (+10, 6 x 10, +20, +30, +40, 3 x 50, 2 x 70, +90)
(numbers are starting to get crazy! )
77th trade: heads (+10, 7 x20, +30, +40, +50, 3 x 60, 2 x 80, +100)
78th trade: tails (-10, b/e, 7x10, +20, +30, +40, 3x50, 2x70, +90)
79th trade: tails, (-10, 7x BE, +10, +20, +30, 3x40, 2x60, +80)
80th trade: tails (-10, BE, +10, +20, 3 x 30, 2x50, +70)

80 trades total: -370 pips, 290 pips floating profit

81st trade: heads (+10, +10, +20, +30, 3 x 40, 2 x 60, +80)
82nd trade: heads (+10, 2x20, +30, +40, 3 x 50, 2 x 70, +90)
83rd trade: heads (+10, +20, 2 x 30, +40, +50, 3 x 60, 2 x 80, +100)
84th trade: heads (+10, +20, +30, 2 x 40, +50, +60, 3 x 70, 2 x 90, +110)
(thinking I may just take this experiment to 200 to see what happens!)
85th trade: heads!!!! (+10, +20, +30, +40, 2 x 50, +60, +70, 3 x 80, 2 x 100, +120)
86th trade: Heads!!!!! (+10, +20, +30, +40, +50, 2 x 60, +70, +80, 3 x 90, 2 x 110, +130)
87th trade: tails (-10, be, +10, +20, +30, +40, 2 x50, +60, +70, 3x80, 2x100, +120)
88th trade: heads (+10, +10, +20, +30, +40, +50, 2x60, +70, +80, 3x90, 2x110, +130)
89th trade: heads (+10, 2x20, +30, +40, +50, +60, 2x70, +80, +90, 3x100, 2x120, +140)
WOW!
90th trade: HEADS! (+10, +20, 2x30, +40, +50, +60, +70, 2x80, +90, +100, 3x110, 2x120, +140)

90 trades total: -380 pips, 1370 pips in floating profit

91st trade: heads (+10, +20, +30, 2x40, +50, +60, +70, +80, 2x90, +100, +110, 3x120, 2x130, +150)
92nd trade: heads (+10, +20, +30, +40, 2x50, +60, +70, +80, +90, 2x100, +110, +120, 3x130, 2x140, +160)
noticing a snowball effect going on here!!!
93rd trade: heads (doubting my coin tossing abilities right now!)
(+10, +20, +30, +40, +50, 2x60, +70, +80, +90, +100, 2x110, +120, +130, 3x140, 2x150, +170)
94th trade: heads! (shook it realllllly good that time!)
(+10, +20, +30, +40, +50, +60, 2x70, +80, +90, +100, 2x120, +130, +140, 3x150, 2x160, +180)
95th trade: heads (seriously..... im not rigging it....) (+10, +20, +30, +40, +50, +60, +70, 2x80, +90, +100,+110, 2x130, +140, +150, 3 x 160, 2x170, +190)
wondering if this is realllllly realistic?????
96th trade: tails (-10, be, +10, +20, +30, +40, 50, 60, 2x70, 80, 90, 100, 2x120, 130, 140, 3x150, 2x160, 180)
97th trade: heads (+10, +10, +20, +30, +40, +50, +60, +70, 2x80, +90, +100, 110, 2x130, 140, 150, 3x160, 2x170, 190)
98th trade: heads (+10, 2x20, +30, +40, +50, +60, +70, +80, 2x90, +100, +110, +120, 2x140, 150, 160, 3x170, 2x180, 200)
noticing the compounded effect of a winning streak. It will take quite a bit now to knock these out.
99th trade: heads (+10, +20, 2x30, +40, +50, +60, +70, +80, +90, 2x100, +110, +120, +130, 2x150, 160, 170, 3x180, 2x190, 210)
100th trade: heads again! (+10, +20, +30, 2x40, +50, +60, +70, +80, +90, +100, 2x110, +120, +130, +140, 2x160, 170, 180, 3x190, 2x200, 220)

100 trades total: -390 pips, 3060 pips in floating profit


Everyone should really try doing this. If loss is at a set point, but reward is infinite... the results are truly amazing. I had a hard time wrapping my mind around all these "legs" going. Also, all the wins I doubted, but - if we were able to catch a long term trend, that is truly possible.

Veefx, Please advise me. I have shorted Gbp/Nzd at 2.1287 TP 2.1100
Is it a good trade in your opinion please?
Thanks,
Bomi

Graeme, SOOOOO glad to see you back! You are like a breath of fresh air!

Just peaked into gbpnzd to confirm my anticipation from last night which I posted earlier and noticed it was spot on !!! I am already feeling great about this strategy

EDIT: As mentioned in some of my earlier posts, I think I am better at predicting shorts...need more practice anticipating upward direction

Hey Behman,

I am not here to provide advice on this thread and I can only provide my opinion in regards to my collaboration with Graeme. Just since you asked about a pair that Graeme discussed yesterday, here's my 'opinion' on the direction (and please don't consider this as my advice as I am not a professional trader).

Looking at latest PA on Gbp/nzd, I notice lower lows on wick on both H1 candles and they both have large body and smaller wicks so sellers are still in charge. Buyers are loosing steam so I expect the pair to drop further to touch 2.1185 support.

Disclaimer: I really hope no one is trading live based on these analysis. If you do, you are doing so at your own risk.

That was an interesting exercise, and illustrates the point well. The odds are stacked in our favour because we control when the game ends. In my mind, I pictured it as a board game. If the market tosses a Head, we move one space to the right in the +pips direction. If the market tosses a Tail, we move one space to the left in the -pips direction. But we have control over the game because we are free to decide when each turns ends, and for how long we allow it to continue. Limited downside, unlimited upside.

Graeme's original exercise of 3 x 20 pip trades fits in perfectly. If a trader has a good chance of hitting this target, then it is the equivelent of starting on the +20 square of the game each time.

The rest of the moves are determined by the market. But are we at the mercy of 50:50 win/lose? No we aren't. Because we use the trend. Entering with the trend could shift those odds to at least 60:40, probably higher.
It would be really interesting to repeat the coin toss exercise, but replace the coin with a dice. If you roll a 3, 4, 5 or 6, then move forwards one space. Move backwards if you roll a 1 or 2. If you reach the +30 square, the never go below the 'breakeven' zero square before ending your turn.
Just for fun, you could start 2 out of 3 turns at the +20 square to simulate your low risk entries.

The board game analogy really help me with this. I hope it helps others too.

Cheers, Beastie.

Shorts are easier to predict, they have gravity in their favor.

P

Your numbers are staggeringly worrisome. Were you trading when you were doing this? The mere length of them makes me feel dizzy.

I've actually read something to that effect - maybe in "The Art of the Trade"?
Supposedly because of the net effect of hedging. Not exactly gravity. LOL!

Good morning, all

VEEFX - Good morning. It is 07:18am here in Sydney. I will be here waiting for you. There is no need to rush.

I have decided to stay home today and dedicate the whole day to this endeavour.

I will create a msn live account so we can interact 'faster' and pm you the detail. For now I will just give you the detail.

The yellow ema line on my charts are always 200ema.

Im wondering why skyline/others have a different feed.

Skyline/others if you are using FXCM UK can you please confirm your daily open line is 09:00 sydney time? Apologies I dont know what that is in other timezones. So in another words its 07:22 at the moment and in 1hr and 40min @ 09:00 I expect today's daily candle to finish forming and new daily candle open. Can anyone else using FXCM please confirm this with me?

Does FXCM mt4 shift server time based on each individual clients timezone?

Sincerely,

Graeme

Thank you Graeme. Your efforts are much appreciated.

Kindest Regards,

Cam

PS: In UK it's 22:32 right now.

morning graeme,
i just opened a new fxcm account this morning and it lines up with what you said, the new daily candle starts at 9am our time

cheers
geoff

While we wait for VEEFX I would like to take this time to briefly re-touch on tight entries. It is asked alot and I understand why.

It is very important to be able to 'save' unnecessary expenses in your business. And trading is your business. One of the best business in the world where it is not bound by unfair legislation or anti-competitive movements.

Personally I like to consider myself a surgeon making a percision cut or a sniper waiting for a single shot single kill. Whichever humourous way you consider them to be, 'tight entry' is nothing more than entering on the same criteria with smaller stop loss/risk.

When you try to enter with smaller stop loss/risk you sometimes also miss few golden movements that has no retrace. But being a versatile trader im sure you will be able to catch those golden movements as a volatile breakout? Think about this please.

Last night, I gave one live example that unfolded together that I would like to go back explain little more to the newer readers.

This was eur/chf. First chart is from last night and rest is from this morning

eur/chf 1hr

http://img23.imageshack.us/img23/7500/aa2hz.png

And currently (for now),

http://img820.imageshack.us/img820/4514/aa1a.png

Last night, a trader not using a tight entry could have entered at the orange circle.

http://img843.imageshack.us/img843/9844/aa1q.png

However, you and I need to have professional standards.

http://img137.imageshack.us/img137/8232/aa1k.png

I assure all traders that I too experience long streaks of losses. It is inevitable but I do know that I will try very hard to minimize the losses as above. The market can take 10, 14, 17 pips from me as long as I know (as a hard statistical fact) sooner or later that it will give me 200, 300, 3000. Just need to wait.

P.S Thank you cameron1st and good morning to you too. Thank you Geoff, greatly appreciated.

Sincerely,

Graeme

Good Morning Graeme,
yes it seems that daily candle opens is the same as your, actually my platform time is 22:52 so daily candle will open in about 1 hour and 8 minutes. I still wondering why the ema200 is different between the two platforms on GBPNZD

Edit : just a thought : it seems only final portion of your ema200 differ from our, since this is an ema200 then latest value need 200 previous candle to be calculated precisely, is it possible that you didn't had at least 200 candle loaded on your 4H chart timeframe ? Please just try to shift on the left your chart to load more candles and see if your ema200 will adjust a little bit....

Hello Graeme,

The new daily candle on my FXCM-UK account opened exactly one hour ago at 5 PM New York time, so it looks like there could be a small discrepancy as from your post your new candle is still an hour away (is that correct?), which would be a difference of two hours. It may not be a big deal, but it does appear that there are some differences in server times. Like Vee, I'm in the USA.

Kevin

Could it be EMA vs. SMA? Exponential vs. simple? Just a thought.

Kevin

Thanks buddy, we are all adults here! Lol No need for disclaimers here! I am doing this game for atleast 5 years now.

Just one more post as we wait for VEEFX.

How? Good question.

There is a niche in retail forex that sooner or later a bright individual or group of bright individual will create a business from.

It is backtesting against 10+ years of price history across the whole board on models.

The results are of critical importance and it would save alot of time for the trader.

I have personally seen how much hard statistical fact you can extract.

It shows you so much inner workings of a method that I cannot describe them all.

VEEFX, you've selected 20 stop loss with 80 take win. And I mentioned that we will keep it like that for now but I will reveal something later.

Your r:r will not work out and I will guide you when it happens.

Please allow me to share a hard statistical fact with all readers.

From the past 10+ years of price history across the whole board: a model based on price expansion from 200ema has an average 400+ pip expansion per opportunity.

Institutions will 'saturate' their risk by entering 2 different spectrum of investment by x1 position take profit @ less than the average and x1 position take profit @ more than the average. Why would that be?

kcarvey - Thank you for the great effort. I hope readers think about your post twice as there is a related discovery within your experiment.

Good morning, skyline

My server time is the same as yours. And yes daily candle will open in 1 hour.

This is my current gbpnzd

http://img843.imageshack.us/img843/3397/aa1c.png

Could it be we were talking about a different pair of currency?

starvin4pips - That is unusual. Not that is matters as everything is all relevant. Did you download from FXCM UK?

Sincerely,

Graeme

I hope it's alright if I try to answer: because if the trade is going in their direction for more profit than expected, they want to stay in action and maximise their profits ?