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  • #2,601
  • Sep 21, 2010 7:19am Sep 21, 2010 7:19am
Quoting duketoga
Hello all,

I am an autotrader, and have been reading this thread with some interest. I would like to point out that the "coin flip" scenario as it is being conducted here is flawed. In fact, as presented here, the expectancy would be enormous!

The error is in the assumption that it is possible to stack the wins with a subsequent win. This is true if and only if each new trade is in the same direction as the previous trade. Missing is that each new trade could be in either the same or opposite direction to the previous trade. So one should...
I thought the concept of stacking was directly related to your anticipating the trend correctly, minimising risk on entries and entering as low a TF as you felt comfortable with. If the trend signals strong reversal you can close out as many of your trades as you wish. If your anticipation is correct then a few winners will cover many losses. The coin tossing illustrates the significance of this, but as you allude to one candle spiking could wipe out a number of winning positions and still be a winner.
The methods that Graeme has mentioned also allows for reversals, but he has yet to go into this in any depth, save to say that he has implied that he has positions in both directions on same ccy pairs. I would consider the reversal as another Hor T sequence that can be started at any time.

Ray
  • #2,602
  • Edited 8:41am Sep 21, 2010 7:21am | Edited 8:41am
A big gratitude to Graeme and Vee for the effort of providing us with first class live lectures.

@Graeme!

I must say I am very excited about the direction where the thread is headed atm, because expansion of the MA is the most important theory by which my trading is oriented.

I have done some testing for myself (around 2000 trades on various instruments 8h timeframe for the last 10 years). I used SMA instead of EMA (no specific reason for that). The method I have tested is simple. I was "always in" the market, long on a 8h candle close above 200 SMA, close and reverse on 8h candle close bellow 200 SMA. Basicaly it is just an 1 SMA crossover without stop losses.

I ve convinced myself that this type of trade have an definite edge on the market. I dont want to talk numbers too much because I am always oversceptical so I want to retest and retest again. Anyhow, in spite of some huge drawdowns and cold streaks (I had a losing streak of 30+), and accuracy of under 15%, this trade is a winner on the long run.

The problems for this method are:
1. You must not miss a trade. There are instances where only one trade covers for all the losses made on previous 100 trades. You dont want to miss that. That is why I chose 8 h timeframe for the most part. Any random distribution of trades, like the one you presented somewhere in the middle of this thread, will be a net loser in case this ONE trade is not selected.
2.The risk is somewhat limited but You dont know your risk when you enter the trade. Basicaly you must wait for the next candle to close, and on occasion it will run much more than one`s risk limits allow. I can play with average loss on last N trades, but this doesnt covers the fact that I DONT KNOW THE RISK when I enter my trade.

Most important lessons I learned from this exercise was.

1. Uneven distribution is a scary animal,
2. "Always in" method is very interesting because it ensures participation (note: price can go on a long run without my favorite trigger entry - lets say an Inside bar, or flying buddha, but it cannot do that without closing above-bellow MA).

The reason why I am overexcited about this new lectures you are taking with VEE, is because the fact that I believe it is possible for us to learn to take razor entries on smaller TF to ensure participation, and reduce risk at same time.

I would appreciate your opinion on my post (and everyone else`s of course).

Keep up the great work.

Best regards

Coronajazz!!!
You wont survive without preserving!!!
  • #2,603
  • Sep 21, 2010 7:58am Sep 21, 2010 7:58am
Quoting traderray
I thought the concept of stacking was directly related to your anticipating the trend correctly, minimising risk on entries and entering as low a TF as you felt comfortable with. If the trend signals strong reversal you can close out as many of your trades as you wish. If your anticipation is correct then a few winners will cover many losses. The coin tossing illustrates the significance of this, but as you allude to one candle spiking could wipe out a number of winning positions and still be a winner.
The methods that Graeme has mentioned also...
Hi, I am not sure what Graeme intended the coin flip to indicate. However, it is clear that participants have misinterpreted the possibilities in real trading.

As you mentioned, Graeme mentioned taking reversal of existing legs, which I believe he considered to be independent legs (apologies if I am incorrect on some details). However, opening opposite positions would negate the gains from stacking positions. This is my main point, that you can't simply suggest win/lose without considering directions of said trades.

I am not trying to hijack the thread... instead I wanted to point out why this cannot be used as a trading system regardless of trend as was suggested.

Best,
/Duke
  • #2,604
  • Sep 21, 2010 8:00am Sep 21, 2010 8:00am
Quoting pipEASY
For myself, I always wait confirmation first. If Im looking for sell then I want to see price close below the open of previous up candle.
http://i51.tinypic.com/205f5zp.gif

Graeme:

May I assume "price close below the open of previous up candle" can be used to determine whether or not to remain in a trade as well?
  • #2,605
  • Sep 21, 2010 8:24am Sep 21, 2010 8:24am
Quoting pipEASY
Just before we all retire for few hours.

There are few things that everyone needs to know.

Price cannot stay around 200ema line for a long time (or any ema for that matter). It needs to break it or bounce from it but must move away from it. It is the nature of price contraction and expansion.

When price hovers around 200ema that is when price is balanced on even keel. Head wins and then tails and then heads again.

When price expands away from the 200ema is when you are experiencing price irregularity. 14+, 15+ streaks of wins on one side...
Question, Graeme: What time frame(s) were used to generate the 400+ pips number?

EUR/USD is approaching the D1 200ema.

http://i51.tinypic.com/qzm341.gif
  • #2,606
  • Sep 21, 2010 8:33am Sep 21, 2010 8:33am
In a previous post Graeme said, "If Im looking for sell then I want to see price close below the open of previous up candle." The opposite would be true for an entry rule for a potential long trade.

In the case of this AUDUSD trade, price closed above the open of the previous down candle, and profit could be taken.
Attached Image (click to enlarge)
Click to Enlarge Name: audusd3 daily 09 21 10.gif Size: 22 KB
  • #2,607
  • Sep 21, 2010 8:49am Sep 21, 2010 8:49am
Quoting duketoga
Hi, I am not sure what Graeme intended the coin flip to indicate. However, it is clear that participants have misinterpreted the possibilities in real trading.
The coin flip example isn't really meant to simulate real trading. It was intended to illustrate what is at the core of this thread right from the very first post, the possibilty for infinite growth if positions are allowed to run.

To put it another way, if 10 coin flips in a row go in our favour, in our little game we are now at +100 pips, +90 pips, +80, +70 etc. Total = +550pips.
On the other hand, if the 10 flips were to go the other way, we don't run all the way down to -100, we stop at -10. Total -100 pips.

If we had a good run in our favour, we could also stop some trades going negative at all (stop loss to BE) or we could decide that the winning streak is coming to an end (change in trend) and decide to take some pieces off the board at their current position (diversification).

I hope this makes sense and I am not just rambling along.

Cheers, Beastie.
  • #2,608
  • Sep 21, 2010 9:03am Sep 21, 2010 9:03am
Quoting pipEASY
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.
Hi Graeme,
this is my first post here, but i spent last two/three weeks reading this thread...
Great reading, thank you for this.
Referring to post above, Is that H4 200ema?
And about the average of 400+ pip expansion, i guess it can be more accurate referred to a specific pair.

With kind regards,
Wolfan
  • #2,609
  • Sep 21, 2010 10:35am Sep 21, 2010 10:35am
Quoting pipEASY
http://img819.imageshack.us/img819/2...10100143pm.png

I just drew 4 trendlines with my eyes closed.

It seems to me price reacts/appreciates/respects my lines that I drew with my eyes closed. How can that be?

It makes me wonder why we do analysis when 'perhaps' the easiest way to trade is to go with the flow.

If its UP then BUY, if its DOWN then SELL.

But we look for bargains that has an antiquity value on it.

Sincerely,

Graeme
Now I understand why I DON'T understand.....
  • #2,610
  • Sep 21, 2010 11:26am Sep 21, 2010 11:26am
Quoting pipEASY
Good morning, VEEFX

Thank you very much for your prompt reply.

For the sake of all readers please state which timezone you are currently residing.

Im Sydney, Australia and currently it is 09:18 of Monday morning.

Sincerely,

Graeme

Hello Graeme,

I just started to read from page 161. I love to follow you and Veefx and eager to learn from both of you.

Thanks you all.

-maaj-
-happyTrading, maaj-
  • #2,611
  • Sep 21, 2010 11:42am Sep 21, 2010 11:42am
Quoting pipEASY
http://img819.imageshack.us/img819/2...10100143pm.png

I just drew 4 trendlines with my eyes closed.

It seems to me price reacts/appreciates/respects my lines that I drew with my eyes closed. How can that be?

It makes me wonder why we do analysis when 'perhaps' the easiest way to trade is to go with the flow.

If its UP then BUY, if its DOWN then SELL.

But we look for bargains that has an antiquity value on it.

Sincerely,

Graeme
This is a very interesting point you are making Graeme. Very compelling.

However, 3rd line from the bottom. That one seems like there is some correlation there. Even if it was subconsious when you drew it.
  • #2,612
  • Sep 21, 2010 12:33pm Sep 21, 2010 12:33pm
Quoting pipEASY
http://img819.imageshack.us/img819/2...10100143pm.png

I just drew 4 trendlines with my eyes closed.

It seems to me price reacts/appreciates/respects my lines that I drew with my eyes closed. How can that be?

It makes me wonder why we do analysis when 'perhaps' the easiest way to trade is to go with the flow.

If its UP then BUY, if its DOWN then SELL.

But we look for bargains that has an antiquity value on it.

Sincerely,

Graeme
Greame you truly are a master.

I can see from your top line showing price action going down.

your second line showing the price has found a double bottom.

and the last 2 lines showing price has reversed and is now moving up.

Your point is proved lol. http://cdn.forexfactory.com/images/icons/icon6.gif
making green pips large and red pips small this is my goal.
  • #2,613
  • Sep 21, 2010 3:03pm Sep 21, 2010 3:03pm
Quoting pipEASY
http://img819.imageshack.us/img819/2...10100143pm.png

I just drew 4 trendlines with my eyes closed.

It seems to me price reacts/appreciates/respects my lines that I drew with my eyes closed. How can that be?

It makes me wonder why we do analysis when 'perhaps' the easiest way to trade is to go with the flow.

If its UP then BUY, if its DOWN then SELL.

But we look for bargains that has an antiquity value on it.

Sincerely,

Graeme
Notice how price reacted at 1.0600, 1.0500, 1.0400 and 1.0300

"If its (at the line and going) UP then BUY, if its (at the line and going) DOWN then SELL." Hindsight indeed!
  • #2,614
  • Sep 21, 2010 3:33pm Sep 21, 2010 3:33pm
Hi Graeme, first may I say what a fantastic thread this is and I apologies for interrupting it.

I have a techi problem with my charts , my 200ema is out of sync with your charts. I don't want to get in the way with this dribble but would like to ask if anybody could possibly start a new thread for techi stuff, so it does don't detract from this wonderful thread.


As a newbie status with FF they will not allow me to start a thread??? been a member for 6 years??? suppose I should chat more...sorry chaps.

Apologies for this rude interruption but really keen to follow what you chaps are doing.

Great Thread

NE
  • #2,615
  • Sep 21, 2010 3:41pm Sep 21, 2010 3:41pm
Quoting NelsonEddy
Hi Graeme, first may I say what a fantastic thread this is and I apologies for interrupting it.

I have a techi problem with my charts , my 200ema is out of sync with your charts. I don't want to get in the way with this dribble but would like to ask if anybody could possibly start a new thread for techi stuff, so it does don't detract from this wonderful thread.


As a newbie status with FF they will not allow me to start a thread??? been a member for 6 years??? suppose I should chat more...sorry chaps.

Apologies for this rude interruption...
Hi Nelson,
just download mt4 platform from FXCM UK to be in sync with Graeme

Cheers,
Skyline
  • #2,616
  • Edited 4:59pm Sep 21, 2010 4:09pm | Edited 4:59pm
Quoting skyline
Hi Nelson,
just download mt4 platform from FXCM UK to be in sync with Graeme

Cheers,
Skyline
Thanks Skyline, I already had FXCM uk, whilst waiting I was reading the latest posts from page 165 and noticed my issue had been spoke about and dealt with in later posts after page 165...so I think I'm ok now...will quietly slip back and enjoy.

Thanks Again NE
  • #2,617
  • Sep 21, 2010 5:15pm Sep 21, 2010 5:15pm
Quoting paul1
Hello, everyone.

Based on coin toss i wanted to see it on charts.

Looking at 1 hour bars regardless of trend.

Check out the last few weeks

Starting at 01/09/2010 till today
Calling green bars winners
Calling red bars losers

Placing a trade at open of each bar and exit at close of bar.

.

I'd like to see that again only where you don't exit if its a win and going for the infinite yield.

From January until now - every hour candle... how many "soldiers" would we have battling for us??? Or lets say daily candle- how many would still be open today?
  • #2,618
  • Sep 21, 2010 5:22pm Sep 21, 2010 5:22pm
Quoting skyline
Interesting test Paul, but where do you place your stoploss ?
For a tight stop loss, right above the opening of the candle. I can see it especially on the daily candles. The opening is usually good for about 50+ pips.
  • #2,619
  • Sep 21, 2010 5:28pm Sep 21, 2010 5:28pm
Quoting Beastie Boy
Yes, you are right. KC seems to be classing a trade as still alive if it moves back to BE, when in fact it is dead and therefore not counted in the negative pips if the next toss is tails.

Cheers, Beastie.

Very interesting point. I thought about that also. For simplicity sake since it was 10 not 11 it could technically stay open. In reality though, Breakeven would have to include the ever-variable spread also.

For another test, we could somehow incorporate 10 pips to add to the B/E to make them stay alive longer.
  • #2,620
  • Edited 5:54pm Sep 21, 2010 5:42pm | Edited 5:54pm
Quoting kcravey
Very interesting point. I thought about that also. For simplicity sake since it was 10 not 11 it could technically stay open. In reality though, Breakeven would have to include the ever-variable spread also.

For another test, we could somehow incorporate 10 pips to add to the B/E to make them stay alive longer.
Can we please stop with this coin toss distraction. It is not relevant to the thread IMHO and only adds noise. The sorts of statistics you are talking about are gambling and not trading statistics anyways. I can say with 100% certainty that you have not stumbled on some holy grail loophole in trading that allows you to just take random trades and succeed when half the statisicians on the planet are constantly looking for some edge.
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