Building an equity millipede | Page 147 | Forex Factory

Options

Go to
Permalinks
Print Thread

Similar Threads

Thegman's Journal (Equity Millipede Concept) 102 replies

Trading an Equity Millipede 23 replies

Equity millipede & Flying Buddha trading journal 9 replies

Build an Equity Millipede with the filtered Flying Buddha 171 replies

Application Development - Journal of Building an equity millipede 14 replies

Attachments: Building an equity millipede
Exit Attachments

Building an equity millipede

  • #2,921
  • Sep 25, 2010 4:59am Sep 25, 2010 4:59am
Quoting Bakuli
Paul, nice explanation there. That should help a lot of people who haven't yet been able to see the bigger picture yet.

Cheers,
Bak
I think folks (or atleast tmanbone in his post above) are able to see the bigger picture but hung up on the last part of the sentence in the theorem.... "but the occurences of such opportunity must be less than 1 per 100 cycle.". The ongoing debate is whether it should read 'more than' 1 per 100 cycle.

Both
Im looking for, opportunities that are less than 10 pip risk, one per day, that will run for 1000 pips take profit but the occurences of such opportunity must be less than 1 per 100 cycle.
AND
1:100 is only viable IF 1000 pip rewards happen more often that 1 per 100 cycle.
are contradicting each other imo.

I spend literally hours today dissecting this just one post word by word. Every word/sentence has a overwhelming deep meaning in it.

The last para says it all ... "but I can assure you everything is in this one post. Condensed and hidden, not purposefully by myself, but unfortunately by the reader and their choice to understand what they wish to understand. It is just human nature,.. unknowingly and unfortunately."

Graeme knew we would understand and misunderstand bits and pieces of this post of what we choose to understand.

I understand most of it except the two contradicting statements highlighted above is puzzling me. I personally don't believe it is a typo in our mission statement.

To get to the bottom of this, I did some modeling of this theorem in excel to play around with different scenarios of risk/reward to gain a better understanding of this concept.

Hope this worksheet helps those who are struggling with this. Please 'beta-test' it and let me know if I got all the worksheet calculations right.
Attached File(s)
File Type: xls Risk-Reward-Theorem-MissionStatement.xls   56 KB | 972 downloads
Staying in my lane...
  • #2,922
  • Edited 5:28am Sep 25, 2010 5:07am | Edited 5:28am
Quoting Mightyzoner
Yes, I clicked and looked through all 7 pages, did not see it.
Hi

Try this. . . http://www.forexfactory.com/showthre...80#post4014180

  • #2,923
  • Sep 25, 2010 6:23am Sep 25, 2010 6:23am
Quoting andante9
Hi

Try this. . . http://www.forexfactory.com/showthre...80#post4014180

thx!
  • #2,924
  • Edited 7:24am Sep 25, 2010 7:03am | Edited 7:24am
Quoting VEEFX
I think folks (or atleast tmanbone in his post above) are able to see the bigger picture but hung up on the last part of the sentence in the theorem.... "but the occurences of such opportunity must be less than 1 per 100 cycle.". The ongoing debate is whether it should read 'more than' 1 per 100 cycle.

Both
[color=purple]Im looking for, opportunities that are less than 10 pip risk, one per day, that will run for 1000 pips take profit but the occurences of such opportunity must be less than 1 per 100...

Hi Veefx,
I think Graeme does so much typing that the odd typo is inevitable and understandable and I am sure that there is one in this sentence, as it makes little sense - to me and to many others - if it does not read MORE than 1 per 100 cycle; that said Graeme has said that he has a completely different perspective on the market to most people and no doubt he will correct or justify it.
The spreadsheet looks fine and says it all. By the way good stuff from you this week - obviously we all have slightly different views on the same chart as yourself and no-one can dictate when exactly to pull the trigger - interesting to watch and learn from - keep it up.

(Having read Paul1 explanation) he and it is correct in as much as the RR could not be 1:100 if you have more than 1 win in 100 cycles in the greater scheme, but a win rate of more than 1 per 100 is when profit starts to grow significantly.
Cheers

Ray
  • #2,925
  • Sep 25, 2010 7:17am Sep 25, 2010 7:17am
Quoting VEEFX
I think folks (or atleast tmanbone in his post above) are able to see the bigger picture but hung up on the last part of the sentence in the theorem.... "but the occurences of such opportunity must be less than 1 per 100 cycle.". The ongoing debate is whether it should read 'more than' 1 per 100 cycle.

Both
[color=purple]Im looking for, opportunities that are less than 10 pip risk, one per day, that will run for 1000 pips take profit but the occurences of such opportunity must be less than 1 per 100...
Ok vee the first part of your puzzle i can definitely answer.
replace "less" and "more than" with "AT LEAST "

Now to be profitable you have to have at least 1 survivor out of 100 entries.
That survivor has to reach at least 990 pips minimum for this theory to be profitable. 991 pips would make you 1 pip. 1000 makes you 10 pips.

1:100 is only viable IF 1000 pip rewards happen more often that 1 per 100 cycle.
are contradicting each other imo.

to claim we have 1:100 r/r
we have to have 1 survivor reach 1000 pips target profit , before we have taken 100 entries of 10 pip risk.

1 survivor = 10 pip risk (your survivors risk on entry)
1 profit = 1000 pips ( he survived and reached profit target)
risk/ reward = 10 pips/1000pips = 10:1000 or 1:100 r/r (per survivor)

Hope i explain clearly
If not ask again please and explain what doesn't make sense only to glad to help.

Can i just add greame may take more than 1 entry per day but is only trying to achieve 1 survivor per day.

So he may at some point in the day take a long signal and later short signal check them later in day see if there are survivors if not he may try again but not more than 3 attempts per day.
making green pips large and red pips small this is my goal.
  • #2,926
  • Edited 8:32am Sep 25, 2010 8:16am | Edited 8:32am
I'am doing a bit of research this weekend to try eliminate wasted entries.
So far establishing entries long or short based on candle colour and coin toss theory.

coin toss results based on the ratio of red and green candles as ratios :-

year 1997--present
yearly candles
red 8
green 7 ratio 48/52

year 2000--present
monthly candles
red 59
green 64 ratio 48/52

2006--present
weekly candles
green 128
red 108 ratio 54/46

daily 1/10/2009--present
green 113
red 130 ratio 47/53

hourly 26/8 --present
green 263
red 233 ratio 53/47

5 minute 26/8---present
green 2916
red 2963 ratio 49.6/50.4

proves to me that coin toss that is present in our charts does not go to 60/40 the most it deviated from 50/50 was 54/46 on the weekly charts.
We can help the probabilities in our favour by limiting losses with stopss and going with the trend based on weekly candle colour,green weekly uptrend red weekly downtrend.

Basing entries off candle colours seems as good entry as any i feel.
And basing trades on candle opens seem good too.

would like your thoughts but trying to build legs.
base hindsight off historic data until the weekly candle starts if it goes red try get short entries using lower time frames.
if its green base entries on long.
try get entries at open price of monthly most likely to survive this month.
try get entries at open price of weekly most likely to survive this week.
try get entries at open price of daily most likely survive the day.
try get entries at open price of hourly most likely survive the hour.
this made me laugh try get entries on open price of 5 minute most likely last 5 minutes lol.

as long as you stick with red or green you have got try pretty hard to be wrong more than 50 %
And has been proved you can be very profitable being right 2% .
Golden rule : whatever you do dont change your mind.
Enjoy being wrong but only for 10 pips.

Sorry for long post.
making green pips large and red pips small this is my goal.
  • #2,927
  • Sep 25, 2010 9:28am Sep 25, 2010 9:28am
Quoting paul1
Ok Hello the first bit :-
A) $50= (8@ $5 pip= $40)+(2 pip spread @$5= $10)= $50 Can you see that? basically saying 8 pip stop 2 pips spread = 10 pips risk

B) 10 pips risk =$50 as above calculated in (A)

c) 1000 pips is what graeme is aiming for in profit and says happens
anywere from weeks to months.

D) now b= risk 10 pips c= reward 1000pips r/r= 10:1000 or 1:100

E) Ok now a cycle =100 entries. assume you lost every entry risking 10 pips thats your target profit 1000 pips .

This says you can lose 100 times before you reach 1000 pips.
But...
Paul I'm with you on this. The only confusing part for me is did Graeme mean "less than 1 per 100 cycle" as he typed in his post or did he mean "more than 1 per 100 cycle"? I'm leaning toward the later which brings it all into perspective. My goal here is to dissect every word/sentence/thought Graeme has posted in this thread and understand it to the best of my abilities. This IMO is the key to enlightenment. Graeme's thoughts are vast. I need to understand/grasp every thought. My motavation is if Graeme can spend 3-4 hours relaying the message, in this particular post, and state that everything is contained within, then it's a heads up to me to make sure I understand every word, sentence, and thought relayed. Thanks for the input.
T
  • #2,928
  • Edited 11:24am Sep 25, 2010 9:56am | Edited 11:24am
Quoting tmanbone
Paul I'm with you on this. The only confusing part for me is did Graeme mean "less than 1 per 100 cycle" as he typed in his post or did he mean "more than 1 per 100 cycle"? I'm leaning toward the later which brings it all into perspective. My goal here is to dissect every word/sentence/thought Graeme has posted in this thread and understand it to the best of my abilities. This IMO is the key to enlightenment. Graeme's thoughts are vast. I need to understand/grasp every thought. My motavation is if Graeme can spend 3-4 hours relaying the message,...
Insert "at least" for less or more ,into the post i beleive it should make sense then.

Using the word less would read " less than 100 attempts" using the word more would read "more than 1 survivor per 100 attempts"
less than zero is no successful attempts you need at least one and even one will be small profit thats his point i beleive.
Once it clicks with you it will seem obvious.

I honestly wouldn't spend too much time trying to look for deep meaning or complex knowledge.

all there is to understand is

entries with low risk
monitor till they are at break even
once at break even nothing else you can do but check to see if they survive the hour/day.
If they do
try add another tomorrow.
If trend continues they grow if it doesnt they die.

With "long term "goals .Trying to get more than a couple of survivors per day is creating more risk and effort for same reward if one entry today dies tomorow ,then its not so bad.
If you spent all day getting 10 entries to break even its likely if tomorow if down day most if not all will die .
If you get entries to break even late in the session near the high.Look at the daily candles not many without wicks.
so unless you think from tomorows open.That price is never going below the open ,it would be wise to exit any positions near the close.

Think about this 50% is by greames teaching classic retrace before continuation .
Eur/usd daily range = 150 pips for example
so it would be acceptable for 75 pips retrace in a uptrend from tomorows open.
most likely survivors would be within the first 75 pips from todays open.


the key is to practise getting entries to break even.

thats really what greame has spent the bulk of the thread doing, showing different methods of getting to break even,
once you conquer that its up to the market.

next lessons will be what to do when they are at 400 pips and you see 150 pip retrace.
How do you tell a retrace from a reversal.

Personally i beleive anything over 50% of whatever leg, Be it 100 pips or 1000 pips is by definition reversal.
Anything less than 50% would be signs of continuation.
only 2 indicator i got is average true range .
Fib retracement tool to judge a retrace from a reversal at 50% level.
making green pips large and red pips small this is my goal.
  • #2,929
  • Sep 25, 2010 11:57am Sep 25, 2010 11:57am
Quoting VEEFX
I understand most of it except the two contradicting statements highlighted above is puzzling me. I personally don't believe it is a typo in our mission statement.
Vee,

If I may: "less than 1 per 100 cycle" is a typo.

Kindest Regards,

Cam
  • #2,930
  • Sep 25, 2010 12:02pm Sep 25, 2010 12:02pm
Quoting paul1
Insert "at least" for less or more ,into the post i beleive it should make sense then.

Using the word less would read " less than 100 attempts" using the word more would read "more than 1 survivor per 100 attempts"
less than zero is no successful attempts you need at least one and even one will be small profit thats his point i beleive.
Once it clicks with you it will seem obvious.

I honestly wouldn't spend too much time trying to look for deep meaning or complex knowledge.

all there is to understand is

entries with low risk
monitor...
Thanks Paul and others for the continued discussion on this important topic. 'atleast' instead of 'more' or 'less' makes the most sense to me. I think, I might have mentioned this in my earlier posts also (or maybe I was just thinking about it). Next time Graeme comes online, this would be my first thing to confirm with him. I don't think we can all simply assume it to be a typo as this entire project is based on the theorem which is part of our mission statement. It has also been referred in multiple posts by Graeme.

Regardless, I agree with the rest of everything you mentioned in your post.
Staying in my lane...
  • #2,931
  • Sep 25, 2010 12:43pm Sep 25, 2010 12:43pm
Quoting VEEFX
Thanks Paul and others for the continued discussion on this important topic. 'atleast' instead of 'more' or 'less' makes the most sense to me....
Just to throw my take out there. I think it is one of several concepts of Graeme's that make sense but might not be stated exactly how he means. I'm not meaning to be nit-picky, since these may just be my own idiosyncrasies.

What he calls "diversifying" makes more sense to me as "consolidating". What he calls "hindsight" seems to me to be "foresight" or "insight". And this one being discussed now with "less than 1 in 100" seems to mean "NOT less than 1 in 100", or another way of looking at it, the "less" referring not to the 1 but to the 100. Less than 100 attempts. (I think someone already pointed this out) Meaning 1 in 99 is acceptable but not 1 in 101. 99 is LESS THAN 100 so it is acceptable.

Again, this is not an attempt to "correct" anything he has said. Just my observation of how different people express their ideas and our attempts to understand them accurately. Hope it helps.

Michael
  • #2,932
  • Sep 25, 2010 1:31pm Sep 25, 2010 1:31pm
Quoting mjaymay
Just to throw my take out there. I think it is one of several concepts of Graeme's that make sense but might not be stated exactly how he means. I'm not meaning to be nit-picky, since these may just be my own idiosyncrasies.

What he calls "diversifying" makes more sense to me as "consolidating". What he calls "hindsight" seems to me to be "foresight" or "insight". And this one being discussed now with "less than 1 in 100" seems to mean "NOT less than 1 in 100", or another way of looking at it, the "less" referring not to the 1...
I see your different view.
It is interesting how people see things differently.
Because 1000 pips profit has been used as our example theoretical target profit .
I assumed rightly or wrongly that all other figure were related.
giving us a fixed attempts as 100 entries.
leaving only the "1" number to be changed.
1:101 or 1:102 would mean the target profit has changed. but it has not been changed its given as 1000pips.

No one including graeme knows when there is going to be a reversal and that is what ultimately would determine our take profit.

but to produce an example the figure 1000 pips has been put forward.
So for the sake of this example assume 1000 pips is maximum potential profit.
giving us 100 potential losses to break even.
1:100 successful attempts to make small profit
2 : 100 and so on but not less than 1:100 successful attempts.
the confusion may be that :-
risk reward is 1:100.
Successful attempts needs to be no less than 1:100 attempts.
but whichever i think we get the jist of it.
making green pips large and red pips small this is my goal.
  • #2,933
  • Sep 25, 2010 1:42pm Sep 25, 2010 1:42pm
and my results are mixed while remaining disciplined. I admit I did misinterpret some entry explanations initially but my re-read of the thread clarified it. Still working to improve.

Some observations/questions:
It sure can be tough to catch that one small spot of p.a. that remains untouched throughout the week on typical wave retraces. It is very plausible to gain correct weekly foresight and have a drawdown on the week if you miss those few spots of clean entries; in my case the only good spots were afterhours. I eventually adjusted my entries to 60min initial and 5min adds, as 5min for the initial entry was awfully choppy on some more obscure pairs. I also did not enjoy 5min scouting a plausible 240min 'area', which could easily last 8 hours. Stops on the 60min seem to average around 20pips, or double my typical 5-min play. To those who trade solely 5min chart as the entry chart, do you place any judgement on the 5min trend?

I was looking for entry methods on the higher timeframes(weekly, 240), such as volatility breakouts for the increased chance that price would move in my direction for the next few bars. It seems that at least for volatility breakouts, the strong movement starts long before the weekly breakout attempt hits. By the time the weekly spot hits, there seems to be rarely any signals to get in on a lower TF as the train is moving fast by then. It also greatly increases the chance of the area being re-tested if a signal occurs, as it'd be so late in the momentum. The adjustment I made was to stop looking for setups on higher timeframes, and instead look for aggressive but plausible 'areas' that have slight hints of price turning or continuing. This seems to find breakouts on lower TF's prior to the big breakout, which seems to act as a confirmation of the trade. Is my thinking wrong on this or am I over-complicating it? Maybe stick to just weekly/monthly as directional and nothing more?

Curious if anyone has counter-trend entry criteria on the weekly besides as a diversification method?

Any comments more than welcome
  • #2,934
  • Sep 25, 2010 5:37pm Sep 25, 2010 5:37pm
Remember the first of last week and the EUR/NZD. 450+ leg; the 200ema is black dotted, can't see the yellow well.

http://s4.postimage.org/BsHKi-87bc9677.gif
T
  • #2,935
  • Sep 25, 2010 6:36pm Sep 25, 2010 6:36pm
For the upcoming week, here is my hindisght and plan for Sunday night entries on 2 pair that I trade. EURUSD is up on all timeframes from MN1 to D1. Plan to enter long at 1.3500, the next major psychological. USDCHF is down on all timeframes from MN1 to D1, but is in lower weekly ATR Zone which is of concern about going short. Plan to enter short at .9825, the next major psychological.

Your comments and critiques are encouraged.
  • #2,936
  • Sep 25, 2010 6:53pm Sep 25, 2010 6:53pm
Quoting johnsund
For the upcoming week, here is my hindisght and plan for Sunday night entries on 2 pair that I trade. EURUSD is up on all timeframes from MN1 to D1. Plan to enter long at 1.3500, the next major psychological. USDCHF is down on all timeframes from MN1 to D1, but is in lower weekly ATR Zone which is of concern about going short. Plan to enter short at .9825, the next major psychological.

Your comments and critiques are encouraged.

USD/CHF, two daily FB's = pullback. EUR/USD looks extended. I personally think you would be paying retail, with very large stops to stay in. Post a H4 chart of one or both. Set up your charts like Vee's. Mark up your prospective entries and lets have a look.
T
  • #2,937
  • Sep 25, 2010 7:26pm Sep 25, 2010 7:26pm
Quoting johnsund
For the upcoming week, here is my hindisght and plan for Sunday night entries on 2 pair that I trade. EURUSD is up on all timeframes from MN1 to D1. Plan to enter long at 1.3500, the next major psychological. USDCHF is down on all timeframes from MN1 to D1, but is in lower weekly ATR Zone which is of concern about going short. Plan to enter short at .9825, the next major psychological.

Your comments and critiques are encouraged.
I have noticed that e/u and g/u have been reacting around 1.xx20 rather than 1.xx00. So personally I am looking for entries there instead.
  • #2,938
  • Sep 26, 2010 3:07am Sep 26, 2010 3:07am
For this week keep an eye on usd/jpy.
The boj possible intervention at 82 level could affect usd pairs and jpy pairs.
they recently pushed it up 200 pips to make usd stronger and may do something similar again.
Not many bears fighting on eur/usd but that could change when people see what bank of japan do.
making green pips large and red pips small this is my goal.
  • #2,939
  • Sep 26, 2010 8:05am Sep 26, 2010 8:05am
I beleive now that both are correct .
depends on interpretation.

more = 1:100 less = 1:100
..........2:100......... 1:99
..........3:100 .........1:98
still think "at least" is better.
As greame says no right or wrong way just interpretation.
making green pips large and red pips small this is my goal.
  • #2,940
  • Sep 26, 2010 12:01pm Sep 26, 2010 12:01pm
Quoting paul1
I beleive now that both are correct .
depends on interpretation.

more = 1:100 less = 1:100
..........2:100......... 1:99
..........3:100 .........1:98
still think "at least" is better.
As greame says no right or wrong way just interpretation.
aha... found my post where I had initially mentioned it should be 'atleast' in our mission statement.

http://www.forexfactory.com/showpost...postcount=2447
Staying in my lane...
5 traders viewing now