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Building an equity millipede

  • #3,541
  • Edited 10:49am Nov 12, 2010 9:43am | Edited 10:49am
I am somewhat hesitant to break the continuity of someone else's thread with my out-of-the box mindset, however, I believe that every trader has to determine whether they trade "in waiting" or trade "in following" in their methodology. A person that trades "in waiting" will utilize trend lines, trend walls, fibs, etc. to determine with probability where to enter and where to exit. A person who trades "in following" will utilize moving averages, heikin ashi candles, etc. and will enter when directed and will not exit until told to do so, knowing that they will lose at least the first and last candle (because of averaging) in their trade. This is a matter of preference but one must realize that each method contradicts the other - that's why you must decide which type of trader you are. It is interesting to note that renowned traders such as Livermore and the Turtle Traders, chose to "follow" trades as opposed to "waiting" (pre-determining exits) in their strategies. When you "follow" a trade, you will have more losses (because of averaging) with greater earnings per win since you're riding your winning trades to complete exhaustion. Since Graeme advocates longer time trades and longer holds, the strategy of "following" a trade might be more conducive to his method - however, that would be for him to say. With this being said, let us not miss the most important lesson as I've indicated before (Post 1910) "A price will fluctuate, oscillate, and vacillate; but it is not mandated to implicate, insinuate, or indicate anything". Knowing this is why Graeme's methods and teachings are right on target.
  • #3,542
  • Nov 12, 2010 11:04am Nov 12, 2010 11:04am
Thanks to all (and especially Graeme) for the many posts. This thread was started more than 4 month ago, it has almost 3500 posts, some wonderful pdf`s, a marvellous indicator specially programmed by SwingMan, but one question remains in my head, a question I know I shouldn`t put here:

How many pips did you make? Forward testing, not visual backtest.

Thanks for your understanding

Forex37
  • #3,543
  • Nov 12, 2010 12:05pm Nov 12, 2010 12:05pm
its been only a week for me.... 1st week's result -eventhough i had too much sloppy entries on purpose- is..
started 5000$ with microlot and if i close my remaining trade now which is on eurusd with about 500 pips profit it would be 5875$...
Summary: Deposit/Withdrawal: 5 000.00 Credit Facility: 0.00 Closed Trade P/L: 387.23
Floating P/L: 487.82
Balance: 5 387.23
Equity: 5 875.05 Gross Profit: 717.68Gross Loss: 330.45
Total Net Profit: 387.23
Profit Factor: 2.17
Expected Payoff: 10.47
Absolute Drawdown: 7.00
Maximal Drawdown: 264.83 (4.74%)
Relative Drawdown: 4.74% (264.83)
Total Trades: 37 Profit Trades (% of total): 14 (37.84%)
Loss trades (% of total): 23 (62.16%)
Largest profit trade: 100.00 loss trade: -35.00
Average profit trade: 51.26 loss trade: -14.37Maximum consecutive wins ($): 6 (600.00)consecutive losses ($): 10 (-200.39)Maximal consecutive profit (count): 600.00 (6)consecutive loss (count): -200.39 (10)
  • #3,544
  • Nov 12, 2010 5:52pm Nov 12, 2010 5:52pm
Agreed. I went through the same folly. Worth reading that post again. Thanks.
  • #3,545
  • Nov 13, 2010 2:48am Nov 13, 2010 2:48am
Hi Graeme,

I did not intend to post more then once. This might be it for now.

Just a follow up from post 3536.

Peter Crown said that some successful traders make all their money from just a handful of (surviving) trades a year. Joel Rensink said the same thing. I am starting to how this can work. I also see what you mean -> the hardest part with your approach is patience and dealing with the emotional hurdles.

I hope your are well.

Kindest Regards
Darren Poyner
Attached Image (click to enlarge)
Click to Enlarge Name: pe2.jpg Size: 286 KB
  • #3,546
  • Nov 13, 2010 7:07am Nov 13, 2010 7:07am
Hello millipedes.
reading through some posts it seems most struggle to "stay in".

Currently I'am trying to apply my losing mentality to winners.
Example.
Has anyone had same thought process?

Ok its gone against me hold it a bit longer its bound to come back,ahh gone more ,still chance it will come back gone more am feeling pain get out .

Result : bigger loss than you wanted the longer you you stay in the bigger the loss.

Another senario :

Its gone against me more hmm, more hmm ahh its coming back cool.
Finaly after lots of tension its in green pips ,ok close with few pips in case it again goes against me again.

Result : Small profit .

Overall result : small profit, big losers.

This is one thing no one teaches but reversing the thought process is hard but key to success.

Sounds wierd but this is how iam trying to apply my losing thought process.

A trade goes my way try feel pain hope it comes back ,carry on holding in case it comes back, ok it looks like coming back cool,ahh no not quite it again moves my way hold there is still a chance .it carries on my way again it looks like it may come back ,ahh no comes back some not back as far as last time Start feeling pain (not lol)

early Retraces in a successful trade are the biggest obstacle to my success

Once we have a good understanding of tecnical analysis thats the easy first step done.
Use greames approaches or your own to get in second step easily accomplishes.
Now comes the obstical that i believe presents the most problems to 95% of traders and once accomplished your on your way to 5% bracket.
Build confidence in your trade stay in green pip trades.
When to doubt red pips and get out quick.

Personally from entry If my entry is based on higher highs and high lows.
The second that this is not the case am out regarless of red or green pips.
Eg : entry based h/h --h/l's. first l/l or l/h get out.

So from my entry regardless were i enter if price moves to make a lower low or lower high get out.
but stay in regarldess of entry if it goes against from entry but doesnt make lower low or lower high.
It helps me from entry to base my stay in get out mentallity.

I would appreciate "staying in and getting out" mind set strategies especially when a trade has moved comfortably from entry and the fear of losing the winning pips kicks in,which for me is from entry lol.
making green pips large and red pips small this is my goal.
  • #3,547
  • Nov 13, 2010 9:43am Nov 13, 2010 9:43am
Quoting paul1
This is one thing no one teaches but reversing the thought process is hard but key to success..
Great post Paul. All of your points are spot on in my opinion. Once you are able adjust to this somewhat unnatural way of thinking, it becomes so much easier to accept and cut your losses, while embracing the "true" winners" as they pullback and test recent S/R areas, and then start the climb or decline in your anticipated direction while giving you little opportunities along the way to add positions.
  • #3,548
  • Nov 13, 2010 10:33am Nov 13, 2010 10:33am
Quoting Warburg
I am somewhat hesitant to break the continuity of someone else's thread with my out-of-the box mindset, however, I believe that every trader has to determine whether they trade "in waiting" or trade "in following" in their methodology. A person that trades "in waiting" will utilize trend lines, trend walls, fibs, etc. to determine with probability where to enter and where to exit. A person who trades "in following" will utilize moving averages, heikin ashi candles, etc. and will enter when directed and will not exit until told to do so,...

As i can see Mr Warburg, number of all your posts is low but every post you did worth plenty of knowledge and experiences ... Thanks
  • #3,549
  • Nov 13, 2010 10:44am Nov 13, 2010 10:44am
Quoting paul1
Hello millipedes.
reading through some posts it seems most struggle to "stay in".

Currently I'am trying to apply my losing mentality to winners.
Example.
Has anyone had same thought process?

Ok its gone against me hold it a bit longer its bound to come back,ahh gone more ,still chance it will come back gone more am feeling pain get out .

Result :...
No I do not have that first problem. Before I enter a trade I ask myself "at what price point will my assumptions have been proven wrong". That is where I put my stop loss and I do not touch it after that. After you are in the trade is too late because the psychology can start playing tricks with your head.
  • #3,550
  • Nov 13, 2010 11:31am Nov 13, 2010 11:31am
Quoting hubbahubba
No I do not have that first problem. You should ALWAYS always always cut your losses and move on. That is why stops are so important. Letting losses turn into bigger losses is one of the top 3 reasons people blow accounts. Again, this is the conventional wisdom and I am merely repeating it.
I understand and hear " cut your losers short" but struggled initially with the thought process as when you enter a trade you are immediately in red pips due to spread.
So my problem was when is it really a loser, now this varies as you hear people entering longer term trades applying stop losses of 50 to 100 pips. And short term traders with 10 pip stops , so my dilemma was ,so when is it officially a loser? I tried a lot of different stop loss strategies which generally cost me a lot of pips as a sudden move could take me out to immediatly reverse like news events and such.And also i find with my broker that in volatile moves like these,my orders and stop losses are likely to get gapped through and not triggered, Its better to monitor and manually close or open trades in such events.
I dont actually place stops as i dont trust them to get executed intraday .
this is why i regardless of entry or how many pips red or green came up with what works for me if long get out on l/h--l/l and vice versa and stay in till the rule is violated.

I would like to hear other peoples view.
making green pips large and red pips small this is my goal.
  • #3,551
  • Edited 1:31pm Nov 13, 2010 12:23pm | Edited 1:31pm
Quoting paul1
I understand and hear " cut your losers short"...
Price WILL often go against you only to come back. If you cannot accept losses because you are always hoping for that you are in for a world of pain IMHO.

I know of a few people who have blown accounts because they couldn't get past that. I personally know 2 guys who have become part of the 95% statistic because of that one problem. Just couldn't shed that gambler mentality. But they both like to gamble. I've never really been interested in gambling so maybe that helps.
  • #3,552
  • Nov 13, 2010 4:10pm Nov 13, 2010 4:10pm
Quoting paul1
I understand and hear " cut your losers short" but struggled initially with the thought process as when you enter a trade you are immediately in red pips due to spread.
So my problem was when is it really a loser, now this varies as you hear people entering longer term trades applying stop losses of 50 to 100 pips. And short term traders with 10 pip stops , so my dilemma was ,so when is it officially a loser? I tried a lot of different stop loss strategies which generally cost me a lot of pips as a sudden move could take me out to immediatly reverse...
I did a thorough research on "Cut your losses and let your winners run"

The conclusion is:

The above statement applies to longer-term trading with great r/r. One big winner more than compensates several small losses. This is particularly useful for traders looking to pick tops and bottoms (or almost tops and bottoms) of bigger moves.

The results are optimum if one splits the entry into three equal parts. Wide stop loss for the first entry. If price moves against the trader, a second entry and final stoploss. Third entry when price again favorably moves i.e. when first entry shows profit. Some caucious traders may also like to bring their stoplosses to BE at this level.

That is simple, but the actual game starts after that. The name of that actual game is Sitting Tight. This is where most fail, because they often forget the second part of the statement i.e. Let your winners run.
The Thief of Wall Street
  • #3,553
  • Nov 13, 2010 5:57pm Nov 13, 2010 5:57pm
Price WILL often go against you only to come back. If you cannot accept losses because you are always hoping for that you are in for a world of pain IMHO.
sorry i dont understand your point.
below is what i determine to get out of entry that goes against me as i say it works for me.
quote from my post :-
I dont actually place stops as i dont trust them to get executed intraday .
this is why i regardless of entry or how many pips red or green came up with what works for me if long get out on l/h--l/l and vice versa and stay in till the rule is violated.
making green pips large and red pips small this is my goal.
  • #3,554
  • Nov 13, 2010 6:44pm Nov 13, 2010 6:44pm
Quoting Chicky
I did a thorough research on "Cut your losses and let your winners run"
This is the statement i see a lot
my problem was, you start off every trade as a loser due to spread.
the question i asked myself "so when is it a loser"
as i said I'am suggesting as soon as it makes a lower low or high.
what do you feel about this?

...
That is simple, but the actual game starts after that. The name of that actual game is Sitting Tight. This is where most fail, because they often forget the second part of the statement i.e. Let your winners run. __________________
the reason i feel this is so hard is that people who have the means to affect price which is only about $10 million .
If possible retest highs and lows because breaks of these points are were trend traders enter.
So if you enter say the break of daily high Its likely that entry will be retested in the next few days.
Look at eur/usd the 1000 pips up leg only a few breaks high that were not retested.
Can you achieve what greame has and watch your position go from 300 pips positive and come right back to your entry take you out turn round and head back up.
most cant watch a trade come back from 20 pips positive .
Please confirm what i say on your chart

making green pips large and red pips small this is my goal.
  • #3,555
  • Nov 13, 2010 7:31pm Nov 13, 2010 7:31pm
Quoting Chicky
I did a thorough research on "Cut your losses and let your winners run"

The conclusion is:

The above statement applies to longer-term trading with great r/r. One big winner more than compensates several small losses. This is particularly useful for traders looking to pick tops and bottoms (or almost tops and bottoms) of bigger moves.

The results are optimum if one splits the entry into three equal parts. Wide stop loss for the first entry. If price moves against the trader, a second entry and final stoploss. Third entry when price again...
That sounds kind of interesting. Can you elaborate a bit? So what happens if price never moves against you? Is it an "if this do that" type of thing with 3 entry rules but could be only 1 or 2 of the 3 used for each trade? If so what happens with the money management aspect? You do not know until after the first trade what happens for the next trade and you do not know after that what happens with the 3rd so are you assuming worst case for MM from the beginning (thus reducing potential reward) or are you (potentially) risking more if worst case risk occurs?
  • #3,556
  • Nov 13, 2010 10:48pm Nov 13, 2010 10:48pm
Would be possible you post the indicator?
We are all learning here and I don't see why not share with others as Graeme is sharing with all of us.
I looked all over the place without success
Thanks beforehand for your cooperation

Quoting tjfxtrader
I looked for "Flying Buddha" and found it. Thanks johnsund.

The D1 and W1 flying buddha are supporting my 106 long entry.

http://i52.tinypic.com/339leev.jpg
  • #3,557
  • Edited Nov 14, 2010 12:30am Nov 13, 2010 11:30pm | Edited Nov 14, 2010 12:30am
Quoting hubbahubba
That sounds kind of interesting. Can you elaborate a bit? So what happens if price never moves against you? Is it an "if this do that" type of thing with 3 entry rules but could be only 1 or 2 of the 3 used for each trade? If so what happens with the money management aspect? You do not know until after the first trade what happens for the next trade and you do not know after that what happens with the 3rd so are you assuming worst case for MM from the beginning (thus reducing potential reward) or are you (potentially) risking more if worst case...
It is interesting only because Jessi Livermore provided this idea. ..........It's another thing that he used to pound heavily after the third entry.

There can be several combinations of entries; and different opinions and calculations about when and how much loss to accept. All such calculations have their own merits and limitations. But the important thing is to understand concept behind such calculations. For example:

A. 50 pip sl for first entry (wide stoploss) = may lose 50 pips.
B. If not, second entry 10 negative pips away from first entry, sl (for both) 20 pips away from first entry = If got stopped out after second entry, may lose 30 pips (remember we set final stoploss after second entry and this may be 20 for first position and 10 for second position)
C. If stopped out after third entry may lose 55 pips = thirty for first two and 25 on the third entry (we entered third entry when first entry showed profit, lets say 5 pips)
D. If first entry of 1/3rd position never shows loss (ignore spread) and gives profit of 550 pips, only one 1/3rd position winner is good enough to compensate for 10 maximum losses. But if you pound like Jessi .......... great r/r

Indeed, the above calculation is only to show how this MM works and is not a formula for tps and sls based on number of pips. Price movements dictate where should be the sls, tps and pyramiding or liquidating positions and how much.

ps. Have tried to answer the relevant part in fewer words, because don't want to divert this thread to less relevant topics. This is a very good thread, a lot of food for thought from Graeme.
The Thief of Wall Street
  • #3,558
  • Nov 14, 2010 2:25am Nov 14, 2010 2:25am
Quoting Chicky
It is interesting only because Jessi Livermore provided this idea. ..........It's another thing that he used to pound heavily after the third entry.

There can be several combinations of entries; and different opinions and calculations about when and how much loss to accept. All such calculations have their own merits and limitations. But the important thing is to understand concept behind such calculations. For example:

A. 50 pip sl for first entry (wide stoploss) = may lose 50 pips.
B. If not, second entry 10 negative pips away from first entry,...
I like it! This sounds like the sort of solution I have been looking for to get me to stack better. I could never sort out a good mechanical way to deal with stops when stacking and this sounds like something I would feel quite comfortable doing. Not exactly sure how that math goes based on your explanation but I'll google around for that persons name and see if I can't find more info.
  • #3,559
  • Nov 14, 2010 6:57am Nov 14, 2010 6:57am
[ATTACH][ATTACH][ATTACH]
Attached Image (click to enlarge)
Click to Enlarge Name: $EURUSD (60 Min) 12_11_2010 hold 4.jpg Size: 130 KB
[/ATTACH][/ATTACH][/ATTACH]

These charts illustrate my thoughts .
You can see entry 1,2,4,8 not retested rest taken out some at b.e. and this is in a strong trend over 4 weeks.
Using stop losses after entry 11 and holding for long term would have no survivors.
Hope the charts illustrate why holding trades long term is so hard.
Even moving your stop to break even can get you out of some good pips.

This is why i wish to discuss when is a loser really a loser and you need to cut it short.
When is it foolish to hold a winner only to let it come back to your entry take you out at break even shortly after resume in your favour without you?
Attached Image(s) (click to enlarge)
Click to Enlarge Name: $EURUSD (60 Min) 24_09_2010 hold 1.jpg Size: 150 KB
Click to Enlarge Name: $EURUSD (60 Min) 13_10_2010 hold 2.jpg Size: 144 KB
Click to Enlarge Name: $EURUSD (60 Min) 11_11_2010 hold 3.jpg Size: 201 KB
making green pips large and red pips small this is my goal.
  • #3,560
  • Nov 14, 2010 7:38am Nov 14, 2010 7:38am
Quoting goldbird22
Would be possible you post the indicator?
We are all learning here and I don't see why not share with others as Graeme is sharing with all of us.
I looked all over the place without success
Thanks beforehand for your cooperation
http://www.forexfactory.com/showpost...postcount=1132
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