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How to be a real trader

  • #21
  • Nov 17, 2010 4:21am Nov 17, 2010 4:21am
How about looking at trades of others. An equity curve paints a thousand words. Go look for systems that seem to work well over a longer period, with real money ...

Currently I'm impressed by this fella. Pull up your charts, look at his trades, and take your time. Go and figure. Nobody will tell you what to do.

http://www.myfxbook.com/members/vict...e/victor/43323
forget about tomorrow, just steal away into the night
  • #22
  • Nov 17, 2010 4:26am Nov 17, 2010 4:26am
I trade strictly EURUSD on both accounts.

For simplicity, let's say that each account is 10K. On January 1st, I begin trading with an exposure of 4K on each account. On February 1st, one account is up 30% and the other is down 25%.

For the account that is down 25% (1K) I expose an additional 1K from my 6K reserve in that account. Once the drawn down account recovers back to 10K, I change my exposure to 4K again and start over. Of course, February could result in another 25% loss on that account, so I would have to dip into the reserve again on March 1 and pull an additional 1K to put me back to a 4K exposure.

Keep in mind, I am swinging for the fence on every single trade in both accounts, so I can very quickly recover my losses on a few winners in a row, thus recovering my reserve bank to 6K on the losing account, and having a high probability of breaking even.

On the winning account, say I continually hit 30% gains each month.... I need to seriously consider pulling everything off the table and starting over again, as the cash cow will only lay golden eggs for so long.

Hope this makes sense.
  • #23
  • Nov 17, 2010 4:30am Nov 17, 2010 4:30am
Thanks Spekitox.
  • #24
  • Nov 17, 2010 4:40am Nov 17, 2010 4:40am
Quoting tdion
I trade strictly EURUSD on both accounts.

For simplicity, let's say that each account is 10K....
T,

On the account splitting it does make sense - although I feel (referring to my earlier post) it is slightly disconnected.

What I mean by that is the following:

The information you are offering in the thread and the title 'how to be a real trader' does not really link to anything but the possibility of a 'type' of money management translated into trading a specific ccy pair (EU) with 2 different strategies.

I am unclear as to whether you offer advice in terms of MM (splitting capital and managing it through 2 accounts and 2 strategies - where you could use one acc. and divide it into 2 sub-accounts....something I have done), or whether this will also lead to advice offered regarding a specific strategy employed by your good self - which would transform an otherwise unsuccessful trader into a 'real' trader.

Forgive me for saying the following: many out here and there say there are a thousand ways to skin a cat. Well, I disagree....there are only a few optimal ways that all have the same underlying principles.

Is this thread to affirm this by pointing others into the direction of how to best manage capital? If so, then I see the connection - otherwise, I find it difficult to discern.

regards,
daytrading
Enter Signature
  • #25
  • Nov 17, 2010 5:01am Nov 17, 2010 5:01am
dt,

Concur. Very few pass through the gates of success.

I don't give away the work for free, though I do share my nuggets out of generosity from time to time.... all in the faith that someone will contribute something I haven't thought of and get my brain sparked.

As for the direction of the thread: the point I was trying to make was, you've got to be able to survive and pull profits in sideways and trending markets. That's how a real trader lasts.

And I have given a framework for doing so, though I do not hand out the hen that lays golden eggs (the systems themselves)


And, keep in mind, my hen can stop laying eggs at any time. Any trader that feels they can't lose is bound for the chopping block.
  • #26
  • Nov 17, 2010 5:02am Nov 17, 2010 5:02am
Quoting tdion
Greets

Nothing new here. Bottom line: How does one survive (no profit) in a year of both sideways and trending markets? Afterall, you can't see what is about to happen before it happens.

The answer is: Run two different strategies on two different accounts... one that does well in trending, and one that does well in sideways.
hey tdion - a reasonable question, but can I also make a respectful observation that there seems to be the underlying assumption in your post - that being you are seeking possibilities relating to the trading of a single instrument to seek profit from its movement one way or another. (please correct me if I am wrong, but I say this because you mention the familar circumstance of trend vs sideways etc.)

So why not use your question as an opportunity to look at other 'dimensions' to trading, such as exploring the possibilities of exploiting the commonalities and differences between various instruments, be they forex related or otherwise. Here I am talking about wider market knowledge, the understanding of who participates in what markets, why and when, and what the likely outcomes are in terms of price, time, volume, etc, and what opportunities this may present to the retail trader looking to make a reasonable living from the markets.. this is quite different to the more common two-dimensional approach that otherwise dominates these forums - that being, how can I trade instrument XYZ in a trending vs sideways market?

I am not suggesting you fall into the two dimensional category, but thought it might be a point worth making nevertheless - I am a (humble) hedginghog, after all. Cheers
  • #27
  • Nov 17, 2010 5:09am Nov 17, 2010 5:09am
Thank you hedginghog!

I am a quant. That is pretty limiting, but it is also why I say that I am "an inch wide and a mile deep." My inch is simply measuring momentum in a chart, and either betting that it will continue, or reverse.

The complexities of correlations, underpinning supply demand, order flows, stochastic calculus relating to bond expirations, indexes, funds, commodoties, and the psychological decision processes that motivate the players to make decisions are.....

too complex for my small brain.

So, I stick with what I can do best: be the best quant I can.
  • #28
  • Nov 17, 2010 5:13am Nov 17, 2010 5:13am
Quoting tdion
dt,

Concur....
T,

Good answer - I was not trying to entice you to make those revelations....pardon me if it sounded like it. And, yes, in this game, you have to be on your toes at all times - otherwise the market may claw back those golden eggs.

regards,
daytrading
Enter Signature
  • #29
  • Nov 17, 2010 5:27am Nov 17, 2010 5:27am
Quoting tdion
Thank you hedginghog!

I am a quant. That is pretty limiting, but it is also why I say that I am "an inch wide and a mile deep." My inch is simply measuring momentum in a chart, and either betting that it will continue, or reverse.

The complexities of correlations, underpinning supply demand, order flows, stochastic calculus relating to bond expirations, indexes, funds, commodoties, and the psychological decision processes that motivate the players to make decisions are.....

too complex for my small brain.

So, I stick with what I...
Such humility is rare in these forums, and no doubt this serves you well in the markets. If you are a survivor in this business then chances are you don't have a small brain! Happy trading, my friend.
  • #30
  • Edited 5:58am Nov 17, 2010 5:36am | Edited 5:58am
I think the best transformation that has happened to me is to remove expectation that the market will be obedient to my trades once they are placed.

Contrarily, a stop loss and take profit level are simply ONE possible end game.... most of the time the trades are closed early because a change in momentum is detected after the trade opened.


Ah, I'm sorry everyone. This post is off topic too... I am A.D.D. I suppose.


The best thing I ever did was stop reading the junk science of Gartley Crabs, Fibo Retracements, Pivot Points, etc. For every pattern that completes like it is "supposed to" there are an equal number that fail.

That is why the Forex books in Barnes in Noble are junk. If there were a blueprint for winning in Forex, everyone would do it.


So where does that leave us? Something called SHORT TERM MOMENTUM. I don't care about much except where the head of the snake is moving. And only try to take short term gains out of a long term trend to:

1) Compound small winnings (more profitable than buy and hold)
2) Improve my odds of avoiding getting "caught" (being in a trade during a trend reversal)


Best wishes everyone!
  • #31
  • Nov 17, 2010 6:16am Nov 17, 2010 6:16am
tdion : you are speaking my language. i think i have a new trader crush!

.

.

how YOU doin?
Congratulations ScalaFX for coming out of the closet!
  • #32
  • Nov 17, 2010 6:21am Nov 17, 2010 6:21am
  • #33
  • Nov 17, 2010 6:40am Nov 17, 2010 6:40am
I do not live off of Forex. This is a foundation that others find appealing... the chance to risk 1% of their portfolio to gain 50% on the entire portfolio in a year.

Ultimate risk return...

Quoting Marcell

Do you actually live from your trading, and are you able to take out money from your trading activity? Or is it only for fun?

I ask because, it seems to me to be a quit risky approach to the markets, you describe here.
  • #34
  • Nov 17, 2010 7:09am Nov 17, 2010 7:09am
Quoting tdion
I do not live off of Forex. This is a foundation that others find appealing... the chance to risk 1% of their portfolio to gain 50% on the entire portfolio in a year.

Ultimate risk return...
You are right, and even 50% a year is high target, if you want to stay in marked during hard times.

I do pretty much like you, I got a portfolio of 6 crosses which, somehow, are correlated to each other. Applied 3 different strategies to the portfolio, only one strategy to each cross.

Use only leverage of 7 as the highest leverage, however normally it is around 2,5-3,5.

It have worked for me for quit a few years.
  • #35
  • Nov 17, 2010 7:31am Nov 17, 2010 7:31am
Besides the point you mention, concerning the market flip-flops, the second pitfall of such strategy is about timing. When do you get out? If you admit that you cannot make a good judgement on what condition the market is in, there is no sensible answer to this question. If you can, please elaborate on how you tackle this problem.

The path you're on is somewhat similar to what I've been thinking of for the last couple of years, but haven't produced yet due to time constraints. I can't tell much about it, but it's also based on "sticky" market conditions.
The nail that sticks out gets hammered back in
  • #36
  • Nov 17, 2010 7:39am Nov 17, 2010 7:39am
Nice. Let me take it one step further and pinpoint a cornerstone: Trading for trends vs. chops is not as simple as taking the inverse of the trades in both accounts.

IE)
Account one: Long, Short, Long
Account two: Short, Long, Short
All trades at the same time with inverse TP and SL.

Will that work? Maybe once a blue moon.

So....... kicking that out with the Monday trash..... the timing is in the system itself. The systems are independent of each other, each REACTING to the market conditions occuring.

Hint: Donchian Channels are my bread and butter! Master them, and you are halfway there.


By the way, this thread is not tdion's gloating thread. I am honestly trying to spark innovative discussion here without giving away my hard work. Nobody should look at my posts as me tooting my own horn, or trying to be bigger than anyone else.
  • #37
  • Nov 17, 2010 8:03am Nov 17, 2010 8:03am
Quoting tdion
... the timing is in the system itself. The systems are independent of each other, each REACTING to the market conditions occuring.
Since you're referring to timing, I assume this post was aimed at answering my question. I either don't understand your answer, or you didn't understand my question, so let me clarify (and I understand it if you're not willing to share the answer, as you might be giving away too much).

Here goes. You have two independent systems. Lets say the method worked, and one has performed well / compounded profits, whereas the other has been consistently losing. Due to compounding, the profits exceed the losses. Your goal is to "take everything off the table" before the market switches again and starts eating away the profits from the system that recently performed well. How do you determine when the time is there to "take everything off the table?"

Quote
By the way, this thread is not tdion's gloating thread. I am honestly trying to spark innovative discussion here without giving away my hard work. Nobody should look at my posts as me tooting my own horn, or trying to be bigger than anyone else.

Don't worry mate, this is a genuine thread and I too hope people will come to great insights participating in it.
The nail that sticks out gets hammered back in
  • #38
  • Nov 17, 2010 8:11am Nov 17, 2010 8:11am
Haha Nology:

You have hit on the ultimate question: where is greed not good? The classic situation of Deal or No Deal (ever see that TV show?)

IE) You banked 1000% return, now do you stick around 2 or 3000%? Odds are certainly no better than when you started.... a wipeout of the 1K% is definitely there, although not imminent.

Perhaps the safe answer is to remove 500% profit, and keep playing.



Do you ask if I have an answer for this? I don't. It is a mind boggling problem that can leave you pulling your hair out.
  • #39
  • Last Post: Nov 17, 2010 9:34am Nov 17, 2010 9:34am
Seems like you have found something that works well for you after all this time. You actually seem like a happy fish, thats good.

All the best !
Measure twice, cut once
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