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  • #9,621
  • Dec 19, 2010 9:13am Dec 19, 2010 9:13am
Quoting NightMoves
Custos,
I totally agree with you, even the method I use is based on stats, when you look at the charts you are looking at what has laready happened, and that is a stat. SO you look at longer term charts and get a better picture and then make decisions from those past market movements....
yep, totally agreed. Basically you can take any pattern we know of or invent a new one and create statistics for it. Gonna be kind of hard if one has to do it manually though
  • #9,622
  • Dec 19, 2010 9:14am Dec 19, 2010 9:14am
Quoting shiko
This is called trading patterns which have higher probability of success.
Higher TF patterns tend to be more reliable.
But in the end, psychology is 90% of trading success.
well, and how is this probability determined? And how does one know that they are more reliable?

Quantification of past results - statistics
  • #9,623
  • Dec 19, 2010 9:21am Dec 19, 2010 9:21am
Quoting Custos
Psychology is only important, if a person has no stats on entries, which stops to use, which targets to use,... A person with stats only needs one psychological trait: discipline in keeping with the system and not violating any rules.
So I would say 90% research of profitable patterns, methods / systems, and 10% psychology. And that is just the trait discipline.
Hey Custos hows it going? I think there is large amount of psychological trading going on, because really it boils down to what you said the reversal patterns at the S/R levels, which really are psychological levels no other reason for them, people like to trade those levels, but one must also know where those levels are and that again comes down to learning how to read the charts.

I cant think of any reason reason some of the levels hold except for psychological reasons, news gets the market moving and S/R levels determine how far it will move after that, I think the thing for new traders too overcome is having some faith in what they are doing, not enough confidence in the system they are using yet, and perhaps the BIGGY "Holy cow the market has moved against me syndrome" thats why it is so imoprtant to stick to the rules of your trading plan and dont alter from them, for one thing you cannot tell if a method works or not if one keeps changing the rules as they go, so any data you get on a method is corrpted right from the start, and secondly a losing trade does not mean a method is no good, heck even the best methods known to man have to take thier lumps too.

They need to give a method a chance by following the rules and then after a few winners and losers you can tell if it is the right method, however if one blows up and account on 2 trades its pretty safe to say it might not be a good method...Hahahaha

--NM
  • #9,624
  • Dec 19, 2010 9:21am Dec 19, 2010 9:21am
Quoting NightMoves
It really comes down to the faith you have in the method you are trading, if you are not really sure of your method you may get caught up in closing too soon, or moving your stop when you shouldnt...etc

The more you practice a method that has had good results the better you get at it and the less are your chances that you will close the trade too early or panic because the market has moved against you, and above all things good money management is the real key to success, not winning trades and not losing trades, its MM, one can lose many more...
I think above all the system already needs an edge. If a system is already doomed to failure, then MM also won't help. But if a system has an edge, then MM can vastly increase the profits.
It is really a combination of R:R and win/loss that makes a system profitable. One of my strategies is just 20% successful but has much higher winners than losers and an approximate profit factor of 1.5, which is pretty high in my opinion. So, here the important thing is just discipline, cause the majority of your trades will be small losers with the occasional big winners.

And good advice concerning keeping a journal.
  • #9,625
  • Dec 19, 2010 9:27am Dec 19, 2010 9:27am
Quoting NightMoves
Hey Custos hows it going? I think there is large amount of psychological trading going on, because really it boils down to what you said the reversal patterns at the S/R levels, which really are psychological levels no other reason for them, people like to trade those levels, but one must also know where those levels are and that again comes down to learning how to read the charts.

I cant think of any reason reason some of the levels hold except for psychological reasons, news gets the market moving and S/R levels determine how far it will move...
Hi nightmoves, doing great over here. Hope you are also doing fine!
yeah, I think we were talking here about two different definitions of psychology.
Yes, the market is totally mass-psychology based.
I was more referring to which personality an individual trader needs to be successful. And individual trader just needs to apply a good method over and over again - discipline.
The market as a whole is completely based on opinions and psychology, and I totally agree that all the S/R levels are basically "psychological" levels. And they are more of a self-fulfilling prophecy, cause everybody believes in them. Actually, the methods I trade are really just based on mass-psychology including hector's method.

cheers
  • #9,626
  • Dec 19, 2010 9:43am Dec 19, 2010 9:43am
Quoting Custos
Hi nightmoves, doing great over here. Hope you are also doing fine!
yeah, I think we were talking here about two different definitions of psychology.
Yes, the market is totally mass-psychology based.
I was more referring to which personality an individual trader needs to be successful. And individual trader just needs to apply a good method over and over again - discipline.
The market as a whole is completely based on opinions and psychology, and I totally agree that all the S/R levels are basically "psychological" levels. And they are more of...
Yep you nailed it, and like I say having a system with an edge like most trend trading methods have, you have the market on your side and the big money on your side, so basically all trend trading methods have an edgoe in one form or another the key is too follow the plan and use good money management, you can actually have a higher percentage of losing trades and still be making money with good MM skills, that is keep your R:R on every trade where it should be, and I know this has been said over and over but risking 50 pips to make 10 is just not good trading habbits, and will certainly lead to ones account being blown.

But thats why they have demo accounts so one can practice different methods and then you will know which style of trading one likes and does not like.

Keeping track in a journal is so incredibly helpful and overlooked by many and really there is no other way of knowing what works most of the time and what does not, trading is about multiple disciplines and all of them have to be utilised to their full extent in order to be profitable, not so much by winning every trade because its not going to happen, but knowing which are the best ones to take and which ones have proven to be the highest probabilities of succeeding and once again it comes down statistics through data collected on past trades.

--NM
  • #9,627
  • Dec 19, 2010 9:46am Dec 19, 2010 9:46am
Quoting Custos
Psychology is only important, if a person has no stats on entries, which stops to use, which targets to use,... A person with stats only needs one psychological trait: discipline in keeping with the system and not violating any rules.
So I would say 90% research of profitable patterns, methods / systems, and 10% psychology. And that is just the trait discipline.
Totally agree here.

Many want a system/method handed to them with the hope of making money.

In reality, its the "lazyness" or ignorance from the individual who wont/isnt willing to gather the statistical relevant amount of data that will ultimately inspire him/her with the confidence and discipline neccesary to stick to the method/systems rules.

That and also having extremely clear entry/exit/management techniques.

If...Then.

Plan A, plan B.

This lack of wanting to gather the data necessary is what ultimately creates the ilusion and chacing of the holy grail method.

As long as someone learns how to keep small losses in check, and at the same time let the good ones run they will make it, "statistically speaking" lol.

pip
  • #9,628
  • Dec 19, 2010 9:56am Dec 19, 2010 9:56am
Quoting Pipalicious
Totally agree here.

Many want a system/method handed to them with the hope of making money.

In reality, its the "lazyness" or ignorance from the individual who wont/isnt willing to gather the statistical relevant amount of data that will ultimately inspire him/her with the confidence and discipline neccesary to stick to the method/systems rules.

That and also having extremely clear entry/exit/management techniques.

If...Then.

Plan A, plan B.

This lack of wanting to gather the data necessary is what ultimately creates the ilusion and...
Yes trading is hard work like I was saying more than one discipline is needed and sometimes one has to force themselves to get that discipline but it is absolutley vital to have, including logging every trade studying every trade after it has closed...etc, these things are necessary if one wants to become a real trader, its all about statistics and psychology, and discipline, and most of those only come through practice and a few hard bumps along the way, there is no get rich quick method of trading, and I think most of the regulars on this thread accept that fact and trade accordingly, however many newbies are fed information they will get rich overnight or in a couple of trades and I really wish people stop leading these new traders down that path because when it does not happen they get discouraged and many quit, and I am sure many of them could be very good at trading if they only had the correct information from the start.

--NM
  • #9,629
  • Dec 19, 2010 10:23am Dec 19, 2010 10:23am
Hi Custos,

Could you please provide me with some figures on the expectancy when letting your trades run. I have been trying to apply this over the last few months and keep getting whipped about by the markets.

Pretty much all if the trades I have entered have shown me profit only to turn around and stop me out at break even or for a loss. Granted The losses are not to big but I do wonder whether it would be beet just to take the profits off the table.

Could you please let me know since you turned to this approach of riding the big moves what your expectancy is?

I really do love this approach and it seems to make sense, certainly when you look at the charts it does, but the reality is more difficult :-)

I have backtested the EUR/USD on a decade or so worth of data and although the results are positive you are only really looking at a 10-12% average annual return. I know this is good but I just thought it would be somewhere more in the region of 20-30%. Are your figures similar? Is it possible to share some of your findings?

Thanks so much.

PipR

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  • #9,630
  • Dec 19, 2010 10:25am Dec 19, 2010 10:25am
Quoting NightMoves
Yes trading is hard work like I was saying more than one discipline is needed and sometimes one has to force themselves to get that discipline but it is absolutley vital to have, including logging every trade studying every trade after it has closed...etc, these things are necessary if one wants to become a real trader, its all about statistics and psychology, and discipline, and most of those only come through practice and a few hard bumps along the way, there is no get rich quick method of trading, and I think most of the regulars on this thread...
Hi NM,

Just a quick question. Do you still do the swing trades or have you also turned to more of the trend riding system.

Also could you maybe provide a little (updated) information on how you manage your profit targets?

Thanks

PipR
  • #9,631
  • Dec 19, 2010 10:34am Dec 19, 2010 10:34am
Quoting PipRiderFX
Hi NM,

Just a quick question. Do you still do the swing trades or have you also turned to more of the trend riding system.

Also could you maybe provide a little (updated) information on how you manage your profit targets?

Thanks

PipR
Hi pipRider,
Yes I still trade the swing trade style but mainly on the longer time frames now because of the amount of time I have.

For targets I use several different methods, the main one is S/R levels on the time frame I am trading, I usually set the target short of the S/R level incase it does not reach it entirely, another way that seems pretty darn good is to use the pattern method of setting targets, again you want to be just short of the actual target to be safe but both methods work really well when setting exit targets, and another way is to use Fib-extension numbers for targets, I use several methods and they all seem to have merit so I would experiment and look back at the charts and see where you may have made an entry had you taken a trade and see where you may have placed an exit target using several methods and see which ones look the most promising.

--NM
  • #9,632
  • Dec 19, 2010 10:49am Dec 19, 2010 10:49am
Quoting NightMoves
Hi pipRider,
Yes I still trade the swing trade style but mainly on the longer time frames now because of the amount of time I have.

For targets I use several different methods, the main one is S/R levels on the time frame I am trading, I usually set the target short of the S/R level incase it does not reach it entirely, another way that seems pretty darn good is to use the pattern method of setting targets, again you want to be just short of the actual target to be safe but both methods work really well when setting exit targets, and another way...
I should clarify myself a little, I do swing trade but ONLY in the direction of the trend, I will watch for the High Swings in a down trend and look for short entries, and target the last swing low for an exit or to reposition my lot size...etc and I do just the opposite in an up trend so I guess its a combination of both, I do not like to range trade so in a sense I guess I swing trade the trend if that makes sense?

--NM
  • #9,633
  • Dec 19, 2010 11:06am Dec 19, 2010 11:06am
Quoting NightMoves
I should clarify myself a little, I do swing trade but ONLY in the direction of the trend, I will watch for the High Swings in a down trend and look for short entries, and target the last swing low for an exit or to reposition my lot size...etc and I do just the opposite in an up trend so I guess its a combination of both, I do not like to range trade so in a sense I guess I swing trade the trend if that makes sense?

--NM
Here is an example of the pattern target, lets say that we are looking to go short, after price breaks the flag lower channel lets say we enter, then move the pole of the flag to point where the breakout occurred and the other end of the pole would be the area we would look to exit the trade, again this only an example but you get the idea.

--NM
Attached Image (click to enlarge)
Click to Enlarge Name: Flag target Example setup chart png.png Size: 24 KB
  • #9,634
  • Dec 19, 2010 11:07am Dec 19, 2010 11:07am
Quoting NightMoves
Here is an example of the pattern target, lets say that we are looking to go short, after price breaks the flag lower channel lets say we enter, then move the pole of the flag to point where the breakout occurred and the other end of the pole would be the area we would look to exit the trade, again this only an example but you get the idea.

--NM
And here is the flag pole moved to set the targeted exit area...

NM
Attached Image (click to enlarge)
Click to Enlarge Name: Target area.png Size: 30 KB
  • #9,635
  • Dec 19, 2010 11:16am Dec 19, 2010 11:16am
Quoting NightMoves
And here is the flag pole moved to set the targeted exit area...

NM
Heres the same setup showing fib extensions as targets...

--NM
Attached Image (click to enlarge)
Click to Enlarge Name: Sam esetup showing fib extensions.png Size: 23 KB
  • #9,636
  • Dec 19, 2010 11:40am Dec 19, 2010 11:40am
Quoting NightMoves
Heres the same setup showing fib extensions as targets...

--NM
Hi NM

nice to see you again. Using fib extensions as targets, why specifically the 175% level? I'm not familiar with fib extns as targets.

thanks
Andy
  • #9,637
  • Dec 19, 2010 11:47am Dec 19, 2010 11:47am
Quoting Andy_G
Hi NM

nice to see you again. Using fib extensions as targets, why specifically the 175% level? I'm not familiar with fib extns as targets.

thanks
Andy
Hi Andy,
NO particular reason it was only an example as to how you can use them, they work really well, I use them a lot too. You can pick any fib number you want actually so the 175% just happen to be at the same point as the flag pole ended up.

--NM
  • #9,638
  • Dec 19, 2010 12:02pm Dec 19, 2010 12:02pm
Quoting NightMoves
Hi Andy,
NO particular reason it was only an example as to how you can use them, they work really well, I use them a lot too. You can pick any fib number you want actually so the 175% just happen to be at the same point as the flag pole ended up.

--NM
Sorry I don't understand, when i use the default settings on my fib tool i get 0-100% etc. then extns of 161, 261, & 423 ??? so why did you have 175.

Andy
  • #9,639
  • Dec 19, 2010 12:06pm Dec 19, 2010 12:06pm
Quoting Andy_G
Sorry I don't understand, when i use the default settings on my fib tool i get 0-100% etc. then extns of 161, 261, & 423 ??? so why did you have 175.

Andy
You can set them any way you want them to show up. Go to your Fibo properties and you can set them up pretty much any which you like.

--NM
Attached Image
  • #9,640
  • Dec 19, 2010 12:16pm Dec 19, 2010 12:16pm
Quoting NightMoves
Hi pipRider,
Yes I still trade the swing trade style but mainly on the longer time frames now because of the amount of time I have.

For targets I use several different methods, the main one is S/R levels on the time frame I am trading, I usually set the target short of the S/R level incase it does not reach it entirely, another way that seems pretty darn good is to use the pattern method of setting targets, again you want to be just short of the actual target to be safe but both methods work really well when setting exit targets, and another way...
Hi NightMoves,

Thank you for your response.

If you would be so kind could you please just answer one more question?

Regarding the SMA's how significant are they to your trading? As in would you be as successful in your trades if you completely disregarded the SMA's and only traded the the trends as defined by higher highs and lows or the opposite in a down trend? So maybe not trading such established trends or do you think the SMA'S give you a genuine edge?

Thanks
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