Building an equity millipede

Hello Cameron

Yes. At the moment it is definitely a no trade for eurusd.

It is impossible to extract profit out of current movement.

Unfortunately, it looks like day 3 for eurusd for not moving.

That is fine as we have been conservative and the only damage is the few ammos we spent on probing.

In a traders starting phase a selected pair may not move for few weeks. It is the belief in the traders own self that will hold him/her together.

Days like this will most likely have the next day revisit todays price range. If today is destined to have a volatile breakout right after we all turn off the computer, the move will flow into next day and next week and even next month. One of the main reason why trading longer hours does not increase productivity in forex.

Today wasnt as exciting as yesterdays US session and hope readers are not disheartened but there is nothing one can do to force the market to move.

Good night all

Sincerely,

Graeme

And ofcourse this happens just to embarass me all together. How rude.

To anticipate for it to happen and then to miss it by few minutes..

http://img91.imageshack.us/img91/4749/aasdu.jpg

However, I will not continue to trade. There will be more opportuntity for me tomorrow.

For those traders who are following eurusd and have just arrived to witness the move. Please be cautious in adding positions and make sure there is momentum behind you.

And please dont forget the best optimum trading opportunity is when you have multiple success in a row when adding positions. 1 loss, 2 loss is definite sign to stop stacking until further new confirmation (preferably a new 1hr, 4hr candle)

Sincerely,

Graeme

Thank you for the advice Graeme, I definitely keep a max 2 loss rule on a setup, in the past I used to overtrade, hopefully I am cured of that now with your help.

Kindest Regards,

Cam

Big thanks to Graeme for all the education, also a few others but too many to name, still trawling through cutting and pasting, just logged in to say hope everyone has a good christmas and may the new year bring all the best returns

Eur/usd = Expect the unexpected.... nice up spike hour ago

Excellent..nicely put it

Wish you all a Happy Holidays and a wonderful New Year.

Just to show you that Forex has a sense of humour...here is a 70 pip 5 min candle.

I've decided to call this freakish looking candle the "Merry Christmas Candle" for all of us who where waiting for the EURO to tank and fall like a brick...lol.

Maybe we'll get our wish come the New Year???

Hi All,

Was tied up a bit for past few days.. just browsed some of the recent posts. Glad we have overcome the minor distraction caused by that reader to Graeme. I do understand why others feel that way but who cares. This thread is about learning and focusing on becoming profitable. Period !

If I start making a million or 2 and Graeme starts making 10s or 100s of Millions from his book, so be it. It won't bother me at all. Some tend to forget that he is also teaching us virtually every aspect of this trading approach (especially spending countless hours with me during our exercises with more to come in the future).

If someone thinks, he is gaining popularity with this thread, forget it... there are no more than a few 100 traders viewing this thread at any time (and just a few thousand who visit FF frequently on the World Wide Web!). I have said enough. Felt I needed to respond as some wondered where I was on this :-

I am personally very excited to hear about Graeme's plans to publish a book. It will certainly be on the list of best sellers! I will be looking forward to a 'signed' copy by the Maestro himself as this will be the first book on trading that I have ever owned in my 12+ yrs of trading life.

For those who want to discuss the challenges/failures, I am still struggling with drawdowns even after being currently 2890+ pips in floating profits across 8 pairs and 11 positions. And this is with limited stacking, trading only on Daily/Weekly/Monthly TF for an hour or two at 00GMT. But the nasty account drawdown is something I really need to address. In all fairness, most of my drawdown happened when I could not concentrate on good entries for couple of weeks in November due to personal reasons. Otherwise, I think, I am getting there slowly and surely. This is a long road to success but definitely a well paved one once we have a few long legs going for us. I plan to go live sometime in late January once I have the necessary framework in place.

Here's my open positions to support what I said above.

p.s. notice my 'comments' column. We should come up with a standard list of setup labels to help us analyze which setups are profitable and which aren't.

Attachment

PipEASY,

Thanks for the thread! Just found it today. Have only read the first 8 pages or so so sorry if this is old news.

My idea of "diversification" ala pipEASY;

not his system, just my explanation. Say that everytime I close out a winning trade, long or short, I let 10% of my size ride with a stop at break even. (I am profitable now and I do not think that leaving this small amount would significantly hurt my profitability.) I record my 10%, my soldier, in a journal. I do this for every winning trade. gradually, my journal shows that my short legs are growing and my long legs, soldiers, are dying.

So, I am becoming more and more net short. I continue trading, adding soldiers long and short, all with STOPs at BE. Eventually the market will correct and I will find that my long soldiers are starting to survive. this indicates that the trend is changing but I am net short. I need to Diversify. I do this by closing some of my short soldiers. I haven't worked out yet which ones or how many.

The bottom line is that I don't want to be net short in an uptrend.

This brings me to hedging.

I have a US account. If I use a subaccount it would cut my margin percent in half, worst case. I would have to separately margin all longs and all shorts. In a hedging account I should have some longs offsetting some shorts and not requiring double margin?

Anyway, next thought; I have my journal that shows all of my "soldiers ."

At any given moment in time, the long and short soldiers will net out to a discrete single position, long or short, and average price. The way to calculate it would be to take all longs times their average price and subtract all shorts times their average price. the result is a single position with it's entry price.

The Point; (example is extreme to facilitate explanation)

I leave 10% of a short trade, enter it in my journal, -.1 lot at 1.3000.
Later, another short -.1 lot at 1.20.

I am short -.2 lots at an average price of 1.25.

The pair drops to .80 then comes back up, I have a long at .80 that is surviving and the market is going up.

My journal shows 2 shorts at 1.25 and one long at .80.

Because I can't hedge, my actual position is -.1 at 1.30 with an extra $4000 in my account from going "long", going long closed/offset one of my shorts and my account shows neither trade any longer. I would actually do this myself because of FIFO. I want LIFO so I would, in order to go "long" at .80, close my short from 1.20, netting .40 or 4000 pips.

Now, if you are still with me, the pair is headed back up. I put on a long at .90. In my journal I have .2 longs with an average price of .85 and -.2 shorts with an average price of 1.25. In a hedged account I would have .40 of unrealized profit for .2 lots and would be neutrally hedged. In my non hedging account, I am flat with $8000 profit, exactly the same result.

Back to the journal, I want to diversify, (don't really know if I do or not, just example). I am neutral and the pair is up. So to make my journal trades net long, I need to close out one of my shorts. In the non-hedging account, I would have to go long at the current price. It would not be an "entry," not a trade entry but rather a bookkeeping entry. a real entry in my account but it would be made at the same price and time as I would be closing the short in the hedged account if I had a hedged account, which I don't and thus the reason for this exercize.

Please remember we all understand that there would be many more trades/positions than this and the prices would be much closer together. I think it would be a simple matter to build a spreadsheet to keep track of this "synthetic hedging."

pipEASY, thanks again for the great thread,

Archie

Hi abdunbar,

With no disrespect intended, you might want to read this thread (and then re-read it again a few times as most of us did) to fully grasp the concept. FIFO, hedging, correlation etc has all been discussed in depth in the past.

BTW: CitiFXPro does allow Hedging in the same account to US customers. So we still have options. I might be going live with them in Jan so do your research. They are my bank for more than a decade so feel comfortable keeping all my money with them :-
Backup is MBT just to play around as a small account for demo purposes.

Regards,

Vee

If you have traded on the lower timeframe using price interpretation we have talked about, you will find sometimes it does not work to your forecast but sometimes it does happen exactly to what you have forecasted. However, the chances of us being right is much more than 50% of the time as we are selective with our scenario; looking for higher probability movements.

Using this price interpretation on the monthly chart has one drawback and one reward. The drawback is that the speed we are use to on 5min chart is now so much slower as each candle is now a months worth of data. But the reward is that a correct hindsight on the monthly chart will bring in huge rewards that does propel your profit levels to the next heights.

----

Graeme,

Please accept my sincerest Greetings and to you and your family, and to all traders following Graeme's thread. I have one thing to clarify. I now prefer using the 5m for entry regardles whether stacking or not. I used to refer to h4/h1 to zoom in S/R level but always come back to 5m for sharp entry. I know it doesnt matter, but would appreciate your thought on this.

Sincerely,

Edd

none taken,

Already live, already profitable for over one year.

As illustrated ny my post, I understand the concept from pipEASY. Read all up to when he said he was finished. very clear. bottom line, let your winners run, rest is details.

good luck live. you'll do great with this inspiration to "let your winners run."

Archie

Hello again,

I called CitiFXPro. A US person can in fact hedge in one account at CitiFxPro. It is a synthetic hedge, the software/platform shows you the hedged trades but your account is non-hedged. It works as I explained in my original post.

I think I will demo their platform to see if experience matches their explanation.

Archie

[quote=pipEASY;4261762]And ofcourse this happens just to embarass me all together. How rude.

To anticipate for it to happen and then to miss it by few minutes..

http://img91.imageshack.us/img91/4749/aasdu.jpg

However, I will not continue to trade. There will be more opportuntity for me tomorrow.


Yes,

I am done also. Interestingly, I had the same stats as you for the day except I did catch the break down and ended up + 1 pip for the day.

Archie

the big spike up later in the day is what convinced me that I'm done until the new year.

Good morning, all

Woke up to see that it didnt require today for the price range of yesterday to be revisited.

That is a nasty spike indeed. Something that is not often seen till a nasty news release as NFP.

May I please request all readers to read this post as this will tie in everything we have done this week and the questions by midknight yesterday.

There are few traders who currently hold few thousand pip profit that has grown for the last few weeks but also hold unsettling large realized loss. For the traders that have produced their trade list through private messaging, there is a striking similarity in between them.

1. They are currently enjoying the nice floating profit because they have constantly traded in the market and hence fortunately caught the volatile movements. Well done

2. However it is this constant active trading that also brings in the unwanted large number of losses in a row

For those traders, look back at your trade list and notice that positions that are surviving till today is most often from same 1hr candle, 4hr candle or same day.

Adversely, they will see that groups of losses often happens in the same one sitting.

There is far more meaning than what this represents alone. For the sharp observant who can connect the above trading 'statistics' and the distribution of opportunity in the market, they will realize that there are good opportunities grouped together in a row and bad opportunities grouped in a row. There is also a mix of good and bad opportunties which is considered bad altogether.

If O denotes good opportunity/momentum and X denotes bad opportunity/range then a forex market can be translated and will look like this on a long thin tape.

OOXOXXOXOOXOOOXXXOOOOOOOOOOOOOXOOOOOOXXOOOOOOXOXOXXOOOOOOOOOOOOOOOOOOOOOOOXOXOOOOOOOOOOOOOO

If one is to highlight the same above series with segments of more than 5 O's, it will look like this

OOXOXXOXOOXOOOXXXOOOOOOOOOOOOOXOOOOOOXXOOOOOOXOXOXXOOOOOOOOOOOOOOOOOOOOOOOXOXOOOOOOOOOOOOOO

Coming back to the above trader who currently holds large unrealized profit but also holding large realized loss, you have been basically trading non-stop hence picked up all the bad parts of the beginning as realized loss and fortunately due to the traders persistence encountered the first set of prolonged 'O's.

If 'F' denotes a trader trading with full focus, the first part of the above tape will look like this:

OFFOFFXOXFXOXOFOXOFFFOOXFXXOOFOOOOOFOOOOOOX

This is the translation of what happened to the trader and why he/she has large realized loss but currently holding large unrealized profit. You have been more or less lucky that a) your capital sustained till you inevitably hit the first row of 'O' b) your persistence saved you c) it was more luck than anything else

For myself as I know the law of uneven distribution and knowing good spaced out trading in a constant frequency is the key. My trading will look more like this on the first segment of the long tape.

OFOXOXXOXOFOXOFOFOXXXOOOFOFFFFOFOOFOOOOOOX

I space out the focus and once it catches on I will raise the aggressiveness. The big difference between myself and the above trader is that a) I know and abide the rule of law of uneven distribution b) I was more aggressive when it was favouring me and was not intimidated by my previous unsuccessful attempts

Now ofcourse this all sounds like good common sense. The point is that when the market is favouring a trader with a prolonged volatile opportuntiy, you will have multiple successful positions. When it doesnt you will suffer rows of losses. I cut my losses at 3 attempt and stack continuously when Im successful until the first 1 or 2 losses. This itself is encoding good risk:reward into your trading approach.

And yes, it is this simple to reduce workload, reduce stress, reduce potential losses, protect my capital and still have interest in the best areas.

Not only does the above keep my trading schedule feasible but it also exposes myself to the best of the times to trade that has the best probability that the price will not return to the previous range.

Yesterday, I had 3 probes die and I quit trading for the day. This is not from gut feeling but the experience and the simple test I just performed that tells me today is another X. A good series of O is most often moves that are 200, 300+ and start of new direction/trend that can be captured the next 4 hours or the next morning as it will be in a series of other Os.

There is absolutely no reason a trader should be trading consecutive long hours.

In forex, long hours does not increase productivity. But constant frequency in spaced out probing till it does latch on.

Sincerely,

Graeme

P.S Today I wont be trading. From what I saw this week, it is another X. If it is a start of a long series of O, I will have more opportuntity early next week. Hope this now makes clear sense as to why.

There is always more than 1 bold weekly candle in a trend gentlemen

Dear Mr. Graeme, yesterday was also a hectic day for me. at around 11am FxPro time, I noticed several inside bars across multiple currency pairs. so I decided to send in probes if opportunities should arise, and also try to stack if possible. here is what happened:

USDJPY - 3 probes, all hit be
USDCHF - 3 probes, 2 be, 1 surviving
GBPJPY - 2 probes, all hit be
GBPUSD - 2 probes, all hit SL, lost $2
EURUSD - 2 probes, 1 be, 1 SL, lost $1
EURGBP - 2 probes, all hit SL, lost $2
USDCAD - 1 probe, sl was hit, lost $1

so all in al it wan`t a successful attempt. I lost $6, and the only surviving probe is about $3 in profit by now. by the time all my USDJPY position hit be, I lost heart and went to bed, exhausted as hell.

Good attempt.

The only thing you require is to do the same approach when the market is favourable.

Yes, you will get exhausted when you try extracting blood out of stone. Conserve your focus for other needed times.

However, well done.

Sincerely,

Graeme

Hi, Graeme.

Reading your writeup in sharing your experience with fx trades had given me a new perspective. There are some hiccups along the way and I am still trying to grasp your idea. So far, I have only reached page 17.

About 6 weeks back, I had initiated and tried the carry trade method. Reason being that I need to build an indefinite passive income. My objective is to reach and replace my disposable income so that I will be able to free my time and do things which I love.

Your methodology are fabulous and profound. The key is that the entry need to be precise. As for exit, it would be determine by the market itself. I love this technique, however, it might not be applicable to me as I need to create a passive income as soon as possible.

I am thinking on how can I blend in your methodology to the carry trade. As you trade only in major pairs, I don't have a clue on how effective will it work on exotic pair, ie. AUD/JPY, TRY/JPY, ZAR/JPY

Based on your vast experiences of fx trading, I was wondering whether can you give me any constructive feedback on my approach to passive income via carry trade (if possible, blending with your methodology)?

Best Wishes and Regards,
Judy

Dear Mr. Graeme, thank you for your reply, I just saw your above post regarding spaced out probing. I think it`s very much true, and I hope one day I`ll reach that kind of levelheadedness as well.

meanwhile my way of dealing with spaced out probing is to have one line only on my chart, and that is the weekly opening line. I observe how price behaves around this line, and send in a probe as soon as it shows signs of getting away from the line. the benefit of this is that once price gets away, I can sit back and relax for the rest of the week. the downside is that this usually takes multiple attempts at close approximaties and usual happening across multiple currency pairs as well. so very exhausting and the worst thing is that you never know which one is gonna stick.

fortunately like you said There is always more than 1 bold weekly candle in a trend, and each week I strive to catch a few of them. and by my limited experience so far I only need to catch two to make my effort worthwhile. maybe I`ll just need to catch one if I could successfully stack.

however stacking requires a lot more screen time. and more stress as well. I quite enjoy the fact that once price gets away from the weekly opening line I could just relax and play with my kid. besides, just like you have said before, more risk does not necessarily mean more profit. more probes mean more risk, but less probes definitely mean less profit when price does move. I`m a bit torn by this, I guess I need more experience to see a bit clearly in this.

best regards

i really like your style and very clear explanation.

i am really looking forward to your book.

i am re thinking this last sentence from you :

"I find that people with higher form of qualification tend to observe, analysis, reason. It is how we are taught in college.

And with trading it is far more simpler as only required trait is the observing."


merry xmas to all
recidiviste