Building an equity millipede

I know what you're saying..
lets hope its just the pain before the gain...
I check my trades from time to time ,its very helpful to see my weak sides..
and I do still make awful trades..but what helped me is
I stick to one pair..I'm only interested in beginning of monthly/weekly and 4 hr candles..nothing smaller than 4hr in terms of setup..
I only trade three 4hr bars (08,12,16) in fxdd malta platform timezone..
still a lot to learn...

We said, confidence & patience. I enjoyed your charts.

Tq,

Let's stick with a $500 account balance, since it looks close to what you had when these trades were put on.

You say that you only want to risk 2% of your account if you had twelve losing trades. That equates to a 0.16% loss per entry, or $0.80. If you were to use a 1:1 geared trade you are giving yourself about 16 pips of stop loss room.

But I see some trades with a size of 2000 or 3000 units. 3000 units on USD/JPY is a gearing of 6:1 for a $500 account, and gives you a stop loss level of just 2 or 3 pips. If you take into account spread you're not giving yourself very much wiggle room at all when you place that entry. Were these stacking entries?

Every person has their own risk tolerances so I can't provide any sort of definitive answers, I can only really ask more questions that you can ponder on.

How frequently are you going to be closing out profitable trades? What could be the worst streak of losing trades?

Are you looking to hold out for legs that are at least 1000+ pips or just a couple of hundred?

The bigger the legs you're looking to build then it's more likely that it will take more entries to get one.

Let's say that only 50% of your entries ever make it to breakeven, the rest hit your stop loss. And that only 2% of your entries ever make it your minimum leg size where you'd consider closing it out for a profit.

What are the chances of you having a bad run? Say you had 10 losers in a row (without having any BE legs reach your target yet). How would a 20% drawdown affect you? What if it continued on and reached 20 losers without a big leg taking hold yet?

The bigger your diversification target then the more losing trades you are going to want to be able to handle within your own comfort zone. Since you are up 50% after just two days, I'm guessing you're willing to take some profits after having legs just a couple of hundred pips in profit.

If you're a trader gunning for the 1000+ pip legs then it makes sense to have much smaller gearing.

Having spent some time reading this method, it seems to me that it would be best applied to markets like the SPX or Russell. Historically these have reached price points that have never been seen again for years, even decades. E/U and other pairs seem a bit to ranging at the moment.

Good morning, all

Thank you for the continued interest.

It seems, finally after 2 weeks of waiting our eurusd has finally made a move for us. And this is one of the inevitability of trading; the fact that the price WILL move sooner or later. Sometimes there are few weeks of range followed by few months of trend, sometimes there are few days of range followed by few weeks of trend. And the longer the stall the further the price will propel after it moves out. How simple is that? This is the only fact you need to know and act upon. Recently, I attended an exclusive seminar hosted by a reknowned economist. It was a very expensive endeavour and I was looking forward to it. Although there was great detail in his work, it was more damage than help in most peoples mind. You dont need to know every little thing about economy to be profitable trader. Just a sound common sense is all that is required. Some of the items he presented was so high tech, I wondered how on earth traders before the computer era ever made profits....... I got up and left at that point.

Just before typing this message, I did go through the posts and the private messages I have kindly received. Thank you.

And there are few things which concerns me that I would like to address to all.

1. There are some traders who have been following eurusd trade for the last 3 weeks only to have missed this week as their capital have bust out. One trader has over -1500 pips of losses from stacking since week of christmas. Im sure there are few readers who are guilty of this and nodding in silence. If this is you, then you need to a) pick better times to trade b) stack at better times c) or learn not to press execute all the time. From my personal statistics I have never and never will endure more than -300 pips on one given pair for one week.

2. There are some traders who have been following eurusd trade for the last 3 weeks only to have missed this week because of fear. They suffered 2 weeks of loss and started questioning the whole theme behind the plan they have created. This worries me as there will be times in the market where there will be more than 4 weeks of range followed by few weeks of trend which they will miss out with the wrong mentality (and this applies to the trader 1 above). Furthermore, few have jumped ship onto another pair only to sink there as well. Thats the same as jumping around indicators or systems. Stick to your wife.

3. There are some traders who exited the trade during the week to cover their losses. Nothing wrong from doing that but if this week was the start of something huge, you have hindered your own chance of profiting greater. This trader is similar to the trader 2 above. It is part fear and uncertainty of ones self. If you continue to close out profitable trades to replenish your losses you are more or less chasing your own tail.

I believe that covers most scenarios happening behind the scene.

On a different subject, I would like to discuss everyones excitement. First of all, I greatly appreciate your appraisals and kind words. I read them and even though I dont publically acknowledge them (as to keep this thread as small as possible), I welcome your words in my mind.

Eurusd had a great week and everyone who were participating seems overjoyed with their new few hundred pip unrealized profit. Just what if this week was another range..? I bet the tone and the atmosphere of the latest posts in the thread would be different and at least one private message with the title 'please explain.' There is nothing wrong with passing the cheer and high-fives however please dont allow the market movement dictate your emotion. 300 pip moves intraweek does not merit a bottle of vintage Krug but a few hundred to few thousand pip in few weeks and months deserve just an approval nod and a smile.

Just what if this coming week goes against last week and becomes part of the same range?

There are some traders thinking like the above already. They have positions opened and they have experienced losses before or scenarios where they had great week only to have the next week come back and slap them backwards. It is these kind of thoughts that will ruin your chances in greater profiting as you will have anxiety attacks and heart palpitations at every miniscule tick movement against you. Hold your grounds and be a warrior. Win the battle and bring home the princess or die in battle honourably. Envision another great week and add positive influence into your thought process. Another week with less than 10% retrace would be swell.

Some wonder how I did with eurusd this week and my plans to diversify. I currently hold 14 sell positions all moved to BE. Total unrealized profit is just under 2900 pips. This is not because I was super duper trader but I remained true to my monthly hindsight which is part of the universal price action interpretation (that I gained in 3x20 exercise). Since we started trading together since week of christmas I currently have about -530 pips of realized loss to settle. As soon as monday opens I will close last 3 or 4 legs to settle the losses and add very small profit into my capital (remember you can close more now to capture potentially smaller but guaranteed profit or close less to capture greater potential rewards). However, I might not close any after the first looks of the opening. Some weeks will have great burst from the open till end. Then Im done but will probe at new highs of the week (normally I would probe both new highs and lows but for now Im only taking one direction trades as everyone else)

My sincerest gratitute to all who have contributed to this thread in the last few days. Great analysis and im surprised to read them as they are so similar to my own thought process.

Special thank you to Tonkar for his statistics (post 3912). Great job and I request all readers to have another look in the pdf file. Even with static parameters, Im not surprised to see a 1.66 profit factor and this itself is already a good result. I hope what you have discovered becomes a framework to your trading approach. And the framework would be that price might not move in a day or two but will move in a year. Pairs have more than 1000 pip average range in a given year so in another words sometime in the given year it did trend. In regards, to your stop loss and the results being better may not prove to be in the following year as you are correct about 12 months not being enough time to gather statistical data. Baccarat that has 8 decks in the shoe requires at least 50000 hands to confirm a hard statistical edge. And thats with finite variables within 8 decks of cards whileas with the market there are infinite variables hence nothing can be confirmed but just continues to flow on and on into infinity and forever, just like space.

Quick word to iplaygames. What hornedgod has pointed out for your benefit is true. I knew a trader who earns 90K a year who decides to automatically deposit $300 per week into his trading account. He places initial $700 deposit and considers that mainly for margin and every week $300 goes in. He is patiently waiting for a long trend to happen but knows that he has only 300 pips per week to spend on. First week, he loses 300 pips. Thats $300 from $1000 he just lost which is already more than 30% realized loss.

Is trading causing him financial trouble?
No.

From return % he just inflicted -30% on his account!
Seemingly, but the trader is controlling his risk.

Control his risk?? Risking 30% of ones capital every week is risk itself Graeme!
The only risk is when trader goes above -300 pips he set for himself. In other words, risking more than he can 'afford' to lose.

And this trader kept adding $300 every week and just letting his initial position run and added one more position few weeks later. Half a year later he cashed out 2500 pips on first position and 2200 pips on the 2nd position. A total of 4700 pips and he had about $8000 saved up in his capital. Once he closed out the positions he had a grand total of $12700 in his trading account which $9000 was from his personal deposits. Thats more than 25% annualised return when banks/stocks/property offer 5-15% per annum on average. And he was content at his small achievement and he built a great foundation from his experience. He still trades today but keeps his job as his main source of income. Hope few readers learn something from this story.

For the furture readers, this is what eurusd looked like this week.

eurusd 4hr

http://img204.imageshack.us/img204/6651/84813351.jpg

There were so many opportunties the whole week was flashing red in my eyes. Less than 33% retrace on 4hr candles everywhere. Something went horribly wrong if you made less than 100 pips this week. On any system or method for that matter.

Sincerely,

Graeme

Hello Graeme,

Welcome and sorry that the seminar was different than the expectations, but on the positive side you had the chance to see something that would not work for you at that seminar (so -1 things to be bothered about) *like Edison, found 10000 ways that didn't work*

Thank you for the EURUSD analysis, I think everyone's watching it for next week as it's an even more critical week than the one that closed for the simple reason that it would show momentum continuation or... back to square one: probing.

Kindest Regards,

Cam

Thank you for the compliments Cameron.

I just read your recent private message and well done.

Just letting you know and everyone else that today i will definitely find time to answer all the pms.

Sincerely,

Graeme

P.S Just going out for few hours.

Hello Mr. Graeme! I was just going to reply to HG when I saw you`ve returned. it`s always a pleasure reading your post, there is always sth there to be learnt. I wish you good health and looking forward to seeing more of your posts.

a humble millipeder salutes to his commander-in-chief

Wondering if anyone else has found the while trying to trade the EURUSD during Asian session, that positions get taken out in the London/US sessions?

I my case at BE, but still a little frustrating when limited to trading the Asian session.

And Graeme, can I add to already numerous accolades from posters here, this is an invaluable thread.

Cheers
SJB

Hello HG! I saw this icon and just couldn`t help pasting it here, hope you don`t mind

I read your posts carefully and I really appreciate your concern. I admit that you are very right about my taking too much risk. but I`m knowingly doing this with a small account to find out the profit potential of trading Graeme`s way, and also how much pain I can tolerate.

at the end of December when I closed all my positions I had recouped all my losses plus 50% gain. I was emboldened by that so I wired a bit more money into my account and doubled my risk per trade at the start of last week. so instead of risking $1 per position I put $2 on the table for each trade, that`s how I got those 2000 and 3000 units positions. but I`m back to $1 per position now, as my drawdown got uncomfortable too quick

the last few weeks` trading has befuddled me. I know I was overtrading but I have always been able to recoup all my losses plus significant profit relative to my account size. although I took big risk for those profit, but isn`t that how the saying goes - no pain, no gain? I felt most in tune with the maret when I`ve had a series of losses, and my last few weeks` experience has shown me that profitable trades often come out after series of losses. of course I`d like my drawdown to be smaller, but that would mean bypassing trades, but how could I tell which trades are winners or losers beforehand?

I guess what I lack is more experience, and hard statistical evidence. that`s why I`m developing an EA now to display trade by trade statistics for each currency pair. including the following features:

1. number of trades per pair, per hour/day/week/month
2. profit/loss per pair, per hour/day/week/month
3. win/loss ratio per pair, per hour/day/week/month
etc,

I think this will really help me get a better picture of my trading performance, and give me insights into my trading. I`ll post it here when I finish coding and debugging it.

Good evening, all

It is sunday evening here and soon I would be getting ready for sleep.

I have spent the afternoon answering all the private messages so please forward me your message if I accidentally missed them out.

There was great variance in the types of questions. Im happy to say that there has been big progress since start of this thread few months ago when most questions were about my exact entry method. How you enter is not important but when you enter.

And this is why alot of mechanical trading that has rigid fixed entry rules and exit rules grow your equity slower than most expectations. There are few mechanical trading methods that has proven profitable but only ever so slightly. 20% growth a year? Traders get excited that its similar to Warren Buffet. 20% growth on billions and billions is incredible but 20% return on $20000 USD is $4000. Not bad considering the return % but its not an amount we can live on. Professional mechanical traders have at the vert least few hundred thousands to trade.

We have chosen to become a bigger trader. We are discretionary traders with a touch of mechanical rules. And the mechanical rules (price interpretation) just helps us with sorting out good from bad scenarios to trade. We aim three digit returns per year cause trading will be your main source of income in the years to come.

With discretionary trading comes few catches. Since there are no rigid trade rules, one has to overcome their own personal emotions first. Fear, greed, anxiety. This takes time and effort to overcome. This brings me to something that I wish to talk about in detail today. Time to stack. Many traders ask when is the best time to stack. The most simple answer is:

1. When the whole market is buzzing with movement. Tick data flying in furiously and all pairs are moving.

2. Your probe is alive and you continue to stack effortlessly until the first close of a position at a loss.

Point 1 is most important. The default view of my metatrader has eurusd 4hr, gbpusd 4hr, usdjpy 4hr, gbpjpy 4hr and in that order with the usual emas and indicators as shown in my charts. I know by quick glances at each pair that I know if market is actually buzzing with traders. We need traders to piggyback on.

Point 2. I mentioned it before many traders are still going past it. A trader continues to blindly stack in a state of greed. More risk does not mean more profit. Please say this 10 times with me. Because you risk more doesnt mean it will bring more. More positions doesnt necessary mean more profit.

This is our first exercise and upon completion you will definitely know the different type of feelings you receive when there is compelling momentum and there is none or little (this should have been one of the lessons you would have picked up on with 3x20 exercise). Soon you will be homing into only those favourable moments because you know what they taste like. Like bee homing into a bloomed flower.

One of the things I regret to have posted in this thread is my live trades few weeks ago on 5min timeframe where I had 10 trades in the gap of 1 hour. Although there was nothing wrong at that instance as my personal experience indicated that I should be stacking aggressively many readers are trying very hard to place tens of positions in a day or a week.

If I may strongly suggest, for the current eurusd exercise in which we are aiming for few thousand profit in the allowed time frame of few weeks, that just 2 positions in early is more than enough. Ofcourse this might not be the case in your thought process if you just spent -1600 pips in the last 3 weeks. Just aim for 2 positions and then one here and one there and then few more the following week. It is ironic for me to contradict myself as I have 14 positions this week but may I suggest everyone to take it slightly slower and aim between 2 to 4 positions in a given week. Dont forget there are plenty of chances the following week. There are more than 1 bold candle in a trend.

I have 14 positions and realized loss of -530 pips. That is more than acceptable while 19 positions with realized loss of -1800 pips (this is happening to one trader and Im posting this with permission) is not going to work in the long run even if you have 4000+ pips of unrealized profit. You will tire yourself out emotionally and sooner or later (and odds will catch up) when your hindsight stops working halfway there and retraces to BE you will literally tear your heart out (also one of the reasons that I trade both directions).

My suggestion:

You would even lose less when the initial first position/probe survives and with the stop loss moved to breakeven, then blindly opening one more position 100 pips later setting the stop loss of the second position to the price you bought on the first position. This way you risk 1 position for the price of 2. Please use this instead if you have difficulty with stacking and time management. I have used this countless times and it works if the trend is valid or it will close out at loss if it retraces. If it does retrace 100 pips to close both positions out then it wasnt a trend in the first place so it doesnt matter. Please use this instead for those in trouble.

All the best wishes for this coming week. It will be an exciting week for the following eurusd traders. Do not be disheartened to see your positions die at breakeven. However, be bold and loud if the direction continues on. Anticipate the best scenario which is less than 33% retrace or my favourite on eurusd which is 10 pips. If it does retrace a classic 50%, make sure you are not intimidated to add on the price coming back down.

Hope to see great results this week.

Extra hours does not increase productivity. Please use price alerts to your cell phone and enjoy your life outside trading.

My thoughts are with everyone.

Sincerely,

Graeme

Thank you Graeme for your continued interest in sharing your knowledge and providing valuable feedback. Very much appreciated. Wishing you a very good year, good health, bue skies and everything nice !

Best regards
Bak

Hello PipEasy
First i have to thank you for sharing your discoveries. Thank you very much.
I have a question. it is not clear for me, what means "Flying buddah". It seems that it is some toping formation, that there is st. like some equilibrium, from which trading setup is made... But i cant help myself, how to filter "false breakout from that point. ? regards. fana

Hello I hope all of you are well and are having a good weekend.
I started trading this way in November and stopped reading the read after 14 pages and got down to trading, well I am now at page 111 and am reading from both sides.
When sharing my results with Graeme he suggested sharing with others. I do not have time to stack on the 5 min charts and have a job that keeps me very busy so I get about an hour to 2 hours a day. I have attached my log which has been difficult to maintain.



An update on my progress is as follows:

EUR/AUD
1700 Pips profit closed and banked trades.
I now still have 5 legs open which total 2635.42 pips.

EUR/USD I have 119 pips closed in profit and 545.5 pips in four open legs.

EUR/GBP
37 pips profit in closed trades after cost and losses, and I have 896 pips in 3 legs still open, two weeks ago they were barely alive.

GBP/JPY
I have 139 pips in closed trades no open legs

GBP/USD
I have a loss of 405 pips with no open trades.

to summerise
1595 pips profit in closed trades and 5285 pips in open positions.

I guess the part where I am battling is method. which one to choose not the understanding. My work does not permit me the time to stack on 5min charts so I mainly trade off the 4h and dailies.
I have a number of entry methods and occasionally I have had some big losses with the biggest been 175 pips, I am okay with this in the past as I am still settling on the my method / system.

regards

Frank

Bakuli - Thank you for the warm compliment, Lee. Also wishing you and your family a safe and healthy 2011 and the years to come.

Fana - Thank you for the interest. Unfortunately there is no preventive measure to avoid or lessen a fakeout in any system or method. However, you could have a mindset to give the market 1 unit as a loss but prepared to take 10 units back when its willing to. I personally have 1 or 2 attempts and if both fails then I leave. A valid flying buddha should not make any new highs or lows above or below the flying buddha setup. Flying buddha is still being traded by a colleague of mine who finds great success. Most mondays are flying buddhas that will change direction of the friday's movement. You will find good success at that point. I trade it quiet often.

Red-Dragon - Thank you for submitting your results. Fantastic.

From what I can see on your excel. It looks like you use 0.05 and 0.1 lot size. Very good and sensible. Realized net profit @ $459.04 and unrealized profit @ $4127.89. You plan to close 4 out of 5 trades on monday and keep one. Good. First trade was taken on 11th November 2010 and about 80 trades in total. Great personal statistics.

It looks like we have ourselves the first thousand pip+ trader in our thread.

Please join me to congratulate red-dragon. There will be many readers dying to know how you trade only 2 hours per day. Hope you dont mind answering to their private messages.

I combed through some of your trades on the charts and I get the gist of how and when you might take the trades. It seems you took the information I provided and tailored to suit you better. Great job.

Well done!

Sincerely,

Graeme

P.S Good night everyone. Stay warm

[quote=pipEASY;4298515]

Red-Dragon - Thank you for submitting your results. Fantastic.

From what I can see on your excel. It looks like you use 0.05 and 0.1 lot size. Very good and sensible. Realized net profit @ $459.04 and unrealized profit @ $4127.89. You plan to close 4 out of 5 trades on monday and keep one. Good. First trade was taken on 11th November 2010 and about 80 trades in total. Great personal statistics.

It looks like we have ourselves the first thousand pip+ trader in our thread.

Please join me to congratulate red-dragon. There will be many readers dying to know how you trade only 2 hours per day. Hope you dont mind answering to their private messages.

I combed through some of your trades on the charts and I get the gist of how and when you might take the trades. It seems you took the information I provided and tailored to suit you better.

Unrealized Profit is $2919.00

Hello everyone! I must publicly thank Graeme for all his contribution here in FF. This thread is by far the most valuable thread I've ever seen on the internet concerning forex trading and believe me, I've seen hundreds of them.
As a daily visitor of FF, I have been following this thread from its beginning. I was reading every single word written here and gathering the most valuable information in my personal script. This way I organize valuable material for myself and I like re-reading it afterwards.

Finally I came with an idea to contribute a small humble piece to this thread. It might come handy to some of you, as it comes very useful to my way of trading when I am still having a steady job and sometimes I cannot be glued to the screen all the time.

I decided to post an EA that I had given developed months ago for slighlty different purposes, but then noticed it can be very useful also with milipede's way of trading. When I cannot monitor the market all the time I simply set either a pending order or enter 1st trade manually and leave it as it is. If price continues into my favour additional trades are opened, if not then SL saves my account. This way, eventhough I'm not monitoring the price movement, I might participate on market stronger and build additional legs that might bring thousands of pips in the future, while if this doesn't happen, I put only a small risk for something potentially much bigger. And all that, when I wasn't even close to the screen!!!



IMPORTANT:
I paid for the EA development, but hopefuly only to my bad luck, the person who coded it suddenly disappeared. Consequently, the EA hasn't been finished to my full requirements at that time, so some of the functions at its end do not work properly (partial close). PLEASE BARE this in mind!
People able to understand the code, please also take into consideration that I decompiled what I had at that time, that's the reason why variables in the EA have strange names.

With all this said, I must encourage you with the fact that I use EA on my live account almost for half a year and it works great for what I need.


WHAT DO I NEED?
I wanted an EA that manages my trades after I manually open 1st trade. I know many other EA's does that, but none of them is/was able to automatically open new trades after certain pre-conditions, and control a common stoploss (SL) for all the open trades.
Let me be more illustrative by giving you a simple example of how the EA works:

1a) I manualy open a 1st BUY trade @ 1.5000 with its magicnumber
1b) EA takes care of this trade's SL as predefined in EA's preset (it's hidden to the platform, but drawn as a red horizontal line on the chart)

2a) After a while price reaches 1.5020, when a 2nd BUY trade with a predefined lotsize is opened by EA
2b) EA takes care of both trades' SL as predefined in its settings. Now both trades have the same SL!

3a) After a while price reaches 1.5035 and a 3rd BUY trade with a predefined lotsize is opened by EA
3b) EA all the time takes care for SL, so does now. All 3 trades have a predefined SL set now.


EA continues opening as many new trades as predefined in its settings. As soon as market reaches SL, all open trades with the same magicnumber on one pair are closed!
For the needs of my previous trading style, I needed such SL logic and it's still fine now. However, if there is any coder willing to change this logic to setting SL to BE, please contact me to do this together.


RISK INFORMATION:
As I believe in math, it was very natural to me to do math/R:R calculations behind EA's settings in order to know how much risk is behind every step and where a totalSL must be placed in order not to increase my risk exposure.

Last few months I am using EA’s settings attached as a *.set file to this post (5 steps, max. 4 trades open, with the steps and SL levels defined in it). If there’s interest in knowing more about it, please say so and I’ll do my best to describe it more thoroughly.
I have changed lotsizes to all 4 trades to its minimum in order to prevent any greater LOSS to anyone here. Please use this EA firstly on demo account in order to understand it and only then put it live if satisfied with its performance.
I don’t take any financial profits/loss as a result of using this EA!
I published it with my good intentions to help other traders who cannot be glued to the monitor all the time, but want to establish more legs when market supports their action!


ATTACHEMENTS:
- VdP_EA_v1.0.mq4 (grid EA to manage your trades)
- VdP_EA_v1.0.zip (preset file that I currently use - 2011-01-09)
- DROP_PENDING_BUY.mq4 (pending BUY script with a magicnumber option)
- DROP_PENDING_SELL.mq4 (pending SELL script with a magicnumber option)

Thanks for above suggestion. Another point to be printed and stick on the wall.

Tq

Hello PipEasy, hello traders,

I just discovered this thread 2 days ago and I have to say that I spent most of my we reading it. I'm now at page 35....you are on page 200 or something.

I read in one of the thread on the first 35 pages that someone started collecting pipeasy messages in a PDF.
Did this tradition continued? it would save me a lot of time (and maibe a marriage )

PipEasy, I would like thank you in public. I will start tomorrow with a demo account to build my first millipede, hoping the info in the first 32 pages are enough.

I can only dedicate 1, 1 and half hour per day (night) to this, I hope it will be enough.

Thank you to all the traders for sharing your results/experience. They are valuable.

Best regards
Francesco

Hi Francesco - I bookmarked this post due to earlier requests, so quick and easy to place in the thread. The post provides the link to Eklavya's download page for a pdf of pipEasy's posts inclusive through the date of his offering. I don't believe it has been updated beyond that date. Hope this helps:

http://www.forexfactory.com/showpost...postcount=3512