After you read rules you would understand why this strategy came to my mind while you were talking pyramiding. it's entries rules, trailing stops and how they are moved all makes good sense for pyramiding purpose, of course if this strategy really has an edge.
go for it:
http://www.forexfactory.com/showthread.php?t=215432
Take your time reading it.
It will open your eyes
rgds
Awesome stuff, thanks for this!
Cheers,
Adrian
Thank you for your comments, you are very kind.
I believe that fundamentals if nothing else help to build a case towards a trade. I wouldn't trade it in isolation but it may help me with regards to position sizing etc.
I second that..Great stuff you've got going over there, keep it comin!
Cheers,
Adrian
I have no doubt you do
I have not a bad knowledge of what price does so, I simply know that I am on my own cannot do it because I lack coding skills for this vast project. I could have done it only if paired with some great coder.
I also think that the only way to trade this style of MM is at least on daily. 4H price action is just not for this type of MM.
MM and pyramiding are different beasts and should be treated individually.
Together, if "well lubricated", can produce ridiculous returns.
But like custos says not many do it and it is in fact hard to do.
If you want to trade by scaling you need solid rules. Rules that will make you emotionless. You need to have a clear understanding of WHAT IS the edge your exploiting.
Some think pyramiding is wrong. I say they dont grasp it fully.
Pyramiding into a WINNING trade, is what pros do.
Averaging down or adding into a lossing trade, is what losers do (IMHO).
Big difference.
Totally agree with you. 
I think with regards to the psychological aspect it really comes down to how the trader manages the position if you will.
1.- You can open trade 1, move to break even when price indicates it, open trade 2, move to break even, open trade 3 and so on and so on.
The advantage here is that you can accumulate huge returns from one trade.
The downside is that if it flops you breakeven, or garner a small loss if that.
2.- You open trade 1, move to break even and partially close when price shows weakness per your rules. On a pullback, you open trade 2 and so on and so on.
The advantage is that *mentally* the trader is more comfortable as he gathers SOME % from his trades.
The downside is that he will miss the huge bomb where you may get 30%-100%R.
I think the key here is to first know what the traders limits and then decide on the above options.
This is just from my own experience and may be different to yours or others.
May i ask you what are the conditions for you to only be getting 10% wins if possible?
Is it based on your rules or the way you pyramid? what TF are you testing this on?
cheers
pip
I think with regards to the psychological aspect it really comes down to how the trader manages the position if you will.
1.- You can open trade 1, move to break even when price indicates it, open trade 2, move to break even, open trade 3 and so on and so on.
The advantage here is that you can accumulate huge returns from one trade.
The downside is that if it flops you breakeven, or garner a small loss if that.
2.- You open trade 1, move to break even and partially close when price shows weakness per your rules. On a pullback, you open trade 2 and so on and so on.
The advantage is that *mentally* the trader is more comfortable as he gathers SOME % from his trades.
The downside is that he will miss the huge bomb where you may get 30%-100%R.
I think the key here is to first know what the traders limits and then decide on the above options.
This is just from my own experience and may be different to yours or others.
May i ask you what are the conditions for you to only be getting 10% wins if possible?
Is it based on your rules or the way you pyramid? what TF are you testing this on?
cheers
pip
Let's talk about robustness.
The more I backtest, the more I realize what is really robust over a really long period of time.
And unfortunately it is a strategy that is psychologically very very hard to do. But it seems to be the most robust of all. Also the compounding effect is very limited unfortunately.
Here we go: PYRAMIDING.
From what I found, the average winning percentage of trades is only 10%. Obviously the winners by far outtake the losers. R:R's from 1:20 to 1:500 are very possible.
Since it's so hard to do, probably most...
I recalled this strategy because I know you do not use fixed take profits. Neither this strategy, stop is a trailing ATR stop that being moved as price moves.
What i learnt is that:
1.- fixed TP can limit your returns considerably.
2.- If you want to TP why dont you just do it manually ONLY WHEN price tells you, instead of on an arbitrary RR?
3.- We never know what price is going to do, hence, why limit the potential returns?
I used to get trades that once hit my TP just bombed and carried on.
If you are disciplined and have good clear *OBJECTIVE* rules, then IMHO i would simply let price tell me when to get out.
my 2 cents
hope it helps!
- #10,108
- Jan 9, 2011 9:57am Jan 9, 2011 9:57am
- Joined Dec 2006 | Status: Trader | 3,852 Posts
Totally agree with you.
I think with regards to the psychological aspect it really comes down to how the trader manages the position if you will.
1.- You can open trade 1, move to break even when price indicates it, open trade 2, move to break even, open trade 3 and so on and so on.
The advantage here is that you can accumulate huge returns from one trade.
The downside is that if it flops you breakeven, or garner a small loss if that.
2.- You open trade 1, move to break even and partially close when price shows weakness per your rules. On...
10% winning trades EXCLUDES all b/e trades. I know, most are counting them into the winnings, but I prefer counting them to the losers, or giving them an extra category. The real winners are really only 10%.
Well, concerning the conditions, basically it is just a simple mechanical trend following methodology.
I always prefer to first test out "concepts", and if those concepts are robust enough for mechanical trades, I can include later on S/R and PA and what not.
I tested the daily tf.
Ok i see.
I sepparate them into winners, losers, be's, but thats just me.
So you say 10% winners, then the rest a mixture of b.e + losses. ok got it.
Im noticing that as long as one can keep the concepts mechanical, then when combining p.a + objective rules one should be ok.
Im still learning each day but im definetely realizing that the more objective my method, the better for me.
I use a "land in the sand" concept, similar to what crucialpoint talks about.
Then i apply concepts from bill williams (alligator....).
And finally a touch of price action, a clearly defined set of objective rules, and discipline (lol).
Something im really getting into is that of defining "scenarios" for price action and i write them down as im trading.
i.e. say im just entering on a short pullback.
price can only do 3 things, it goes up/down/sideways.
What will i do IF, price goes sideways for x time/bars?
Are we also at a sessions lunch period?
What will i do IF, price goes down?
if price does xyz then i will ....
What will id do if price goes up against me? Where is my limit before pulling out?
These are just some things that have and are helping me in evaluating price and also more importantly in becoming disciplined with my trading approach.
So in essence a mechanical strategy with solid clear objective price based rules.
And a good dose of beginers luck lol!
I sepparate them into winners, losers, be's, but thats just me.
So you say 10% winners, then the rest a mixture of b.e + losses. ok got it.
Im noticing that as long as one can keep the concepts mechanical, then when combining p.a + objective rules one should be ok.
Im still learning each day but im definetely realizing that the more objective my method, the better for me.
I use a "land in the sand" concept, similar to what crucialpoint talks about.
Then i apply concepts from bill williams (alligator....).
And finally a touch of price action, a clearly defined set of objective rules, and discipline (lol).
Something im really getting into is that of defining "scenarios" for price action and i write them down as im trading.
i.e. say im just entering on a short pullback.
price can only do 3 things, it goes up/down/sideways.
What will i do IF, price goes sideways for x time/bars?
Are we also at a sessions lunch period?
What will i do IF, price goes down?
if price does xyz then i will ....
What will id do if price goes up against me? Where is my limit before pulling out?
These are just some things that have and are helping me in evaluating price and also more importantly in becoming disciplined with my trading approach.
So in essence a mechanical strategy with solid clear objective price based rules.
And a good dose of beginers luck lol!
10% winning trades EXCLUDES all b/e trades. I know, most are counting them into the winnings, but I prefer counting them to the losers, or giving them an extra category. The real winners are really only 10%.
Well, concerning the conditions, basically it is just a simple mechanical trend following methodology.
I always prefer to first test out "concepts", and if those concepts are robust enough for mechanical trades, I can include later on S/R and PA and what not.
I tested the daily tf.
- #10,110
- Jan 9, 2011 10:33am Jan 9, 2011 10:33am
- Joined Dec 2006 | Status: Trader | 3,852 Posts
Ok i see.
I sepparate them into winners, losers, be's, but thats just me.
So you say 10% winners, then the rest a mixture of b.e + losses. ok got it.
Im noticing that as long as one can keep the concepts mechanical, then when combining p.a + objective rules one should be ok.
Im still learning each day but im definetely realizing that the more objective my method, the better for me.
I use a "land in the sand" concept, similar to what crucialpoint talks about.
Then i apply concepts from bill williams (alligator....).
And finally a touch...
good luck !!
I know. Read reminiscence of stock operator? Or any of the market wizards books? Or O'Neals "how to make money in stocks". They all pyramid. I am not sure it is possible to be richly successful in any trading without trend exploitation and pyramiding(i dont care what the lad claims otherwise). I am reading and re-reading them again to nail pyramiding down.
I have already the entry and exit down. It is the pyramiding that i am still rusty on.
If you do decide to pyramid make sure that each trade be looked at individually.
Dont add-on unless your previous trade is at least break even.
I know its common sense but it is still important to apply.
Also dont focus on the return but on the risk at hand. Focus on reducing risk and protecting capital.
Many trades will be breakeven if not a small loser. But if you focus on protecting capital then eventually your winners will turn up.
Take this with a pinch of salt since it is my own beliefs about the market.
Hope all goes well!
