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Nb 1.0 trend trade system

  • #681
  • Edited 7:17am Jan 16, 2011 6:54am | Edited 7:17am
Quoting nanningbob
"Here is the problem by example. In one simulation, the account was sitting at $2235. There was an A+++ trade, but it had a very large stop from the last swing, a stop of 151 pips. On Bob's system, he would trade with 2.2 mini lots on this trade, and that would generate a loss of $332. That's a loss of 14.8% on a single trade!"

Not quite sure what figures you are using but if you trade ten cents per thousand you would be only playing with twenty two cent lots. A 151 pip loss would only be $33.22 hardly threatening anyone's account. ?????...
I misunderstood. You are trading lots 1/10th the size of what I thought. Correct me if I'm wrong, but when you say you are trading 10 cents/ thousand, that translates to one micro lot. (Standard lot moves 100,000 units, mini moves 10,000, and micro moves 1,000).

If so, I will edit my posts with the correct numbers, which will be quite different. Edit: I already changed the two posts above. Of course, the differences are extremely dramatic. Ruin now would take a decent streak of losing trades over a fairly large number of pairs - say 5 trades series in a row, all losing, with about 10 pairs in each series, and with fairly big stop sizes. In a streak like that, anyone who did not either adjust lot size, or the number of pairs traded, would probably deserve the ruin.
  • #682
  • Jan 16, 2011 11:17am Jan 16, 2011 11:17am
Duffy- I have been following your back test studies with great interest. I have a couple of questions and an observation.

Is the formula you are using for expectancy 1 - (percent winning trades * average win) – (percent losing trades * average loss) ?

When you calculate your 2% risk per trade. Is this the $ per pip times the stop loss pips times the lot size?
2% of $1,000.00 is $20.00 .
A 50 pip stop loss at $0.10 per pip with .04 lot would be $20.00 risk.

Bobs money management of $0.10 per pip per $1000.00 is conservative. For example on pairs denominated less than a dollar (AUDUSD @ .9848) you are allocating $1000.00 to buy $984.80 worth of AUDUSD. The effective leverage is less than 1.

Looking at your results for the V1 Trend trades in your post #674
$1504 is about 1.34% per month average growth on .01 lot per $1000
$5504 is about 5.65% per month average growth on about .04 lot per $1000
$32907 is about 29.85% per month average growth on .1 lot per $1000

A 10x increase in leverage yields a 22x increase in return and also as you point out in losses. 14.8% versus 1.48% losses on a single trade. The point of this is that the maximum possible return in a series of trades is always the point at which one more losing trade would destroy the account. We never want to get that close to that edge.
  • #683
  • Jan 16, 2011 12:31pm Jan 16, 2011 12:31pm
Quoting Tanstaafl7
Duffy- I have been following your back test studies with great interest. I have a couple of questions and an observation.

Is the formula you are using for expectancy 1 - (percent winning trades * average win)...
For expectancy, I first figure out the Reward:Risk for each trade. I then take the average of that number.

2% Risk Per Trade means that if you are stopped out you lose 2% of your equity. So you are correct. Account * 2/100 = LotSize * PipValue * StopSize

I don't trust the accuracy of your monthly figures. My totals result from risking 2% of the account each trade. That means that they automatically compound. A straight monthly average does not capture what occurs.

If I wanted to figure a monthly return, I would use the following formula:

(1 + (E * %R/100))to the Nth power.

Sorry for the clumsiness. I'm not sure how to express the power in this format. In this formula E = expectancy; R = %Risked; and N = Number of trades in the period.

So, using our test, you end up with about 8 trades in a month. The expectancy is .37, and the %Risked is 2%. Thus

(1 + (.37 * 2/100) to the 8th power = 1.06, or a 6% return per month.

Now, if you could trade with the same results over 10 pairs, you could maybe generate 80 trades/month. But that would be too risky, because you would probably often be carrying as much as 8% risk at any one time. It would probably be more realistic, at 2% risk, to limit the trades to about 40/month. That way, you could probably make sure that you never had more than three live trades at once. With that assumption, and this expectancy, you should see returns of more like 34%/month.

Go one step further, suppose you wanted to take full advantage of the 80 trades per month that were available, and still limit your risk. You could maybe reduce the risk/trade to 1%, which would let you carry say 5 -6 trades at a time, and thus realistically get to 80 trades in a month. This might also have the effect of limiting your risk through diversification. With these assumptions you would still make 34%/month. (You would make slightly more with the 80 trade/1% strategy, it actually comes down to 34.37% versus 34.30%)

Given these options, which would you choose?
  • #684
  • Jan 16, 2011 4:32pm Jan 16, 2011 4:32pm
Quoting duffypratt
5) All of the above, which is basically a variation on V.6 of Bob's countertrend system.
Does this mean you take every signal if price goes outside the TMA and cross the SMMA(5)?
  • #685
  • Jan 16, 2011 4:46pm Jan 16, 2011 4:46pm
My figures are based on a recovery type system but also because too many new traders trade too high lot size to account size before they learn how to do this. They are not ready for the surprises that come along the way and the natural DD that happens to every account. They think its the system but there is no system that matches the market all the time. That is why I added the money management paper. I wanted to show that you could make it to a million dollars trading smaller lot sizes. The question is are you willing and have the patience to trade that way??
  • #686
  • Jan 16, 2011 5:45pm Jan 16, 2011 5:45pm
Quoting Mediator
Does this mean you take every signal if price goes outside the TMA and cross the SMMA(5)?
Yes. With the additional requirement that you don't take a signal if there is already a trade open. Since the stop is the prior swing high/low, its possible for you to get into a trade, then have price come outside the bands again without hitting the stop, and then go back again to cross the 5. That would generate another signal, but you would not take it because you are already in a trade.
  • #687
  • Edited 8:55pm Jan 16, 2011 8:30pm | Edited 8:55pm
First possible trade for today could be the AUD/CHF. It is developing into one at this point.
Attached Image (click to enlarge)
Click to Enlarge Name: aud chf trade.gif Size: 45 KB
  • #688
  • Jan 16, 2011 9:57pm Jan 16, 2011 9:57pm
there is the opposite at my template. may be it is a problem with the broker.
Attached Image (click to enlarge)
Click to Enlarge Name: audchf.gif Size: 12 KB
  • #689
  • Jan 16, 2011 10:28pm Jan 16, 2011 10:28pm
A95 and Nann,

Looks like Nanningbob is reviewing the information on the 4H chart. A95 you are looking at the 1h chart unless I am missing something which I can tend to do.
  • #690
  • Jan 16, 2011 10:42pm Jan 16, 2011 10:42pm
Quoting A95h
there is the opposite at my template. may be it is a problem with the broker.
Different brokers use different time periods and start and close times. For example NZ brokers start 2 or 3 hours earlier than USA brokers so they have more candles now than USA brokers have. Some MT4 brokers run their platforms GMT+2, GMT+1, and so on. So you may get a signal slightly different than others. Your signal is a no trade at this point. Either way we are in a ranging pattern so price will price go up and down until something makes price move out of the range.
  • #691
  • Jan 16, 2011 10:44pm Jan 16, 2011 10:44pm
Quoting CUtiger95
A95 and Nann,

Looks like Nanningbob is reviewing the information on the 4H chart. A95 you are looking at the 1h chart unless I am missing something which I can tend to do.
I will continue to use the Tan colored screen for 1H trades. 4H trades I will change the color so as not to confuse
  • #692
  • Jan 16, 2011 10:48pm Jan 16, 2011 10:48pm
You are right. I have the same signal like you at H4.
  • #693
  • Jan 17, 2011 12:20am Jan 17, 2011 12:20am
Dang I do have the 4 hour chart. SHeeeeeeeeeeesh. skip that one.
  • #694
  • Jan 17, 2011 1:02am Jan 17, 2011 1:02am
I went through the pair again, this time going to Break Even once price hits the opposite channel, and then exiting either at break even, or when price returns again to the original TMA channel. (Long trade, when price hits top channel then set to BE, then close at BE or when price comes back down to bottom channel).

Results:

242 Trades
82 Winners (34%)
44 Break Even (18%)
116 Loser (48%)

Expectancy - .50

With 2% per trade risk $1000 grows to $8506

This is more or less in line what I found earlier with a holding strategy. Fewer winners, but much greater returns. Expectancy is .5 instead of .37, which is a pretty huge increase. As a result, the growth is to $8500 instead of $5500. None of that is very surprising.

I also kept track of trades in relationship to the 48. Here was the big surprise.

In the A+++ type trades, where the 240, the 48, and price all line up neatly, the expectancy dropped to .19. Remember it was about .60 with the normal take profit.

Conversely, the expectancy of the trades where price is between the 240 and the 48 jumped from .25 to .68. Those are huge and startling differences.

Here's what seems to be happening. On the A+++ trades, the trend has already run for a while. Price jumps the channel, and then tends to come back to break even. The other trades, however, come either at the start of trends, or after a big correction. Thus, they are ripe for huge moves.

This pattern suggests that it might be worthwhile to try to hold onto the trades where the price is between the 240 and the 48, and to exit earlier on the trades where price is beyond both the 240 and the 48. That's about the opposite of what I would have expected, but it's what the numbers show.
  • #695
  • Jan 17, 2011 5:15am Jan 17, 2011 5:15am
In traditional Radio style I made my own template based off the NB system. No disrespect... I love the 4h chart and am thinking I can trade with the trend out to the extremes and counter with the 5.3v back some and trade both ways. I also adjust the take profit to a 4 shift on the 4h for longer runners with the trend...will see how it goes. I have made over 800 pips with the 5.3 since 1/6(live). Even though I am in the US I can not abandon that system.
http://i688.photobucket.com/albums/v...stronaut/1.gif
  • #696
  • Jan 17, 2011 1:18pm Jan 17, 2011 1:18pm
Quoting duffypratt
I went through the pair again, this time going to Break Even once price hits the opposite channel, and then exiting either at break even, or when price returns again to the original TMA channel....

Great stuff. You must have posted this kind of stuff 2 dozen times here.

Why don't you try making a few trades and talk us through them.
rat
  • #697
  • Jan 17, 2011 2:07pm Jan 17, 2011 2:07pm
Quoting rattyo
Great stuff. You must have posted this kind of stuff 2 dozen times here.

Why don't you try making a few trades and talk us through them.
I'm extremely close to going live. I did some testing on V.6 of the counter-trend trade system. Finally, I decided against trading it. The main reason for my decision was my personal discomfort with the recovery system. Even with enough leverage, the recovery system didn't appeal to me because it did not clearly define risk before putting on a trade.

The new system, I think, better suits me. But, as I said before, I won't trade a system, or even a pair within a system, without first personally testing it, and without arriving at my own understanding of how it works. I'm almost there now.
  • #698
  • Jan 17, 2011 3:01pm Jan 17, 2011 3:01pm
Quoting duffypratt
I'm extremely close to going live....
Duffy...thanks for all your hard work. I and no doubt others have learned a lot from you.

Looking forward to how you actually trade.

Cheers,

Freddi
  • #699
  • Jan 18, 2011 4:04am Jan 18, 2011 4:04am
I've read through the entire manual but still have some queries.

1) there isn't any hard rule on which perioud where you can use this right? So what is the recommended time frame one should use?

2) I still am confused on what part does the 5MA plays in deciding our entry. Say for example the 240MA crosses the TMA center line. So how do we use the 5MA line?
  • #700
  • Jan 18, 2011 4:54am Jan 18, 2011 4:54am
Quoting orionhan
I've read through the entire manual but still have some queries.

1) there isn't any hard rule on which perioud where you can use this right? So what is the recommended time frame one should use?
It started out as a H1, Nanning added the H4 because of his understanding of that tf - still a few of us are trying to get the correct H1 setup - duffy seem to have something going, I'm following suite.

2) I still am confused on what part does the 5MA(5x5) plays in deciding our entry. Say for example the 240MA...
Hope this helps
Buy
*TMA > 240 MA
*5x5 < mid TMA
*price < 5x5
*activate 5x5 buy ea
Sell
*TMA < 240 MA
*5x5 > mid TMA
*price > 5x5
*activate 5x5 sell ea

5x5 is the trigger for the entering a trade.
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