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Sonic R. System

  • #17,921
  • Feb 25, 2011 3:03pm Feb 25, 2011 3:03pm
Hi PipHunter,
can you show me how to calculate max 13% of drawdown?
Thanks

Quoting pipphunter
Hi TAH

You have result of 70/73 winning rate and get +1300 pips per month, this result is very trader dream of. However, the huge drawback limit the ability turning those pips to money. Since you maybe only risk 0.5% of your equity per trade, therefore, if come to the month’s percentage return of your capital, that won't look that fantastic.
[size=3][font=Calibri]On the other hand, if you have 75% winning rate (which seems achievable for your ability with Soinc R) , reward/risk...
  • #17,922
  • Edited 6:28pm Feb 25, 2011 5:57pm | Edited 6:28pm
Quoting andrew1974
Hi PipHunter,
can you show me how to calculate max 13% of drawdown?
Thanks
Piphunter wrote:
"If you have 75% winning rate, reward/risk ratio at about 2.1, risk 3% to 4% equity every trade, limit the drawdown to max 13%. The result of %/capital return will be much better. "

Question:
if the goal is to limit the drawdown to a maximum of 13%, how do you calculate that?

Answer:
Piphunter is saying that the drawdown (fixed cost of open trades) should not exceed 13% of the Equity of the account (which changes as open trade prices fluctuate). There are some terms to deal with first, that appear in the MT4 Trade list -

Balance = value of account with no trade running
Equity = value of account with trade running, and may be higher or lower than the Balance
Margin = amount of Equity tied up in trade, the original cost of all opened positions. Think of it as "Cost".
Free Margin = amount of Equity not yet tied up in trade

Margin is simply your investment in, or Cost of your open trade(s). If a trade goes to profit, then your Equity is increased by the profit, and your Margin/Cost becomes a smaller % of Equity. If a trade goes to loss, then your Equity is decreased by that loss, and your Margin/Cost becomes a larger % of Equity. The % relationship between real-time account Equity and your static Cost of open positions is referred to in MT4 as "Margin Level" and can be mathematically expressed as.....

Margin Level % = (100 x Equity) / Margin

In words it becomes....Multiply Equity (Balance +/- profit/loss of running trades) by 100 and then divide by Margin (the Cost of running trades). Note that this Margin Level % will drop as.....
1. you enter more positions, increasing Cost/Margin
2. running trades increase loss, decreasing Equity
When the Margin Level % drops to 100% (ie, same value as Equity), all your trades are automatically closed by your broker.

Finally....
Still, how do we compute if our drawdown has reached 13% of Equity? We are looking for the relationship of the investment in, or static Cost of all open positions (Margin), to Equity (the changing sum of the account Balance +/- profit/loss of open positions. Mathematically it can be expressed as.....

Drawdown % = (100 x Cost) / Equity
or,
Drawdown % = (100 x Margin) / (Balance +/- Profit/Loss [of open positions])

The values for the terms used on the right side of the above equation are all provided at the bottom of the MT4 Trade list. As you can see in the above equation, as more positions are opened the Cost/Margin increases, which increases the Drawdown %. If open positions increase in loss, then the Equity is reduced, which also increases the Drawdown %.

I believe I have this all correct. However, if there is any error, I encourage another to correct this for the benefit of us all.

Regards,
-tah
  • #17,923
  • Feb 25, 2011 6:29pm Feb 25, 2011 6:29pm
My SonicR trade for EuCad

Placed sell stop @ 1.35540

+99 pips

TP= 4H support 2nd chart 1.34XX
SL= above the range high mentally
Attached Image(s) (click to enlarge)
Click to Enlarge Name: eucad.jpg Size: 116 KB
Click to Enlarge Name: eucad1.jpg Size: 109 KB
  • #17,924
  • Feb 27, 2011 8:53am Feb 27, 2011 8:53am
Quoting sonicdeejay
Bias: Bullish
Next stop: 1.384x. 1.40xx level
Resistance: 1.345x level

After hitting my predicted stop level 1.342x level, EU went into serious swing mood and created big pip swing till the end of the week..
It was only Friday, when it became to start bullish.
It ended with a bullish candle as the result and that made me change my trend bias on the pair...
http://www.forexfactory.com/attachme...1&d=1298212268

Sonic
Bias: Bullish
Next stop: 1.384x. 1.40xx level
Resistance: 1.345x level

After seeing a big turn around in last Tuesday.. I firmly believe that the pair is on the course toward 1.40xx level..
However, we had a pull back in last Friday, causing the candle ends with wicks on the both ends.. that can be viewed as the exhaustion of the bull thrust.

In summary, I am still slightly bullish in the pair with overhead resistance 1.386x and 1.404x..


Trade Safe..

Sonic
Attached Image (click to enlarge)
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  • #17,925
  • Feb 27, 2011 9:46am Feb 27, 2011 9:46am
Quoting traderathome
Piphunter wrote:
"If you have 75% winning rate, reward/risk ratio at about 2.1, risk 3% to 4% equity every trade, limit the drawdown to max 13%. The result of %/capital return will be much better. "

Question:
if the goal is to limit the drawdown to a maximum of 13%, how do you calculate that?

Answer:
Piphunter is saying that the drawdown (fixed cost of open trades) should not exceed 13% of the Equity of the account...
In my opinion, 13% drawback is a rule rather than calculation. 13% drawback means I have 4 loss trades in a row (risk 3% equity), it’s time to stop trading and think about what’s going wrong.

For every trader, there is ultimate mathematic model (AKA betting system), that can achieve the best financial outcome from their trading ability. This ultimate model will have the winning rate and reward/risk ratio balanced. This balance will be vary for all traders, as everyone’s ability and trading style are unique. You can have all trading record in Excel and run simulation to find out what betting system will get more. Before doing simulation, you have to make sure your trading performance is solid and steady. On the other hand, as TAH said, changing money management will affect you mental skill, it may push you out of comfort zone, and let the greed and fare dominate. So, It’s multi factors balance work, it takes time to polish.

regards
seeing through
  • #17,926
  • Feb 27, 2011 4:03pm Feb 27, 2011 4:03pm
green pips too all sonicerz ...

Attached Image (click to enlarge)
Click to Enlarge Name: enigma4x_sonic_r_gbpusd_27.02.2011_m15_crazy2.jpg Size: 270 KB


cheers enigma4x
enjoy my life ... and ride the waves - all what I do
  • #17,927
  • Feb 27, 2011 6:23pm Feb 27, 2011 6:23pm
UJ:

The H1 chart is used to point out clearly that recently the highest trading interest has been at the lows, hence buyers predominate. The M15 Dragon is displayed on this H1 chart to show that it won't take much PA to get the Dragon angled upwards. The H1 Trend aligns with the RgH target for the day, so the RgH area looks like a prime target candidate.

On the M15 chart, the PV study already shows spikes in trading interest at the early asian session lows, which again points to buyers predominating.

In conclusion, I would place this on a watchlist for a SonicR long setup today. I already have a long position in this from late Friday.
Attached Image(s) (click to enlarge)
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  • #17,928
  • Feb 27, 2011 6:38pm Feb 27, 2011 6:38pm
GU:

The PV study on the attached M15 shows sellers predominate. Firstly, it shows a high volume selloff candle from early session highs. Secondly, it shows that afterwards the price was repumped and then trading activity picked up again at the highs. This was followed by another selloff. This all points to sellers predominating.

The described PA has also created a WAVE for a SonicR short. And the last selloff activity created an EP. The Dragon is angled down and PA is below the Trend. However, this is just the early part of the asian session. Entry here might be deferred to an entry later during the London session. Between now and then, PA might not commit to a run down.
Attached Image (click to enlarge)
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  • #17,929
  • Feb 27, 2011 8:21pm Feb 27, 2011 8:21pm
I believe the swing for EU is done for now..
London wil bring the another clue..

Someone post EU 15m chart pls. Thx

In the middle of sea now..

Sonic
  • #17,930
  • Feb 27, 2011 9:04pm Feb 27, 2011 9:04pm
Quoting sonicdeejay
I believe the swing for EU is done for now..
London wil bring the another clue..

Someone post EU 15m chart pls. Thx

In the middle of sea now..

Sonic
Entered EU long @1.37247. reasons:
1. H4 up treding,
2. PA reached major support area, with unusual high vol.
this is NOT sonic R trade, i only risk 1/3 normal size.
Attached Image (click to enlarge)
Click to Enlarge Name: eu15 28feb.gif Size: 33 KB
seeing through
  • #17,931
  • Edited 9:55pm Feb 27, 2011 9:41pm | Edited 9:55pm
I am happy to announce that my "field test" version of the new indicator for 2011 is working. Forex Factory made some coding changes last week which I have become aware of and have incorporated. I do not know if they are done messing around with it, so I will delay reposting this new indicator for 2011.

As I stated in an earlier post, I deleted the post made last week to supply the 2011 indicator to Sonikers in the hopes that it would work when we saw that our previous SonicR FFCal Headlines indicator had stopped working. The 2011 version worked, but only temporarily because FF was continuing to make changes. When I saw that the 2011 version had also stopped working, I pulled the post.

We cannot be sure that FF is finished changing code and that the new 2011 indy will remain ok. So, for the time being, I have incorporated the current changes into the indy released on 12-01-2010, and it is attached hereto.
Attached File(s)
File Type: mq4 SonicR FFCal Headlines.mq4   46 KB | 1,263 downloads
  • #17,932
  • Feb 27, 2011 10:20pm Feb 27, 2011 10:20pm
Quoting pipphunter
Entered EU long @1.37247. reasons:
1. H4 up treding,
2. PA reached major support area, with unusual high vol.
this is NOT sonic R trade, i only risk 1/3 normal size.
Piphunter, H4 is not up trending. It has been ranging for over a month. And it looks like we now have a Double Top with a strong Bear candle coming down off the second and lower of the two.

On M15 neither was there unusually high volume at the support area. If you look closer, you will see the high activity was on the selloff starting at the price region where the candle begins. This is confirmed by looking at the M1 chart. Yes, price is being worked up again, but on decreasing volume! Therefore, we might expect high volume again, once the price is at whatever high area they are taking it to, and also once they start selling it off from that high area.
Attached Image(s) (click to enlarge)
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  • #17,933
  • Feb 27, 2011 10:59pm Feb 27, 2011 10:59pm
Quoting traderathome
Piphunter, H4 is not up trending. It has been ranging for over a month. And it looks like we now have a Double Top with a strong Bear candle coming down off the second and lower of the two.

On M15 neither was there unusually high volume at the support area. If you look closer, you will see the high activity was on the selloff starting at the price region where the candle begins. This is confirmed by looking at the M1 chart. Yes, price is being worked up again, but on decreasing volume! Therefore, we might expect high volume again, once the price...
HI TAH

thanks for pointing out these. I noticed the possible doulbe top, and will be very caution @ 1.382x. the PA may resiste or break at this area, either way, will be big run. (normally i do look at this at D1)

please see following chart, it's how i see the up-trend, base on very classic Dow theory.
And the M15 chart, the vol is a bit different, mine is FXCM (i think they have bigger clients base, so the vol data maybe more reliable), The Pin bar in H4 is my biggest reason for the entry

I entered early in order to get a better reward/Risk ratio, so i can risk smaller in this critical time. it kind of balance i try to achieve.

regards.
Attached Image(s) (click to enlarge)
Click to Enlarge Name: eu h4 28feb.gif Size: 25 KB
Click to Enlarge Name: eu m15 28feb 2.gif Size: 25 KB
seeing through
  • #17,934
  • Feb 27, 2011 11:17pm Feb 27, 2011 11:17pm
Quoting pipphunter
HI TAH

thanks for pointing out these. I noticed the possible doulbe top, and will be very caution @ 1.382x. the PA may resiste or break at this area, either way, will be big run. (normally i do look at this at D1)

please see following chart, it's how i see the up-trend, base on very classic Dow theory.
And the M15 chart, the vol is a bit different, mine is FXCM (i think they have bigger clients base, so the vol data maybe more reliable), The Pin bar in H4 is my biggest reason for the entry

I entered early in order to get a better reward/Risk...
Now you can see further what I pointed out. Now you see the higher activity again, AFTER they pumped the price back up! This is sure sign that sellers predominate. Doesn't mean price won't be pumped even higher, but it does mean that the price manipulations are by and for sellers.
Attached Image (click to enlarge)
Click to Enlarge Name: # 641.gif Size: 33 KB
  • #17,935
  • Feb 27, 2011 11:20pm Feb 27, 2011 11:20pm
Quoting pipphunter
Entered EU long @1.37247. reasons:
1. H4 up treding,
2. PA reached major support area, with unusual high vol.
this is NOT sonic R trade, i only risk 1/3 normal size.
Nice catch..
T vol could be considered stopping vol...
My bias is UP too..


Sonic
  • #17,936
  • Feb 28, 2011 3:22am Feb 28, 2011 3:22am
Quoting sonicdeejay
Nice catch..
T vol could be considered stopping vol...
My bias is UP too..


Sonic
Thanks Sonic! I learned a lot from this thread. you, TAH, and all sonicers' contributions give me great help in polishing my trading skill.

thanks guys
seeing through
  • #17,937
  • Feb 28, 2011 3:26am Feb 28, 2011 3:26am
Quoting pipphunter
Entered EU long @1.37247. reasons:
1. H4 up treding,
2. PA reached major support area, with unusual high vol.
this is NOT sonic R trade, i only risk 1/3 normal size.

closed 50% +92 pips, reward/risk 3.68:1.
set stop at 1.3756, see if it will fly.
regards
Attached Image (click to enlarge)
Click to Enlarge Name: eu m15 28feb 3.jpg Size: 119 KB
seeing through
  • #17,938
  • Feb 28, 2011 3:51am Feb 28, 2011 3:51am
Quoting traderathome
Now you can see further what I pointed out. Now you see the higher activity again, AFTER they pumped the price back up! This is sure sign that sellers predominate. Doesn't mean price won't be pumped even higher, but it does mean that the price manipulations are by and for sellers.

Still manipulation? Still sellers dominate? I think you should stop speculating and trade skillfuly like you know how.

You said it best yourself:
If I scream, "It is twelve! It is twelve!", I will be right twice a day!)
  • #17,939
  • Feb 28, 2011 6:10am Feb 28, 2011 6:10am
Quoting Pips 4 All
Still manipulation? Still sellers dominate? I think you should stop speculating and trade skillfuly like you know how.

You said it best yourself:
If I scream, "It is twelve! It is twelve!", I will be right twice a day!)
It was a nice run/pump/manipulation back up.....and totally consistent with all I have been saying about how the PPMs are playing this one since the first of the year. As you can see, they have pumped it back to the last high ground. The story isn't over. And the ending is becoming even more clear with each such manipulation.

I am glad you made pips on your non-SonicR play. Now people will have another to criticize for such trades, not just me! And I am glad Sonic commented on your non-SonicR trade with encouraging words. That should put to rest any doubt about that issue.

However, I am continuing to stick to the short side on this one.
Attached Image (click to enlarge)
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  • #17,940
  • Feb 28, 2011 6:24am Feb 28, 2011 6:24am
Quoting pipphunter
Thanks Sonic! I learned a lot from this thread. you, TAH, and all sonicers' contributions give me great help in polishing my trading skill.

thanks guys
Keep it up..

http://www.fightersgeneration.com/ch...imaru-auto.gif

Sonic
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