The System II (Yes with irony)

1st trade of the morning

I´m with you on this one.

Dear traders!

I want to eleborate a little more about this simple trading approach.

You know - finding feb2865's threads was changing my whole life, because I can make money since that time just from my house. I have no need to go somewhere to find job. In fact - I have other job, I am a teacher - but that's the other story. the moment is - even when I coudnot get my money from our government as a teacher - I still could get it from trading.

I know what you feel when you see posts like this one of me... You think - "Ah! This guy is telling us something abstract, not about business... etc"...

Well. Back to business. I will try my best to explain you HOW TO TRADE THE SYSTEM II. Feb did change my trading's life. I will try to do the same with you....

P.S. - if someone is not agreeable with me - it is your Rigth! But - the idea for me is not to argue with someone. Remember - I am making my money. If you do not want to listen, or you think you are smarter - it is your problem, Not mine. Thanks.

BRB.

First at first.

I like to explain in my manner, so - please, sorry if my explanation would be something strange... lol.


At the beginning of this thread - you can see the first post and the first chart. At that chart we can very clearly see... what? - Some sort of move up. Yes? Not range, not move down. No need to be a super-mega-pupper-technical analyst to tell that the market is going up...


Please. Tell me (or yourself) - do you see the market is going up at that first chart????? This is very important! This is the core of this method.


One could tell you here a very long story about what is market, how to trade market etc. i would not. My idea here is to tell you about this method. That's it. Everything else will come with experience.

So... no one is capable to tell for sure where the market will go the next second.... But there are some tricks there...


I will continue in one or two hours. just another 2 or 3 posts and you will get the idea. I promise!


BRB.

...

So... no one is capable to tell for sure where the market will go the next second.... The market is just collective state of mind. To be profitable you must have some things: 1) you have to have some sort of REGULARLY REREATING market behaviour; 2) you have to know how you would manage your risk; 3) and you jave to know how you would manage your trades.


About market behaviour.

Look... We do not know - if the market will go up, down, or sideways next minutes. Right? We ould look at charts for weeks, months, years, but we will still not have a clue where the market will go next second. If somebody like to predict market's moves - welcome! But - you probably did hear a lot of sad stories about traders who did like to predict the market. Of course everywhere are exceptions... But... Ok.

If you will accelerate your car up to the very fast speed - could you then stop it just in one second? Or your car will need to have some time and distance to down its speed? Ah? (This was metaphor).

What is reading the market? - If you will look at 5 min TF charts back in some months - you will notice that very often (not every time - trading is about possibilities, remember this!) after we had some sort of strong move up or down - there would be a continuation of that previous move after the pullback (after some rest)... Got it?

This is like a .... centrifugal move. Hope - there is no need to explain you what it is. By the way - here is one guy (or girl - not sure) who did talk a lot about "go with the flow"-thing. The moment is - for every particular method this would ve a little different thing. In our case "go with the flow"-thing is - we hold that trade as long, as the market is go in our favor. So - if the initial impulse move was up, and we did buy afer the pullback - we need to stay with that trade as long as the market is going up... Why the hell should we hold that trade ir it will go down? No sence! Right? (I hope you get this...)

So - in our case, for this method, reading the market is - YOU HAVE TO LEARN HOW TO FIND EARLY THAT FIRST INITIAL MOVE. If you will find it after the fact, I mean - after the pullback and continuation - then it is too late to be excited. The bus is gone for now. lol. But you will train your naked eyes to find that initial impulse (centrifugal - call it like you want) move in time, then look for the pullback - then you would be able to squeeze the market very often.

If you will study your charts very careful, you will sart to understand that one cannot predict the market, but one can make logical assumption, that if the market was starting to go up or down in anger (impulse, centrifugal move) - then there is a BIG POSSIBILITY that the marke twill follow that move after the some sort of little rest (pullback).

And - if you trade this method - your READING THE MARKET is - finding initial impulse moves. Ranges are irrelevant for your trading, at least this time...


BRB.

In trading you just have to have some tricks, and common sense.

- This is my opinion, but please, do not take it to the heart. I could be worng in my opinions.

Your trick here is..... What? - Impulse move! You do not know how to predict market. But you know - centrifugal moves will go some distance for sure before it will stop. And - once you spot your impulse move - be ready to trade! No second guessing... No indicators. Just trade that move.


Common sense... You know in which direction you did take your trade. So - you have to learn how to not giwe away your profit up to the market. Again - common sense tells you - if you was buyer, and the market did change its direction from up to down - you just have to go out if the market with your already gained profit. Do you agree - this is just common sense?

I hope I did help for someone with my previous posts.




Now... about "go with the flow"-thing.... the best explanation of this is of course one of the posts of feb2865. I will paste it here in this post...
I will make bold, italic, or underline text - to show how my understanding of this...
_______________________________________________________________

Post 538 - is the bible for Expectancy ("go with the flow")

I have some interesting questions about exits/limits… etc... rule of 20… all that

20 ( or any number) stop loss is what guru's consider a "hard stop"... it's an insurance against a catastrophic move against your position.

Although we're trailing that stop, if you see the market moving like 15+ pips in your favor and all of the sudden it gets down to 6, 5, 4 back... do me a favor and press the panic bottom... please!!! Do this as many times as
you see it happening and I promise you will get a runner very soon!

Don't let a winner turn into a loser... don't "hope" that the market will turn back on your side......never do that.

You don't know what the market it's going to do next......

Remember! You're "guessing" that the market will move that way, more often than not... that's pretty much the end of all technical (and yes baby, fundamental) analysis...if anyone tells you a different story, consider it a
"snake oil" tactic.

I've been conditioning your mind since the get-go... because losing is part of this business......you will lose
I lose a lot.....I "test" the market a million times...but I assure you, I get a runner pretty often.

Please look at me when I am talking to you....Don't get distracted
I've been in this business for a long time for two reasons:
1) I don't take the market for granted - I don't "hope" that my magic "system" will come
back and save me from the chop monster.
2) I give a reasonable chance to my position...

Explaining # 2 - Ok....

I have "expectancy " that the market will move on my side within a reasonable time frame.. . at a reasonable "speed" AKA momentum... if that doesn't happen... my ass is on the line... what would I do..."hope"? …"wait"?... no sir... I have no reason to be holding
that position…


I have in my mind a pre-conceived way of how the market “ should” perform, or I just close the trade and wait for the next one. I give no quarters.


Daytrading is a cruel environment. You need some sort of an "attitude"... be cocky… arrogant.... but humble with your fellow trader and family…


Consistency is the crux of every trader.....you get discouraged…depressed...you are hoping to make it so you
can quit your job etc


Take note of this... no system... no strategy... no fibo's... stochs, Big
Mac… will EVER in your whole life as a trader, give you consistency.
You must create that… it's in your hands... how you learn to manage
your trade it's the ONLY route to consistency... engrave this in your
mind.


Your job is to cut that loser short, no matter what. Don't worry about how many times you'll have to cut that loser, at the end you'll get a runner.
Your job is simply to preserve your capital. Eventually, you'll be compensated.


"So...Feb, I don't like your idea because I will leave some money on the table"
Ok I see the problem...this is what we'll do
so you were shooting for 20 and you only got 5… ok I'll make you a deal
you give me those 5 pips in exchange for -12 lose pips from your trailing stop.
Deal? - Of course not.

_______________________________________________________________


Hope - you got what it is all about...


BRB.

Now....

We did talk a lot about the entery (after an impulse move). By the way - I am not going to just copy here everything from the start of the thread. you have to read it for your own. Just at least first 50-100 pages.

The art of trading get from the EXIT of the trade....

Again - common sense tells us - if the market is going a little in our favor, we should to move our initial stop-loss a little, to decrease our risk just in case.
How to do it? Mechanically? Intuitively??? - I do not know. you shoud chose it for your own - how you going to trail you SL.But I assure you - after some time of the demo-trading (learning) it will click in your head how to do it. How is comfortable for you. But... this is about art for sure,

I do not remember the number of that post, but there is in the thread one post where feb2865 told me that the trading is like - SURFING! Your job is just to wait for the wave, and try to ride that wave as long as possible.
Very true these words are about The System II....

Listen people... so lot discussion is here about this simple and little trading concept. The System II is just like framework for you to trade. Everything else you have to decide for your own. For example - if you like to get profitable trades more often - then chse your profit target for at least 1:1 risk:reward. Or just put your TP at 20 pips everytime when you have your trade. That way you will have your profitable trades more often, than if you would like to get 50 pips form the trade. If you chose to put 20 pips TP every trade - then you just have to adjust your load based on numbers of pips in the pullback to risk the same amount of money every trade....


I have telling you a lot about The System II method. At least - what it is about. I could not to trade for you, and this is because you have to put your brain in motion and start to think how would you can to implement this trading concept in your daily job (trading).

Feb2865 has given us an idea - how and when we could have consistently and predictable trades. The rest is about us, people!


Good luck!

Hope it helps.

Hello to all,

Ok.. what this poor guy is trying so hard to explain due to no success, I will humbely explain it in a few words.

Solid and simple explanations of "Going with the Flow" based on this thread is:

Dance with the price!!..
<< When one clean "swing..pullback" combo setup is presented >>.. THAT IS IT.. no more no less.

If your looking to squeez a flow out of this timeframe (5M), this is as good as its available.

A clearer version of explanation runs something like this..
The setup,.. if you see it.. you do it.. if you don't see it... you don't do it.. so, you wait til you see one.. no matter if you have missed the run or not.. because, you got to firstly see the "swing".. keep in mind that a swing is the intial move of something, which could/may or have a chance to lead to something better.. so, its just a alert time... then comes the hesitation, AKA "Pullback", its, get set time.. then simply the breakout, The trade... anything other than this in short TF its a whole other story... Bounce/Level trading is not about "flow".. the name says it all "bounce" lol, it's a immidiate reversal... Bracket trading is not about "flow"... because the damn thing is stuck in a sideway zone, aka "Range/consalidation".. another words, NOTHING significant has shaped in order to tell marekt could be leading in certain way.
but yet... a runner can occur from any of these situations and more... I hope you all agree with me on this one point more than other, beacause we see it happening ALL THE TIME.
Thats it for that part.


I will point out couple of important points for you all to think about if your batteling with this style of trading, which can help you greatly.

One..
Looking for the "flow" to catch a runner, while useing a tight trail stop!!.. these two in this fashion, will confilict eachother... and it won't work.. you won't catch a runner consistently and at best it makes you a average scalper.. why I say so?... well, I won't just tell you like some people, "because I know" or Ah??, get it??" lol.. (just kinding with you guy).. I just simpely point out the everyday facts that we all experience each and everyday with our own sets of eyes.. the deal is, in each burst/candel, price plays out in millions of ways while traveling each and every tick, it don't just take one direction and countinues straight up without all kinds of hesitations, chip and peal... there is ton of up's and down's movments in one singel candel or time period... so, if I got to constantly push the panic botton in conditions like is suggested, then my chances narrows down in catching ENOUGH runners to compensate for my overall losses.. so the runners capitalizations is pretty much deminished. (by the way.. a runner is not a 20pips tp.. a worthy runner is when profits reaches 40pips at least if not more)

Next important point..
you will not catch runners with just a singel pattern setup!!!.. which in this thread the setup is a simple 123 with minimum 30 pips swing.. unless you agree that all market runs pitches out of a singel setup and not out of ranges, brakets, chops levels, etc..
so end result is... market can make a run without your aloner setup apperacne and you will be watching instead of capitalizing, because you were waiting for your setup to appear and avoided trading the sideway moves.. by doing so just everything else its pluses and minueses the benefits of preserving capital and the cost of missing out in more runs then one can imagine.




.................
ok... Mr. dim
If you disagree with my post in technical level or personal level.. well, I am sorry, you dished it out yourself to begin with.. so before you think about coming out with a reply back... I should tell you that i won't get engaged in any useless arguments... the only thing that can really prove a "Profitable Trader" like what you seemed to be claming here, which I got no problem with... is to come out and LIVE TRADE my man.. and show us your aresnal, so everyone can see it with clearity which can turn into great deal of benefits.. which I presume thats what you intentions are < TO HELP > ... and certainly avoid the tone that you have been using, such as phrases like this: read the first post FOR GOD'S SAKE... GET IT??? AH?? etc.. its simely not well served and somewhat disrespectfull.. it will not be accepted as a worthy if its presented in such fashion.. like you know it all and are so smart, and everyone else is dummy and unaware. its embaressing my friend.. there are no slimest certantity in this business.
If you want to gain anyone's respect... learn firstly to be respectful and secondly and most important, to prove yourself with laying yourself on the line at least a few times before just preaching way toomuch to no help... this way people will tune in and listen and eventually learn a thing or two and at the end you have serverd your purpose of "careing & helping".
(just a few brotherly words)


Thank you.



Best of luck to all

just pointing out the challenges for those who can relate too.. those of you who have honestly made it and are profitable, please ignor...

wow, what a thread. i just found this discussion.

i have evolved finally to the point where i have taken most of the indicators off my charts. just the 21 bar ema of a 15 minute candlestick chart. i enter trades upon breakouts of price channels. the channels are formed at certain times of the day and night. i draw demark trendlines from pivot points to pivot points.

periods of consolidation are followed by periods of movement. i want to enter the trade when the bracket formed during the consolidation is exceeded either to the upside or downside.

my most consistently profitable times to trade are from 8pm to 8 am est.

since i'm so well edumacated it has taken me two or three times as long to learn how to trade as the average human. since i love trading i never gave up learning new techniques. always advance - never retreat - never ever give up.

i salute you feb2865 for starting this thread and keeping it going. when i have the time i plan to contribute more.

123 setup with a very deep Pullback which makes it risky to take action on..
risky for two reasons..
1) deeper SL.. because its behind the PB.
2) most likely not getting the strong breakout due to deep pullback.

should trade it? or, should be avoided?.... let's follow it live..

guys, I appreciate what you (Dim and fxartist) try hard to explain system ii to me. My system is still kind of mix, system ii + indicator, I can't participate much to post, It'll screw up all you and feb did if I post mine.

I have a question here,
while you trading system ii, is runner mentality still be use ?
or you just satisfied with 20 pips and then wait other setup .

Thanks for the further answer.
I short, here is my system ii



Musanto

Musanto,

Runners mentality can not be done with tight trail stop like is suggested early on.
The other part about 20 pips satisfaction... well, you got to look at the setup!!.. a normal 123 setup comes with a mininum of 20 pips SL (sl behind the pullback, like is suggested).. so, at best your RR is 1:1.. now you got to worry about your Hit Ratio with this setup and the tight trail stop... meaning that you got hit 50% mark with the avg win/loss of 20 pips just to be breakeven..
do you think you will hit that mark consisitently with the 123??
if you ask me.. I say NO, you won't. considering the use of tigh trail stops, which could improve the avg loss department.. even if produces a 60%, still is not good enough... because when the market goes into one of his crazy cycles then I'll be introuble for sure with mounts of losses pailing up even if they are as little as 8 pips losses... it won't be recoverd with just a 20 pips wins. in a good market maybe it prevails but not so eye catching.

Runner mentality works when one can extent the avg win to above +40, which will create a 1:3 RR ratio with a sound defensive plan is inpalce.. because one would most likely be dealing with a low hit ratio, the avg win need to be higher than just 20 pips.
... and lets not forget.. the longivity of each trade equals to less trades... less trades equals to being at less risk of getting sting more.



Best of luck to you.

I show you all one of my live trade...
its not text book system II.. without offending anyone all due respact.. I can say maybe this is the better and more logical way of doing it..

as simple as this:
find a solid 123 setups.. mix with levels.. and use a tight firm SL.. and give it a go till it finds its direction to get something around 40 or more..
thats it..

Hello, brother Musanto!

Nice to see you!


About trading, runner mentality, take-profit orders, etc.

As for me - I get it for myself long time ago - profitable trading is possible when you have consistency in your profits. I mean - if you know your set-up, if you have inner ability to take each of your set-ups, if you know all pros and cons of your traiding method - then your profitability needs consistent profits, to have all the puzzles in order!

For me - if I trade System II - 20 or 23 pips profit is that minimum, which if I take it consistently, makes my trading, and my living successfully ))) I use take-profit orders.
I do not need runners to make my trading profitable. At least I know I could take 20 pips and they could make my day.


You could see a lot of meanings here about what profitable trading is about, or what is not about.... But,,,

The trading is just all about CONCEPT. Look - the CONCEPT of System II is - looking for the market goes unbalance, and taking the follow-thriugh after the pllback.
We wait for centrifugal move of the market, and then, after the pullback (because we do not want to be burned in the middle of battle), we take our trade. This is the CONCEPT of this technique. If you know this - you just start to imagine yourself how you could explore this trading CONCEPT. Then (after some research) you just chose that trading model, based on known CONCEPT, which suits for your personality the best. That's it...

The guy (or girl - who knows, roght?) fxa is trying to to prove something to someone.... Well. if he did not get the basoc idea, that here we have just CONCEPT, and if trader has made his own profitabily trading based on that CONCEPT - that trader is RIGHT just by the DEFINITION.
Who could be the the judge for the trade if he is right or wrong if that trade is successful? Think for yourself...

So, brother Musanto, if your trading is profitable - you are right. You got the CONCEPT, you have applied it in your trading, you are successful... then - you are right!

Think bout this - you could have ONLY 5 pips daily, or about 60-80 pips monthly, but for sure... - would you go to look for something else?????

I doubt it.



Good luck!

lol....

Nice way to hide behind the famous "LOL"...
c'mon, man up don't be shy and just go for one of these .. knock yourself out..


Just like I expacted.. a sound reply back is way beyond your capabilities... you should have remained silent.

You have not made a dime in your life in trading, its just too obvious. what?? you say NO.. you are profitable!!!... ok, good for you.. but, back it up or don't mention it at all... show it? before you preach the preacher.. or at least learn the ability to expalin a thing or two without copy pasting other peoples voice.


You make fun of the fxa guy... who cares... but, at least he could do what he preached and you and many others followed for a very long time.. even feb himself did some live trades and showed things live.. these guys stood behind what they meant... now why don't you go think about that before you shout.


Live trades!!!... uffffffff way beyond your league.


oh dimi... one more thing... I am a girl by the way.. who loves to bang the hell out of Anna K .. just incase you wanted to know.. lol

.............................

This system is a very stressfull system as you have to be glued to your screen for fear of missing that one trade that will run and make up the numerous losses you have picked up that day or week even. It has its merits too though. I think the 5 min chart is great for managing a run. Moving that stop up after each swing etc. But the loss after loss after loss after loss is just too much for the soul to take. I traded this method back in the fx achilies days. Stress and a depleted account were the main order of the day!

;ust an idea but I may have a way to make this system work more profitably. You make your chart a 4hr chart. Mark continuous horizontal lines everywhere you see a 4hr turning point. Save them to your chart forever. Now make your chart a 5min chart. Wait for price to near a 4hr line and look for a fcr away from it. If it breaks line then wait for a pullback.

Of course if you are happy and making money just ignor this lol.

Dim are you making regular profit now?