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  • #4,501
  • May 25, 2011 9:22am May 25, 2011 9:22am
Hi Karelk,

I just woke up since my break from this thread so let me respond with my opinion for what it is worth...

I 'used' to think exactly the same way in terms of booking profits in my early years of trading. The net result of the two scenarios is exactly the same if you ignore the spreads. The only difference (atleast to me) was the phycological effect on trader's mind. Having a large unrealized profit with positions at BE will do wonders and help you sleep better at night when compared to a large account balance with equally large unrealized loss. Account Balance is just a number so to speak. It's the floating equity in your account that really matters as it determines your buying/selling power and available margin.

hope this helps.


Quoting karelk
I cannot yet send private messages so I hope Graeme will come to read this, or someone could forward it to him.

Graeme,

I started to read the thread fairly late - probably after you left few weeks ago...
Staying in my lane...
  • #4,502
  • May 25, 2011 9:43am May 25, 2011 9:43am
Quoting VEEFX
You are right on the diversification. I was referring to the "(partial) profit taking during particular (ranging) market conditions."

During range, we don't know which direction the market will break out... hence trading in both directions at high/low levels to build positions....
not at all confrontational. no worries. It's actually nice to hear from you after a long time.

I still think there is a disconnect

I didn't talk about squeezing pips in ranging market.

While you are taking about participation by entering both sides, looking for break outs, I was trying to explain what 'diversification' means, in my understanding:

You basically ride a trend and keep adding positions. Once market starts ranging, may be you can close some of your smaller legs to add to your capital (partial) and leave the bigger ones to continue the battle, in case the trend continues.

Is this correct?


Thanks
TS
Haste not to Enter AND Haste not to Exit !-TradeStar
  • #4,503
  • Edited 10:42am May 25, 2011 10:31am | Edited 10:42am
Correct about diversification but with a caveat

We need diversification ONLY (again this is my interpretation!) to smooth out the equity curve and recover the account balance from failed probes. If there is no loss incurred during position building (due to pure luck!) then there is absolutely no need to diversify. You just need to let the position run and at the next stall, put buy/sell orders and simply follow the market wherever it wants to go. If it goes against the main trend, you go in the opposite direction and 'lock' your unrealized profit.

for instance, my long EU trade from September I posted here http://www.forexfactory.com/showthre...03#post4068903 is still going strong from 1.3047. I lost only a few pips to get on this position (pure luck imo) so I did not diversify. Fundamentally, I am biased on EU short so took some trades in december and earlier in May making some 300+ pips in profit in my Oanda account (which I really should have just let it run!). If it drops below 1.40, I am going short again and won't be closing them at all. If my short touches 1.3047, I don't care as I have already locked in about 953 pips regardless of where the market goes this year.

You repeat this continuos cycle on multiple timeframe and on multiple pairs and you are on the way to prosperity my friend

I will tell you this for sure... trading in two separate accounts in US is painful but doable.

Hope this helps.

- Vee

EDIT: Ideally, one should be able to tell the trend just by looking at the position ledger without even looking at the charts. If positions die at BE, you know which way the trend is headed :-

Quoting TradeStar
not at all confrontational. no worries. It's actually nice to hear from you after a long time.

I still think there is a disconnect

I didn't talk about squeezing pips in ranging market.

While you are taking about participation by entering both sides, looking for break outs, I was trying to explain what 'diversification' means, in my understanding:

You basically ride a trend and keep adding positions. Once market starts ranging, may be you can close some of your smaller legs to add to your capital (partial) and leave the bigger ones...
Staying in my lane...
  • #4,504
  • May 25, 2011 11:05am May 25, 2011 11:05am
Quoting VEEFX
I 'used' to think exactly the same way in terms of booking profits in my early years of trading....
Hi Vee,

it wasn't a difference between unrealized profit and realized profit in the account with your broker but unrealized profit and realized profit in the account in your bank! That would make all the difference to your sleep if you did not know your broker and started to worry what could happen to your big $$$!

Karel
  • #4,505
  • May 25, 2011 11:41am May 25, 2011 11:41am
Quoting karelk
Hi Vee,

it wasn't a difference between unrealized profit and realized profit in the account with your broker but unrealized profit and realized profit in the account in your bank! That would make all the difference to your sleep if you did not know your broker and started to worry what could happen to your big $$$!

Karel
Good point Karelk. I rather not trade FX if I have to loose sleep over my broker's credibility but that is just me I guess. There are some decent brokers out there like IBKR and Oanda (and possibly MB and CitiFx) but you just never know
Staying in my lane...
  • #4,506
  • May 25, 2011 2:39pm May 25, 2011 2:39pm
Hi graeme,
sorry to take u a step back with this question.in one of you post,you talked on taking trade with the weekly price action[trend].this i did last week on ej only to feel sorry for my poor self.up to this moment the pair never looks at my direction and same with eu this week.please,what will you advise one to in this situation.prompt response needed.
  • #4,507
  • May 25, 2011 5:30pm May 25, 2011 5:30pm
Graeme is not around so much these days . All the information on how to trade has been given . You will get lots of losses with this sysytem ,that is part of the trading plan . Just keep reading from Post 1 until you get it.
Good luck.
  • #4,508
  • Edited 3:33am May 26, 2011 3:03am | Edited 3:33am
Hi Graeme,

I wonder how this new NFA regulation coming into effect on May 30th will alter your management approach, if at all.

http://fxtrade.oanda.com/help/close-trades-fifo

With kind regards,
MK
  • #4,509
  • May 26, 2011 3:34am May 26, 2011 3:34am
Quoting MidKnight
Hi Graeme,

I wonder how this new NFA regulation coming into effect on May 30th will alter your management approach, if at all.

http://fxtrade.oanda.com/help/close-trades-fifo

With kind regards,
MK
Only applies if you are with a US broker.
  • #4,510
  • May 26, 2011 8:50am May 26, 2011 8:50am
Quoting MidKnight
Hi Graeme,

I wonder how this new NFA regulation coming into effect on May 30th will alter your management approach, if at all.

http://fxtrade.oanda.com/help/close-trades-fifo

With kind regards,
MK
Thanks MK. I was not aware of this. The way I understand, they have to be the same unit size for FIFO to apply. Can't this be overcome by adding 1 unit to your default position size?
For instance...
First Position: 10,000
Second Position: 10,001
Third Position: 10,003 etc

This way, it should allow you to pick and choose any position in any order for the same pair. I hope I am right on this as this would be another blow to US traders who are already disgruntled with recent regulations.
Staying in my lane...
  • #4,511
  • May 26, 2011 9:25am May 26, 2011 9:25am
Quoting VEEFX
Thanks MK. I was not aware of this. The way I understand, they have to be the same unit size for FIFO to apply. Can't this be overcome by adding 1 unit to your default position size?
For instance...
First Position: 10,000
Second Position: 10,001
Third Position: 10,003 etc

This way, it should allow you to pick and choose any position in any order for the same pair. I hope I am right on this as this would be another blow to US traders who are already disgruntled with recent regulations.
The way I understood it is this:

If I wanted to close half my first position I would be able to. But when I go to close half my second position instead of taking it out of 10,0001 it would close the rest of the first.
A woman drove me to drink, and I forgot to thank her
  • #4,512
  • May 26, 2011 3:11pm May 26, 2011 3:11pm
Hello VEEFX

it's true, i have ask to OANDA.

the workaround is exactly this.

First position : 5000
Second position : 5001
Third position : 5002

You can close what you want in this example.

Hope this help.

Sergio

Quoting VEEFX
Thanks MK. I was not aware of this. The way I understand, they have to be the same unit size for FIFO to apply. Can't this be overcome by adding 1 unit to your default position size?
For instance...
First Position: 10,000
Second Position: 10,001
Third Position: 10,003 etc

This way, it should allow you to pick and choose any position in any order for the same pair. I hope I am right on this as this would be another blow to US traders who are already disgruntled with recent regulations.
Financial Freedom
  • #4,513
  • May 26, 2011 5:22pm May 26, 2011 5:22pm
Quoting pipEASY
Good morning, all

Apologies for my sudden absence.

The cold weather has taken its toll on me and I spend much of the time resting for now. However, my thoughts are with everyone.

Before my leave, there were few traders messaging me with their progress and questions. Apologies but it will take awhile for me to answer them at my current situation.

My showing/teaching is more or less complete in this thread and the book is still on schedule.

I plan to invest my efforts in completing the book before anything else for this year hence I may...
Hi Graeme,

Thanks again for your continuing input to the thread. I for one have found your recent messages particularly helpful, despite having read the whole thread through, more than once!

For example, it was while reading your previous message that it suddenly clicked with me the benefit of not using a stop loss. For the last few months I have improved my entries, going with the weekly trend. But the majority of my positions were stopped out because of setting tight SL's, with the result that my equity was steadily going down week after week. Once I stopped using a SL (well I can't actually bring myself to not enter a SL at all, so I enter a large one - typically 200-300 pips) my positions started growing, often despite an iffy beginning. I've also stopped waiting for a failing position to hit my SL. Now I have to make a decision, I tend to make it earlier, with smaller losses. I'm now starting to grow some legs at last!

I also appear to be becoming more successful at stacking, now that I know to aim for only 1-2 additions per week. I now wait for a retrace on H4 before adding another entry - before I was trying to stack much closer on lower timeframes, with negative results.

One area I'd really appreciate some help with is when a pair changes direction. I find I'm suffering repeated losses at these events. For example, lets say I've just added another sell position, and then price changes direction, taking my new position into loss. I'll wait for 1 or 2 H4 candles to close in case it's just a retrace. If it's still moving against me, and H4 has closed higher than the previous down candle opened, then I'll open a buy position, in case it's the start of a new trend. But when should I decide to close the sell position? I find I'm closing it for a loss, then price reverses again (on H4), so I open another sell position, and close the but position for a further loss. And on it goes - you get the picture. What am I doing wrong, and more importantly, what should I do to improve things? Any feedback welcome, obviously from Graeme, but also from anyone else who can help me.

In the meantime, I wish Graeme good health and happiness. You have changed my trading approach for good, and I hope one day to be able to meet you and thank you in person.

Alan
  • #4,514
  • Edited 12:52am May 27, 2011 12:38am | Edited 12:52am
Quoting Alan0810
.... but also from anyone else who can help me....
My 2 cents... just blindly following the golden rule of "buy when price closes above the open price of previous down candle" and
"sell when price closes below the open price of previous up candle" will incur some drawdown and fair amount of frustration/nervousness initially. Trading without SL does require nerves of steel imho and I also struggled with the concept initially. We all focussed a lot initially on entries, candle patters/setup and to practice low risk entries on M5 etc but it is simple common sense logic as Graeme mentioned if you keep the longer term view in mind.

Curious if you factored weekly Hindsight? The golden rule becomes powerful if you only trade in the direction of your weekly hindsight.
You could use a bullish/bearish engulf candle as an indication to exit/diversify and/or continue stacking as a suggestion for you to explore further.

Alternatively, if you can master patience, you could only open positions when the golden rule is applicable to atleast 2 or 3 higher timeframes.... that would be the red aura moment Graeme mentioned in his posts. Only 10-12 opportunities per year but high probability and low risk if you span across multiple pairs.

Hope this helps.

EDIT: Forgot to attach chart
Attached Image (click to enlarge)
Click to Enlarge Name: Snap82.jpg Size: 54 KB
Staying in my lane...
  • #4,515
  • May 27, 2011 2:04am May 27, 2011 2:04am
Quoting VEEFX
Thanks MK. I was not aware of this. The way I understand, they have to be the same unit size for FIFO to apply. Can't this be overcome by adding 1 unit to your default position size?
For instance...
First Position: 10,000
Second Position: 10,001
Third Position: 10,003 etc

This way, it should allow you to pick and choose any position in any order for the same pair. I hope I am right on this as this would be another blow to US traders who are already disgruntled with recent regulations.
Yeah that'd probably work V - good thinking. I don't know if all brokers allow that type of size flexibility and I recall Graeme using FXCM. They used to (7 years ago) only allow 100k minimum positions, perhaps that has changed nowadays.

All my best,
MK
  • #4,516
  • May 27, 2011 3:05am May 27, 2011 3:05am
Quoting VEEFX
My 2 cents... just blindly following the golden rule of "buy when price closes above the open price of previous down candle" and
"sell when price closes below the open price of previous up candle" will incur some drawdown and fair amount of frustration/nervousness initially. Trading without SL does require nerves of steel imho and I also struggled with the concept initially. We all focussed a lot initially on entries, candle patters/setup and to practice low risk entries on M5 etc but it is simple common sense logic as Graeme mentioned if you...
Hi Vee,

Thanks very much for your comments - they're helpful and re-assuring.

I am factoring in weekly hindsight. An example of my problem is with EURUSD this week. Since Monday when it starting giving signs of changing direction on H4, I've entered 3 buy positions and 2 sell positions, closing them all out for a loss, as I convinced myself that price had changed direction once again. Your suggestion of taking into account the spacing between the EMA's would have saved me some of those losses. I will also be conscious to look out for bullish/bearish engulf candles.

I now have a sell position and a buy position in place, both without SL, and plan to wait like this until the opportunity arises to stack either another buy or sell position. I have mentally paired these 2 positions off, for a small net loss, and will hold them until I can diversify them together with another position, for a net gain. I don't know if this makes sense to anyone else, or parhaps you can see the fatal flaw! My aim is that it stops me getting whipsawed while the market determines which direction it wants to go.

Alan
  • #4,517
  • May 27, 2011 8:23am May 27, 2011 8:23am
Quoting Alan0810
Hi Vee,

Thanks very much for your comments...
Alan
You are welcome Alan. Couple of further thoughts to ponder.

- I suggest removing 'net P/L' or 'averaging' from your lingo and thought process. Every new position, either opened or closed, has to have a valid justification based on your own price interpretation/action and hindsight otherwise your head will start spinning big time once you have more than a dozen positions across multiple pairs causing unnecessary anxiety.

- don't forget to move your profitable positions to BE even when no SL is used. That's the only way to track major trend just by looking at your trading ledger. IMO, moving to BE also needs to be justified by price action instead of simply moving after 15, 30 or 100 pips pips in profit. Hint: use upper timeframe for confirmation to move to BE.

I should stop now as I am sounding like I have mastered this trading approach which is far from the truth. Apart from basic skill, it also takes a different mindset and philosophy to succeed in any longer term position trading which, for me, is going to be a life long 'continuos improvement' journey.

Hope this helps.
Staying in my lane...
  • #4,518
  • May 27, 2011 10:03am May 27, 2011 10:03am
Hi VEEFX
Please do not heistate to continue to post your ideas concerning Graeme's method. I would guess there are several others out there whom like me benefits from an idea being stated in different terms. Many times I think I fully grasp something, only to read anothers take on the same idea and realize that I had not considered that point of view.
I just want to say that this site seems to have an abundance of quaility contributors who do not normally let their egos get in their way of helping.
Thanks again to all
gmcc
  • #4,519
  • May 27, 2011 10:22am May 27, 2011 10:22am
Hi MK,

Yes, FXCM provides the flexibility to trade in 1k micro lots. Many traders say it improved their risk management. Hope that helps!

Good trading,

Jason

Quoting MidKnight
Yeah that'd probably work V - good thinking. I don't know if all brokers allow that type of size flexibility and I recall Graeme using FXCM. They used to (7 years ago) only allow 100k minimum positions, perhaps that has changed nowadays.

All my best,
MK
  • #4,520
  • May 27, 2011 12:39pm May 27, 2011 12:39pm
Quoting VEEFX
You are welcome Alan. Couple of further thoughts to ponder.

- I suggest removing 'net P/L' or 'averaging' from your lingo and thought process.

- don't forget to move your profitable positions to BE even when no SL is used.

Hope this helps.
Hi Vee,

Thanks for your further thoughts - they do indeed help!

I agree with not getting involved in thoughts of "averaging" or "Net P/L", and try to ensure each entry is justified on it's own merit. My comment about net gain/loss just referred to the process of diversifying.

I am moving my profitable positions to BE. I only have one sell/buy position without SL at any one time, so only add a new position when I'm comfortable moving the existing position to BE, based on price action.

Please don't stop with your thoughts. I agree with gmcc that we all benefit from having an idea expressed in different terms.

Thanks again for your comments,

Alan
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