Building an equity millipede | Page 231 | Forex Factory

Options

Go to
Permalinks
Print Thread

Similar Threads

Thegman's Journal (Equity Millipede Concept) 102 replies

Trading an Equity Millipede 23 replies

Equity millipede & Flying Buddha trading journal 9 replies

Build an Equity Millipede with the filtered Flying Buddha 171 replies

Application Development - Journal of Building an equity millipede 14 replies

Attachments: Building an equity millipede
Exit Attachments

Building an equity millipede

  • #4,601
  • Jun 27, 2011 5:26am Jun 27, 2011 5:26am
Hello Vee,

(I'm saying this in a friendly, non-confrontational way)

It all comes down to how each of us interpreted Graeme's articles, for comparison here is my view:

Quoting VEEFX
hmm...last Outside Bar on Monthly:
....
you are letting too much of your hard earned unrealized profits to 'die' if you wait for Monthly engulf (i.e. outside bar) candle to close.
I think that it depends on the TFs he is using, maybe he is taking hindsight from Monthly, filtering on Weekly and entering on 4H, how do you know the bias has changed if you don't wait for a candle to close ?

Quoting VEEFX
p.s. If I am not mistaken, I don't believe Graeme has mentioned 'waiting' for anything to start a trade in opposite direction. It's all based on price action/interpretation based on your chosen timeframe.
Well if you ask me, he did mention waiting for clear signs (candles closing on the higher TFs) before entering in the opposite direction. If you look back at the charts Graeme presented, there was the 2 weeks projects, he entered after an outside bar candle closed on the weekly confirming direction. (this is from memory, but I believe memory serves well).

Kindest Regards,

Cam
  • #4,602
  • Edited 6:18am Jun 27, 2011 5:51am | Edited 6:18am
Hello Cam, Vee,
As a sidenote to what Cam wrote, I remember that Graeme also said to enter a probe on current unclosed candle (H1 or H4) anticipating it'll close as engulfing bar. So probe should have been placed at the level where current candle starts engulfing previous candle in opposite direction.

If I'm not mistaken, Graeme said it's impossible to create a system with rules which won't be violated from time to time, and still system will produce profit. Market can't be digitalized.

He said he makes exclusions from his own rules from time to time, and he also stressed our attention that he didn't teach a standalone system (enter here, place stoploss here and close here), instead he taught us general rules, creating right mindset using his method, which is EXTREMELY profitable no matter what entry system you use.

Plus to said, he taught never sit on the sidelines, trade both directions when proper signal arises. I.e. if hindsight is bearish, but there is a bullish PA say on H4, he enters longs just to check the idea if bulls are getting power.

This prevents from frustration, when you have your hindsight down, but whole week/month was a bullish PA and you feel you missed smth important.
For more ref. pls check post 3672 by Pipeasy. It answers many "Qs".
  • #4,603
  • Jun 27, 2011 5:55am Jun 27, 2011 5:55am
Quoting VEEFX
hmm...last Outside Bar on Monthly:

- E/U was over 950 pips
- G/U was over 650 pips
- G/J was over 550 pips

you are letting too much of your hard earned unrealized profits to 'die' if you wait for Monthly engulf (i.e. outside bar) candle to close.

just my 2 cents (no offense intended)
None taken

Sorry for my miscommunication, I was still thinking of the Usd/Chf downtrend example. If that pair (which is in such a strong downtrend) made a bullish englufing candle for say July, then I'd start to consider diversification and start buying the dips. In the mean time, every 'up' week is seen as discounted short sales until otherwise. To me, its way too easy to overtrade this way, thus why I want higher TF confirmation.


Quoting cameron1st
I think that it depends on the TFs he is using, maybe he is taking hindsight from Monthly, filtering on Weekly and entering on 4H, how do you know the bias has changed if you don't wait for a candle to close ?
Exactly Cam. End of month: review monthly charts & sort trenders. End of week: review those charts and sort again. Those would be the only ones traded the next week on the 4/1HR.
  • #4,604
  • Jun 27, 2011 6:37am Jun 27, 2011 6:37am
Quoting AlexanderSV
Hello Cam, Vee,
As a sidenote to what Cam wrote, I remember that Graeme also said to enter a probe on current unclosed candle (H1 or H4) anticipating it'll close as engulfing bar. So probe should have been placed at the level where current candle starts engulfing previous candle in opposite direction.
...
Hello Alex,

Thank you for mentioning the exact post of Graeme you were referring to. After reading the respective post, I see that part "Few traders ask why I break my own rule of buying when price closes above open price of previous candle and vice versa."

but

You see in this example Graeme took hindsight from the Monthly chart, and that one was a closed engulfing candle. There is always some "higher timeframe" that you use for taking hindsight from, be it Monthly, Weekly etc., so in my view you can't mess about with the "higher timeframe" i.e. if you are taking hindsight from the Weekly chart, and the last two weeks were up, it's not a good idea to go on the 5m chart and stack sell. Graeme broke his rule on the lower timeframes because he had hindsight from the Monthly chart.

Kindest Regards,

Cam
  • #4,605
  • Jun 27, 2011 7:33am Jun 27, 2011 7:33am
Hmm.. can't disagree with you, Cam.

But additionally, in that same post 3672 of particular interest to me was this phraze:


"C. Keeping your hindsight intact however also covering the fact that it might not work out by placing few probes against your hindsight. But also aggressively adding more and more when the price action does play out to your favour in the following weeks and months".

When I first read it few months ago, it went so solidly into my mind, that any hindsight can be wrong, so we need to always participate, place probes here and there all the time even against our hindsight irrespectively in accordance with which hindsight (higher or lower TF) this or that probe will be. It's just the current PA what suggests to probe, that was my understanding of Pipeasy's teachings.
  • #4,606
  • Jun 27, 2011 8:36am Jun 27, 2011 8:36am
Quoting AlexanderSV
Hmm.. can't disagree with you, Cam.

But additionally, in that same post 3672 of particular interest to me was this phraze:

"C. Keeping your hindsight intact however also covering the fact that it might not work out by placing few probes against your hindsight. But also aggressively adding more and more when the price action does play out to your favour in the following weeks and months".
...
Hi Alex,

What Graeme says is true, but you have to pick your moment for going against the hindsight. For example: if your Monthly hindsight is down, when do you try to enter buy ? When the first candle on the 5m chart says so ? Probably not a good idea, right ?

I would say that if you are using Monthly as hindsight, you still have to wait for a Weekly candle to close against your hindsight before even trying to probe against the hindsight.

Kindest Regards,

Cam
  • #4,607
  • Jun 27, 2011 11:21am Jun 27, 2011 11:21am
Hi Cam,
I would like to refer to posts 1617 and 1622 made by Graeme. They're dedicated to topic of trading against the hindsight and I like how Graeme
explained his views on this topic, so I just accepted it as it is and it works so far very well for me.

My interpretation of his words was that in a situation when market shows beautiful bullish price action on H4 with good momentum whilst both MN and WK hindsights are bearish - in that scenario nothing can stop me from making a probe entry AGAINST both hindsights, set its SL to BE, and then stacking heavily next week if this week forms bullish engulfing bar (or even before weekly close, as per your preference).
Graeme said he makes counter-trend probing from time to time when there is price action with compelling momentum.

What can I get in return? Excellent chances for probe to survive weeks and even months after if it works out + amazing profits covering all spent ammos + solid returns.
  • #4,608
  • Jun 27, 2011 11:47am Jun 27, 2011 11:47am
Alright Alex, as long as you are trading profitably.

Truth is that each of us interpreted what Graeme presented in their own way, but it's up to each individual to make this work for them.

Kindest Regards,

Cam
  • #4,609
  • Jun 27, 2011 5:14pm Jun 27, 2011 5:14pm
Hi everyone,

I have been an early reader of this great thread and Graeme is an extraordinary trader and teacher. There are not enough words to thank him for his patience and dedication to this forum.

However, even though I believe I understand his trading approach which makes perfect sense for the patient, long-term investor who looks beyond short-term volatility (and losses) and focuses on the big picture, I have the feeling this philosophy has a much more impactful result when applied to stocks or even commodities rather than on FX instruments.

Why? Because stocks and commodities, although subject to global macroeconomic trends like any other instrument, are not directly impacted by new data several times a week every week. Some would argue that after some volatility around the time important market data are released, the long terms resumes its course, and this happens quite often. However, the reverse is also true and I have some unpleasant experiences of seeing my profits evaporate as I tried Graeme's approach on a few occasion. Maybe I should have gotten past this and have shown more persistence, but not everyone has other income sources beside trading and needs regular results.

This is in no way a criticism of Graeme's teachings, I sincerely believe he has developed a very solid method for long-term profits with a limited investment of time. I just believe this may not apply to everyone's style as far as FX trading is concerned and, in any case, it shows phenomenal results when applied to stocks and commodities where investors seem to have longer term holding periods hence longer directional movements.

Just my two cents.
Best,
D
  • #4,610
  • Edited 1:00am Jun 28, 2011 12:36am | Edited 1:00am
Thanks for clarifying Emerald. It all depends on your own emotional threshold, how many 'months' you have been in the usdchf downtrend, how many unrealized pips you have floating and how many positions/legs you have going for you. For such a long term downtrend, ideally, one should have atleast 10+ leg millipede. That equates to 5000-8000 total pips disappear waiting for confirmation of monthly candle compared to (say) 1000 pips lost in sending probes trying to catch the potential reversal.

For me (and probably most of us following this thread), that would be a huge emotional turmoil to see their unrealized pips reduce while waiting for this confirmation. I have personally received numerous PMs from folks giving up on this thread when their legs die after just 500 or so pips... hence I thought a word of caution was warranted.

I think, probing a few longs at strategic placement (double wick bounce, 33%, 50%, FB etc) would prove worthwhile as every long probe that survives is in essence freezing your unrealized pips.

As Cam rightfully said, whatever works for you is what you must follow. Personally, I wouldn't wait for over 120 H4 candles in uptrend waiting for a confirmation on Monthly or weekly for that matter.


Quoting EmeraldEyes
None taken

Sorry for my miscommunication, I was still thinking of the Usd/Chf downtrend example. If that pair (which is in such a strong downtrend) made a bullish englufing candle for say July, then I'd start to consider diversification and start buying the dips. In the mean time, every 'up' week is seen as discounted short sales until otherwise. To me, its way too easy to overtrade this way, thus why I want higher TF confirmation.




Exactly Cam. End of month: review monthly charts & sort trenders. End of week: review...
Staying in my lane...
  • #4,611
  • Jun 28, 2011 3:55am Jun 28, 2011 3:55am
Quoting VEEFX
As Cam rightfully said, whatever works for you is what you must follow. Personally, I wouldn't wait for over 120 H4 candles in uptrend waiting for a confirmation on Monthly or weekly for that matter.
Hi Vee,

Actually I notice on the thread that most try to fit the hindsight and targets to their expectations (rather than choose a hindsight and wait for the market to play out). For example: if you are trading with the intention to ride the Monthly chart, it's not a good idea to go against the Weekly and Monthly trends just because 4H chart is showing you differently... if you do decide to follow the 4H charts in these cases, then you are trading the 4H chart, you are not trading the Monthly chart anymore.

Personally I don't go down to lower timeframes trying to find the picture I like. If I'm trading the Monthly chart, then I would wait at least for the Weekly chart to show weakness.

And I can actually demonstrate that what I'm writing aligns with what Graeme was saying:

Let's look for a moment at post 1614 and the following in that row:

http://www.forexfactory.com/showthre...39#post3984839

So Graeme is using Weekly -> 4H -> 5M, and he waits for weakness on the 4H charts before considering to probe against the original hindsight.

Now if we translate to Monthly -> Weekly -> 4H, then as I previously said it would be normal to wait for weakness on the Weekly chart before going against hindsight.

Kindest Regards,

Cam
  • #4,612
  • Jun 29, 2011 3:43am Jun 29, 2011 3:43am
Quoting AlexanderSV
Graeme said he makes counter-trend probing from time to time when there is price action with compelling momentum.
This line is important. Example; Eur/Chf is making a bullish FB on the monthly. With rumors of inevitable intervention from the SNB, some long 'probes' would be a good idea. If the weeks move sideways, then no. Momentum = money's participation
  • #4,613
  • Jun 29, 2011 4:11pm Jun 29, 2011 4:11pm
Quoting EmeraldEyes
This line is important. Example; Eur/Chf is making a bullish FB on the monthly. With rumors of inevitable intervention from the SNB, some long 'probes' would be a good idea. If the weeks move sideways, then no. Momentum = money's participation
Sold
  • #4,614
  • Edited 6:46pm Jul 3, 2011 6:08pm | Edited 6:46pm
Quoting cameron1st
...... Now if we translate to Monthly -> Weekly -> 4H, then as I previously said it would be normal to wait for weakness on the Weekly chart before going against hindsight.

Kindest Regards,

Cam
Agreed !

Here's the bottom line (goal) to achieve from bidirectional trading regardless of what approach or timeframe one chooses to accomplish... "Over a given period of few weeks I am technically fully hedging my positions. However I am also strategically placing my interest to reap the 'inevitable' big move that will happen sooner or later by simply following the current movement happening." as in Post #3883.

It's one of the key ingredients (among many others!) of this approach to simply follow the price while building millipedes across many pairs. It is because of this bidirectional approach that Graeme (I think!) is able to sleep peacefully with so many open positions across so many pairs. This combined with the fact that we trade a currency "PAIR" in spot forex and not a single currency makes bidirectional trading approach a very powerful combination in keeping a smoother unrealized equity curve during world news/events affecting currency markets.

p.s. bidirectional trading also optimizes(maximizes) the use of margin for most non-US based traders in a single account.

Wondering if anyone has started a journal on FF (apart from nomask). I could not find any.
Staying in my lane...
  • #4,615
  • Jul 5, 2011 2:51pm Jul 5, 2011 2:51pm
Hi guys,

This is been on my mind for a while and need to put it out there for your feedback. Wondering if anyone has had similar experience. During my practice and live sessions, I find it much much easier on my mindset to break my regular lot size (based on my MM rules) into smaller chunks.

For example, if I were to trade one standard lot, I have had much better success with my probes if I start with 1 minilot first and then 'sub-stack' with 2minilots, 3minilots and 4minilots subsequent probes. I do this regardless of the outcome of my first mini probe. Also, this applies to only new probes on pairs that I don't have any positions running.

I personally think it is more related to phycology/mindset of getting in tune (feel??) with the market/price action with these 4 mini-probes. This also helps dealing with falls breakouts and limits drawdowns at times.

Just curious if I this trading style will affect my overall millipedes growth and profit potential. I don't think so but better to get some feedback before I form this habit :-
Staying in my lane...
  • #4,616
  • Jul 5, 2011 3:45pm Jul 5, 2011 3:45pm
Hi Vee,

In my personal opinion: if you can afford to probe with one lot (based on the size of your account), then best to stick with that, otherwise you risk having a golden opportunity on your hands, and only having 1 or 2 minilots in play. Golden opportunities are not that often and you want to have good size on when they happen (but again, based on your account size)... it would be worse on your psychology if you get a good opportunity and have only 1 minilot in play...and then 3 or 4 losses on 4 minilot size, right ?

If you plan on replying that you can enter some more after the main volatility move started, my understanding from this thread is that the idea is to have your probes set before a volatility breakout, rather than during. I remember Graeme writing that shortly after he enters a probe he wants to see the other market participants following in the same direction otherwise he would be inclined to close the probe. It's important to be early in the move.

Hope this helps.

Kindest Regards,

Cam
  • #4,617
  • Jul 5, 2011 4:17pm Jul 5, 2011 4:17pm
you are not alone man!

I have been doing similar things, and the major "why am i doing this?" is that i feel i don't have to often stoploss and get frustrated and very doubtful of my judgements.

though my reason is different, i do very similar things like you.

i put 0.02 lot at the end of US day, next day, if it is wrong, i put 0.03 or 0.04 (i mean no martingale) for the opposite direction, or same direction, if market goes well, .......
of coz, for some days, i have to just wait and do nothing.

generally, after 3 or 4 ~ 9 or 10 days, i can end up approximately 1~2 lots totally (dozens of 0.02 positions), and when the overall basket turn into profit, i'll reap it.

as you said, i can feel and grasp the rythm of the market this way.

as to the millipede thing, i exit 2/3, and leave 1/3 positions to run for free or die.

bring it on, V!

Quoting VEEFX
Hi guys,

This is been on my mind for a while and need to put it out there for your feedback. Wondering if anyone has had similar experience. During my practice and live sessions, I find it much much easier on my mindset to break my regular lot size (based on my MM rules) into smaller chunks.
  • #4,618
  • Jul 5, 2011 6:50pm Jul 5, 2011 6:50pm
Quoting cameron1st
Hi Vee,
... 1 minilot in play...and then 3 or 4 losses on 4 minilot size, right ?

Hope this helps.

Kindest Regards,

Cam
Thanks Cam and Charvo for your feedback. Allow me to clarify. I missed out a bit of detail on purpose thinking I might stir up the conversion in the wrong direction so here it goes.

Breaking up my lot size in 4-6 parts does allows me to be 'ahead' in anticipation of a volatile breakout but with less risk on the table.

Here's my logic:
- this is not martingale in the traditional sense as we all understand it is bad for your account's health and livelihood. I am not risking any more than my usual lot.
- This applies to probes on pairs that don't have positions in unrealized profits going for me
- applies only to 1st mini-probe that goes in a loss. If first mini-probe goes in profit right away, I have gained confidence and will be loading up all the remaining mini-probes to match my lot size and let market decide it's faith.

Based on my trading history, average typical loss has been between 15-30 pips more or less before I give up on a probe. So 15-30 pips is my playing field for these 4 min lots to build up my confidence. This typically happens within 10-25 pips on M5 TF as I am in 'recovery' mode to get out of this probe as soon as possible. I have noticed, with this approach, it also smoothens my account drawdown without sacrificing more than 15-25 pips from long term growth which is peanuts on Monthly/weekly scale.

Unfortunately, this approach also skews up my pip count when time comes to diversify and recharge my account balance but it does improve my win/loss ratio from below average to above average big time due to averaging up/down. I don't care much about the win/loss ratio so not a big thing for me. Another MM rule I apply is to do this only when I have realized profits in our account balance (i.e. house money). Reducing overall lot size is a safer approach to prevent further drawdown imho.

Hope this helps.
Staying in my lane...
  • #4,619
  • Jul 6, 2011 1:11am Jul 6, 2011 1:11am
Hi Vee,

Uhm well, since most probably don't use this model, it means there's no practical experience with it, so it is a bit on you to gather the statistics and see if you are happy with it for long term, see if it affects your winners and losers etc. For my trading I use the same position size, like Graeme does, no particular reason, that's how I got used.

Kindest Regards,

Cam
  • #4,620
  • Jul 6, 2011 1:23am Jul 6, 2011 1:23am
Hiya V,

I have reverted back to my similar MM approach that I was doing when scalping index futures except on these bigger timeframes. I've never done well with a black and white all in/out approach and even though I know it is sub-optimal versus all in/out when evaluating my trade log data, it free's my mind and tunes me into the flow.

Graeme laid out the core principles; hold your winners, participate often, trade both ways. I do not think you are alone in this type of thinking at all and you are right to integrate the core principles in a way that suits your approach.

All my best,
MK
3 traders viewing now