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Good returns realistic by trading with higher time frames?

  • #1
  • First Post: Jul 17, 2011 8:26pm Jul 17, 2011 8:26pm
I'm not sure if I am only dreaming, or if it's within reach.

I would like to achieve two things simultaneously:
A pretty decent return of ten percent consistently per month with low risk.
Yet not have to stress with lower times frames, ONLY trading daily charts.

I don't know whether this is achievable, or (if it is) how to make it a reality.

Comments, traders?
  • #2
  • Jul 18, 2011 12:34am Jul 18, 2011 12:34am
Quoting dice action
I'm not sure if I am only dreaming, or if it's within reach.

I would like to achieve two things simultaneously:
A pretty decent return of ten percent consistently per month with low risk.
Yet not have to stress with lower times frames, ONLY trading daily charts.

I don't know whether this is achievable, or (if it is) how to make it a reality.

Comments, traders?
No your not dreaming. More than 10% in a month is possible but don't focus on percentage per month, rather executing high probability trading setups and the high percentage and money gains will follow. I do not mess around with lower time frames, I used to trade 30 minute, then the 1Hr, 4Hr and now trade the minimum 8Hr chart and above but my main trading decision is based on the daily charts. I have learned that the higher the time frame the more profitable my trading has become. Here is my suggestion on how to trade making good profits.

1) Learn Price action, How to read charts for patterns. The market repeats them over and over but you have to train your eye to see them and capitalize on the formation presenting itself, ex (Wedges, Triangles, Broadening formations)

2) Forget stochastics, MACD, RSI..etc. Place Pivot Points on your charts and adjust them for Monthly pivots. Depending on the previous months high, low, close calculations, usually the range between pivot points AND midpoints are in the 150 to 250 pip range.

3) DO NOT GO IN HEAVY ON TRADES. meaning CONTROL your risk. the trading method i just described is a powerful one using confluence between price patterns and Monthly Pivot points to determine support and resistance areas to enter so the many of the trades will be profitable.

Again, learn it on a demo first and get familiar with chart patterns and monthly pivot points. Below is a little example of what im talking about. Good luck.

http://i29.photobucket.com/albums/c2...cket/ex1-1.png
http://i29.photobucket.com/albums/c2...Bvcket/ex2.png
"The market doesn't beat them, they beat themselves" - J. Livermore
  • #3
  • Jul 18, 2011 5:54am Jul 18, 2011 5:54am
Thanks for your reply. NYWallSt.

I'm no expert, but... Those are rising trendlines, i.e. you would be using them for a potential long position not a short position?
I do see "the trade" however, pinbar against "a line" looks good to me
  • #4
  • Jul 18, 2011 6:55am Jul 18, 2011 6:55am
Quoting dice action
I'm not sure if I am only dreaming, or if it's within reach.

I would like to achieve two things simultaneously:
A pretty decent return of ten percent consistently per month with low risk.
Yet not have to stress with lower times frames, ONLY trading daily charts.

I don't know whether this is achievable, or (if it is) how to make it a reality.

Comments, traders?
hm, 10% a month is achievable, but I don't think that it can be done easily on a consistent basis and not with low risk.
I personally am a system trader, so not relying too much on discretionary patterns. What you want is to find a method that is robust / consistent. But you have to realize that most robust methods don't give you insane returns with low risk, but you can bet that the next 10 years + they will give you nice returns (for me that is anywhere between 20 and 50% a year).
Now, if you can accept larger equity swings, like deep drawdowns, then you can tune up the returns significantly. However, in order to do that, you really need to know your edge and worst case scenarios, otherwise your account is depleted before the winners take over again. Here I am talking about 50 - 60% drawdowns, then with the proper edge you might gain around 200 to 500% a year. It all depends on your risk profile. However, you really really need to be sure that you have an edge with your method. Know the odds of each trade beforehand, not made up odds, but odds based on observation from the past.
  • #5
  • Jul 18, 2011 12:17pm Jul 18, 2011 12:17pm
Quoting dice action
Thanks for your reply. NYWallSt.

I'm no expert, but... Those are rising trendlines, i.e. you would be using them for a potential long position not a short position?
I do see "the trade" however, pinbar against "a line" looks good to me
Hello Dice, Yes its a rising trend line however there are two ways to have played this. The formation is a triangle and getting narrow so you could have gone long at support with a stop loss underneath or waited for the triangle breakout either up or down. once support was broken then you could apply one of the basic rules of Technical Analysis, support becomes new resistance and resistance becomes support. On the pullback you enter short at M2 and ride it to the next pivot support area at S1 which was good for 120+ pips, if S1 gets broken you could hold on for the next support M1 for 300 pips. while lowering your stop and locking in 100 pips.

http://i29.photobucket.com/albums/c2...Bvcket/ex3.png
"The market doesn't beat them, they beat themselves" - J. Livermore
  • #6
  • Jul 18, 2011 12:34pm Jul 18, 2011 12:34pm
Hi, thank you for your help,
can you post your monthly pivot indicator?
Thank you again and good trading
Pop


Quoting NYWallSt
Hello Dice, Yes its a rising trend line however there are two ways to have played this. The formation is a triangle and getting narrow so you could have gone long at support with a stop loss underneath or waited for the triangle breakout either up or down. once support was broken then you could apply one of the basic rules of Technical Analysis, support becomes new resistance and resistance becomes support. On the pullback you enter short at M2 and ride it to the next pivot support area at S1 which was good for 120+ pips, if S1 gets broken you could...
To make an omelet you have to break a few eggs so breathe and be happy
  • #7
  • Jul 19, 2011 9:28am Jul 19, 2011 9:28am
Quoting dice action
I'm not sure if I am only dreaming, or if it's within reach.

I would like to achieve two things simultaneously:
A pretty decent return of ten percent consistently per month with low risk.
Yet not have to stress with lower times frames, ONLY trading daily charts.

I don't know whether this is achievable, or (if it is) how to make it a reality.

Comments, traders?
Hi Dice

My take on this is that you can't. If you could manage 120% pa with low risk then everybody would be rich! The reason you can do very well at Forex trading is simply because you can have an appetite for risk that would be impossible for just about any fund manager.

My own appetite for risk is an absolute maximum drawdown of 50% (max risk of 2% per trade). With that risk appetite I've found a way to make a consistent and reliable 42% pa withtout compounding... but if I wound that up to 100% drawdown it could (in theory) produce a reliable 84% pa... but I'm not that brave (I think 50% is reckless enough). Those figures are based upon a ten year back-test. It is not difficult to devise a strategy that would have made a huge return in the last six months (but that is simply curve fitting).

You are on the right track with daily charts. As time frames become lower they become less predictable and (after many years of trying) I've never found a strategy that backtests with consistent profits on very short time frames.

So in summary... with $100,000 capital and acceptance of max 50% drawdown it is my assertion that the most you could reliably make, and spend (no compounding built into the figures) would be about $42,000 pa.

Medran
  • #8
  • Jul 21, 2011 9:30am Jul 21, 2011 9:30am
Thank you all for your replies...

I would much prefer to set aside 10k and compound it to 1.9m in 15 years, rather than making 42% on 100k and spending it every year...

So we got NYWallstreet saying it's possible, and Custos and Medran saying it's impossible with low risk. Who is right? Or are they all wrong?
  • #9
  • Jul 21, 2011 9:40am Jul 21, 2011 9:40am
Quoting dice action
So we got NYWallstreet saying it's possible, and Custos and Medran saying it's impossible with low risk. Who is right? Or are they all wrong?
They're all right, or wrong.

Nasty drawdowns happen, no matter who you are. I've run into a couple of really long ones, not very deep, but very fucking long. Having the mindset that you're going to make 10% per month will set you up for some serious mind-screwing when you miss that target for 2-3 months. Or try not hitting it for 9 months. What are you going to do then? Just get that silly idea out of your head right now and you'll be a lot better off.
  • #10
  • Edited 1:01pm Jul 21, 2011 9:50am | Edited 1:01pm
Quoting dice action
Thank you all for your replies...

I would much prefer to set aside 10k and compound it to 1.9m in 15 years, rather than making 42% on 100k and spending it every year...

So we got NYWallstreet saying it's possible, and Custos and Medran saying it's impossible with low risk. Who is right? Or are they all wrong?
while this might be possible, you have to include the yearly tax on your profits. If you are living in europe then that might be around 50% of your trading income (depending on where you live), that will deeply cut into the compounding process.

Look, we are playing here a game of probabilities. Even if you would have a system that is 99% right and only 1% wrong, doesn't mean that you can't have 100 losers in a row. That's the thing, you have to be prepared that such outliers happen, and they definitely will happen, I can promise you that already.

In other words, there is no free lunch. If you want high returns, then be prepared for deeper drawdowns. If high returns with low drawdowns would be possible, then you just could give your money to a fund manager instead of doing it yourself and trying to outperform them.
  • #11
  • Jul 21, 2011 10:15am Jul 21, 2011 10:15am
Quoting Custos
while this might be possible, you have to include the yearly tax on your profits. If you are living in europe then that will be around 50% of your trading income,.....
50% ? wow.
  • #12
  • Jul 21, 2011 10:18am Jul 21, 2011 10:18am
Quoting supremeChaos
50% ? wow.
well, only for high earners, if you earn less, you have to pay less. Somebody has to pay for our social system
  • #13
  • Jul 21, 2011 11:16am Jul 21, 2011 11:16am
Quoting supremeChaos
50% ? wow.
in holland its taxfree till 17.600 Euro, after that you pay 1.2%, not 50...
and should you have kids, you can count an extra Eur 2762,- for the taxfree part (per child)
  • #14
  • Jul 21, 2011 11:21am Jul 21, 2011 11:21am
Quoting ido370
in holland its taxfree till 17.600 Euro, after that you pay 1.2%, not 50...
and should you have kids, you can count an extra Eur 2762,- for the taxfree part (per child)
I gotta move to holland
  • #15
  • Jul 21, 2011 11:40am Jul 21, 2011 11:40am
I like to figure on 28% flat capital gains tax , thus:
60% per annum would be a real return of 43,2% which I could compound.
42% would in above scenario be equal to 30,24% real return annually, which isn't that much higher than what you may sometimes get with stock mutual funds (sigh)... And with stock mutual funds I wouldn't have to pay any taxes all the time while invested until the day I choose to sell the the assets...

If there's really so "little" extra to gain by being a full time trader, makes me think why would we even bother trying.
  • #16
  • Jul 21, 2011 12:23pm Jul 21, 2011 12:23pm
Quoting dice action
I like to figure on 28% flat capital gains tax , thus:
60% per annum would be a real return of 43,2% which I could compound.
42% would in above scenario be equal to 30,24% real return annually, which isn't that much higher than what you may sometimes get with stock mutual funds (sigh)... And with stock mutual funds I wouldn't have to pay any taxes all the time while invested until the day I choose to sell the the assets...

If there's really so "little" extra to gain by being a full time trader, makes me think why would we even bother trying....
It all depends, can you pull off 30 % real return CONSISTENTLY? Cause most funds can't, and most funds will at one point blow up when there is a new crisis.
If I know that my method is recession proof, then I would rather trade for myself, than investing in a fund.

Returns mean nothing, if they are not consistent.
  • #17
  • Jul 21, 2011 12:58pm Jul 21, 2011 12:58pm
Quoting dice action
I like to figure on 28% flat capital gains tax , thus:
60% per annum would be a real return of 43,2% which I could compound.
42% would in above scenario be equal to 30,24% real return annually, which isn't that much higher than what you may sometimes get with stock mutual funds (sigh)... And with stock mutual funds I wouldn't have to pay any taxes all the time while invested until the day I choose to sell the the assets...

If there's really so "little" extra to gain by being a full time trader, makes me think why would we even bother trying....
Expecting mutual funds to return 30% a year is absurd.

And I suspect that many people who want to become a full time trader want it for the life benefits, i.e. working for yourself, working from anywhere, etc. more than just the money.

I would listen to Dopey; get the idea of "X % a month" out of your head.
  • #18
  • Edited 2:29pm Jul 21, 2011 2:25pm | Edited 2:29pm
Quoting smittens4212
Expecting mutual funds to return 30% a year is absurd.

And I suspect that many people who want to become a full time trader want it for the life benefits, i.e. working for yourself, working from anywhere, etc. more than just the money.

I would listen to Dopey; get the idea of "X % a month" out of your head.
I never said I expected mutual funds to return 30 percent per year on average. I said I expected forex to return a lot more than 30 percent per year.
There are some nice mutual funds out there that have good average annual returns (geometric mean).

If you invest in a good fund and earn 15-20% annual returns on average, then you dont have to work at all. And yes, you can still travel!

If you are earning 30 percent a year as a quote "full time trader", then the only thing that separates you from the average Joe with a solid career and all that comes with it, is a few measly percent per annum, unless you actually lose money of course (while average Joe actually makes money from his investments over time by just sitting still and following the "good advice" from his bank/financial advisor/whatever).

Also, the only thing that separates you from another guy who doesn't trade at all and just lazes away on a tropical beach, is only a few measly percent per annum, in exchange for all the boredom, screen-staring, frustration, dilemmas, stress, disappointment, pain and fear.

I was always expecting forex to be more lucrative than that.
  • #19
  • Jul 21, 2011 3:34pm Jul 21, 2011 3:34pm
Yes - this goal is achievable.

But first some comments about other comments. . .

About trend lines . . . the definitive book on trend lines is "The New Science of Technical Analysis" by Tom DeMark. His definition of trend lines and ongoing study of price action trend lines using Supply and Demand trend lines will remove any arbitrary speculation of what constitutes a trend line and its relevance in trading. When I asked a very successful years ago about trend lines, he suggested I get DeMark's book and read Chapter 1 100 times. Great advice.

About pivots, fibs and oscillators . . . they are equally reliable, or unreliable. Based on your trading training, beliefs and systems exposure, you will have been convinced that one is better than another. Typically all mechanical systems use one or the other or a combination. A case could be made for or against any of them. Statistically, their reliability and performance are near equal.

About market price action . . . you must learn the language of the market. Price action, structure and repeatable patterns are much more reliable statistically than any indicators.

About higher time frames . . . 10% a month is very possible and I agree completely with NYWallSt - fewer, yet higher probability set ups are the road to success - and don't worry about that percentage as a yardstick. The market will reward your patience. Most traders tend to be impatient and subsequently over trade.

Last but not least, you need to have the account size and stomach to position trade. Profits are sizable, but the draw downs can be as well.
  • #20
  • Jul 21, 2011 3:46pm Jul 21, 2011 3:46pm
I would like to achieve two things simultaneously:
A pretty decent return of ten percent consistently per month with low risk.

Brother
10% monthly is a "billion dollar" return overtime!

Start with 10000..
10% monthly componunded triples your money in a year (aprox.)
1Year 30000
2 year 90000
270000
810000
2,430000
7290000
7 year 21800000

Yes 10% monthly is "a pretty decent return", it would make you over 20 million in 7 years, starting with some humble 10000 bucks.
Wish you the best of success..!!!!!!!!!!!!!!!!!!!!!
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