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Trading Made Simple

  • #10,541
  • Aug 23, 2011 9:17pm Aug 23, 2011 9:17pm
Quoting Phx62
Attached are a couple of screenshots of three trades taken so far this week using the simple rules of TMS.....two of them on the H1 time frame set-ups per rules I discussed in a post last Sunday (100 pip TP on the cross of green over red and stochastic agreement).
Nice posts Phx62, goog trading.
Good Trading
  • #10,542
  • Aug 23, 2011 9:19pm Aug 23, 2011 9:19pm
Quoting dean
Yep .....although its not advice its just my opinion.
I am with you in regards to taking profit. At the risk of offending, taking 10 pips profit when you have your stop 80 pips away on the last swing high or low is insane. Anyone who does this on a consistent basis, I can only hope their stops get hit a few times in a row so they learn its simply not worth it. Hopefully they dont have their life savings on the line when it happens. I dont care if you are only demo ing.....the fact is ...trading needs to become mechanical habit like dginc has said....emotionless...
Dean, did you post your chart? For some reason it's not coming up. Thanks
F09
  • #10,543
  • Aug 23, 2011 9:26pm Aug 23, 2011 9:26pm
Sorry syder and fitness....here is the chart I meant to post
Attached Image (click to enlarge)
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  • #10,544
  • Aug 23, 2011 10:56pm Aug 23, 2011 10:56pm
Quoting dean
Yep .....although its not advice its just my opinion.
I am with you in regards to taking profit. At the risk of offending, taking 10 pips profit when you have your stop 80 pips away on the last swing high or low is insane. Anyone who does this on a consistent basis, I can only hope their stops get hit a few times in a row so they learn its simply not worth it. Hopefully they dont have their life savings on the line when it happens. I dont care if you are only demo ing.....the fact is ...trading needs to become mechanical habit like dginc has said....emotionless...
Thanks Dean...good info. I'll just have to be a little more patient for the best setups.
  • #10,545
  • Aug 24, 2011 12:47am Aug 24, 2011 12:47am
Quoting spyderman
I still can't wrap my mind around the right TP or SL. When I set SL at the previous low and then others say take profit on 20 or 30 pips...that risk/benefit ratio is way off.

If I try for 100 pip TP I just don't see that happening.
Spyderman, Dean's words are very wise and definitely take heed of them.

As always, there's a few different variations on a theme. Although there's a number of people here who do set based on last swing high / low, there's also people that take a more programmatic approach, in particular dcginc and a few others.

In particular, it involves using ATR (Average True Range) to set the SL and TP levels. Typically he'll set SL to ATR(7) x 2 and same with TP. A number of others do the same, including myself. [ ATR(7) being the average true range over the last 7 periods ].

The advantage is that it's a consistent stop/profit criteria that adapts to market conditions. Having said that, you can get caught out during the early hours of London because typically the range has been flat during Asia and suddenly perks up, but your SL / TP is still mainly based on what happened during Asia.

I've also experimented with SL = ATR(7) x1 and TP still at x2. Works most of the time, but can get stopped out early, currently trialling SL at 1.5.

For me the key is this ...

Use ATR to determine what your SL is going to be, then use that to calculate your position size. This means that no matter whether your SL is 100 pips or 20 pips (because it can vary that much based on market conditions), you are only risking the same amount of $ per trade. If you don't calculate your position size based on this, you risk some losing trades becoming much more expensive than others, especially if you're using a NZD or AUD based account for example. My way, whatever the currency pair, whatever the market volatility, it's still the exact same amount of $ at risk.

Links to some of dcginc's key posts ...
http://www.forexfactory.com/showthre...92#post4756692
http://www.forexfactory.com/showthre...63#post4765263
http://www.forexfactory.com/showthre...82#post4769782

Absolutely you must determine yourself whether on top of this, you want to be setting SL to BE at a certain point, or a TS, etc etc.. I do, others don't. Test, test, test, analyse, analyse, analyse, and find out what works for you.
1 pip at a time ... if the entries are strong, the rest will follow ...
  • #10,546
  • Edited 1:43am Aug 24, 2011 1:32am | Edited 1:43am
Quoting antantnz
Spyderman, Dean's words are very wise and definitely take heed of them.

As always, there's a few different variations on a theme. Although there's a number of people here who do set based on last swing high / low, there's also people that take a more programmatic approach, in particular dcginc and a few others.

In particular, it involves using ATR (Average True Range) to set the SL and TP levels. Typically he'll set SL to ATR(7) x 2 and same with TP. A number of others do the same, including myself. [ ATR(7) being the average true range over the...
Thanks for this great information. I do have a question, and it may be a little elementary, but lets say I entered long Eu right now and the ATR(7) is @ .0022 and I was going to set my TP @ .0044. How would I determine where that is as far as price? Thanks again.

Obviously I wouldn't enter right now because the conditions are not right for the TMS method.

Updated: If the ATR(7) is showing .0022 does that mean it's avg movement is 22 pips? So 2*ATR(7) would be a 44 pip SL and TP?

Update #2: If that is the case, then I can figure how much of a position I would buy or sell according to how much I am willing to risk?
  • #10,547
  • Aug 24, 2011 1:54am Aug 24, 2011 1:54am
Quoting DaveUK
Yep you got it. That's exactly how it works.

By the way, really enjoying this thread at the moment. There are some really good contributions coming from a number of people (won't name cos I'll forget someone... but you know who you are!) Excellent stuff... thanks all.
So why the heck haven't I been doing these calculations after a year of live trading (and a year of teaching myself) and how the heck have I been making money? Man, you learn something new every day.

I try to share what I can, but thanks so much to all the great contributors on this thread.

F09
  • #10,548
  • Aug 24, 2011 1:59am Aug 24, 2011 1:59am
Quoting antantnz
Spyderman, Dean's words are very wise and definitely take heed of them.

As always, there's a few different variations on a theme. Although there's a number of people here who do set based on last swing high / low, there's also people that take a more programmatic approach, in particular dcginc and a few others.

In particular, it involves using ATR (Average True Range) to set the SL and TP levels. Typically he'll set SL to ATR(7) x 2 and same with TP. A number of others do the same, including myself. [ ATR(7) being the average true range over...
This is great info and thanks for the support antz. The other factor to having hard stop losses and take profits is this....and its JUST as important as money management.....having set SL and TP remove the greed (TP) and the fear (SL)..so as long as you have assessed the trade as per your rules and methods and it meets your criteria, you can let it fly and walk away. Removing emotions from the trade can improve your trading greatly and hard stops and Ts can do that. But in order to do that with this type of method you need to trial and document the trades you have...find the level of stop you are comfortable with getting hit and ensuring your trade entries are perfect. If your stops are tighter but your win rate is good it doesnt matter if you get stopped out more....the impact is lower and you have prepared for that with MM. Then you just need to improve on picking your trades and the entry point and off you go....sounds simple eh??
  • #10,549
  • Edited 2:31am Aug 24, 2011 2:01am | Edited 2:31am
Quoting Fitness09
Updated: If the ATR(7) is showing .0022 does that mean it's avg movement is 22 pips? So 2*ATR(7) would be a 44 pip SL and TP?

Update #2: If that is the case, then I can figure how much of a position I would buy or sell according to how much I am willing to risk?
Yep you got it. That's exactly how it works.

So let's say your account size is $2000 and your maximum risk per trade is 1.5%. That means if you're trading 0.1 lots = $1 per pip = 30 pips maximum stop loss.

If you wanted your stop loss at 60 pips, you would have to trade .005 (50 cents per pip) lots to maintain that 1.5% risk.

A 44 pip stop loss would mean (gets calculator out) .007 lots.

It's worth having all this on paper so when you come to trade, you can see instantly what your trade value should be for the stop loss you want. So you could have the pairs you trade listed and how many pips are represented by each lot value. For EURUSD for example you'd have 0.1, 0.07, 0.05, 0.04, 0.03 and 0.02 listed at the top, then underneath 30 pips, 43, 60, 75, 100 and 150. So if you saw a trade and wanted your stop loss at 75 pips, you could glance at the chart and see straight away that it's a 0.04 lot trade.

EDIT: obviously the above numbers only relate to a $2k account with a max 1.5% risk per trade. If you're running a $5 account with a 2% max risk, they'll clearly be different. Even if you're running demo though, I think it would be worth taking the figure you expect to trade live and using it for your calculations. That way, when you do move to live, all this stuff should be second nature.

By the way, really enjoying this thread at the moment. There are some really good contributions coming from a number of people (won't name cos I'll forget someone... but you know who you are!) Excellent stuff... thanks all.
  • #10,550
  • Aug 24, 2011 2:02am Aug 24, 2011 2:02am
I just don't know how I didn't blow up my account by trading without setting these levels.
  • #10,551
  • Aug 24, 2011 2:03am Aug 24, 2011 2:03am
Quoting DaveUK
Yep you got it. That's exactly how it works.

So let's say your account size is $2000 and your maximum risk per trade is 1.5%. That means if you're trading 0.1 lots = $1 per pip = 30 pips maximum stop loss.

If you wanted your stop loss at 60 pips, you would have to trade .005 (50 cents per pip) lots to maintain that 1.5% risk.

A 44 pip stop loss would mean (gets calculator out) .007 lots.

It's worth having all this on paper so when you come to trade, you can see instantly what your trade value should be for the stop loss you want. So you...
Thanks Dave I really appreciate it
afternoon mate how are we??? ready to go?
  • #10,552
  • Aug 24, 2011 2:05am Aug 24, 2011 2:05am
Quoting dean
Thanks Dave I really appreciate it
afternoon mate how are we??? ready to go?
Mornin matey! Yep have to be out for a good deal of the day but we'll see what happens!
  • #10,553
  • Aug 24, 2011 2:50am Aug 24, 2011 2:50am
Ok so all you guys out there that study butterflies and gartleys and whatever all those other weird and wonderful patterns are....is this a head and shoulders??? If so I believe they generally keep heading down once the lower shoulder is broken correct??
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  • #10,554
  • Aug 24, 2011 3:17am Aug 24, 2011 3:17am
I'm in
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  • #10,555
  • Aug 24, 2011 3:21am Aug 24, 2011 3:21am
Short on EU H4 TMS 1st Trade
On M5 and M15 scalp 1 live trade each for a few pips
TMS is cool !!!
Attached is an exel file for MM (for those who are interested), I DL it last week, I'm trying it out now to manage my lotsize for live trading.
Attached Image
Attached File(s)
File Type: xls DDSMM-v1.4.xls   874 KB | 571 downloads
  • #10,556
  • Aug 24, 2011 3:23am Aug 24, 2011 3:23am
Quoting dean
Ok so all you guys out there that study butterflies and gartleys and whatever all those other weird and wonderful patterns are....is this a head and shoulders??? If so I believe they generally keep heading down once the lower shoulder is broken correct??
looks similar but that pattern doesnt cut the mustard. I would prefer a more symmetrical left shoulder and I like the neckline to be a major S/R level, fib, or pivot, BRN etc. that looks more like a range bound pattern.
  • #10,557
  • Aug 24, 2011 3:24am Aug 24, 2011 3:24am
Quoting dean
I'm in
err...disregard...you beat me to it.
  • #10,558
  • Aug 24, 2011 3:25am Aug 24, 2011 3:25am
Quoting XxLessoxX
looks similar but that pattern doesnt cut the mustard. I would prefer a more symmetrical left shoulder and I like the neckline to be a major S/R level, fib, or pivot, BRN etc. that looks more like a range bound pattern.
Thanks. What do you mean range bound pattern??? as opposed to what??
  • #10,559
  • Aug 24, 2011 3:29am Aug 24, 2011 3:29am
Quoting XxLessoxX
err...disregard...you beat me to it.
strong candle and bounce off trendline. M30 looks as though it is going to be a signal so I will stick with it...I am up 20 pips now with a 20 stop loss. Aiming for around 1.05 even....maybe
  • #10,560
  • Aug 24, 2011 3:29am Aug 24, 2011 3:29am
Quoting dean
Thanks. What do you mean range bound pattern??? as opposed to what??
instead of a reversal pattern (head and shoulders).
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