PTT Method (Profitable Trend Trading) in Forex
Hi all,
behman, no worries on the math part.. figuring out %, ROI, etc. all u gotta worry about is the balance at the end of the week, month, year..
Actually, it is good to keep track of the floating loss (open float) as this is what causes margin calls if it gets too high. Even that, though, just keep your lots in proportion to your acc size and you should'nt have to worry.. it's not like u are trading martingale or something. I like to keep a trade log just to keep track of what I traded and a the result in pips won or lost. I then write down a simple win/loss record like this.. trades won / total trades taken. so for me and PTT this is 1/11 right now.
nubchai, I hear u about the fri. close. I don't know if I like the idea of holding trades open over the weekend and risking any open profit gained to wild market opens, but that is the PTT method so I'll give it a good trial before I discard that part of it. I'll just keep track of what my balance would be if I had closed all open trades each fri. vs what I get by trading PTT.
behman, no worries on the math part.. figuring out %, ROI, etc. all u gotta worry about is the balance at the end of the week, month, year..
Actually, it is good to keep track of the floating loss (open float) as this is what causes margin calls if it gets too high. Even that, though, just keep your lots in proportion to your acc size and you should'nt have to worry.. it's not like u are trading martingale or something. I like to keep a trade log just to keep track of what I traded and a the result in pips won or lost. I then write down a simple win/loss record like this.. trades won / total trades taken. so for me and PTT this is 1/11 right now.nubchai, I hear u about the fri. close. I don't know if I like the idea of holding trades open over the weekend and risking any open profit gained to wild market opens, but that is the PTT method so I'll give it a good trial before I discard that part of it. I'll just keep track of what my balance would be if I had closed all open trades each fri. vs what I get by trading PTT.
- #185
- Sep 10, 2011 5:17pm Sep 10, 2011 5:17pm
- Joined Jun 2009 | Status: Trend Trader | 6,287 Posts
If you think you can or cannot do it you are correct
- #190
- Edited 10:13pm Sep 11, 2011 10:01pm | Edited 10:13pm
ericjschroed said 'Probability perhaps, but not margin since it requires no more margin than first required.'
Ok, I understand margin used stays the same, but I was actually looking at it like this.. u would need to be in a trade longer as u waited for tp2 and tp3 to hit and therefore would have more of your available margin tied up for longer than if u just exited all al tp1. right? Also, I don't know what your broker's min lotsize is, but for me a micro lot is the smallest. I can only afford to trade with 1 micro lot and wouldn't trying to use 3 SL's like this require me to open each trade with at least 3 micro lots?
'I tested the GBPUSD for the last year, the one that got a whopping -23% loss in the first test, taking every IB except Sundays, and exit at every 1st target 1:1, with SL at the other end of the IB, and got a -8% loss for the year and about 40% W/L ratio.'
Doesn't sound too promising. I hope behman and any others trying this method achieve a better result. Behman, u probably did some backtesting of your own? What results have u seen? Any pairs did real good or to avoid with this method?
'Also, Alto, there are simple trade management EAs which could easily handle this multiple exit plan'
Yes, I like Hopwood's EA for this.. if I were to try it.
I just took a look at my platform.. I was a bit scared that market might gap against my open trades and so I would be losing or worse, but it looks like the market favors PTT and all 3 of my open trades got a nice gap in the right direction. cool! I will be looking for new IB's and setting some stop orders. I think the idea is to add-on to existing trends and sunday bars serve to make good IB's for that, plus the market has most likely settled down by then and chosen to continue a trend or not.
Ok, I understand margin used stays the same, but I was actually looking at it like this.. u would need to be in a trade longer as u waited for tp2 and tp3 to hit and therefore would have more of your available margin tied up for longer than if u just exited all al tp1. right? Also, I don't know what your broker's min lotsize is, but for me a micro lot is the smallest. I can only afford to trade with 1 micro lot and wouldn't trying to use 3 SL's like this require me to open each trade with at least 3 micro lots?
'I tested the GBPUSD for the last year, the one that got a whopping -23% loss in the first test, taking every IB except Sundays, and exit at every 1st target 1:1, with SL at the other end of the IB, and got a -8% loss for the year and about 40% W/L ratio.'
Doesn't sound too promising. I hope behman and any others trying this method achieve a better result. Behman, u probably did some backtesting of your own? What results have u seen? Any pairs did real good or to avoid with this method?
'Also, Alto, there are simple trade management EAs which could easily handle this multiple exit plan'
Yes, I like Hopwood's EA for this.. if I were to try it.
I just took a look at my platform.. I was a bit scared that market might gap against my open trades and so I would be losing or worse, but it looks like the market favors PTT and all 3 of my open trades got a nice gap in the right direction. cool! I will be looking for new IB's and setting some stop orders. I think the idea is to add-on to existing trends and sunday bars serve to make good IB's for that, plus the market has most likely settled down by then and chosen to continue a trend or not.
One thing to consider is that maybe it's not wise to trade all IBs. For example maybe smaller IBs or IBs that are no more than a certain % of the previous bar (e.g. 40%) would produce better results.
I also think there may be merit to kevin's method of a fixed Sl of 30 instead of using the oposite side of the IB for SL.
I think u got me wrong.. I'm not actually using the IB method, at least not the same one as behman.. I am using IB's to set my stop orders like Kelvin lined out, but only in a strong, visible trend move. (only in the direction that agrees with 50ema and usually the pair shows a bounce off ema and/or some other obvious trendish PA) I do use the 30 SL on all 6 majors that I trade, plus a 50 SL on e/j and g/j.
alto
note: wow, got 6 open trades now and i'm sitting on $146 positive float, despite having 1 more small loss already today. so my record is 1/12. real tempting to close all now and take the profit.
*seems as if I finally caught u/j on the move.. looks like another bounce down off the ema. only took me 4 tries!
- #194
- Sep 12, 2011 6:34am Sep 12, 2011 6:34am
- Joined Feb 2009 | Status: Trader | 25,867 Posts
SEE LINE,TRADE LINE..PRICE HAS TO GO SOMEWHERE,,, PRICE WILL GO SOMEWHERE.
Hi nubchai,
I think u got me wrong.. I'm not actually using the IB method, at least not the same one as behman.. I am using IB's to set my stop orders like Kelvin lined out, but only in a strong, visible trend move. (only in the direction that agrees with 50ema and usually the pair shows a bounce off ema and/or some other obvious trendish PA) I do use the 30 SL on all 6 majors that I trade, plus a 50 SL on e/j and g/j.
alto
note: wow, got 6 open trades now and i'm sitting on $146 positive float, despite having 1 more small loss already today....
I was really thinking more of Eric's backtest where he took all of the IBs. I agreethat Kelvin's strategy would seem to increase the probability of success. But I'm also wondering if you get that bounce off the 50 and the IB is really small if that suggests a bigger move. If that pattern was true then you could use it to maybe increase your lot size. Just thinking out loud.
Hello All,
Nubchai, sounds like an interesting tweak.. if u could figure out what correlation the size of an IB has, if any, to the size of the following move. Sounds like u would need to do some major backtesting to determine that, and lots of forwardtesting to cement your findings. For me, I just think IB's are an easy to spot, good place to enter already established trends and we are simply trying to ride/follow those trends until price stops us out.
Now, kinda contrary to PTT thinking here, but last night I was watching my open trades and saw a $150 float.. I was tempted to close all, or at least the big winners, but decided that I should follow the PTT method. Anyway, I'm wondering if a global equity close of some sort should be used.. maybe at 10-20%? I know a monster trend is always around the corner (from what I read from people's trading experience, there comes 1 monster trend every few months or so.. by monster trend I mean 1000+ pips) After 1 of these monster trend moves come, I'm sure it's like in the youtube 'whipsaw' song.. 1 good trend pays for them all.
but let me do the math here.. say we get an average of 10 small sl's per week, that's 40 sl's per month, and 120 every 3 months. ok, 120 x 30 pip sl = 3600 pips lost. Now let's say it's 1000 won for the monster move, plus 4 add-on trades.. for let's guesstimate a total of 2000 pip gained in total. now, my ej trade just stopped out for a 324 pip gain, so i'm guessing a trade like this might happen about every 2 weeks? (i'm being conservative here, but i'll just use that for now) so that's 300 pips per regular trend, 600 pips per month, and 1800 per 3 months. Add that to the 2000 from the monster move and we get 3800.. let's just call it 4000. So, if we take 4000-3600 = 400 (the total pips won in 3 months) now, that's a good profit i know, but hardly the ROI that can be had if we took 10-20% gains about every 2 weeks. For my little account, trading micro lots, that comes to $40 won shen using the monster trend way vs a possible $120+ when using the GEC method at 10% every 2 weeks. (actually, i started at $400 account, so $40 is 10%/month, not 2 weeks. I'm also not figuring out the compounding) Yes, we'll be leaving pips on the table by not following that monster trend to completion, but it might just be a more profitable way. Plus, we can still get back into that monster trend via the IB's.
I think I've convinced myself, I'll be switching the the GEC method. Further convincing myself.. at least I'm not being as greedy by holding out for that monster trend to show up?? I know, not really.
Nubchai, sounds like an interesting tweak.. if u could figure out what correlation the size of an IB has, if any, to the size of the following move. Sounds like u would need to do some major backtesting to determine that, and lots of forwardtesting to cement your findings. For me, I just think IB's are an easy to spot, good place to enter already established trends and we are simply trying to ride/follow those trends until price stops us out.
Now, kinda contrary to PTT thinking here, but last night I was watching my open trades and saw a $150 float.. I was tempted to close all, or at least the big winners, but decided that I should follow the PTT method. Anyway, I'm wondering if a global equity close of some sort should be used.. maybe at 10-20%? I know a monster trend is always around the corner (from what I read from people's trading experience, there comes 1 monster trend every few months or so.. by monster trend I mean 1000+ pips) After 1 of these monster trend moves come, I'm sure it's like in the youtube 'whipsaw' song.. 1 good trend pays for them all.
but let me do the math here.. say we get an average of 10 small sl's per week, that's 40 sl's per month, and 120 every 3 months. ok, 120 x 30 pip sl = 3600 pips lost. Now let's say it's 1000 won for the monster move, plus 4 add-on trades.. for let's guesstimate a total of 2000 pip gained in total. now, my ej trade just stopped out for a 324 pip gain, so i'm guessing a trade like this might happen about every 2 weeks? (i'm being conservative here, but i'll just use that for now) so that's 300 pips per regular trend, 600 pips per month, and 1800 per 3 months. Add that to the 2000 from the monster move and we get 3800.. let's just call it 4000. So, if we take 4000-3600 = 400 (the total pips won in 3 months) now, that's a good profit i know, but hardly the ROI that can be had if we took 10-20% gains about every 2 weeks. For my little account, trading micro lots, that comes to $40 won shen using the monster trend way vs a possible $120+ when using the GEC method at 10% every 2 weeks. (actually, i started at $400 account, so $40 is 10%/month, not 2 weeks. I'm also not figuring out the compounding) Yes, we'll be leaving pips on the table by not following that monster trend to completion, but it might just be a more profitable way. Plus, we can still get back into that monster trend via the IB's.
I think I've convinced myself, I'll be switching the the GEC method. Further convincing myself.. at least I'm not being as greedy by holding out for that monster trend to show up?? I know, not really.
