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Trading Made Simple

  • #12,221
  • Oct 1, 2011 4:12pm Oct 1, 2011 4:12pm
Quoting 4xbillions
In my opinion, one should never really have a goal of pips per day or pips per week, etc.

you will find that you really can turn any and all of your dreams into reality.
Those of you who responded to my post are quite right of course. I could have worded my post much, much better. I really was just trying to get across that profits will come, and your account size will grow making regular profits. They don't have to be huge, just a little at a time and the effect of compounding will increase the return exponentially without greater effort from you.

Large positive pips to all.
Short Euro and remaining that way. That's just the way it is !
  • #12,222
  • Oct 1, 2011 6:58pm Oct 1, 2011 6:58pm
Quoting smatthew
Trade taken at 1pm GMT+1 turned out to be a winner.
Automatic trade management took care of moving my stop up.
Nice work SM. Good job skipping those first couple of cross signals too.
Everyone's got a plan until they get punched in the face
  • #12,223
  • Oct 1, 2011 8:48pm Oct 1, 2011 8:48pm
Quoting piprac
Perhaps. Dean, I trade the 1H (preferred) or 15M during the NY session so I take what I can get. I reentered 3 hrs later selling the A/$ & gbp/$ and got +26 pips for a net of +11 for the morning. Like BigE I have not had success with the NY 4H at 07:00 cdt my time so again as he suggests I go to the 1H.
Erebus has suggested a manual backtest looking at the 1H early morning to see if 1 or 2 prs consistently deliver +25-50 pips. I can then push lot size to a more agressive 3 or 4%. This isn't set in stone but just a testing idea. Thanks for you input...
The profits you are taking are ridiculously small for the one hour chart....becasue I know full well that your stops would be at least 2 to 5 times those amounts if you are trading it correctly and using the last swing high or low for your stops....if you trade the hourly chart and make your trading plan one that takes 10 to 25 pips with large stops required for this method you will end in a blown account.
  • #12,224
  • Oct 1, 2011 9:01pm Oct 1, 2011 9:01pm
Quoting Britpip7
Points to consider:

1. 10 pips a day, componded every day will indeed perform as you say

2. To achieve 10 pips a day, where will you set your SL?

3. If you have a loss, how long does it take to recover the account?

4. What is your money management plan / risk - reward ratio, etc?

5. What % of accuracy will you need to achieve 10 pips per day / how many trades?

6. Are you able to watch the trades to achieve these goals?

Many more points to consider, but the main issue is that hitting 10 pips as a target gets you in trouble as soon as...
GREAT post Britpip. Compounding sounds fantastic on the surface and it is....but the prior post regarding compunding is assuming that every trade you have is a winner....and that just aint gonna be the case....so its just as important to have a failure plan to dig you out of the hole.....and this is where I believe the % method can be of harm....I dont want to get into an argument about it and I know it works for a lot of people, but my basis for this statement is this.....when you have a string of losing trades......and you will.....the 2% (or whatever % you use) becomes less because your account has shrunk due to the losses.....so say 5 trades in a row go bad and your account goes from (I will just use round numbers for ease of understanding) $5000 to $4000 due to the losers....now you are entering trades with 2% of $4000 instead of 2% of $5000 so to dig yourself out of that hole you will need more than 5 trades and thats just to break even...which as this post suggests.....then leads to overtrading and chasing your arse........which in turn usually leads to a bigger hole and well on your way to a blown account.....anyway....this is not a money management forum, my main point is in agreement with Britpip here....you HAVE to account for losses in a manner that gets you out of the hole quickly.....its not as rosy as thinking...WOW this compounding will get me to riches quickly....you are going to have losses....lots of them....so ensure you have a plan to get you back on track quickly.
  • #12,225
  • Oct 1, 2011 9:14pm Oct 1, 2011 9:14pm
Many months ago I read a post on some forum by a scalper - he often but not always risked 30%, looking for the big $ on 4 or 5 pips. This is interesting: assume $1000 starting margin, risking 10% of available margin, and you have 10 straight losses. How much will you have left in the margin acct? Ans.: $348.68, still enough for several Happy Meals at the golden arches.

I"m not advocating this at all but it does illustrate that dwendling margin accounts using the same percent of risk need not necessarily go broke, just slightly devasted!!! p
  • #12,226
  • Oct 1, 2011 9:20pm Oct 1, 2011 9:20pm
Now use the same maths to work out how many straight wins you need to get back to your starting balance.
Good Trading
  • #12,227
  • Oct 1, 2011 9:50pm Oct 1, 2011 9:50pm
Quoting smatthew
Trade taken at 1pm GMT+1 turned out to be a winner.
Automatic trade management took care of moving my stop up.
Smatthew, interesting posts. a question, Why do you use Sto (3,8,3)? BigE's strategy has always been used Sto(8,3,3).

Thank you.
Enter Signature
  • #12,228
  • Oct 1, 2011 11:41pm Oct 1, 2011 11:41pm
Quoting piprac
Many months ago I read a post on some forum by a scalper - he often but not always risked 30%, looking for the big $ on 4 or 5 pips. This is interesting: assume $1000 starting margin, risking 10% of available margin, and you have 10 straight losses. How much will you have left in the margin acct? Ans.: $348.68, still enough for several Happy Meals at the golden arches.

I"m not advocating this at all but it does illustrate that dwendling margin accounts using the same percent of risk need not necessarily go broke, just slightly devasted!!!...
Your math is spot on, but just wondering why you use the term "margin" instead of the more common "Account Balance"? (assuming he only has time for 1 trade at a time when using this method of course)

And why did you drop to 10% for your example?

Here is what happens when you gamble that 30% as mentioned. I think the psychological impact of losing 30% of account in the first trade would cement his gambler mentally in place and he would just continue at that risk in an attempt to recover quickly.

The only way to contain the loss to 30% would be to have a hard stop in place. As a scalper, this would probably be a very large position with small stop, possibly a mental stop as he "knows" he is right with his trade, so why use a stop?

As he continues to do this, and get his random rewards, he will surely continue doing it until the inevitable ending; hopefully he will be far enough ahead with his account by then, but still, a 30% hit to an account of any size is going to hurt, no matter whose money it is!

YMMV
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It takes a lot for me to IGNORE you, but you can try.
  • #12,229
  • Oct 2, 2011 12:16am Oct 2, 2011 12:16am
Quoting dean
GREAT post Britpip. Compounding sounds fantastic on the surface and it is....but the prior post regarding compunding is assuming that every trade you have is a winner....and that just aint gonna be the case....so its just as important to have a failure plan to dig you out of the hole.....and this is where I believe the % method can be of harm ....I dont want to get into an argument about it and I know it works for a lot of people, but my basis for this statement is this.....when you have a string of losing trades......and...
Quoting dean
the 2% (or whatever % you use) becomes less because your account has shrunk due to the losses.....so say 5 trades in a row go bad and your account goes from (I will just use round numbers for ease of understanding) $5000 to $4000 due to the losers....now you are entering trades with 2% of $4000 instead of 2% of $5000 so to dig yourself out of that hole you will need more than 5 trades and thats just to break even...which as this post suggests.....then leads to overtrading and chasing your arse........which in turn usually leads to a bigger...
Quoting dean
and well on your way to a blown account.....anyway....this is not a money management forum, my main point is in agreement with Britpip here....you HAVE to account for losses in a manner that gets you out of the hole quickly.....its not as rosy as thinking...WOW this compounding will get me to riches quickly....you are going to have losses....lots of them.... so ensure you have a plan to get you back on track quickly.
An excellent post Dean, and I would like to hear your view on what method you suggest to use as you say the % method will harm us but do not suggest any alternative? No argument here, just like to know what you are talking about using instead of %.

Just to sort the math out in absolute terms; an account of $5,000, will require 11 straight losses of 2% before it goes to $4,000. At that point, yes it will take a lot of trades to get back to $5,000 = DEPENDING on the SIZE of the winning trades of course!

As for a plan to get back on track: (or better, plan ahead before trading)

a) Back-test your method to 'know' the possibility of number of losers in a row (yes, we all know that past performance does not guarantee future results, but you have to start somewhere)

b) Again, back-test your method to 'know' the winners are larger % (in $) than the losers (note: you can have more losers than winners and still be ahead, see example)
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It takes a lot for me to IGNORE you, but you can try.
  • #12,230
  • Oct 2, 2011 8:09am Oct 2, 2011 8:09am
The reason I gave 10% as an example is because that is what the scalper usually bet. He always kept an eye on the news and if that favored his upcoming trade he bet more - 12, 15, on up to sometimes 30%. Not my cup of tea but there is a strategy for every trader's personality. p
  • #12,231
  • Oct 2, 2011 12:55pm Oct 2, 2011 12:55pm
Quoting dean
GREAT post Britpip. Compounding sounds fantastic on the surface and it is....but the prior post regarding compunding is assuming that every trade you have is a winner....and that just aint gonna be the case....so its just as important to have a failure plan to dig you out of the hole.....and this is where I believe the % method can be of harm....I dont want to get into an argument about it and I know it works for a lot of people, but my basis for this statement is this.....when you have a string of losing trades......and you will.....the 2% (or...
Dean - spot on mate.

As part of my backtesting I ran all of of the test rades in the spreadsheet so that I could adjust the numbers and test out differing %s for risk reward / SL / TP, etc. Running the back tests doesn't take that long really, so maybe an hour or two for each pair going back to the start of the year - however, adjusting the spreadsheet, adding columns for additional data and getting all of the information set up and re-running the numbers was critical and took weeks.

Then comes the trading plan followed by another batch of backtesting to verify / tweak the plan for a few more weeks and then comes an additional 3 months of live testing and some more verification / tweaking.

Everything has been based off of the TMS/TDI approach although I do run with some additional set ups that I had been using prior to finding TMS - you'll see some of that in my chart set ups.

With regards to 10 pips a day - I have never seen it happen in my testing, so can't really say wheter anyone can achieve this - I stick to the H4 and Day charts and would rather take a couple of trades per week based off the ATR approach for SL/TP.

I did caught on the wrong side of last weeks Fed announcement and that was my biggest loss in 3 months, so Sept was my worse month at a net gain of 570 pips

My advice to the "10 pips a day" crew is to go through the back testing very seriously and pick a timeframe that gives you the most consistent results - probably nothing below H1 unless you can screen sit for hours every day and you have a large bucket of Tums / Andrews / Heartburn medication.

With all of the above said - you do not need a large account to start with - you do need a rock solid trading plan / money management plan / trading mentality / ability to follow the plan and above all consistent results - this is what will take the time.
"To live with Passion, it takes Courage and Grace to survive"
  • #12,232
  • Oct 2, 2011 4:31pm Oct 2, 2011 4:31pm
Hi Brit

I'm trying to get my head around a backtesting process at the moment. I've been trying it in strategy tester but it's quite slow. Are you manually backtesting by just scrolling through the candles and marking up potential trades in your spreadsheets? I've been testing H1 and just one month takes me a couple of hours to run through once.

Cheers,

Dud
Everyone's got a plan until they get punched in the face
  • #12,233
  • Oct 2, 2011 6:19pm Oct 2, 2011 6:19pm
Quoting Dud45
Hi Brit

I'm trying to get my head around a backtesting process at the moment. I've been trying it in strategy tester but it's quite slow. Are you manually backtesting by just scrolling through the candles and marking up potential trades in your spreadsheets? I've been testing H1 and just one month takes me a couple of hours to run through once.

Cheers,

Dud
Dud,

I only ran with Manual back testing - F12 for stepping through the candles on candle close H4 and Day. Switch off Fractals if you are using them while doing back testing - I have not used a simulator and the main issue here is that TDI has already painted, so you will not necessarily see the fake outs, but this will show the entry points very well.

It takes time so keep with it and learn the charts and patterns for the entry points - check to see what the max drawdowns are compared to ATR as well as any other indicators that you use. Also look at the S/R levels to see how that influences the trade.

Live testing will help you fine tune so spend the time needed to get consistent - open a live account and run with mini lots once your testing is giving you the results - the emotions on live trading and real $ will be a culture shock, so that will be the next learning step.

Follow your trading plan and good pip hunting.
"To live with Passion, it takes Courage and Grace to survive"
  • #12,234
  • Oct 2, 2011 8:18pm Oct 2, 2011 8:18pm
Quoting piprac
Many months ago I read a post on some forum by a scalper - he often but not always risked 30%, looking for the big $ on 4 or 5 pips. This is interesting: assume $1000 starting margin, risking 10% of available margin, and you have 10 straight losses. How much will you have left in the margin acct? Ans.: $348.68, still enough for several Happy Meals at the golden arches.

I"m not advocating this at all but it does illustrate that dwendling margin accounts using the same percent of risk need not necessarily go broke, just slightly devasted!!! p
Exactly as AUD just said....now he only has $348.68.....and 10% of that is f%^&ck all....try and dig yourself out of the hole with that amount and get back to square.
  • #12,235
  • Oct 2, 2011 8:30pm Oct 2, 2011 8:30pm
Quoting Erebus
An excellent post Dean, and I would like to hear your view on what method you suggest to use as you say the % method will harm us but do not suggest any alternative? No argument here, just like to know what you are talking about using instead of %.

Just to sort the math out in absolute terms; an account of $5,000, will require 11 straight losses of 2% before it goes to $4,000. At that point, yes it will take a lot of trades to get back to $5,000 = DEPENDING on the SIZE of the winning trades of course!...
As I said mate....I dont really want to get off track herer and onto maoney management because just like trading...its a personal thing and as I mentioned, the % works for many like yourself who have a plan and stick to it. For me...I use a monetry value....so I only take trades that have a risl reward of at leat 2 to 1 and preferably closer to 3 to 1. I began with a 10,000 account trading single lots. Once the account reaches 15000 I up my lot size to 1.5 lots.....if I lose 4 trades in a row I half my lot size......why???...becasue I know by only taking trades with my R;R, I will be back out of the hole and in profit within a couple of trades......if I take another string of 4 losses (so 8 in a row) I half my lot size again....and I reamain at that lot size until my account balance is at the level to up the lot size...this also protects my captital becasue as I hit a string of losers...the lot size and therefore risk is much lower......work it out for yourself and see how much captial is actually left even if you had 12 staright losers.....also....if I am at the stage of 8 straight losers or more....I am doing something drastically wrong and I may as well just trade the exact oppposite way
Again...this suits me and my style of trading....the % method suits most others.
  • #12,236
  • Oct 2, 2011 9:21pm Oct 2, 2011 9:21pm
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I have had very good success trading eelfranz template using the 4hr tdi crossing the rsi at the 2 or 4 o'clock position and entering on a 5 minute chart pullback using macd to determine the pullback. I have not lost a trade using this entry method in 4 weeks. If the trade moved against me
after entering, I would check to make sure the 4hr tdi was still in the 2 or 4 oclock position and add to the trade.
  • #12,237
  • Oct 2, 2011 9:40pm Oct 2, 2011 9:40pm
The previous chart I posted was the 5 min eur/usd. I entered my
trades at 3362, 55,56,63,60. I exited at 3352. I should have held on
for more gain, but got cold feet.
  • #12,238
  • Oct 2, 2011 10:47pm Oct 2, 2011 10:47pm
Quoting dean
Exactly as AUD just said....now he only has $348.68.....and 10% of that is f%^&ck all....try and dig yourself out of the hole with that amount and get back to square.
He was just giving an arithmetic example and never had 10 straight losses. Geez.
  • #12,239
  • Oct 2, 2011 10:59pm Oct 2, 2011 10:59pm
Quoting piprac
He was just giving an arithmetic example and never had 10 straight losses. Geez.
The point of your arithmetic example was to suggest that 10 straight losses at 10% was not so bad.

To find out how bad, do the same maths to work out how many straight wins you need to get to B/E.
Good Trading
  • #12,240
  • Oct 3, 2011 1:31am Oct 3, 2011 1:31am
Hi guys

During Sept 2011 I took a total of 37 trades
Trades won 30
Trades lost 6
Trades that broke even 1

80% win rate using TMS

Total pips for the month 1247

Happy pippin for the month of Oct
X-man the legendary conqueror of markets
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