Zero Net Loss Trading Strategies

Ok Olu,

I will post a constructive comment. Although it is challenging your theory, but it is a constructive and valid question that traders will want to know.

I will assume that you are genuinely not selling any service or product and I will assume that the main topic of discussion in this thread is the money management system that you are proposing.

1)*Most Important* Do we assume that all the traders have a solid edge? As I understand, any method, even if it is riskier will prove profitable as long as your edge over the market if unquestionably solid AND you are nowhere near a risk of ruin. In that case, regardless of what you do, you will be profitable. You don't need this grid money management (or any stop loss style money mangement)

2)If we assume that not all traders have a solid unquestionable edge (which is most likely the case in most situations for most market participants), we are relying solely on the fact that money management (in this case a grid like system) will provide us with that missing edge. For now to make the discussion easy, let us assume that we do not have an edge over the market. Herein lies the biggest issue. Allow me to explain.

Firstly, in hindsight, any chart is as clear as day. It is easy to say that my system works because you already know the outcome of the trade to a certain extent. When you backtest, all the candles have already been drawn out.

In real time, when candles are drawn on the fly, nobody knows where price is going to go next. For example:
a)you buy 1 lot on trade 1 and you were wrong,
b)you want to enter trade 2 with sell 2 lots.

-How do you know at trade 2, it will not reverse?
-How do you know that every trade you place will be at the extreme ends of the range?
-How do you know that each trade you place will follow with a breakout? -How do you know that your trade will reverse strongly enough to cover your original positions?

The answer is simple. You do not know. I do not know. Even George Soros would not know. Nobody can predict the future. This is the biggest problem on solely relying on money management to provide an edge.

In summary:
-In real time, it is difficult to determine the point of entry that will conform to our money management strategy and give us that "sure win" effect.
-Backtesting in hindsight always seems perfect. It is not so perfect in real time because we don't have crystal balls.
-If you were so good at picking directions, you don't even need the grid management system to begin with. Think about this last comment.

This is a good thought. But it is not central to what we are discussing about Olu's theory. It is applicable even if someone has a more traditional stop loss, good risk:reward ratio style - albeit it will be much slower. This is a whole different topic.

What you intended to say was that Olu's method can give quick profits allowing you to stash away some for safekeeping. Honestly, I could do it with any other method. I don't need Olu's method specifically.

But what you also have to agree on is that there is a possibility that right off the bat, you could go into a drawdown - just as you assumed that right of the bat you went into profits. In that case, you might be stuck with rollover rates eating into your profits for months long.

Like I stated in my previous post to Olu, the core problem of trading solely on money management is the fact that we cannot be sure of the future. We lack the edge to help us predict the future (in most cases, even if we do have an edge, we can never be 100% sure). We will never know if that last position we took is going to "go according to plan".

I always like to say: "If you are so good at picking tops and bottoms, you won't need a grid like money management style to begin with".

Tdion, I don't believe he charges for managing accounts. Look at his signature, it says "freely we have received, freely we give" or something like that. I believe he provides his services for free, as he says "the source is Jesus Christ" and we all know that Jesus gave His life for free so I am sure he does not charge.

Nice to see, that someone make a thread, and some users always shit in the thread. If you don't like to read, DONT READ IT. It's so simple... We have to let him to work. If this system is his Holy Grail, let him to trade this way, and help him.

Thanks for this thread.

Thank you for your comment Sir,They cant see what I am looking at or what I can see. I thank my God that they cannot see it, because if they can they will merchandise the system.

Thank you.

Well, I'm all for an open mind and exploring new possibilities. However, you will have to convince me especially if it is an experience I personally went through myself.

All these questions and doubts that are thrown out there are valid concerns. They need to be addressed. These martingale and grid theories have been discussed for a long time and it has yet to produce any positive results. We can keep discussing and maybe one day we will find an answer. But it all starts with addressing the concerns and problems that is inherent to these strategies.

Hanover made this very brilliant post and it covers all the doubts that I have regarding Olu's methods. In fact it even addresses betterlife's suggestion of withdrawing profits:

FF, I’m afraid that what I must say will sound negative. I don’t mean it to be, I sincerely hope that you can somehow use my (and others’) earlier comments constructively, to improve your EA. I’m simply trying to be realistic. And I'm not criticizing the idea behind the EA - IMHO, it's original and ingenious, like you say, a ‘Martingale on steroids’.

I don’t believe that it’s possible to completely eliminate the possibility of the ‘death trade’, no matter what parameters (INCREMENT, LOTS, LEVELS, etc) are used. Given enough time, price must eventually move in such a way as to create the ‘not enough money’ scenario. Like Pisara, I think it’s very possible that risk could be reduced by making entries only when market conditions appear more favorable, and that this offers better hope of surviving longer, than by simply trying to optimize the MM parameters. But I can’t see how there can ever be any absolute guarantee. The bottom line is that to enjoy a massive win rate, one has to take a massive gamble (i.e. be lucky enough to reach one's financial goal, and then quit, before the ‘death trade’ occurs).

Withdrawing money from the account does not solve the fundamental problem. Firstly, the less money there is in the account, the greater the probability of the ‘not enough money’ scenario occurring, so we’re actually compounding the problem. Secondly, while I agree that any money withdrawn is safe - and also that once the initial deposit is withdrawn, we’re playing with the market’s money - but the point is that the ‘death trade’ is equally likely to occur at any time, i.e. very possibly before we have the opportunity to make the withdrawal. So no matter how we slice it, it’s still a gamble, as to how we time any withdrawal(s), and how much we withdraw. This topic has been discussed on other Martingale threads.

Another possibility that’s been discussed is to take nominal losses when the situation appears to be ‘getting out of hand’ (i.e. set the MAX_LOTS parameter to a significantly lower value, to ensure that every block of trades is closed well before the margin is exceeded). But this is likewise a gamble, because there’s no way of knowing which (if any) of these situations will end up as the ‘death trade’, so we would end up incurring many ‘unnecessary’ losses along the way.

Nvwine, it appears that the EA parameters we used are identical. However, my the first trade in my back-test is at 07:55, yours is 00:02. I didn’t put a date range on my test, my test data simply starts at that point. The way the EA operates, a new block of trades is opened immediately the previous set reaches its TP/SL level, so a different starting point will result in a completely different sequence of trades being taken thereafter. (Also my data is sourced from Alpari, and has much poorer modelling quality, and mismatch errors.) However, it’s interesting how such small differences can cause a radically different result. IMHO, it further highlights the precarious nature of Martingale (or pseudo-Martingale).

I recall reading somewhere that Martingale is the product of wishful thinking, and the natural human desire to avoid loss.

The money markets have been around for decades, and they’ve attracted many millions of traders. I just can’t help but think, that if there was a MM-based formula that guaranteed success without risk, some brilliant academic would have discovered it long before now. Gaming theory tells us that MM in itself can not offer a real edge.

Dear Oluwadane,
thank you very much for your thread and teachings. Surely there is a lot of concrete methods to think about now. I will make it with the time, and try to incorporate them into my strategies.

Please allow me to reply to thelws briefly.

Thelws: thank you for all your help and contributions. I look at them with interest and attention. Let me reply here just briefly because I don't want to cannibalize oluwadane's thread. Eventually I will post you a PM with a much longer and more complete reply.

1. Please understand that I'm absolutely not a newbie. I think I've read almost all the relevant literature concerning trading, comprising risk management, and also well beyond forex: i.e. a lot of books about derivatives, in particular options, and several "quant studies". I am very familiar both with the most advanced "mechanical" techniques (e.g. digital signal processing, fractal geometry), and with the most "pure" price action trading.

2. It is sure that, in more than 5 yrs of intensive and serious research I've not yet found the way to consistent profits and to make of trading a way of living. This is due surely to the fact of tight time restrictions given a too stressful (and hated) job. So: I recognize that, with huge capitals and a huge amount of time, probably good scalpers or followers of pure price action, with a risk model based on position sizing starting from defined stop loss can be profitable.

3. Your notes about the lack of edge and that nobody can forecast the future, anyway, lead me to a conclusion quite opposite than yours, namely that systems based on high accuracy and high R/R are quite unlikely to produce high returns.

... we can discuss privately on those things extensively, if you want.

Coming to the point discussed in your last messages, also by Hanover (another estimated member of the forum) let me tell you these points, just as an "example" (i.e. not with the due mathematical / scientific demonstration):

1. The "black swan risk" can be normally quantified as being very low. Surely low probability is always > 0, and so we all know that, sometimes in the future, even tomorrow, the swan will fly.

2. In life we face dozens of situations having very low probability but catastrophic consequences. We usually accept this risk. It happens every time you take a plane or simply drive your car: we know that sometimes with low probability planes unfortunately crash and more often than one would imagine serious car accidents happen. We accept this risk, even if we know that this time could be "the time", because we want to reach some goals in life.

3. The fact justifying the adoption of a hedging scheme instead of conventional scheme of risk management, in my opionion, can be the SPEED of the balance growth. If you have a risky system that anyway doubles the balance every week (let's assume), would justify the adoption of a hedge-withdrawal strategy.

4. People, comprising Hanover, goes on thinking about "the long term". Who cares of the long term? Think about this as a business. Your trading account is just capital at risk! I don't care demonstrating to anybody that my account is becoming bigger and bigger (it seems a very "macho" challenge! LOL). If every week, every month I can take out of that my salary (or something more) eventually starting from scratch with a new deposit if something gets wrong, eventually growing it a bit... well: that's it. I think that, if/when I get to the point of having a good amount of capital, I will never ever think at forex as the best place to invest it. Rather, I will turn onto regulated markets, with the ability of investing like hedge funds make, hedging, the real way, with derivatives.

5. Last: Martingale is one thing. Hedging the way oluwadare explains here (or otherwise) is a very different thing.

So: all that is just food for thinking and I'm glad to go on privately, if you want.

Your contribution is anyway very appreciated. I confess: I appreciate much less the opinions of the two/three 1-2 years traders coming here and calling us dummy. They gave the impression to "know it better" and that all we others were "dummy newbies". This is because their viewpoint is so limited that they cannot imagine that there is somebody knowing it better, and eventually looking forward.

As Socrates said: "I know because I know that I don't know". Which reverted means: "There is no worst dummy than the one who doesn't know that he doesn't know".

Bye

BL

Good-day All,
I just added these to Lesson 5
1. The Trades are based on 4hr chart and grid of 100s, 1hr chart is used as lower timeframe and dailychart is used as the higher timeframe; for good decision making.
2. Give High Respect to Support and resistance Levels,and Brake-out levels.
3. Give Respect Ranging market on any timeframe.Every Ranging market has a brake-out.
4. Give High Respect to Average Trend size of each Time Frame of the currency pair.
5. Never expose your portfolio to the market.Hedge it Internally against unforeseen market occurrence.The strategy will help you recover the loss margin.
6. Note that if the market crash you will make more money if the strategy is properly applied.Market Crash is your friend to make more money.

Thanks

Oluwadare

Good-day thelws,
The strategy here must not be traded with an EA,because it is a purely manual and intuitive strategy.You don't need to stress yourself looking for market direction.All you need is to understand all the points I made in the lessons and place your trades.

Hello Oluwadare! I sincerely commend you for your efforts in explaining your trades. But I'm still having trouble following your trades. Would you be willing to take the time to explain your trades based on your 9 rules. It'd be a huge favor to slow-pokes like me. Thank you again.

Spot on Intu...spot on!

Can I watch some more video please!

Hi Oluwadare.

I would like to get in touch with you .
My email is smafxfx"at"gmail.com

There are a few things I would like for you to explain.

Thanks.

Good-day All,
This strategy guarantees at least 10% of your capital monthly. For Account management and trade signals go to:http://www.fxwealth.webs.com/ and contact me.

There are only 9 pages in this thread! Where's the summary you mentioned?

By the way, if you have included some sort of images or visual diagrams, your thoughts would be much more clear. Thank you ...

I completely agree with you Oluwadare. Those statements Pipfarm mentioned, are the number one reason why 90% of traders lose. Basically, if they were right, there wouldn't so many losers in financial markets. I absolutely disbelieve in Stop Losses and I have been working on my own strategy to escape them for a while now. As soon as it's successfully devised, I'll be more than happy to share with you and other members...

Ehi ido370 I've been trying to contact you desperately for days..... This is my mail : [email protected]