The Confession & The Secret | Forex Factory

Options

Go to
Permalinks
Print Thread

Similar Threads

Billy & Jim TMA & Channel & Life Health & Wealth 1,084 replies

The Secret: How to break through your psychology 8 replies

ECN && STP && Scalping && Hedging - Broker Review - Oct 2009 24 replies

The Confession of a Forex Trader 6 replies

Twoblink and "The Secret Sauce" 79 replies

Attachments: The Confession & The Secret
Exit Attachments

The Confession & The Secret

  • #1
  • First Post: Edited Oct 27, 2011 8:25am Oct 24, 2011 10:52am | Edited Oct 27, 2011 8:25am

- Link to actual trade journal can be found here: http://www.forexfactory.com/showthre...89#post5078089.

- I will use that journal to post pics of the trading platform and its Closed Positions window, at the end of every Swap Cycle.



********************
Though it may sound like the title of a new movie, it is merely the reality that has become my life as a Trader.

For more than a decade, I have tried to engineer the infallible trading system. I have researched, analyzed, studied, tested, tweaked, optimized and otherwise evaluated the market from top to bottom. I have applied scientific analysis, retro-mathematical interpretive analysis (my own creation) and multidimensional analysis (taken from cube analysis). I've worked as many as 36 hours a "day" without sleep, multiple times per week, searching, studying and looking for clues and patterns within the market data. All for not? No. All for the benefit of my education.

In all my searching, I have found many things that will make money. However, rarely I have found things that will make money consistently and relatively effortlessly - until now. It took more than a decade of hard study to realize that successful trading is by definition - easy. When the cash flows effortlessly, that's when you know that your education has come full circle. And, after all these years and countless numbers of custom indicator creations, ultimately, I will end up using only one (1) of them. 10 years... more than 100+ custom indicator designs... only 1 survived. There is an epic story to be told behind that reality. That's the confession.

Now, for The Secret.

To be a successful trader - to derive cash flow effortlessly - to breakeven without breaking so much as a sweat on a bad day - to trade without stress and without worry more than 99% of the time - to be the best of the best at what you do as a trader -- all you need is A Single Horizontal Line, Continued Directional Volatility and a Volatility Trigger. After that, all one needs to do is play the Swap game until the desired profit level is realized. That's the Secret.

I did not post this thread to discuss the details about how I trade. This thread was posted as a cathartic exercise for me personally. A sort of cleansing of the soul and the mind - a personal confirmation of sorts.

I am finally a mature Trader. One who now understands that there was never really anything to fear, but fear it self. Experience has taught me this and 10+ years of obtaining my education has humbled me to the reality that some "secrets" are deeply hidden not because they are buried 10 miles below the surface of the earth - but because they sitting directly underneath your nose.

Almost with tears in my eyes as I type this - I can finally see the light at the end of the tunnel. All of those dreams of doing things with my life that go well beyond trading, but that require huge capital outlays, I can now see myself actually doing in just few short years from now.

Not having to worry about what direction the market will move next, is a very refreshing and freeing experience. The bondage of directional trading is gone, forever! Never again will I have to worry about what direction the market takes. Whatever the market finally decides to do, I'll always be right there waiting - patiently.

The race is not given to the swift, nor the battle to the strong, but he who endures to the end.

Lesson learned [the hard way]. Finally!
Y = MX + B. The most important price level of all.
  • #2
  • Oct 24, 2011 11:01am Oct 24, 2011 11:01am
Nice to hear. Glad you could make it. you deserve it man.

Now coming to the secret...can you elaborate more on it...
  • #3
  • Edited 11:21am Oct 24, 2011 11:11am | Edited 11:21am
Quoting Line In Sand
all you need is A Single Horizontal Line, Continued Directional Volatility and a Volatility Trigger. After that, all one needs to do is play the Swap game until the desired profit level is realized. That's the Secret.

I did not post this thread to discuss the details about how I trade.
Why not? Lots of people do this, some (me, 7 3/4 years in earnest) after just as long. The "volatility trigger" does sound interesting. Charts!
(Or is this an infomercial?)


Anyhow, yes, congrats. Must be tough accepting after such a journey.
  • #4
  • Oct 24, 2011 11:43am Oct 24, 2011 11:43am
Quoting Line In Sand


Almost with tears in my eyes as I type this - I can finally see the light at the end of the tunnel. All of those dreams of doing things with my life that go well beyond trading, but that require huge capital outlays, I can now see myself actually doing in just few short years from now.


congratulation line
Quote
Not having to worry about what direction the market will move next, is a very refreshing and freeing experience. The bondage of directional trading is gone, forever! Never again will I have to worry about what direction the market takes. Whatever the market finally decides to do, I'll always be right there waiting - patiently.
[/font]

I must say that, actually we can not predict where the market move next , but we can see the clues that the market gives us, and trade by this clues, its not so hard as seen.

Best regards,

Jin Shan
- 888 Horse Power - Fast Momentum Speed Run Towards VICTORY
  • #5
  • Oct 24, 2011 12:18pm Oct 24, 2011 12:18pm
Zamfir and ha-pattern,

I don't have anything to sell. Who could sell a horizontal line anyway. Sure, many people do it, but without understanding where to place the line. That's super critical information. Without it, the whipsawing tendency of the market can make the method futile.

That's why a Volatility Trigger is necessary - abundantly necessary and that's part of what my custom indicator does.

In truth, I also use a Double Stochastic set-up along with my custom indicator to set the Volatility Trigger. That's where I draw the line in the sand. But, that's only half the battle. The remainder of the war is fought around that line. Both guts and patience are required to realize profits in some cases, as the Swap Sequence runs its course. After that, he who endures to the end is the victor. It is a classic game of attrition and keeping your losses to an absolute minimum during the Swap Sequence.

Do it right, and it is very hard to lose money. Do it wrong, and it will seem like all you ever do is lose money. That's the hidden secret. Behind the fear off what appears to be a constant flow of losing trades, resides the "hidden one." That trade or series of trades, that ends up making things rather easy.

Draw a line in the sand, be patient and persistent.
Y = MX + B. The most important price level of all.
  • #6
  • Oct 24, 2011 12:23pm Oct 24, 2011 12:23pm
Quoting Line In Sand

Draw a line in the sand and be patient.
Hence your name Line in the sand.

btw, i did not understand a single word you wrote..
  • #7
  • Oct 24, 2011 12:46pm Oct 24, 2011 12:46pm
Quoting ha-pattern
The "volatility trigger" does sound interesting. Charts!
The Volatility Trigger can be anything... anything that works. Anything that accurately announces coming Magnitude, regardless of direction.

So, Harmonic Patterns are great little Volatility Triggers, but there are many more ways to find them. I use a Double Stochastic combined with one of my custom indicators, to derive a new custom indicator in its own right.

Take a look at some of those "failed" Butterfly Patterns, Bat Patterns, Crab Patterns, etc., etc., etc... Here's a little secret, they are not failures at all!

Every point in a Harmonic Pattern is a potential Volatility Trigger level. X, A, B, C, D and P. Fibonacci Ratios in combination with Harmonic Patterns, are also very good sources of Volatility Triggers.

Ratios such as 61.8, 127, 144 and 161.8, can be nice V-Triggers as well. Combinations of Leg Pairs and Fibonacci Ratios, can be very good V-Triggers: XA combined with a 61.8 B, for example.

Unconventional Harmonic angles can also be good V-Triggers: Angle XB, for example is a high probability V-Trigger.

None of these have anything to do with direction, but they all have everything to do with potential Magnitude looming on the horizon and that's all I need to know. Where is the point of high probability Magnitude? The rest belongs to the Swap Sequence, which is nothing more than going where the market goes and limiting losses along the way until the market decides to show-off its Momentum. The market loves to show-off.

Let the market be the Stage Queen. Let her run in whatever direction she desires, but don't ever allow her to get pass your line in the sand without taking her up on her offer. That's the secret. She's a Queen - she's got to eventually get out there to strut her stuff - like all Queens do.

This comes down to understanding that in the end, the market is never wrong.
Y = MX + B. The most important price level of all.
  • #8
  • Oct 24, 2011 1:15pm Oct 24, 2011 1:15pm
Quoting zamfir
Hence your name Line in the sand.

btw, i did not understand a single word you wrote..

Everybody is out trying to build the next great directional indicator. That's the point - you don't need one. All you need is a horizontal line and a good idea of where Momentum is most likely to re-enter the market (that's your Volatility Trigger). Simply draw a horizontal line on your chart and start the Swap Sequence around that line. Never allow price to cross that line without swapping positions.

The better you are at the Swap Sequence, the better you net returns will be for the day. Optimize the location for the line and profits will soar.

It is not about the "indicator." Its about the carry-through Momentum and precise Swapping. The rest is embarrassingly simple, effortless and easy.

Your education is complete, when generating profits becomes effortless (after the Swap Sequence). Most people give up during the Swap Sequence, because they did not locate their Volatility Trigger in the right place. There are many ways to locate your V-Trigger (see my post above). One can also use news events (economic reports, etc.) but most trading platforms are geared to work against you during economic indicator releases by widening the spread, slippage, platform freezes and re-quotes.

A horizontal line, the expectation of momentum (magnitude) and good swapping habits, is all one needs for success as a trader.

Never get tied down to Direction. That's the big lie in trading. You don't need Direction (that's the secret). All you need is the freedom to Swap at will and on a dime.

You also need to get over losing money. Losing money is a part of trading, for any hyper-active trader. Almost all trades have a Draw Down phase. When you trade the line, your Draw Down phase comes in the form of several smaller components over time, instead of one larger Draw Down value. That's a psychological hurdle that you will have to learn to overcome.

If you Draw 40 pips on 1 single trade - then that is absolute no different than Drawing 40 pips over 9 trades. If you net out 86 pips once momentum/magnitude comes back into the market on your final trade, then you've net/net 46+ pips for the Swap Cycle. You will care less what direction the market accomplished all that, once the pips hit your account.

99% of all trading success and failure can be found in the space between your ears.

Remember this scene from Dune?
Inserted Video


"I must not fear. Fear is the mind killer."

Think of the 'Reverend Mother' as the voice in your head telling you to stop the Swap Sequence. If you stop the Swap Sequence, your trade will surely die. But, if you do not fear the smaller losses by learning to roll with the market about your V-Trigger Line, then after you close out your final trade, it will look very much like young Paul's hand: Unscathed, intact, whole and never once in real danger.

Afterwards, the ability to control your own mind is enhanced and you become mentally tougher with each trip to the Box. At some point, the Box of Pain (the Swap Sequence) becomes a Portal for Profit, that you effortlessly walk through without worry or fear.

Fear is truly the Mind Killer.

Thus, fear not.
Y = MX + B. The most important price level of all.
  • #9
  • Oct 24, 2011 1:25pm Oct 24, 2011 1:25pm
I have done something similar in the past i think, basically keep reversing your position until price moves away from that area. So if e/u is at 1.3950, you make sure you are long above 1.3950, and short below say 1.3945 (trade with a 4 pip stop) keep reversing the position until your on the right side of it.
  • #10
  • Oct 24, 2011 4:43pm Oct 24, 2011 4:43pm
Quoting highlander2
I have done something similar in the past i think, basically keep reversing your position until price moves away from that area. So if e/u is at 1.3950, you make sure you are long above 1.3950, and short below say 1.3945 (trade with a 4 pip stop) keep reversing the position until your on the right side of it.

That's basically it - you genius you! LOL, isn't life grand when things are so simple.

Of course, this is where having a good indication of high probability magnitude becomes essential - else - you get whipped up like some kind of dairy product sold at the grocery store.

I looked at this years ago, but my trades kept getting whipped-up like creamed milk at a dairy convention in Pennsylvania. So, I put the idea on the shelf and went back to my predictive model for trading. While I was working on yet another custom technical indicator, I ran into the line idea again, only this time I backed into it through my own indicator which sets a Limit target for each trade.

At some point, I asked myself - "why does price go there?" Then I asked myself probably the most important question of all which was: "Who really cares, as long as price gets somewhere?"

Then I followed the target line backwards to the point at which price began to move off of a major swing. I then "drew a line" on the chart and noted price action. That's when I knew that price direction made no difference to trade success, whatsoever. I became a Swapper ever since.

Find a reason for the market to move and all else matters not. When the market moves - go with it. Just make sure that you are in a place in the market where there is still enough Momentum to carry through the minor losses incurred during the Swap Sequence.

Swap Meet anyone?

LOL! It is so easy, that it should be illegal.

Wait - don't tell Dodd or Frank that, because they will find a way to make 'Swapping' illegal. They'll create some really absurd Federal Rule that says: "High Frequency Trading is no longer allowed in all 50 States of the Union" - or something equally as repugnant as that.

Have you ever gotten up out of bed at 5am in the morning, just to go to a Swap Meet - LOL! Heck - I can't wait for the sun to rise tomorrow morning.

Maybe I should change my username to Swap Meet.

Aaaah - so funny.

The secret is that there is no secret. LOL - sorry - I'm just giddy with laughter today.

Yes - you have the right idea. Just make sure there is enough fuel in the tank (momentum) of the market for the remainder of the trading session AND make sure you are near a high probability Swing Level in the market as well. There are a number of different ways you can figure both of those things out. (Magnitude and Volatility Trigger)

After that, join the Swap Meet.
Y = MX + B. The most important price level of all.
  • #11
  • Oct 24, 2011 5:00pm Oct 24, 2011 5:00pm
well put, one line and keep it simple. i read these threads {not this one} instead of watching comedy on tv as thay are sooooooo funny, people putting out charts with so many indicators, lines balloons and doing the talk but hey ho like you say it doesnt matter which way the market goes just as long as you are with it, and thats what i do even though i have in the past been known to make my own resistance/support line but thats due to boredom lol. Nice advice
SEE LINE,TRADE LINE..PRICE HAS TO GO SOMEWHERE,,, PRICE WILL GO SOMEWHERE.
  • #12
  • Oct 24, 2011 5:01pm Oct 24, 2011 5:01pm
BTW - those of you who live in the GMT/London time zones have it easy. You get local hours, a normal trading day and plenty of ponies to pick from (EUR, GBP and CHF). You get the best volatility frequency of any time-zones on earth - you lucky sons and daughters. And, you still get 100:1, which can be very beneficial once you master the Swaps.

If I want your hours, I have to work the grave yard shift. Else, I get left-over volatility from the U.K., which is still plenty enough to do quite well. But, all you U.K. types should be down on your knees every single morning in full thanks, for the currency flowing through your region, without having to work obscene hours.

Maybe this will be a good excuse to get a place in Paris! Gee, ya think! Six months in Paris, six back home in the States. Plus, I get my 100:1 back for an ever steeper growth curve to boot. Hmmmmm.
Y = MX + B. The most important price level of all.
  • #13
  • Oct 24, 2011 5:02pm Oct 24, 2011 5:02pm
I gave up on this due to getting nailed in sideways crap. The more you get nailed the further you need the market to go to get your money back. It will in the end move but to know when is hard. I tried to play this system on s/r and breakouts.

You are basically on the wrong side of the market for only 5 pips of the entire market (if you use a 5 pip stop) and anywhere else you are in a winner with basically limitless potential for gain. But its hard to hold.

Here is a chart of mine from last year-
Attached Image (click to enlarge)
Click to Enlarge Name: reversing.jpg Size: 118 KB
  • #14
  • Oct 24, 2011 5:21pm Oct 24, 2011 5:21pm
Quoting Line In Sand
That's basically it - you genius you! LOL, isn't life grand when things are so simple.

Of course, this is where having a good indication of high probability magnitude becomes essential - else - you get whipped up like some kind of dairy product sold at the grocery store.

I looked at this years ago, but my trades kept getting whipped-up like creamed milk at a dairy convention in Pennsylvania. So, I put the idea on the shelf and went back to my predictive model for trading. While I was working on yet another custom technical indicator, I...
Hey Man,

Interesting stuff. So say if EU was coming to a volatility trigger (support), you would place a buy limit and if it reversed great, if it fell through, at which point would you start to sell. Also would you hedge or cut and reverse? If price retraced back above the support line how far would you let price run before cutting your sell and buying again?

Would it depend on the situation? IE: during NFP there may be wild swings so you might want expand your volatility triggers out a bit more.
  • #15
  • Oct 24, 2011 5:31pm Oct 24, 2011 5:31pm
Quoting billytt
well put, one line and keep it simple. i read these threads {not this one} instead of watching comedy on tv as thay are sooooooo funny, people putting out charts with so many indicators, lines balloons and doing the talk but hey ho like you say it doesnt matter which way the market goes just as long as you are with it, and thats what i do even though i have in the past been known to make my own resistance/support line but thats due to boredom lol. Nice advice
True - there are many different support and resistance levels to pick from. The idea is to make sure that you pick a swing level that historically has some significant magnitude, so the momentum of the move is large enough cover your cost of doing business.

All those smaller losses can be considered capital improvements in your business - investments, or simply part of the cost of doing business in FX - thank you very much.

Funny - everybody (including me once upon a time) is out looking for the *free business venture* with zero capital outlays. Other than the United States Congress and the Federal Reserve, I have a hard time coming up with such a business model. The Treasury Department gets to print money whenever it wants and Congress gets to steal money through ridiculous tax structures, whenever it wants. But, beyond that, I really don't know of any free lunch.

Every business has some kind of operating cost factor to deal with. It is the nature of business. So, in trading, we pay the spread, normal (mechanical) execution slippage (not the broker induced slippage - if your broker plays that game, then it is time to find another broker) and natural Draw. 99% of all trades will have some form of Draw Down.

For the line trader, minimizing the Draw is like writing your own bonus check at the end of the trading day. If you handled your Swaps well, then your bonus check is larger. If you mishandled your Swaps, then you get no bonus at all. If you completely ignore your Swaps, then you lose capital - it is just that simple.

Swing with probability are everywhere. If you don't like my idea on using Harmonic Patterns to locate swings (which are some of the best IMO), then use something simple like ATR. Everybody knows what ATR is all about, but how many people actually know how to trade it for profit? Precious few, I believe.

Mix ATR with a simple 127/161-Fibo. Pick a time-frame under 4 hours (I use the M15 chart) and start drawing the XA leg using a simple Fibo tool. Place 'X' at the start of a clearly defined swing and draw down to 'A' which will be the end of that same swing. Now, note the 127% retracement zone between 127% through 161.8%. Does price make it to that region? If so, expect that to be a high probability pivot region -IF- there is still enough ATR remaining in the Daily time-frame.

Yes - you can make up your own swings. In fact, it is probably best that you do.
Y = MX + B. The most important price level of all.
  • #16
  • Oct 24, 2011 5:41pm Oct 24, 2011 5:41pm
Quoting highlander2
I gave up on this due to getting nailed in sideways crap. The more you get nailed the further you need the market to go to get your money back. It will in the end move but to know when is hard. I tried to play this system on s/r and breakouts.

You are basically on the wrong side of the market for only 5 pips of the entire market (if you use a 5 pip stop) and anywhere else you are in a winner with basically limitless potential for gain. But its hard to hold.

Here is a chart of mine from last year-

Why walk through mud, when you can glide through the air faster than a hot knife through butter?

Looking for areas of resistance is also a great way to trade the line, but if you take that approach, then you have to also include Timing into your equation for the line and that requires more complexity. You will have to know when price is about to reach the end of the wormhole and that means you have to know something about Timing the compression zone. Why fool with it when you don't have to.

Got plot any Bollinger Band on any chart you want. You will note wormholes all over the chart. Those are the areas of price compression, where the next move is on standby. For how long? That depends on your ability to nail Timing to the wall. Again, why bother.

Each bar has its own built-in timing mechanism. It is called ATR. Funny, how the most simple of ideas turn out to be some of the most powerful. Go ask the 'sophisticated trader' how to effectively trade ATR and most of them will laugh at you. All the while, not knowing that they are the butt of the joke.

I just gave you some examples of how to determine your own Volatility Trigger. Hunting for phases of price congestion is like running East looking for a sunset. You will always get whipped around like cottage cheese at the local natural health food store.

Trade the line, not the cottage cheese.
Y = MX + B. The most important price level of all.
  • #17
  • Oct 24, 2011 5:45pm Oct 24, 2011 5:45pm
Here's a jet route with a northerly heading. Notice the line drawn at the bottom, then the line drawn at the top. The bottom line was the entry and the top line was the target. As close to a knife through butter as you can get, with only a little hesitation at the start.

M15 Chart with a Line drawn on it:

http://www.freeimagehosting.net/t/5bbf5.jpg
Y = MX + B. The most important price level of all.
  • #18
  • Oct 24, 2011 5:47pm Oct 24, 2011 5:47pm
Now. How many potential Volatility Triggers do you see on the chart I just posted?
Y = MX + B. The most important price level of all.
  • #19
  • Oct 24, 2011 5:59pm Oct 24, 2011 5:59pm
Quoting sidhujag
Hey Man,

Interesting stuff. So say if EU was coming to a volatility trigger (support), you would place a buy limit and if it reversed great, if it fell through, at which point would you start to sell. Also would you hedge or cut and reverse? If price retraced back above the support line how far would you let price run before cutting your sell and buying again?

Would it depend on the situation? IE: during NFP there may be wild swings so you might want expand your volatility triggers out a bit more.

a) I don't trade news unless I have specific information about direction and that information must be golden before I take a position.

b) After I enter at the line, I initiate the Swap Sequence.

c) During the Swap Sequence, I swap positions as often as necessary and as close to the original entry as possible, until the market decides to remove itself from the entry zone.

d) I don't dare take my hand out of the Box. That's foolish.

c) I only enter on the line, when the market has enough pips to give in either direction for the remainder of the trading session. That's understanding the magnitude of the higher time-frames.

Go back and watch the video I posted in this thread. Young Paul, wanted to remove his hand, but his mind would not allow it. The Reverend Mother (the sideways market) was taunting him the entire time - telling him him that his hand was burning. This is what happens when you are taking smaller losses during the Swap Sequence. The market is taunting you to remove your hand from the Box.

Sure, it is painful in the Box, if your mind only understands that the Box is all there is. Once the Box has been broken and proves itself to have only been an illusion of your mind, then you finally realize that what you thought was pain, was nothing more than the cost of doing business in FX, on your way to profitability.

It is all between your ears.

It is not what you trade, but how you trade it that makes all the difference in the world.

How many pips does the EURUSD move each day? 150? 160? 170? 180? 135? How many pips do you need each day? 25? 40? 65? 70? 100? Then, how many Swaps can you afford each day? 5, 7, 10, 15?

This is not rocket science. The deck is actually stacked in your favor, not the other way around. I bet nobody ever told you that.

There is no excuse for losing money on a consistent basis in FX. None.
Y = MX + B. The most important price level of all.
  • #20
  • Oct 24, 2011 6:03pm Oct 24, 2011 6:03pm
Quoting Line In Sand
Now. How many potential Volatility Triggers do you see on the chart I just posted?
Do you see any V-Triggers now?
http://www.freeimagehosting.net/t/65eca.jpg
Y = MX + B. The most important price level of all.
0 traders viewing now