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The Confession & The Secret

  • #41
  • Oct 24, 2011 7:38pm Oct 24, 2011 7:38pm
i have just been plotting my own ATR but am a bit unsure about the (differance between high and low) is this some sort of pivot. imust be getting bored as i said earlier i dont normally use these things, but i'm a pro trader and i'm always open for new ideas. thnks
SEE LINE,TRADE LINE..PRICE HAS TO GO SOMEWHERE,,, PRICE WILL GO SOMEWHERE.
  • #42
  • Oct 24, 2011 9:02pm Oct 24, 2011 9:02pm
This is really great stuff and I am embarrassed to say your way over my head. A lot of what you say makes sense, I just can't put it all together. I am too new to trading to even be called green but need to do something different from my current directional trading with predictive indicators. A new system is needed and this may work for me. Is there some books that I can read that might get me caught up to speed?
  • #43
  • Oct 25, 2011 2:12am Oct 25, 2011 2:12am
hello Line in the sand,

Thank you for sharing your very interesting method.

On average, how many times do you have to swap before you earn enough to hit ur profit target and erase your loses?

best regards.

-guandi
  • #44
  • Oct 25, 2011 4:17am Oct 25, 2011 4:17am
Sometime ago I was testing a similar concept based on the belief that we dont require to predict/follow 'direction' per se, but all that is needed is to simply have movement/volatility that takes the trade into profit.

I mean, if one was to place a random line on a chart with his eyes closed, and looked at what price did at such line, then we always find a reaction, irrespective of supply/demand or watever.

Price always moves to and from the line (keyword: Moves)

So long story short, exploit the movement, the volatility, without considering direction.

My tests where using the open/close of the candle AS a reference point to place my 'line in the sand'. And as candles print 'movement' we can see it historically creates a range of expected movement (atr...) from open to high and open to low.

These tests arent 100% conclusive for me, but the risk was fixed at 0.5%/trade with minuscule stops.

In essence trading volatility.

PS: Ive only been at this for 2 1/2 years.
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  • #45
  • Oct 25, 2011 6:38am Oct 25, 2011 6:38am
http://www.forexfactory.com/showthread.php?t=22663
  • #46
  • Oct 25, 2011 6:52am Oct 25, 2011 6:52am
the method here involves reversing a position until you are on the right side of the market and price leaves the area you have drawn "the line in the sand".

However the bigger the hole you dig for yourself the further the market must move to recoupe the losses.

A way round this would be to double your position size each time you reverse. So for example say you use a 4 pip SL and a 6 pip TP. We KNOW for a fact that the market will move more than 16 pips in a day, Therefore in theory this is a guaranteed way to make money. In theory...

i reality you will sometimes end up with enormous positions, which I do not believe you broker would appreciate. Ever tried a couple of billion units?

But in theory with flawless execution and unlimited funds and a pile of leverage at your disposal you would come out on top.

I believe this is called martingale.
  • #47
  • Oct 25, 2011 7:02am Oct 25, 2011 7:02am
Quoting highlander2
the method here involves reversing a position until you are on the right side of the market and price leaves the area you have drawn "the line in the sand".

However the bigger the hole you dig for yourself the further the market must move to recoupe the losses.

A way round this would be to double your position size each time you reverse. So for example say you use a 4 pip SL and a 6 pip TP. We KNOW for a fact that the market will move more than 16 pips in a day, Therefore in theory this is a guaranteed way to make money. In theory...

i reality...
?

why would you do that... ever?

why not at least wait until you have churned enough losses that you have no chance of recouping if the expected and latent unfulfilled range finally develops?

the point is that you have x amount of pips potentially to lose before you have no chance of breaking even for the day. martingaling yourself after each loser is never an answer, and never will be, and in fact defeats a big part of the whole point of defining a reference price to trade away from with expectation of a daily range to follow. this is why 'line' keeps mentioning the volatility events, and why just picking random areas to trade from is potential folly.
Congratulations ScalaFX for coming out of the closet!
  • #48
  • Oct 25, 2011 7:14am Oct 25, 2011 7:14am
Quoting nubcake
?

why would you do that... ever?

why not at least wait until you have churned enough losses that you have no chance of recouping if the expected and latent unfulfilled range finally develops?

the point is that you have x amount of pips potentially to lose before you have no chance of breaking even for the day. martingaling yourself after each loser is never an answer, and never will be, and in fact defeats a big part of the whole point of defining a reference price to trade away from with expectation of a daily range to follow. this is...
I never said pick random areas to trade this, in fact i traded a method similar to "lines" last year for several months, drawing the line where I believed the market would not stay, at strong s&r or after the news for example.

But no matter where you draw the line, there will be times when the market moves sideways in a tight range and you will be chopped to pieces. The more times your stopped and reverse your position the further the market has to go to give you yor money back.

what i said was that in theory if you doubled your position each time you reverse you would only ever need the market to go a small distance to come out on top compared to a large distance without increasing position size.

I no very little about martingale, and I have NEVER used it in trading ever, it does not interest me.

If I got the math wrong then i will apologies.
  • #49
  • Oct 25, 2011 7:26am Oct 25, 2011 7:26am
Quoting highlander2
I never said pick random areas to trade this, in fact i traded a method similar to "lines" last year for several months, drawing the line where I believed the market would not stay, at strong s&r or after the news for example.

But no matter where you draw the line, there will be times when the market moves sideways in a tight range and you will be chopped to pieces. The more times your stopped and reverse your position the further the market has to go to give you yor money back.

what i said was that in theory if you doubled your position...
i get that, but what you have missed is the part where this can be built around ATR. once you have lost the amount of pips as is expected for the daily range then you have lost for the day, so to speak.

martingaling will reduce the number of times you can lose to a handful of trades PLUS you also lose your account, as opposed to what is being suggested here which can give you as many or more times to potentially lose individual trades before quitting for the day and in the end you will only be down x pips / $ instead of your entire account.

or, i have misunderstood and am full of crap.
Congratulations ScalaFX for coming out of the closet!
  • #50
  • Oct 25, 2011 7:42am Oct 25, 2011 7:42am
Quoting nubcake
i get that, but what you have missed is the part where this can be built around ATR. once you have lost the amount of pips as is expected for the daily range then you have lost for the day, so to speak.

martingaling will reduce the number of times you can lose to a handful of trades PLUS you also lose your account, as opposed to what is being suggested here which can give you as many or more times to potentially lose individual trades before quitting for the day and in the end you will only be down x pips / $ instead of your entire...


I 100% agree, martingaling your way out is not the answer. I should have made this clearer in my post. But in theory with unlimited funds and the ability to execute huge positions you could come out on top because you know you could come out on top because you know the market will move more than 15 pips a day.

Because in reality this does not work I should not have brought it up, waste of time.

Im sorry I don't understand the atr part of your post, all I used the atr for was stoploss distance.

I found it very hard to stick to my line after a series of losses, and would abandon it. The result was a large drawdown.

here was a bad one from last october
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  • #51
  • Oct 25, 2011 9:11am Oct 25, 2011 9:11am
Quoting guandi
hello Line in the sand,

Thank you for sharing your very interesting method.

On average, how many times do you have to swap before you earn enough to hit ur profit target and erase your loses?

best regards.

-guandi

I've stated in this thread and inside my journal, that 1-10 (on average) Swaps are typically seen. The fewer the Swaps, the higher the probability for trade sequence success and profitability.
Y = MX + B. The most important price level of all.
  • #52
  • Oct 25, 2011 9:15am Oct 25, 2011 9:15am
Quoting Pipalicious
Sometime ago I was testing a similar concept based on the belief that we dont require to predict/follow 'direction' per se, but all that is needed is to simply have movement/volatility that takes the trade into profit.

I mean, if one was to place a random line on a chart with his eyes closed, and looked at what price did at such line, then we always find a reaction, irrespective of supply/demand or watever.

Price always moves to and from the line (keyword: Moves)

So long story short, exploit the movement, the volatility, without considering...

Very interesting. The choice of where to draw your line is also interesting, but the time-frame used to make that determination seems a bit small, given your use of a "random" line location.

However, profit is profit in any case and what works, is --- well... what works!

Good post.
Y = MX + B. The most important price level of all.
  • #53
  • Oct 25, 2011 9:24am Oct 25, 2011 9:24am
Quoting eurotrash
http://www.forexfactory.com/showthread.php?t=22663

The problem for me here are two fold:

1) Standard Support and Resistance
2) Take a loss at 1%

Of course, to each his own and I'm not qualified to tell anyone what to do with their own capital. However, if Support and Resistance behave normally, then one can expect horizontal fracturing of the market price at those two levels (Support and Resistance).

Why take that risk?

My approach (as you note from reading the thread) is to use key points (V-Triggers) in the market that denote high probability price levels where the market is most likely to "move" - not to "consolidate before moving." That's the difference and the key.

If I do it right (which is what I'm testing right now on this forum), then I get almost immediate movement after the initial entry, without the need to engage a long Swap Sequence. If the Swap Sequence starts to get long in the tooth, then I know I've got the Volatility Trigger wrong, or less than optimal. That's where the study comes in - trying to find the optimal V-Trigger levels.

One 1% clause - I prefer to never take a loss. The question of profitability is a matter of Time. If I've done my homework on the V-Trigger, then sustained market movement will take place. If I have blown the V-Trigger, then I get caught in a volatility trap, which will eat away at the account balance, until the Box is removed and price move freely again.

You make your money with this method going into the deal. The better you are at finding good V-Triggers, the higher your profitability will be and the less risk you will encounter along the way.
Y = MX + B. The most important price level of all.
  • #54
  • Oct 25, 2011 9:32am Oct 25, 2011 9:32am
Quoting highlander2
A way round this would be to double your position size each time you reverse.
Ouch! One of the fasted ways to lose money ever devised, when you really don't have a laser on Direction.

Can it be done effectively? Yes. Can it be done effectively over prolonged periods of time? Yes. But, one really needs to sit down and study their account management strategy to the Nth degree before ever attempting it. You need to analyze in a spreadsheet, precisely what the limits of each incremental increase in lot size will look like. You need to model this to the absolute limit, in order to understand the risk/reward. You will also have to stay away from market compressions - without question. So, your Volatility Trigger will need to be spot on every single time - else, this will drain your account rapidly.

Do I recommend it? No. Not unless you have BOTH your Sunni and your Shiite together very tightly.
Y = MX + B. The most important price level of all.
  • #55
  • Oct 25, 2011 9:32am Oct 25, 2011 9:32am
I may be getting a V-Trigger here - gotta go get to work. Bye!
Y = MX + B. The most important price level of all.
  • #56
  • Oct 25, 2011 10:29am Oct 25, 2011 10:29am
Hello Line in the sand,

reposting my qn again, are you still using your TCD for this current system or it is irrelevant to this system?

looking forward to learn more about your line in the sand system.

thank and best regards.

-guandi
  • #57
  • Oct 25, 2011 10:49am Oct 25, 2011 10:49am
Quoting guandi
Hello Line in the sand,

reposting my qn again, are you still using your TCD for this current system or it is irrelevant to this system?

looking forward to learn more about your line in the sand system.

thank and best regards.

-guandi

Since my current trade is running below my V-Trigger, I can take the time to respond.

There are no other indicators, signals, calculations, algorithms, functions, modules or steps involved in drawing a line on a chart. As I mentioned earlier in this thread and in my journal on this forum, I do use one of my original indicators in conjunction with a double stoch arrangement, to help me locate the V-Trigger/location for the line. I also use multiple time-frames to help with the Swapping Sequence. Other than that, this method virtually indicator free.

You have to have some technical way for determining where to place the line and that location has to be at a place where both Swing and Momentum (continuance/magnitude) are most likely to occur.

Drawing a line on a chart, unfortunately, is not a trading system. It is much more a methodology for trading.
Y = MX + B. The most important price level of all.
  • #58
  • Oct 25, 2011 10:58am Oct 25, 2011 10:58am
Quoting nubcake
...this is why 'line' keeps mentioning the volatility events, and why just picking random areas to trade from is potential folly.
It is potential folly, but the potential for bigger reward is just a "thin line" away.

As a strict matter, I don't ever recommend that any newbie jump into Martingale, regardless of what they use to make entry/exit decisions. For the average trader (especially a newbie), using such an MM turns out to be disastrous.

However, having said that, for the advanced trader with a definite edge on Direction and for a very specified target level, including a very specific and well defined absolute loss limit - there may be some advantage to using Martingale, or some kind of Martingale variant that is customized specifically to the trading style and/or system used by the trader.

I don't write it off as total folly for all traders, just those that really don't understand what they are getting themselves into with Martingale. If you tie Martingale, to a very specific and historically accurate probability for signal outcome, then you can eek out some advantage. But, that kind of optimization requires a ton of detailed and meticulous analysis across a very deep historical data sample AND a lot of forward-testing convergence as well. This is not something the average newbie gets into - and for good reason.
Y = MX + B. The most important price level of all.
  • #59
  • Oct 25, 2011 11:07am Oct 25, 2011 11:07am
Quoting highlander2
If I got the math wrong then i will apologies.

No - you don't have the general math wrong - you are indeed correct - in theory.

But, we are talking about tightrope walking, when increasing size on a strict Martingale mandate. What I have not talked about in this thread, is the trader's timeline for profit: When does the trader need their money back?

I need to (like to) roll my capital back into the market every 24 hours. So, if I get caught in an overnight hold, that's disadvantageous to my style of trading, based on how rapidly I like to grow my capital. However, for a Swing Trader, Martingale, coupled to a really good V-Trigger, would be an actual boost to trading profits. But, that is ONLY predicated on the fact that the trader can maintain high probability V-Triggers for long periods of time.

So, the timeline for capital return with profit needs to be considered, here.

- How many pips does the EURUSD move in a Week or Month? Answer: Tons.

So, if the V-Trigger is well placed, the tons of pips waiting in the wings would be enough to bailout all underlying losses, plus add-on substantial profits above and beyond the initial capital outlay.

But, again - CAUTION! This is NOT for the trader who refused to do the homework BEFORE hand.
Y = MX + B. The most important price level of all.
  • #60
  • Oct 25, 2011 11:12am Oct 25, 2011 11:12am
Quoting nubcake
...martingaling will reduce the number of times you can lose to a handful of trades...
Absolutely, correct.
Y = MX + B. The most important price level of all.
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