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The Rockenbach System

  • #101
  • Oct 22, 2011 2:18pm Oct 22, 2011 2:18pm
This looks like a really good system. Can you use Stoch filter with it?
  • #102
  • Oct 22, 2011 6:44pm Oct 22, 2011 6:44pm
Quoting Ibm
This looks like a really good system. Can you use Stoch filter with it?
Other than the moving averages, you don't need to add anything else. Other indicators will only complicate the simplicity of this method. I have tried different kinds of indicators on various systems, the only thing they did was make my head hurt and cause me to loose trades.
  • #103
  • Oct 22, 2011 6:53pm Oct 22, 2011 6:53pm
One of the most important points you begin to realize after loosing so many trades is this.

1. What is your exit point if the trade goes wrong. I have made the fatal mistake of always thinking the trade will turn around.

2. Trade small enough lots based on your trading balance that will allow you to withstand 5 to 10 straight losses without significantly affecting your account. I have learned this the hard way be destroying 3 live accounts.

I am not an expert, but you learn to duck after you get hit in the head many times.
  • #104
  • Oct 24, 2011 7:31am Oct 24, 2011 7:31am
  •  Frv
  • | Joined Dec 2010 | Status: Keep working and you will get there | 77 Posts
Quoting Everett
One of the most important points you begin to realize after loosing so many trades is this.

1. What is your exit point if the trade goes wrong. I have made the fatal mistake of always thinking the trade will turn around.

2. Trade small enough lots based on your trading balance that will allow you to withstand 5 to 10 straight losses without significantly affecting your account. I have learned this the hard way be destroying 3 live accounts.

I am not an expert, but you learn to duck after you get hit in the head many times.
Everett, I appreciate your help in answering questions from other readers ... I'm happy to know that the system is working well .... we'll keep working .... many pips to you ...!!!
" Keep walking and you will get there "
  • #105
  • Nov 4, 2011 1:25pm Nov 4, 2011 1:25pm
  • #106
  • Nov 5, 2011 1:04am Nov 5, 2011 1:04am
Hey
I just read the whole thread and can't wait to test this system when the market opens.

Muito obrigado
let's skype: @elchinoazul
  • #107
  • Nov 7, 2011 3:00am Nov 7, 2011 3:00am
Quoting Frv
Hey esquire...... thanks for posting your question, but you're wrong ...your math is not right... let me explain why ...

This strategy is a high probability, then the chances are between 60-70% winning trades.
And then, even with your example of losing 60% of trades, you still have good profits. I'll show you why (I'm not counting the spreads to be easier to understand, and how in general they are between 2-3, they will not do "much" difference in the outcome of this example).

Let's assume you start with only $ 100. With the SL at 30...
Hi everybody!

Frv can you please better explain your compounding money management ?

From what I understand, you risk 30 pips to get 100 pips. You size the lot so that 100 pips is your target amount. Each time you win you double the lot size. Each time you loose you remove the loss from the target and calculate the risk the same way (100:30) that is 30*target/100 ($) which is always 100 pips.

So if you win 3 times in a row, starting with $100 target, you make $100 risking $30, then $200 (risking $60) and lastly $400 (risking $120). this sums up to $700. The risk for the next trade is $240. At the 4th trade you are targetting $800, risking $240. Now if you loose, $560 are left ($800-$240) and you now target $800-$240=$560. Your risk is then $168.

The rule is then

TP set at +100 pips, SL set at -30 pips. R:R = 3.333:1 (100:30)

- After a winner
new target = 2 * target
new risk = 2 * risk = 30 * new target / 100

- After a looser
new target = target - loss
new risk = 30 * new target / 100

Is that correct? I hope I'm wrong.

Let's consider the following trading sequence (W=winner, L=loser) like W, L, L, L, L, W, W, L, L, L
10 trades, 3 winners. R:R = 100:30. Expectancy = 3/10 * 10/3 - 7/10 * 1 = +0.3. Such a system has a positive expectancy.

From a $3000 account,
Risking $30 each time, you win 3 * 100 and loose 7*30. Net +90
Risking 1% each time, you make +100, -31, 31, -30, -30, +100, +103, -32, -31, -31. Net +87
What I described makes +100, -60, -42, -29, -21, +48, +96, -57, -28, -40. Net -34

A positive expectency system is turned into a loosing system! I really hope I'm wrong....

Other point, 3 loosers in a row destroy 66% of whatever accumulated so far. Interestingly enough, this system has the property that any order of the W/L sequences leads to the same result.
Therefore have 3 loosers anywhere in the sequence kill 66% of the profit. 4 loosers and that's a good bye to 76% of your profit...

Please tell me I'm wrong!
No greed. No fear. Just maths.
  • #108
  • Nov 7, 2011 5:06am Nov 7, 2011 5:06am
  •  Frv
  • | Joined Dec 2010 | Status: Keep working and you will get there | 77 Posts
Quoting Rodcisal
Hey
I just read the whole thread and can't wait to test this system when the market opens.

Muito obrigado

Please post your results.....good pips!!!!
" Keep walking and you will get there "
  • #109
  • Nov 7, 2011 5:43am Nov 7, 2011 5:43am
  •  Frv
  • | Joined Dec 2010 | Status: Keep working and you will get there | 77 Posts
Quoting PipMeUp
Hi everybody!

Frv can you please better explain your compounding money management ?

From what I understand, you risk 30 pips to get 100 pips. You size the lot so that 100 pips is your target amount. Each time you win you double the lot size. Each time you loose you remove the loss from the target and calculate the risk the same way (100:30) that is 30*target/100 ($) which is always 100 pips.

So if you win 3 times in a row, starting with $100 target, you make $100 risking $30, then $200 (risking $60) and lastly $400 (risking $120). this sums...

Hi Pipmeup .... thanks for the question ... I'll explain to you ....
First, the SL 30 and TP 100 are not the targets of the strategy .... then your calculations are not correct, and do not apply ... but I will explain how compounding ....
Every strategy has two sides ... or is it positive or negative .... this strategy is a high probability (nothing is certain in forex), so why not get the best out of it with compounding?!
If you use a lower laverage as 1:25 for example, your losses will not affect your bankroll too ... but I assume that you will earn more than you lose, you will be able to multiply your earnings with compounding .
If you properly follow the strategy will achieve a minimum 2:1 R / R, and will be more times on the positive side, making money.
In your example you used 3 wins and 7 losses, the strategy would be only 30% positive ... that would be super bad strategy, that is NOT the case. You can easily 50/50 using my rules (or more )....
I hope I have explained ....regards.
" Keep walking and you will get there "
  • #110
  • Nov 7, 2011 6:52am Nov 7, 2011 6:52am
Quoting Frv
Hi Pipmeup .... thanks for the question ... I'll explain to you ....
First, the SL 30 and TP 100 are not the targets of the strategy .... then your calculations are not correct, and do not apply ... but I will explain how compounding ....
Every strategy has two sides ... or is it positive or negative .... this strategy is a high probability (nothing is certain in forex), so why not get the best out of it with compounding?!
If you use a lower laverage as 1:25 for example, your losses will not affect your bankroll too ... but I assume that you will...
Of course the example system I chose is bad (on purpose), yet the mathematical expectancy is positive. 30% success rate with 10:3 R:R leads to
E = 0.3 * 3.3333 - 0.7 * 1 = +0.3
(poor but positive)

A 60% successful system with 2:1 R:R has an expectancy of
E = 0.6 * 2 - 0.4 * 1 = +0.8
Of course better.

Also keep in mind that any non-perfect system (win ratio < 100%) will at some point generate this sequence. Just a matter of time.

OK. That was just an example anyway. My point was to understand the compounding method you use because it's a very important point. I was almost certain to be wrong and I'm happy you confirm I was. :-)

I still don't understand how you produce the serie described in post #17. May you describe the steps with the sequence say W, L, L, W, W, W, L, L, L, W ?
No greed. No fear. Just maths.
  • #111
  • Nov 7, 2011 8:11am Nov 7, 2011 8:11am
  •  Frv
  • | Joined Dec 2010 | Status: Keep working and you will get there | 77 Posts
Quoting PipMeUp
Of course the example system I chose is bad (on purpose), yet the mathematical expectancy is positive. 30% success rate with 10:3 R:R leads to
E = 0.3 * 3.3333 - 0.7 * 1 = +0.3
(poor but positive)

A 60% successful system with 2:1 R:R has an expectancy of
E = 0.6 * 2 - 0.4 * 1 = +0.8
Of course better.

Also keep in mind that any non-perfect system (win ratio < 100%) will at some point generate this sequence. Just a matter of time.

OK. That was just an example anyway. My point was to understand the compounding method you use because it's a very...

One thing you should remember is that SL and TP are not a specified amounts (I think that's the misunderstanding). They are held when the MA's cross ..... or MACD also crossed the line .... so they gonna be diferent from trade to trade (but positive) but still .... let's test your example ....
let's star with u$ 1000....

1- W = 1000 + 30% = 1300
2- L = 1300 - 10% = 1170
3- L = 1170 - 15% = 994
4- W = 994 + 25% = 1243
5- W= 1243 + 30% = 1616
6- W= 1616 + 20% = 1939
7- L= 1939 - 10% = 1745
8- L= 1745 - 15% = 1483
9- L= 1483 - 12% = 1305
10-W= 1305 + 25% = 1631

...and other things that are very important, is that in some trades .... you will be able to enjoy some great moves and make 50% or more, and this greatly influences the compounding, since the enter point is a MA cross, and its exit too, so never will have a loss equivalent to that big move. Couse if you dont use the compounding, you will end up with u$ 680 in profit...is more than if use compound, but this big moves ( that i dont used in the exemple) will make a huge diference in the long run....tks for asking again....
" Keep walking and you will get there "
  • #112
  • Nov 7, 2011 10:31am Nov 7, 2011 10:31am
Check this out.
There's a cross about to happen as you see in the pic.



would that work as a entry signal?


Regards.
Attached Image (click to enlarge)
Click to Enlarge Name: r1.png Size: 35 KB
let's skype: @elchinoazul
  • #113
  • Nov 7, 2011 10:41am Nov 7, 2011 10:41am
I also have a few questions, Hopefully I read well and you didn't answered before.


1. What pairs do you trade most? Majors?
2. How many pairs do you check in order to get entry signals?
3. What about a trial stop? I know all the money management rules but based upon trade history what about if it goes 29 pips on your favor but then it bounces back to reach your SL?


Regards
let's skype: @elchinoazul
  • #114
  • Nov 7, 2011 11:33am Nov 7, 2011 11:33am
  •  Frv
  • | Joined Dec 2010 | Status: Keep working and you will get there | 77 Posts
Quoting Rodcisal
Check this out.
There's a cross about to happen as you see in the pic.



would that work as a entry signal?


Regards.
if you are waiting for a short...yes .... this seems to be a good .... but you did not include in your chart the MACD indi ... it will confirm that if is a good trade ....
What you need to understand is that the 50 ssma is a good MA to help recognize areas of support and resistance .... this is the main thing in the strategy ... with it you can take advantage of the continuation of the trend.....
" Keep walking and you will get there "
  • #115
  • Nov 7, 2011 11:35am Nov 7, 2011 11:35am
Quoting Frv
if you are waiting for a short...yes .... this seems to be a good .... but you did not include in your chart the MACD indi ... it will confirm that if is a good trade ....
What you need to understand is that the 50 ssma is a good MA to help recognize areas of support and resistance .... this is the main thing in the strategy ... with it you can take advantage of the continuation of the trend.....

you said "if you're waiting for a short" that's because price is under 50SMMA?
I can't attach a macd indi on my charts don't know why
regards
let's skype: @elchinoazul
  • #116
  • Nov 7, 2011 11:41am Nov 7, 2011 11:41am
  •  Frv
  • | Joined Dec 2010 | Status: Keep working and you will get there | 77 Posts
Quoting Rodcisal
I also have a few questions, Hopefully I read well and you didn't answered before.


1. What pairs do you trade most? Majors?
2. How many pairs do you check in order to get entry signals?
3. What about a trial stop? I know all the money management rules but based upon trade history what about if it goes 29 pips on your favor but then it bounces back to reach your SL?


Regards

Rodcisal....it is best you use the majors ... I also like to pair with little range, they are easy to identify the trend ...
and each pair has its own behavior analysis ... do one individual pair at a time ...
... with 30 pips is better to set to break even ... and go to the next trade ... regards...bons pips !!!
" Keep walking and you will get there "
  • #117
  • Nov 7, 2011 11:44am Nov 7, 2011 11:44am
Quoting Frv
Rodcisal....it is best you use the majors ... I also like to pair with little range, they are easy to identify the trend ...
and each pair has its own behavior analysis ... do one individual pair at a time ...
... with 30 pips is better to set to break even ... and go to the next trade ... regards...bons pips !!!
thanks!
I'm starting to test this system now!
I'll keep a log with everything I do then I'll tell you how it worked.

regards
let's skype: @elchinoazul
  • #118
  • Nov 7, 2011 11:50am Nov 7, 2011 11:50am
  •  Frv
  • | Joined Dec 2010 | Status: Keep working and you will get there | 77 Posts
Quoting Rodcisal
thanks!
I'm starting to test this system now!
I'll keep a log with everything I do then I'll tell you how it worked.

regards

" Keep walking and you will get there "
  • #119
  • Nov 8, 2011 12:48am Nov 8, 2011 12:48am
Quoting Frv
1- W = 1000 + 30% = 1300
2- L = 1300 - 10% = 1170
3- L = 1170 - 15% = 994
4- W = 994 + 25% = 1243
5- W= 1243 + 30% = 1616
6- W= 1616 + 20% = 1939
7- L= 1939 - 10% = 1745
8- L= 1745 - 15% = 1483
9- L= 1483 - 12% = 1305
10-W= 1305 + 25% = 1631
Thanks you for your time and the values. In fact I'm interested in the algorithm which produces them. How do to get +30%, -10%, -15%... That's the interesting point. Much more than the values themselves.
At step 1, the +30% are 3 times the $100 risk. Right?
At step 2, I'm already lost...-10% are $130. Where are they coming from? Nothing I can think of computes with the -15% (-$176) at step 3.

How do you size the risk after a winner; after a looser?

Sorry if I'm a pain... But I clearly understand that it is probably even more important than the entry.

PS: if anybody else is ready to explain (s)he is welcome
No greed. No fear. Just maths.
  • #120
  • Nov 8, 2011 1:43am Nov 8, 2011 1:43am
how many trades do you guys put on usually?

I'm just starting to try this system out and I've put on two trades. One of them is 30 pips up so I moved the SL to BE and the second one is -10 pips but it doesn't reach SL yet.

Let's see what happens.


Regards
let's skype: @elchinoazul
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