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Pitbull Trader with Position Building

  • #461
  • Jan 18, 2012 12:26pm Jan 18, 2012 12:26pm
profit from the swap runup
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  • #462
  • Jan 18, 2012 12:44pm Jan 18, 2012 12:44pm
Pitbull AudUSD swap -Account Management.

I have shown where the trades went bad..but account management was able to take care of those trades.

Now I have a few postions that might grow with the longterm move...if the EURUSD decides to turn around. I will BE the position to remove the risk.

Hope this helps...On to a new set of trades...buys maybe...

I'm really not using my DD facility to the max if you notice..I have 15% of account bal to use.

So I can close all and walk away...I'm close to making 50% just under 3 weeks of on and off trading.

My indicators are cycling now..from Loss Profit Loss...Notice
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  • #463
  • Jan 18, 2012 3:28pm Jan 18, 2012 3:28pm
Hello Chips.
Can you tell me that you rely in deciding where to place limit orders?.
Thanks
  • #464
  • Jan 18, 2012 3:53pm Jan 18, 2012 3:53pm
I think it may be prudent in the near term to reindex current pair selection. More banks are more bulish on the Yen and Euro in near term. It may just be easier to convert into that direction.

Any thoughts ?
  • #465
  • Jan 18, 2012 4:11pm Jan 18, 2012 4:11pm
Hi there, I love this thread! But i was wondering if since the pairs are positively correlated when the pairs are in order (buys all together and sells all together). Why cant we trade the largest profit and the smallest profit in the same direction. For example the pairs are aligned as such (from top - largest loss to bottom - largest profit):

Sell eur/jpy
Sell nzd/jpy
Sell aud/jpy
Sell gbp/jpy
Sell usd/jpy
Buy eur/gbp
Buy gbp/usd
Buy aud/usd
Buy nzd/usd
Buy eur/usd

This means we are in a buying market. And it would make sense to buy the two fastest movers in the market. Which are eur/jpy and eur/usd.
Direction is more important than speed. Alot of people go nowhere real fast
  • #466
  • Jan 18, 2012 4:44pm Jan 18, 2012 4:44pm
Quoting traderjess87
Hi there, I love this thread! But i was wondering if since the pairs are positively correlated when the pairs are in order (buys all together and sells all together). Why cant we trade the largest profit and the smallest profit in the same direction. For example the pairs are aligned as such (from top - largest loss to bottom - largest profit):

Sell eur/jpy
Sell nzd/jpy
Sell aud/jpy
Sell gbp/jpy
Sell usd/jpy
Buy eur/gbp
Buy gbp/usd
Buy aud/usd
Buy nzd/usd
Buy eur/usd

This means we are in a buying market. And[b] it would make sense...
That is ABSOLUTELY BRILLIANT , can't believe that has not been mentioned before, thought we had the best brains in forex working on this rocket science method, go for it, and be sure to report back next week, but remember,

demo, demo, demo, practice, practice, practice


It takes a lot for me to IGNORE you, but you can try.
  • #467
  • Jan 18, 2012 4:56pm Jan 18, 2012 4:56pm
The reason why you would not trade the smallest profit is that it is in a no-man zone. It has not yet developed into a complete direction, therefore you are not sure yet that it will, however on the flip side most of the smallest profit will be the so caled Jumping Pairs, they will ocilate more frequent and you can offcourse make money that way too.
  • #468
  • Jan 18, 2012 6:07pm Jan 18, 2012 6:07pm
Quoting traderjess87
Hi there, I love this thread! But i was wondering if since the pairs are positively correlated when the pairs are in order (buys all together and sells all together). Why cant we trade the largest profit and the smallest profit in the same direction. For example the pairs are aligned as such (from top - largest loss to bottom - largest profit):

Sell eur/jpy
Sell nzd/jpy
Sell aud/jpy
Sell gbp/jpy
Sell usd/jpy
Buy eur/gbp
Buy gbp/usd
Buy aud/usd
Buy nzd/usd
Buy eur/usd

This means we are in a buying market. And it would make sense to buy the two...
You cant do that. It would not be a hedge. What if the market reversed? Then you would have both in DD. Dont look to change the method. Look to perfect it.
  • #469
  • Jan 18, 2012 7:11pm Jan 18, 2012 7:11pm
Has anyone tried this on two accounts with taking the opposite trades in the second account and using the MPTM to close trades when a set profit is reached? It seems logical if it the group of trades in each account cycles from loss-profit-loss-profit-etc.
  • #470
  • Edited Jan 19, 2012 12:09am Jan 18, 2012 11:10pm | Edited Jan 19, 2012 12:09am
Chips

Whats your view on the 14 pair basket please.

My account still stands at 50% increase since 3rd Jan...

Learning not to overtrade... is my key.


Thanks.

PS a by the way, I find the: A samir Universal pitbull indi very handy with this system. thanks to the poster
  • #471
  • Jan 18, 2012 11:16pm Jan 18, 2012 11:16pm
Quoting txfxtrader
Has anyone tried this on two accounts with taking the opposite trades in the second account and using the MPTM to close trades when a set profit is reached? It seems logical if it the group of trades in each account cycles from loss-profit-loss-profit-etc.
Nothing holding YOU back, I say go for it, the forex world is your oyster,

PRINTING MONEY, PRINTING MONEY, PRINTING MONEY, PRINTING MONEY, PRINTING MONEY, PRINTING MONEY, PRINTING MONEY, PRINTING MONEY, PRINTING MONEY, PRINTING MONEY, PRINTING MONEY, PRINTING MONEY, PRINTING MONEY, PRINTING MONEY, PRINTING MONEY, PRINTING MONEY, PRINTING MONEY, PRINTING MONEY

It takes a lot for me to IGNORE you, but you can try.
  • #472
  • Jan 19, 2012 4:16am Jan 19, 2012 4:16am
Hello TheDirtySerb,

Very interesting the method you are applying but please, could you give me a clear example as I'm allowed to hedge (I live in Paris) ?

Merci de ton attention,

Happy trading all,

Angel
  • #473
  • Jan 19, 2012 5:09am Jan 19, 2012 5:09am
Quoting Angel65
Hello TheDirtySerb,

Very interesting the method you are applying but please, could you give me a clear example as I'm allowed to hedge (I live in Paris) ?

Merci de ton attention,

Happy trading all,

Angel
Well since you're allowed to hedge I would say follow the method Chips is presenting. For example say your weakest pair is AUD/JPY, or it is the furthest into DD. You could take out a long position in that pair to balance your hedge and reduce further DD. I have to rely somewhat on chart analysis because I cannot hedge and therefore have to open a larger position in order close out my largest losing position. You can trade it either way as long as you find a way to compensate for the pair that is hurting you the most. The thing that I like about the way I'm doing it is that by closing out the pair that is largest in DD and entering it at a new level I am at the same time reducing the odds that if the market should turn suddenly it would hurt my pairs that are currently well into profit.

Not sure if I'm being clear so here's a scenario:
The pairs that were fastest into profit this week were EU and AU. The fastest into DD I think were AJ and EJ. I may be wrong about those two but lets just use them as an example. As EU was quickly rising I would take out a bigger position on EU. When it was at break even or greater than say AJ - my biggest loser, I close out the big EU trade and AJ loser. Then right away open a new AJ short at the same original lot size. My original EU lot size is still in place. So what have I done? My balance did not change much but I've increased my equity some. Also should AJ start going down now, I have an entry in a much better spot.

I've done this about 6 times this week. So not very much maintenance. But by getting rid of the biggest losers my basket is well balanced. So if EJ tanks today, it really wont matter because I was able to sell it higher than when I originally opened the basket. Hope this helps and I didnt ramble on too much. Sometimes its hard to put thoughts or actions into words.
  • #474
  • Jan 19, 2012 5:39am Jan 19, 2012 5:39am
Dont you just love living in the USA. I guess we are just too stupid to learn and therefore we cant hedge. Really this does put a terrible wedge into forex trading, but....

That said you can achieve a stop-loss hedge by using 2 accts, 1 primary and 1 alternate. You need to be well founded to do this, and you need to be able to transfer easilly between the accounts.

You will then achieve a true hedge. Another way is to open a sub account and trade exactlly or close to, opposite innto that acct. This way you should theoretically have an acct that has generated some profit, and will allow you take opposite side of the trade at that moment.

Both ways are just more work.

This this link http://kreslik.com/forums/viewtopic....&highlight=fpi. This will give you more information on setting up a true hedge using multiple pairs.

Now to be fair you also have to understand and immediatelly acknowledge without any doubt the following risks.
1. The correlated hedge can and does many times get out of control. You must apply other risk methods.
2. Your costs in the apposite acct will go up due to interest. That is ok however, after all you are buying insurance at this point.
3. Your exposure will increase significantly, double or more. This is a huge risk, and you have to be preparred to understand it and accept it.

DO NOT hedge unless you understand the above, but once you do..., and once you understand all the above concepts fully, you then will start making money.

The absolute must, is to learn all the techniques above, not just to assign some arbitrarry method to them. To master this takes a long time, and a lot lot of work.

If you want a safe way while reducing your profits just simply close or reduce the largest looser and accept that you will take the lost, and not benefit from any reversal, but if your bottom line has increased, is that a bad thing?
  • #475
  • Jan 19, 2012 6:25am Jan 19, 2012 6:25am
Serb,

If you are going to use a Correlated Hedge in place of a 1:1 you need to adjust your lot sizes. This is very very important, and will make a big difference.

Always look at http://fxtrade.oanda.com/analysis/currency-correlation or http://www.forexticket.co.uk/en/tools/01-01-correlation and try to make sure that at least 1hr and 1d realtions are still valid.

You also need to look at volatility for a given pair. The daily range needs to be as close as possible. For Example take a EURNZD trade that you woould like to hedge against. You will have a choice of EURAUD and GBPNZD.

Now look at ranges - EURNZD(161) GBPNZD(198) and EURAUD(114), and there is the problem - you need that will be closest. GBPNZD is a better candidate there.

Another aspect are the fundementals involved, which ultimatelly set the price. These will shift correlations, and you will need to adjust accordingly.

Take all of the above into consideration or - use a sub account. Or reduce the original position offsetting profit.

The above list some of the major problems with correlated hedges.

Read The Handbook of Pairs Trading. You can find it at amazon or on the web if you have to. That single investment will payback 1000 times.




Then adjust your size accordingly for each pair based on pip value.
  • #476
  • Jan 19, 2012 7:16am Jan 19, 2012 7:16am
Re-bonjout TheDirtySerb,

Thanks a lot for your clear reply : it's very kind of you !!

My gut feeling finally leads me to your method :

Closing firstly your bigger profitable trade before closing the biggest losing pair (knowing the fact that the profit should be at BE or better than the loss of the related pair).

By following this process, you better know the right direction of the market by waiting your taking profit FIRST and by closing out the pair that is largest in DD, and entering it at a new level you are at the same time reducing the odds that if the market should turn suddenly it would hurt your pairs that are currently well into profit.

And by hedging precisely at a turning point, you multiply your trade loss by two : not a really good bargain !!

And LESS stress because less trades open too.....etc........

IMO, just entering a hedge trade on a pairs because it's just the biggest loss is not solution with our balanced basket.

God bless you and all,

Happy trading,

Angel
  • #477
  • Jan 19, 2012 7:34am Jan 19, 2012 7:34am
Quoting Angel65
Re-bonjout TheDirtySerb,

Thanks a lot for your clear reply : it's very kind of you !!

My gut feeling finally leads me to your method :

Closing firstly your bigger profitable trade before closing the biggest losing pair (knowing the fact that the profit should be at BE or better than the loss of the related pair).

By following this process, you better know the right direction of the market by waiting your taking profit FIRST and by closing out the pair that is largest in DD, and entering it at a new level you are at the same...
Hello Angel,

You dont enter the Hedge for the sake of a stop-loss. You do it becuase you understand market cycles. In order take adventage of a hedge strategy you need to study Wave Theory (elliot etc ), Makret Cycles and fnally top down trading to execute it. Then you will be able to make money hedging. Hedging used in this context is alike to an insurance with a payout contract. It will allow you to make profit once you trade using any top-down method.

For example what if BOJ intervenes right now. This instant. You can do an SL. or you can open a Hedge. Now if you look at the past interventions you will notice that it simply failes after a toime period. Eventually this will create a smaller wave inside of a larger wave.

There is a very good example given by a trader with no bias in Dreamliner's correlation thread with a chart explainign it. Unfortunatelly people who succeed with Hedging do not have the time, or inclination to explain all of the needed details, assuming that you will know those or will learn.

The position size issue is controlled by not over extending. That is the key to you being to be in a care free state of mind.
  • #478
  • Jan 19, 2012 7:54am Jan 19, 2012 7:54am
Quoting esprit
Hello Angel,

You dont enter the Hedge for the sake of a stop-loss. You do it becuase you understand market cycles. In order take adventage of a hedge strategy you need to study Wave Theory (elliot etc ), Makret Cycles and fnally top down trading to execute it. Then you will be able to make money hedging. Hedging used in this context is alike to an insurance with a payout contract. It will allow you to make profit once you trade using any top-down method.

For example what if BOJ intervenes right now. This instant. You can do an SL. or you can...
Hi Esprit, thank you for your informative posts but I think you may be overthinking or complicating what we are attempting to do here. We are just trying to take 8-10 correlated pairs and trading the fastest mover while managing DD.

As simply as I can put it: Buy, Sell, Rinse, Repeat.

I'm going to sound like Brijon or Chips here but managing DD is key however you do it. However you choose to do it profitably. For me personally its best to offset the biggest loser with a winner and re-enter that loser at a better spot. Yes my balance will not initially increase but my overall equity will. Take for example right now. GJ is really hurting my basket. But because I was able to release my original losers and re-enter them in a better spot, my basket is still well in profit.

Good luck to all.
  • #479
  • Jan 19, 2012 8:02am Jan 19, 2012 8:02am
Quoting TheDirtySerb
Hi Esprit, thank you for your informative posts but I think you may be overthinking or complicating what we are attempting to do here. We are just trying to take 8-10 correlated pairs and trading the fastest mover while managing DD.

As simply as I can put it: Buy, Sell, Rinse, Repeat.

I'm going to sound like Brijon or Chips here but managing DD is key however you do it. However you choose to do it profitably. For me personally its best to offset the biggest loser with a winner and re-enter that loser at a better spot. Yes my balance will not...
I was not trying at all to complicate the subject, it is complex enough as is. You are doing fine with this approach and that is good, no matter what method you will use, account management is the key. "Printing Money" which simply means entering a trade is only the first step, everything else in that trade management is the key.

I am pointing the above out only so you can learn more, and trully undertand what is behind this methodology and why what you are doing is working, and once you learn, you will be able to trade without ever worrying about the current spike or similiar, and infact take advantage of the trade you just closed.

Releasing the looser, stop loss etc are all forms of management, a must, but all of them are not equal, and need to be understod in seperate context as applicable.

On one of the videos that Brian created, shows a spreadsheet which has the correlation table with proper sizing for the what if event.
  • #480
  • Jan 19, 2012 8:09am Jan 19, 2012 8:09am
Quoting esprit
I was not trying at all to complicate the subject, it is complex enough as is. You are doing fine with this approach and that is good, no matter what method you will use, account management is the key. "Printing Money" which simply means entering a trade is only the first step, everything else in that trade management is the key.

I am pointing the above out only so you can learn more, and trully undertand what is behind this methodology and why what you are doing is working, and once you learn, you will be able to trade without ever worrying...
Yup, well said. Good trading to you.
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