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Thegman's Journal (Equity Millipede Concept) 102 replies

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Building an equity millipede

Quoting RED-Dragon
I think Graeme has passed on all the info one needs to become a successful trader. The problem for many is that to get to that point, it takes a whole lot of time and energy and numerous lessons to be learnt. I think it would be nice if this thread had a Mentor, how likely that is to happen?, who knows as that takes a whole different energy and time.

I"m happy to post trades I take as and when I can.

Good Trading People.

What is really needed is a 'hand-holding' live trade that is documented from beginning to finish. I know that will take a lot of time. Also who knows which trade will develop into a long lasting millipede with loads of legs...

Olu
Find a trend and milk it for all it is worth. That's how to be profitable
Good morning everyone, have a great week and all the best building your legs
Greetings fine people - I have followed this thread with great interest, and now I've run into an issue it seems several of you have solved - how does this strategy work with US brokers that do not allow hedging, IE First in, First Out (FIFO)? It seems there are some brokers that offer Last in, First Out, (LIFO) but I am still researching this, and would like to save some time by getting your experienced input.

Questions:
1) Is anyone able to use hedging or an equivalent with a US broker? I've seen these mentioned:
- Interbank FX (IBFX)
- CTIFX Pro

2) As anyone trading this strategy in the US modified it to work in spite of FIFO/non Hedging rules?
- Using two accounts?
- Multiple pairs?
- allowing stops on recent entries to take out old positions, but allow recent trades to go negative (using account balance gained from older, profitable positions)

I greatly appreciate what has been contributed here. Many thanks to Graeme and I'm looking forward to the book!
For those that want to stimulate this thread how about opening a demo account, post credentials of the accounts, Fxbook or trade explorer and do the 3 X 20 exercise and discuss trial and tribulations on the thread so everyone can learn.

Without this key skill, one will not be able to leverage this style of trading to its true potential.

If anyone wants to do this but not wants in public, please pm me and we can together get this going by exchanging notes and experiences over pm/emails.
Quoting eiffel
Greetings fine people - I have followed this thread with great interest, and now I've run into an issue it seems several of you have solved - how does this strategy work with US brokers that do not allow hedging, IE First in, First Out (FIFO)? It seems there are some brokers that offer Last in, First Out, (LIFO) but I am still researching this, and would like to save some time by getting your experienced input.

Questions:
1) Is anyone able to use hedging or an equivalent with a US broker? I've seen these mentioned:
- Interbank FX (IBFX)...
FIFO does not affect IBFX, they do it through their reporting. Your trades are yours to close as you wish. You can open a second account and take trades in opposite direction, thus hedging.
After a very calm (o.k. deathly dull!) time in the JPY pairs for quite a few months, the last couple of weeks has seen great new trend in the JPY pairs..this is what you need to make money from Graeme's system... large-scale long-running trend which-- hopefully will go on for years
Quoting Eklavya
For those that want to stimulate this thread how about opening a demo account, post credentials of the accounts, Fxbook or trade explorer and do the 3 X 20 exercise and discuss trial and tribulations on the thread so everyone can learn.

I'm trading live and have a journal going here of FF using the flying buddha:

http://www.forexfactory.com/showthread.php?t=339192

I didn't want to bog this thread down with that.
Quoting Eklavya
For those that want to stimulate this thread how about opening a demo account, post credentials of the accounts, Fxbook or trade explorer and do the 3 X 20 exercise and discuss trial and tribulations on the thread so everyone can learn.

Without this key skill, one will not be able to leverage this style of trading to its true potential.

If anyone wants to do this but not wants in public, please pm me and we can together get this going by exchanging notes and experiences over pm/emails.
Hi Eklayya,

Count me in.
-happyTrading, maaj-
Initiated a short on AUDCAD today at 1.0618, I will build on it if the weekly break is confirmed...
Best,
D
I haven't read all 5000+ (!!) posts in this thread, but I followed along for quite a while. Could someone review my understanding to see if I've got the basic idea?

* Graeme's basic concept is to jump onto trend moves, and ride them as long as possible. He says to use whatever entry methods work for you.

* He enters both long and short positions, as entry opportunities present themselves. Eventually the market moves and takes out the positions on one side or the other, and that tells you which direction things are going. He tries to minimizes his losses on the wrong side of the market by using good entries with tight stops.

* He continues entering (long and short, I think) as the market continues moving. As time goes on, he builds many "legs" on the position, which grow rapidly as the trend continues.

* When the market turns, his counter-trend entries start to survive and the trend entries get knocked out. This is how he adapts to pullbacks and trend changes.

OK so far?

There are some challenges for US traders who have to deal with hedging rules, but you could adapt the "go short against the trend" entries to "exit long positions against the trend" and get the same result. I think you could use trailing stops (to reduce your net long position) instead of adding short positions.

One thing I'm not clear on is his exit strategy. I didn't see anything about him moving the stops up as the trend progresses. It wouldn't do you much good to build up a gigantic open profit if you give it all back when the market turns. When do you exit positions? Does this have something to do with him promoting legs to a different group? I.e. each group has a different stop, trailing the market at different distances?

If I missed a good summary or explanation of these points somewhere in the thread, I'd appreciate a pointer. Thanks for any help!

Gary
Quoting garyfritz
One thing I'm not clear on is his exit strategy. I didn't see anything about him moving the stops up as the trend progresses. It wouldn't do you much good to build up a gigantic open profit if you give it all back when the market turns. When do you exit positions? Does this have something to do with him promoting legs to a different group? I.e. each group has a different stop, trailing the market at different distances?

If I missed a good summary or explanation of these points somewhere in the thread, I'd appreciate a pointer. Thanks for...
Gary,

Welcome. I think you have the gist of it.
Graeme uses exits sparingly. When the market appears "uncertain" as to where its going (I read that as a somewhat ranging period) or whenever else you deem appropriate you "diversify" your positions, closing out the nearer orders (another problem for US traders due to FIFO) and retaining or graduating the older ones to the long term group. These will be saved indefinitely to experience "unlimited growth.

Many here have of course adapted these techniques to work for themselves. I am employing the Flying Buddha entry technique that Graeme talks about in this thread. It employs a more conventional approach to exiting. I too don't like to see all those positions evaporate as the major trend changes. I'd rather close them and reenter new ones if the original trend continues.
Thanks, Spydie. Seems to me that in most market conditions you could get whipped around a lot before it finally breaks out. I would be inclined to trade this with a trend bias. Find a pair that's already moving well, and make a good low-risk entry to jump onto that trend. Then keep stacking as the trend moves. That seems like it would be a lot less loss-prone and nerve-wracking than placing longs & shorts and waiting for the market to tell you where it's going.

So the exits are pretty undefined. OK. Guess everybody can apply what works for them. Like you, I wouldn't want to build up thousands of pips and then watch them dribble away when the market turned. If I understand the "promoting" concept, I guess you might implement it as something like "recent entries trail a stop 100 pips behind the market. Once they get more than X pips in profit they graduate into a 200-pip trail group, then at Y pips profit they graduate to 400-pip trail, etc." That way your recent entries won't give back much, but you leave lots of wiggle room for the entries that have a lot of open profit.
Be sure to read Graeme's wick interpretation and scale down of time frames over and over again. In my opinion, it gives great hints when to enter with minimum draw down. So far this week, I've entered 3 trades on EURUSD with ~20pips-30pips risk, and reward is 150+ for each trade.

I usually close half of my position when my latest trade goes break even or loss.

I began to look for counter trades, or wait for confirmation of trend continuation.

However, if a trade of the remaining half get closed, I close half of it again. By this time, I would probably have legs building in the opposite direction.

Just thought I'd share my trading style.

Quoting garyfritz
Thanks, Spydie. Seems to me that in most market conditions you could get whipped around a lot before it finally breaks out. I would be inclined to trade this with a trend bias. Find a pair that's already moving well, and make a good low-risk entry to jump onto that trend. Then keep stacking as the trend moves. That seems like it would be a lot less loss-prone and nerve-wracking than placing longs & shorts and waiting for the market to tell you where it's going.

So the exits are pretty undefined. OK. Guess everybody can apply what works...
Thanks, Chick. That's in this thread? Can you give me an idea where in the 5000+ posts to find it??
Page 50, Post 738. That is for wick interpretation.

Quoting garyfritz
Thanks, Chick. That's in this thread? Can you give me an idea where in the 5000+ posts to find it??
Hello Good morning,

I have a trade explorer open in my profile for my latest attempt at building a equity millipede, everyone should be finding there own way or "one thing"...but sometimes its nice to track other peoples forwards testing.

Please note Its still being tuned as I go forward.

As you can see the strength of the YEN currently dictates my equity, but no matter I still keep looking to add positions and keep my bias and entrys dynamic and flexible.

Remember your edge is your ability to handle the money management and ability to sit on your hand and watch equity swings without bailing out, and many more psychological challenges........your entry's alone are NOT your edge IMO, they don't need to be good enough to make you money trading a 1:1RR or even a 1:2RR they are just a framework where to enter at sensible positions, get to BE and that have a good chance of long term survival, set entry rules stop you from over-trading and just throwing mud at the wall......anyway I'm a nobody, never made (or lost) a penny trading, this is my view I could be massively wrong, and in 12months my thinking could be vastly different, but then that's the whole point of a journey....to experience and learn

Anyway all the best with your position building
Thanks Graeme for your time and patience to teach us what you were doing...

Actually,I read your thread already 30 times and I will read 100 more times.Each time it is teaching me a new lesson.Learning was easy for me but applying was quiet hard.So,I Started practicing and I found my one thing.

Last three days I started trading with your blueprint and My rules :

Here are my results:

This for last three days I have been trading 4 currency pairs and tried establishing 20 legs of which 13 legs are surviving 3 died at be and 4 legs died totally of 120 pips.Now,My unrealized profits is at 1500 pips.I will still try to Improve my system and I will avoid my unnecessary draw downs as minimum as possible.

Thank you
Prakash
I am a hunter...i kill both bulls and bears...
oathbreaker, very impressive. Which is your entry criteria or entry rule, in order to open new positions?
I find that the most difficult part is to open new positions without being stopped.
Quoting Jordi
oathbreaker, very impressive. Which is your entry criteria or entry rule, in order to open new positions?
I find that the most difficult part is to open new positions without being stopped.
Hi Jordi
There are no set of rules to follow.All are relative.Just look at the charts and first define the trend in higher time frame(monthly).I use 200 ema to define my trend but Graeme uses 5/10 ema crossovers.Just see which one of this are you comfortable with.This is the most important part of your trading even a candle in monthly gives you 1000's of pips.So define the trend in the higher time frames.After Defining the trend in higher time frame you will have more than 2 currency pairs in your hands which you feel trending.Now,you will move to next lower time frame(weekly)there use the same trend analysis.By defining trend in both time frames you will eliminate some currency pairs.
This is similar to boxing don't hit punches aimlessly this is not how professional plays.so,you don't enter aimlessly where ever you feel like entering.Just do it as professionals,just define trend in higher time frames and by this you will have your blue print with you.Just,do your home work and find your one thing which will be yours for rest of your life.That is The one thing for you.You might think I m hitting the bushes but think and define trend in higher time frame.Then,move on to lower time frame.This will avoid most of your losses.

Blue Print
step-1: Defining the trend in higher time frame
Step-2: Pre-select the currency pair based on your one thing
Step-3:Now you will enter in lower time frame with your hindsight
Step-4:Try entering at the open of the daily or 4H bar
Step-5:Look at your charts daily and try defining trend and you will sub-consciously connect with the market.
Step-6: There is no prefect system and no perfect suggestion you should try on your own.It might take you some-time to know your one thing but it is really worth it.Don't enter aimlessly you will hurt your-self.
Step-7:read the .PDF from page-233 (or) page-234 of this thread.make sure that you read it at least 5-6 times.

All the best.If you want some help i am ready to help. But,do your home-work.Just try to learn how professional play.

Cheers
prakash
I am a hunter...i kill both bulls and bears...
thank you oathbreaker
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