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Fail Better

  • #3,001
  • Mar 14, 2012 3:03pm Mar 14, 2012 3:03pm
This is a nice trade I took today on USD/CHF - a rounded retest off the 0.9252 level, with D1 bias (yesterdays bullish outside bar) up to the D1 level at 0.9300.

This is my first week back trading live since taking a break from live trading shortly after posting this.
Quoting BadgerMatt
This was my 4th week trading the methods set out in this thread live. And it wasn’t a good one. 5 trades (1 gap, 1 SFP, 3 rounded retests), 5 losses. If you add on the previous trade the previous Friday (also a rounded retest) that is 6 losses in a row.
So it's nice to start back with a winner!
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  • #3,002
  • Mar 15, 2012 10:24am Mar 15, 2012 10:24am
Quoting BadgerMatt
This is a nice trade I took today on USD/CHF - a rounded retest off the 0.9252 level, with D1 bias (yesterdays bullish outside bar) up to the D1 level at 0.9300.

This is my first week back trading live since taking a break from live trading shortly after posting this.


So it's nice to start back with a winner!
Matt don't worry too much......a lot of us are struggling with this method and getting more losers than winners despite Tom's best efforts. Dont forget he has years of experience and knows the stuff inside, and he will also tell you that it took him years to get into profit. Only solution is to keep learning and try to keep your losses small as you can - I have managed to do this despite a lot more losers than winners! So my money management and risk control has been GOOD and thats something to build on though it seems that the learning never stops!!
  • #3,003
  • Mar 15, 2012 10:36am Mar 15, 2012 10:36am
Quoting Kalbar
keep your losses small as you can
I did a very un-scientific first off run through last week setting alerts for levels in IG and then triggering orders from these. Since Tom's approach works off very specific price areas you can set these with very tight stops (for FX) between 10-20 points (this is just my rule of thumb and entirely my own humble opinion so don't anyone come back to me on this, ok) and achieve some extremely high 'R' winners. The one that kept me out of the 's**t' was 16R as I just left it the hell alone

With only 1 winner and six losers I still made 60pts profit on aggregate. The discretionary/experience component is what improves this win/loss ratio and of course being able to watch price to improve the ratio further. Not having huge stop losses also means (with consistency) scaling up risk shouldn't be too.

Since I'm sitting in an office all day I'd have to chose only the very, very best examples and go from there. Setting a bunch of SMS alerts helps but this is backed up with quite a lot of 'scenario planning' both in the evening and in the morning. It all takes time so I'm sticking to only 3 pairs as I reckon familiarity with how prices move is important.

Main thing for me to focus on is not to take trades at levels that don't mean anything... Patience, patience, patience... I probably need to tattoo this word on my forehead...
  • #3,004
  • Mar 15, 2012 3:12pm Mar 15, 2012 3:12pm
Quoting Kalbar
Only solution is to keep learning and try to keep your losses small as you can - I have managed to do this despite a lot more losers than winners! !

Quoting robertislive
Since Tom's approach works off very specific price areas you can set these with very tight stops (for FX) between 10-20 points (this is just my rule of thumb and entirely my own humble opinion so don't anyone come back to me on this, ok) and achieve some extremely high 'R' winners.
It's very interesting to see you say this. It's something I am keeping an eye on too, because of my winning trades which are based on the blind touch of a level, my greatest drawdown has been 16 pips, and in half of those trades, the maximum drawdown has been 10 pips or less. And my stop size (which does vary quite considerably) averages around 30.

Now, this is based on a very, very small sample and so no conclusions ought to drawn from it at all. But it gives me hope that as time goes on and I build up a more solid statistical foundation, I might be able to ratchet up my R:R ratio without having too much of an impact on my strike rate.
  • #3,005
  • Mar 15, 2012 3:35pm Mar 15, 2012 3:35pm
Quoting BadgerMatt
It's very interesting to see you say this. It's something I am keeping an eye on too, because of my winning trades which are based on the blind touch of a level, my greatest drawdown has been 16 pips, and in half of those trades, the maximum drawdown has been 10 pips or less. And my stop size (which does vary quite considerably) averages around 30.

Now, this is based on a very, very small sample and so no conclusions ought to drawn from it at all. But it gives me hope that as time goes on and I build up a more solid statistical...
Apologies, can't resist breaking this down further...

The entry points I want have the following characteristics.

1) You can spot them in advance based on previous price action
2) You know exactly where the trade idea 'fails' and it's time to get out
3) The distance between the two points (stop) isn't a huge numbers of pips

This achieves what I view as three primary aims (imho) of something thsat should work beautifully with some practice

High probability of success (setup works 'x'% of the time)
Low risk (but possibly 'high' ££ per pt depending on your overall account)
High potential reward in terms of R:R

Exit points are a completely different ball game that I'm not going to go near although if you track this too I'm sure you can improve R:R here too!

Never thought I'd say this but success comes through statistics - lol
  • #3,006
  • Mar 15, 2012 9:53pm Mar 15, 2012 9:53pm
Quoting robertislive
I did a very un-scientific first off run through last week setting alerts for levels in IG and then triggering orders from these. Since Tom's approach works off very specific price areas you can set these with very tight stops (for FX) between 10-20 points (this is just my rule of thumb and entirely my own humble opinion so don't anyone come back to me on this, ok) and achieve some extremely high 'R' winners. The one that kept me out of the 's**t' was 16R as I just left it the hell alone

With only 1 winner and six losers I still made 60pts...
I've been backtesting this with Forextester2 with touch trades at support/resistance lines and my my stop behind the candle that initially broke this line as per his notes (plus a little further back behind this candle or a swing point). My target is the first swing or support/resistance. Very high R:R which does help by going from one S/R to the next S/R. Only looking at 1h charts.

I'm not filtering it with the daily range using ATR(20) yet, but I am consistently ahead with backtesting.
WARNING: Don't follow me as I'm just learning
  • #3,007
  • Mar 15, 2012 11:23pm Mar 15, 2012 11:23pm
Quoting adam777
I've been backtesting this with Forextester2 with touch trades at support/resistance lines and my my stop behind the candle that initially broke this line as per his notes (plus a little further back behind this candle or a swing point). My target is the first swing or support/resistance. Very high R:R which does help by going from one S/R to the next S/R. Only looking at 1h charts.

I'm not filtering it with the daily range using ATR(20) yet, but I am consistently ahead with backtesting.
Absolutely.

Speaking of forextester, it's a great tool regardless...I would recommend anyone to drop the cash on it. Especially with this type of trading (simple S&R and/or SFP), builds the confidence as you're trading real data. It's certainly made a difference in my trading.
  • #3,008
  • Mar 15, 2012 11:47pm Mar 15, 2012 11:47pm
Quoting sam0182
Absolutely.

Speaking of forextester, it's a great tool regardless...I would recommend anyone to drop the cash on it. Especially with this type of trading (simple S&R and/or SFP), builds the confidence as you're trading real data. It's certainly made a difference in my trading.
Hey there,
For those who dont know and didnt want to pay for software, MT4 has a strategy tester built in which allows you to run through historical data as well.. First post on this page
http://www.forexfactory.com/showthread.php?t=70742
describes how to set it up with the files needed there as well.. Also another option called Vhands which does the same thing in MT4..As mentioned by sam awesome for practice
Josh
nollej is power..
  • #3,009
  • Mar 16, 2012 12:14am Mar 16, 2012 12:14am
Sure thing, if there is a cheaper (or free) option that provides similar feedback, that's perfect. Bottom line, for those who may not quite have the confidence in place, patience, etc...a simulator like these can certainly help.

Since my previous post (~50 mins ago), I traded some EUR/USD starting somewhere in 2001 on fxtester. I took screen shots of the five trades I was able to see/take in this time period...four of which were your standard S&R break/ftb and one was a Sunday gap close. Four were closed at profit and one closed at a small loss.

The term "backtest" has always scared me...the connotation of guys "backtesting" ea's, pulling 500% a month and then subsequently blowing their live accounts comes to mind. However, backtesting with forextester or a similar program/setup can truly build confidence in a particular method...especially this one (S&R w/FTB, SFP, etc).

The difference, as nollej posted, is that you're demo trading JUST your setups, with entries, stops, tps, margin calls, etc. and you can kick the speed up (as posted, run through weeks of price in an hour, if you wish). I feel that instant gratification of seeing the outcome of a demo trade, compounded (x25 demo trades p/hour for example) builds confidence. You see what your hit rate could be if you took JUST ftb trades...or JUST sfp on the daily...etc.

There's a reason I rarely take 1hr S&R trades anymore. I suspect that same reason is why I can't recall my last full stopout

I encourage anyone who isn't already doing this to give it a try. It helps.
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  • #3,010
  • Mar 16, 2012 1:11am Mar 16, 2012 1:11am
Tom doesn't recommend crosses but this is one I'm watching tonight.
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  • #3,011
  • Mar 16, 2012 8:11pm Mar 16, 2012 8:11pm
I never knew such things existed, what a wonderful discovery! I've often given up backtesting in the past because it's so difficult to work out what levels you would have drawn on at the time, and whether and when you would have traded them. I can see it would be much easier for a system which is purely mechanical, but with methods like the ones Tom teaches on this thread, which require discretion and judgement it's so difficult to make sure you don't see what happened next and let that influence your thinking.

So i've now installed the free strategy tester which nollej mentioned and spent the evening trading EUR/USD for an entire week last May!
  • #3,012
  • Mar 16, 2012 10:27pm Mar 16, 2012 10:27pm
Quoting BadgerMatt
require discretion and judgement it's so difficult to make sure you don't see what happened next and let that influence your thinking.
Exactly.
  • #3,013
  • Mar 17, 2012 6:41am Mar 17, 2012 6:41am
Holy S**t! Why did I not know about this before?! see rhetorical answer below

@Sam0182 / @nollej

Since I'm working 9-6 I've a huge challenge getting time in the market and so of course I miss lots of opportunities to learn. This will allow me to learn in a structured, disciplined way and connect with how the market moves in relation to how I perceive it (+Tom's approach)

I will be all over this when I get back from the gym...

Thank you, thank you, thank you!

Didn't know about this before 'cause I'd not 'realised' I had a problem to overcome there. What you don't know you don't know is dangerous/may kill you
  • #3,014
  • Mar 17, 2012 8:11am Mar 17, 2012 8:11am
http://www.forextester.com/

It really is worth the more than the price paid. You can even have multiple time frames on different charts moving in sync / speed up / slow down / different order types / and even go back in time to try different trade scenarios
WARNING: Don't follow me as I'm just learning
  • #3,015
  • Mar 18, 2012 12:08pm Mar 18, 2012 12:08pm
Quoting adam777
http://www.forextester.com/

It really is worth the more than the price paid. You can even have multiple time frames on different charts moving in sync / speed up / slow down / different order types / and even go back in time to try different trade scenarios
Yeah Agree is a nice software but can be empowered more.
Greetings, BeLikewater
  • #3,016
  • Mar 18, 2012 6:12pm Mar 18, 2012 6:12pm
Yen pairs are moving, keep an eye.
  • #3,017
  • Mar 19, 2012 3:56am Mar 19, 2012 3:56am
Quoting nollej
Hey there,
For those who dont know and didnt want to pay for software, MT4 has a strategy tester built in which allows you to run through historical data as well.. First post on this page
http://www.forexfactory.com/showthread.php?t=70742
describes how to set it up with the files needed there as well.. Also another option called Vhands which does the same thing in MT4..As mentioned by sam awesome for practice
Josh
Thanks for the link nollej. Is there any way to place limit orders with this tester? Seems to be a great tool if one wants to test a method that uses stop orders but I haven't figured out how to place limit orders.

Thanks
A lawn mower is not an effective tool to pick-up dog poop!
  • #3,018
  • Mar 19, 2012 4:27am Mar 19, 2012 4:27am
Hi Tom,
On Monday when you are looking at D1 Bias, do you use or ignore Sunday's candle?
Hugh.
  • #3,019
  • Mar 19, 2012 6:16am Mar 19, 2012 6:16am
Quoting Jazflyer
Thanks for the link nollej. Is there any way to place limit orders with this tester? Seems to be a great tool if one wants to test a method that uses stop orders but I haven't figured out how to place limit orders.

Thanks
Hey there.. No worries man glad I could be of some help. Ive never really tested placing orders and such with the tester I usually just use it to visually run through price history to get as much screen time in as possible and to hone my level picking skills.. I did have a quick test to see if I could do something you couldnt but it does seem to be a limitation that you cant place limit orders ( only stop orders)... I had a look at vhands again ( i had a play with it ages ago as well ) and after having a look, with that you can place limit orders as well as stop orders.
http://www.forexfactory.com/showthread.php?t=60849
Theres the thread there.. Just download that first file and follow the instructions included, pretty simple to set up as well, with a pdf included.. Just make sure when dragging your orders onto the chart to pause the simulator first then unpause once order and TP/SL are placed.. Hope you can work it all out fine and let us know how you go
Josh
nollej is power..
  • #3,020
  • Mar 19, 2012 9:56am Mar 19, 2012 9:56am
Quoting nollej
Hey there.. No worries man glad I could be of some help. Ive never really tested placing orders and such with the tester I usually just use it to visually run through price history to get as much screen time in as possible and to hone my level picking skills.. I did have a quick test to see if I could do something you couldnt but it does seem to be a limitation that you cant place limit orders ( only stop orders)... I had a look at vhands again ( i had a play with it ages ago as well ) and after having a look, with that you can place limit orders...
Thanks Josh. Seems kind of odd that the author would put so much effort into coding the simulator but would leave out such an important order type.

Aloha
Jaz
A lawn mower is not an effective tool to pick-up dog poop!
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