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  • #61
  • Apr 2, 2012 11:34am Apr 2, 2012 11:34am
This works. It requires paitence and discipline, but it works. When someone has found something that works for them, they automatically think its the way to go and no other way works. They probably have tried this method and didn't like it which is why they have such hatred for it. BUT I DO ADVISE USING A SL FOR LEVERAGED POSITIONS, ALWAYS. I have a similar trading plan. Except I have one trade open and don't open another until I breakeven that trade, giving it room to run. Averaging in losing positions (which goes againt the professional mindset but at 0.01 lots, its technically impossible to get a margain call) in 1000pip gaps. But again, this requires an incredible amount of paitence which is why I (and you) need other avenues of income.

In the end, it all adds up.
  • #62
  • Edited 1:45pm Apr 2, 2012 11:53am | Edited 1:45pm
Quoting whatfx
fxtr51


can you describe your lock / unlock strategy ?

how do you come out of profit / break even if you are hedged , there will always be a loss as one trade in profit, the other in loss ?
whatfx,
it is amazing, most of those who flame others here never asked
that.

They discuss their own prejudices and beliefs only.
In other words: they offend and vent and have no clue at all
what they are talking about.

Strange world, isnīt it ?

A big hello to all naysayers.

Here is a screenshot which says it all.
I will only answer to sober and serious questions though, but I think you already showed that you qualify.
http://i.imgur.com/X9SRP.jpg
Attached Image (click to enlarge)
Click to Enlarge Name: lock unlock.jpg Size: 129 KB
  • #63
  • Apr 2, 2012 12:24pm Apr 2, 2012 12:24pm
Quoting Nacho
You are right, I'm basically risking it all for 15 pips and I am conscious of it. The idea I'm believing in is that as long as I trade small and I have probabilities in my favour this will not happen, and before I arrive to lose half my account I think I'll have already have found some counter measures such as hedging the losing position (still have to figure out the rules), or the sum of other succesful trades will compensate for one big loss (That would still mean a waste of time, but at least not a waste of money)

Time will prove me right or...
Nacho, for me trading should feel safe and making progress. That is why I use SL to avoid extremely bad possibilities like blowing account or stuck for weeks/months in a losing trade. With that I can easily move on if the price movement I expected doesn't come, set positive expectation for the next trades, and sleep tight at night.

Trading with SL, there will be profit and loss, and probably string of losses (which can happen to any business). It's all healthy. String of losses are the test of true entrepreneur/trader. If you can face it, smile to it, and survive, you are stronger than the world. Market will then bow to you and have no option but to start giving you positive results in its own way.

I am not lecturing you to use SL, just sharing what have been working for me. You can do such thing too if you are interested, if not, no problem. Your life your adventure.

Good luck
The tone of your words reflects the quality and result of your trading ;-)
  • #64
  • Apr 2, 2012 12:26pm Apr 2, 2012 12:26pm
Quoting fxtr51
whatfx,
it is amazing, most of those who flame others here never asked
that.

They discuss their own prejudices and beliefs only.
In other words: they offend and vent and have no clue at all
what they are talking about.
That's a good one!

Quoting charvo
what you said is CRAP!
charvo, do you have a clue what are you talking about? Because fxtr51 doesn't think you do!
Gentlemen always play by the rules. If they can't, they change the rules.
  • #65
  • Apr 2, 2012 12:34pm Apr 2, 2012 12:34pm
[quote=charvo;5534244]what you said is CRAP![quote]
No.


Quote
ur so-called "lock-unlock" may works,
It does.

Quote
but not due to the smart "lock-unlock", it is due to your decision has an "edge". meaning that out of 100 times, you have more than 50 times to be right, statistically (assuming 1:1 R/R).
I need no statistics, but in order to trade the lock-unlock
you need patience and a basic understanding of S/R , candle patterns
and stuff.
It is not for a noob.

Quote
with an "edge", u do whatever u can, no prob.
Yes.

Quote
but a noob comes here, read ur "CRAP", and believed it is due to your smart "lock-unlock" way. then this noob is focked up by the misbelief that you presented here.
I never presented a misbelief.
You are doing that.

Quote
for a noob, (due to a win rate lower than 50%), he might easily run into this situation: whatever he does, the market will go against him. he long, market drop, he short to hedge, market rise again, he long to follow, the market drop again....... then the noob will be collapsed......
A noob can learn it, it is not rocket science.
And if he does it correct, he will never get a margin call or collapse.
Before he is mastering it, he should not go live.

Isnīt that what he should do with all strategies ?
So whatīs up ?
Where is your problem ?

Saving noobs ?

You should know that 10 traders get 10 different results with the same
strategy, right ?

If you teach them the SL belief system, 8 will lose money and 1 will break even and 1 will make money.
Such is life.

If I teach them the lock-unlock, 1 will lose, 1 will break even and 8 will
make money. Simple as that.
  • #66
  • Apr 2, 2012 12:48pm Apr 2, 2012 12:48pm
Thank to those who gave meaningful opinions and suggestions instead of just sniping at the method. I am aware that it needs to be adjusted with a sound risk management rule/strategy.
I'm interested in reading about different risk management methods that go beyond just putting a SL.
I also have traded with SL, but have found out afterwards that most of my trades would have been winners without it...if just I had the patience to wait.

I'm not expecting to become millionaire with this method. But I think it can produce a consistant, even if small, source of profit.


The most difficult part is at the very beginning, when account is small, and therefore lots are also small. I have to enter many trades per week in order to make some money. As soon as I will have bigger margin, I will increase lots size accordingly, always avoiding leverage.

By then, trading 0.02, 0.03, 0.04 lots will mean that I will need to enter fewer trades to make the same amount of money. So I think that if I can be succesfull now that I trade many small lots, it will be all downhill from here.

P.S. As of today, I have a 4,2% account return in 3 weeks using this method, and floating loss is about 1,6% of my account as of now.
  • #67
  • Apr 2, 2012 1:05pm Apr 2, 2012 1:05pm
Quoting fxtr51
If you teach them the SL belief system, 8 will lose money and 1 will break even and 1 will make money.
I respectfully disagree. I would say: if you teach them the SL belief system, 95 will lose money and 5 will make money.

Quoting fxtr51
If I teach them the lock-unlock, 1 will lose, 1 will break even and 8 will make money. Simple as that.
I'm not so sure about that. Let's hear what charvo thinks about that!
Gentlemen always play by the rules. If they can't, they change the rules.
  • #68
  • Edited 8:59pm Apr 2, 2012 6:52pm | Edited 8:59pm
Quoting Nacho
Thank to those who gave meaningful opinions and suggestions instead of just sniping at the method. I am aware that it needs to be adjusted with a sound risk management rule/strategy.
I'm interested in reading about different risk management methods that go beyond just putting a SL.
I also have traded with SL, but have found out afterwards that most of my trades would have been winners without it...if just I had the patience to wait.

I'm not expecting to become millionaire with this method. But I think it can produce a consistant, even if...
From what I understand there are four ways to handle a losing trade.
1. Hang on until a trade hits 0. That could take a short time to years.
2. Use a specified stop loss system.
3. Use some kind of recovery or multiple level system.
4. Use a hedge or opposite trade to stop the increasing DD until you unhedge the trade at a reversal point.

Not interested in 1, use 2 some of the time, use 3 most of the time, not allowed to use 4 in the USA. The problem is those who use 2, there is a very small group of very nasty individuals who cant comprehend or understand anything else or the rest just does not compute to them as viable. Some people can think 3 dimensional and can make other money management systems work.
Short summary of each:
1. You really cant use leverage or must be extremely small leverage, very small lots. Seldom has a losing trade.
2 allows you to use low to high leverage, large lot trading methods.
3. uses low leverage small lot trading methods
4. allows you to use high leverage, medium to large lot trading methods.
  • #69
  • Apr 3, 2012 6:15am Apr 3, 2012 6:15am
Quoting fxtr51
whatfx,
it is amazing, most of those who flame others here never asked
that.

They discuss their own prejudices and beliefs only.
In other words: they offend and vent and have no clue at all
what they are talking about.

Strange world, isnīt it ?

A big hello to all naysayers.

Here is a screenshot which says it all.
I will only answer to sober and serious questions though, but I think you already showed that you qualify.
http://i.imgur.com/X9SRP.jpg

well, in my experience hedging does not work. it certainly has never worked for me in any case...

various problems arise. such as what to do in a ranging market when simultaneous buy / sell signals are happening. you will be locking / unlocking your hedge several times and taking losses.

if you unlock your position, what happens if the price then rebounds and continues in that direction. you will be losing again before entering another hedge ?

instead of hedging why not just close the position and enter a trade in the opposite direction as per your charts signal. and then re enter in your original direction when the right signal is given ?

but if hedging works for you, then good luck to you ..!
  • #70
  • Apr 3, 2012 7:35am Apr 3, 2012 7:35am
Quote
well, in my experience hedging does not work. it certainly has never worked for me in any case...
I understand that.
It is an art.

Quote
various problems arise. such as what to do in a ranging market when simultaneous buy / sell signals are happening. you will be locking / unlocking your hedge several times and taking losses.
No, I never take losses.
When I unlock, I close the winning position only with a profit.
And place a pending order above/below in case the market continues in that direction.
There is no loss, only a bigger distance (risk) in case my new pending
is triggered.
But we are talking about new floating loss of 1,5 or 2 % instead of
1 %.

Since I usually unlock at good levels, I only have to lock again once or twice before the market releases me into an overall breakeven or profit.

Just an example:
For a few days I had a lock in GBPJPY and since it is a demo and I am playing to test extreme situations,
I had a floating loss of 10 % on that lock.

I unlocked a few times at the wrong level and booked 14 % profits, but had to lock again while all the time my Short was there floating.
Yesterday I caught the good level and unlocked.

I placed a TP for my Short above its entry and placed a pending long which was never triggered.
This morning I woke up and boooommm.
GBPJPY had hit my TP for the Short, so it closed with a 2 % loss.

Now: 14 % profit minus 2 % loss = 12 % profit on the whole thing.

That is the way it works.

I always end with either a breakeven or a profit.

Quote
if you unlock your position, what happens if the price then rebounds and continues in that direction. you will be losing again before entering another hedge ?
No. I donīt lose ever.
The only loss is on the initial position, but at a place where my overall
result is a breakeven or a profit.

Quote
instead of hedging why not just close the position and enter a trade in the opposite direction as per your charts signal. and then re enter in your original direction when the right signal is given ?
Because I feel better and because I can sleep well and because
my profits are much bigger than yours if you trade all signals like
I do and you take the loss and I lock-unlock.

If you take your loss and trade in the opposite direction, you can get whipsawed like crazy and lose on every trade until the market has mercy on you and breaks out, but you will not recover from the whipsaw
if you donīt increase your risk.
I neither increase my risk nor does a whipsaw like that harm me .


Quote
but if hedging works for you, then good luck to you ..
Has nothing to do with luck.
It is just more profits, but on the other hands more work and
requires more patience and skills .... which pays good rewards for the effort taken.
  • #71
  • Apr 3, 2012 10:43am Apr 3, 2012 10:43am
Quoting fxtr51
I understand that. It is an art.
No, I never take losses.
Can you provide more details on your technique, because so far nobody has managed to make it profitable? It's known as futile hedging.

Let me give you an example and correct me if I misunderstood your way of doing it.

Suppose at some point you buy the euro at 1.3000, assuming that it will go up, and you have a target at 1.3050 (50 pips), that would be 1% of your account. If the market drops to 1.2950 you don't take a loss of 50 pips (1%), instead you open a sell position. At this point you have "locked" a 50 pip loss no matter which way the price goes from here, but both your positions are still open. Let's say the price keeps falling. When do you take profit on the short position? Let's say you do it at 1.2900. So now you added 1% to your account, but the buy you have left from 1.30 is a 2% negative trade. Now it's clear that if the market comes back to 1.2950 you manage to close that with a loss of only 50 pips and overall you're breakeven (spread excluded). But what if it keeps falling and gets to 1.2850? There you probably open a fresh short, but you locked a 150 pip loss at this point (3% of the account) and you only managed to close a 1% gain so far. Overall you are losing 2% so far. I hope you see where this is going. If the market is in a tight range moving up and down between the same 2 levels you make money, closing shorts and longs. However when a trend develops even if you only close the positive trades overall your equity drops. The counter-trend position you have open is bigger than the positions you manage to close in profit. Also the distance between your 2 open positions gets bigger and bigger, you will always be bought at a top and sold at a bottom. Even if our downtrend stops at 1.25 let's say and then an uptrend develops, in a few months you will be left with a sell at 1.25 when the market price is around 1.35.
  • #72
  • Apr 3, 2012 11:19am Apr 3, 2012 11:19am
Quoting LazyPawn
Can you provide more details on your technique, because so far nobody has managed to make it profitable? It's known as futile hedging.

Let me give you an example and correct me if I misunderstood your way of doing it.

Suppose at some point you buy the euro at 1.3000, assuming that it will go up, and you have a target at 1.3050 (50 pips), that would be 1% of your account. If the market drops to 1.2950 you don't take a loss of 50 pips (1%), instead you open a sell position. At this point you have "locked" a 50 pip loss no matter which way the...

If you follow the example above then the outcome will be as described - when hedging you have to know when to keep only a single side of the hedge open or to increase one side of the position to compenaste for a directional bias.

For example once a trend establishes you then trade in the direction of the trend at 1.3x the original size up to the point of break even.

If you understand your risk amplitude ( your leverage ) then you can manage your position.
  • #73
  • Apr 3, 2012 11:24am Apr 3, 2012 11:24am
Quoting nanningbob
From what I understand there are four ways to handle a losing trade.
1. Hang on until a trade hits 0. That could take a short time to years.
2. Use a specified stop loss system.
3. Use some kind of recovery or multiple level system.
4. Use a hedge or opposite trade to stop the increasing DD until you unhedge the trade at a reversal point.

Not interested in 1, use 2 some of the time, use 3 most of the time, not allowed to use 4 in the USA. The problem is those who use 2, there is a very small group of very nasty individuals who cant comprehend...

In addition to the above you can construct a triangular hedge which will not impact you trading in USA and will also allow you a greater flexibility;
http://en.wikipedia.org/wiki/Triangular_arbitrage : the same principle and thus leaving you market neutral, which also will allow you to adjust your lot sizes as needed.
  • #74
  • Apr 3, 2012 11:48am Apr 3, 2012 11:48am
Quoting LazyPawn
Can you provide more details on your technique, because so far nobody has managed to make it profitable? It's known as futile hedging.
I doubt that nobody has managed to make it profitable.
I am not the only one who did.
Ask Favorite, he is doing it too ... and as far as I know with success.

Quote
Let me give you an example and correct me if I misunderstood your way of doing it.

Suppose at some point you buy the euro at 1.3000, assuming that it will go up, and you have a target at 1.3050 (50 pips), that would be 1% of your account. If the market drops to 1.2950 you don't take a loss of 50 pips (1%), instead you open a sell position. At this point you have "locked" a 50 pip loss no matter which way the price goes from here, but both your positions are still open. Let's say the price keeps falling. When do you take profit on the short position?...
Yes, I know the way to the abyss and therefore avoid it.
That is the art and therefore not everybody can do this.
Because it requires patience, discipline and a good understanding of
the market ( price patterns, S/R and that stuff ).

It is not different from taking the loss like you do .
Because you cannot show trade blind
and without understanding Price Action and all of that.
95 % fail to do it right, if we believe those who always are telling us that.

Quote
If the market is in a tight range moving up and down between the same 2 levels you make money, closing shorts and longs. However when a trend develops even if you only close the positive trades overall your equity drops. The counter-trend position you have open is bigger than the positions you manage to close in profit. Also the distance between your 2 open positions gets bigger and bigger, you will always be bought at a top and sold at a bottom.
Here is my veto in our security councel.

Because this will only happen if a trader does not understand all the stuff
he should know before starting to trade with real money.

It is like saying that nobody on earth will ever be profitable in Forex because nobody is finding an entry which will give him a profit.
Is that true ?

Somebody said:
Open a H4 chart, attach a 14 SMA and tell me if you could profit.

Or use the Alligator or whatever , the 50 SMA or the good DiNapoli stuff
and trade on higher timeframes with those .... and if you donīt do everything wrong, you can make profits.

So, if you assume that I cannot find a good pullback or reversal
of 50 Pips on a H4 chart to unlock and wait until the market gives me
those 50 Pips before it continues to nag me,
then you are correct, then I will unlock and lock again 50 times in a row
and my floating loss will increase,
but please, LazyPawn .....
let us look at every H4 chart we can find and then you will
have to admit that only a blind and maybe stoned trader
will do it so terribly wrong.

Quote
Even if our downtrend stops at 1.25 let's say and then an uptrend develops, in a few months you will be left with a sell at 1.25 when the market price is around 1.35.
I say: No.
Because I zoom out on the charts.
Then I look at the big picture and S/R and Trendlines and Fib levels
and therefore I only need 1 or 2 additional locks, but never 20 or 30 of them.

Just looked on a H4 chart of EURUSD.
I see pullbacks of 100 - 200 Pips in a major trend before the trend
continues.
Fib-traders profit daily from such pullbacks to 38, 50 or even 78 Fib levels.
They happen all the time and there I unlock and enjoy the ride
to my be-level and beyond into profits.
  • #75
  • Apr 3, 2012 12:04pm Apr 3, 2012 12:04pm
fxtr51,

This has nothing to do with how good a trader is, or how well one can read the charts. The point is that keeping the losing trade open doesn't add to profitability compared to taking a small loss on that trade and opening another trade when you "know" that you are right. If you have a locked position (say 50 pips loss) you still have to make a decision at some point in the future, to close one of the two legs. Even if you read the chart well and close the right leg, overall your profit is not bigger than what you get if you take a loss first followed by opening a new position at the right point. You assume that you only make one mistake when you open the first position, which later you have to hedge. In fact, even if you are an exceptional trader, it could very well happen again later, when you think the market will reverse ... you could be proven wrong again and the distance between your open positions at the extremes just grows larger.
  • #76
  • Apr 3, 2012 12:06pm Apr 3, 2012 12:06pm
Everything works, and Nothing works.
  • #77
  • Apr 3, 2012 12:14pm Apr 3, 2012 12:14pm
Nacho,

Your approach can work, but you will need to put much more work into it then what you have so far. That said you will gain a lot from trading this way, especially with a very small account. You will learn quickly many aspects of trading.

It is one thing to say that you can take a loss and another to actually ride out a 500 pip move against you.

That said you need to put a lot of work into what you are doing. For one you should try to first make sure you can make money on a simple s/r / Moving average system. A simple 60/40% system will give you profits over a period of time.

When you consider SL, you need to ask really what the principle of SL is? Most people automatically set a SL because well... That is a good practice and you should always set it... and this way you will avoid a catastrophe...

The point is an SL order is nothing else then just an order to limit your risk. Setting one just because is never a good approach. On the other hand you should always limit your risk to a point that is adequate for YOU!. Not some number of X Pips or X $/EUR.

You risk should only be defined by your tolerance. You on the other hand also need to consider the ramifications of what if you do get to that point of being stopped out. Btw you actually DO have a SL. The SL in your case is the Margin Call on your account, or the size of your account, and that is fine as long as you acknowledge that risk.

One thing that you need to look at is that if you are prepared to risk 500 Pips, why should you not expect to make 500 Pips ?

Why should your TP be only limited to 20 Pips ?

If you are trading from a 4HR time frame you should want greater profits, in proportion to your risk.

Hedging is a strategy that you can use to limit your risk. It takes a lot of experience and a magnitude of studying to learn, but the rewards are much greater then many other strategies.

Here is a link that is very useful: http://oyc.yale.edu/economics/econ-251
and will teach you how to properly use hedging.

I believe its lesson 20-21, although anyone trading FX markets should take this course, especially since it is free.

Ultimately you will succeed, because you are willing to think outside of the box, but the thought needs to be grounded in knowledge.

GL
  • #78
  • Edited 12:30pm Apr 3, 2012 12:20pm | Edited 12:30pm
Quoting LazyPawn
fxtr51,

This has nothing to do with how good a trader is, or how well one can read the charts. The point is that keeping the losing trade open doesn't add to profitability compared to taking a small loss on that trade and opening another trade when you "know" that you are right. If you have a locked position (say 50 pips loss) you still have to make a decision at some point in the future, to close one of the two legs. Even if you read the chart well and close the right leg, overall your profit is not bigger than what you get if you take a loss...
Why do you assume that my overall profit is not bigger than
trading the conventional sl way ?

Example: 3 x SL hit, then 1 winner.
All with 1 % risk.

The SL-believer has this result:
-1 , -1 , -1 , + 1 = - 2 % net.

The lock-unlocker has this result:
0 , 0 , 0 , + 1 = + 1 % net.

In my books +1% is bigger than - 2 % loss.

Quote
In fact, even if you are an exceptional trader, it could very well happen again later, when you think the market will reverse ... you could be proven wrong again and the distance between your open positions at the extremes just grows larger.
Then the normal trader has only losses and I will end up in breakeven or profit.

esprit, great input from you. Thank you very much.
  • #79
  • Apr 3, 2012 12:48pm Apr 3, 2012 12:48pm
Quoting fxtr51
Why do you assume that my overall profit is not bigger than
trading the conventional sl way ?
It can be, if the market is in a tight range, as I already said. The big problem is what happens when it starts trending.

The problem is the next: You buy ... and it happens to be a top. The market drops 800 pips after that. During that 800 pip drop you open some shorts and get some pips selling, but you never get the entire 800 pip distance. You are lucky if you catch around 4-500. Because you don't open the short at exactly the same point as the previous one was closed. So ... you have 4-500 pips gained, but your loss is now 800. One of the biggest trading myths which stems from our psychology is that unrealized (floating) P/L is less significant than realized (already banked) P/L.

I invite you to read 2 threads: Merlin's and Hannover's thread. Those guys know what they're talking about, and all experienced traders have the same opinion. It's a mathematical certainty that nedging is not a way to increase profits, on the contrary. This post has a good summary. But if you still think you're right by all means feel free to do it. I'm just warning you that many people have walked that path before and it's a losing one, same as martingale and grid trading strategies.
  • #80
  • Apr 3, 2012 1:09pm Apr 3, 2012 1:09pm
nacho

what if you open say a long, then market falls. and keeps on falling for the next few months ?

never returns to your original position.....

scary thought, eh ?

complete wipe out !
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