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No SL No Leverage Strategy - working so far

  • #481
  • Apr 15, 2012 3:26pm Apr 15, 2012 3:26pm
Quoting nanningbob
DUH. This is FF and we are here to discuss trading. Great sentence though, made me laugh. If Arbitrage cant be used to trade why discuss it? Great one there.
we both know that nobody in this thread earns consistently cash by not using a stop...

dont bother, let em talk...blahblahblah

anyway nice to see ya around,

regards
Jonas
Hero calls followed by margin calls...
  • #482
  • Edited 3:53pm Apr 15, 2012 3:42pm | Edited 3:53pm
Quoting PhAnTi'
we both know that nobody in this thread earns consistently cash by not using a stop...

dont bother, let em talk...blahblahblah

anyway nice to see ya around,

regards
Jonas
I do. Well let me rephrase this. I know when to cut a trade.

Here are my targets for this week.

3130, 3147, 3170, 3182, 3202, 3232. I see range trading 3040 as the bottom of range, 3470 as top. 3540 main target, 3600 slippage where i will start considering shorts down to 2600 Not for April's monthmy bar without reaching the 3540 area first. Won't get into specifics on my system, but I don't use stop loss orders.
All that is left in FF is just plain garbage. "Cloggie"
  • #483
  • Apr 15, 2012 8:38pm Apr 15, 2012 8:38pm
Quoting tonyo524
I do. Well let me rephrase this. I know when to cut a trade.

Here are my targets for this week.

3130, 3147, 3170, 3182, 3202, 3232. I see range trading 3040 as the bottom of range, 3470 as top. 3540 main target, 3600 slippage where i will start considering shorts down to 2600 Not for April's monthmy bar without reaching the 3540 area first. Won't get into specifics on my system, but I don't use stop loss orders.
But judgign from this statement, am I right to say you have a mental stop. A point at which you know you will exit a losing position should it reach that point.

I'm still not a fan of mental stops probably because the different style of trading does not allow me to do so (or that I'm just not large enough to bother ). But it is still a stop of some sort.
  • #484
  • Apr 15, 2012 9:06pm Apr 15, 2012 9:06pm
Quoting Lonestar
Obviously unbeknownst to you there are many many aspects to trading and very few, if any I am rapidly discovering, that you have even a basic grasp. Do you actually think that every aspect of trading can be discussed at once? Let me clue you in. The answer is a resounding no. Certain things need to be completely understood to move on to other aspects. Until you understand the mechanics of pair movement in relation to other pairs you won't understand arb. And arb had nothing to due with the issue that was being discussed. Nor did entries or exits...

Ouch...

He wont change. He's been repeatedly told of his errors in thinking but absolutely refuses to acknowledge them.

You must realize Bob has repeatedly said he is a 3Dimensional thinker and how the rest of us are so closed minded.

He thinks I am joking when I say he needs to take a step back from trading and read or re-read some books on trading psychology.

Oh well, guess were not all cut out to be traders.

Good Luck Bob !
Master your Mind,,,Master the Market
  • #485
  • Edited 11:39pm Apr 15, 2012 9:10pm | Edited 11:39pm
Quoting thelws
But judgign from this statement, am I right to say you have a mental stop. A point at which you know you will exit a losing position should it reach that point.

I'm still not a fan of mental stops probably because the different style of trading does not allow me to do so (or that I'm just not large enough to bother ). But it is still a stop of some sort.
Yes.. Those 2 losses were when I strayed from my system. 15 pip loss I wasn't paying attention, and 488 pip loss the entry was not according to my system. the entry was triggered along with the tp of a previous trade. i strayed away from my system, and attempted to play a range trade. after holding a negative for a week, I looked for signals according to my system, cut the trade, took the loss, and proceeded to trade strickly according to my system. in summary, when I trade directly in compliance to my system, i don't use any stops. but am still smart enough to know when to cut a trade off. that 488 didn't give me any signals that it would retrace anytime soon, so I cut it and have made half back already. Have a good one!
All that is left in FF is just plain garbage. "Cloggie"
  • #486
  • Apr 15, 2012 11:06pm Apr 15, 2012 11:06pm
A good trader never, ever takes a loss, but often postpones a win by temporarily withdrawing from the market. Yes, certain numbers on the screen will now be slightly smaller, but he's smart enough not to be fazed by that. He knows he has an edge. There will be many more opportunities. Two steps forward. One step back. Just quietly plug away.
  • #487
  • Apr 15, 2012 11:16pm Apr 15, 2012 11:16pm
Quoting AllanS
A good trader never, ever takes a loss, but often postpones a win by temporarily withdrawing from the market. Yes, certain numbers on the screen will now be slightly smaller, but he's smart enough not to be fazed by that. He knows he has an edge. There will be many more opportunities. Two steps forward. One step back. Just quietly plug away.

HUH ? You talking drawdown, mental stops voodoo magic?

How about successful traders never ever add to a losing position.
Master your Mind,,,Master the Market
  • #488
  • Apr 16, 2012 4:33am Apr 16, 2012 4:33am
At the end of the year, if a trader is in the black, he has not taken a loss. He has taken many steps back from the market, but these are not losses or failures, but are necessary to better position himself for the next attack.

If he takes a trade and it goes against him, he exits until a better opportunity becomes clear. By doing so, he isn't losing. He's gaining. True, the balance goes down temporarily, but these are just numbers on the screen.

It's like a boxer stepping back. Not only does he avoid his opponent's punch, it gives him a better chance to get in a good one of his own.

This is how I see it, anyway.
  • #489
  • Apr 16, 2012 3:27pm Apr 16, 2012 3:27pm
Quoting PhAnTi'
since each setup is different,how can you have a fix target ? this is non-sense
you are right, by doing this way i'm sacrificing some profit actually, but at the same time this limits somehow the risk to remain hanging on a trade for days if something goes wrong, and I can free margin pretty quickly so I can enter new trades
  • #490
  • Apr 16, 2012 4:25pm Apr 16, 2012 4:25pm
Quoting AllanS
If he takes a trade and it goes against him, he exits until a better opportunity becomes clear. By doing so, he isn't losing. He's gaining. True, the balance goes down temporarily, but these are just numbers on the screen.
Allan,

I agree, and I would take it one step further than that.

Let's use some hypothetical numbers. Suppose at the end of the year I am +5000 pips. However, during the year I exited one loss at -100. If I'd exited that loss at -50, my end of year total would have been +5050.

In other words, cutting losses earlier can, in certain situations, improve your bottom line. The key is to view overall bottom line, not the result of individual trades.

The obvious question is: "but if I exit all of my losses at (for example) -50, instead of -100, how many potential winners would I cut off in the process?" That comes down to trading expertise; knowing where to optimally, on average, exit a loss. As such, an edge needs to be based on probabilities offered by the market, i.e. by considering where price is most likely, on average, price is likely to reverse (example: confluences of different S/R types), rather than simply trading on the basis of whether the current trade is winning or losing, which the market cares nothing about.

A quick word about mental SLs, which were being discussed earlier. Obviously these work only if you're willing to continuously monitor the price action (if you leave a position unattended for a few minutes, and price suddenly crashes through your mental SL, you're stuffed). A physical SL allows you to trade more objectively, by leaving the computer to babysit your trade for you.

Again, it's my view that SL location should be determined by technical criteria (after which you size your position, to set your risk). Unless this technical criteria changes as the trade unfolds (e.g. new S/R levels, or supply/demand areas, are formed), or there are other statistically proven reasons, one is really only adjusting the SL on the basis of guesswork and hope. Hence one might as well use a physical SL, and be done with it.

David
  • #491
  • Apr 16, 2012 5:52pm Apr 16, 2012 5:52pm
Quoting hanover
Allan,

I agree, and I would take it one step further than that.

Let's use some hypothetical numbers. Suppose at the end of the year I am +5000 pips. However, during the year I exited one loss at -100. If I'd exited that loss at -50, my end of year total would have been +5050.

In other words, cutting losses earlier can, in certain situations, improve your bottom line. The key is to view overall bottom line, not the result of individual trades.

The obvious question is: "[i]but if I exit all of my losses at (for example) -50, instead...
However, if you had been patient with the trade and it exited at +50 you would have +5150 pips for the year. You see there is the other side of the argument you all forget to deal with. Once you take a too quick SL it is permanent. The issue here is always presented as whether or not someone uses a SL. I have pointed out that my losses account for 20% of my trades. It just never dawns on these people that there are losses. We just take many fewer ones that is all. But we have been down this road before. It is easier to just call people stupid and dumb and idiotic (and I dont mean you do this Hanover) than to realize that using smaller lots and leverage means you can stay within the ranges of of currency pairs. Here is a pic for the gbp/cad. I have taken very few SL on any GBP pair because for the last 3 years they have all stayed in a certain range. Once you see that on a monthly chart you start selling at the top of the range and buying at the bottom. There is no need to take a SL because you just play its range. See pic below. Once you see this it becomes very simple to trade some of these currencies. But who am I to tell others. While you guys have been bashing me to no end that last couple of weeks I have received 10 PM from traders thanking me for showing them how to become profitable traders. It works whether you believe me or not. I dont write to win an argument, I write so others can see there is an easier way to trade. I can go to bed and leave all my trades running. If after another two years, 6 years or 2 months, the gbp changes its ranges then I will change mine and do it all over again. It is the nature of currencies to do this because of Macro economics but I aint going down that road. These guys dont even understand that all currencies must balance accounting wise so their math formulas will always show balance. If you cant understand that simple concept you certainly wont understand anything else. Sorry I used your post to rant and rave Hanover, this wasnt really directed at you at all. BS you still havent enlightened us on the proper use of a SL.
Attached Image (click to enlarge)
Click to Enlarge Name: gbp cad.gif Size: 27 KB
  • #492
  • Apr 16, 2012 6:12pm Apr 16, 2012 6:12pm
Quoting hanover
Again, it's my view that SL location should be determined by technical criteria (after which you size your position, to set your risk).
Yes. Determining the exit so it fits some arbitrary r:r criteria, or having a trailing stop of some sort basically randomizes every second trade you take, which isn't the smartest move. (The exit should be seen as a trade in its own right.)

I hate losing. Psychologically, I find it far better to view the exit from a bad trade as a temporary strategic withdrawal than a loss. Again, a good boxer weaves and ducks and sways as the fight progresses, quickly stepping into the action and out again, minimizing personal risk while watching for that fleeting, high-probability opportunity to strike.
  • #493
  • Edited 9:19pm Apr 16, 2012 9:03pm | Edited 9:19pm
Bob,

Quoting nanningbob
using smaller lots and leverage means you can stay within the ranges of of currency pairs......
Indeed we have been down this road before. And as I have said before, I don’t doubt that you’re profitable. However, by “using smaller lots and leverage”, you’re restricting the size of your profitable trades commensurately. For example, if (and the numbers are hypothetical) I have to trade my account at 0.01 lots per trade merely to allow enough space to recover from a 1,000 pip loss, then I’m only making 1/10 of the profit that a trader who limits his losses to 100 pips, and trades at 0.1 lots. Also, while I’m waiting for losing trades to return to breakeven, there is an opportunity cost, as my capital can’t be redeployed into more profitable opportunities elsewhere.

Quoting nanningbob
I have pointed out that my losses account for 20% of my trades. It just never dawns on these people that there are losses.

You say that 20% of your trades are losses. If you had cut those losses earlier, then your bottom line would have been better, although it likewise begs the question asked in my previous post:
Quoting hanover
"but if I exit all of my losses at (for example) -50, instead of -100, how many potential winners would I cut off in the process?"


Your choice of GBPCAD as a ranging pair is a good one IMO, as GBP and CAD tend to be, correlation-wise, ‘middle of the road’ currencies, and the chart you posted reflects that result.

It’s impossible to beat a random game. If I may generalize, the reason forex is potentially conquerable is that trends exist that are qualitatively different from those that would be produced by a random number generator. If we can show that forex prices trend frequently and far enough to make a trend following strategy viable, then it makes sense to cut losses quickly, and let profits run, because once a pair starts moving in a certain direction on a given horizon, the probability that it will continue moving in that direction exceeds 50%. If our trade is in sync with that direction, then it makes sense to leave it open, and attempt to maximize our profit. Conversely, if we find ourselves on the wrong side of a market move, then the probability that things will get worse before they get better likewise exceeds 50%, and it makes sense to revert to net flat (whether by exiting or hedging, it makes no difference) to arrest the growing loss.

I understand that this is the opposite line of thought to mean reversion, i.e. (as you say) “what goes up must eventually come down”. It is possible to make money either way. However, I prefer to swim with the prevailing tide than against it, because that’s where the highest probability of a big move lies. My focus is risk-adjusted return, i.e. maximizing profit, and minimizing loss. If I can increase the size of my winners, and decrease the size of my losers, then I’m better off on two counts. It is not the only way to trade, I grant you, but it works well enough for me.

David
  • #494
  • Apr 16, 2012 9:55pm Apr 16, 2012 9:55pm
Quoting hanover
Bob,



[font=Verdana]Indeed we have been down this road before. And as I have said before, I don’t doubt that you’re profitable. However, by “using smaller lots and leverage”, you’re restricting the size of your profitable trades commensurately. For example, if (and the numbers are hypothetical) I have to trade my account at 0.01 lots per trade merely to allow enough space to recover from a 1,000 pip loss, then I’m only making 1/10 of the profit that a trader who limits his losses to 100 pips, and trades at 0.1 lots....
Yes we have, anyway, the bottom line I think is this. Probably less than 10% of traders consistently year after year are profitable. I have proven myself to be one of them and so have you. Always a pleasure to talk to you. One last thing I believe the regs making 10:1 leverage will become law at some point in the future. How will that affect your trading? I basically am already there even though my account is 50:1 on the main pairs and 25:1 on the others. So I wont have to adjust when they make the change.
  • #495
  • Apr 16, 2012 9:59pm Apr 16, 2012 9:59pm
Quoting nanningbob
Yes we have, anyway, the bottom line I think is this. Probably less than 10% of traders consistently year after year are profitable. I have proven myself to be one of them and so have you. Always a pleasure to talk to you. One last thing I believe the regs making 10:1 leverage will become law at some point in the future. How will that affect your trading? I basically am already there even though my account is 50:1 on the main pairs and 25:1 on the others. So I wont have to adjust when they make the change.
Leverage has almost no effect on a trader with stops if that is what you want to know. In fact, leverage only affects traders with no stops.
  • #496
  • Edited Apr 17, 2012 12:18am Apr 16, 2012 11:20pm | Edited Apr 17, 2012 12:18am
Quoting nanningbob
Yes we have, anyway, the bottom line I think is this. Probably less than 10% of traders consistently year after year are profitable. I have proven myself to be one of them and so have you. Always a pleasure to talk to you. One last thing I believe the regs making 10:1 leverage will become law at some point in the future. How will that affect your trading? I basically am already there even though my account is 50:1 on the main pairs and 25:1 on the others. So I wont have to adjust when they make the change.
If the laws affect traders with accounts outside of the US, then they could cramp my style, as I usually need around 50:1, when I have multiple positions open. Hence my ROE would be reduced commensurately. However, perhaps my biggest worry is the prospect that spot forex might not be available to the retail trader shortly:
Quoting Fudomyo
Unless something changes dramatically with the roadmap for the new regulations, we have possibly another 18 months before Retail Forex as we know it is finished. Many of the banks are unwinding their proprietary trading operations which is going to affect liquidity for OTC. With the new laws regarding capitalization requirements, they simply aren't going to be able to participate in the Intrabank market to the same extent. Besides that, I think were going to see more protections put in place against currency speculation.
[EDIT] don't want to hijack this thread any further, but I've posted an example of a method that performs the complete opposite of what the OP is suggesting, namely the aggressive use of SLs to create the possibility of high RR trades.
  • #497
  • Apr 17, 2012 1:05am Apr 17, 2012 1:05am
Quoting nanningbob
Yes we have, anyway, the bottom line I think is this. Probably less than 10% of traders consistently year after year are profitable. I have proven myself to be one of them and so have you. Always a pleasure to talk to you. One last thing I believe the regs making 10:1 leverage will become law at some point in the future. How will that affect your trading? I basically am already there even though my account is 50:1 on the main pairs and 25:1 on the others. So I wont have to adjust when they make the change.

UHHHH...it wont! Once again you make an ass out of yourself. You really dont know what in the hell your talking about!

And sorry there is no enlightening idiot wannabe's about SL's.. You've got your head so far buried in the sand you may want to try Alorente's breathing system..

Like I said Bob go read some books and try and educate yourself a bit more.
You really really need to.
Master your Mind,,,Master the Market
  • #498
  • Apr 17, 2012 6:02am Apr 17, 2012 6:02am
Quoting bluesteele
UHHHH...it wont! Once again you make an ass out of yourself. You really dont know what in the hell your talking about!

And sorry there is no enlightening idiot wannabe's about SL's.. You've got your head so far buried in the sand you may want to try Alorente's breathing system..

Like I said Bob go read some books and try and educate yourself a bit more.
You really really need to.
Here you go big boy. An article about the big traders and how they trade. Read it and weep. You have proven over and over again that you know absolutely nothing of this world.

The sharp correction for EURUSD up from 1.3000 to 1.3145 at the start of this week has left many pundits bewildered. They are struggling to understand the strength of the Euro, pointing to several factors of nonsense – while in reality it is due to one very simple fact, which short-term players will never understand.
The daily chart shows a clear line of support in the area 1.3025-1.2975 – tested on several occasions since late January. Every time visited, there has been a pretty sharp bounce from this level within a short time.
It is not a technical reason for this, which is why pundits have problem understanding what is going on and it is not to be seen in the trading habits of those they follow or from any statistics that is available (COT).
So what is it then?
It is for the same reason as seen for any major EURUSD turning level over the last 4 years – it is a level where long-term money has an interest.
Short-term traders – among which the crowd or retail traders now has become dominant, has an outlook no longer than to their nose tip – give and take 40 pips. Whenever they go short – and they do it like sheep – they cover their shorts whenever they are this number of pips “in the money” or through stops for a similar distance whenever they are “out of money”. Whatever they do – as a group - they cap the move.
Long-term money – which is few as a group but big in volume – is looking for distances. Whenever they buy or sell, the outlook is for 750+ pips. They don’t use stops and they have time to wait. They enter from a mixture of fundamental thinking, a level more than a fixed price, high confidence factor – and by bidding, not taking out offers whenever they are buyers – and offering, not hitting bids whenever they are sellers.
1.30 +/- 25 pips can be justified as an attractive entry level for a long-term long EURUSD position. I have advocated my bearish USD long-term view on several occasions and shall not repeat this here. But those views are shared by a few investors of magnitude.
In foreign exchange we talked a lot about “leads” and lags” some 20 years ago. Today – you hardly hear the expressions mentioned. Well – it is time to bring them back again – and the reason is that there are hundreds of billions of delayed purchases of EURUSD waiting for the right moment to make the entry. These are “lags” soon to turn “leads”. The amount is from sovereign wealth funds, central banks and substantial investors who do not see the attraction in USD, from the simple thinking that it is yielding 0% and it is too much of the currency floating around.
The reason their purchases of EURUSD is delayed is simply from the political uncertainty about the Euro-zone ability to protect the currency and its markets through a sufficient firewall instrument and a well supporting central bank. That proves now to be the case and with the fiscal cooperation now coming into place – the Euro-zone is getting its act together. This was a missing confidence factor for a long time. Now the confidence is coming together. And long-term money likes it.
So – on the occasions over the last 3 months when short-term players have sold themselves short at the lower level of 1.3000 – there has been long-term money bidding for these funds – not returning them to the short-term players and hence leaving the short-term players to cover their shorts in among themselves and themselves only.
Long-term money will not be offering their EURUSD for a long time to come – or more correctly as time is not critical for them – at a very different level from where we are. 1.4500-1.5250 is more the level they have in mind.
Short-term traders will never understand how long-term money thinks or acts. Short-term traders think the market is made only from players who think like they do. That is why they don’t understand what happened yesterday and those who comment on the market are equally bewildered. They only talk to short-term players and have no clue to what the REAL position takers are doing.
That is how the FX market is, that is why certain EURUSD levels become milestones and that is why a few in this market win while most traders lose.
  • #499
  • Edited 10:01pm Apr 17, 2012 9:46am | Edited 10:01pm
Bob you are one lost kitten. Your head is even further in the sand than I thought. Probably poking out in China somewhere .

Did a 5th grader write that ?





And a real BIG SLOW CLAP for Macho Nacho.....

Nacho your going down the right path following these dimwits. Good Luck your going to need it.
Master your Mind,,,Master the Market
  • #500
  • Apr 17, 2012 4:41pm Apr 17, 2012 4:41pm
Bluesteele banned. He is not giving any contribution to this thread but just insulting other traders anyway.
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