Pitbull Trader with Position Building

Ok, after reading through this thread, and digesting the information presented here (as well as reading the Brijon threads over on Steve Hopwood's site), I have analyzed and come to some conclusions about this trading method.

I know there has been a lot of confusion about how to 'manage the drawdown', and how to do this in a way that results in long-term profitability, but I think I have figured out what this means, and will explain it below.

It is true, that there is no one "true way" to 'manage' your drawdowns with this method. When your account (temporarily) in a drawdown, you have to be creative and analyze the situation, and make a determination at that moment, on how to safely 'hedge' trades that are underwater, in order to prevent the trade from moving any further away from you. And then from there, once the market moves in one direction or another, you can close out one of those hedged trades to lock in those profits and then make a new decision about what to do about the other trade (either replace it with a new hedge or, if the entire basket is in profit at some point, close everything out and start new, etc). The whole method involves making trading decisions in the moment, based on where your account sits.

Having said that, I have come to the conclusion that after you open your basket, and then after waiting and you find/open a trade on the most profitable pair, there are THREE possible scenarios that can happen over the next 12 to 24 hours:

1. The entire basket moves into overall profitibility
2. The entire basket moves against you (this is usually the result of the larger 0.04 trade moving against you after opening it)
3. The pair that has the large trade starts to range, and the overall basket bounces back and forth between positive and negative territory.

Now, because there are so many ways to open the basket and so many different schools of thought on how to open the large trade (and how many pairs to do so etc), that there is no one specific way to react to the three scenarios. Brijon had his own way, Chips and Courtney each have their unique ways, etc. But I think this is a good plan on how to deal with the scnearios and the possible drawdowns:

1. If the basket is in overall profitibility, then you can either go ahead and close the entire basket and start over, or you can close the large trade, replace it with a new 0.01 trade, and repeat the entire process with whatever is the new "most profitible" basket trade at the bottom;

2. If the entire basket moves against you, then you have to determine how far against you it has gone. As I mentioned up above, this scenario usually results when, after you open the 0.04 trade, that pair reverses and moves against you. When that happens, you can hedge the losing 0.04 pair with another 0.04 trade going the opposite direction (freezing the loss) and then look for a new bottom trade to close and replace with a 0.04 trade. This all depends on the available margin in your account. From there, you wait to see what the pairs do. The pair with the bog losing trade will make a price move at some time, and you can close whichever trade is winning to lock in profits, and then from there, make a decision based on the new scenario that you have. Watch your account for the next several hours, and look for a scenario where closing all trades will result in just a tiny loss or a tiny win, and then start all over again. ULTIMATELY, if the drawdown approaches 15%, then just close all trades, accept the loss, and start over.

I dont know what the average 'daily profit' would be for this method (again it would depend on the way you trade this), but lets say it is 3%. So as long you have 6 days that you make 3%, for every one day that you take a 15% hit (a 6:1 ratio), then obviously this system is profitable. The question is, are you going to have more than one 15% day in a row? How many -15% days in a row can you withstand? So far, no one has posted that this has happened (maybe it has, we dont know). But apparantly there are enough people trading this and no one has reported yet, this happening.

3. If your account is fluctuating, you can either do nothing (wait for a pair to break out one way or another), or you can go ahead and look for a second basket pair that is in good profit to close out and replace. Wait another hour or 2 or 3 etc and just see where things are at. If in overall profit, then go ahead and close the whole basket and start over.

HOPEFULLY THIS HELPS, AND CLEARS UP THE CONFUSION ABOUT HOW TO 'MANAGE THE DRAWDOWN'. Ultimately, this method is very flexible, and you can trade it (and also manage the drawdown) in a way that suits you.

Hi SmartGXL

Nice work.

I use the profit tracker to keep an eye on% DD.

You can hedge with a larger lot .10 or .20 .30 etc and this can go into profit and build quicker. Then you can close the DD trade and the hedge trade at BE.

Also if the hedge pair goes into momentum profit, I close the DD pair and and equal amount of the hedge trade to bank at BE, then I let the balance on the hedge trade remain open and take more profit (assuming the momentum keeps up) and this has provided very good results.

I believe Chips dose not like to close any DD pairs he works the cycle, but then he keeps the basket open.
I close it daily so any adverse news or large profit is not reflected in the basket the following day, otherwise I find it difficult to ascertain if the pair at the base is there from current days momentum.

Just closed all trades for day on new £3K demo (I constantly run a demo on this system) +2.9% today. No brilliant but not bad.

your scheme does sound like "programmable"

an EA may do at least 90% of your scheme. um, why is no one trying it so far?

i was watching a video by brijon how he uses a currency meter strength for entry on the pitbull on utube he uses the above 6 reading on usd and jpy can anyone tell me were i can obtain this meter

obviously you did read the whole thread, so sorry about my earlier remark.

in my opinion your quote is not correct.
if dd approaches 15% you do NOT close out all trades.
you would take no more trades and let the market do its cycle and just manage your positions as price comes back.

also it is not likely that the 15% dd happens in 1 day as you compare a
+3% day with a -15% day, but more likely takes days to weeks to get to a 15% dd.
this must come as a relief for your research into this way of trading.

Well, I personally am not a big fan of EA's. I understand their value, but most EA's that are out there seem really flaky and unreliable (especially on MT4). I simply cannot visualize trading a 5-figure account with an EA. It is like I cannot trust it to work correctly.

Although yes, some of this would be programmable. However, what I was describing is something that requires a lot of decisions that are based completely on where your drawdown happens to be at that point in time, at that moment...I am not sure that it is something that can be made into an EA. The decision making process when analyzing the drawdown, is just simply too subjective. It requires a human mind to determine this, one who has experience with mastering the ebb and the flow of the way basket trading can work.

This is also why Chips was having problems explaining how to "manage the drawdown". There really is no one way to trade the scenarios I described above. One has to, yes, practice this method in demo mode in order to understand what the impacts are, of closing one hedged position and opening another. There is no one single way to manage the drawdown; it requires analyzing the real-time profit/loss tracker that is built into your broker's platform, and determing what pairs to close/reopen, what pairs to move to BE, etc. Every day is going to be a different day; every time you check your account, there is going to be a different 'story' or 'picture' and the actions you take are going to be different from day to day. Yes, most of the time, your account will fall into one of the scenarios above, but there are many different ways to react. Some reactions involve opening new hedges, some involve moving some trades to BE, some involve closing the whole basket, etc. I closed my basket a few hours ago for a 1% profit for the day (the markets seem rather quiet earlier this morning).

in brijons video he talks about entry to avoid high dd using a currency meter for hedge entry and curency pitbull trading
it seems like he only uses this for entry and pit bull trades with dd max under 5 % by using the currency meter can you help me

Also, a lot of people were confused by Chip saying to "wait for the Profit-Loss-Profit Cycle", or to wait to cycle out, etc.

What I think Chip means here, is that even if you show your in a drawdown, you have to understand, that is an "unrealized" DD...its not "real" until you close the trades and accept the loss to your equity. So what Chip is saying is, that the real-time P/L tracker built into your broker's platform, is a real-time floating indicator that shows the cumulative P/L of all the positions in your account at that second (and most people here know that), but what I am getting at here, is that that figure will change from profit to loss to profit, based on the natural price actions of the individual currency pairs that you have positions on...as the prices move up and down, your P/L will go from profit to loss and then back to profit...and then this is magnified by any "position trades" that you have in your account (as opposed to the basket trades/indicator trades). Oftentimes, if your account is in DD, you can take several different steps, including hedging the losing trade and waiting for price action to make one or the other profitable, then replacing it and setting it to BE, looking for another bottom pair to close out, lock in profits and replace (this depends on how much margin you have) etc. Or you can wait to see if the basket goes to a small profit and close out, etc. There are all sorts of ways to exploit the basket, and practicing in demo account will teach you this and teach you how to lock in equity gains that you get from the winning trades, while at the same time, not letting the drawdown get too steep. You "allow" the floating drawdown to exist while locking in equity via the "exit/replace" method with the winning trades, while waiting for underwater trades to drift back into profitability.

fantastic,

I dont have a currency meter, but somebody else might be able to help?

but im still wanting to find a currency meter as his last profits on his video were super using this currency meter for entry to the hedge and pit bull trades it make life so much easier and easier to understand for me

i never dreamed one could trade using a currency meter to enter a trade
but im still learning im sl lucky someone got me the latest video

at last things are clear to me i was so confused before

please help me find a good currency meter that he uses

This should do the job.

No problem Yonnie!

And, you are right, I would not be necesarily closing trades at 15%...like you said, just stop trading altogether, but my concern is what happens if you go beyond 15%...do you just take some units off the table from erxting trades (I use OANDA and can do this). And yes that does come as a relief that it takes days or weeks to get to that point...that is a good thing. I think I knew that in my mind. But I do worry about those days where a large trade goes WAAAAAY out there (1000+ pips against you), but it seems like that wont happen very often.

i have watched all brijons videos a friend gave me the list i was confused a little untill i saw his new video, it opened up for me exactly what i was looking for, the importance of the curency strengths how to enter a hedge and when to enter a trade using pit bull to avoid so much dd not only in trading the pitbull but all trading

i was trading shares watched many threads on forex trading then after a friend told me about the forex factory and gave me some of brijons videos

i must admit his videos were confusing untill i saw the last on his latest today at last i understand a lot more clearly

i cant wait to test in demo his entrys it seems so much more exact
and finaly i can see exactly were to enter trades

im a little slow in catching up with you but iam not so dumb i think

By that time you would have frozen your bad trades.
And if it goes WAAAAAY out of there, just place a second trade the other way, larger than your original trade. That second trade will show up anyway at the bottom of your basket and just take that trade in the other direction.

for every trade you enter, you can also enter an emergency stop immediately where you want to freeze this position. so no matter what happens when you`re asleep, the stop will keep your floating loss to a minimum.

No sweat charley

One thing I havent figured out yet, is WHEN to determine that a directional trade has gone too far away, and will need a hedged trade against it...I havent determined that yet...when do you decide to freeze it? Has anyone had to freeze a trade yet, and if so, at what point did you do so?

there's a dumb way, but not a wrong way:

do it by an evenly-distributed interval. in other words, when encountering DD, adjust your position by a fixed period, say, every day, or 8 hours, or even every hour depending on your preference.

i had no experiences dealing with Pitbull. but i trade sth similar and the average timing fits the market rythm, long-term speaking. that is to say, for one day or two, this frequency may not be correct, but for longer period, the frequency generally fits market's movement.

Ah ok, I like this idea of of checking once per day and determining what to do, just enter another trade. Which ever trade was the winner over the past time interval, you close that, lock the equity gain, and then replace it. At some point your equity gains on other directional trades (on other pairs) will supersede the losses on that trade and you can close it out just to get rid of it....or not, up to you. As long as the account keeps growing every day, you can take a losing trade from time to time just give yourself a chance to unwind the entire basket and start over.

Now I like to think --- one enter the hedge with .o1 using jpy and usd strength over 6 as brijon video says there for after the trend of the hedge bottom line is loss after 3 days maybe or not

We leave that hedge on and wait for the both curency strenghts of usd and jpy to move above 6 again we then put buys and sells reverse from previios hedge on at .o2 so we are now with both hedges on bias longer in reverse to the original hedge

As this becomes a new hedge FOR Non USA Brokers
I think usa people cant have same currency hedges
not sure if it is so


This may be a silly idea but it may keep the hedge drawdown lower and give me a inproved indicater

For my trading

As the last post Mr Smartx mentioned realy, the pitbull is an indicater for the fastest moving currency ,Im sorry for my understanding as English is my second language and i have some times poor understanding .

Trading the currency those 3 that are in profit , are just trades we can trade using the curency meter strength and our normal trading entry methods and our own money management methods.

As far as ihave learnt by observation this is a system of trading using the pit bull as an indictar to enter the best trade the fastest moving trades now is that correct?.

The control of drawdown of the new trades is using a larger lot size than the indicater so if we have .o1 and .03 on these are our indicater

the new lot size trade is bigger say .04.

so as Brijon said learning drawdown control is a large part of forex trading,
one should learn how to understand currency strenght for entering any trade

We should use pit bull as an indicater and apply our normal trading methods to enter using first the currency strengths as a guide

the method of bias is using our actual trades that were in loss apply bias control to them as i understand the system

as a true hedge never deviates if aplyed corectly by more than 5 % in Drawdown so brijon says

Then its only trades we put on in were not correct that cause an inbalance to dawdown of greater than 5 %

so i draw a conclusion now the real problem is the new trades that cause
a large drawdown is bad entry trades

no real management control of these new trades

so as traders its not the indicater but how we control these new trades and trade like good traders

I realy sorry but it is my poor so far understandingof this system later i will improve

I think the best basis for trading this is to remember to keep it simple.

Open a basket
Wait
Trade the bottom pair when it moves into profit with higher lot size
Add to it, if momentum demonstrates its good.
Control DD on top pairs.
Set a maximum account balance DD say 15% or 20% when you will take more aggressive corrective action.
Bank trades at certain profit points to build equity... Building equity is the focus.

The only issue is you have to decided when to act on DD
(Bit like the Euro Zone at present!!!)
My experience is... act quicker than slower.... IE don't let a pair get into huge DD before you act. Set a monetary amount, when you will take action.

SmartGFX... I would not let a trade go 1000 pips out. I would take action much sooner. The platform is set to profit not pips, pips almost become irrelevant. I act on DD when a trade reaches a certain amount of $ loss.

I find the currency strength meter ok... but my preferred indi is Samir.
All indis are posted in the thread.

Pic of my platform set up also showing yesterdays 2.9% and today's fresh basket.

All thanks to Chips.... and Brijohn.

Cheers.

CW.

Sorry to ask but where on this thread is Samir to download , thank you MR C it is so nice to keep it simple , but i find it not so easy , but will learn with help from you.

I have no problem so far with drawdown but im not at this moment making so many trades just practicing in demo.

So far my small acount is up nice percentage in short time , from account begining this month $5000 demo to now $5800with drawdown ranging max $ 400.

I have been very slow selecting trades from pitbull signals.

Using only entrys from currency strength now after getting currency meter.

I am using .o5 lots for trades

I am still learning im a little scared of live trading until i have a lot more experience.

so far drawdown im lucky its not such problem but im only trading this for one week.

I am sure the problems many have, i will see later

IT is with your help I am doing this method ,ok for now, i think so