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Extreme TMA System

  • #12,081
  • Jul 25, 2012 7:34am Jul 25, 2012 7:34am
Quoting tp0440

@Thewriter30: I'm sorry to read about all of this. All I can say is: if you don't trade positively consistently for 6 months on demo, don't even open real account. Good luck!

BR
Thanks mate, yes, i have been trading for 3 months now...lets keep going....
  • #12,082
  • Jul 25, 2012 7:43am Jul 25, 2012 7:43am
Hello Bassramy,
ı looked h1 and h4 chart according to me will buy 121.30 am ı right ? Could you give me inform.?
Best Regards.
Bülent.
  • #12,083
  • Jul 25, 2012 8:04am Jul 25, 2012 8:04am
(as requested by TheWriter30)

The choice between "do I use SL, or do I hold drawn down positions forever (and add to them) until they can be exited without a loss?" is probably the most basic question that a trader has to decide, because that will determine the lot sizes you trade, how long you are going to stay in any one trade, your trading style and so forth. I do not like the Recovery Method of trading, and I'll try to clearly explain why in as few words as I can.

If you are going to be profitable in trading your analysis must be right more than it is wrong. That means when you see a trade setup the market is more likely to go the way that you expect than in the opposite way. It won't always go your way so there will be a share of losers too. But the point is, your primary trading technique must be net profitable or you might as well go home. What I am doing when I use an SL is I'm saying, "If the price gets to here, the market is doing the opposite of what my analysis expected it to do, so this is one of the cases that my technique struck out. I'm out -- before this costs me any more."

What I am doing when I use Recovery is saying, "The analysis was wrong and it resulted in a loss of X pips. Now I'm going to switch trading methods and use a different method to make X pips so I break even." In the SL case, I'm relying solely upon my analysis and main trading method to make me money which includes covering losses from losing trades. In the Recovery case, I'm mixing methods and using the trading method defined by the Recovery strategy to make up the amount lost by the first method. What I'm trying to clearly convey here is that these are two distinct trading systems: Recovery Method being one of them and whatever primary trading method you use is the other one (Extreme TMA System for example -- I'll just call it Technique #1).

Therefore, if the Recovery Method is being asked to make you X pips for every time you lose X pips with your primary technique, then that requires that the Recovery Method be net profitable as a stand-alone trading system all by itself. So if it is net profitable by itself then you could dispense with the first technique that resulted in a loss of X pips, enter the market at random and use Recovery method to make X pips clear profit. There is no mystical connection between Technique #1 and Recovery Method which makes Recovery peculiarly profitable only when Technique #1 fails, so if Recovery Method cannot be profitable by itself, then it will not help you when coupled with Technique #1.

You are asking the Recovery Method to be a more reliable and more consistent trading system than Technique #1. In which case your best bet would be to abandon Technique #1 and trade Recovery Method as your primary trading method.

Okay -- show of hands -- who has tested the Recovery Method as a stand-alone trading system? Is it net profitable? I invite anyone who is so inclined to create an EA that enters a trade at random with a TP of X and Recovery for trades that draw down. And demonstrate that this EA is consistently profitable (and if it is, then hey, let's all quietly shut down this thread and go trade that thing into the ground).

Now, after damning it so completely, there is one circumstance in which Recovery Method will work, and that is when you have the long term trend at your back. In this case, if your trade goes sour and the position draws down, the long term trend will eventually bring it out of drawdown. That's kind of like only going boating up-river, so that if your engine fails the river current will bring you back home. But you have to be darn certain of the long term trend and that it's not going to reverse before it will carry you to safety. And it's not really the Recovery Method that is rescuing your drawdown here, it is the long term trend.

To sum up, the most reliable and most profitable technique you have logically should be your main trading technique. And when you take a drawdown or loss, the best way to recover the amount lost and make more is with the most reliable and profitable trading technique you have, which is your main trading technique.
Sure I have a trading plan. Buy low. Sell high. What's yours?
  • #12,084
  • Jul 25, 2012 8:18am Jul 25, 2012 8:18am
Quoting bulent
Hello Bassramy,
ı looked h1 and h4 chart according to me will buy 121.30 am ı right ? Could you give me inform.?
Best Regards.
Bülent.
Even if the rules are met, this trade is counter trend , i don't recommend going long in this bearish market environment, this pair's long term trend is down and bottoming, midterm bearish and short term bearish and bottoming , if you take this trade it will be against 2 bearish trend and bottoming and 1 bearish one according to our system.
I will at least wait for the H1 TMA to cross the H4 lower band TMA Upward to confirm the bull trend change and wait for the PA to retest the lower H1 band to go long.
I always recommend trading with the trend, period.

Regards,
B.R.
Master Your Setup, Master Your self. (NQoos)
  • #12,085
  • Jul 25, 2012 8:33am Jul 25, 2012 8:33am
Quoting Bogdan G
HI HErnan,
Did you give this a thought:

"Hello everybody.

I am glad to see some of you are still trying to keep this thread alive. This thread is the only reason for joining FF and writing my first post.

All the best
IT DOES! I did missed that! gee, it makes sense...so much to learn..i wish I could get another loser to test this oh well, they always re around the corner
So i hedge and close at B/E or when it gets to lvl 2 right?

cheers
  • #12,086
  • Jul 25, 2012 8:38am Jul 25, 2012 8:38am
Quoting bassramy
Even if the rules are met, this trade is counter trend , i don't recommend going long in this bearish market environment, this pair's long term trend is down and bottoming, midterm bearish and short term bearish and bottoming , if you take this trade it will be against 2 bearish trend and bottoming and 1 bearish one according to our system.
I will at least wait for the H1 TMA to cross the H4 lower band TMA Upward to confirm the bull trend change and wait for the PA to retest the lower H1 band to go long.
I always recommend trading with the trend,...
Hello Friend,
Okey ı understand more better. thank you very very much.
Best best regards.
Bülent.
  • #12,087
  • Jul 25, 2012 8:47am Jul 25, 2012 8:47am
Quoting Trainman
(as requested by TheWriter30)

The choice between "do I use SL, or do I hold drawn down positions forever (and add to them) until they can be exited without a loss?" is probably the most basic question that a trader has to decide...
The qeustion, that every a bit more experienced trader her asked himself/herself and we probably all know the answer to, but we want to aovid the answer.

Great explanation. I'm also glad to read at least one more trader with same thoughts. I'd love to be able to say (or Al) found the holly grail, but... unfortunatly it's a game of chances.

Anyway - I'd buy you a beer if I could. I agree 100%.


BR
  • #12,088
  • Jul 25, 2012 8:48am Jul 25, 2012 8:48am
Quoting Alorente
Thank you guys. It´s great to be back.
Hi Al,

I am having some challenges trying to figure general direction for any particular currency.

When I look at price and the multiple TMA's I typically get multiple conflicting signs of direction. Some say it's time to go long, some say it's time to go short.

I have attached a picture of the NZDUSD pair as an example. The 1H being below the 4H says to me - ok it's time for things to start turning up. However, there are multiple other factors noted in the picture that says go short. Is this a long or a short situation?

Thanks for your help.

Best regards.
Attached Image (click to enlarge)
Click to Enlarge Name: nzdusd conflict al interpertations 2.jpg Size: 181 KB
  • #12,089
  • Jul 25, 2012 8:53am Jul 25, 2012 8:53am
Quoting Trainman
(as requested by TheWriter30)

The choice between "do I use SL, or do I hold drawn down positions forever (and add to them) until they can be exited without a loss?" is probably the mos .
Thanks so much for this. I am still thinking about what you said. Trying to translate it to a system I could follow.
I had only bad experiences with SL, so I am thinking on a hybrid. I think we all agree that newbies are to stop losses what a deer is to a wolf....it's how they slowly but firmly get our pockets empty.
i read over and over from experienced traders: When it's against me I am out...please DEFINE against me! of course, that's experience, tons of it.
EJ i imagine you guys would have closed it long time before reaching the PNR (point of no return) but WHEN that was to me is still not clear...

to sum up i'd like to be able to say OK recovery is fesible (as you said it'snot just random but feasible, a valid entry) and ok! I was wrong, let's get the hell out.
This also requires time, to be watching the trade when it hits certain milestones, such as 50 pips 100 pips down or so. EA was running during the night with me sleeping or working so I could not tell

if it was easy we would all be millioners i suppose
  • #12,090
  • Jul 25, 2012 8:58am Jul 25, 2012 8:58am
Hello Bassramy,

According to the System, i short Gold at 1584 ,but it 1600 now ? I don't understand the Recovery System vey well, Could you give me some suggestions?

Thanks for your help.

Best regards.
  • #12,091
  • Jul 25, 2012 10:38am Jul 25, 2012 10:38am
[quote=Fishcoo;5875590]Hello Bassramy,

According to the System, i short Gold at 1584 ,but it 1600 now ? I don't understand the Recovery System vey well, Could you give me some suggestions?

Thanks for your help.

Best regards.[/QUOTE

I think this question should be asked to Master AL, he is the expert in the recovery system cause i dont use it a lot.

Regards,
B.R.
Master Your Setup, Master Your self. (NQoos)
  • #12,092
  • Jul 25, 2012 11:22am Jul 25, 2012 11:22am
Quoting Riddermark
Hi Al,

I am having some challenges trying to figure general direction for any particular currency.

When I look at price and the multiple TMA's I typically get multiple conflicting signs of direction. Some say it's time to go long, some say it's time to go short.

I have attached a picture of the NZDUSD pair as an example. The 1H being below the 4H says to me - ok it's time for things to start turning up. However, there are multiple other factors noted in the picture that says go short. Is this a long or a short situation?

Thanks for your...
If i may cut in, You have done a fantastic job compiling Al's work and wisdom, and if i may say that the truth is within i woudnt be exagereting.
Good luck,
B.R.
Master Your Setup, Master Your self. (NQoos)
  • #12,093
  • Jul 25, 2012 11:34am Jul 25, 2012 11:34am
Quoting Trainman
(as requested by TheWriter30)

The choice between "do I use SL, or do I hold drawn down positions forever (and add to them) until they can be exited without a loss?" is probably the most basic question that a trader has to decide, because that will determine the lot sizes you trade, how long you are going to stay in any one trade, your trading style and so forth. I do not like the Recovery Method of trading, and I'll try to clearly explain why in as few words as I can.

If you are going to be profitable in trading your analysis must be right...
I sort of disagree with your analysis of Recovery. I have used it about 8 times in the past 4 months and it has ALWAYS resulted in my getting out of
a trade THAT I ENTERED INCORRECTLY with a small (5 pip) profit. On the other hand I have entered 17 SL's during the same time period and was taken out by 14 of them for a loss. The other 3 were not hit. I take a lot of trades. I think the key here is to enter the trades based upon AL's instructions in Page 1 and throughout this thread. If we do that we will be profitable and we will not have to worry about really bad trades. It may be that some of us just read enough to sort of understand the system but don't take trading seriously enough to STUDY the system and the market we are trading to try and have an income. IMO Recovery works. Thats all I have to say about that.
  • #12,094
  • Jul 25, 2012 11:56am Jul 25, 2012 11:56am
Quoting thewriter30
Thanks so much for this. I am still thinking about what you said. Trying to translate it to a system I could follow.
I had only bad experiences with SL, so I am thinking on a hybrid. I think we all agree that newbies are to stop losses what a deer is to a wolf....it's how they slowly but firmly get our pockets empty.
i read over and over from experienced traders: When it's against me I am out...please DEFINE against me! of course, that's experience, tons of it.
EJ i imagine you guys would have closed it long time before reaching the PNR (point...
Well, you ask great questions. I'll give my perspective on "please DEFINE against me!" and maybe a few pieces will drop into place.

It all comes down to being precise about your point of entry. You want to enter the trade at a defensible price point. What is a defensible price point? It is a price point where your risk is clearly defined and strictly limited. It is a price point at which, as long as the price action stays above that point or below that point your trade is safe, but once that price point has been breached (like the invading hordes pouring through the castle wall) everything on the other side of it comes within reach and there's no telling how far it will roam. That is the point at which you get out.

Let's consider an example. Watch some M1 charts for a while. Use horizontal lines to mark the day's high and low so far. Now watch what happens as price action approaches the high or low line. As it comes near, the price slows down, hesitates. Quite often the price will precisely touch the line and bounce away. In some cases the line is penetrated but by only a few pips, can't push through, and then it returns inside the line again and roams away toward the other side. If your analysis indicates a short position, then selling at or near the upper line is a highly defensible position. Because as long as price stays below that line, it has nowhere to go but down. But if that line is decisively penetrated, then there's no telling how far up it may continue. That's your line in the sand, behind that is where you put your SL. If your analysis says that price is due to drop, but it starts making new highs and continues to make higher and higher highs for the day, what does that say? It says that the analysis is wrong, get the f__k out!

It works in reverse too: if the analysis indicates that price should go higher, and price is below the magic line, if it can't get above that line, then it's got nowhere else to go but lower, so in that case you'd exit if price could not break through the line. Alternately, you would wait until price broke through the line before opening the trade, and be quick to exit the trade if the price could not remain above/below that line.

I'm using the day's high and low merely as examples here, but there are a number of other such lines. One of my favorites is Fibonacci retracements. If you see a distinct and well-defined price move with a clear top and bottom, it will nearly always produce support/resistance lines at the 38.2% and 50% retracement points, and less often at 61.8%.

Class exercise: Open a EURUSD chart, H4, with end of April to beginning of July 2012 visible. Drop a Fibonacci retracement tool on the high of May 1 and the low of June 1. Now look at what happened on June 11. Precise contact with 38.2, then swoosh down the slide, over 200 pips in one day. This isn't just occasional coincidence, it happens again and again. You can use Fibonacci almost anywhere you can find a price retrace and see these numbers, 38.2 and 50% over and over again.

To use this chart for one more example, look at the high of June 20. See how closely it aligns with the high of June 18? But it could not manage to go any higher. It couldn't even reach the 50% Fibonacci retracement after two attempts and started trickling off lower. Sign of weakness, short it at your earliest opportunity. Set the SL a little above the highest high reached, that is your line in that sand where if price makes it up there again then the euro isn't as weak as you assumed.

You will hear traders talk about lines of support and resistance. You will hear about pivot points. These are additional lines that traders use in this fashion, and you should know about them. (I haven't gotten good results with either of them but I know traders that use nothing else and do fantastic, so use whatever you can get good results with.)

Over at forexlive.com, Greg Michalowski teaches a free Trader's Course Tuesdays and Thursdays. If the things I'm talking about here are new concepts to you, your time would be well spent in taking in this course for a while. He usually uses live charts in his examples and its really helpful to see the same charts you've just been staring at all day and have a professional trader walk you through them.

Anyway, this thread is supposed to be about the Extreme TMA system, so let's keep it on topic, shall we? I hope I have provided readers here with some insights into how they can improve their entries and reduce their trading risks, something that I think everyone is interested in.
Sure I have a trading plan. Buy low. Sell high. What's yours?
  • #12,095
  • Edited 12:18pm Jul 25, 2012 11:58am | Edited 12:18pm
Quoting Riddermark
Hi Al,

I am having some challenges trying to figure general direction for any particular currency.

When I look at price and the multiple TMA's I typically get multiple conflicting signs of direction. Some say it's time to go long, some say it's time to go short.

I have attached a picture of the NZDUSD pair as an example. The 1H being below the 4H says to me - ok it's time for things to start turning up. However, there are multiple other factors noted in the picture that says go short. Is this a long or a short situation?

Thanks for your help.

Best...
It is really quite simple. Start with the Weekly TMA and step down through the time frames. The weekly is the boss. Where price is in the weekly will determine direction. If it is in one band, medium term it is going to the opposite band. Then look at the Daily and do the same thing. In your chart, the next move will be to the opposite band on the H4 TMA. It is already on the way while turning H1 TMA upward. Use the shorter TMA for timing your entrance and the longer TMA for direction. The ideal situation would be a pair price that is on the same band on all TF TMAs but that is rare. Also, remember that longer term TMAs take a long time to repaint so you have to be creative to visualize where the band will end up when all is said and done. Yesterday I posted the AudUsd weekly chart. Here is the Weekly and Daily TMAs. I see the Weekly top band wrapping around after repainting and touching the highs already established. The pair is also on the top band of the D1 TMA. It is now climbing to the top band of the H4 TMA (Not on the chart). When it gets there use the H1 TMA for timing and short it to the bottom of the H4 or D1 band.
Attached Image (click to enlarge)
Click to Enlarge Name: audusd.jpg Size: 127 KB
Observation is the path to discovery.
  • #12,096
  • Jul 25, 2012 12:35pm Jul 25, 2012 12:35pm
Quoting tomthepoppop
I sort of disagree with your analysis of Recovery. I have used it about 8 times in the past 4 months and it has ALWAYS resulted in my getting out of
a trade THAT I ENTERED INCORRECTLY with a small (5 pip) profit. On the other hand I have entered 17 SL's during the same time period and was taken out by 14 of them for a loss. The other 3 were not hit. I take a lot of trades. I think the key here is to enter the trades based upon AL's instructions in Page 1 and throughout this thread. If we do that we will be profitable and we will not have to...
Fair enough. 100% agreement isn't expected, and the point about studying Al's instructions closely to obtain best results is well taken. Glad to hear that you are getting great results with Recovery. Through dialog and discourse we may all get fresh perspectives and gain by it. Thewriter30 was having a difficulty, with a trade having gone to Level 5 and the account decimated. Perhaps as an advanced user you would like to offer your help.
Sure I have a trading plan. Buy low. Sell high. What's yours?
  • #12,097
  • Jul 25, 2012 12:40pm Jul 25, 2012 12:40pm
Quoting thewriter30
IT DOES! I did missed that! gee, it makes sense...so much to learn..i wish I could get another loser to test this oh well, they always re around the corner
So i hedge and close at B/E or when it gets to lvl 2 right?

cheers
Yes, correct, you close the hedge when you open the lvl 2 trade. In my example, at -100 pips DD on the sell, you put 50 pips in your pocket from the buy (because you opened it at -50 on the sell) and open a lvl 2 sell. Now you only need a 25 pips move in your original direction. Like you said, always close the buy at BE, don't let it become a loser.

All the best
  • #12,098
  • Jul 25, 2012 1:34pm Jul 25, 2012 1:34pm
Quoting Trainman
Fair enough. 100% agreement isn't expected, and the point about studying Al's instructions closely to obtain best results is well taken. Glad to hear that you are getting great results with Recovery. Through dialog and discourse we may all get fresh perspectives and gain by it. Thewriter30 was having a difficulty, with a trade having gone to Level 5 and the account decimated. Perhaps as an advanced user you would like to offer your help.
Recovery works extremely well if you respect these two conditions:

1- Enter small positions relative to total equity (2% to 5%) so you can continue to trade while one or more positions are in recovery.

2- Always, always and that means always trade in the direction of the longer trend so the odds of your position returning to breakeven is extremely high. Determine the trend by the Weekly and Daily TMAs.

Using Recovery without complying with one or both of these conditions can be dangerous to your trading health.
Observation is the path to discovery.
  • #12,099
  • Jul 25, 2012 2:17pm Jul 25, 2012 2:17pm
Quoting Trainman
Fair enough. 100% agreement isn't expected, and the point about studying Al's instructions closely to obtain best results is well taken. Glad to hear that you are getting great results with Recovery. Through dialog and discourse we may all get fresh perspectives and gain by it. Thewriter30 was having a difficulty, with a trade having gone to Level 5 and the account decimated. Perhaps as an advanced user you would like to offer your help.
I actually think your advice and comments were quite good - I just happen to disagree on the subject of Recovery. I believe a trade that goes to 500 pips against someone should have been closed out long ago. If it is a well thought out trade, with no unforseen spike ( which will occasionally happen), I do not think it should go over 150 - 200 pips before reversing - but that is just my experience. The key is not just jumping into a trade just because the candles are at the bottom or top of the TMA lines. You gotta do all the other things that Al has recommended first. As far as training someone else on Al's thread - I am still just a student myself.
  • #12,100
  • Jul 25, 2012 7:07pm Jul 25, 2012 7:07pm
Quoting Alorente
Recovery works extremely well if you respect these two conditions:

1- Enter small positions relative to total equity (2% to 5%) so you can continue to trade while one or more positions are in recovery.

2- Always, always and that means always trade in the direction of the longer trend so the odds of your position returning to breakeven is extremely high. Determine the trend by the Weekly and Daily TMAs.

Using Recovery without complying with one or both of these conditions can be dangerous to your trading health.
Hi,AL

The first conditions is simple , but how can i determine the trend by the Weekly and Daily TMAs?For example in the EURUSD Weekly and Daily chart you see the PA crossed the bottom band , it means the next move will be to the top band ?

so when the price moves to the top band in the H1 chart , can i short ?

Sorry for my poor english ,can you understand what i mean?

Thanks for your help.

Best regards
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