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Set it and Forget it, Dollar Cost Averaging

  • #81
  • Aug 19, 2012 4:53am Aug 19, 2012 4:53am
Quoting jaws810

If anyone has any ideas on how to stop from being on the wrong side of a big trend or a way to minimize loses that's not overly complicated, please share.

Sorry everyone goes through the no loss phase and no one has ever cracked the secret.


No short cuts in trading sorry!!
Nothing to it, but to do it!!! Stick to the plan FOOL!!!!
  • #82
  • Aug 19, 2012 8:59am Aug 19, 2012 8:59am
Quoting jaws810
I think I would have been short since there was a small bull run over the last week, but I wasn't there so I'll never know.

If anyone has any ideas on how to stop from being on the wrong side of a big trend or a way to minimize loses that's not overly complicated, please share.

You may be right...then again...

So you have to be willing to risk your entire account, at least in the short term, if you're going to employ this type of system.

Your trading live on Oanda, so obviously you are willing to do that at this point. Don't know what account size your risking but it will definitely get harder psychologically as your account size grows.

I would suggest deciding now a percentage of account growth, that when hit, you withdraw your profit and reduce the account size back to the starting size.

You'll limit your top end exposure that way.

You can adjust that amount as time goes on and you become comfortable (or less so) with your system.

If the account size you are using is relatively small, let's say $100, then you could reason that's a small price to pay for the lessons learned along the way. At least you will be studying price action along the way and you watch your trades develop and you will be critiquing the quality of your entries as well.

Just some thoughts.
  • #83
  • Aug 19, 2012 9:44am Aug 19, 2012 9:44am
Quoting spyderman
Jaws,

So are you moving your TP to 50 pips above average or 50 pips profit for the whole basket. If its 50 pips above average then you're looking to get 50 pips profit per position you have open at the time.

And what if you get all 20 of your positions open and you still haven't hit TP?

There is no point risking being in the hole with 20positions against you, if all your after is a total of 50pips from the first postion.

The solution is simple, you only trade with the trend and you exit all positions when the trend is no longer valid.
Nothing to it, but to do it!!! Stick to the plan FOOL!!!!
  • #84
  • Aug 19, 2012 12:02pm Aug 19, 2012 12:02pm
why being so modest?

Point is, you CAN know for SURE that the market IS going to boom/collapse.

it is a simple fact, isn't it?

these kind of crap can keep winning for at most 3 months (in my exp) and collapse like crap.

Quoting Barbossa
Well, I did give you an example with averaging every day, didn't I? And while it "almost did it" on one occasion, it ended up in a disaster. Point is, you can't know for sure that the market is not going to boom/collapse. And if it does, I wouldn't want to be on the wrong side. Sincerely,
Barbossa
  • #85
  • Aug 19, 2012 1:34pm Aug 19, 2012 1:34pm
Quoting Turveyd
There is no point risking being in the hole with 20positions against you, if all your after is a total of 50pips from the first postion.

The solution is simple, you only trade with the trend and you exit all positions when the trend is no longer valid.
excellent advice
  • #86
  • Aug 19, 2012 6:52pm Aug 19, 2012 6:52pm
Quoting Turveyd
There is no point risking being in the hole with 20positions against you, if all your after is a total of 50pips from the first postion.

The solution is simple, you only trade with the trend and you exit all positions when the trend is no longer valid.
That has been a problem since I started trading, how do you define a trend and when does a retrace become a trend reversal. Every time I see a chart with trend lines it looks like a game of pickup sticks.
Any ideas would be appreciated.
  • #87
  • Aug 19, 2012 10:43pm Aug 19, 2012 10:43pm
Quoting spyderman
You may be right...then again...

So you have to be willing to risk your entire account, at least in the short term, if you're going to employ this type of system.

Your trading live on Oanda, so obviously you are willing to do that at this point. Don't know what account size your risking but it will definitely get harder psychologically as your account size grows.

I would suggest deciding now a percentage of account growth, that when hit, you withdraw your profit and reduce the account size back to the starting size.

You'll limit your...
Your right it's a small account and I will eventually stop growing the account and just take profits and save up for a disaster.
  • #88
  • Aug 19, 2012 10:56pm Aug 19, 2012 10:56pm
I'd appreciate if you can help me understand how a 25% retracement would get you to a break even? Also, why and when would you add the 6th buy position? According to his example your 1st buy position would be at 1.5000, 2nd at 1.4900, 3rd at 1.4800, 4th at 1.4700 and 5th at 1.4600. Your average TP would be set at 1.4850 due to your rule of setting it at 50 pips away from your average position. At 1.4600 you'd be at -1000 pips. At 1.4700 you'd be at -500. At 1.4800 you'd be at break even and at 1.4850 you'd be at +250 pips. Do I understand this correctly or am I missing something? Thank you.


Quoting jaws810
First thing your calculation is off a bit, on day five I would have 5 open positions times the 200 pip reversal would bring me to BE and I would open a sixth position and wait for a few more pips to hit my 50 pip average profit. Even if it did happen, you had me down 1000 pips and a 200 pip retrace brought me to BE, I'm relying on the consistency of the 50% retracement and even in your scenario it would only take a 25% retrace to hit my TP.

I understand the math I just don't think it will ever continue in the same direction for 20 trading...
  • #89
  • Aug 19, 2012 11:49pm Aug 19, 2012 11:49pm
tropics, jaws does not enter every 100 pips....see post 1.
  • #90
  • Aug 19, 2012 11:52pm Aug 19, 2012 11:52pm
I am aware of that. Please re-read my post. I was using it as an example that was brought up by another person a few days ago. Thanks.

Quoting yonnie
tropics, jaws does not enter every 100 pips....see post 1.
  • #91
  • Aug 19, 2012 11:56pm Aug 19, 2012 11:56pm
I've been thinking about all the suggestions in the posts and I think I have a possible solution to make this profitable in the long run. Most of the time I could run this system in either direction and make money. So if I modify the rules a bit and run it in both directions most of the loses would be covered by the other side. Here is how it would work.

1)Open one trade in each direction no sl, and 50 pip tp using 2 separate accounts.

2)Come back and check accounts throughout the day if one of the trades hit TP open a new trade in that direction.

3) Then around midnight NY time check accounts again if they haven't hit TP open another position and move the TP for all open positions to 50 pips from your average position. Do this on both accounts. Go back to step 2.

Doing this will increase maximum weekly profits to over 10% on the winning side if TP if hit every day, which means that almost all the loses(40%+ out of 50% loss) from one account's MC will be covered by the other account profit in the same 20 days. So it is profitable most of the time in both directions and when the occasional bad trade comes along the losses would be minimal.

I might even lower the maximum number of open positions before I take a loss while still only using 5% per position, I'm thinking possibly taking a loss if it ever goes 200+ pips against my average position after 5 days to minimize losses.

So what do you think? I'm going to set it up as soon as my current trade closes. I'll also add the second account to the account tracker.
  • #92
  • Aug 20, 2012 2:12am Aug 20, 2012 2:12am
Hi jaws,

"2) Come back and check accounts throughout the day if one of the trades hit TP open a new trade in that direction."

Can we facillitate this rule by simply placing pending orders in both directions @ the TP50 levels? And...make pending scaling down orders at the -50 pip levels?

Would it make any sense to increase the threshold from 50 to 100 pips. Perhaps place entries at the 00 lines?

I realize these changes would make the entries price action dependent rather than time dependent...but if it works?

Sorry...I'm not attempting to change any of your rules...just thinking how this strategy could be made a bit safer and easier to implement, rather than using the not so precise variable time entries.

Thanks for sharing!
  • #93
  • Aug 20, 2012 3:03am Aug 20, 2012 3:03am
Quoting jaws810
So if I modify the rules a bit and run it in both directions most of the loses would be covered by the other side.
This is only true for relatively small movements in a single direction. Larger movements would accumulate exponential losses that couldn't possibly be covered by the linear profits collected.
  • #94
  • Aug 20, 2012 6:55am Aug 20, 2012 6:55am
Let's assume we start at 1.5000 for discussion purposes. We would place one long and one short trade on different accounts. Price goes to 1.5500, that means that one account is +50pips and the other is at -50pips (plus the spread of course, on both positions). Since our long TP was hit we would add another buy position and set our TP to 1.6000 I assume. And also I guess our TP for the short position should be moved to 1.5500(50pips away from our average position, question is do I move it to 1.4500 or 1.5500 since it is a short position?). And then at midnight let's assume the price was at 1.5700, if the price still didn't hit our another TP we would open another trade in each direction and move our TP for all positions 50 pips away from our average price correct? Again do we move it 50 pips up or down from the current position?


Quoting jaws810
I've been thinking about all the suggestions in the posts and I think I have a possible solution to make this profitable in the long run. Most of the time I could run this system in either direction and make money. So if I modify the rules a bit and run it in both directions most of the loses would be covered by the other side. Here is how it would work.

1)Open one trade in each direction no sl, and 50 pip tp using 2 separate accounts.

2)Come back and check accounts throughout the day if one of the trades hit TP open a new trade in that direction....
  • #95
  • Aug 20, 2012 8:46am Aug 20, 2012 8:46am
Quoting tropics
Let's assume we start at 1.5000 for discussion purposes. We would place one long and one short trade on different accounts. Price goes to 1.5500, that means that one account is +50pips and the other is at -50pips (plus the spread of course, on both positions). Since our long TP was hit we would add another buy position and set our TP to 1.6000 I assume. And also I guess our TP for the short position should be moved to 1.5500(50pips away from our average position, question is do I move it to 1.4500 or 1.5500 since it is a short position?). And...

Interesting take, trading both way's atleast you'll always have some money being made, and then another pot accumulating positions waiting for a reversal.

Work better in trendless pairs, AUDUSD for instance 1300pip range all year so shouldn't cause you a great deal of hassle at the moment.

You might have to double the lot size at your 5th position then 10th, 15th that will bring the average down faster getting you out faster.

You might want to increase the new trades lot size to the same also, therefore keeping the compensation for the against trend trades similar.

Your account will still be losing money, till it snaps back and hits your big average + 50 TP, but that + all the other trades, should in theory put you up huge, depending on how far into it you got.

Likely write an EA and back test above fairly easily!!
Nothing to it, but to do it!!! Stick to the plan FOOL!!!!
  • #96
  • Aug 20, 2012 8:54am Aug 20, 2012 8:54am
The strategy works if your account can sustain huge drawdown to avoid MC.
Follow me to the Promised Land
  • #97
  • Aug 20, 2012 8:54am Aug 20, 2012 8:54am
Quote
2)Come back and check accounts throughout the day if one of the trades hit TP open a new trade in that direction.

Instead of checking if the trade has hit the TP why don't you place new pending orders every 50 pips up to a few hundred pips above (or below depending on which direction you trade in that account) the price.
Or you could open a trade with no TP and wait until the end of the day to close it if it is in profit of at least 50 pips?


Quote
I might even lower the maximum number of open positions before I take a loss while still only using 5% per position, I'm thinking possibly taking a loss if it ever goes 200+ pips against my average position after 5 days to minimize losses.

I suppose the only way to make this work would be to get it to work for times when it would have blown your account, even using 2 accounts as suggested. Check Jan to April 2011, December 2009 to may 2010, July to November 2008 on EU and any pips made by the winning side wouldn't have mattered as the losing side would have incurred a very large DD (and there are probably many other times where your account wouldn't have survived).

However I suspect that if you tweak it to work for these periods of time then profitability will be significantly reduced.

Guiom
  • #98
  • Aug 20, 2012 9:05am Aug 20, 2012 9:05am
Quoting Bobcat2
Hi jaws,

"2) Come back and check accounts throughout the day if one of the trades hit TP open a new trade in that direction."

Can we facillitate this rule by simply placing pending orders in both directions @ the TP50 levels? And...make pending scaling down orders at the -50 pip levels?

Would it make any sense to increase the threshold from 50 to 100 pips. Perhaps place entries at the 00 lines?

I realize these changes would make the entries price action dependent rather than time dependent...but if it works?

Sorry...I'm...
I've tried the pip dependent averaging and it didn't work out because when there is increased volatility too many positions would be opened, however a pending order at the TP sounds like a good idea. I appreciate new ideas don't worry about sharing them, I'm not easily offended.
  • #99
  • Aug 20, 2012 9:20am Aug 20, 2012 9:20am
Jaws, can you please let me know if I have a general understanding of the altered system and let me know if you can address my questions. I've posted a couple of hours ago with an example. Thanks.

Quoting jaws810
I've tried the pip dependent averaging and it didn't work out because when there is increased volatility too many positions would be opened, however a pending order at the TP sounds like a good idea. I appreciate new ideas don't worry about sharing them, I'm not easily offended.
  • #100
  • Aug 20, 2012 9:29am Aug 20, 2012 9:29am
Quoting tropics
Let's assume we start at 1.5000 for discussion purposes. We would place one long and one short trade on different accounts. Price goes to 1.5500, that means that one account is +50pips and the other is at -50pips (plus the spread of course, on both positions). Since our long TP was hit we would add another buy position and set our TP to 1.6000 I assume. And also I guess our TP for the short position should be moved to 1.5500(50pips away from our average position, question is do I move it to 1.4500 or 1.5500 since it is a short position?). And...
Ok, your numbers are confusing me, your talking about 50 pip moves but your numbers show a 500 pip move. The longs and shorts are independent for TP calculation. Here is how it would work.

Longs: open a position at 1.5000 with TP at 1.5050, TP is hit open a second position at 1.5050 with a TP at 1.5100, then at midnight you would add a position at 1.5070 which would give you an average position of 1.5060 with a TP for both positions at 1.5110

Shorts: open a position at 1.5000 with a TP of 1.4950, come back at midnight since the TP hasn't been hit you open a second position at 1.0070 which would give you an average of 1.5035 and a TP of 1.4985

Hope this helps.
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