$100 trading

STOP * STOP * STOP * STOP * STOP * STOP * STOP * STOP * STOP * STOP * STOP * STOP * STOP * STOP * STOP

******************* Please, note that this system is not being traded anymore. *************************

STOP * STOP * STOP * STOP * STOP * STOP * STOP * STOP * STOP * STOP * STOP * STOP * STOP * STOP * STOP


Hi everyone!

Why 100$ trading ?

After a long period of having been thinking and crunching numbers, calculating and removing the more possible risk, I'm now so confident with this strategy on my mind and mainly on my spreadsheet that I choose to test it NOW on a REAL account with you guessed, 100$ on it. Well, the exact amount is 101.03 We will see if this thing grows up or not in the following weeks, months, years...

I would like also to give my thanks to Dreamliner and his thread "Super Carry Trade Trading System" from which I have been inspired.

Preamble:

This is a boring system/method which makes pips slowly but surely. If you are looking for fast and furious scalping or some other magical and colorful indicator or other MA cross system, this is not the place to be.

If instead you are a patient trader, you want at almost any cost protect your capital and you want to stay in for a long run, continue reading, this could be of interest for you.

The System in Short:

In short, this is another grid system but with an edge on "standard" grid systems. This edge comes from the following:

First, You! you must sense the market. Yes, it's easy to say, what I mean is that you have to take care and not just apply the grid blindly !

Second, the dynamic side of the legs vs static legs in standard grid systems. The legs become larger or custom while a down-trend unfolds or when trading at historical high prices.

Third, Use only swap paying pairs and preferably (AUD/JPY). We are paid for maintaining danglers instead of hoping for a reverse or closing them at a loss.

The rules :

1 - No indicator on price is needed but you can use an oscillator on day and week time frames to check if we are over-bought/sold .
2 - No Stop loss for long orders, only for short. !Important!
3 - Use of low leverage (around 10:1), to keep sufficient margin reserves is mandatory. !Important!

What you need:

2 - Some more capital in reserve in case we are caught in a down trend at start. !Important!

Wich pair will we play and why : AUD/JPY

1 - It pays swap during losing times while we wait for a trade to be profitable. !Important!
2 - It’s enough volatile to make profits all the way up and also the way down during retracements.

The strategy :

We calculate buy levels starting from 81.00 and adding 0.3 (30 pips) all the way up : 81.30, 81.60, 81.90, etc.
When a new level is reached, you can take the profits or set a trailing stop on the precedent and do that all the way up until you feel that the trend is coming to an end.

But how do you know that the trend has come to it's end ?
Well, you will have your last order open for a day or 2, 3 or more... and certainly your oscillator is overbought...

Then when trend reverses, wait for the dust to settle or that your (daily) oscillator is near or at oversold levels, then you start buying the way down the same way but applying the following multiplicators :

Skip the text below (in gray) which is now obsolete, keep reading and look for updates at the end of this post.

1, 1, 1, 1, 1, 2, 2, 2, 2, 3, 3, 3, 4, 4, and then 5 for the following...

We subtract 1*0.30 for the first 5 levels, then 2*0.3 for the 4 following levels, then 3*0.3 for the 3 next, and so on...

Lets say we are near the end of a down trend and start buying at 78. Applying the multiplicators we would buy at:

78 (level 0)
77.7 (level 1 = previous level - 1*0.3 )
77.4 (level 2 = previous level - 1*0.3 )
77.1 (level 3 = previous level - 1*0.3 )
76.8 (level 4 = previous level - 1*0.3 )
76.5 (level 5 = previous level - 1*0.3 )
75.9 (level 6 = previous level - 2*0.3 )
75.3 (level 7 = previous level - 2*0.3 )
74.7 (level 8 = previous level - 2*0.3 )
74.1 (level 9 = previous level - 2*0.3 )
73.2 (level 10 = previous level - 3*0.3 )
and so on ...

Of course, doing so, you may need to add additional cash to your account to avoid a margin call. BUT, If you feel also that price is headed south, or that we are at the beginning of a major down trend, or that the price is well above it's historic average, you can also skip some levels or stop buying for a moment.

Benefits:

1. You are emotionally detached from your trading. If price goes up, you take profits and when price goes down, is no more than an opportunity for future profits. This is in fact the philosophy of this strategy !

2. No more complicated charts with dozens of indicators. This saves you time and will make you more confident because this strategy is simple to manage.

3. You are paid for holding losing positions while waiting for the price to come back.

If you are curious about this, I have already began to trade this on a real account. So I will regularly post my trades, open positions, account balance, etc.

Keep in mind that we play safe and protect our capital. If you want to be rich quickly, this is not a thread for you.
Note also that as no system as to be trusted, You should use a demo account and no real money, and conduct the due diligence in the case you would test this system.

Curious and ready to go a long trip with me ? Follow the thread and you are welcome to comment.

30-10-2012 Update. Please see post 83 on page 6.
09-11-2012 Update. Please see post 86 on page 6.

Thanks for sharing, may I ask you question: How long have you been using this strategy? What broker do you use for this strategy?

Started trading on Sept 24 2012 with a balance of 101.03

Here is my current order history :
04-10-2012 Bought 0.01 audjpy @ 80.000 STILL OPEN
03-10-2012 Bought 0.01 audjpy @ 80.000 closed 03-10-2012 @ 80.150
25-09-2012 Bought 0.01 audjpy @ 81.000 STILL OPEN
24-09-2012 Bought 0.01 audjpy @ 81.000 closed 25-09-2012 @ 81.150

Balance: 104.95, Equity: 101.55, Margin Level 985.95 %

I have been thinking about this strategy for months asking myself where was the flaw and not finding the flaw, I decided to try it live but starting small, to see how it behaves. I began trading it on the 24 september 2012.

I'm with markets.com but I think that the broker is not important as long as it pays you the swap.

keep posting

Shure, I will continue to keep you updated!

Thanks for your reply. How much swap (in USD$)do you get from 0.01 micro lot daily? Do you use martingale in this strategy?

I get 9 cents per day which is 2.70 per month which is 32.40 per year which represents 32.4% gain on the initial 100$ which I think is not bad when just doing... nothing.

Sorry, I forgot. I think that this is not a martingale as I only trade in one direction (long) and without doubling any position.

How much money are you willing to pump into this if a down trend would start? You say you only trade long on this one pair, and if it goes down you will buy all the way down. Just something for you to think about and put into your plan. It will work well when the market is going on or in a big range which it currently is.

Good luck

Off course it depends of the length of the down trend.

Taking a quite bad case scenario for example, let's say that you start buying at 80 and it goes all the way down to 70. We would have bought at 80, 79, 77, 74 and 70 for a medium price of 76.000 (80+79+77+74+70)/5.

So, at current price of 70, that would represent a loss of 380$ (I can give you my calculation details if you want). So this is what I should add to my account to keep my initial 100$ as margin reserve. And off course this is without counting overnight swap and you have to take into account that last time AUD/JPY touched that level was in 2009.

So I think that we could have some time before going to that level to cash in swaps and certainly profits from retracements.

Thanks for your post.

Regards.

My friend, I hate to say it, but I believe this method is doomed to failure; having tried something similar myself I can tell you it is not going to be profitable in the long run.

You are indeed using Martingale, and that is where the problem comes in. Martingale in essence means you add to losing trades, throwing bad money after good. When you continue to purchase in a downtrend each of those purchases works against you, in a COMPOUNDING manner (and swap will never come close to making up for compounding losses) whereas your profits only make SIMPLE gains.

And so this is the problem: compounding losses while making simple profits. It is not a sound methodology, though it may work for a little while until a downtrend kicks in.

Just wanted to give my .02, please accept or disregard as desired.

Dear Dreamliner,

You are free and welcome to give your opinion being it positive or not, I appreciate any view that could open my eyes a litle more.

To respond to your claims, where you say that I'm adding to losing trades, I would say instead that I open new trades in a contrarian attitude. Some important things are to not trade too big from start, Know where you are (historical top, bottom?), leave enough room between each trade and spacing consequent trades when trend goes against you. Sooner or later, the trend reverses and all those losing trades become your allies ready to become profitable.

Anyway, thank you for your post. I hope you will follow this thread and also that I have a chance to prove that you where wrong. Not to say that I'm smarter than you but just because I'm just convinced that this can work.

Regards.

I love it when a man has a plan!

Will follow along with you...

Thanks for following and welcome on board
I hope you will have the patience as this baby will take some time to take off...

Lets say that I want to take my time starting small just to check that all instruments are working as expected...

haha, very wise!

I've already traded this on various other pairs, at least very similar to yours, and since I will not trade a system like this again, I have all the patience in the world as I watch you do it!

hi there, although its a $100 (which im sure u can afford to make do w/o).
I agree with the other user that without stop loss, its bound for account bust.

Nobody knows where the market goes, historical data are merely used as a gauge for better trading in some ways.

even seasoned traders risk minimal with stop loss, no offence, but stop loss is the core of risk management. and risk management if not everything, is at least a big part of trading puzzle.

Hope things turn out well in time, cheers

that's exactly what I mean broke. That's 3 times that amount of money you started your account with just to stay in these losing positions that you really don't know if they will or will not turn around. I remember A LOT of people saying the same thing as you are right during 2000, 2001, and 2008. yes price may go down and hasn't been there for 3 years, but that doesn't mean it will come back, kinda like the housing prices in the USA right now.

it's your money do as you wish with it but i would suggest reading the different jack schwager books, market wizards. Almost every single trader in all his books say to never do what you are.

I wish you luck, and back off to reviewing my trades.

Hi, I'm a novice trader myself, but your system has caught my interest. I like the idea of detachment from the markets.

Just a small point I'd like to raise. Everyone knows that in forex anything can happen, so I'm sure you would have considered what will happen during a worse case scenario of when AUD/JPY crashes down more than expected. My question is, do you have a system of when and how you top up your money to maintain the margin? I feel that a potential flaw is when that scenario occurs and there is no proper system set up to manage it. That may result in the loss of the 'detachment mindset' which is the key philosophy of this trading system.

This system is only good because JPY is at the end of its rise... you can buy any JPY pair but AUD is probably the worsed ones because it should be going down next 3-5 years... USDJPY is better for long term.

Cheers