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$100 trading

  • #21
  • Oct 4, 2012 12:51pm Oct 4, 2012 12:51pm
Quoting simpleguy
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...
Simpleguy,

I read market wizards, Jesse livermore and dozens others. I liked to do it but at the end, and while applying their theories to my trading, I lost everything.

Now, I just want to keep my mind open and try my proper method.

Yes, I could keep losing positions for months or even years but I'm prepared and Ok with that, as long as those positions pay positive swap I will not give back to the market a single cent anymore.
Simplicity is the Ultimate Sophistication.
  • #22
  • Oct 4, 2012 1:07pm Oct 4, 2012 1:07pm
Quoting HeavenBlade
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...
Hi HeavenBlade,

The key is to have sufficient balance to support such kind of drawdowns.

I have calculated that with 1 microlot, and 100$ you have margin to support a 7$ drawdown and still have 200% margin reserve. This is divided by 2 when you add a second position and so on. Would you add 100$ to your account at that time ? to keep the 7$ drawdown space ? I think that it depends on the current volatility, position, etc but it would be recommendable to do it let's say when entering the third position just to stay cool and sleep well at night.

Thanks for posting.
Simplicity is the Ultimate Sophistication.
  • #23
  • Oct 4, 2012 1:23pm Oct 4, 2012 1:23pm
Quoting broketrader
Hi HeavenBlade,

The key is to have sufficient balance to support such kind of drawdowns.

I have calculated that with 1 microlot, and 100$ you have margin to support a 7$ drawdown and still have 200% margin reserve. This is divided by 2 when you add a second position and so on. Would you add 100$ to your account at that time ? to keep the 7$ drawdown space ? I think that it depends on the current volatility, position, etc but it would be recommendable to do it let's say when entering the third position just to stay cool and sleep well at...
I can PROMISE you you will NOT be sleeping well at night when you are having to add to your account because all the trades are going against you. It will be extremely difficult for you to put more money in an account that is vanishing.

But that's just me, maybe you're made up entirely different than I am.
  • #24
  • Oct 4, 2012 1:23pm Oct 4, 2012 1:23pm
Quoting sidhujag
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
sidhujag,

USDJPY has a negative swap and this is a strategy which is some king of carry trade derivative and which needs a pair paying positive swap, please re-read the first post.

Regards.
Simplicity is the Ultimate Sophistication.
  • #25
  • Oct 4, 2012 1:28pm Oct 4, 2012 1:28pm
Quoting broketrader
sidhujag,

USDJPY has a negative swap and this is a strategy which is some king of carry trade derivative and which needs a pair paying positive swap, please re-read the first post.

Regards.

True gluck I see AUD has having carry but they just reduced their rates... and forex is fwd looking so I dont see big players "getting in" for the long haul on AUD... USD or GBP maybe... ever heard of interest rate hikes? If you catch a bottom and struggle for a year or two then you can hold it for decades.
  • #26
  • Oct 4, 2012 1:38pm Oct 4, 2012 1:38pm
Quoting zmolokoz
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

I know that I'm going against the crowd saying that but I will say it anyway. Stop loss serves to confirm losses not to stop them. When losses are confirmed, your balance decreases, you open new orders and hope that you are in the right direction. I know it, I did it in the past.

Have you ever thought about what you need in order to not use stop loss ?

I will tell you :
1. Deep pockets if you play big or use leverage
OR
2. Not to use leverage and play small to have enough capital to backup your trade if things go against you.

And my edge: Get swap while holding loser position.

Thanks for posting,
Regards.
Simplicity is the Ultimate Sophistication.
  • #27
  • Oct 4, 2012 1:40pm Oct 4, 2012 1:40pm
Quoting sidhujag
True gluck I see AUD has having carry but they just reduced their rates... and forex is fwd looking so I dont see big players "getting in" for the long haul on AUD... USD or GBP maybe... ever heard of interest rate hikes? If you catch a bottom and struggle for a year or two then you can hold it for decades.
Okay, but it's not what this strategy and myself wants to do.

Thanks for posting,
Regards.
Simplicity is the Ultimate Sophistication.
  • #28
  • Oct 4, 2012 2:01pm Oct 4, 2012 2:01pm
Quoting Dreamliner
I can PROMISE you you will NOT be sleeping well at night when you are having to add to your account because all the trades are going against you. It will be extremely difficult for you to put more money in an account that is vanishing.

But that's just me, maybe you're made up entirely different than I am.
The message is that I should be more prudent on drawdowns, well, I could increase the space to 1,5$ from 1$ while adding in downturns. I will think it...

I mean, if I bought at 80, I should buy at 78.5 instead of 79 and then at 75.5 instead of 77... it would be more conservative for my account and for my nights

Anyway, I know that I will have to add to my account in a near future and I have no problem with that and it will be a good test for the strategy.

Thank you for contributing,
Regards.
Simplicity is the Ultimate Sophistication.
  • #29
  • Oct 4, 2012 2:20pm Oct 4, 2012 2:20pm
Quoting broketrader
I know that I'm going against the crowd saying that but I will say it anyway. Stop loss serves to confirm losses not to stop them. When losses are confirmed, your balance decreases, you open new orders and hope that you are in the right direction. I know it, I did it in the past.

Have you ever thought about what you need in order to not use stop loss ?

I will tell you :
1. Deep pockets if you play big or use leverage
OR
2. Not to use leverage and play small to have enough capital to backup your trade if things go against you.

And my edge: Get...

No problem

This comment "1. Deep pockets if you play big or use leverage" worries me alot.

trading without stop loss or in huge percentage of account size relates to gambling, there's no other way. its not about whether u will lose, its a matter of when.

trading is an art. Place your stops then distribute your position accordingly. Take it slow, trading is a get rich slow scheme.

Lastly, yen pairs are largely volatile.
Will the swap be able to cover huge price declines?
Will a string of losses lead to a margin call?

Sorry if i sound impolite, main intention is to (hopefully) prevent innocent money going down the drain =)
  • #30
  • Oct 4, 2012 2:34pm Oct 4, 2012 2:34pm
Quoting zmolokoz
No problem

This comment "1. Deep pockets if you play big or use leverage" worries me alot.

trading without stop loss or in huge percentage of account size relates to gambling, there's no other way. its not about whether u will lose, its a matter of when.

trading is an art. Place your stops then distribute your position accordingly. Take it slow, trading is a get rich slow scheme.

Sorry if i sound the , main intention is to (hopefully) prevent innocent money going down the drain =)
No problem zmolokoz,

But please understand that I'm the black sheep that wants to go against the crowd without well... placing any stop loss. Sorry for insisting but this is a key point for this strategy.

And for those that will not be able to sleep at night without stop losses, please don't risk your money on this, and try another thing...

Regards.
Simplicity is the Ultimate Sophistication.
  • #31
  • Oct 4, 2012 5:04pm Oct 4, 2012 5:04pm
I've patched one of my EAs to model this strategy and the results are really asthonishing. The only intentionally difference is that I'm only trailing with 40pips and don't secure the pips below. Maybe there are some flaws but it looks like it's working.
If we act as if 2008 never happened there could have been money made over the last decade
Test was done with a $100k account and 0.1 lots fixed

First pic is 2000-2007 with 38% profit (excl. swap) and only 4 losing trades that were closed by the tester because end of period

Second pic is 2008 alone....but that year never happened

Last is 2009-2011 with 50% profit and 3 losses closed by tester

I couldn't test 2012 because I have a data gap between 02/12 and 10/12
I've tried several broker but I'm only getting a single history file for 2012

At least my conclusion is that this strategy can absolutly be profitable over the long term. I think that a 4,500 pips drop within 3 month as seen in 2008 won't happen again because of the actual BOJ policy
But you never know....

When I find the time I will make a MT5 version of the EA because the MT5 tester is factoring in the swap. That would also be a way to find out whether it makes sense instead of averaging down to short a positively correlated xxxJPY pair
Attached Image(s) (click to enlarge)
Click to Enlarge Name: audjpy_2000_2007.gif Size: 9 KB
Click to Enlarge Name: audjpy_2008.gif Size: 10 KB
Click to Enlarge Name: audjpy_2009_2011.gif Size: 9 KB
  • #32
  • Oct 4, 2012 5:20pm Oct 4, 2012 5:20pm
iwjw,

Thanks for your work. Personally I'm off course convinced that this strategy works in the long run. The only but most important thing that we must care about are the downturns which need to be negotiated with great respect.

We have some important tools for that:

1. The price itself: Any price above 90 tells that we are near historical highs meaning that we should be prudent and allow for more spacing between trades.

2. Any preferred indicator (mine is stochastics) on weekly or monthly chart to see if the pair is overbought or not yet...

Thanks for your post,
Regards
Simplicity is the Ultimate Sophistication.
  • #33
  • Edited 5:38am Oct 5, 2012 3:26am | Edited 5:38am
Well, I have calculated what would happen to this baby using the worst case scenario, based on what happened during summer of 2008.

No swap or profit during the period of calculation was taken into account.

Back in 2008, July 22, 2008 exactly we would have began trading and entered our first trade at 104.
Then we would have entered consecutive long trades at :
103, 101, 98, 94, 89, 83, 76, 68 and last at 59 on 24.10.2008

What happened in those 3 months :
1. Pair has lost 43.2% in value which is uncommon in just 3 months.
2. We had to add to account for a total of 7360 $ to maintain margin.

Situation after those 3 months
1. We are sit on a 0.1 lot (10 trades @0.01) for an average price of 87.50
2. Balance is now 7460, P/L:-3676, Equity:3783, Used Margin: 52
3. The free margin is of 3731 which is 50% of balance. This was the rule I used to add to account all the way down.

You have the details in the excel file attached.

Regards.
Attached File(s)
File Type: xlsx audjpy-2008-nightmare-simulation.xlsx   281 KB | 637 downloads
Simplicity is the Ultimate Sophistication.
  • #34
  • Oct 5, 2012 4:49am Oct 5, 2012 4:49am
an expert advisor would be interesting?
  • #35
  • Oct 5, 2012 5:49am Oct 5, 2012 5:49am
Quoting kemps1982
an expert advisor would be interesting?
Thanks kemps, but there is really no need for that. Actually I just need being able to put limit buy orders to buy at desired prices.

Regards.
Simplicity is the Ultimate Sophistication.
  • #36
  • Oct 5, 2012 10:56am Oct 5, 2012 10:56am
Do I understand this right, that you start with $100.00 and add over $7300.00 on the way down? Is that correct?

Quoting broketrader
Well, I have calculated what would happen to this baby using the worst case scenario, based on what happened during summer of 2008.

No swap or profit during the period of calculation was taken into account.

Back in 2008, July 22, 2008 exactly we would have began trading and entered our first trade at 104.
Then we would have entered consecutive long trades at :
103, 101, 98, 94, 89, 83, 76, 68 and last at 59 on 24.10.2008

What happened in those 3 months :
1. Pair has lost 43.2% in value which is uncommon in just 3 months.
2. We had...
  • #37
  • Oct 5, 2012 11:57am Oct 5, 2012 11:57am
I get on the train ... I like your strategy
This indicator can help
Attached File(s)
File Type: mq4 00 indi.mq4   3 KB | 484 downloads
  • #38
  • Oct 5, 2012 4:56pm Oct 5, 2012 4:56pm
Quoting Dreamliner
Do I understand this right, that you start with $100.00 and add over $7300.00 on the way down? Is that correct?
Yes that is correct but it was for the worst case scenario.

Did you thought that you could grow an account from 100 without any other money to back up ?
On my first post, talking about what was needed, I wrote "Some more capital in reserve in case we are caught in a down trend at start" And I set that statement as important.

Regards.
Simplicity is the Ultimate Sophistication.
  • #39
  • Oct 5, 2012 5:20pm Oct 5, 2012 5:20pm
Here is my account status for the week. Have a nice week-end !

Here is my current order history :
05-10-2012 Bought 0.01 audjpy @ 80.000 STILL OPEN
04-10-2012 Bought 0.01 audjpy @ 80.000 Closed 04-10-2012 @ 80.100
25-09-2012 Bought 0.01 audjpy @ 81.000 STILL OPEN

Balance: 106.22, Equity:97.34, Free Margin/Balance: 89.4%
Simplicity is the Ultimate Sophistication.
  • #40
  • Oct 5, 2012 5:48pm Oct 5, 2012 5:48pm
Quoting iwjw
Maybe there are some flaws but it looks like it's working.
see below

Quoting iwjw
If we act as if 2008 never happened there could have been money made over the last decade
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