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  • #301
  • Jan 27, 2013 11:11pm Jan 27, 2013 11:11pm
Quoting stevexyg
Ahhh right yes I wasn't looking far enough back! So there we have or rather had, some big sellers positioned. Price repeatedly rejected around that level for 3 weeks (1.3280-99) then came the breakthrough on the 11th and now that area has become supportive and has been tested several times and held for two weeks. So now we have buyers in this area so we accept that as a buy zone until or unless price dips through and retraces from the underside to test? In the mean time 1.3299 has become a launch pad for a break of 1.3400. This is making sense,...
Yes you're on the right track. The first weekly high was put in on Dec 19. Then price declined from that level significantly. Lots of sell orders build up there. It then takes several tries over three weeks to absorb all those sells. Once price breaks through all the sellers are filled price again trades away from the area and when it returns only buyers are left. Like I said earlier in the thread the market moves from one block of orders to another. Why the occasional breakout? Could be central banks, could be big changes in fundamentals, could just be the absorption over time of all the sellers.

I don't know why, but with a heavily traded currency like EU you will always have the odds in your favor if you fade tops and bottoms. The breakouts are far fewer in number than the rejections and the breakouts nearly always come back and give you the reentry on a retest.
  • #302
  • Jan 27, 2013 11:41pm Jan 27, 2013 11:41pm
Hey Seneca,

Enjoying your thread, admire your sincererity in sharing your experiences.
I also live in Eastern time zone and trade from midnight (E.T) till 5 am. I have been trading for about 3-4 years. I have paid my dues, read everything out there, tried this and that, now I am comfortable with my entry method.
I take short term trades for about 15-20 pips, mostly Euro. I am better in trading breakouts and continuation setups.
Obviously the quest is to think and act like a seasoned pro trader.
I have a lot to master in terms of letting profits run, when I know I got in early and the move will work, given more time.
Anyhow, It's refreshing to read stuff that I can relate to, i.e your essays.
Never Trade without a defined risk, never, never, never.
  • #303
  • Jan 28, 2013 12:28am Jan 28, 2013 12:28am
Quoting FxGladiator
Hey Seneca,

Enjoying your thread, admire your sincererity in sharing your experiences.
I also live in Eastern time zone and trade from midnight (E.T) till 5 am. I have been trading for about 3-4 years. I have paid my dues, read everything out there, tried this and that, now I am comfortable with my entry method.
I take short term trades for about 15-20 pips, mostly Euro. I am better in trading breakouts and continuation setups.
Obviously the quest is to think and act like a seasoned pro trader.
I have a lot to master in terms of letting profits...
Glad you enjoy them.
  • #304
  • Jan 28, 2013 1:18pm Jan 28, 2013 1:18pm
To trade sucessfully you need the discipline to follow your system. If you don't have the discipline to follow your system then emotions take over and you will lose money. If you system indicates a buy or a sell - you must follow it - if you don't follow it - then you dont have a system. You are just taking entries from some other randon indicator - but that is not a system. You will never know if your system works if you don't have the discipline to follow it. If you have a well defined system and Follow It you will find your emotions are gone (like they should be) your stress level will come Way Down and at the end of the day or week you Will Know if your system works! But if you kon't have the discipline to follow your system, you will never know if your system works.
  • #305
  • Jan 28, 2013 1:29pm Jan 28, 2013 1:29pm
Quoting 2ii2c
Hello Everyone,

SP has mentioned his belief that certain significant price levels exist from which to trade. One such level is last week's close at Eastern time.
I used EURUSD, N = 10 years/520 weeks/2500 days.

My quick analysis revealed that 95.21% of the time one or more of this week's daily bars will cross or touch last week's close.

I'm too lazy to calc how many more times during the week that level is "hit". One could derive a profitable method from that kernel alone.

I didn't get if SP simply made an empirical observation and...
If you think you can make a good strategy with the closes. Spend a little time and study the highs and lows. You don't always know which way to play the closes. Sometimes it takes a few days for the market to sort itself out. You always know what to do with highs and lows.
  • #306
  • Jan 28, 2013 3:57pm Jan 28, 2013 3:57pm
Quoting Seneca pilot
So, you want to trade for a living.

You have heard the advice. You have heard that you need proper capitalization. You have heard that you need a clear concise and consistent trading plan. You have heard that you need an edge that can be quantified and proven. You have spent hours reading and dreaming about traders like Paul Tudor Jones, Bruce Kovner, Michael Marcus, Richard Dennis, Mark Cook, etc, etc. You are sure that this is the life you want. You have read and been told that these are just a few; a tiny fraction of those who have tried....
Wow powerful stuff. Thanks. Kind of hit a few notes with me and addressed some of the things I've been grappling with.
Remember, Red. Hope is a good thing, maybe the best of things...
  • #307
  • Jan 28, 2013 4:10pm Jan 28, 2013 4:10pm
here i disagree somewhat again, and i am seriously disagree to carry on the meaningful discussion over this thread

1st. check my signature, yes i agree backtest is sort of useless in the scenarios that you described

2nd, backtest may be made very reliable and "creative".

say, there's a tester that i use now "forex tester", a very good program. it might "virtually" put a screen of 2010 usdjpy in front of you, then bar by bar the price moves like real market, and you trade accordingly using your method. how come this is not a great way for testing a trading strategy?

after your test, the program will also summarize your trading stats, very informative.

this is not a real account forward testing, but my experiences told me 'making money or not' is not depending on real-money account/demo account (mostly).

another advantage is that, when you replay the history, you may try different strategies going thru same time period. the difference in their outcome is sometimes astounding. .......open my eyes as well as my mind......

i cannot say backtesting is meaningless (should've changed my signature, lol).

Quoting Seneca pilot
The truth:

Backtesting is pretty useless, Forward testing, though with real money (even a tiny account) will tell you if your method will stand up to the heat of trading real money live. Forward testing will show you if your method can be traded in real time with real money for profit.

Hope it helps.
  • #308
  • Jan 28, 2013 5:42pm Jan 28, 2013 5:42pm
Quoting charvo
here i disagree somewhat again, and i am seriously disagree to carry on the meaningful discussion over this thread

1st. check my signature, yes i agree backtest is sort of useless in the scenarios that you described

2nd, backtest may be made very reliable and "creative".

say, there's a tester that i use now "forex tester", a very good program. it might "virtually" put a screen of 2010 usdjpy in front of you, then bar by bar the price moves like real market, and you trade accordingly using your method. how come this is not...
Ok.
  • #309
  • Jan 28, 2013 7:39pm Jan 28, 2013 7:39pm
[quote=charvo;6399799]here i disagree somewhat again, and i am seriously disagree to carry on the meaningful discussion over this thread

1st. check my signature, yes i agree backtest is sort of useless in the scenarios that you described

2nd, backtest may be made very reliable and "creative".


The reason back testing is meaningless is because I've never met a losing paper trader. It's just not the same.

"Like the duelist boasting to his second that he can snap the stem of a wine glass with a single shot from 20 paces, and the second replies, yes but can you do that when the wine glass is pointing a loaded pistol straight back at you." (apologies to someone, can't remember who)

One exception to my view is a full on black box trend type system in which case I would just rather give my money to Mann Group or Winton Capital etc etc to manage my money for me in a Turtle breakout type way. Their trend folowing systems will be way better than mine anyway...
  • #310
  • Jan 28, 2013 8:48pm Jan 28, 2013 8:48pm
Quoting 2ii2c
Thanks SP. I appreciate your acknowledgement. I used the same sample and 52.68% the high is touched and 46.36% the low is touched. Maybe it has something to do with the prevailing, long term trend? One can still find opps to successfully fade as is your habit. JFC, if you can't take money out of a 100+ pip ATR just send your checks, I mean cash, to me.

1. Well, I violated my parole so I gotta run. The voices in my head said, "Send bo, pelosi, reid, durbin, frank, dodd and others to a motorcade in Dallas". I sent them tickets and the next...
I enjoy your posts.
  • #311
  • Edited 8:55pm Jan 28, 2013 8:50pm | Edited 8:55pm
Hyperion I think the OP knows his system and if he gets meaningful data from back testing and has even based aspects of his system around that meaningful data then someone interested in his methods would follow his advice to back test.

This isn't a debate. its a sys/methodology thread. If you don't find back testing any use don't do it.
  • #312
  • Jan 28, 2013 8:52pm Jan 28, 2013 8:52pm
Quoting Seneca pilot
I enjoy your posts.
They scare me.
  • #313
  • Jan 28, 2013 9:17pm Jan 28, 2013 9:17pm
[quote=Seneca pilot;6340109]The purpose of this thread is to discuss the truth about trading.

This will not be a thread about methods. I will not be discussing my methods. I want to discuss the true fundamentals of trading. The important things that are never discussed.

Hi Stevexyg,
See above!! the first few lines of the thread. If you wish to defend back testing I don't mind. My views are shared by which ever market legend I quoted who I couldn't remember. Sorry if I ruffled your feathers. I'm not attacking that guy just giving my personal opinion and if I say so myself quoting an awesome analogy which is exactly why paper traders never lose. They lose with real money.
  • #314
  • Jan 28, 2013 9:29pm Jan 28, 2013 9:29pm
Quoting stevexyg
Hyperion I think the OP knows his system and if he gets meaningful data from back testing and has even based aspects of his system around that meaningful data then someone interested in his methods would follow his advice to back test.

This isn't a debate. its a sys/methodology thread. If you don't find back testing any use don't do it.
Its not that I don't backtest. I just don't trust it until its been verified with real money. I know that in the eighties the turtles method worked (lets call that the backtest) I also know that there is no way I could have traded that system with my real money. Successful backtest does not mean tradable method. I need enough winning trades to feel that I can finish a large majority of my days in profit. I need enough winning trades to know that I will have virtually zero losing weeks. I need enough winning trades to know that I will never have a losing month. Many can't understand this thought process but you have to remember I pay my bills doing this. I can't afford to trade many methods that may test well.

I feel I need to say it one more time. A method that is optimized on past data may not work tomorrow. If any of you wish to trade for a living your methods must be robust. They must work on any market, any timeframe, and in any market cycle from trending to chop. If your "system" can't survive all these conditions with profits you will not survive.

These comments aren't directed at any specific person. I just feel that were getting a little sidetracked over a small thing. I never really said do or don't backtest. The only point I have tried to make is don't trust the survival of your account to something you have tested on past data. Prove the method with real money in a small account. James 16 says fund with 10% of your planned full account to learn and make mistakes. Fantastic advice.
  • #315
  • Jan 28, 2013 10:18pm Jan 28, 2013 10:18pm
The word system sort of galls me. It rubs me raw in a private place. I see so many traders on these forums talking about systems. When I see the word system in relation to trading, images of x must cross y while a is above b and g is over 50 and rising start flowing across the movie screen in my head. You see "systems" are a rigid set of rules, usually optimized for what ever data set the creator had to work with at the time. Markets are not rigid though. Markets flow, markets hiccup, markets trend, markets chop, markets gap. Markets are made up of many individuals who cannot be counted to do the rational thing, let alone the right thing.

Think about the indicators that make up many of the methods in the systems section of this forum. Most of these indicators are some variation of moving averages. All of these indicators are calculated on past data. Most of the "system" creators simply put up a slew of indicators and play with the input values until they fit the price on the screen. These indicators aren't predicting anything. No indicator or combination of indicators can possibly tell you what the next tick will be. They can't tell you what the next fifteen minutes will bring etc. Individuals making decisions move the market. I don't care if the slow stoch has been oversold for two hours and has shown its third divergence. If Caterpillar needs to sell some of that oversold currency to hedge the two billion dollar order they just closed for some mining equipment its going down more.

Think of indicators in these simple terms. If your broker, you know the one who buckets your trades, knew that anything using indicators would ever be profitable over the long run; why would they ever be included in their charting package? The brokers want you to have a "system". They want you to believe that selling a huge red bar because the momentum indicator just turned south is a good strategy. Brokers want you to believe that buying when x crossed y while a was above b and g was over 50 and the move is 80% done is a good strategy.

The truth:

Trading is not a video game. Trading cannot be reduced to a mathmatical formula. Trading is the hardest easy thing there is. Trading is the simpleist most complicated thing there is.

Hope it helps.
  • #316
  • Jan 29, 2013 12:47am Jan 29, 2013 12:47am
I share your keep it simple theory.

After battling to learn the behaviour of the market, day in day out for last 3 and half years, now I am doing ok in trading.

But everyday market reminds me that knowing what to do is never enough to succeed, one must do it consistenly.

At this point, how to trade (i.e method/system) is not the issue. It's all about psychological demands of day trading.

Trading for a living demands us to make a series of correct decisions every session, be totally flexible at all time, and be free of fear, greed and regret.

I may be wrong, but I think these are the things you wanted to discuss also when you started the thread, along with market behaviour.
Never Trade without a defined risk, never, never, never.
  • #317
  • Jan 29, 2013 2:09am Jan 29, 2013 2:09am
Quoting Seneca pilot
The word system sort of galls me. It rubs me raw in a private place. I see so many traders on these forums talking about systems. When I see the word system in relation to trading, images of x must cross y while a is above b and g is over 50 and rising start flowing across the movie screen in my head. You see "systems" are a rigid set of rules, usually optimized for what ever data set the creator had to work with at the time. Markets are not rigid though. Markets flow, markets hiccup, markets trend, markets chop, markets gap. Markets are made...
So right. There is nothing new under the sun and anything you see in a indicator is just a different lagging rose tinted view of the past when the present is already creating the next past.

I would like to share the one thing I learned from Van Tharp which changed my equity curve for the better and is now the foundation of my trading. He ran a study that entered he market on a flip of a coin but crucially, he aimed for 3 to5 times profit compared to what he risked. That was the ONLY rule. It made money. Surely I thought, I can add value to the coin toss and as long as I aim for 5 plus return of what I'm risking, then I'm be ok. Sure enough, that worked BUT it was the hardest thing I've ever done. Running profits is hard. Gaining an exponential return when you can capitalise on a good move is hard when every bone in your body wants to bank and run that small profit. In fact the only way I could train myself to do it was to just pretend it was an interlectual exercise and just "do the right thing and not focus on the $$ outcome", hence the mantra by my name. Cheers
  • #318
  • Jan 29, 2013 7:48am Jan 29, 2013 7:48am
[quote=Hyperion;6400115]
Quoting Seneca pilot
The purpose of this thread is to discuss the truth about trading.

This will not be a thread about methods. I will not be discussing my methods. I want to discuss the true fundamentals of trading. The important things that are never discussed.

Hi Stevexyg,
See above!! the first few lines of the thread. If you wish to defend back testing I don't mind. My views are shared by which ever market legend I quoted who I couldn't remember. Sorry if I ruffled your feathers. I'm not attacking that guy just giving my personal...
Hi Hyperion,

I'm not sure if you are picking me up there on saying it's a 'sys/methodology' thread or the OP SP for discussing a bit of 'method' after being questioned on it? Personally I regard any traders approach to the market (including all of their considerations) as making up their 'method' or 'systematical approach'. We all know this thread isn't about a rigid indi based entry system so I'm using the terms in what would be considered by some as loosely in this environment. Apologies if that caused you some confusion. Also when you say 'my views are shared by' a market legend do you mean 'i get my views from' a market legend? Or have you personally found back testing gives you results that can't be replicated live?
  • #319
  • Edited 9:09am Jan 29, 2013 8:30am | Edited 9:09am
OP, thanks for the thread. I had to read every word and every posting bit by bit. BTW, i used your method to place a buy @ 1.3478 (Weekly high of last week) and worked exactly like you explained it. It's Charm. Today my range was low 1.33590 and 1.35000. Was it right for me to place a sell @1.35000?
One thing that i keep noticing and coming across is the type of orders that people take. Most newbies go for instant orders because of their anxiety to jump on the train when the "Money Bags" are at it. On the other-hand experienced traders like you usually use pending orders(Buy stops and Sell Stops, Buy Limits and Sell Limits) which are coupled with stops and TPs. I guess am right to say that this is what you also mostly use since you set levels and trade daily/weekly highs and lows. I personally have a problem of setting stops and would like some help...my trades can be Instant or Pending with TPs but no stop loss. I try to be around my trades and stop them when i have to...but this costs me alot, i also still have emotions of fear and greed. I would like a little insight on the issue of risking 2% on each trade i make or a 1.48:1 Risk ratio.

Lets make it simple: Suppose i am trading EURUSD, and i have $500 in my A/C. My leverage is 1:500. My Volume or lot-size is 0.1.
Qtn: If i am targeting posting one trade in my platform(say a buy @1.34600) then stop it(with a TP of say @1.34700=10 pips/ $10), how far should my stoploss go to target 2% risk?
  • #320
  • Jan 29, 2013 9:22am Jan 29, 2013 9:22am
Quoting square1
OP, thanks for the thread. I had to read every word and every posting bit by bit. BTW, i used your method to place a buy @ 1.3478 (Weekly high of last week) and worked exactly like you explained it. It's Charm. Today my range was low 1.33590 and 1.35000. Was it right for me to place a sell @1.35000?
One thing that i keep noticing and coming across is the type of orders that people take. Most newbies go for instant orders because of their anxiety to jump on the train when the "Money Bags" are at it. On the other-hand experienced traders like you...
I want to address all your questions completely. I am in a trade currently. First though I want to say read the thread carefully. I think you missed something. I don't buy weekly highs from below. I am afraid you may have a problem. Now your buy may work here but only if the breakout of the previous week high holds. I sell weekly highs from below and buy weekly highs from above. I will post a chart when I reply fully later to make this clear.
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