Simple Money Making Method

is this good setup ? (according to the rules)

Those aren't really setup's i'd take. There reason being that there is no real directional bias there. the 72 and 200 ma's are going sideways.

The first thing i do when i look at a chart is make a decision about the direction, there needs to be a clear trend.

Glad to try... Newbie

GBP/JPY

has anyone had consistent success with this method? From my experience its seems like there is no easy method. For now this helps a lot with my trading
www.1yrbp.com/baby-pips-school

GU Forming up now.

Anyhow, Brixton thank you for still being here when most have stopped replying. I hope everyone's well, and maybe even subscribing to the thread.

I live in Indonesia. Pardon my lack of existence in this thread, I am not somebody who's active in threads. But in tems of interest, SM3 has caught my attention for the past 2-3 months.

Little bit about myself. I am on hiatus from trading live. (had a string of losses from my previous trading, 20% absolute drawdown, which is unacceptable risk for). Been exposed to Futures and Derivatives since march 2012, I have learnt and grown a lot since then but I still consider myself by and far a Newbie. Haven't been profitable but I am fixing my approach on it.

Right now I focus more on reassessing my trading psychology (re-reading Super trader from Tharp, Disciplined Trader and Trading in the Zone by Mark Douglas). Also, came across Jack Schwager's Market Wizards, it is a compilation of interviews with various traders active on the 80s till now. It's a very inspiring book. Old classic, amazingly still very relevant to today's trading world desite being published in the 90s.
Right now I am reading on his newer publication New Market Wizard. I highly recommend it to the newbies for a perspective of what it takes to go pro.

Anyhow, for the past month I got a start on intensive backtesting on SM3. I have hired a few college kids to do part-time data entry for me. Basically, instead of backtesting with an EA, I teach the system directly to them, and I have them log the information of the trade (date, profits/losses, position duration)
From this analysis, I will be able to find optimal trading timezones, reasonable exit and scaling in/out strategy. Data analysed will be 2007-now, 8 different currencies (for now), SM3 applied to H1 and SM3 applied to H4.

Once backtesting and analysis is done, I will got demo for 3 months. I shall only go live when demo gets me reasonably similar results as analysis.

Money management wise I will be compounding 1% of equity, and regularly assess weekly and monthly drawdown. If drawdown is big (weekly over 5%, monthly over 10%, I will lower the lot size. if it breach my absolute tolerance (drawdown 20%) I will stop trading live entirely and re-asses profitability.

people in this thread keeps reminding that if you want answers as to risk/reward ratio, win %, go find it yourself. I am going to use hard cold analysis to exactly find that. Maybe I can share my findings in this thread once I am done with backtesting. Maybe in 1-2 months time.

Best of luck to you guys following SM3. Also to FX-Pro, you disappeared quite abruptly, like the rest in this thread I hope you're well. Thank you for being a good mentor.

Welcome, it really is a fantastic method, as long as applied only when clear trends are evident. Always be ware of the sideways market!

Of my last 10 trades I've had 4 winners, 5 break even and only 1 loss.


I am currently reading Schwager's new book - Hedge Fund Market wizards. Only came out last year so very up to date!

On "Hedge Fund Market Wizards", are there a lot of individuals with specialization on forex trading? Technical trading? What's your review so far?

For the Newbies, a lot of the content in Schwager's books seem to revolve around the same basic philosophy... Money management and trading psychology. Do not take it lightly. Finding a profitable is important, but it is not as important as FINDING A SYSTEM THAT SUITS YOUR PERSONALITY, trading prudently (money management) to save your ass for times when you have a strings of losers, and trading limitations is more about the individual discipline and perspective (trading psychology) than the limitations of a system. Any system that works can blow in your face if it conflicts with your beliefs of the market, and if it is in contrast to your basic personality. I used to scalp during news, got tired of it after too many slippage. It could be profitable but I couldn't deal with the stress from the high pace and the futility of slippage.

Brixton,

Agreed on the choppy market portion. I will be doing volatility analysis and other aspects (eg. how does news affect profitability. General consensus is don't trade when there's impending high impact news, but to what extent is this true?)

Also, about win rate. For AUDUSD, FX-Pro closes half position at +20pips and set the rest to BE. From my raw analysis this method of scaling out is prudent FOR AUDUSD. But the exact target pips for scaling out and moving to BE for other currencies, +20pips might not be optimal. Eg. For USDJPY +40-50pips might be better.

I even plan to optimize the parameters for SM3 for every currency. They say that you get lost in analysis, don't fret the small stuff... But I disagree. The devil is really in the details, in the data If you stand for something, prove it with hard evidence, data and statistics. My advantage is that in Indonesia I can just hire a bunch of college students to do freelance data entry for me. If they are more skilled I will have them help me on the analysis portion.

One idea I can bounce off is that if you guys are interested in discretionary backtesting, you can outsource it. But training the individuals will be a challenge. Not everyone is as intuitive to measuring the market, especially if they come from zero trading background. I am facing that obstacle now, after realizing that certain individuals can be focused, detailed and conscientious for simple data entry but they can be so lacking in learning the concepts of technical indicators. (At first I looked for Accounting majors, now I look for science or engineering majors. Maybe the calculus will help them grasp the concept better. We will see, still in middle of training)

Brixton, Burzmeister or whever is still visiting this thread...

What kind of pips are you guys making following SM3? From my initial backtesting on euro, gbp, cad, aud, yen and the yen crossed, the lowest a currency can make is around 100+ potential pips/month (assuming you know where to exit )

So... can someone share how they incorporate their money management into SM3?

Hey mate,

I haven't visited this thread or traded this method for quite a while. It's good to see people making pips out of the SM3, I bet FX-Pro would be proud!

The main reason I stopped trading the SM3 was because, for me to have confidence in a trading strategy, I need at least 2:1 Reward/Risk. That's just my personal preference. Think about drawdown - Would you be better off with 1:1 or 2:1 reward/risk?

Hope you're all doing well?

Agreed brother. It is a valid concern. However my personal preference is to have a strategy with higher win rate (60-80%) even at the expense of lower R:R (0.6-0.8) (and of course a reasonable expectancy too). Think about the losing streak when you have a low win rate strategy, would you have the patience, discipline, mentality and grit to soldier on? Even so, for how much longer before you see the silver lining?

But I recognize Burnzmeister's preference and know some traders have my preference too. To each his own.

hEY GUYS, i HAVE BEEN WITH THIS THREAD ALMOST SINCE THE BEGINNING. I remember the rules FX-Pro Gave us to follow:

Look for a Reject from 72 EMA
•Enter after the price closed above/Below the 12 EMA
•The entry Candlestick should be one single bar rejecting from 72 EMA & Closing Below/Above 12EMA & should be a Pinbar, Marubozu, Engulfing Pattern… Etc


I have said it before here and I repeat it again, how often do you find a trade where price rejects the 72(for me it busts thru it 90% of the time) and with in ONE bar closes above or below the 12ema!!!!??? I say that exact scenario will not happen once a month on any pair. I usually trade the asian and london sesion but do not find when I sometimes trade NY it is any different. In fact, in NY session I find price when it gets to the 72ema , can whipsaw around it and thru it like a snake stopping you out over and over.(If you take re-entries.)

So my 2 questions are-Does anyone find they are getting 8 trades per month as FX pro IS DOING PER PAIR? And mostly, is anyone actually ahead enough on this system to make it worth all the struggle to keep monitoring it????

Hey Silat50,

I've been meaning to come back and have another look at this method with a view to writing an EA. Just having a quick look over the beginning of this month for the AUDUSD, I can see a couple of instances where it does work: 8th March, 0800 UTC and 1st March, 1000 UTC.

We all know that the market becomes a lot more volatile from the London open to the NY close, so why not just look for entries at the London open? Could be a good filter...

By the way, if you're ever going to have any confidence in a system, you have to do your own leg work. Trust no-one!

Sigh. You mad bro?

Not many setups out there at the moment. Keep at it though, under the right market conditions, this method is gold

Yes you still have to be strong on the fundamentals knowledge for the discretionary part (knowing when market is ranging)... Otherwise, you won't even come close to a positive expectancy.

SM3 is gold, yep. Still sticking to it for now, I think it fits my personality and pursue for simplicity. Risk/reward ratio still has to be tweaked.

Eur/Gbp forming up...

Short - 0.8520

In my Data Window Daily ema72 = .8505.

Take care,
Lietuve

We take the 72ema date off the h1 chart. Not the daily