Building an equity millipede

I've got my stats going back a few months, I'll post them later.

The best stat though is how many basis points made. risk is not too critical because I know I've got that covered.

Hey Calc,

Good to have you back with us. We would love to see your stats! What you are proposing is way too razor sharp requiring intense focus and skills? Boable but at the cost of long term well being. It's just my opinion as I am doing similar short term aggressive stacking in my cash-flow small account with fixed position size of 1x or 2x starting capital if $1000 which resets 1st of every month. It is exhausting

Attaching my FXCM live statement of Closed Trades for first 3 weeks in July for folks to critique. I still have floating positions from last week so haven't closed the book for July yet :-


EDIT: My %win -%Loss stat (or risk/reward for that matter) is skewed as I am usually negotiating a "wholesale collective bargaining agreement" with the strong (or weak) currency when the markets are hyperactive.

V

You make an excellent comment.

Yes, it requires a lot of concentration, that really is the key. Give me better concentration any day over better analysis because if you concentrate the good trades keep showing up. I cannot stress this point enough.

As for long term being, it shouldn't take a toil, and so far it hasn't for me. I think it's all down to the 7:1 risk/reward. As I said in an earlier point 7:1 hides a multitude of trading sins. For example, on some days things don't go right from the off, ie lose-lose-lose-b/e-lose-lose-lose then BAM, two winners. What looked like a clear losing day suddenly turns into a really profitable one. You can only get those sorts of results if your losses are far small than your wins.

Higher rewards are great but in this game everything is ying/yang. So for every advantage you have to accept a disadvantage and in my case it's more losses/lower win %. Believe me I've been trying to get consistent with my trading for a long time and I could never crack it. So one day I was playing around with my spreadsheets and looked at the relationship between low hit rate (around 20%) and high reward. At 20% win rate and 7:1 reward things looked really interesting but then a fair number of trades have to be done. In my case somewhere between 30-60 trades a week. Risk can be kept under control because it's 20 basis points. If you're really risk adverse use 10bp.

The other advantage with a low hit rate/high potential profit is just how bad one would have to be to lose money. At 14% winners you'd breakeven. Think about this point because if the odds are very high that you'd get 14% winners at worst then you're going to be a breakeven trader at worse and although that's not the aim of trading it's a hell of a lot better than losses. And if 14% winners (86% losers!) is all you're getting then the further good news is you can probably only improve with both more experience and bettter concentration. Get more of those and your win % is going to be nearer 20%, then the profits will be flowing

To be able to trade 30-60 times a week then it's got to on something like the 5m. The 5m is also beautiful for 7:1 trades because with a 5m stop the reward is an 35 ticks which in many cases is very ahcievable. The other beautiful thing about th 5m chart, and I can't stress this enough, is something that I got from Mark Douglas - he basically said keep cool, forget about the past trade(s) because if you dwell then it takes you out of the 'opportunity flow' and chances are you'll miss the next good trade(s). Follow 3-5 markets on the 5m and the day litterally turns into a never ending stream of potentially great trades. They litterally drop off a conveyor belt over the course of the day. Now, of course you won't be able to catch them all, and will get frustrated trying to catch them (losses due to being too agressive/early or missed opportunities due to lack of concentration) but you will over a week catch some of them, and that's all you need to do.

Three Points

1. Better to be aggressive rather than timid


I'm still not agressive enough but am getting better. So give the trade a shot, if you lose it's only 20bp but there's a good chance you'll win (or b/e or get stopped at 40bp). Trading is about taking risks, if you don't take them you can't of course lose but at 7:1 you'd be mad not to take the trade so give it a shot (but at the same time don't be reckless trading any pattern that moves)

One thing that's helping me is this - if I ever look at the market and say 'no, this is not the place to trade' - STOP! Be aggressive, look to trade there. I can't tell you how much money I'e left on the table by saying the above and not looking closely at the market to put on a trade.

2. Always take the 2nd trade

Trading as we all know is a very psychological game so when we lose on a trade that often effects us and we might lose interest in that market for a period of time. But if you're looking to trade around the lows of moves you know that sometimes the market sets up perfectly (tidy reaction) yet other times the reaction lower is messy. So if the trade idea is right, ie price moves higher, yet you go long and get stopped out, chances are that's the market f***ing with everyone. That's the market being perverse (idea right yet lose money). So keep concentrating on that market and take the 2nd trade if it sets up. I don't keep the stats on why I entered a trade but I'd guess the win % on those second trades is at least 50% (and that's a big win % for me).

3. No positions over figures

If you want to really control your risk on the 5m it's very hard to do so if you hold positions over figures. If you do, and if price makes a big move, a 5 tick stop can turn into a 20 tick one or an 80bp loss and that's far too much to lose on one trade in the 5m world.

--------------------------------------

Here are some stats.

Any questions I'll do my best to answer.

Great stats Calculus and another enlightening post, I like the idea of 14% win rate means BE.

Regarding the time you are actively watching the market, is this whole London and US sessions or do you limit it to half the session for example or stop after you are up a certain amount(I know you said you have a daily loss limit)?

Do you recalculate your 20bps each trade from account size?, I know Oanda allows you have it calculate this automatically on its one click trading which is useful (as well as auto stop loss/take profit). I guess you want to do this to benefit from the compounding effect.

Thanks again for the posts and information very much appreciated.

thanks, Calculus. your recent posts open my eyes wide, and sort of confirm what i used to suspect.

if i have an edge, 51% vs 49%, that's enough, just increase the position size, and i can be profitable sufficiently and enormously---- why would i hold it for months?

my post might also be an example to V's questions after his "almost margin call".

i tried to trade G's way, since 2010. over these 3 yrs, my pathetic entry skill improved a little bit. I've repeatedly experience 20% ~ 40% equity rise due to floating profit (both auto and manual trading). and then mostly evaporated soon or later. one major cause is that I'm not that type of trader can track all positioned pairs well every week. even if i track a pair well, if it goes into a sudden reversal, the floating profit just die so fast due to the NO of postions (yes, over exposure). I think that's not necessary risk.

one example, for July, I ran into once 40%, once 20%, and i didn't exit. now for July, my account went down almost 20%. and the most frustrating thing is that if i took that 40% or 20%+ (or both), i'd absolutely not have ended up 20%- (i'm sure).

so i ask myself: if I can every month get a chance of 20% up, why would I NOT grab it??? isn't 20% per month too poor? or am i just stupid?

i guess that i love G's concept so much that i just can't get rid of this ridiculous behavoir circle of floating positive and ending up negative for the past 2 years. i just realise that i can set my EA that exit all my pos at 10% or 20% equity rise, and i'll do it. isn't a xx% equity rise what we trade for originally?

Mark

I'm based in the UK so trade from 8am - 5pm everyday. I tried a 7am start but that didn't work because I'm not a morning person, 8am works far better although I probably leave 50-200 basis points on the table a week by starting an hour later. There's big FX money located on continental Europe and 7am London is 8am their time so you can bet the boys are all at their desks.

When it comes to figures I won't put a new position on 20mins before and will cover whatever trades I have on 10 mins before the announcement.

I don't stop trading after a certain amount but if somebody made 300+ basis points in a day, why not consider it.

20bp is caluculated at the start of the week and stays that level all week, whether the trades are going my way or not. Same with the amounts to trade per cross, they're calculated against Friday's closing prices and stay the same all week.

Yes, the strategy is basically ALL about compounding

Charvs

I think you nailed it when you said 'pathetic entry skills'. I'm the same, and I think that without good entry skills G's mehtod won't be that good for any aspiring trader. But that's a paradox because if you have good entry skills you don't need to follow G's method, and if anything it will get in the way of a nice smooth equity curve and the mental advantages that brings.

My advice is in my recent posts, focus on participating in the 5m markets, give the market your best shot with some small risk you will get a few good winners (7:1) and if those winners are better than 13% you'll breakeven. If they're better than 15% you'll make a touch and if you can do better than 25% you'll be on your way to make some excellent cash.

Although I wasn't trading last week, markets too quiet/illiquid, here's the sort of trade I look for.

Want I like to see if a generally flowing uptrend and then the boys forcing everyone out, when that happens look to go long. Remember, I only go long because a) on the 5m there's always plenty of trade opportunities even when the markets are being hit, b) I find longs easier to spot, and c) it keeps my brain on one track rather than having to shift from a long perspective to a short one.

This trade (EUR-JPY) was about 4pm on Friday (2nd August 2013)

So here we have price generally glowing higher - be on the lookout for longs.




See how they bash it down with some thrust and through the stops? Interesting, especially as the market springs from that level. This is an area I want to try to get involved, give it a shot so to speak.



I also look at the 1m but only in areas where the 5m gets interesting. And what do we have on the 1m, a big spring! All I try to do is look for something 'interesting' at these levels, then try to trade it. I use a stop 1 tick below the low, in this case 131.06 but the close on the 1m spring bar was 20 so stop far too large. For EUR-JPY my stop range is 5-10 ticks.



But for every 1 tick extra stop that requires a larger gain to get 7:1. So for a 7 tick stop the market has to clime 49 ticks to get 7:1 yet for a 10 tick stop the move is obviously 70 ticks. This is why I will use 10 ticks in certain conditions but in a pattern like this I'd try to use more like 8 ticks.

I would therefore have placed a long order at 130.14 and as luck would have it I got filled . Price then moved up to 130.36 which is a very tricky level because should I move stop to b/e or not? Markets love to f*** everyone up, including me, and I can't tell you how many times I've been aggressive in moving stop to b/e only for price to come back, stop me out before motoring higher. What I'm learning is to be less aggressive and do more of the HARD THING (trading rewards those who generally do the hard thing) which is not to bring stop to b/e too quickly.

But at soon as price took out the 131.38 high at around 5pm I would have moved to unchanged. Anyway, it was 5pm so I would have been off for the day, so the trade would have been covered in the 130.38 - 130.40 range for about a 60bp profit.

If it hadn't been at the end of the day I would have aimed for 130.70 (7:1) but if price hit 130.54 (5:1) I would have moved stop up to 130.30 to give me a 2:1 trade. I get a fair number of those and from my rough stats for it's about 50-50 so everytime that's the right decision (market would have gone lower to stop me out at b/e) it's an equal amount of the wrong decision price stops me out at 40bp before moving higher to make the 7:1 level. Personally I don't think there's an answer to this questions, remember we're dealing with markets/people here which have too many ways to express themselves.

One big problem that traders have to solve is how to trade the perfect setup versus the imperfect one.

Take a normal reaction as an example.

1. Price is generally flowing higher
2. So we're looking for longs
3. Market retraces with a bit of thrust down then pauses
4. This is a great place to go long assuming that the reaaction is text book (reacts then heads straight back up)

But what happens when the reaction is messy, ie reacts lower, gets people long, then has a further reaction before moving higher. This is a messy reaction.

If you're the trader it's sods law if you don't take the first trade the market will move higher without you being onboard. But if you wait for the messy reaction chances are it won't come and the simple reaction was the one, with hindsight, to take.

How to solve this problem?

Better analysis might work but then again we're trying to analyse something that's very fickle so better analysis might work today but is useless tomorrow.

My solution is this - we're dealing with a beast, markets that can do strange things, markets where it only takes one trader to tip the balance, and that trader might even be me with my small orders (unlikely but still possible as my or your order could be the straw that breaks the camel's back).

Therefore we won't know till the future which was the right analysis to use so why not just take every damn signal and realise that some will work while others won't. Keep the risk amount small (10-20 basis points), keep taking the signals. Doing this you'll probably generate plenty of losses but also a few good winners as well, and all you need is a few good winners if the profit amount is large in relation to the loss amount.

I used to dream about perfection and consistency with my trades, being right 60-70% of the time was my goal, no doubt like many others. But then I started to realise that for me imperfection was better alongside small losses and big profits....And if you think about G's method it's really that isn't it - small losses/big profits.

Cheers Calc,

I'm in the UK also, it's not a bad time zone to live in for trading, my wife is from Greece and they are 2 hours ahead of us so would be even better. Being a night owl I hate waking up early in the morning like yourself.

I really struggled with the idea that one could get the perfect entry or read FX market so well you could get a high hit rate. I think the market is just too random most of the time to get a high hit rate on smaller time frames, although I do believe you can do better than random. Your style of trading takes this into account and the beauty is, I would imagine, each year you could get better at entries and increase your weekly BPs while keeping the same risk, although I would be happy with half of what you are getting now.

Taking loss after loss and still entering and sticking to your framework is something you would have to get to grips with quickly with this style and something that traders who fail probably struggle with, I see this as a benefit though. I am planning to trade this style 2 days a week for 3 months with smaller amount of money (I can't do demo), and to monitor my stats , will post them.

Mark

Hi Calculus - Looks like you are on your way to become Ted Williams It requires a different mindset which, I must admit, I don't prefer to pursue having gone that route myself in the past. Looks like you are trading fulltime and if that is the case, I understand why you would choose this trading style.... especially when they have a significant trading capital to see decent amount of profit taking to make their time worthwhile. If 7:1 results in a $10K profit-taking, I can understand but most of the folks here are trading with account size of less than $10K and it would require insane discipline. The burn rate is definitely high so not sure how long you have been starring at M5/M1 charts 8 hours a day and/or how old you are. If you are in 20s or 30s, it may be ok but someone like me in mid-40s trying to earn more by working less every year, looking for compelling momentum conditions is the only way to have a balanced life style. My best trades these days are the ones when I don't even look at charts and enter whenever I can whatever pair is moving at that time. Probes are just that, punts you throw on your quote screen, switch to your position book, position quickly move in profit, stack stack stack (for the next hours/days as long as the opportunity exists). If not, let's move on and wait for another price alert to arrive on my cell. Bottom Line (and this is for Mark!)... one HAS to pick a trading style that fits your life style or else, you will be profitable but depressed and miserable with no wife or kids to enjoy your hard earned dollars when you depart from this world. I know because I have experienced (and still am) the toll trading takes on personal and family time. Being in pacific time zone and staying up late beyond midnight for Londoners to join is just no fun at all even when I am making decent profit as there is someone else at home willing to take a bigger sacrifice!!! One has to factor personal priorities when they choose their trading style...unfortunately, you will NOT know which one fits your style unless you have spent atleast a couple of years. G does this and G does that and let's look at why others are profitable is all meaningless when success comes with a lot of strings attached. One should focus on traits/personalities/phycology/mindset/etc of successful traders instead of what they DO, how much SL they use, when do they move SL to BE etc etc. Just replicating someone else's strategy simply won't work in the long run. I have certainly become more wise participating in this thread BUT to think I am doing everything what G does is very much far from the truth!

charvo - I feel your pain and they are ALL valid painpoints that I have personally experienced and anyone here who says otherwise is simply LYING!!!. One thing G does not tell us is this:

Participation > low risk > growth > "continued participation to preserve current equity growth". One cannot simply walk away with a bunch of legs growing at 200+ pips hoping they would turn into 2000. That is stupidity and FAR from reality and one is required to follow the price (as CAM has repeatedly mentioned) which will result in either locking/freezing of equity or continues growing of equity. Realized short term loss will ALWAYS be there. It is very hard emotionally even though on the surface, it seems so logical and common sense. One has to consider trading as a passionate hobby to not worry about their legs dying at BE. My threshold is a collection of 500-1000 pips acquired at the fastest possible route of least resistance across multiple pairs. Growth (and ultimate success of this strategy) is not tied to how many large legs you can accumulate to show off to your peers and to boost your ego. I got none and yet my account is growing to newer heights every week/month with very little stress even for my super-aggressive style in one of the subaccounts for stacking. in regards to your reference on Margin Call, I give up on trying to make folks understand the concept of Margin Call. Having all positions at BE does NOT make it RISK-FREE. This is a market where huge slippage can happen all the time whether intended or un-intended by your broker. If you are trading 10:1 true leverage on a 200:1 account leverage, sure that is conservative and protected. For me, if I am trading 35 to 40 by1 on a max 50:1 account leverage, I am at risk of a margin call during an immense market turmoil which can happen any time!. I PERSONALLY WOULD NOT TRADE THIS STRATEGY IF YOUR BROKER LIQUIDATES ALL POSITIONS UPON MARGIN CALL. You are fooling yourself if you think a SL or TP or BE or pending order will trigger to protect yourself all the time. My almost "margin call' concept is designed to fit my trading style which is WAY WAY different from G's or anyone else. With FIFO, it is just not convenient to do what G recommends so I am using small chuncks in sub-accounts for new episodes of probes and aggressive stacking without BE OR SL. I am willing to make big $$ or close all positions at average price level during a stacking episode. I go all the way to 90% of margin to maximize the use of leverage in that particular sub-account and I have a whole different methodology to incorporate the concept of Participation > Low Risk > Growth. I can literally write a book on it myself

Here's the email I just received from Boris Schlossberg which seems so appropriate to post here:

"To an outsider the baseball may appear to be more boring than a month of solitary confinement. It's a game where the pauses matter much more than the brief intermittent play. It's as much a game of the mind as of the body where reaction is often much more important than the initial action. Above all baseball is all about controlling failure and in that sense it is very much like trading.

One of the hardest things to do in all of sports is to hit a small hard baseball thrown at you at more than 150 kilometers per hour with a round wooden bat that is not much bigger than a stick. It's so hard to do that those athletes who fail to do so 7 out of 10 times are considered superstars and are paid millions of dollars per year for their very infrequent success.

The art of hitting a baseball is so hard that its been more than 70 years that anyone has been able to average 4 hits per every 10 times at bat. The last player to do so was Ted Williams -- considered almost mythical by today's standards -- when he batted 406 in 1941. In addition to having great hands and almost supernatural vision, Ted Williams also possessed one skill that all of us traders should learn to emulate. He never swung at a pitch unless it was in his hitting zone.

What made Ted Williams so great is that he only acted when the odds were in his favor. He never, ever chased pitches. That one act of discipline is what set Ted Williams apart from every other baseball player since.

When I think about every big loss I've ever incurred as a trader, it has almost always been the result of me chasing a trade. The hardest thing to do in both baseball and trading is to stay perfectly still and wait for the right moment. We are all programmed to engage, to jump in, to act because we all associate action with success. But trading like baseball does not reward action it only rewards "efficient" action which means that in order to succeed most of the time we need to do nothing. That's the lesson of Ted Williams and it is perhaps the hardest one to learn."

Cheers Calc, I'm in the UK also, it's not a bad time zone to live in for trading, my wife is from Greece and they are 2 hours ahead of us so would be even better. Being a night owl I hate waking up early in the morning like yourself.

I get 8-9 hours sleep pretty much every night and even then I feel half dead till about 10-11am. Not tired, just not on the ball. 8am works far better. In fact 7:45 is something I'll aim for come September as I've noticed good trades often setup from then onwards, and by 8am it will probably be slightly too late.


I think the market is just too random most of the time to get a high hit rate on smaller time frames, although I do believe you can do better than random.

Yep, that's what I think as well so try to identify good areas and take a shot or two. Price is fickle in all time periods, probably more so in the 5m so most aren't going to be able to get consistentcy they want, including me. But what about this -

If you can't get consistency in the short term, can you get it in the long term?

Maybe!

1. Imagine your stats are 20% winners on average per day
2. 6 trades taken per day = 1.2 winners and 4.8 losers
3. 1.2 x 140 = 168 bp profit
4. 4.8 x 20 = 96 bp loss
5. Costs = 20bp
6. Net Profit = 52bp
7. However, it would actually be at least 20bp higher because there would have been other trades that I don't count in the win/loss, those being breakeven and 2:1 trades
8. I'd therefore put the net profit at about 70bp per day
9. Yes, some days would be losers, others breakeven give or take 10 bp others in the 150-300 range (probably 1 a month)

The point I'm making is with concentration, sensible levels to trade (look for areas where the longs are being forced/stopped out) those sorts of average daily stats are achievable). So if we then add them together to get weekly stats we'll gain that all elusive consistency which is what many of us are aiming for.

I would imagine, each year you could get better at entries and increase your weekly BPs while keeping the same risk,

Yes, it has to happen doesn't it as long as you learn from mistakes/losses. Mmaybe easier said than done though, still slow improvement at worst is almost a guarantee.

Although I would be happy with half of what you are getting now.

If you do this for 2 days over the next 3.5 months (good to stop mid Dec when liquidy drops off) that's about 1.5 months of trading. Depending on how good (simple?) your analysis is I think you've got a great shot at making a minimum of 200bp. Build on that. Anyway, even if you breakeven that's a hell of a foundation to build on.

The problem you might have is the lack of constant market action. Right now I'm learning to fly a Gilder and I didn an intensive 5 day course a few weeks back. I couln't fly again for about a week and was amazed at how much I forgot. So I'm having to take another 5 day course as the consistency can't be beaten. Maybe same with you Mark, so try to trade the 2 days consecutively and if you can put more days in, all the better.

Taking loss after loss and still entering and sticking to your framework is something you would have to get to grips with quickly with this style and something that traders who fail probably struggle with, I see this as a benefit though.


Go back to your school days, when teacher asked you a question and you got it wrong, it wasn't a good feeling compared to when you got the question right. When wrong the class may well take it out on you by sniggering etc, basically we all want (or at least like) to be right whether money is at stake or not. And when money is at stake it can make being wrong even harder.

Same with me, I don't like to be wrong but then I learned that being wrong is part of the game, you need to be proved wrong in order to be proved right as the markets are often somewhat predicable (looks like we're going higher) but at the same time make it hard to enter. Some of the entries are text book, others are tricky and will setup 5-10 mins after the first trade in that area which was stopped. So to find the winners you have to play the odds and take every trade that sets up, many of them will be losses but a few will be winners and when the 7:1 profit level is 35 ticks that's not that much of a move in the 5m, ie it's achievable.

Is it easy, nope. It's not easy coming in all ready on a Monday morning to get stopped out in 30 seconds on your first trade, then lose on the 2nd, 3rd and 4th. You're down 80bp (+ costs) and it's not even 10am yet. Teacher has asked you 4 simple questions (like how many wives did Henry VIII have, you said 4!), he's getting madder and madder, the class is saying you're stupid, I don't know maybe you are ), now teacher is asking you a 5th question and it's a hard one! (the hard trades to take often turn out to be the profitable ones)

That's what this method is like, or at least like much of the time. I reckon 90% of my first trades of the day are losers and probably 85% of my 2nd trades are losers as well. So by 9-10am most morning I'm usually down 20-60bp. Sure, sometimes things go great from the off, but most of the time it's losses to start with. KEEP AT IT - KEEP AT IT - KEEP AT IT - That's what I've learned.

And when I do keep at it, great traders normally always appear. Remember they keep dropping off the 5m conveyor belt as the 5m chart is a never ending series of oppurtunity. So many days that start out looking like shit end up beautiful. And when that happens I guarantee that at the end of the day when you're doing your stats you'll reflect on that 7:1 ratio and say 'you know what, 7:1 is a beautiful thing'

Hello Calculus and all other old timers of this thread

How are you guys doing. I have been away from trading for a while.

Good to see this thread is still going live.

Calc, your posts on this 5 mins approach is interesting, though it is not in line with G's theory.

You talk about few (4 to 5) consecutive potential losses then a good win on a 5 min. This can lead to more than 10 to 15 trades a day, easily and something like 90 to 100 trades per week. Am I right? This excessive attempts can eat into profits. How can you control the number of attempts if you have to keep at it.

Thanks
TS

Yes, the cost of doing business has to be respected. I try to do less than 10 trades a day so it's important not to trade anything that moves. Patience is a virtue but at the same time you have to be aggressive.

MInimum balance to trade like this via Interactive Brokers is £20,000. Better is £25-£50k. Less than £20k and the comms become too much (minimum deal size is about £3.25 round turn). No point trading with any broker that can't offer the ability to trade the bid/offer. IB's comms at 0.02% are in my opinion a touch on the high side.

10 trades a day may seem excessive at first glance, however if you are trading 5 pairs over 8 hours then its 2 trades per pair (when you average it out, obviously some days might be 5 n one pair 0 in another) over 8 hours. Also from Calcs stats he is doing around 40 trades per week. Not sure how you got 10-15 trades per day to 90-100 per week . So not that excessive actually seems quite constrained.

I think Calculus got what I was saying. I didn't mean 10 trades a day is high for a day. In fact, if you can manage to limit within 10- 12 trades for his style that is good. My point is you can easily end up trading 40 to 50 times in a day chasing a successful entry on 5 mins.

Thanks
TS

Yep, everthing works and nothing works.

What's good for Mr A is viewed as strange by Mr B.

Just find your style, something that you gel with, then try to trade it.

I tried your M5/M1 style last night Asian and London sessions with a little bit of twist (using daily/weekly pivots) to net 296 pips across 39 trades. It was fun and yet frustrating at the same time. Adding this to my trading arsenal to add some excitement to my trading life

EDIT: I did not strictly follow for 7:1 risk/reward model so that might be a test for another night :-

entered on Aug 5 for 33 entries, and lost only one (-23). (i didn't consider those -1. or -2 pips as losers......)

this is incredible, i'm totally speechless. your entry skill is superb! you should open a thread teaching your entries, V!

I think all trading is frustrating for most players.

I bet if you ask some of the world's biggest and most established they'd say it's a constant battle.

39 trades V, too much! Your broker will EAT you alive in costs .

Remember, from the longside - when price is forcing the longs out and/or making it hard to go long, that's an area you should be looking at getting involved. Yes, those trades can be high risk but you only need to hit a few right to end up on the profit side for the day.

If you only trade from the longside then the days to be really aware are the big down days that move lower throughout the whole day, ie the move down is spread out and isn't just a couple or price collapses die to a few figures. Those days will have you going long on a suspected low only to be stopped out before going long again, getting stopped out and so on. If you take every trade that might mean 5-10 longs and 5-10 losses.

How to handle these days? These are my 2 solutions -

1: Slump Low

There's no way to know that price is going to act this way until it's all too late. So you should have been buying (assuming everything sets up ok) AT LEAST THE FIRST TWO TRADES. Maybe you'd take the 3rd trade as well (remember, markets like to make it hard for people to trade so wouldn't it be perverse if the 3rd move, after stopping traders out at least once, was the big move higher? Let's therefore assume you took the 3rd trade and again got stopped out. Right now I'd stop going long, thinking this could well be one of those nasty trending down days.

But I will still keep an eye out for longs. But I'd only look to go long if we have a sharp move down where the angle of attack is far lower than the previous 2-3 moves lower (where you got stopped). So if the previous 2-3 moves took price down an average of 25 ticks over 20 minutes, this one takes us 50 ticks down over 8 minutes (not figure related).

I call those (potential lows) 'slump lows' and when one happens I'll look for long setups and if that gets stopped out I'll look for the2nd trade. Now, if the 2nd trades loses that's 4-5 losses, probably over half a day in one market. Possibly too much, so what's the right thing to do? Probably stop trading that market and hope you've had some better results elsewhere. Who could argue with this decision? ME!

Why, because it's not the HARD THING TO DO, it's the easy thing to do and on balance the easy thing to do with make you breakeven at best and lose at worse.

The hard thing to do is to KEEP AT IT with that market. But be FAR MORE SELECTIVE.

Remember the conveyor belt?

Remember Mark Douglas's opportunity flow?

That's the 5m - a never ending stream of opportunity, like a conveyor belt it never stops and those 7:1 trades keep droppoing off. Now, either you're going to put yourself in place to try to catch at least one or you're not. If you stop looking at the market it's impossible to have the potnetial to catch the next 7:1, but granted, you won't lose any more either (there's the ying/yang at work, everyadvantage comes eith a disadvantage in this game)

It's at times like this where your CONCENTRATION is really tested. You've just had 5 losses trying to catch what's turned out to be a falling knife. That cross is certainly not your friend today, in fact it looks like it's playing with you, is enjoying making you out to be a real fool. That's why it's so easy to give up. I'll be the first to say that in these situations my concentration needs a lot of work. I'm probably at a 5/10 when I should be nearer 8 if not 9.

But you must be selective on this trade, don't try to force a trade, sit back in your chair and WAIT. I'd have a good bet that a 7:1 will happen before the day is up, alot can change on the 5m in a over a short time period. What turns out to be a really nasty move in the UK morning session, rallies 120 ticks in the PM one. You're looking for a really obsious trade to set up, sort of like the one above, I'd call that textbook with the stops being taken out on thrust, market stalls alongside the 1m spring. That's the sort of trade I'd be looking but if it wasn't textbook I wouldn't take it and instead wait for the next textbook trade (that by the way, waiting IS THE HARD THING TO DO )


2: Wait for the flow to change

Although price might be generally flowing higher on the 5m if you look at 2-5 days worth of trading on your chart. The shorter term flow on these steady down days is down. So you've buying with the long term flow yet trading against short term flow. Sometimes one is stronger than the other as in this case (short term stronger than long term).

Again, you'd have taken the first 2-3 trades and got stopped out so now back off that market, wait for the short term flow to change to up, then look to buy some retracement off that.