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Simple Sma-based strategy

  • #161
  • Aug 28, 2013 5:19am Aug 28, 2013 5:19am
Quoting yonnie
whatfx, your idea will be interesting if there are too many 4-entry losses. in my testing: TP 50 pips........generally the entries were 30 pips apart on average, so on a 2-entry trade I made 50 pips on the 2nd entry and 20 pips on the 1st entry. in other words: you close out at a loss on the next entry of 30 pips. price goes up and you make 50-30 = 20 pips. if price goes up after triggering the next entry, I can still make a profit on the entry before that one. and my profit would be 50 + 20 = 70 pips. a big fat difference in my backtest were the...

i think you folks are missing my point. if the trades dont go your way i.e. all four positions lose, then you will have a huge compounded losss of 1:1:3:6.

your comment above assumes that one of the positions will go into profit. but what if it doesnt ? closing each position out when entering a new one will prevent youyr losses compounding. that is what i meant.


can you illustrate with a few trades and chart examples your way of trading this method and what would happen if only the 3rd and 4th positions go into profit , and what would happen if all 4 positions lose.

then we can be clear as to the point i was making.
  • #162
  • Aug 28, 2013 7:55am Aug 28, 2013 7:55am
I am afraid you are both right, whatfx and yonnie.

The ratio of the entries 1:1:3:6 is basically a martingale strategy which is doomed to explode, eventually (point made by whatfx, I believe).

On the other hand, yonnie is correct in the sense that this system applies here and now because the probability of success is on your side (correct me if I am wrong). Which means that you are likely to make a profit and not an unbearable loss.

If I may, I would like to suggest a very simple way out in case the market turns to the ugly side (as whatfx worries) and losses start mounting: hedging. You simply open a trade in the opposite direction for the amount of 1+1+3+6=11 and wait for the right market conditions to unlock it (which are: price higher than the BUY trade and going down or price lower than the SELL and going up). It is the only cure to a martingale nightmare, that I know of. And please note that I said simple, not easy. Unlocking can be a nightmare on itself.
  • #163
  • Aug 28, 2013 3:37pm Aug 28, 2013 3:37pm
Quoting whatfx
{quote} i think you folks are missing my point. if the trades dont go your way i.e. all four positions lose, then you will have a huge compounded losss of 1:1:3:6. your comment above assumes that one of the positions will go into profit. but what if it doesnt ? closing each position out when entering a new one will prevent youyr losses compounding. that is what i meant. can you illustrate with a few trades and chart examples your way of trading this method and what would happen if only the 3rd and 4th positions go into profit , and what would happen...

The loss will be small on the early positions, closing a trade to take a trade in the same direction makes no logical sense.

Martingaling is where you do not have an exit strategy just a average down for ever strategy, so no it's not martingaling at all.
Nothing to it, but to do it!!! Stick to the plan FOOL!!!!
  • #164
  • Edited 11:40pm Aug 28, 2013 6:00pm | Edited 11:40pm
whatfx,

I`m sure we all know what you mean when you say that you don't want to compound your losses if the trade goes wrong.

I think all of us have to look at the basis of this system:

it only works if there are not many 4-entry losses.
if that is the case, it would not be smart to close entries out at a loss.
if there are too many 4-entry losses, don't trade this system.

only extensive testing in your time frame on your pair will reveal if trading this system is worthwhile.
even if this system shows to be breakeven at the end of your test, it might be working far better later when you get more experience.
its not easy to profit from a mechanical system, where you always do the same thing over and over without using any discretion.
but by trading the system on demo or very small size and starting to notice even small things which will minimize risk and enhance profitability, you can get far.

in my short backtest I had an average win of 146 pips and a 4-entry loss of 680 pips.
if I have 1 loss in every 6 trades I am about even; 1 loss in every 10 trades and I win handsomely.

my 4-entry loss is 680 pips on average - my average win from 4th entry is 310 pips (entry4 6x50 + entry3 3x20 - entry2 -10 - entry1 -40)
  • #165
  • Aug 28, 2013 7:32pm Aug 28, 2013 7:32pm
Quoting whatfx
{quote} i think you folks are missing my point. if the trades dont go your way i.e. all four positions lose, then you will have a huge compounded losss of 1:1:3:6. your comment above assumes that one of the positions will go into profit. but what if it doesnt ? closing each position out when entering a new one will prevent youyr losses compounding. that is what i meant. can you illustrate with a few trades and chart examples your way of trading this method and what would happen if only the 3rd and 4th positions go into profit , and what would happen...

the problem here lies in the relative sizing of your entire position.
more importantly your MM should be geared towards the total ratio.

Im not sure if im deviating from the modus here, so if i do, just take it as me playing devil's advocate.
Think about it this way, do you only have to snowball downwards?
By adding postions into the trend, your are essentially snowballing unrealised profits as well. so it works both ways. flexible.
if we are worried abt unrealised losses then obviously we are not trading within our comfort zone.
  • #166
  • Aug 28, 2013 8:15pm Aug 28, 2013 8:15pm
Quoting jest1081
{quote} the problem here lies in the relative sizing of your entire position. more importantly your MM should be geared towards the total ratio. Im not sure if im deviating from the modus here, so if i do, just take it as me playing devil's advocate. Think about it this way, do you only have to snowball downwards? By adding postions into the trend, your are essentially snowballing unrealised profits as well. so it works both ways. flexible. if we are worried abt unrealised losses then obviously we are not trading within our comfort zone.

Well, if only pos 1 fills then it runs 200pips, he makes 200pips, if pos 1, 2 3 and 4 fill then he'll make 2200 pips, scaling into a position has this issue, there is no way around this sadly just accept what you make and move on.

I've moved to a system similar to this and I must admit I like it, I only lose when my trend changes.
Nothing to it, but to do it!!! Stick to the plan FOOL!!!!
  • #167
  • Aug 28, 2013 11:45pm Aug 28, 2013 11:45pm
Quoting Turveyd
{quote} Well, if only pos 1 fills then it runs 200pips, he makes 200pips, if pos 1, 2 3 and 4 fill then he'll make 2200 pips, scaling into a position has this issue, there is no way around this sadly just accept what you make and move on. I've moved to a system similar to this and I must admit I like it, I only lose when my trend changes.
looks very easy to do Turvey..........but the devil will be in the details.

what is your trade management after you get into a trade?
  • #168
  • Aug 29, 2013 6:15am Aug 29, 2013 6:15am
Quoting yonnie
{quote} looks very easy to do Turvey..........but the devil will be in the details. what is your trade management after you get into a trade?
Easy is good!

Varied, i have a stack of entry setups So require even more exit rules.

I allow for expected range / chop, so i dont get SL'd if the market has a chop day.

I also have faster setups with a smaller range.


Lack of time keeping this a works in progress sadly
Nothing to it, but to do it!!! Stick to the plan FOOL!!!!
  • #169
  • Aug 29, 2013 2:21pm Aug 29, 2013 2:21pm
Quoting Turveyd
{quote} Easy is good! Varied, i have a stack of entry setups So require even more exit rules. I allow for expected range / chop, so i dont get SL'd if the market has a chop day. I also have faster setups with a smaller range. Lack of time keeping this a works in progress sadly
yes, easy is good, but unfortunately its not easy. it only sounded easy.

you must be trading high TF if you have your SL in such a way to avoid a chop day........can you give an example how you are setting your SL?

thanks
  • #170
  • Edited 7:42pm Aug 29, 2013 2:41pm | Edited 7:42pm
whatfx,

if you are concerned with the losses, what about a different entry method.
only enter when the uptrend resumes.

so price hits 60sma - we do nothing
price hits 200sma - we place a pending order at 60sma and the order will only be hit if price goes up again.
price hits 300sma - we have a pending order at 200sma and 60sma.
price hits 400sma - we have a pending order at 300sma, 200sma and 60sma
maybe add a 500sma? with pending orders at smaller sma`s.

so if we have a fast down trend, no orders will be triggered or only a few.

comments anybody?
  • #171
  • Aug 29, 2013 6:38pm Aug 29, 2013 6:38pm
Quoting yonnie
{quote} yes, easy is good, but unfortunately its not easy. it only sounded easy. you must be trading high TF if you have your SL in such a way to avoid a chop day........can you give an example how you are setting your SL? thanks
No M5 I was a M1 boy until this year, changed tactics here.

Here is an example I posted earlier, yellow dots are short term 40ema Range, then the outter blue 200ema based lines markets tend to stop within accurately enough to trade off with a big SL, obviously losing example at the end of the chart, but a stack of winning trade upto that point.
Attached Image (click to enlarge)
Click to Enlarge Name: Example 2.jpg Size: 443 KB
Nothing to it, but to do it!!! Stick to the plan FOOL!!!!
  • #172
  • Sep 23, 2013 6:02pm Sep 23, 2013 6:02pm
what happened to this thread ? no longer viable ?
  • #173
  • Sep 26, 2013 5:22pm Sep 26, 2013 5:22pm
Quoting whatfx
what happened to this thread ? no longer viable ?
The thread may no longer updated, but I still trade with this strategy and make a profit.
There is one big change coming soon - I will trade it automatic by EA.
Tests are made and results are amazing.
  • #174
  • Sep 27, 2013 6:34pm Sep 27, 2013 6:34pm
Quoting smilee89
{quote} The thread may no longer updated, but I still trade with this strategy and make a profit. There is one big change coming soon - I will trade it automatic by EA. Tests are made and results are amazing.

i never use ea's. whatever changes are there make it manual.
  • #175
  • Last Post: Apr 17, 2014 3:21pm Apr 17, 2014 3:21pm
Quoting smilee89
{quote} The thread may no longer updated, but I still trade with this strategy and make a profit. There is one big change coming soon - I will trade it automatic by EA. Tests are made and results are amazing.
hello smilee89,

are you still trading with SMA system? How does it going, do you have good results?
regards lapras
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