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Attachments: Rags to Riches in 10 or 20 Trades - Simplicity at its finest
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Rags to Riches in 10 or 20 Trades - Simplicity at its finest

  • Post #661
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  • Edited Oct 8, 2013 7:56am Oct 7, 2013 7:48pm | Edited Oct 8, 2013 7:56am
Probability comes from a set of fixed variables.

The market and its participants variables are never fixed, therefore probability cannot apply to the markets.

I'm sorry to say that is the raw truth. Only SKILL applies to the markets.
Skill in recognizing the market patterns that the market makers trade off of.
Psychological skill, discipline, patience.. all of it has nothing to do with probabilities.


What's probable for one person may be improbable for another (skill difference).
That's not true probability. It has to be equal across the board, like in a casino
(although skill also effects probability in casino too, but it can be calculated... such as Blackjack, bad players vs good players vs card counters, you can calculate that if they play this hand vs this hand everytime this will be their overall %chance of winning)


Therefore if you cannot calculate the skill of a trader, you cannot calculate his probability.


You can use historical data to predict future probabilities but that's all it is is a prediction.
It's the self fulfilling prophecy of people trying to trade on "historical probabilities" that creates the success of those probabilities in the future.

Not the historical probabilities themself. But the self fullfilment of those by the traders.
That's why I believe markets are far more technically driven than fundamentally.

And that's why true market technicians seem to be able to predict monetary and fiscal policy before they even change. It's because the policies PURPOSELY FOLLOW the HARMONY and TECHNICAL PATTERNS of the markets.


To make a distortion between policy and how the technicals look on a chart, would create confusion and would dry up liquidity. Markets would be stupidly volatile from even the tiniest of orders..but not liquid. World trade would cease to function.
Be hopeful in a winning position, and fearful in a losing position.
Quoting Rag2RichesFX
Probability comes from a set of fixed variables. The market and its participants variables are never fixed, therefore probability cannot apply to the markets. I'm sorry to say that is the raw truth. Only SKILL applies to the markets. What's probable for one person may be improbable for another (skill difference). That's not true probability. It has to be equal across the board, like in a casino (although skill also effects probability in casino too, but it can be calculated... such as Blackjack, bad players vs good players vs card counters, you...
Rags2Riches, I just want to say that I am a big fan of yours and I love this thread and the work that you're doing. You may know that I've been following you for some time, and whether or not you are as good a trader as you portray, I think you have brought up an extremely relevant point of discussion and that is how to leverage your winning trades and shrink your losers, so much to the extent that you can change your life within potentially just 10 or 20 trades. I personally think this is relevant to every single trader here on Forex Factory regardless of your level of success, because the point is the same... How to really leverage your winners and shrink your losers, and this is the area that I've been struggling with, probably like most other traders here. I think that trading is as much about the "intangibles" like patience, discipline, and conviction in your trades than it is about constantly "being right". In my opinion, the only battle we are fighting is not one with the market itself but rather one with oneself. Knowing that each person is his or her own worst enemy in their own right, and simply doing what is necessary to combat this, like staying disciplined and following your system regardless of what you "think" or how you "feel" about the market. Although I disagree with your point about probability, I think that is a different point of discussion and one that I'm not entirely willing to get into as of right now.

I just wanted to send a quick shout out to you and let you know to keep up the good work! I am a veracious fan of yours and I too am working on this "Rags to Riches" goal of yours of turning a small investment of $100 or so into a small fortune. Although I have come close (I have turned $100 into $600 within 24 hours), I have yet to hit the jackpot and I am hoping to do so with your generous, mindful, and encouraging help.
Please check out my blog at https://from-zero-to-hero . net
Quoting Rag2RichesFX
{quote} $100 to $10,000, ive seen a few live accounts that have done that. Using a different strategy (scaling bigger into losers and adding to winners), but typically with the same stop loss. I've also seen an account go from $10k to $100k in 3 months. Also using a "scaling" into positions type strategy. Forexsaint has gone from $100 to $10,000 in 9 days. It's all about adding to winners on the big moves, constantly levering up (using up new margin from profits, which will of course decrease the amount of pips between market price and your BREAK...

hi R2R,

I've found @nanningbob's martingale grid calc spreadsheet (finder3-altered3.xls) but i'm unsure how to use it accurately. I understand the Martingale grid concept and simply want to map out a grid for my available margin and sizing constraints. Any previous posts here (or elsewhere) that explain the calculator usage? Looked around with google but nothing usable came up and thought you might be familiar with the grid calculation.

edit: I ended up making my own spreadsheet to calculate a grid and it works ok.
cryptocurrency everytime
Quoting Rag2RichesFX
{quote} $100 to $10,000, ive seen a few live accounts that have done that. Using a different strategy (scaling bigger into losers and adding to winners), but typically with the same stop loss. I've also seen an account go from $10k to $100k in 3 months. Also using a "scaling" into positions type strategy. Forexsaint has gone from $100 to $10,000 in 9 days. It's all about adding to winners on the big moves, constantly levering up (using up new margin from profits, which will of course decrease the amount of pips between market price and your BREAK...
R2R, thanks for thinking outside the box and helping us to take a step back from the retail traders cliques and mantras that are infused into our trading DNA as soon as you ask your first question on any Forex related forum by well meaning if sometimes run with the herd type traders. I've been one of them myself. I know all the trading no no's by heart....:-)

I've heard so often that averaging down losers is heresy. But is it? Not with proper risk controls as I think you are suggesting above. Choose you risk, say for this example 5% of trading capital and a 100 pip SL enter 5 trades risking 1% every 20 pips price goes against you. If your 100 pip SL is hit you lose you 5% risk. Its not reckless martingale never taking your losses and constantly doubling down until you blowup your account. Its thoughful MM and looking to enter in a zone and gaining an average better price. Sure there are compromises, in trading there always is. But in the simple example above the other trader who would never average down enters with 1 trade risking his 5% on a 100 pip SL and if price goes against him by 100 pips he too loses his 5%. Is one better than the other? Not necessarily and I'm not saying that, its just a different way of MM and its what suits your emotional needs and works out "long term" profitable that counts. Just don't be afraid to try something a little different from the usual churned out phrases that accompany the 95% of unprofitable traders.

I would appreciate you expanding on your own method of longer term trading and perhaps a more detailed example of what you mentioned above.......to quote
Quote
It's all about adding to winners on the big moves, constantly levering up (using up new margin from profits, which will of course decrease the amount of pips between market price and your BREAK EVEN point)..... until the pullback, then you cash out all of it and start to build increasingly bigger positions back into the main trend once again

Many thanks and I hope I'm not too off topic here.............
Quoting silverpuma
{quote} R2R, thanks for thinking outside the box and helping us to take a step back from the retail traders cliques and mantras that are infused into our trading DNA as soon as you ask your first question on any Forex related forum by well meaning if sometimes run with the herd type traders. I've been one of them myself. I know all the trading no no's by heart....:-) I've heard so often that averaging down losers is heresy. But is it? Not with proper risk controls as I think you are suggesting above. Choose you risk, say for this example 5% of trading...

hi silverpuma,

R2R will no doubt respond regarding your questions and remarks. Your post comparison of the textbook 5% capital risk vs a spread-out martingale got me thinking about trade entry. We tend to enter and exit trades with defined criteria - sometimes bending them a little to acommodate unique circumstances such as PA starts running past your price target or PA moving against you is obviously heading for a significant confluence level - so you pull your SL back in sympathy. Ideally, we want to develop the skill and method of spotting high probability opportunities whereby we enter with high confidence and a small SL. Yet, even veteran traders (and I mean the successful ones) point out that not every entry is a winner and that we make human mistakes - and those losses come with the teritory.

So, what i'm getting at is that a grid martingale method with defined risk and disciplined application is acceptable in my mind. It needs to balance with a good (and ever improving) method for spotting high reward trades to ensure efficiency (of time spent trading) and a compounding account balance - as outlined in these pages.
cryptocurrency everytime
Quoting venzen
{quote} hi silverpuma, R2R will no doubt respond regarding your questions and remarks. Your post comparison of the textbook 5% capital risk vs a spread-out martingale got me thinking about trade entry. We tend to enter and exit trades with defined criteria - sometimes bending them a little to acommodate unique circumstances such as PA starts running past your price target or PA moving against you is obviously heading for a significant confluence level - so you pull your SL back in sympathy. Ideally, we want to develop the skill and method of spotting...
I agree venzen! As you become better spotting your entry the "zones" get smaller and the RR better. Price so often retraces from our entries, that for me to load up (say 5% as our example) on the first entry may not be the best solution. For swing trades it seems reasonable to work within a carefully thought out zone but make sure your max risk is factored in and have the freedom to allow your trades to play out. Of course one of the compromises I hinted at above is that if price triggers your first entry (using the 5 x 1% example above) and goes straight in your favour you are only benefiting from the 1% whereas if price cuts straight through to your stop loss you incur the full 5% loss. So we need a way to maximize our winners and cut of losers. I'll stop with this thought as this is R2R thread and I want to learn from R2R and others, but a possible improvement I'm mulling over is a pip by pip trailing stop on all open positions so your losses are rarely a full loss. Still thinking these ideas through so don't follow me.....LOL
Quoting silverpuma
{quote} I agree venzen! As you become better spotting your entry the "zones" get smaller and the RR better. Price so often retraces from our entries, that for me to load up (say 5% as our example) on the first entry may not be the best solution. For swing trades it seems reasonable to work within a carefully thought out zone but make sure your max risk is factored in and have the freedom to allow your trades to play out. Of course one of the compromises I hinted at above is that if price triggers your first entry (using the 5 x 1% example above)...

puma,

there are a few things you mention that are also on my mind:

1) trades going against you. I don't know what it is but suddenly for the past 4 maybe 6 weeks i cannot hit an entry right. This is especially unfortunate given that i'm mainly trading gold, so the DD is cold-sweat stuff. Switching to a grid martingale has reduced the stress and i can actually sit through the trade without stomach cramps and 10 cups of coffee. And, yes, when price does go my direction from the first entry I feel like I'm riding with trainer wheels in the Tour de France...

2) Look Ma! No hands! The matter of maximizing a winner is the next challenge. A few weeks ago (before someone put the voodoo on me - or whatever happened) I would enter with max leverage max size and (with occasional drawdown) bag a large profit. Before that i was out there on my trainer wheels risking 5% on low leverage and the days turned into months. Then I decided to go large - found this thread at the same time - and did it at full volume for a few weeks which was exhilirating. Now, due to caution and a "sensible" martingale i'm back on those trainer wheels. It's sparing my account balance but i am questioning my progress... perhaps once Gold finishes it's corrective churning the opportunities will show themselves again.
cryptocurrency everytime
Quoting venzen
{quote} Now, due to caution and a "sensible" martingale i'm back on those trainer wheels. It's sparing my account balance but i am questioning my progress... perhaps once Gold finishes it's corrective churning the opportunities will show themselves again.
Very interesting and stimulating a number of thoughts and ideas. But as I said above I'm here to learn from R2R and others and since I'm no expert myself I'll shut up with my pondering on this thread! But what I may do later is start a thread with my fledgling ideas and perhaps we could further discuss these things there and help/learn from each other and those who think it worthwhile.....? Only a thought.
As a broker many years ago, it was my job to convince the people that the FOREX market was like this giant ATM machine just waiting to double and triple everyone's money. Now that I'm a trader who lost my first two accounts constantly "swinging for the fences," the slow and steady route is working much better for me.

The problem with this theory is that your risk management doesn't work. If you are trying to double your account on every trade you're spending a lot of time bumping up against margin limits. If you have a trade go against you and your stops are not in place correctly, it'll wipe out your whole account in a matter of seconds in a fast moving market (if you're trading the spot market). If you're trading the options on futures, then half your investment is automatically gone in a straddle (the safest way I know to trade the options on futures). You will need about a 100 pip move to double on every trade.

My experience this year is I am up 236% since April when my account went profitable. I was up as much as 480%, then I started thinking how easy it was, I took my eye off the market , and the dollar turned on me. The FOREX market is a great place to make some extra money and an outstanding return on your money, but I am highly skeptical of this trading strategy.

Doubling your $50 account balance with one trade? Seriously??
Quoting neelyfx
As a broker many years ago, it was my job to convince the people that the FOREX market was like this giant ATM machine just waiting to double and triple everyone's money. Now that I'm a trader who lost my first two accounts constantly "swinging for the fences," the slow and steady route is working much better for me. The problem with this theory is that your risk management doesn't work. If you are trying to double your account on every trade you're spending a lot of time bumping up against margin limits. If you have a trade go against you and...
Hey man, first of all, I hope you burn in hell RE: you're last "job"
Secondly, this is just a bit of fun, not a serious trading strategy or long term investment vehicle... Just like a punt at the races.

God still loves you so I hear
Time hides Nothing
Quoting CindyXXXX
{quote} Hey man, first of all, I hope you burn in hell RE: you're last "job"


Didn't want to post... but oh my .....
cant stop laughing
100 Fold Challenge->Interested? ->https://www.forexfactory.com/thread/32152
Easy, Tiger! I never got any accounts and never lost anyone's money. If I go to Hell when I die, it won't be for what I did as a FOREX broker. Lol
Quoting CindyXXXX
{quote} Hey man, first of all, I hope you burn in hell RE: you're last "job" Secondly, this is just a bit of fun, not a serious trading strategy or long term investment vehicle... Just like a punt at the races. God still loves you so I hear
I understand now. We Yanks are a little slow sometimes...or maybe just I am this morning.
Quoting neelyfx
Easy, Tiger! I never got any accounts and never lost anyone's money. If I go to Hell when I die, it won't be for what I did as a FOREX broker. Lol
haha...

Cindy slay brokers..
Time hides Nothing
Haha... who why and how developed this strategy? If you loose your very first two trades you are on street :-p
Very true iahmedz, if your life savings total 50$ and u blew it ur out
Quoting iahmedz
Haha... who why and how developed this strategy? If you loose your very first two trades you are on street :-p
Did you read the whole thread ? If so, you would known what is the purpose of this thread.

BTW, there's no trading strategy in this thread ...
MT4/MT5 EAs/Indicators/Alerts coder
I'm done with this. Have a great day everyone!
Quoting neelyfx
I'm done with this. Have a great day everyone!
Hey neely I was just messing around .. Nice day to you as well sir..
Time hides Nothing
Quoting uberteh
Very true iahmedz, if your life savings total 50$ and u blew it ur out
and lol
Time hides Nothing
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