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Why Simple is better in trading and Complex is not

  • #81
  • Nov 20, 2013 8:56am Nov 20, 2013 8:56am
Quoting cungchoi
Cannot argue with your post, TEB63. But: Is the first step - find the trend - the most tricky one? I mean how if you are near the reversal and don't even know? or how to know for sure?
If you're having trouble with finding a trend, this trader gave me a tip when I first started that worked pretty well: Pick the time frame you will be trading in, then go up 2 time frames see the trend, drop down to the next and see if trend continues, then drop down to your time frame checking to make sure trend is continuing, then drop down 1 lower than the time frame you want to trade and see if you still have the same trend. After a little practice it becomes second nature and pretty soon you can scan and see . Take it for what it's worth
Nobody ever went broke closing a trade in profit
  • #82
  • Nov 20, 2013 9:29am Nov 20, 2013 9:29am
Quoting TEB63
{quote} You know 33% winning is not great I think you can come up with systems that can give you 50% 05 66% with out to much study also if you are doing RRR 10 for 25 is this not a losing system? would you not need 10 for 30 (and would do you deal with spread slippage) I think a simple system has to have a positive RRR so at least 50% or a really high RRR rate just my 2cents
Thanks for your comment.

Say I lose twice (-20=-10x2) and win once (+25). I get +5 (spread not considered).

So, 33% of winning rate is, say, even.

Now, if I can keep at least 35% forever, I'm a winner forever. Then, I put 100 lots on every trade eventually.

This is my basic approach to trading/money management.

A paper thin winning rate can be a great edge in a long run if it is for sure. Blackjack card counters rely on less than 1% of advantage and win millions of $.

Well, like I said before, I'm in a minority in this forum. I understand most people here don't appreciate this kind of edge (paper thin advantage). They rather pursue an obvious big winning even if it comes around once in a while....
  • #83
  • Nov 20, 2013 9:48am Nov 20, 2013 9:48am
Quoting gp00053
{quote} If you're having trouble with finding a trend, this trader gave me a tip when I first started that worked pretty well: Pick the time frame you will be trading in, then go up 2 time frames see the trend, drop down to the next and see if trend continues, then drop down to your time frame checking to make sure trend is continuing, then drop down 1 lower than the time frame you want to trade and see if you still have the same trend. After a little practice it becomes second nature and pretty soon you can scan and see . Take it for what it's...

to add this is a used 50 sma see the 1st confirm on the 2nd traded on the 3rd
if you have different trends on 1st and 2nd do not trade
Attached Image (click to enlarge)
Click to Enlarge Name: trend.PNG Size: 54 KB
  • #84
  • Nov 20, 2013 9:50am Nov 20, 2013 9:50am
Quoting Forexgogo
{quote} Thanks for your comment. Say I lose twice (-20=-10x2) and win once (+25). I get +5 (spread not considered). So, 33% of winning rate is, say, even. Now, if I can keep at least 35% forever, I'm a winner forever. Then, I put 100 lots on every trade eventually. This is my basic approach to trading/money management. A paper thin winning rate can be a great edge in a long run if it is for sure. Blackjack card counters rely on less than 1% of advantage and win millions of $. Well, like I said before, I'm in a minority in this forum. I understand...

maybe but get it up to 40%
or make more then 2 pips on 3 trades
ie, even on the EurUsd
you are not making 5 pips but 2 pips - to cover the 3 trades
  • #85
  • Nov 20, 2013 9:55am Nov 20, 2013 9:55am
Quoting gp00053
{quote} If you're having trouble with finding a trend, this trader gave me a tip when I first started that worked pretty well: Pick the time frame you will be trading in, then go up 2 time frames see the trend, drop down to the next and see if trend continues, then drop down to your time frame checking to make sure trend is continuing, then drop down 1 lower than the time frame you want to trade and see if you still have the same trend. After a little practice it becomes second nature and pretty soon you can scan and see . Take it for what it's...
Let's say you trade 5m to go long.

4h, 1h, 15m, 5m and 1m all show bullish trend.

Do a back test on any pair with this combination and you will come up with a mixture of results.

In a few cases, the trend continues with a move, a lot of times no movement or erratic movement and lastly there's a trend reversal.

We're back to :

Quoting cungchoi
Cannot argue with your post, TEB63. But: Is the first step - find the trend - the most tricky one? I mean how if you are near the reversal and don't even know? or how to know for sure?
a) Most of the time the market do not move or make erratic moves.

b) Markets ding dong in a range some of the time.

c) Trends appear once in a while.

The fundamental point to consider is whether to trade;

1. continuation trend , or

2. trend reversal (catch a falling knife) in a -
a) range movement, or
b) trending movement
(the problem is how do you know whether it is going to be a) or b)).

One thing is certain though. We know the market has moved when it does move.

The question is how much does it move ?
Or when does it stop to reverse ?
And what do we do about it ?

Quoting cungchoi
I mean how if you are near the reversal and don't even know? or how to know for sure?
It's possible to know with reasonable certainty some trend reversals. The trick is to find out which ones. That means you don't know all the trend reversals, but there some trend reversals you can determine them accurately. To find out these trend reversals you need to do long hours of back test to confirm your results. The thing to look out for is in the details.
  • #86
  • Nov 20, 2013 10:09am Nov 20, 2013 10:09am
Quoting Forexgogo
{quote} This is my basic approach to trading/money management. A paper thin winning rate can be a great edge in a long run if it is for sure. Blackjack card counters rely on less than 1% of advantage and win millions of $. Well, like I said before, I'm in a minority in this forum. I understand most people here don't appreciate this kind of edge (paper thin advantage). They rather pursue an obvious big winning even if it comes around once in a while....
Do use this approach to money management because you're a newer trader and are not sure how to make bigger trades or don't have the confidence? The reason I ask is I came to trading being a full time poker player, and when I first started that was my approach; in out; small wins, like playing 10 tables of on line Holdem, personally I don't think black jack is the right example, but anyway that's not the point. I was talking with a full time trader and I told him my approach to trading which was basically the same as yours, and he told me keep learning and building my skills and that my approach would change with confidence . He was right and it did. That's why I'm asking you about your approach.
Nobody ever went broke closing a trade in profit
  • #87
  • Nov 20, 2013 10:10am Nov 20, 2013 10:10am
Quoting cungchoi
Cannot argue with your post, TEB63. But: Is the first step - find the trend - the most tricky one? I mean how if you are near the reversal and don't even know? or how to know for sure?
IMO, trends are not a definite thing. Say, 100 traders define more than 5 different trends with more than 100 of trend lines.

Here's my way to see trends. Put 3 of EMA -- red - ema48 yellow - ema96, green - ema200.
Primary trend is ema 200.
Trend's strength is the width of red and green.

Now it is you to decide where to enter

Hope it helps and Good luck
Attached Image (click to enlarge)
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  • #88
  • Nov 20, 2013 10:11am Nov 20, 2013 10:11am
Quoting skyway
{quote} Let's say you trade 5m to go long. 4h, 1h, 15m, 5m and 1m all show bullish trend. Do a back test on any pair with this combination and you will come up with a mixture of results. In a few cases, the trend continues with a move, a lot of times no movement or erratic movement and lastly there's a trend reversal. We're back to : {quote} a) Most of the time the market do not move or make erratic moves. b) Markets ding dong in a range some of the time. c) Trends appear once in a while. The fundamental point to consider is whether to trade;...

I think the issue is you are trading on the 5 mins not the system
do week, day and 4 hour and it will work
(make sure the 1st 2 - esp the 2nd one has a good angle)
I main you will be right more then 50% of the time more like 70%
cheers
  • #89
  • Nov 20, 2013 10:12am Nov 20, 2013 10:12am
Quoting Forexgogo
{quote} IMO, trends are not a definite thing. Say, 100 traders define more than 5 different trends with more than 100 of trend lines. Here's my way to see trends. Put 3 of EMA -- red - ema48 yellow - ema96, green - ema200. Primary trend is ema 200. Trend's strength is the width of red and green. Now it is you to decide where to enter Hope it helps and Good luck {image}

you are adding trend strength !
very Good stuff!!
  • #90
  • Nov 20, 2013 10:15am Nov 20, 2013 10:15am
Quoting Forexgogo
{quote} Thanks for your comment. Say I lose twice (-20=-10x2) and win once (+25). I get +5 (spread not considered). So, 33% of winning rate is, say, even. Now, if I can keep at least 35% forever, I'm a winner forever. Then, I put 100 lots on every trade eventually. This is my basic approach to trading/money management. A paper thin winning rate can be a great edge in a long run if it is for sure. Blackjack card counters rely on less than 1% of advantage and win millions of $. Well, like I said before, I'm in a minority in this forum. I understand...
Let me take it further.

Quoting Forexgogo;
{quote}So far, I've been able to keep my winning rate more than 33% in each week

This means that you can achieve 33%/wk x 4weeks = 132%/mth returns


That'll give 264% returns in 2 months. Which means you can double up your lot size in your 3rd month and repeat that cycle.


That'll only happen if -


1. you stick to your game plan, and


2. the market behaves in the manner that you it projected


You wish these cycles come faster and the answer lies in increasing the number of your pairs and/or trade lower TFs.
  • #91
  • Nov 20, 2013 10:18am Nov 20, 2013 10:18am
Quoting skyway
{quote} Let me take it further. {quote} This means that you can achieve 33%/wk x 4weeks = 132%/mth returns That'll give 264% returns in 2 months. Which means you can double up your lot size in your 3rd month and repeat that cycle. That'll only happen if - 1. you stick to your game plan, and 2. the market behaves in the manner that you it projected You wish these cycles come faster and the answer lies in increasing the number of your pairs and/or trade lower TFs.

nope it will not happen

again slippage and spread will kill you

regards
  • #92
  • Nov 20, 2013 10:23am Nov 20, 2013 10:23am
Quoting gp00053
{quote} I was talking with a full time trader and I told him my approach to trading which was basically the same as yours, and he told me keep learning and building my skills and that my approach would change with confidence . He was right and it did.
I'm a full-time trader (independent), and have several trading ways.

I do conventional trading (SR, fib, big numbers), too (on 1h and 4h).

I do the "small win" approach on 15m.

Recently, I do the latter much more b/c it's easy and much less stressful.

Frankly, I just want to enjoy my life more, not grinding my nerve.

Again, it all depends on your philosophy.

If your friend and you are right about your way of trading, that all matters.
  • #93
  • Nov 20, 2013 10:25am Nov 20, 2013 10:25am
Quoting TEB63
{quote} nope it will not happen again slippage and spread will kill you regards
Forexgogo has accounted for slippage and spread when he put up this 33%/week figure.
  • #94
  • Nov 20, 2013 10:26am Nov 20, 2013 10:26am
Quoting skyway
{quote} Let's say you trade 5m to go long. 4h, 1h, 15m, 5m and 1m all show bullish trend. Do a back test on any pair with this combination and you will come up with a mixture of results. In a few cases, the trend continues with a move, a lot of times no movement or erratic movement and lastly there's a trend reversal.
I understand what you're saying but just a couple of corrections. 1. If you're trading the 5m you would check only the 15m 30m not 1h+
2. In my post, I was only referring to establishing the trend, as his question was only to do with trend not taking a trade.
Before taking a trade I want trend, momentum, cycle and verify entries, sl and tp with support and resistance. But again his question was to do with trend
Nobody ever went broke closing a trade in profit
  • #95
  • Nov 20, 2013 10:30am Nov 20, 2013 10:30am
Quoting skyway
This means that you can achieve 33%/wk x 4weeks = 132%/mth returns That'll give 264% returns in 2 months.
I wish...

"33% each week" means if you trade 100 times in a week, you win 34 times and lose 66 times.

So, in 2 month (8weeks) you win 272 and lose 528 -- the winning rate remains the same 33%.
  • #96
  • Nov 20, 2013 10:32am Nov 20, 2013 10:32am
Quoting Forexgogo
{quote} I'm a full-time trader (independent), and have several trading ways. I do conventional trading (SR, fib, big numbers), too (on 1h and 4h). I do the "small win" approach on 15m. Recently, I do the latter much more b/c it's easy and much less stressful. Frankly, I just want to enjoy my life more, not grinding my nerve. Again, it all depends on your philosophy. If your friend and you are right about your way of trading, that all matters.
I can speak for him in this matter for sure. He and I would agree with you 1000 percent. My simple forex philosophy is "everything depends" and if you take the time to study and learn you will find "there is more than one way to skin a cat."
Nobody ever went broke closing a trade in profit
  • #97
  • Nov 20, 2013 10:36am Nov 20, 2013 10:36am
Quoting TEB63
{quote} I think the issue is you are trading on the 5 mins not the system do week, day and 4 hour and it will work (make sure the 1st 2 - esp the 2nd one has a good angle) I main you will be right more then 50% of the time more like 70% cheers
I've 2 problems with this week, day and 4h setup.

1. a) How often does this happen in one week ? How many trades does it give you in one week ?

b) How many of them turn out winners and how many losers?

c) How many pairs must I look at to find that ideal trade scenario.
Quoting TEB63
{quote}(make sure the 1st 2 - esp the 2nd one has a good angle)
2. What is the S/L for this higher TFs ? 30-50pips ?
  • #98
  • Nov 20, 2013 11:05am Nov 20, 2013 11:05am
Quoting Forexgogo
{quote} I wish... "33% each week" means if you trade 100 times in a week, you win 34 times and lose 66 times. So, in 2 month (8weeks) you win 272 and lose 528 -- the winning rate remains the same 33%.
For a 33% win/loss ratio, you need a fairly large profit/loss ratio, ie. greater than 1:2(breakeven) to make any reasonable returns.
  • #99
  • Nov 20, 2013 11:10am Nov 20, 2013 11:10am
Quoting TEB63
I have 50 100 200 EMA & SMA on this chart 4 hour chart - what do they say about where price is - I say very little! basically they are useless other then for a general since of trend what do others think? and I think MA are the best of the tools lol {image}
Two words: MA bounces.....
Simple recipe: 1. Choose a "reactive MA" (i.e. one that many people monitor)
2. Wait for price to approach MA
3. If price gives indication that it bounces from it, enter with the flow
4. SL/TP depend on MA, TF, etc...
Attached Image (click to enlarge)
Click to Enlarge Name: TEB_chart.jpg Size: 240 KB
  • #100
  • Nov 20, 2013 12:44pm Nov 20, 2013 12:44pm
Quoting kostas1
{quote} Two words: MA bounces..... Simple recipe: 1. Choose a "reactive MA" (i.e. one that many people monitor) 2. Wait for price to approach MA 3. If price gives indication that it bounces from it, enter with the flow 4. SL/TP depend on MA, TF, etc... {image}
I am a believer of EMA200 (1h, 4h, day, and week)
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