Multi-Lot Multi-Timeframe Position trading

Greetings to all. To those who know me, welcome to my new thread. As you may know, I formerly had a thread on another Forum, but fell out with the Admin there. I've been actively trading for many years and I learn new things almost every day. I definitely believe many minds are better than one and I hope we can all become better traders by working together. I'll specifically try to avoid any form of drama here and just focus on trading issues. This will be a positive psychological zone. Any negative comments will simply be ignored and not answered. Anyone of any level of experience is free to discuss trading issues here. I'll describe my current trading method, and post updates as it is updated for changing markets.

With that said, let's dive right into it. I'd like to outline my trading method and answer any questions about it. Then we should be able to work together to pick out the best trades for the participants of this thread.

First of all, mine is a trend following method. Generally, one must choose one of two beliefs. Either that trends exist, or they don't. If they don't, there is no mathematical way to make a long term profit trading. After the spread cost, a random walk of price will always produce a negative expectancy. If that is your belief, there is really no purpose to your being here. Another belief is that most of the market moves are random, but there are underlying trends that can be traded for profit. That is the jumping off point for my trading method.

If there are trends, then they could exist on any or all time frames at the same time. After all, even though there may be 9 timeframes on your platform, they all really display the same single price movement, only looked at with different levels of granularity. When people ask me what timeframe I trade, I answer all of them. That will seem to be a very reasonable answer as we move forward. For the moment, let's just assume that trends exist on all timeframes and our goal is to get in them and ride them for as long as possible for as much profit as possible.

So I'll give a quick example of how this works. Suppose every timeframe from 1 Minute to 1 Month is going up at the same time. That could be some sort of random event with no significance at all, or it could be caused by an underlying trend. If it's just a random event, you have about the same probability of winning a reasonable trade as losing it, ignoring the negative expectancy imposed upon your trading by the spread cost. If however there is some sort of underlying trend at work, it would stand to reason that an appropriate long trade should have a better probability of winning than losing. That slight trend bias is what my trading seeks to exploit. All nine timeframes don't have to be moving in the same direction at the same time to enter, but usually most will be. So, for another example, suppose all the short timeframes are going up, say 1M, 5M, 15M, 30M. Suppose the H1 is going down. Suppose all the higher timeframes are going up, the H4, Daily, Weekly and Monthly. In that situation I'd say the shorter timeframes must have been going down at some previous time to drive down the H1, but they have now already turned back up to rejoin the direction of the longer timeframes. More often than not, I'd expect the H1 to turn up soon as well. Of course, I'll not enter against the direction of the market, but if H1 turns up I'd feel comfortable placing a trade. That's generally what I mean by multi-timeframe analysis. I'll simplify that later.

When I say position trading, I simply mean that I will take a position in a particular pair that agrees with my analysis and I will hold that position as long as there is some potential for additional profit. I may hold it for a very short time and exit with a small loss, or hold it for weeks or months if the market allows. I have no preset time limit on my trades. Of course, no one ever got rich by taking huge losses, at least that I am aware of, so I'll often be exiting with small losses or around breakeven. Breakeven trades, small losses, usually of less than 25 pips, and small wins of about the same size make up 80% or more of my trading. The goal of my trading is to make small losses, breakevens and small wins slightly profitable after spread costs. After that, a few huge wins retained for a very long time will generate a very comfortable living. The reason to hold good trades a long time is that the longer the trade is held, the more time the underlying trend has to affect the price. So, that said, most of my trades will look almost like scalping or interday trading, but they are really just trying to establish longer term trades that can fund my lifestyle. Most will end with small losses, breakevens, or slightly larger small wins. The few that last weeks or months were really the goal all along. Of course it would be best if the very small trades could make a profit on their own. After all, losing is a very difficult way to win. But we'll never forget that our real goal is to take that wonderful trade that will make us hundreds or even thousands of pips.

The final element of this trading method is what I call multi-lot. You can call it multi-leg or pyramid if you like. The philosophy behind it is that nothing succeeds like success. If a trade is winning, add to it. As long as it keeps winning, we'll keep adding. We can't win by losing, so if it turns, we'll have to take some profits. It will always turn eventually, so the goal is to extract as much profit on the turns as possible, while still staying in the longer term trends as long as possible. There is a method to that and we'll discuss it going forward.

Since I'll be trading about 24 pairs at the same time, and some of those pairs will have many lots working at the same time, money management is of critical importance. I never use more than 1/2 of my available margin so I never face a margin call. I'd strongly suggest that anyone who wants to try this style of trading do it with either a demo account or a micro lot account at a penny a pip. If it works you can always fund a larger account and if it's just not for you you shouldn't risk enough to endanger your lifestyle.

This has been the broad brush overview of what I am setting out to accomplish here. If anyone has any questions, I'll do my best to answer them over the next day or so. If not, we'll move on to setting up some trades.

Too much text. I am a big fan of multiple time frames, but try to support your argument with some screenshots to entice people to come to this thread.

The only reason I came here is because I saw "Multi Timeframe" in the title.

Other than that, nice work, and good luck!

If someone has a comment or question, I'll happily address it, otherwise I'll just move on.

Trading is really a rather simple activity. We only do two things, enter and exit. Everything else is done for us by the market. Entries will always be similar in that we will attempt to enter a few trades a day on pairs that are steadily trending. Since it's generally agreed that only about half the pairs trend at any time, about 10 entries would be the maximum. I'll go to 12 or so in a very hot market, but more entries won't earn more pips. Better entries will earn the profit. When we get a good entry we'll look for opportunities to pyramid up the lots on that pair and increase it's profits. It's best to enter just a few pairs each day or two. That way, if there is a major market reversal like sometimes happens after a big news announcement, only a few recent entries get hit by it. Trades that have been running much longer and that are hundreds of pips ahead easily ride out those little bumps. Right at this moment, the pairs GCad long and EN, AN, EG short are all trending in most timeframes. This method starts exactly like a scalping or interday trade where we want to either make a small profit or break even on the initial entry. I've entered all 4 of those trades according to my entry rules. If you have your own entry method for shorter term trades and it works well for you I'd suggest you use that. If you don't have any experience with such things, there are many short term entry methods discussed elsewhere on this forum and I suggest you research them and pick one that suits your temperaments. The main point here is we want to enter pairs that are trending well on the longer timeframes, since we want to find trades we can ride to fantastic profits over a very long period of time. Any pair that satisfies all the entry criteria of your shorter term method and is trending well on the longer timeframes is good for a try. I enter with a 50 pip stop loss but I almost never allow a trade to go that far against me before I can see it isn't working right and exit. Typically my exits for a loss are only 15 to 25 pips against me, or as soon as I can see the trade isn't working. If the trade works, we'll want to set the stop loss to break even when we are in the range of 50 to 75 pips ahead. Good trades will usually go right into profit. Bad ones go right into loss. Fight for every pip and never let one go any further against you than you must to see that it isn't working as you planned.

My GCad long is now up 46 pips and It's near my bedtime so I'm moving the sl to -16 pips, just below a previous support and also just below the H1 100 sma. I like putting stops below support/resistance lines, but fiddling with stops never made anybody rich, so don't fret too much over it. It might stop out overnight, but 16 pips won't change my life one way or the other, so no problem. My other three trades are positive from 22 to 42 pips. That's normaly too tight to move stops to BE, but since I'll be sleeping, I don't want to risk too much, so I'll move all the stops to below some reasonable resistance lines between -15 and BE or so to reduce risk overnight. That done, I'll sleep and let the market work it's magic.

Good Comments. I'll throw up some screenshots tomorrow. Thanks!

Sorry for the swift comments, that is just my opinion of course. I prefer to see images over text.

And I particularly like to see everyone's different systems they use to trade... or at least a part of it. I find charts fascinating, how could you not

Sorry again, I probably should have read the first three posts before I posted, but I just read them and I see that you are a trend follower. I agree with you that is probably where traders make most of their money, but you can definitely predict ranging markets as well. You just need to use the proper tools... of course!

I'm a fan of trading all market conditions -- anytime you think you can make more than the spread -- but I'm a short-term trader and aggressive at that. So I'd take my advice with a grain of salt

I agree with a lot of your points, but also believe there's room for improvement in the sense that you have outlined it as a "trending only" system. Here's a screenshot of my system, if it helps. It is MTF-approved, as you can see...

Hello Graviton,

Very nice concept and thanks for sharing. I look forward to the charts and whatever else you are willing to share with us.

very nice introduction to the thread, essence of the every trend following system.... given nice and clear

If you took those trades, you should be nicely ahead now. Of course, that wont always be the case. Many attempts will fail or end near breakeven. Knowing that to be the case, we might want to put a small test trade in for the first entry. So if you normally trade standard lot size, it's not unreasonable to put in 0.2 lot for the first entry. Then if it's successful, put in 0.5 for the second, and if it's successful put on your standard 1.0 lot for the third. Remember that the probabilities of winning any single trade over a very short period of time aren't good due to the negative expectation imposed on your trades by the spread. To change those odds, we must hold the trade long enough for the trend to affect the outcome. How long? The longer the better. Weeks would even up the odds, months would put them in our favor.

I was asked to show a chart, so here's one where we are right now on EN short.

First entry was around 1.6475 with a stop of about 50 pips, just above a recent resistance.
That trade went to +46 pips before bedtime.
That First entry Stop was moved down to BE + a few pips just before bedtime.

A Second Entry Has now been made, also with a stop loss of about 50 pips.

That stop loss will also be moved to near BE once that lot is somewhere between 50 and 75 pips ahead.

Additional lots will then be added at about 75 to 100 pips apart until price turns and stops will be moved to BE when the trade is ahead 50 to 75 pips.

It's a simple construction. In this pic I have just shown a simple 3EMA X 10SMA moving average cross to make it clear that the trend on this strongly down and in fact it has been for several days.

It's pretty clear the price went down to a support and bounced off it. The support is shown on the chart over to the very left hand side. If price penetrates that support and continues over the next few hours, we have the very beginnings of a good trade. if it bounces off, I can exit both trades for a nice profit to cover a failed entry later.

If you look at the other timeframes for this EN, you'll see the monthly, weekly, daily and H1 are all strongly trending down. That helps even the odds up a bit on this trade. Now, I apply infinite patience, which is about all we can do while waiting for the market to make a decision on your last move. The market either approves of this move or it rejects it. if it approves the second stop loss will wind up moved to near BE and I'll prepare to make a third entry, but I'll want to start to space these out so a little retracement doesn't take them all out. About 100 pip spacing would be good for the third entry.

My goal is to just make a few entries today. I don't want to make too many entries on any single day lest a minor retracement put them all in jeopardy. This is a very long term trading strategy. It will take weeks to set this thing up properly and there will be many entries stacked on the best trades, but since stop loss is always moved to near BE before a new entry is made, no pair ever risks more than 50 pips. In fact, initial entries usually only risk 15 to 25 pips. Typically I can see that a trade isn't working by then and just exit it for a very small loss. The goal is to fight for every single pip. Small losses are to be made up with small gains so the small trades make a small profit, just like scalping or interday trading. The large gains are to be retained for as long as possible to let the trend work on them over time. With a good 4 trades on, there is a good chance one of these 4 will be retained for weeks, maybe longer.

I've added second lots to pairs that were moving nicely now and moved the first entry stop losses to near BE. I'm also carrying a couple trades from earlier in the week for small gains. Total pips for this basket of trades is about +380 now. That's a good start, but we are looking for much more over the longer term.

As I said earlier, we only need to do two things in trading, enter and exit. The market does all the heavy lifting. There will be many hours, days, weeks of just waiting on the market to move our trades. This is not meant to be entertaining or exciting. In fact, if you are excited by it you are probably over-trading. Good trading should be a little boring, like, Ho Hum, just made another 400 pips. Yawn. I'll get a sandwich and see what else happens.

Entries are simple as they are always the same. We want our entries to go quickly in our favor. If they don't, we want to keep the losses as small as possible. You can use whatever short term entry method that works well for you. I simply enter on momentum in my favor and breakouts in the direction of my trade. The only real requirement is that all the longer term trends are in your favor, since setting up longer term trades is the actual goal. There is no need spending endless hours trying to perfect the Holy Grail of entry methods. If only a few more than half of our trades go in our favor right after entry, we can depend on the trend to move some of those to great profit.

Exits are more important since that is where profit is made. They are also more complex. While there is only one reason to enter, i.e. all our entry criteria are satisfied, there are many reasons to exit.
First of all, if a trade goes against us right after entry, we have to consider that we may have picked a bad spot to enter. I mean, that's kind of obvious if it didn't go in our favor right away, right? We never let a small bad decision turn into a big bad decision. We'll exit with a small loss and try again later today or on another day. If I try twice to get a trade on and fail both times, it's obvious something isn't working and I'll move to another pair. I scan 24 pairs, so there is always something else I can do. There is no need to turn 2 failures into 3. As they say, your first loss is the best one. Not to say it's good, but after that first one, they get worse and worse.

So, the first reason to exit is the trade goes against us right away. Cut those losses very short so they can easily be made up for with small wins later.

The second reason to exit is price reversed and came back and hit a stop loss previously moved to BE. This will happen a lot just due to market volatility and there is nothing that can be done about it. It doesn't really matter though since there is no loss involved. We just ignore all BE exits as they don't affect us one way or the other. Expect a lot of them but don't spend any time trying to fix them. There is nothing there to fix.

It's the third reason to exit that really gets interesting. There, we have several lots on, say 2 or more, and price starts to reverse. OMG, we are we are losing money! What do we do? DON'T PANIC. There is a simple way out with a profit. In fact, this way out pays for all the failed entries in the first exits and leaves profits to spare.

So, say we put a first lot on and it went to +60. We moved the sl to BE and put a second lot on and it went to +75. We moved the Stoploss to BE and put a third lot on. Price reverses and we start to lose. We simply exit the 2nd and 3rd trades for a combined profit that would cover a failed entry that we have made in the past, or will make in the future. We were up +75 on the 2nd trade when we put the third lot on, so if the two of them drop 25 pips, that's giving back 50 pips, but there is still 25 pips profit on those two lots combined. We can exit them both for that 25 pips and it will cover a failed entry attempt that we made earlier or will make later. Meanwhile, the first lot remains on. There is no need to do anything with it as it is set to BE and can't create a loss. About half the time it will exit at BE. There is nothing to fix there. About half the time it will turn back up to rejoin the longer term prevailing trend. If price again goes above where the second lot was originally put on, we can re-enter and start the process over again. The point is, once you have two or more lots on, you should never have to take a loss. Once you have three or more on, you should never have to take a loss and you can let your best trades continue to run for more profits by exiting 2 at a time as necessary to never take a loss.

I'll answer any questions on this if there are any since it is the heart of making this thing work.

I have a total of 9 lots trading now on 6 pairs. That's overly aggressive since I've only been trading this basket for two days. I'm up +300 pips at the moment, but I need to slow down on taking new trades and adding additional lots to existing ones. I'll tighten up on my entry criteria now and try to get back to my trading plan of only adding a few trades every day or two.

No problem Smash. If you are successful at short term trading, then you already have the tricky part of this figured out, entering trades that quickly go in your favor. Entering this is just exactly like your short term trading. The only difference is you only enter trades where the long term trends agree with your trade direction, and you let only the best of those trades continue to run until they are several hundred pips ahead. Your comments are welcome and appreciated.