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Building an equity millipede

  • #6,261
  • Mar 29, 2014 6:58am Mar 29, 2014 6:58am
Quoting pullice
{quote} Yonseo, if I may ask what is your your definition of a "small account", What would be the minimum to build a millepede?
Hi pullice,

My definition of "small account" is an account size where your ENTRY has no significant impact on the market. Good question though since we cannot draw a fine line to define what is big and what is small. For example 1k may be small to a millionaire but it is alot to a high school student.

As for minimum size to build a milipede, you can build milipedes on any small account size. The question comes down to approximately how much would you like to make a year on average, in light of your personal stats and available capital.

Compare a 10k account holder making 50~60% annual returns compared to a 1000k account holder making 20~30%. The latter makes more and takes less risk relative to his or her account size. The author of this thread traded accounts of 6 figures and had constant 6~7 figure cashflow coming in from other business based ventures. That information alone explain why position trading is difficult psychologically for most retail traders.
  • #6,262
  • Mar 29, 2014 7:10am Mar 29, 2014 7:10am
Quoting bluefish
{quote} Would you care to elaborate on that a bit more, please? I am interested in the "mathematically" part.
60minuteman made a claim that "mathematically position trading is more profitable" is a fact. I will leave it up to him to clarify this further.
Until then he is equally guilty of the so called "cognitive bias"

Profit in dollars, profit in pips, profit in relation to time, size of risk per trade and so forth are all relevant factors where numbers are involved. Hence no math has been twisted as 60minuteman seems to claim.

It comes down to common sense. If a short term trader turns 1k into 10k within 1 year and a position trader turns 1k into 2k within 1 year, then who is more profitable mathematically?
  • #6,263
  • Mar 29, 2014 7:23am Mar 29, 2014 7:23am
Quoting yonseo
{quote} 60minuteman made a claim that "mathematically position trading is more profitable" is a fact. I will leave it up to him to clarify this further. Until then he is equally guilty of the so called "cognitive bias" Profit in dollars, profit in pips, profit in relation to time, size of risk per trade and so forth are all relevant factors where numbers are involved. Hence no math has been twisted as 60minuteman seems to claim. It comes down to common sense. If a short term trader turns 1k into 10k within 1 year and a position trader turns 1k into...
I can see we have different opinions, but this is a thread for people who want to, or are interested in position trading so let's keep it on that subject.
tradewith60
  • #6,264
  • Mar 29, 2014 7:29am Mar 29, 2014 7:29am
There was a trader on FF called Trader888 who was a trader for various large banks, his posts are well worth a read..

http://www.forexfactory.com/trader888
tradewith60
  • #6,265
  • Mar 29, 2014 7:30am Mar 29, 2014 7:30am
Hello everyone !

I have a question that is bothering me for weeks now, maybe someone can give a an extra neuron or 2

Which scenario seems to have the advantage here:

1. Follow every signal on the Daily by drilling down to the 1H and finding a sharper entry. No matter if it's long or short, not matter what positions you already have. Without having a bias and waiting to see how things develop. Things will become clear naturally like G said.
Daily decide long/short > drill down to 1H and enter

2. Have a monthly bias, follow only Daily signals in direction of the monthly bias with a sharper entry on the 1H.
Monthly decide long/short > drill down to Daily > drill down to 1H and enter

G used bias but than again he opened long and short on the same pair at the same time .. bias is used to decide if you are rather short or long, but if you take both side anyway than why having a higher timeframe bias .. it's kind of contradictory to me
Don’t ever let someone tell you that you can’t do something.
  • #6,266
  • Mar 29, 2014 7:32am Mar 29, 2014 7:32am
also this post on no brainer trades, look at the relationship between winning and profit, even without adding positions if you can aim for great RR how it affects profit...

http://www.nobrainertrades.com/2010/...placement.html
tradewith60
  • #6,267
  • Mar 29, 2014 7:33am Mar 29, 2014 7:33am

Quoting 60minuteman
{quote} I can see we have different opinions, but this is a thread for people who want to, or are interested in position trading so let's keep it on that subject.

Yes and people are also interested in the pros and cons of position trading. One way to do this is compare a long term approach to a short term approach.

Remember you made the initial claim about the so called "mathematical probability" so until you clarify exactly how position trading is more profitable mathematically, I will simply take your last post as a concession on your part regarding this issue since no attempt seems to have been made on your part to support your claim mathematically.

You also made the above statements:

"Simple and effective position trading - no millions needed and always more profitable then getting in and out of the trend."

"Don't let anyone tell you it can't be done, most people lose trading intra-day with small RR...that is a fact."

"Don't let someone elses opinion twist the math based on their cognitive bias "

If you are referring to me in these instance, please don't quote me out of context. You are commiting the "strawman fallacy" by doing so.
  • #6,268
  • Mar 29, 2014 7:37am Mar 29, 2014 7:37am
Quoting yonseo
{quote} Yes and people are also interested in the pros and cons of position trading. One way to do this is compare a long term approach to a short term approach. Remember you made the initial claim about the so called "mathematical probability" so until you clarify exactly how position trading is more profitable mathematically, I will simply take your last post as a concession on your part regarding this issue since no attempt seems to have been made on your part to support your claim mathematically. You also made the above statements: "Simple and...
mmm I don't think anyone is interested, but again, thanks for your opinion.
tradewith60
  • #6,269
  • Mar 29, 2014 7:45am Mar 29, 2014 7:45am
Quoting Armacom
Hello everyone ! I have a question that is bothering me for weeks now, maybe someone can give a an extra neuron or 2 Which scenario seems to have the advantage here: 1. Follow every signal on the Daily by drilling down to the 1H and finding a sharper entry. No matter if it's long or short, not matter what positions you already have. Without having a bias and waiting to see how things develop. Things will become clear naturally like G said. Daily decide long/short > drill down to 1H and enter 2. Have a monthly bias, follow only Daily signals...
Hi Armacom,

Good questions. The most direct answer is the method that works better for YOU is the most advantageous. If you plan to build positions long term, either method should get you positions surviving the bigger trend.

To answer your other question regarding probing both directions, even if the monthly trend was currently up, it is up to the market to REVERSE or CONTINUE at its own will which means if the move continues up then you have more buy positions stacked in the direction of the trend and if the price reverses then your new sell positions might end up becoming the biggest winners if the monthly direction does in did change over the course of next few months. Only by probing both ways, you will grab opportunities in both scenarios.
  • #6,270
  • Mar 29, 2014 7:47am Mar 29, 2014 7:47am
Quoting Armacom
Hello everyone ! I have a question that is bothering me for weeks now, maybe someone can give a an extra neuron or 2 Which scenario seems to have the advantage here: 1. Follow every signal on the Daily by drilling down to the 1H and finding a sharper entry. No matter if it's long or short, not matter what positions you already have. Without having a bias and waiting to see how things develop. Things will become clear naturally like G said. Daily decide long/short > drill down to 1H and enter 2. Have a monthly bias, follow only Daily signals...
Hi Armacom...

In my group of traders half of us trade with bias and half don't, same strategy otherwise... both have pro's and cons and both's results are reliant on what the market decides.... in the group it seems most have made their decsions on the psychological results of trading the two options.... some just find trading with bias easier..

Ultimately being flexible will be the best solution but we all need differing amounts of structure to trade profitably... imo
tradewith60
  • #6,271
  • Mar 29, 2014 8:00am Mar 29, 2014 8:00am
Thank you both for the answers, very clear and helpfull !

What I like at trading both directions and not using a bias is that it's one less assumtion to make. I think that the less assumptions we have to make the better it is, because there is one less variable to be wrong about
Anyway thanks a lot !
Don’t ever let someone tell you that you can’t do something.
  • #6,272
  • Mar 29, 2014 8:24am Mar 29, 2014 8:24am
Quoting Armacom
Thank you both for the answers, very clear and helpfull ! What I like at trading both directions and not using a bias is that it's one less assumtion to make. I think that the less assumptions we have to make the better it is, because there is one less variable to be wrong about Anyway thanks a lot !
also if you are using bias based on something like a moving average that your bias will change also but just not as quick - again there are pros and cons to that
tradewith60
  • #6,273
  • Mar 29, 2014 8:35am Mar 29, 2014 8:35am
The easy part about using a moving average is that it's more often than not a black or white situation. It's above/under it or touching. But it's a fairly blunt tool i have the impression. When using candle formations it's harder both when done correctly a more exact tool Wasn't G using the open of the day as a filter or am I mistaken
Don’t ever let someone tell you that you can’t do something.
  • #6,274
  • Mar 29, 2014 8:39am Mar 29, 2014 8:39am
There was a trader called Nikita on the babypips forum if I remember correctly who used the simple principle of 'monkey see, monkey do' principle. If yesterday was a buy day than today is too and vice versa .. Seemed to basic at the time I read it, but after the past months of enlightment I can see the possible benefit
Don’t ever let someone tell you that you can’t do something.
  • #6,275
  • Mar 29, 2014 9:42am Mar 29, 2014 9:42am
Quoting Armacom
There was a trader called Nikita on the babypips forum if I remember correctly who used the simple principle of 'monkey see, monkey do' principle. If yesterday was a buy day than today is too and vice versa .. Seemed to basic at the time I read it, but after the past months of enlightment I can see the possible benefit
We have done so much testing on these issues, bias, TF's, stop size etc etc - that we came to the conclusion that as long as your approach insures you get the big wins then the rest is just shifting sands, one modification will reduce losses but increase the size of the losses etc etc.

For instance, here are comparisons of a no bias position trading strategy using H1 and M15 - you would think M15 would have less risk and therefore greater profits - but in fact, the only real difference is more time needed to manage the trades.

Attached Image (click to enlarge)
Click to Enlarge Name: Screen Shot 2014-03-29 at 14.41.09.png Size: 312 KB
tradewith60
  • #6,276
  • Mar 29, 2014 9:57am Mar 29, 2014 9:57am
Quoting 60minuteman
{quote} We have done so much testing on these issues, bias, TF's, stop size etc etc. {image}
Thank you so much for sharing !
I currently writing my thesis and it's about developing and testing a 'naked' trend following system. Once done (juin) I can share my results if you like :nerd:

Ps. Did you mean what you said about Merlin ? You got me entrigued
Don’t ever let someone tell you that you can’t do something.
  • #6,277
  • Mar 29, 2014 10:27am Mar 29, 2014 10:27am
Quoting Armacom
{quote} Thank you so much for sharing ! I currently writing my thesis and it's about developing and testing a 'naked' trend following system. Once done (juin) I can share my results if you like :nerd: Ps. Did you mean what you said about Merlin ? You got me entrigued
Would be great to see your results.... I have lots and lots of position trading test results, I should point out they were done by a friend who has the work ethic to succeed at trading - more than me for sure...!

I was being completely serious about merlins strategy - in as much as all you need to do is wait for a new high or low to be made and for price to reverse - obviously you need some money management to make it work - but that is easy really if you can think rationally and act rationally. What fools a lot of people is the believe that they will find a way of entering where there are no costs, once you accept that there will always be costs to participate then you can shift focus to where the profit really lies.

Here is an example -

our bias is long, so every time price makes a low for the week, changes direction and breaks out - we will buy....
If we are in an uptrend we need to find the losers in that trend, and that will be selling into the lows - also we are positioned where we are likely to survive and generate big RR. Notice how no analysis is needed or price action or support and resistance etc etc - it's just logic, if price goes up and down in a random sinewave then we just need to enter in the right locations and wait
(i have deliberately picked a bit or rangy price action to show that it's not only in strong trends that it may work)
Attached Image (click to enlarge)
Click to Enlarge Name: Screen Shot 2014-03-29 at 15.22.50.png Size: 134 KB
tradewith60
  • #6,278
  • Mar 29, 2014 10:53am Mar 29, 2014 10:53am
Quoting 60minuteman
{quote} 60minuteman{image}
I can only agree with everything you said. It's only since I stopped using indicators and S&R that I started making profit. Not enough to live from it, but profit none the less.

I am convinced thìs way of trading is what I need, but I have to admit that even though I found what suits me I'm still searching to improve the results .. Greedy ? Me ?

Only way to do that is:
- Entering more at the tip of the lower wick for an up-trend and vice versa
- Diversifying at the best possible moment

But if those are at the top of our concern list, I think we can estimate ourselves to be lucky
Don’t ever let someone tell you that you can’t do something.
  • #6,279
  • Mar 29, 2014 11:43am Mar 29, 2014 11:43am
Quoting Armacom
{quote} I can only agree with everything you said. It's only since I stopped using indicators and S&R that I started making profit. Not enough to live from it, but profit none the less. I am convinced thìs way of trading is what I need, but I have to admit that even though I found what suits me I'm still searching to improve the results .. Greedy ? Me ? Only way to do that is: - Entering more at the tip of the lower wick for an up-trend and vice versa - Diversifying at the best possible moment But if those are at the top of our...

I personally found Denise Shull's thoughts to be super helpful, once you have a robust method then it's time to work on the traders mind. Give her videos a watch, you might like them

Inserted Video
tradewith60
  • #6,280
  • Mar 29, 2014 6:06pm Mar 29, 2014 6:06pm
Quoting yonseo
{quote} Yes and people are also interested in the pros and cons of position trading. One way to do this is compare a long term approach to a short term approach. Remember you made the initial claim about the so called "mathematical probability" so until you clarify exactly how position trading is more profitable mathematically, I will simply take your last post as a concession on your part regarding this issue since no attempt seems to have been made on your part to support your claim mathematically. You also made the above statements: "Simple and...

yenseo thank you for your perspective. It is always good to hear an alternate perspective.
If you are good at something, never do it for free--Joker
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