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Looking for Real Trading Method

  • #61
  • Jun 3, 2014 1:27am Jun 3, 2014 1:27am
Quoting Chicky
I am NOT a professional trader but have deep interest in foreign currency trading. Have spent many years in this market and have developed and tested countless trading methods, also tested methods invented by others. I don't know how much and what is true in whatever is posted or claimed here.
Why you still looking for real trading method? THE HOLY GRAIL is not good enough for you?
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That which does not kill us makes us stronger
  • #62
  • Jun 3, 2014 1:41am Jun 3, 2014 1:41am
Quoting saqoli
{quote} hi, I do something like this with a little difference, after opening a position and for each 10,25,45,70 distance from opening position I will add one new order in direction of first order and also instead of sl I add pending position with volume of 1.5 all total order but in vise direction. what is your idea about it?

This sounds like martingale to me, and that does not work> However , if your indicators and experience tell you the price will turn back toward the first, when it does turn back, that is not martingale, adding a position makes good sense, whether or not the first one is still active - as long as you diversify your holdings and have room in your margin.


Remember, your margin will never fall below 100%. Your broker will close trades for you to keep it from doing so. Keep it well away from that and the market will forgive you for just about anything you do.
  • #63
  • Jun 3, 2014 2:12am Jun 3, 2014 2:12am
Quoting saqoli
{quote} Surely I have, but after many years I understand Forex is good sample for chaotic system, so everything can change in just minutes, in this way i manage my loss and also can reduce it by taking some profit from reversed trend. the main problem for me is around news it cannot work good!!!
If instead of hedging the same pair, you enter a trade in a highly correlated pair the right way, it hedges for you , then when the news hits a pair, the effect is not so great on the other pair. The problem does not go away, but with this strategy it is alleviated. Use small lot sizes in your multiple stops and a good high margin % and the market will come back to you. ( I think).

It is a real trading method, used in variations by many. But is it the best? Always open to suggestions. It helps me think about the market.
  • #64
  • Jun 3, 2014 2:50am Jun 3, 2014 2:50am
Quoting Rap Skallion
{quote} This sounds like martingale to me, and that does not work> However , if your indicators and experience tell you the price will turn back toward the first, when it does turn back, that is not martingale, adding a position makes good sense, whether or not the first one is still active - as long as you diversify your holdings and have room in your margin. Remember, your margin will never fall below 100%. Your broker will close trades for you to keep it from doing so. Keep it well away from that and the market will forgive you for just about...
in my opinion it isn't martingale because I follow my main trend but if I change it looks like that, maybe I cannot transfer my way correct, however every position in my strategy must use max 5% of my money not more and it is very far from my margin.
I must note that I add position in reverse direction that I suggested before only for reducing lost not hedging. and when this position activated that means tend is changed.
but as I told it is not good time near big news!

I am interesting to know how you do it.
  • #65
  • Jun 3, 2014 6:11am Jun 3, 2014 6:11am
Quoting saqoli
{quote} in my opinion it isn't martingale because I follow my main trend but if I change it looks like that, maybe I cannot transfer my way correct, however every position in my strategy must use max 5% of my money not more and it is very far from my margin. I must note that I add position in reverse direction that I suggested before only for reducing lost not hedging. and when this position activated that means tend is changed. but as I told it is not good time near big news! I am interesting to know how you do it.
Now that is interesting:
the Main trend, once it is found will save a man even from martingale, if he keeps his commitments small enough for the trend to kick in, and each entry is at a price that is a greater bargain than the other. Just watch the margin, and know that margin% will drift lower the longer the counter trend is in.

I would start out by going to the monthly charts and picking out the best three or four trends you see there. (I would pick the ones that climb or dive the most). I would verify them by considering the swap, which should be in the direction of the trend (usually is).

Now you have an edge.

The major difference between this and what I do is that I wait for the price to come back some, before I put in the other trade. and I do it in a different pair. If I do it right (most of the time I do) that pair is going into profit as the other pair comes out of loss.

I find that easier to manage (benign neglect comes to mind) that track opposite entries on the same pair.
But you are doing the same entry on the same pair. If you keep your margin level at a good comfortable level this has possibilities.

As far as I can tell, margin level percentage is the key clue to whatever system you use. If you can keep it from dropping too much, Eventually you will come into money.

A good method of Choosing the best entries which gives you a good chance of profit, will enhance that.

A reasoned way of closing trades that threaten that percentage will ensure that.

My apologies for calling your method by that nasty name.

By using a currency that correlates with the one you entered, if the one is driven into loss, the other goes into profit by big news surprises.

the art comes in cashing in the profit. sooner or later (usually the market over reacts, comes back more to where it was) the other one will come back into profit, driven by the long term trend. Of course if you cash in the hedge too soon, you can always get back in for more... I do that frequently.

It is easy to find pairs that correlate negatively. If one pair starts with a name, and the other ends with the same end, they correlate negatively .
Look at today's trace for the Eur/gbp and compare it with the trace for the Gbp/usd the one dipped and came back while the other rose and came back.
One currency is apt to move while its neighbors in the various pairs are apt to stay the same.

This is usually even more pronounced when the centers for one pair are closed and the the other one active: A good example of that is the Eur/aud vs. the Aud/usd.

Now when you do this, be aware that the trend of one is the opposite of the other ( they are negatively correlated) and be more conservative with the one you put against the trend. Or use other pairs.

There is a high degree of correlation, positive or negative between every pair of a major currency and about a third to half of all the other pairs.

Chances are If you trade multiple pairs, you are hedging by accident even though you do not know it.

You don't have to stop doing what you are doing to try this out: Try going to .01 lot and playing the Eur/gbp when it looks good and the Gbp/Usd when it looks good to go the other way.

You will see soon enough the advantages and complications this can bring you. (You will be able to identify the pairs by their teensy lot size). ( A penny a pip makes for easy math.) I find this better than back studies. If it works for you , let it grow as kind of an account within an account. Wait for various conditions to develop and see how well (or poorly) it fares, before you get too big.

Now I play lots of pairs. When some of them are "dry" and don't seem to be going anywhere, I play the ones that are.

You have to tolerate a lot of slop with this method: I guess I am a "sloppy kind of guy"; ( I have been told that by female acquaintances).
  • #66
  • Jun 3, 2014 8:32pm Jun 3, 2014 8:32pm
Quoting Davit
{quote} If its working for you then its fine.I have never been fan of hedging. Either you have confidence in your trades or you don't.
I have a different opinion about hedging but also a different definition of Hedging than as it is generally understood in forex trading circle.

In my consulting days, I used to provide market updates and adivse stock brokers and mutual funds on portfolio management. My clients included Bear Stearns, Templeton Galbraith and other well reputed companies in financial sector. There is a visible difference in how most (retail or small) forex traders trade currencies and how mutual funds manage their investments or trades. I believe many issues (including stoplosses, spikes, retraces, stoploss hunting, etc) can be taken care of if a currency trader tries to develop and manage a portfolio of trades. It is one time effort that may take several months but once it is done rest is easier. Based on an estimate, managing a currency-trades portfolio can annually yield anything from 10% to 20%. I tried that for about one year but my bottom line was around 3%. That much return was too little for me to make a living solely on forex trading.
The Thief of Wall Street
  • #67
  • Jun 3, 2014 8:46pm Jun 3, 2014 8:46pm
Quoting Chicky
{quote} Few years back, I was designing layout of my house. I had limited space of 19,870 sq.ft of covered area. One of my wives wanted big bedrooms, one other wife was more in favor of a huge living room and banquet hall. 3rd, 4th and 5th wives had their own preferences. I finally managed to get them agree on one thing and the issue was settled. The point is, you resolve your sl issue once and for all. The best solution of this problem to me is Not Have One. Problem solved. The only thing one has to resolve from SL to NO SL trading is to find a...
LOST INTEREST IN THE STOPLOSS ISSUE IM MORE INTERESTED IN THE 5 WIVES,

MAYBE THATS ANOTHER THREAD

  • #68
  • Jun 3, 2014 8:57pm Jun 3, 2014 8:57pm
Quoting Chicky
{quote} I have a different opinion about hedging but also a different definition of Hedging than as it is generally understood in forex trading circle. In my consulting days, I used to provide market updates and adivse stock brokers and mutual funds on portfolio management. My clients included Bear Stearns, Templeton Galbraith and other well reputed companies in financial sector. There is a visible difference in how most (retail or small) forex traders trade currencies and how mutual funds manage their investments or trades. I believe many issues...
I totally agree about the portfolio idea, I was really struggling until I opened myself up to six currencies and all their combinations. I know of successful traders who suggest I open up more.

Now I feel relaxed confident and sure. It has become easy fun for me. I keep looking around for problems, and they keep hiding from me.

No one buys a stock and sells it at the same time: they'd have no stock. The "forbidden" kind of hedging in the forex just isn't possible elsewhere.
  • #69
  • Jun 3, 2014 9:10pm Jun 3, 2014 9:10pm
Quoting diceman555
{quote} LOST INTEREST IN THE STOPLOSS ISSUE IM MORE INTERESTED IN THE 5 WIVES, MAYBE THATS ANOTHER THREAD
We have not opened this thread to lose anything, even our interest.

Have tried to make a key point with some fun. If we want to develop a real system it should be capable of eliminating every fear or negative element from our trading. If stoplosses bother us, we should find a way how to manage risk without stoplosses. If spikes bother us, we should trade in a way that takes fear away from a possible spike. If we do not want market to take away our profits once made, we should find a way to resolve this issue.

Just think of having a trading method that is fear free, has no gambling element, consistently profitable and generates decent returns. Not a crazy return but just enough to make a moderate living with a decent investment. Such a system won't be like taking home income every week or month as salary, but at least with some consistency.
The Thief of Wall Street
  • #70
  • Jun 3, 2014 9:14pm Jun 3, 2014 9:14pm
Quoting Rap Skallion
{quote} I totally agree about the portfolio idea, I was really struggling until I opened myself up to six currencies and all their combinations. I know of successful traders who suggest I open up more. Now I feel relaxed confident and sure. It has become easy fun for me. I keep looking around for problems, and they keep hiding from me. No one buys a stock and sells it at the same time: they'd have no stock. The "forbidden" kind of hedging in the forex just isn't possible elsewhere.
Rap, I read your earlier post and can say that you are going in the right direction. Keep your positions as small as possible.
The Thief of Wall Street
  • #71
  • Jun 3, 2014 9:26pm Jun 3, 2014 9:26pm
Quoting Chicky
{quote} We have not opened this thread to lose anything, even our interest. Have tried to make a key point with some fun. If we want to develop a real system it should be capable of eliminating every fear or negative element from our trading. If stoplosses bother us, we should find a way how to manage risk without stoplosses. If spikes bother us, we should trade in a way that takes fear away from a possible spike. If we do not want market to take away our profits once made, we should find a way to resolve this issue. Just think of having a trading...
yes eliminating ones fear,

you have developed or are developing your method having resolved the stop loss issue and hence your fears.

did the stoploss issue result in developing your method as a result of your fears regarding stoploss ?

my fears are no stoploss as a result I am developing my method with this consideration. I feel totally secure in my trades with a 5 to 10 pip stop in place.

that's my point ,unless you answer the stop loss issue I find it difficult to believe that one can begin to develop there style
  • #72
  • Jun 3, 2014 9:43pm Jun 3, 2014 9:43pm
Quoting diceman555
{quote} yes eliminating ones fear, you have developed or are developing your method having resolved the stop loss issue and hence your fears. did the stoploss issue result in developing your method as a result of your fears regarding stoploss ? my fears are no stoploss as a result I am developing my method with this consideration. I feel totally secure in my trades with a 5 to 10 pip stop in place. that's my point ,unless you answer the stop loss issue I find it difficult to believe that one can begin to develop there style
This is exactly what we all are trying to resolve. One method may require setting 5 to 10 pip SL, other methods may require 20 to 100 pip SL and yet another method may require setting an "Emergency" SL. Can there be any method of trading currency that requires no SL but still risk remains limited within a calculated range?

I am sure there are more than one ways of doing that. Some people do not set SLs but place a "Same Pair Hedging" pending order, some use the same technique but "Hedge" partially, some use "Different Pair Hedging" which is always partial or excessive depending on the price and correlation between these two pairs, some people use "multiple pair hedging", some people use trailng SLs, some use mental SLs, so on and so forth. Every such method has its own merits and demerits.

They all use different techniques to resolve these two issues:1) Eliminate fear of getting stopped out before market goes in their favor, 2) Limit risk. The one million dollar question is: Can these two objectives be achieved without any kind of stoploss?
The Thief of Wall Street
  • #73
  • Jun 3, 2014 10:25pm Jun 3, 2014 10:25pm
So far we have identified two key elements of a real or good trading method:

1. The skills and mindset of a trader

2. Resolving the Stoploss issue

Any comments on these two will be highly appreciated.

The third element that I would like to table is how to reduce Idle Capacity of an account margin. By that I mean, how to maximize use of available idle balance in our account. For example, if we risk 1% of our account for a possible 3% return.

This issue can be resolved by opening a heavy position with a very tight SL of let's say 7 pips (risking 1%) and also a tight TP of 21 pips (aiming at 3% return). But again, a tight SL is bound to get hit any time.

The other option is to risk 1% with a 100 or so pip SL and 300 pip TP. But this will have two issues stemming from it. 1) What we do with rest of the equity in our account? 2) Our funds will remain blocked if price does not move out of a 50 or 60 pip range for days. Trade frequency and return combined determine ROI.
The Thief of Wall Street
  • #74
  • Jun 3, 2014 10:36pm Jun 3, 2014 10:36pm
Quoting Chicky
{quote} This is exactly what we all are trying to resolve. One method may require setting 5 to 10 pip SL, other methods may require 20 to 100 pip SL and yet another method may require setting an "Emergency" SL. Can there be any method of trading currency that requires no SL but still risk remains limited within a calculated range? I am sure there are more than one ways of doing that. Some people do not set SLs but place a "Same Pair Hedging" pending order, some use the same technique but "Hedge" partially, some use "Different...
Oh Chicky ,I WISH I HAD NOT VISITED YOUR THREAD NOW,

your relighting a fire I put out some time ago . and I can feel tingles of excitement.

I spent 2 solid years trying to solve that very problem , albeit on the ftse 100.im positive it can be achieved .I just could not find the stop point ,only a discretionary one . and that does not solve the long term .umm you've certainly got me thinking !!!
  • #75
  • Jun 3, 2014 11:03pm Jun 3, 2014 11:03pm
Quoting diceman555
{quote} Oh Chicky ,I WISH I HAD NOT VISITED YOUR THREAD NOW, your relighting a fire I put out some time ago . and I can feel tingles of excitement. I spent 2 solid years trying to solve that very problem , albeit on the ftse 100.im positive it can be achieved .I just could not find the stop point ,only a discretionary one . and that does not solve the long term .umm you've certainly got me thinking !!!
2 years is nothing. Even 15 years worth every single minute of it if we find a solution to this. ..................Here is the solution.

How an exporter, importer, investor, borrower or lender eliminates currency exchange risk from a transaction/asset/liability denoted in a foreign currency? You know the answer. It is Futures Contract known as Hedge. Why we should do different? If we want to eliminate risk from a transaction, why not to hedge it paying the cost for this assurance? We don't do this because as forex traders, we not SEEK FOR but PROVIDE this assurance. Now, how do we manage our risk in this business of buying risk and selling assurance? The answer is plain simple. By Managing our risk. OK. How do we manage our risk? Again simple: Transfer, Diversify, Share, Control or Accept Risk. The basic principles of risk management. The most relevant in our case is Diversify. Diversify over pairs, diversify over timeframes, diversify over market sessions, diversify over whatever you can get hold of....................... or simply a diversified balanced portfolio constantly updated as events unfold.
The Thief of Wall Street
  • #76
  • Edited 2:36am Jun 4, 2014 1:48am | Edited 2:36am
Quoting Chicky
{quote} 2 years is nothing. Even 15 years worth every single minute of it if we find a solution to this. ..................Here is the solution. How an exporter, importer, investor, borrower or lender eliminates currency exchange risk from a transaction/asset/liability denoted in a foreign currency? You know the answer. It is Futures Contract known as Hedge. Why we should do different? If we want to eliminate risk from a transaction, why not to hedge it paying the cost for this assurance? We don't do this because as forex traders, we not SEEK FOR...
End result is: No risk for the producer (the real positive contributor to society).
Risk is transferred from the producer to the speculator and cannot be eliminated. In the best situation it can only be minimized.
That is why, long term (for most sooner than later) the trader / speculator must lose.
The producer can apply the basic principles of risk management to eliminate risk, the trader cannot (actually there is only one available to him/her: the greater fool principle: the last trader left "holding the bag" takes the loss)
... the course "economics 101" may be worth taking again.
  • #77
  • Jun 4, 2014 2:18am Jun 4, 2014 2:18am
Quoting Chicky
So far we have identified two key elements of a real or good trading method: 1. The skills and mindset of a trader 2. Resolving the Stoploss issue Any comments on these two will be highly appreciated. The third element that I would like to table is how to reduce Idle Capacity of an account margin. By that I mean, how to maximize use of available idle balance in our account. For example, if we risk 1% of our account for a possible 3% return. This issue can be resolved by opening a heavy position with a very tight SL of let's say 7 pips (risking 1%)...
thats no different with gambling method...
gambling use skills and mindset. gambling involves risks. and concern very much on losses or wins...

trading for the sake of opening a trade helping other traders to fullfill their orders in the market > use the trading methods myth in page 1 plus 5 wives.

trading for the sake of profit , i don't think they are using common trading methods

“Some people want it to happen, some wish it would happen, and others make it happen.”
― Michael Jordan
This is clearly wrong quotes....
you don't want it, you don't wish it, you don't make it
(It refers to trading methods)

Just Do It, MC later and think about risk later...
14QDuJtV7okxhBzC86FwawaR6tV5LvetLq
  • #78
  • Jun 4, 2014 3:22pm Jun 4, 2014 3:22pm
Quoting Rap Skallion
{quote} Now that is interesting: the Main trend, once it is found will save a man even from martingale, if he keeps his commitments small enough for the trend to kick in, and each entry is at a price that is a greater bargain than the other. Just watch the margin, and know that margin% will drift lower the longer the counter trend is in. I would start out by going to the monthly charts and picking out the best three or four trends you see there. (I would pick the ones that climb or dive the most). I would verify them by considering the swap, which...

sorry for my late reply, I try your idea about hedging through more than 2 pairs but with no predefined map and rule, usually I take some position in more than one pair and sometimes they have different direction, but it is very difficult to manage them and use this idea as strategy. for example for some pair like EUR/USD and USD/CHF they have very high negative correlation but for EUR/USD and USD/JPY in some time have good negative relation and in some time they have really high positive correlation that i cannot understand why!! however if you can manage them, it is really big skill and if you can show some more detail it is very good for me!!
  • #79
  • Jun 4, 2014 5:59pm Jun 4, 2014 5:59pm
Quoting saqoli
{quote} sorry for my late reply, I try your idea about hedging through more than 2 pairs but with no predefined map and rule, usually I take some position in more than one pair and sometimes they have different direction, but it is very difficult to manage them and use this idea as strategy. for example for some pair like EUR/USD and USD/CHF they have very high negative correlation but for EUR/USD and USD/JPY in some time have good negative relation and in some time they have really high positive correlation that i cannot understand why!! however...
Gone all day and just back to my screen now.

The first pair of Eur/ usd and Usd/chf share the currency Usd and do so in opposite places.
If you buy eur/ usd you are expecting value to flow from usd to eur so that it can purchase more usd. (you are buying Eur and selling USD)
However if you buy Usd/chf, you are expecting value to flow from the CHF to ( you are buying usd and selling chf. )
As for as the USD is concerned, this are opposite actions to it, and opposite correlation is bound to exist long term.

This holds for the second pair of pairs as well. But Japan is trying the force its currency lower and trying very hard to manipulate the market.

Look at the two pairs on a monthly scale from beginning to end, the euro usd is slightly up, and from beginning to end the USD Jpy is trending down.

Because a national bank has been trying to resist the market forces that give it natural play the smaller timeframes have been confusing.

Right now the USD JPY has risen to the top of a decending channel and should probably be turning down fairly sharply.

So what do you do about this.; Don't trade the usdjpy against its current flow just because it is supposed to be neg. correlated to the Eur/usd!

Use other indicators to verify that the negative cor. is there right as you trade. if not, look at , in this instance the USD/cad pair. Its monthly chart shows long term trend in selling direction. Unfortunately right now, it is also moving in correction to its long term trend.

Bottom line: of the three other pairs possible to negatively correlate with the Euro, TheUsd/Chf is the best choice right now. You have picked it out as the best choice of the moment. Why go with any other?

Now it can come about that none of the so called negative correlations involving the Usd are working.

Beside the Eurusd with the usd in second place, you also have the Audusd, and the GBPusd with the usd in second place. A buy of any of these pairs indicates you are selling the USD. This is a positive correlation which also tends to hold true simply by the fact that in all three pairs you are selling the usd. Say you have bought the Eurusd. If you see that the Gbpusd is going down, Sell the pair. Beside the fact that you make money on the second pair , you know that you have a hedging effect on the first pair.

You can use that as a hedge.

Trade as though you are neither hedging or using stoploss. If the trade goes as you planned, You won't need either and should not do them.
You should trade a small enough lot size that you can carry it in loss for a long time with running out of margin. Trade with the long term trend so that you have some confidence that, eventually it will come into profit.

Leave it at that , unless you see as you watch your pairs a good set up that also has a hedging effect On one or some of your first trades. Take that trade.
Think about this:
Money coming in from any source always hedges the money you have put out.

When the money coming in exceeds the money you have put out, Your hedge has succeeded.

Your focus should be on identifying the best setups of the dozen or so offered somewhere in the pairs every day, entering two or three of those, and managing you margin. One quality among others, and not the most important one, of a a good trade is that it hedges another trade you have open at the moment. Commonly shared names is a simple and obvious way to identify a setup that may hedge one of your trades.

This is not all there is to it. You should try to expand your vision, your awareness of various qualities of the market constantly.

Trade small enough, and you will after a while develop a real feel for what to do in the market, and as you gain confidence (and avoid false confidence) you can slowly get bigger. After a while, couple of years, you will have grown into a real trading method.

You cannot trade my method. Only I can trade my method. I can only give you glimpses of features which you may or may not incorporate into your method.
  • #80
  • Jun 4, 2014 9:22pm Jun 4, 2014 9:22pm
Quoting ud1nh0
{quote} thats no different with gambling method... gambling use skills and mindset. gambling involves risks. and concern very much on losses or wins... trading for the sake of opening a trade helping other traders to fullfill their orders in the market > use the trading methods myth in page 1 plus 5 wives. trading for the sake of profit , i don't think they are using common trading methods “Some people want it to happen, some wish it would happen, and others make it happen.” ― Michael...
I am also of the opinion that forex trading is no different from gambling. Have expressed this view many times over several years.
In any gambling, there are two types of players. 1) Who take risk but never get in a position to manage that risk. They are known as Punters. 2) Who take risk but are always in a position to manage their risk. They first reduce their risk, then they bring it to zero and finally they get into a positioon where no matter what the outcome is they are sure winners. They are called Bookmakers. Your brokers are part of this gambling but they are bookmakers because they can never lose if they accept equal amount of orders from buyers and sellers and earn spread from both. The excess of buy or sell orders are sent (ceded) to market for a commission in form of reduced spread (paying spread less than what they collect from their clients). If one works hard enough, can spot many opportunities in forex market that offer chance of bookmaking even to punters. If a punter is knowledgeable and skillful can get into the shoes of a bookmaker to make few sure bucks. Many are trying to get to this level and refer this kind of trading method a Holy Grail. Does it exist? ............. it sure does.
The Thief of Wall Street
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