Just want to discuss a couple of ideas I have running through my head that may or may not interest others here. First thing is that I received an email in my inbox this morning with a new Dustin Pass system which looks like it is based on some hedging strategy that increases lot size as the trade progresses and then looks for an overall target. Well that was video No.1 only so I'll have to watch the next few videos to see exactly what he is selling this time. I'm not a fan of his but it had me thinking about a similar idea I had a while ago, which I eventually had built into an EA. Didn't work out as good as I thought it would, so it was discarded for a few months.
I have more than likely discussed this somewhere else here in FF, but basically it was taking one trade with a base lot entry of say 0.1 lot with a specified target. If this target was not hit and there was a reversal signal, then a new trade would be opened in the reverse direction with a larger position size and still looking for that same overall profit target. This sequence could go on for many trades in both directions until the target was hit. The EA was pretty basic and didn't have anything to assist with initial trend selection etc. Like a lot of trading systems, they look good on paper and in theory and then proceed to let you down when put under the pump.
But a couple of weeks ago I was watching another video that basically showed a trend identified and the system was only taking trades in the direction of that trend. So if for example the major trend was up, then the system would only take buy trades on each new trading signal generated, so you could end up with multiple buy trades open. This got me thinking and took me back to my old EA as mentioned above. I figured if I could identify a major trend, put the EA on a smaller time frame chart, and using a couple of my favourite indicators which would generate buy and sell signals, I should be able to hit a nominated overall target even if price moves against me. All good in theory!
A few concerns then became pretty obvious. First up only trading in one direction and increasing position size each trade can lead to a pretty heavy overall position size, hence money management is critical. The good thing is that I get to nominate the lot multiplier on my original EA, and instead of using the good old martingale where you double up every new trade, I went with a little more softer softer approach and just use the fib sequence to lessen the martingale affect (a little), so my first trade is 1, followed by 2, then 3, 5, 8, 13, 21 and 34. I don't go any higher, but I do continue with 34x position size for quite a few more trades. I can also elect to close out the sequence at a nominated level so it doesn't blow up your account.
My next issue is what do I do if there is a change of the major trend and I still have a sequence of trades open in the opposite direction. Ideally I would like to begin a new sequence of trades in the this new direction, which is really not an issue. But do I immediately close the old sequence out and more than likely take a hit, or let the sequence complete in profit keeping in mind the trend is now against me. This is where it gets tricky.
There were also a few minor issues with my basic EA as it will immediately open a new trade as soon as a profit target is achieved, which then begins a new sequence
I don't particularly like sitting staring at charts all hours, so I am a big fan of EAs. Now I know for a fact that there are plenty of EA haters out there but you will be wasting your breath trying to convince me otherwise. I appreciate they are not perfect but man they make my life easier and I have no problems on relying on them for entries and some trade management, especially as I had them built for me. So I am in the process of having my Programmer modify this very basic EA to include some other inputs, including custom indicators to ID trend direction, trading times, Friday close time, option of nominating how many profit sequences I would like and also modifying initial lot size on subsequent sequences etc. Basically more bells and whistles. Looking forward to seeing what she comes up with.
There is a lot of discussion on these forums about basic trading where one position is entered at a time, and even some discussion on adding to winning positions as the trades progresses in your favour. And dare I say, there is discussion on averaging down where you are basically adding to a losing position when price goes against you. I guess this method I am talking about here falls in all three categories. Again I can't stress how important strict money management is here as you don't want to blow your account. I like the idea of looking for an overall profit at a number that fits the system rather than some fib or resistance level etc as that takes a lot of the thinking out of it.
Probably a fair bit here and maybe a tad confusing for some so I will do up one of my pretty crappy videos to try and show some examples of what I mean. I always find a video is a great resource when coming to showing trading methods. I have also attached a pretty basic spreadsheet I had made up for me to help in calculating profit target or break even point if you have multiple trades open on one pair in either direction. Some may find it handy if you trade this way. Cheers. Jim
I have more than likely discussed this somewhere else here in FF, but basically it was taking one trade with a base lot entry of say 0.1 lot with a specified target. If this target was not hit and there was a reversal signal, then a new trade would be opened in the reverse direction with a larger position size and still looking for that same overall profit target. This sequence could go on for many trades in both directions until the target was hit. The EA was pretty basic and didn't have anything to assist with initial trend selection etc. Like a lot of trading systems, they look good on paper and in theory and then proceed to let you down when put under the pump.
But a couple of weeks ago I was watching another video that basically showed a trend identified and the system was only taking trades in the direction of that trend. So if for example the major trend was up, then the system would only take buy trades on each new trading signal generated, so you could end up with multiple buy trades open. This got me thinking and took me back to my old EA as mentioned above. I figured if I could identify a major trend, put the EA on a smaller time frame chart, and using a couple of my favourite indicators which would generate buy and sell signals, I should be able to hit a nominated overall target even if price moves against me. All good in theory!
A few concerns then became pretty obvious. First up only trading in one direction and increasing position size each trade can lead to a pretty heavy overall position size, hence money management is critical. The good thing is that I get to nominate the lot multiplier on my original EA, and instead of using the good old martingale where you double up every new trade, I went with a little more softer softer approach and just use the fib sequence to lessen the martingale affect (a little), so my first trade is 1, followed by 2, then 3, 5, 8, 13, 21 and 34. I don't go any higher, but I do continue with 34x position size for quite a few more trades. I can also elect to close out the sequence at a nominated level so it doesn't blow up your account.
My next issue is what do I do if there is a change of the major trend and I still have a sequence of trades open in the opposite direction. Ideally I would like to begin a new sequence of trades in the this new direction, which is really not an issue. But do I immediately close the old sequence out and more than likely take a hit, or let the sequence complete in profit keeping in mind the trend is now against me. This is where it gets tricky.
There were also a few minor issues with my basic EA as it will immediately open a new trade as soon as a profit target is achieved, which then begins a new sequence
I don't particularly like sitting staring at charts all hours, so I am a big fan of EAs. Now I know for a fact that there are plenty of EA haters out there but you will be wasting your breath trying to convince me otherwise. I appreciate they are not perfect but man they make my life easier and I have no problems on relying on them for entries and some trade management, especially as I had them built for me. So I am in the process of having my Programmer modify this very basic EA to include some other inputs, including custom indicators to ID trend direction, trading times, Friday close time, option of nominating how many profit sequences I would like and also modifying initial lot size on subsequent sequences etc. Basically more bells and whistles. Looking forward to seeing what she comes up with.
There is a lot of discussion on these forums about basic trading where one position is entered at a time, and even some discussion on adding to winning positions as the trades progresses in your favour. And dare I say, there is discussion on averaging down where you are basically adding to a losing position when price goes against you. I guess this method I am talking about here falls in all three categories. Again I can't stress how important strict money management is here as you don't want to blow your account. I like the idea of looking for an overall profit at a number that fits the system rather than some fib or resistance level etc as that takes a lot of the thinking out of it.
Probably a fair bit here and maybe a tad confusing for some so I will do up one of my pretty crappy videos to try and show some examples of what I mean. I always find a video is a great resource when coming to showing trading methods. I have also attached a pretty basic spreadsheet I had made up for me to help in calculating profit target or break even point if you have multiple trades open on one pair in either direction. Some may find it handy if you trade this way. Cheers. Jim
Attached File(s)
JAGfx
