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Multi-Lot Multi-Timeframe Position trading

  • #141
  • Sep 4, 2014 10:39pm Sep 4, 2014 10:39pm
Quoting Graviton
{quote} Well, it is a risky business after all. But the risks can be managed in many ways. For instance, I don't initiate a trade on fundamentals. I wait for a solid trend to develop, then I look to see if there is a solid fundamental reason for it. Therefore, I never enter a trade that isn't already strongly trending based on FA that might never move the market, or as you pointed out, may move it in the opposite direction than was anticipated. When Trend is down and fundamentals say it should go up as in the NZD trade, I consider that fundamentals...
Yes thats a very sound answer, after all reactionary trading is not wise, let the things calm down and enter when all things line up.

Fundamentals should not be contradictory, i mean the data is the base here, but thanks to the stupid media, they hype unnecesarry things up and cover big things up, so if there were no news agencies giving misleading info and expectation, then the data should be the relevant thing, and the
fundamentals = sentiment 100% of the time, but thanks to media nastyness fundamentals =/= sentiment only on rare occasions and you always have to guess the "mood" of the market, despite the clear and factual data that the CB give out.
"There's a sucker born every minute" - P.T. Barnum
  • #142
  • Sep 5, 2014 5:14am Sep 5, 2014 5:14am
Quoting iDoubleStoch
{quote} Establish an account with some value less than $10k. Target 30 pips per day. Set a goal to double the account in 13 days. How successful will you be relying on what the ECB tells you it is going to do with Euros to avoid a recession. Not very successful. Out of those 13 days, you will have just one day where you get such fundamental guidance. So, what's the alternative to growing your capital on schedule. You will need to pick and track a number of currency pairs (if you intend to do this in the currency markets) and then hope and pray for...
I liked this post and the ones you posted ahead of this one. I suppose nearly everyone who read the comments on positive expectancy will think, "duh, of course". It should be made clear that positive expectancy is not another way of saying you hope for a positive outcome. Positive expectancy is a result of deep market structure analysis, and calculated risk/reward analysis, among other things. When you open your charts each day, the last thing you should be looking for or thinking about is a trade.

As for multi-lot multi-time frame trading, I trade this way, having started long-term trading this past spring, along with day to day, short-term trading, too. As for trends, I recall a comment made by a Federal Judge a long time ago regarding a case before the court dealing with pornography: I can't define it but I know it when I see it.
  • #143
  • Sep 5, 2014 12:46pm Sep 5, 2014 12:46pm
We've discussed trends a lot here in the past few days. I dearly LOVE long running trends that run for months or years. All the big successful traders I know of trade that way. They don't get shaken out of a good trade on a small dip following some stray bit of news. They "build a position" over time and ride it to riches over months or years. We've discussed how to find a good trend and drilled down into market dynamics a bit to examine the differences between a "real" trend driven by underlying fundamental factors and an "apparent" trend which is just the result of random motion of prices. Some deny that there is anything random about price movement, but the best statisticians using the best techniques say that most price action is essentially random. It's ok to make the counter argument here, but just be prepared to back it up with good logic and statistical analysis. Some think they can predict random price action, and I wish them well. I can only say from my 40 years experience in trading, I have never seen or heard of anyone that could do that more than 50% of the time. Anyone who had such superpowers could easily be the first trillionaire. Hell, why waste time in the markets, just go to Vegas and play $1 million a hand at Binions Horseshoe Casino (they allow that) and get free drinks while getting rich. Seriously, we can discuss this more if you like, I can pull out the very sophisticated statistical studies and we can pour over the math (I have), or we can just accept that there is a lot of noise in the markets and use some reasonable method to try to filter it out and not let it disturb our good trades. I'm happy to discuss trends as long as I breathe, and if anyone wants to discuss them more I'm all for it, but picking a pair and a direction is just one part of our goal here. We also want to discuss "building a position", and I'd like to discuss that a little, if no one objects.

The first step in building a position is the first entry. I've suggested you use your own entry method if it works for you, but if you don't have one there are many good ones discussed in detail in this forum. The fact is, if you are trading a pair for weeks or months, your entry method doesn't matter that much. If you want a decent one, perhaps not the best, but simple, just drop down two timeframes from how long you want your trade to run (be realistic here) and enter when the RSI crosses the 50% line in your direction. You might have to wait about 1/4th the time you want your trade to run or a little longer to see that happen, but it's about as good as any for these very long term position trades. If you've selected a good trend, the market will make it right in time. The next step will be to cut losers short and add to winners.
  • #144
  • Sep 5, 2014 5:09pm Sep 5, 2014 5:09pm
I've been building long term positions in the E/$, G/A, $/Y, and the G/$. Started this several months ago. I opened an account to dedicate to these positions, and maintain two additional accounts for short term day trades. I am trading the Day/4H charts on the long term positions, while trading the 4H/1H on the daily trading (entering on a 10M chart). As of today, each position consists of 3 open trades, except the yen position which consists of 2 trades. I do extensive FA and TA on the pairs I trade. To be considered for a long term position, there needs to be significant FA reasons/justification, which developed over the summer for these pairs. From there, I use TA to pick new entries, among other things related to managing these positions.
  • #145
  • Edited 6:31pm Sep 5, 2014 6:08pm | Edited 6:31pm
Cutting losses short is a critical part of successful trading. Anyone that claims they can trade without losses hasn't been trading very long. Losses are an inevitable component of trading. The goal is to keep them as small and as far apart as possible. The first thing to do is to select a stop that will not be hit by some random news flash in the pan. Typically if you are running trades that last a week, You'd want a stop about 2X daily atr or about 100 pips. I run stops typically between 100 and 200 pips so I don't get hit with transient news events. I sometimes adjust them up or down a little to be well on the other side of a major s/r line. The point is, if you have confidence in your trend selection method, then you want to give the trend time to work on the price. You don't want to lose pips because the stop was too tight, only to see afterwards that your trade selection was good. In perfect trading you would never hit a stop. Stops always take you out of the trade at a minimum profit or maximum loss point. We should be able to see a trade is not working long before we hit a stop. I hit one occasionally and always go back to see why. In almost every case the stop was too tight and the trade straightened out to go on and continue a long trend in my direction. I don't worry over it too much, but I try to set reasonable stops. If I want a trade to run a week, I set the stop around 2X daily atr. If I want it to run a month, I set it around 2X weekly ATR. Then if I see a trade going bad, I just exit manually with as small a loss as possible. I can always re-enter later. Small losses are much better than big ones, and as you perfect your trend selection, you'll get fewer and fewer losses. Never ever adjust a stop against the direction of your trade. If you see you are trading with stops too tight for the volatility of the current market, it's best to exit immediately and start all over again with a more appropriate stop. I've known people who traded without stops. They are all broke now.

Once you are in with a reasonable stop, you can scan other pairs or do some research or read a good book. With position trading you'll have lots of free time. Actually I continue scanning pairs until I have a full basket of trades and then let them run, occasionally talking profit by cashing in a big fat one and replacing it with a fresh one. A full basket of multi-lot trades uses about half the available margin in my account usually with about 2 to 5 pairs, but if there are no trades, or only 1 good one, I wont try to force it. I'll exit trades that go bad early and let the good ones run until I have a basket with only good trades, If I'm trading with stops around 200 pips, I'll want price to be at least up 100 to put a second lot on. Beyond that, I'd want to be up a full sl to put additional lots on. This week I just traded with two and three lots. I'll be doing more in the future. The additional lots should be put on with the same proven entry strategy that the first was put on with. Don't shortcut that second entry, be patient and wait for it. If it's a good trend, it will come, and if it's not you don't want to put another lot on it anyway. When you are ready to take profits, take the fattest one (the first one) off as close to a peak profit on an upswing as possible. I often use the stoch to assist with that. Then the replacement is put on the next downswing according to your entry method. If I'm using the 50% RSI cross, that means I must wait patiently for price to fall to drop the RSI below the 50% line then climb back up to give me my entry signal. That sometimes takes hours or days. Once you have one of these multi-lot trades running, you never allow yourself take a loss on it. A good trend will run for weeks to years, but they must all end eventually. When it does, get out with some profit and move on. Don't ever let a big winner turn into a big loser.

With this method, you should be able to average around 3 to 5% per week with minimal risk and drawdowns. If that doesn't sound like enough for you, run the compound interest calculator and you'll see 3% per week compounded for 52 weeks will turn $10,000 into $46,500 in a year and 5% compounded weekly will turn $10,000 into $126,420 in a year. Of course that doesn't account for bad weeks and bone-headed mistakes, of which I make my share. Still, it's not bad for part time work. Questions? Comments?
  • #146
  • Sep 5, 2014 6:22pm Sep 5, 2014 6:22pm
Quoting GEfx
I've been building long term positions in the E/$, G/A, $/Y, and the G/$. Started this several months ago...
Wow, that's great! Any suggestions for us?

Sounds like you are well on your way.

Best success in the future.

G
  • #147
  • Sep 6, 2014 10:17am Sep 6, 2014 10:17am
Quoting Graviton
{quote} Wow, that's great! Any suggestions for us? Sounds like you are well on your way. Best success in the future. G
Not sure what suggestions I could give. I think the difficult thing about this type of forum is that everyone has (or believes they have) different levels of experience in the many things that go into trading. In my trading I employ both FA and TA, so the first thing that would likely happen here is there would be some giant argument about the merits of both or either, complete with academic papers and other such references, to "prove" that the things I do don't or can't work. Let's not go there. If I were you, the first thing to discuss, regarding long term trading, might be what to look for to identify a change in the prevailing paradigm of a currency. Just a suggestion...
  • #148
  • Sep 6, 2014 12:58pm Sep 6, 2014 12:58pm
GEfx, I don't mind a lively discussion, as long as people are polite and professional. This is a discussion forum. I understand there are many right answers to the question of how can I profit from Forex. As far as the merits of Technical Analysis and Fundamental Analysis, there are very few people in these forums that follow the FA. Most traders here are trying to make profit trading the short term noise of the market on short timeframes, and FA doesn't help that at all. I was never very successful in short timeframes and I don't know many who are. I think the odds highly favor longer timeframes. Usually, the reason people like short timeframes is they can always win some trades for near instant gratification, by pure chance if no other reason, so they fall for the gamblers fallacy and think if they only do it a little better next time, they can win most of their trades. Some go broke trying, some just give up trying, and some realize that they need a real edge to profit. This thread is about creating an edge by trading position trades long term and the FA is a very good way to create an edge.

Yes, there are two ways to go about this. You can first do your fundamental analysis, select your pairs and direction, and then watch and wait for a good entry and hope you get in on a good trend, which you will sometimes, or you can first find good trends and then do the fundamental analysis around them to see if there is a good underlying fundamental factor that is likely to continue driving the trend in the future. Either way works and arrives at the same point in many cases. I prefer to use TA first though, so I don't spend time analyzing currencies that are not currently trending. Also, there are many cases as Proximus pointed out, where the fundamentals never produce a trend or price actually moves against the direction fundamentals would indicate. I eliminate all those bad trades from the mix since I start by looking for a good trend first and then do FA on it. It could still reverse the day after I enter it, but for a trend that runs 2 years, that's one day in 730, so odds are it wont, and if it's fundamental factors driving it, a major reversal isn't likely until the fundamental factors change, and there are some things we can know about them that no one can derive from TA alone. For instance, the European economy isn't likely to turn around tomorrow.

I'd be interested in hearing your opinion, or anyone's, of this method of doing it the other way around, TA first, and then FA on the strong trends.
  • #149
  • Edited 2:23pm Sep 6, 2014 1:57pm | Edited 2:23pm
Of course, I'm not claiming this is foolproof. Anyone who hasn't traded long term position trades before should test it out for themselves first on a demo account or at a penny a pip. If you have another edge that works fine for you, I can understand if you wouldn't be interested. But if you are interested, let me suggest that it's much easier to join a trend that already exists than to guess when one might be about to start. And if you decide to incorporate fundamental analysis, you have the makings of a real edge in trading. FA really isn't as hard as it seems. All the terms are clearly explained on the net in places like Investopedia. We aren't trying to understand everything, only the fundamental factors affecting the two currencies that are involved in a trend we have already found. Really, there are only about 5 to 10 factors that we need to examine, Central Bank changes in policy, employment, housing, GDP, inflation(deflation), Balance of accounts, and perhaps a couple others depending on the economy. There may be a dozen pieces of information coming out about the Swiss Franc, but if it's not trending, there is no need to pay any attention to them. Also, usually the information that affects the trend in a currency is usually contained in just one or two items, like the Central Bank policy (the most important) and maybe one or two more, like employment and/or GDP. It usually only takes a few minutes to see what fundamental factor is driving a currency trend. If you can't figure it out, just don't trade it. That will eliminate a few good trades and a lot of bad ones.

When I started investing, research meant many hours searching dusty libraries and standing at a newsstand looking for current articles on items of interest. These days anyone can do it quickly from the comfort of their own home or office. Just type into Google, why is the GBP trending down, why is the Euro falling, why is the USD strong, or something like that. In minutes you can have expert opinions from the worlds greatest minds to help you make decisions. If the picture is unclear, just throw the trade out. There will always be more, and you only need a couple to bank major pips with these long term multi-lot trades.

In the end, you have to make only two decisions. Is the top currency strong or weak? Is the bottom currency strong or week? If both are strong, throw the trade out. If both are weak, throw the trade out. If one is strong and the other weak, price should be trending in the direction of the strong currency, if it's not, throw the trade out. If price is trending in the direction of the strong currency, it passes the FA test and it's time to start planning a trade.

If anyone would like to discuss this more, has questions, comments, or disagrees with something posted above, shout it out.

We need more open discussion here. Happy trading!

G
  • #150
  • Sep 6, 2014 10:21pm Sep 6, 2014 10:21pm
I don't think any of that has much to do with FA. There is a big difference between fundamental announcements and fundamental analysis. An announcement does little to change the Day trend, although they are fun to trade on the 4H and the 1H. You need good FA to understand the existing and ongoing paradigm for each currency ( to provide the basis of day to day short term trading, and to put your TA into context). It's not enough to recognize the trend. You need to understand why it's trending, and then what must change before the trend ends and changes.
  • #151
  • Sep 7, 2014 8:58am Sep 7, 2014 8:58am
Quoting GEfx
I don't think any of that has much to do with FA. There is a big difference between fundamental announcements and fundamental analysis. An announcement does little to change the Day trend, although they are fun to trade on the 4H and the 1H. You need good FA to understand the existing and ongoing paradigm for each currency ( to provide the basis of day to day short term trading, and to put your TA into context). It's not enough to recognize the trend. You need to understand why it's trending, and then what must change before the trend ends and changes....
I see your point. Trading FA is different than just trading the news. The current paradigm for the EU is the Euro is weak because of banking problems and unemployment and other bad economic and political issues and that the USD is relatively strong because of improving employment and GDP, etc. One single news release doesn't necessarily change the paradigm. But news is important to forming the paradigm over the long haul. If all the news coming from Europe was great there would need to be a paradigm shift since the fundamental data would not be fitting with the current paradigm.
  • #152
  • Sep 7, 2014 9:05am Sep 7, 2014 9:05am
Quoting GEfx
{quote}...As for trends, I recall a comment made by a Federal Judge a long time ago regarding a case before the court dealing with pornography: I can't define it but I know it when I see it.
I have no problem defining a trend. It is simply a series of higher highs or lower lows. I think that is more significant, much more so, when it is happening across multiple timeframes. But a trend in only one timeframe is still a trend in that one timeframe, a series of higher highs and lower lows, it just may or may not be profitable to trade it. If all the other timeframes are trending down and that one is trading up, it probably is not profitable to trade it.
  • #153
  • Sep 7, 2014 2:43pm Sep 7, 2014 2:43pm
Quoting Graviton
{quote} I see your point. Trading FA is different than just trading the news. The current paradigm for the EU is the Euro is weak because of banking problems and unemployment and other bad economic and political issues and that the USD is relatively strong because of improving employment and GDP, etc. One single news release doesn't necessarily change the paradigm. But news is important to forming the paradigm over the long haul. If all the news coming from Europe was great there would need to be a paradigm shift since the fundamental data would...
If that were true, then everyone would be a fundamental trader/rich. FA plays a very specific role in long term trading, and it has little to do with the market's reaction to the next announcement, or the next 10 announcements (which as I said, is more for day to day trading, which is how FA fits into that level of trading). I think long term FA is predictive in nature and therefore is used to anticipate all your statistically significant options for position management. It becomes the foundation of your market structure analysis, and helps you plan all of your short term and long term trading strategies. If you don't have this as part of your trading, the market appears random, and you will never make sense of TA and PA. IMHO.
  • #154
  • Sep 7, 2014 8:51pm Sep 7, 2014 8:51pm
Graviton

I have read your post with interest , and just by curiosity , could you define " 100 period quadratic regression," if im not mistaken it means Polynomial regression line ?

Thank's in advance for your time

Landsat
Logic will take you from A to B Imagination will take you anywhere (A.E)
  • #155
  • Sep 8, 2014 8:24am Sep 8, 2014 8:24am
Quoting landsat
Graviton I have read your post with interest , and just by curiosity , could you define " 100 period quadratic regression," if im not mistaken it means Polynomial regression line ? Thank's in advance for your time Landsat

Greetings Landsat. The 100 period quadratic regression I use is just a common least squares curve fitting technique which is a polynomial regression of the 2nd order using the past 100 data points. It has the form y=ax^2 +bx + c and usually yields something like a smooth parabola curve. There is some good discussion of these terms on Wikipedia. Here's a decent indicator that does that and a little more for MT4, http://www.mql5.com/en/code/10249

Of course, there is no magic indicator, but some may act as a visual aid for some people. I have two sets of charts, one with widgets and one almost bare. This indicator is on my widget chart which is a bit messy right now, but I still refer to it quite often and it is used for objective technical analysis, whereas I use my bare chart for subjective observation of price action. Thanks for the good question and Happy Trading!
  • #156
  • Sep 8, 2014 9:18am Sep 8, 2014 9:18am
Quoting GEfx
{quote} If that were true, then everyone would be a fundamental trader/rich. FA plays a very specific role in long term trading, and it has little to do with the market's reaction to the next announcement, or the next 10 announcements (which as I said, is more for day to day trading, which is how FA fits into that level of trading). I think long term FA is predictive in nature and therefore is used to anticipate all your statistically significant options for position management. It becomes the foundation of your market structure analysis, and helps...
Very reasonable. Everyone can't get rich, since it's a zero sum game. In fact, the vast majority will lose a little so a very few can get very rich. Of course, all things do change in time. The Euro will go back up eventually. It must if it's not going to zero. Paradigms do change, albeit slowly. Trying to predict the exact time of that change is difficult, if not impossible. It is basically the same as picking tops and bottoms on a very long term chart, like the monthly. I can predict that the Euro wont turn up until better data comes out of Europe. I can predict that wont happen quickly. But until the data starts to turn up, I can't predict exactly when that change will occur. If you can accurately predict such things, you must have superpowers. Being a mere mortal, I will keep an eye on the data.
  • #157
  • Sep 8, 2014 10:17am Sep 8, 2014 10:17am
Quoting Graviton
Of course, I'm not claiming this is foolproof. Anyone who hasn't traded long term position trades before should test it out for themselves first on a demo account or at a penny a pip. If you have another edge that works fine for you, I can understand if you wouldn't be interested. But if you are interested, let me suggest that it's much easier to join a trend that already exists than to guess when one might be about to start. And if you decide to incorporate fundamental analysis, you have the makings of a real edge in trading. FA really isn't as...

thanks graviton for this great reasoning. very pratical and you made it so simple. too much analysis will only result into paralysis. just a bit of FA and observe it on price action using TA that you are already familiar with, visual observation on all TF's, a bit of common sense, and that's it. attact heavily when you are right and step back, analyse when you are wrong. certainly i am your fan graviton.
  • #158
  • Sep 8, 2014 11:18am Sep 8, 2014 11:18am
Quoting Graviton
{quote} Very reasonable. Everyone can't get rich, since it's a zero sum game. In fact, the vast majority will lose a little so a very few can get very rich. Of course, all things do change in time. The Euro will go back up eventually. It must if it's not going to zero. Paradigms do change, albeit slowly. Trying to predict the exact time of that change is difficult, if not impossible. It is basically the same as picking tops and bottoms on a very long term chart, like the monthly. I can predict that the Euro wont turn up until better data comes out...
Let me be clear: predictive in this instance means to anticipate the possibility of a change. Watch the charts develop. Trade what the charts till you through TA. Find proof in changing FA in the charts as TA shows the changes. When the charts show that the new paradigm is being trades (ie, the pair is being professionally traded according to the new paradigm), start trading it in the new direction. If you don't anticipate the change, you are likely to continue trading the old paradigm, which of course is a bad thing to do. No superpowers. Just thoughtful trading. Good trading everyone!
  • #159
  • Sep 8, 2014 12:49pm Sep 8, 2014 12:49pm
Quoting GEfx
... It should be made clear that positive expectancy is not another way of saying you hope for a positive outcome. Positive expectancy is a result of deep market structure analysis, and calculated risk/reward analysis, among other things...
Yes, positive expectancy is completely dependent upon an extant empirical and historically demonstrated reality - a statistical reality projected into the future to some degree or another. If that statistical reality projected to some degree into the future does not exist in one's trading, then one is doing the closest thing to Guessing & Gambling as they possibly can.

Empirical evidence rules every decision a wise technical Trader makes - every single one of them. Take away the empirical evidence and I cease to exist as a Trader in any market. I just won't participate without clear (crystal clear) empirical analysis.


Quoting GEfx
As for multi-lot multi-time frame trading, I trade this way, having started long-term trading this past spring, along with day to day, short-term trading, too. As for trends, I recall a comment made by a Federal Judge a long time ago regarding a case before the court dealing with pornography: I can't define it but I know it when I see it.
Having been exposed to it, he could probably know it when he saw it. That too, would require some kind of historicity with a degree of quantifiable consistency, before he could call it porn in the present. If the judge has no historical context, then something could be put before him that "looks like" porn, but may indeed be something other than porn. It could be porn-like, but not the real deal. The judge's ability to make such distinctions would not be possible, had it not been for his historical points of reference where he had to have encountered real porn in all of it various attributes.
F-X-C-M | A Classic Retail Bucket Shop Scam Artist Who Manipulates Prices
  • #160
  • Sep 8, 2014 12:56pm Sep 8, 2014 12:56pm
Quoting iDoubleStoch
{quote} Yes, positive expectancy is completely dependent upon an extant empirical and historically demonstrated reality - a statistical reality projected into the future to some degree or another. If that statistical reality projected to some degree into the future does not exist in one's trading, then one is doing the closest thing to Guessing & Gambling as they possibly can. Empirical evidence rules every decision a wise technical Trader makes - every single one of them. Take away the empirical evidence and I cease to exist as a Trader in any...
Agreed. I guess, to some degree, the judge needs to have developed some dirty old man characteristics -- lol. Same holds true for trading, except we're talking about FA, not porn. Good trading my friend!
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