Multi-Lot Multi-Timeframe Position trading

And what does all this waiting get us? More pips! Now it's satisfied the spacing rule, a minimum of 50 pips between my newest lot and where another would go on right now. But I still haven't got the retracement signal on the RSI yet. So, what do I do? You guessed it, I wait some more. I can wait until It goes to 75 pips spacing between the newest lot I have on now and where I'd need to put another lot on, or to say, the newest lot I have on now is +75 pips. At that point, I really NEED to take profit. But right now, I don't need to, so I wait for the beginning of a small retracement. I just wait...tick...tick...tick... Good trading is sooooo boring. Questions? Comments?

Well, I never got the perfect EU short exit, but since it's Friday and I wanted to reduce risk over the weekend, I took the oldest lot off at +125 pips anyway. Not bad to have a plan not work perfectly and have to settle for +125. I had earlier taken a 112.9 profit lot off this same trade, so that's about 238 pips off an initial risk of only 62 pips to enter, or about a 4 to 1 r:r ratio. I can do better than that though. I'm still carrying two lots short over the weekend, one at +80 and one at +30, and that's enough weekend risk. Most long term traders will just ride through the opening gaps after the weekend and continue with their trades. That makes a lot of sense if it's a winning trade. Probably more than half the time, the gap will wind up being in the traders favor if it's a winning trade. If it's a losing trade going into the weekend, that's easy for me; "Cut losses short". So, in the end, a trader only needs to do the same 4 things over and over to make a very good living at this trading game, Buy low, Sell high, let winners run, and cut losers short. It's just that simple. I hope my examples have demonstrated how that can be done in a real-time trading environment with live trades, and perhaps they clicked a light switch on for someone out there. I hope so. I'll give more examples next week for anyone who want's to see them. There are some situations, like news spikes, deep reversals, and run-away markets that I haven't really covered in detail.

Once again, I'll emphasize that trading is very risky. You can lose all your capital learning how to do this and by the time you figure it out you have nothing left to trade with. I always advise everyone, no matter their experience to perfect the method with a demo account or at the smallest trade size they can trade. That might take 5 or 6 years. If your method is sound, it will work just as well at $0.10 per pip or a penny a pip or on demo as it will trading multiple standard lots. Save your capital for when you are sure you've got it down cold, then go out and make your fortune. I wish everyone a wonderful weekend. The weather will be beautiful here and I plan to spend it with family and friends. I will be in and out to answer any questions or comments

G

I was just surfing topics about trading today when I came across an interesting article. A top trader had a great method of letting his profits run. Once he was well ahead on a trade, he would just leave it on and take the rest of the day off. Some days he would come back the next morning and see it had reversed and stopped out overnight. Then he wouldn't bat an eye. He'd just go back to work trying to establish another good position. Most days however, he would come in and cash in the huge profits that piled up in what was already a good trade that he walked away from 20 hours ago. That's not my method, but as I read it I remembered the many times I over-traded a position, closing it early for small pips only to see it move hundreds of pips in my direction afterwards. I remembered all the times I went to sleep with a position a little ahead and woke up with a basket full of pips. There's a lot of be said for establishing a good profitable trade, then just walking away from it to let it work. I'm working on developing that degree of patience and confidence, but I really can't say I'm there yet. Lacking that level of patience, except when I'm sleeping where I do quite well, I do the next best thing I know of.

My simple method takes profits out of a trade in ever bigger bites, as long as the market will offer them. So while I may not have the confidence and patience to let a single lot run to 400 pips, I can still manage to "let my profits run" by taking them off and putting lots back on at 100 pips a pop for 4 complete cycles. Some would say I am paying four spread costs when if I had just left the lot on, like the fellow that just went home after a trade got well ahead, I would make the same amount plus the extra three spread costs, increasing the positive expectancy of my system. I can't argue with the math, and I applaud anyone who has that much confidence in their trades. I'm perfectly happy though taking off a 500 pip swing in five 100 pip trades. It's probably more of a psychological thing than anything else. After all, even the top trader mentioned above couldn't just sit by his screen and read a good book while his pips added up. He had to get up and leave the office to let his profits run. As I said earlier, letting your profits run is the hardest thing to do in trading. It's much harder than picking a pair and a direction. It's even harder than cutting losses short, which is a very tough thing to do. Sure, there are a very special few people who can scalp small pips here and there and make a nice living at it, but they are called special for a reason. For the vast majority of us mere mortals, if we want to be a successful trader, we need to find a method of letting profits run. We have to defeat those demons that would have us take a 50 pip profit, only to see the good trade we worked so hard to find run up another 300 pips or more.

This is my method of beating back those demons who would have me early exit a profitable trade leaving the vast majority of the profits on the table. It works for me as I have shown in live real-time trading here in this forum. If you have your own method, even if it is to take the rest of the day off to spend with family when a trade is doing well, then that's fine too. The point is, any successful trader, except those "special" few, must find a successful method that will mechanically cause them to let their profits run. Sometimes a gut feeling might work, but it can't be relied on to pay the bills. You need something more methodical and mechanical that you can depend on in good times and bad. If you don't like this method, I suggest you think long and hard about what you intend to do about this problem, and it is a problem, of letting profits run. And that's my observation about that interesting article.

G

Hello Graviton,
Hope you and your family are well. Thanks for your market insight and your valuable information. I have been trading your system this week but didnt get a runner....i was either stopped out or went to BE. I was intrested in especially the GBPNZD and EURJPY according to my fundamentals and the currency metre but somehow they didnt move that much. Anyway i tried the AUDJPY sell but still it didnt work out.....I think i have to refine my entries...I understand you look at trending pairs and have keen interest. then filter with fundamentals and the currency metre...I realised the currency metre keeps changing and by the time the strongest vs the weakest pair appears, it has moved almost its ADR...Do u think trading High ADR pairs will improve this...or you wait for a retracement and then renter? Please clarify that to me boss and give me an insight on what pairs you have keen interest on and why? also how you may filter them?
Another question is about handling a position....i thought you only remove a lot when there is a retracement (me i consider rsi 15 min going above 50 level) and replace it when all entry conditions are back in place....but you keep adding lots in case there is no sighn of retracement as long as the spacing between the latest lot and the one you are going to add is right...but you keep moving the stop to a BE level of the newest lot and the latest.Is this the case sir?
And how big should these gaps be? is this a multilpier of ADR? wat do u use or consider boss?
Funny but i can handle handling the pressure and taking chance on a position to give me as much as i can get and keep adding lots if all conditions are still in place as long as i know am already in profit and the worst is BE....maybe becoz i have done gambling before...haha
My problem is which pair to choose..the entry i know...maybe we keep guessing...lol and try any that meets all requirements..never know...it may make the big pips...
A BIG THANK YOU TO YOU SIR GRAVITON....I am alwyas here waiting for your new post and advice....Let the good Lord keep you and your family in good health and always enable you to keep posting here.
God bless you and have a good weekend

Hi Nogames. Good to hear from you. You are correct, everything starts with a good entry. The GN should have been a good trade, but the volatility was very high on it. Just the H4 ATR was 80 pips. Compare that to the EU that only had an H4 ATR of 28 pips and you can see your problem there. You had the right pair, one that had a weekly range of 660 pips low to high and went up every day of the week, but your stop was way too tight for the volatility of this pair. If you wanted the pair to run the week, you'd need to enter with a stop at least one daily atr, or, about 175 pips. Of course you could always exit early for a smaller loss if it was a bad entry, but any entry with a stop less than the H4 atr of 80 pips is suspect. So, on that one, good pair selection, bad stop loss. Now, if you can't fit a sl of 190 pips within your money management, then you just have to pass on the trade anyway. Either way works, entering a good a good trade with an adequate sl, say 1 to two daily atrs, or just skipping that one and look for one you can afford. Entering a good trade with a sl much less than a daily atr is probably going to result in a loss due to volatility nearly as often as a win. So, the problem on that one was not the entry or which pair to choose, it was the volatility and the stop needed. Always check the daily atr before taking the trade and setting the stop. Problem fixed.

Moving on...

If you are getting kicked out of good trades too often on a BE, then you are probably going to BE to soon. Double the distance you are using to set to BE and that problem should go away.

I'm going to recommend you to something that may help you to select better entries. This is the 100 period regression line that I gave Landsat earlier. Here is the link: http://www.mql5.com/en/code/10249

Use this as your primary indicator when looking for trends heading the same direction for 8 or more timeframes. Since it considers the past 100 candles, it often provides a better overview of trend direction. See if this doesn't provide a better selection of pairs for you.

EJ is a bit of a problem as both the ECB and the BOJ are racing to see who can devalue their currency the fastest, so it might not pass the fundamental gut check. Selling AJ, or any pair with JPY on bottom also might not pass the Fundamental gut check since the BOJ is trying desperately to reduce the value of the JPY.

Yes, the currency strength meter lags price action a lot. I just use it to eliminate trades that don't line up with the philosophy of trading strong vs. weak. So for instance, perhaps the EJ looks like a good trade from trends, but if both the Euro and JPY show up as very weak, I would pass on the trade as it's anybody's guess as to which will turn out to be the weakest. If however EU short looks like a good trend, and USD shows up as strong and Euro as weak, it passes that test. These trends should last for a very long time, so even though you missed the last impulse move that generated the strong vs. weak signal, in most cases there will be other moves and you'll be in position for many of them.

Favorite pair at the moment is EU short. 8 of 9 TF's trending down as measured by the RSI below 50% or the 100 period regression line. USD is fundamentally strong, Euro is fundamentally weak. There is also this formation that I have been trading for quite a while now as shown below:



As far as spacing between lots, I will typically put the second lot on pretty fast, at about +30 pips from the first. The third will go on about +50, then I'll seek to slowly increase it as I take profits and put on new lots. We want to buy low and sell high as best as we can, so that would entail buying a new lot right on the bottom of a deep retracement, or really just as it starts to end, and selling right on the peak of a price impulse upward (for a long trade) as best we can. We wont always be right, but every time we are it's extra pips in the pocket. Sometimes price will move so fast we wont get much of a retracement to put new lots on and take them off. In that case, I just use the spacing to guide me to when to put them on and take them off, not considering a retracement if there is none to use.

In general I'd rather be a little slower to move the stop to BE. Sometimes I'll just move it half way there, since I don't want to get kicked out of a good trade too early.

I hope that answers some of your questions. If you have more, feel free to post them and I'll answer as I can.

G

Thanks for this thread Graviton.
I have been trading a similar system for the last couple of months off a tread at Babypips and am having trouble staying in the trend and also letting my entries run too far into trouble if a move goes against me straight away (the trader there was trading with no SL).
Although still in profit I am sure I can do a lot better with the insights you have provided into better entry strategies with tighter initial stops , adding to winning positions which is a ploy I haven't yet used and wider stops once the trade is on track. I am currently running with a maximum used margin of about 10% of equity, so have a fair safety margin to load up winning trades.
I have 4 trades running at the moment all positive as at Friday close - long GCHf, short NJ, long AN, long UCHf
Will have to be a bit cautious with the yen trade as the BoJ could wreck it at any moment so won't be adding to that one I think.
I got stopped out of short EU a couple of times at 100 pips with a stop too close so will look at re establishing that in the next day or two if it doesn't bounce off this strong resistance from 11/2012

Once again thanks and I enjoy the long texts - reading a few times to really get the gist of what you are saying whiles away the waiting and stops the overanalysing.

Regards
DT

Thought I'd just share this
My memory isn't so flash so I need something simple to keep 24 pairs in order
I only have one display at present so this is how I run through my quick checks and keep my thoughts on a spreadsheet
it calculates the maximum pip risk at the current SL setting and Max drawdown if everything turned to S*** together.
If I close the spreadsheet the shorter TF's are there to look at.
I save a MT4 profile for every pair with all the timeframes so its just one click between pairs.
Also a Profile with all the active pairs on it to quickly check how they are doing.


Regards
DT

Glad to hear you are in profit Dallytrader. Congrats on that! I don't advocate trading without a stoploss. It works well for a little while, then the law of large numbers catches up with you and a trade runs against you so far it wipes all of your profits and eventually your account. I do agree that a stoploss has to be wide enough to absorb the vast majority of news flash swings. So, if you are taking large occasional losses from having no stoploss, I'd advise don't do that. Decide on what you personally consider a large loss, set a stop there, try to cut your losses to half that amount as often as you can, and never take another large loss in your life. If you want to trade for a week or more, then a large loss for EU might be 1X to 2X daily atr, or 75 to 150 pips. But for a more volatile pair like GJ it might be 150 to 300 pips. In any case, if you decide for yourself what a large loss is for the pair, market conditions, and your personal trading goals, set your stop there and practice over and over trying to recognize bad trades early and cutting losses short, you can usually hold your losses to 1/2 what you personally consider a large loss and never take another large loss again as long as you live. That's what I do and what I advise.

So, if the trend is strong, and you are having trouble staying in it, you are trading with too tight a stop or exiting too early. Before you exit, go back and look at the longer timeframes that caused you to take the trade in the first place, and see if this is just a minor retracement, even if the pip's seem large, or is this a long term reversal. 9 out of 10 times if your initial trade selection was good, it will just be a short term retracement and you should just ride through it. Occasionally major news will come out like a change in central bank policy causing a major reversal and you should exit. Once I have a few lots running, my method automatically takes me out on a major reversal, so I don't worry over those. I just trade about 1/3rd on each of 3 lots as I would for trading a single lot, and it all works out fine in the end.

As to your current trades, GChf long seems to have good long TF trends. It looks pretty good to me. I wouldn't worry over the small bobbles on short TF's on it. NJ short had a great week, but as you noted, don't get squashed by the BOJ there. They really want the yen to be low in value. AN long also had a great week and UChf is doing great due to the increasing strength of the dollar vs. the stable Chf. Over all it looks like a good basket, but I'd be careful of trying to hang in there through any major reversals greater than a couple adr's. You can always exit and re-enter if dark clouds form and it clears back up later.

I have been able to stay in the EU trade with not much more than 100 pip stop, say 100 to 140 pips, but maybe that's because I entered at a different place. Sometimes stop will be more as I usually only move it down after a major retracement on the H1 has completed. These good trends usually run for weeks to months, so I'm in no big hurry to trail my stop closer. I also have that 11/12 resistance marked up on my EU, but that's a few hundred pips away and trading multi-lot I can make lots of green before that hits.

The very most important factor to success in trading is, DON'T QUIT! As long as you don't quit you haven't failed. You can only fail when you quit. If you are trading with good money management and not using too much leverage so you can keep trading even through bad times, you can succeed eventually. Maybe 90% of traders will either go broke from trading too many and too large of trades, or just quit before they reach success. Don't be one of those guys and you'll make it.

Best success,

G

Good idea to use a spreadsheet to keep things in order. Thanks for the contribution!

G

Thanks for the Comments G...

Will eventually get this stoploss under control
I don't trade with no stoploss now but getting it in the right place has been a bitch.
Your multi position answer will take the problem away and I am grateful for that.
Also learning to jump back on the train after its just been shunting in a through station not at the terminus!
have a great week
DT

Does anyone have any good ideas for taking profits when using multi lot trading?

I can get multiple trades on with a new trend and ride it well using a stop loss adjusted daily but often give back a lot when price reverses back to my stop, especially if the trend does hot hold too long. So I need an idea of how to close trades and put money in the bank but still be able to ride a good trend as far as it will take me.

Greetings MarshalMax. I suppose there are many ways to take profits off. I discussed my method a bit in previous posts, but I'll detail it here again tomorrow. It's now way past my bedtime. Welcome to the thread


G

MarshalMax, here's my Take Profit method summarized as best I can. You said you can get multiple trades on and ride the trend well, so let's take it from there. This example is taken from my live trading posted earlier. The goal is to always buy low and sell high. Here we are setup with a 3-lot EU short, and wanting to take profits off as shown below. Closing out a short near the bottom of a swing is buying low. The top lot, or the oldest short has the most profit and it's the one that would be closed lowest from the sell point. Spacing in this example is about 50 pips per lot, so we have a little more than 100 pips profit on the oldest (top) lot and that's the one we'll take off as profit. Initially the trade looks like this:

You can see I have already trailed stops a bit so I was only risking the newest lot's sl at that point. In case of a major reversal, the oldest two would have stopped out BE. We want to buy low and sell high during this process. Since this is a short trade, buying low consists of closing the oldest lot as an impulse down in price is just ending, locking up over 100 pips of profit. Profits are taken off in 100 pip (or larger) bites like this over and over until the trend plays out, which could be weeks or months. We had a good impulse down move here and it was just starting to end with price starting to turn back up so I took about +125 pips off as profit by closing the oldest lot as shown below.

Then we will replace that old lot with a new one when we get two conditions satisfied. We want to put the new short lot on a "sell high" point for a short trade as best as we can, but we also want to maintain or even increase our spacing between lots. That means we want to short another lot on the highest peak price the market will give us, which would really be just after the peak has occurred, and price is just starting down again to rejoin the downtrend. We also want to make that sell at a point that will maintain or increase our 50 pip spacing between lots. Slowly increasing spacing between lots is critical as it gives us the ability to ride through ever larger retracements over time and stay in the trend, and over time it makes each lot that closes worth more pips.

The upswing is just now ending on this trade, but the spacing isn't correct yet to add another lot, so I need to wait for another down and then back up swing to complete. That might take a day or three. Here is how it looks at this moment after the top lot is closed for profit:

After the third lot is placed on, the stops will be trailed again to just between the oldest two lots so they would break even on any major reversal and I'm purposefully a little slow to do that. With profits locked in and risk less than profits in the pocket I will then be set up for another cycle. I'll post when another lot is added and stops trailed.

So, the goal is to buy low on a short trade, which is to close the oldest lot (Take Profit) just after an impulse down begins to end which satisfies my 50 pip or greater spacing. That Take Profit point can be much greater than the 50 pip spacing, but not less. It would be just the opposite for a long trade with the goal of Selling High, selling the oldest bottom lot just after an impulse move up is ending that is 50 pips or greater from the previous lot. Profits are taken off mechanically so if there is a mistake, it wasn't mine, it was just the screwy market. I've already cycled this trade twice for 240 pips, so whatever happens at this point I walk away with profit. Any questions?

Hello Graviton

I just finished reading the rest of the thread (twice) and I have one question from the top of my head.
In one of your early posts (#4) you have mentioned that your stops are really small (mostly less than 25 pips). But in recent posts you mention initial stops as big as 2xATR
and to cut them half way (that would be 1xATR). So Ive got an impression that somewhere along the way you have widen your stops, or you have always had them as big as 2ATR. Could you shine some light on this?
I hope my rambling make any sense.
Again fantastic thread.
Thank you

Sure rew2k7. I have moved from trading shorter term, hours or a couple days, to longer term, days or a couple weeks. There were a few reasons for that. One is I just had to get away from the screen more and this way I can be away for hours at a time without it having much affect on my trading. I suppose I could have started a new thread, but this is the direction I am going, ever longer trades. My trading does adjust to market conditions as well. As price becomes more volatile from geopolitical turmoil, I need to trade wider stops to keep from being knocked out of good trades by news flashes. Tighter stops were working well to demonstrate this method in the beginning, but as the mid-east problems have escalated, I can't use short trades to explain what I'm proposing here because I'll be stopped out from volatility before I can get a 3-lot trade on. While my stops have widened significantly, mostly 80 to 100 pips on entry now, my early exits to escape a losing trade hasn't changed that much. They now run 30 to 60 pips, whereas before they were closer to 20 to 50 pips. The concept is pretty much the same, but the trade durations have lengthened. But yes, I have widened the stops considerably to avoid being kicked out of good trades with news spikes. There might be other adjustments to changing market conditions in the future, but for now my trading is stable and profitable. Thanks for giving me a chance to clear that up. Let me know if you have any other questions.

Rather than just cherry picking past trades to post up here, I've been trying to show live real-time trading results. But the market evolves, changes and adjusts over time with changing economic and political climates. There is even a seasonal effect where many large traders take the summer off and volatility drops off, only to take back off when they return to trading in the fall. I don't know of any method that will always work for every market condition and trader without adjustment over time. At best, if the market doesn't change character too quickly, small adjustments can be made in the trading plan to track it's changes and keep a trader profitable. Usually just small adjustments are sufficient to keep a trader "in tune" with the market, but some effects are significant, like the fall off in volatility at the beginning of the summer and the resumption of volatility at the end of summer, or increased volatility during times of political and economic uncertainty. Changes in central bank policy can cause long term trends to reverse sharply or very large trades can execute for commercial purposes causing a major deviation from established trends and patterns.

Adjusting for these changes requires a careful balance between completely abandoning a paradigm or system that has been profitable for a very long time and being so married to the details of that system that one refuses to acknowledge the losses as they pile up. If a traders system is based on a non-scientific basis, using something like tarot cards or astrological signs and it works, I say great for the trader, I hope they get very rich and enjoy an early retirement. It's like the octopus that can pick world cup winners. There is no scientific reason it should work, but as long as it does he won't have to fear being served up on a plate with some garlic butter. Of course, if it quits working, there is nothing the owners of the octopus, or even the octopus himself can do to fix it because it does not have a logical and scientific basis. If the method does have a scientific basis however and it has been profitable for a very long time, there is no immediate need to abandon the system and seek out another because something in the market has changed. In most cases, just a small adjustment in the system will bring it right back into profit, and a good scientific understanding of the system will indicate right where that adjustment needs to be made and how large or small it should be.

Volatility can be greater or less so, trends can be steeper or more shallow, longer lasting or shorter in duration, existing in one pair and then another and my trend following system has knobs to turn to adapt for those changing conditions. Of course, if trends just completely disappeared from the market place, it couldn't work over a large number of trades. But as long as there are trends, I will find them and trade them profitably.