{quote} Opss.. in all these years I always work with diagonal..lol and not always related with time, only with space and movementbut enough for me {image}
- #10,881
- Oct 23, 2014 1:23pm Oct 23, 2014 1:23pm
- Joined Feb 2014 | Status: ember | 1,268 Posts
- #10,882
- Oct 23, 2014 1:36pm Oct 23, 2014 1:36pm
- | Membership Revoked | Joined May 2012 | 1,218 Posts
{quote} Opss.. in all these years I always work with diagonal..lol and not always related with time, only with space and movement
let the rest setting bellow as default
hope it help and best regard
MTH
- #10,883
- Oct 23, 2014 2:16pm Oct 23, 2014 2:16pm
Thanks cfdtaleong and ephisi for your answers.
Yes important points!
Let me discuss some thoughts.
Position Sizing (Money Management):
I think that this is the most important aspect of MM. If a trader gets this wrong, no strategy or system will work in the long run.
There are many ways to do it. For example, some traders like to risk a certain % of their account on each trade. Other, like me, prefer a constant dollar risk per trade (called R) and rise that amount every delta (for example every 1/3 account increase).
Constant position sizing also helps to smooth out the equity curve, if you have a winner, let's say you win +2R (2 times the risk) and then you have a loser (-1R), now you'll end up with 1R, no matter how different the setups were (in terms of pips).
While using a fixed position size (for example 1 lot on every setup) you would have a hard time managing risk. One winner and one loser could be: +50 pips (setup on 1H EURUSD) and -250 pips (4H EURAUD), here the outcome depends on the setups (pips) and in this case you would have lost money. What happens is that you avoid to trade bigger timeframes because of bigger risk and you force yourself to smaller setups.
To sum this point up, the amount risked on each setup should be individually calculated and adapted, so that each setup is equally valuable.
Many know how to do this. For those who don't, check out this online tool (http://www.learntotradethemarket.com/forex-trading-tools/forex-trade-position-size-calculator) to calculate position sizes for each setup.
If you are interested on calculating it by yourself, here is a PDF with examples.
Stop Loss (Trade Management):
Some traders here trade without stop loss orders successfully. I think this depends on the personality of each trader.
This could be risky. cfdtaleong described an example above. If the probability of the price coming back to your target X within h bars is 95% what happens with the other 5%? Maybe 4% are tolerable, but the 1% could continue in the opposite direction causing a margin call/cut.
I think an open position with predefined stop loss level is easier to handle psychologically. You know, trading is 20% skill and 80% psychology.
The difficulty with the stop loss is to get it right, ie. giving the setup enough room to breathe while controlling risk and the risk:reward ratio.
An alternative to stops is hedging. But not allowed everywhere and difficult if you don't know how to do it. Better a stop loss instead of 2 open orders on the same currency pair withouth a plan.
TZ:
We know that price X will be hit with a certain probability within h bars.
What we don't know is how much price will deviate away from our entry before hitting the target.
A wider SL distance means smaller reward (risk:reward ratio) but eventually bigger win rate.
A smaller SL means bigger reward but more potential valid trades turning into losers.
This dilemma is hard to solve.
A question to the traders having 95% win rate here. Do you experience those 1% huge drawdown trades?
A big secret lays here I suspect.
Hedging Idea (Trade Management):
By using a risk reward ratio of minimum 1:1 you know that you will risk only 1R. If the market goes against you, while the trade is still valid (ie. no SL hit), it is possible to hedge with trades on setups taken from smaller time frames in the oppisite direction of the original setup.
For example, let's say I take a short setup on the 4H TF and the entry point turns out to be a fake move and price does not move immediately as expected in my direction.
As soon as I see smaller TZs forming and invalidated (PTZ) on the 15min TF I can trade in that direction. If the original trade turns out as a loser we have made at least another 1R to balance out the loss, so basically break even, or better we made more trades on the smaller TF and we end up with a profit.
This works only with constant position sizing, since all setups have the same weight on our equity.
Hope you get the idea. But I could be wrong.
ps. turned out as a huge post, wont happen again
{quote}So lets say now you want to trade a return to level X. You know price will go there but do you know when and how it is going to get there? It could go 20? 30? 50? pips against you first so how much can your account take? Now lets say your are very sure of your level then all you need to do is hold until it hits you target even if it goes in the red right? But for how long do you have to hold? Will you have enough margin to take other trades while holding the original one. Can your account still be productive and efficient while holding? It...
Let me discuss some thoughts.
Position Sizing (Money Management):
I think that this is the most important aspect of MM. If a trader gets this wrong, no strategy or system will work in the long run.
There are many ways to do it. For example, some traders like to risk a certain % of their account on each trade. Other, like me, prefer a constant dollar risk per trade (called R) and rise that amount every delta (for example every 1/3 account increase).
Constant position sizing also helps to smooth out the equity curve, if you have a winner, let's say you win +2R (2 times the risk) and then you have a loser (-1R), now you'll end up with 1R, no matter how different the setups were (in terms of pips).
While using a fixed position size (for example 1 lot on every setup) you would have a hard time managing risk. One winner and one loser could be: +50 pips (setup on 1H EURUSD) and -250 pips (4H EURAUD), here the outcome depends on the setups (pips) and in this case you would have lost money. What happens is that you avoid to trade bigger timeframes because of bigger risk and you force yourself to smaller setups.
To sum this point up, the amount risked on each setup should be individually calculated and adapted, so that each setup is equally valuable.
Many know how to do this. For those who don't, check out this online tool (http://www.learntotradethemarket.com/forex-trading-tools/forex-trade-position-size-calculator) to calculate position sizes for each setup.
If you are interested on calculating it by yourself, here is a PDF with examples.
Stop Loss (Trade Management):
Some traders here trade without stop loss orders successfully. I think this depends on the personality of each trader.
This could be risky. cfdtaleong described an example above. If the probability of the price coming back to your target X within h bars is 95% what happens with the other 5%? Maybe 4% are tolerable, but the 1% could continue in the opposite direction causing a margin call/cut.
I think an open position with predefined stop loss level is easier to handle psychologically. You know, trading is 20% skill and 80% psychology.
The difficulty with the stop loss is to get it right, ie. giving the setup enough room to breathe while controlling risk and the risk:reward ratio.
An alternative to stops is hedging. But not allowed everywhere and difficult if you don't know how to do it. Better a stop loss instead of 2 open orders on the same currency pair withouth a plan.
TZ:
We know that price X will be hit with a certain probability within h bars.
What we don't know is how much price will deviate away from our entry before hitting the target.
A wider SL distance means smaller reward (risk:reward ratio) but eventually bigger win rate.
A smaller SL means bigger reward but more potential valid trades turning into losers.
This dilemma is hard to solve.
A question to the traders having 95% win rate here. Do you experience those 1% huge drawdown trades?
A big secret lays here I suspect.
Hedging Idea (Trade Management):
By using a risk reward ratio of minimum 1:1 you know that you will risk only 1R. If the market goes against you, while the trade is still valid (ie. no SL hit), it is possible to hedge with trades on setups taken from smaller time frames in the oppisite direction of the original setup.
For example, let's say I take a short setup on the 4H TF and the entry point turns out to be a fake move and price does not move immediately as expected in my direction.
As soon as I see smaller TZs forming and invalidated (PTZ) on the 15min TF I can trade in that direction. If the original trade turns out as a loser we have made at least another 1R to balance out the loss, so basically break even, or better we made more trades on the smaller TF and we end up with a profit.
This works only with constant position sizing, since all setups have the same weight on our equity.
Hope you get the idea. But I could be wrong.
ps. turned out as a huge post, wont happen again
the 3rd wave is the crowd's wave
- #10,884
- Oct 23, 2014 2:36pm Oct 23, 2014 2:36pm
I have an EA that detects the most recent stochastic mismatch between the 1-hour and the 30-minute timeframes for any symbol you attach it to. It draws a horizontal line on the chart at the price where the mismatch was detected. It should not matter what timeframe you pick to attach the EA to. There are some refinements I might want to make but here it is, such as it is. I wrote it as an EA, not an indicator, because it might become the framework for an EA that gives alerts and/or places trades in fully-automatic mode. {file}
Open to new approaches.
ps. turned out as a huge post, wont happen again
. The reason we avoid going into detail on that here is because it very much falls into the "how to trade" category and any decent post on that will have to be at least as long as the one you made (and that is just scratching the surface) which is going to add more clutter to the thread as it is. "How to trade" is not really the purpose of the thread anyway. That said, a post of your nature will be required from time to time I suppose to remind people explicitly of the things that should be considered when trading, be it TZ or not. Good job! 
I want more brain power!
{quote} Yes important points! Let me discuss some thoughts. Position Sizing (Money Management): I think that this is the most important aspect of MM. If a trader gets this wrong, no strategy or system will work in the long run. There are many ways to do it. For example, some traders like to risk a certain % of their account on each trade. Other, like me, prefer a constant dollar risk per trade (called R) and rise that amount every delta (for example every 1/3 account increase). ...
I can't stress enough on how important TM & MM are for the continuity of the account.
When I first started the TZ strategy account I do admit that I was not using any SL, the setups that I take have extremely high probabilities of reaching their TP or at least not going too far away from entry price. However, I was always ready for each and every trade to go extremely bad, so choosing the correct lot size / trade & hedging on lower TFs was the trick of those 1-5% bad trades.
As the account grew, I decided to make things a bit more extreme & pump steroids into my lot sizes
At this stage a set SL became a no brainer. I let go of a lot of promising/profitable trades just because the R/R wasn't good enough for my lot sizes. At the moment I am only tackling extremely high probability trades with a very tempting R/R ratio. I am also sacrificing valuable pips for the sake of immediate move confirmation on lower TFs.What i get back from this sacrifice is that I almost always manage to move SL to BE in a matter of minutes, and from there have a free ride.
My advice is to treat each trade differently. Each trade has its risks and potentials. Each trade should have its own probability analysis, SL, and volume size, never settle for one standard model.
P.S. it took me years to try to perfect my MM techniques & get over the emotions in trading. Don't be frustrated if you don't do it well from the start. Frustration will only lead you to stop trying, and that's where the real problem is.
Best,
Jay
{quote} Top notch trade planning as usual. I like!
USD/CAD: 1st trade +34 pips - Done
Re-shorted at almost the same entry as 1st trade, now running profit + 18 pips (looking for another 10-15 pips)
EUR/USD: 1st trade stopped at BE
Re-entered long at 1.2640
Still planning to add more if we get lower prices
- #10,892
- Oct 23, 2014 6:08pm Oct 23, 2014 6:08pm
{quote} thanks Vlady{image}
No, I really wouldn't have been able to see that. H1,H4 charts would had suggested bearishness at time of your first entry.
Its only with hindsight that D1 chart shows AUDJPY was ranging April to mid-Aug, broke upwards, then plunged down in October and seem trying to recovered to previous ranging zone in last few days.
It's a worry I could not see what you could, even if I had tried. A reason why I've never been successful.
I will try a TZ indicator. Hopefully that will put color rectangles that give me an Ahaa... moment.
When in doubt, HEDGE
{quote}I don't want respect from any of you that claim I have an angle with my posts, just leave me alone. Ignore me, whatever... Focus on you, forget about me and carry on.
No wonder why you were banned from the other thread & ignored by senior members around here.
The fact that you got irritated by a post not directly pointed towards to you just explains a lot.
Anwz here's a part you probably missed:
"No one has the right to ask anyone for proof, every one has the freedom to do whatever he/she wants without needing to prove anything. After all this is a free forum and no one is paying subscription, so no one has the authority or right to demand anything."
- #10,895
- Oct 23, 2014 6:32pm Oct 23, 2014 6:32pm
- Joined Oct 2011 | Status: quo | 4,193 Posts
{quote} Awesome...
try to find ONE THING that you think works most of the time for YOU. you do not need ANYTHING ELSE.
that ONE thing can be TZ, dissimilarity, breakout, coin tossing, crystal ball, anything that you can imagine. But make sure that one thing works for you most of the time.
after you find it start perfecting it and you will have your holy grail system one day. the most important thing you have to remember is that the Holy Grail is YOU.
makes sense?
As Above, So Below
- #10,898
- Oct 23, 2014 7:31pm Oct 23, 2014 7:31pm
{quote} i will tell you something most people ignore and will never understand. So i can post it here without any consideration. This actually is a secret teaching
In previous years, I came across some how-to-trade-forex guides so tedious that I thought forex trading was meant for robots. Having no further luck in sourcing open material, I robot-traded and self-learn inside a silo. But failures came after failures.
Only recently Ullen's trend-is-your-enemy got my curiosity. That led me to this thread of Eurusdd and I was astonished some useful knowledge are being shared in this forum. Getting out of my silo is better late than never and I'm open to all ideas. Thankyou to Eurusdd and all that are generous in sharing your knowledge & experience.
When in doubt, HEDGE