Stimulating Discussion on a non-conventional way of operating

Hi All,

This is the first "thread" I have created and have no real intention to maintain it vigorously. To put it simply, I'm throwing a line out to see whether there are fish around. I have hesitated to create this thread for over 2 years now as I was not sure what purpose it would serve... in any case, I have decided to write this thread now - purely to see if there are like minded individuals out there (at least in FF) and hopefully create a network amongst like minded individuals as trading can be a very lonely avenue/profession. Additionally, I also believe there are much more intelligent individuals out there than I am... I'm hoping that they do come to FF and see this post and network.

So that there is no pretence... here's a quick intro to this thread.

For those looking for a magic bullet or a system/strategy or looking for a coach/mentor..... don't waste your time with this thread or requesting otherwise directly from me. This thread is intended to stimulate thoughts & discussions and get input from like minded or open minded individuals.

I will not be answering any personal questions with specific to my personal finance situation but simply put.. I'm happy where I am at with my trading. I request that all responders keep their post to this thread professional and relevant.

AND NO.. I AM NOT SELLING ANYTHING or any educational service etc... AND NO... I'm not interested in being given a large capital to invest and make money along the way... quite happy with my existing financial avenues and investing my own money... so please don't ask.. (as you can tell this is not my first rodeo).

With the intro done... moving on. Here's my take/story.

There are many indicators out there... (by extension strategies that use the indicators) mostly lagging and some would say a handful of leading... I personally have not found any leading ones that has worked for me in that way.

Like all surviving traders, we've all had our battle scars (some good and some bad) I've ventured into a number theories, books, strategies, indicators etc. but the one thing I have found is that there is no single source of truth.... i.e. no magic bullet.

For those still reading to see a magic bullet in this post... here it is... "Adaptability".... markets change you must be equipped to be adaptable.. no strategy is adaptable to all market conditions all the time.. so look to be adaptable and stop looking for strategies and EAs that only make its creators wealthier (no pun intended to individuals who are in this line of business). Not saying EAs cannot be adaptable or part of one's portfolio but that would be YOUR EA not someone else's.

Moving on...

I've tried back testing (in its technological form i.e. platform/ea based) and forward testing... none have really provided consistent result (there were extremely good months and followed by extremely bad ones).. usually you lose more than you win in the end... and worse yet, you've invested so much time in it to prove that something doesn't work... I needed to get through the testing quicker with more flexibility to answer questions that were running through my mind... they were subjective ones that formulated as I went.

So, one day, I decided.... to take ALL indicators out of the chart.. (yes nothing new..it's called naked trading) then all of a sudden I saw patterns in price movements rather than lines all over my chart.. at first the patters were really simple... bulls and bears.... so the next step was to start looking at those profitable patterns (like as if I was in a time machine going back into time with the future result in hand) and say to myself.. hey, if I did this then and got out then.. what would my past month's result be? This was all done manually.. on screen (drawing lines) and on excel manually typing entry and exit points/prices.... painful yes... in hindsight this was a necessary step in my maturity in FX.

Finally a thought came in my mind.... hey how bout I dump out all the daily stats i.e. O,H,L,C and just do some basic interrogation.... e.g. if a candle was followed by a bull candle how many points did it move above the previous high... then similarly on bear, inside and the engulfing candles. Then I started asking... let's see what an optimum point of entry was (this was really a whole bunch of trial and error questions proven fact or false using excel numbers)... and then further asked.. show me where my entry would have been a "fake out" movement... I then further optimized it to take as much of the "fake out" as possible. When it looked promising... then I looked at the optimum exit points first for Take Profit then second for Stop Loss. To do this again I used patterns within the numbers (not the chart)... the only way to do this was to analyze the lower time frames.. in the first instance the hourly. And so the process continued.

After three days or there abouts... I then derived the optimal entry, exit (TP & SL) at least for my style of trading. By "my style" I mean that a trading style to suit your lifestyle rather than to change your lifestyle to suit trading.

At the end of it, I had a money management ratio that may have been skewed more to the risk rather than the reward.. big no no apparently... BUT!!!! the one thing I learnt is that true risk is the frequency/probability of it becoming real. So.... to put simply... I personally defined risk not by a simple risk to reward ratio of n:n but more so the probability / frequency of profiting (take profit being taken) versus probability / frequency of losing (stop loss being taken).

Anyone share these thoughts or already have this in practice???

I have uploaded an image of my account not for bragging rights or anything like that but to provide supporting evidence that I am coming from an angle of relative success and partially, if i was the reader of this thread and not the author... I would think the author was a nut bag and felt like I wasted my time.

Anyway, thanks for taking time to read through this... and taking interest in the post. I look forward to like / open minded individuals commenting back.

Regards,

Archie Oh

very cool approach Archie! just out of curiosity, are you willing to provide the statistics for your method? How frequent did your patterns develop (i.e. was there a large sample size (number of patterns) so that the statistics are meaningful?) Is it timeframe dependent? (i.e. you mentioned that you had to drill down to the hourly data-- could your pattern setup be observed on monthly data and then drill down to weekly or daily data for the entry?) Is it pair dependent? (i.e. only "works" on EURUSD and not other pairs?) How robust is your entry? Is the entry a range or an absolute point within your set-up pattern? (i.e. if you "missed" your optimal entry, how negative is the impact on your P/L?). I'm subscribed...

Hi Dave,

To be quite honest, I can give you an example of a potential entry using fresh data and what I find but you may need to wait a couple of days as my original workings that has brought me majority of my success shown in my stats is lost in the transition from one laptop to desktop to laptop to desktop due to upgrades of hardware. The market has changed since 3 years ago and that particular strategy is no longer my primary but definitely will be in play when the market conditions becomes more conducive to that strategy.

What I ended up doing at the end is building a spreadsheet the supported my findings so I plugged in the needed statistics and it gave me my objective order entries & exits. So what you see there in my stats was that I did 226 orders (All Time) in 3 years.. that means I picked the entry & exits strategically to get to the 723%. I basically place an order daily.. and if it gets taken or not, I don't care and clear the deck everyday... I also don't panic and watch the market because statistically speaking, I was comfortable with the potential loses or frequency of losses so it was truly objective and took the emotion out of it.

Rather than give you something.. do you have anything in mind.. lets say entry wise? I'll quickly do an analysis for a currency pair in regards to the entry but is not to be taken as a strategy.. just simply stats of a potential entry. Any request? Even better, is there anything in particular you'd like for me to look at in terms of probability and statistics... you can privately message me if you like. This will get you a feel for things... the only caveat I have is that if your suggestion is right, that you will allow me to work with it further...

This is exactly my purpose for this thread i.e. see if there are other individuals out there that operate like me and hopefully we can benefit from sharing knowledge with each other. I'm not after any strategy however I will statistically look at it.

Please don't include indicators in what you are suggesting as these are lagging.. (but in saying that, I reckon that with a bit of tweaking may be.. but dunno.... there could be something in it. So for example.. don't send.. when macd cross xyz and divergence abc .. and so on... keep your chart clear and tell me what you see and would like me to look at.

To everyone else, given Dave is the first to reply, I will be doing this for illustration purposes to satisfy Dave's request only.... not interested in increasing my workload.

@ Dave, happy to continue our conversation privately if you like.

Regards,
Archie Oh

I think we think a lot alike. I have had the idea of a network of people who think alike and also after many years, dont use or think about indicators in the regular way.

This is what im looking at now when i trade:



None of the things you see in there is something i use mechanically. Instead i make decisions, am i going to do that or am i going to do this?
The envelope you see on M1 for instance is a general zone of some resistance, and as you can see in the picture it has an effect of slowing down price. This is not always so and it is NOT something to trade on alone, its simply a part of what i use. There are reasons for all the other stuff as well. For instance the D1 chart is for the general long term trend. The H1 is in that timeframe because i want it to be exactly that timeframe, i want that resolution and that information presented to me in that way because it helps me to make decisions. The M1 chart is mostly there so i can read the earliest signs of price action. The envelope is there to tell me if things are moving quickly or not. I have been using it for many years so its a habit and to me its very usefull. Also i use the M1 to place my S/R, which i put there because of the PA in those places.

In a normal day i close on maybe 15 positions. A slow day maybe 7 positions. Sometimes i have positions open for a week, even though most of the time i would prefer not too. I trade very small positions compared to my account and if i compare to what other people do mostly. Probably more often then not i have one or several open positions. I trade only E/U, because i see no reason to trade more pairs then the one i know best.

So i guess to put it short and sweet: I am making the decisions to trade or not to trade, not some mechanical "If this happens do that". I am also making the decisions of when to close so i dont have any fixed ideas on how big TP or SL i am going to have. I adapt to what the market does. That also means i dont have a fixed plan, it changes. I honestly think this is pretty much the only way to do this as a lone wolf trader without all the best data and frontrunning EAs and big 100+ lot orders and such.

So to give you an idea what that mean sin practice i will analyze price right now:



But still, i dont know if you call this a "non-conventional way of operating". In way it is since most people here seem to be searching for a mechanical "if this happens do that" sort of way of trading and i dont think thats going to work given the circumstances. On the other hand there is quite a few people who are trading on PA and discrete S/R. So i dont know. Anyhow, happy trading and lets see where we go from here.

Note: I originally sent this as a PM to Archie, but decided to post this for the sake of conversation and discussion.

Hi Archie,

I've been working on something similar to your first post.... basically looking at optimizing breakouts but on the weekly and monthly time frame. For my analysis I use Amibroker, for it allows me to rapidly write simple code to test my breakout ideas. The programming is somewhat similar to using Excel. Specifically, I wrote a script to answer the following question: For any given pair, if the current weekly (or monthly) move from last week's (or last month's) close is greater than lets say 100 pips, what is the likelihood that the market will continue to move higher? Likewise, if the current weekly (or monthly) price has dropped below last week's (or last month's) close by lets say 100 pips, what is the likelihood that the market will continue to push downward? Very simple. Importantly, I can specify the pip threshold to test (100 pips 150 pips, etc...) so that for each pair I can determine a unique upside and downside threshold. But the beauty of the script is that it then assigns, for each condition described above, a binary score of +1 or 0 depending on whether or not the market has met the above criteria for any given weekly or monthly period. Then the script adds up over a user-defined look-back period the number of times both criteria are met in the same week (or month), and calculates a percent similarity. The lower the percent similarity of the thresholds, the lower is the likelihood that both thresholds would be hit within the same weekly or monthly period. What this means is that I can go to any pair and select a unique robust upside and downside weekly or monthly pip threshold to use as an upside or downside breakout entry point for a trade. The permutations of this idea are endless. Nothing new idea wise, but it seems to work well in my limited back-testing...if anybody is interested in the code I'll be happy to post it.

Dave

Well I would hope that everyone who cares about r/r understands that it's not only about the risk vs reward but also about the frequency of loss vs win. You can't have one without the other, as e.g. decreasing your SL may improve your r/r ratio but also increases the likelihood of the SL getting hit, which decreases your win rate.

Practical example of the thoughts above.


Like i said, TPs prone to change.

I will leave those trades for say... 20 minutes and go have some tea. Then if it has gone through the S/R i might enter if it is not shooting north very fast. The positions placed are very small, but this is how i do it, every day. Happy trading to all and everyone!

Another non event..... Thanks for at least trying to make this something yaed