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  • #181
  • Nov 23, 2014 9:59am Nov 23, 2014 9:59am
Fez, you sure are a wonderful person and one of the first in FF opening my Forex eyes. As soon as your MM post is here I will start to begin/learn small using the method in my micro live acc. Keep on going with this great thread. Thank you.
  • #182
  • Nov 23, 2014 10:00am Nov 23, 2014 10:00am
Thanks a lot for sharing your method! Will continue to read your posts with greatest interest.
  • #183
  • Nov 23, 2014 10:25am Nov 23, 2014 10:25am
Hi,

I've been eagerly reading all the posts since this morning.

When I was reading the millipede thread my only regret was that the OP was gone since long. I tried the millipede. Three times. I failed. Three times. The mistake I made: over leverage. The accumulation of little losers was such that the 700 pip winners weren't enough to cover.

Anybody who read my posts should already know that I'm objective and very math oriented. That's why I'd like to correct two misconceptions I found here and which I wish I knew when trying the millipede.

First: "With a 40 to 1 RR you can lose 39 times"
It isn't true in general. It depends on your MM. This is only true with fixed lot size (or martingale if you can sustain the
$562,949,953,421,312 DD before your make $1 profit). But a lot of people are using x% MM.

With R=40, if you risk 1% and win your account is multiplied by 1.4. If you lose, your account is multiplied by 0.99. So 39 losers multiply the account by 0.99^39 ~ 0.67573. The winner brings the account at a DD of 5.4%. Not in profit. Not back to breakeven.

If you risk 5% per position like some people do here, after 39 losers and 1 winner, the account will be in DD of 52.6%.

What if you risk a ridiculous 0.1% with this system? 39 losers followed by one winner multiply the account by 1.0002: breakeven. The key is not only big RR but very small risk per position. Obviously you won't turn rich next week this way. BUT If your risk is around 0.1% or 0.5% you're almost certain that you can't go bankrupt. After 150 losers in a row (!) your DD would only be 53%.

Second: "That's a scam, can't be for real!"
Very wrong. Well I can't tell whether Fez's is a scammer or not but this doesn't prevent to be done for real. Just think about it: the expectancy of your system is the average money per trade you make net for every $ you risk. The formula is E = winrate x (1 + R:R) - 1. It needs be positive for a system to be profitable.

Let's say your system wins 55% of the time with a RR=2. Your expectancy is 0.55*(1+2)-1 = 0.65. This system can be considered very good.

The expectancy of a system with a winrate of 7% and a RR of 40 is 0.07*(1+40)-1 = 1.87 How would you consider this system?

It's not without a reason fezmar went red diamond in a night. He is the new Graeme.
No greed. No fear. Just maths.
  • #184
  • Nov 23, 2014 10:57am Nov 23, 2014 10:57am
Quoting Traffex
Hello Fez, You use all timeframes from 1 h to 5 min and this in all majors. How much time do you require and how many trades do you make on average in a day ? When do you trade ? London Open to Close ?
Sorry that I ask again.
  • #185
  • Nov 23, 2014 10:57am Nov 23, 2014 10:57am
Quoting PipMeUp
Hi, I've been eagerly reading all the posts since this morning. When I was reading the millipede thread my only regret was that the OP was gone since long. I tried the millipede. Three times. I failed. Three times. The mistake I made: over leverage. The accumulation of little losers was such that the 700 pip winners weren't enough to cover. Anybody who read my posts should already know that I'm objective and very math oriented. That's why I'd like to correct two misconceptions I found here and which I wish I knew when trying the millipede. First:...
PipmeUp -- read from beginning and try to understand what Fez written in his post:

started with 3000
First win when account balance reached 600. That means lost 3,000-600=2400
Each trade he lost 90. Therefore he lost 2400/90 = 26 trades.
In each trade one can go for 1.8 standard lot to risk 90 with 5 pip sl.

How many pips one need to earn to double his account with lot size of 1.8?
333 pips.

For the time being try to forget your calculation and listen what Fez is trying to revel here.
Keep patience instead of drawing your conclusion.
Enter Signature
  • #186
  • Nov 23, 2014 11:15am Nov 23, 2014 11:15am
Quoting fezmar
.....Rest assured I will not abandon this thread until I feel I have laid everything out in an adequate manner, regardless of whether anybody is interested. Stay safe, Fez
thank you!
and looking forward to hearing more about this interesting topic!

best
Lorenzo
  • #187
  • Nov 23, 2014 11:20am Nov 23, 2014 11:20am
Quoting mokhlesur
{quote} PipmeUp -- read from beginning and try to understand what Fez written in his post: started with 3000 First win when account balance reached 600. That means lost 3,000-600=2400 Each trade he lost 90. Therefore he lost 2400/90 = 26 trades. In each trade one can go for 1.8 standard lot to risk 90 with 5 pip sl. How many pips one need to earn to double his account with lot size of 1.8? 333 pips. For the time being try to forget your calculation and listen what Fez is trying to revel here. Keep patience instead of drawing your conclusion.
I never post in a thread I didn't fully read and understand. I think YOU totally missed my post. So please do yourself read and understand what I wrote. You didn't get it at all. Second you clearly didn't read the thread yourelf. Fez explained that his MM drastically changed since then. He explained, should you have read, that he moved to a very low leverage for this very reason. This is exactly what I explain. So I'm glad to have posted this math you don't care about. Yet it was directed to people like you: people who don't read half, don't bother to understand completely and try the same with insane leverage. Then blow their account and blame the OP to be an evil scammer working for the devil stop chasing broker.

Mathematics are not meant to draw MY conclusion. Math are objective. They draw universal conclusion. 1+1=2. You may believe it or not. You may like it or not. You may accept it or not. 1+1 will keep being 2. With or without you.

Please Fez go ahead with your excellent thread.
No greed. No fear. Just maths.
  • #188
  • Nov 23, 2014 11:36am Nov 23, 2014 11:36am
Quoting Traffex
{quote} Sorry that I ask again.
My apologies, I must have missed this. I am normally busy during the day studying/working. I trade on my breaks and 3-4 hours after I get home. I do not worry about sessions and the like. I simply turn on my monitors and look for setups. I make on average maybe 4 or 5 trades a day across all the pairs, bearing in mind I use anything down to 5 minute chart.

Fez
  • #189
  • Nov 23, 2014 11:45am Nov 23, 2014 11:45am
Quoting PipMeUp
Hi, I've been eagerly reading all the posts since this morning. When I was reading the millipede thread my only regret was that the OP was gone since long. I tried the millipede. Three times. I failed. Three times. The mistake I made: over leverage. The accumulation of little losers was such that the 700 pip winners weren't enough to cover. Anybody who read my posts should already know that I'm objective and very math oriented. That's why I'd like to correct two misconceptions I found here and which I wish I knew when trying the millipede. First:...

I thank you for your valuable post. Your calculations are naturally spot on. However, one thing I mentioned in an earlier post to another trader - I do not risk a % of my account after the first trade. For example my account right now is at circa 550k. I risk 0.5% in that trade, so around $2,750.

I now risk this constant $2,750 until I am in profit again.

Does that make sense? The reason why in your experiments the large winner wasn't enough to cover all the small losses was because the large winner, although a large percentage gain of the account after the losses, is actually a smaller percentage increase in terms of the original account value before the losses. With the way I trade it, that large winner will be enough to cover the losses. For example:

$2,750 risk on 5 pips - lost 39 trades = $107,250 = Account value down to $442,750
My 40th trade wins - still a risk of $2,750, therefore a gain of $2,750*40 = $110,000 = Account value to $552,750.

Naturally this is a small profit margin in this calculation. In reality I actually shoot for larger risk:rewards and have a slightly better win rate.

The main problem with this is the drawdown. I have accepted this, and the risk that comes with it. I understand that the percentage risked of the account effectively increases after every trade. Many traders cannot accept this, and therefore they cannot trade this with what I have laid out, but would be more suited to the money management you proposed. It is a matter of personal discretion.

Fez
  • #190
  • Nov 23, 2014 11:47am Nov 23, 2014 11:47am
Quoting PipMeUp
Hi, I've been eagerly reading all the posts since this morning. When I was reading the millipede thread my only regret was that the OP was gone since long. I tried the millipede. Three times. I failed. Three times. The mistake I made: over leverage. The accumulation of little losers was such that the 700 pip winners weren't enough to cover. Anybody who read my posts should already know that I'm objective and very math oriented. That's why I'd like to correct two misconceptions I found here and which I wish I knew when trying the millipede. First:...
While I can't disagree with the fact of your math, there is something else that I have noticed that happens. When the trend bites, which it does eventually, your win rate changes. You find you have fewer losses, more BE, and most importantly multiple winners running. So what was once 1 win in 40, becomes you sitting on 10-12 wins for 3-400 pips each. It is only at this point that the balance really tips in your favour. I agree 100% that trading as small as you can is the safest way to go, and building mulitple 'legs' as Graeme described is the safest (and ironically quickest) way to get there. JMHO
  • #191
  • Nov 23, 2014 11:53am Nov 23, 2014 11:53am
Quoting fezmar
{quote} I thank you for your valuable post. Your calculations are naturally spot on. However, one thing I mentioned in an earlier post to another trader - I do not risk a % of my account after the first trade. For example my account right now is at circa 550k. I risk 0.5% in that trade, so around $2,750. I now risk this constant $2,750 until I am in profit again. Does that make sense? The reason why in your experiments the large winner wasn't enough to cover all the small losses was because the large winner, although a large percentage gain of the...

Very interesting. Trying not to jump the gun on questions, but what you mentioned brings up one I don't want to forget later.

Just to be clear, the 39 losses could be on a variety of pairs...for example 8 on E/U, 7 on G/C, etc. etc...right? Then you hit the winner on any pair and you then start moving forward with a new lot size.
  • #192
  • Nov 23, 2014 11:59am Nov 23, 2014 11:59am
Quoting spyderman
{quote} Very interesting. Trying not to jump the gun on questions, but what you mentioned brings up one I don't want to forget later. Just to be clear, the 39 losses could be on a variety of pairs...for example 8 on E/U, 7 on G/C, etc. etc...right? Then you hit the winner on any pair and you then start moving forward with a new lot size.
Precisely. This is how I compounded my account from an initial $3,000 to circa $300,000. After that I stopped worrying so much about specific trades, and focused more on my equity. As long as it was in the green I would add more trades.

This method does have some risk attached to it. However you can see how, back when I was risking 3% on a 5 pip stop I was making mammoth percentage gains. You could say I got lucky in that I didn't get more than 33 losses while shooting for more than 200 pips - I could not argue with this, perhaps it was luck. But the principle remains perfectly sound - it was just the risk that even I now tremble at.

Fez
  • #193
  • Nov 23, 2014 12:01pm Nov 23, 2014 12:01pm
Quoting fezmar
{quote} I thank you for your valuable post. Your calculations are naturally spot on. However, one thing I mentioned in an earlier post to another trader - I do not risk a % of my account after the first trade. For example my account right now is at circa 550k. I risk 0.5% in that trade, so around $2,750. I now risk this constant $2,750 until I am in profit again. Does that make sense? The reason why in your experiments the large winner wasn't enough to cover all the small losses was because the large winner, although a large percentage gain of the...
This is exactly it. You trade fixed size. More precisely piecewise constant lot size since you increase from time to time. While a lot of people including myself trade %. That's the reason I wanted to warn "1% is far too high with this method". You claim very big runners and for sure people will translate that they can bet 10% and turn millionaires next week. Just read all the "1 pip per day" kind of threads. A lot think that if you can average 1 pips per day you simply need a crazy leverage to be extremely wealthy.

I wanted to ask you when do you decide to shift from $xx to $yy?
No greed. No fear. Just maths.
  • #194
  • Nov 23, 2014 12:07pm Nov 23, 2014 12:07pm
Quoting mokhlesur
{quote} PipmeUp -- read from beginning and try to understand what Fez written in his post: started with 3000 First win when account balance reached 600. That means lost 3,000-600=2400 Each trade he lost 90. Therefore he lost 2400/90 = 26 trades. In each trade one can go for 1.8 standard lot to risk 90 with 5 pip sl. How many pips one need to earn to double his account with lot size of 1.8? 333 pips. For the time being try to forget your calculation and listen what Fez is trying to revel here. Keep patience instead of drawing your conclusion.
This is actually all correct. This is exactly how I traded in the initial compounding stages of my account. The only error I have noted - A lot size of 1.8 yields $18 per pip. My initial account value was 3,000 - to double that would be to gain 3,000, in addition to the 2,400 I had lost on the small losses equalling $5,400 needed. 5,400/18 = 300 pips exactly.

Which is what happened. If you actually pause to think about it, my account balance went from 600 to 6,000 in a single trade - Double the initial balance, but 1000% increase of the balance after losses. To a naive me at the time, it seemed reasonable. Naturally when I told the traders I had newly become acquainted with of my story, they all went quite pale. It was then that I lowered my risk down to 0.5%, and plan to reduce it in the near future to 0.1% - That way even after losing 40 trades I'm only in a drawdown of 4%. Of course the percentage returns aren't huge, but from a 6 digit account it's more than enough to live very comfortably.

Apologies for any mistakes I may have made in advance - maths was never my strong point.

Fez
  • #195
  • Edited 12:14pm Nov 23, 2014 12:13pm | Edited 12:14pm
Quoting PipMeUp
{quote} This is exactly it. You trade fixed size. More precisely piecewise constant lot size since you increase from time to time. While a lot of people including myself trade %. That's the reason I wanted to warn "1% is far too high with this method". You claim very big runners and for sure people will translate that they can bet 10% and turn millionaires next week. Just read all the "1 pip per day" kind of threads. A lot think that if you can average 1 pips per day you simply need a crazy leverage to be extremely wealthy. I wanted to ask you when...
Precisely that. The 3% a trade I used to risk makes me tremble now - were I back where I was four years ago with my knowledge today I would never risk anything more than 1% - even that being in danger of a hindering drawdown.

When I was initially trading and compounding my account aggressively I would increase my lot size every time after a winner. In the example calculation I posted above, once I had the large winner and was up to $552,750 I would then start over risking 0.5% of this new balance.

However, as I said these days I'm much more conservative. I've reached the level I am today and have tasted real success, and returning to where I was through carelessness is a pain I am not willing to go through. So the money I have available for trading is actually split into several accounts, with a savings account kept specifically in case an unforeseen horror should ever happen to my account.

Fez
  • #196
  • Nov 23, 2014 12:17pm Nov 23, 2014 12:17pm
Hi Fez - just had a quick read through the thread and well done to you. It needs an awful lot of patience to trade that way and a sizeable account.

Only thing I would say is (imo) too much money in one account. Edit: just read post above. Cancel that comment.

Keep it going. Was going to wish you good luck but don't think you need it!
  • #197
  • Nov 23, 2014 12:20pm Nov 23, 2014 12:20pm
Hi fez,Thank you for your Moneymanagement system.I was following you from your first post and i will follow you till your last post.Keep your good work.
One question how much pips need you for move stoploss into breakeven.
We can not learn without pain.
  • #198
  • Nov 23, 2014 12:30pm Nov 23, 2014 12:30pm
Quoting alonghuman
Hi fez,Thank you for your Moneymanagement system.I was following you from your first post and i will follow you till your last post.Keep your good work. One question how much pips need you for move stoploss into breakeven.
I use a 1:1, so I set to breakeven when I'm 5 pips in profit. Naturally the quicker you set to breakeven the more trades get taken out at breakeven but the less losers you have, so it's in essence a trade off.

As I've stressed, the entries do not make the method. I've shown above that all you need is to get atleast half of your entries to breakeven ( obviously the higher % you get to breakeven the higher the profitability & lower the drawdown) - the market does the rest of the work for you.

Fez
  • #199
  • Nov 23, 2014 12:36pm Nov 23, 2014 12:36pm
Quoting fezmar
{quote} I use a 1:1, so I set to breakeven when I'm 5 pips in profit. Naturally the quicker you set to breakeven the more trades get taken out at breakeven but the less losers you have, so it's in essence a trade off. As I've stressed, the entries do not make the method. I've shown above that all you need is to get atleast half of your entries to breakeven ( obviously the higher % you get to breakeven the higher the profitability & lower the drawdown) - the market does the rest of the work for you. Fez
Thank you for your response.
We can not learn without pain.
  • #200
  • Nov 23, 2014 12:45pm Nov 23, 2014 12:45pm
Quoting fezmar
{quote}the market does the rest of the work for you - . Fez
That's the cookie cutting the mustard right there...
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