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  • #341
  • Nov 24, 2014 9:33pm Nov 24, 2014 9:33pm
I would consider break even to include cost of spread/commission. Which is why a loss is 6 pips instead of 5.
  • #342
  • Nov 24, 2014 9:54pm Nov 24, 2014 9:54pm
hi Fezmar
i think I finally got it!
you enter a trade with a high expectancy of getting it to B/E Asap as well as being profitable
and you keep doing this in both directions using your preferred entry method as they appear
and leave them once they're at B/e and hope a few sticks for the long term
because then it takes the guesswork out of which way the market will go
then you exit when you're happy with the no. of pips you made
It's absolutely brilliant! And very generous of you to share with us

I have high regard for you as you sincerely want to help
Sylvia
  • #343
  • Nov 24, 2014 11:48pm Nov 24, 2014 11:48pm
Good morning,

Fezmar thx for the insights

I am intrigued by the thread, as I am a pure FIFO (Fast In Fast Out) trader, this is so opposite of what I am doing..

Will follow with great interest..

green pips

Udine
Sleep less, live fast, as it aint gonna last
  • #344
  • Nov 25, 2014 12:29am Nov 25, 2014 12:29am
Quoting fezmar
Good evening to you all. With a few years of profitable trading under my belt, I feel it is time for me to give out some information on how I trade. I have actually shied away from this for a long while, however upon reading Graeme's fantastic thread and seeing the joy he brought to people's lives I feel I am obliged to share. My name is Fez, I am a 4th year Medical Student. Naturally as you can imagine this is a very demanding degree, and so I am not sure how often I will be able to post here, although rest assured I will attempt to spend as much...
Hi fezmar,

Thanks for sharing. I'm interested.
  • #345
  • Edited 1:58am Nov 25, 2014 1:02am | Edited 1:58am
Quoting fezmar
{quote} Perhaps you haven't clearly understood the concept of my trading, which is that I aim for huge risk rewards by riding weekly/monthly trends, from a minimum of 200 pips up to around 1000 pips. Those trades did go up for 30,40,50 pips. What you don't see is that if i scrolled to the right, price went straight back down and took out all of my trades at breakeven. So the fact that they went double digit pips does not equate a success for me. Such is life. Fez
Hello,

Why you dont enter 5 trades instead of one, take TP on your first trade 50 pips, TP of 2nd trade 100 pips etc, just an example and let run the last trade as you do usally... that way you probably hit TP 1 or more if price come back to break even and if not you have the fifht trade as usual.

regards
Bottomless wonders spring from simple rules, which are repeated without end
  • #346
  • Nov 25, 2014 1:05am Nov 25, 2014 1:05am
Quoting limprobable
{quote} Hello, Why you dont enter 5 trades instead of one, take TP on your first trade 50 pips, TP of 2nd trade 100 pips etc, just an example... that way you probably hit TP 1 or more before price come back to break even. regards
Because in the long run it would reduce the R/R ratio.

Artem
Let's go with the flow
  • #347
  • Edited 3:49am Nov 25, 2014 3:32am | Edited 3:49am
Hello, Fez. I guess you missed this post.

I'm really gratefull to God for stopping by in this thread of yours. It is really interesting, and sure I'm going to try it out live.

Some questions remains, though, for now.

1 - How many hours do you spend on Forex per day?

2 - How many successfull trades you make per month/week (considering those you close only with profit)?

3 - You trade 1H, 30M, 15M and 5M. How do you change those periods during your working session? (e.g., do you start with 1H and go down?)

4 - Do you always wait for the pullback and another resistence/support crossing to enter, or make some discretionary enter?

5 - How many trades per day/week/month you do (average)?

Hope you don't get mad with this. I read your posts and didn't find/understand those situations.

All the best for you, may God bless you even more.
  • #348
  • Edited 6:45am Nov 25, 2014 4:30am | Edited 6:45am
  •  sym
  • Joined Apr 2011 | Status: Working... (too much) :) | 356 Posts
Quoting fezmar
{quote} My trades are automatically set to breakeven once they hit a 1:1 risk:reward.
Hi Fezmar

thank you for sharing your knowledge and experience with us. You are a very kind person and I like your attitude.
I think you put passion in your work as well, and your patients are lucky for sure. Go on this way.
One point:
you set orders to BE when R/R reach 1:1... is not that too close?
I mean... the system works, but couldn't be better set it to BE+3 pips when R/R is 1:1 + 3 pips (or +2 pips)?

It's just a chat about a possible little modification, using your experience in the system or do you you think it's pointless?!!

Thanks a lot!!!

EDIT: if you have 50% out of 200 trades at BE, leaving BE+2 pips you could have more or less +180 pips only with BE orders !!! -500 pips DD with 100 losers and 4-5 orders with 200 or more pips in gain (+1000 pips).
--- nothing to say ---
  • #349
  • Nov 25, 2014 4:38am Nov 25, 2014 4:38am
Hello all.

Ran this by Fez before posting. We both thought it might be interesting.
I'm trying his trade strategy on a small live micro account.
I'm using a simple MA crossover for entry with a 7 pip stop (to cover spread) moving to BE at 8 pips.
I have an EA making the entries so it's running 22 hrs a day. (I'm going to shut it off at close of NY session for a couple of hours as the spreads widen)
I've loaded an explorer and have it in my signature if anyone's interested.

Frankly I'm skeptical of this working with this strategy as I'm not filtering the entries in any fashion (other than using pairs with an acceptable spread)
But it may be a good study in the efficacy of the thread methodology.
  • #350
  • Nov 25, 2014 4:44am Nov 25, 2014 4:44am
Quoting spyderman
Hello all. Ran this by Fez before posting. We both thought it might be interesting. I'm trying his trade strategy on a small live micro account. I'm using a simple MA crossover for entry with a 7 pip stop (to cover spread) moving to BE at 8 pips. I have an EA making the entries so it's running 22 hrs a day. (I'm going to shut it off at close of NY session for a couple of hours as the spreads widen) I've loaded an explorer and have it in my signature if anyone's interested. Frankly I'm skeptical of this working with this strategy as I'm not filtering...
Great. Let's see how it works live.
Enter Signature
  • #351
  • Nov 25, 2014 5:39am Nov 25, 2014 5:39am
Quoting Art5
Hello, Fez. I guess you missed this post. I'm really gratefull to God for stopping by in this thread of yours. It is really interesting, and sure I'm going to try it out live. Some questions remains, though, for now. 1 - How many hours do you spend on Forex per day? 2 - How many successfull trades you make per month/week (considering those you close only with profit)? 3 - You trade 1H, 30M, 15M and 5M. How do you change those periods during your working session? (e.g., do you start with 1H and go down?) 4 - Do you always wait for the pullback and...
My apologies, it seems I did.

1 - I spend perhaps 2 hours a day when I get home.

2- I only close perhaps one trade a month, if averaged out. When I used to compound aggressively and was closing out at +200 I would close out a trade once a week or so.

3 - I trade the majors. During the couple of hours I spend a day there isn't enough time for a new setup to develop on the hourly and 30min. Therefore I look at these first. If I spot a potential setup which may occur in the next couple of hours I mark it, if not I don't look at those charts again until the next day. Then I drill down to the lower timeframes and watch them intently. You become more efficient as you get used to it.

4 - I always wait for pullbacks, to put me in line with the lower timeframe trend and give the trade a good chance of getting to breakeven.

5 - My total trades are around ballpark 30 a week.

I would never get annoyed with somebody attempting to understand what I am laying down. Thankyou for your questions, I hope I answered them well.

Fez
  • #352
  • Nov 25, 2014 5:40am Nov 25, 2014 5:40am
Quoting sclipp
hi Fezmar i think I finally got it! you enter a trade with a high expectancy of getting it to B/E Asap as well as being profitable and you keep doing this in both directions using your preferred entry method as they appear and leave them once they're at B/e and hope a few sticks for the long term because then it takes the guesswork out of which way the market will go then you exit when you're happy with the no. of pips you made It's absolutely brilliant! And very generous of you to share with us I have high regard for you as you sincerely want to...
Hit the nail on the head.

Well done, hope you can gain some value from it.

Fez
  • #353
  • Nov 25, 2014 5:41am Nov 25, 2014 5:41am
Quoting spyderman
Hello all. Ran this by Fez before posting. We both thought it might be interesting. I'm trying his trade strategy on a small live micro account. I'm using a simple MA crossover for entry with a 7 pip stop (to cover spread) moving to BE at 8 pips. I have an EA making the entries so it's running 22 hrs a day. (I'm going to shut it off at close of NY session for a couple of hours as the spreads widen) I've loaded an explorer and have it in my signature if anyone's interested. Frankly I'm skeptical of this working with this strategy as I'm not filtering...
Fantastic. Let us see how it plays out in the coming weeks. Thankyou

Fez
  • #354
  • Nov 25, 2014 6:02am Nov 25, 2014 6:02am
Quoting Kubiasty
fezmar so what is this strategy? When sell/ buy entries? How many pairs? You mean 50 open positions, 1 is winning or 1 is loosing position ?
All answers you will find throughout the thread, which by judging your questions you did not read.
  • #355
  • Nov 25, 2014 6:50am Nov 25, 2014 6:50am
I read all But i cant get it.. i dont understand, You buy and sell the same pair at the same time?! When do you close one position with tp/sl ? What with the other one?

Suppose you open EU pair -> buy and sell. Suppose its going down. You closing TP position which was sell. And.... its going more down and more down, and your Buy position is loosing more. I dont get it...
  • #356
  • Nov 25, 2014 6:51am Nov 25, 2014 6:51am
Quoting Kubiasty
I read all ...
No you didn't.
  • #357
  • Nov 25, 2014 6:57am Nov 25, 2014 6:57am
Quoting Kubiasty
I read all But i cant get it..
So you should read it again ... What you are asking has nothing to do with the way you should handle your positions.
MT4/MT5 EAs/Indicators/Alerts coder
  • #358
  • Edited 8:19am Nov 25, 2014 7:01am | Edited 8:19am
Quoting fezmar
{quote} On a 5 minute timeframe chart a 5 pip stop loss is actually very reasonable. Many of my entries have a 1 pip drawdown only, before going to a 1:1 risk reward allowing me to set them to breakeven. With regard to "practically all" trades hitting the stop, my own experience (and statistics) will show that around one in 40 trades or 2.5% will hit 200 pips. I have already provided an example of the profitability but just for the sake of this debate I will provide one more, with different numbers. I have just shown you that, even if the market...
Since we are talking about math for a random market (and not real market) here, I would like to correct few things. I think there are subtle errors in your argument / calculation in this.
(we are ignoring transaction costs altogether for simplicity)

for a random market, probability of reaching 200 pips profit with 5 pips stop loss will be 1 in 41 trades ( 5/(200+5) = 1/41 and not 1 in 40 trades). So close but not exactly 1 in 40. you can say out of 205 trades, 5 will reach 200 pip target.

what is correct that 50% of the trade will reach 5pips profit before they reach 5 pip stop loss. So you are right that 50% of the trades will reach a point where you can move the stop to breakeven. there is no skill needed to pick entries for this - infact for a random market no amount of skill will increase this chance (just by definition of random market). so no matter how you pick you entries, 50% will reach a point so that you can move the SL to BE. so far so good.

however there is an error in the argument after wards. What happens when you move the stop to breakeven for 50% of the trades? the original 1 in 41 probability (of reaching the 200 pips profit target) will alter since now there will be some trades (or if you want to think of price paths, some paths) which would have reached 200 pips target when stop loss was 5 pips loss but will now get stopped out since the stoploss is moved to breakeven.

hence in this scenario, your expected # of trades that will reach to 200 pips profit target is not 5 out of 205 anymore. it will be lower. in fact you can calculate it. lets do that just for completeness sake

once the trade is at 5 pip profit and SL is moved to breakeven, then the probability of trade hitting profit target (without hitting the SL which is now at BE) will be 5/(195+5) = 5/200. (from this point, price has to move 195 pips for profit target and 5 pip for SL hence 5/(195+5)).

so lets look at all the pieces.

1. of the 205 trades, 50 % will hit original SL of 5 pips . pnl = 205 * 50% * -5
2. of the 50% for which sl will move to BE, 5/200 will reach 200 pips target and 195/200 will result in sl at BE. pnl = 205 * 50% * (5/200 * 200 + 195/200 * 0).

so total

205 * 50% * -5 + 205 * 50% * (5/200*200 + 0)
= 0

so the expected pnl from this is 0 and not 400 pips you calculated.

and we are ignoring all the spread costs. hope this clarifies it. So the claim that with this strategy, we can make money even in random market is just not true.

Not disputing your strategy in real market but just clarifying the error in argument when you assume this will make money in random market too.

Now real market is not totally random so thats a different story. But in real market also if the entry does not have predictive power (i.e. cannot make money on their own) and trends are small then it will not be possible to make money using this trade management method. so in that sense entry is not totally irrelevant - it is still important but not as much as in scalping.


I have seen these types of error in many threads here (more recently in EURUSDD's thread where he misused math many times by throwing big theorems / symbols etc while interpreting those incorrectly). Usually i dont correct these but your other posts are pretty coherent and so i know you will be able to understand the subtle issue here and hopefully this will also help you think about randomness and markets in general.

Thanks for sharing your method here - really helps to know how others are approaching the market,.
Think : Trade : Live Life
  • #359
  • Nov 25, 2014 7:23am Nov 25, 2014 7:23am
Quoting stt
{quote} Since we are talking about math for a random market (and not real market) here, I would like to correct few things. I think there are subtle errors in your argument / calculation in this. (we are ignoring transaction costs altogether for simplicity) for a random market, probability of reaching 200 pips profit with 5 pips stop loss will be 1 in 41 trades ( 5/(200+5) = 1/41 and not 1 in 40 trades). So close but not exactly 1 in 40. you can say out of 205 trades, 5 will reach 200 pip target. what is correct that 50% of the trade will reach...
You anticipated me by some minutes.
I wanted to discuss about this mistake as well, and you presented it perfectly, which I thank you for.

Really important to distinguish theoretical random models from real markets. Markets do not follow a guassian distribution of yields/movements.
Although close to it most of time, it's biased by the trend. Such as, μ can differ from 0, and σ can differ from 1.

Thank you for your spot-on.

Hence, fezmar presented a very interesting money management scheme, which has a 'simple' (not banal) logic , but it should be stressed that his success is due mainly (more than 50% of samples) by his ability to pick non-randomic entries, such as profitable trades. Otherwise, it's not explained why he would not enter randomly to the market, which (since the market is not random) is not profitable.

my two cents.
Lorenzo
  • #360
  • Nov 25, 2014 7:34am Nov 25, 2014 7:34am
Don't confuse random market and random walk market. For you example that's mu and sigma that change randomly. If you prefer it's not random like a coin you flip but like a biased coin which bias changes randomly (and quite slowly) over the time. The bias of the coin can randomly change between strongly to heads and weakly to head. Yet it is still biased to head. In the long run the bias is 50-50 in average.
No greed. No fear. Just maths.
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