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  • #561
  • Nov 30, 2014 3:25pm Nov 30, 2014 3:25pm
Quoting joelmusicman
{quote} If its true that random entries could work just as well, it'd be a simple matter to test via EA back testing. Just build one with a totally random entry with 5 SL and 5 TP. Of course due to spreads the account has a negative expectation, but we'd purely be focused on the win/loss rate. The "wins" in this EA would be entries with SL moved to break even.If the entry has a tradeable edge, then it should have a better % than the random EA, without optimization, and across multiple tests with different date ranges.
Hi Joel,
Thank you for discussion. I did an EA which did something similar and got very interesting results. Curve was amazing. Problem was that inclination was negative, but very smooth. On the other hand I use EA which have random entries but sophisticated (actually not so much sophisticated) exit. It work on lose small, win big principle. Using random entry and very tight SL you can be almost sure you hit SL often. More than 50%.

It might appear that chance is 50% minus some spread. This is not so simple, unfortunately. Situation changes drastically when there is enough room to breathe for position but it doesn't make sense using this method.

Random entry method trades in every situation which is not very good for system itself. Trader can pick tops and bottoms quite easily with couple of years of training. There is very good thread here on FF (unfortunately I don't remember its name) where institutional trader was explaining how big guys place orders. Goal was to place an order with tight SL and taking profit on first S/R level. This is what I did for very long time. I've never thought of letting it grow so much as it worked very well but then Fez came and offered me eye-opener.

I'm pretty sure you can find very precise entry method with very low risk. To make it perfectly took around 2months of training in forextestester and another 2-3 months on real account.
The point is you can lock many trades on BE. You'll collect loosers and BEs and your winners will be still virtual as profit will be still open. It is probably reason why so many of traders are afraid of this method.

I need usually 2 attempts to get into position. I find entry on H1 and I need to shot first bullet to find where is the balance and second time I'm able to shot accurately. This is not possible to do with EA. Your gut is much better than some code...
Lose small, win BIG
  • #562
  • Nov 30, 2014 4:00pm Nov 30, 2014 4:00pm
Quoting 60minuteman
Obviously the entries nearest the high would stand the most chance of surviving.
Yes. The trick is to find the absolute top over and over in various timeframes. Unfortunately, the market will shake you off almost every time. Basically, a top is the last stop-hunt. Until the next one.

To my knowledge, the lowest risk entry is a trendline break near s/r, followed by a retest of the high, forming a double top. These pop up quite often at significant points in a channel in a higher time-frame and get quite a few trades to BE. However, too few survive to make it worth the effort for long-term trading, and too many fail to make it work short-term.

Interestingly, "Graeme" said (Millipede Post4) "tomorrow when we look back today, where is the most likely place for a position to survive? It is at the near the top… Near the open of the daily candle."

Near the open?? In a continuous market, the open is meaningless. My bullshidometer began to buzz.
  • #563
  • Edited 5:25pm Nov 30, 2014 4:48pm | Edited 5:25pm
Quoting AllanS
{quote} Yes. The trick is to find the absolute top over and over in various timeframes. Unfortunately, the market will shake you off almost every time. Basically, a top is the last stop-hunt. Until the next one. To my knowledge, the lowest risk entry is a trendline break near s/r, followed by a retest of the high, forming a double top. These pop up quite often at significant points in a channel in a higher time-frame and get quite a few trades to BE. However, too few survive to make it worth the effort for long-term trading, and too many fail to...
No offence but it is clear you didn't understand the thread. What you just posted wholly misrepresented what was meant by Pipeasy...

Quote
If today is going to be a bear candle then whereabouts is the higher price? If we are in a downtrend (which is also in lieu with down weekly trend) and (unknowingly) today is going to be another down day. THEN tomorrow when we look back today, where is the most likely place for a position to survive?

It is at the near the top… Near the open of the daily candle. This insures that you catch the major move of the day + highest probability that the position will survive the pullbacks of next day (and the next 2-3...

Lets break this down, within the context of the entire thread...
''If today is a bear candle'' - he wasn't predicting the future, if the weekly was down, on the next daily he was selling
''and today is going to be another down day'' - bare in mind he is going with the trend, not trying to predict the future
''then tomorrow when we look back where is the place for the position most likely to survive'' - at the open which is often at the top of the bar, which for him was just a way that he could consistently enter the market.

He isn't picking tops and bottoms. If you understood the thread then you would have realised that the salient points were as follows a) goes with the trend, b) he buys when price is up and sells when price is down, c) he holds positions for the long term d) he adds to his positions

You read into that what you wanted. You picked a small sentence in his thread and put it out of context. He deliberately (and repeatedly said) that entry method was yours alone. He said that because he wanted the point of the thread to highlight a few key things... taking a long term view, adding to winners and letting profits run. The rest was left up to you, to workout whatever way you wanted to apply the philosophy to your own trading... you clearly didn't get that.

Have you tried some of the principles in that thread and put them to the test?
  • #564
  • Nov 30, 2014 4:52pm Nov 30, 2014 4:52pm
Quoting AllanS
{quote} Yes. The trick is to find the absolute top over and over in various timeframes. Unfortunately, the market will shake you off almost every time. Basically, a top is the last stop-hunt. Until the next one.
Now this is thinking, I hated the thrust of this thread until I see this kind of thinking. The last stop hunt is where they run out of gas, this is exactly where we come in.

So to 60's predictions, they are useless unless we invoke our knowledge, the point where stop hunts are meaningless, the bookmakers have no choice..

At this point there is no thought of a 6 pip SL, this is frustrating because it is difficult to language it. Allan is wrong in his last four words, this is our edge.

OK, real world, call it live, Allan's meter is trembling.

The S&P is telling us all to buy, the breadth indies say buy, oil say buy, the brokers say buy .... so let's buy with a SL of 6 points.
  • #565
  • Nov 30, 2014 5:13pm Nov 30, 2014 5:13pm
Quoting AllanS
{quote} Yes. The trick is to find the absolute top over and over in various timeframes. Unfortunately, the market will shake you off almost every time. Basically, a top is the last stop-hunt. Until the next one. To my knowledge, the lowest risk entry is a trendline break near s/r, followed by a retest of the high, forming a double top. These pop up quite often at significant points in a channel in a higher time-frame and get quite a few trades to BE. However, too few survive to make it worth the effort for long-term trading, and too many fail to...
there is only one top and bottom of the week/month/year - the secret is to ensure your method of finding it is not too costly.

You also have to select the right markets - but that isn't hard, usually obvious.
tradewith60
  • #566
  • Nov 30, 2014 5:48pm Nov 30, 2014 5:48pm
Quoting MCRotter
If today is a bear candle, if the weekly was down, on the next daily he was selling. And today is going to be another down day
I've found no useful relation between what happened yesterday and what will happen today. You may as well toss a coin.

Higher time-frame "trends" don't help because they're impossible to define.

If you can reliably identify a trend, within a month or two you can buy an island in the Bahamas.
  • #567
  • Nov 30, 2014 6:14pm Nov 30, 2014 6:14pm
Quoting AllanS
{quote} I've found no useful relation between what happened yesterday and what will happen today. You may as well toss a coin. Higher time-frame "trends" don't help because they're impossible to define. If you can reliably identify a trend, within a month or two you can buy an island in the Bahamas.
They aren't impossible to define, the problem is there is no definitive way to define a trend, it can be whatever you want it to be.

Do you have to be able to predict the markets next move to make money?

You seems to be in search of a technical method that works all the time for all time, nothing like that exists.
  • #568
  • Nov 30, 2014 6:15pm Nov 30, 2014 6:15pm
Quoting 60minuteman
there is only one top and bottom of the week/month/year - the secret is to ensure your method of finding it is not too costly.
It's a secret, alright.

The daily top will also be a 5m top. But who in their right mind wants to stare all day at 5m charts? We need a magic EA that brings 5m entries to BE (without using Martingale). But if we could do this, why millipede? Trade small, trade often, and compound.
  • #569
  • Nov 30, 2014 6:18pm Nov 30, 2014 6:18pm
Quoting MCRotter
They aren't impossible to define, the problem is there is no definitive way to define a trend,
  • #570
  • Nov 30, 2014 6:19pm Nov 30, 2014 6:19pm
Quoting AllanS
{quote}
Do you know what that means? You cut out the most important part of the sentence.
  • #571
  • Nov 30, 2014 6:30pm Nov 30, 2014 6:30pm
Quoting MCRotter
{quote} Do you know what that means? You cut out the most important part of the sentence.
Couldn't resist.

I'd argue that if a trend is "whatever you want it to be", it's impossible to define.

Do I have to be able to predict the market? Yes. A little bit. Just enough to get an edge. Is that possible? For average punters like us, I doubt it very much.
  • #572
  • Nov 30, 2014 7:01pm Nov 30, 2014 7:01pm
Quoting AllanS
{quote} It's a secret, alright. The daily top will also be a 5m top. But who in their right mind wants to stare all day at 5m charts? We need a magic EA that brings 5m entries to BE (without using Martingale). But if we could do this, why millipede? Trade small, trade often, and compound.
I agree and both approaches work - you can only increase profit by increasing risk and vice versa.....
tradewith60
  • #573
  • Edited 7:12pm Nov 30, 2014 7:02pm | Edited 7:12pm
Quoting AllanS
{quote} Couldn't resist. I'd argue that if a trend is "whatever you want it to be", it's impossible to define. Do I have to be able to predict the market? Yes. A little bit. Just enough to get an edge. Is that possible? For average punters like us, I doubt it very much.
I toiled trying to find an all encompassing way to define a trend, I gave up when I released that an all encompassing definition doesn't exist, what matters is that you can identify something to your liking and work it - that is very much possible. You seem to be searching for a perfect definition?

Predicting the future, why bother? I ran a system that had a great theoretical edge when day trading, when it went live it tanked, spread and slippage killed the system. Even though my stats told me that there was an decent expectancy (chi square test was highly significant, Monte Carlo system said it would work) I still could not make money of it - which is kind of funny. You can't get slipped 23 pips day trading and for the expectancy to hold out.

I'm starting to think of it more as putting yourself in the way of luck. But there are edges out there...

Swap rate - all other things being equal positive swap will make a currency go higher
Trading for the longer term - you think you couldn't make money in 2008 downtrend?
Bigger stops - never seen 200 pips stop hunt
Fundamentals - people say they don't work, in reality people haven't spent their time understanding them (read bruce kovner market wizards)
Follow price - allows price to confirm a bias

I agree with you, I don't think we have an edge on short time frame. I think we all need to think longer term, and we all need to start engaging our brain. My trading approach has done a complete about turn these past 6 months. I don't day trade anymore, I don't fade price anymore, I don't use technicals to predict the market anymore, I do hold positions longer, I do use fundamentals, I do trade breakouts, I do use technicals to manage leverage, I do use technicals to tell me when I am wrong. The rest I leave the to the market.

I don't know if it will continue to work 2 years down the line,but I know this is better than before. Using my brain makes sense and having a few rules keeps me from doing anything stupid.
  • #574
  • Nov 30, 2014 8:06pm Nov 30, 2014 8:06pm
Quoting MCRotter
Using my brain
Good reply.

I traded futures 20 years ago. Very proud of my system. It had an historical win rate >75%. Dozens of wins in a row. (The wonders of curve-fitting.) Traded live, it fell over in months.

Long term is the only hope in this game, assuming the gods give us a nice long trend. Spread and noise kill you dead short-term, and so does capital gains tax.

Must have a look at fundamentals.

Cheers
  • #575
  • Nov 30, 2014 10:28pm Nov 30, 2014 10:28pm
Hi Frez,

Thank you for your thread, now I can understand little clearly money management and how to scale in the position when we ride the trend. I have the set up what can give me more chance B/E. So I will start to apply your money management strategy from now onwards. I know the key important for your strategy is patient and discipline.

I just think if we have a good set up and don't know money management & scale in/ out position we just have enough money for living but if we have a good set up and good money management and good scale in/ out position we can become millionaire.

I hope you and few people can apply your money management strategy become millionaire soon.
  • #576
  • Dec 1, 2014 1:14am Dec 1, 2014 1:14am
Quoting MCRotter
{quote} I toiled trying to find an all encompassing way to define a trend, I gave up when I released that an all encompassing definition doesn't exist, what matters is that you can identify something to your liking and work it - that is very much possible. You seem to be searching for a perfect definition? Predicting the future, why bother? I ran a system that had a great theoretical edge when day trading, when it went live it tanked, spread and slippage killed the system. Even though my stats told me that there was an decent expectancy (chi square...
so much quality in this post
tradewith60
  • #577
  • Dec 1, 2014 3:00am Dec 1, 2014 3:00am
So while all the intellectuals gathered here sharing how their systems worked for x number of years and how Fez's system can not work or he and abc are same persons. He is not posting here anymore.
  • #578
  • Dec 1, 2014 9:32am Dec 1, 2014 9:32am
Quoting VEEFX
{quote} My apologies 60M to use your post to send this message across. The secret is in the last word in your post. One may ask what is obvious in all markets. I can list at least 50 things that are universal and so mind numbing to the human eye. It happens every day on every chart on every pair on every market. why do we humans search for complexity in things that are right in front of us? We all need to dumb our intelligence down a notch or two and ' Take Action on the Obvious things in life and in trading'. The universal truth of trend following...
Do your posts repaint?
  • #579
  • Edited 5:52pm Dec 1, 2014 10:35am | Edited 5:52pm
Quoting AllanS
{quote} Good reply. I traded futures 20 years ago. Very proud of my system. It had an historical win rate >75%. Dozens of wins in a row. (The wonders of curve-fitting.) Traded live, it fell over in months. Long term is the only hope in this game, assuming the gods give us a nice long trend. Spread and noise kill you dead short-term, and so does capital gains tax. Must have a look at fundamentals. Cheers
Fundamentals is tricky. A guy once told me, in other words and to quote a famous movie, follow the money
In other words you job is to figure out what x means for the where the money moves too.

I took some notes, and continue to add to them on what I think is important for fundamentals, here is my top down approach, risk on and off being the most important for setting the scene.

1- Is risk on or off?
If risk is on expect money to flow out of safe havens into stocks, other countries as money gets invested = eg. generally weaker USD
If risk is off expect money to flow towards safe havens = eg. generally strong USD
If safe havens are considered risky expect gold and silver to rise
Examples: In 2008 risk was off, money flowed into USD. In 2009-2010, QE left many thinking USD would become seriously devalued, money flowed into metals.

2- Where is money moving towards? - most relevant when risk is on.
Are bond prices are rising relative to your base currency country = strong upward pressure on the currency eg. 2013 rising euro bond (and vice versa)
Are equity markets rising relative to your base currency country = strong upward pressure on the currency
Is the economy doing well relative to your base currency? = strong incentive to invest in country
What are the interest rate differences between your base currencies eg. japanese carry trade
Examples: In 2013 rising European bond prices, sparked by ECB policy to provide whatever assistance lenders need, caused the Euro to rise despite poor economic results. In 2000s carry trade

3- What does the news mean for central bank policy and how will that effect money movement
Main lever is interest rates
Look for jobs reports, sector growth and inflation.
Think what that means for central bank policy - I recommend listening to Jarett Davis on this section

Of course I am still adding to that list regularly.
There has to be a reason why the likes of George Soros and Bruce Kovner are so into their fundamental analysis.

Quoting 60minuteman
{quote} so much quality in this post
lol, thanks. But as we know, money does the real talking. I know enough now to just be slightly dangerous lol

Once I have my myfxbook running, and consistently profitable then I will start feeling good
  • #580
  • Dec 1, 2014 1:02pm Dec 1, 2014 1:02pm
Quoting VEEFX
...but wait, speaking of circles, can you visualize a wick of any candle being a circle? A circle or a cart wheel happens on every wick when it starts forming at the open price to start its journey to the tip of wick. Once a tip is formed, it relentlessly continues to trick us and continues its journey back to where it started navigating through peaks and valleys tricking us all into thinking it is about to do 'something'.


Thank you for brilliantly summing up the devil known as "price action" that has caused me many false entries with my finger on the trigger hoping to buy a "breakout" only to be stuck holding the bag as the idiot who bought at the very top!
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