Multi-Lot Multi-Timeframe Position trading | Page 29 | Forex Factory

Options

Go to
Permalinks
Print Thread

Similar Threads

building multi-pair multi-timeframe scanner 48 replies

Multi timeframe multi chart 13 replies

Timeframe inside current timeframe - is that possible? 2 replies

Seeing higher timeframe indicators on lower timeframe 4 replies

BUY run profit 1 lot, SELL LIMIT 2 LOT down again n BUY 1 lot - EA Reqd 5 replies

Attachments: Multi-Lot Multi-Timeframe Position trading
Exit Attachments

Multi-Lot Multi-Timeframe Position trading

  • #561
  • Dec 6, 2014 1:37am Dec 6, 2014 1:37am
Hi G,

Thank you for your thread. I learnt a lot from your thread and I am applying the method similar your trading system and quite profitable in live account. I know it is quite lucky and I am free psychology since live account is quite small amount and some time I use quite big stop loss.

We all know the key successful in forex trading in long term is money management and as you said profit return around 25 - 30% per year and the best trader in the world also have the same return.

If we are full time trader with 25 to 30% per year we need at least account capital around 200K US$, so that it can generate 50K US$ to 60K US$ per year for living. I think it is difficult to us have a large amount to deposit and also we don't know which reputable broker we should choose. Therefore, Forex is not good business and we just trading forex like game and fun and can not living with it.

I think best trader have profit return around 25 - 30% because they have a huge capital and so it more difficult to have high return and quite conservative risk management but we can expect a profit return higher due to small account and accept higher risk.
  • #562
  • Dec 6, 2014 9:18am Dec 6, 2014 9:18am
Hello Graviton, I find this is probably one of the most interesting and well written educational threads for forex traders. With your knowledge you could write a book on level with Alexander Elder, Van Tharp, Mark Douglas among others. Well written and to the point. Thanks for sharing. I look forward to follow the exchange of knowledge between you and the many excellent contributors.
  • #563
  • Dec 6, 2014 10:54am Dec 6, 2014 10:54am
Quoting renegade
{quote} In my opinion, don't cut a winner short. Let the market tell you when to get out. Congrats on your success. Fear and greed are traders arch enemies! Exits are as important as the entries. Have a plan for all scenarios so you can follow your plan and not have to think about it during your trade.
Excellent response Renegade. We want to stick to our plan here of adding to winners and exiting losers quickly. Cutting winners short and letting losers grow would be just the opposite of what we want to do here.

I'll add a few observations. The reason I'm stressing risk management for the past few days is it's a critically important and often ignored component of a winning trading plan. As I've said before, it's easy to make pips in Forex, it's hard as hell to hang onto them. In my own humble opinion, if one is making 10 times what most successful traders make, they shouldn't change their trading plan. They probably should take a careful look at the risks they are taking however. I've gone over a few things to look at and I'll go over a few more. Some may not apply to any single traders plan, but I bet some will apply.

For instance, note that most professional traders are making 25 to 30% return a year in a good year. If one is making a lot more than that, say 10 times more, they must be taking a lot more risk. This goes back to maintaining reasonable expectations. Of course, I'm not saying any trader should make less money. What I'm saying is that the more a trader makes, the more they need to perfect their risk management. Simple items like loss limits, margin management, leverage levels, diversification, worst-case scenario planning and such can be a good place to start evaluating and controlling the risk in ones trading. When I'm finished with this subject, we'll have a very good list of things to look at, but that is just a start. Learning to control risk is a lifelong endeavor for any professional trader and it's a critical skill that can always be improved.

So by all means, make all the pips you can, but the more you make the more effort you should put into understanding the risks you are taking and learning how to effectively manage and control those risks. You can't control the markets. No one can. But the risks you choose to take in those markets can be reasonably controlled if you choose to do so. Of course, that's just my own humble opinion.
  • #564
  • Dec 6, 2014 12:35pm Dec 6, 2014 12:35pm
Quoting Graviton
{quote} Excellent response Renegade. We want to stick to our plan here of adding to winners and exiting losers quickly. Cutting winners short and letting losers grow would be just the opposite of what we want to do here. I'll add a few observations. The reason I'm stressing risk management for the past few days is it's a critically important and often ignored component of a winning trading plan. As I've said before, it's easy to make pips in Forex, it's hard as hell to hang onto them. In my own humble opinion, if one is making 10 times what most...
Thank you for the kind words G. I have been following your thread from the beginning, and your teachings are much in line with one of my all time favorites "Jessie Livermore". I am constantly reminded of him saying he made more money by sitting and doing nothing. Letting his trades run until exhaustion or the markets told him to exit. It is hard not to micro manage our positions. Thanks again for the great thread as I am really enjoying it!
  • #565
  • Dec 6, 2014 3:40pm Dec 6, 2014 3:40pm
Quoting tinypip
Hello Graviton, I find this is probably one of the most interesting and well written educational threads for forex traders. With your knowledge you could write a book on level with Alexander Elder, Van Tharp, Mark Douglas among others. Well written and to the point. Thanks for sharing. I look forward to follow the exchange of knowledge between you and the many excellent contributors.
Thanks Tinypip. I'm glad to hear you are finding something worthwhile here.

G
  • #566
  • Edited 5:37pm Dec 6, 2014 5:25pm | Edited 5:37pm
Quoting sonata95
Hi G, Thank you for your thread. I learnt a lot from your thread and I am applying the method similar your trading system and quite profitable in live account. I know it is quite lucky and I am free psychology since live account is quite small amount and some time I use quite big stop loss. We all know the key successful in forex trading in long term is money management and as you said profit return around 25 - 30% per year and the best trader in the world also have the same return. If we are full time trader with 25 to 30% per year we need at least...
Thanks for the feedback Sonata. There is an important point in your reply. Part of the measure of risk in trading is how much you are risking relative to your net worth. So if you are worth millions, opening an account for $15,000 to trade mini's (0.1 lot) is relatively low risk, since even if it is all lost, it wont affect your lifestyle any at all. But if you saved for three years to open an account for $1500 to trade micros (0.01 lot) and you lose it all, it's a heartbreaking disaster.

On the other hand, if you are trading $2000 in capital and make 25% or $500, it's not really that much. Perhaps it's not unreasonable to take a little more risk to try to make more, like 50% in a year, since the amount of capital at risk is low. But if you are trading $200,000 and making 25% or $50,000 a year, that's a lot and you probably wouldn't want to take much more risk than that.

These are some hard decisions to make, but at least the individual trader should be well aware of the risks they are taking And make the decisions from an informed perspective. I personally only trade a small percentage of my net worth. I would be upset if I lost it, but it would not affect my lifestyle. I think it's a good general rule to never trade amounts that would affect your lifestyle if you lost it. Be careful out there.

G
  • #567
  • Dec 6, 2014 8:31pm Dec 6, 2014 8:31pm
Early exits via invalidation of trade basis

One way to reduce risk is to exit when the market invalidates the basis of the trade. So if the indicator or candle formation or whatever says go long, and it switches to short soon after we enter, we have a decision to make. Should we exit or wait and see if it turns back to a long indication?

Generally, if we have confidence in the indication, we should exit and reduce the risk of a loss. If we don't have enough confidence in the indication to exit when it says we should, we probably shouldn't be taking the entry off the indicator in the first place. We don't want to get whipsawed back and forth, but we should consider the real possibility that our indicator is telling us that market conditions have changed and it would be safer to exit and perhaps re-enter later.


Maintaining reward/risk ratio

Some good research surprisingly shows that most traders win most of their trades. So why is it that most traders lose money? The same research shows that their average loss is much larger than their average win. So, in other words, they are cutting their many wins short and letting their fewer losses grow large before closing them. If we take all our wins and average them and all our losses and average them we can calculate the real reward to risk ratio generated by our trading over a long period of time. As long as the reward to risk ratio is greater than 1:1, we aren't falling into the trap of ever smaller wins and ever larger losses.


Partial exits

So, you've made a ton of pips with a particularly wise trade. Now, do you exit with your profits, or let it run for even more? If you exit with profits, the risk is of missed opportunity. If you stay in the trade for more gains, the risk is that unrealized gains may vaporize before they can be cashed in and made real. Generally, opportunity is less valuable than unrealized profits, but there is the option of taking some of the profits and keeping some of the opportunity with a partial exit. The advantage of this method is the overall risk of the trade is reduced in the process of cashing in at least some of the profits from a good move.

Next: Worst case scenario planning
  • #568
  • Dec 7, 2014 6:26am Dec 7, 2014 6:26am
Graviton, I think you are a bit confused with the different time frames, let me explain. from what I read previously I got the notion you think that different timeframes, can move differently to eachother, they can not. pls note that there is only 1 price, if price go 10 pips in one direction on the 1 minute chart, it will also go up 10 pips on ALL the other timeframes. it doesn't matter if you have renko charts, tick charts with different tick sizes or whatever.
Bulls are stupid Animals!especially when Im short!
  • #569
  • Dec 7, 2014 6:53am Dec 7, 2014 6:53am
Quoting roughtrader
...if price go 10 pips in one direction on the 1 minute chart, it will also go up 10 pips on ALL the other timeframes.
The scale of the TF in time and price range are significant.

In a period by period review, 10 pips in one minute is noticeable. For the 1 hour, it may also be noticeable, if the bar has only started to form, but relative to the next 59 minutes and the previous 1h candles, it's much less significant.

This is quite helpful, in that you can use the 1m, 5m (or any lower TF from the TF you normally trade from) to either see how momentum is moving and/or actually buy on a signal, especially if it's leading into a potential signal on a higher TF.

And for the reverse scenario, you might see strength in a buy signal on lower TF's, but if you are hovering on a reverse (or have been in a downtrend) in higher TF's, you might want to want and get further confirmation before getting in.
  • #570
  • Dec 7, 2014 11:15am Dec 7, 2014 11:15am
Quoting roughtrader
Graviton, I think you are a bit confused with the different time frames, let me explain. from what I read previously I got the notion you think that different timeframes, can move differently to eachother, they can not. pls note that there is only 1 price, if price go 10 pips in one direction on the 1 minute chart, it will also go up 10 pips on ALL the other timeframes. it doesn't matter if you have renko charts, tick charts with different tick sizes or whatever.
Good point to discuss Roughtrader. Yes, it's true that price is only one thing and if it's moving up it must be moving up at any sampling time, be that 1 minute, 1 hour or 1 month. The sampling time is what is different and that is what gives the impression of price trending up in one timeframe, say the 15 minute and down in another, say the 1 hour. Each of those observations of price are valid in that timeframe, but that data can't necessarily be applied to a different timeframe. That is to say, there is unique information in each timeframe.

The 1 minute timeframe has unique granular information about price that has been filtered out by the longer sampling time of the 1 hr TF. The 1 hour timeframe contains a longer record of price, but loses some of the granularity of the 1 minute. Of course, you can zoom way out on the 1 minute TF and see the same general price pattern as zooming in on the H1, just with more granularity, because price is just one thing.

The question then naturally arises, what is the best sampling time? Should I zoom way out on a shorter timeframe or way in on a longer timeframe to get the best view of price action. That depends both on what the market is doing and what it is you are trying to see.

If price is moving fast, that can best be seen on a shorter sampling time, or smaller timeframe. A fast move on the 1 Minute may be almost invisible on the 1 month. If price is moving very slowly, it might not make much difference. If you want to see short moves in great granularity and detail, like deciding where to enter a trade, you might want to look at shorter timeframes, if you want to join in an existing long term trend, you might want to look at longer timeframes.

In conclusion, each timeframe provides a different view of the same thing, price movement. My personal experience is that when all these different views say the same thing, price is going up for instance, then price is more likely to be going up than down. That is the basis of my trend analysis. It doesn't work 100% of the time of course. But all I need is for it to work most of the time to make a good living in this business. If something else works better for you, by all means use that. No two successful traders will trade exactly alike. It's still possible that some of the other techniques mentioned in this thread can be beneficial. That's something you need to evaluate for yourself for your specific style of trading. Best success.

G
  • #571
  • Dec 7, 2014 12:29pm Dec 7, 2014 12:29pm
Quoting Nefser
{quote} The scale of the TF in time and price range are significant. In a period by period review, 10 pips in one minute is noticeable. For the 1 hour, it may also be noticeable, if the bar has only started to form, but relative to the next 59 minutes and the previous 1h candles, it's much less significant. This is quite helpful, in that you can use the 1m, 5m (or any lower TF from the TF you normally trade from) to either see how momentum is moving and/or actually buy on a signal, especially if it's leading into a potential signal on a higher TF....
Yep, just right.

G
  • #572
  • Edited 7:05pm Dec 7, 2014 2:15pm | Edited 7:05pm
I have a few more items, but most have been discussed in this thread before. I'll just tack them onto the bottom of the main list of tips, tricks, techniques and methods to manage risk below and if anyone want's to discuss any of these any more we can:

Risk management techniques

Demo trading
Maintain reasonable expectations
Leverage limits
Loss limits (VaR)
Diversification
Margin Management
Scaling in
Avoiding a large loss
Set risk per trade
Early exits via invalidation of trade basis
Maintaining reward/risk ratio
Partial exits
Worst case scenario planning
-Ask, what's the worst thing that could happen? Then plan to survive it.
Hedging
-I don't use it, but some do well with it.
Profit targets
-Set them large. You wont always hit them before the trend reverses, but when you do it's really sweet.
Trading with trend
-I believe it to be less risky
Fundamental confirmation of technical trends
-Less risk that the apparent trend is a mirage
Add to winners, close losers
-Losers are risky, close them while they are still small
Riding through volatility
-We need to give the market a little room to breathe, just a little though.


Note that while developing the list, we identified three types of risks. In descending order of importance they are:

Risk to trading capital-most important because it could take us out of the game.

Risk to unrealized profits-slightly less important because I can't buy stuff with it until it is realized.

Risk to opportunity-least important since it has yet to be converted to unrealized gains.


If I missed something important, shout it out and we'll add it to the list. Otherwise, there is a ton of information on each of these subjects on the net. If anyone wants to discuss a subject relating to Risk Management, discussion is encouraged.

G
  • #573
  • Edited 7:53pm Dec 7, 2014 6:42pm | Edited 7:53pm
AU, ACad, Gu trending down. UChf trending up. Looking for good entries.
  • #574
  • Dec 7, 2014 7:07pm Dec 7, 2014 7:07pm
Graviton, there is no best timeframe, timeframe is a individual thing based on how much time you want to spend infront of your computer, and also how much you are willing to risk, some people say that the lower timframes is just noise, that is not true, there is no noise in the market, it is all price, the character and patterns of price is the same on 1 minute chart as it is on the monthly chart. therefore , if you can't make it on a 5 minute chart, you can not make it on a monthly chart either, so don't believe people saying its easyer to trade the higher timeframes, it is not, they are the same. lets say you dont have much time to trade every day, then what is most suitable for you would probably be the daily chart, because only 1 candle is printed in one day, then you just check your charts every day when you get home after work, this only need to take 10 minutes each day or even less, ofcourse on a 5 minute chart there is a new candle printing each 5 minutes, that chart require you to babysit your trades all day. there is also a question of risk, because on higher timeframes your stop loss will be much larger, personally I like 1 hour best, but 30 min 15 min and 5 min is good to, but thats just me, because I sit infront of the computer the intire london and new york sessions another thing to take into consideration is that you will make more money on the lower timeframes because you can trade every retrace also wich would not be there on a higher timeframe.
Bulls are stupid Animals!especially when Im short!
  • #575
  • Dec 8, 2014 4:45pm Dec 8, 2014 4:45pm
Quoting Graviton
Losers are risky, close them while they are still small Riding through volatility -We need to give the market a little room to breathe, just a little though
Graviton,

On the topic - close losers quickly vs. give the market room to breathe - would you be willing to provide a bit of insight to how you handle this ie. method, system and/or rules. Personally this is one of the areas where I could improve. Do you use SR or trend lines to determine this or ATR on the specific pair or some other combination. Do you consider where PA is in the overall trend. Thanks.

TP
  • #576
  • Dec 8, 2014 7:57pm Dec 8, 2014 7:57pm
Quoting tinypip
{quote} Graviton, On the topic - close losers quickly vs. give the market room to breathe - would you be willing to provide a bit of insight to how you handle this ie. method, system and/or rules. Personally this is one of the areas where I could improve. Do you use SR or trend lines to determine this or ATR on the specific pair or some other combination. Do you consider where PA is in the overall trend. Thanks. TP
Good question Tinypip. Of course we need to give the trade a little room to work out, but we are sworn to never take a large loss. There are lots of ways to look at it. I do like to set stops on the other side of s/r's from entry. I usually drop down a couple TF's down from how long I want my trade to run to search for a good place to put a stop.

For instance, currently my average good trade runs about a week, so I'll look for s/r's about two timeframes down, around the H4. If the weekly ATR is 200 pips, a 100 pip stop would be the max to provide a 2:1 reward to risk ratio, which seems reasonable. If I'm hoping to make 200 pips, it would probably be unreasonable to hope I could get good entries with less than 20 pips stop. So, for my trading, I'm looking for a good stop between 20 and 100 pips away on the other side of an s/r line on the H4. A range closer to the midpoint of these extremes is probably more reasonable, so I'm most likely to place a stop about 40 to 80 pips away, for my personal trading style.

From my point of view, this is giving the trade some room to breathe, but I'm not taking a risk of a "large" loss. I can, of course, exit the trade early if it is obvious it is not working out as I intended and I do so quite often, sometimes trying another entry later if my indicators still say it's a good trade. If your average good trade lasts a day, your stop would probably be tighter than mine, and if it lasts a month, it would probably be wider. A much wider stop doesn't improve your trade selection though, so always set it on the safe side to not risk taking what you consider to be a large loss for your trading style.

I've never heard of anyone getting rich with good stop selection, so I wouldn't worry over it too much. I have heard of people blowing out an account by not using stops or moving the stop against the direction of the trade, so that should never be done. It's all very dependent on your personal trading style and goals, as I noted above. If you are regularly getting knocked out of good trades with quick stop outs, it might be that your entry points aren't good enough, rather than your stops aren't large enough. If that's the case, larger stops might just make for larger entry losses.
  • #577
  • Dec 15, 2014 6:56am Dec 15, 2014 6:56am
Graviton...you mention often in your posts about trade management that you "exit early if it's obvious it's not working out". What is it about the trade that is so "obvious" that it is not working? If you have already addressed this, please if you would just point me to that post...Jon
  • #578
  • Dec 16, 2014 9:19pm Dec 16, 2014 9:19pm
Quoting jmf0805
Graviton...you mention often in your posts about trade management that you "exit early if it's obvious it's not working out". What is it about the trade that is so "obvious" that it is not working? If you have already addressed this, please if you would just point me to that post...Jon
Good question Jon. I'm just too tired to answer it at the moment. Lots of things happening here at command central. Trading is very simple at the moment. Just trading UCad long and AU short and throwing another lot on every time it moves 100 pips or so. Other things are wearing on me though. I think I'll need a vacation after the holidays. Gone for some well deserved rest now. Be back later to carry on.
  • #579
  • Dec 17, 2014 10:14am Dec 17, 2014 10:14am
Quoting jmf0805
Graviton...you mention often in your posts about trade management that you "exit early if it's obvious it's not working out". What is it about the trade that is so "obvious" that it is not working? If you have already addressed this, please if you would just point me to that post...Jon
I'll continue on and try my best to answer your question now. These early exits will almost always be taken shortly after entry when a trade is losing. One reason to exit early is the original basis of the trade has been invalidated by the market. That can be a technical reason, like I go long if an indicator is above the 50% mark, and the indicator is now below 50% and the trade is losing. It could be a fundamental reason, like I go long in the USD because I believe the Fed will tighten up on their quantitative easing soon, but deflation occurs and it becomes obvious that the Fed will be maintaining their loose dollar position. If the original basis of the trade has been invalidated by market price action and/or fundamental factors, and the trade is losing, it's a candidate for an early exit. Another reason for an early exit is I just didn't see something of importance before I entered the trade, but now I understand it. Say we were long the Aussie for technical reasons, but now we see that the China economy is slowing down and realize that will affect the Aussie, driving it down.

In most of the above cases the odds have turned against us. Some of those trades may still produce a profit, but most will lose. We are playing the probabilities here. What we originally thought was a 75% probability of a winning trade has now turned to a 30% probability of a winning trade due to some new or unforeseen information, and the trade is now losing. The question is do we ride it all the way down to the stop loss and take a large loss, say sl = 85 pips, or exit early for a smaller loss, say at -35 pips, saving 50 pips of trading capital. Of course, we don't want to get whipsawed back and forth, but if the trade is losing and we have good reason to believe the probabilities have changed against us, it makes sense to cut our losses short. If the trade does turn out to be one of those 30% that recovers to go on to make a good profit, we will have many chances over the next days or weeks to re-enter it, perhaps at an even better price, after it finishes it's retracement.

There is a big difference between riding through a short retracement in a long running profitable trade and taking an early exit from a new entry on an as yet unproven trade. Most of the risk of my trading occurs shortly after the entry. That is where the risk to my trading capital occurs. Once a trade is well into profit, there is no risk to my trading capital, only to my unrealized gains. As discussed before, there is a big difference between risk to trading capital and risk to unrealized gains. By reducing that entry risk with early exits by say 50%, I reduce the size of my average losing trade and increase my real reward to risk ratio by a factor of 2 times. The tricky part is to pick out the trades that present a good reason to exit early. Sometimes, I just can't know the reason a trade is turning against me right after entry, but I can see that it is. It becomes a judgment call that gets easier after you have done it a few thousand times. The good news is, if you are wrong you can always re-enter the trade and go on to make up for the small loss with huge pips on a second run at it.

So, my conclusion is, if soon after an entry price turns against you and the trade is losing, look for a reason why. If the market has invalidated your original reason to enter, then consider exiting early and reducing your entry risks. If you can't see a reason why the market has turned against your trade, but it is clearly losing, then you have a judgment call to make. Since I don't know of any case where anyone went broke exiting a losing entry quickly, if I fail, I want to be sure it's on the side of exiting a little too early rather than a little too late.

I hope this answers your question, because it was a good one. If we need to discuss it some more, let's do so. Best success.

G
  • #580
  • Dec 17, 2014 10:38am Dec 17, 2014 10:38am
Thanks to Jon for the good question. After a bit of a side discussion on controlling risks, that returns us to the main topic of current discussion , Expert Exits.

Earlier we listed 6 possible reasons to exit a trade, and we had just begun to look at each reason more carefully. Those reasons were:

1) It's losing - We discussed exiting losing trades in detail, but we can discuss this more if anyone wants to.
2) Its winning
3) It's doing nothing
4) Reduce risk
5) Increase margin (to allow room for better trades)
6) Live life

Let's look at the second reason to exit a trade now, It's winning
0 traders viewing now