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Multi-Lot Multi-Timeframe Position trading

  • #781
  • Jan 27, 2015 12:03pm Jan 27, 2015 12:03pm
Graviton,

Congrats on your EURUSD and USDCAD long USD trades! :-) It was smart to take profits IMO. I see the following 3 reasons for you to TP where you did:

1) Core Durable Goods Orders m/m huge miss today (bad for USD)
2) FOMC meeting tomorrow (event risk)
3) CAD huge option OI at 800 level (corresponding to 1.25 in USDCAD): http://www.cmegroup.com/trading/fx/o...rest/main.html This level will be defended heavily.

Regards,
EZ
  • #782
  • Jan 27, 2015 12:15pm Jan 27, 2015 12:15pm
Thanks Graviton. Its great when the sitting tight pays off and its finally time to take rewards you built. Hope you enjoy the winnings.

My earlier question was directed more at exiting manually or moving up the stop during the initial building of the position, rather than profit taking. As I guess you wouldn't be looking to be at break even until 2X daily ATR, I imagine you move the stop up in stages. I'd also imagine that if the trade went against you or retraced too much during the initial hours and day after entry, you would be looking out for certain things that would incline you towards exiting and taking a small loss.

You talked about this before in terms of trades that would last a few days, e.g. a big warning sign was seeing the M15 RSI turn negative. For more ambitious targets like weeks and months duration, are you prepared to wait for say the H1 or H4 to turn bad? Or do you still always look for an initial quick positive move as an essential immediately upon entry?

Anyway, please don't feel I'm pestering you. If/when you have the time and inclination to chat about these issues I'd be all ears.

My own research and experience tells me its a fine line between making sure you participate and not losing too much in trying to make that happen, and balancing that right is for me what good entry practises are about. Mathematically, in Forex, its better to enter on the pull back, but the problem is that if it just keeps pulling back you will run your capital down too much on the losses. So you want momentum, but then there is the problem of getting in too late. Also, I've found that a trade that is positive after an hour is about 25% more likely to keep going significantly than one that isn't - but of course if you do bail out after an hour, you will miss some great winners.
  • #783
  • Jan 27, 2015 3:04pm Jan 27, 2015 3:04pm
Quoting Graviton
Here's a list of old trader sayings I created a few years ago. Some are repetitive, some are contradictory. Perhaps worth the time to read. I'll let the reader decide. Feel free to add to the list or discuss if you like: Gaps Usually close. Always trade with a stop loss. Never move a stop to stay in a trade that's going against you. Never average down. Always trade with the long term trend. Cut losses short, but give your trade room to breathe. Let profits run, but if you don't take SOME profit, you won't make any money. The first loss is the easiest...
Hi Graviton,

thanks for sharing all that wisdom. There is only one of them about which one I am a bit suspicious:

"The correct position size seems too small to be worth the time and effort."

What do you think of that?

IBO
  • #784
  • Jan 27, 2015 6:08pm Jan 27, 2015 6:08pm
Quoting IBreakOut
{quote} Hi Graviton, thanks for sharing all that wisdom. There is only one of them about which one I am a bit suspicious: "The correct position size seems too small to be worth the time and effort." What do you think of that? IBO
Yes, that might could be more simply said, Don't overtrade. I think anyone who has read this thread understands that the risk of ruin is excessive for any single trade risking more than 1% of account balance. As I had noted before, many large traders limit their risk to 0.1 to 0.2% of account balance for any single trade. Personally, I will usually compromise and put my first lot on at 0.25% and if it turns into a winner I'll trade 0.5% after that. I can testify from experience, there is no need to trade more than 1% of account per trade to make great profits when trading multi-lot, but I would advise trading the smallest amount possible, like 0.01 lot per trade, until consistent profitability is achieved.

G
  • #785
  • Jan 27, 2015 8:02pm Jan 27, 2015 8:02pm
Quoting lemna
Thanks Graviton. Its great when the sitting tight pays off and its finally time to take rewards you built. Hope you enjoy the winnings. My earlier question was directed more at exiting manually or moving up the stop during the initial building of the position, rather than profit taking. As I guess you wouldn't be looking to be at break even until 2X daily ATR, I imagine you move the stop up in stages. I'd also imagine that if the trade went against you or retraced too much during the initial hours and day after entry, you would be looking out for...
I'll provide the best answers I can, but often these decisions are based on having taken thousands of trades in the past and already having made every possible mistake several times over. Yes, I do move the stop up manually in stages. The trade needs to prove itself over time. The higher the volatility, the slower I'm going to move the stop. I don't want to be prematurely kicked out of a good trade. If I risk a small loss, like 1 X SL, that is a small calculated risk, but getting kicked out early from a potentially good trade can cost me 20 or 30 times that much in the future. I can't risk more in sl to stay in a trade without violating my trading and money management rules, but once the trade is in profit, I can risk a reasonable portion of the profits to stay in the trade longer. The longer I am in the trade and the more profit it has made, the more profit I can reasonably risk to stay in it. In perfect trading I'd never hit a stop. All exits would be taken manually before the stop is hit. I have hit a few stops for profit this year while I was sleeping and a large retracement blew through, but so far I've not hit any while I was awake and none for an overall loss in the multi-lot trade for that pair.

For longer duration trades, I will usually be trailing stops well behind price, so a quick retracement wont take me out. I will never allow a long duration multi-lot trade to take a loss once it's well into profit. If I have to exit all for a little profit in a deep retracement and re-enter when it's over, I'd rather do that. I don't consider indicators to be much use once the trade is running. I'm mostly looking at the Profit line on the positions to make decisions. I'm watching to see if enough spacing has developed to put a new lot on, or if price is retracing to the point that I need to close some or all of the trade. If price retraces, I want to take as much profit as possible without bailing completely out of a good trade. The Profit line is where money is made or lost. Indicators are a bit of a distracting side-show once in the trade and can encourage me to bail out of a trade I should stay in or hope for the end of a retracement that shows no chance of ending. For me at least, once the trade is running, it's better to just focus like a laser beam on price, profit, risk and reward, numbers rather than pretty pictures.

Yes, it is a fine line between making sure you participate and not losing too much to make that happen. Protect your trading capital like a mother lion protects her cubs. You will have to take some risks, but as much as possible, take the largest risks with unrealized gains or even better with possible gains in the future that haven't even been earned yet. Feel free to ask more questions or discuss this subject more. Perhaps we can zero in on something valuable here.
  • #786
  • Edited 8:49pm Jan 28, 2015 11:32am | Edited 8:49pm
We could see some extreme volatility this afternoon if the US Fed changes the wording in their policy statement. Be careful out there.

Later: No change in policy. Yay!
G
  • #787
  • Jan 29, 2015 2:55pm Jan 29, 2015 2:55pm
Hi Grav,

I have a topic which maybe you could discuss with us a bit more in detail. It would be entering trades at a better price. Lets say there is a retracement in a recent trend and we are looking to enter at a better price. I say an example (without looking at charts, only for the example). Lets suppose EURUSD went down to 1.0500 and we see a retracement now back to 1.0700. According to the rules, we wait until all TFs had down. If we wait for this, it can happen that we will enter a trade at 1.0500 or even lower for a breakout until all TFs head again to the wanted direction. This way we would lose hundreds of pips. On the other side we also do not want to enter too early because it might be a reversal and not a retracement. So, staying at the above example, lets say the retracement stopped at 1.0700 and started to go down again, currently is at 1.0620. At this moment, most likely this 1M, 5M and 15M would be down, the 1H and 4H probably up and the Daily and above down again. So what do we do? Would this be enough confirmation to enter at market price and enjoy the ride from 1.0620 already to 1.0500 down again or you just wait until or TFs head down inline with the trend and miss the whole move?

This is important for me, because I look a lot at my charts and started using the method. I really think it has a huge pontential. I also like the "sell high buy low" and "buy low sell high" thinking, only when I wait for all TFs to line up often the move is over.

Thanks,

IBO
  • #788
  • Jan 29, 2015 9:45pm Jan 29, 2015 9:45pm
Quoting IBreakOut
Hi Grav, I have a topic which maybe you could discuss with us a bit more in detail. It would be entering trades at a better price. Lets say there is a retracement in a recent trend and we are looking to enter at a better price. I say an example (without looking at charts, only for the example). Lets suppose EURUSD went down to 1.0500 and we see a retracement now back to 1.0700. According to the rules, we wait until all TFs had down. If we wait for this, it can happen that we will enter a trade at 1.0500 or even lower for a breakout until all TFs...
Good question. Specific enough that I can give a specific answer. Let's go to the charts. Look at EU weekly. There were about 6 major retracements like you speak of over the last 6 months of the EU fall. See it? Now look at the largest, about the first week in Oct. 2014. Now zoom in on it on the daily chart and look at oct 5 to Oct 28th. There were at least 4 retracement head fakes, where price went up and then headed back down like you spoke of. But then price turned back up to make a higher high. You would have been stopped out before price finally headed back down and never made another higher high again. You would have lost on each of those trades had you tried to call a top and make an faster entry. But now look at the RSI(10) and 5emaX10sma and zoom into the H4, on Oct 20 and Oct 21, the H4 RSI dropped below the 50% line and the 5 ema crossed below the 10 sma. Both also crossed down on the daily chart just a little later about Oct 22. That was a decent entry. Price retraced back about 40 pips on Oct 28th, but with a decent stop you could have stayed in that trade. On Oct 28th they all crossed down and never came back up. That was a perfect entry. Instead of trying 6 or so times to get a good entry, you could have gotten in in one or two tries. See that? It was a clear signal to short the EU. Had you taken that signal, you had a clear 1000 pip run ahead of you. Trading multi lot you could have made 5000 pips easily.

So, that is the sort of trade you want. A 5000 pip trade. Don't get sucked into trying to get into the very beginning of a questionable trade to make an extra 100 pips. That's a suckers game. Wait until everything lines up just right and make that 5000 pip trade, or at least a big slice of it. It takes a ton of patience to wait for that trade to develop. Then it takes nuts the size of basketballs to stay in the trade through all the little retracements and collect on that 5,000 pips profit. But I suppose that's what good traders are made of, patience and nuts. It's a careful balance between not being reckless and not being fearful. Good trading always lies somewhere in between those two extremes, fearfulness and recklessness. Good question. I can post the charts here if you can't see it. Just let me know.

G
  • #789
  • Jan 30, 2015 3:29am Jan 30, 2015 3:29am
Quoting Graviton
{quote} Good question. Specific enough that I can give a specific answer. Let's go to the charts. Look at EU weekly. There were about 6 major retracements like you speak of over the last 6 months of the EU fall. See it? Now look at the largest, about the first week in Oct. 2014. Now zoom in on it on the daily chart and look at oct 5 to Oct 28th. There were at least 4 retracement head fakes, where price went up and then headed back down like you spoke of. But then price turned back up to make a higher high. You would have been stopped out before...
hello G.

This is how i would have traded that period, according to your rules. What do you think? I would have missed the first entry with a sl got to BE. Of course, i could have waited the retracement without moving SL, but it needs a very strong stomach to manage that.

https://www.tradingview.com/x/7MW0qERO/
  • #790
  • Jan 30, 2015 4:35am Jan 30, 2015 4:35am
Quoting Graviton
{quote} Good question. Specific enough that I can give a specific answer. Let's go to the charts. Look at EU weekly. There were about 6 major retracements like you speak of over the last 6 months of the EU fall. See it? Now look at the largest, about the first week in Oct. 2014. Now zoom in on it on the daily chart and look at oct 5 to Oct 28th. There were at least 4 retracement head fakes, where price went up and then headed back down like you spoke of. But then price turned back up to make a higher high. You would have been stopped out before...
Hi G,

ok great post. So as I definitely do not want to belong to the suckers game here is my interpretation of the trade you wrote (it is better that you did not attach chart so I had to work myself through it):

You entered the trade on Oct. 28 because both 4H and Daily TFs lined up in a way that MA crossover took place and RSI was under both TFs. So going back to my question, all 9 TFs did not necesserily had to line up to enter the trade. Actually it can happen that they lined up, I did not zoom into those little TFs. We can also say you did not care much about 200 pips you left on the table, because you made a lot more later on.

Now, this makes sense if we used the Daily TFs too, because on the 4H, according to your rule I do see 2 further entry points which satisfy your needs: check on 4H Oc. 10 and 14. Both days RSI will be under 50 and the MAs are heading down the way they should. The Daily does not line up though.

Maybe we can talk about those entries live, it might be one of the few missing/unclear points.

Thanks for the discussions once more. Even if my entries differ sometimes (but only the very first position entry after a reversal occurs) to your approach the scale in method you introduce can always be applied no matter what the exact entry or exit point is. So this was a good example.

Basically to make a conclusion of my question, you do not get back in the beginning of the end of the retracement but also not wait until a breakout to the downside occurs.

IBO
  • #791
  • Jan 30, 2015 9:14am Jan 30, 2015 9:14am
Quoting IBreakOut
{quote} Hi G, ok great post. So as I definitely do not want to belong to the suckers game here is my interpretation of the trade you wrote (it is better that you did not attach chart so I had to work myself through it): You entered the trade on Oct. 28 because both 4H and Daily TFs lined up in a way that MA crossover took place and RSI was under both TFs. So going back to my question, all 9 TFs did not necesserily had to line up to enter the trade. Actually it can happen that they lined up, I did not zoom into those little TFs. We can also say you...
Yes, all 9 timeframes lined up at several points during that day. Any would have made a pretty good entry try. I've gone through several of these trades live here in the past. I'm in another with a re-entry on the UCad right now. If you try this sort of entry 30 times in the year and 25 of those tries make just a few pips on average, but 5 hit the jackpot, that would probably be at least a 100% trading profit year, maybe much more!. A very good year indeed!
  • #792
  • Jan 30, 2015 9:23am Jan 30, 2015 9:23am
Quoting lemming78
{quote} hello G. This is how i would have traded that period, according to your rules. What do you think? I would have missed the first entry with a sl got to BE. Of course, i could have waited the retracement without moving SL, but it needs a very strong stomach to manage that. https://www.tradingview.com/x/7MW0qERO/
Hey Lem, glad to see you went through the charts yourself and thanks for the correction on the pullback, 135 pips in retracement is quite different than 40! . Yes, there were a few ways to trade this. Yours would have been perfect. There are usually several trades this good each year. Making just a few pips on all the others and catching just a few of these huge ones will make you super trader. Then the big challenge is to not get overconfident and reckless. Many, if not most traders who have several years of good trading like this are struck by the "King Kong Effect". They are taken down by their own pride, arrogance, overconfidence and recklessness. Remain humble. Make huge pips. Repeat as necessary.
  • #793
  • Jan 30, 2015 2:53pm Jan 30, 2015 2:53pm
Some lively discussion in my chat group today about the risks of trading in Forex. This was brought up by a quote from a trader (not in my trading group) who was heavily long the EChf before the peg was removed. Price gapped 2000 pips down and he received a call from his bank that he owed $500,000 in negative balance on his account. This is "Black Swan" risk. It can't be predicted, but it can be mitigated in various ways. Forex trading is risky. Trade demo all you like, but when you go live, you need to understand the risks and take reasonable steps to mitigate that risk. First of all, lower leverage produces lower risk. The fellow who took the $500,000 hit was probably trading maximum leverage, which is no longer allowed in the US. Second, don't keep more money in your trading account than you need to trade with. You are immediately liable for any losses up to the balance of your account. Beyond that, the banks or brokers must try to claw that loss from your other accounts, and often that is difficult. Third, keep your life's savings in well-diversified Retirement Savings Accounts where it is not subject to being garnished for civil settlements. Fourth, in the U.S. you can form an L.L.C. that can firewall your personal property. Fifth, if you weren't sure about the risk of trading a pegged or highly manipulated currency, you should be now. If the free market isn't being allowed to trade in an open auction style, then it's a rigged game by whomever is setting the prices. Consult a CPA or other financial professional if you have any concerns about being liable for losses exceeding your account value. Mitigating the risk of "Black Swan" events is critical to the long term survival in this market.
  • #794
  • Jan 30, 2015 10:16pm Jan 30, 2015 10:16pm
Quoting Graviton
{quote} A 5000 pip trade. Don't get sucked into trying to get into the very beginning of a questionable trade to make an extra 100 pips. That's a suckers game. Wait until everything lines up just right and make that 5000 pip trade, or at least a big slice of it. It takes a ton of patience to wait for that trade to develop. Then it takes nuts the size of basketballs to stay in the trade through all the little retracements and collect on that 5,000 pips profit. But I suppose that's what good traders are made of, patience and nuts. It's a careful balance...
Yes Graviton, that's the type of trade I need to make.

Holding onto it for a few more weeks. I have established some pretty good entries. Now all I need is for it to grow and that takes time.

I always think about taking profit but I am holding onto it. for something bigger.

Cheers,
Eric
  • #795
  • Feb 1, 2015 11:34am Feb 1, 2015 11:34am
Pairs to be kept under control this week:

aud/usd - bear
audchf -> flat
chfjpy --> flat
eurusd -> bear
eurchf-> flat
eurgbp -> bear
gbpusd ->flat
gbpaud -> bull
gbpnzd -> bull
nzdusd-> bear
usdcad ->bull
usdjpy -> flat

what i've written is simply the direction i'm looking for opportunities.

Let's wait G. for confirmation.

Bibi
are we ready?
  • #796
  • Feb 1, 2015 11:49am Feb 1, 2015 11:49am
Quoting lemming78
{quote} hello G. This is how i would have traded that period, according to your rules. What do you think? I would have missed the first entry with a sl got to BE. Of course, i could have waited the retracement without moving SL, but it needs a very strong stomach to manage that. https://www.tradingview.com/x/7MW0qERO/
Hi L.,
sorry for my late answer. If you ask me - I am handling SLs in a bit other way. As every pair (and anything you trade)
is trending with a move followed by a retrace why switching SL before retrace has happened? Your chances to stay in the trade are much more greater if waiting for the move to have been completed by a retrace. If the prices falls under (trading a downtrend) the low of the recent move- than its a good time to move SL. Only my opinion .
Attached Image (click to enlarge)
Click to Enlarge Name: Moving SL.png Size: 227 KB
Have a nice day
  • #797
  • Feb 1, 2015 1:41pm Feb 1, 2015 1:41pm
Quoting doerpn
{quote} Hi L., sorry for my late answer. If you ask me - I am handling SLs in a bit other way. As every pair (and anything you trade) is trending with a move followed by a retrace why switching SL before retrace has happened? Your chances to stay in the trade are much more greater if waiting for the move to have been completed by a retrace. If the prices falls under (trading a downtrend) the low of the recent move- than its a good time to move SL. Only my opinion . {image}
Thanks man, good point actually
  • #798
  • Feb 2, 2015 8:44am Feb 2, 2015 8:44am
Yes that is a good point about waiting for the pull back before moving to BE.

From looking at a bunch of entry cases I have in mind some extra points that you guys might feel are worth discussing:

1. When there has been a substantial move into profit from the entry - say about 100 pips - and the price comes back to retest the entry level, wait and see what happens. It should turn around again within a few hours and go on to exceed the original high or low. If it doesn't, usually best to get out.

2. Almost all the best trades are in profit at the end of the first day. For example if you are entering during the London session, by London Close / New York close, if it isn't in profit, it is probably not worth staying in the trade.

3. If the trade goes against you right after entry by about 30/40 pips and doesn't turn around quickly after that, it is probably best to get out.

4. If after the first retest the price moves back in your favour but then goes on to make a double bottom or top at its earlier maximum favourable excursion and then comes back to the entry point, probably best to go to BE.
  • #799
  • Feb 2, 2015 8:50am Feb 2, 2015 8:50am
There was a good example of my point 3 from my previous post in action today.

I got long UCAD at 1.2750. It went about +20, but then after a couple of hours it was down -20 and we had a marked bearish V-shape on the H1 chart.

I got out for a loss of -30, just because the bearish V looked awful. It turned out to be the right thing to do (and this might be the end of UCAD for a while).

Attached Image (click to enlarge)
Click to Enlarge Name: Screenshot1.png Size: 24 KB
  • #800
  • Feb 2, 2015 11:49am Feb 2, 2015 11:49am
Quoting lemna
There was a good example of my point 3 from my previous post in action today. I got long UCAD at 1.2750. It went about +20, but then after a couple of hours it was down -20 and we had a marked bearish V-shape on the H1 chart. I got out for a loss of -30, just because the bearish V looked awful. It turned out to be the right thing to do (and this might be the end of UCAD for a while). {image}
Hi L.,
depends on the timeframe you are looking/trading .....Regarding weekly nothing has happened so far. I switch my SLs tighter and let the market decide....
Attached Image (click to enlarge)
Click to Enlarge Name: U-CAD.png Size: 26 KB
Have a nice day
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