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As simple as possible: 00 level trading

  • #26,561
  • Feb 9, 2015 4:11pm Feb 9, 2015 4:11pm
Quoting Sis.yphus
Hey guys, Great system yall are trading with here. I am currently working out the best way to adapt to how I am looking to trade the markets. Any ways just wanted to share some info with you guys in regards to the R:R we are using, Spread and Commission. These stats are based off of FXCM Spread and Commission Structure. GBPJPY has an avg spread of 1.2 and .80 round trip fee for 10,000 units. So a round trip cost a total of $2.00 So say I am risking 10 pips to make 5 Pips with my SL and TP. I am really Risking 12 Pips for 3, after spread and commission....
I am currently learning and demo trading this system for the past 2-3 weeks and have read about 20,000 posts in the thread. From what i have noticed most traders will either 1) consider the cost of spread+commission in TP and SL, 2) add the cost of spread+commission only to their TP, or 3) leave the TP + SL at a fixed 5 &10 and chalk up the costs as the price of doing business.

Small spreads and/or lower commissions are an important aspect of this strategy. This is also one of the reasons why exotic currency pair are not encouraged.

Regarding Udine, i have read him reply that he kept his TP and SL fixed at 5 & 10 respectively. If you study his charts from the beginning you will see it clearly. Personally, i am also keeping them fixed because i am still learning the system and until i have 300/400/500 trades under my belt i won’t have enough data to tweak my exits for increased efficiency. Until that time, i know that 5 & 10 are proven to work so that is what i will use to learn.

Udine and other senior members have made more specific comments regarding R:R and this specific strategy in the past that you can search for, but from what i can remember off the top of my head you should look into the strike rate of this strategy and what percent is required to BE & start profiting. My personal opinion is that strike rate is essential whenever making R:R considerations. Also note that one of the best ways to keep your strike rate high (in WUKAR 00-level) is only take two trades at the recommended times, recommended pairs, within all the other rules, per day. The two trade rule seems to be the one most broken, especially by newbies, and it can have a significant impact on the bottom line.

Many people have posted weekly stats in the past and that gives a good idea of what is possible.

Hope this helped in some way.

Happy pipping,
N.
  • #26,562
  • Edited 4:41pm Feb 9, 2015 4:21pm | Edited 4:41pm
Thanks for the response Nik, very useful. In regards to the strike is exactly why I am bringing it up. Look at these numbers

Assuming Spread is .2
(5 Pip Target for 1:1)
1:1 = 3 Pips For 5 Pips = 4 Pip Pay Out or 4 Pip Loss After Commission/Spread. - True R:R 1:1.66 - 13% Win Rate Needed To Make Up.
1:2 = 3 Pips For 9 Pips = 8 Pip Pay Out or 4 Pip Loss After Commission/Spread. - True R:R 1:3 - 8% Win Rate Needed To Make Up.
1:3 = 3 Pips For 13 Pips = 12 Pip Pay Out or 4 Pip Loss After Commissions/Spread. - True R:R 1:4.25 - 6% Win Rate Needed To Make Up.
1:4 = 3 Pips For 17 Pips = 16 Pip Pay Out or 4 Pip Loss After Commissions/Spread. - True R:R 1:5.66 - 6% Win Rate Needed To Make Up.
1:5 = 3 Pips For 21 Pips = 20 Pip Pay Out or 4 Pip Loss After Commissions/Spread. - True R:R 1:7 - 5% Win Rate Needed To Make Up.

(10 Pip Target for 1:1)
1:1 = 8 Pips For 10 Pips = 9 Pip Pay Out or 9 Pip Loss After Commissions/Spread. - True R:R 1:1.25 - 6% Win Rate Needed To Make Up.
1:2 = 8 Pips For 19 Pips = 18 Pip Pay Out or 9 Pip Loss After Commissions/Spread. - True R:R 1:2.37 - 4% Win Rate Needed To Make Up.
1:3 = 8 Pips For 28 Pips = 27 Pip Pay Out or 9 Pip Loss After Commissions/Spread. - True R:R 1:3.5 - 4% Win Rate Needed To Make Up.
1:4 = 8 Pips for 37 Pips = 36 Pip Pay Out or 9 Pip Loss After Commissions/Spread. - True R:R 1:4.63 - 3% Win Rate Needed To Make Up.
1:5 = 8 Pips for 46 Pips = 45 Pip Pay Out or 9 Pip Loss After Commissions/Spread. - True R:R 1:5.8 - 3% Win Rate Needed To Make Up

(20 Pip Target for 1:1)
1:1 = 18 Pips For 20 Pips = 19 Pip Pay Out or 19 Pip Loss After Commissions/Spread. - True R:R 1:1.11 - 3% Win Rate Needed To Make Up.
1:2 = 18 Pips For 39 Pips = 38 Pip Pay Out or 19 Pip Loss After Commissions/Spread. - True R:R 1:2.17 - 2% Win Rate Needed To Make Up.
1:3 = 18 Pips For 58 Pips = 57 Pip Pay Out or 19 Pip Loss After Commissions/Spread. - True R:R 1:3.22 - 2% Win Rate Needed To Make Up.
1:4 = 18 Pips For 77 Pips = 76 Pip Pay Out or 19 Pip Loss After Commissions/Spread. - True R:R 1:4.28 - 2% Win Rate Needed To Make Up.
1:5 = 18 Pips For 96 Pips = 95 Pip Pay Out or 19 Pip Loss After Commissions/Spread. - True R:R 1:5.33 - 2% Win Rate Needed To Make Up.

So Using a 5 pip SL and 5 Pip TP, you need to make up an additional 13% to your win rate for it to be profitable. So instead of being 50% to be profitable you really need 63% win rate after commissions. & if you adjust the TP and SL so its truly 1:1 R:R $$ wise, the win rate you are expcted to achieve by default is 37% compared to 50% so again you will need to make up 13%.

So taking that into consideration with the first example I gave in regards to
EURJPY .7 Pip Spread + Commission you need 77% Hit Rate or Higher.
EURUSD .2 Pip Spread +Commission you need 74% Hit Rate or Higher.
GBPJPY 1.2 Pip Spread + Commission you need a 81% Hit Rate or Higher.

Those are all using the 10 pip 5 pip TP SL.

Normally with a 2 risk 1 Reward system you would only need a hit rate of 67% or higher to break even but because of the spread + commissions we need to make up an additional 10-14% win rate to break even.

Those are some really high hit rates required to beat break even. I am curious what kind of hit rate have you been experience so far in your 2-3 weeks of trading?

Or if any other members care to share what their experience has been Hit Rate/Win Rate wise.
  • #26,563
  • Feb 9, 2015 4:45pm Feb 9, 2015 4:45pm
Quoting Sis.yphus
TNormally with a 2 risk 1 Reward system you would only need a hit rate of 67% or higher to break even but because of the spread + commissions we need to make up an additional 10-14% win rate to break even. Those are some really high hit rates required to beat break even. I am curious what kind of hit rate have you been experience so far in your 2-3 weeks of trading? Or if any other members care to share what their experience has been Hit Rate/Win Rate wise.
Thats a really interesting post, will save for further analysis, thanks.

I dont't have enough experience to give you my own numbers, but again from memory i have seen strike rate is the upper 70's to mid 80's from a few members including Udine.

Here is another thought for you: This strategy has a Trailing-Stop EA in use that will prevent trades that lose steam after 3.5-4.0 pips from turning around and hit SL. The EA essential triggers at a given pip distance and moves the new TS to .5-1.0pips above trigger/open (your choice obviously). These trades are generally small net profits, how does that influence your strike rate? TS's are not TP or SL, they are just above BE. It's important to get hard numbers on TP, TS, and SL to really get a good handle on this strategy. While i may be new i can attest to the important effect of the TS EA . . . its vital. Hope this made sense :-)

Best
N.
  • #26,564
  • Feb 9, 2015 4:50pm Feb 9, 2015 4:50pm
Quoting Nik-Nyc
{quote} Thats a really interesting post, will save for further analysis, thanks. I dont't have enough experience to give you my own numbers, but again from memory i have seen strike rate is the upper 70's to mid 80's from a few members including Udine. Here is another thought for you: This strategy has a Trailing-Stop EA in use that will prevent trades that lose steam after 3.5-4.0 pips from turning around and hit SL. The EA essential triggers at a given pip distance and moves the new TS to .5-1.0pips above trigger/open (your choice obviously)....

Made perfect sense and I to believe the SL provides a tremendous advantage to protecting losses with this system. I am unsure exactly how I can implement the affect it will have on the numbers I am posting so I have just been approaching it as all or non for the time being.

Also I would consider being stopped out at BE a win, since it wasn't a loss.
  • #26,565
  • Feb 9, 2015 5:49pm Feb 9, 2015 5:49pm
Quoting Sis.yphus
{quote} Made perfect sense and I to believe the SL provides a tremendous advantage to protecting losses with this system. I am unsure exactly how I can implement the affect it will have on the numbers I am posting so I have just been approaching it as all or non for the time being. Also I would consider being stopped out at BE a win, since it wasn't a loss.
I think you typo-ed SL instead of TS above, but otherwise we seem to agree. I won't say i love TS, but i will gladly take them over the alternative. And believe it or not, the small net profits from TS do add up . . . i see people splitting hairs over $1/lot in expense but it goes both ways, especially if it compounds :-)

Good luck, and trust me reading the thread is worth it.

N.
  • #26,566
  • Feb 9, 2015 5:54pm Feb 9, 2015 5:54pm
Quoting Nik-Nyc
{quote} I think you typo-ed SL instead of TS above, but otherwise we seem to agree. I won't say i love TS, but i will gladly take them over the alternative. And believe it or not, the small net profits from TS do add up . . . i see people splitting hairs over $1/lot in expense but it goes both ways, especially if it compounds :-) Good luck, and trust me reading the thread is worth it. N.

I see what you mean but sadly it only goes one way, the brokers way. you pay when you walk in the trade and when you leave and they never pay you. Also my break even +1 pip trade, usually covers the cost of the commission which avgs to about .8 a pip every 10,000 lots which I am very happy with as then I am truly break even on the trade, the sad thing is my account would never grow with only TS, but that is nothing to worry about as there will be many TP's because the the TP is so small.
  • #26,567
  • Feb 9, 2015 6:41pm Feb 9, 2015 6:41pm
Trade #1 EURJPY H1 Method TS +.9pips (net)

http://s23.postimg.org/7f58odlrf/Scr...7_38_24_PM.png
  • #26,568
  • Feb 9, 2015 6:51pm Feb 9, 2015 6:51pm
Quoting Nik-Nyc
Trade #1 EURJPY H1 Method TS +.9pips (net) {image}
You're a bold man my friend trading the Asian session with this liquidity
Attached Image


You know what they say though, the fortune favors the bold!
  • #26,569
  • Feb 9, 2015 6:54pm Feb 9, 2015 6:54pm
Quoting bubincka
{quote} Maybe Udine can accept a compromise on his thread, that is advanced traders like you and Snail every now and then post simple HP, just to give the taste and inroduce the argument. Of course last word to Udine- In the meanwhile EJ to TS, and it was good since DP is very close. {image}
Yes Udine has the final word on the matter of course.

I can tell you though that once harmonics enters the arena the whole 00 trading method will change convincingly.

Why?

Because harmonics deals with "symmetry" and extensions within the market, looking for setups that are at least 1:1 and usually much better than that which for me means I would be looking to trade for example (on a small TF...M1 or M5) a SL = 10 pips and a TP at least 10 pips as well (not less)

Harmonic setups look for risk:reward such as risking 10 pips to make a TP of >=10 pips and based on Fibonacci Ratios such as:
** TP = SL x 100%;
TP =SL x 127.2%,
TP = SL x 161.8%;
TP = SL x 200.0%
etc etc etc

Also based on order flow (the movement of price on your charts by bull or bear power made clearer by candlesticks there is a judgement call on the part of the trader to monitor PA at crucial levels and quite often the trade is terminated at any of the following (not complete either):

** 38.2%, 61.8%, 78.6% retracement of the main leg
pivots, support and resistance levels (and yes even the DO price line)

For pattern setups (Bat, cypher, butterfly, crab etc etc) it takes a lot of monitoring time, waiting for a pattern to materialize and then waiting for the "best" time based on PA to go short or long as the case may be.

I hope this clearly shows that harmonics is far different from the 00 trading method (the risk:rewards for one thing, the fixed SL and TP for another)

So bringing a full blown discussion of harmonics into the 00 thread would create a massive change in the way it is traded since in harmonics you very rarely care about opening a trade at the start of the hour (or M15 system) or whether the H1 and D1 candles are the same color.

It's completely different type of thinking and hence trading is very much different.

In terms of the 00 method it is better to simply apply candlestick analysis and follow price action (PA).

Good trading,

Masterrmind.............
Master your Mind then Master your Trades
  • #26,570
  • Feb 9, 2015 7:54pm Feb 9, 2015 7:54pm
Quoting Nik-Nyc
{quote} Thats a really interesting post, will save for further analysis, thanks. I dont't have enough experience to give you my own numbers, but again from memory i have seen strike rate is the upper 70's to mid 80's from a few members including Udine. Here is another thought for you: This strategy has a Trailing-Stop EA in use that will prevent trades that lose steam after 3.5-4.0 pips from turning around and hit SL. The EA essential triggers at a given pip distance and moves the new TS to .5-1.0pips above trigger/open (your choice obviously)....
Hello, Nik
I have once analyzed all Udine's trades during last June and July.
His winning rate was 91.4%
Attached Image

Winning rate of senior members in this thread is very high....
  • #26,571
  • Feb 9, 2015 8:08pm Feb 9, 2015 8:08pm
Quoting sada69
{quote} Hello, Nik I have once analyzed all Udine's trades during last June and July. His winning rate was 91.4% {image} Winning rate of senior members in this thread is very high....
Very interesting data. I would be curious to hear from Udine if this is his true numbers. I am still also very curious to hear from more of the people who post in here all the time.
  • #26,572
  • Feb 9, 2015 8:15pm Feb 9, 2015 8:15pm
Quoting sada69
{quote} Hello, Nik I have once analyzed all Udine's trades during last June and July. His winning rate was 91.4% {image} Winning rate of senior members in this thread is very high....

Sada, very useful . . . i'm a big believer in this system and the traders that use and help us noobs learn it, pretty unique. Now that i know +90% is possible i guess i will have to make it a goal . . . pdf & bcc!

@Sis., Asian session has its nuances, but if you study the thread you will find many traders do very well, very consistently. JPY & AUD pairs should be your starting point in this session if you are new to system/forex.

@Mastermind, the harmonics thread you often post to is quite interesting. It's definitely the next step after some consistency with Wukar, candlesticks, and PA basics. If other members are interested they can have a browse here: http://www.forexfactory.com/showthre...45#post8044445

N.
  • #26,573
  • Edited 8:35pm Feb 9, 2015 8:22pm | Edited 8:35pm
Trade #2 EURJPY TS +.5pips(net)

I think my Karma today is TS-ey. Then again as said earlier they are always welcome when considering the negative alternative. Thus far i have 2 TS for 1.4pips total, not easy pips but still 14% of my daily goal of 10pips.

http://s7.postimg.org/a0foyrrgr/Scre...9_03_18_PM.png
  • #26,574
  • Feb 9, 2015 8:40pm Feb 9, 2015 8:40pm
Quoting Nik-Nyc
{quote} Sada, very useful . . . i'm a big believer in this system and the traders that use and help us noobs learn it, pretty unique. Now that i know +90% is possible i guess i will have to make it a goal . . . pdf & bcc! @Sis., Asian session has its nuances, but if you study the thread you will find many traders do very well, very consistently. JPY & AUD pairs should be your starting point in this session if you are new to system/forex. @Mastermind, the harmonics thread you often post to is quite interesting. It's definitely the next step after...
I don't usually participate in a thread unless I find something of true worth or it interests me.

Many fall far below par unfortunately but that's ok because its easy to move on and find a thread that suits you (1000's of them out there!).

The participation level of the thread you refer to is very very low which is a shame but that's life I'm afraid.

Learn everything you can and master the charts because no single thread has all the answers to your success.

You have to seek it out from many places!

Good trading,

Masterrmind...........
Master your Mind then Master your Trades
  • #26,575
  • Feb 9, 2015 8:52pm Feb 9, 2015 8:52pm
Quoting Masterrmind
{quote} I don't usually participate in a thread unless I find something of true worth or it interests me. Many fall far below par unfortunately but that's ok because its easy to move on and find a thread that suits you (1000's of them out there!). The participation level of the thread you refer to is very very low which is a shame but that's life I'm afraid. Learn everything you can and master the charts because no single thread has all the answers to your success. You have to seek it out from many places! Good trading, Masterrmind........... ...
Masterrmind, I would greatly appreciate your opinion and input in this matter as I have noticed you have been posting in this thread for some time now.

http://www.forexfactory.com/showthre...98#post8056698
http://www.forexfactory.com/showthre...04#post8056504

I believe the information and questions being brought up is very useful to any one who is currently trading this system or trying to adapt it to their own style.
  • #26,576
  • Feb 9, 2015 9:34pm Feb 9, 2015 9:34pm
Trade #3 EURUSD TP +5pips (H1 method)

The 1.13400 level has been good to me, both yesterday and today. Not easy finding setups this morning in TO, could this be because tomorrow is Japanese bank holiday and so its a "friday" mentality? Thoughts?

Going to call it quits till NYO, 1.33% for the session.

Happy pipping,
N

http://s29.postimg.org/7ri6826av/Scr...0_27_47_PM.png
  • #26,577
  • Feb 9, 2015 10:29pm Feb 9, 2015 10:29pm
Quoting Sis.yphus
{quote} Masterrmind, I would greatly appreciate your opinion and input in this matter as I have noticed you have been posting in this thread for some time now. http://www.forexfactory.com/showthre...98#post8056698 http://www.forexfactory.com/showthre...04#post8056504 I believe the information and questions being brought up is very useful to any one who is currently trading this system or trying to adapt it to their own style.
I know this thread is very long but similar calculations have been discussed throughout the thread several times so please find them and read them.

In short you need to get the "push" and the "direction" of the trade spot on from the get go..if you don't it has a greater chance of smashing into your SL which is something all traders try to avoid.

If you were to use a 5 pip SL so that it gives you a 1:1 r:R you would lose out the majority of the time unless you are supremely skillful.

You cannot expect to achieve >90% win rate if you simply follow the "rules" ...won't work!

I have found (and yes I have been actively "aggressively" trading the method for several months) that the 10 pip SL is the minimum requirement to give your trade the bare breathing space it needs to move....anything less than 10 and you increase your chance of hitting SL significantly.

Apologies for using the word "significantly" because that implies that I have conducted mathematical analysis that draws strong conclusions.

Let me say this I have tried several TP and SL scenarios (love analysing data you could say) for the 00 method and the 5 pip TP and 10 pip SL works for me for this 00 method only.

Different story in my other trading of course...totally different.

Back to the 00 method...........

If you view my trade screen shots you will see that there are several examples where my DD has been between the 3 to 6 pips on a trade which tends to imply that a 10 pip SL is sufficient without being too large to potentially sacrifice an account.

You are not the first to ask such questions and you will not be the last.

All of us have contemplated this "negative" risk:reward ratio of the 00 method but as long as you can effectively read PA and avoid "dumb" trades which should never have been opened in the first place then all will be good in the land of the 00 kingdom!

Enjoy the journey,

Masterrmind...........
Master your Mind then Master your Trades
  • #26,578
  • Feb 9, 2015 10:49pm Feb 9, 2015 10:49pm
Hey Masterrmind!

When you say "I have found (and yes I have been actively "aggressively" trading the method for several months) that the 10 pip SL is the minimum requirement to give your trade the bare breathing space it needs to move....anything less than 10 and you increase your chance of hitting SL significantly."

Are you saying that we shouldn't account for spread/comm in our TP and SL at all?

Thanks

Vlad
  • #26,579
  • Feb 10, 2015 2:42am Feb 10, 2015 2:42am
[Demo] 7.5 TP, 10 SL, 5 TS

#1 EJ to SL -10

Attached Image (click to enlarge)
Click to Enlarge Name: EURJPYM15.png Size: 45 KB


Comment: shit happend or i have no idea

#2 GU to TP +7.5

Attached Image (click to enlarge)
Click to Enlarge Name: GBPUSDM15.png Size: 43 KB


#3 #4 AJ to TS

Attached Image (click to enlarge)
Click to Enlarge Name: AUDJPYM15.png Size: 45 KB


Comment: It would have been 2 TP if TP lv is 5

#5 UJ to SL -10

Attached Image (click to enlarge)
Click to Enlarge Name: USDJPYM15.png Size: 45 KB


Comment: I think long wick candle at LO is the reason

Numberman
  • #26,580
  • Feb 10, 2015 2:49am Feb 10, 2015 2:49am
Quoting numberman
[Demo] 7.5 TP, 10 SL, 5 TS #1 EJ to SL -10 {image} Comment: shit happend or i have no idea #2 GU to TP +7.5 {image} #3 #4 AJ to TS {image} Comment: It would have been 2 TP if TP lv is 5 #5 UJ to SL -10 {image} Comment: I think long wick candle at LO is the reason Numberman
Hi numberman, are you just testing the 7.5 TP at the moment? Whats the logic behind it?

Vlad
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