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Testing High Leverage Compounding

  • #61
  • May 15, 2015 9:47am May 15, 2015 9:47am
Quoting shellsnail
EUR possible 130 pip bounce from here. EUR/JPY trigger signal, SL not hit.
Bingo.. I might have underestimated the win %...

This rally has more to go imo.. half way there so far. 1.15 today??
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  • #62
  • May 15, 2015 4:19pm May 15, 2015 4:19pm
Reminder to self

Sometimes I forget how my systems work. Monday and Tuesday were enormous days for the system. 5R and 6R days. Wed, Thur, Fri were horrible days, with strings of losers like never before... Still, I come out +6R ahead for the week. One of the better weeks in fact.

Such is the reality of trading.
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  • #63
  • Edited 2:37am May 17, 2015 2:13am | Edited 2:37am
A Crazy Scaling In Method

Going to test a crazy scaling in method next week onwards. the entry will narrow SL to around 4-5 pips, thus allowing perhaps triple/quadruple the initial position size and still have a BE stop. If this works, then one winner will easily give +100% profits.

This relies on a simple pattern on the 1 min chart that occurs frequently around break-outs.

Will demonstrate in real-time...

Although, depending on how intense my intra-day live trading activities are, I may or may not have time to trade this... Let's see how it goes.
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  • #64
  • May 17, 2015 2:30am May 17, 2015 2:30am
Quoting shellsnail
A Crazy Scaling In Method Going to test a crazy scaling in method next week onwards. the entry will narrow SL to around 4-5 pips, thus allowing perhaps triple/quadruple the initial position size and still have a BE stop. If this works, then one winner will easily give +100% profits. This relies on a simple pattern on the 1 min chart that occurs frequently around break-outs. Will demonstrate in real-time...
The basic principle is as follows.

Large lot/scale-in only considered after price has travelled to beyond 1 * SL distance, where initial position is at break-even.

After entering the large lot, SL immediately shift up to BE of total position.

Then after price travels 1 * NEW SL distance, shift SL of large lot up to BE and initial trade SL back to original point. This way, even if the large lot gets stopped out, the trade is still safe. This allows for multiple large-lot entries should the first one not take-off. Since the SL is usually 1/8 - 1/10 of the initial SL, in a high momentum move it almost always travels in our favour allowing SL to be shifted to BE... In most cases, this takes-off, but if not, we can get a second chance or a third chance. If it fails then, well too bad we are still break-even though.
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  • #65
  • May 17, 2015 2:44am May 17, 2015 2:44am
The Importance of Testing and Learning New Edges

Since testing this system I have incorporated an additional filter to my intra-day system. This is the filter that if price has travelled 5 * 1 hour ATR(200) without significant retrace, then I will stop taking trend trades in that pair. Did some testing. Seems reliable and tend to prevent the really really really bad days and doesn't affect the good ones. So anything that'll cut my drawdown, I'll take it, even if it reduces my overall profitability slightly. Have to protect my psychology, which is the weakest link in the system.

Also, this obsession with scaling-in has led to me discover some additional edges in the market. Simple ones really, but I have never really thought about them or looked at the market in this way. In retrospect, they are so obvious; yet, they were so unobvious a couple of days ago... I've also understood why EMA crossovers or any cross-over system tend to generate so many losing trades in a row and what is typically the similarity for all these losing periods and how they can be avoided. This is golden for my intra-day trading. At the end of the day, these indicators are mirroring price, and if price is not breaking new ground and just trotting on the spot, they tend to paint a false/overly rosy picture. So the key is to go back to price and rely on OHLC. If this makes sense to you, great.

I have since incorporated this edge into my system and using it to transform my subsequent entries after a SL gets hit for my main trade (regardless if it is BE SL or losing SL). The flavour here is similar to the scale-in method I'll be implementing next week.

So my point is, testing and learning new stuff are very important. You never know what you'll learn and how they might be useful...
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  • #66
  • Edited 5:20am May 17, 2015 4:37am | Edited 5:20am
Well, staying true to the thread's title...

Testing a different sort of High Leverage Compounding..

I've eyed Rag2Riches' thread for nearly a year now. The bottleneck has always been a consistent, repeatable edge that I am comfortable trading day-in-day-out. Now that I have that, I guess it's time to give it another shot.

Due to margin restrictions, I'm using 1:500 leverage but the stop-out level is at 80%, so I can only employ ~40% risk per trade assuming my SLs are around 12 pips (my usual SL size for my trades).

Have added the trade explorer. Starting with S$50. Will be unable to trade if I lose 4 full-sized trades in a row from the onset.. That would be unfortunate. The more winning trades I can get early on, the more likely I will survive until the end because I can tolerate longer periods of losing trades. (If I can hit $500, then it's pretty safe I can survive a 6 losing trades streak, that has never happened yet; if I luckily hit 5000 quickly, then I'm pretty much guaranteed to make it to the end because I can survive a 12 trades losing streak.)

The good news is, my wins are on average 4:1RR and above up to 10:1RR, so I would only need around 4 net winning trades to get to $5000. If I am lucky, it can happen within 3 days. $5000 is my safe-zone.

Still, probably a tough experiment because my win-ratio is at best 30%, with lots of BE/partial wins and the rest losses. If I hit the no-trade point, I'll top up the account back to $50. This imo shouldn't happen more than twice unless I'm really unlucky.

Let's see how it goes.

The first milestone is S$50,000. (estimated to hit after 60 full-sized trades/250 total trades, around 6-8 weeks.) After which, I'd reduce risk to 10%. 2nd milestone is S$200,000, where I will cut risk to 5%. Last milestone is S$500,000, where I will cut risk to 1%. But sure, too early to think about that. Let's trade consistently first.

p.s. this is not trading the system i've posted in page 1. Would not be sharing the method in detail, but you can observe the trades and guess if you want to. All information is made public. Thanks.
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  • #67
  • May 17, 2015 3:25pm May 17, 2015 3:25pm
Good luck I hope you succeed!
  • #68
  • May 17, 2015 3:48pm May 17, 2015 3:48pm
Quoting ExForX
Good luck I hope you succeed!
Thanks. I do really need some luck because depending on how my system performs over the next few weeks it could mean a successful first run or it could mean a couple of blown accounts! Ironically, if my starting balance were $5000 this would be "safe". But I think it's better to build from small, fail a couple of times it's okay.

Hope to see you around! Good luck to you too.
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  • #69
  • May 17, 2015 4:22pm May 17, 2015 4:22pm
Different Trading Paradigms

In this thread I've approached trading mostly as a Science and a game, in which there are certain principles and causal dynamics and that as participants we have to operate based on rules we define.

But one could also argue a different approach to trading, and I very much agree with that interpretation as well. One could think of trading as a Sport or performance activity. In this case, we start each trading day afresh and we 'warm-up' to the markets by taking a few small trades or going to our go-to set-ups. As the day progresses, we get more in-tuned with the markets and we start taking the higher RR plays and start scaling into our winners. We build our momentum up throughout the day. When we lose money, we trade defensively and slowly rebuild the momentum.

IMO, both ways of viewing the market are legit and they are not necessarily contradictory.
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  • #70
  • May 17, 2015 5:40pm May 17, 2015 5:40pm
Quoting shellsnail
The Importance of Testing and Learning New Edges Since testing this system I have incorporated an additional filter to my intra-day system. This is the filter that if price has travelled 5 * 1 hour ATR(200) without significant retrace, then I will stop taking trend trades in that pair. Did some testing. Seems reliable and tend to prevent the really really really bad days and doesn't affect the good ones. So anything that'll cut my drawdown, I'll take it, even if it reduces my overall profitability slightly. Have to protect my psychology, which is...
Thank you for nice informative tread. I have already learned a lot from you here.
This post caught my attention, since I am trying to formulate bot rules.
Could you elaborate on this point - getting back to OHLC and why crossovers dont work?
Also, what would be the trigger to get back to trend trades after price moved extensively?
Thanks
  • #71
  • May 17, 2015 6:11pm May 17, 2015 6:11pm
Quoting MZen
{quote} Thank you for nice informative tread. I have already learned a lot from you here. This post caught my attention, since I am trying to formulate bot rules. Could you elaborate on this point - getting back to OHLC and why crossovers dont work? Also, what would be the trigger to get back to trend trades after price moved extensively? Thanks
The simple answer is that price is trapped in a range. Typically during high volatility periods, we don't expect ranging, but it happens sometimes. The key is to stay out of the market when it happens and only get in when the range breaks.

usually, this starts when your cross-over signal fails i.e. you get stopped out by opposing volatility, and then the market stops breaking new highs but then keeps generating cross-over signals. So you need to ignore the indicators and focus on price. The most recent high is the one you want to focus on. Once price closes beyond the CLOSE of that candle that generated the high, we have a break-out. Now you can enter a trade once price breaks above this new candle with a stop-order. Typically the SL can be really tight, like the base of that candle, if it's 1min chart it's no more than 5-6 pips.

See for example EUR/USD price action last friday.

Attached Image


It's a bit hard to code an EA for this, but not impossible.
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  • #72
  • Edited 6:56pm May 17, 2015 6:39pm | Edited 6:56pm
Asian pairs in focus

AUD/CHF Short
EUR/JPY Long
EUR/NZD Long
GBP/AUD Long
GBP/NZD Long
NZD/CHF Short
NZD/JPY Short
NZD/USD Short

In summary:
Short AUD
Short NZD

against GBP and EUR or CHF pairs basically.
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  • #73
  • May 17, 2015 6:44pm May 17, 2015 6:44pm
imo euro about to explode into break-out up.
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  • #74
  • May 17, 2015 6:56pm May 17, 2015 6:56pm
Quoting shellsnail
Asian pairs in focus AUD/CHF Long EUR/JPY Long EUR/NZD Long GBP/AUD Long GBP/NZD Long NZD/CHF Short NZD/JPY Short NZD/USD Short In summary: Short AUD Short NZD against GBP and EUR or CHF pairs basically.
All pairs have started to move counter-trend... now just have to wait for trend change on 5 minute for entry.

Rmb, it's better to wait for momentum to shift than to catch a falling knife on the higher time frame charts (5min and above)
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  • #75
  • May 17, 2015 7:12pm May 17, 2015 7:12pm
Short AUD/CHF

Attached Image (click to enlarge)
Click to Enlarge Name: Screenshot1.png Size: 80 KB
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  • #76
  • May 17, 2015 7:29pm May 17, 2015 7:29pm
Quoting shellsnail
Well, staying true to the thread's title... Testing a different sort of High Leverage Compounding.. I've eyed Rag2Riches' thread for nearly a year now. The bottleneck has always been a consistent, repeatable edge that I am comfortable trading day-in-day-out. Now that I have that, I guess it's time to give it another shot. Due to margin restrictions, I'm using 1:500 leverage but the stop-out level is at 80%, so I can only employ ~40% risk per trade assuming my SLs are around 12 pips...
I Like you approach......I am getting ready to do the exact same thing
  • #77
  • May 17, 2015 9:48pm May 17, 2015 9:48pm
Long EUR/JPY

Attached Image (click to enlarge)
Click to Enlarge Name: Screenshot1.png Size: 71 KB
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  • #78
  • May 17, 2015 9:50pm May 17, 2015 9:50pm
Quoting Mooz
{quote} I Like you approach......I am getting ready to do the exact same thing
Good luck!
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  • #79
  • May 17, 2015 9:53pm May 17, 2015 9:53pm
Quoting shellsnail
Short AUD/CHF {image}
stop-out for a loss.
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  • #80
  • May 17, 2015 10:50pm May 17, 2015 10:50pm
Quoting shellsnail
{quote} The simple answer is that price is trapped in a range. Typically during high volatility periods, we don't expect ranging, but it happens sometimes. The key is to stay out of the market when it happens and only get in when the range breaks. usually, this starts when your cross-over signal fails i.e. you get stopped out by opposing volatility, and then the market stops breaking new highs but then keeps generating cross-over signals. So you need to ignore the indicators and focus on price. The most recent high is the one you want to focus on....
You have described what would constitute inside bars on higher time frame or triangles or pendants. Am I right?
So, you would continue in direction of previous move on brake of high/low of last movement?
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