Just a bit of advice, for anyone, for free | Page 3 | Forex Factory

Options

Go to
Permalinks
Print Thread

Similar Threads

Great EA, I just need a bit of help 116 replies

Anyone running MT on Windows 7 64 bit? 19 replies

seeking advice for next steps... a bit lost 9 replies

Does anyone feels the same way? Need Advice.... 16 replies

Free Advice - Any EURUSD Trade 4 replies

Attachments: Just a bit of advice, for anyone, for free
Exit Attachments

Just a bit of advice, for anyone, for free

  • #41
  • Edited 7:40pm Sep 23, 2015 7:01pm | Edited 7:40pm
Quoting katrooo
{quote} hi Copernicus, thanks for your input, this is also my reply to Atokys which I promised before. Basically I am not against mechanical / automated systems. It's just the fact that I believe that a seasoned experienced trader who works hard, is patient / disciplined and understands the way markets work and market participants behave, can do much better than any mechanical / automated trading system - might be wrong here though as have never done proper research into automated trading Actually there is something I would be really opened to...
Thanks for the response K :-)

You may be very well right in regards to discretionary systems in the hands of excellent traders outperforming fully automated systems.....but the problem however lies in the fact that this can never be validly authenticated, as discretionary systems by their nature mean that the technique or the skill is inherent to the trader and cannot faithfully be transferred to another with exact fidelity.

Given the problem of fidelity of translation, and given the fickle nature (noise) of this market, the only way that I can therefore obtain sufficient confidence that it is the actual strategy which has an edge as opposed to the skill of the trader is through the application of full automation. Exact repeatability and the logging of performance results therefore serves to validate the technique itself as opposed to the capability of the trader applying a technique.

With that in mind then we come to question of whether there is a valid technique that is applicable for all seasons. I agree that the performance results of different techniques apply to different market conditions but as Atokys suggests, the power of a system is not simply defined by 'when' it trades but also very importantly when it 'doesn't' trade. The premise I therefore adopt for automated systems is that like a spider's web, a trade signal is placed to capture the strays that fall outside the bounds of random chance. I am very much philosophically "90% Efficient Market Hypothesis" and say "10% Behavioural Hypothesis" and therefore my trade style is that of a 'weak' hunter very patiently setting traps for it's prey.

....anyway, interesting stuff.
  • #42
  • Sep 23, 2015 9:22pm Sep 23, 2015 9:22pm
Quoting katrooo
{quote} I look a lot at many different things apart from charts. But regarding charts only, I look a lot at daily and weekly candle charts to get the sense of direction, trend, big levels, how over-extended the move is, price action / candles. From that I try to get a sense of what kind of market I can expect for next few sessions, and then I trade from 15m-1h charts accordingly - sometimes it's buying the dips / selling the rallies (if I expect trending market), sometimes it is fading the breaks (if I expect squeezy market). I draw general stuff...
Hello katrooo:

Thanks for your reply and willingness to help struggling traders. But what is a squeezy market ?

Also what type of reasonable return should a retail trader in Forex expect to make on say a $ 10,000 account once the trader has put in the required years of study, losing money and learning from mistakes ?

If you don't mind can you say what per cent of your trades are profitable, break even and loss trades ?

What is the typical reward/risk ratio of profitable trades ?

How long are you typically in a profitable trade ?

What percentage of months are you profitable ?

What would be your maximum draw down ?

How many losing trades in row would you allow before calling it quits for the day ?

What do you look at to determine how liquid a market is during the day ?

Thank You

Borg
May the Forex be with you.
  • #43
  • Sep 24, 2015 12:01am Sep 24, 2015 12:01am
Quoting katrooo
{quote} That's a fair point Atokys. I just believe I would be a better filter by applying discretion / experience to decide the right market conditions for a given system and when to turn it on. At least that would be the way I would go for if I was ever running EAs. But I would say there are different things working for different people.
If that approach fits your beliefs then it can be an effective approach. Even among mechanical traders, beliefs will differ and translate to vastly different systems.

My personal approach to the markets involves these two beliefs:
1. That Long-term trends exist and trading them using a standardized approach results in net profit over the long run.
2. That price momentum potentially indicates the path of least resistance.

My approach would be to design a long-term system which quantitatively defines and follows the long-term trend. This is then supplemented by several other systems that trade around the long-term position based on short-term momentum. Not applying trend filters to the short-term systems allows them to capitalize on mean-reversion as well.
  • #44
  • Sep 24, 2015 11:41pm Sep 24, 2015 11:41pm
Katrooo,

Good advice. Believe me, that's not something I say very often. Too many here are looking for a "holy grail" that will make them rich quickly - they're just gambling, really. That's why I tell them to go to Vegas ( the results will be the same, but in Vegas they can at least have some drinks and a show).

Also, you're spot on about watching fundamentals and flows. This is absolutely essential to have any chance at success. Too many here relay solely on technical analysis, which is a grave error.
  • #45
  • Sep 24, 2015 11:45pm Sep 24, 2015 11:45pm
Quoting gravitist
Also, you're spot on about watching fundamentals
You mean funny-mentals?
  • #46
  • Sep 25, 2015 12:40am Sep 25, 2015 12:40am
Quoting Borg
{quote} Hello katrooo: Thanks for your reply and willingness to help struggling traders. But what is a squeezy market ? Also what type of reasonable return should a retail trader in Forex expect to make on say a $ 10,000 account once the trader has put in the required years of study, losing money and learning from mistakes ? If you don't mind can you say what per cent of your trades are profitable, break even and loss trades ? What is the typical reward/risk ratio of profitable trades ? How long are you typically in a profitable trade ? What percentage...
Quote
Hello katrooo: Thanks for your reply and willingness to help struggling traders. But what is a squeezy market ?


Squeezy market is a market where people get washed out both directions pretty much. Especially happens when there is a big consensus on the market and participants are positioned in the same direction. It's usually the moment when a lot of information is already priced in and expectations are overstretched. When you get a market event or eco release (or series of such events) which is against this consensus, you get an avalanche of position unwinds and price moves against the consensus position in search for "pain" triggering a lot of stops on the way. Many times after this happens you get a resumption of the original move as some people use the dip / stops triggered spike to get into the consensus trade (the ones who didn't participate in the previous move). Some people might do it a bit late though (i.e. not catching the spike, but only after the trend resumes) and therefore get bad entry levels, and many times it happens in a very event driven fashion (e.g. series of events/eco releases against the consensus triggering stops, followed by an event/eco release in next few days confirming the previous consensus trend) and it is driven by emotions where market participants chase the market. When these people chase the market back into a consensus trade and buy/sell at bad levels with emotions involved, the market can be very vulnerable to another squeeze (back into the direction of previous stops) unless there is another catalyst to push the consensus trade in the original direction. Don't forget there is still an original consensus trade positioning with a lot of traders / investors positioned, i.e. not everyone got stopped out as some people are very fundamental / macro oriented on the institutional side and hold trades for longer. Depending on how much of a consensus the trade is (i.e. how big is the positioning of the market), you get a different types / power of squeezy market. This process is very complicated to explain by text and would probably need to use some real examples of it, with charts and macro explanations. It is also not something which is observable on intraday level but rather on several days sometimes even weeks horizon. Sometimes this process might resemble a different types of corrective moves / pullbacks on daily charts (when the trend is present) and it is usually a period when majority of people on the institutional side loses money by getting spooked as the market is in "search for pain" mode. I've seen this happening thousand times. Many retail traders are thinking that banks and big institutions don't want them to make money / want to screw them, but that is just not true, nobody cares about retail and whether they make money or not, it is just too small of a market. Many on the retail side also think there is some hidden "edge" on the institutional side, but that's not true, there are a lot of people struggling and losing money, having good and bad periods, it is normal. A big majority (80%+) of institutional risk takers (especially in prominent firms moving big money) is using global macro / fundamentals and only complementing it with technicals to fine-tune the entries/exits (many of them completely ignore technicals). And also apart from CTAs/quants and prop shops, there is a very small % of those using some kind of mechanical systems for trading. It is a complete must because you also have to face the clients who are invested in your funds, and if you tell your pension fund client that you took some trade based on a trend line, he takes the money out of your fund next day. My point is, even if you trade intraday, if you know when to expect such a squeezy market, there is an immense amount of opportunities to trade in such a market, you just need the experience to do it (i.e. you need to see it few times and understand how / why is market behaving in such a way)

Quote
Also what type of reasonable return should a retail trader in Forex expect to make on say a $ 10,000 account once the trader has put in the required years of study, losing money and learning from mistakes ?


It all depends on your risk profile, i.e. how much risk you are willing to run (whether you quantify it by VAR or by % risk per trade). I prefer to run a bit less risk than most members around here because I like to trade around my positions. But what I find realistic (and consistently achievable) is something like 60% hit ratio with 1:1 average risk reward. If you can do that consistently just do the maths with your maximum risk profile and you get your target return. Would say 20-80% annual return is achievable but the range is wide as some people have different trading frequency and different maximum risk / max. drawdown tolerance, I would personally target 30-40%, which can be very good if your capital base is high enough. Smaller the available capital, higher risk should be taken, because you don't want to spend your entire life building up your wealth from 100 EUR.

Quote
If you don't mind can you say what per cent of your trades are profitable, break even and loss trades ?


I don't care and I honestly don't know. The only thing which matters to me (and how I manage my risk) is that my PNL curve is upward sloping / uptrend resembling curve, i.e. impulsive on the way up and corrective on the way down.

Quote
What is the typical reward/risk ratio of profitable trades ?


I don't have a fixed ratio of R:R because I think it isn't the right approach. Every trade has its own risk : reward profile which is given by many different factors, like macro, market positioning, technical levels and others. I assess the risk : reward profile of every single trade before I take it, if is something I like I go for the trade - normally I am looking for at least 1.5:1 reward : risk ratio, preferably 2:1

Quote
How long are you typically in a profitable trade ?


Again, there is no clear answer to this. I can be in a trade for few hours, which is often the case when I trade around my positions. But I can have trades which I run in the background and I hold them for days / weeks.

Quote
What percentage of months are you profitable ?


Based on the past, something like 9 out of 12 are profitable for me.

Quote
What would be your maximum draw down ?


Can't really answer that as the risk limits / PNL targets on the institutional side are set in a completely different way, so it wouldn't give you much information. But in general my maximum drawdown is fairly limited because of the style I manage my risk (in one of my previous posts here)

Quote
How many losing trades in row would you allow before calling it quits for the day ?


I don't consider myself a day-trader so can't really answer that, there is very few day-traders on the big institutional buy-side (real money / hedge funds etc). First people are looking beyond technicals most of the time + there are liquidity constraints. On top of that, you wouldn't raise any funds if you told your potential clients that you are a day-trader trading FX intraday based on mechanical system. Where you have day-traders, is in banks (sell-side) where they have a lot of market-making / customer flows around which they trade. They also don't have clients who invest in their funds so it becomes easier for them to trade very often and with whichever methodology they want. Even though they have a lot of short term trading, the spot desk in a bank as a whole would run some long term / macro positions alongside daily trading - this are usually market calls by the head of the desk / chief trader or just a team view. Pretty much all the FX desks I know on the sell-side in London do it in this way (GS, JPM, Nomura has very good macro risk-takers in FX, etc.) There is also a lot of technical based traders in quant hedge funds / CTAs which are running various automatic models, and in some prop shops (which usually lose money anyway). My point is that I still can trade solely 100% from the chart (which I sometimes do), I just need to have a fundamental / macro / other explanation ready in my sleeve (which is not difficult to make up if you do it for long enough).


Quote
What do you look at to determine how liquid a market is during the day ?


Well, during the day, the market is most liquid during London and NY sessions, that's very general. Then it is less liquid in periods of stress / sharp moves as market - makers can't really recycle risk and are very limited in terms of prop trading (i.e. don't want to take much inventory into the book when the market is blowing up). Then there are periods when the market is less liquid, for example NFP day, FOMC days, summer in general, days around bank holidays, December when everyone closes the books before the year end.
  • #47
  • Sep 25, 2015 12:42am Sep 25, 2015 12:42am
Quoting Atokys
{quote} You mean funny-mentals?
Be more open-minded and don't make fun of people using different style than yourself, at least not in this thread
  • #48
  • Sep 25, 2015 12:46am Sep 25, 2015 12:46am
Quoting katrooo
{quote} Be more open-minded and don't make fun of people using different style than yourself, at least not in this thread
Unless you have insider knowledge that gives you an edge over the rest of the world fundamentals that you typically read about are not useful and have already been priced into the market.
  • #49
  • Sep 25, 2015 12:47am Sep 25, 2015 12:47am
Yes, funny-mentals. Always see what economic factors are moving the market. Forex is macroeconomics in its purest form. I really honestly, sincerely believe you gotta know that sort of thing . Hey, there's plenty of sources - the economic calendar right here at FF is a good starting point.
  • #50
  • Sep 25, 2015 12:56am Sep 25, 2015 12:56am
Quoting Atokys
{quote} Unless you have insider knowledge that gives you an edge over the rest of the world fundamentals that you typically read about are not useful and have already been priced into the market.
It depends on how you read fundamentals and how you use it in your trading (on top of other several factors!) to make money. That gives you an edge with enough experience. I didn't mean fundamentals in terms of "read what Bloomberg / CNBC articles are saying and trade based on that". And I find it surprising someone like you with probably very limited understanding of fundamentals and probably very little experience trading with help of fundamentals is telling me that it doesn't work, while I've proven to myself that with the right circumstances it is an extremely powerful thing to know. It's like if I started telling you that all the automatic models are crap and don't work while knowing very little about them.
  • #51
  • Sep 25, 2015 1:03am Sep 25, 2015 1:03am
Quoting katrooo
{quote} It depends on how you read fundamentals and how you use it in your trading (on top of other several factors!) to make money. That gives you an edge with enough experience. I didn't mean fundamentals in terms of "read what Bloomberg / CNBC articles are saying and trade based on that". And I find it surprising someone like you with probably very limited understanding of fundamentals and probably very little experience trading with help of fundamentals is telling me that it doesn't work, while I've proven to myself that with the right circumstances...
Ok. I just prefer to call them funny-mentals. I didn't invent the term, can't really remember where I got it from.
  • #52
  • Sep 25, 2015 3:46am Sep 25, 2015 3:46am
IS FX TRADING 'GETTING RICH QUICK'?

Dont too fast to answer this question. First, we should determine first 'quick and rich'.
What do you mean by 'quick' (one week, one month or one year)? What do you mean by 'rich' ($5000, 10000, 100000, 1000000, 1B)?

'Definition and data' are important, consider them before judging.

Many statements here are 'half true' and misleading.
  • #53
  • Sep 26, 2015 3:43am Sep 26, 2015 3:43am
Quoting katrooo
Hi everyone.......
Very good points IMHO.

With regards to your points 3 &4, I've gradually moved away from "systems" and more toward "knowledge". I believe that there's a delicate balance between the benefits offered by mechanical approaches (higher consistency, elimination of guesswork, greater feeling of certainty with implementation, less personal attachment, greater objectivity, etc) and discretionary approaches (flexibility, ability to adapt to changing market conditions, provision to apply economic or contextual factors advantageously, ability to incorporate and weigh different types of analysis, etc). Perhaps systems appeal to less experienced traders, engineer/programmer personality types, and (dare I say it) folk who are looking for shortcuts to get rich as quickly and as effortlessly as possible, because in simply applying a fixed set of rules there is less need for knowledge and experience; but IMHO there is no substitute for these after the trader has matured sufficiently to accommodate them without undermining his edge.
  • #54
  • Sep 26, 2015 4:26am Sep 26, 2015 4:26am
Quoting hanover
{quote} Very good points IMHO. With regards to your points 3 &4, I've gradually moved away from "systems" and more toward "knowledge". I believe that there's a delicate balance between the benefits offered by mechanical approaches (higher consistency, elimination of guesswork, greater feeling of certainty with implementation, less personal attachment, greater objectivity, etc) and discretionary approaches (flexibility, ability to adapt to changing market conditions, provision to apply economic or contextual factors advantageously, ability...
I think you are probably right David but for those with a fundamental distrust of the human condition, it pays to adopt a mechanistic viewpoint based on 'survivability'. Fortunately there is a track record of consistent strong performance available from the CTA space that allows those that are very risk averse to prosper. This is a game where you must recognise your own personal limitations and as such that space which gives me a quantifiable edge recognising those weaknesses is full automation. I recognise that I am a bad trader and for that I must use tools to ensure I don't stray too far into the unknown. At least with full automation you can be totally transparent to any investors that may wish to part money's with you and place the blame on 'market uncertainty' as opposed to irresponsible trading practices.
  • #55
  • Sep 26, 2015 4:31am Sep 26, 2015 4:31am
Quoting katrooo
{quote} {quote} Squeezy market is a market where people get washed out both directions pretty much. Especially happens when there is a big consensus on the market and participants are positioned in the same direction. It's usually the moment when a lot of information is already priced in and expectations are overstretched. ....
Hello katrooo:

Thanks for the great explanation of a squeezy market and the other great answers to my questions. But I am having a hard time visualizing it as any thing more than a large correction in a say a bull trend, followed by a move back up to make a double top. But it can't be that simple. If you have a chance can show a chart explaining what a squeezy market is ?

Thank You

Borg
May the Forex be with you.
  • #56
  • Sep 26, 2015 5:33am Sep 26, 2015 5:33am
The trader himself is also a system whose experience and beliefs would invariably affect the system that he uses be it mechanical or discretionary. The trick is to find a trading style that is compatible with oneself. Successful trading involves celebrating opportunity and uncertainty in the moment of now. The people who refuse to accept the uncertain nature of markets dwell in a place that could have been but never materalized.
  • #57
  • Sep 26, 2015 6:39am Sep 26, 2015 6:39am
Hi Kat,

Thanks for the excellent advice especially on expectations, i had a similar belief that was confirmed by yourself.

Quoting katrooo
5. You have to read a LOT of good books as well, trust me
Also, with regards to "good" books giving sound advice, do you have any recommendations
  • #58
  • Sep 26, 2015 8:01am Sep 26, 2015 8:01am
Quoting hanover
{quote} Very good points IMHO. With regards to your points 3 &4, I've gradually moved away from "systems" and more toward "knowledge". I believe that there's a delicate balance between the benefits offered by mechanical approaches (higher consistency, elimination of guesswork, greater feeling of certainty with implementation, less personal attachment, greater objectivity, etc) and discretionary approaches (flexibility, ability to adapt to changing market conditions, provision to apply economic or contextual factors advantageously, ability...
Thanks for your thoughts hanover. I absolutely agree with everything you said - I will just add some points to your post if you don't mind, also for the others. I used to belong in the camp of mechanical systems, especially at the start of my trading journey, kind of always trying to find the right "combination" of things and indicators which would give me an edge. I have no doubts there are such things, but I guess I was just not patient enough to find something which would fit me and do it for long enough to master that technique. That means that it wasn't for me probably and at the end I found my edge in a different way. I believe the reason why people tend to look for mechanical systems is the fact that it takes a lot of emotional burden out of you and it also kind of makes you feel that once you "get it" you will not be required to think and work hard anymore, as you will just apply that mechanical thing on the market and multiply your capital over time. When you are a discretionary trader, and especially when you are considering many other factors than technical analysis in your decisions (i.e. you have no mechanical set of rules to make a decision) it becomes a very different game, as you constantly keep asking yourself "am i doing the right thing?", emotions and behavioural finance problems are also difficult to control, and you need to work hard constantly and think a lot how to extract money from the market, think about your risk management each time/trade and each time in a different way, and many other things. That comes with hard work, market knowledge and experience, I haven't seen anyone in my life who would come to a forum, take someone else's system and become profitable with it. I don't believe in "work 3-4 hours a day, follow your hard rules, make millions" type of adds about trading you see everywhere around you on the internet.
  • #59
  • Sep 26, 2015 8:11am Sep 26, 2015 8:11am
Quoting Copernicus
{quote} I think you are probably right David but for those with a fundamental distrust of the human condition, it pays to adopt a mechanistic viewpoint based on 'survivability'. Fortunately there is a track record of consistent strong performance available from the CTA space that allows those that are very risk averse to prosper. This is a game where you must recognise your own personal limitations and as such that space which gives me a quantifiable edge recognising those weaknesses is full automation. I recognise that I am a bad trader and for...
That's a fair point Copernicus, it's all about finding your own "thing". And I am sure that as an EA developer and a guy who is into automatic systems / models you need to work extremely hard to make it really works and find these hard combinations of things which give you an edge. Also you need to deal with market changes and adapt / tweak your models / inputs or turn some of your models on/off when necessary. You also probably run different models at the same time and allocate different ammount of capital to each of them, based on the current market conditions and depending how these models perform. There are also other things to keep in mind, like correlation between these models and what is the risk that they stop working at the same time. I am not that much knowledgeable about these things, but there is a group of around 50+ people sitting on my floor who are running a very prominent quant hedge fund with very strong performance over last 10-15 years. They are almost all PhDs with very strong technical backgrounds, and they run probably around 50-100 models in all asset classes at the same time. The fact is, they work incredibly hard and do all these things I explained in this post.
  • #60
  • Sep 26, 2015 8:12am Sep 26, 2015 8:12am
Quoting Atokys
The trader himself is also a system whose experience and beliefs would invariably affect the system that he uses be it mechanical or discretionary. The trick is to find a trading style that is compatible with oneself. Successful trading involves celebrating opportunity and uncertainty in the moment of now. The people who refuse to accept the uncertain nature of markets dwell in a place that could have been but never materalized.
0 traders viewing now