ETMA_The Evolution

The perfect Amateur trading setting for medium to long term trends, really.

Thanks for your advice! ... indeed,. in my real account it is 1/10 of the lotsize used in demo or lower.

MERRY CHRISTMAS!

is this your workstation setup?

No it's not, this is the basic setup of the Bloomberg terminal which cost $24000 for a single yearly subscription and it comes with a 2 years minimum sub, this is an institutional level terminal with gives you access to all the Financial data of the world.

I was referring to the hardware setup not the software but u get the picture.
Attached is another example.

Its being proved again and again that those traders who trade with low leverage are the ones that are consistently pulling profits from the markets year in and year out, bet sizing is also one of extreme importance, it have to be proportional to your equity and not risking more than 1 volatility adjusted percent per trade (Study the turtle bet sizing to understand the concept or other volatility adjusted position sizing).

The basic concept is you bet more on less volatile Instruments and less on more volatile ones measured by the Average ATR to keep a same dollar value for every position taken in your portfolio thus the same dollar risk, this is not too complex a theory but need a little bit study, this or a variant of this bet sizing system is used by many successful hedge funds and institutions which trade millions of Dollars per day.

Van Tharp have a book That explained this and other betting systems thoroughly, The Definitive Guide to Position Sizing - Van Tharp Institute and a game Position Sizing Game 4 and this is the YouTube Position Sizing Strategies. Control Your Risk When Trading.

Quoting Van Tharp : Size really does matter in the markets! Position Sizing (a term coined by trading coach Van Tharp), tells you how much to risk on any particular trade. It is one of the most important concepts that any trader should know. Van Tharp has also written The Definitive guide to Position Sizing Strategies, a desk reference for serious traders.

Best,
B.R.

It looks so amazing

Yes, overtrading would be one of the worst mistake, one can make in trading.

In spirit of Christmas, i would like to re-quote this excellent article posted in FF... May you are there one day...

The 5 Steps to becoming a trader

Step One: Unconscious Incompetence.

This is the first step you take when starting to look into trading. you know that its a good way of making money because you've heard so many things about it and heard of so many millionaires. Unfortunately, just like when you first desire to drive a car you think it will be easy - after all, how hard can it be? Price either moves up or down - what's the big secret to that then - lets get cracking!

Unfortunately, just as when you first take your place in front of a steering wheel you find very quickly that you haven't got the first clue about what you're trying to do. You take lots of trades and lots of risks. When you enter a trade it turns against you so you reverse and it turns again .. and again, and again.


You may have initial success, and thats even worse - cos it tells your brain that this really is simple and you start to risk more money.


You try to turn around your losses by doubling up every time you trade. Sometimes you'll get away with it but more often than not you will come away scathed and bruised You are totally oblivious to your incompetence at trading.

This step can last for a week or two of trading but the market is usually swift and you move onth the next stage.

Step Two - Conscious Incompetence

Step two is where you realise that there is more work involved in trading and that you might actually have to work a few things out. You consciously realise that you are an incompetent trader - you don't have the skills or the insight to turn a regular profit.

You now set about buying systems and e-books galore, read websites based everywhere from USA to the Ukraine. and begin your search for the holy grail. During this time you will be a system nomad - you will flick from method to method day by day and week by week never sticking with one long enough to actually see if it does work. Every time you come upon a new indicator you'll be ecstatic that this is the one that will make all the difference.

You will test out automated systems on Metatrader, you'll play with moving averages, Fibonacci lines, support & resistance, Pivots, Fractals, Divergence, DMI, ADX, and a hundred other things all in the vein hope that your 'magic system' starts today. You'll be a top and bottom picker, trying to find the exact point of reversal with your indicators and you'll find yourself chasing losing trades and even adding to them because you are so sure you are right.

You'll go into the live chat room and see other traders making pips and you want to know why it's not you - you'll ask a million questions, some of which are so dumb that looking back you feel a bit silly. You'll then reach the point where you think all the ones who are calling pips after pips are liars - they cant be making that amount because you've studied and you don't make that, you know as much as they do and they must be lying. But they're in there day after day and their account just grows whilst yours falls.

You will be like a teenager - the traders that make money will freely give you advice but you're stubborn and think that you know best - you take no notice and overtrade your account even though everyone says you are mad to - but you know better. You'll consider following the calls that others make but even then it wont work so you try paying for signals from someone else - they don't work for you either.


You might even approach a 'guru' like Rob Booker or someone on a chat board who promises to make you into a trader(usually for a fee of course). Whether the guru is good or not you wont win because there is no replacement for screen time and you still think you know best.


This step can last ages and ages - in fact in reality talking with other traders as well as personal experience confirms that it can easily last well over a year and more nearer 3 years. This is also the step when you are most likely to give up through sheer frustration.

Around 60% of new traders die out in the first 3 months - they give up and this is good - think about it - if trading was easy we would all be millionaires. another 20% keep going for a year and then in desperation take risks guaranteed to blow their account which of course it does.


What may suprise you is that of the remaining 20% all of them will last around 3 years - and they will think they are safe in the water - but even at 3 years only a further 5-10% will continue and go on to actually make money consistently.


By the way - they are real figures, not just some ive picked out of my head - so when you get to 3 years in the game dont think its plain sailing from there.


Iv had many people argue with me about these timescales - funny enough none of them have been trading for more that 3 years - if you think you know better then ask on a board for someone who's been trading 5 years and ask them how long it takes to become fully 100% proficient. Sure i guess there will be exceptions to the rle - but i havent met any yet.


Eventually you do begin to come out of this phase. You've probably committed more time and money than you ever thought you would, lost 2 or 3 loaded accounts and all but given up maybe 3 or 4 times but now its in your blood

One day - im a split second moment you will enter stage 3.

Step 3 - The Eureka Moment

Towards the end of stage two you begin to realise that it's not the system that is making the difference. You realise that its actually possible to make money with a simple moving average and nothing else IF you can get your head and money management right You start to read books on the psychology of trading and identify with the characters portrayed in those books and finally comes the eureka moment.

The eureka moment causes a new connection to be made in your brain. You suddenly realise that neither you, nor anyone else can accurately predict what the market will do in the next ten seconds, never mind the next 20 mins.


Because of this revelation you stop taking any notice of what anyone thinks - what this news item will do, and what that event will do to the markets. You become an individual with your own method of trading


You start to work just one system that you mould to your own way of trading, you're starting to get happy and you define your risk threshold.

You start to take every trade that your 'edge' shows has a good probability of winning with. When the trade turns bad you don't get angry or even because you know in your head that as you couldn't possibly predict it it isn't your fault - as soon as you realise that the trade is bad you close it . The next trade or the one after it or the one after that will have higher odds of success because you know your system works.


You stop looking at trading results from a trade-to-trade perspective and start to look at weekly figures knowing that one bad trade does not a poor system make.


You have realised in an instant that the trading game is about one thing - consistency of your 'edge' and your discipline to take all the trades no matter what as you know the probabilities stack in your favour.

You learn about proper money management and leverage - risk of account etc etc - and this time it actually soaks in and you think back to those who advised the same thing a year ago with a smile. You weren't ready then, but you are now. The eureka moment came the moment that you truly accepted that you cannot predict the market.

Step 4 - Conscious Competence

You are making trades whenever your system tells you to. You take losses just as easily as you take wins You now let your winners run to their conclusion fully accepting the risk and knowing that your system makes more money than it looses and when you're on a loser you close it swiftly with little pain to your account

You are now at a point where you break even most of the time - day in day out, you will have weeks where you make 100 pips and weeks where you lose 100 pips - generally you are breaking even and not losing money. You are now conscious of the fact that you are making calls that are generally good and you are getting respect from other traders as you chat the day away. You still have to work at it and think about your trades but as this continues you begin to make more money than you lose consistently.

You'll start the day on a 20 pip win, take a 35 pip loss and have no feelings that you've given those pips back because you know that it will come back again. You will now begin to make consistent pips week in and week out 25 pips one week, 50 the next and so on.

This lasts about 6 months

Step Five - Unconscious Competence

Now we’re cooking - just like driving a car, every day you get in your seat and trade - you do everything now on an unconscious level. You are running on autopilot. You start to pick the really big trades and getting 200 pips in a day doesnt make you any more excited that getting 1 pips.


You see the newbies in the forum shouting 'go dollar go' as if they are urging on a horse to win in the grand national and you see yourself - but many years ago now.

This is trading utopia - you have mastered your emotions and you are now a trader with a rapidly growing account.

You're a star in the trading chat room and people listen to what you say. You recognise yourself in their questions from about two years ago. You pass on your advice but you know most of it is futile because they're teenagers - some of them will get to where you are - some will do it fast and others will be slower - literally dozens and dozens will never get past stage two, but a few will.

Trading is no longer exciting - in fact it's probably boring you to bits - like everything in life when you get good at it or do it for your job - it gets boring - you're doing your job and that's that.


Finally you grow out of the chat rooms and find a few choice people who you converse with about the markets without being influenced at all.


All the time you are honing your methods to extract the maximum profit from the market without increasing risk. Your method of trading doesnt change - it just gets better - you now have what women call 'intuition'

You can now say with your head held high "I'm a currency trader" but to be honest you dont even bother telling anyone - it's a job like any other.


I hope youve enjoyed reading this journey into a traders mind and that hopefully youve identified with some points in here.


Remember that only 5% will actually make it - but the reason for that isnt ability, its staying power and the ability to change your perceptions and paradigms as new information comes available.


The losers are those who wanted to 'get rich quick' but approached the market and within 6 months put on a pair of blinkers so they couldnt see the obvious - a kind of "this is the way i see it and thats that" scenario - refusing to assimilate new information that changes that perception.


Im happy to tell you that the reason i started trading was because of the 'get rich quick' mindset. Just that now i see it as 'get rich slow'

If youre thinking about giving up i have one piece of advice for you ....

Ask yourself the question "how many years would you go to college if you knew for a fact that there was a million dollars a year job at the end of it?

Take care and good trading to you all.

I left of the name of the author of this piece by mistake. If anyone knows the name of the true author, please let me know and I'll add it here. Thanks and sorry for the confusion.

Dial

Noel Burch in the 1970, Four stages of competence .
Actualy its not actualy 5% that make it its more than 30% that are making it and more in some brokerage and this statistics are taking from last 10 biggest brokerage survey.

Sone books I would recommend to read at your free time - Enjoy your great holiday!

Blink by Malcolm Gladwell ... http://gladwell.com/blink/
The Tipping Point.... http://www.slideshare.net/mamata.sam...l-book-summary
‎Outliers.... http://thelifelifebalance.com/book-s...colm-gladwell/

Thinking, Fast and Slow by Daniel Kahneman... https://erikreads.files.wordpress.co...ok-summary.pdf

[Trading is no longer exciting - in fact it's probably boring you to bits - like everything in life when you get good at it or do it for your job - it gets boring - you're doing your job and that's that]. My actual situation, bored from trading, passionate about research, about constant improvements of my trading skills, systems, strategies and thinking more and more about automating it all.
I would add another screen, one for my ninja, one for my MT4 -5, one for my web browser and my other PC work.

Are these people for real, no wonder a small number of traders are making it, how can it be that 66.09% of Oanda traders are short on the UCAD, i dont know but maybe the statistics are taken on the small TF's or the majority of Oanda traders are scalpers, but 66.09% are against the main trend, that is fascinating.
same goes for gold and GU.

In a way that reinforce my last post on traders profitability stats which say that 30 - 35 of traders are profitable in the long run, in Oanda's case its 33.91%.
I dont know but maybe i'm the one who is trading against the crowd.

How can u be 66.20% Bullish on this same Daily Real Time chart taking from Oanda Web Site ?.
The heat map tells a totally different story.

Its quite incredible isn't it.. I would love to know the metrics for the percentage of time frames traded by the 66% who are short ?, I would hazard a guess the majority trade through H1 and lower, but I,m only guessing.

Still, I like being part of the 33%.. would we want it any other way ?

Hope your Xmas is going well Bass..

Cheers... Ja

After digging deeper i discovered that these stats are mostly very short term as you can see from the Graph taken from Oanda website the Average trade time is 0.4 - 0.5 Hour and the Average profits is 5 - 8 - 10 pips which means that most of Oanda traders are scalpers thus the trade against the Trend style.

They were scalping this on the 5-15-1H TF on 23 Dec, 93% were short.

Merry Christmas to you too buddy.

Thats interesting, thanks...This must give us an insight into the population of the majority of loses in the retail space...I suppose if you are going to trade noise the results are going to be explanatory ..I wouldn't mind betting the time frames and time of open exposure used by the institutional side are very different to the retail side..

Cheers for the info.. Ja.

The Greatest Trading Strategy Of All Time (Part II – The Results)
BY SCOTT WELSH ON OCTOBER 28, 2015

“I have read a lot of material, and I would change in a heartbeat if I could improve on my firm’s performance. But I just haven’t seen anything better than what we were taught [in the Turtle Program].”
-Jerry Parker, original Turtle and founder of Chesapeake Capital ($230 million AUM)

Is trend-following the greatest strategy of all time?
I made a case for that in last week’s post (you can find it here).
Trend-followers were wildly successful in the 1970’s and 80’s, and, according to the public numbers, they’re still successful today. In fact the most famous trend-followers, the Turtles, are still managing almost one billion dollars of investor money.
So what is trend-following? What does that really mean?
It means you believe that trends are eternal. You believe that, as long as there are public markets, there will be trends. And all you have to do as a trend-follower is get yourself in position to trade those trends. It’s that simple.
Furthermore, most trend-followers are mechanical in their execution. When you read about trend-followers or hear them talk, almost every single one of them gets into a trend in a rigidly systematic way.
Remember, the Turtles themselves were 100% mechanical. They followed strict rules to try to get into trends, and that was the end of it.
Trend-followers believe in trends, not discretionary thinking, therefore, their systems are easy to understand and easy to follow.
In short:

Anyone can be a trend-follower if he/she believes in the immortality of trending markets, and can then doggedly follow a strict set of rules.

In the past few weeks, I took the elements of the Original Turtle Strategy, which is available online, and tested it to see if the strategy still works today. Furthermore, I wanted to really see if a trend-following method was something anyone could do.
Here are the trend-following rules I adhered to and also the benchmark of what I was hoping to achieve with my testing:

1. The systems had to be 100% mechanical. No human discretion.
2. The systems had to be long-term. As Jerry Parker said in an interview from 2014, “I think trend following is broken if you trade too short-term. It stopped working in the late 90’s–the shorter term approach. But the longer term approach continues to do very well.”Since he’s the most successful Turtle of all time, I followed his advice. All of my testing for this study was done on 240-minute charts.
3. I wanted a trend-following system based solely on price action. No indicators. So I used the Original Turtle strategy as a starting template.
4. The portfolio had to be diversified. The Turtles traded at least 20 different markets. Some trend-following managers trade up to 100 markets. I wanted at least 6 different markets in my portfolio to start (with more to be added in time).
5. I tested Forex spot market currencies and stocks, however, I only used currencies in this portfolio. The Turtles traded a wide range of markets, but I wanted to keep it simple.
6. The current Turtles are doing very well with their multi-million dollar funds, averaging 13.3% per year as a group. I then compared the results of my portfolio to that benchmark number.

Here’s how it turned out.
First, the currency pairs I used for this portfolio were:

1. AUDJPY, EURUSD, EURAUD, USDJPY, GBPUSD, GBPJPY

I simply picked currency pairs I’ve traded for a long time. I’m familiar with how they trade, and I am familiar with their spreads, so it’s easier for me to build in the correct amount of slippage for accurate testing.
The Turtle Rules I used were:

1. Buy when price breaks out above the previous high of “x” number of bars. The Turtles used a breakout above the high of the past 20 bars, for example. I optimized each currency pair individually, so each had a different breakout number. [Note: The reverse is true for short trades. The Robots sell when price breaks below a low from “x” amount of days.] The Turtles, however, used the same breakout number for every market.
2. Risk a fixed amount of the account each time. This ranged in my testing from 1% per trade to 6% per trade.
3. Calculate the stop loss amount using volatility. The Turtles liked Average True Range, so that’s what I used. The Robots calculated that for me and bet the appropriate amount automatically for each trade.
4. Exit when a trade stops out or when price breaks below the low for “x” amount of bars. For example, if you were in profit in a long trade, but then price broke below the low of the past ten bars, the trade was closed. The reverse was true for a short trade (in profit first, and then an exit when price breaks above the high of “x” amount of days).
5. Last, some currency pairs used a time stop in my testing, exiting after a certain number of bars. The original Turtles didn’t do that, but many current trend-followers use a time exit, so I added that in.

Below are the statistics on the Turtle Trend-Following Portfolio.
From January 1, 2007-October 27, 2015 (using a hypothetical $10,000 account):

1. Total profit: $42,311
2. Average profit per month since 2007: $399
3. Percent of months that ended profitably: 60.4% (106 total months)
4. Max drawdown (on an end-of-month basis): -$3,438
5. Max drawdown period: January-June, 2014 (no winning months in that time)
6. Average Annual Return: 20.8% per year (over an 8.75 year period)

Here is the profit by year (no compounding; this assumes we never change the trade size):

1. 2007: $9,092
2. 2008: $8,148
3. 2009: $6,566
4. 2010: $884
5. 2011: $1,303
6. 2012: $6,793
7. 2013: $6,062
8. 2014: $1,702
9. 2015: $1,761

As you can see, there were no losing years. That’s pretty amazing for a trend-following system. Markets don’t trend all the time, and when the trend goes away the systems don’t perform. That’s why the best trend-followers go through tough periods.
No losing years doesn’t mean trading this trend-following system would have been a breeze, though. If you look at the max drawdown period, you would have lived through a 34% drawdown in 2014 and would have lost money for six straight months.

Again, that’s very typical. Every trend-follower, including the Turtles, goes through multiple losing months.
The interesting thing is, even after losing for six consecutive months, 2014 still ended up being a profitable year. This is also typical of trend-following: Just when you think the system is broken, the trends show up in a big way.

In summary, there’s a reason the Turtles are still profitable today. The reason is that trend-following works. It worked several decades ago, and it works today. That’s why it might be the greatest trading strategy of all time. And the systematic rules make it accessible to anyone.
But a crucial key to trend-following strategies is diversification. I plan to further diversify this portfolio to see if we can smooth out that drawdown.
And then I’m going to add a little tweak of my own.

Check back to see how it turns out.

Altegris Managed Futures Manager Rankings .

Great article! I am commenting on it so that people follow me can see it. Hopefully some will comment as well.

Anything that emanates from this thread is pure gold. That article is just spot on. Nothing to add