gpbusd 4h Nov 2015-today. 34SMA
It seems that the LWMA is better.
It seems that the LWMA is better.
sorry,pls u explain what is the 'rookie' terms,because i am a real rookie 
That's how I understood it as well. And in addition no SL was moved to BE.- #147
- Feb 1, 2016 12:57pm Feb 1, 2016 12:57pm
- Joined Oct 2006 | Status: Trader | 2,271 Posts
Greetings all, now home from my long flight, and will post more of my method.
Everybody always wants to know about ranging markets, how to handle the whipsaws, etc. This is good and right, for we are simply trying to minimize losses. Every business should do this.
I have spent the last 10 years studying ways to minimize whipsaw. I’ve read practically every thread on Forex Factory and have studied with mentors outside of Forex Factory, always seeking the illusive answer to minimizing losses during flat markets. I made it my goal to figure out how to do this.
What I have discovered in my search is that I had been asking the wrong question. Instead of asking “how can I minimize losses in a ranging market”, instead of looking at a flat SMA and saying “wow, that sure would have produced some losses”, I have learned to change my thinking and questioning.
Here is how I have changed my thinking. Now I ask, “How can I be profitable in trading?” Now, instead of looking at ranging markets around a flat SMA I look at the trends before and after, and ask, “Could I have traded that entire period profitably? Would trading this have made me money?”
Now that’s not to say that we should stop looking for a method that would minimize drawdown during flat-lining markets. We should always be trying to improve, to find ways to reduce cost, to make our business more efficient.
But what I am trying to get us to do on this thread is to look at the big picture. To view our trading from 40,000 feet. To zoom out and see the entirety of our trading method, and ask ourselves a simple question: “will I make money trading this way?”
And so the one key thing to embrace in trading (which includes both our rule number 1 and rule number 2) is this:
Keep our losses linear while making our profits exponential.
Take numerous single losses around that flat SMA, but when the trend materializes then pile on the orders hand over fist, using multiple reentry methods if you’d like. I’ve shared my reentry method, which simply amounts to buying low and selling high (in comparison to where the market just was), others have shared some of their methods. I like my method, it allows me to pile on orders and ride a very strong tailwind.
Again, keeping the big picture, the actual method for reentering is not as important as the fact that we are committed to multiplying profits in a trend. If compounding interest is the 8th wonder of the world, compounding profits in a trend is the most important thing in a trading method. These compounding profits will more than make up for singular losses around a flat SMA.
So yes, continue looking for ways to minimize losses in ranging markets. But don’t let them discourage you, or you’ll not ever make a good trader. Rather than being discouraged by them, rise above the chop and see things from a higher view. Is it sound trading to take linear losses and exponential profits? Am I making money when I sit through 40 periods of chop followed by one trending period? These are the questions to ask.
Relating this to the business of flying, we must learn to think like a CEO not an employee (absolutely nothing wrong with being an employee, I’m just using an illustration). A CEO does not look at times where flights are delayed, which cost the company money, and think “wow, these delays will ruin our yearly profits.” Or “oh my, these winter months are losing us money every single month, I don’t think it’s worth it to run this airline.” No, a CEO sees a bigger picture. He looks at the operation from 40,000 feet and sees that Spring, Summer and Fall months bring in much more profit than a few losses in the Winter. Granted, he is always looking for ways to minimize losses; implementing cost saving programs when and where he can. But he accepts small losses in exchange for large profits as a normal part of business life.
We must do the same in our trading. We could look at flat line SMA times all day long, and all of us agree they would be times of losses. This might lead us to decide that, for my type of personality, I would rather be a range trader, since ranges happen the majority of the time. That’s perfectly fine, and a good decision for many. Or, we might decide to accept small losses, helping our range trading brothers and sisters make a living too, and stay with our trend trading methodology.
After 10 years in this industry, reading everything I could find on the subject, testing many different methods and concepts, I’m convinced that range-losses are here to stay, and that trend-gains will overcome them, by a value of multiples.
Having said that, let’s look at some times when whip-saw is the norm, and losses start to pile up. In the following picture we go through a 40 period range-loss. That’s 40 period-times (in this case 4 hour) where we get one delay after another, where we wonder if this plane is ever going to get in the air. And I do know that there are times when ranges are much longer…the flight gets canceled and we try again the next day!
Here is the first picture. Study this chart!
Next post, when I recover from jetlag.
Everybody always wants to know about ranging markets, how to handle the whipsaws, etc. This is good and right, for we are simply trying to minimize losses. Every business should do this.
I have spent the last 10 years studying ways to minimize whipsaw. I’ve read practically every thread on Forex Factory and have studied with mentors outside of Forex Factory, always seeking the illusive answer to minimizing losses during flat markets. I made it my goal to figure out how to do this.
What I have discovered in my search is that I had been asking the wrong question. Instead of asking “how can I minimize losses in a ranging market”, instead of looking at a flat SMA and saying “wow, that sure would have produced some losses”, I have learned to change my thinking and questioning.
Here is how I have changed my thinking. Now I ask, “How can I be profitable in trading?” Now, instead of looking at ranging markets around a flat SMA I look at the trends before and after, and ask, “Could I have traded that entire period profitably? Would trading this have made me money?”
Now that’s not to say that we should stop looking for a method that would minimize drawdown during flat-lining markets. We should always be trying to improve, to find ways to reduce cost, to make our business more efficient.
But what I am trying to get us to do on this thread is to look at the big picture. To view our trading from 40,000 feet. To zoom out and see the entirety of our trading method, and ask ourselves a simple question: “will I make money trading this way?”
And so the one key thing to embrace in trading (which includes both our rule number 1 and rule number 2) is this:
Keep our losses linear while making our profits exponential.
Take numerous single losses around that flat SMA, but when the trend materializes then pile on the orders hand over fist, using multiple reentry methods if you’d like. I’ve shared my reentry method, which simply amounts to buying low and selling high (in comparison to where the market just was), others have shared some of their methods. I like my method, it allows me to pile on orders and ride a very strong tailwind.
Again, keeping the big picture, the actual method for reentering is not as important as the fact that we are committed to multiplying profits in a trend. If compounding interest is the 8th wonder of the world, compounding profits in a trend is the most important thing in a trading method. These compounding profits will more than make up for singular losses around a flat SMA.
So yes, continue looking for ways to minimize losses in ranging markets. But don’t let them discourage you, or you’ll not ever make a good trader. Rather than being discouraged by them, rise above the chop and see things from a higher view. Is it sound trading to take linear losses and exponential profits? Am I making money when I sit through 40 periods of chop followed by one trending period? These are the questions to ask.
Relating this to the business of flying, we must learn to think like a CEO not an employee (absolutely nothing wrong with being an employee, I’m just using an illustration). A CEO does not look at times where flights are delayed, which cost the company money, and think “wow, these delays will ruin our yearly profits.” Or “oh my, these winter months are losing us money every single month, I don’t think it’s worth it to run this airline.” No, a CEO sees a bigger picture. He looks at the operation from 40,000 feet and sees that Spring, Summer and Fall months bring in much more profit than a few losses in the Winter. Granted, he is always looking for ways to minimize losses; implementing cost saving programs when and where he can. But he accepts small losses in exchange for large profits as a normal part of business life.
We must do the same in our trading. We could look at flat line SMA times all day long, and all of us agree they would be times of losses. This might lead us to decide that, for my type of personality, I would rather be a range trader, since ranges happen the majority of the time. That’s perfectly fine, and a good decision for many. Or, we might decide to accept small losses, helping our range trading brothers and sisters make a living too, and stay with our trend trading methodology.
After 10 years in this industry, reading everything I could find on the subject, testing many different methods and concepts, I’m convinced that range-losses are here to stay, and that trend-gains will overcome them, by a value of multiples.
Having said that, let’s look at some times when whip-saw is the norm, and losses start to pile up. In the following picture we go through a 40 period range-loss. That’s 40 period-times (in this case 4 hour) where we get one delay after another, where we wonder if this plane is ever going to get in the air. And I do know that there are times when ranges are much longer…the flight gets canceled and we try again the next day!
Here is the first picture. Study this chart!
Next post, when I recover from jetlag.
- #148
- Edited 2:41pm Feb 1, 2016 12:58pm | Edited 2:41pm
{quote} can you run 3 year test? thanks
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EURUSD 4H, 34LWMA 2013.1.1 - 2016.2.1 --just a sample test,no stoploss no money management no any others ...
- #154
- Feb 1, 2016 1:08pm Feb 1, 2016 1:08pm
- Joined Oct 2006 | Status: Trader | 2,271 Posts
I do agree what thread starter do but I believe not everyone could profit as he does. Trading always is not about system, strategies or whatsoever. It is all about risk, money management, patience and discipline.
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