Trading Made Simple

Hi Bill,

Yes, that MT4 trade account summary is for the trading period from March 2 to 29. It is my 20-trading days cycle and all trades are done with planning from the higher timeframes Monthly, Weekly and Daily. I trade with Multiple Entries / Multiple Exits ME/ME unlike most traders here who trade with Single Entry / Single Exits SE/SE

Here are previous posts on SE/SE , SE/ME, ME/SE, ME/ME.

Money Management
Big E on using multiple entries in the CHS thread
Post#2622 , Post#2629 , Post#2771 and Post#2912
Money Management Strategy for TMS: Post#48,008
Using Multiple-Lot Positions to Improve trading TMS: Post#33,507
Entry and Exits: Post#24,918 Post#18,422 Post#19,617
How to Build a Position: Post#19,588
Multiple Entries / Multiple Exits for Day chart trading: Post#58,726

If you want to know why I chose 20-trading days cycle,
read this post and its attachment.
http://www.forexfactory.com/showthre...24#post8813924


regards,

Hey guys;

Still trying to use the system... breaking even this week so far, some good setups right now.
Here's one that seems a bit tricky... NZD/JPY - clear signal in the 4H chart, right after a brief consolidation slightly above a previous peak. Is it worth it to go short or do you think the uptrend may be too strong and it's better to sit this one out until the longer term trend is clearer?

https://charts.mql5.com/10/702/nzdjp...-forex-llc.png

Drawdown and Maximal Drawdown

You need to know what these means and how you can manage your trading business better when you know when to cut losses short to minimise drawdown and how to recover (recovery trading) from that drawdown in a duration as short as possible. A recovery period should not be longer than two times the duration of any drawdown period. Recovery trading is not easy for many traders even for some experienced traders here. You have to be an all-round trader and a very seasoned trader.

Back to school for some here:

http://www.babypips.com/school/under...-drawdown.html

Often times we do not "tip our hat" enough, I'll certainly tip mine to Emmanuelle, he has been helping new traders here for a long time and I am sure if anyone seriously treated his advice and counsel seriously, they would be profitable rather quickly.

I am not sure if I am going to post here on the forum regularly, not that I am a huge contributor anyway, but I feel I have made 'TMS' mine enough that I can demonstrate how I trade the H1 charts and how it has been working for me.

This is my trading style, it is does not mean it is the only way to trade, nor should it be considered financial advice of any kind; but it is a detailed look at how I trade using the root concepts of 'TMS', again not sure if I will staying around here, but like I said in an earlier post back way back in 2012 when I discovered this thread, this thread ultimately lead to me becoming profitable, so this is my "pay back" if you will.

This is a quick "look" that will contain a lot of info you probably already know, but with the influx of new traders, I do not think this will hurt anyone to read, or at least provide some food for thought.

**NOTE** This is part #1 and it is long enough, this is talks about risk, my pt 2 later this week will have charts with trading examples.


I. Time Frame & Time of Day

Choosing a Time Frame to trade is very important in my opinion, if you find yourself bouncing from 15m charts to 4 hour charts, then back to 30 min charts trying to nit pick entries, I really do not think your going to have much success with this or any other method.

The time frame you trade is very important and should not be arbitrarily decided because you think trading 15 mins charts is cool or 4hr trades because they are “slower”, the time frame should suit your overall trading emotions (some people like and thrive being right in and right out, while others like to build positions and participate in the markets less).

There are other factors to consider, your timezone and job, i.e it is pretty hard to trade 15min charts when your at work during the London/European session, while a longer term approach such as the 4 hour charts obviously make more sense for someone in this spot.

I like the 1 hour charts right at the European Open, I live in the EST time zone, now I trade mainly the Gbp.Usd/Gbp.Cad and sometimes the Gbp.Aud... However, I find the Gbp.Aud sometimes makes it move earlier in the morning and this already requires me to wake up at around 3:30am in preparation so I often miss out on Gbp.Aud (these are just pairs I like, there are many others that work nicely, but I am comfortable trading the pound, just a personal choice, trade whatever you like).

I also will trade Eur.Jpy & Eur.Aud, but again, I often find they make there moves a little too early for me and I often miss out on them.

The reason why I trade this early in the morning is because I find the European/London Session is when the majority of the money hits the market and the forex pairs actually move, enabling me to make money and not fight the whipsaws that are associated with an illiquid market.

This is not risk or myth, simply look at your charts and you will typically see your forex pair trading with very small candles in the first few hours the market is open in Asia, then when Europe comes online, you’ll see bigger moves and candles and you’ll actually be able to trade and find set-ups that make sense.

Now, there are exceptions and occasionally you will see the Asian session set up nice moves especially with the .Aud and .Jpy currency pairs; however, this is the exception and not the rule and I comfortable trading Europe.

I also use the concepts of ‘TMS’ when I trade stocks, however, I trade the first two hours only of the US Stock market because that is when the money is moving in the market and I can trade set-ups that make sense, typically, from lunch hour, 11:30am-12pm till about 3:00pm EST, the market stops making big moves and trades are much more difficult and just ranges.

II. Risk & The Rigged Game

This is the most important part of what I am sharing with you all, ignore this information at your own peril, but controlling risk is the ultimate step in becoming a profitable.

The FOREX market that we trade is completely rigged, it is not fair and you need to accept this NOW, while not impossible to set the odds in your favour, you need to see what you are up against.

You have a broker who makes money when you lose, we often hear “we make our profit from the spread etc” well, this may assist the broker (hereinafter called the market maker) bottom line, but they make their big money by taking the opposite side of your position and you eventually blowing your account in fact, many orders are never sent to the actual market, this is a fact, read the fine print of your agreement with your brokers, you will see tucked away “we sometimes will take the opposite side of your trade” (usually more jargonist language, but it is in there).

So immediately, you are at a huge disadvantage because your broker is in a position on the opposite side and now has a vested interest in the success or failure of your trade.

To sweeten their odds of your blowing your account, they offer us a poison pill called leverage (this is a necessary evil because we need it to some degree to participate but…)

Some firms offer 100:1+ and advertise on how quickly you can grow account, in fact, some posters on Forex Factory are quick to talk about turning $1,000 to $5,000 in a week and how awesome they are, only to vanish a few days later.. well folks, they used excessive leverage so they were fortunate to have a couple of wins, however, when they had probably just a couple of standard losses, their account goes into a huge draw down and likely blown.

The Market Maker wants you to leverage your positions as much as possible, they want your money.

We want to grow our accounts and get rich quickly, so we gladly accept their pill, but we often get to greedy and put our accounts and potentially our financial wellbeing at a huge risk in an already rigged game.

Just because your firm may offer you 100:1 or 200:1 whatever amount, does not mean you have to take it, you need to come up with common sense position sizes that protect your account, this should be the main focus of your trading business.

What’s the worst that can happen? well despite the inevitable huge draw down you will incur utilizing this amount of leverage, you also can set yourself up to face financial ruin by not being able to meet a margin call, or in an extreme market event (they do happen especially with the heavy Central Bank involvement) the market could move above or below your stop loss rapidly, leaving you owing your broker more than the value of your account.. sleep on that the next time you take 100:1 leverage.

Back to a trade example:

Here is a scenario that I see often…

I get a TMS buy set up and I like the risk reward, meaning I am going to set my risk below the entry candle or what I think is going to be the swing low and typically for me its around 30-40 pips, can change obviously, but for this example let us use 40 pips.

I am comfortable risking 1% of my trading account on this trade, meaning if the trade moves below my set up candle, I lose the 40 pips and 1% of my account.

$100,000 trading account, $1,000 risk, SL in place.

However, this is where you need to look at where the previous swing high was and you can target that location…usually it is at least 2R away, so if your trade hits that mark we have succeed in a 2% gain or +$2,000.00… typically I like to shoot for 3R minimum, but you will often see you can snag 4r+ if you let it go…

When your trade hits 2R you can move your SL up or do whatever you want, but if you notice where you believe the last swing high was is less than 2R away, this is where Big E said “look for basic forex stuff…” what Big E means here is that your trade needs room and if your trying to trade in this spot, your going to be in tough to make any significant profit as your swimming with an elephant on your back and I would look for a different trade where it has more room to move up in this scenario.

So, without getting to detailed if we took just 3 1hr set-ups per week and we lost 2 of them, our account would draw down to -2% and then on the final trade we make our 3R, we make +3%, simple mathematics shows us that our win rate was only 33.3% but we grew our account by 1% (not including commission deductions).

If this cycle were to even out for the month we would be taking 12 trades a month, only winning 4 trades and losing 8.. however, our account would grow 4% (not including commissions)

Now when you factor in compounding, you can grow an account very quickly and safely under these conditions, provided the pairs you trade have a fairly competitive and reasonable spread.

No, I am sorry, I don’t follow that up with a magic super dooper EA that was programmed by a NASA scientist that will eliminate the losers, this is trading folks, boring, not glamorous, but grow your account and it is extremely lucrative.

Keeping your risk at 1% also has a lot of advantages, say you have 10 losers in a row (trade longer if you haven’t encountered this yet), you draw down to 10% which is depressing enough, but fortunately if you nail just a couple of 2-4r trades you’ll quickly get yourself square and ready to continue the grind up of your trading balance.

If you expand this thinking and target a 30% win rate and a 3-4r target you will see the monthly results are even better, knowing you only need a 30-35% win rate to make a nicely month gain, think you can bat that using TMS guidelines? I know you can!!

The rules of TMS are easy, entering trades are easy, but that is where “easy” ends in trading.. your emotions aren’t “easy”, your expectations aren’t “easy”, losing money isn’t “easy”.. managing risk isn’t “easy”.

Despite all of the wonderful advice here, you will need to make “TMS” your own, you will have your own tweak or rule parameter that will be exclusive to you that sets up further confluence to your edge.

This went on so much longer than I intended, I will write a part 2 with some of my trading examples with charts.

Thanks for reading this and I wish you all the sincerest good luck with whatever you set out to do in trading, just remember that you need to control risk, if you did nothing else but focus on surviving your first 3-6 months as a new trader instead of getting rich and keeping your stops honest and limiting a loss to 1% of your account equity, wow, you would be so much further ahead than thousands of traders.

So is this valid?

Another Gem of a post!

Same

yes, its is valid. PA looks toppisch.
since GU exhausted its average weekly range and when the TDI is way above its overbought region, short term traders will tend to go short.
we can trade such conditions but do not expect a reversal today. Just a intra-week correction.
take what the market gives you and run ...

nice.
use CaveManager and "set and forget"... walk away and let CM do the trade management.

if you look at this trade too often you will bound to do something silly.

Leon, I am on this trade.
I was a bit confused from the D1 but Emm clarified in his response.

Note from Emm -- Just a intra-week correction. take what the market gives you and run ...
All the best

Need some perspective from the senior members.

AUDUSD

D1 shows blue APBs and not OB TDI


H4 shows APBs that are turning red.
TDI has already crossed nicely at OB around 4 PM angle.


Should I still hold back or pull the trigger at H4 since the red bar has already crossed down on the yellow MA line.

The sharing of your trading insights are extremity appreciated and encouraging, just as are Emmanuels' and others.
Looking forward to Part 2!
Thank you Andy.

Thanks Emm. These are invaluable insights. This comes with the opening of the 3rd eye.
Much appreciated as always

Hi,

your 'third eye' will see the PopGun setup.
this is much clearer than asking if the candles are big or small, etc. which can be subjective.



http://www.forexfactory.com/attachme...1&d=1352442108

http://www.forexfactory.com/attachme...1&d=1353070144

http://www.forexfactory.com/showthre...63#post6202763

http://www.forexfactory.com/attachme...1&d=1356741736


Two posts with good reading materials;

http://www.forexfactory.com/showthre...82#post6662582

http://www.forexfactory.com/showthre...95#post6779095

Trading H1 since started following TMS, I do look at all other time frames when I trade H1

I am still new to TMS, but I would like to share my opinion because everyone has the different understanding on the knowledge, team work is always better than fighting alone

very good！refresh my mind.

You are the man! So so helpful, thank you very much.
One of the laws of this Universe is that what you give out comes back to you (usually double, triple or 10 fold). No wonder you are successful

I'm enjoying this very active thread and am feverishly reading and learning. I look forward to my first TMS trade soon.

Bill

Andyvix,

This is a great post and i very much appreciate it. I also could not agree with you more regarding Emmanuel's guidance.

I have also made TMS/5-method my own by using some of it's core principals and tweaking other aspects to better fit my personality, goals, and psychology. I have shared and discussed my trade plan with other members via PM/email, but have always been hesitant to discuss it openly in the thread. However, i am inspired by your post and i have gained a lot from reading other members post which outline their personal strategy and personal trading journey.

I will also put together a post with a little about my journey and how i have made tms/5-method work for me.

Best,
N.

Very impressive, good post, thank you very much for sharing.