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Building an equity millipede

  • #7,201
  • Jul 20, 2016 4:16pm Jul 20, 2016 4:16pm
I pay much attention to comments like this. It gives me a target for my trades and I think it's much better than just entering blindly in both directions.

"Goldman Sachs currency strategists projected the euro EURUSD, -0.0272% will reach parity versus the dollar during the same time frame. The dollar was buying $1.10 euro Wednesday afternoon in New York. Goldman also expects the buck to strengthen against the yen USDJPY, +0.38% to around 125 from its most recent level of 106.81."
http://www.marketwatch.com/story/why...-us-2016-07-20
If slaughterhouses had glass walls, everyone would be a vegetarian!
  • #7,202
  • Jul 30, 2016 1:11am Jul 30, 2016 1:11am
I'm thinking about only trading after important news releases, because it really is the news that are moving the markets in the long term, not patterns on a screen. Does anyone here have success with combining news trading with the equity millipede strategy?

In this chart you can see the price action for USD/CAD after the release of GDP figures in Canada and USA. It was announced in the 15 minute candle after the vertical line. If you had sold there you could have moved the stop loss to breakeven now and just wait and see what happens to the trade. I have a feeling that this can happen for many news releases. Especially anything that could influence the chance of the FED raising interest rates.
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If slaughterhouses had glass walls, everyone would be a vegetarian!
  • #7,203
  • Jul 30, 2016 1:33am Jul 30, 2016 1:33am
Same hypothetical trade on a monthly chart. Sadly I was sleeping when the news was released. Great risk/reward even if you didn't place the trade before 15 minutes after the news was released. I don't think that Graeme paid much attention to news and that apparently worked for him, but why should we expect a trade to survive if nothing has changed fundamentally?
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If slaughterhouses had glass walls, everyone would be a vegetarian!
  • #7,204
  • Aug 31, 2016 11:04pm Aug 31, 2016 11:04pm
Flying buddah monthly candle for USDJPY off of 100. Very nice looking.
Twitter: @zusch_ -- Preselecting trending pairs, stocks on a weekly basis.
  • #7,205
  • Edited 3:18pm Sep 19, 2016 9:40am | Edited 3:18pm
Quoting Gambler180
I'm thinking about only trading after important news releases, because it really is the news that are moving the markets in the long term, not patterns on a screen. Does anyone here have success with combining news trading with the equity millipede strategy? In this chart you can see the price action for USD/CAD after the release of GDP figures in Canada and USA. It was announced in the 15 minute candle after the vertical line. If you had sold there you could have moved the stop loss to breakeven now and just wait and see what happens to the trade....
Correct me if Im wrong...but in my opinion theres a majour flaw in the milipede strategy:LEVERAGE.
If you are invested on multiple lots or mini lots...multiple....
What happens if a big news like the one on CHF hits you, with an 800 pip drop...spike...????
What if your broker does NOT give you negative balance protection?
You could accumulate a massive private debt in virtually seconds...!

The idea of scaling in, against scaling out is my favourite...but on a 5 minutes chart...with milipede on a dayly monthly basis, you are constantly exposed to the big black swan...getting in and out quick, reduces your exposure exponentially...always exposed with leverage.

Solution, milipede without leverage, but then you need at least a million dollar of your own cash...and trade staright forward...

My 2 cents worth...
  • #7,206
  • Sep 20, 2016 1:53am Sep 20, 2016 1:53am
Hi everybody.
I am starting reading this treath but pictures of pipEASY are closed so I dont see how he trades in graphic examples. Is here some doc or pdfwith rules and pictures?
  • #7,207
  • Sep 20, 2016 3:11am Sep 20, 2016 3:11am
Quoting miroslavo
Hi everybody. I am starting reading this treath but pictures of pipEASY are closed so I dont see how he trades in graphic examples. Is here some doc or pdfwith rules and pictures?
Hi mate:

You can find it at post #6464.

Regards.
That which you give to others, life will return it in spades
  • #7,208
  • Sep 20, 2016 5:14am Sep 20, 2016 5:14am
Quoting cuchuflito
{quote}What happens if a big news like the one on CHF hits you, with an 800 pip drop...spike...???? What if your broker does NOT give you negative balance protection? You could accumulate a massive private debt in virtually seconds...!
Nothing would happen because you wouldn't be trading that market from the long side. Who trades something with that potential risk when there are so many other markets that don't have the embedded risk and are basically normal (a currency with a peg is not a normal market).

I've said it before, it's hard to have any sympthay with people who lost money because of the peg. What were they thinking, put a stop at 1.1999 and get filled with no slippage or a few ticks if/when the peg broke or in this case was cancelled? Remember, whenever there's a currency peg in force - it's just a matter of time before it breaks and all hell breaks loose. Traders MUST study financial history to see what has and can happen, then understand that whatever they've seen can a) happen again, and b) with potentially bigger moves than they thought possible. If all the traders who got caught in the Swiss had studied their financial history they wouldn't have touched the Swiss with a bargepole as they would have fully understood the risks.

Anyway, show me a day like the Swiss debacle and I'll show you 5000+ days when the markets trade normally. If people are worried about such events, trading is not a game for them. Buy blue chips, buy Gold, keep your money in cash.
Road To Wisdom? To err and err and err again, but less and less and less...
  • #7,209
  • Sep 23, 2016 11:10am Sep 23, 2016 11:10am
Quoting Calculus
{quote} Nothing would happen because you wouldn't be trading that market from the long side. Who trades something with that potential risk when there are so many other markets that don't have the embedded risk and are basically normal (a currency with a peg is not a normal market). I've said it before, it's hard to have any sympthay with people who lost money because of the peg. What were they thinking, put a stop at 1.1999 and get filled with no slippage or a few ticks if/when the peg broke or in this case was cancelled? Remember, whenever there's...
I wouldnīt be so sure calculus...the world is so crazy...I think black swans can happen to any non pegged underlying...5000 days is not much...just 10 15 years of trading...if you get busted ...there goes your Money and a decade of trading ....
Granted thereīs no sure Thing...but at least I will set my trading plan to avoid any black swan...
  • #7,210
  • Sep 23, 2016 11:28am Sep 23, 2016 11:28am
Yes, anything can happen.

But I always say this to people re big moves - the odds are you won't be on the wrong side as you can only have 3 positions in the market, flat, short or long (I say flat is a position).

So if you have a big move there are 2 ways that you won't get hurt (flat or long assuming the move big move is up) and only 1 way you can get hurt, short. The odds are therefore always in your favour of not being hurt.

If anyone wants to protect themselves against the potential of a flock of black swans descending on them there are only 2 ways - one, don't trade and the other is risk a maximum of 10 basis points (0.10%) of your account on any one trade.

So in the case of a long Swiss trade with a 40 tick stop risking 10 basis points and assuming you went long at 1.2040 and sold 1.0000 that would be a 2040 tick loss, call it about a 5% loss on your account. But as ever in this game you have to look at the other side of the coin so very low risk translates into very low returns so in a good year you'll probably make about 2% and maybe 3% on a spectacular one.

In this game we are paid to assume risk, so if you assume little you can't get paid more than little.
Road To Wisdom? To err and err and err again, but less and less and less...
  • #7,211
  • Sep 24, 2016 8:31pm Sep 24, 2016 8:31pm
trading is more about 'doing' than 'thinking/analyzing', just place the trades and manage them.
  • #7,212
  • Sep 25, 2016 3:15pm Sep 25, 2016 3:15pm
"So in the case of a long Swiss trade with a 40 tick stop risking 10 basis points and assuming you went long at 1.2040 and sold 1.0000 that would be a 2040 tick loss, call it about a 5% loss on your account."........

Sorry Calculus but I donīt agree again..

The Point is STOPS where NOT HOUNOURED on that Swissy Black Swan...Only after trading resumed, and then orders where filled to the available quotes ,after the gap...I just checked again the dayly range of EURCHF: a whopping 2226 pips!!!!!!!!!!!!!!!!!

If thereīs nobody on the other side of your trade, ready to buy or sell your STOP, it just wonīt trigger...it doesnīt matter if your Broker is ECN or Market Maker....
That is the reason why hardly any Broker will guarantee negative Balance...cause they woud be risking their own asses...!!
Thereīs Brokers who guarantee stops (against a bigger spread cost)...which would be an interesting option to study.
  • #7,213
  • Sep 25, 2016 3:24pm Sep 25, 2016 3:24pm
AND, thereīs documented stories in the web, about traders who were on the right side of the EURCHF on that day....who though they were rich...

Check this: their Broker (a big Name, I wonīt say it), returned them their Position days later, requoted with a LOSS...!!!
​Explanation: they needed to Balance their books to Keep up with all the loosing trades, and it was all LEGAL!!!!

​Needless to say thereīs hundreds if not thousands of litigations in court, both ways..!!

Studying all this, is what I call real Risk Management...anybody who getīs caught again after all is an idiot...

Iīm just trying not to be one....
  • #7,214
  • Sep 25, 2016 7:18pm Sep 25, 2016 7:18pm
You just reinforced what he mentioned, history. SNB is certainly not the first one doing this, and won't be the last one. BOE for example has been there done that not really long ago at least. Moral of the story, don't touch those pairs with peg in action.
  • #7,215
  • Sep 26, 2016 2:37am Sep 26, 2016 2:37am
Cuch, yes, of course there was a tremendous amount of monkey business involved with the Swiss debacle, that's when everyone realises their brokers can and will make up some of the rules as the game is being played. And we know who the rules are going to favour, them over us. No point for anyone to whinge and whine, including me, that is the game we all play.

But as I said, and XD also remarked, all of this sort of hassle can be very easily avoided by not going within 100 feet of any currency that has a peg in force. Same sort of advice for any currency that's likely to get heavy Central Bank intervention, then you can find yourself off by 100-200 ticks within 1 second. I don't trade the Yen, but I think the BOJ might be forced into doing some intervention over the coming months so anyone that gets caught can't complain as their 10 tick stop comes with 90 tics of negative slippage.

Ultimately in this game we know where the hidden risk lies before we trade and where the normal risk lies. Trade the markets with normal risk and everyone will be fine. Right now the Yen crosses have some hidden risk, whereas most Sterling, USD and Euro crosses don't. Plenty of money to be made in them over the coming months.
Road To Wisdom? To err and err and err again, but less and less and less...
  • #7,216
  • Sep 27, 2016 2:30am Sep 27, 2016 2:30am
Oanda offers hedging accounts/subaccounts...since a few days..!!
I opened a hedged live subaccount yesterday...very interesting...if it works as promised...Iīm Long EURUSD with a pending hedge 20 pips away..

EXAMPLE:
If I go Long 1000 Units, and instead of a stop I open a hedge , same size,20 pips away, just like a stop( if the pair doesnīt go my way of course..).

"IN THEORY" There could not be a margin call , cause whatever happens, one loss is compensated by one win, minus 20 pips right?

I do hedge in my strategy, having the trade on the same Chart, both ways makes my life real simple...cause I used to open the hedge on a subaccount..

The only latent danger remains: if Big Black Swan occurs right in the time where Iīm invested and my hedge didnīt trigger yet...but the market gaps brutally and my hedge doesnīt get hounoured...only after things normalize...100000 pips later..
Considering my trading exposure time is usally no more than a couple of hours, that should reduce my risk of TOTAL RUIN to the max.
  • #7,217
  • Sep 27, 2016 7:19pm Sep 27, 2016 7:19pm
Life is, you believe what you believe. Move on.
  • #7,218
  • Oct 4, 2016 10:05am Oct 4, 2016 10:05am
Quoting cuchuflito
Oanda offers hedging accounts/subaccounts...since a few days..!! I opened a hedged live subaccount yesterday...very interesting...if it works as promised...Im Long EURUSD with a pending hedge 20 pips away.. EXAMPLE: If I go Long 1000 Units, and instead of a stop I open a hedge , same size,20 pips away, just like a stop( if the pair doesnt go my way of course..). "IN THEORY" There could not be a margin call , cause whatever happens, one loss is compensated by one win, minus 20 pips right? I do hedge in my strategy, having the trade on the same Chart,...
Did you undestanded the margin values ?
I am at Oanda also and i noticed that the margin calculation in hedge account is diferent.

For instance , if you have a EUR account with leverage 100:1 and you buy 1000 units of eur/usd and sell 1000 units , the margin is only 10 instead of 20
Is that correct ?
  • #7,219
  • Oct 4, 2016 11:18am Oct 4, 2016 11:18am
Hi everyone:

Hope it could help to newbies. All Master Graeme's post.

A bit gift.
Attached File(s)
File Type: pdf Building an equity milliped part1.pdf   6.3 MB | 2,921 downloads
File Type: pdf Building an equity milliped part2.pdf   3.8 MB | 1,512 downloads
File Type: pdf Building an equity millipede part3.pdf   3.1 MB | 1,553 downloads
That which you give to others, life will return it in spades
  • #7,220
  • Oct 7, 2016 2:24pm Oct 7, 2016 2:24pm
Quoting Zemanel
{quote} Did you undestanded the margin values ? I am at Oanda also and i noticed that the margin calculation in hedge account is diferent. For instance , if you have a EUR account with leverage 100:1 and you buy 1000 units of eur/usd and sell 1000 units , the margin is only 10 instead of 20 Is that correct ?
Donīt know, I use 50:1, and get it in my hedge account, and calculate my position size carefully...including avoiding a margin call and or negative balance in the evnt of a black swan..

Wonder how people with hundreds of trades on a milipede campaign calculate to protect themselves...or maybe they have 100 million deposited...
This game is going crazy...3 black swans in 2 years...used to happen once every 20...

I think this is a total game changer...everybody needs to do their homework...and even then, no guarantee...suddenly even bucket shops like OANDA look safer than ECN...maybe...
Some people were short cable last night, their brokers payed them only after half of their profits dissapeared...they were frozen till then...(guess OANDA was one of them)...
You could accumulate profits for 10 years of hard work...and loose them all and more in 10 minutes...
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