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The Only Real Edge: Trading from Breakeven

  • #81
  • Oct 9, 2015 5:10pm Oct 9, 2015 5:10pm
Hi Don_xyZ, an interesting thread you have, I'll try to read it. It's nice to see ideas spreading across FF, e.g. I'm about to read skfx's threads from beginning to end. The only problem is I'm very busy with my other commitments now and have not traded or had the time for reading for a few weeks now (it's good to be making money at the grind though, since my trading is still sub-par in terms of p&l despite sn interesting thread ). Having had a look at your thread introduction, I have one insight from my experience to share. I monitored my performance on myfxbook some time ago, and the discovery I made was that I'm hugely profitable in terms of pips, risk-reward and all that, but I was still losing money because losers happened to be when I had bigger size on, somewhere upwards of 0.4 lot, i.e. real money on the line that can buy a dinner or pay a bill, not just trying out this or that or playing smart but small. Which led me to some hard thinking and to some conclusions, and the most important one is that this is a mental game in the first place: a winner's attitude/beliefs and actions. And since winning matters, and since winning is possible from BE up, and since there are several probabilities and a few games in play at any time, and all is a flux, so this thread was born. I'm excited to see that others like it, too, so please feel free to contribute while I'm having my busy days.
"To the busy day / To the idle play"
  • #82
  • Dec 7, 2015 7:46am Dec 7, 2015 7:46am
Back to trading after a while, had to take care of other business activities. It would be a pity to let this thread stop here, so I'll add a few more ideas. Finished reading Jim Dalton's book on Market Profile and he confirmed a few other ideas I originally got from Al Brooks on the subject of how to read price action. Al in his book gives very good sequencies of what bulls and bears are thinking as price action unfolds, e.g. after a spike to a new high and a retracement. Meanwhile, Jim Dalton adds the higher timeframe dimension and uses it on market profile to give a comprehensive outlook not limited to just one TF (Brooks teaches a signle TF view).

To sum up, in the market there are several groups of players, and they determine all price action in real time:

Strong bulls currently in profit
Weak bulls currently in loss or near BE
Strong bears currently in profit
Weak bears currently in loss
Sideline bulls (early entry fodder to stop scalpers)
Sideline bears (early entry fodder to stop scalpers)

And the same categories apply to price action setups in all timeframes, of which Jim Dalton identifies three:
Long-term (Daily/Weekly charts)
Short-Term (60 minute and above)
Scalpers (Intraday, 1-60 minutes)

So in theory you have 18 combinations of players dictating market play. The trick is to read correctly which group is dominating, and how the other groups are perceiving their positions accordingly.

Please contribute any thoughts or ideas. My current idea, and JD stresses this as the best of opportunities, is to identify lower timeframe breakouts against longer-timeframe trends or from longer timeframe ranges that are caused by strong higher-timeframe players deciding to book or hedge their paper profits, like the usual trailing stop runs/retracements after a strong move in one direction.

The technique I'm experimenting is try to make an assumption and read PA on that basis. If the assumption is correct, you start seeing clear motives behind every significant PA event in the market and gain confidence at predicting the events that may or may not follow (all the "...if .. then.." logic). If the assumption is incorrect, you run into a wall and things make no sense to you.

Just chipping in to get the discussion going again
"To the busy day / To the idle play"
  • #83
  • Dec 8, 2015 11:38am Dec 8, 2015 11:38am
Hi

One has to determine the activity levels for the timeframe and each players involved... which can change due to market structure (attract/reject)

one needs to know that short timeframe participants usually makes up most of the transactional volume (activity)in a given timeframe,
while usually Longterm timframe participants make up a small amount of volume in the same timeframe

regardless of wheter prices are in excess , or are faciliating trade in the short timeframe , a market created opportunity which is attractive to
a long timeframe buyer will not be attractive to a long timeframe seller.

therefore, longterm buyers almost never buy from longterm sellers

where prices are faciliating trade and are thus fair in the short timeframe, a price or price area which is attractive for a shortimeframe buyer will be attractive to a short timeframe seller,


where can one lookout for an interaction between longterm and short term traders , and what opportunities may arise to position oneself ?

if price trades towards the extremes of a balanced area , it becomes attractive for long timeframe participants , and any given market structure created at the same time attracts short timeframe participants ,

as an example..

in the case of Usd/Jpy we have to look back..
Attached Image

and we see that from June-August , the extremes of the "range" where price remaind for the peroid at the time where res. 125.80 and sup. 120.46
which leaves us with the "mean" (where most transactions took place) @123.125 ..

now lets look how price behaved when it traded back to this level (123.125)
Attached Image (click to enlarge)
Click to Enlarge Name: u2.PNG Size: 92 KB

we see that price respected that level and traded downwards , creating a significant market structure of well defined lower highs (stair step)
which gives us further insights of assumptions where potential Stop levels may reside , . now either two things may happen if we break and trigger those stops

1st we see price moving fast in the direction of the initial break (stop run)
2nd or we see that the created liquidity is used to offset(longs) or initiate sell positions of bigger swinging d...s


in this case the latter was the case , so the reaction at the highs (123.6) was not due to no one was interrested to follow price any higher (passive) but due to
an active selling into demand (sl cascade)..

the market structure was created mostly due to the activity of the short timeframe traders , while the structure was exploited by the long timeframe traders..

so one has to lookout what price is doing at the extremes (tested or retested) and lookout how price behaves arround those levels (market structure)

currently UJ is contained within a well defined range with the highs beeing 123.600 and the lows at 122.200 which leaves us with the mean at 122.90
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and now we look how that range plays out .. either accumulation or distribution ? .. in the mean time trade the extremes
  • #84
  • Edited 3:20pm Dec 8, 2015 2:14pm | Edited 3:20pm
Quoting PrymeTyme
and now we look how that range plays out .. either accumulation or distribution ? .. in the mean time trade the extremes
A nice range-based approach to markets! I also favour a range outlook, seeing trends and microtrends as occilations in ranges and/or trending ranges rather than the other way round (like in the "trend is your friend" or "trend following" approach).

One point I want to argue about and possibly explore further is your notion of liquidity. You say stop orders are liquidity. But in reality liquidity consists of limit orders only -- trading on exchanges you can even get paid for providing liquidity, i.e. trading using limit orders -- liquidity is what you see on the DOM, limit orders to buy from or sell to, that's what creates the market proper -- the inside market supported from both ends. The trick, when the prices reaches an extreme, is to see which side, breakout or countertrend, short-term liquidity providers are supporting and how well they do. Where limit orders are concentrating, on the breakout chasing side or counter side. There are two scenarios here:

a) When there is liquidity from long-term players looking to add to positions or initiate new positions, normally breakouts fail and yield at least a countertrend scalp, even on second touch. If that happens repeatedly, it's a safe (how safe is a question of course ) bet that an average countertrend swing may occur, pulling closer to the mean.

When countertrend liquidity, i.e. limit orders are not sufficient to absorb stop and market orders of the breakout just beyond the extreme, longer-term players will step aside and
b) either create a vacuume propelling prices a much further where they will repeat their experiment in tight ranges, or
c) allow liquidity supporting the breakout to emerge, i.e. in limit orders and chasing orders, into which to position just slightly beyond the extreme and still achieve at least a scalp countertrend and then take play further from a breakeven position -- the fakeout scenario.

That's my theory, perhaps from a slightly different angle, but on the same issue. It does not provide any answers how to trade breakouts, but at least I have theory to go by when gauging market players' positions.
"To the busy day / To the idle play"
  • #85
  • Dec 9, 2015 9:07am Dec 9, 2015 9:07am
Quoting StopRunFx
{quote} A nice range-based approach to markets! I also favour a range outlook, seeing trends and microtrends as occilations in ranges and/or trending ranges rather than the other way round (like in the "trend is your friend" or "trend following" approach). One point I want to argue about and possibly explore further is your notion of liquidity. You say stop orders are liquidity. But in reality liquidity consists of limit orders only -- trading on exchanges you can even get paid for providing liquidity, i.e. trading using limit orders -- liquidity...

agree !

however here is my point of view on stop Vs. limit orders ...

Limit orders are somewhat "pseudo" liquidity as u know they can be pulled as fast as they appear.. while stop orders especially if they are tied to open positions
are pretty sure "real" liquidity just to asure the exit of a open position if the market doesnt playes out as expected..

thats a "weak" spot where "strong holders" or informed traders actually can prey on.. in whatever their market anticipation or campaign may look like..

just like a lion which actually hunt the weakest prey (young , injured) to "preserve and maintain their edge" .. proper market participants do the same..

ofcourse they need to test the markets in a certain way to get an insight in which side price has the least resistance.. ie.. if they think that the balance may shift in the favour of demand .. they sell an approriate volume and whatch how the market "absorbs" or moves in the direction to conduct further actions..

keep in mind proper individuals , may even "create" a form of market structure which plays in their hands , in the form of making a market "look weak"
while they buy and sell into the breakout.. caused by panicking bears etc.. (spoofing)

the "Edge" you refered in your thread name , lies in getting in well ahead of a breakout in which case it doesnt evenmather if its a fakeout as u are on BE right from the start..

if i play breakouts i usually only go for the "early bird entries" .. which would look like so... (example)


on crude we trade near the lows of 2009 .. (weekly) (longterm lurkers may get active ?)

we are somewhat oversold (daily) (longterm lurkers may get active? )

Attached Image (click to enlarge)
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if we form some sort of "absorbtion" near res. i would take a retracement (5min) (trading against shortterm beasr leaning against res.)
or if we test and reject the "mean" i would probe the markets for a long

Attached Image (click to enlarge)
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OTOH .. any breakout + pullback is still welcome
  • #86
  • Dec 9, 2015 9:35am Dec 9, 2015 9:35am
see...

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  • #87
  • Dec 10, 2015 12:25pm Dec 10, 2015 12:25pm
Quoting PrymeTyme
{quote} .. they sell an approriate volume and whatch how the market "absorbs" or moves in the direction to conduct further actions.. keep in mind proper individuals , may even "create" a form of market structure which plays in their hands , in the form of making a market "look weak" while they buy and sell into the breakout.. caused by panicking bears etc.. (spoofing)
This is a bit like a conspiracy theory. I used to believe in such theories before, but now I think markets are more complicated than that. Thinking that WIDE stops of weak players are just there to be hunted by strong players is a bit of a simplification imho, and a retail traders' myth. Those players who move the market are never too weak and I doubt they have very wide stops when entering. Yes, they do leave a trail of stops at BE and better, and that's what my idea is in starting this thread. But imho there are more strategies in managing bad positions than just leaving a stop at a concentrated location: e.g. exit early (I guess most used), scale in and exit at BE overall, and, above all and most forgotten by retail traders, HEDGING. When institutions see their profitable positions threatened, they may be hedging and that only intensifies the move against their positions, but puts them in safety and they can restart the game as we discussed above. The biggest weakness is getting in a position that goes beyond a few ticks into the red immediately, other than that, it's pure strategic games around BE for institutions imho.
"To the busy day / To the idle play"
  • #88
  • Dec 12, 2015 3:48am Dec 12, 2015 3:48am
if this post is way to off topic i apologize..


Quote
This is a bit like a conspiracy theory. I used to believe in such theories before, but now I think markets are more complicated than that.

The example ive illustrated was just a context added to the price behaviour and as market manipulation comes in all forms and shapes and still do
on the large scale and small scale ie. intraday (scalping etc) aswell as position or longterm trading one can use to judge the markets ,
market manipulation was and still occures in the markets , if a certain market structure occures , i plan ahead with in theback of the mind
on HOW price acts at a certain level (resistance) or after a certain situation (breakout) like if i take action eitherway , for example follow thr breakout
,fade the breakout or stay on the sidelines , so i lay out a context to the current price behaviour and ad scenarios to it and however the market plays out (based on basic market knowledge) i will position myself , and as always if one plays directional trades one has to be wrong in order for the other to profit..

market manipulation examples..

http://blog.themistrading.com/2015/1...tch-a-spoofer/

  1. Defendants spoof orders created a strong (but false) signal regarding interest on one side of the market. These large spoof orders deceptively encouraged other market participants (and their algos programmed to react to changes in book pressure) to enter orders on the same side of the market as the spoof orders.

https://en.wikipedia.org/wiki/Forex_scandal
The forex scandal (also known as the forex probe) is a financial scandal that involves the revelation, and subsequent investigation, that banks colluded for at least a decade to manipulate exchange ratesfor their own financial gain.

http://www.bbc.com/news/business-26526905
The foreign exchange market is not easy to manipulate. But it is still possible for traders to change the value of a currency in order to make a profit.

http://seekingalpha.com/instablog/29...e-stock-market
He described how he could push stocks higher or lower with as little as $5 million in capital when he was running his hedge fund.

http://www.econmatters.com/2015/03/c...e-filling.html
Brent Spoofing & HFT
As the European Market closes today and oil has some bearish sentiment to the trading day, one of the common techniques is to bang the European close in the Brent contract which being a much less liquid contract than WTI can be quite profitable. Usually this takes place around 10:00 to 10:30 am CST but with the time changes this week everything is pushed back an hour here in the US with the European close now being 11:00 to 11:30 am CST.

Spoofing just one HFT Market Manipulation Strategy

This kind of spoofing strategy usually takes place with 100 order lots in the oil markets, and the 900 contract effort was just hilarious, taking overkill to an entirely new level. I have even seen several firms lined up with 100 contract fake sell or buy orders on consecutive price levels. For example, 100 at $48.51, 120 at $48.52, 150 at $48.53, 105 at $48.54 etc. all with the same intent to move prices in the opposite direction of these orders. They don`t really want to get filled, in fact they will never get filled, as soon as a couple contracts hit one of these orders they are pulled from the market.

Now big orders get filled all the time but somebody with a big order doesn`t just advertise to the entire world in most cases, and if legit doesn`t cancel the order when it gets hit. Usually large orders are disguised in the market via various methods to maintain a lower or better cost basis on the overall position. This Spoofing Strategy works, and is highly profitable because its frequency has increased over the last three years with more and more firms adopting this HFT trading strategy. There have been a couple of small fines for this behavior, but the blatant occurrence of this strategy and the increasingly brazenness of the manipulative trading technique shows there is no regulatory force enforcing this trading impropriety by participants.

Markets are Rigged at both the Macro & Micro Level from the Fed to HFT Firms



its isnt important to know what the story behind a chart is , but rather how price behaves at the very moment it trades towards your level of interrest
and how it behaves at that level , in order to know how and when to enter and manage your position according to the current market action..

it gets complictated if you want to follow the institutions which are spread all across several markets due to their "risk model" hedging etc.. but u dont need
to know their intentions ,as they mostly trade their math/quant models , which per se .. are moving more and more away from the basic markets operation
nevertheless , but that doesnt mean that there are still "proper individuals" out there plaing their game according to the basic market knowledge,



Quote
Thinking that WIDE stops of weak players are just there to be hunted by strong players is a bit of a simplification imho, and a retail traders' myth.

its actually that simple, but hunting stops is not an everyday occurence noir the main strategy of "a shadow figure in the background"
but its a part of the market mechanics nevertheless , as a part of price discovery and in search for liquidity etc.. certain individuals may
take advantage of such occurences here and there..

Quote
Those players who move the market are never too weak and I doubt they have very wide stops when entering. Yes, they do leave a trail of stops at BE and better, and that's what my idea is in starting this thread.But imho there are more strategies in managing bad positions than just leaving a stop at a concentrated location: e.g. exit early (I guess most used), scale in and exit at BE overall, and, above all and most forgotten by retail traders, HEDGING. When institutions see their profitable positions threatened, they may be hedging and that only...

Yes and No , Big players can stand heat for sure , but they are not immortal and eventually face a loss and getting forced to puke out of the markets , even more
so since the dawn of the math whizz , quant/math approaches on the markets..

"smart traders" ie PhD quants , dont really know how to make a proper market these days, they are basically hiding behind their numbers and models
in order to find an edge where no one else sees it , which actually is caused by the misguided focus on quant/math and "risk systems" theirfore
those traders are often trading the risk system rather then trading the markets, which will backlash in some form or the other..
they cant or arent allowed to trade against their risk system , hence they end up all in the same place and after all are trend players...

while actually institutionals should make money when everyone else is losing , most lose aswell , due to their strict models , "black swans"
occure more and more and are bigger and bigger based on that , ...

actually all of the largest losses have come since the introduction of stricter risk management ,

example

2012 (whale trade) JPM https://en.wikipedia.org/wiki/2012_J...e_trading_loss

In April and May 2012, large trading losses occurred at JPMorgan's Chief Investment Office, based on transactions booked through its London branch. The unit was run by Chief Investment Officer Ina Drew, who has since stepped down. A series of derivative transactions involving credit default swaps (CDS) were entered, reportedly as part of the bank's "hedging" strategy.[1] Trader Bruno Iksil, nicknamed the London Whale, accumulated outsized CDS positions in the market. An estimated trading loss of US$2 billion was announced, with the actual loss expected to be substantially larger. These events gave rise to a number of investigations to examine the firm's risk management systems and internal controls.

they should actually get back to focusing more on the basics of market making , rather then trade their risk models...
trading is not a mather of intelligence but basic trading skills and market understanding , away from subjective interpretations (quants/math models) ie. phds
bound to their academic ball and chain , back to objective trading , orderflow , activity on price , market making ie. trading the front book ,

there are "savvy" traders and firms out there but they get less and less... hence the misguided information on the trading world spreads..
  • #89
  • Jan 5, 2016 1:45am Jan 5, 2016 1:45am
Quoting PrymeTyme
its isnt important to know what the story behind a chart is , but rather how price behaves at the very moment it trades towards your level of interrest and how it behaves at that level , in order to know how and when to enter and manage your position according to the current market action..
A great overview on spoofing and institutions PrymeTyme, definitely not off topic. But you summed it up nicely in the above sentence: for practical purposes all you need is a simple approach, even simplified I might add, to making decisions. For me this is the breakeven approach. Never to trade with nonsense wide stops. I have doubts if institutions use wide stops (I think they hedge). When you have a wide stop like 20 pips in place, and the price goes 18 pips against you and then goes the 19th pip -- does it then make sense for you to move your stop just another pip or two? Of course, it does, because you are risking an extra pip or two to save 19. It's an awesome risk-reward proposition. That's the loser's thinking.

On the other side you have the breakeven-up thinking. If you're 19 pips in profit and you added every few pips and the market is going your way, it does make sense to add to the position for that extra pip or two, why not -- you may lose a couple of pips on your last entry, but you have profits locked in on 15 pips or more with trailing stops. Those trailing stops will eventually provide the hidden liquidity you described, and whether or not it will be used to re-enter in the same direction is always a questionmark.

So my hopothesis is that for the most part the market is a 50/50 battle around every pip and larger directional moves are results of more or less random trending which is known only to the players moving it (and even they don't know the strength of the opposing force). You can only exploit trends by sitting in them randomly when they happen, but to sit in them you first need to get on board. And getting on board with minimal risk, around BE, is a skill. Fading climaxes and trying to catch breakouts, taking one or two pip losses and similar partial profits, locking in breakeven positions, and hoping to be on board for those random trends. The trend is your friend, but only if you manage to get in without serious losses.
"To the busy day / To the idle play"
  • #90
  • Jan 5, 2016 9:08pm Jan 5, 2016 9:08pm
Hi StopRunForex,
Very interesting read from you and the other contributors. I like the idea of finding an execution edge.

Regarding the attempt to create a BE position by breaking up your position into two or three components. I have been trying to understand the Risk Reward benefit of this. The psychological benefit cannot be underestimated.

When breaking up a position one is essentially trading two or three separate systems. You have one system with a risk of 5 pips for a Net 1-2 pip reward and another system risking 5 pips for a 10-15 pip reward and another system risking 5 pips for a 30 pip reward. In addition, if price moves against you by 3-4 pips you set the TP at BE on all of these systems. If you remove all the BE trades, each of these systems will have their own success rate/ RR ratio, and potentially only one or none will have an edge.

Additionally, when price moves against your initial position 3-4 pips and you enter another segmented trade it sets up 3 new systems with a tighter stop loss with their own success rate/ RR ratio (stop loss on this trade 3 pips, reward 2/13/30). So, actually six different systems.

If you have a track record for all the trades using this approach it would be interesting to isolate each trades segmented system and identify what the expectancy is. I'm not asking you to do this, but its something I would do to analyze the efficiency of the trading method.

Maybe the combination of all these systems have some kind of synergy allowing diversification and offset each others weaknesses? maybe im overthinking it and should just try it!
  • #91
  • Jan 6, 2016 10:26am Jan 6, 2016 10:26am
A very valuable observation and insight, Blix! It would be very useful and interesting indeed to have this kind of stats. I may try to try to glean something from this using MyFxBook, will let you know if I have something to share.

But on the other hand, these success rates would be in relation to risk reward ratio only, which in itself is not an edge (in my opinion, longer moves are basically random, dependant on what happens tick by tick on the way). I would say an edge in this case would be to get a BE position with minimum cost (execution edge, as you mentioned!) (i) and gauging momentum correctly so as not to exit the position unless warranted by changes on tape/tick chart and then ultimately candle/bar chart, bar by bar. Both elements are largely intuitive and discretionary, I doubt it would render itself to any rule-based system. Of course, you have to follow the conventional Technical setups, but as is the case with any setup, there's always the more or less equal probability of breakout/reversal failure, the probability of failed failure (i.e. success after initiaql failure) and then renewed failure of the successful breakout, including all kinds of increasing volatility and expanding ranges, and so it goes almost randomly. What matters is to watch your back, as PTJ II said in his famous movie.
"To the busy day / To the idle play"
  • #92
  • Edited Jun 25, 2018 6:01am Jan 29, 2016 8:36am | Edited Jun 25, 2018 6:01am
Maybe this tick indicator I wrote a while ago can be of some use with this approach.
Instructions inside.
Enjoy!
{ copyrighted attachment deleted by staff }
Attached Image (click to enlarge)
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  • #93
  • Feb 1, 2016 8:36am Feb 1, 2016 8:36am
Quoting Jdpnz
Reading this, I thought about the tick indicator that I developed some years ago. Perhaps this may be of some help to someone. Keep in mind that the MT4 platform does not maintain tickdata - the chart is created in realtime. As such, at startup the indicator will have a blank screen. Best is to start the platform with the indicator, then go make a cup of coffee. Usually in around 5-30 minutes (depending on the time of day) I have a chart and can trade the ticks. {image} Thanks for a very interesting and informative discussion here. {file}
I kinda like it. I ll put in on my charts later today. Thanks.
  • #94
  • Oct 9, 2016 4:55pm Oct 9, 2016 4:55pm
Quoting Retlaw
Maybe this tick indicator I wrote a while ago can be of some use with this approach. Instructions inside. Enjoy! {image} {file}
Nice indicator. What does Average Speed indicate?

BTW, some unusual tick action on EURUSD shortly after open today, let's see if it will lead to anything major. It is being accompanied by large volume, too.
Attached Images
"To the busy day / To the idle play"
  • #95
  • Nov 28, 2016 6:47am Nov 28, 2016 6:47am
Quoting StopRunFx
{quote} Nice indicator. What does Average Speed indicate? BTW, some unusual tick action on EURUSD shortly after open today, let's see if it will lead to anything major. It is being accompanied by large volume, too. {image} {image}
It's Average Spread, not "Speed"
  • #96
  • Feb 12, 2017 11:00am Feb 12, 2017 11:00am
Quoting Retlaw
Maybe this tick indicator I wrote a while ago can be of some use with this approach. Instructions inside. Enjoy! {image} {file}
You did not include the MQ4 file for the tick indicator.
My Threads: Trading is as simple as 1-2-3, Highest Open / Lowest Open Trade
  • #97
  • Edited Jun 25, 2018 6:06am Feb 12, 2017 1:25pm | Edited Jun 25, 2018 6:06am
Quoting TooSlow
{quote} You did not include the MQ4 file for the tick indicator.
That's right

Actually here is an updated version. This one also plots the SL, TP lines on the indi. Enjoy!

{ copyrighted attachment deleted by staff }
  • #98
  • Edited 3:46pm Mar 14, 2017 2:12pm | Edited 3:46pm
Hi seems this thread has slowed? a shame good interesting info.
I have played around with similar methods from Bob Volman with 70 tick and tight pressure moves , running Cristina Lee's trade manager which will automate the trades.
I have also seen a tick number counter at price , even on MT4 to see the bulls and bears.
for an interesting tight method all be it on Ninja Trader but which provided inspiration. Try this

Inserted Video


It would be great to see some of the trading interface's available on MT, like the limit nudge etc.

the Granular bars are easy to obtain with an offline chart I use an indicator from ovo which works fine.
single pip bars or tight constant volume derated to 4 digits.

Well I hope it promotes interest
Pho
I am not affiliated with Trading the Tape or Ovo

Edit havent used this for a while so knocked up a template , 10 pip renko with wicks, although I did not use renko as they dont overlap you may get the idea :-).
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50 Tick looks promising
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Amazing what a few minutes can do
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  • #99
  • Mar 21, 2017 7:56am Mar 21, 2017 7:56am
Quoting Blix
Hi StopRunForex, Very interesting read from you and the other contributors. I like the idea of finding an execution edge. Regarding the attempt to create a BE position by breaking up your position into two or three components. I have been trying to understand the Risk Reward benefit of this. The psychological benefit cannot be underestimated. /.../ So, actually six different systems. If you have a track record for all the trades using this approach it would be interesting to isolate each trades segmented system and identify what the expectancy...
It looks like I have an answer for you, Blix .

By now I have some data to show that my trade management approach is not sound, although the price action based entries and exits seem to be okay. I created a trade explorer and traded this way, which was quite messy and inconsistent to be honest. Some very good streaks, some horrible sloppy emotional streaks, quite long periods of not trading, etc. All in all, over almost half a year since October I did over a thousand trades (including partial exits) and made roughly +1500 pips, according to the Explorer. But the result was -96 pct on the account... It's a losing way to trade.

Which only means one thing -- it does not make sense to take these partial two to four pip profits... Yes, it does help psyhologically in the sense that, well, you have at least made a pip on most trades, but the small size that remains does not cover for the losers.

I'll now try to get a fresh start, focusing on uniform size and holding for longer -- still from the same BE perspective and with a BE stop if warranted (considering re-entry if stopped out), but will try not take those minor profits. At least I have learnt a lesson. It is not new to me, but good to have some personal experience and data from that experience, which will hopefully help unskew my perception. It's all psychology -- risk aversion in humans is higher when in profit than when in the red. A phenomenon discussed in detail in psychology literature.
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"To the busy day / To the idle play"
  • #100
  • Oct 6, 2017 4:29pm Oct 6, 2017 4:29pm
Is called death by a 1000 thousands cuts and is the first cause of death between scalpers or wonnabe scalpers. . If i may give you an advice, stop focusing on BE or not BE, y are wasting your time; at this stage of your path you should focus on how your ability to read the flow could help you to find a proper entry, what exactly you wonna see in the dom/tape/ftprint to trigger an entry. Once y solved this part of the equation the rest will come naturally, including when put a trade at BE made sense or not. Good luck
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