Get away from my stop loss jerks

[Op3nTheJar]

Hey there Jordan here,

Back to complain :P. Not really I just want to share something and get some feedback, some reassurance. Three subjects I want to hit.


NUMBER 1 I do believe I've found the bulk of what I need to trade forex . I've made a breakthrough, I can finally look back on all that stuff people tell you that you don't want to hear and say thanks guys, you were looking out. Discipline! It's a bit shakey but I feel it solidifying as I go.

NUMBER 2 Two weeks ago I started trading with one system, one stoploss and a sort of running take profit. The system looks good but I think its flawed big time, the entries seem to form at the peek of a move so the only way to profit, there would have to be a more substantial move in the same direction after entry. I back tested this system for a month and found pretty good odds but like I said it was only one month. I came up with approximately 564 pips gained and 200 lost. I found this strategy on "forex strategies revealed" it was a scalping strategy I thought looked interesting. I will post a picture it's called 'EMA Bands'. I've taken almost every opportunity and it seems that with live results i'm just slowly and surely losing my money through my stoploss. Here is the strategy.



This scalping system was sent by Frank Tenerife (Spain).

Thank you Frank! You contribution is greatly appreciated.

Here is the system:

"This is an efficient system of scalping that works in 1 minute up to 1 day all periods and all Currency

Ema 3
Ema 5
Ema 7
Ema 9
Ema 11
Ema 13
Color yellow

Ema 21
Ema 24
Ema 27
Ema 30
Ema 33
Ema 36
color Green

Ema 55 Color Red

Well
The system in The Oanda Forum.

And Way Works is

Buy Or Sell When the Group of Ema`s Yellow Breaks Ema 55
Take Benefit When Yellow Group Touches The Group Green.

If The Yellow group does Pull Back in Ema 55 or In Green Group Buy or sell again

Take Profit 10 Pip in Breaks Ema 55 And take Profit 5 pips In Pull Back

Stop loss 5 Pip 5 Minute Periods


NUMBER 3 I know I shouldn't think like this but it's hard not to when it happens so often. On three occasions in the same day, prices moved to my exact stoploss and went back the other way. Honestly I don't think brokers should be allowed to trade, since they do have access to our orders and all that good stuff ANYWAY, I want someone to tell me I'm just paranoid. Please!

I will be looking for a new strat to trade to start with on sunday, but I'm afraid I might be jumping the gun.

Well thanks for listening, NOW WHERE's MY FREE FEED BACK?!

[phil838]

You're just paranoid.

With a 5 pip SL of course the price is gonna hit your SL and then reverse pretty often. That's just the way it works...

I'm not saying it's a bad system or the SL is too low or anything like that, I'm just saying it's understandable that the SL is getting hit on the exact price and reversing a lot because it's so small.

No need to be paranoid.

[mastergunner99]

Scalping is by far the most difficult style of trading to master in Forex.

You really have to know when price is going in your favor. And I'm fairly certain, you won't capture that market edge with lagging indicators.

[akeakamai]

Originally Posted by mastergunner99

Scalping is by far the most difficult style of trading to master in Forex.

You really have to know when price is going in your favor. And I'm fairly certain, you won't capture that market edge with lagging indicators.

Ain't that the truth! 5pip SL can work only if somewhere in those 5pips is a support or resistance created by the wick of a candle on a smaller time frame. Round figure S&R are valid, but there is always volatility around these numbers even if they do turn out to be barriers to price movement.

I never go below 10pips trading a 5min chart, so 5pips sounds best suited for a 1m chart. And it looks like you are trading a 15min chart from the image you posted!

[Op3nTheJar]

Originally Posted by akeakamai

Ain't that the truth! 5pip SL can work only if somewhere in those 5pips is a support or resistance created by the wick of a candle on a smaller time frame. Round figure S&R are valid, but there is always volatility around these numbers even if they do turn out to be barriers to price movement.

I never go below 10pips trading a 5min chart, so 5pips sounds best suited for a 1m chart. And it looks like you are trading a 15min chart from the image you posted!

Actually fellas (I shoulda mentioned this) I was using this strategy as a day trading strategy, so I was using the 15min chart, with a 20!! PIP stoploss that's 20!! PIPS so on those three occassions my 20 pip stoplosses were hit exactly not 5 but 20. The average move in signaled direction was about 40 pips after entry but I wasn't taking them because a lot of times I saw 80 to 150 pip moves, so I followed the system and exited when the bands touched back the problem with that though was that a lot of times when they did touch bach the price would be right above or below entry price so there was nothing gained. So that's 20 pips not 5.


Jordan

[TopsandBottoms]

Ultimately, trading boils down to one question in the long-term; do your profits consistently outwiegh your losses?

In theory, however, there is one problem with scalping from a trader's perspective - a high transaction cost. If you are paying a spread to get into each deal, and you make a large amount of deals relative to other traders - swing, day, etc, then you are making a large amount of money for your broker - I don't believe that most brokers discourage scalping (mine actualy has a "scalping view" in the platform trade preferences), because they make money on the spread, thus, if the spread is payed out many times, they make quite a bit of coin on that. Some brokers, mine included, will charge per transaction and offer a tighter spread, but still they make money on each transaction. That being said, having a really tight stop does not necessarily = scalping; but in practice, if your stops are being hit often, and you keep re-entering rather than having a larger stop-loss and re-entering only if the deal is still valid, then it amounts to scalping, albiet with a progressive profit target, which in my mind is when your "scalp-entry" turns into a potential swing trade and is the solid gold part of your trading equation.

Also, you're trading is likely to be more energy-intensive relative to other traders, and you might feel exhausted at the end of the day. In time, you may want to experiment with other styles (obviously with smaller positions at first) I'm not faulting your style or anything, just giving you some ideas. Either way, my first point stands, and you seem to be doing well for yourself, so keep it up.

[Op3nTheJar]

Originally Posted by TopsandBottoms

Ultimately, trading boils down to one question in the long-term; do your profits consistently outwiegh your losses?

In theory, however, there is one problem with scalping from a trader's perspective - a high transaction cost. If you are paying a spread to get into each deal, and you make a large amount of deals relative to other traders - swing, day, etc, then you are making a large amount of money for your broker - I don't believe that most brokers discourage scalping (mine actualy has a "scalping view" in the platform trade preferences), because they make money on the spread, thus, if the spread is payed out many times, they make quite a bit of coin on that. Some brokers, mine included, will charge per transaction and offer a tighter spread, but still they make money on each transaction. That being said, having a really tight stop does not necessarily = scalping; but in practice, if your stops are being hit often, and you keep re-entering rather than having a larger stop-loss and re-entering only if the deal is still valid, then it amounts to scalping, albiet with a progressive profit target, which in my mind is when your "scalp-entry" turns into a potential swing trade and is the solid gold part of your trading equation.

Also, you're trading is likely to be more energy-intensive relative to other traders, and you might feel exhausted at the end of the day. In time, you may want to experiment with other styles (obviously with smaller positions at first) I'm not faulting your style or anything, just giving you some ideas. Either way, my first point stands, and you seem to be doing well for yourself, so keep it up.

No no, my results are pretty bad the 80 to 150 pip moves I was seeing were only from back testing, I've only seen one 150 pip move since I started trading it and I didn't get in on it because I set my tp at 40 pips and went to sleep.


Jordan

[TopsandBottoms]

Originally Posted by Op3nTheJar

No no, my results are pretty bad the 80 to 150 pip moves I was seeing were only from back testing, I've only seen one 150 pip move since I started trading it and I didn't get in on it because I set my tp at 40 pips and went to sleep.


Jordan

LOL, if we start getting into war stories, I have my share of missed moves. I've been in and out of trades where a few minutes after I got out, the market moved 100-300 pips in the direction I was in, or me setting my stop-loss at +100pips or so (as locked in profit), seen the market retrace, hit my stop and then move up another 100 in my original direction. It happens quite often to me in fact. Sometimes I get in and out at the perfect levels and leave nothing to the other side. That's all part of being a trader, it happens to everybody, and dealing with those situations is part of learning the game. The trick to dealing with loss or profit left on the table is not to "never let it happen again" but to deal with it somehow, take a break, have a smoke, eat a cookie, stop trading for the day, or move on to the next opportunity, etc.

[Blaiserboy]

You might consider doing some research so that you have some statistics to use in establishing your stop loss.

What you might do is set up a spread sheet and document 100 or 200 entries...... record the entry, the adverse travel, the specific set up you used.....

Get an idea as to how many different entries you have on that rainbow system, the average particulars of each.. and that will guide you as to which entry is successful and which settings you prefer to use.

I well realize that to be a lot of work. however it will quickly point out to you the entries that are costing you money as well as the entries that pay you well.

The closer you study your entries and the more statistics you make..... the better will be your decision making.

Rainbow is very lucrative once you have several months of screen time invested in it

[TopsandBottoms]

Originally Posted by Op3nTheJar

Hey there Jordan here,

Back to complain :P. Not really I just want to share something and get some feedback, some reassurance. Three subjects I want to hit.


NUMBER 1 I do believe I've found the bulk of what I need to trade forex . I've made a breakthrough, I can finally look back on all that stuff people tell you that you don't want to hear and say thanks guys, you were looking out. Discipline! It's a bit shakey but I feel it solidifying as I go.

NUMBER 2 Two weeks ago I started trading with one system, one stoploss and a sort of running take profit. The system looks good but I think its flawed big time, the entries seem to form at the peek of a move so the only way to profit, there would have to be a more substantial move in the same direction after entry. I back tested this system for a month and found pretty good odds but like I said it was only one month. I came up with approximately 564 pips gained and 200 lost. I found this strategy on "forex strategies revealed" it was a scalping strategy I thought looked interesting. I will post a picture it's called 'EMA Bands'. I've taken almost every opportunity and it seems that with live results i'm just slowly and surely losing my money through my stoploss. Here is the strategy.



This scalping system was sent by Frank Tenerife (Spain).

Thank you Frank! You contribution is greatly appreciated.

Here is the system:

"This is an efficient system of scalping that works in 1 minute up to 1 day all periods and all Currency

Ema 3
Ema 5
Ema 7
Ema 9
Ema 11
Ema 13
Color yellow

Ema 21
Ema 24
Ema 27
Ema 30
Ema 33
Ema 36
color Green

Ema 55 Color Red

Well
The system in The Oanda Forum.

And Way Works is

Buy Or Sell When the Group of Ema`s Yellow Breaks Ema 55
Take Benefit When Yellow Group Touches The Group Green.

If The Yellow group does Pull Back in Ema 55 or In Green Group Buy or sell again

Take Profit 10 Pip in Breaks Ema 55 And take Profit 5 pips In Pull Back

Stop loss 5 Pip 5 Minute Periods


NUMBER 3 I know I shouldn't think like this but it's hard not to when it happens so often. On three occasions in the same day, prices moved to my exact stoploss and went back the other way. Honestly I don't think brokers should be allowed to trade, since they do have access to our orders and all that good stuff ANYWAY, I want someone to tell me I'm just paranoid. Please!

I will be looking for a new strat to trade to start with on sunday, but I'm afraid I might be jumping the gun.

Well thanks for listening, NOW WHERE's MY FREE FEED BACK?!

I would also like to make a few points on the system, and systems in general now that I have read your original post over again.

- Demo trading is different that real-money trading, and sometimes the difference is purely psychological - I did very well demo trading for many weeks after a few weeks of consistently loosing demo money. I treated it as real money, and got stessed, etc when I lost demo money on the day (I roleplayed that well). I got back to break even on my demo account and made some profit on top, then I said, I've earned the right to play with my real money acccount (which was on hold). Lost a fair bit of money right out the gate, because it felt different and I had a hard time adjusting.
- In my experience a 5 or even 10 point stop-loss can work, but the statistics on it aren't very good over a series of trades. Remember that support levels aren't solid lines in the sand where the action will not cross, even if they hold. Minor noise on the charts can equal those 5 to 10 pips, and I rarely have a deal where I do not go at least 5 or 10 in the negative before it turns back in my direction.
- Remember that your spread automatically has you starting in -ve so once you pay the spread 2-6 for the major pairs during "average" market conditions.
- if there is major volatility or heaven forbid a big news release, a 30-50 pip stop-loss can be considered "tight" by some (including me). Look up the NFP dates for the last 6 months, and then check the action in the 30 minutes both before and after the release on EUR/USD or GBP/USD on your 5 or 10 minute charts to see the chaos, or better yet the 1 or 2 minute charts, as the daily and hourly will still look relatively smooth and normal - if your charting platform can go back to those dates. Also, even if you don't trade it, watch the next one, and see how crazy-wide the spreads can get - I remember seeing the price fluctuate by 30-40 pips in fractions of a second during the minute of the actual release and something like a 20 point spread on the EUR/USD for one of the last 6 NFP releases, but I can't remember which.
- Also, you mention your exact stop-loss being hit, and then the price reversing in the other direction and you imply that your broker is "stop hunting" your particular stops. This might not be your broker, for the record, but there is stop hunting, but it seems to be practical only for very large (i.e. big banks) institutions that have the muscle to move price with very large orders. When they do so, they, and the traders that follow them, will often gun for resistance/support levels, which means that not only will they try to hit that exact price level where new people tend to place their stops, but they will go below or above by a few pips just in case to grab the stops of people that put their stops too close to said levels. I've actually heard very new traders ask questions during webinars and such, to the flavour of "but I thought 1.3850 was resistance, so how come it got hit when it was supposed to be resistance?" This is when the price moves back and away, thus resistance/support is considered to have held. Hell, sometimes resistance/support is breached by 20 or so pips before the price is moved back and away, and is still considered to have held in hindsight.
- There is no holy grail system, imho, but there are holy grail traders, i.e. people that trade and make money consistently and over a long period of time. Some systems are curve-fitted to past trading charts or specific currency pairs and may crash and burn under conditions for which they are not tailored. This is why for me personally I would never trade a "system" or strategy that I didn't personally develop to some degree, and trade in real market conditions with the bare minimum position available (i.e. 1 and only 1 mini-lot) until I've had a few weeks with it, and made 10s or 100s of trades. I have applied ideas from various systems and other traders, but my strategies are personalized, and suited to my psychological characteristics, and deployed during certain market conditions, but they work on just about any pair I've traded, when I use them correctly.
- Also, losses are inevitable, but when they start to outwiegh your profits by a serious margin, it's time to start evaluating your strategies and your rules, which seems to be what you are doing by making this post.
- Different strategies should be applied to different conditions, i.e. a ranging strategy, a trending strategy, a sideways strategy. Some traders employ one strategy and only one strategy, and it works great for them, but what if markets fail to deliver those conditions for the day? For the week? For the month?
- In the end, you can always experiment more, and demo trade the strategy under different conditions and times, and learn when and where it works and when and where it doesn't to give you an idea of when and where to deploy it. Possibly look to using another strategy for the times when it doesn't work.