Alternative Technical Templates.

[Tess]

Originally Posted by Mr Average

I seem to find reasons to take profits earlier than I intended, even when I know I shouldn’t.

So that’s my next goal: to get into the habit of setting pre-defined profit targets (like my stops) and leaving them where they are.

If that's the only major hurdle in your armoury thus far, then you're sitting pretty.

Obviously, you'll do what feels more confortable to your aims & expectations etc, but I'd be careful about adhering religiously to pre-defined targets.

What that process does is instill rigid parameters into your strategy model & we all know that markets don't dance to our tune, neither do they play out where & when we want them to.

You could set your profit level at say 60 pips for 1st pare off & price nudges 52 pips before falling back & hitting your stops?

What you gonna do if that scenario begins to (regularly) play out??

Would it not be more potentially productive to trail your initial (profit) stops behind a technically relevant move up or down on your chart template?

That way you can pare off at a convenient technical level on the move if you're trading more than 1 lot. The remaining lots can then be trailed to a specific bar count, or technical level to test the intent of the entry-price move.

Just a suggestion.

But it would definitely pay you to explore those options before rigidly applying a set procedure to your strategy. It can be dangerous from a psychological viewpoint to allow your mind to adopt a principle which doesn't afford a degree of flexibility.

Markets are fluid, uncompromizing animals. They ignore rules & don't recognize orderly behaviour.

Your strategies must allow for the unexpected & plan for the unknown

[Mr Average]

More excellent suggestions Tess. Much appreciated. I hadn't considered trailing my stops. Definitely something to think about.

I guess I should've explained how I've been managing trades before using a word like "pre-defined."

At the moment, I only enter a trade if there seems to be a relatively clear path to 1R, at which point I take half off the table. Also, when initiating the trade, I try to identify likely profit-taking points (turning points - based on previous price action - as well as 50 and 00 levels, as opposed to a rigid fixed pip count. And that's where I run into trouble. Once I've taken my 1R half, I start looking for faults in my profit-taking points and find reasons to take the next portion early, which knocks on to the next portion, and the next.

Before I know it I'm all out or down to my last portion, watching the price hit the areas I'd originally earmarked to take more off the table. And feeling pretty daft.

[johnnykanoo]

Mr A you are an inspiration to me. Ive been messing in fx for 2 years but only the past month have i really been getting serious in my trading. Im still trying to define my own system and like you I work. In an ideal world I would be able to stay in front of the charts all day. How did you decide on your rules? Also Does anybody have any good advice for me in helping me define my trading rules. Tess,Tony, and Joceyln you guys have been a big help to me so far.
Many thanks, John

[Jocelyn]

The "running your profits" part of your trading plan will iron itself out as you become more experienced & familiar with your strategy.

A good deal of those types of quirks can be attributed to confidence. The more you play to your rules & the more consistent you become, the easier it will be to implement that specific element of your plan.

At the moment you're still in the honeymoon stage. You're seeking confirmation that your tactics actually work over the mid term. That's natural & can't be rushed. Just take your time to ensure you're engineering the entries in accordance with your research first.

Once you get your triggers, set up's & risk management sorted, you can then turn your attention to aspects of your exits & profit management.

I agree with Tessa, it appears you're constructing a template based on sound & sensible principles. They'll hold you in good stead going forward.

[Mr Average]

Thanks for the reply Jocelyn. I take your point about consistency. That's what I've been focusing on so far regarding my entries - now I have to maintain it. Also a good point about the honeymoon period. I'm not going to get carried away. If I can reach my 2R-per-week goal and keep it up for, say, 12 months, I might think about giving myself a pat on the back. Until then, it's one trade at a time...

[Harry Potter]

Wont let this thread slip to page 2

So anyway, I just finished reading all posts... for the second time, and wanted to say thank you for all who have participated in sharing ideas. I can only join Mr A. in pretty much every thing he said. Im a rookie in forex too and with the information gathered form the thread i managed to get about the same results he did. My money management is slightly different but the rest of the methods is identical. Thank you all again, very impressive and valuable thread you have put together.

Keep up!

[Mr Average]

Good to hear, Harry.

I was just wondering if any of the thread's protagonists would be able to comment on something I've been thinking about. As I mentioned, I found that divergence improved the win/loss ratio, as did S&R entries on/around the 00 level, so I was thinking...

Would it make sense to weight your trades according to how much confirmation you identify. You know, 1% on a trade that meets your minimum requirements, 1.5% on a trade with additional confirmation, 2% on an entry with more confirmation, and so on.

Not sure if it's a good idea, and if it is I'm sure it's not an original one, but any thoughts or ideas would be appreciated. I'm not particularly mathematically minded, so feel free to shoot holes in what I've written if it's rubbish.

[tonymand]

Originally Posted by Mr Average

Good to hear, Harry.

I was just wondering if any of the thread's protagonists would be able to comment on something I've been thinking about. As I mentioned, I found that divergence improved the win/loss ratio, as did S&R entries on/around the 00 level, so I was thinking...

Would it make sense to weight your trades according to how much confirmation you identify. You know, 1% on a trade that meets your minimum requirements, 1.5% on a trade with additional confirmation, 2% on an entry with more confirmation, and so on.

Not sure if it's a good idea, and if it is I'm sure it's not an original one, but any thoughts or ideas would be appreciated. I'm not particularly mathematically minded, so feel free to shoot holes in what I've written if it's rubbish.

Why not just trade the entries with all the confirmation and keep your win/loss high. That way you can afford the 2% risk without excessive drawdown.

[JimmyMac]

Originally Posted by tonymand

Why not just trade the entries with all the confirmation and keep your win/loss high. That way you can afford the 2% risk without excessive drawdown.

Yeah, I got to agree with that view.

You should really be restricting your entries to Grade A set ups anyway, as has been alluded to on here by the girls.

The tighter you wrap your strategies, the less likliehood for too much extended drawdown, particularly if you're operating intra-day or short timeframe strats.

Get your quality sorted & wait patiently until the real sweet trades begin showing their hands. You only really require 2-3 well qualified opportunities per week across 3-4 pairs to maintain your consistancy.

Let those who haven't sufficiently prepared their templates take on the skewed risk. Don't be in a rush to pre-empt a set-up or step in front of a dodgy, half assed signal.

[Mr Average]

Originally Posted by tonymand

Why not just trade the entries with all the confirmation and keep your win/loss high. That way you can afford the 2% risk without excessive drawdown.

I guess that's the logical conclusion.

I suppose I was thinking that, assuming your basic/minimum requirements to take a trade are profitable in the long run (without whatever you might consider as additional confirmation), then you're assured of a positive outcome (well, as assured as you can be given past performance). And if that were the case, and you then weighted trades with additional confirmation with a higher percentage of risk, wouldn't that be a good thing?

For instance, say I identify my S&R zones and the dominant trend, wait for an IB or OB trigger, as well as divergence with stochs. That's my basic requirement and, based on past experience, I'm happy that this is enough to be profitable. However, say I also noticed that on the rare occasions when that basic set-up occurs in conjunction with one of the higher level fibs, the likelihood of success is even higher, wouldn't it be wise to put more behind those rare once-in-a-blue-moon trades when everything lines up?

I'm talking rubbish again, aren't I?