Risk/reward

[edacsac]

Thanks akeakamai,

No, I'm not feeling my method is anything. I'm not even feeling I have a method yet and appreciate all the input. This is really only about the 3rd trade I've made in demo since I've been learning forex. I appreciate your comment, thats for sure. I never considered volatility. I haven't looked at enough charts to even gauge volatility yet! I'm still running back to pip school to re-read sections as I come across different topics.

[ECN-scalper]

You are doing better edacsac.
And frankly, S/L setting advice of
25 PIPS is sad to say the least.
No wonder your record is so
atrocious akeakamai.
Every single one of your trades
get stopped out for losses eh?
Please, don't give out any more
advice to traders doing better
than you. Please!

[Andrewunknown]

Originally Posted by ECN-scalper

And frankly, S/L setting advice of
25 PIPS is sad to say the least.
No wonder your record is so
atrocious akeakamai.
Every single one of your trades
get stopped out for losses eh?
Please, don't give out any more
advice to traders doing better
than you. Please!

Akeakamai suggested widening stops on a specific TF on a specific pair to account for relative volatility, and recommended a 2:1 ratio. Is that a sufficiently wide SL? Perhaps not, but that depends on more factors than edacsac has presented here. If the objective is to earn 10 pips only on trades taken from a 30M AUD/JPY, for example, a 25 pip stop loss inappropriate. But a 5 or even 10 pip stop (2:1 or 1:1) is begging to get stopped out on a chart where the ATR is 150 pips.

Also, the validity of a general recommendation (that is accurate, in principle) about acknowledging volatility when placing stops isn't somehow contingent on that trader's rate of return or track record. Plenty of people who can't trade (not suggesting this about akeakamai because I don't know either way) successfully offer trading-related guidance and advice that is cogent and sound, even if they haven't or choose not to practice it.

Akeakamai contributes worthwhile content to this forum who has done nothing to break forum rules, so there's no need to call for his censure, which is the responsibility of none other than a moderator. And 3 trades in a demo account hardly constitutes "doing better" than...well, better than anything, except perhaps 2 trades in a demo account. I'm not trivializing edacsac's efforts by saying that number of trades amounts to nothing.

Contributing constructive, edifying content - correcting another, where necessary - and maintaining a positive environment for newer traders is what this forum is all about. Tearing down someone else's contribution - whatever their "record" is - in this fashion is not merited.

[akeakamai]

Originally Posted by ECN-scalper

You are doing better edacsac.
And frankly, S/L setting advice of
25 PIPS is sad to say the least.
No wonder your record is so
atrocious akeakamai.
Every single one of your trades
get stopped out for losses eh?
Please, don't give out any more
advice to traders doing better
than you. Please!

I actually opened a 30M chart of AUDJPY, I checked what the ATR has been like over the past few months and since ATR rarely gets above 30pips (ATR for past 100 candles is 17pips), I'd say my stop recommendation was very applicable advice. Just because you don't use a 25pip stop loss doesn't mean his system shouldn't.

Not even sure why you assume I use a 25pip stop loss. My stops are generally in the 50-100pip range, but I trade large TF's than edacsac.

[akeakamai]

Originally Posted by edacsac

Thanks akeakamai,

No, I'm not feeling my method is anything. I'm not even feeling I have a method yet and appreciate all the input. This is really only about the 3rd trade I've made in demo since I've been learning forex. I appreciate your comment, thats for sure. I never considered volatility. I haven't looked at enough charts to even gauge volatility yet! I'm still running back to pip school to re-read sections as I come across different topics.

Well I wanted to give you advice related to risk/reward because that's what you were seeking, but in my opinion your true problem is that you were trying to pick the top of an uptrend. That is very risky business, and I would recommend a strategy that involves trading with the trend (on a larger TF).

As for stops, that is a very complicated topic, and volatility is just a small part of deciding where to set your stops. If you've got any specific questions, I'll be around to answer them. And if you're worried that my track record taints my advice, just keep in mind that I'm just the average trader who starts off not knowing much and then learns more and more as time goes on. The problem (to some) is that my results encompass my entire learning curve, and I understand it's not easy to see that I have improved a lot in the last 3 months by those results.

[edacsac]

I hope my post wasn't the cause of any hard feelings. I appreciate everyones input, and I thought posting an image of my trade would stir up some conversation. Everyones opinions have been very useful. I've learned two things through this post: considering volatility and ATR (which I have to learn what ATR means).

The only reason I have only 3 demo trades is because I'm spending time watching. I treat my demo account like it was real. If I'm going to do this, I'd like to be at least moderately successful.

I'm not sure I have enough experience to just jump in to longer time frames. I'd like to, and I know I'm on demo, but I want to stick with sound MM habits. I don't know if I have the breathing room for longer TF's - especially if I'm using too large of s/l's for small timeframes.

Thanks again for all the great advice and opinions! I'm going to be jumping in more with stupid questions as I progress (I promise to search first), even if just to liven things up a bit with discussion .

[akeakamai]

Originally Posted by edacsac

I'm not sure I have enough experience to just jump in to longer time frames. I'd like to, and I know I'm on demo, but I want to stick with sound MM habits. I don't know if I have the breathing room for longer TF's - especially if I'm using too large of s/l's for small timeframes.

Oh, I didnt mean to say that you have to trade longer TF's. I mean you can gather the overall trend from a larger TF (say 4Hr) and then use that knowledge to only look for buys or sells on your 30M timeframe. This weeds out trades that are more likely to get stopped out just because the overall trend is going in a certain direction.

[edacsac]

I would actually like to start looking at longer time frames. I just think my initial deposit will be too small to do anything close to a swing style. Also, when I look at my 3hr chart (Oanda doesn't have 4hr chart), it's more of a couple month view. How much history do you take into consideration for the TF your actually trading on?

[Andrewunknown]

Originally Posted by edacsac

I would actually like to start looking at longer time frames. I just think my initial deposit will be too small to do anything close to a swing style. Also, when I look at my 3hr chart (Oanda doesn't have 4hr chart), it's more of a couple month view. How much history do you take into consideration for the TF your actually trading on?

Every TF has what Raghee Horner has called a "market memory", or the duration of time/historic data that remains relevant for the current period. For a 3H (and 4H) chart, that is approx. 1-2 months of data, as Oanda displays. 30M is about 2 weeks, 15M 3-5 days; 1D is about 1 year. This will vary somewhat for each pair; and as you trade you'll get a feel for how much previous market activity to consider when performing analysis.