Many old school traders who still trade today consider the following publication to hold a lot of validity, even in today’s markets (the book was first published in Dec 1998) : Technical Analysis of the Financial Markets: A Comprehensive Guide to Trading Methods and Applications (New York Institute of Finance). It’s been nicknamed the “bible” of trading from a PA/TA prospective.
Admittedly, it does start from the absolute basics up to more in-depth information; although its real benefit comes from the fact that everything is quantified (which in my personal opinion should be the number one goal of any PA trader). Without quantifying your trade plane from entry, exit and all of in-between it becomes incredibly difficult to replicate success and avoid loss making decisions. You really don’t want to have a subjective trade plan, rather it needs to be an objective trade plan which agrees with a fixed non-negotiable set of rules that must be apparent in the market place at a specific time for a trade entry to be validated. This rule set is applied to the market every time - ultimately the only variable is the market - your trade analysis is identical every time with no discretionary element.
At the end of the day I don’t need to know how you trade, i’m sure as time moves on you will be able to paint a picture of your performance and evaluate the areas that you might want to focus more attention on. This is perfectly normal.
Trading really isn’t difficult - what’s difficult is learning the correct material!
CRA has a rule that if you are an active trader that you must declare your income as regular income. You do not qualify for capital gains. Day traders, active traders, etc. There is a bulletin they put out. I can’t find it right now, but I found another article that explains it in detail.
The market sees the SL as another order and tries to fill that. That simple it is.
If the market is in accumulation phase it will get to the SL eventually.
So be patient to enter a trade or do swing trade with 100 to 300pips SL based on higher timeframes or trade smaller timeframes with a tight SL.
In that case…based on what i have read through…some says thats the market market stratergy to gain profit…which is to hit ur stop loss and reverse back the trend…because theorically and logically…if u put stop loss at ur trading…it will visible at their system…or thats what i call it…thus, by hook or by crook the so called market markers will eventually try to hit ur stop loss to gain profit by manipulating the market…instead of clicking or visibly put ur stop loss…my suggestion is that u keep ur stop loss amount regardless based on PIPS or money mentally…just keep it to ur self…by yhe time it hits ur set in mind stop loss…u can just close the deals…to minimize the market manipulatiin by so called market makers…
I’ve also tried it in backtesting mode in which there is no counter party or market maker. So, that “visible” thing I don’t feel is applicable.
I’ve decided to change my strategy and manage my risk by going ridiculously small in lot size and then just riding out the market until my target is hit.
It is a good strategy though…but as far as profit making concern…its all come to rules of thumb…high risk high return…sometimes we just have to accept the losses in order to gain more… so far i used 1h time frame to determine the trend and closed order when against the trends around 100-150pips…its a 60-40% chances actually but there is risk management…capital will be protected…
Well, we’ll see what happens. With this strategy I’m using now (very small lot sizes), I’m using the 15m time frame and 1d time frames. The backtesting has worked well, with 100% win rate. Although, the drawdown has been huge on the account, I’ve figured out some sizes that even in Auguest of 2015 (double dip) that I didn’t stop out at the account level. Big drawdown, but it came back.
I know you can’t use the percentage return in the backtest to determine anything, but the return is roughly 50 times from 2012 until 2017. Starting with $1000 USD and ending up with $50000 USD. The number of trades is about 270-ish over that time frame with, as I said, a 100% win rate.
If I use way more conservative sizing, I can get the drawdown cut in half, but then the return goes down to 300% over the same period of time. Much smaller return, but still an amazing return if you look at it as an “investor”.
Either way, I feel confident enough in the EA I created to put $1000 in and see what happens. Fingers crossed, so far so good, but it’s only been since Thursday. But, it is acting exactly as I expected it to.
I don’t recommend this approach. The reason being, if there is a price spike such as market news or some unforeseen event that causes the price to go parabolic in mere seconds, the risk of taking a much larger loss than anticipated is far more dangerous IMO than using a hard stop. I will take a 1 or 2% stop out vs. a 30% parabolic price spike against me. That’s just my 2 cents…
Yes…u are right…there is a risk also…for a long term traders with big stop loss should consider the fundamental analysis aside from technical analysis…thats why plan the trade is essential…especially when planning currency pairs to trade…
Okay, yeah that makes sense. You are less leveraged when trading longer time frames and profiting more off of movements over time, so I a sharp move against you wouldn’t necessarily wipe you out. I think hard stops are more necessary with intra-day trading on lower time frames. It would also depend on whether you play the news or exit around news events. Sounds like you play on news events as well, yes?
I don’t play binary events at all. I’m just using a basic MA trading strategy. However, I stay ridiculously small. For example, I started a $1000 account last week with this EA and the trades have been either 0.02 lots or 0.03 lots. I buy when it signals and hold it until a minimum amount of profit.
My EA uses both a 15 min timeframe & a daily timeframe with different parameters around each.
Using both timeframes in the backtesting turned $1000 into $93,750 from 05/2012 until 05/2017.
Yeah…but only news with high impact…usually closed my other trades hour before news releases and seek for breakout pattern, set a pending order up and down the trend…so far seem promising…well the fact is…it is not 100% guarantee that the situation will favour us…sometimes it might be false signal…but if it is more than 50% chances…it is worth a try…
That’s certainly not unbelievable, over five years, at all. 100 to 1 over five years is more than achievable from a retail point of view with a small balance. That’s about 250% a year, with yearly compounding.
However, i’d be more concerned that you hold a position until it enters an area of profit? How’s that fairing out for you?
That’s pretty impressive especially considering the small position sizes you are taking there. Hopefully you get similar market conditions going forward in real time to replicate those kinds of returns.