Great to hear that tymen!
I hope your health is doing as well as the progress you are making! Don’t neglect that! 
WOW! Okay, i’ll contact my broker and get some help on the backtesting area. Just yesterday only i was short on the usd cad, i looked for entries on the 5mins. Same situation as above, pips went my way and retraced and i got stopped out at BE. I re entered again and got stopped out at BE.
Whereas if i had just let the trade run, i would have decent amount of pips.
So different scenarios would call for different action. Won’t it be nice if it just went my way and retraced a little only! Hehe 
Btw, is your platform on est of gmt?
Yes, your goal will be to strike the perfect balance between cutting your losses short and letting your profits run. It depends on the volatility, time frame, pair trade selection, etc. One way to do this is to look at setting your “Move to BE Point” as a % of ATR. That’s because ATR reflects the volatility of the pair you are trading, in the timeframe you are trading, when you are trading it. This makes the back testing a little easier since you don’t have to test as many cases.
So for instance, right now I am trading the 4H on eu. 4H ATR is 47 pips right now, so if I were going to move to BE at 50% ATR, which might keep me in the best 1/2 of my trades, I would move to BE after +23 pips, which doesn’t sound too unreasonable. But if I’m trading a 15M chart, ATR is only 11 pips, and half of that, about 6 pips, just doesn’t sound reasonable at all. It sounds so tight that i would probably be kicked out of many very good trades.
One way to do this is to use a little more complicated formula, so instead of using b(ATR) where b is the percent represented in fraction, or 0.5 for using 50%, use b(ATR) +a, so we add a constant amount of pips to each calc to keep it from ever getting to ridiculously low.
So if I were going to move to BE at 50% ATR plus 10 pips, the formula is BE=0.5(ATR) + 10, or for the 15min ATR of 11 that would be BE=0.5(11) + 10 or 15.5 pips, so I would move to BE with a gain of 15 pips or more on the 15 minute TF for the current volatility condition.
For the 4H chart I’m trading, the formula would be 0.5(47) + 10 or I would move to BE with profit above about 33 pips. This also sounds fairly reasonable.
By varying the factors b and a, you can test different formulas out. If you want to make it just a little more complicated, you can add a factor for the TF you are trading, so you add a larger constant for larger TF’s and a smaller constant for shorter TF’s, or a formula of say BE = b(ATR) +a + c(sq. Root TF(in minutes)) . This formula will give more breathing room to longer TF trades, and less to shorter TF trades.
So, for example, set c=1 for the moment, and if we are trading the 15M TF example above, the square root of 15 is 3.87, or round to 4. Since we are going to add 4 as a result of trading the 15 M TF, take 4 off the constant a and make it 6 and the number for the 15M TF turns out the same, BE = 0.5(ATR) + 6 + 4 or BE=15.5 for that example of trading the 15M chart with an ATR of 11, or the same 15.5 as above, which sounds reasonable.
But if I’m trading the 4H chart, or 240 minutes, with the ATR of 47, the formula would be BE=.5(47) +6 + (sq. rt. 240) or BE=23 +6 + 15.5 or or, BE=44.5, or about 11 pips more than the simpler formula yield of 33 for the same conditions, which might prove out better in testing. You would have to run several tests and juggle formulas to get the perfect balance for your trading. Note that I set c=1. If you want the time frame you are trading to have more effect, you can increase c, and decrease a.
Well, that’s the basis of playing with this stuff. You can make the formula as simple or as complex as you like, with as many or as few variables (ATR, TF, etc.) and constants (a, b, c, etc.) as you like. I would suggest starting with something simple first Of course the simplest formula is just to always use a constant amount to move to BE, like a=5 or a=15, but you’ve already tried that and can see that the same constant amount won’t work for all conditions.
Remember when you were in High School and were forced to study algebra and you thought, I’ll never need this stuff. Well, now you do
When it is 1PM EST (13:00) it is 20:00 on my platform market watch time.
I was in chat and someone complained of being killed with whipsaws. You know, where you go long and the market turns short and you stop out, so you swap and go short and the market reverses and and turns long and you get stopped out again. The solution to this problem is simple. Pick a preferred direction to trade a particular pair for the day. You can base that on longer timeframe trends as I do, or on fundamentals, or on what ever you like, but only trade in one direction for a particular pair for the day. If a pair is ranging, you would try to buy low and sell high within that range in only one direction. You would not try to ride price up and down both. It’s possible you could pick the wrong direction for that day, or just make a bad entry, and still get stopped out, but it’s impossible to get whipsawed if you are only trading in one direction for the day. It’s as simple as that. Whipsaws can be forever removed from your trading. Happy Trading
Wow brilliant stuff graviton! Thank you so much for all that valuable information. Just let me copy paste all that into my notepad or something for future reference!
Just curious thou, when you trade everyday do you actually sit down in front of the monitor from 9-5?
After couple hours my eyes starts to turn heavy man. Or do you come back every once in a while to check on your trades?
I thought ofswopping to the 4HR and dailys as i would have more time for myself and when school reopens, it offers better time management and flexibility.
yes! There are times emotions get in our way and we want to revenge back on the market. We reverse our position and get killed once more! ouch.
Dear Graviton
Thanks so much for a great thread and for all of the teaching you have provided. I really appreciate it. You mentioned in one of your earlier post (on Tymens thread) that you wanted to help newbies from being burnt in the market. You’ve certainly helped me. I have learnt a great dealIf nothing else I have learnt not to use the stop loss as a way to exit a trade.
The expensive trading course I took last year taught me to trade using the daily charts and often our stop loss was 100+ pips. We were taught to expect to lose trades, even to lose many trades in a row, and expect to be stopped out. In trade after trade I was being stopped out for over 100 pips. As you can imagine, this didn’t feel particularly fantastic.
I can tell you that I have indeed seen the light and I am crossing to the other side. I still have a lot to learn but I know I am already a far better trader just from reading this.
I, xxxxbabe, do hereby pledge to always protect thy sacred trading capital. To always close my trades before they hit the stoploss. I will write a trading plan and demo test it prior to any more live trading. I shall study the ancient trading scriptures of TYMEN and GRAVITON until I can recite thy lessons word for word. And deliver myself from the temptations of greed and fear. Amen.
Hey there xxxxbabe!
Nice picture,maple story eh? lol
Hope you have a enjoyable learning journey ahead!
Best of all, it’s free!
Good luck
Yes, today I am trading the 4H so there is no need to be a screen zombie. I’m doing other things like planning a large bond trade and running errands. I check my trades once an hour or so, but I could just check them at candle closes. When I trade below 30M TF, I have to be glued to the screen. The more choppy the market, the lower TF I trade. When the market is trending nicely, I trade higher TF’s. I’d say, plan on needing to check your trades about two or three times on average for the time frame you are trading. So on 30M, you’ll need to check your trades every 10 or 15 minutes, which pretty much glues you to the screen all day. On the 4H, you can check the trade every couple hours or so, and many trade the daily just checking it in the morning before work, at lunch, and after work.
Glad you’ve seen the light xxxxbabe. I’ve posted just about every important thing I know about trading and it should be enough to put most new traders on a path to success. It’s a long path though and in the end, each must find their own way. Every once in a while someone mentions something, like the whipsaws above, and I realize there is something worthwhile I left out, so I’ll post it. Otherwise, I wish you many good pips along your way.
Oh i see.
By the way grav, i have a fundamental qns that perharps you could shed some light on.
I think ytd the US jobs unemplyment was out and it was worst than expected.
I noticed the Usd cad rise, due to the fact that cananda and us are large trading partners thus this might dampen the economy of cad, thus usd cad rise?
But the usd chf and usd jpy fell?
Is there a correlation in that?
thanks!
The dollar rose against most currencies as there was a flight from risk. Essentially investors were planning for another wave of recession in the world’s economies by cashing in everything and exchanging those currencies for dollars and buying US Treasuries.
The USD/CHF is an exception as most consider the CHF a safe haven currency. The CHF has been gaining value against all currencies, including the USD for the last 10 weeks or so.
The Yen has been gaining against the USD since June 2007. The yen is also considered a safe haven currency.
Since the Euro has major problems, and the USD is hurting due to a slow economy, someone with lots of cash to invest are investing lots of it in the Swiss Franc and Yen, essentially diversifying away from the USD and Euro. So how much cash would that take to move the Forex market trade long term in USD/JPY and USD/CHF? It would take LOTS of cash USD, on the order of tens to hundreds of billions USD. So who has that much in USD just sitting there with nothing to do with it but diversify it? Can you guess?
Hmm, could the answer be China along with the big banks?
Bingo. China. Part of the story can be found here, but it’s only a small part:
Is Diversification Out of the Dollar Real?
With a little research you can learn the rest. So what good does that do you? Well, for instance, knowing the big picture, you wouldn’t want to make any large long term trades against the Yen, Swiss Franc or gold.
Oh icic. So the chf is even a safer haven than the usd? I learnt something new again!
The dollar has been falling against the yen badly since 2007 and 2001 agains the chf. Deintely no way im going to go long on those currencies in the long term.
And by the way, isn’t the yen give 0% interest rate. There was a point in time whereby their interest rate hit negative right?
So why would people with lots of cash want to park their money with the yen as a safe haven? 
Anything to do with the carry trade?
Yes, the Swiss economy is strong. Their main problem is the Franc is so strong it runs up the cost of their exports. For the moment the Swiss National Bank has decided not to print Francs and buy Euros to hold down the value of the Franc, but they can change that policy at any time, catching the echf shorts in a short squeeze.
Yes, the Yen is at effectively 0% interest rate. They won’t let it go negative. But on the monetary side, the Bank of Japan will buy every bond issued in Japan, running down the cost of corporate and private borrowing and injecting massive cash into their economy. On the fiscal side, the government has announced the third round of fiscal stimulus, including a public-private partnership plan designed to leverage public investment funds with 3 to 1 private funds. I like this plan very much and only wish the Obama Administration was bright enough to do the same in the US,
So why park cash in the Yen? It’s proved a very good investment. Money parked in the Yen has returned about 27% vs. the Euro over the last few years. That’s very good income if you were parking say 200 Billion.
To learn more, read, read, read. Here’s an Economist article to start you off: Currencies, gold and bonds: The mysterious rising yen | The Economist
Knowledge is power. ~Sir Francis Bacon
Thanks for sharing grav! Now im seeing a bigger picture instead of just technical charts. You have been a great guiding light to me and i know a simply thank you is not enough.
Still, thank you
Thanks for the kind words. I do hope I’ve been able to do a bit more good than harm. There’s an old story about a traders nephew who came to work for a firm for the summer as a runner carrying orders to and from the pit. He was 18 and hoping to earn a little money for college. After a few paychecks he caught the trading bug and convinced his uncle to open a small trading account for him for a couple hundred dollars. That summer he turned the $200 into $20,000 which was a huge amount in that day. The kid was a natural. A very rare individual whose brain is just naturally wired for trading. Needless to say, everyone was very impressed, but everyone encouraged the kid to go on to college as he had planned and get his education, since he now had enough money to pay for a full four year degree. They told him the markets will still be here when he gets out.
The kid took the advice of his parents and the senior members of the firm and went to college and got his degree in finance. When he graduated he went right back to his uncles firm and took a job as an entry level trader. Everyone had high hopes for him, but he had no success. In spite of being paired with the firms best trader, he simply could not make a winning trade. After a year of absolute failure, he took another job at a bank as a loan officer and never went back to trading.
It seems the four years of study in finance had changed the way he looked at trading forevermore. He simply could not ever go back to the way he looked at the markets before he was formally trained. In trying to help the young man, and encouraging him to attend college, his mentors really did him no favor. I think of this story often and that’s why I encourage each new trader to find their own path. Perhaps it will look a little like mine, perhaps not, but it must be made their own. Happy trading
Just to follow up, the kids uncle was a good friend of mine. He went on to law school while working as a loan officer at the bank and obtained his law degree. He still works at the same bank and has moved up well as head of their trust dept. Other than participating in the bank’s 401K plan, he still does no trading and I doubt he ever will again. This isn’t an unhappy ending as he found his path in life. Perhaps it was a better path since many “naturals” at trading burn out young and die early. In any case, he is happy with his life and that’s what counts in the end, in my own humble opinion.
Burn out young and die early?
That sounds very pessimistic :eek:
I have my studies right now too, another 2 years to go before i get my degree. Similar footsteps as the kid you mentioned, just that i intend to keep trading while persuing my degree.
No doubt i will have to move up to a higher TF like the 4HRS or daily.
This offers great flexibility and lesser time need to monitor my trades.
Thanks for sharing the story, not the most motivating one i have come across i must say, but still it’s true we all have different paths to take.
This field is still very new and green to me and i defintely want to be successful at it.
Well i have some stats and for the past month, i had an account appreciation of 1% !! Ha, seems very measly i know. But im telling myself, not losing is already an accomplishment to me right now 