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45

Thank you for the quick reply. It’s all about learning for me and there is no problem with having different minds :wink:
I now see the edge No-SL is giving. It eases the psychological aspect of the trading. Your method can be profitable until the market crash/reverse consistently. All the trick is to see when that crap’ will occur and then close your positions. If you don’t, you can lose everything.
I still think that using stoplosses is way better because, as you said, you just cut your loses, instead of having the probability of losing months of work in just one day. This problem wouldn’t occurs the same way on other markets. For instance, raw materials, which are (unfortunately) correlated to the USD inflation, should never crash. Of course, you lose the benefits of the interest rates, but I think it may be a better option.

What do you think about it ?

Ps: I may be a bit direct in my posts but only because my vocabulary is limited :slight_smile:

46

You are welcome nuKs, and I could also seem direct as English is not my mother tongue. I express myself better in French or Spanish.

You are right about the psychological aspect.

For the remaining, I have to say that I have calculated what I would add to my account in order to keep my losing positions starting at the worse moment and enduring the worst case scenario draw-down. This is what could have happened in summer of 2008 when audjpy went from a peak of 104 all the way down to 55 in 3 months losing about 43%.

In the hypothesis of having started buying at 104 which was, and it’s still is the historical top, and buying all the way down according to plan I would have the following positions: 104, 103, 101, 98, 94, 89, 83, 76, 68 and 59. Ten positions of 0.01 lot each for a total of 0.1 lot and an average price of 87.50

All the way down, during those 3 months, I would have had to add to my account for a total of 4490 !

Yes, it’s a lot of money in regard of the initial 100$ deposit but we must consider that, that bad case scenario has happened once in history and that the probability for it to repeat again is low. Not meaning that we have not to be prepared for such a similar case.

As long as you have some cash in reserve just in case, and that you have sufficient margin to allow at least 5$ draw-down in one day, you can sleep well waiting for the trend to reverse if you are in a losing position and cashing the swap during that time.

Thanks for posting,
Regards.

47

broketrader,

As I posted before, your no SL method isn’t a real problem for me but your leverage and especially your size lot seems to high compared to your account.
0.01 lot (ie 1000 units) for 100$ seem too high for me as I only trade batch of 7 units (having a take profit from 9 pips to 99 pips and even more according to situation).
That’s the only point I don’t match with you, your strategy seems really interesting in all other points :wink:

48

Zeuhl50,

First, I cannot trade less with my current broker but don’t want to change now.

Second, you are right ! 0.01 lot is quite high for a low balance of 100$, but even with such a low balance, I have enough time (margin) to see a major down-trend coming and eventually add the necessary cash to my account. I was aware of that from the beginning.

The funny thing is that if I have some luck from the start having the account growing a little, It would mean that at next draw-down I would have to add less money to my account.

But the more important is that I need to start low to build confidence in the system, also compare the numbers of my broker with those that I have on my excel sheet and verify that I’m doing right.

I’m verifying my instruments before taking off. That’s good for my safety, isn’t it ? :cool:

Thanks for posting,
Regards.

49

Hmmm, I’m must admit I don’t see the advantages of spending 45 times your initial amount for frugal benefits, however the drawbacks stand obvious if the nominal swap profits are below the inflation. Moreover, the interest rates seem to reverse on long period, which could give you a negative swap.

50

I agree with your point about draw down as we all have discussed before.
About interest rates, it’s easy to switch to another security and take the advantages of it, especially if you can open a sub account in another currency :wink:

51

Maybe. it’s a possibility, but I think that the swap is not the most important parameter in this strategy. It just helps you to feel better while waiting for the next uptrend. You get by far more profits in any uptrend.

I could say, swap is important and fun to have but not crucial.

53

As I have just done, I will, on a monthly basis, publish this system’s performance by updating a graphic at the bottom of the first post.

54

hi broketrader, your trading strategy sounds promising…i will be following your posts and updates regarding your live account…please never stop what you are doing…detractors, pessimists, antagonists, etc. etc will always be there, so don’t pay any attention to them…

i too trade without SL due to the nature of my strategy and people who do not and cannot understand this should just keep away from this thread…

now broketrader, let’s rake in some pips!

55

Hi Actu,

Thanks for your post !

And be sure that I no worry about detractors and other insulting people out there as I have not being developing this strategy for them but for myself and just wanted to share it. That’s all !

Good to see other more open-minded people like you, but also Spronx, zeuhl50, nuKs and Banker928 and certainly others that I forget which are curious and help with their contributions.

Cheers.
BT

56

Hi all,

During the past 2 weeks, I noticed that I was leaving too much pips on the table, and this is why I decided to reduce the space step between each trade from 1$ to 0.5$ and also to modify the multipliers I apply at each step to calculate the next buy level. And according to my spreadsheet, the strategy is viable starting from current price levels of about 81.

you have to understand that if prices were higher, this would not be possible as the possible draw-down to face would be of a greater magnitude of what it can be from today.

That means that the spacing number (0.5 now) and the multipliers (see below) have to be adapted according to the price of your first order.

For example, if you trade all the way up to 104 before a draw-down, you will finish with having an open position at that level, which will become your first order, and starting from there, you should change your numbers to say, support a draw-down of 50% without being forced to add to your account no more that 4K or 5K or whatever you can.

Below are the multipliers I utilize now:
1,1,1,1,2,2,2,3,3,4,4,5,6,7,8,9,10,11,12,… and so on.

The formula is: Next buy price = Current buy price - (multiplier*0.5)

That means that with the fist buy @ 80, subsequent buys are at :
79.5, 79, 78.5 ,78, 77, 76, 75, 73.5, and so on…

Don’t forget that with a first order at an historical high you could keep the spacing number at 0.5 but maybe change the multipliers to 1,2,3,4,5… and so on.

Regards.

57

A little update…

I have again shortened the grid (spacing number) to 0.3 instead of 0.5 and I’m having good results. The month is not yet terminated and I’m having a net return of more than 30% so far.

The attached image tells the whole story. If you have questions, you are welcome to ask.

Kind Regards.

october-2.jpg700×307 27.4 KB

1 Like
58

Your strategy seems to work very well so far.
I’m eager to see how it works when trends are pulling back.

Good work anyway mate :wink:

59

Hi, zeuhl50,

Thank you for your encouragements. I’m also eager to see how that works in a downtrend.

And also, how I will do myself, because it will also depend on me, on my ability to see the next draw-down and let it unfold a bit, not entering too early.

I didn’t write my rules in stone and self judgment and care is necessary mainly when prices are high and that the potential for a come back increases.

As an example, you can see in the picture that I have an open order an 82.494 (82.5) and normally, according to the rules, I should have also bought at 82.2 (82.5-0.3) on the retracement but I decided to not and instead waiting for the trend to resume or not.
You see, this is the kind of care I take when riding an up trend because we all now that sooner or later it will end.

If it goes through 82.8 (82.5+0.3) I will enter, then putting a trailing stop at the same time on my 82.5 order to lock-in profits and then wait for the 83.1 level and so on. Each time I add (0.3) to define next buy level.

At some time, a down trend will begin, my last order will remain open and I will have to wait and see and let the draw-down unfold. Maybe, I will have to wait some days before I have again comfortable prices to work with, I mean around 81 and below…

60

Does your broker allow hedging ?
If it does you could cover your positions in a safe way :wink:

61

Yes, I think it allows. Please develop…
I’m also updating my first post to reflect my changes…

62

With hedging system, you could have a coverage strategy and have winning positions regardless to the trend.
I assume you know the principle of hedging :wink:

63

Yes I know what it is, but I haven’t yet found a way to have a good hedge on this pair without paying swap.
Do you have something particular in mind ?

65

Today we had the CPI release which was of 1.4% vs 0.9% expected.

As of FF :“Actual > Forecast = Good for currency;”

“Consumer prices account for a majority of overall inflation. Inflation is important to currency valuation because rising prices lead the central bank to raise interest rates out of respect for their inflation containment mandate;”

So the today’s release mean that the RBA [B]should[/B] not lower it’s interest rate on it’s next meeting which is good news for us.

Kind regards

66

Really, I’m not finished with the handling of my numbers. But with each passing day, the system improves, the ultimate goal being to always remove a maximum of risk.

So now, after a study of the past draw-downs, always on the AUD/JPY pair, I found that regularly occurred two types of draw-downs. The small ones in the order of 5% and the larger ones, in the order of 12% starting from the last peak.

To this we must also add an exception, that of 2008, which reached 47%!

With this in mind, I decided to make the following changes to the system.

  1. The calculation of the size of the legs in the grid is no longer fixed in pips but instead, in percentage points over a range of 12%

  2. The legs have to be larger if the value is above 81 and that in proportion to the distance between the current value and the level of 81. And smaller below the 81 level and being a multiple of 81by steps of 30 pips.

  3. The maximum number of purchases should be limited to between 8 and 10. It is in this way possible to support a larger draw-down, at least up to 45% and survive, obviously having fed the account throughout the descent.

Here is a practical example:

I currently have an open position at 83.40

By applying the rule of 12% drop spread over 8 positions, I could take a position every 1.5% so, my next purchase will be 83.4 - 1.5% = 82,149, which rounded to 30 pips is 82.2

I obtain the following table:

CP NBL FT MUL STEP

83.4 82.20 -1.44% 4 1.20 <- CP here is our first buy
82.2 81.00 -2.88% 4 1.20
81.0 79.80 -4.32% 4 1.20
79.8 78.60 -5.76% 4 1.20
78.6 77.10 -7.55% 5 1.50
77.1 75.90 -8.99% 4 1.20
75.9 74.70 -10.43% 4 1.20
74.7 73.50 -11.87% 4 1.20

CP = Current Price
NBL = Next Buy level
FT Distance from first buy
MUL 30 pips (or 0.3) Multiplier
STEP Resulting step = MUL x 0.30

Kind Regards