I have a question regarding the target profit level. In TMB’s video, he uses 50% of AD as his target one. I am just wondering if there are different targets for different patterns, Like does the butterfly pattern have different Fibb level of target setting as the bat pattern? And do we always use AD as the standard for setting targets?
Hello all. I have a question: in post #4, TMB says:“Please note that the “D” I use for any given pattern must land on or near (5 pip range) a fibonacci point. If price closes above or bellow the fibonacci line then I will close my trade.” What does that mean exactly?
It means, if the price closes (on the pattern timeframe) past the projected D point, then the pattern is invalid and he closes the trade as it is a warning sign of a failing pattern.
Hi shonick. I strongly suggest you to take the course on the baby pips school.
The calculation you are done is wrong. You must know very well what is a pip, how to calculate your position, your risk and everything before doing anything on the Forex market, or you can lose your account in a single trade. I can clarify what TMB says.
Let say he has an account with 10,000 USD, so he is risking 10% of his account on every trade, and is looking for a profit of 30 pips. What is needed to know is the Risk:Reward or as I like to call, the Profit/Loss ratio. For a good trader, a Risk Reward of 1:2 or P/L of 2/1 is good, so I assume the risk TMB is taking is 15 pips to win 30 pips. 15 pips must be equivalent to the 10% of his account, or $1000, so 15 pips = $1000.
He next need to calculate the position size, assuming he is trading EUR/USD with a default pip value for a full lot of $10 per pip.
What is the value of the pip in the trade is $1000/15 = $66.7 per pip. So if $10 = 1 full lot, how many lots are equivalent to $66.7? That is 6.67 lots.
So there, if the trade is winner, TMB had won $66.7 * 30pips = $2000, that is 20% of his account on a single trade. Repeat that once a day from Sunday to Friday, and you have 100% in a week.
Thank you for the response. I have seen, that TMB puts buy/sell stops at the fib levels. Would it not be better to wait and see, what price is making at the level? So, if price goes beyond the D point and comes back, it is more safe to enter at this moment. When price goes beyond and closes beyond, it is an unnecessary risk to have entered directly some pips before the level. What do you think?
Sometimes (frequently) the price don’t touch the D level again. I think this is the reason to place the entry trades.
I understand the system of TMB is like a stop loss protection, but a “logical” or “visual” stop loss, instead of a physical one.
A physical one is triggered if the price touches it, no mater if it is touched once and then the price goes on the trade direction. The visual stop prevents this. I think a combination of both are the best. A physical stop for protection for internet failures or something like that that prevents a disastrous loss in the case you can’t check the trade for a while, and a visual one to avoid the false breakouts. The risk calculation I think is the more conservative is using the widest of both stops.
IF you have to put a physical stop, TMB suggested that to put a stop to the next fib level. In post #4, as far as I understood, he meant that the D point (the entry point) should be at the convergence fib level or in 5 pips range from the fib. If the entry bar closes negatively to the entry fib point based on the chart time frame (not neccessarily the D point), then you close the entry to avoid a potential fakeout. If the pattern is based on 60m-30m chart, you look for the 30m chart to monitor the closing bar. If the pattern is based on 15 m or 5 m chart, then check the 5m chart for the closing bar.
There is detailed information about TP discussed in this thread. In brief, it is relatively safe if you take 30 pips as TP if you trade on 60-30m chart, or 38.2% of AD or CD (dependent on you agressive you are). In addition, it is suggested that you move the SL to b/e or around after the price reaches .236 of AD or CD (or 15 pips as someone’s practice).
Thank you so much. That makes thing clear now. One time, TMB mentioned that he always have 90% fund available. That leads me to the confusion on my part.
Thanks for the suggestion, I already done it. I should have time 1.3333 to the above formula to convert EUR to USD though. In my formula, I used 10% required margin for a position as I stated.
What I was confused is that he use visual stop. That means there is no fixed pip lost, so when he refer to 10% risk margin, and said that he always have 90% margin available. I though that he use 10% for the required margin. Since I have that thought, I got confused. Thanks for clearing up.
I don’t know I have never used FXCM. But I think Trade Station can support something like Expert Advisors, so it could be done, at least something to grab the trades from a metatrader.
Again, I’m not so sure that I understand what he meant with 20-35% of account margin in the US and 10-7% in Europe.
Did he meant the risk margin? if so, why there is a difference? In order to achieve the same return, one in the US may just put more required margin to a position(same lot). That would give the same risk margin though.
Or Did he mean required margin for a position? if yes, then from my previous concern, it will never match that 50-100% return per week.
Could anyone who understand this can explain this to me? thanks
Thank you for clearing it up. Another thing that gets on my nerves is trading time. TMB said in the very beginning of the thread that in order to avoid fakeouts, we should only trade patterns that formed within the trading session of the pair. Like right now, I saw both a bearish butterfly and bearish bat forming for AUD on both 15&60 Time frame at 1.0762&1.0765 which is only 3 pips away from each other. IMO this is a great setup, however the timing isnt good. Now its 4:15 am EST, and almost nighttime in Sydney. I am afraid this will turnout to be a fakeout. So do you guys trade patterns regardless of time period they form or otherwise?
short audusd 30m at 1.0758 (demo), when price crossed back down the XA127.2/CD127.2 confluence (ellipse). TP 1.0734, which is the 23.6 fib of AD and last S/R zone (red line).
I have never used FXCM. But I think Trade Station can support something like Expert Advisors, so it could be done, at least something to grab the trades from a metatrader.
