Still on 1% risk Cyco? such a great thread.
The NFP Trading weeks are incredibly slow. I normally have averaged at least 5 Swing Trades by this point in the week, however I just closed out my 2nd trade today. Thus far I am up 45 pips, but cannot wait for NFP to pass tomorrow so we can all get back to trading!!
Nice job Cyco coming in at 9.73% gain!
Hey Cyco, had a quick question about this trade. The bishop seems to have been in decline since 17/05/12, how did you only encounter it on 25/5/12?
Also there seems to have been a dip in the ADX (above 40) around 11/05/12 as well which would have gotten you out much sooner?
Thanks
mozdef, my chart shows a flattening of ADX on about the 13th, but it doesnāt show it dropping till about the 23/24th
mozdef,
Iām not sure what platform youāre using, but the base ADX indicator on MT4 isnāt actually the ārealā computation of ADX as per Wilder so it disagrees with many other platforms. It doesnāt include the recommended smoothing of the ADX line and so it can be a little premature. I only mention it because Cyco has mentioned he does not use MT4 so he may have a properly smoothed version of the indicator.
Cyco,
I notice your trend reversal seems to be quite a bit like something Iāve used (I lifted the idea from Chuck Lebeau) since āVā reversals seem to happen quite often in forex. You might find it interesting to read his very good method of spotting and entry. Old entries of his traders system club have the description (I donāt have enough posts to link for you).
Ahh I see, Iāve downloaded the proper one now (I think).
Btw Cyco, I notice all three of the main strategies in this book are trend following (trend analysis, conqueror, channel breakout). Do you think it may be useful to also have 1 or 2 mean reversion or range trading strategies? There are many managed funds who mostly do trend following and there are some negative years due to the fact there are some better years than others for trend following strategies. I found Smithās assumption that these strategies will always give you positive years a little baseless. If that were the case why wouldnāt hedge funds use these exact strategies and make positive returns every year?
Hi Cyco!
Itās been a while, mind giving us an update regarding your positions/progress? Itās always very reassuring to check my positions with yours to make sure Iām not messing it up 
Thank you!
mscmorris: Iāll do some reading about Leabeauās system - more knowledge would be helpful in this regard.
mozdef: Until proven otherwise I have to take Smithās work that he never has a loosing year using his trend following systems. I certainly, whilst having some negative months, am massively up so far on the back of his system.
I suspect the hedge funds have several motives - keeping their employees busy when no trends are happening; keeping income at a flatter rate (makes prospectus look better); and attempting to maximise ROI.
My situation regarding there is: I still have a full time (50-65hrs/week) job, plus other activities (sports coaching, etc) so my trading time is already limited. Removing negative months would obviously increase my account position, but Iāve not come across a strategy/ies that are quick and easy to implement at this point in time.
The biggest issue big funds have is they are big. They can only invest is very large, liquid markets or they will distort the market too much. Attempts to catch a breakout when you have huge money can result in a great deal of slippage and cost you a lot of profit in the process. I am in the process of reading Nick Leesonās book and this is one of teh issues he describes as leading to his looses - he couldnāt just ditch his bad trades as the would distort the market due to volume.
cyanidez: I your last couple of weeks have been positive then you are doing better than me! Iām down about 4% this calender month at the moment.
Hey Cyco,
Have you made any changes to smithās systems? Iām up to the channel breakout, I skipped trend analysis and started reading from the psychology chapter and then moved back to the start.
On fig 3.3 p41 pound with the ADX, I canāt find exactly where in the book but does he ever mention loading up at a retest of the 55channel after a significant move away from it? so in fig 3.3 is there anywhere you would load up in the direction of the trend after an initial entry or is it just one entry per trend based on a mechanical perspective.
When you started out how where you keeping your journal, was it just through the spreadsheet?
Hows trading on the 360 platform? Iām russling up some MT4 hotkey thing that will automatically load templates as a hotkey. I was thinking about cancelling everything else and getting with GFT, hwo are they going with switching over to the UK laws so hedging is available? In the beginning where you just entering everything willy nilly if the mechanics of the setup where valid?
I tend to trade Smithās systems as has printed them (I have been known to get it wrong). He has spent the time to test and refine them and until I feel like paying for some serious testing software Iāll leave them as they are. He does mention that all trades should be taken with a view of the fundamentals in mind, and Iāll try and do this, but the success rate seems to imply I read the fundamentals the same way he does, or they are rather immaterial. In the chapter on the Kelly Criteria he mentions a 45% win rate, and on his systems I am currently running at 43.69%. I do test other methods though.
If the market moves away from the channel and then breaks through again I just treat it as if the market had been on the edge of it. Its a breakout, or it isnāt.
The spreadsheet is my only journal, I record the occasional note on it (like on Monday - WTI.cfd āWAY too large a trade. F***ed up ATR calculationā) but generally it is just a log off all trades with - as you have seen - a small amount of extra dataā¦
I like the 360 platform in may ways more than the MT4 one. It is much prettier, but MT4 is far better if you wish to use EAs and do lots of customisation. GFT Au have not been able to do a switch, but allow any AU customer to set up an account with GFT UK to allow suspension of FIFO rules and allow hedging (if thats what you want).
boo ya 43%ā
When I was reading through the channel breakout chapter in my assimilation I thought he had said that the bounce mid oct from fig 3.3 would setup for another position short (so 2 positions for the same trade) on the retest of the 55 channel, is this what you took from it.
Is your trade risk formatted with the kelly formula or 1% flat? :64:
Would you post all the instruments you are trading with the smith systems?
Edit: if this is just a diary I will get rid of these posts.
I find that there can be more than one way to read what he has written at times. Makes it hard to āflawlessly executeā when you canāt work out exactly what you are trying to execute!
My trading is 1%ish - depending on number of lots if it is just over the 1% Iāll normally take it to something a fair way under.
Iāll trade anything I have the capital for! Iām mainly trading the currencies of AUD, CAD, CHF, EUR, GBP, NZD, JPY and USD. Iām also trading Gold, Silver and WTI (West Texas Intermediate - Light sweet crude oil).
Hey Cyco, this is an extremely insightful thread! Thx a lot!
The trading style and approach is exactly what I was looking for: time friendly (I do have a full time job too), and dumb - I mean, once the indicators have been set up, it seems that you donāt need to reflect much. Green buy, red sell, no emotional calculations involved. Iāll definitely go through Smithās book.
I have a doubt on your strategy: are you risking 1% per position or is it the risk compare to your whole capital?
Having some trouble with 55 20, do you have orders sitting and update each day as recommended or do only place orders @ market when you are doing your 20 mins in the morning? All Iām getting so far back testing 55 20 is stop outs, going through day by day.
With correlated pairs are you trading everything in sight or staying with the first pair to fire off?
@ max2pips itās 1% acc capital or less than
If your only setting up once each morning how do you determine if the next dayās orders will be in step with with ADX entry filter for 55 20, is it something to do with the +DI and - DI?
max, its 1% per trade, calculated with each trade.
I will have orders sitting there if the market is heading towards the channel, for example if the market is heading up towards the top of the channel I wonāt have any short orders in. I have missed a few entries this way on fast reversals, but many of those donāt seem to last so Iām not too bothered. ADX is slow to respond, so if it has been heading up for a week or so it takes a big move in the other direction to make it head down again, so I can be fairly safe leaving a stop order on a channel for weeks at a time.
For correlated pairs I just trade everything! Tends to give bigger swings in floating profit, but it seems to be working so far for me.
When you are entering on the channel breakout are you leave a relatively wide stop for the sitting order say a 1/3 of the 20day stop (discretionary) and then within the first 2 days of getting into a position the rejection rule (RR) can be used to stop out the trade but the close for the day that the RR is triggered is higher than the sitting stop order will you just exit @ the mkt (well at the close because of the time you are up viewing the just closed day) based on the RR?
Here is what I would have done, attached is a picture and each number point is for the actions I took on that day at the close of the market which hypothetically I would have checked only once for the day at 5am when NY closes. The thicker pink line is 55 Price Channel Top (PC Top)
1.
Order Sitting Buy .8937
Order Sitting Stop .8775
Bar Info:
O= .8840
H= .8865
L= .8775
C= .8844
7.
Enter .8937
Bar Info:
O= .8886
H= .8986
L= .8885
C= .8935
It closed below the initial breakout from I think now I would have stayed in the move because it seems insignificant even though this would be against the principal of instant gratification and rejection rule.
8.
Exit .8830 (Rejection Rule)
Bar Info:
O= .8933
H= .8941
L= .8810
C= .8830
Flat, no sitting orders.
Should I have exited at bar 7 on with the rejection rule clean and simple?
Should I have altered my sitting stops from bar 1 to something a little higher as price consolidated from bars 2 to 6.
Is the instant gratification rule king?
P.s. ADX entry filter was in the clear when getting into the trades, would you speak on that how that affects your entry when it is a slight down tick, do you cancel sitting orders.
In this case Iād have a stop order (long) placed at 0,8934 which would be tripped into action by bar 7.
My position size would be calculated based on the 20 day low created by bar -8, and when I view the trade on ābetweenā 7 and 8 I would place my stop at the bottom of 7, maybe 6.
Rejection rule would not be needed as the stop would be tripped by bar 8 or 9.
So your 1% risk is calculated from the entry to the 20day channel, but the stop would still be set by rejection rule or last bar technique?
The entry would be be tripped between 6 and 7 and then closed out based on the rejection rule according to the book; defined as any close below the initial break out (in this case the close of [B]7[/B] is 2 pips below the entry and 1 pip above PC Top)ā¦
because this is such a tiny tiny amount would you just leave it be and keep the discretionary stop (now that I think about it at the end close of [B]7[/B] [so on the morning of 8 xD] I would have changed my stop to the low of [B]7[/B]) ?
In the scenario of the close being too close to tell just above, RR should kick in at the close of day [B]8[/B], is this right?
From my thinking 5 day condition is in place and price has closed below initial breakout level within 2 days from entry. Is the initial breakout level the 3 pips outside the 55 channel or PC Top.
Hi Cyco, this is a great thread. I have started demo trading using channel, conqueror and trend analysis in the last few weeks, and hopefully can learn the ins and outs of each method over the next few months. I have only ever used day trading methods in the past, so this is new and I canāt wait to learn more. Any updates on your trading?