Like any business decision in any sector, the best decisions are ones based on hard data. Data that is generated from historical research or even better, data created from the business operations. I’ve based my decision on when to trade from historical research. Will these times actually reproduce in a live environment. Who knows. All I can do is collect this data and again analysis it in the future.
You will see in a number of my posts elsewhere that I believe time of day is the greatest filter a day-trader can use.
Thanks for the well wishes and best of luck with your journey bro.
When trading channels, we gotta let those periods wherein the trade is in the red but not stopped out go until they result in a stop getting triggered. If we don’t, we are trading something other than the channel.
It is common for trend followers to have a low win ratio (meaning they win less often than they lose) but the reason they profit in the long run is because wins are bigger than losses although less frequent. As Seykota sings: “One good trend pays for em all.”
I enter and exit just a pip outside of the channel. But when the price rolls on the MDMA (crosses the 200 day moving average) I enter in the new direction on the first break of pip further than the extreme of that day.
CHF/JPY gave me a whip on the ten day too since I was long from July 15. But I took profit in GBP/JPY on the 4 week channel.
But of course, this recent swing pushed my OTE higher. Long GBP/AUD since early May and GBP/CAD since June 15, those positions looks pretty nice today. Get a whip and a saw yall.
I was also stopped out on AUDNZD short but with no slippage. Stop was already trailed so damage was only -0.52R. Similar with EURJPY long, no slippage and -0.79R loss.
Indeed, as Ed Seykota sings ‘one good trend pays for them all’ and today’s event is evidence. Now the hardest part is to resist the urge to close out and let the winners run. Who would have thought that winning is so painful…
Just chillin, playing the waiting game. Got a short on the EU and a long on the UJ after breaks earlier today. So the wa-zoo is climbing up me insides slapping the grey matter about. News events out of the US could mean a bit of a wide ride. Positive news could see large moves in favor of the USD. Any signs of whipsawing and I’ll switch the bots off
Also switching back to FXBook. FXBlue, no sir I don’t like it
I checked out your fxblue link a few times and I found it very difficult to find the stats that I want to see. I find the formatting confusing and there seems to be a greater emphasis on dollars and pips rather than percentages. Perhaps I am too used to myfxbook format. I’m interested in the reason(s) why you don’t like it if you don’t mind sharing.
Also, is your live account subject to commissions?
Sorry, I am still battling to grasp this strategy. You sold when it broke through the DC’s lower channel, right?
" I will exit this trade on the next break of the four week Donchian Channel to the upside toward the two hundred day moving average"
But if it pierces throught the bottom and you sold wouldn’t it be a loss if you TP when it reaches the top of the channel.
I apologize if I come across as newbie-ish, I am trying to understand how it works, so I can start trading this way.
Let us take a 4 week chart, with plain ole candlesticks as the price indicator. I have applied the DC channels and the 200 MA to filter out bad trades.
Price approaches the bottom of the channel and pierces. I sell, where do I TP/SL. Does the stop go to the top of the candle, above the body or wick? Do I move this stop closer to price when it breaks even and lock in profits, and just let it run?
I will appreciate immensely if you can add light to my darkness.
Yes, but if the channel moves down until the top of the channel is below the entry then the stop goes into profitable territory.
The stop always trails the channel by a pip. And you get out with either a profit or a loss the next time the channel is broken in the direction against the trade.
So when price breaks through we buy/sell and tp.Then we buy/sell again and ride it back to the other side of channel or do we wait for the price to pierce again?
There is no TP other than the one stop. You don’t take profit until the channel is broken against you. If the channel is broken against you before it passes your entry then you take a loss. If the channel is broken against you after it passes your entry you take a gain.
This is how you follow the golden rule of trading: cut your losers short and let your winners run.
In case you don’t know, it’s important to mention that donchian channel trading has a win% of 30-40%…so don’t get impatient, in the long run this system is profitable, but you might experience a drawdown first…
Mike I think I remember u saying u where thinking about trading the channels the opposite. Did u ever do it. Its a interesting idea.
If u didn’t do it I think I’m gonna fund a small account and see what the results r.
I realize in the long run trading the correct way will out preform. But trading the right way means no interference. Ive been trading for a long time and various instruments and I still have a hard time not interfering(haven’t traded doch for a long time just trading in general)
I wonder how many can with out interference. A ACID seems to be the only 1 I know and I think even billbob said he had issues with that. (I don’t want to speak for them ) just from what I remember .Plz correct me if I’m wrong
The key is to not get too concerned about your drawdown when your open trade equity actually has your net account value in positive territory. Jerry Parker said: “There is no such thing as a drawdown.” This was a joke, but he was pointing out the differences between closed equity and open trade equity. If you are truly taking many small losses while letting winners run you can have a long period wherein you see lots of small losses but your total account value looks to be climbing great.
If you look at this account which trades the 4 week system you can see that since April it has taken many small losses resulting in a 31% drawdown by mid August (the red line). But when the account was at that 31% drawdown, the actual net account value (the yellow line) was 29% up from the starting value.
As of September 1 the system in that account has only taken a few winning trades and the closed value (red line) is at a 24% drawdown from the initial balance in April. Many of our cohorts around here would say: “24% drawdown in five months!!! That is TERRIBLE!!!” But the net account value with the open trade equity in it as of Sept 1 is 65% above the opening balance. With time the open trades will eventually close at a handsome profit. It may be less than the current 65% gain, but certainly more than a loss. Patience is the name of the game.
The drawdown and losing streaks r what make traders stop using the channels. Like u told me before I started using then
m, don’t use unless your 100 % ready and committed for it.
IMO I don’t think its something someone new to forex or trading for that matter should start with.
This is the biggest psychological barrier for a trader to overcome. On the surface, it sounds impossible to be true but it is. The secret of DC trading is that the average win will be many times larger than the average loss. On my live account, there have been 31 trades, 9 winners (29%) and yet it is profitable because average win is 2.6 times average loss.
