Very interesting…worth a try…thanks for the sharing…🖒
I don’t recommend this approach. The reason being, if there is a price spike such as market news or some unforeseen event that causes the price to go parabolic in mere seconds, the risk of taking a much larger loss than anticipated is far more dangerous IMO than using a hard stop. I will take a 1 or 2% stop out vs. a 30% parabolic price spike against me. That’s just my 2 cents…
Yes…u are right…there is a risk also…for a long term traders with big stop loss should consider the fundamental analysis aside from technical analysis…thats why plan the trade is essential…especially when planning currency pairs to trade…
Okay, yeah that makes sense. You are less leveraged when trading longer time frames and profiting more off of movements over time, so I a sharp move against you wouldn’t necessarily wipe you out. I think hard stops are more necessary with intra-day trading on lower time frames. It would also depend on whether you play the news or exit around news events. Sounds like you play on news events as well, yes?
I don’t play binary events at all. I’m just using a basic MA trading strategy. However, I stay ridiculously small. For example, I started a $1000 account last week with this EA and the trades have been either 0.02 lots or 0.03 lots. I buy when it signals and hold it until a minimum amount of profit.
My EA uses both a 15 min timeframe & a daily timeframe with different parameters around each.
Using both timeframes in the backtesting turned $1000 into $93,750 from 05/2012 until 05/2017.
Yeah…but only news with high impact…usually closed my other trades hour before news releases and seek for breakout pattern, set a pending order up and down the trend…so far seem promising…well the fact is…it is not 100% guarantee that the situation will favour us…sometimes it might be false signal…but if it is more than 50% chances…it is worth a try…
What is the wins rate percentage?
My win rate percentage is 99%+ in the backtest over the same period of time. With approximately 230 trades over the time period.
That’s certainly not unbelievable, over five years, at all. 100 to 1 over five years is more than achievable from a retail point of view with a small balance. That’s about 250% a year, with yearly compounding.
However, i’d be more concerned that you hold a position until it enters an area of profit? How’s that fairing out for you?
Your R:R must be minimal, right?
That’s pretty impressive especially considering the small position sizes you are taking there. Hopefully you get similar market conditions going forward in real time to replicate those kinds of returns.
I’m not really sure if you are being sarcastic or not. I guess sometimes “tone” is hard to get in messages. But, as far as the R:R goes, it depends on the timeframe. On the 15m timeframe I’m looking for a much smaller profit than with the daily timeframe.
As far as “how is it going”? I’ve only been live trading it for 1 week and 2 days so far. It has completed 5 trades with 1 still open. The position sizes were 0.02, 0.02, 0.03, 0.03 and my current open position is 0.03 lots. I made $6.25, $6.00, $8.25 and $8.63 for the first 4 trades. Currently I’m drawndown $19.64 for my open position. However, with 0.03 lots being held, there is no worry on my part of holding that. If the current drop continues down in the SP500, I will hold it until it recovers.
My net profit right now is +0.934% from when I started Thursday, June 8.
Yeah… I’ve got dynamic lot sizes programmed into my EA. I can change the setting in the inputs of the EA. But, basically, it takes the overall size of the account and then calculates the leveraged being used and then determines how much of the available margin I want to use for my position size.
I’m finding that numbers of smaller than 3.5% for the position size in comparison to the available margin works well. Any larger position size can’t be held because the drops like Aug 2015 (double dip) and Jan 2016 will kill the account.
I wish I could get older tick data for SP500 to test it through 2008 credit crunch and such. That would be better. But, the oldest I can figure out how to get is 2012.
No, I wasn’t being sarcastic.
I just wanted to suggest that $1k into $100k over five years is actually doable - with of course immaculate trading decisions and a proven track record of ‘success’.
Your biggest (unlimited risk) is that you hold a trade open indefinitely until it comes back around to turn a minimal profit. I certainly couldn’t stomach that - but I understand your logic by using very small position sizes relative to your account balance. Essentially, using 1:1 leverage. It’s not a new concept, many have gone down the same thought process and given it a try. Let us know how you get on
I will keep you guys informed if you are interested.
I’m ONLY doing this on SP500. My thinking is that commodities and FX don’t really have a positive kurtosis (eventually always goes up), whereas the SP500 does. I know that there are periods of time when the SP500 goes down, and sometimes extended periods of time. However, ultimately, it goes back up and surpasses.
That’s why I would never try this strategy on an FX pair or commodity.
I figure for $1000, I really can’t go wrong. The worst that happens is I lose $1000. Best case scenario, I’ll have a good return in 5 years. 
Yes, this sounds interesting. Please do share your results going forward.
While not for the faint hearted Al Brooks has published his approach to trading raw price action in a 3 volume set covering trends, ranges and reversals respectively. Each volume is about 500 pages, extremely technical and not cheap. The consensus seems to be that his approach requires much determination, time and effort to grasp (let alone master) “but it’s worth it”. A search of the Interwebz will turn up free intros, videos, etc.
Tim Morge has published a lot of info about recognizing SR levels and interpreting their significance in the context of median line trading. He offers (expensive) courses but has made most if not all of the core material (30-40 webinars, articles, PDF files) available for free on a few websites he owns or sponsors but also on the Interactive Brokers website under archived webinars. Again, a search will turn these up.
From a technical perspective lately I’ve been using modifications of the MT4 “TLB OC v02.mq4” indicator for its method of picking SR levels. While the indicator is intended for use with the three-line-break approach to breakout trading (i.e., SR level failure) it’s one way to incorporate SR levels as a metric in a bot (EA) as an aid to placing entries, stops and targets whatever the algorithm. I use TLB SR levels together with a couple of divergence indicators for MACD and Stochastics derived from a public domain RSI divergence indicator when trading manually.
In general the length of time it will take to become consistently profitable depends on your gifts, your work ethic and what barriers you have to overcome psychologically. There is no substitute for experience. When I started out I was completely naive (e.g., no clue what a system was) and profited from a foundations course purchased from a more or less reputable vendor. In my case, in the 15 years it took me to become a so-so trader I studied trading psychology and every concept, indicator, method, system, platform and language I stumbled across, including every fad in artificial intelligence, while battling a host of counter-productive personality traits–hopefully your journey will be shorter and less arduous
All trades need a stop loss, you cannot trade sensibly without one as you effectively have no risk management.
Profitability is dependent on two factors win rate and reward to risk ratio RRR.
However the most profitable combination of reward to risk for a particular trading strategy may be for example a 30% win rate and a 4:1 RRR. However that is based on a Robot taking trades, when you factor in a human psychology you find that a win rate under 30% which means the probability of drawdown periods, losing days and weeks is higher. Then it will cause the trader to trade differently and not follow the trading plan/ strategy and thus the system does not work. So I believe that a win rate of over 50% is a necessity and my signal actually runs around 70% as humans like to win.
So that being said naturally the stop losses must be bigger and RRR (between 1:1 and 2:1) lower, but the trader is happier trading and more consistent.
Now this is based on trading strategies where trades are held for hours to days, for swing style trading the RRR can be higher.
So before you even think about where to place stops you need to establish your trading style and psychology and attitude to risk etc. Once you have established your target win rate and RRR you then can use this to then know where you will be placing your stops.
Example If I am a day trader and I have found an entry on the 30min chart for USD/JPY I know I operate a RRR around 1-1.5:1 and i have a target in view which is 50pips away and is an untested key moving average and ties in with a low from yesterday. From this I know I have anywhere between 1 to 50pips for 1:1 and 1 to 33pips for 1.5:1 for my stop. Then that is the point where you decide where to put your stop and use previous highs, support and resistance and key moving averages to prevent your stop being triggered while also ensuring your RRR is maintained.
I have made a video here about the psychology of a new trader it may be of interest.
Regards
Matt
TheForexCoach: I don’t agree with your message. It almost sounds like you are getting ready to start selling some kind of coaching service. And, very interesting that you have been on the forum for 1 day and have made two long posts about RRR.
You can’t say that I have effectively no risk management. If I’m only buying 0.02 and 0.03 lots for a trade, the “size” is the risk management. Rather than trying to PREDICT when/where the market is going to go, I just buy and hold until I am correct.
It’s also important to know that I’m ONLY investing in the SP500 using this strategy. The reason is that there is no kurtosis with Commodity or Forex instruments. However, with SP500 there is a natural upward drift over time. So, as long as my leverage is small enough to withstand the drawdowns without stopping out, then there shouldn’t be a problem.
That said, I know there is no guarantees, but I’m willing to risk $1000 to see if I can make this strategy work. But remember, over 5 years, my backtest resulted in 240-ish trades. Whereas what you are suggesting you would probably pass that in 6 months. So, while I’m using futures/CFD’s, I’m not looking to “trade” as much as fine opportune times to INVEST.
You suspicious soul.
Just because someone joins a forum under the name “TheForexCoach” and very promptly happens to mention that his signal service has a 70% win rate, you think he’s here to promote something?
Whatever gave you that impression?
You cynic!!
jthornton I am not criticizing you so please don’t fell that i am, i am just stating my opinion.
Yes I am passionate about risk management as that seems to be where most new traders go wrong, and although i do not doubt it is possible to trade a single market wit little risk and leverage that way. Fundamentally it is a bad habit. And my concern is that you or others may start using it on other markets, bigger position sizes/ leverage etc. As soon as this happens you are sitting of lots of open positions and can not trade as your account is at margin limit. Why not just trade with stops and RRR.
The strategy is poor if you can not use it to have a stop + RRR and a good win rate so change the strategy. How did you back test it for 5 years, because I assume it was software and a very simple strategy ie a MACD cross or something?
The SP500 is a perfect example of why your theory is bad, as you may have entered a short period in hundreds of places since July 2009 and they would all still be in drawdown? If you get the overall trend direction correct then it will work ie you were only placing long positions from 2009. And maybe only placing shorts now thinking this is the top of the market (which i believe it is).