man do you know how many times I’ve lost trades becasue I was impatient and couldn’t wait for it to break out of a certain level? Patience is something I’m still working on, but I’m getting better with it everyday.
So, this is a form of mean reversion trading?
If so, leaving aside the risks arising from this assumption re price behaviour - and ALL price behaviour carries its own specific inherent risks - you wish to avoid a directional bias - that would just be trend- or momentum-following. In which case, do you run two accounts, one with long positions on the selected pair and the other with shorts?
That’s exactly where I’m at now Tommor…
I’m working on a hybrid system that goes countertrend
and then follows trend
my original strategy simply capitalised on divergence
from the bands with no regard to trend.
I’ve found, for example, if you try that on H1 and oppose
directional bias on H4 and D1, you will likely get
slaughtered
Elijah’s strategy must be best as it’s proven to be consistent,
but like Justshell mentions, patience may be required
Limit orders are all fine and dandy if they are hit, but it gets a bit
frustrating if they rarely are, … but I guess not to a patient trader,
and essentially a patient trader is a successful trader
Long story short, I don’t have all the answers, Ive done very well
last three months but I’m still making mistakes
Here’s the Hybrid prototype
… the initial Buy trade did revert to mean despite the
overpowering downtrend, and the sell limit order has been filled
and should be on it’s way down
if that happens, and always happens, we have the Holy Grail.
We need to see if it happens enough to be interesting -
its very loosely based on Elijah’s strategy but with deviation from
bands thrown in
but I have to say to anyone reading, if a guy has a system and
posts his verified 100% success rate, and is willing to advise,
you probably shouldn’t even be reading this thread
it begs the question, what more are you looking for? … or
why am I trying to improve on 100%
although I guess we all have our own slant, and there is a
satisfaction that comes from building your own system,
even if most of the components have been adapted from
other sources
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well if only all trades were so picture perfect
and again, what a different outcome if stops
had been in place, two distant stop levels
would have been hit
maybe this is a bit of an eye opener for some
actually I always set a stop, it’s a basic necessity
if using a trade manager, and it’s helpful to graphically
move the stop around and get used to the amount of DD
in relation to distance
once I’m completely at ease with worst case scenario,
and can handle whatever the market throws at me, only
then I cancel the SL order
so, if I’m only risking 1% per trade, should I use a stop?
well its a lose lose situation. with a stop you will get
stopped out regularly and your account will gradually
wittle down to nothing - this is the preferred choice
of traders
without a stop and a regular risk % per trade, a few
very bad trades will also wipe you out
‘Trades need room to breath’
true, but in the example below, even a lot of breathing
space wouldn’t have saved you.
very small lot sizes are the only truly safe option
To revisit my USDPLN trade…
it finally made +542 pips as you can see below
that is honestly no surprise to me, I was quite sure
price would cross right through the bands
but in order to collect your 542 pips, you need to place stop
at least 324 pips away plus allow for spread widening
overnight, so maybe 350+ pips - and even that could
easily have been hit
as you can see my tight stop was very naive, and I was taken
out very quickly
this is not exactly some freak, bad luck that happens to
traders on rare occasions - this is exactly what is supposed to
happen nearly all the time, - you make a very well informed
decision on the likely direction of the market, it stops you out
and then goes more or less exactly where you knew it would go
Limit order will probably not be hit,
but if it is, it is very hard to see
how you can fail to make money
Limit order on EU wasn’t hit, but we have news later
and news moves markets so have recalculated
my sell limit order
also GBP news coming up, similar situation.
Not all such PO’s will be hit, but I would hate that
level to be hit and I didn’t have my order in place
audcad long also closed for +30 pips as price is
likely to move down 46 pips. I have placed a buy limit order
just under that to go long again at a lower price
at the time of writing this all made perfect sense
rationale is price way above bands on both H1 and H4,
with engulfing candle screaming to go short
but interestingly…
price is way below bands on both D1 and weekly
screaming to go long ( which is why I was previously long )
No real contradiction here … market is bullish and I will
hope to resume the upmove after the pullback
hopefully…
Seriously nervous now
I just feel, thanks largely to Elijah’s input, that
I may finally be on the right track
Much of the last year has not been wasted
I have for example resurrected my Market Profile
indicator. when using it before it served no real
purpose, but along with supdem zone indicator
it really makes targets stand out as obvious -
and exits are critically important
I was doing ok on D1, but trades can drag, and
time is money and profits can be severely limited
I’m extremely nervous trading M5 as I have
never had consistent results
at the moment it seems I can do no wrong
I don’t fear my luck will run out, I fear that luck is not
relevant here, that I’m actually seeing exactly what the
market is doing!
if I could succeed as well on M5 as I do on D1 I will
be facing major psychological issues, I can sense that
already
fear of success is every bit as a reality as is fear of failure
so I’m staying calm and trading M5 on demo for a while
the EU I closed on live but traded on demo. it hit TP
at demand zone
I then saw that price was well below bands on all TFs from
M5 to weekly!
I can’t walk away from that!
So I went long on M5 at demand zone and added on at 38.2%
retracement
I have noted supply zone on M5, Market Profile Median Line on both
M5 and H1, and have set TP just under all of them
I have a strange confidence that I have never had on M5 before
but apart from current open positions I think I might need a break
until Monday. its all getting a bit too stressful
It’s only the very short time frames I find stressful. I
will hope to get back to them next week
In the meantime on H1 to D1 it’s business as usual
I’ve used one or two trailing stops where I’m not too
confident, so there is still a chance of a good profit
with little to lose
this screenshot is interesting
when price deviates from bands it invariably reverts
and crosses through to distal band
as we see I wasn’t expecting that to happen in this case
and set TP at Market Profile Median line
the reason is because price hadn’t moved out of the yellow
box zone. such situations may still be tradeable but usual
rules don’t apply, in other words, look for the nearest
likely target only, not furthest
as we see, sure enough price is reversing from that target now,
and although it did spike up to just about hit median band,
I would expect it now to confine itself to proximal to median
lower section of the bands. I would be surprised if it pushes
much further than that
all the action started within the yellow box, and noting the
contour of the Market Profile I just don’t see price progressing
much beyond the nose formation, and given the resumtion
of the downward slope of the bands, adds weight to that.
I am trying to get this down to be as mechanical a formula
as possible
It doesn’t work the same way on shorter timeframes, I’ll
get back to that next week
but working on H1 and above, the next higher TF must
be confluent, and TF after that, must be either confluent
or neutral but never opposing
for example, if price is well below the bands on H1 and H4
but price is above bands on D1, the higher time frame will
likely dictate the direction
on the other hand, if price on D1 is within the bands, it’s
effect is more neutral
recognizing a vaild set up is easy. price will move toward the bands
and if it doesn’t, then you simply go in again at the next supdem level
exit is where more discernment is needed
Providing that price has deviated quite suddenly and significantly
from both bands AND the yellow market profile box
then TP1 should be the largest lot size ( but still small ) it will
almost certainly be hit
indeed, if you are extremely risk averse, you could just trade
TP1
TP2 would be just before vicinity of central band or MP Median line
as arrowed in screenshot and should be half the position size of TP1
TP2 will nearly always be hit
Live account up 8% this month, I don’t think I’ve
hardly ever been in profit on a live account before
With very modest lot sizes on the larger time frames
it doesn’t now really feel much different to demo
I would dearly love to make 10% this month, but of
course you can only take what the market gives
so far, I haven’t seen a real problem with DD so much
as stagnation, I noticed this week long periods
of lull, when nothing hardly moved at all.
and then suddenly everything bursts into life
10% per month would be great if it was consistent
I was actually doing very well on the M5 strangely enough
If I could refine that Hybrid system purely as a supplement,
even as little as 2% per month might make an 8% month a
10% month, or even better,
a 10% month becomes a 12% month
now that I do like the sound of
but I want to try to integrate the shorter time frames very
gently and gradually, and not get stressed and blow
everything
I have had cause for reflection over the weekend
I am now just 60 PLN short of my 10% profit for the month,
I have made 820 PLN profit real money
for me, that is a phenomenal result.
so, looking back over the last few posts, I sense some of
the old madcap musings creeping back in
‘are there any kinks forming in the STR straight line?’
’ how long does the nose of the market profile extend?’
‘how long is a piece of string?’
you get the idea of what I mean.
the basic system that has finally made me real money
is trading the divergence of price from the bands
the supdem zones are extremely helpful
the confluence of the higher time frame is a wise precaution
but that really is about it
Einstein said, ‘keep things as simple as possible, but no simpler’
over the weekend I did some strategy testing on M5
Disastrous!
the bands just repainted beyond belief, so effectively
price never returned to them
this band system does not work on short time frames,
other systems likely do, but not this one
the saying goes ‘if it ain’t broke why fix it?’
I’m doing very well on H4 and D1 so ‘acting in my
own best interest’, I must put my focus on what
I know is working
( update: as I write I am now just 40 PLN from my 10% profit )
so, although I like market profile, and it is useful on H1
and H4, it doesn’t seem to work on D1, whereas supdem
zones work consistently well on all time frames
so I will endeavour to keep things as simple as possible
ie ’ trade the set up, the whole set up, and nothing but the set up’
then simply ‘rinse and repeat’
this is now my third successful month, I must be doing something
right. but this obsession with tweaking, refining, will likely
be my downfall - ‘snatching defeat out of the jaws of victory’
sometimes, a set up on H4 looks good, maybe far above bands
and paused at a supdem level. invariably it will return
to bands and usually plough right through them.
but sometimes when you check D1 the confluence is
just so powerful
it may be that price is not far from bands, but reacting to
a supdem level, but the bands are in a steep downward
slope
this is seriously as good as it gets in forex trading, in my
experience at least.
sometimes you look at an open position and you see the ink blot
situation, the optical illusion where price seems definitely to be
reversing, then you look again and it seems definitely to be
retracing. you check on HTF and you see the same ambiguity
if you are already in profit, just take the money, quit while
you are ahead!
don’t stay in, hoping and praying you will get lucky, there
are enough non ambiguous trades to invest in
so when in doubt get out! I’ve found this principle has
served me very well last few weeks
Another lesson I’ve learnt is very hard to believe
I know some guys (and girls) do very well, making
over 20% per month, but risking as much as 5%
each position
I’m still not quite sure how I’ve managed to do so well,
risking a paltry 0.2% each position
I presume because losers are so minimal that the
gains soon add up
I think I could safely go in with 1% risk and make 5x profit,
but just one disaster would be psychologically devasating.
You must trade stress free, and that does necessitate very
small lot sizing.
but be sure of one thing it does quickly add up!
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@Jerome32 are you using any type of automated take profit?
I know @rrram2 will use a 5 pip trailing stop loss once his trades are positive by a certain pip amount. I don’t recall the exact parameters but I did read in one of his posts that he does use trailing stop loss in this fashion.
Perhaps something to consider fwiw.
Great job! Inspiring! I’m looking forward to going live myself,
KC
Just standard TP order in MT4, and trailing MT4 stop of usually 50 pips
on Daily time frame but I wouldn’t say a trail is a big feature,- if I’ve made enough
profit and it actually looks like there could be more I’ll use it
All the best when you go live
I hit my 10% earlier but we still have a week to go
and there is no guarantee it will just go up and up
but what I am noticing, is when I am trading in a level headed
way and not making stupid mistakes, a pattern is forming
Because I typically have a basket of trades, I don’t seem
to get much of a problem with DD, at least not at the moment
what seems to happen is that the market generally seems
tread water most of the time, and then you get a sudden
surge which is where the profits come from
Most of the time there is nothing to do, like doldrums,
there is just no movement at all
I am hoping that I will exceed the 10% level, even if
only to 12% or so.
I’ve done my calculations, and to my absolute amazement
modesty definitely pays
even making single digit profit per month, under 10%, and risking
just 0.2% per trade, I should make almost half a million
in 24 months and 1.3 million in 36 months, at least if
the last three months are anything to go by.
Risking 2% per trade, I should theoretically make half a million
in just ten weeks - or possibly blow my entire account
I much prefer a slow and very steady equity curve, like the
tortoise and the hair.
I don’t mind if I average as little as 5% per month, because if
its consistent it would be brilliant.
I might try to reactivate my FXbook, although in the past it
completely wrecked my demo accounts, but I suppose I
could still trade webtrader in an emergency