That’s whats up man! keep up the good work, keep grinding!
The really big thing now is psychology
I came home tonight and nearly all positions had reversed
Here is the BIG truth-
If you just check the charts and calmly place a Limit order 100 pips
away, knowing there will be even bigger profit if/when they are hit,
you can stay bouyant and reasonably optimistic
If you open your daily email statement, or call up the mt4 terminal
you will see hundreds of dollars drawdown and you will quickly
close all your positions before your entire account gets blown!
This is basically why no one wins at forex. I really don’t mind
price consolidating a bit, maybe moving away half inch, that’s
painless enough
but to see the bottom line of the terminal is (- $500) would
be terrifying, even though that financial reading is really
just saying the same thing ie your positions have moved
about about half inch against you
Seriously, I’ve had one winner already, usdjpy is stalling
but not moving our way yet, but all the others look about
right for a Monday, and if I was still on demo I wouldn’t be
perturbed at all
This however is not an easy system! it does move against you
a LOT!
and now for the secret that will alienate 90% of readers - the
reason I never have losers is because I don’t use stops
with no stops you never lose a trade - you may have many
badly losing trades but they never actually lose unless
the broker stops them out due to insufficient margin.
If you use stops with this system you will have a very high rate
of losers! still interested?
worse, even without stops, the trade can go against you for
several days. it can be very stressful,
trading is nearly all about psychology, and this system will
test you out!
What are the ‘Magic’ bands?
they are not magic. they are a small part of a commercial
system that I am not in any way promoting or endorsing
But you can make your own bands simply enough, they won’t
be the same, but with enough practice you will get very similar results
You might try, for example using 100 SMA for directional bias
and only trade when 100 SMA is either flat where you can trade
long or short deviations
or where there is a slope, you only trade deviations in the direction of
the slope and never counter trend.
add to the 100 SMA, a 33 SMA high and low for bands,
then when price makes a pronounced and sharp impulsive
deviation, trade to the opposite band
If using D1 TF, Plot your entries on H1 or you may miss too
much of the move.
it will usually win, but be sure there will be some upsets
from time to time
Just for the record, my one remaining demo
position is well in profit. just about all closed
trades were in profit and this remaining is also
looking good.
I have opened a position on USDCAD demo using the above criteria
As you can see, 100 sma is up on daily, and we have a trendline break on H1
I doubt that there is any statistical advantage to my usual bands,
I just use them because I’m more familiar with them
most of my positions experienced 50 - 100 pip drawdown
but are now starting to move back to the entry level
so horrific drawdown is now just terrifying drawdown. the
charts themselves look ok, they just look like the trades may
well take a couple of weeks to mature.
but this has been an incredible aha, eureka moment
You really don’t want to know just how much money you are losing
that is the worst possible psychology
prices on all currencies and stocks are fluctuating all
the time, if they weren’t you couldn’t possibly make any money
sometimes price fluctuates a lot and we may have to learn
to not pay too much attention. I’ve found that the trade
rarely goes into profit the more you check on prices
on the contrary, the more you fuel either greed or fear
the more likely you are to make foolish emotional mistakes,
speaking personally I should add.
I never remember being so terribly into drawdown and
at the same time being so optimistic about all my positions
It looks like it could be a long wait this week, and likely next.
Probably the hardest lesson to learn is to watch the price
make brilliant gains, only to reverse right back to your entry,
before making it’s second move to the even bigger profit.
This happens quite a lot
The other fear that needs to be mastered is when price
immediately reverses - what I do is put a Limit order
100 pips away, or at supdem zone, and just confidently
expect price to soon turn around again, or go right
to the Limit order or beyond. which should mean
extra profit.
You can be rewarded for your courage. How so?
When price falters and returns to entry, far from
being a losing trade, if you hang in long enough it
invariably gets a second wind and lunges even further
than you would have expected the first move to have made.
It really is about hanging in there, and not panicking.
This is a very new discipline for me, helped perhaps because
I have a lot of faith in the system, the rubber band principle
If all goes well I will deposit a lot more money into my account
early in the new year.
but riding the rapids? I have never seen trading success and
failure so clearly. You must be able to withstand the knocks
and patiently wait for things to eventually move in your favour
providing of course you have a basis for such confidence
Here is an example of what I mean
my last demo position, chfjpy is doing great and may just keep
moving down to TP, but life isn’t a bed of roses
and the screenshot below is quite likely to happen
If you can really steel yourself, and change your
beliefs, eg if price reverses against you its great
because you make far more money if Limit order is hit
and if trade ‘fails’. thats the best possible scenario
as the trade invariable will make a second lunge
and move far more than you were expecting.
It truly is about keeping your nerve, and finding your
‘sweet spot’ the maximum position size that doesn’t stress you
this is something I have thought about often. That technically you don’t lose money unless you close a losing trade. The thing that I like about Forex versus options is there is no time constraint.
If your risk management is good and there’s no Margin Call things revert to the mean.
K
that’s so right. which is why it is so easy to double
or triple your demo account, just don’t use stops,
eventually your target will usually be hit.
of course real money accounts you can’t be
so casual, and most wouldn’t dream of not using a stop.
and the screenshot below highlights the dilemma
the trade is now moving in my favour but initially it
moved 180 pips against me.
of course I didn’t know anything about that - by the time I
checked it was down to only 90 pips against me.
Many would have been stopped out in the process
90 pips down is still quite serious but I’m focused
on the gradual recovery into profit.
Its like an ocean oil tanker can’t spin into reverse,
it’s a very long winded process
nearly all my positions are in drawdown ( I say
that because ‘losing’ isn’t a good word )
but most are now starting to cooperate.
I can really see this spilling over into next week.
hopefully some targets will be hit next wednesday
or thursday but they can’t be rushed.
just as a good stew takes time for the meat to
marinate, trades, like investments, take time to
mature
none of my ten remaining positions are currently
going against me, but some are consolidating
that’s what the market dies
I have an FXbook account linked to my live trading account
but at the moment it wouldn’t be very encouraging. Once
I get lift off and a healthy equity curve I might utilise it more.
I recall the Einstein quote, ‘Keep things as simple as possible,
but no simpler’
so I am determined not to fuss and fume over my trades
I check them about twice a day, but probably once a day
should be sufficient
I don’t think total set and forget is wise, but definitely
the more I keep my fearful meddling self out of the equation the better
I’m not pretentious enough to type out a legal disclaimer, however
as I’m getting around 10k views I may have beguiled some with my
statement. I really want to stress that this system frequently goes against
you - even hundreds of pips! which would normally stop you out
I don’t use stops myself but I would never encourage others to be reckless
with their hard earned money
always test a system on demo before even thinking about trading live - and then
only with small position sizing
As you see cooperation beginning and eventually confirmed, will you start putting on additional long positions as it goes up enroute to your original position?
Unless of course everything is reversed and you’re short.
KC
Hadn’t thought about that KC - sounds like a good suggestion
Now have 19 positions open on live
the self sabotage didn’t take long - I ‘accidentally’ opened 10 x
the correct lot size on the worst reversing trades
it seems the unconscious mind often has a good idea what
trades are going to lose, and helps you to mess up on them
you really got to ask yourself why it does that.
Last two months on demo +736, +1,500 is unlikely to be
repeated on my Live account
At least I have learnt what my ‘sweet spot’ isn’t
I’m not comfortable trading more than 0.2 at the moment
the good news is that most my trades are between 1:2 RR
up to 1:9 RR
so if most do win it may not end in total tragedy - and I’ve learnt a
lot. I will deposit more into my account only when the account has
doubled and withdraw all my deposits when that is doubled so
I am trading brokers money - that will be a great psychological
benefit
As regards the home made bands 33 SMA high and low
that trade is up 30 pips
of course it is - its on demo
Homemade bands trade up 100 pips on USDCAD
In fact I can seem to do no wrong on demo as you can see,
the demo trades I opened are faring much better than live trades
not a coincidence!
I’ve got to get as near to demo as possible on my live account
in order to make the same decisions and get the same results
On the other hand who really believes you will
get thirty straight winners month after month
if you do have two spectacular months it will
surely even out with a few losers before the
system picks up again
One mistake I have made is comparing the
size of the deviation from bands. if it is unusually
far from bands the assumption is it has reached
it’s limit
but you can never dictate to the market when it’s time
to reverse, sometimes it just keeps on going
so I’ve often tried to get in at the very top or bottom
when it is probably better to wait for a convincing
reversal pattern, especially if at a supdem zone.
where there is a supdem zone you can place a
stop other side, which will give you a much bigger
position size
if you get stopped out for a little, just wait for price to reverse
higher and repeat process when it forms a next convincing
reversal pattern
Eventually it always comes back to the bands, providing
the bands don’t come up/down to your entry price
This is the danger with steeply sloping bands
Flat bands are much safer as they take longer to
start sloping to entry point.
but you still want to see a good deviation
and higher time frame is very important with this system
I was trialing 15m TF last night. disatrous! simply because
higher timeframe bands were moving in opposite direction
Never oppose higher time frames! not with this strategy.
The indicators I use are for confidence, I wouldn’t say
they are necessary
supdem is very helpful.
also, if you enter at osc. divergence and there are missed
weekly pivots, if trade loses price will almost certainly reverse
at the next divergence, but price always returns to bands eventually.
This is definitely a wnning system - it just needs fine tuning
also KC has made a good suggestion - adding to winning positions
may well be the way to go.
Jerome, great Intel.
Thanks for posting.
Are the 33 SMA bands a 33 SMA standard deviation positive negative? If so what are you using for standard deviation?
Sorry if I missed the settings, I’ll reread.
KC
you can probably make anything up
I just put that out as a sample
it was 33 sma standard deviation, one applied to high
and one applied to low .but there was very little thought
went into it
its just a measuring rod to detect a major deviation
probably some experienced traders could do this with the
naked eye
I just find bands help to see everything in context
Roger.
Tx.
I have been doing some extensive back testing and
have a lot of screenshots to post
It has been extremely profitable
Unfortunately I can;t comment on each screenshot
but I will try to cover the basics here
I have three categories of set up -
- price forms a reversal pattern around one or more
of the moving averages - yellow arrows. entry is discretionary,
sometimes wait for price to hit proximal band
these seem to be the least problematic trades
distal band is always hit - what’s not to like!
- price reverses at osc, divergence - blue arrow
entry is when candle closes close to, or just past
proximal band
distal band is always hit, sometimes with a runaway
profit
but often price can go badly against you and can really
test your courage
- price makes a pronounced deviation and a very
definite reversal pattern. entry is discretionary. you can
wait for price to close around proximal band but often
the reversal pattern is very compelling and you can go in
earlier - blue arrows
Harmonics are not that essential to this system, but grey
arrow harmonic arrow despite repainting can be
helpful. If they appear with a good set up, and it is
obvious they are past repainting point, it can signal
a big move. good for confidence
Supdem is extremely useful if you know what you
are doing. if price has deviated a lot from bands
and bounces off a definite, established supdem
zone, then set up is as good as category 1 yellow
arrow
FAILSAFE
If you have a really good set up on H4, the really
smart approach is to enter on H4, where distal
band will definitely e hit, but switch exit to distal
band on D1, providing there is a reasonable
distance left to D1 distal band
if you enter long on H4 when price is above D1
bands the trade can easily go against you.
If everything is lined up. you have a very strong
H4 set up and the D1 doesn;t have to be a good set up,
it just has to be in agreement, meaning you should
be travelling across both bands in the same direction
If you do this, it should be very hard to lose
However, the system is very intuitive, and there
is nothing magical here. If you can read reversal
patterns accurately, this system can be dynamite
even regardless of slope of bands, price does
zigzag across the bands
This system just helps us optimize the best times
to enter.
It works on most pairs so plenty of selections
Even if they all win eventually, its probably best
to wait for everything to line up perfectly
you will still have several trades a week
but stop or not to stop?
I prefer no stop, but common sense dictates that
Lot size needs to be very small. because there are a lot
of selections bank will build up quite quickly
on the other hand, you can use wide stops above the peak
or low of the divergence. you will get stopped sometimes
but because risk is controlled you can use bigger position size
again, no magic formula here, probably evens out and is down
to personal preference
but no stops can mean virtually no losers! that is a great feeling,
of course providing you only trade the very best set ups
The following set ups are for my personal records, please feel
free to disregard them
Bands.pdf (1.1 MB)
What I’ve done this week, is just place orders on demo
as usual - completely relaxed. They usually all win
then I just copy trade over to my Live account
Last week about seven of my trades were valid,
three were bad trades, one seemed a good
trade but continued on without reversing and
now has a big drawdown
I think only one trade lost USDPLN. there is
probably a reason why traders leave exotics well alone
very choppy
There is a reasonable chance I will be able to salvage
something out of last week’s fiasco
but you absolutely must have confluence of time frames
that is the number one FAILSAFE
There must be a reversal pattern at some significant level
TP is discretionary but if price usually overshoots distal
band, then look for s/r zone around that area for TP
I have found that even though system works, the entire
chart repaints after a week! things disappear, nothing looks
like it did the week before
I have taken KC’S advice and added on to my winning trades.
because I am deliberately not checking my accounts
I can’t be sure how many losers I’ve had - at least one
but I have two very bad trades that look ominously like
they will be stopped for a massive loss. I just got
to learn from the experience
Since then, some of the trades have turned around
and some are doing extremely well
I think going in now at more modest risk I think I
can turn my live account around after the next two weeks,
and from November onward last week’s self sabotage
will just be history
I can’t believe this capricious thread has had 10k views,
there certainly has been a lot of wacky concepts that
turned out to be vague imaginings
indicators are of very limited value, Stanford university
did a lot of research that proved they had no predictive
value at all.
it has been suggested that their best use is that they
will filter your trades and restrict the number of
positions you open
but they can give confidence when confluent
for example, if price retraces 38% or 50% and forms
a clear reversal pattern at that point, it’s certainly worth
taking note of.
One of my current trades formed a definite reversal
pattern at the trendline - they are good too. as are
such patterns when they interract with MAs
Its all about reading the charts, not about indicators.
so although I have a definite system I can only gain
by continuing to study and research price action
to become more aware of all the tell tale signs
Don’t get many losers on demo but I quickly
closed this trade for a loss
it might have won
but check HTF D1!
i was really going against the tide on H4!
I must be really strict on this
this might be worth pursuing - can’t be exactly sure how far
price will move through the bands. so reduce position size
at every band
somethings got to get hit!
when things do go wrong it ain’t pretty
I have two correlated pairs about to be stopped out for 10x
the position size I had intended
It seems the price doesn’t always return to the bands
straight away - that would actually be the absolute
holy grail, but it doesn’t always happen
In this case EURUSD has moved down 370 pips
and USDCHF has moved up 370 pips
so it is extremely unlikely I will lose one trade and not
the other.
After the last two outstanding months on demo
my first disastrous month live has all the signs of
self sabotage
I have absolutely got to find that sweet spot that
doesn’t stress me win or lose.
these two trades will set me back around 5% of
my account, and should be offset by some of the other
trades which are starting to move toward the bands
but the last week hasn’t been a pleasant experience
