I believe this is the foundation of @rrram2 s system. Everything I’ve read drilled it into my head stop loss is the primary risk management tool.
However, as I continue to read, and learn, I have come to believe position sizing, is far more critical. In relation to drawdown, a smaller position gives you much more flexibility and latitude in navigating larger swings in the market.
My thought is a loss is only an actual loss if you close the position while in negative pips.
Given that, while all positions are open and in play, technically everything is only on “paper”- paper positive Pips, paper negative Pips - not until a trade is closed does anything become concrete.
While an excellent entry is always desired; from this viewpoint, it would seem the most important thing is the exit.
Actually, there are two cardinal sins being committed here. Neglecting
to use a stop is suicidal according to nearly all Forex experts, also
’Averaging’ has been mathematically proven to invite disaster.
Averaging is the practice of adding to losing postions in the certain belief
that the market must eventually turn in your favour.
of course with large or even regular 1% risk position size all this
would be perfectly true
but I remember many years ago opening a Swiss bank account,
and although I didn’t have vast offshore funds, or even modest
offshore funds, I wan’t involved in trading, but I did regularly check
on the exchange rate, and it was most illuminating, especially
without the smokescreen of the charts. while the price would
always fluctuate a little, it always reverted to the mean.
but even a small fluctuation can be hundreds of pips, which
on the charts can look like the Wall Street crash. but it isn’t.
price may fluctuate hundreds of pips in either direction but rarely
thousands of pips, so by just hanging in, price eventually hits TP
but I agree that exit ( or exits ) is where the chart reading skill comes in.
As a rule of thumb I look to Distal band which is invariably hit, but usually
price overshoots, so I would like to optimize the trade if I can
at the moment I have sixteen open positions and they are all uniformly
going against me at the moment
what is good is that this provides the opportunity to test the system
and gain confidence when it turns back in my favour. it will do
@rrram2 is right, his enviable stats prove it, if price moves against you
hundreds of pips then open another position which might go hundreds of
pips against you. Its highly unlikely but if you can handle that scenario
then it becomes a waiting game, not a panicking game
and incidentally, you can trade this system on the lower time frames
but the Daily is the best TF, the bands do reconfigure on the Daily a
littl,e but repaint on M15 a lot, so it is riskier, but still more profitable
than binary options
sorry your cardinal sins are the 2 biggest lies in forex that cause RT’s to lose $ daily
the banks and LP’s average! and for the record, If dont believe I know check the 99% winners on the live account, with DD in check and managed smartly.
Key in on and understand the underlying market mechanics, and AVERAGE! small and wide and be patient, and of course enter the trade in the right direction LT (long term).
and here is an old video I discovered last week, that I never saw, its quite amazing, what I do is very similar, except I am way better than the presenter, and I dont need to hedge! hedge is you giving pips back! The Trend Is Not Your Friend, Randomnes Is dont miss tis video, you may need to wacth it 3 times like I did, but this should wake most people up! watch it over and over til you get it! this is HOW FXSTREET trades their live accounts! The trend & the RT’s stop losses are the banks BEST friend!
What you say is not wrong - but its only not wrong in the context of the way you trade. If I’ve understood posts correctly, you don’t trade the way jerome does and he doesn’t trade the way you do. Its not just a difference of opinion over tactical detail re e.g. the choice of MA durations, or the preference for EMA over SMA, you both come at the objective of making money from opposite directions.
So what you do is right in the place where you’re doing it but if he does it in his trading - without changing his style to parallel yours - he will very likely lose.
Not saying he’s right and you’re wrong, just trying to add a health warning.
Elijah ( @rrram2 ) isn’t disagreeing with me, he just thinks he is because he is not
always reading posts with understanding. I’m British, and I’m guessing sarcasm and irony is not obvious to everyone, especially African and Asian cultures. I don’t use stops, and I do open multiple pending stop and limit orders.
so yes, I commit the two, all time worse ‘cardinal sins’, but they are not
my sins as Elijah states, they are disinformation spread about to completely
confound unwary retail traders
that said, I’m not a conspiracy theorist, and I believe a lot of mentors
and even professional traders have bought into the lie, and pass it
on to newbies believing they are actually helping them.
I’m sure there are traders who are profitable using stops, but for the most
part stops are the biggest trap for traders, and ‘stop hunting’ isn’t a myth,
banks, institutions, brokers et al are all in on the act - you can look at
any chart - you see all the manipulation all the time
This is the worst case scenario, price doesn’t come
down to bands, but bands move up to past entry,
severely reducing the chance of profit,
this is the H1 TF. it doesn’t seem to be a significant
problem on D1
even so, I am very wary of steep, sloping bands that
might move up to entry before price hits TP although
ironically they are very often accompanied by very
bold, sweeping moves that plough through the bands
and overshoot, giving much greater scope for profit.
I haven’t cracked this yet. as has been said, exit is
by far the trickiest part of the trade
In the example below, price probably will come right
down but I’m not happy with lower time frames
well, you dont exactly want to be selling NZDUSD today I dont think, maybe intot he close as it will move up another leg today, as the ST sentiment changed after only slightly positive NZD news yesterday, I did sqr up all my nzdchf orders in profit and am now only working EURAUD short. ANd Jerome trades very much like me, and I am very sacrastic and use a lot of irony. And say the opposite in a joking way, but trust me, I 100% accumulate contratrend, and I do not ever use a stop loss order to realize a loss! I use them to lock in profits sometimes with an attached Trailing stop (TS). I dont (DIS)agree with Jerome one bit, I dont even think I do
The EURAUD short, start shorting at the yellow line, for the timid, but im short with a bunch of sliced up orders wide spaces small lots sizes, fade the top at 1.6250 then the yellow line , then 1.6300 then 1.6350 unlikely it will return to there today at least, but im up there waiting with pending orders, if it comes there I will be filled, if not I will wait and wait, no matter how long it takes, all the while collecting swap and holding shorts lower waiting for the return to the weekly demand lower. goes down I take profits, goes up I sell, real simple.
euraud ON M5 is simple, actually I can get the concept now,
My NZDUSD was just experimenting on demo on M15, which I
moved up to H1, and as you say is still no better.
My strategy is very risky on shorter timeframes as it takes
into account distance from the bands, and they shift too
much
but I see the euraud as being in an overall downtrend where
you place a sell limit at the supdem zone, and if it doesn’t
hold, retreat up to the next zone at 1,6336 with another order
This approach is probably 100% successful but not suitable for 90%
of traders as order is not likely to be hit most the time, and patience
will be tried.
However, when you have deviated that far from the mean, I don’t
think you can go far wrong - and not going far wrong is surely
what it’s all about
In the meantime I’ve made an unexpected discovery,
having opened too many positions. The trades
that have reversed the worst are the ones that are
in conflict with the weekly timeframe.
I knew that H4 had to agree with D1 but it didn;t
seem to occur to me that D1 had to also agree
with higher timeframe
Of the sixteen open positions I now only have three
that I am happy with, that conform to the screenshot
below.
I have four that are going awry that I am hoping
to close for break even. I don’t care if they could
have been profitable, it is not smart to oppose
the directional bias of the higher timeframe
Actually, the principle of the screenshot is very
encouraging
I know on the weekly, price will definitely hit the median
band and almost certainly the distal band, so if I have
targeted the distal band on the D1 which will be hit
before the median band on the weekly …
then I think I will probably win, at least at some point
in the future, but it could take quite a long time
I am starting to see that patience is the big issue here
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.
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?
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
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
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
