Priceless!!! LMAO!!
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Priceless it is! That quote is now up on my wall! Thanks guys for
the feedback, itâs much appreciated
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but I may have been overlooking the obvious, just as ball park
rule of thumb - swing highs and swing lows may be two green
candles followed by two red. of course not always that straightforward
but just by trying to identify the highs and lows at a reasonable divergence
from bands, might really save me a lot of unnecessary drawdown. it wonât
make me more profit, less probably, but it will take most of the stress out
of my trading and that is far more important.
What Iâm thinking now, is donât even think about going in until at least a
reasonable distance from bands, then wait for some evidence of a swing
high or low. I may be premature, but at least wait for some evidence
I tend to be trading the Daily, so when I get just one opposing candle,
why not check the H4 to see if there are two consecutive opposing candles,
signifying a likely reversal?
Perhaps that would be a better time to go in, or at least start to go in
as we see on NZDJPY I opened three positions prematurely, and seemingly
for no good reason
all is not lost, and they should add to the overall profit, but I would now
have preferred not to have entered so early but to have waited for
some concrete sign of a reversal which Iâm only now getting
Hopefully, this might be a helpful guide for future trades
and of course, exits would be the same principle in reverse
To get an idea where price might be heading eventually it might be worth taking a look at where itâs been. This video adresses that as well as some other videos on YouTube by proact traders.
Iâm not endorsing the service but I have found the videos they have posted are tremendously helpful.
Understanding supply and demand
KC
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Thanks for that. Like you I wouldnât endorse him
or any other paid service, but there are definitely
a few nuggets there on his free stuff.
I love the way he keeps stressing âThatâs what they do!â,
True, there are some scammy mentors around that
market âmanipulationâ, but in this case I think he
is genuine enough, and really does see whatâs really
going on.
Although what he is doing is poles apart from what
Iâm doing, or attempting to do, I am thinking very
seriously about the WOS wide open spaces principle
Iâve long since closed my swissy trade for a small
loss because it was just plain terrible, and likely
to be an irritation for a very long time
I also closed EURJPY and GBPUSD for a good profit,
even though there was much more to come, they didnât
fit my present criteria ie opposing weekly bands ( sloping
wrong way )
I absolutely will not oppose weekly bands. price can deviate
from weekly bands by 6,000 pips or more
so although that wasnât likely in the three positions I closed, I
just wanted to have a clean sweep, with no possibility of
drawdown of that proportion!
My remaining five open trades are all completely confluent
with the weekly bands, price is extremely divergent from
Daily bands, in short, perfect set ups
It is the more perfect set ups that tend to incur massive
drawdown ironically
but where price is so distant to bands, there surely can only
be profit as it must spring back eventually.
It does, but that raises a new question
I can now go on holiday for several weeks and when I next
check the charts, find price has cut right through bands
and hit my targets
I believe this is a highly probable outcome
but is that really my trading style?
I donât think that it is
Hereâs the problem, price does cut right through bands
but in waves, retracements, zig zags
call it whatever you like, but it doesnt hit TP, hundreds
of pips away in a straight line ( stating the obvious )
although it will get there in the end
but in the meantime, like now, you are faced with weeks
of tedious frustration, as price seems to be behaving,
then goes completely against you
( âWelcome to trading!â I hear someone say )
Ok, true enough, but if I could eliminate as much
of that frustration as possible, I think I would
so how aboutâŚ
filtering tradesâŚ
they must be confluent with Weekly
band slopes,
price must be conspicuously divergent from bands on
Daily charts and showing some sign of reversing, with
attention to H4 here. and if price continues to move away
from bands, only add on when there is another sign
of reversal. Hopefully, this should cut out a lot of premature
entries
So now to a critically important question, to me now, and
to all traders alwaysâŚ
when to exit?
If I am 300 pips below bands, there is a high chance price
will move to 300 pips above bands ⌠eventually.
it looks so exciting in hindsight
but you really have to wait and suffer all sorts of emotional
turmoil as price does whatever it wants to do before
finally going your way
I think deep down I know the truth, that trading is only
minimally about finding the âwinning systemâ but mainly
about developing the mental toughness you need to
succeed in this game.
I know I donât have that mental toughness, not yet at least.
Risk management is probably the most overlooked and
underrated aspect of trading, and that is directly related
to the emotional. psychological factors
So I immediately related to the WOS principle
taking your profit before the weeks of consolidation
and/or retracement hits you⌠would that be such a bad thing?
Iâm not completely certain about this
but I have reworked my open positions
I know that price always returns to bands, usually cutting
right through and beyond
I also know that a very big impulsive move will definitely
retrace to 38% and very likely to 50% and even 61% and
beyond
I also accept that price will usually move through WOS
relatively quickly before getting snarled up in consolidation
or before it retraces
so I can see the sense in setting a very conservative TP
at around 38.2% fib where there is a WOS to that
level, and sure enough that fib level is often where
prior consolidation can be found
sometimes the WOS will extend to 50% fib, which
would suggest setting TP there
I can absolutely see the sense in this
my only reservation is that I know there are hundreds more
pips to be made by âLetting winners runâ
but how is being snarled up in literally weeks of tight consolidation,
followed by a retracement almost back to my entry⌠how is that
âLetting winners runâ?
ultimately it is, if you have the patience and stamina to hang in
until the final victory.
Successful investors donât worry about the daily fluctuations
and truthfully, I donât think I would, if I was an investor
but Iâm not an investor, and quite honestly I would prefer
my positions not to drag on for more than a few days
that might suggest moving down to H4 TF, in the direction of
Daily TF. That might be one possibility
In the meantime, here are screenshots of me aiming for both
38.2% or 50% where they are supported by WOS
Despite the horrifying DD, they are actually very compelling
trades, and I feel I could do worse than use these screenshots
as a template for all trades
Of the five trades, there is one that would not qualify completelyâŚ
I have targeted 38.2%, but WOS does not really extend that
far. The TP will almost certainly be hit, and what I have arrowed
isnât a swing high, but might mark the end of WOS. I think the
WOS guy in the video would skip this in favour of the far more space
of WOS in the other charts
Iâm obviously not too dogmatic about this, but we note how far more clean and compelling the other four charts are with regard to respecting WOS as a big TP criteria
At least, thatâs how it seems to me at the moment
and here is the one that just doesât seem to shout out, 'Wide open space with
no obstructions â ⌠actually, it might be interesting to see how it gets on, but
at any rate, this is my least favourite open trade
the WOS ( wide open space ) or FTA (first trouble area ) approach is a
tried and tested principle
I donât know if itâs really best for my strategy.
yes it will make for small but fast profits
but all this mixing and matching of systems eg weekly
pivots are always hit, price should retrace 38.2% fib
itâs all true but maybe confusing the matter
My system is remarkably reliable as it stands ie
when price deviates rapidly and wildly from bands,
it always returns to bands, and more often than
not will cut right through bands.
so that really is the system, capturing the big move
back to the bands
so by looking for a faster and safer option, of just
targeting the WOS, or aiming for FTA,
maybe selling out.
so, let us say, my lot sizes were far smaller, would
I then be so keen to accept a very modest return by
jumping ship at the first sign of trouble?
price will return to the bands, that is the essence of
the system, Iâve identified that highly profitable pattern,
and now I seem to be set to completely ignoring that
I probably need clarity⌠price will return to the bands
Another thing I have just noticed EURNZD has fallen
800 pips, eleven consecutive Bearish candles
this has never happened before, but as soon as I put my
money down it happens - and there is no guarantee it stops
there!
So I really need to decide, am I really going to be governed by fear
and seek a new approach that basically is aimed more at getting
out of DD more than making serious profit?
or will I stick to my guns, and trust the system, trust that price will
always return to bands, even if not in one take?
Is this not why traders fail? that as soon as they go into DD, they
start changing the system instead of just being disciplined and
sticking with the system consistently?
even so, looking at the chart below, I must take note that the
impossible can happen!
whilst it is true that price will have to come within the bands at sometime in the future this can be achieved by the bands moving to price which is not what you want.
Still loving the journal and best of luck.
No, that is definitely not what I want! and this is precisely
what happens on lower time frames all the time.
but your concern reminds me of a brokerâs advisor encouraging
me to trade more, because when price is outside Bollinger Bands
it must âreturn to meanâ as price remains within BB 95% of the
time
This is just an optical illusion, viewed in hindsight
The truth is price does whatever it likes with 0% regard to BB!
In actual fact, BB retrospectively encases price 95% of the time,
price does not respect BB any of the time, it just looks like that
in hindsight
The strategy I am using, and the bands I use, are far more reliable,
but obviously the same principle applies, regardless of appearances,
the bands are simply responding to price movement and in no way
can dictate price movement
However, If you enter at a big divergence from bands with the slope
on Daily in your favour, and confluent with weekly slope, you should be
alright
Even in the event that bands move to price rather than
price moving to bands it shouldnât be catastophic
but much the same can be said for Martingale staking, with a good
win ratio system it works like magic! until the inevitable happens
and you blow your account
The real secret is Lot sizing, ⌠I can see from current
EURNZD that you simply cannot predict how far price might
move against you once youâve entered
just because it never moves more than 200 pips away
does not preclude the possibilty it could suddenly
move thousands of pips against you
the big players that move the markets are not bound by
bands on someoneâs chart (sadly)
I donât know how my current DD will turn out
will bands follow price in the wrong direction until
margin stop out?
it is possible.
I could deposit more funds, would that be throwing good
money after bad? again, that is unlikely but possible
there is an answer, and only one answer, very small Lot
sizes, controlling risk, along with controlling over confidence
and greed
a comprehensive reply, thank you. Whatever system you use there will be losers. I have been working on managing the losses and I think I have a system. It is in its early stages at the moment but showing promise. Its one drawback is it takes a lot of time and effort but it has enabled me to eliminate loss positions and it has the extra advantage of giving me confidence to trade more freely.
Good luck with that, eliminating loss positions sounds good
to me, giving you all important confidence
thatâs precisely what I am currently learning the hard way,
when you are over exposed and everything goes wrong,
fear paralyses you, that feeling of being so out of control
is horrible, you canât think positively, you tend to panic
and make wrong decisions
this morning all my positions seem to be finally turning
back to the bands, if that continues I hope I will learn
the lesson, and keep everything manageable from now on
you can make a lot of money very quickly in this game
and then lose it all twice as fast
Two new open positions
NZDUSD
interesting to gauge deviation in proportion to trendline,
and this time, if it wants to move 500 pips against me, Iâm
ready for it, bring it on!
also GBPNZD note very nice support level
also GBPAUD will place Buy Stop above close of first Daily green candle, about
350 pips divergent from bands, canât go any further ha ha
I have placed Limit Orders as far away as 825 pips away, so I
hope Iâm ready for anything the market throws at me.
Note the Limit orders are at stategic supdem zones. simply,
they may or may not be reached. if they are, it just means
more profit. if theyâre not hit there is nothing lost
Actually had the courage to check my equity for the first time
in a while
From 1st October 8,813.00 I peaked at 10,500,00 early this month,
only to reach rock bottom last Friday 16th with equity down to
8,039,00
Things have picked up over weekend and during today, and Iâm
around 9,000,00 at the moment. so my account is actually in profit
and there is a chance I can exceed the 10,500,00 peak if prices
simply return to bands.
thatâs all they have to do!
is it asking so much )
Actually Buy Stop entry on GBPAUD is only 265 pips away, there is a chance
it will continue returning to bands for a modest profit, but it is just as likely
to be a retracement before moving further down
I have just two Limit orders in place, the second over 800 pips from
bands. Both Limit orders are at significant levels
It doesnât matter if it moves to bands now, or moves 800 pips away and
then moves back to bands
eventually it will have to cross back over the bands
and this is a very good case in point, to further answer Diabloâs
concern
instead of price moving up through bands for a profit, supposing
bands move down past entries?
you have to be clear that price and bands are not independent
of each other
so let us assume just about the worst case scenario, that price
moves away 800 pips from bands
this massive move will cause the bands to recalculate and shift down,
not likely more than 265 pips, but let us say 265 pips
the good news is that we are now positioned to make over 900 pips
profit, even though the profit on the original Buy Stop would
be minimal, we make a very big profit on the distant Buy Limit
orders
We actually do better when we go into deep drawdown
the secret is preparing for it financially and emotionally
if we only move toward the bands from the get go, we still
make around 365 pips as bands wonât sag under the weight
of the drawdown
if this happened all the time we would do very well as all
the profitable trades would mount up
if, on the other hand, we always returned after massive
drawdown, we would do far better
there is no way of predicting which category the trade
will fall into, so you have to prepare for massive DD,
but at the same time aim to make at least significant
profit if we only have the one original modest position
when all bases are covered, you avoid the stress which
can be quite taxing
You still have the issue of having to wait possibly weeks
for some of these DDish trades to mature
but that isnât the problem I thought it would be
the problem is when you are stressed out of your
mind not knowing if you are going to blow your account,
and that stressed is prolonged over weeks
when itâs a matter of confidently waiting for the trades
to mature there is optimism in place of stress
This set up is classic, in that everything is covered and
no nasty surprises. This is how all future set ups
should look, more or less
One little touch is placing the Buy Stop order in just the right
place, if it can avoid being hit by a retracement so much the
better, but really it isnât such a big deal, and it shouldnât be
something to fear
I donât think there is much more for me to do
except wait, maybe something to report by Christmas
but hereâs something interesting I found on Youtube
Itâs basically just four MAs
Iâll give them to you as someone is sure to ask
80 Simple Close
25 Simple High
14 Exponential High
6 Exponential High
the channel owner is 100% non commercial, he isnât selling
anything, not even offering a free ebook or course, nothing
at all.
Iâm not sure of the system rules, and I just look for MAs
to all cross over where price is other side of 80 SMA
I especially include the essence of the earlier video
provided by KC and only trade WOS
It seems to work quite well
but you can hear the original rules here
these are my first four trades
RETURNING TO MY BANDS STRATEGY
Everything always looks so conclusive and encouraging
in retrospect.
yes, eventually price always seems to spring back to
Bands and beyond
but then in real time, as soon as you put your money down,
it seems the market is out to get you.
It will suddenly move hundreds and hundreds of pips away
from the bands, and it seems there is no hope in sight, it
seems the drawdown will just continue unabated until
your account is completely blown
but looking at the example below, we see we were above
the Bands at point A, and it went down for around 267 pips to
lower band,
ordinarily at first glance it looks like another success story
but you really have to put yourself in that situation as though
it were real time, or strategy tester
Looking at point B, it doesnât look such a big deal now, but at
the time, imagine how you would feel when what is now a
nice looking bearish wick would have been a solid candle
body, strongly indicating a lot more Bullish momentum
at the time it would have been very disheartening, but a day
or so later price did come down for 267 pip profit
Now look at far right of chart, we see we were doing ok, but now
price is going against us. disheartening.
but in a few weeks time you will be able to look back at this chart
and see, that despite the frustrating ups and downs, price did
eventually return to the bands. it always does
but the word âeventuallyâ is probably the operative word
Here is the absolute worst trade I made in ages
it was never really a set up in the first place
I opened this trade over a month ago. I closed it for a small loss which
I donât regret
but if we look at the chart now, we see price did eventually come down
and return to Lower band for a 134 pip profit.
It really was never a set up in the first place, the biggest warning
I ignored was the ascending Weekly bands, ( thatâs why I closed
the trade )
so if even the worst possible set ups return to bands for a profit,
the best, well thought out set ups should do well
but just to add, regarding the only real cause
for concern, that of bands shifting to meet price,
rather than price returning to BandsâŚ
thatâs precisely what happened here on USDCHF
you note I targetted the original lower band
price, sure enough, did hit the lower band, but
not at the original level of lower band!
this is the very worst case scenario that Diabolo
has alluded to a couple of times, and he is right,
it does happen!
So even though the bands did repaint ( quite badly
for Daily time frame )
nevertheless, if I had continued with the trade and
continued to tack, and adjust TP to the repaining
lower band, I still would have made 134 pips
profit.
It would have taken a month, and it wouldnât
have been deserved
but arguably, this system might be modestly
profitable, even when you open the most idiotic,
non qualifying set ups
How much better when you wait for massive divergence
of price from bands, in direction of Weekly bands
You have mentiond a few times that a big DD (drawdown) is good and Rrrm2 also makes this observation. With hindsight surely this means that the entry could have been better. So I donât see why it regarded as good. I would be grateful for your comments.
keep up the good work.
I know Rrrrm2 is quite keen on drawdown. His system
is a bit different to mine and he seems to open a lot of very
small positions. I donât quite get it, but it does seem very
profitable.
I do however see the sense in having âI love Drawdown!â as
a T shirt motif
If you canât beat it, learn to love it
and here is the problem, you canât beat it
It isnât drawdown thatâs good, thatâs obvious, itâs what it represents
or what it can potentially represent
it can represent ever increasing loss and utter despair, and I
guess that would be the general consensus
but it can also represent ever increasing opportunity for profit
Why doesnât Rrrm2 just wait and put his entire risk at the very
top/bottom?
simple answer, he doesnât know where the absolute top/bottom
will be
so you can hold back from entering, in order to avoid drawdown,
which is very likely what you would get, but then you wonât make
any profit
or you can open more and more postions as price goes against you
and if that sounds suicidal, I would substitute the word âcontrarianâ
In rrrm2âs case he has been doing this a long time, and he knows
the further price seems to be moving in the âwrongâ direction, the
more profit he will make when price eventually returns
I see things exactly the same way although I may quite likely
prove to be more suicidal than contrarian at the moment
Once I have closed ( or broker closes ) my current positions
I will definitely be contrarian and not suicidal.
I will open less positions, far more spaced out and risk assessed
on far greater distance from entry. this will minimize drawdown
but not eliminate it
I need therefore to incur a lot of drawdown to reach my distant Limit
Order, and I need to trigger that distant Limit order in order to
make a lot of profit.
your question, is why not just place the distant limit order, and avoid
all the interim drawdown?
because you canât know if price will reach it, so just keep opening
positions, and eventually you will have a position at the maximum
distance which is key to obtaining the greatest return
so the key to obtaining the maximum return is to incur as much
drawdown as possible
all positions go into drawdown before eventually becoming profitable
so the more you have the better, arguably
true, I just said I want fewer positions , but if I really had the courage of my
conviction,s my charts would be plastered with Limit Orders
just like Rrrm2
Drawdown is only bad if it ends in loss
Whilst making perfect sense to me, this is probably a nonsensical
answer
Perhaps if Rrrm2 would be kind enough to explain why he thinks
drawdown is âgoodâ, and why he is aggrieved when he has low, or
no drawdown
that might prove to be more illuminating
thank you for your comprehensive reply. I will put the question to Rrrm2.
As you say it requires courage and confidence in oneâs system to tolerate a large DD. This is where my loss management system comes into its own. Having operated it for sometime I am gaining in confidence that it works. Not 100% confident because experience tells me that just when you think that, the market throws up a curved ball.
A picture paints a thousand words
I canât use my system on lower time frames because
bands repaint too much. I have adapted it for M15,
and as you can see, I am hoping for massive drawdown
so that all my Limit orders will be triggered for a profit
If I donât get the drawdown I donât get the profit
I hope Rrrm2 will confirm this is loosely speaking why
he seeks drawdown, but if not, I will be especially
interested to find out what other possible reason
he would wish for drawdown
