This thread is opened to allow side-discussions that arose from Tymen1’s excellent thread on trend trading, The Finest in Trend Trading, located in the Newbie section. Trolls will find no home here and flames will simply be ignored and not responded to. Otherwise everyone of all experience levels are welcome and wide ranging discussions of trend trading are encouraged.
I manually trail stops as I have found no automatic trailing stop setting that meets my needs. My first goal of moving a stop is to remove all risk to capital from the trade. After risk is removed, I want to use profits to make profits.
Once risk is removed from the trade, all effort is devoted to not reintroducing risk and maximizing profits. I use candle patterns, Bollinger Bands and everything else at my disposal to minimize risk and maximize profits.
Let me be clear that I am not encouraging anyone to over-trade. Over-trading is a quick and sure path to failure in Forex. The 5 lot strategy is used to minimize risk and maximize profits only with correct position sizing. To start with this strategy you should demo trade it until you have found it either works for you or it doesn’t. It’s not for everyone.
So this is what I suggest. Set up a demo account. $1000 to trade micros, or $10,000 to trade minis. I will refer to lots and pips. A lot for a micro demo is 1 micro. For a mini demo it is one mini. Of course, for a $100,000 standard account it would be one standard lot. But for simplicity I will just refer to the unit as a lot.
Graviton, thank you for starting new thread. I will be your visitor
The positions are taken as follows:
The first lot entry is made using Tymen’s BB DNA method with stop just outside the extreme candle (allowing for spread) just as in his method. The stop will vary depending on the TF being traded. I will exit that position if it goes negative more than 15 pips. The reasoning is if I have made a good entry it should never go negative beyond the initial spread loss more and just a few pips. Since we are entering risking our trading capital, we are completely concerned with minimizing risk to that capital until all risk is removed from the trade. So at this point, it’s all about minimizing risk to trading capital.
If the trade goes positive we let it run. When it is 15 pips ahead, we move the lot #1 SL to BE and enter lot #2 (same size as lot #1) with a 15 pip SL. Note that we now have 2 lots on, but our risk is now about the same, or in some cases much less, 15 pips max.
If the trade goes negative we have a decision to make, let both trades run negative until they both hit SL, losing 15 pips, or exit with less than 15 pips loss.
At this point the results would be close to the same either way, but remember the rule, “Trading capital is sacred. Only profits are for risking to make more profits.”
If the trade goes positive, we are in a happy place. When lot #2 is 15 pips ahead we move it’s SL to BE, move lot #1 SL to capture 15 pips, or +15 pips, and enter lot #3 with a 15 pip SL. We now have three lots in, and have removed all risk from the trade.
If the trade goes negative, we have the same decision as above, but there is now no risk if it stops out. We are now in a happy place, three lots on with no risk. This happens several times a day in my system. If it stops out we go look for another trade. “No harm, no foul”
If the trade goes positive we let it run. At another +15 pips we close lot #1 for 30 pips profit. Move lot #2 SL to capture +15 pips. Move lot #3 to BE and enter lot #4 with a 15 pip SL. We have now captured 30 pips profit and removed all risk from the trade. Once we are at this point, all risk is removed from the trade and now the point is only to not re-introduce risk and to maximize profit. It’s easy the rest of the way.
If the trade goes negative we let it stop out and happily take our 30 pips profit and go merrily on our way. It yields a 1:2 risk to reward ratio which is considered by most to be very reasonable. Risk to trading capital was well contained throughout the trade and the potential for greater profit was there, it just didn’t work out this time. This will be the result most of the time with good trade selection and Tymen’s entries.
If the trade continues to go positive, at +15 pips we move the SL on lot #2 to capture + 30 pips, move the SL on lot #3 to capture +15 pips, move the SL on lot #4 to BE and enter Lot #5 with a 15 pip SL. We are now riding the breakout with 4 lots. This will happen about once a week in my system.
If the trade goes negative, which it will half the time we let it stop out and we now have 60 pips profit for an initial 15 pip risk, yielding a 1:4 risk to reward ratio, considered to be excellent by most.
If the trade goes positive, which will happen only about half the time, we let it run, adjusting our manually trailing stops on the 4 lots to 20 pips now since, “Profits are for risking to make more profits.” We ride the breakout as far as it will go. This only happens about once every two weeks in my system on average. Though I have had it happen several times in a single week. That’s a good week!
When we see signs of a reversal, we have a decision to make. If we think it’s just a little bump, we may decide to ride it out. If it is more than just a little bump then we were wrong. We take profit off by closing lot #2 and tighten stops back to 15 pips on lots #3, 4 & 5 in case of a spike against us.
If it continues to drift against us, we have a decision to make. We definitely do not want to lose any pips back. if the remaining three lots look like they are going to go negative as a group, close all three lots quickly and go merrily on your way with 80 to 100 pips profit off one trade. If it turns and starts to resume the break out, or BB Walk, we’ll keep the 3 lots on and manually trail the stops, but this time more conservatively, “Once burned, twice shy.” We NEVER want to get in a situation where we have to give pips back. That is the WRONG way to trade this position sizing system.
I’ve started my trading experience in November last year with 100$ … just to try. By the end of December, my account increased to $ 600. I don’t know how. No rules, no system.
Then I lost all earned and another 3 or 4 deposits by tring to reverse negative position
Now I learn
You are most welcome here RenLa. I hope this thread helps you in some small way.
Please be aware that my trading system is like dynamite. It can be a very useful tool in the right hands, but it can blow up your account in an instant if not used properly. That is no joke. Only trade it in demo and with the position sizings I have recommended.
This is just a small part of my system, the part that deals with position sizing and trailing stops, the subject of Cordite’s question. There are many other aspects that relate to money management and trade selection. I will try to explain them as best as I can, but I do not have the natural teaching talent that Tymen has, so please be patient with me. I will be happy to answer any questions and I will try to be patient and explain until everything is understood completely.
Your explanation of the 5 contract method is very well done here, Graviton.
Readers here should take note of your 22 years of experience in trading forex.
I hope many posters will join this thread!!
since I new, I would like to ask what BE is? and what TF to use for SL=15 pips?
BE= Break Even…moving your stop loss to point of entry price.
oh, thank you PTB I glad to see you
OK, this time let’s do this the right way. Open your demo account with the sizing I recommended and only after you have mastered this system until it is reflex, go to live trading. Being my first visitor, you are going to be my special project. I’m going to make a world class trader out of you, or die trying. We’ll have some fun along the way I’m sure, but this is business and I can be very serious about business. Let me know if I’m getting too intense and I’ll back off. It’s just one of my many character flaws. Now, let our journey begin.
I’m honored by your visit Tymen. I feel like the Head Master has just steped into my class, offering encouragement. Please feel free to add comments anytime. Especially if I make a mistake, which I tend to do when excited. And trading trends does get me excited. It’s just the way I’m wired. So welcome
Oh yes! I am in the right place and in right time
I whould be more then happy to let you do what ever you need to do “to make world class trader out of me”
I promise you will be successful or we die trying together
If you say me that I cant be successful trader then I will give up
My system uses multiple time frames, from 1 Month down to 1M. There is lots of philosophy and math behind it but I won’t go into most of it. This however, you need to know.
Every tick on the tick chart represents a point where a buyer and seller have agreed on a price. It represents the market consensus of price at that point in time. It is right by definition. It is valuable information. In the most extreme case, we will even be watching it tick by tick, but in most cases that will not be necessary. Most of the time I will keep the tick chart for EURUSD displayed off in a corner as I trade. Being the most traded pair, it’s sort of my market barometer. I don’t have to glance at it often, but I do sometimes.
The reason I don’t have to look at it very often is the motion of all those ticks is nicely compressed into the one minute chart giving us the most important information each minute, open, high, low and close. Often the 1M chart doesn’t carry as much detailed information as the tick chart, since it’s highly compressed data, but for our purposes it’s a nice summary of what happened for the last minute. So for most practical purposes the 1 minute chart gives all the definition of price movement we will need. The 5M chart is the same information, but even more highly compressed, giving the range of the last 5 1M candles. We lose a little fine detail of the data, but it starts to smooth out more. But realize, all the data in the 5M chart is just a sort of a smoothed out sum of the 1M chart. It’s the same data, just shown in a different way. And so on, right up the line to the one month chart. All the larger charts are just compressions of the data of all the smaller charts, all the way back down to the tick chart, where the actual uncompressed data is shown.
So the long term trends do not control the shorter time frames as many believe. It’s really the opposite. The long term time frames are just a compressed representation of the shorter time frames. In that sense, the tick chart controls them all.
But we will spend most of our time using the mid timeframe charts, at least to start. There is good reason for that and it will be obvious as we move along.
This is the underlying philosophy of Multi-Time Frame Trend trading. All time frames are really just the same price information shown in a more or less compressed form. Time is arbitrary, something someone chose way back when. But price is the real information we trade. We don’t trade time, we trade price.
So the answer is, we will trade all time frames at once. It’s not as difficult as it first sounds. The monthly chart only forms a candle a month. So if you had a really good memory, you only need look at it once a month. Since I’m old and my memory isn’t that good, I glance at it quickly every morning. And so on down the line. I’ll answer any questions if you have any.
never give up Learn from people with more experience.
Study charts excessively until you really understand what they are tilling you
But most of all learn from [U]YOUR [/U]mistakes.
It will take time but it will be worth it.
And never stop learning.
Welcome PTB. I feel like I’m at a high school reunion. Glad to have you here
I am glad you decided to start this thread, Tymen’s method is a great entry method, but imo trade management is the key to becoming a profitable trader.
I have already leaned a lot from you posts on Tymen’s thread and hope to learn more here.
Well, if i stop to say welcome to everyone from Tymen’s very excellent thread, and everyone who isn’t (you’ve missed something important, believe me). I’d have to spend way too much time welcoming and wouldn’t have much time for explaining. So I will say it once for all time. Welcome to all who wish to discuss trading trends
no questions at this time
my memory is good