I’m not surprised that the more experienced traders are having better results with this system than newer traders. Many have made extensive studies of candle stick patterns, money management and other relevant material that is all coming together for them now. Experienced traders have all sorts of loss limits that prevent them from getting so deep in a hole they can’t climb out. I have a daily and weekly loss limit, but I also have a limit that I will never take more than two stop losses on the same pair in a day.
Tymen ran through some basics of indicators and concluded that they didn’t work by themselves. When he introduced the BB DNA entry method, but advised that it was not for new traders. That might be because there are many other things like money management and pair selection that more experienced traders have already practiced. So let’s look at some things that might help newer traders select fewer and better trades.
The Tymen method of BB DNA is a type of filter that selects trades that are already at their statistically maximum or minimum values and have turned a bit to revert back toward the BB Mid band. If you find that you are stopping out too often using Tymen’s method just as he presented it, there is nothing wrong with prefiltering your trades and only selecting the ones that give you fewer stopouts. I suspect this is something the more experienced traders are doing almost reflexively. I’ll present a few possibilities and you can test them for yourself.
I’ve noticed some experienced traders are combining candlestick methods with BB DNA. This makes sense since it is a direct observation of very detailed price action. They watch for a particular pattern like a star or a doji before entering and seem to be getting very good results. I’m not saying that anything works for everyone, but if you haven’t spent some time studying these patterns, this would be a good time.
Others are using higher level time frames to filter their trades, only trading when two or even three trends of TFs above them are in the direction of their trade. This makes really good sense since the way to make the most pips with this system is to always trade WITH the trend. If you are keeping a traders journal, the very first thing you should start doing is review your trades at the close of the market each week. I suspect if you go back and review you will find you have not been trading Tymen’s system as he presented it or you have not been trading WITH the trend.
Tymen also showed us the method of only Trading long when the MACD is above the 50% line and only short when the MACD is below the 50% line. There is nothing in his system that prevents you from using an indicator as a pre-filter to only take better trades and I encourage you to review your trades at the end of each trading week to see if one pre-filter or another would have prevented the majority of stopout losses. This is something professional traders do every week of their whole carreers. Yes it is hard work, but it pays very well indeed.
Tymen also once suggested to a trader that the stochastic could be used as a filter (you have to read his comments very carefully). I’m a Stoch trader from way back and used to look for particular setups where the 15m was coming off the bottom (for long) and the 30m and 1h were already headed up. This is almost the same as saying the trends for two levels above are headed up. I would ride the 15m up and if it saturated (a complaint many have about the Stoch) I would move one level up to the 30m, if it saturated up, I would move up to the 1h chart and continue to follow it up. It was a simple system, but I had good long term results from it. Walking up timeframes allowed me to stay in a good long trend longer. There is a simpler way to just use it for a trade filter and I detailed it in an earlier post. if the short term line is above the long term line, only trade up. If it’s saturated up, move up a timeframe for a signal. Use just the opposite for a trade down.
These are all entry filters. You can try others like the RSI or ADX. Another popular one is if price is above the 100sma and 200sma only trade long, if price is below both, then only trade short. Another is if price is above a major up trend line, only trade up, if price is below a major down trendline, only trade down. There must be a very large number of these. Anything directly related to price action should be considered first.
The point is not to trade these filters by themselves, but rather use them to reduce the number of trades you are taking, and then only take them when conditions are most favorable. I can’t say which, if any of these filters will reduce your stopouts. I would suggest first try filters that are closely related to price action, such as candle sticks or PA above the 100sma and 200sma only go long, or below only go short. Trend lines are also a tool I have found to be very effective, and of course, if you haven’t been trading WITH the trend, this would be a very good time to start. If nothing else, this will reduce your number of trades and SL losses and give you more time to think over the trades you do take.
If anyone is having problems with too many stopouts (a poor W/L ratio), I will be happy to work with you directly to get it up where it should be and show you methods to keep it there. I’ll bring in other senior traders for their opinions if that is needed. Whatever it takes. All you have to do is ask. But you’ll need to ask quickly as I’m running out of time to get through these basic things and I need to move on to some more advanced material.
