But I don’t think it’s challenging enough for this fine group to just trade all time frames at one time, so we we will trade multiple lots in all time frames (see my multiple lot description above). And really, for a group with this much promise, I would be remiss unless we did all that in multiple pairs at the same time. So fasten your seat belts and hold on. This will be a wild ride.
Hi jcgibson, I glad to see you too
someone told me that trading is such business that it is better to learn from other people’s mistakes and from their experience
The logic of trading multiple pairs at the same time is simple. We want to diversify some of our risk away. We can’t diversify it all away, but anything we can do to reduce risk to our trading capital we will try our best to do. Why? Because, “Trading capital is sacred.”
Also, we make lots more pips trading multiple pairs at the same time, but that just a side benefit 
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I will refer to Tymen’s BB DNA entry method here, as I have adopted it into my system. Anyone who hasn’t any exposure to it should read his enlightening thread on the subject of trend trading. To make things simple though, we will use the “simple” entry method he discussed for the most part, which is when the candle just pulls free from the Bollinger band. We will give a glance to the single CBL though, just to help make better entries.
I recall reading some where, that when you study the charts long enough, that eventually the light bulb will turn on in your mind. At that time, whenever you look at the charts, you will see what is happening in a new light. You will be able to quickly see what has happened, what is happening, and what will probably happen. But this is only after you have spent many, many hours pouring over the charts and have paid your dues.
I have been trying to find out where I read it…I’m sure I saved it some place. Pretty sure I read it on one of these threads. That was kind of how I felt last week when trying to put Tymen’s lesson into practice. The Bollinger Bands inter woven with Tymen strategy’s just seemed to make sense to me…so that I am seeing things in a new way. Very exciting! I know I have a lot to learn with how to use this information. Please include me, along with RenaLa, in your personal trading development project. I’m very much looking forward to utilizing your’s and Tymen knowledge to enhance my trading skills. Thank you both very much!
EVERY trade consists of only 5 parts.
- What is traded
- The direction of the trade
- The size of the position
- The entry point
- The exit point.
We have already discussed how we will handle 3, 4, and 5. So all we are left with is 1 and 2.
I’ll be happy to answer any questions on 3, 4, and 5.
what will be the exit points? the bollinger bands?
oh, never mind I understood
Graviton, please correct me if I wrong
If the trade goes positive then we will close a lot once it reach 30 pips
and let the rest continue to run for profit? right?
sorry for my english I will verify from time to time
With what you know now you could probably throw a dart at a list of pairs and flip a coin to pick direction and do better than 95% of traders, but we want to do better, much better.
So we will first start with #1. Pair selection. We will want to trade only the best pairs, but by what criteria?
OK, some more philosophy you will need to know.
There are two camps about price movement in the markets.
The theory camp says price movement is a random walk with no real discernible direction. If that’s so, no one can make a living off just trading price because the spreads will always cause them to lose in the long haul.
The practical camp says price is driven by individuals who are trading on fundamental information, at least part of the time. That creates trends and then more people jump on those trends making them larger and longer. This is called the “fat tail” of the markets, because price moves differently than a math model like a normal distribution says it should. There are trends that create a tail of extreme moves out on the end of the curve.
Everyone here should believe that trends do exist in markets. If you do not believe that, I can’t help you. Now, our goal is to get on those trends when they have shown themselves, and ride them as long as is reasonable to do so. To do that, we want to select pairs that are trending.
It’s very important we don’t try to force a trade. We want the trades to come to us, effortlessly. So now we know what we are looking for, trending pairs. But, you might ask, trending in which time frame? We trade price, not time. It would be wonderful if a pair had a price that was trending up in all time frames. That would be an easy pair to select to trade. But things are rarely that neat and tidy in the markets. I have seen it happen a few times though, and predictably, price went up, at least for a while.
One thing you can see right away is when we have #1 answered, we will also have #2 answered, which direction to trade. So we are really down from 5 questions now to just one. See how easy this is?
So let’s rephrase #1 as pair selection, for Forex trading, and look at it from a different angle 
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Good question. Yes, generally that is what we are doing with the 5 lot strategy, throwing fresh lots on the bottom and pulling the first chunk of 30 pip profit off the top. The other four we can ride to the moon, if the market will just carry us there.
I have given an average case in my example. Remember my rule, “Every rule has an exception, and every exception has an exception.”
In very active fast moving markets, or very volatile, 15 pips may not be enough SL to keep you in the trade, you may need 20 pips. In that case you can pull a 40 pip chunk of profit off the top. You will see that when both London and New York are both trading.
In very slow moving markets, like right after NY closes and Before Asia opens, you may need to adjust SL down to 12 (or even 10) pips. In that case, you will be taking a 24 (or 20) pip chunk of profit off the top.
You can use the Average True Range indicator to help decide, but after a while you will get a feel for it. 15 pips is just an average case. We can talk about it more as we get into demo trading.
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We need to find where “fat tail” is and where it started for each pair that we going to select
Very correct!
So we are on a treasure hunt for trending pairs, but trending in which time frame.
Looking at it from another angle, we know that shorter time frames yield smaller trends. Like with the 5M the outer band to outer band BB moves are only about 10 pips or so on average. That’s one reason it’s so hard to make a profit there. By the time you identify the trend it’s half over and what ever you can get is eaten up by spread. If you look at the very long time frames, like the monthly and weekly, their trends move thousands of pips. But those trades come around rarely and you have to enter with a really big SL, which is not the same as a really big risk, but perhaps we’ll get to that in a position trade addendum to this thread later.
We also know we want to pull off chunks of profit about 20 to 40 pips in size. So our trends need to be a little larger than that for us to get in on them and pay the spreads (lots larger is nice too). Say, 30 to 100 pips bottom to top. If you look at the Average True Range for moves in the majors, you’ll see those sizes of moves occur sometimes in the 1H and often in the 4H and Daily Charts.
So that’s where we start our treasure hunt 
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There’s a rule, “Do not trade dead or thin markets.” It’s in my list of rules in Tymen’s trend trading thread. There must be a hundred of the darned things. My suggestion is you print them out, clean them up, ask questions if any aren’t clear or seem contradictory, then start adding your own. I just put down the ones I could think of off the top of my head. I’m sure I forgot some. I forget things sometimes. Anyway, read them each Saturday when the market is closed and add to them as you discover good new ones. Thats really how old timers trade. Notice, you don’t see lots of poor old traders
So, back to the treasure hunt. Let’s start with the majors. This is something you need to learn to do, because you will be doing it a long time. Open up your chart software and look at the monthly chart of eurusd. Adjust your zoom to see about 4 1/2 years of candles, back to around mid 2005. See any trends? 
I am still waiting for the chart update … hmm too long
Of course. They are easy to see. The eurusd trended up for about 2 1/2 years, then down about 9 months, then back up about 11 months, and most recently down another 5 months. And look at the sizes of those trends! Thousands of pips! Wouldn’t you love to get in on one of those! I can show you how. But let’s move on for now. zoom in to get a better look at say the last 2 1/2 years. see the trend down that started at the end of Nov 2009? We are still in it, but it’s curling up a little at the end, just in the last month.
It will not update. The market is closed.
Graviton, thanks for starting this thread. I’ve only just got back from the shift I left home for 16 hours ago, so am going to bed. Will read tommorrow when I wake up, but wanted to say cheers before I did.
Cord
You will need to open a chart on a system like MT4 that was updated on Friday before close. Otherwise we are stuck here till you can look at a chart. Maybe you can get someone to post one for you?
No problem. Til it be morrow.