Multi-Time Frame Trend Trading

Beginner Questions
706

Cordite, thanks so much for posting the ATR stop indicator. I’m sure this will help many. This sort of thing has been requested by lots of folks. I factor in ATR when I figure stops but my formula changes with the pair, time of day, extreme candle low or high and last lower high or higher low and time frame. It’s just way too complicated to try to post and just not confuse everyone. My method also requires considerable experience to know when the number is no good and what to do about it. This gives people something to start with and they can refine it as they go. As I’ve noted before though, I don’t know anyone who has ever gotten rich by setting a stop more precisely. I think the point is to always have a stop, have it’s setting make some sort of sense, never move it against the direction of your trade, then move on to things that will make you rich. Just my own humble opinion.

Thanks!

707

Thanks Graviton,
I didnt look at weekly chart :frowning:
yes, I do so on demo. the PA right now by SR level that I drew on my weekly chart
what other things you’ve mentioned? (if you have your secrets its no problem
every trader does)

708

RenaLa, some of my methods, like entering into an existing trend, do more harm than good to new traders. I have to be careful I don’t ruin someones trading with something that works for me but wouldn’t work for them. But otherwise no, I have no secrets. I’m baring my heart, soul and mind here. Everything I do is or will be contained in the pages of this thread. I can’t promise it will all work for everyone, but maybe it will help someone.

I can’t believe after all the ton’s of MTF analysis we did on pairs, probably 100 hours of my time, and you didn’t think check the higher TF chart???

Graviton pulls hair out in clumps

Just kidding. If you are patient, I’ll show you how to trade the daily chart, OK?

709

Someone today asked how I handle losing streaks. I can’t print the question, but here was my answer.

The greatest traders in the world have losing streaks. The trick they know is how to lose very little until it passes.

When I have a losing streak, I send myself to rehab, like a pitcher who threw out his arm. I will quickly drop my position size from $10 a pip to 50 cents a pip. That’s a reduction in position size of 20 to 1. If the losing streak lasted weeks, months or years, I can stand it at 50 cents a pip.

It takes all the pressure and stress off so I can think a lot more clearly. I follow all my rules just as if I was trading Std lots and keep a list of any that I break and work on not breaking them again, like my overtrading rules. Those are the hardest for me because I love to trade.

I make up new rules to take care of any situations that come up during my re-hab period. I have about 20 rules on my list. That sounds like a lot, but I’ve had a lot of problems with my trading in the past and I need every one of them. If I get kicked out on rules, I study till the next day. I’ve actually learned some of my best stuff while kicked out on rules.

When I’m back to profit at 50 cents a pip, I move up slowly in price per pip till I’m back to my regular size. If I have a problem along the way, I stop there until it’s fixed. If it’s not fixed in two days, it’s back to 50 cents a pip till it is. Usually I’m out of rehab and making pips again like crazy in a couple weeks. My longest rehab was about a month after my father died. I just couldn’t think right.

So when I’m winning, I make thousands, and when I’m losing, I lose hundreds in rehab. Today I made 750 pips in a wild afternoon. I took no trades all this morning because the market was stinky with all whipsaws on every chart. In just a few hours this afternoon the trades came to me and I hit my profit target and went well above it and then lost 10% back and I was kicked out for the day on my maximum giveback rule. No chance of losing it back. Not today at least.

Tomorrow, a 5 trade max rule for the whole day kicks in and the max daily loss rule is 50 pips and I am kicked out for the day. That’s my rule on a day after hitting PT above 500 pips. You can bet I will be the most careful trader in Forex tomorrow.

Don’t sweat it. Drop your price per pip by a factor of 20 and do your rehab time like all the rest of us have to do during a losing streak. No one is above it.

I have known people who would take a vacation anytime they got in a losing streak. I take my laptop and trade on vacations when my family makes me take them. So that wouldn’t work for me. For me, it’s either rehab or no trading for a couple weeks. I’ll take the rehab.

Happy Trading

710

Graviton
Your words are gold gold, thank you for the advice.

This rule of 5 trade max, you follow it everyday or only after hitting PT above 500 pips?
thanks! :slight_smile:

711

Now that I have my overtrading under better control, I only impose the 5 trade max rule any day after I hit my profit target. But I analyze my trading every weekend when the markets are closed. If there is any sign of overtrading, the 5 trade rule goes back on. It makes me think twice before putting on a sloppy trade. My profit target started out much lower, basically the number I could hit 50% of the time. I now have it set as a stretch target to give me a harder target to hit. It’s plenty hard!

712

I think it’s not just losing streaks I have to worry about. I have taken your advice about the King Kong effect to heart and after a 3 week run which averaged gains of 36% per week in one of my accounts; I closed the last position and transferred all the money out of that account. It will stay empty until next week. I figured a 5 day trading break in that account might help to reduce any temptation to take ever more risky trades.

My other account hasn’t been doing so well the last couple of weeks, and I am now limiting the trading on it to nothing without a plan.

Again, all due to your sagely words, Graviton.

713

Graviton, your mind, heart and soul in every word, its true.

trading is like a huge ocean, there is no doubt your advise helps to many!!
OK

714

Thanks Cord.

715

I’m still seeing many new traders trying to trade without a plan. Congrats to those who have started one. A trading plan is the Holy Grail. No one can give you a plan that is perfect for you. If you want to be successful in this business, you must create your own, then continually improve it. I’m still improving mine after decades. I’ll post a sample, just to help kick start anyone who isn’t clear what it should look like. This is just an example. It is not a plan you should adopt. You must write your own.

716

Thanks! Valuable diamonds of wisdom gained from your vast experience. Can I conclude that the causes of such losing streaks are down to the human factor and not due to the trading methodology not working because the market has changed from its normal behaviour for a while?

717

Thanks. I’m well on my way but am having difficulty. Would appreciate an example from you. :):):slight_smile:

718

I wrote my first ever trading plan a couple of weeks ago, and it has been one of the most valuable (and there has been many) things I have taken from this thread and the Tymen thread.

I have refined the plan a couple of times since then and I am actually starting to see a system emerge with a positive expectancy! This is really exciting to me!

I look forward to seeing your example of trading plan.

Thanks again for all of your insight.

719

I’ve been trying for two days to post a simple example plan. Unfortunately, something in babypips is blocking my copy, so I’ll have to start over. But it sounds like you have got a good start. I’ll retype the sample as soon as I have a chance.

720

I’ve tried about 10 times to post this, but something in babypips is blocking it. I’ll try re-typing it directly into the post and perhaps it will go this time.

This is an example only. You should not copy this. Start from a clean sheet of paper and create your own plan for you.

A trading plan should be a concise list of rules you promise yourself you will follow. The point is to keep it short and concise, but to include every rule you need to trade. The goal of the plan is to make every decision you will need to make while trading, but before you enter a trade.

Example Trading Plan 4/20/2010

Pre-trade Analysis: Perform multi-time frame analysis of at least 5 pairs to consider trading. Pull some fundamental information also on pairs to be traded.

Entry:

  1. Enter Tymen CBL method in M30 or greater retracements, always in the direction of the next higher (4 to 6 times longer time) time frame trend.

  2. Also, enter squeeze breakouts per Tymen method. Use 15M Stoch filter on all entries.

Stop: Initial 1st lot stop set under previous swing high/low on home time frame. Stops manually trailed under previous swing high/low as close as possible to position management rule.

Position Management: Scaling into larger positions per 5 lot method. Increments to be based on ATR formula (15+ ATR)/2

Early Exit: Exit anytime any profit over 40 pips decreases by 50%
Early exit if 15M Stoch changes direction.

Additional Rules:

  1. Check Forex Factory Calendar each morning for news. Sit out red flag news.
  2. Always use a stop.
  3. Never move a stop against direction of trade.
  4. 8 trades per day max
  5. Wait 15 minutes minimum between each trade.
  6. Take away a minimum of 1/2 of any profit above 40 pips on any trade,
  7. If confused or unsure, sit out.
  8. No over night holds.
  9. Close all trades by 2 PM Friday
  10. Never average down.
  11. Take no fliers in good account.
  12. Don’t trade tired.
  13. Log all trades in journal.

In a separate section of your trading journal you will want to keep a log of your trades. You’ll want to record the pair, time, long or short, stop amount, won or loss amount, if you lost, why you think you lost, reason for taking the trade, any of your rules broken, other observations, etc.

This and any other information is used in post trade analysis performed every weekend while the market is closed and at the end of each month.

Post Trade Analysis Includes:

Total # of trades, Win/Loss ratio, Risk/Reward Ratio
Total # of trades according to plan, Win/Loss ratio trades according to plan
Total # of trades not according to plan, Win/Loss ratio not according to plan
Average pips of winning trade, Average pips of losing trade
Total pips of winning trades, Total pips of losing trades
% increase (decrease) in account value

A list of all rule violations and number of times each violated.
New rules to test to improve trading.
New methods to back test or demo test.

As your plan evolves you might have several entry methods, additional trade filters, additional things you want to log and track, etc. Some rules won’t work for you and you’ll delete them. You’ll add other ones as you need to to correct problems you find in your trading. Make it your plan and revise it as necessary to suit your personal needs. This will be your Holy Grail, but you have to create it yourself.

Whew! Thank goodness. This time it posted.

721

Wow, that’s a really great plan, Grav! Much better than the crappy one I spent so much time on. :slight_smile:

722

Very useful information Graviton. I´ve never thought of making a post trade analysis, but i will start now.

I have a question: is there any day of the week that you stay out and dont trade? For me that day is Friday, price act really “weird” on that day.

Thanks! :smiley:

723

Often it’s hard to tell in the beginning what is wrong with your trading and why your percentages are dropping. It could be you have been trading in a falling dollar environment and the dollar has started a long term rise in value, but you are stuck in your old ways and haven’t adapted to the market, or something like that. Or it could be you have been trading nice long trends and the market has gone into a sideways consolidation with lots of whipsaw action. It could be a King Kong effect after a long streak of wins or some other “Human” factor.

The point is, don’t keep losing and expect your results to change. It doesn’t work that way. If you want different results, you need to do something totally different. That’s the reason for going into “rehab”, just as a pitcher would do who is having trouble with his pitches. You go back down to the minor league, reducing your value per pip drastically, at least 10 to one, so all the pressure is off and you can think clearly, and work on your game. You don’t return to the big show until your game is ready, and then you step it back up slowly, carefully watching for any problems along the way and stopping to fix them when they are found.

Performance at a world class level isn’t an accident. It’s the result of lots of discipline and preparation. That’s the same for a trader as it is for the sports star you see on the weekend. The question is, do you want to be an amateur or a professional? If you want to be a professional, what kind of professional do you want to be, one who barely gets by, or a world class professional? If you decide you really want to be a world class professional, these are the sacrifices you will need to be prepared to make to get there. But of course, always, family first, then trading.

724

Thanks. I’m sure yours will be better than this in no time at all. But it’s a start at least. Happy Trading

725

I think it’s different for different traders. I rarely enter any trades on Monday morning or Friday after noon. There seems to be too many large traders taking positions and closing out positions at those times for me to get a clear understanding of price action. I know traders that only watch the market on Mondays because their post trade analysis shows they lose on average on those days. One thing is for sure, if you don’t feel comfortable with a certain pair or on a certain day or session, don’t trade it.