Hey Journal.
So, I have all my ducks in a row now. This is, when I think about it, my roots. These things that are gonna be mentioned is what hit me so hard. It is my truth. You know, there’s really nothing new out there. Everyone has their own individual style. And it’s all nothing but a little bit of here and there. But now, I’m going to show you where I’ve picked up my truths from. I’ll start from the beginning and move chronologically.
This is all from Mastergunners ‘Forex Portfolio’ thread.
As a result, I’m able to capture all of the trends. If you ever see a lengthy trend in the markets, I was in it. That’s what I hold out for. Large pip movements. I’m not trying to get 10 or 20 pips. That requires too much work for too much risk and it takes too much time. As Sweet Brown would say, “Ain’t nobody got time for that!”
Price movement has to be respected. It is extremely volatile, and when you try to contain it, you’ll find the angst of unnecessarily triggering losses. You’ll never hear me complain that I’m being stop hunted. Ever. Furthermore, I trade price action. I don’t use instruments to guess which direction price is going to move. I simply move in the direction of price. While that sounds so simple, it really isn’t. I as well am no fortune teller, and though I enter into the overall direction of price, price still does what it does and trades do turn against me.
That’s right, I never ever set a take profit target. There would be no way I would be able to let a trend run it’s course if I were to sit there and pull out of a trade after an arbitrary amount of pips. When a trend comes to an end, it shows in price action. And that’s when I will enter a stop loss, locking in some pips and giving price an opportunity to continue on the path I want it to go.
I got news for you. The market doesn’t care what your trading plan is. You can add up all the math you want and it won’t make a lick of difference. You don’t control the market and you never will.
Whether you aim for 20 pips a day, or limit yourself to five trades a week, you are only creating an atmosphere where you are limiting your potential.
Your goal should be one thing, and one thing only. And that is to maintain an edge in the market. For if you have an edge, the results will be self evident.
I don’t, and certainly the market, doesn’t care what your goal is. I care about what you did. For what you say you can do, what you add up in your excel sheet, what your calculator computes doesn’t mean a thing until the deal is done.
Your trading methodology will dictate what you get out of the market. You don’t have a say in it. So get over it.
My methodology on average reaps me a little over 60 pips a trade. So knowing that wouldn’t I want to swing the bat as many times as possible? I’m not going to say, okay, I’m just going to swing twice and that’s it. Makes no sense. I want to trade as often as I can given what my methodology will output.
So quit dreaming. Forget adding up the dollars that aren’t there. Focus on developing your edge. And when you have it, use it to exploit the market as often and as profitably as you can.
Ok Journal. Now, isn’t that just priceless? I mean, I can just see what Mastergunner is really saying. He has taken a step back from the in and out, day trading scenario and focused on one thing only. That’s riding out the trends. Any of them, and, in fact, all of them. This is a methodology. It has been said over and over again. Meaning it’s not a specific trading strategy. And what I see here is principles. He’s riding out longer term trends. It is really that simple. He feels so strongly about his method that he feels it’s necessary to not contain it to just one pair. It’s an edge. And he will use it on any pair that is trending.
That is another confirmation to me that on the daily time frame and above that there are long lasting trends that do occur. So…you get the idea.
Another huge factor within that thread that affected me was only one other person. Without a doubt, the smartest guy ever to step foot in BabyPips, the genius of all genius’s. Intelligence upon intelligence. The most respected person who I have never met personally, but regard as the Einstein of Forex.Clint Eastwood. Only because of my age am I able to discern how intelligent, thorough, knowledgeable, and …old. (Look, I don’t know for sure, but he has to be very old, because I fully believe in the older you are the smarter you are). In my mind, when Clint talks, you need to listen. And guess what? Yep, he was involved in the thread. And it was the things that he said that really grabbed me. It’s because he talked about what was the heart and soul of the methodology. [B]THE TREND[/B]
And here’s some of his wisdom.
The following comments aren’t necessarily directed at Raj, as he seems to have things under control. Rather, these comments are directed to any newcomers to this thread who might be attempting to use the MG99 methodology, but — instead of achieving dramatic profits — are experiencing unacceptably large losses.
This thread presents a powerful methodology, the MG99 Portfolio Methodology, which can supercharge the trading results of almost any swing trader who is already consistently profitable.
And therein lies an important caveat —
If you are not already successful placing individual swing trades, one at a time — do not count on this methodology to somehow magically transform you into a successful swing trader. In other words, you can’t blindly toss a bunch of bad swing trades into a portfolio, and expect a few winners to compensate for all the losers.
This is not a shotgun approach to trade selection.
Instead, this methodology will simply amplify what you are already doing.
If you are already swing trading successfully, this methodology will accelerate your winnings. If you can achieve overall profitability making five, or ten, or twenty consecutive swing trades, then this portfolio methodology offers you a way to trade all five, or ten, or twenty positions simultaneously — multiplying your profitability — without creating intolerable overall risk.
On the other hand, if you are an unsuccessful swing trader — heading for an ultimate crash and burn — this methodology will simply ensure that you crash and burn sooner, and more dramatically.
So, before adding the MG99 Portfolio Methodology to your trading strategy, make sure your trading strategy is profitable over the long term.
•
If your swing trading is not yet consistently profitable, week after week, and month after month — without this methodology — then, before you consider adding this methodology to your current trading strategy, your first task is to develop your swing trading skills.
I recommend that you spend some serious study time examining the swing trading strategies detailed here in the Show me the money! [Swing Trading] forum, and in the Free Forex Trading Systems forum. There are some good strategies outlined in those two forums, and you should be able to find one that fits your preferred way of trading.
The very first step in any successful swing trading strategy — and in the MG99 methodology — is to identify trends (price swings) which you can trade. If you’re having trouble with this basic first step, check out The 3 Duck’s Trading System. That system offers you a simple, easy, highly-effective method for identifying trade-able trends. The Three Ducks method can be applied to any style of trading, but it is presented specifically for swing traders.
The MG99 Portfolio Methodology is a powerful tool, which can do good things in the right hands. But, it can do a lot of harm in a short period of time in the wrong hands. So,make sure you are a competent swing trader, before you try to apply it.
Actually everything he says should be highlighted.
In simplified terms, the methodology involves identifying and entering a valid trend, and holding your position for as long as the trend remains valid. Obviously, this requires a solid understanding of trend-trading, including successful strategies for (1) identifying a trend, (2) entering in the direction of the trend, and (3) identifying the end of the trend.
In the Mastergunner Portfolio Methodology, the end of the trend is the basic exit signal.
Mastergunner has not specified rules for identifying trends; instead, he has left it to each trader to use his/her own preferred method of trend identification. There are many ways to identify a trend, and entire books have been written on that subject. I’m not going to attempt a review of those methods. You can study trend-trading on your own time.
I will tell you that my preferred method involves simple trend-lines and trend-channels, and that I define a breakdown of the trend as a retracement (of a certain size) out of the trend-channel. The retracement which triggers an exit (for me) is the close of a daily candle below an up-channel, or above a down-channel, by more than 38.2% of the channel range. For example, if an up-channel has a range of 200 pips between channel boundaries, then the close of a daily candle more than 76.4 pips below the lower channel boundary signals an exit of the position. Why 38.2%? Because it’s an easy percentage to drop onto a chart using a Fibonacci tool, and it seems to work.
None of the above is meant as a recommendation for you; it’s merely an example. Develop your own ways of identifying trends, and identifying when they collapse.
A number of traders on this thread have introduced the idea of adding stop-losses and profit-targets to this methodology. And that can definitely be done successfully. But, it represents a different trading concept from the one outlined by Mastergunner; and, if you go that route, you need to understand that you are trading a variation of the original methodology.
Well, there it is Journal. Hopefully you can understand why I subscribe to this methodology. In my mind, it’s all about the trend. These 2 monsters have made that point. And now, my job for me, is that I want to prove it to myself. You know, sometimes in life, there are real golden nuggets that drop into your lap. You just have to be aware of them. And capitalize on them as best as you can.
Mike
