Alright let me comment here in sections (I’ll try to keep my comment ‘clear and concise and to the point’)!!! LOL!!!
Honestly: I’ve not looked at it in ages. To be VERY honest: I don’t think I ever even went through the whole thing i.e. I just ‘jumped’ to the parts where there were details of indicators or trading systems. Who knows??? Maybe if I’d gone through the whole thing step by step things would have turned out a lot differently and a lot sooner than they did. I’ll never know I guess.
I sh*t you not!!! I’ve always joked around about 50 000:1 leverage but until just this last week the most I’d ever seen on offer was 500:1!!! But as I noted: leverage in and of itself is not the problem. The problem comes in when the trader doesn’t know how to calculate and manage their risk. Many people don’t understand this or get confused by this. It doesn’t matter if you’re trading a micro lot (1 000 units) of EUR/USD (YES: I’ll use a spot FOREX example) with 10:1 leverage or 50 000:1 leverage (or, alright, 1 100:1 leverage). You’re STILL making (or losing) $0.10 per pip movement. The only difference that leverage makes is how much margin is required to open that position. Leverage is very misunderstood I’m afraid. If I’m trading CFDs on the Dow Futures at 1:1 leverage or 10:1 leverage: I’m still making (or losing) $1 per point movement (and note that’s PER FULL point as in ‘1.00’ i.e. ‘in the good old days’, and THAT wasn’t too long ago either, the Dow was never quoted with decimals but THANKS to the requirements of the likes of Goldman Sachs and Algorithmic High Frequency Trading Systems this was changed). The only difference is the amount of margin that is used (reserved) to initiate and keep the trade open. So if you’re discliplined and implement risk / money management it doesn’'t matter what leverage you trade with.
Well you make a good point and MAYBE I’m being a bit ‘sanctimonious’ when I say things like ‘all you need is … and forget about trying to learn or understand the markets’. I think I’ve noted this before somewhere: MAYBE (and I think this is what you’re saying) WITHOUT all the ‘digging’ and reading and learning and asking questions I STILL wouldn’t be profitable. I mean: I don’t trade something ‘blindly’ although the sole extent to which I’m subjective (conciously anyway), I believe, is that when looking at a chart, and if it just doesn’t ‘feel’ right, then I won’t trade that instrument at that time, and it’s not something that I can really explain. That’s the only reason why, I believe, my (Wilder’s) trading systems cannot be automated. I suppose I could sum it up by saying that I’ll never trade an instrument where the price bars have HUGE wicks on either side of the body of the price bar. That sort of ‘turns me off’. And I tend to look at instruments that ‘ordinarily’ trend and they’re pretty easy to ‘spot at a glance’. I don’t rely on an indicator to tell me whether an instrument is trading in a range or is trending and that’s odd because ONE of the functions of Wilder’s ADX is JUST THAT but unfortunately lags too much. But ADX is only a PART of one of Wilder’s trading systems. It was never intended to be used as a standalone indicator. At worst case, on it’s own, it MAY be used to confirm signals of his other trading systems but, as I noted, it does lag. Would I get whipsawed LESS if I used it as confirmation for my Swing Index System trades??? Probably. But if I look at the amount of trend trades that lasted MONTHS that a trader would have missed because ADX wasn’t giving the ‘correct confrimation’ well, then, I’d rather live with the whipsaws!!! LOL!!! Alright: this is getting LONG again. What I’m trying to say IN SHORT is that I’ll never know NOW if all of the ‘superlous knowledge’ gained as noted has stood me in any better stead. That being said: one thing I DO know is that if you’re trading a purely mechanical or technical trading system you cannot ‘second guess’ that trading system no matter how ‘wrong’ the trade may ‘feel’ to you (this of course assumes that you’ve got a sound trading system that has been PAPER TRADED over a good few years of data and can be proved to be profitable over time). Honestly: I still SOMETIMES have a hard time taking a signal that ‘feels’ wrong to me but I’ve learned to literally FORCE myself to take the signal. And guess what??? Almost all the time: the trading system was right and I was (would have been) wrong.
You’ve ‘hit the nail on the head’ and to this end read the attached Adobe .PDF document. It’s ‘good for a laugh’ but there’s a very succint point made (I THINK ‘succint’ is the right word to use). As far as CFDs vs. spot FOREX trading is concerned. OTHER than the way that the underlying instrument may ‘move’ and the fact that if you’re, for example, trading CitiGroup, or Bank of America, you’re looking at the SAME CHART as every other trader that’s trading that particular instrument and that, to me, makes a HUGE difference, there IS no difference (and don’t get me wrong: there are CFDs on equity futures and commodities that ALSO don’t ‘behave themselves’ and that I wouldn’t trade either). Pure candlestick trading or trading chart patterns is supposed to be the ‘ultimate’ in trading so I’m led to believe. Well here’s the thing: take three different brokers in three different timezones that close their 4-hour and daily charts at different times and see how many times the candlesticks are identical and how many times the same chart patterns occur at the same time at the different brokers. It’s not often I can tell you. Does it all ‘average out in the end’??? I’m not sure. But it’s a little thing like this that I’m referring to when I say that you’re starting OUT with ‘odds stacked against you’ before you’ve even placed your first trade. In other words: given an identical trading system it’s success or failure may very well depend at which broker you’re trading with and in which timezone they are. That doesn’t sound like an ‘exact science’ to me!!! LOL!!! Then again: apparantely trading is an ‘art’ but I perceive it as a ‘science’ and that could very well be the reason for my ‘contrarian’ statements and opinions.
This is the only thing I cannot bring myself to agree with (that you’ve noted). Those tests were based on the same pair, same timeframe, same broker, same period, same EA (‘Test 1’). How could the differences be explained away FIRST getting different results when the tests were initially run and then getting different results doing the exact same test a week later??? To me that’s MORE frightening than the fact that the results of ‘Test 2’ (different brokers, therefore different timezones, but the rest being equal) differed greatly. At least THAT I can ‘get my mind around’ i.e. there’s at least SOME type of logical explanation albeit it frightening too!!! LOL!!!
But hey: all of this is ‘just me’ and my ‘findings’ based on my testing and my experience. Maybe (as I’ve noted) my trading systems are just not suitable for the trading of spot FOREX. I do know, as but one example, that all of Wilder’s trading systems’ calculations are heavily weighted in favour of the daily CLOSE. Given that you have as many different daily closes in spot FOREX as you have brokers in different timezones that would explain a lot. THAT BEING SAID (I’m starting to sound like an analyst here i.e. ‘well this could happen but if that happens then this could become that happening’): I’ve always sworn that I’d never trade (again) on any timeframe shorter than the daily timeframe. Now: I find I’m trading on both i.e. long term trades on the daily timeframes and intraday trades on the 1-hour timeframes (alright: if I’ve got profit locked in on a trade with a stop and reverse order I’ll change the order to a stop only and go to bed and sometimes to my delight in the morning the trade has kept on going in my favour). This ‘change’ came about from being ‘bored out of my mind’ (trading the daily timeframes, although the signals are by FAR more reliable, does require ‘bucketloads’ of ‘patience and restraint’ so I started experimenting and found that other than certain anomalies that occur on the 1-hour timeframes with Wilder’s Swing Index System, which do not manifest themselves on the daily timeframes, the system performs just as well). The point I’m trying to make I guess is that I don’t think that you ever DO stop learning in this business even if it’s unintentional!!! And, well, I enjoy being ‘glued to the screen’ hour upon hour whereas it would drive others nuts or they’re just not as fortunate as I in that they have to have a ‘real job’!!! (And THAT was most DEFINITELY a joke i.e. ‘bad things’ have happened to people that have told me that trading is not a ‘real job’)!!! LOL!!!
IN CLOSING (I’m worried that I’m getting to that 15 000 character limit again): I’m not here to ‘knock’ spot FOREX trading or spot FOREX traders. I failed at it and I assure it wasn’t for lack of trying on my part. But I can trade equity futures and commodities well. The EXACT reasons for this will probably always be debateable (even to myself). I’m here to share what I know to work for me (and OBVIOUSLY to solicit clients let’s be honest). BUT: it doesn’t help to solicit clients that are going to lose their money either and the only way that I PERSONALLY know of to aid new traders to not lose their accounts is to advise them to trade equity futures and commodities. The idea is to help new traders GROW their accounts and therefore increase their trade sizes and in so doing the broker commissions become bigger and bigger. Many people think it’s the opposite (and unfortunately with FAR TOO MANY BROKERS the opposite IS true) i.e. people think that it’s in the broker’s interest for a trader to lose their account. That depends on whether you’re a ‘Bucketshop Broker’ or a ‘Proper Broker’. And THAT unfortunately is a ‘slippery slope’ i.e. you either have to take the word of someone like myself or open a live account and see if you can close profitable positions without being requoted until the position has turned into a loss!!! That type of thing!!! LOL!!! Broker Reviews on REPUTABLE review sites like Forex Peace Army DO help but sometimes some of the reviews posted can be ‘suspect’ as well unfortunately. There are actually three different ‘Broker Models’ but that’s a discussion for another time I think.
How we got from ‘Parabolic SAR - that’s all!!!’ to THIS I don’t know. BUT WAIT: I DO know. I got ‘involved’ in the thread again!!! LOL!!! Of late, when that happens, the threads tend to ‘drift off course’!!! LOL!!!
But if I MAY say so: this has, thus far, been one of the more INTERESTING ‘interactions’ and hopefully some of the above will help some new traders (if nothing else it should give them ‘hope’)!!! LOL!!!
Regards,
Dale.
P.S.
Regarding the attachment. I know that the type of behaviour described doesn’t manifest itself at Deltastock but I’m willing to bet my trading account that it certainly did (and still does) at my FIRST broker being the ‘Bucketshop’ and scam artists that they STILL are!!! LOL!!!
