Now it’s all starting to make sense, and thank you so much.
I don’t want to get annoying but I have one more question to get the whole picture. Given the calculation above, 10 / .01*.10 meaning $10 that I risk from a $1k account, .01 is ATR(20) and .1 is the dollar volatility per point so 10 / .01*.1 = 10,000. Now is that units? and what does that translate into lots? or even micro lots?
I’m going to disagree with Aydo’s response and say definitely not. If you figure there are no more than 8 major currencies (USD, EUR, JPY, GBP, CAD, AUD, NZD, CHF) that means at any given time you can only run a maximum of 4 positions without overlapping currencies (for example EUR/AUD, NZD/USD, CAD/JPY, GBP/CHF). Even then you have to be looking at correlations between and among the 4 pairs you would trade).
Now compare that to the Turtles trading 20+ markets including equity indices, Treasury futures, currencies, and a number of different commodities.
Thats a very good point. If you have the typical breakout type system with a 40% win rate and 2:1 R:R, and you only take 1 trade per month, then despite positive expectancy, most months will be unprofitable. If you trade 10 uncorrelated markets with the same system, then most months will be profitable.
So diversification is quite important when your dealing with an edge that has a low win rate, as it allows you to achieve the true expctancy over shorter time horizons.
Hello again,
Not annoying at all Aydo. No such thing around here. BELIEVE me: when I started out I used to make a total and utter nuisance of myself (and probably still do) and EVEN rhodytrader used to put up with my inane questions!!! Thanks John!!! LOL!!!
THAT BEING SAID I’m still unclear as to what it is that you’re trying to work out.
Put another way:
I THINK it’s just the TERMS that are confusing. Also: I can only talk about us (Deltastock) and the other brokers that I have had the fortune (or misfortune) to have dealt with in the past.
Using EUR/USD as an example:
A STANDARD lot would be 100 000 units of EUR/USD which would equate to $10 per pip movement.
A MINI lot would be 10 000 units of EUR/USD which would equate to $1 per pip movement.
A MICRO lot would be 1 000 units of EUR/USD which would equate to $0.10 per pip movement.
A NANO lot would be 100 units of EUR/USD which would equate to $0.01 per pip movement.
All of the above is REGARDLESS of leverage.
At least that is the way that I understand the lot sizes anyway.
If I’m not mistaken: Oanda will allow you to trade 1 unit but I’m not quite sure what that would be called!!! LOL!!!
Does that help???
If not: feel free to ask again.
Regards,
Dale.
What I’m trying to ask is according to my calculations it says to buy 5,000 units with the $0.10 per pip price movement so accordingly that would mean I buy 5 Micro lots, isn’t that correct?
Hello,
I would say that is correct yes. But as I said: you need to be fully aware of what your broker deems to be a micro lot. In other words: when you elect to buy or sell 5 lots you need to be sure of the lot sizes that you’re buying or selling. In some cases it’s not ‘user selectable’ and depends on the way that your account is set up or what type of account it is.
Regards,
Dale.
Ahh! I seem to be really getting it now. I just had to put it in a different word, thank you very much sir.
Well I’m pleased to hear it and it’s only a pleasure.
I’ll tell you this though: I seem to remember that Clint (‘Clint’) posted a wonderful post on this very same subject (position and lot sizing) some time back. Just go look for all his posts and you’ll find it. He tends to explain things far clearer than I do (no ‘waffle’)!!! LOL!!!
Regards,
Dale.
Now I would like to ask a question:
Why FOREX now??? Just curious (I ask everyone who has traded stocks and has now moved to trading forex this same question)???
Regards,
Dale.
I believe stocks are more prone to price movements based on news, ridiculous analysts, and pretty much irrational price action that can’t be justified.
Forex is much more liquid, so it’s much less prone to irrational price movements given that the liquidity minimizes it to a certain extent. Do you agree?
Hah, hah, hah! 
Take a look at EUR/CHF and see what the impact of even the rumor of Swiss National Bank intervention (and some actual ones) has done to that cross at times. Nasty intraday spikes.
That said, it is generally true that the liquidity of the forex market keeps the news/rumor/data reactions a bit more muted than in other markets. Plus, they are inherently less volatiliy on a % basis than individual stocks in the first place.
Well you DO NOT want to get me ‘started’ on this subject!!! LOL!!!
Somewhere on the forums there is an entire post on this subject and the reasoning behind my ‘belief system’. I guess if the truth be told: every last cent of losses (and believe me when I say they’ve been SPECTACULAR and I know I shouldn’t be ‘making light of them’ because I still owe a LOT of money to people for when I was trading for them in my personal capacity) can be attributed to forex trades. Taking into account five years or so of history: overall I’m ‘up’ on equities trades and WAY down on forex trades (and unfortuanately the overall forex losses overshadow the overall equities profits by a HUGE factor). There has to be SOMETHING in that (given the exact same trading systems that were used). BUT: in that post to which I refer there are many more ‘scientific’ reasons for my ‘belief system’.
Regards,
Dale.
Edit:
I hope I get to edit this BEFORE somebody reads it!!! To me: it’s the major INDICES that are ‘where the money is’ and NOT so much individual stocks. That I omitted to mention.
which indices do you use? and are you trading futures?
Well ‘my darlings’ are the S&P, the Dow, and the NASDAQ but they all ‘turn me on’ (ALMOST as much as Margaret Brennan of Bloomberg TV, sorry Ashley)!!! LOL!!! I like the way they ‘move’ (the INDICES that is)!!! LOL!!!
On a SERIOUS note though: NONE of the indices are ‘dogs’ to be honest. And then do not discount the ETF’s!!!
Don’t get me wrong here i.e. I’m by NO means a successful S&P trader!!! But THAT IS MY GOAL IN LIFE!!! That’s ‘the tiger’. Master THAT and you’re a TRADER!!! For a good while now: the Turtle Trading System would have spelled DISASTER (unless you applied my little ‘tweak or two’ that is and even THEN you’d not have made any money for good while now). But GET THERE I WILL!!! LOL!!!
On the OTHER hand just take a look at Sugar with the Turtle Trading System!!! ‘Poetry In Motion’!!!
Regards,
Dale.
By the way (and in closing):
Out of ‘the goodness of my heart’ I’ve attached a MetaTrader 4 ‘indicator’ for the Turtle Trading System (now attached to the same post where I uploaded the ‘The Original Turtle Trading Rules’ document). Unfortuanately: you have to calculate your risk etc. based on ATR etc. yourself. OF COURSE: I’ve have developed an ‘indicator’ for Delta Trading (which calculates your risk, each entry point, ‘you name it’) which is available FREE OF CHARGE but UPON REQUEST!!! LOL!!!
OK: the MetaTrader 4 ‘indicator’ you could have found easily by yourself so I cannot claim credit for it!!! LOL!!!
Regards,
Dale.
While learning Forex most tutorials read said I should concentrate solely on one one currency pair (EU/USD is best) and learn its behaviour. Before I know anything about The Turtle Traders. I thought to myself, " isn’t success in trading a waiting game; waiting for a really hot up-trend, one that is universally obvious regardless of currency-pair or market." If I was to stick to a single currency pair, I would have wait longer for a good up-trend and settle with less positive up-trend indications. Maybe I could be an expert on a specific market or currency-pair but these are subject to too much change. I ,Donatello, want to specialise in maintaining a universal robust system, much like what the turtles have
Hello,
That’s great THEORY but if you only trade ONE pair you’re going to get SOOO frustrated that you’ll ‘lose it’ and start to overtrade out of sheer frustration!!!
Do NOT fool yourself: the Turtle Trading System is BY NO means a ‘Holy Grail’ or ‘magic bullet’. Yes: there are clearly defined ‘rules’ which leave NO room for imagination or interpretation BUT it’s not a ‘one size fits all’ trading system either. I believe you need to read this thread i.e. there are some very good opinions expressed here (and I thought this was going to be a short ‘in and out’ thread)!!! LOL!!!
Regards,
Dale.
From what I can tell, the Turtle System relies on Donchian Channel breaks which do have positive expectancy as an entry criterium as suggested here. However, it isn’t spectacularly high. Waiting for 20-40 day breaks is a LONG time to wait.
Hello AGAIN ‘old friend’. Long time ‘no hear’.
Yep: DONCHIAN (‘the father of trend trading’). You are 1 000% correct!!!
And yes: again you’re right. Trading this system (Turtles or Donchian Channels or Price Channels) requires ‘TRUCKLOADS’ of ‘patience and restraint’ much more than MOST (on most occasions including myself) can muster. And ‘there’s your problem’ (Mythbusters)!!! LOL!!!
Regards,
Dale.
That applies more to short-term trading. You can’t do it as a longer-term trader. You wouldn’t get sufficient trading opportunities.