The Adam Theory of Markets - Welles Wilder
Just google it. Easy to find a free copy to read!
Thanks and good luck to you too!
Raining Pips!
I’m using an FXCM demo account for this experiment. The platform offers 54 pairs, but I can only select and display 20 at a time. So, to avoid constantly changing the menu of pairs, I just decided to eliminate 8 of them from mastergunner’s list of 28. I have eliminated 7 NZD pairs, and the EUR/CHF.
I’m trying to be a purist in this experiment. Mastergunner says the only legitimate reason to exit a position is because of a change in bias — which can’t be determined prior to news. So, in this experiment, I’m ignoring news, and everything else except trends (bias), and entry/exit points.
And, yes, it’s hard to resist the urge to cash out, even in demo. With real money on the line, I’m sure that urge would be even stronger.
I’m also trying this methodology. I think I’m going to review the example chart because I’m trying to catch reversals before they are confirmed…
Hi Clint, no I have been following this thread for some time now, and trying to trade MG’s approach as best as I can understand it. Thank you to MG for initiating and continuing this thread, and to you Clint for " putting it out there" in your efforts to follow as well. I appreciate the collective time and effort people have made to this thread. I have learnt a great deal, and look forward to contributing also. Regards Glen
I am also trading with this methodology. I’m so nubbish that I feel most of my inputs are worthless. but if anyone is interested here’s what I found out:
I open my demo account with a $1000 so I am trading .01 lots (I believe these are micro lots?). I find the most difficult thing is determining a bias. If you look back on a year’s worth of daily candles one can see an overall trend. If you look back a couple months and/or then a couple weeks, one can see contradicting trends. I feel that one person’s retracement is another persons reversal if you look/don’t look back far enough.
Nevertheless, in the beginning, I was interpreting a retracement as a change in bias, which lost me some pips (10% of my account). However I’m beginning to see the light, my winning picks right now are:
EURCHF SHORT @ 1.23004
USDCAD SHORT @ 1.02815
USDJPY SHORT @ 93.89 (this one I’m not sure if I should have taken the long term trend seems bull but the last 18 days or so seem bearish.)
I have several other open positions most of which are giving me >50 pips. I won’t bore you all with them. One position I just took was this one:
First question, did I pull the trigger to early THIS time? I know to each his own for these methodologies, but what would you do in this situation?
Finally, I understand that you’re supposed to take-profit when you think the bias switches, but I feel that by the time you can REALLY tell the bias switches you are two late and have lost 100 pips or so. Unless we are trying to catch the 300-400 pip trades, why not set trailing stops?
[U]Forex Portfolio[/U] - Thursday 4/4/13, 2:30am EDT (New York time)
11 open positions — no change in positions since last update — current Open P/L +510 pips.
This portfolio is heading in the wrong direction (from a high of +1,213 pips one week ago). Equity has dropped to break-even (current equity = starting balance). Monetary news out of Japan this morning is causing some of the turmoil. But, I’m not bailing out of any positions based solely on negative P/L.
I will continue to use [I]bias[/I] to make decisions on entering, holding and exiting positions. And I will try to refine the way I determine bias. As a long-time day-trader, I’m not yet comfortable with letting intermediate-term bias dictate everything. But, that seems to be the main rule of this game; so, for the purpose of this experiment, I will try to play by the rules.
Currently, I have a clear bias on only 4 pairs; all the others are “wait” pending some trigger.
[U]Bias opinion - 20 pairs[/U] (not included: NZD-pairs, and EUR/CHF)
EUR/USD — maintain current SHORT bias provided D1 does not close above 1.2870 (weekly pivot)
USD/JPY — wait for the dust to settle in the yen-pairs
GBP/USD — wait — SHORT bias if D1 closes below 1.5015 (weekly S2)
AUD/USD — wait — LONG bias if D1 closes above 1.0496 (3/26 high)
USD/CHF — wait — LONG bias if D1 closes above .9566 (3/14 high); SHORT bias if D1 closes below .9350
USD/CAD — SHORT bias
EUR/JPY — wait for the dust to settle in the yen-pairs
EUR/GBP — wait — SHORT bias if D1 closes below .8409 (4/1 low)
EUR/AUD — SHORT bias
EUR/CAD — wait — SHORT bias if D1 closes below 1.2965 (3/27 low)
GBP/JPY — wait for the dust to settle in the yen-pairs
GBP/AUD — wait — SHORT bias if D1 closes below 1.4379 (3/12 low)
GBP/CHF — wait — LONG bias if D1 closes above 1.4387 (weekly pivot)
GBP/CAD — wait — SHORT bias if D1 closes below 1.5242 (3/12 low)
AUD/JPY — wait for the dust to settle in the yen-pairs
AUD/CHF — wait — LONG bias if D1 closes above .9976 (3/27 high); SHORT bias if D1 closes below .9852
AUD/CAD — wait — SHORT bias if D1 closes below 1.0545 (1/23 swing high)
CHF/JPY — wait for the dust to settle in the yen-pairs
CAD/JPY — wait for the dust to settle in the yen-pairs
CAD/CHF — LONG bias — look for the bull-flag to play out
This is what kills me… I feel like news destroys the methodology in the short term. Take the AUDCHF, without the news… two bearish candles and it looks like this pair is ripe for the reversal. With the news, I have no clue where this pair is going… do I set up my sell stop 20 pips below the closing candle? or do I actually take into account the news and wait a couple days to settle. Doing the latter means this methodology IS in fact news dependent…not taking into account the news would mean that this methodology’s weakness is the news since it makes w. Not knocking, just trying to figure out if news can be accounted for, should be ignored, or should be proceeded with more caution. Am I the only person that feels this way? The cyprus bank raid had a similar affect on my demo account.
[U]Forex Portfolio[/U] - Friday 4/5/13, 1:30am EDT (New York time)
My portfolio has turned negative. A substantial overall gain in equity (+7.5%) has turned into a substantial overall loss of equity (-5.5%), basically due to two factors:
[B]1.[/B] Several days ago, I removed the initial stop-losses which I had placed on my early positions at the start of this experiment. I removed those stops (against my better judgment) in order to conform to the rules laid down by mastergunner.
I think that the turmoil in the yen-pairs over the last 24 hours has clearly demonstrated that it’s a mistake to leave a position totally unprotected. I think that I was right to put stops on my positions at the time of entry, and I was wrong to remove those stops.
I went back and added stop-losses to all open positions. These (new) stops were placed 150 pips away from each entry price, and they were not trailed. On my worst yen loser (short EUR/JPY), adding a stop-loss automatically closed the position. So, after applying the stop-losses, 10 positions remained open.
[B]2.[/B] I think there has been a basic flaw in my management of open positions. Mastergunner has said that an open position should be closed only after a change in bias. I took that to mean that a long position should be closed only after the bias on that pair turns to SHORT. I now think that a long position should be closed after the bias on that pair turns to NEUTRAL. A short entry should be stalked when the bias has turned to SHORT. Vice versa for open short positions.
In other words, I have held a few losers way too long. I will continue to judge bias on a daily basis, and use my bias determinations with these rules:
[B]a.[/B] When bias is judged to be LONG, if I have no long position in this pair, then I will begin to stalk a long entry. If I already have a long position in the pair, then I will hold it.
[B]b.[/B] When bias is judged to be SHORT, if I have no short position in this pair, then I will begin to stalk a short entry. If I already have a short position in the pair, then I will hold it.
[B]c.[/B] When bias is judged to be NEUTRAL (or “wait”, as I have been calling it), I will close any open position I have in the pair, and I will stay on the sidelines until bias changes to either LONG or SHORT.
I have gone back and applied these 3 rules (retroactively) to my 10 open positions, with the result that 9 of those 10 positions have now been closed.
I have one remaining open position, short USD/CAD, showing a piddly profit of 9 or 10 pips.
My portfolio is down a little less than 5½% from its starting balance on Monday, March 25. I will rebuild it from here.
[U]Bias opinion - 20 pairs[/U] (not included: NZD-pairs, and EUR/CHF)
EUR/USD — has closed above 1.2870, my trigger for a change in bias — current bias: wait until next week
USD/JPY — for all yen-pairs: stand aside for now; re-evaluate bias on the yen-pairs next week
GBP/USD — wait — SHORT bias if close below 1.5015 (weekly S2); LONG bias if close above 1.5260 (3/25 high)
AUD/USD — wait — SHORT bias if close below 1.0385 (4/1 low); LONG bias if close above 1.0496 (3/26 high)
USD/CHF — wait — SHORT bias if close below .9350 (3/25 low); LONG bias if close above .9566 (3/14 high)
USD/CAD — SHORT bias
EUR/JPY — see usd/jpy, above, for notes on the yen-pairs
EUR/GBP — wait — SHORT bias if close below .8409 (4/1 low); LONG bias if close above .8520 (weekly R1)
EUR/AUD — wait — SHORT bias if close below 1.2218 (4/3 low); LONG bias if close above 1.2452 (weekly R1)
EUR/CAD — wait — SHORT bias if close below 1.2951 (4/4 low); LONG bias if close above 1.3116 (weekly pivot)
GBP/JPY — see usd/jpy, above, for notes on the yen-pairs
GBP/AUD — wait — SHORT bias if close below 1.4379 (3/12 low); LONG bias if close above 1.4640 (4/1 high)
GBP/CHF — wait — SHORT bias if close below 1.4300 (weekly S1); LONG bias if close above 1.4474 (3/28 high)
GBP/CAD — wait — SHORT bias if close below 1.5242 (3/12 low); LONG bias if close above 1.5600 (3/25 high, R1)
AUD/JPY — see usd/jpy, above, for notes on the yen-pairs
AUD/CHF — SHORT bias
AUD/CAD — wait — SHORT bias if close below 1.0533 (4/4 low)
CHF/JPY — see usd/jpy, above, for notes on the yen-pairs
CAD/JPY — see usd/jpy, above, for notes on the yen-pairs
CAD/CHF — SHORT bias provided D1 does not close above .9286 (weekly pivot)
Not too versed yet on what Myfxbook numbers mean yet, but yesterday or so ago, I think I was 18% in drawdown because most of my trades had retraced but had not gone past the point of a change in bias. I hung on to big losses in up to 15 trades for almost a month waiting to recover from the pullbacks…and today most of the trades finally did. Long EURJPY was one them. I did open a 2nd position near support on it and CHFJPY when they were at their worst which helped immensely when the biases finally resumed. I closed all trades this evening so I can re-evaluate the sensitivity setting that I use for my bias analysis. I thankfully can report I’m up 9% since I started this demo in Feb :51:
Just an update, I’m a month in live now, I’d been long on a couple of the yen pairs since about the middle of the week.
I did close out too soon, but my account this month has gone from £2300 to £5500 and according to fxbook i’ve made near 5000pips at 70p pp, but as i open 2 positions for each pair is more likely to be around a genuine 2500-3000pips.
I’ve not used a stop loss at all, but just used daily time frame(hourly to monitor) and fibs, I had been keen on going long on the yen pairs since price had retraced to the 78% at 120.280 on the ej (25th feb low to following yearly high), it made it down to the 94% where I opened another position.
Its only been the last couple of months that i’ve added the 86% and 94% to my fibs, if you haven’t got these already its a must!
I always used to think that if price has exceeded the 78% then its not valid, so not true, the fibs and other support/resistance are all you need, just keep drawing them from significant highs/lows till you find price snaps to them well (weekly, daily) and keep them on the chart. I was forever drawing new ones, and also using an mt4 that uses a candle close at nyc, thats a must too, I use axi trader for that.
Hope this might help some people
Hi All.
Since my last post my demo a/c has been slowly losing money. Looking back I see several main reasons.
- losing my nerve and closing trades when they hit 80-140 negative pips
- not choosing the best entry points
- letting some trades go too long and end up losing most if not all unrealised profit
a) To remedy the first one I have started to let the trades run longer and see how I feel when price action forms retracements, S/R testing, ranging and new big trends. The aim of this is to broaden the boundries of my own comfort zone while a trade is open.
b) I need to be [U]MORE PATIENT[/U]. I have been too keen to enter some trades and they have gone against me. I was not waiting to enter once price had started a new trend. I was entering while it was still retracing and retesting.
Some times I would enter when price had bounced off a trend line of the main trend which sent it in the opposite direction to the main trend. (This one really frustrated me until I worked out what I was doing. doh!) I will now wait and enter when price has bounced of a trend line sending it in the same direction as the main trend. ([I]hope that makes sense[/I])
c) Learning when to close a trade is still hard. I have lost too much unrealised profit while trying to decide if the trade should be closed or not. MG99 said he uses stop losses at passed S/R levels while still giving price the room to move. I have started to do this and hope this improves my realised profit.
Some of the currencies have had big moves recently which have cost me. Like others of you out there I have not been trading JPY for a while.
d) On a positive note, I can read candles better now.
I think you mean that your account has gone from £550 to £2300 — based on the positive pip-haul you reported in your post. If those numbers are correct, CONGRATULATIONS on your stunning success with this methodology.
Silly me, I meant £2300-£5500!
Hi
I have a question.
Do you enter your trades from pullback with price action confirmation? If yes, which signals?
Or do you also enter continuation setups like a continuatin Inside Bar?
Interesting to know.
Regards
[U]Forex Portfolio[/U] - Sunday 4/7/13, 8:30pm EDT (New York time)
I’m using Daily charts to determine bias, and 1-hour charts to determine entry/exit points; however, in most cases, those entry/exit points will be specified in terms of the Daily (D1) chart closing price.
Starting with this post, when I post an update (not necessarily every day), I’m going to report bias and entry/exit points for each of the 20 pairs that I’m following.
At the opening of trading today (Sunday), I had only one open position (short USD/CAD). Therefore, except for that pair, all of the entry/exit points listed below refer to [I]entry points[/I] only (because there are no other positions to exit).
[U]Bias and entry/exit points for 20 pairs[/U] — (not included: NZD-pairs, and EUR/CHF)
EUR/USD
Bias – NEUTRAL – (possible long bias if D1 closes above 1.3109; possible short bias if D1 closes below 1.2814)
Entry/exit point – wait
USD/JPY
Bias – LONG
Entry/exit point – enter long after a retracement below 97.80 (filling the Sunday gap)
GBP/USD
Bias – LONG
Entry/exit point – enter long if D1 closes above 1.5363
AUD/USD
Bias – SHORT
Entry/exit point – enter short after a retracement above 1.0388 (filling the Sunday gap)
USD/CHF
Bias – SHORT
Entry/exit point – enter short if D1 closes below .9300 (the figure)
USD/CAD
Bias – SHORT
Entry/exit point – hold current short, unless D1 closes above 1.0237 (weekly R1)
EUR/JPY
Bias – LONG
Entry/exit point – enter long after a retracement below 126.75 (filling the Sunday gap)
EUR/GBP
Bias – SHORT
Entry/exit point – enter short if D1 closes below .8409 (Apr 1 low)
EUR/AUD
Bias – LONG
Entry/exit point – enter long after any retracement lower, provided 1.2430 (weekly pivot) holds as support
EUR/CAD
Bias – LONG
Entry/exit point – enter long if D1 closes above 1.3317 (Apr 5 high)
GBP/JPY
Bias – LONG
Entry/exit point – enter long after a retracement below 149.60 (filling the Sunday gap)
GBP/AUD
Bias – LONG
Entry/exit point – enter long after any retracement lower, provided 1.4658 (weekly pivot) holds as support
GBP/CHF
Bias – NEUTRAL
Entry/exit point --wait
GBP/CAD
Bias – LONG
Entry/exit point – enter long after any retracement lower, provided 1.5518 (weekly pivot) holds as support
AUD/JPY
Bias – LONG
Entry/exit point – enter long after a retracement below 101.30 (filling the Sunday gap)
AUD/CHF
Bias – SHORT
Entry/exit point – enter short below .9630 (Feb 22 high)
AUD/CAD
Bias – SHORT
Entry/exit point – enter short after any retracement higher, provided 1.0582 (weekly pivot) holds as resistance
CHF/JPY
Bias – LONG
Entry/exit point – enter long after a retracement below 104.30 (filling the Sunday gap)
CAD/JPY
Bias – LONG
Entry/exit point – enter long after a retracement below 95.83 (filling the Sunday gap)
CAD/CHF
Bias – NEUTRAL
Entry/exit point – wait
These are not intended as signals for anyone else to trade on. These are [I]my opinions[/I] on 20 currency pairs, as I attempt to follow the methodology that mastergunner has introduced in this thread. I am not a swing-trading expert. I am out of my comfort-zone here. Your opinions are probably more valid than mine. Do your own analysis, and trade what [I]you[/I] see — not what I see.
I think that a picture says more than 1000 words. I’m posting my currently open trades.
I think that 2863.8 pips is a pretty big number for floating profit!
I was just about to ask if anyone was taking advantage of the HUGE JPY move, and you answered my question! I’m currently up around 2400 pips myself!
Yes, Clint. You caught the concept of exiting. It’s not designed to stay in every trade all the time. When there is blatant indecision I set a stoploss to lock in some pips or limit a losing position.
There’s a careful line between allowing for price variance and simply hanging on to a loser.
Limit your losses when it’s not looking to be in your favor.
Nice going medisoft. Did you open them based on The Three Ducks?