The Insolvent Paymaster

Trading Systems Free Forex Trading Systems
1

Pyramiding, that is what this is about!

If you would never step inside a casino then exit the bus now :smiley:

Before we start you will need a micro Forex account with $150.
The size of the trades are going to be 1 micro lot per $150 and
that equates to an initial risk of 5%.

Lets start:

Start at the open of any candle on any time frame chart it really doesn’t matter. We are selecting an open so we have a date and time to refer to to show us our starting point.

Pick a single long term direction:

Look at the weekly or monthly chart to see which half of the candle price closed on and that will be your direction for this pyramid.

Feeling out an entry (long?):

  1. Enter an order 75 pips from the open.

  2. Place a 75 pip SL.

  3. Every time price falls 75 pips your re entry
    will be 150 pips in the opposite direction.

Forex 2 x 2:

When you have 4x your initial risk in profit (300 pips) double your position
and double your stop loss.
If you are stopped out then you will break even or have a loss equal to
the the number of times you lost 75 when trying to get into the pyramid.

Don’t worry though because if you lose 75 pips 5 times for -375 and
double to 4 units total then your loss is reduced to 93.75 pips or 46.88
pips with 8 and you have hundreds of pips locked in profit to negate this.

Dont forget that you have a 150 pip SL which could be 225 or more
pips from the high if price moves another 75 pips before retracing.

They key to this pyramid method is giving the market room to breath
and using a 4x multiple of risk (in profit) to double this breathing room and double your position size without any added risk of loss.

:eek: Why the strange look? Didn’t I say to get off the bus?

2

Hi,

I can�t understand when are we going to entry. I look to the weekly/monthly but I can�t understand how to know if I have to long or short…

could you please detail bit more or example…

thnks

3

Look at the mid point between the high and the low of the weekly or monthly.
If price closes below the mid point trade short and if above then trade long.

Use the open of any time frame as a starting point just be sure to write it down.
Even after you are stopped pay attn to every 75 pip drop because your re entry is 150 pips or two “boxes” in the opposite direction (still in your long term direction).

Your entry starts at 75 pips from the open.

When you double your position you double your stop the first time.
After this the SL remains at 150 pips and you continue to double
your position every 300 pips setting a stop of 150 pips.

1unit your up 300 add 1unit set a 150 pip stop: result is BE if stopped.

2 units your up another 300 add 2 units set a 150 pip stop: result is +300 pips if stopped out (-300, + 450, +150, for +300)

4 units your up another 300 add 4 units set a 150 pip stop: result is +750 pips if stopped out (-600, +750, +450, +150, for +750)

These are only the if stopped out numbers!

I can only imagine your Christmas face if God smiles on you with a very long monthly candle :eek: -n:D

4

Can you give a full example with numbers for prices, lots etc so we can follow all the way through?

5

It is mostly just a formula:

Say you are risking 25 pips and you make 100 pips profit or 4 times your risk.
You can safely double your position to 2 units and double your stop to 50.

Now you are dealing with 50 pips in risk (really BE) and you make 200 pips or 4 times your risk. You can now safely double your position again from 2 units to 4 units and double your stop from 50 to 100 pips.

A more aggressive strategy is the one listed below where you only consider the initial risk and double your position every time you reach 4 times your initial risk.

So when: Profit = Risk * 4, double your units and double your stop.
I can be applied to any method of entry.

The trick is to get into your first position by working your self away from a single point of origin as if there was only 1 randomly selected open price on the chart and you are trading away from it.

That said, you do not want to trade in 2 directions at the same time when trading for longer periods of time; you want to focus all your energy in a singular direction.

One way of picking a direction is to look at the previous weekly or monthly candle and see which side of its total range price closed on.

6

Can you explain this more?

7

I guess instead of saying “feeling out an entry” I should be more descriptive huh?
Ok, it works like this:

When trading momentum, every currency has a range (think of a box) which upon impact in the opposite direction cancels trading in the prev. direction.

The key point is this box should not get hit often during a trend yet signal a reversal which if signaled and then corrects should not reverse the trend again.

Wow, that was a mouth full…

Upon a reversal signal you enter the “risk zone” for the opposite direction as price likes to congest here after failing to make a new low or high.

If price makes a new higher high or lower low you resume trading in your prev. direction, but when in the risk zone you wait for price to move twice the range in the opposite direction (from the high?) before looking:eek: for trades in that new direction.

One thing you will notice is that a lot of times price signals the end of say longs and you are in the risk zone. Then price meets twice the range short and you get a signal to end short trades (the range is met in the opposite direction), but it is just a “zero line effect.” (you can cont. short trades immediately without waiting for a new low in the case of twice the range being met short).

A zero line effect is when there is a prior breakout of a major pivot and then price returns to the breakout price and then resumes moving in the direction of the breakout. I am sure you have been zero lined if you are a breakout trader quite often and this is why I usually recommend people place pending orders where their stops would be after a breakout and then move them down as needed.

How should you enter? Pending orders always…what is a market order?

When do you stop placing pending orders? When the range is filled in the opposite direction.

I thought we use the weekly or monthly for direction? W&M are used to pic out a SINGULAR long term direction to focus upon while ignoring signals to trade in the other direction.

Again, every pair has a different range and my mentors use fibonacci numbers and place trades in the risk zone:eek: (you had better know what you are doing).
I personally prefer to use multiples of 25 to find this range instead of using fibonacci. I am also a huge fan of the number 3 and multiples of this number.
For this reason I will start with a range of 75 for passive pairs and 150 for volatile pairs like GBPUSD and expand this range or contract it by 25 as needed.

I hope this helps, it is hard to post pictures when you are under contract.

8

Thanks for the interesting thread.

9

babyp-005.gif : Free Image Host.

Here you see an example of a major pivot (MP) and a move down below it that met the twice the range rule. Price then zero lines (ZL) giving a great entry if you trade it correctly. Now the public gets excited and waits with short order below the break out point (BO) and this is where you step in:

If you had an order to short that break out what stop would you use?

Picture 9 other traders sitting next to you trading the same breakout and consider what stops they would use (25, 35, 45?). Now average your imaginary SL with the SL that you think they would use and set a pending order at that price above the breakout for the snap back.

There you go, you opened a can of woop a$$ on the sheeple and are sitting pretty most of the time.

PS: this is the chart compression that I recommend you use when viewing short term charts. You will notice that larger time frames are just a zoom in and zoom out to different areas of the chart.