Well how do you feel about those results??? Not bad I don’t think??? Personal opinion anyway. I mean to say: that’s on just ONE instrument. Say you were trading ten or twelve at a time??? NOT FOREX!!! LOL!!!
Put it this way: I’d rather see THOSE gains than something that came back with +1 000% I’ll tell you. But now that you’ve come this far I reckon you’ll be able to do some nice testing. Would be nice to know if that TradeStation chap, as well as Connors himself, are on the mark when they say that changing parameters doesn’t REALLY affect the overall outcome overall which, in their theory, proves the robustness of the concept.
As I said: I’d be lying to you if I told you that I didn’t at least notice those levels (well: nowadays anyway). Problem for me (among other things of course) is if you kept looking at levels like that as confirmation for trades with this trading system then I fear the number of trades would drop considerably. But I don’t have data to back that up of course.
With reference to my above post: I see what you’re saying. If I read you correctly (and taking the last part of your chart to the right and most current data): once the thing has reached a level then it’d be alright to go long when signaled to do so and no matter how many times you got a signal to do so UNTIL price hit the next level (in which case you’re either start taking short signals or not but certainly avoiding long trades for the time being)???
And while we’re trying to squeeze this thing for every last cent it’s worth here’s something to think about (and the other reason I started this thread) (well at the time anyway i.e. it’s grown now to something else):
There MUST be SOME way to try ride out the profitable trades. I don’t know what it is. Maybe placing a stop at break even on a trade once you’ve been signaled to TP. Dunno. But something. As but one fine example: I took profit on the S&P THREE DAYS AGO because I was signaled to do so. Just take a look where we’re at right now. Maybe a BE stop once you’re being signaled to TP and then trail a stop while you’re still on the position (maybe, and in this case, the lowest low of the two previous bars or the low of yesterday or something like that). Dunno. But sometimes there sure is a lot of profit lost i.e. seen this plenty times but have never figured out a way that works. I did mention somewhere that I reverse engineered RSI so that I could work out what the minimum level WOULD have been if it had closed at EXACTLY 70 (or 30) and then placed a stop the next day at that price. But invariably those stops were taken out the next day (which obviously still resulted in a profit but slightly less in most cases). Dunno. But solve this conundrum and those percentages would double at least I’m sure.
Matter of fact and with reference to my post above:
Given that I’m long Oil and in profit: assuming that it keeps going up today (only needs to move slightly and close there and that will be a TP signal): maybe I should put the above to the test (I need the money but frankly I’m not going to make it out of this situation so fu*k it: may as well go out with a bang). If given a signal to TP on Oil then move my stop to BE on the trade. If it then continues on up I’ll just trail a stop that’s effectively locking in profit as it goes up. Exactly where to place such stop and from where to start trailing that stop is another story altogether of course. Lemme see and decide.
Oil possibly not the best instrument to try this on right now I suppose. But who knows. If this does become a rule then I guess one cannot be choosy as to when to attempt this and when to not.
Suppose I could do the same with Google and Facebook too really.
I’m going to try the alternate “geometric progression” (as @Spudfan has termed it) on the NASDAQ assuming it closes at or near where it is now i.e. as long as RSI(2) is again above 75 as was the case at the close yesterday. It’s a perfectly legitimate as advertised signal to go short at the close tonight. it will push the position size to three times what it should be (even starting out with the minimum allowable size available to me). However: if I TP on Oil both Brent and WTI then there’s no risk of over trading or anything like that i.e. instead of having three smaller positions open on three different instruments I’ll have one position open but three times what it should be. Don’t see an issue with that. Obviously because the position size will be three times as large then the hard stop will have to be adjusted accordingly also. Basically it means the risk on this single trade and experiment will be 15% as opposed to 5% is all.
I always have a problem when describing the scaling in. So I’m proposing that from now on the scaling in is described in and as tiers and abbreviated as T1, T2, T3, and T4. And if you’re going to bend the rules then those 1-day or first-day signals will be T0.
So tonight on the NASDAQ (all things being equal) I’ll being going short just before the close T1 @ whatever price. Monday: scaled-in T2. Tuesday: scaled-in T3. And so on and so forth.
I’m trying to get things nice and tight because at some point I’d like to document and detail this version of this trading system so that it’s basically carved in stone. Makes it much easier to follow the rules.
And you know I just realized something that I’ve forgotten about over the years. Trading individual stocks. I just happened to log into a particular trading platform that I’ve not seen for years and was just wondering how things were going is all (too much time on my hands). Anyway: I happened to notice the news feed. And there is such a wealth of information that comes through on an almost second-by-second basis (obviously with a proper news feed i.e. not some retail FOREX broker’s afterthought). I’m by no means suggesting trading the news. But I’m talking about stuff like for example Citigroup has just upgraded Electronic Arts to neutral and with a target price of $102 per share. The stock is currently under $100. I remember watching this stuff some years ago but never acted on it to be honest. Didn’t think I had the experience or the understanding at the time. But I’ve kinda been around the block with this stuff let’s face it. Anyway. Over the years I have noticed that invariably this type of thing does move a stock. It will normally shoot up (in this case) at the open and invariably come right back to where it started out (unless it’s news of the earth shattering type of course). And that’s the time to go in. Not sure how that pertains to what we’re doing here with this system but just saying. Maybe could be used as a filter of sorts i.e. data like that giving you an indication that the most likely direction of the stock, for now, is up so not the best of ideas to take a short signal. If you see what I mean. There’s such a wealth of information out there on a per second basis when it comes to stocks. All but forgot about this stuff.
As I sit here (and watch Oil tank again) I’ve been mulling over this geometric progression idea of scaling into these positions.
If you examine the methodology of this trading system then what would you categorize as the strongest signals. To my mind: a T1 signal is far weaker than a T4 signal woudln’t you agree (using my proposed new terminology here). In order for there to be a T4 signal then that’s actually four higher or lower closes while in the trade (and five if you count the requisite first signal given). In other words: at T4 the probability of there being a snap back is far greater than the probability of a snap back at T1 wouldn’t you say. So doesn’t it make sense then to basically be piling on the scale ins during the latter part of the trade. Alright and one could argue I suppose that this would be even more applicable if you had four or five CONSECUTIVE higher or lower closes but that we could not count on nor wait for with this system obviously. In addition and let’s assume that the trade does go against you pretty much right from the start. It you’re implementing the hard stop idea then this means that prices needed to get to the stop comprise mainly of the T3 and T4 scale in. In other words: the likelihood of the stop being hit is actually reduced as the bulk of what’s going to get price to the stop is coming now from the last throws of the trade (theoretically) as opposed to the losses adding up on a straight line basis right from the get go. And it’s also obvious that using this geometric progression your average price on the entire trade is being improved exponentially. In other words: break even or better is a lot closer once you’re fully committed to the trade.
I have but ONE problem with any and all of this and as is usually the case the very moment I try getting fancy here. And that problem is this: why did Connors not suggest this. I know he says there’s dozens of ways (or was it thousands) to trade this concept. But this seems pretty basic to me. Almost fundamental. So why.
Imo your position sizing is the wrong way. Like in a house the fundament is the heavy weight and the higher you go the lighter the material should be.
Starting 40-30-20-10 would give respect for your entry signal being the strong reason for the trade. As further the trade goes on the more volatility can be expected (pullbacks) so lighter position high above the entre make surw that you dont get shaken out that easily from a profitable trade. Then you will find it easy to hold to positions much longer.
Uh uh. Dunno if you’ve looked how this thing is designed but there is actually LESS likelihood of the snap back occurring when the trade is first initiated. And you’re not supposed hold trades once you’ve been told to take a hike and not overstay your welcome. I just get frustrated on days like today when a trade I was in is still going strong after I’ve taken profit. Then again: I need to remind myself too that very often price turns against you the very next day after you’ve taken profit. On those days of course you’re smiling and have that warm and fuzzy feeling. Oh and no stops so never a shakeout. Those new hard stops are my idea. As I noted to somebody else on another thread: If these stops are hit you can be certain it was a bad trade and it’s only going to get worse. Not those stops that you either move or remove or simply don’t execute because the trade could come back to you.
I scale in as well but not on a consistent size. This is something that I have to address. I will usually set a small grid of limit orders (.03-.05) most of the same size throughtout and deep into a S/D zone. My thoughts here are to catch any possible spikes for a top notch entry catching additional pips.
Depending upon the PA and look of the trend based on M/W/D charts will reduce size and set additional limit orders as price continues trending.
If the market is consolidating, looking like it’s trying to chew through S/D, I will sprinkle those zones with .01 orders and may put in some larger orders deep into or beyond these S/D zones looking for the outlier price spike.
I know that this is propbably considered unorthodox but it has been working for me with my limited but growing (very slowly) forex knowledge as I continue to refine my strategy and paitience.
KC
Edit: Just took a look at the oil chart. This is purely technical no fundamentals… I set pending orders: 3-.01, 1-.02, 1-.03 beyond demand zone (.03 isn’t showing up on screen grab). If the .01s are hit but the price looks like it’s continuing down will cancel remaining limit orders.
Well just let me make it clear here though for those that may come across this thread and only cherry pick the last few posts:
However you scale in just remember that we are scaling in to a full size position NOT adding to a loser hoping to improve the average price in order to get to break even or better. There is a big difference. The final full size of the full size position and the risk on the final full size position is calculated PRIOR to then scaling in to the full size position in increments. Big difference. Very important.
Post wasn’t directed at you at all. Mainly just to newcomers who come along and read and think “that sounds like a good idea” and not being aware of the possible consequences.
I suppose the bottom line is that it doesn’t matter what regimen you use when building up to or adding to a position. But there has to be a limit as to how far you can go and that limit should be based on the overall risk on the trade as a whole Probably no right way or wrong way to scale in. Some methods may suit one style or system while others may suit another style or system. At the end of the day it’s how much is at stake and if the trade goes pear shaped will you live to fight tomorrow.
That is exactly the point with this business of just adding positions on a whim. It may work five, ten, twenty times. But that day will come when price doesn’t come back to you. Not a question of IF but WHEN it happens. But again it just comes down to risk. Hell you could have a hundred positions open. But that may only give the trade a point to move against you and you’re out for a loss. But even that is better than to not have a plan in place before you start scaling in or adding. Because the unfortunate tendency is that a trader will hold on a little longer then a little longer and then a little more longer. Maybe even add some more. And then it gets worse because the loss gets so big that it is even harder to close. So the whole thing feeds on itself until it implodes on itself.
You hit the nail on the head. This happened when I first started developing my own strategy.
You had mentioned the ADX indicator a while back. I started using that a number of weeks ago and have found it to be a great help for me.
I used to use (tick) vol but I couldn’t “make it fit”. I know that Pete Fader uses it for his forex trading (another BPs poster) style which is along the lines of wycoff and vsa but it doesn’t do it for me. ADX has been far more helpful.
Pleased to hear that. I actually did notice it on your charts. There is plenty hope for you!!! LOL!!!
Listen up: I don’t have all the answers. Believe it or not: when I post about things you can be sure it’s things I’ve done myself. Sometimes more than once. Always with the same result. But I am still here and slowly but surely have been able to eek some profits out of this business for a good while. But you can never let your guard down that’s for sure. Anyway. Sad part is that looking back on it all: none of this is rocket science. And I really don’t believe it’s necessary for others to lose the farm to get to even this point. Hence my posts I guess.
I have done a lot of reading, demo, live trading, crazy live profits (options) and even crazier live losses (2X my profits! ) ground it down to $7 and TDAmeritrade keeps the account open. That’s not enough for a brokers fee!
Sorry to ramble in your thread…
The thing I like about forex is that there is no expiration. Trading small lots .01 I can hold on to that forever (I know there is swap to consider etc…) but it doesn’t lose value as the days, weeks, months go buy.
I look back and all the advice and warnings that I had read about in books, forums and heard at lectures and meet-ups about new traders … that wasn’t going to happen to me… it all came true!
Now, for me, it’s steady as she goes, a day at a time and think before I trade.
) ground it down to $7 and TDAmeritrade keeps the account open. That’s not enough for a brokers fee!