TYG's Trading Story - Thoughts, Trades and Technicallity

[TYGMedia]

Thoughts: My First Forex Mentor

Before 2005, I traded only stock market. My encounter with stock market was an incident, because of I needed subject to research neural network in 1999. My major was computer science. In short, I was introduced with Marketiva. In within 10 days I turned 10 USD into 100 USD. Next few days, I successfully set it back to 0. Either driven by excitement or greed, I kept trying and failed always. Next I got introduced with MT4, in since then my forex adventure was getting more and more interesting.

I developed my first EA, then testing every indicators available, after few months none of them survive in back testing. While I kept doing, someone introduce an academy. It was famous, I was told the mentor earn 1 million from 2k in within 2 years. In short I paid 3k for 1 month course. I was living in Singapore at the time.

To my surprise, The course was total garbage. I was taught to trade double top / bottom on USDJPY, M5. They claimed it can generate profit 10% / month. They gave money back guarantee, if it didn’t work by condition, I had to follow their trading rule strictly.

I successfully followed their rule and gain profit minus more than 50%. I complained to them, demanded a refund, but they adviced to try for another month. After a long arguments, I was introduced to their real mentor. The mentor explained I needed to learn price action. The course was another 5k SGD.

I took the course. The course was under a very luxury place in Sentosa island. The course was only 3 days. In short, during 3 days full training, only the third day the mentor tell us the real thing. The problem was it took only 1 hour. The whole 3 days were total garbage. The strategy was trading double top/bottom when there was a 30 pips price movement. I was stunt and huh?

After months of trying, I complained back to the mentor. And then they started to show their true face. They offered me commission to invite others to attend their courses. They told me trading was difficult, but they had solution to return back what I had lost. I rejected their proposal.

After weeks, I got contacted by the mentor. He said he wanted to help me recover my loses. He initiated a group so called elite trading group. I had to register an account under his IB, then he would trade for us. The group was 20 persons. I was reluctant, but I really wanted to validate if he was really as good as he claimed. In short after 1 year, I was sure he couldn’t trade. Our account was drop 20% and none of his claims were true.

The mentor kept contact us to help him to find students, he claimed he had tried a lot to help us. I moved forward to leave them when many others still gave hope they could get back what they had lost.

This is only one story of courses I had attended. I had tried 4 courses in Singapore, 3 in other countries. All of them were the same.

Do you still believe a forex mentor?

Simple fact, if there is person who is really good in trading, he/she doesn’t need to earn for courses. They will be targeted by broker to be representative or become a fund manager.

[TYGMedia]

@SovoS

I would guess this is an issue for very many TA traders, whatever method they use.
If only I had a dollar for every time I have taken a position based on what my method is “definitely” about to show! - only to find that the signal didn’t generate afterall!

I think it is also important to keep in mind what generates price movements. Ultimately, it is the flow of real funds between currencies as well as into, and out of, indices and commodities, etc. But these moves tend to be more identifiable on longer term charts, where these longer trends become visible.

The shorter term moves such as intraday tend to be dominated by speculative trading using cfd’s and futures rather than the actual underlying product. And these moves are far more unreliable, particularly in determining how far they are likely to continue. This is evident, for example, on bank holidays when market volume and ranges disappear.

Unfortunately, it is precisely these short term markets that attract us retail traders due to small capital and closer SLs in risk management. But, at the same time, we are trading within a very erratic, sometimes random, price environment in these short timeframes. Movements within these timeframes are often dominated by self-fulfilling TA methods where large numbers of retail traders are all watching the same things such as high/lows on higher TF’s!

We can see this just by looking at a weekly chart where all the detailed analysis on our hourly charts simply dissolves and disappears in one candle- and made meaningless in the longer term!

This does not mean we shouldn’t trade short term charts. It just means we need to be more aware of the erratic nature of price movements within these TFs and accept that TA analysis is far less accurate and reliable here. This also underlines that risk/money management is crucial in this area…

Just some general thoughts…

You are correct for price movement. This is something to do with the fundamental of the instrument. But the fundamental has pattern that can be seen on the chart. It has uniqueness.

As in price action we identify two kind of movement or wave: momentum wave and corrective wave. By differentiate them, we know when and how to enter and when to exit. We also can calculate the risk and win rate for every position we put. Of course nothing is precise, and this is the reason we need to have trading stats before hand.

There is nothing such retail trader movement. Since most forex broker are bilateral, even you open 1 million lot, it wont move the market. Unless you are trading through banking / financial network. By this fact, every movement in the forex market are done by institution. The price movement on our platform is used to show us the price only.

The statement above also tells the price movement has their own regulator. Every country try to regulate the instrument in favor of their own. And this is the key for us to speculate when the price move.

The last thing, we need to train our eyes and mind on how to look the chart. For beginner chart bellow H1 is probably too chaotic. It takes time to train our eyes and mind on how to relate them. The more experience you have, clearer you see the story behind all movements.

[tommor]

I believe not everyone needs any trading training at all. Every trader needs a strategy but all the strategies that are practical, easy to follow and which are consistently profitable have already been developed. They are readily available in the public domain though sometimes you have to buy the book.

The new trader needs only to find and demo trade a few strategies to find one which suits their character and life-style.

The only person who might need a mentor is a very profitable trader who is moving into big money.

[SovoS]

@TYGMedia

There is nothing such retail trader movement. Since most forex broker are bilateral, even you open 1 million lot, it wont move the market.

Yes, of course, I didn’t suggest that retail traders move markets, only that speculative trading (as a whole) impacts the short-term, intraday type, moves. This is primarily institutional speculative trading, which is notably and visibly absent on bank holidays, etc.

As you say, the interbank market and the retail brokers are different worlds.

@TYGMedia

Price Action is the oldest technique and yet still valid up to now. The problem is how we know we learn the real price action, we have so many variation of price actions are being introduced in the market.

Certainly candlestick analysis has been around for a long, long time. Many argue that PA is far superior to indicators because indicators are lagging. An certainly here on BP price action has grown in significance over the years amongst posters and journal keepers.

But it is strange that, in spite of that situation, the proportion of failures amongst retail traders has remained remarkably unchanged. which kind of returns to your point about it not being what we use but how we use it…

The problem with achieving consistent profitability is not in the charts or in what we add to those charts. They simply show us price. The problems lie elsewhere, most likely between the ears…

[TYGMedia]

@SovoS

Certainly candlestick analysis has been around for a long, long time. Many argue that PA is far superior to indicators because indicators are lagging. An certainly here on BP price action has grown in significance over the years amongst posters and journal keepers.

But it is strange that, in spite of that situation, the proportion of failures amongst retail traders has remained remarkably unchanged. which kind of returns to your point about it not being what we use but how we use it…

The problem with achieving consistent profitability is not in the charts or in what we add to those charts. They simply show us price. The problems lie elsewhere, most likely between the ears…

Since I am a heavy user of PA, my point of view is always using PA. When I choose indicator, usually I will compare the indicator with PA. When the indicator is inline with PA, then I will use it. When we analyze chart using PA, you need to “think”, for indicator you can conclude what is going on instantly.

This is my illustration:

If you are using indicator, for example MACD, when you see golden cross, you will think of price is moving up, when you have death cross, market is going down. That’s all and so simple.

If you are using Price Action:

• You need to identify the proper HH, HL or LL, LH. From here you need to figure out the phase of current market.
• Later on, you must identify the valid major range and then minor range. From here you know where you are. You will need to consider market direction and risk surrounding it.
• Next you need to identify price range or block near current price. It’s almost similar with SnR but we need to identify the weight each of them.
• The last thing look for entry signal.
• Along the time, you will know prior the risk of each signal. Choose only signal that match your risk profile.

Can you see the different? Most PA’s practitioners use the technique wrongly. They probably know only part of them. You can see from their analysis, only show SnR and H/L. I’m always questioning how they conclude without knowing major / minor range. Why they never mention about price block/range to identify entry zone. All must be combined together before having conclusion.

About indicator, you need to differentiate them. There are indicator to identify equilibrium, momentum, volatility and range. The lagging indicators will be related to equilibrium. Momentum and volatility will be leading indicators.

Equilibrium, the example is MA with period more then 80. When you want it to be a leading indicator, set it to bellow 20. If you feel it’s not fast enough, you can use EMA, TEMA and more aggressive type of MA.

The way you use indicator also make an indicator becomes leading or lagging. So there are many factors can define how an indicator works.

After all, the most important thing will be thing between our ears. You need to manage your mentality and discipline. Most traders fails because of it. Poor money management is also the main contributor. These two things can only solve by experience.

[TYGMedia]

Technicallity: Price Action - GBPUSD’s Support Has Been Broken

As a Price Action Trader as usual, we need to identify the possibility of HH/HL and LL/LH.
It can be seen here, we have HH and HL. So the conclusion is GBPUSD is having uptrend.
But as can be seen, the latest low is formed bellow HL. So our mindset need to think that GBPUSD is having its trend switched. The next thing we need to find out where the price range that will be an area for having new LH. For beginner it’s not advisable to trade against the trend. So we only find short position here.

When you have trade confirmation, the next thing you need to find is the risk. You need to have trading stat for GBPUSD. This information will be the key for your consideration to enter the market. So it’s very important to back test your strategy. The back test result is the compass for your trades.

This is also the point for traders who are reluctant to tell their secret by calling it as intuition.

[TYGMedia]

Technicallity: Trading & Entry Strategy

There are many strategy for trading. There are two kind of strategies:

• Entry Strategy. It refers to how to decide or what we use to trigger a position.
• Trading Strategy. It refers to how to operate, maintain and exit from market according to our Money management.

The example of entry strategy, We use Double MA crossover as the tools to find good entry position. Price Action can also be considered as Entry Strategy, or the most popular one Smart Money Concept (SMC) and ICT. The purpose of of entry strategy is to find an opportunity to enter the market.

Once a position has been opened, the next thing is about how to operate / maintain your position. Most trader stop once a position is opened, let market decide weather hit profit or stop loss. The reality is, there are so many thing can be done once a position has been open, and this relates to trading strategy. Other than single entry, there are averaging, grid system, martingale, hedging, arbitrage and many others. Every strategy has their pro and cons. Understanding their characteristics, allow us to harvest more profit from market.

[TYGMedia]

Trades: XAUUSD - Small Bullish

On H1 chart, we can see, live, price has broken previous High. That means there is an incoming uptrend for XAU. Remember it’s a H1 chart, so the trend wont be strong. When we open H4 chart, the story becomes different, the trend is down. Don’t get confused by which trend we should follow. Mind only your money management.

Since I’m targeting for around 100 pips, this H1 chart has been sufficient to fill my greed.

Next will be my decision to enter. The safest one will be waiting for correction wave. If I want to be aggressive, I will take a trend reversal.

As in price action we will locate price range, where price will usually go down. If you are familiar with SMC, it’s similar with Order Block. The fact is, all strategies are actually looking at the same thing. They create they own term to make it special.
I can create my own strategy and if I want to sell it, I will create a good name, for example Ultimate Fund Trader or UFT. Then to make it catchy, I will call the waiting zone as Magic Block or Super Block.

Back to XAU, we have to wait till price correction. When it going down to those area, we need to monitor the liquidity in those area. When there is a rejection, that will be time to open position.

[TYGMedia]

Trades: The Correction Wave of USDCHF

As we can see, USDCHF is having strong downtrend. On 1H chart, we can easily spot LH / LL, After calculate the risk and money management, I can open a risky position in USDCHF. This is not invitation to trade. I’m using averaging strategy for this account. All need to be calculated precisely.
A method that works for one, doesn’t necessary work for others.

What I want to show is how Price Action can be used on every scenario.

[TYGMedia]

Technicalliity: Anatomy of Single Entry

Disclaimer: I’m not selling anything. I’m only sharing experiences of my own. Trading is a high risk activity. You take responsibility for all of your actions.

Single Entry is the most difficult strategy to learn. The key to make it work are the discipline, proper chart analysis and risk management. Most beginners are introduced this strategy as it’s the safest methodology. But, by not having proper information about how to execute it becomes the primary reason so many of them fail, 99% surely will fail. Only few of them who are sensitive enough can see the reason behind it.

The path to make use Single Entry as your strategy will be:

• Find a strategy that can be used consistently and clear.
• Find the statistic of the strategy. Only strategy with win rate more than 50% can work.
• Optimize the strategy by implementing Risk Management.

The common mistake by beginner, once they get a strategy, they immediately run forward without analyze the SOP of the strategy. What they should do before is obtain more data such as

• On what instrument it work, which time frame.
• How the strategy work mechanically.
• Analyze its performance by looking at historical price.

When we can see the positive result on all of them, the strategy is worth a try.
By doing Forward Test (FT), we confirm the strategy. When FT has the same performance like Back Testing (BT), this is the reward.

The parameters to evaluate a good strategy:

• Win Rate (WR) has to be more than 50%
• Reward Ratio (RR) is at least 1:1
• Profit Factor (PF) must be at least 1.25.
• Consecutive Loss has to be less then 5% when it multiple with our Trading Risk.

About Consecutive Loss less then 5%, for example for every trade you have to risk 1% or your capital. If your strategy shows the Consecutive Loss is 5, 5 x 1% will be 5%. When your capital drop 5%, it will be difficult to recover.

Let say the strategy survive all conditions above: the last thing is to optimize the strategy. On this level, you need to carefully pay attention on specific condition that makes the strategy work fabulously. It can be due to trend, SnR, specific pattern, etc. When you got it, let’s optimize the RR. For example the initial RR is 1:1. When you see it can give RR 1:2 or even 1:5 that will be a treasure.

The example of a good trading report will be bellow:

• Standard
  Strategy MACD
  Instrument: EURUSD, M15
  Win Rate: 75%
  Reward Ratio: 1:1
  Profit Factor: 1.6
• Opitimized
  When Trending and following trend RR will be 1:5
  When Sideways, 1st wave RR will be 1:2
  When Double Top/Bottom is forming, RR will be 1:5
  etc …

These are the detail. It’s not easy, but it will reward you a long time success in trading. You can even use this to trick your student as mentor. My mentor in the past used these to trick their students, so the mentor got worshiped as a God of Trading .
Every time I asked my mentor for help, his respond will be: Oh this is my trading experience. I always got intuition in trading somehow it guided me. (WOW)

Some were even worse, bringing God and Angle as the enlightenment entities to his mind during trading hour. Their holy face was tinted with deceptions. We were asked to pray in the beginning of live trading session, when he wanted to open position he mentioned, an angle just whisper into his mind to open position.

My response was: Angle of … What???

[TYGMedia]

Trades: GBPUSD - Breaking Out

Spotting LH and incoming LL on H4 chart. GBPUSD is under string downtrend.
As a trader, it’s safer to look for sell.

To have a deeper understanding to GBPUSD, we have to breakdown GBPUSD at lower time frame (LTF)

Look at the price range or price block for potential entry signal here. Compare to your trading stat for the highest success rate. If you are using Stochastic, RSI, RMI, RVI, MA Crossover or MACD, you will see where are most strategic area to open a position.

[TYGMedia]

Technicallity: MT Expert Advisor doesn’t after an upgrade

For almost 2 months I have been converting my accounts from MT4 to MT5. Now I only have 3 MT4 accounts left. MT4 is seemed not stable enough lately.

Three days ago I saw message Old Version on the bottom right corner. None can be done, except making an upgrade. Then my platform got upgrade from 1415 to 1420.

The problem happened, once I upgraded the platform, my Expert Advisors doesn’t work anymore. So I have no choice but to manage all of my MT4 accounts manually

I think, it’s really a necessity to avoid MT4. But, there are many reputable brokers, offer only MT4. My question is why? Why don’t they offer MT5?

I can understand MT4 hard to stop due to many old traders love it and use MT4 based EA. But, this is two edges sword since MT4 is not supported anymore by Meta Quotes. It’s hurting the user and the EA developer.
If you have no trading experience, rely only on trading bot, when there is problem, surely you will get sweat. It feels like you are in a flight then the pilot fall unconscious.

Now, I have been debugging my trading bot for 3 days. I haven’t found what make my bot mad. Probably my bot is feeling agitated due to new working environment

[TYGMedia]

Thoughs: Psychology’s Stats of A Beginner

Anxiety is one of my enemies. It grows a long with my trading journey. When it comes, depression rise. The whole body feels pain, my chest feels tight, hard to take breath. I can’t do anything, surrendering my life. Just like what is happening now.

While focusing on writing, I’m listening to encouraging music, such as Two Steps From Hell, because I’m literally two steps from the hell.

Becoming a trader, one needs to be brave. Most people look at trading as a way to solve their financial problem. The urge to have a quick solution is against the requirement to learn trading. Fear and greed, the adrenaline race, reward and pressure are switching very fast, destabilize our personality. This is what you have to pay in the progress.

There is also a possibility you have a smooth trading journey. You feel so powerful. You make an assumption, you have know everything about the markets. Everything is wrong except you. You feel unbeatable, arrogant is coming. Don’t be careless, stay low. Don’t let market beat you flat, without mercy. Humbled by market is not a joke.

A lot of things more important in our life. There is no place for ego. During my anxiety, I like to look at the sky, asking my self, what am I? I’m so small, so not important compare to the sky. Why are my ego let me suffer in the pain of right or wrong?

Above the sky, I let my thoughts perish inside my cerebrum …

[TYGMedia]

Thoughts: How Good is Trading Methodology?

So many trading methodology available now, start from

• Price Action
• Smart Money Concept (SMC)
• Inner Circle Trader Series (ICT)
• Liquidity Inducement Theory (LIT)
• Volume Price Analysis (VAP)
• Order Flow Analysis
• Wyckoff Trading Method

And many others without name. After so many years, which one is the best one?

Sometime it is felt like being cheated, after learn all of them, their win rate about the same, it’s not more than 50%. The best is 55%.

There is a secret to use them successfully. Sadly, they are not taught by the mentor or included in courses. This is always in mind. Probably as what @tommor had mentioned before, they design it with flaws. So the student will always back bring some money to them

For me, every trading strategy just likes compass. In the end, we have to decide how to use it safely. If we want to go to north, we look at its pointer. When there is a hole in the direction, we need to find the safest way to reach our destination.

Btw, there is an update for MT5. Now, I need to remote my VPS to update every MT5 I use. Imagine to restart 80+ accounts one by one … it feels soooo …

I can’t just restart the machine. By doing so, it may corrupt MT5’s configuration. So, I really have to be patient

[TYGMedia]

Technicality: MT4 Instability

I don’t want to say MT4 is bad. But, recently it causes a lot of problems since 1420 update. The stability my EAs is ruined. They keep crash and freeze. Is this because I’m using Linux server to run them? But I face no problem running MT5 with them.

I can see, MT4 is using more memory compare to MT5. It sounds impossible since MT4 is 32 bits and MT5 is 64 bits. Is it because my EA’s algorithms are not fit with 32 bits architecture?

I need more time to understand. But I’ve had certainty to leave MT4 for good. The future of my automated trading rely on MT5 and cTrade.

MT4 has been accompanying me for almost 20 years. I have to thanks this old good platform. There will be a farewell party between me and MT4. MT4 will always be a part of me, and remembered as a good platform that have guided me to what I’m now.

Thank’s MT4 for your contribution and hard work. Thanks for Meta Quotes for bringing MT4 into my life. I will continue my trading journey with MT4’s little brother, Meta Trader 5.

[TYGMedia]

Thoughts: Automated Trading System

I always think of Trading as a serious business. Having an automated system, just like you are an entrepreneur who are setting up a branch office. You can’t rely on your own to expand your business. You need to have a good team and system. If don’t want have others involvement as your team, then you have to use robot.

Why do we need a automated system? Have you ever thought, when you are unable to trade, sick for example? Who will help you?

There was time, when I had to away from market. I finally understand clearly the human nature. When you have misfortune, most people will stay away from you. You are the burden. When you are wealthy, everyone want to be your friends or claim the closest one. This happened to me. When I was in prime, so many people visited to have network with me. When I was down, they were disappear, rejected my distress call.

Automated trading is the solution. I just need to supervise my robot to perform trading according to my plan. They work hard, tirelessly. When they are down, I just need to have them restart to refresh their mood back.

I don’t need to stay on facing the market, I trade with less pressure as my pocket money. my day to day activity is research new trading system. When I got a good one, I will “teach” my robot how to use them. And they are surprisingly eager to “learn” and fast to understand my “teaching”.

Our organic body has limit. We have to have backup for anything.

[TYGMedia]

Thoughts: Trading is similar to open a business

When you open a burger stand, you have to know how to make burger. You need to prepare equipment and things related to having a burger stand. Let say, for each burger you sell, you make profit $1. Then you can sell 100 burger for 1 day, your profit will be $100.

If you sell your burger $7 each, that means the cost of a burger will be $6, you need $600 as the capital. Your profit will be 100/600 x 100 % = 16%.

That looks big, isn’t it?

Before make any conclusion, we need to calculate the capital and cost. For example you need to by kitchen equipment, promotional stuffs, cooking material and etc. There are also cost to handle garbage, rental and permit to open the stand. So in total let say we need 5000 capital to run the business. There is also expenses need to deduct every month for example 1000. You also need to calculate the cost of employee and yourselves to run the business. After all, you probably will have 5-8% profit each month.

The same thing happened in trading. You need to think capital, profit you have on every position and the cost of trading. When you can reach consistent profit about 5% / month, it’s similar to run a business in real.

The similarities are:

• You need have a long vision to run a business. The longer you can commit, the higher the opportunity to get rewarded.
• You need enough capital to run a business. You have to breakdown the requirement to have accurate amount of capital to run the business.
• You need to know the cost of running the business. In trading that will be the risk.
• You need to find a good spot to generate profit. It must be a joke to sell burger in cemetery. In trading, where to open a position.

In short, to start business you need to understand these points.

I often got asked, can I have a good income from trading?
I was asking the definition of good income. It was 500 USD.
I asked again, how much capital the person had. It was 500 USD.

Immediately, I got my mouth shut. …

[TYGMedia]

Thoughts: Trading Changes Path of Life

A lot of unexpected thing in our life. We just need to give ourselves a chance to explore them.

It was back to end of 2006. Once I left my mentor, I pursued trading by my own way. I bought many books, went to many courses and joined many trading communities. Once was Baby Pips . My intention was only one, to learn more.

After a long time, I finally could construct a strategy from every information I got. I traded for 3 months and I successfully increased my balance up to 60%, more and less. Boldly, I shared my result to my mentor, I was in his mailing list. Nothing happened in the beginning, after more then a month, he contacted me.

He asked my trading method, I didn’t tell much. In short, he explained he was managing fund from few companies. He asked if I had interest to help him. After a long talked, I agreed. I wanted experience, the benefit was also interesting.

Since then, I was his helper to manage fund from several company. A long the time I developed an EA. The EA could mimic my performance for around 60%. The EA then used to manage some corporate’s fund.

Since I was graduated from Computer science, I was then asked to help him to establish a broker. I handled all issues related to computer, such as installing server, trading infrastructure, Managing MT4 trading server, I finally knew how to setup a broker from zero. I also learned how to operate a broker. In the beginning, we were white label broker, after less then 3 months, we were converted to a full white label broker and got self-owned server to manage.

It was amazing to look at how our clients made orders. We earned only from commission or spread. Profit was huge, same thing with to operational cost. Later I knew, many international companies were using CFD as hedging tools for their business. Even there were only few of them, the portion of their funds were extremely huge. I then realized the truth of Pareto Principle: on many outcomes, 20% are the cause of 80%. 20% of our clients were the owner of 80% of our trading volume.

This was the key that allowed me to have deeper experience with the world of broker. I learned how important regulation and license for broker, how dangerous is an unregulated broker. These knowledge enriched my trading’s method. It changed every single thing on how I saw market.

[TYGMedia]

Thought: Reference to Learn Mechanical Trading System

I’m not selling thing here. This is just one of the books I read. It’s good enough to guide who want to learn mechanical trading.

Amazon.com: Mechanical Trading Systems: Pairing Trader Psychology with Technical...

[TYGMedia]

Technicality: London Breakout Strategy

After read this article few times, I am interested to create an EA for it.

London Breakout Strategy - 1H Timeframe Modified

Hello everyone, This is not something new but rather is something I have stumbled across and made a few small changes along the way to suit my own trading style a little better. Back-tested this and it has shown really good results over the last 6-12 months so I thought I’d share this with you all. Once again, this is not 100% my own strategy, but rather something I found through research that has been around for a long time and just made changes to it to suit my own lifestyle and trading sty…

Let find out its trading stats. If it’s good I will post here the result.

I really need new perspective to see market.