Fighting an Average Joe

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Old Nov 25, 2017, 7:13pm   #17
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I've never seen a trend one way just turn into a trend the other way.
There has always been a degree of ranging after a trend ends.
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Old Nov 25, 2017, 8:03pm   #18
 
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Originally Posted by LazyMax View Post
2. He never closes his losing positions until they become profitable...
This isn't Average Joe, it's Enlightened Joe
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Old Nov 25, 2017, 8:16pm   #19
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Originally Posted by Nowler View Post
I've never seen a trend one way just turn into a trend the other way.
There has always been a degree of ranging after a trend ends.

In order of probability, IMHO, I can suggest that long-term trends:
1) continue
2) pull back and then continue
3) consolidate and then continue
4) consolidate and range
5) consolidate and reverse
6) reverse
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Old Nov 25, 2017, 9:59pm   #20
 
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Originally Posted by Nowler View Post
I've never seen a trend one way just turn into a trend the other way.
There has always been a degree of ranging after a trend ends.
know that you dont know, then youre one step ahead of the average joe.

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Me and you, we is largely the same bruv! We dont know shît! The difference is, I know I dont know shît!!
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Old Nov 26, 2017, 10:48am   #21
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Originally Posted by gerryg View Post
How can we expect exponentially growing rewards? Can I know how you define risk? Asset variance?
Yes, I define risk as asset variance: the maximum drawdown level I can get when price fluctuates, making me lose small amounts of money on each stop loss I get inside the large move.

As for the exponential grows: when we enter into a sharp move with a single position, our profits grow linearly as price moves forward. But, if we add more into the winning direction, we get arithmetic progression.

For example, if price moved from 1000 to 2000, we get 1000 points of profit with a single position. But, if we add into this position every 100 points, we will get 1000+900+800...+100 at the end. And, even if price fluctuates inside this big move, we are limiting our losses to these small stops, 100 pips each, especially if we move stop losses to their breakeven levels for previous levels.

For example, when the price finally reach 1800, it's a good idea to move 1700th position stop loss into breakeven. So, if the price moves backwards, we will lose 100 pips at 1800th position, but even if price will sharply move backwards even more, we will close all previous positions without losses.

It's not an "exponential grows", but it's still better from overall rr ratio at the end, I hope. But, we can actually get exponential grows if we add exponentially growing amounts, as our "Poor Joe" does when he tries to average his losses. So, when we are in a winning position at 1000, we can add higher amount at 1100, etc. Something like "1 lot at 1000, 1.1 at 1100, 1.2 at 1200", etc.

It's just an idea, I plan to test it in the next few days on a simulator first, then on a demo account for a few weeks.
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Old Nov 26, 2017, 11:04am   #22
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Originally Posted by Nowler View Post
I've never seen a trend one way just turn into a trend the other way.
There has always been a degree of ranging after a trend ends.
Yes, getting into the trend is a tricky task by itself.

Moreover, I don't believe that I will be more correct at predicting the future than a flipped coin. The main idea of this system is not in correct predictions, it's in increasing your rr ratio to the point where you no longer need to be correct to win the game.

Even if I will flip the coin every time I enter the market, not trying to predict the move, I'm limiting my losses to several small stops along the way. But, there are times, you know, when something big happens. And these are events you can't predict.

So, when something big happens into the positive direction, I can cover all my previous small losses with a sharp move. If the same happens when I'm on the opposite side of the track, I will lose something around the size of my stop loss.

For example, I took about 150 pips of small losses this Friday, trying to enter the market into the right direction. At the end, I was rewarded by a move which gave me about 800 pips total. It means that from that moment I can be wrong for 5 times in a row, but I will still be in a profit.

I agree that such moves don't happen every day. On the other side, it's better to be ready for them all the time.

So, in short, it's not about predicting the direction of the price. We can't predict the future. It's all about stats. It's about taking plenty of small losses, waiting for a big move we can't predict.

PS: If you look at it from "Average Joe" perspective, you will find that it's such big events that cause him to lose. He is happy and profitable, taking small profits from the market for some time, until something terrible (for him) happens. He "knows" that currencies retrace to previous levels most part of the time, that he is safe taking small gains and waiting for his losses recover to breakeven. We will lose for a while, he will profit for a while. But, when it's time for him to lose BIG, we will earn even bigger, because we are not limited to a margin call level of our accounts.

Last edited by Max Pastukhov; Nov 26, 2017 at 11:17am.
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Old Nov 26, 2017, 12:42pm   #23
 
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Originally Posted by LazyMax View Post
... it's just fun to research the market, looking for investment ideas, plus develop some internal tools along the way.

Honestly speaking, I don't want to become a trader. I'm more like a research guy, a marketing analyst and a software developer. I don't like to take big risks. I prefer safe ways to earn money like developing and selling software products. Or something like real estate/index funds/short-term bonds..
Hi lm

I was going to comment on some of your ideas in this thread and then saw your post from last week so preferred to ask:

how does all this fit in with what you said above? I'm a bit confused.

k

Last edited by Kaeso; Nov 26, 2017 at 4:43pm.
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Old Nov 26, 2017, 2:32pm   #24
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Max Pastukhov started this thread
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Originally Posted by Kaeso View Post
Hi lm

I was going to comment on some of your ideas in this thread and then thought about your first post here and so preferred to ask: how does all this fit in with what you said above? I'm a bit confused.

k
I'm a researcher and software developer in my heart. I earn my living selling my software products for the last 15+ years. A one-man show.

On the other side, I hate developing and (especially) selling products I don't use. When I research the market (hobby #1), I usually organize and automate my work along the way (hobby #2), which gives me great product which I'm happy to develop, use personally, polish and sell to other people.

My last business was about marketing products - I was selling keyword databases because I organized and automated my work as an internet marketer. I sucked at the marketing itself, but the products were great. If you are curious, google "xedant".

This time I research trading, hoping that I will find software ideas as well. I'm tired of marketing niche because, as I told previously, I don't like to do marketing. I'm good at research and coding, not at sales. I feel that trading niche is the one that can fit my lifestyle, because there is a lot of research and experiments along the way.

I don't want to become a trader, but I enjoy solving this complex problem. I also organize and automate my work along the way, which will give me great products to use personally and sell, as well.

For example, when I told several days ago that I plan to test my strategy on a simulator, it means that I'm already developing one. It's fun Both the research itself and the product development process.

But don't worry, I came here not to blatantly promote my products, but to learn and research. It will be great if I can help somebody, too. So, you can treat me as a trader, because when I solve this problem, I become a trader, even if I don't want to become the one at the end.

As you can see, I try to develop a trading strategy that fits my lifestyle. I don't want to spend days watching charts, I would rather find something I can trade several hours per week, spending the rest of my time on research and software development. Something that will not make me nervous, something I can trade mechanically.

On the other side, the more I research the market, the more trading opportunities I see. I feel that I can change my mind about "not becoming a trader" at the end

I plan to trade stocks after I finish my experiment in the Forex market. I see that stocks are much more profitable in terms of number of available trading ideas, so I plan to profit both ways: from the trading itself and from my products. But, as I told you, research and software development will be my top priority, anyway.

PS: Here is a screenshot of the simulator I'm developing at the moment: http://xedant.com/images/trading/sample.png
If you like it, please pm me to become the first beta tester in few weeks

Last edited by Max Pastukhov; Nov 26, 2017 at 2:43pm.
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