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Old Jun 20, 2014, 12:23am   #25
Joined Sep 2013
charlesD started this thread I'm not faulting anyone's style of trading, everyone should find his or her own preference and find out what works for them, whether it's trading using micro stops, or larger stops. Even finding a preferred instrument to trade, as each has its own idiosyncrasies. As long as it works for them and it makes a profit that's all that matters.

Well actually, I've traded forex majors as well, and these behave slightly different to the Dow, less volatile, so a 10 pip stop on a forex major out of hours (when Wall Street is asleep) is only slightly more lenient than on the Dow (especially during market hours - or when Wall Street wakes up). I noticed with the forex majors, the price is range bound most of the time making for a good trading channel (+/- 60pips), then the price is prone to a large movement (200+ pips) over say a day or two in one direction or the other probably once every week or two, then it goes range bound again for a week. So the forex yes will probably be better for that style of trading when you're in and out quickly trading a channel, but try placing your micro stops on the Dow when the New York markets are open, your 5-10 pip stops get stopped out almost instantly all the time whether you got your initial direction right or not it won't matter.

I tried 5 pip (usually 10) stops on the forexes as well, but since the spread on forex although start at 1 pip spread but changes more frequently depending on time of day sometimes upto 3 or 4 pip spread, then a 5 pip stop is no good is? Placing these micro stops I found sometimes my positions were closed at a loss before the screen even finished executing my buy order and updating my onscreen balance!

Besides, I never found the opportunity or set ups for 20 trades a day just watching one instrument, so Forexmospherian you must have 4 screens open at once waiting for good set ups no? I myself have not, and also making 10-15 trades a day would mean you're stuck in front of the screen for 8+ hours a day no? Or would you prefer to enjoy the outdoors if you so happen to live next to a beach in a tropical climate?

In my own personal experience, the best running streak I've had spreadbetting was I doubled my account and it took 6 months. I was placing 10pip stops and trailing my stops first to break even then along with the price and getting stopped out at anywhere between 1-40 pips most of the time, sometimes a little more, I would trail my 10pip stops along with the price movement. I was making only 1-5 trades a week, and averaging 10-30 pips profit a week. Now all the other times when I started making 10-20 trades per day, I just ended up losing. I lost all my profit that took me 6 months to build in just 3 weeks because I went crazy just overtrading trying to win back my losses after my first initial loss!!! I lost discipline and patience! This behaviour I believe has been coined revenge-trading which I am now aware of having experienced it. I am not too worried because it wasn't a large sum of money we are talking about, but after trying various methods to see what works for me, I will not overtrade again. Only when I started only making 1-5 trades per week did I become profitable.

This is why next time I'm going to try larger stops and only trade 1-5 times a week.
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Old Jun 20, 2014, 11:57am   #26
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[QUOTE=Forexmospherian;2350168]
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Originally Posted by highbury fx View Post


Hi Highbury FX

There is a cost to every trade yes - but you are not looking at it in a correct perspective

If Trader A has say at 70% success rate and his average RR on wins is 2 - - then if he takes 10 trades over say 3 days - his average result would be - 7 wins x 2 and 3 losses x 1 - net result then 14 - 3 = 11 - so if he uses a 1% stake - in theory he increases his capital by 11% - over 2 days

If Trader B is a scalper with 70% and takes say 20 trades in a day - but his average RR is 1.5 and not 2 - his average result in just one day will be 14 wins at 1.5 against 6 losses at 1 net result - is 21 - 6 = 15 - so 1% stake in theory he increases his capital by 15 % - in one day

The extra trades costs are already included in the RR's and are really minimum

ie I dont mind a cost of 30% if I make say $20k - thats better than having a cost only 10% and only making $10k - ie NET $14k against less trades and lower cost - NET $9K

Costs in trading are not just linear - i dont know whether I might on make 7 pips with a 1 pip cost on one trade - or 30 or 300 pips on a 1 pip cost - because only my stops are fixed - never my targets

Net cash is King - not just low costs - but with lower receipts as well

Would you now agree with that ?

Or would you prefer to think just 1- 5 trades a day are good ???

There are so many other advantages of multi trading - but rarely am I in more than 2 trades at the same time

I might agree with you 20 -25 trades a day ( manually ) could be looked upon as excessive and over trading - but last time I made 24 trades in day on July 4th 2013 - I made 409 pips

On average I probably do 13/14 trades a day - and if I have a good AM session and do over my target I might only do 8 trades in say 4 hrs and stop.

The markets are dynamic - a trader needs to be dynamic - no fixed targets - only fixed stops - no fixed number of trade - all depends on the movements etc

Back to this cost myth

To repeat - I would prefer to be paying a broker 30% cost of my trades and make a higher net figure - than pay only 10% costs and only make 50% or 70% of the higher net turnover.

ie which company would you sooner have

Company A - all costs only 60% of turnover - but turnover say $1 million

Company B - all costs 90% of turnover - but turnover $50 million

Cost in isolation can be wrong used to make an incorrect point - and I am sure you know that.

Here we have swing traders with stops of 40 -70 pips and win rates of only 45 -60% and taking days to make 100 pips - and then they worry about a 2 pip cost of trading - when every loss they are down by say 50 pips or so- and have wasted 2 -10 hrs finding out

So inefficient

I want to know when I am wrong within 1 - 5 mins normally

How many books and guru's etc tell you that ? because I have not read many as normally traders do not have business and accountancy backgrounds - and just listen to basic - "keep cost as low as possible" -

Sometimes the bigger picture - like in trading is important - but please dont think a trader should only take 1- 3 trades a day - NO as far as I am concerned it inefficient and wrong.

But that's just me - and i am different to 90% of all other FX traders...........

Regards


F

Dear F

An interesting response but I'm still not in your camp.

You said at the end of your post that I shouldn't think a trader should only take 1-3trades per a day as it is inefficient and wrong.

I don't think that and I didn't imply anywhere in my post that a trader should do a set number of trades per day. I was saying however that 20 trades a day was overtrading and that you do actually have to consider the total spread you pay as a cost. I stick by that.

Whatever risk model you personally run and the way you manage your bank roll is entirely up to you and over the years you may perhaps have found a style that suits your experience, your risk appetite, your cash and your available time, but not everybody has done 15,000 trades like you and they are the people that need to be given some basic pointers on how to not go broke in record time. The information they need is not restricted to trend spotting and scalping techniques but should be more relevant such as why they should only trade liquid contracts at times when relevant data isn't being released, to ALWAYS use stops AND limits (or trailing stops at least) and to be mindful of how many times per day they trade to control the most basic of costs, ie the spread.

You are clearly experienced and no doubt very well respected and the content of your posts are accurate and informative albeit at a level that most people here haven't yet attained. Whilst my experiences in s/b is different to yours, my interest in t2w is helping people get going and survive the first few months without falling away like the majority. Once they get a couple of years under their belt they may find that a strategy like yours (trading 10-20 times per day) suits them, but as a noob they'll get eaten up by the costs of the spread.

regards
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Old Jun 20, 2014, 12:02pm   #27
Joined Oct 2013
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Originally Posted by charlesD View Post
I'm not faulting anyone's style of trading, everyone should find his or her own preference and find out what works for them, whether it's trading using micro stops, or larger stops. .........

I tried 5 pip (usually 10) stops on the forexes as well, but since the spread on forex although start at 1 pip spread but changes more frequently depending on time of day sometimes upto 3 or 4 pip spread, then a 5 pip stop is no good is? Placing these micro stops I found sometimes my positions were closed at a loss before the screen even finished executing my buy order and updating my onscreen balance!

Besides, I never found the opportunity or set ups for 20 trades a day just watching one instrument, so Forexmospherian you must have 4 screens open at once waiting for good set ups no? I myself have not, and also making 10-15 trades a day would mean you're stuck in front of the screen for 8+ hours a day no? Or would you prefer to enjoy the outdoors if you so happen to live next to a beach in a tropical climate?

Hi CharlesD

I think it all depends if you are very experienced and also a full time retail trader

I generally trade up to 6 main FX pairs - EU / EJ / EA / GU / AU - and flavour of the session .

Yes i normally cover from say 6 30 am to 5 -6 pm UK time ie over 10 hrs of trading opportunity.

The actual time I am at my desk and trading is normally under 4 hrs - average scalp 5 -15 mins - and every hr - I only check my time windows for approx 12 -15 mins max

Now after spending 20+ years in the business world - working 50 -70 hr weeks - my average 20 -30 hrs a week at my desk - it's like a walk in the park

Timing in crucial - yes robots even are set to time

I have just taken 2 successful scalps in last hr with the only stop size I needed was 2.4 pips on the EU and 3.5 pips on the GU

You cannot do this without years of experience and understanding of market movements - but when you have it then 10 -20 trades are day are on - but like I say over 20 for me is too much - unless we have really busy days and I am on a roll.

Also and this is most important - the more you do something - the better you get and as the great golfer said - the more I practice - the luckier I get

Only doing a few trades a week - will take you what 5 - 10 years to get you up to the level I am on about - so how will you gain more experience and movement knowledge with out really covering the "coalface"

I suggest 5 -10 trades a day is needed as a full time FX trader to know your method is working and you are continually learning more and improving

Only my view - but it certainly works for me

Good Trading


Regards

F
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Old Jun 20, 2014, 12:55pm   #28
Joined Sep 2013
charlesD started this thread
Quote:
Originally Posted by Forexmospherian View Post
Hi CharlesD

Also and this is most important - the more you do something - the better you get and as the great golfer said - the more I practice - the luckier I get

Only doing a few trades a week - will take you what 5 - 10 years to get you up to the level I am on about - so how will you gain more experience and movement knowledge with out really covering the "coalface"

I suggest 5 -10 trades a day is needed as a full time FX trader to know your method is working and you are continually learning more and improving

F
I certainly agree with what you said about the more you do something the better you get at doing it, whether it's playing the violin, golf, or in this case spreadbetting. I don't know how many trades I've made, but It's probably somewhere about 1000-1200. I wouldn't say I'm good yet, but I'm starting to get used to all the ups and downs. When I started I used to sell always near the bottom of a down spike, but now I'm a little more cautious about jumping in too quickly.

Interesting to know about what method you use, those are small stops aren't they, I guess my mistake when I was using small stops was not taking profits quickly because the price always went back down only to get stopped out, so a good profit level is what 2x, 3x or 4x the stop level regardless of the stop size? So a 3 pip stop should aim for a 10 pip profit, or a 30 pip stop a 100 pip profit (or even a 300pip stop and 1000pip profit), the optimal ratio between the stop size and profit level appears quite constant proportionally regardless of the stop size - in regards to market volatility, the only difference is the time frame of the trade.

What do you think is the optimal ratio of the stop/limit? Or do you think a better technique is just trailing the stops and going along with the price as far as you can? I used to always trail my stops, and most of the time I'd stop myself out too early only to watch the price rise (or fall) further, but I preferred trailing in order to lock in profit, because nearly always the price falls (or rises) back to your original stop. So have you a set limit target you stick to like 2-3 times the stop size, or do you trail which you think is better?

Well regards to what you said about it taking longer to get better only doing 5 trades a week as opposed to 20 a day, I'm not so sure. As long as you're active in the market watching the price, for example, I haven't traded for 8 weeks now, but my most recent trade, I didn't even risk any money, I just mentally placed a stop, and watched the price. Yes, It was before markets opened this week on Sunday night, I thought if I was going to trade this I would place a buy (on the Dow) at 16725 with a stop at 16690. Sure enough it opened on Sunday night the price fell to as low as 16699, and by market open on Monday it was as high as 16795. I didn't place any money on this trade, but If I did that would've been a nice 70 pip rise! Now if I was actually in this trade, I would've either trailed my stops along with the price to probably get stopped out at about 50 pips above my price, or I would've placed a stop just a few pips above my buy price hoping for the price to move even higher. Now looking at the chart in retrospect, If I had done that I would've got stopped out as the price went back down to 16725 and I would've lost all my profit. But if I had just kept the original stop (16690) in place I would've still been in the trade for the whole week, with the price at 16900 now, for a +175 pip profit. This is what I would've been aiming for. These are the kinds of gains I need to offset my losses in order to make any real progress, but my mistake is taking profits too early I guess, trailing to lock in profits, only for smaller gains that don't offset your losing trades.
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Old Jun 20, 2014, 3:14pm   #29
Joined Oct 2013
Quote:
Originally Posted by Forexmospherian View Post
EU

For now low at 3564

scalp buys OK but need to see if we stay above 65/66 - and then try 78 to hold on a bit longer

Hi CharlesD

i posted the above comment at 2 12/13 pm UK time in my intraday live trading thread - after Low at 2 04 pm

My stop would be really 4 pips as at that time spread was 0 4 of a pip

I have now just posted another comment to scalp sell under 3586 - as its an interim high.

To be able to do this you do need special skills that take a lot of time to develop - but your comments have hit a few points on the head.

I will over the weekend explain in more detail etc - with regards to best stop sizes - targets etc etc

Got to get back to a few more trades meanwhile - but have no problem sharing many of my findings - and do every day in the other thread

More to follow

Regards


F
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Old Jun 22, 2014, 10:53am   #30
Joined Oct 2013
[QUOTE=highbury fx;2350468]
Quote:
Originally Posted by Forexmospherian View Post


Dear F

An interesting response but I'm still not in your camp.

You said at the end of your post that I shouldn't think a trader should only take 1-3trades per a day as it is inefficient and wrong.

I don't think that and I didn't imply anywhere in my post that a trader should do a set number of trades per day. I was saying however that 20 trades a day was overtrading and that you do actually have to consider the total spread you pay as a cost. I stick by that.

Whatever risk model you personally run and the way you manage your bank roll is entirely up to you and over the years you may perhaps have found a style that suits your experience, your risk appetite, your cash and your available time, but not everybody has done 15,000 trades like you and they are the people that need to be given some basic pointers on how to not go broke in record time. The information they need is not restricted to trend spotting and scalping techniques but should be more relevant such as why they should only trade liquid contracts at times when relevant data isn't being released, to ALWAYS use stops AND limits (or trailing stops at least) and to be mindful of how many times per day they trade to control the most basic of costs, ie the spread.

You are clearly experienced and no doubt very well respected and the content of your posts are accurate and informative albeit at a level that most people here haven't yet attained. Whilst my experiences in s/b is different to yours, my interest in t2w is helping people get going and survive the first few months without falling away like the majority. Once they get a couple of years under their belt they may find that a strategy like yours (trading 10-20 times per day) suits them, but as a noob they'll get eaten up by the costs of the spread.

regards
Hi Highbury FX

I would agree with you that - all new traders should not just expect to become extremely skilled at intraday trading within a few months and even a few years - and therefore should not try and copy anything I might do etc on a real live account.

You too also talk a lot of sense and I am sure you are experienced as well and I am in your camp with regards to always using stops at levels they find comfortable with - and based on proper reasons rather than just saying 30 pips or 70 pips is large enough that will do etc etc..

My worry is when new traders only take say 1 or 2 trades a day - or even just say 3 per week - initially on a demo account rather than with real money - its going to take them quite a long time to find out whether what they are actually doing - will carry on working or whether they are purely being lucky and think after say 1 month they have had say 15 winning trades out of say 23 that's all the testing they need.

I think you need well over 100 trades with swing trading and may be even 4/500 trades on intraday trading to at least know you method might have a chance of working over the longer time - that's only my own view and I am open to other suggestions etc

All the best

Regards


F
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Old Jun 22, 2014, 11:43am   #31
Joined Oct 2013
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Originally Posted by charlesD View Post
I certainly agree with what you said about the more you do something the better you get at doing it, whether it's playing the violin, golf, or in this case spreadbetting. I don't know how many trades I've made, but It's probably somewhere about 1000-1200. .................

What do you think is the optimal ratio of the stop/limit? Or do you think a better technique is just trailing the stops and going along with the price as far as you can? I used to always trail my stops, and most of the time I'd stop myself out too early only to watch the price rise (or fall) further, but I preferred trailing in order to lock in profit, because nearly always the price falls (or rises) back to your original stop. So have you a set limit target you stick to like 2-3 times the stop size, or do you trail which you think is better?

Well regards to what you said about it taking longer to get better only doing 5 trades a week as opposed to 20 a day, I'm not so sure. As long as you're active in the market watching the price, for example, I haven't traded for 8 weeks now, but my most recent trade, I didn't even risk any money, I just mentally placed a stop, and watched the price.
Hi CharlesD

Re - Stop sizes and fixed or trailing etc etc?

I personally believe you should always trade with a stop and it should be based upon whether the trade you are taking should happen - before price goes and hits you stop.

Many new traders think - OK - i can see a new direction and a target and its say 50 pips away. Therefore I need to allow price room to get there - I will not place my stop at just 20 pips away - its far too close - and the next real S or R is 45 pips away - so to be safe i will go for one further away - so a 80 pip stop should be OK

By doing this - they look that the market as more chance of going in their direction for only 50 pips - rather than going against them by 80 pips. In many cases they might be correct - but immediately by having a negative RR - they will need a win ratio of at least 65% to even make small gains in the future.

Stops for me should be as tight as possible - but still allow you to make positive pips.

Optimal stop size all depends on your trading knowledge and experience and of course bear a relationship to your actual target . A 5 or 10 pips stop after a 150 -200 pip target would be extremely difficult to pull off for any new or intermediate trader. Therefore many go down the RR route and think I need a minimum RR of 2 for this trade - so my stop should be somewhere up to 75 pips away from entry. 40 50 pips is a S or R away - so I will allow a bit and yes 65 pips is OK

But is it ??

My own view - but please remember I don't recommend this to any new trader - or trader who is not very experienced at reading PA - is I need a stop as tight as possible if I believe the direction is changing.

In my own case every trade I take as to be with a stop size of under 7 pips and can be as low as 3 pips on a pair with a spread of only 0 3- 0 5 of a pip.

That requires exact timing and patience etc etc - especially if I am going to take 10 -20 trades a day.

I will not except a win ratio of under 65% - and expect to always be around the 70 -80% every 100 trades taken.

My targets are totally dynamic. If I risk 5 pips - I don't just want a 3 pip result - BUT yes if I can only take 3 pips - I will accept it rather than end up minus 3 or stopped at minus 5.

Most trades do end up between 7 and 25 pips - normally in 10 -15 mins - and majority under 30 mins.

Many trader just think - well that's no good only say 16 pips as a result - hardly worth doing

What they dont realise is that trade as a RR of 3+ ( stop 5 pips) and monetary wise is exactly the same as me risking 50 pips to make 151 pip or even risking 100 pips to make 301 pips.

Yes the money I make off a 16 pip win in under 15 mins is the same as if I had waited 2 days for 300 pip with a 150 pip stop.

So that's why I want tight stops - to be able to make more money.

Even if I set my mental stop at 4 pips and I am stopped out - It still does not stop be risking another entry again - if I am still believing the move will go my way.

So I could actually have 2 losses of total 8 pips and then catch the trade and it goes on to make 25 pips - so end result - 3 trades - 2 losses - risked 12 pips in total and made 25 pips - still a very positive result.

I think to get to as low a stop as possible you need to work and trade a long time at the "coalface" - Ideally on 3 min or 1 min charts and then when they become slow - down to tick charts.

Initially try 8 or 9 pip stops - remember if you need a stop over 10 or 15 pips - it really a total different trade to a short term intraday trader.

Traders with stop over 20 or 25 pips are thinking they are being safe - but really just hoping and not understanding PA at the real coalface. The industry wants trader to think it cannot be done - IE - Trading in the noise is too risky - dangerous - near impossible.

Well its not - but it take years to get to the level that you can nearly follow every pip and wave move and then cherry pick the ones with the highest probabilities that might make you RR's of 3 or 5 + even in under 30 or 60 mins.

With regards to clues on how you do it. -

1. Watch small frame charts for many 1000's of hours.

2. Keep an eye on all levels - interim - dynamic - pivots etc

3. Keep an eye on the time of every move

4. Watch for false moves - ie a quick spike of 5 -10 pips to encourage traders to enter a trade in the wrong direction

5, When a move looks a certainty - be careful in may 7 out of 10 cases - its a set up - false sentiment - before a completely different move in the opposite direction

6. Learn to read patterns - even simple 123 or ABC as well as Head and Shoulders or other harmonics on the small frames as well as even candle stick clues.

7. Take 100's or even thousands of trades on a demo first to get the feel of quick entries etc etc

All these thing cannot be all achieved in 6 or 9 months - but after a few years of focus and determination etc etc - you will get there and then you will think - why did I ever need 20 or 30 pip stops?

Finally - its so important you do keep trading via demo or live account. As you know live account is a different world to demo - and even just mentally thinking out a trade is not the same as carrying it out.

No Pain - No Gain - and it certainly applies to trading - but then one day - the pains slowly go away - and the gains keep on coming in

Hope that helps


Regards


F

Last edited by Forexmospherian; Jun 22, 2014 at 4:18pm.
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Old Jun 22, 2014, 9:01pm   #32
Joined Mar 2014
95% lose regardless of how good you are

once you learn that you will be ok and not lose your shirt
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