Trading Naked - Part 2

[foredog]

Just my take.

The problem with trying to pick whch stop to use is that you can be sure that if you go for logical one as todays a choppy day then you can be sure that the first trade's going to shoot off with no pullback, so you'll kick yourself for having the wrong stop, go to a fixed 20 point stop and be stopped out on trade 2.

Either way will deliver a decent amount of winners, just sometimes the logical one would deliver a better return, but others it won't. Will you be able to use he right one each time or end up chopping between both and getting the worst of both?

 

[Bloodhound]

Just my take.

The problem with trying to pick whch stop to use is that you can be sure that if you go for logical one as todays a choppy day then you can be sure that the first trade's going to shoot off with no pullback, so you'll kick yourself for having the wrong stop, go to a fixed 20 point stop and be stopped out on trade 2.

Either way will deliver a decent amount of winners, just sometimes the logical one would deliver a better return, but others it won't. Will you be able to use he right one each time or end up chopping between both and getting the worst of both?

The voice of reason

Thanks for telling me what I needed to hear!!

 

[barjon]

Hi Jon,

Excuse my ignorance, but I just want to get this straight... math's has never been my strong point!

You're simply add/reducing every 10 points in your favour? Could you please put it into another example with stops etc, because I'm not getting this?

Sorry...

hawk

First of all I should say that I agree with Rob and shakone (I add on confirmations myself - bit like Rob's traffic lights!!) but, if you want the mathematical route, then the reflecting pyramid is probably the best of the bunch.

So, ignoring spread etc

buy £10pp @ 500

(with an average expectation of 60 points, say)

price moves to 510

- your paper gain is £100

buy £5pp @ 510

you now have £15pp in play and if price goes against you from here you must not lose more than £100 (break even overall). eg: a stop at 504 would leave you making £40 on the first position and losing £30 on the second = +£10 overall.

price moves to 520

- your paper gain is £250 (£200 on first position and £50 on second)

buy £2pp @ 520

you now have £17 in play and if price goes against you from here you must not lose more from this third and last position than you have gained on the second position (£50). eg: a stop at 513 would leave you making £15 on the second position and losing £14 on the third. (and + £130 on the original first position of course)

price moves to 540

- your paper gain is £590 (£400 on the first; £150 on the second and £40 on the last)

sell £2pp @ 540

you've banked £40 and even if you leave your stop on the rest where it was (513) you ensure another £145.

sell £5pp @ 550

you've banked another £200 so that's a total of £240 totally safe and sound

sell £10pp @ 560

you've banked £600 giving a total of £840

The rationale behind this is that the risk of the move ending increases the longer it goes on - hence smaller additions and the scaling out.

good trading

jon




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[Vaco]

The rationale behind this is that the risk of the move ending increases the longer it goes on - hence smaller additions and the scaling out.

good trading

jon




-

Which ever route you take this is the line to remember imo.

 

[HawkTrader]

hawk

First of all I should say that I agree with Rob and shakone (I add on confirmations myself - bit like Rob's traffic lights!!) but, if you want the mathematical route, then the reflecting pyramid is probably the best of the bunch.

So, ignoring spread etc

buy £10pp @ 500

(with an average expectation of 60 points, say)

price moves to 510

- your paper gain is £100

buy £5pp @ 510

you now have £15pp in play and if price goes against you from here you must not lose more than £100 (break even overall). eg: a stop at 504 would leave you making £40 on the first position and losing £30 on the second = +£10 overall.

price moves to 520

- your paper gain is £250 (£200 on first position and £50 on second)

buy £2pp @ 520

you now have £17 in play and if price goes against you from here you must not lose more from this third and last position than you have gained on the second position (£50). eg: a stop at 513 would leave you making £15 on the second position and losing £14 on the third. (and + £130 on the original first position of course)

price moves to 540

- your paper gain is £590 (£400 on the first; £150 on the second and £40 on the last)

sell £2pp @ 540

you've banked £40 and even if you leave your stop on the rest where it was (513) you ensure another £145.

sell £5pp @ 550

you've banked another £200 so that's a total of £240 totally safe and sound

sell £10pp @ 560

you've banked £600 giving a total of £840

The rationale behind this is that the risk of the move ending increases the longer it goes on - hence smaller additions and the scaling out.

good trading

jon




-

Jon,

That looks interesting, thanks for taking the time to write that out. I think the spread would kill me doing that though!

Can I ask you (and others) how much you add to your position when a setup reoccurs? 50% of original? Or fully as if it's a totally seperate trade? If I added 100% on my setups reoccuring, I would probably give back my profit for most trades.

 

[Vaco]

my plan is to treat as a seperate trade but that only means 100% of the first addition.

t1 1 lot
t2 1 lot 100% increase
t3 1 lot 50% increase.

dont think i would take it any further then this.

 

[HawkTrader]

Do you take into consideration where the next setup is at, or how far your first setup has gone?

For example say you're day trading short GBP/USD, looking for about 30 pips. Then suddenly it drops 60 pips and your setup comes once more, but it's at a strong support area, would you cancel additions or perhaps consider increasing BUT with a smaller lot size?

 

[barjon]

Jon,

That looks interesting, thanks for taking the time to write that out. I think the spread would kill me doing that though!

Can I ask you (and others) how much you add to your position when a setup reoccurs? 50% of original? Or fully as if it's a totally seperate trade? If I added 100% on my setups reoccuring, I would probably give back my profit for most trades.

hawk

If my set up repeats it is taken as if a new trade, therefore 100% (but see below), since if it fails it will trigger an exit in the first trade in any event.

My additions are a little different since I don't always enter a full position immediately. I will then enter half position, add to make it a full position on confirmation and then some more - usually another 50% - on further confirmation.

good trading

jon

 

[foredog]

Cable being very dull so far today, broke below 16350 and has now gone into a 5 pip range for the last 10 minutes.

 

[motion100]

ok, although I'm not new to Rob and his trading ways, I am new to this thread. I've been reading the Naked threads avidly and have to say there's some great info here. Thanks for the wise works guys. I must say I am a complete novice and have as yet, failed to make money trading so if I acidentally sound at any point like I'm giving advice, my overruling piece of advice is ignore what I say. Anyway back to the charts.

After having a while away from the charts due to Mr Branson and his work force, I have finally got access to some charts...

Here's my H1 bracket orders for this morning...

Also, depending on how quickly she moves, I might play the M5 too...

 

[Bloodhound]

Hello Steve,

Thanks for dropping in and hope you're well. Looks like you've been triggered!!

All the best

Rob

 

[HawkTrader]

Welcome to these forums Motion100,

Your analysis looks quite good (I'm still a beginner too so don't listen to a word). The bracket on your 1H is quite tight though, what would you do if it broke and then pulled back? Just wondering because Cable has been so damn choppy recently.

Here is what I'm watching at the moment.

 

[HawkTrader]

Another.

The correlation's are driving me crazy, I'm not used to watching so many pairs. Can I be long USD/CAD, short AUD/USD (that seems to make sense) but also short EUR/GBP?

Wouldn't GBP/USD have to be rising for EUR/GBP to drop? But then that would mean USD is gettting weaker so my USD/CAD trade is pointless. Ahhh, gotta love trading.

EDIT: Forgot to add my stop loss, it's just above the upper green line.

 

[Bloodhound]

Do you take into consideration where the next setup is at, or how far your first setup has gone?

For example say you're day trading short GBP/USD, looking for about 30 pips. Then suddenly it drops 60 pips and your setup comes once more, but it's at a strong support area, would you cancel additions or perhaps consider increasing BUT with a smaller lot size?

Not sure who this was directed at but FWIW, I take each individual entry on its own merits. I certainly try to avoid trading straight into a support area although, if price stalls at a support area, then it gives me added confidence to load up the other side as I can see a reason why price may have stalled at this level.

Take cable here and now......



Price has broken its previous low and moved down but found support at 6309 - stopped at the traffic lights. One of 3 things will happen. It might stall completely, reverse and go back up (which would indicate that there was strong support at 6309), or continue down (which would indicate that 6309 has failed as a support level).

If the third eventuality takes place then it would be fair to say that price will drop some more until it finds another support level which holds. Q.E.D. sell some more if it drops below 6309, and keep selling until it finds a support level that holds, at which point close position and go long.

(If only it were that simple LOL!!)

P.S. Before anyone picks me up on it, I know 6335 is the better level ATM but I would have liked to have got in early. Pretty picture perfect though. Break 6335, hit 6309, bounce back up and hit 6335.

 

[Bloodhound]

It's been a long day today but nice to see some moves after the last couple of days....





T10 and 11 still running (just)...

Edit: Cable doesn't want to play ball any more today!! All closed at 6410 and probably done for week. Time to focus on moving house (perhaps).

 

[motion100]

looking at the cable dailies, are we in an uptrend or a downtrend...? I personally see a HRH and HRL and am currently long.

I know you guys are trading lower TFs but i thought i'd see what you made of the longer term picture.


Hi Hawk, cheers for your thoughts. Seems you were right about the H1. I got faked, faked and faked again. more importantly I was not able to get to the charts quickly enough to adjust my stop and cut at the right time but have learnt a valuable lesson in that i shouldn't be trading H1's while i'm committed to non trading activities. so that's why i'm back on the dailies. Lots of pairs providing entries on the dailies, just coming to terms with having stops of 100+ pips. Will be playing all but cable on demo for a while though until I get myself sorted.

Hope you guys had a good day.

 

[Bloodhound]

Hi Steve,

As you know I am rubbish at this higher tf stuff but it certainly looks like she's going up. Break of the HrH would be nice. If you get a chance to have a look at H4 there's a nice 1-2-3 setting up at the moment IMO.

All the best

Rob

 

[Bloodhound]

A quick view of cable ATM.

Blue = possible buy on break of level
Red = possible sell on break of level
Grey = levels to watch out for



All the best

Rob

 

[Vaco]

you think this week has been choopy during the morning session because of half-term??

 

[HawkTrader]

you think this week has been choopy during the morning session because of half-term??

I certainly do. Blame other people for your losses, that's my motto.

Big players were probably spending time with their kids and family.