When the plan comes unstuck...

[wasp]

I have a cunning plan, cunning as a weasel and all that...

Its based on price. Trends and S/R, short term (ie 2hrs to 24hrs) 24/5 in spot FX, mainly Yens. I run it from the Sunday open through to Friday close, 90% of the time I'm in, and try to catch 80% of the swings back and forth. Its all manually traded and essentially discretionary although with some strict rules as per the markets of choice normal behaviour.

Its been back-tested, forward-tested, tested with small amounts and traded properly and it was producing a tidy 70% average win/loss ratio, taking about 400 pips a week.

So, all has been sweet as till this week. Now, this week, has produced the worst single run of losses to date (live and tests) and consequently the first losing week of the year.

Whilst I am not crying about the fact that I've had a dire week, that's inevitable occasionally, my actual issue is thus;

> Since the market behaviour has changed to such a degree that everything that has been the basis of my trading this year has suddenly stopped working and the plan has exceeded its worst case scenario, what would others do?

1) Reduce size for a week or two and see if it was just a bad week.
2) Step back and look at the market in a new way to try and understand why.
3) Chuck the ****ing laptop out the window and go get trollied till forget what I actually do for a living!

(3 is winning for me right at the moment!)

Any opinions appreciated...

Cheers

 

[nine]

Laptops lack the grunt of a good desktop ... just upgraded to an 8500 on a new motherboard and with that PC you would not have made the mistake. Throw the laptop in the Thames.


Seriously. I'd look at why my strategy failed this week. What beliefs drive it? Were they wrong? Why? Is this likely just to be a bad week I didn't test for? Or could it be a shift in the market? If its a shift how can I tell next week?

That would give me the basis for some actions to take next week.

 

[FXSCALPER2]

Jesse Livermore said that in the long run, you can't beat the market and I think he is right. You have to have something very special to do this for a long time. Ask yourelf whether what you do really makes sense in the very long term. Or get as much money as you can out of the markets and quit while you are ahead.

 

[wasp]

Seriously. I'd look at why my strategy failed this week. What beliefs drive it? Were they wrong? Why? Is this likely just to be a bad week I didn't test for? Or could it be a shift in the market? If its a shift how can I tell next week?

That would give me the basis for some actions to take next week.

Jesse Livermore said that in the long run, you can't beat the market and I think he is right. You have to have something very special to do this for a long time. Ask yourelf whether what you do really makes sense in the very long term. Or get as much money as you can out of the markets and quit while you are ahead.

The future, being unknown, whichever colour you may post in, leaves only statistics. Whilst I would love to get out enough to support myself for life this year FX, I doubt its going to happen! Thus, I will have to keep going on and hoping my edge is a permanent one. I do agree with Jesse that I probably won't keep obtaining my 400 a week forever though.

Whilst there is a bottle of fine tequila in the local awaiting me right now, I think the best option is to try and zoom out, see the wood for the trees and get a better scope of what I may have missed and then come back afresh, reduced size and see whether the end really is nigh...

 

[FXSCALPER2]

What I am saying, wasp, is ask yourself what makes your method work. If the logic of your method is sound, in a variety of ways, then that was a just one bad week. If your method was something that worked only because of the previaling condition in the market and you can't see how to adapt it to a changing one, then clearly something is amiss.

 

[wasp]

What I am saying, wasp, is ask yourself what makes your method work. If the logic of your method is sound, in a variety of ways, then that was a just one bad week. If your method was something that worked only because of the previaling condition in the market and you can't see how to adapt it to a changing one, then clearly something is amiss.

Yep, I see what you and Nine are both driving at and I do believe that it is a solid method with all factors accounted for so believe it should continue to be profitable. Having a worst case scenario broken and most of what has been paramount in the market to date, virtually discarded all week like it was meaningless just really throws you and does question whether it really is that robust.

 

[Crap Buddist]

I have a cunning plan, cunning as a weasel and all that...

Its all manually traded and essentially discretionary although with some strict rules as per the markets of choice normal behaviour.

When it went pear shaped what happend ? I mean that rollover section that mashed up your strat, that needs a look at. In fact can you give any entry or post a chart, maybe we can eyeball the rollover ...

 

[wasp]

When it went pear shaped what happend ? I mean that rollover section that mashed up your strat, that needs a look at. In fact can you give any entry or post a chart, maybe we can eyeball the rollover ...

HI CB,

No single event that did it, rather a week of bizarre uncharacteristic behaviour. Tell you what though, bring up a chart of hourly EURJPY and scroll through 2008 and see if you think this week has been wildly different to the last 15, or if its just me!

(apart from the obvious factor that its just gone up all week! - the behaviour and action en-route I mean)

 

[Crap Buddist]

Couldn't resist putting a pinhead on it.

Well on your edit, I think that sums it up, "overlooking the significance of the obvious."As Socrates might of said. Together with "look, look, its screaming at you. !"

What do you want the reason for the action ? hmm well I guess enough sell orders were triggered to fuel the up leg , the market has em trapped and is wringing their necks. Whether the market thinks like that if that is the case I dunno.....

But failed sustained break south or fake out then ramrod up all week the angle under the upper resistance says anticipate higher prices, those demand angles show on all time frames and is worth positioning for a punt long, even at the top, under the resistance. Its very bullish.

You cannot complain that I do not tell you absolutely everything.Everything is known in advance. I've said too much already, and now I must leave this thread never to return.

 

[arabianights]

You don't have to trade. For the next fortnight or so all I'll be doing is arbing spreads on panic until this Libor stuff is settled one way or the other: capital preservation is my main goal. If similar irrational moves in FX are occurring might I suggest the same?

 

[wasp]

You don't have to trade. For the next fortnight or so all I'll be doing is arbing spreads on panic until this Libor stuff is settled one way or the other: capital preservation is my main goal. If similar irrational moves in FX are occurring might I suggest the same?

Good advice and wise words there arabianights cheers.

 

[wtrader]

I have a cunning plan, cunning as a weasel and all that...

Its based on price. Trends and S/R, short term (ie 2hrs to 24hrs) 24/5 in spot FX, mainly Yens. I run it from the Sunday open through to Friday close, 90% of the time I'm in, and try to catch 80% of the swings back and forth. Its all manually traded and essentially discretionary although with some strict rules as per the markets of choice normal behaviour.

Its been back-tested, forward-tested, tested with small amounts and traded properly and it was producing a tidy 70% average win/loss ratio, taking about 400 pips a week.

So, all has been sweet as till this week. Now, this week, has produced the worst single run of losses to date (live and tests) and consequently the first losing week of the year.

Whilst I am not crying about the fact that I've had a dire week, that's inevitable occasionally, my actual issue is thus;

> Since the market behaviour has changed to such a degree that everything that has been the basis of my trading this year has suddenly stopped working and the plan has exceeded its worst case scenario, what would others do?

1) Reduce size for a week or two and see if it was just a bad week.
2) Step back and look at the market in a new way to try and understand why.
3) Chuck the ****ing laptop out the window and go get trollied till forget what I actually do for a living!

(3 is winning for me right at the moment!)

Any opinions appreciated...

Cheers

this is a very common problem and you need to identify another setup that can bring in the money while the markets change to another cycle that would work for the other system. the system you are using sounds like a trend system and this is typical of that type of system. i would recommend keep it in your toolbox but look to add a setup that will work in the changing consolidation market until the other setup will start working again.