Maximum profit?

Quantt

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Jul 23, 2017
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#16
Let's look at the experienced traders here. We each have a system that gets us in and out at the right times. Risk control is in place, money management is fine, we've got past emotional trading and we're making some money. And this through consistent planned trades, not lucky windfalls or tips.

But isn't there a higher level? Can we reach it? How can we make the MAXIMUM profit from whatever we're doing? And I mean maximum, not just another decimal on the r:r, not just another ten quid by waiting just one more candle.

How are you doing it?
The best approach I am using is to optimize betting size using Kelly criterion... Hope it help...
 

Jason101

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Oct 9, 2008
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#17
Hello Tom, have you made any headway on stepping up your gains?

Another idea for you (other than early pyramiding) is the the use of notional accounts.
In other words instead of risking a percent of your account you risk a larger percent of an imaginary part of your account formed by profits. For example you may say " I am bullish on EUR/USD so for the next quarter (as in 3 months) my long EUR/USD (for example) will be my usual x% of my whole account plus 50% of all profits from short USD trades from this quarter (for example). So you are allowing greater risk but only on profit within a certain predefined criteria which has been ring fenced for this purpose.
 

tomorton

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#18
Nice idea Jason, and it formalises what have been tendencies in my trades anyway so there's a real parallel.

In fact I have been tracking the comparative TA strengths of all the pairs containing a major currency to identify if he consensus is bullish or bearish for each. I then positively favour trades in line with those tendencies and avoid all trades that would be contrary. Simple stuff, but same effect.

I have started pyramiding every trade now as unrealised profit reaches break-even. The trend TA only comes in for the first trade, after that the profit or lack of tells me whether the trend continues or not. This has enabled me to get into some trends at an early stage that actually started more weakly than results would have suggested. Which just goes to show. Wish I'd done this sooner.
 

brewski1984

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Sep 9, 2010
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#19
The psychology behind pyramiding or using profits as above is an interesting one. You're just tricking yourself into thinking of it as one trade that wins you a massive amount when in reality all you've had is 2/3/4/x separate trades in a row that are winners. Unrealised profits are still actual profits just the same as unrealised losses are still losses.
 

tomorton

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#20
The psychology behind pyramiding or using profits as above is an interesting one. You're just tricking yourself into thinking of it as one trade that wins you a massive amount when in reality all you've had is 2/3/4/x separate trades in a row that are winners. Unrealised profits are still actual profits just the same as unrealised losses are still losses.

Not really.

In order to take 4 consecutive trades as separate unrelated actions, I would need 4 separate entry signals. for me, these would be from TA to confirm the trend and the timing of the entry.

When pyramiding, I only use TA on the first trade, the subsequent trades are opened as profit passes each threshold, each being another increment of an amount equal to the original risk. The only input TA has after the initial entry is e.g. if the trend supporting these pyramid trades significantly weakens.

As a rule of thumb, I see from my TA so far that the trends I use tend to weaken significantly before I would ever get 4 valid entry signals, so there would never be 4 consecutive trades without the pyramid.
 

brewski1984

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#21
Not really.

In order to take 4 consecutive trades as separate unrelated actions, I would need 4 separate entry signals. for me, these would be from TA to confirm the trend and the timing of the entry.
Is the first of the 4 trades at a quarter of the risk or full risk from the start? If you could have banked 1R but then open another trade (with or without entry signal) and move to breakeven, you're still using that 1R profit to fund the second trade ie, you're still risking more capital even if it doesn't seem like it in your head because "it's still unrealised and only 1 trade not 4". You still have to pay 4x spread/commissions.
 

tomorton

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#22
Is the first of the 4 trades at a quarter of the risk or full risk from the start? If you could have banked 1R but then open another trade (with or without entry signal) and move to breakeven, you're still using that 1R profit to fund the second trade ie, you're still risking more capital even if it doesn't seem like it in your head because "it's still unrealised and only 1 trade not 4". You still have to pay 4x spread/commissions.

Yes, full risk from the start. As many times as I pyramid, no loss can be larger than the original £ risked. And pretty quickly, this deduction represents a reduction in profit, not an actual loss.

You could be right, maybe I am fooling myself into the ability to take multiple profits from the same instrument. But if that's what it takes....
 

Jason101

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#24
You could be right, maybe I am fooling myself into the ability to take multiple profits from the same instrument. But if that's what it takes....
Yes, multiple profits but at the same risk % as your original account %R at the time of the original trade.

"fooling myself" But if that's what it takes"....
Fooling myself, I think we need to fool our self, in order to overcome our own in built emotional biases.

As trend followers we need to concentrate on running winners and cutting off losers.
This is not confined to the two dimensional aspect of TA. This philosophy probably has an even greater impact when used in money management and psychology.

EDIT: Once you are profitable, the number one question every day, again and again, is how can I 10x my profits!!!
 
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Jason101

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#26
This thread is why signal services/gurus don't work, because it's all in the execution.
Even robots can't yet compete on creativity and knowing when to alter or break rules.
 
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progix

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Feb 25, 2016
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#29
I know there is no point in seeking profit. Trading should be first and foremost enjoyable.
I believe earning from forex trading is really hard and is not that easier as it looks like which is the reason that we need to control our emotions too. So i think we can only enjoy trading till the odds are not moving against else its your bad time started dude.
 

tomorton

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#30
I have started pyramiding every trade now as unrealised profit reaches break-even. The trend TA only comes in for the first trade, after that the profit or lack of tells me whether the trend continues or not. This has enabled me to get into some trends at an early stage that actually started more weakly than results would have suggested. Which just goes to show. Wish I'd done this sooner.

Update on my own position as from couple of months back.

I am continuing to set a pyramid order as soon as every trade is opened. When that opens, I set another order and so on and so on. Its working well though disappointed that the maximum number of trades open on one instrument at a time has not yet passed 5. Nevertheless, I am commonly getting stopped out when I have 2 or 3 trades open per forex pair or index, which is 2 or 3 times better than before I started pyramiding.

So much so that I had to introduce a new rule this month - when unrealised net gain reaches +25% of the account, close the basket of trades, take a week off and then start again.
 
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