The Three Keys

[Lightning McQueen]

On the trade management issue here's my thoughts.

Here's the 15 min chart from post 155 with the bands added back on, we can see that greater fool theory holds good from entry with fresh air between the price and the bands with an exit signalled when the price and MA bands converge once again. Easy and still simple or what

 

[black bear]

Thanks for pm FW,

I have to agree with firewalker. Neither your "poor trader" nor your "good trader" are exercising what I would call trade management, anymore than operating a vehicle while blindfolded and bound is "driving".

Clearly you have put a great deal of thought into this, but there is also a lot of "feeling". And, for both traders, a great deal of hope. Hope and feeling and could and might are not friends of responsible trade management. I understand the point you're trying to make about stops, but placing so much responsibility on stops when the entries and trade management are so poor (on both sides) is a bit like bailing out a sinking dighy.

Trading all in/all out creates all sorts of problems, particularly with regard to relying on hope. Focusing on true value can help, but since true value is in a continuous state of flux, this focus must be likewise flexible. One can also avoid the issue of stops by being in the market at all times, and if one is going to work with channels/envelopes/bands, this course may be just the thing, even though it carries its own set of challenges.

In any case, placing more than one level of stops and hoping that one's losing trade will eventually revert closer to an ever-changing mean is probably not the best choice for he who wants to improve his trading performance. When your poor trader does not exit at his target, his issue is not stops. When your good trader finds himself in a losing trade and hangs onto it in the hope that he will be able to exit at a better price, his issue is likewise not stops.

Steve, what you are on about just doesn't work, nor is it necessary, nor does it have anything at all to do with profitable trading, your approach is nothing at all except an attempt to minimize the psychological hurt of losses on your well-being, same like the simultaneously long / short same instrument model that share many of the woulda-coulda-shoulda arguments that this approach necessitates.

Here is why your idea does not, cannot, work:

You go long at 100, your (mental) SL is at 90.

Price goes to 90, then retraces to 95.

You exit at 95, believing that you've minimized your loss.

Price then goes up to 120, meaning you closed out a good trade for no reason.

Even if price doesn't go back up again, your smaller than expected (this example) vs larger than expected stop losses (see scenario 2) - will simply average themselves out over time.

Others that just exit at their initial stop loss however have far less hassle, and far less risk, in the many cases when trades will just keep going against you.

Scenario 2.

You go long at 100, (mental) SL again at 90.

Price goes all the way to 80 without retracing.

What do you do then ?

At some point you'll have to exit, and markets can go against you far longer than your ability to participate without receiving a margin call.

I really do not know why people always insist on going chasing after the holy grail rather than accepting that trading is just a probability game, and that stop losses are nothing else than a means that allows you stay in the game, while simultaneously providing you with a great opportunity factor, ie close out a losing trade when price has gone against you sufficiently to indicate that per your method this trade is a loser, and just move on to the next opportunity.

Trading is simple.

As long as you have it all planned out ahead of time and stick to your plan, great, assuming that what you are doing generates profit.

Given the differences of opinion and in approach expressed here, and my comment above, I suppose I should point out -- and this is in reference to nobody in particular -- that whether or not one makes money doing whatever is not a sufficient test of whether or not he is "right" to be doing whatever it is he is doing. If, for example, one has a near target and a wide stop, he can make money if he is good at entry (assuming that he is also disciplined). But his reward:risk is never going to amount to much. But he is making money. Therefore, he is "right". Now someone else might look at this and think he's out of his mind to settle for what seems paltry. But they're hardly in a position to tell him that he's wasting his time and ought to try something else. It is not, after all, their money.

Some might think that I, for example, am fairly casual about stops. My targets are support and resistance, and I don't exit unless I am presented with a clear reversal signal. Absent that signal, I don't much care what price does on its way to the target as long as it gets there. On the other hand, if I get that signal, I'm out. Is that a stop? Some might say so. Some might not. One might just call it an exit strategy. In any case, I know exactly what I'm looking for, and when I see it, I'm done. I don't wait around to "see what happens". I don't hope for more.

And I'm out of here as well.

Hi FW

Thanks for pm, I have re-read posts as per your request

I would thank all for their typo time on this one ~ appreciated by me at least.

I am with the HARD STOPS because if I can not decide where to put the stop it is obviously not a Pinkpig setup:cheesy:

"Some might think that I, for example, am fairly casual about stops. My targets are support and resistance, and I don't exit unless I am presented with a clear reversal signal. Absent that signal, I don't much care what price does on its way to the target as long as it gets there. On the other hand, if I get that signal, I'm out. Is that a stop? Some might say so. Some might not. One might just call it an exit strategy. In any case, I know exactly what I'm looking for, and when I see it, I'm done. I don't wait around to "see what happens". I don't hope for more."

plucked that out db, hope you don"t mind, I think the red bit below is the way my tradings been going anyway so no need for any grey areas to where I am right and wrong , and I have come to hate the bit in the middle I would rather do something else = I can"t F..ck it up if I go and ride my bike.

My targets are support and resistance, and I don't exit unless I am presented with a clear reversal signal. Absent that signal, I don't much care what price does on its way to the target as long as it gets there.

Don"t suppose you would pop back on the thread for one post and tell us what your clear reversal signal is db :?: is that during the journey from S-R R-S :?: or do you go for a bike ride or run while your waiting for your target to be hit

From now on = its in the timsk plan

1 HARD STOP and PINKPIG SETUPS ONLY

 

[laptop1]

Let me show you how this will not work over time, in real time. Click on the first chart, it's an hour chart with a long entry
1 Hour chart
http://quote.prophet.net//applets/j....net&symbol=YM0803&duration=15d&frequency=60m


Ok you went long on the hour chart, now zoom in to a 1 min chart, if you placed a 30 point stop, you would have been stopped out .However, on the hour chart it looked a smooth good trade. But the fact is, it would have given you a loss.This is why I think it's flawed

1 min chart
http://quote.prophet.net//applets/j...t.net&symbol=YM0803&duration=15d&frequency=1m

 

[Splitlink]

I think Don's got some confirming tricks up his sleeve. Do you, still, use that MACD signal, Don? I doubt, although I'm not sure, whether it would have been going up at that point. Therefore, a long entry would not have been valid.

Split

 

[black bear]

This is what I see LW errrrrrrrrr a PinkPig

On the trade management issue here's my thoughts.

Here's the 15 min chart from post 155 with the bands added back on, we can see that greater fool theory holds good from entry with fresh air between the price and the bands with an exit signalled when the price and MA bands converge once again. Easy and still simple or what

Hi LW

I share Laptops concern for entry without more info and control in method etc

location of index and trend filter ? Higher timeframe considerations, S&R levels etc

Tight stops on the hour timeframe, the whips will do the nut in of newbies IMO if they do not no why they are taking a dozon loss"s for one good un

This is what I see, its the same day but on the next month contract,(own rubbish on cash BIGPIG ) It was a clean entry on the breach of the hour lows and open hours range for me.

The trend is down I think :whistling but it will not always be so clear will it :?:

(did not trade it because do not trade Dow)

IG charts so I can post them easy, my others are a bit of an upload :cheesy:

Thanks for rep pt Split, I seem to have posted on the wrong thread AGAIN I only got one rep pt so you only get a little pig

All the best LW,:clover:

look forward to reading about macd filter and other filters

Ps no posts from me next week :innocent: well perhaps one or two after two

Charts have not transfered all info but you get the idea I hope

 

[Lightning McQueen]

I think Don's got some confirming tricks up his sleeve. Do you, still, use that MACD signal, Don? I doubt, although I'm not sure, whether it would have been going up at that point. Therefore, a long entry would not have been valid.

Split

No indicators are in use Split, I don't know what laptops on about to be honest

I don't think his entry system is the same

 

[Atilla]

No indicators are in use Split, I don't know what laptops on about to be honest

I don't think his entry system is the same

Hi LM,

PinkyPig has got no MAs in his charts and others are referring to indicators not in the system.

I am also using a number of additives. :whistling

I know it's not my thread or place but I do think some sort of structure to the system debate would help. :cheesy:

My understanding of a good system would be that if used by 10 traders there should be at least 51% agreement on entry. Either the system is bad at giving signals or traders bad at following them.

I found the discussions on SL interesting and would confess I also use mental SL as well as no SL sometimes. It all depends on setup, direction and the day really.

This goes out to all testers on this thread. To clarify do we have agreement on time frame and entry based on this 3K system yet?

 

[Lightning McQueen]

Hi LM,

PinkyPig has got no MAs in his charts and others are referring to indicators not in the system.

I am also using a number of additives. :whistling

I know it's not my thread or place but I do think some sort of structure to the system debate would help. :cheesy:

My understanding of a good system would be that if used by 10 traders there should be at least 51% agreement on entry. Either the system is bad at giving signals or traders bad at following them.

I found the discussions on SL interesting and would confess I also use mental SL as well as no SL sometimes. It all depends on setup, direction and the day really.

This goes out to all testers on this thread. To clarify do we have agreement on time frame and entry based on this 3K system yet?

Yeah, its all going pete tong, what with laptops trigger bands looking shot to bits, pigsys non ma strat, what's going on in the kitchen

ok so we need a benchmark timeframe to follow, difficult one that as I'm actually on several timeframes, whichever gives a signal I go with, I'm all for an hour with 0.075 % trigger bands , although 15 min can give an early signal

I have to admit the thread is running out of puff, I'm suprised its managed this much to be honest, after all not much to debate really is there ...price and one MA

Anyway up to the thread contributers how the whole thing pans out method wise. I feel ok with which ever way it goes, take it where you want

 

[black bear]

Just trying to help LM

Yeah, its all going pete tong, what with laptops trigger bands looking shot to bits, pigsys non ma strat, what's going on in the kitchen

ok so we need a benchmark timeframe to follow, difficult one that as I'm actually on several timeframes, whichever gives a signal I go with, I'm all for an hour with 0.075 % trigger bands , although 15 min can give an early signal

I have to admit the thread is running out of puff, I'm suprised its managed this much to be honest, after all not much to debate really is there ...price and one MA

Anyway up to the thread contributers how the whole thing pans out method wise. I feel ok with which ever way it goes, take it where you want

LM

Morning Rule Breach because I like to answer a post if I have started something/sorry joined in with a valid concern

Sorry, I thought you wanted to see what others saw regards your entry LM :?:

I thought it was a method / system in progress, I am concerned regards whipped entries thats all.

You started on the Ftse, you said you would kick its butt, we are looking at a Dow chart :?:

Ftse I am sure would have done your brains in over the last couple of weeks, if I am wrong then post the good trades and bad and show how method held up (no discrection)

Just trying to help with filters if you want any help that is LM :?:

Ftse, I just popped a plain 5 ma on and I can see you would have had a monster trade from a conservative entry useing manual S&R pts from 6160 Fut - 5950 approx 15th &16th Jan

but 9th & 10th and in fact the period up to that trade not really sure LM

Looks like a lot of small razor wounds to me that add up

I watch the hours form if I am trading (screen time excess/ mornings only) and they are very whippy LM, the bars not done untill the turn on the hour and it very often goes up and down multiple times, I am sure others will back me up on this.

Whats the proposed method going to do with what appear to be multi entries on the same bar:?:

I just think its a little early to be getting excited thats all

I posted my charts which just show a bog standard method as old as the hills being employed, which would just have easy caught the same move with IMO a more valid Stop and in fact if the trade was split into 2 lots one for the 15 min timeframe and one for the hour timeframe (the runner) a trader would be sat very nice this morning LM

Rule: exit on breach of High by 5 pts or the average tail in the hour candles = whatever you want = Simple , eazy peezy

Good luck with method and trading LM :clover:

 

[Splitlink]

About that 0.5% problem I have with the SP500. I'm going to try pinning the SP to the FTSE signal and see what happens. If the the FT gives the signal I enter a trade on SP. Both indices seem to act together fairly well.

I haven't worked out a decent %age band for the SP, yet. 0.5% is too far away for me.

Split

 

[Lightning McQueen]

About that 0.5% problem I have with the SP500. I'm going to try pinning the SP to the FTSE signal and see what happens. If the the FT gives the signal I enter a trade on SP. Both indices seem to act together fairly well.

I haven't worked out a decent %age band for the SP, yet. 0.5% is too far away for me.

Split

Alright Split, try .025% bands for S&P much better size

pinky, no need to get knickers in a twist chum

 

[black bear]

Stop postin over a valid concern for Newbies who read

LM

Morning Rule Breach because I like to answer a post if I have started something/sorry joined in with a valid concern

Sorry, I thought you wanted to see what others saw regards your entry LM :?:

I thought it was a method / system in progress, I am concerned regards whipped entries thats all.

You started on the Ftse, you said you would kick its butt, we are looking at a Dow chart :?:

Ftse I am sure would have done your brains in over the last couple of weeks, if I am wrong then post the good trades and bad and show how method held up (no discrection)

Just trying to help with filters if you want any help that is LM :?:

Ftse, I just popped a plain 5 ma on and I can see you would have had a monster trade from a conservative entry useing manual S&R pts from 6160 Fut - 5950 approx 15th &16th Jan

but 9th & 10th and in fact the period up to that trade not really sure LM

Looks like a lot of small razor wounds to me that add up

I watch the hours form if I am trading (screen time excess/ mornings only) and they are very whippy LM, the bars not done untill the turn on the hour and it very often goes up and down multiple times, I am sure others will back me up on this.

Whats the proposed method going to do with what appear to be multi entries on the same bar:?:

I just think its a little early to be getting excited thats all

I posted my charts which just show a bog standard method as old as the hills being employed, which would just have easy caught the same move with IMO a more valid Stop and in fact if the trade was split into 2 lots one for the 15 min timeframe and one for the hour timeframe (the runner) a trader would be sat very nice this morning LM

Rule: exit on breach of High by 5 pts or the average tail in the hour candles = whatever you want = Simple , eazy peezy

Good luck with method and trading LM :clover:

Alright Split, try .025% bands for S&P much better size

pinky, no need to get knickers in a twist chum

Morning LM


"pinky, no need to get knickers in a twist chum"

errrrrrrrrrrrrrrrrrrrrrr just a question or 2 :cheesy:

no problems this end, knickers on just fine thanks, just don"t tell the mrs

answer the post and stop postin over us

 

[Lightning McQueen]

Absolutely dont see any problems with the trades taken, the cap spreads demo showed no more than six points underwater on dow before going our way, I dont see how that is douping newbies, in fact its more than helping them

the reason I'm on the dow is because I work nights and its a long way past bedtime waiting for a signals on ftse.

as far as I am concerned this method is valid on dow or ftse you can test away for yourself I've proved this for myself for months, neither care here nor there what you think to be honest

 

[black bear]

Good luck

Absolutely dont see any problems with the trades taken, the cap spreads demo showed no more than six points underwater on dow before going our way, I dont see how that is douping newbies, in fact its more than helping them

the reason I'm on the dow is because I work nights and its a long way past bedtime waiting for a signals on ftse.

as far as I am concerned this method is valid on dow or ftse you can test away for yourself I've proved this for myself for months, niether here nor there what you think to be honest

LM

Good luck Steve, I will pass thanks

 

[Splitlink]

It's a pity when two people, with whom I'm friendly, fall out. It makes third parties unhappy.

So knock it off, please.

Split

 

[firewalker99]

If I'm allowed to make a suggestion. Just start posting charts with trades on them. That way it'll soon be clear if the method has potential or not.

 

[black bear]

I no Fall out with anybody

It's a pity when two people, with whom I'm friendly, fall out. It makes third parties unhappy.

So knock it off, please.

Split

Hi Split

hope your on the right side of this one Split,

No problem this end at all, was just trying to help out, thought it was open debate on un-finished method and it looks a bit whippy without a few filters thats all:?: I was not having a go at all

Its not my cup of T anyway, so I will mind me own

Think LM got the wrong end of stick, must have been a late night I guess, any hows.........

Sweet Dreams LM , and good luck with your project :clover:

 

[Atilla]

Hi Split

hope your on the right side of this one Split,

No problem this end at all, was just trying to help out, thought it was open debate on un-finished method and it looks a bit whippy without a few filters thats all:?: I was not having a go at all

Its not my cup of T anyway, so I will mind me own

Think LM got the wrong end of stick, must have been a late night I guess, any hows.........

Sweet Dreams LM , and good luck with your project :clover:

Hi PinkPig,

It's more likely to be my comment. I just wanted some structure to the three keys that's all as I'm using it and so far each night I managed to scalp about +20pips.

I personaly felt it was going way off tangent and so thought I'd stick my oar in. However, my system as per chart is a variation too using DEMA22 as well as MACD.

This is a live trade I just placed short on USDJPY at 106.03 so we'll see how it plays out.

Apologies to all and let's Carry On - as we were!!! :innocent:


Mental SL around 106.1 as per the top red line. Was up +5 but now +2. As it is 5min charts and we are scalping I'd be happy to take anything above 10 pips. Anything less not worth the effort. Will risk -10 loss.

 

[Atilla]

Ok 20mins into the trade and now at -1.

Perfect graph to show a bounce off DEMA22. Not sure why 22 might be a typo usually 21 but leave it as is.

Now if this:

1. Makes a LH and carries down I'm relaxed and in the money.

2. It makes a HL and carries up breaking my DEMA22 then alarm bells ringing to close trade at 106.1...

Let's see...

Also, MACD looking bullish but hourly charts looking like a possible fall. Coming next.

 

[Atilla]

Oh well +2 in 33 minutes. Some you win some you don't. Trade closed.

Closed trade based on this move and MACD indicating a rise.

I mean a HL coupled with MACD breaking the middle line why wait.

When playing the very short 5min 1min time charts you have to be quick and take what's on the table imo.

Just as I'm about to post it dives...