Best Thread Trading Naked

[HawkTrader]

What is everyone doing?! You're supposed to be blowing your weeks winnings! Nevermind...

I hope you're all taking it easy though, ready for the coming week.

1) First off I believe that price is never random in its movements but 100% unpredictable.

This is something I strongly agree with. Why try to 'beat' the market and spot reversals if you can just buy when it's rising, and sell when it's falling!

 

[barjon]

.................but I treat entries (set-ups) as a very small part of the game. It's what happens next and how I deal with this that is the key for me ........................

Rob

I've been lurking and watching you thread with interest

Excuse me for butting in, but I wanted to highlight your comment because it's a truth that should be carved in stone. Getting in is the easy bit, it's the getting out that's hard.

If I've learned one thing over the years, it's that the "getting out" sorts the men from the boys. Call it trade management, money management, exit strategy, or whatever you like, it doesn't matter - as you rightly point out, it's the key to trading success.

good trading

jon

 

[Bloodhound]

Loading Up - Part 3

OK - given what I wrote in Part 1, I have discovered the following things about myself:

1) I am risk averse and I want to get in and out quickly - make my money and run.
2) I want to make money. I do not want to be some sort of 'expert' trader. I just want to make money.
3) I like Livermore's views on loading up a position if it's going my way as the more I can make out of one trade, the less I will need to trade.

How this works in reality is pretty simple. (the following numbers are made up and do not reflect my trading account btw!!). Apologies for the $'s, but my pound sign doesn't seem to be working on this keyboard!!

Say I have a wish to pay myself $1000 per week from trading and I have a starting balance of $10,000, this would mean I need to return 10% per week. If this is what I need to return then my focus must be purely on achieving this return - nothing else matters. (I'm not naive enough to believe this will happen every week but, for the sake of what I'm trying to explain bear with me on this one)

With this in mind I now have a target to shoot for, and I have already decided that I don't like being in the markets for too long, so I have a target to shoot for and a desire to do this as quickly as possible.

How do I achieve this? Well if a trend runs for 100 pips, and my stop was 20 pips, with a capital risk of 1%, then from entry to exit I would make 5 times my risk or 5%. This is not enough though as I am trying to make 10%.

I'm sure it's obvious where my thought processes took me - how can I eke more out of this 100 pip move?

 

[Claudia123]

Rob

I've been lurking and watching you thread with interest

Excuse me for butting in, but I wanted to highlight your comment because it's a truth that should be carved in stone. Getting in is the easy bit, it's the getting out that's hard.

If I've learned one thing over the years, it's that the "getting out" sorts the men from the boys. Call it trade management, money management, exit strategy, or whatever you like, it doesn't matter - as you rightly point out, it's the key to trading success.

good trading

jon

Sexist remark - what about 'the girls from the women' ??

Seriously though, I agree totally the exit is where the money is made or lost. But getting in is also important especially for new traders - we all bought at the top sold at the bottom. Entering the market at the right time makes the exit so much easier.

 

[Bloodhound]

Loading Up - Part 4

What I am now going to say is the hardest and yet, most important bit for me when thinking about 'loading up my position.

Whilst I know I am 'loading up' I try very hard to ignore this fact and take each individual set-up for what it is and trade it, regardless of what came before.

I am not going to deny that I find this incredibly hard to do for all the psychological issues it raises around fear and greed.

I have read all sorts of things about adding to positions and they seem, in the main, to revolve around taking some profits off the table, throwing some back into new entries etc. but I am simple-minded and also, when trading M5, I do not have time to start doing maths - there's too much else going on, so all I do is have one simple rule and that is that I won't add to a position if the existing positions aren't at least at break even.

When I add, I simply double up. What this means is that, assuming my initial risk was 1%, the most I can ever lose from this trade and any additions (slippage aside) is 1%, but it allows for me to win big

 

[barjon]

Sexist remark - what about 'the girls from the women' ??

Seriously though, I agree totally the exit is where the money is made or lost. But getting in is also important especially for new traders - we all bought at the top sold at the bottom. Entering the market at the right time makes the exit so much easier.

apologies, claudia - how about great from the good

yes, of course entries are important - it's just the relative balance where most people seem to focus most of the time on entries as opposed to exits.

jon

 

[Claudia123]

apologies, claudia - how about great from the good

yes, of course entries are important - it's just the relative balance where most people seem to focus most of the time on entries as opposed to exits.

jon

Or 'the bad from the ugly' /??:clap:

What you say is correct and it is my biggest failing in trading. But, and big BUT - I set my targets weekly and I get them trading once a day mainly cable and sometimes GBP/JPY and USD/CAD. Stop when target hit.

To get the big points come you often have to let a winning trade turn into a loss. I prefer small gain (20 points or so) then walk away.

Great thead by the way Rob.

 

[Bloodhound]

Loading Up - Part 5

Here is a chart of the cable H1 trade I took a few days ago. I have slightly modified it from the actual trade I took to include a set-up I had missed as it formed coming out of the Asian session and I was asleep. Each 'T' represents a trade and each 'S' represents the trailing stop. For the sake of the thread I am using 2% as my risk.



Entries and exits as follows:
T1 - Entry 5941
Stop 5856 (Risk 85 pips = 2%)
Exit 6029
Gain = 88 pips / 1.04 x risk / +2.07%

T2 - Entry 5976
Stop 5927 (Risk 49 pips = 2%)
Exit 6029
Gain = 53 pips / 1.08 x risk / +2.16%

T3 - Entry 6018
Stop 5970 (Risk 48 pips = 2%)
Exit 6029
Gain = 11 pips / 0.23 x risk / +0.46%

T4 - Entry 6078
Stop 6008 (Risk 70 pips = 2%)
Exit 6029
Loss = -49 pips / -0.70 x risk / -1.40%

Total net gain +3.29%

OK - so not a great return but, as was pointed out to me at the time, I exited way too late as I ignored the weakness at what became the top of the move (aroung 1.61). If I had been more aggressive and moved my stops to my T4 break even level then the return would have been just under 5 times risk or 10%.

This is why I am happy to sometimes just close my M5 trades and walk away, as I have identified my financial needs (return I would like get get on my capital risk), and don't want / need any more.

And finally, here's a chart from a few weeks ago. I had had a tough week and it had taken 24 entries since the Monday to get in on this runner.



Anyone trading cable will probably remember what happened next. Was I upset? Well obviously a little as, if I had held on to my shorts, the move would have left me about 70% up on my account but, to be honest, I was tired, stressed out by a tough week, and just wanted to take my money and run

 

[Bloodhound]

Rob

I've been lurking and watching you thread with interest

Excuse me for butting in, but I wanted to highlight your comment because it's a truth that should be carved in stone. Getting in is the easy bit, it's the getting out that's hard.

If I've learned one thing over the years, it's that the "getting out" sorts the men from the boys. Call it trade management, money management, exit strategy, or whatever you like, it doesn't matter - as you rightly point out, it's the key to trading success.

good trading

jon

Hello Jon,

Thank you very much for dropping in and I hope you don't mind that I cut and pasted that 4-liner reply of yours but it really is extremely important IMO!!

Although I haven't resorted to flipping a coin yet I do firmly believe in that statement about exits. It's interesting that, this week, I have tried some higher timeframe stuff and failed, not because my entries were wrong (in fact almost all of them were right) but because I am not used to higher timeframes and couldn't get my head round when to cut potential losers and let the winners run.

All the best

Rob

 

[forexkunta]

Here is a chart of the cable H1 trade I took a few days ago. I have slightly modified it from the actual trade I took to include a set-up I had missed as it formed coming out of the Asian session and I was asleep. Each 'T' represents a trade and each 'S' represents the trailing stop. For the sake of the thread I am using 2% as my risk.

View attachment 66132

Entries and exits as follows:
T1 - Entry 5941
Stop 5856 (Risk 85 pips = 2%)
Exit 6029
Gain = 88 pips / 1.04 x risk / +2.07%

T2 - Entry 5976
Stop 5927 (Risk 49 pips = 2%)
Exit 6029
Gain = 53 pips / 1.08 x risk / +2.16%

T3 - Entry 6018
Stop 5970 (Risk 48 pips = 2%)
Exit 6029
Gain = 11 pips / 0.23 x risk / +0.46%

T4 - Entry 6078
Stop 6008 (Risk 70 pips = 2%)
Exit 6029
Loss = -49 pips / -0.70 x risk / -1.40%

Total net gain +3.29%

OK - so not a great return but, as was pointed out to me at the time, I exited way too late as I ignored the weakness at what became the top of the move (aroung 1.61). If I had been more aggressive and moved my stops to my T4 break even level then the return would have been just under 5 times risk or 10%.

This is why I am happy to sometimes just close my M5 trades and walk away, as I have identified my financial needs (return I would like get get on my capital risk), and don't want / need any more.

And finally, here's a chart from a few weeks ago. I had had a tough week and it had taken 24 entries since the Monday to get in on this runner.

View attachment 66134

Anyone trading cable will probably remember what happened next. Was I upset? Well obviously a little as, if I had held on to my shorts, the move would have left me about 70% up on my account but, to be honest, I was tired, stressed out by a tough week, and just wanted to take my money and run

Yep, that was a tough week, but elliott wave counts saved my bacon. It told me when to get in and when to get out. Made just over 600 pips on that series of trades with a net return of just over 40%. And best of all, only indicator used was the relative strength index.
I hate that was a stressful week for anyone, but turned out to be a fabulous week for me.
Regards,
Kent

 

[HawkTrader]

Gotta agree with Paul, I love how this thread is kicking off, I'm bored of all the RSI and Fib system threads, something like this is awesome for a change.

Just wanna say if nobody has already, make sure to get and read "Trade Your Way to Financial Freedom" by Van K. Tharp. I haven't even read it all yet and it's a fantastic book... I thought at first it was all about money management but there's even some stuff about methods. The main jist of it so far is that we, no matter what system or method we use are just trading our "belief's" about the market, nothing more. Kinda like what Rob was saying about a 100% unpredictable market, but still not random.

Don't get too big headed, keep it simple, stick to your plan and trade it!! (Stay smart)

 

[tenbobtrader]

M5 chart

Hi Rob

you mentioned that 13/10/09 would not have been that good a day for you

why ?

answer Monday is good - can see you been posting hard

Andy

 

[Bloodhound]

Trade expectancy

Hi Andy,

Best if I answer now as I'll be back at work tomorrow and may not have time to!!

Basically it all comes down to trade expectancy - my interpretation of it anyway. I think this is a very personal aspect of how I trade and no 2 people are going to think the same things about it. This is quite simply the hardest bit of trading for me. If I were to pinpoint one bit of what I do as my edge it would be this, and it is not easy. In fact it is really tiring, can sometimes be soul destroying and also very costly if I get it wrong. You suggested I should be focuing on ways to improve on what I do and this is the area for improvement.

In essence I view every level that I see on M5 as a pressure release valve. What I am expecting to happen is to see consolidation followed by a big surge in price movement - the sorts of things I am expecting are moves where I simpy don't have time to move my stops quick enough as price is trucking up (or down) so quickly. When this happens I know that I have hit a level that the market was also looking at (for whatever reason).

In numerical terms I guess I am looking to see my level busted by 10-20 pips pretty much instantly (1 second to 5 minutes) - unless I can see an obvious reason why it might stall, such as trading straight into another level (something I try and avoid lol!!).

On Feb's thread he describes it as those moments when price is just clunking up or down with no pullbacks, stalls or even 10-20 second consolidations. In other words, I expect my trades to be instant winners. There was some interesting stuff on T2W about this a few months ago I recall. The time element in price movements is extremely important to me. Not just time after my trade has triggered but what it is doing in the minutes running up to my trade being triggered, as this will influence how I perceive what happens next. If I were trading the Asian session, for instance, I would be expecting very different things from price than the UK / US sessions - i.e. slower, more measured or possibly more jerky, but ultimately not as decisive, and this would affect my trade expectancy.

As I mentioned before I am extremely risk averse and what this means is that I am at pains to get my stop to break even (+1) as soon as possible as I know that the real movers on cable are never going to hit that stop - it's the marginal trades and losers that might (or will) stop me out and I am not interested in either losing or risking my capital on marginal trades. I can't predict which will be the 'best' set-ups to take but I can at least bail out of the ones that don't work instantly.

Anway with all that in mind, here are 2 charts of cable from Monday and Tuesday telling vastly different stories (IMHO).

Monday was a clean-up day for me. Money made by 9am and then could have / should have taken the rest of the week off. These are the movements that I am expecting - it is my job to make sure I am around to jump on these and then load up to extract maximum profit. (see chart below)



Tuesday would have been hard work. I have seen enough of these days to know that they lead to a slow decline in my trading performance throughout the day. I get tired, despondant (sometimes) and make mistakes. Yes, a good trending day, but none of the breakouts were decisive enough for me. There would have been lots of b/e trades, losers and maybe the odd winner to pay for the losers, but I would probably have come out flat or a little down on the day. When I trade I am a spoilt child and I want my money handed to me on a silver platter - this wouldn't have happened today so I would probably have thrown my toys out of the pram!! (see chart below: blue lines = probable winning entries and red lines = probable losing entries)



All of the above said I am flexible. If cable is, for whatever reason, moving slowly I tend to slow down a bit with her. If she is having a bad hair day and is very spiky them I am super fast to move stops up, kill trades etc.

I hope this goes some way to answering your question. Feel free to ask away if I haven't explained myself particularly well.

All the best

Rob

 

[Bloodhound]

This post is as close I can get to explaining how I deal with trade expectancy in real time. I had already mentioned that I viewed this level as one that might blow aggressively, but it didn't. The M1 chart hopefuly shows how I react in these circumstances..

http://www.trade2win.com/boards/forex-strategies-systems/75950-trading-naked-29.html#post942136

 

[rawrschach]

Trades for this week
NQ short/ USDCAD long

I'm watching Oil - looks like it should get up to 85 at least, just watching for an entry.

 

[apmf]

Good morning guys,
Three trades so far. Just exited T3(3rd trade).

 

[tenbobtrader]

Hi Rob

thanks for your answers and thoughts

free pdf books that sit nice on this thread imvho - better here than in my pdf book vault anyway

are you the phantom of the pits Rob :?:

 

[candles]

only one cable trade for me. Closing half here. Seeing if the rest runs but I doubt it will. In fact, I imagine it turns down here. We'lll see....

 

[apmf]

Nice going Paul - cable is hard work this morning

T4 was a sucker followed by T5 & T6. Not really a interesting Monday so far. Lets see what happens next.
Paul

 

[Bloodhound]

Hi Rob

thanks for your answers and thoughts

free pdf books that sit nice on this thread imvho - better here than in my pdf book vault anyway

are you the phantom of the pits Rob :?:

Tough morning on cable and hit my limit so flat until tomorrow.



I thought I would have a quick look at the 'POP' book and I have to say Andy, it is an absolute gem. Only 20 pages in but already bowled over by what he says. Talk about a difinitive guide to trade expectancy and trade / money management.

"You lose good and you're wrong small" - I think they will become my new screensaver!!