Cj
“All my trading is. simple, wait for a thrust in price action, then wait for a pull back and jump abode.”
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What gets defined as goal of trading with this very simple method?
I agree, that is very simple – an under the right conditions it actually works. The problem with that statement is “under the right conditions”. It is a very simple pull back methodology but I see several things that come to mind quickly.
1) When this simple pull back occurs, over what time frame would the currency pair have needed to be moving in either direction such that it meets your definition for “thrust in price action”?
There is a “trust in price action” for every bar of time in existence. 1 minute bar thrusts, 3 minute bar thrusts, 8 minute bar thrusts, 15, 32, 79, 121, 279, 367, etc. But, those are all shorter-term “thrusts”. What about daily thrusts weekly thrusts and monthly thrusts? A time frame, or series of time frames (bars) have to be identified in order to establish both the initiation and termination of the “thrust”. Which leads me to problem number 2.
2) How does one identify the inherent characteristics of the “thrust”?
For bar “X”, thrust could be defined as Xsub1. But, for bar “Y”, the thrust cannot be defined as Xsub1, it must be Ysub1. Therefore, before you can simply “jump in” the trade, you must know with a high degree of certainty not only whether the thrust segment has been initiated by the market, but also the extend (or, Magnitude) of said “thrust”.
You need to know this in order to properly determine (calculate if you are automating this model of trading) the best Probability for the entry. Without having a way to determine the probability for the magnitude of the thrust, you are left with only an educated guess about the timing of the entry. Which brings me to my third problem.
3) Once you have identified “a” thrust. How do you know that “the” thrust is not part of an occluded thrust spanning multiple contiguous bars (overlapping thrusts)? Or, even more interesting, how do you know whether or not your particular “thrust” is not running just prior to a much more powerful thrust in a larger bar, that has the potential of swallowing “your” smaller thrust whole?
There could be a weekly “thrust” just about to break Long, when you witness what you believe to be an hourly or daily thrust breaking Short. So, you “jump in” to the Short side and then get whipsawed back to the stronger reality of the “larger” thrust. So, how do you account for multiple thrust initiations in opposite directions at or near the same time?
I could go on forever with this one. I used to trade like this – basically, Trend Following and it has some severe limitations – especially inside a Horizontal Market. Trend Traders simply don’t have a prayer in Horizontal Markets. Many Wizetraders and 4X MadeEasy traders have been sucked into this big time.
What’s your accuracy rating using this method? Out of the last 100 trades that you have made, how many were successful?
Lastly, how do you determine strategic profit model with “trust pull back trading”? In other words, there must be a pip target or a “price” target in play. Accuracy is a critical component to all trading – more so than consistency. In fact, consistency resides within the domain of accuracy. I can be very consistent and not very accurate at all. However, it is mathematically impossible for me to be accurate AND inconsistent at the exact same time.
So, for the trader “accuracy” drives everything in terms of making progress towards some revenue goal. And, if one does not know what to expect in terms of pips/net gain, then how can one establish a revenue target and then measure against it with any real meaningful measuring rod?
“Volatility will give you clues to where the market wants to go.”
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When the dance of the “volatility orchid” is complete, how do you know that its not time to grab your coat & hat and head home, but rather sit tight and enjoy the short break in the action while everyone grabs some refreshments from the bar? In other words, volatility is great – after the fact. Admittedly, it is a very good educated guessing tool – but not a real hard hitting “projector” of things to come.
What if I told you that there was a way to know where the next batch of “volatility” was most likely to come from, before it actually happened? This would clearly demonstrate that waiting around for volatility to “happen”, is not very optimal.
I’ve created a system indicator called Distinct Vega (one of many core system indicators). It is a volatility indicator. Vega means volatility. Distinct simply means that it is unique and different from all other measures of volatility – hence the term: Distinct Vega. What if I told you that volatility occurs in not just one dimension (as most all other measures of volatility indicate), but that volatility can actually be measured in five (5) different dimensions? And, what if I told you that Distinct Vega is light years ahead of regular volatility in measuring the optimal Direction for the trade AND the Magnitude of the trade?
DV was my third core system indicator. However, it was not until 2 years ago that I fully understood its rightful place within the system. It took me years to fully understand its true value. It is one of few multi-purpose indicators within this system.
Volatility is great, but there is a lot more under the hood than most traders are aware of.
“May I ask TV how much do you stake when placing a trade?”
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When I trade in Production Mode (meaning with real cash and not a test account), my trades average $2.1 million at present. So, I am a small time trader by any “real” standard in the Forex. That is because I have been trading only sub-part-time while I worked full-time developing this technology – so, for only a part-time trader, I’ve done fairly well.
At this point, finishing this project is more important to me than trading is right now. My target goal is to be in control of a 10 – 11 figure account. Making my first million was simply a matter of following a Revenue Model. My first model used a 30% net gain mimimum, so it took a bit longer to strike my target - 92 planned trades.
The revenue model spec’d out at 92 trades using a 30/100 formula. That simply means a 30% net gain per trade and reinvesting 100% of all profits. Given the fact that the system (which was a different version than the one in use now), I was able to see the revenue goal in 78 actual trades – so 14 trades were truncated. Much the same way I jumped from trade number 6 to trade number 9 on this forum during my test trades.
My current trade number 9 has already far surpassed its revenue target of 50% net gain and right now, I should be starting my next trade at between numbers 13 and 14. This time – a total of only 56 trades will be needed to score in excess of $1 million. That is because I’m using a 50/100 rule, instead of the old 30/100. The reason I did that had to do with the improvement in the system’s overall accuracy rating – so I was able to bump up the expected minimum profit per trade to 50%.
So, while I am a small time trader today – I don’t expect to stay at this level for much longer.
“Why I ask this is, I have seen highly educated traders with state of the art method/sytems.but when it comes down to placing money (SIZE) on any one trade, they become soft frightened and the glass ceiling draws down on them.”
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I think that has a lot to do with having confidence in what you build. It is probably easier for someone who comes from a “technical” background because you are already used to having confidence in empirical data.
Bottom line: I think people should eat their own dog food. Right now, I trade no more than 30% of my total account balance. So, my production grade trades of $2.1M represent 30% of the total account balance.
But, to give you an idea of how beautify currency pair trading can be, because I noticed that you are not trading the actual pairs, my current trade number nine which is now at 292% (as I type), would have been a nice $6.132 million if I exited the trade right now 12/20/04 at 7:29pm. This is the beauty of trading – the larger your account balance becomes, the easier taking down revenue targets get – it is poetry in motion. The hardest part is building up a balance that has a chance of becoming super critical.
In my personal opinion, super critical happens near the $150 million mark. Now, that’s just my own personal definition of super critical mass because you really do have a fairly easy shot at your first billion from this vantage point – but you also have enough to reduce your per trade cost basis down to something as small as .01% and still be in the market with more than 7 figures per trade. So, I define super critical mass at this level because everything becomes so easy at this level.
However, with some of the things that I’d like to accomplish in life, $150M simple won’t even pay start-up costs. So, I’ve got a long way to go – and that is why I need a very powerful trading tool and that is why I dedicated what “will be” about 6 years total out of my life to build this. 6 years out of your life including physical problems associated with working too many hours had better come with some payback – and I’m experiencing some of that right now – thankfully.
“Do you base all you trades on the start of every sunday,3,30”
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No – this is just a function of the broker and the real-time DDE link data that I receive into the prototype engine. So, my DDE link does not come on until 3:30pm each Sunday. Because of some of the physical problems that I developed over the past 5 years of working myself into the ground, I no longer do any coding or system development on the weekends (thank goodness). So, now days, I don’t see my system until early Monday morning – which is the way it should be. No more weekends.
