Well, I promised full disclosure when I started this thread. So, here it is: my consecutive losses are almost comical. I was nearly certain that entering through the STOP orders would mitigate my losses. To be fair, it is only a short test, but the results were abominable. I'm now don 35% since the peak of my account.
This is exactly why I chose not to put forth the detailed system when I started. If it sucks, I didn't want to offer it as if it was a workable system.
Now, I am up in total - that's true. But who in their right mind wants a system with a 35% drawdown? The problem is, it's across all currency pairs, so it's not as if I can say that trading this pair or that pair helps matters.
I am not abandoning the system. Past results indicate that there is something there. And looking at the charts, there is plenty of money to be made on a trendng basis.
I will let current orders run, but will be really taking a closer look at all these trades to try and figure out what the issue is. I could live with the 10% drawdowns that were made back fairly quickly, but not this. I need to hammer out better entries.
I think I can make this work, but I am not going to stubbornly persist in a losing scheme. I think I've given a fair test that shows upside, and now I need to figure out where the downside is killing me.
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Joe's Journal
Re: Joe's Journal
by Joe T » Wed Aug 05, 2009 8:53 am
- Joe T
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Re: Joe's Journal
by Joe T » Fri Aug 07, 2009 12:31 pm
I am in the process right now of really just reviewing my trades. So, I'm not real active at the moment. If and when I am ready to start testing again, I'll move on it. It's all good - overall I still ended up in my account, but am not at all happy with the results that have taken much of that away, and if it does that in such a short time, I'm smart enough to realize this is too risk of a system. So I'm recalibrating here.
- Joe T
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Re: Joe's Journal
by Joe T » Fri Aug 07, 2009 5:29 pm
OK, so here are my thoughts on things to this point:
1) Despite the account being up overall, the win ratio is atrocious. I mean, it's really bad. I'm not at the platform right now, but I think I've literally closed out at a loss on 20 trades in a row. It's actually amazing the account is up overall. I guess that does show the power of hitting those big trades occasionally. And while I want to tap into that power, I am currently really looking at scaling back and finding only the very best set-ups to try and hit those trades. Clearly, the strategy of bouncing off trend-lines just wasn't robust enough.
2) So, what have I learned? Two main things: (1) When you hit the trend right, you can score huge. (2) Money management can save you from going bankrupt, even with a long string of losses; (3) I don't like a long string of losses; (4) there seems to be a kind of "trend line gravity," at least on secondary trends lines. Meaning, as price gets close to the trend line, it tends to reach it, and often reach past it. Then, even if it bounces, it often tends to bounce back (even after a large bounce). Many of my losses are from a piercing of the line, but many other smaller losses are from a bounce that moves into profit, moving the trailing stop up/down, and then a pull back to the trend line that hits my stop loss.
3) So, this got me thinking... As counterintuitive as it may seem, perhaps I should just accept that I'm horrible at entries and try to put that in my favor. I'm currently working on modifying my "Trailing Stop" EA to make it a "Trailing Profit" EA. Somewhat unconventional, I suppose, but how it would work is I would keep a set stop loss equal to the trailing profit amount, suing the same calculations I do today. Instead of a LIMIT order, I'd place a STOP order before the trend line. If price moves against me, I actually trail my Take Profit number down to better catch a bounce back up/down. Obviously, I could get stopped, and that will happen. But I'm not joking when I say all my positions have closed in a loss lately. I would apply this strategy on secondary and less robust trend lines. The assumption, I guess, is that such trend lines are more likely to get pierced, or not reflect a trend with any expediency.
4) So, what about the solid/primary trend lines? I'd still trade these with the trend, and try to hit a large move. Looking at my successful trades, almost all of them were in the direction of the longer-term, more established trend. It just so happens that almost all recent entries were being made on the secondary trend lines. It didn't work most of the time. So, hopefully, I'm going to find a way to optimize probability of longmoves, while playing a counter-strategy using the gravitational pull of the other trend lines for smaller, shorter-term profits.
5) But what if trades go wrong? I said I've made money on the system and now you're doing the opposite, so won't I lose money? A: I don't think so, because the Take Profit I used to allow those huge losses was quite distant, and most of the trades simply ran using the trailing stop. With this strategy, the stop loss would be set at a much closer level. So the amount I will lose from being stopped will be less than the amount of profit made from letting the trades run. In addition, I would only run this type of trade on the secondary trend lines. I would still trade the primary trend line as I did before, or with even stricter criteria than before depending on my full review.
I'm working on all this at the moment and will post here when I'm ready to move on it.
Also, I'm simultaneously looking at a completely different approach that would be more of a daily trading strategy. It's likely that I'm bouncing around too much here, but both of these ideas have been something I've thought about for some time now.
1) Despite the account being up overall, the win ratio is atrocious. I mean, it's really bad. I'm not at the platform right now, but I think I've literally closed out at a loss on 20 trades in a row. It's actually amazing the account is up overall. I guess that does show the power of hitting those big trades occasionally. And while I want to tap into that power, I am currently really looking at scaling back and finding only the very best set-ups to try and hit those trades. Clearly, the strategy of bouncing off trend-lines just wasn't robust enough.
2) So, what have I learned? Two main things: (1) When you hit the trend right, you can score huge. (2) Money management can save you from going bankrupt, even with a long string of losses; (3) I don't like a long string of losses; (4) there seems to be a kind of "trend line gravity," at least on secondary trends lines. Meaning, as price gets close to the trend line, it tends to reach it, and often reach past it. Then, even if it bounces, it often tends to bounce back (even after a large bounce). Many of my losses are from a piercing of the line, but many other smaller losses are from a bounce that moves into profit, moving the trailing stop up/down, and then a pull back to the trend line that hits my stop loss.
3) So, this got me thinking... As counterintuitive as it may seem, perhaps I should just accept that I'm horrible at entries and try to put that in my favor. I'm currently working on modifying my "Trailing Stop" EA to make it a "Trailing Profit" EA. Somewhat unconventional, I suppose, but how it would work is I would keep a set stop loss equal to the trailing profit amount, suing the same calculations I do today. Instead of a LIMIT order, I'd place a STOP order before the trend line. If price moves against me, I actually trail my Take Profit number down to better catch a bounce back up/down. Obviously, I could get stopped, and that will happen. But I'm not joking when I say all my positions have closed in a loss lately. I would apply this strategy on secondary and less robust trend lines. The assumption, I guess, is that such trend lines are more likely to get pierced, or not reflect a trend with any expediency.
4) So, what about the solid/primary trend lines? I'd still trade these with the trend, and try to hit a large move. Looking at my successful trades, almost all of them were in the direction of the longer-term, more established trend. It just so happens that almost all recent entries were being made on the secondary trend lines. It didn't work most of the time. So, hopefully, I'm going to find a way to optimize probability of longmoves, while playing a counter-strategy using the gravitational pull of the other trend lines for smaller, shorter-term profits.
5) But what if trades go wrong? I said I've made money on the system and now you're doing the opposite, so won't I lose money? A: I don't think so, because the Take Profit I used to allow those huge losses was quite distant, and most of the trades simply ran using the trailing stop. With this strategy, the stop loss would be set at a much closer level. So the amount I will lose from being stopped will be less than the amount of profit made from letting the trades run. In addition, I would only run this type of trade on the secondary trend lines. I would still trade the primary trend line as I did before, or with even stricter criteria than before depending on my full review.
I'm working on all this at the moment and will post here when I'm ready to move on it.
Also, I'm simultaneously looking at a completely different approach that would be more of a daily trading strategy. It's likely that I'm bouncing around too much here, but both of these ideas have been something I've thought about for some time now.
- Joe T
- Posts: 186
- Joined: Thu Jul 02, 2009 10:26 am
Re: Joe's Journal
by Joe T » Thu Aug 20, 2009 6:15 pm
Just thought I'd check in to let everyone know that I'm still working on a few things. I'm simultaneously testing / preparing to test a few different things. I continued to play around with the strategy in this thread, and unfortunately it has continued to prove remarkably volatile. No way would I recommend anyone to risk serious cash on the strategy, and therefore I am continuing to try and find ways to filter out the bad, imrpove the chances of the good. To that end, here's what I'm working on:
1) I am testing a pseudo-scalping strategy that I developed in my head in about 15 minutes, but as the culmination of other random thoughts that have struck me as I've worked through my trading. The strategy basically involves trading microlots with *gasp* no stop loss. If this proves successful, I will outline the rationale to it and the trading process. Again, as when I started this thread, I prefer to not provide too many details until it proves successful. You'll have to trust that the info is true and correct.
Day 1 return: +0.298%
Day 2 return: +1.595%
Day 3 return: +1.735%
Day 4 return: +0.938%
Total return after 4 days: +4.639%
These are realized balances. Current drawdown on open trades against total realized balance is -3.438%.
2) I have a spreadsheet that I've been working on when I can that gets me back to my roots - math. I've downloaded the daily price movements of every daily candle for every currency pair and am doing probability analysis on whether or not the previous two bars indicate a high-probability directional movement on the subsequent bar. This hasn't been fully vetted and tested yet, and I'm still working on getting all the data exactly the way I want it in order to do so. I'll report back with any findings.
3) Since I've been working on #2, I haven't had an opportunity to try and work on an EA for my "trend line gravity" approach using a trailing Take-Profit. I will report back when I have worked on that and hopefully have some results.
I'll try to keep the journal up-to-date on the scalping method, while I continue to make slow-but-sure progress on the spreadsheet.
1) I am testing a pseudo-scalping strategy that I developed in my head in about 15 minutes, but as the culmination of other random thoughts that have struck me as I've worked through my trading. The strategy basically involves trading microlots with *gasp* no stop loss. If this proves successful, I will outline the rationale to it and the trading process. Again, as when I started this thread, I prefer to not provide too many details until it proves successful. You'll have to trust that the info is true and correct.
Day 1 return: +0.298%
Day 2 return: +1.595%
Day 3 return: +1.735%
Day 4 return: +0.938%
Total return after 4 days: +4.639%
These are realized balances. Current drawdown on open trades against total realized balance is -3.438%.
2) I have a spreadsheet that I've been working on when I can that gets me back to my roots - math. I've downloaded the daily price movements of every daily candle for every currency pair and am doing probability analysis on whether or not the previous two bars indicate a high-probability directional movement on the subsequent bar. This hasn't been fully vetted and tested yet, and I'm still working on getting all the data exactly the way I want it in order to do so. I'll report back with any findings.
3) Since I've been working on #2, I haven't had an opportunity to try and work on an EA for my "trend line gravity" approach using a trailing Take-Profit. I will report back when I have worked on that and hopefully have some results.
I'll try to keep the journal up-to-date on the scalping method, while I continue to make slow-but-sure progress on the spreadsheet.
- Joe T
- Posts: 186
- Joined: Thu Jul 02, 2009 10:26 am
Re: Joe's Journal
by Joe T » Fri Aug 21, 2009 4:53 pm
On the scalping method- after 5 days of trading:
Today's Realized Return: +2.004%
Realized Return to date: +6.735%
Daily Average Realized Return: +1.312%
Annualized Realized Return (just for fun...): +2,602.550%
OK, so that all looks good, but current open positions represent a draw-down of 5.591% of current reqlized balance, if I were to close them out today.
Soooo... if I look at the equity balance and give a more honest return for the five days, it's +0.768% for the week. But hey, if I annualize that it's a 48.8% return, which ain't too bad.
The key here is that the plan is to simply never close out a losing position and the lot sizes are so small that it doesn't really become "dead money." The scalping should more than offset the drawdown. The thinking here is that the realized balance should increase more quickly than the unrealized balance, and that this gap should widen as time goes on. In my head, that's what I'm thinking, anyway. We'll see if it holds true.
I'll continue to update.
Have a good weekend. I may be off and about on Sunday and Monday, so daily returns will be down. I may pick up a couple wins on open positions, but there won't be other positions opening nor will I be taking quick profits on any positions. But that's OK. I won't always be in a position to monitor a screen, so getting days like that into the averages should be more realistic.
Today's Realized Return: +2.004%
Realized Return to date: +6.735%
Daily Average Realized Return: +1.312%
Annualized Realized Return (just for fun...): +2,602.550%
OK, so that all looks good, but current open positions represent a draw-down of 5.591% of current reqlized balance, if I were to close them out today.
Soooo... if I look at the equity balance and give a more honest return for the five days, it's +0.768% for the week. But hey, if I annualize that it's a 48.8% return, which ain't too bad.
The key here is that the plan is to simply never close out a losing position and the lot sizes are so small that it doesn't really become "dead money." The scalping should more than offset the drawdown. The thinking here is that the realized balance should increase more quickly than the unrealized balance, and that this gap should widen as time goes on. In my head, that's what I'm thinking, anyway. We'll see if it holds true.
I'll continue to update.
Have a good weekend. I may be off and about on Sunday and Monday, so daily returns will be down. I may pick up a couple wins on open positions, but there won't be other positions opening nor will I be taking quick profits on any positions. But that's OK. I won't always be in a position to monitor a screen, so getting days like that into the averages should be more realistic.
- Joe T
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- Joined: Thu Jul 02, 2009 10:26 am
Re: Joe's Journal
by Edward Revy » Tue Aug 25, 2009 7:51 am
Hi Joe,
You've made many important conclusions, in particular about money management.
Thank you for good summaries, I'm sure lots of traders will find it very useful.
I think range bound trading period was a culprit of many losing trades. Ranging markets aren't easy to trade, they are quite annoying to me as well. At Forex-strategies-revealed.com I'll be sharing my thoughts about detecting and trading range bound markets soon. For now I'm making a list of various methods and indicators to help detect upcoming sideways patterns. As soon as I get a chance to sit down and write a summary about it, I'll make an announcement.
So, as I understood you're now into scalping. It should be exiting to follow your updates.
Stop-free trading sounds quite disturbing though. How about some Critical stop then, e.g. some fairly distant stop to keep you out of trouble if things turn very bad in one second: serious financial or political troubles or, much closer realistic threats: a trading platform freezes for a good period of time, an internet provider goes down and you cannot quickly find another solution, you try to phone your broker to manage orders, but it takes longer that you expected, or worse, you are put on hold... A critical stop loss will protect you. Taking losses with a critical stop will be painful, but it'll protect you form losing even more.
You've made many important conclusions, in particular about money management.
Thank you for good summaries, I'm sure lots of traders will find it very useful.
I think range bound trading period was a culprit of many losing trades. Ranging markets aren't easy to trade, they are quite annoying to me as well. At Forex-strategies-revealed.com I'll be sharing my thoughts about detecting and trading range bound markets soon. For now I'm making a list of various methods and indicators to help detect upcoming sideways patterns. As soon as I get a chance to sit down and write a summary about it, I'll make an announcement.
So, as I understood you're now into scalping. It should be exiting to follow your updates.
Stop-free trading sounds quite disturbing though. How about some Critical stop then, e.g. some fairly distant stop to keep you out of trouble if things turn very bad in one second: serious financial or political troubles or, much closer realistic threats: a trading platform freezes for a good period of time, an internet provider goes down and you cannot quickly find another solution, you try to phone your broker to manage orders, but it takes longer that you expected, or worse, you are put on hold... A critical stop loss will protect you. Taking losses with a critical stop will be painful, but it'll protect you form losing even more.
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Edward Revy - Site Admin
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Re: Joe's Journal
by Joe T » Tue Aug 25, 2009 1:10 pm
Edward Revy wrote:Hi Joe,
You've made many important conclusions, in particular about money management.
Thank you for good summaries, I'm sure lots of traders will find it very useful.
I think range bound trading period was a culprit of many losing trades. Ranging markets aren't easy to trade, they are quite annoying to me as well. At Forex-strategies-revealed.com I'll be sharing my thoughts about detecting and trading range bound markets soon. For now I'm making a list of various methods and indicators to help detect upcoming sideways patterns. As soon as I get a chance to sit down and write a summary about it, I'll make an announcement.
So, as I understood you're now into scalping. It should be exiting to follow your updates.
Stop-free trading sounds quite disturbing though. How about some Critical stop then, e.g. some fairly distant stop to keep you out of trouble if things turn very bad in one second: serious financial or political troubles or, much closer realistic threats: a trading platform freezes for a good period of time, an internet provider goes down and you cannot quickly find another solution, you try to phone your broker to manage orders, but it takes longer that you expected, or worse, you are put on hold... A critical stop loss will protect you. Taking losses with a critical stop will be painful, but it'll protect you form losing even more.
Thanks, Edward. I'm not sure I'd consider myself "into" scalping. I continue to test and look into all strategies that interest me, including continuing some semblance of the strategy I started here. I'm experimenting with a little scalping method that can also easily be tweaked into more of a buy-and-hold strategy for periods of time where I will not be able to effectively "scalp." In fact, I've done that over the last couple days because I won't be at the computer much, so I am targeting hgiehr profits.
I realize how scary the "no stop loss" thing sounds. And I completely agree it's a bad idea under normal position sizes. I am trading 1 micro lot per trade at the moment. That means a 1000 pip freefall draws my account down by $100. I feel I can live with that risk. I will not go without a stop loss on any position sizes that could hurt with a large movement in pips.
1 microlot may seem silly, but I've taken about a $1650 account up over $1800 in a little over 5 days, so even those small lot sizes can make you money. As long as I don't need to pull the money out, I can afford to wait for any current drawdowns to work their way out.
Having said all that, I may find out that you're absolutely right and this strategy is stupid...
I don't particularly want this to be my main, long-term strategy, which is why I'm working on other things as well. I don't want to bounce around and abandon something that shows promise just because of a bad run, so I continue to look for a way to make the trendline strategy work, and even if a ranging market is the culrpit, I still want some protection against such a huge drawdown. I don't like giving back 40% of my account, even if the end result was a gain of a few percent. A lot of work and risk for a relatively small gain.
I still consider myself a newbie, so all this is about experimentation, learning, and hoping that by Year 3 I'm making consistent returns.
- Joe T
- Posts: 186
- Joined: Thu Jul 02, 2009 10:26 am
Re: Joe's Journal
by Joe T » Tue Aug 25, 2009 6:09 pm
I haven't had much screen time the last couple days, but here are the results:
8/24 - Daily yield = +0.803%
8/25 - Daily yield = +0.595%
Daily average (on trading days) = +1.137%
Return to date = +8.232%
Annualized = +1,686.512% (assumes 250 trading days)
This is realized balance. I'm currently carrying an unrealized loss of about 7% of realized balance, so overall positive even if I had to close those out.
8/24 - Daily yield = +0.803%
8/25 - Daily yield = +0.595%
Daily average (on trading days) = +1.137%
Return to date = +8.232%
Annualized = +1,686.512% (assumes 250 trading days)
This is realized balance. I'm currently carrying an unrealized loss of about 7% of realized balance, so overall positive even if I had to close those out.
- Joe T
- Posts: 186
- Joined: Thu Jul 02, 2009 10:26 am
Re: Joe's Journal
by Joe T » Fri Aug 28, 2009 12:36 pm
8/26 - Daily yield = 0.985%
8/27 - Daily yield = 0.683%
Daily average = +1.069%
Return to date = +10.043%
My drawdown, for the moment, seems to have stabilized. However, I''m also being a little more selective with my entries than when I started. Yields this week aren't quite as high since I didn't have a lot of computer time for actual scalping activities in the traditional sense.
I was pretty busy with other things this week, so I didn't have a lot of time to make progress on the other methods I'd like to test. Will keep you posted.
Thoughts: With a small account, it is easy to get discouraged, and it's easy to talk yourself into taking dumb risks to try and increase your account size quickly. One exercise that has really helped me to keep it all in perspective is to take a look at the cumulative impact of compounding over time if you can keep very slow and steady performance up. So, if you think you have a method of consistently yielding $10 per trading day on a $1000 account, some people would think that's just a waste of time. But consider it practice and the sweat that is building your base for the future. Put a little spreadsheet together that puts a 1% per day yield in perspective over a 3-year horizon, and I promise you that you won't look at a $10 gain the same way. Also, keep in perspective the yield from a money market fun, a savings account, or even a stock fund (in normal times). Even $10 profit in a week on a $1000 account pummels these things.
I can't promise or know that I will ever figure this stuff out, or that I'll have the success I hope to have. What I do know, though, is that this market is powerful in more than one way. Sure, it's great if you take a huge risk and hit a move. You could multiply your account with one move, and some people have done that. But this market also presents a great opportunity for much smaller, consistent returns that people don't seem all that interested in, particularly with small accounts. I'm testing this method here having started with $1670. My best day so far is $35. Yet, in 9 trading days I'm up over 10%. From a dolalr standpoint, it's not worth the time - right now. But I'm "in training" and if I can hone my skills and get success, then in 3 years, 5 years, 10 years I should be making a lot of money - just off that initial amount. Of course, if I truly figure it out I'll put more in to speed up the process, but even if you can't do that there's a good long-term outlook. It requires patience and discipline. I think those things are probably more important than the perfect strategy. (Then again, why listen to me? I haven't made money yet, I'm still testing, and I'm still a newbie. Just putting my thoughts down as I see them.)
8/27 - Daily yield = 0.683%
Daily average = +1.069%
Return to date = +10.043%
My drawdown, for the moment, seems to have stabilized. However, I''m also being a little more selective with my entries than when I started. Yields this week aren't quite as high since I didn't have a lot of computer time for actual scalping activities in the traditional sense.
I was pretty busy with other things this week, so I didn't have a lot of time to make progress on the other methods I'd like to test. Will keep you posted.
Thoughts: With a small account, it is easy to get discouraged, and it's easy to talk yourself into taking dumb risks to try and increase your account size quickly. One exercise that has really helped me to keep it all in perspective is to take a look at the cumulative impact of compounding over time if you can keep very slow and steady performance up. So, if you think you have a method of consistently yielding $10 per trading day on a $1000 account, some people would think that's just a waste of time. But consider it practice and the sweat that is building your base for the future. Put a little spreadsheet together that puts a 1% per day yield in perspective over a 3-year horizon, and I promise you that you won't look at a $10 gain the same way. Also, keep in perspective the yield from a money market fun, a savings account, or even a stock fund (in normal times). Even $10 profit in a week on a $1000 account pummels these things.
I can't promise or know that I will ever figure this stuff out, or that I'll have the success I hope to have. What I do know, though, is that this market is powerful in more than one way. Sure, it's great if you take a huge risk and hit a move. You could multiply your account with one move, and some people have done that. But this market also presents a great opportunity for much smaller, consistent returns that people don't seem all that interested in, particularly with small accounts. I'm testing this method here having started with $1670. My best day so far is $35. Yet, in 9 trading days I'm up over 10%. From a dolalr standpoint, it's not worth the time - right now. But I'm "in training" and if I can hone my skills and get success, then in 3 years, 5 years, 10 years I should be making a lot of money - just off that initial amount. Of course, if I truly figure it out I'll put more in to speed up the process, but even if you can't do that there's a good long-term outlook. It requires patience and discipline. I think those things are probably more important than the perfect strategy. (Then again, why listen to me? I haven't made money yet, I'm still testing, and I'm still a newbie. Just putting my thoughts down as I see them.)
- Joe T
- Posts: 186
- Joined: Thu Jul 02, 2009 10:26 am
Re: Joe's Journal
by Joe T » Mon Aug 31, 2009 6:12 pm
While I continue to work on about 3 strategies at once from a back-test/research standpoint, the one I am actively testing is the pseudo-scalping method. It's not really scalping in that I don't sit at the computer screen and wait for a quick profit, but it's kind of like scalping in that I will take small profits and then re-enter a position shortly after that.
I started this similar to a Martingale-type of system, and paid little attention to entries. I used pending orders for entry points and didn't worry about price action. In retrospect, there's really no good reason why I did that, and because of it I'm probably carrying more of a drawdown than necessary. Also, I only went in one direction (long) and "hedged" using currency pairs that "should" go in the opposite direction. For all the talk of correlation of pairs, I'm finding that this hedge isn't always all that effective. Now, since I've settled into those pairs, I still trade them, but not necessarily as a hedge against the others.
The method is pretty simple and takes very little of my time - and yet I am averaging multiple trades per day. Basically, what I do is this: Check the pending trades. If one is in profit, close it. If the best position in one of the currencies is over 50 pips down, open another position. Depending on the chart, this may be a buy or a sell. Close the platform, and wait a minimum of an hour before checking again. Lather, rinse, repeat.
This is less than two weeks in the making, so I make no promises. To date, I've maintained my strategy of closing on profits and letting losses just run. No stop loss. Edward rightly expressed concern about this. I need to be very clear that I am trading very, very small lot sizes. Almost all my trades to date have been 0.01 lots. Thus, a 1000 pip drop loses $100 (on an xxxUSD pair). Edward did give me food for thought, though. By putting in pending orders, I was putting myself in the unnecessary position of buying or selling against a huge price move (from news, e.g.). By moving to market orders and not even looking at the platform for at least an hour in between, I will let the market do what it will do. I will look at the charts to make sure it doesn't look like there's a spike going on. The only time I will wait to get in is if it looks like there's a large price movement. Also, I don't want to get overextended even at these small lot sizes, so I'm not trading all currencies, or even all currencies with lower spreads. I'm even questioning if four currencies is too much, and as time goes on I'll evaluate this. I'll judge it by the extent of the negative unrealized position I'm carrying.
I simply decide on the direction based on where price is in relation to the rest of my chart.
So far, all my realized trades are closed with profit. There are a number of trades in a negative position that I just carry. Because of the small lot sizes, there is no angst on my part at this time over that, and it isn't limiting my trading. It looks as if the drawdown amount is settling in at 7-10%, depending on the time. A number of those positions were pending orders that were filled, and when I was only going long. I'm hoping I can get that percentage lower. I may also slow down my planned increase in lot sizes to maintain more of a 5% drawdown. (Currently, every tenth trade is 0.02 lots). Due to the nature of the method, profits get closed, so all the carried trades are always negative. That never looks pretty, but the growing balance is what counts.
Again, this could all end up a horrible idea, so please don't try and emulate it until all this plays out.
Always keep in mind that there is a negative unrealized balance that is being carried when I present the realized gains. Until I mention otherwise, assume a 10% unrealized "penalty" against the total realized balance.
8/28 - Daily yield = +0.913%
8/31 - Daily yield = +1.380%
Daily average to date = +1.083% per day return
Total return to date = +12.580%
I started this similar to a Martingale-type of system, and paid little attention to entries. I used pending orders for entry points and didn't worry about price action. In retrospect, there's really no good reason why I did that, and because of it I'm probably carrying more of a drawdown than necessary. Also, I only went in one direction (long) and "hedged" using currency pairs that "should" go in the opposite direction. For all the talk of correlation of pairs, I'm finding that this hedge isn't always all that effective. Now, since I've settled into those pairs, I still trade them, but not necessarily as a hedge against the others.
The method is pretty simple and takes very little of my time - and yet I am averaging multiple trades per day. Basically, what I do is this: Check the pending trades. If one is in profit, close it. If the best position in one of the currencies is over 50 pips down, open another position. Depending on the chart, this may be a buy or a sell. Close the platform, and wait a minimum of an hour before checking again. Lather, rinse, repeat.
This is less than two weeks in the making, so I make no promises. To date, I've maintained my strategy of closing on profits and letting losses just run. No stop loss. Edward rightly expressed concern about this. I need to be very clear that I am trading very, very small lot sizes. Almost all my trades to date have been 0.01 lots. Thus, a 1000 pip drop loses $100 (on an xxxUSD pair). Edward did give me food for thought, though. By putting in pending orders, I was putting myself in the unnecessary position of buying or selling against a huge price move (from news, e.g.). By moving to market orders and not even looking at the platform for at least an hour in between, I will let the market do what it will do. I will look at the charts to make sure it doesn't look like there's a spike going on. The only time I will wait to get in is if it looks like there's a large price movement. Also, I don't want to get overextended even at these small lot sizes, so I'm not trading all currencies, or even all currencies with lower spreads. I'm even questioning if four currencies is too much, and as time goes on I'll evaluate this. I'll judge it by the extent of the negative unrealized position I'm carrying.
I simply decide on the direction based on where price is in relation to the rest of my chart.
So far, all my realized trades are closed with profit. There are a number of trades in a negative position that I just carry. Because of the small lot sizes, there is no angst on my part at this time over that, and it isn't limiting my trading. It looks as if the drawdown amount is settling in at 7-10%, depending on the time. A number of those positions were pending orders that were filled, and when I was only going long. I'm hoping I can get that percentage lower. I may also slow down my planned increase in lot sizes to maintain more of a 5% drawdown. (Currently, every tenth trade is 0.02 lots). Due to the nature of the method, profits get closed, so all the carried trades are always negative. That never looks pretty, but the growing balance is what counts.
Again, this could all end up a horrible idea, so please don't try and emulate it until all this plays out.
Always keep in mind that there is a negative unrealized balance that is being carried when I present the realized gains. Until I mention otherwise, assume a 10% unrealized "penalty" against the total realized balance.
8/28 - Daily yield = +0.913%
8/31 - Daily yield = +1.380%
Daily average to date = +1.083% per day return
Total return to date = +12.580%
- Joe T
- Posts: 186
- Joined: Thu Jul 02, 2009 10:26 am
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