Intraday Trading the Forex market to make consistent profit
- Thread starter Forexmospherian
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L
Liquid validity
When you get round to the above point, another additional
question to those above:
How many open trades do you have as a maximum, and average?
You focus on multiple pairs, but its not entirely clear if you only ever
have one trade open at any one time.
Obviously multiple open trades exacerbates the over leverage issue.
Broker server goes down (or similar) with say 5 open trades at 40X leverage
is going to sting if they all move against you before you can close.
Yes its highly unlikely they all would if you avoid correlated trade duplication.
It is a possible black swan event.
Shrugging it off and dismissing it as rare won't stop it happening.
The whole point is a black swan should not have the potential to
take you out, or leave a serious dent.
On another note, yes, static stops and targets are far from ideal, I agree.
Forexmospherian
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Hi Guys
I am getting a bit behind on this thread - I notice I have at least 4 comments / points / etc to answer and am nipping out for tea and then watching some Champions league footy on the TV
So its going to be a few hours before I get back on the case - and before I progress more with my own particular way of trading - I will answer the questions first and anymore that might appear meanwhile
Cheers
Regards
F
I am getting a bit behind on this thread - I notice I have at least 4 comments / points / etc to answer and am nipping out for tea and then watching some Champions league footy on the TV
So its going to be a few hours before I get back on the case - and before I progress more with my own particular way of trading - I will answer the questions first and anymore that might appear meanwhile
Cheers
Regards
F
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Forexmospherian
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Cheers Jack and welcome to this forum
If you have been used to targets and earning a living from commissions and rewarded by effort - not just a guaranteed income - fx trading should be up your street
You will need to get past the basics before understanding a lot of things I get up - and I know you probably will not want to hear it - but its a 3- 7 yrs plus journey to get to a good standard etc- its all down to your effort commitment and having a bit of luck finding out "what works and what don't"
GL on your journey
Regards
F
robster970
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Folks, here is a simple method:
1) Switch to an exchange traded product so you can see volume.
2) Wait for a trend to emerge.
3) When price gets sticky, confirmed by a volume spike, fade the move that got it there (short for a uptrend, long for a downtrend)
4) Place stop just below the highest(short), lowest(long) point.
5) Exit mgmt: Trail on 15min or follow the mantra "What gets you in, gets you out"
6) Rinse and repeat. Any timeframe.
Today I missed the big move upwards but caught the downward move for 2.75pts with a slightly fluffed exit.
Now, where is the lady with the crochet bikini?
1) Switch to an exchange traded product so you can see volume.
2) Wait for a trend to emerge.
3) When price gets sticky, confirmed by a volume spike, fade the move that got it there (short for a uptrend, long for a downtrend)
4) Place stop just below the highest(short), lowest(long) point.
5) Exit mgmt: Trail on 15min or follow the mantra "What gets you in, gets you out"
6) Rinse and repeat. Any timeframe.
Today I missed the big move upwards but caught the downward move for 2.75pts with a slightly fluffed exit.
Now, where is the lady with the crochet bikini?
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counter_violent
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'Tis true, the trading gods have been kind to me of late, and my win rate isn't too shabby. However, in the interests of transparency to all reading, I should mention I risk a very small % of my account size. Very small. And I'll spare you the details, but my account isn't small (by self-funded trader standards).
F glad to hear you're not taking it personally - none of this intended to be derogatory (I've had enough rants with others, I don't need more lol) - but as you and I have discussed before, I think we differ in outlook on risk mgmt and profit potential.
Suffice to say I focus a lot on risk mgmt. I think LV is right to draw attention to potential downsides - he knows his stuff. I for one have experienced a few things (with trades on) that 'shouldn't have happened'. Unannounced Central Bank intervention in an FX trade anyone?
I've seen live 3 mega examples where things can go drastically wrong.
1) a few years back when BOJ intervened and usd jpy gapped 800i'sh at just the time when that famous broker IB had it's 15 min nightly downtime maintenance. How much carnage would that have caused in their customer acct's !!
2) again a few years back, was trading online with a female colleague who was short Dow cash @ £30 a point (she was a pure scalper and really rather good at it) when an unexpected interest rate rise announcement hit the market. From memory, it gapped up 300 and in the next 2 mins probably added another 100...needless to say, she was wiped 12k in 3 mins flat !
3) we have the well documented flash crash.
Forexmospherian
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Hi ctipast
Sorry for delay in coming back to you
Yes the divergence can be on an oscillator - my favourite used to be a RSI on a super quick 2 setting and for scalping used it on a 10 or 15 min chart
I don't bother so much now with the RSI as I have an LR2 as a "leading indicator" showing OB /OS and change of direction prior to a new time frame forming. Like any indicator its never going be 100% accurate - most are only 50 /50 but certain ones on non standard setting can be more like 70%+ - and then give you another edge when combined with all other "clues"
Today for me - 7 21 am UK time on the EJ - was a abrupt stop on a quick runaway scalp sell train - many of the clues I mentioned in the 10 came into play
It did not drop another 2 pips before spending a couple of hrs going up over 30 pips - a perfect scalp buy / free trade set up ( yes posted it live in half hr time window)
Most traders prefer divergence to be shown on a four hr or daily chart - which is fine - but don't get using 70 -100 pip wasteful stops when you can drill down and get a 5 or 10 or even 20 pips stop if you are not that accurate on catching all highs and lows,
Hope that helps
Regards
F
Forexmospherian
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Hi CV
Yes the market will always want all traders to remember bad "black swan" events to just to make sure they have got into your mind and frightened you
( Slighty off subject - but it stays in my mind when I was driving through Walthamstow in East London about 15 yrs ago - and some van driver flicked the "v" at a black BMW driver at some traffic lights. Within seconds 3 guys got out the BM with sawn off shot guns and went to have a word with the van driver - who by this time had done a full throttle wheel spin start over the red traffic lights They got back in the car and drove off as I in the car behind them hid under my steering wheel - scared stiff )
Moments like that - you remember
So the trick of the market - is to have those "frightening moments" just to remind you who is boss and to psychologically damage you
It works on 99% of all retail traders - whether they are playing with 1 lot or 50 lots per pip.
Now I am not saying I am never going to be caught out - because I will - it bound to happen - but if you check on the last 5 or 10 main black swan events of the last say 7 -12 years - there is a time correlation
As an experienced trader CV - you will know of those 4 key times
Its up to all other traders to do their homework and also be aware of "special times" of the day or week or month
I get the feeling we are due one in this next month or two - as even NFP days have become boring -
Will it be a 300 -450 pip move on the EU one day - and will that be up or down ??
Lets say we have a 200 pip crash in 5 /15 minutes tomorrow - with a say 50 pip gap
I would lose if i was in the trade the wrong way - and remember its 70% + that I should be in the correct way - that's if I am trading at that time as well on say 200 pips ( worst case scenario) £16k and more than likely under £9k
That could be what say 25% to 45% off my account in what say 15 minutes or 30 minutes ??
More than likely the bounce might go over half way back up - or even 80% over the rest of the day - but that's another ball game - ie how may traders can keep a cool head in panic times ??
So if that did happen - I would have to work 2 - 3+ weeks for nothing - ie just to get my loss back - and more than likely put back some of the money I have been taking out the last 4 /5 yrs.
Does it worry me ........ NO
Would it have worried me 5 yrs ago ....... YES
Regards
F
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Forexmospherian
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Hi LV
Sorry for the delay in coming back to you
NVP - commented on this this thread under post 15 the following -
I note (and am shamelessly now duplicating) the 5 pip trading system where you load up a trade then exit X% of stake after hitting around 5+ pips ..........you are virtually in free trade territory then and well earned indeed if the trade runs ..........this confuses the Hell out of many reading you but they just need to go research the principles or multiple staking on entry / exit techniques and realise its probably one of the major holy grail secrets re MM - one size does not fit all ....
Over 50% of my trading time - I am in only one scalp at a time - exposing 0.3% to 1 % of my own capital to the market
I do scalp certain pairs at the same time - ie EU and Swissy and also EA and AU and sometimes with the EU - the EJ
These dual scalps take place when i am at least up half of my target pips in the morning session - and yes I could be exposed to 1% on 2 simultaneous scalps - but I don't rely purely on similar or reverse correlations as these might only work 70 -85% of the time - as we know nothing is 100%
I have in this last 3 month had 3 simultaneous scalps out on the market for about 10 -15 mins - but my total exposure was still under 0.8% of my capital - as I was taking additional risk of juggling 3 quick trades in one go
With "free trades" it's different
A free trade is normally on say 25 -50% of the original scalp stake ( I normally do 2 lots if scalp as been on 6 lots or approx 30% )
This trade as a stop already in profit
Yes the stop can be gapped or jumped - but only had a couple happen like that in last 5 yrs if I remember correctly
So "free trades" - with profits locked in to me - are no worry / extra risk - and so if I can build up to have say 4 on or more in a session - no problem - they do not effect my risk on my scalp trades
I have commented on this thread to CV what would happen to me if we had a flash fall of say 200 pips in less than 15 minutes - so that also answers the other part of your question
I am risk averse - even when I am aggressively scalping - and yes - am I use to losses - cause I am - I have had thousands over last 11 years
Regards
F
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robster970
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Why don't you just look at what price is doing rather than lagging mathematical derivations of price?
L
Liquid validity
So you accept that risk.
Yet you have not mentioned it until drawn on the issue.
How many following this were aware of this potential risk.
Some, but not all I would guess...
Going back to the figures you used for potential loss.
25-45% black swan slippage loss.
That requires a 50-90% gain to get back to pre slippage bankroll level
in 2-3 weeks...using your figures and recovery time.
This is exactly why I initially mentioned over leverage and 2% R & 5SL being
dangerous.
I was saying you should avoid correlated trades altogether:
http://www.futuresmag.com/2011/04/01/avoiding-forex-disaster-through-noncorrelation
Trading EURUSD & USDCHF at the same time is discussed in the following link:
http://www.trade2win.com/boards/forex/25774-correlation-strategy.html
Basically its a EURCHF position, potentially twice as large as intended...
Forexmospherian
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i tried naked price reading for about 6 months
Could not get the accuracy for entries on sweet spot scalps within 1- 3 pips I need
Time windows assist me a lot - and would agree most indicators are not that helpful on any standard settings
But when you play with them and place them on 10 second or 1 min charts that are on minimum lag - then they are a help
My Lrs on a tick chart are super - far better than any MA's etc - and I could out read any naked chartist most of the time - not just by PA but by price structure given from the LR set up
I do reckon I have ever read or heard anyone ever say that - even Lance Beggs and Al Brooks would gain more off my set up
To me - simple systems are never the best
They normally give simple results
This is a very complex and dynamic market - and if simple works why do 90% of traders never get to make consistent gains - on going - and I don't mean just 30% per annum - for retailers that just a failure - for commercial institutions with 100's of mill - yes then 30% per annum is a great success
Just my own view - and would love someone to really prove me wrong
Regards
F
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tar
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A note here , its not totally equal to a EUR/CHF position , there's still a $3.7K exposure / 1 mini lot traded .
Forexmospherian
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Hi LV
Yes - I believe a 33% loss requires a 50% net gain to put you back to the same position and a 50% loss - at least 75%+ gain
But remember - 2 to 3 months on a $50k account - I expect a minimum 70% gain - ( poor on my standards) to 150% account gain ( that would require at least 3 great months )
So if I have a black swan event every 2 - 4 years which is a big one - I want to be back to normal within 2 months - and on small black swan - flash crashes - ie under 200 pips in under 15 mins - at maximum exposure - still expect to right that within 2- 4 weeks
With regards to correlated trades -I should be amongst the first being a scalper to spot when they decouple or whatever technical term the trade use
And normally I do
Regards
F
robster970
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Because their heads are all fncked up. You are conflating performance issues with the method. A pig with lipstick on is still a pig.
I also happen to believe that your need for trigger mechanisms is your coping strategy for this very problem. Left with a naked chart you cannot manage your timing, even though all information is there for you to see by your own admission.
The responsibility & accountability of making an entry or exit unaided is a very heavy burden to carry. It is comforting to delegate this to an indicator which in turn improves your performance because you are no longer in control and prone to c0cking up.
That said, whatever works for you works. G/L.
L
Liquid validity
???
50% loss on 50K = 25K
To get back to 50K requires 100% gain...not 75%
You said earlier you would expect to recover that in 2-3 weeks.
Now its 2 months?
Not that it matters.
This is why I said right from the start, 0.5% with a 5SL is safer.
Although in all honesty, as Rob has said, trading that tight,
its better to be on something exchange traded with volume.
Forexmospherian
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Sorry a 33% loss does require a 50% gain - but if in worse case scenario - I lost 50% on a $50 k account - it would not take me a 100% gain to get back the $25k - as I would be putting more capital back into the account form previous months winning and would not trade under 1% stake without my account being over at least $35k - so then I would need less than a 75% gain to get my $ 25 k loss back
This is what so many books do not explain - if you have been making profits for months and years etc - If you had the bad fortune to lose 50% of your normal trading account - due to a Black Swan scenario - you dont carry trading with that reduced amount
You put more capital in from previous winning and get you account back up - I don't mean fully reload it back up to $50 - but on 50% - 25k loss - I would put at least another 10k back into the account to work with
With regards to money gains - I would expect to make $25k back up in 3 -5 weeks - it was half that ie $12k that needed 2 - 4 weeks max - but whatever - I am trying to explain that in a worst case scenerio - a one off - 2 -4 yrs flash crash mess - I would expect to be totally back to square 1 - ( ie before the crash) within 2 - 3 months
So say a quarter of my trading year is messed up - hardly the end of the world - and so far in last 5 years - I have had not suffered any 25% or 50% being wiped off my main account during that time
Regards
F
L
Liquid validity
Did I say your 33% loss and 50% gain was wrong - no, so why mention it?
Your 50% loss and 75% gain was what I questioned.
You did not mention fresh capital injection.
You have not mentioned that anyone should set money aside for that
until now either.
Point is, do you still recommend 2% risk with a 5SL,
now that the potential pitfalls of over leverage have been highlighted?
You yourself do not use 2%R and 5SL - so how can you recommend it to those you teach?
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robster970
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@ffsear - did you do a clean-up on the squirrel post?
