Thread: Important – Why systems are profitable (or not)

67600

Originally Posted by ;

Sorry Rob for being a bit short with you. I have just got in from another hard day's slog in the office lol.

It's this procedure, however entries are not random - I exchange within a range taken in the daily charts and am looking for specific points or regions of entry. However, due to the large stop loss (pip shrewd, not% shrewd ), entries are much less significant than most conventional methods.

Kind Regards
Steve

No difficulty at all, no offense taken

I recall where I read it today, it had been in the why 95% fail thread concerning the grid/no stop/hedge (I think) method.

I suppose with such a higher success rate you might possibly risk 5 or 10 percent on every trade. In case 1000 pips = 10 percent, then 50 p = 0.5percent so that I could observe the process being feasible if you were able to get three or four trades per week...

94826

Originally Posted by ;

I wonder how he did this week. I just put it on a chart (had to go searching for the MACD indior). We've had bearish divergence on the E/U and G/U, 1H charts since Thursday, and whoops! Away she goes, into the blue.

IMO, that you know, he's doing a lot more than just MACD divergence. I will wager with transactions that large, he has a couple favorite entrances that are phenomenal, to prevent drawdown - 3000 per pip!

Blue,'' I have no idea who he is, or how he deals MACD divergence. I had been seeing parts of a Camtasia demonstration, and the instructor (Vic Noble) said that the trader was his most successful student (nice means to give oneself an indirect compliment!) , and was using him as an example of how entry trading could be profitable. I anticipate he should be trading something such as a $5m-$10m account dimensions to warrant those position sizes. Who knows, maybe it's some sort of managed fund?

Also, I think I could see how the misunderstanding between you and Steve happened. Do not wish to make myself unpopular by sticking my nose too much but I think if you mentioned it's been mathematically and logically proven that this will not work you were referring to C26000's thought of trying random entrances, while Steve believed that you were referring to my original post, where I had been discussing his or her FXTitan's unconventional approach to RR.

David

94826

Originally Posted by ;

2. To profit, we must be net long while price is rising, and/or net short while price is falling, often enough to overcome costs (disperse swap). This applies to a variety of methods, conventional or otherwise, without doubt, constantly. As long as we are accomplishing this, our account fairness (that is the sum of realized P/L from formerly closed positions, plus unrealized P/L from currently open positions) will rise; otherwise it will fall.

3. As long as our account fairness continues to grow overall, we might assume that we have an edge. To achieve this, we need to time our orders (i.e. correct our web position) accurately enough about market reversals, on balance, to be net long while price is rising, and internet short while it is falling. Here is the bottom line no matter if we are (in conventional terms) entering, exiting, scaling in, scaling out, realizing a profit, realizing a loss.

4. The result of any 1 trade is insignificant (if we are hedging, or scaling in/out, together with positions offsetting each other, the concept of a person trade is effectively meaningless, anyhow ). It is the overall effect on account fairness, i.e. internet P/L, that is the bottom line.

Hi David,

I have been working along these lines too, i.e. attempting to manage a web position as opposed to a series of individual round trip transactions. If you are interested in a concrete illustration, check out the second post in my diary of today. I'm placing market orders supporting the price as it rises. My purpose is to build a short position throughout the next downleg, thus being net short as price drops. During that downleg though, I will be placing buy orders behind the move, in order that when price turns back up I will be liquidating the short position and building a lengthy one. So on...

I'm also doing something similar but different with my long-term NZD/USD carry position. Ever hear of something called Automatic Investment Management (AIM) created by a man named Robert Lichello? He produced a position management system which has worked well for a few although he wrote a novel in the 70's using a VERY cheesy title. I'm experimenting with ways of adapting it to FOREX.

94826

Originally Posted by ;

Hi David,

I have been working along these lines too, i.e. attempting to manage a net position as opposed to a series of individual round trip transactions. Have a look at the second article in my journal if you're considering a concrete example. I'm placing orders behind the price as it rises. My purpose is to construct a short position throughout another downleg being net short as price drops. Throughout that downleg I will be placing buy orders behind the move, so that if price turns back up I will be liquidating the short position and constructing a lengthy one. And so on...

I'm also doing something similar but distinct with my long-term NZD/USD carry position. Ever hear of something called Automatic Investment Management (AIM) made by a man named Robert Lichello? He wrote a book in the 70's with a VERY cheesy name but he created a position management system that has worked for some. I'm experimenting with ways of adapting it to FOREX.

Was Not that book How to Produce a $1000000 from the Stock Market Automatically?

That has been a cheesy title LOL... Good book though

94826

Originally Posted by ;

Was not that book How to generate a $1000000 from the Stock Market Automatically?

This was a cheesy name LOL... Good book though

You added an extra zero there I believe but you have it, Scott. This was the book!

The actual method is simple and it's all over the place online. It's a contrarian typical kind method that is down, so it can really be harmful in a high leverage environment. But I am treating my leverage NZD standing and trading round the core holding using Lichello's basic idea.

94826

Originally Posted by ;

I believe when you said it's been mathematically and logically recognized that this will not work you were speaking to C26000's thought of trying random entrances, while Steve believed that you were speaking to my first article, where I had been talking his or her FXTitan's unconventional strategy to RR.

David

Yup, sounds appropriate.

94826

Originally Posted by ;

Hi David,

I have been working along these lines as well, i.e. trying to handle a web position as opposed to a series of individual round trip transactions. Check out the second post in my diary of today if you are interested in a concrete example. I am placing market orders supporting the price because it climbs. My purpose is to construct a short position throughout the next downleg being net short as price drops. Throughout that downleg I will be placing buy orders behind the play, in order that if price turns back up I will be liquidating the position and building a long one. And so on...

seems a lot like a grid EA I composed for a fellow. Works great... until it quits working. You end up with an extremely large position when you get one of those rare-but-not-rare-enough large moves in the EUR/JPY.

Best have a plan for that.

94826

Originally Posted by ;

Sounds a lot like a grid EA I composed for a fellow. Works good... until it quits working. You get a very large place going against you, when you get one of those rare-but-not-rare-enough big moves on the EUR/JPY.

Best have a plan for that.

I read about grids a couple years back on MoneyTech (I believe that's where it was), but I seem to recall they had unlimited risk. What I'm doing has defined risk; every order has a halt. Big moves in one direction are great because I'd be adding to a winning position during the transfer.

As David said in his very first post; net extended during up motions and net short during down motions.

94826

Originally Posted by ;

I read about grids a couple years back on MoneyTech (I think that's where it was), but I seem to recall that they had boundless risk. What I am doing has defined risk; each order has a stop. Big moves in one direction are great because I would be adding into a position throughout the transfer.

As David said in his first article; net lengthy during up moves and net short during downward moves.

Originally Posted by ;

I am placing market orders EUR/JPY behind the price because it rises.

I guess that's what threw me. I'll stop commenting on matters unless I fully understand them.

94826I'm placing sell orders behind the price as it rises.

Originally Posted by ;

I guess that is what threw me. I will stop commenting on matters unless I fully understand them.

Whoops, sorry about that; I should have clarified. I think of price like a person walking, so behind the price is the place. For an increasing price leg like we have in EUR/JPY, the place beneath the price is behind it. Since we can be short or long, it makes it simpler to explain a procedure without specifying the exact leadership.

Therefore the orders which I am placing behind the price are at reduced prices, and they are not filled yet. Using terminology from the securities markets, these are sell stop orders. They get hit in the event the price begins to head south and turns out.