$TRILLION STRATEGY

trading strategies and money management discussion, code, results

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Shane280us
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Postby Shane280us » Sun Sep 02, 2007 4:15 pm

I've been using this strategy everyday since mid July. I would not begin my trading day without first referring to this strategy to view the eight Forex currencies I trade each day and understand what the market is doing for the day.

But ulimately it's upto the individual's decision whether to enter a trade or not. If something does not go the way you expect it, then look at yourself and don't blame the indicator.

The information I've gained on this site helped me move from a mini account using Esignal to a main Forex account on Tradestation.

All the information anyone needs to trade is within this site and mentioned over and over again.

I'm very thankful that we have these few experienced traders on this site that share their knowledge and expertise and ask for nothing in return.

But everyday when I trade it's my decision when to trade and where to set my stops. I don't get greedy I'm focused on taking a little consistently every day and growing my portfolio.

oh, and When I gamble, I'm always in a Casino and never in the market.

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casinoman
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These are the posts that try men's soles

Postby casinoman » Sun Sep 02, 2007 10:47 pm

Let's answer the last question first (the 47-47-5) since it is the simplest and easiest (just math) but the most boring (math).

(pw * aw) - (pl * al)
pw = probability of win
aw = average win amount
pl = probabilty of loss
al = average lose amount

The computation to break even would be:

(.47 * (1 / .47 - 1)) - ((.47+.05) * 1)
(.47 * 1.128) - .53
.53 - .53 = 0

This tells us that each time we risk (bet) $1 that we must receive back $1.28 each time we win (on average) to break even. Therefore, to have a profit we must have an average win in excess of $1.28

Say we wanted to make a return (profit) of 5%:

Our total risk is two buys (bets) for $1 each, a total of $2.
$2 * .05 = $0.10
The formula then is:
(.47 * (1.1 / .47 -1)) - (.53 * 1)
(.47 * 1.34) - .53
.63 - .53 = .10 profit expectation

Now I must reiterate a point made in my earlier post. There are only two factors to be considered in determining profitability on the risk taken:

1. Win a greater percentage of the time than you lose, or
2, Win a greater amount of money each time you win with a lower winning percentage than losing.

We have just seen a working illustration of the lower winning percentage. To see the greater winning percentage:

(.55 * 1) - (.45 * 1)
.55 - .45 = .10 profit expectation

In both illustrated instances, each person has the exact same .10 profit expectation. Now let's look at the real key for success.

The key is the number of results (decisions) that are made during a defined time period relative to the profit expectation. The vast majority of traders place undue emphasis on being right. Just like Pavlo's dog, we have been conditioned to get a 95% test score to receive an A. Whereas, less than a 70% is failing. To be right is good and to be wrong is bad. But that is a fallacy in trading - Profit expectation relative to the number of decisions in a time period is the true measure for traders.

Would you rather be (excluding time available, etc, etc):

(A) 100% right in choosing the instrument, entry and exit, doubling your $1,000 risked with one trade per month, or

(B) would you rather be right only 48% time, yielding $174 on a $,1000 risk with 40 trades per month?

A. (1 * $1,000) - (0 * 0) = $1,000
B. (.48 * $1,174) - (.52 * $1,000) = $564 - $520 = $45 * 40 = $1,800
"Technicians never die - they just chart away"
Trade like a Lemming but don't jump off the cliff like the others

casinoman
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Sorry for mistake

Postby casinoman » Sun Sep 02, 2007 10:52 pm

I apologize to all for the same post multiple times. I kept getting an error page which indicated to me that the post was not made. So I kept adjusting the post and resubmitted. To my horror (and I'm sure yours also) they were actually posted. DUHHHH
"Technicians never die - they just chart away"

Trade like a Lemming but don't jump off the cliff like the others

dgbones
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Postby dgbones » Mon Sep 03, 2007 2:25 pm

Casinoman asks (in my opinion) the correct questions.

The absolute two most difficult things for me as a retail trader are/where:

1) The necessity to be right. Once in a trade I'd fall in love and sacrifice to keep the affair going. I'd have rather shoved a sharp pencil through my hand that take even a little loss.

2) The amazing capacity to kill my winners while they where yet babies.

I would watch losers grow because I knew that I was right and the market was wrong and as soon as I was up a thousand bucks on a trade I'd exit not because of any method or discipline but because it seemed as though I did not want to make too much money too fast...that idea was reserved for the losing trades that I was in love with.

Now, about 65% of the trades are winners and the losers die before they get big enough to hurt me.

I moved my timeframe out to what for me seems like centuries and I make way fewer trades. 14 or 15 trades since June 1....9 winners and 4 losers.

It is very difficult to resist taking each set up but I force myself to enter only the trades that "have legs". In the period: $3097 average winning trade and $700 average loser.

I am reluctant to "advise" anybody directly about their method or their discipline. But I do want to ask the question. If you are willing to take 10 pips, where do you kill the losers and in that method how many winning trades or what win:lose ratio do you need to maintain to be achieving your trading goals. I, personally, was never and still am not master enough to make that work....I know guys do it, but they have different and better skills than I do.

juangecko
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Postby juangecko » Fri Sep 07, 2007 3:25 pm

dgbones, I feel the same way as you. What do you mean by have legs?

I have looked at the main idea of the strategy.
This is what i understood (if not please correct me)

Buy if current candle is green and price is above the top of the previous candle
Sell if current candle is red and price is below the top of the previous candle
Use for example NY forex hours for daily canddles.
Look for 10 pips profit...Stops?? that is something very subjective..but i would try with 10 pips..less than that would be very near entry price (it depends the pair and voli at he moment)

At a first glane it looks nice but Ithink the problem with it is the drawdown you can get. Also the strategy has to have above 70% win rate to be someting worthfull.
I am not saying this strategy is not good , I am only saying that is not as easy as eating a cake
Any comments?

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dgbones
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Postby dgbones » Fri Sep 07, 2007 3:50 pm

Hello Juan,

I want you to understand that I was not commenting on this or on any specific strategy, rather on trading methodology in general.

By "legs" I mean trades that look like they might continue to move in my favor for a long (relative) period of time.

For example, since I have abandoned what I would call a true trading time frame (arbitrage) for something that is more like short term investing, I am taking first profit at 89 or 144 pips (equivalent) from entry. I am looking for, say, 89 pips, 144 pips, and then either 233 pips or a breakdown in original entry premise to signal the close of the remaining trade. I do NOT trade forex because IMHO, you get ripped on the spread and there are no order handling rules that give or protect your rights as a market participant.

I trade currency futures on the CME and I want everyone to take a look at the differences between that and forex.

So what I mean by legs is a trade (using forex equivalent) where I would take off one lot at 89 pips one at 144 pips and the last one when a reversal looks eminent or the profit is 233 pips. $890 plus $1440 plus $2330 is a gross profit of $4660 versus what has been described as a 10 pip trade on a three lot or $300. $4660 HAS LEGS!!

My stop loss is extreemly well defined and I would rather poke out an eye than suspend my stop loss rules...this way a bad loser on a three lot might be $750 to $1250. So you can look at that and determine for yourself what my expectation might be. I think I posted trade results and while the winners are not all $4,000 the bad loser was $1080 and I think the ratio was about 4:1.

I hope that this response addresses what you where asking.

Trade Well! DB

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TheRumpledOne
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Postby TheRumpledOne » Sun Sep 09, 2007 7:05 pm

DB:

Sounds like you are trading the Vegas tunnel.. Is that correct?
IT'S NOT WHAT YOU TRADE, IT'S HOW YOU TRADE IT!

Please do NOT PM me with trading or coding questions, post them in a thread.

dgbones
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Postby dgbones » Sun Sep 09, 2007 8:14 pm

Not sure how to answer that other than yes.

Yes the methodology described above is very similar...I'd say 60% exactly the same premises as the tunnel method put forward by Vegas. I owe him tremendous credit for validating and providing some "missing links" to a strategy that I had been working on for quite a while. I imagine you recognize the fib exits, those are all Vegas.

Credit and great gratitude to you too Avery for providing the additional framework needed to go from pretty good to really good. Because of your work with EL I was able to "visualize" my indicators in a way that has been one of the best discoveries of my carear ...this led to some great methodology development.

I use a Tom DeMark indicator called TD MA2 to create something like Vegas "tunnel". I use EL learned from reading your doc's to plot a color change that grows each time the "planets start lining up". I got there by using your slot machine...that representation gave me the visual display that I needed to "get it" then I plot the information back to a chart.....mostly because that is how I learned way back, to watch for entry.

The final three pieces needed to generate a trade signal are:

1. The TD MA2 displays a color change.
2. The price has closed through the TD MA2 indicator.
3. A trade filter (the same as Vegas from the 1 hr. tunnel) except that I use an 8 period or a 5 period depending on the degree of color change from #1, closes through the TD MA2 indicator.

The broader indicators (top of the funnel) are similar but generally I'm looking from longer timeframe to shorter timeframe.

I am not sure if you wanted me to describe with that detail or not....or if you want me to post more detail. But YES, I have had great success trading a method very similar and significantly based on Vegas' Tunnel Method and TRO programing/EL genius.

Much respect and gratitude to both of you. DB

BP
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Postby BP » Mon Sep 10, 2007 4:28 am

DG,

I would be interested in hearing more on your strategy above and how you use your indicators. Maybe you could start another thread? Also, do you know if those same indicators are programmed for MT4?

Thanks,

BP

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TheRumpledOne
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Postby TheRumpledOne » Wed Sep 12, 2007 10:56 pm

dgbones

Please post a screenshot or 2.

thanks
IT'S NOT WHAT YOU TRADE, IT'S HOW YOU TRADE IT!



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