2009.06.24 WHY 95% OF TRADERS LOSE PART III

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TheRumpledOne
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2009.06.24 WHY 95% OF TRADERS LOSE PART III

Postby TheRumpledOne » Thu Jun 25, 2009 12:20 am

2009.06.24 WHY 95% OF TRADERS LOSE PART III

Image

They lose because everything they do doesn't work in the long run.

Do you think you can buy a system that makes money over the long term? If such a system existed then there would be no market because the system you bought would own everything - it would only be a matter of time and scale. Besides, the owner of the system wouldn't sell it because they would want to own everything.

Do you think looking at charts and indicators really help? You do realize that you can not make money on historical candles, right? Only the current and future candles can pay out. And you do realize that NO ONE can predict the future, right?

What can you do?

Let's see, you can determine when you enter a trade and what direction. And you do realize the reason you enter a trade has NO EFFECT on the outcome of the trade, right?

You can predetermine how much you are will to lose (risk) per trade. RISK = STOP LOSS * POSITION SIZE.

That's all you can do.

The only way we can expect to win the trading game is to have a method that gives us a positive expectancy and to execute that method flawlessly.

WHAT IF...

You only entered trades in one direction, kept your losses to 2% or less of your account and let the winners run?

Let's say you only enter LONG and you are trading the GBPUSD. We know from statistics the average hourly range usually exceeds 30 pips. Over the last 8000 bars the average is 47 pips.

When the hour opens we enter the trade if the price hit open + 5 pips. (Yes, the Buy Zone!). We only enter ONCE per hour.

Possible outcomes:

* the price never hits open + 5, we do not enter.

* the price hits open + 5, reverses and we stop out.

* the price runs close to or above average and we make a profit.

How many times does price take off like a rocket from the open and never drop more than a pip or 2?

Let's apply some "common sense".

We start with $1000 and only risk 2% or $20 per trade. If we trade 2 minilots, that would be a stop loss of 8 pips ( counting 2 for spread or commission ) for a total loss of $20.

If we make 22 pips on a trade, that would be $44 ($40 net) for a 4% return. Do you realize what $1000 becomes if you compound it at 4% a day?

You do realize that OVER TRADING is one of the mistakes most traders make, right? How many trades PER DAY do you need?

DO YOU SEE IT?

2009.04.04 WHY 95% OF TRADERS LOSE

http://kreslik.com/forums/viewtopic.php?t=1722


2009.05.16 WHY 95% OF TRADERS FAIL - PART II

http://www.kreslik.com/forums/viewtopic.php?t=1815
Last edited by TheRumpledOne on Sat Dec 19, 2009 5:18 pm, edited 1 time in total.
IT'S NOT WHAT YOU TRADE, IT'S HOW YOU TRADE IT!

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Open your eyes!

Postby kc8flq » Thu Jun 25, 2009 1:14 am

Talk about draining the banks!!! :shock:
The yellow brick road lays directly ahead of you with what TRO just showed us. Open your eyes if you can't see it :D .
Give a man a fish.... feed him for a day...
Teach a man to fish.... feed him for a LIFETIME!!!

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Postby aVi » Thu Jun 25, 2009 1:56 am

Dammit... I can't see...

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Wake up Mr. Green...

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Postby johnsund » Thu Jun 25, 2009 2:15 pm

This is very interesting, and I really like your perspective for many reasons. If you were going to establish a trading method to capitalize on the concepts you present, what indicators would you use? Would you create a template for this please?

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Postby jgadefelth » Thu Jun 25, 2009 3:06 pm

Master tro can you make an indicator that drags a line or something at 5 pips below or above the ope price ?

best regards

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Postby koolbreeze » Thu Jun 25, 2009 3:30 pm

Johnsund, I believe the trading method you found very interesting already exists. Indicators and template are readily available. I Think TRO is speaking of the BuyZone trading method. Correct me if I'm wrong TRO.

jgadefelth, The buy zone indicator already does what you are suggesting if I understand you correctly.

Maybe I'm wrong but what I SEE is the buyZone is all that is needed.

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Postby MightyOne » Thu Jun 25, 2009 6:26 pm

"They lose because everything they do doesn't work in the long run" -TRO

So they lose because they do not know how to respond to change?

Everything works and everything doesn't :lol:

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Postby lukx » Thu Jun 25, 2009 9:30 pm

TRO can you please write the names of indicators from the image? I got so many from you that it's hard to find :)

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Postby TheRumpledOne » Thu Jun 25, 2009 10:12 pm

jgadefelth wrote:Master tro can you make an indicator that drags a line or something at 5 pips below or above the ope price ?

best regards


I did that years ago.. it's called the BUY ZONE.
IT'S NOT WHAT YOU TRADE, IT'S HOW YOU TRADE IT!



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TheRumpledOne
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Postby TheRumpledOne » Thu Jun 25, 2009 10:14 pm

lukx wrote:TRO can you please write the names of indicators from the image? I got so many from you that it's hard to find :)


TRO_RANGE_GAUGE

TRO2009_WICK_HISTOGRAM.

You don't need those indicators.
IT'S NOT WHAT YOU TRADE, IT'S HOW YOU TRADE IT!



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