2009.06.24 WHY 95% OF TRADERS LOSE PART III

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Chrisl
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Postby Chrisl » Tue Jul 28, 2009 1:22 pm

Hi Tro
I can understand and respect that.. : )
,but please answer me on the spread issue with a simple 'yes' or 'no'.....
Can you set up the navigator so that you can completly avoid the spread?
yes or no ?
'You only see what you have learned to see,everything else is invisible'
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TheRumpledOne
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Postby TheRumpledOne » Tue Jul 28, 2009 4:13 pm

What do you mean avoid the spread?

The spread changes as new bids and offers come to market.

You are not paying the spread, so it doesn't matter.
IT'S NOT WHAT YOU TRADE, IT'S HOW YOU TRADE IT!

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Re: 2009.06.24 WHY 95% OF TRADERS LOSE PART III

Postby razorboy » Tue Jul 28, 2009 4:51 pm

most people lose because they have no clue about the probabilities behind their edge. I dare say most dont even know what their edge is.

the one thing missing from this is how and when to take profit - yes, you can go broke taking a profit.

It has taken me about 6 months or so for this to really hit home.

TheRumpledOne wrote: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?
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Postby TheRumpledOne » Tue Jul 28, 2009 7:41 pm

How and when to take profit?

You take it when you can!

You can set your TP at a desirable risk/reward ratio and let the market decide if you win or lose.

You can decide how much you lose. The market decides how much you can win.
IT'S NOT WHAT YOU TRADE, IT'S HOW YOU TRADE IT!



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Postby razorboy » Tue Jul 28, 2009 7:45 pm

Respectfully, I have to disagree - you need to have a plan for taking profit - just like you need a plan for everything else
Ya, I manufacture clear shoe boxes.....http://www.clear-shoe-boxes.com.............who would have thunk!



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Postby TheRumpledOne » Tue Jul 28, 2009 10:12 pm

But the market doesn't care about your plans or my plans.
IT'S NOT WHAT YOU TRADE, IT'S HOW YOU TRADE IT!



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Postby razorboy » Tue Jul 28, 2009 10:52 pm

not an issue of caring. But from a mathematical point of view, you have to hold your winners to make up for your losers. I've worked my way up to an 80% win rate and still struggled to break even. I've found more profit in a system that produces 40 to 60% wins at a 1:4 risk reward ratio.

Bottom line is that you need to know your numbers and that includes how far you need to ride your winners for
Ya, I manufacture clear shoe boxes.....http://www.clear-shoe-boxes.com.............who would have thunk!



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Postby TheRumpledOne » Wed Jul 29, 2009 1:29 pm

Perhaps your SL is too big.
IT'S NOT WHAT YOU TRADE, IT'S HOW YOU TRADE IT!



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Postby razorboy » Wed Jul 29, 2009 1:46 pm

TRO

check your email.........sent you a present - maybe you have it already - it pretty basic

Has nothing to do with SL.......the SL i use now is the same as I was using before
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Chrisl
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Spread bandits

Postby Chrisl » Thu Jul 30, 2009 12:10 pm

TheRumpledOne wrote:What do you mean avoid the spread?

The spread changes as new bids and offers come to market.

You are not paying the spread, so it doesn't matter.


"I trade with MB Trading Direct Access Brokerage Firm

MBT is an ECN. THERE IS NO FIXED SPREAD IN FOREX.

You can google and find out what I really think about "FIXED SPREAD BANDITS".

I'll leave it at that so I don't get banned.

[glow=red]How do I avoid the spread?[/glow]

I explained this to someone yesterday in an IM.

That is what I mean by how to avoid to spread...
you yourself said it....All I wanna know is if I only need to work through the commision then all I need to do is go for maybe 2 pips TP and a 2 pip SL and as far as sweetspots lines go always win...?????

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