LeMercenaire wrote: ia1979 wrote:
Hi Lem, hope this finds you well. I have been reading your material here and on FF. It would be an understatement to say you know what you are talking about. I have learnt a lot from you, from TRO and from Too Slow. Thanks for that. I am also based in the UK and thinking about starting to trade SP500 and Dax. You appear to be making 5% a day which is insane so congratulations on that. I am starting out with a capital of around £50k and 5% a day would be out of this world but seems a bit ambitious for me. Also, I would be nervous about putting 50k into a trading account (large moves, spikes, black swan etc scare me). I might leave 30k in my bank account and start trading with only 20k (but trading lot sizes as if I have 50k in my trading account). Is that advisable or not?
I also like the simple trading methods of Buy Zone, and the way you and Wanna started this thread (trading the WZ of the midday candle UK time). Having read the thread, it has evolved a bit. The 500 flip has come into play as well as S+D zones etc. In your experience, do you think Buy Zone and WZ would still work on the SP500 and Dax?
I also like the idea of hedging and have done it in the past (without much success). I always found myself unwinding a short hedge for example (expecting price to move back up) but it just went lower and lower and lower lol. Having read your material, I think I have a better grasp of it now. Must try in demo first though. Say you bought SP500 and price moved to the opposite direction and passed a short trigger, you then put on a short trade as well. Wait for it to decide on its next move. If it goes lower and hits support, close the short in profit and open up another long there. That way price doesn't have to retrace all the way to your original long and you can close the longs at breakeven before that. Is that pretty much the hedging idea? Thanks a lot for your time and sorry for this essay
Hi Bud and welcome to The Other Galaxy
Glad to have been of some help along the way and it's no worries at all about asking questions, I am happy to answer anything I can help with - however, as your post contains a number of different queries and as we are heading into the weekend, I will take my time and spread out the answers over the next few days and possibly into next week, if that's ok. That way I can give as detailed an answer to each question as you need.
It's all good
What I would say to get us started, is that if you are in the UK, I would set up a spread-betting account with your broker, rather than a ''normal'' FX acc.
Right, back on board again - though it's been so slow today, I had to wait till mid arvo to nab my cash off a very sloth-like DAX-Monster. Such is life.
Anyway. A few of the points (mostly concerning the cash-value of your account) have already been touched upon and valid points have been made. I won't go back over them.
I will add my take from my own perspective and you can add that to the mix and make your mind up.
With a £50G bank (not account), then you are giving yourself a significant edge. This does not mean that I would be putting all of that into a trading account. I can only speak as to the way I trade and how I run my set-up.
I do have a base figure of +5% per day. However, this is just a number. There will be days I bag +1% and days it can be ten times that. All from the same set-up, my morning DAX trade. So long as I end the day green, I am happy.
That gives me a cushion and I can then either go on to trade my other overlapping methods through the day in some combination or other. Today, for instance, there was no trigger for my a.m. trade, so I waited till I found a good scalping ground and took two scalp trades there, one too early and one faded into that. Both came good and I got my percents. I could just as easily have walked away completely once I saw how flat the day was looking.
I will aim for +5% on every trade set-up, so if I run my morning Monster, then The Dead Zone, then a 1-2-3 and / or HOLO (or two), then a handful of scalps, then you can see that this all mounts up real quick. I don't usually recalculate my percentages per set-up. I am generally a lazy s**t but I have done so in the past. It is a useful way to supercharge your account if you do it that way.
This now brings us to my specific niche, the counter trade. If you are planning on counter trading, you must leave enough ''spare'' to cover the extra trades that may be needed. Two ways to do this:
1: Have a set amount in the account and then ''split'' it. So for instance have a £5,000 total but run it as if the account is £1,000 size. This means you maintain a better margin in the eyes of the broker as well. Can be useful in all sorts of ways I shouldn't have to go into here. With this, your +5% is +£50 per day.
2: Have your trading account but coupled with a ''fund'' that can top up your account margin should you need it and is used for nothing else. This is easy to do with us spread-betting account holders. Once your trades play out, you withdraw the ''emergency'' addition.
I've used both ways. Use whichever one suits best. Just make sure you can cover the possible counters when you need them.
I run a base £10,000 account, aim for the +5% and withdraw profits through the month, either every week, or every two weeks or every month...whatever. I then return the account to the £10,000 level. The larger amount means I am running #2 easily. If I am looking to fund something specific, then I may leave it in and compound away for the whole month. I kinda' just wing it.
I run a couple of main accounts (sometimes three) and also a couple of smaller ones where I can run through ideas and concepts.
If you have that £50,000 then I'd suggest running it as a £10,000 account with the rest as your floating ''bank''. (Though of course none of this should be taken as financial advice in any way, shape, or form. This is just expanding on my own way of doing things).
As for the other parts of your query, yes, BZ and WZ work perfectly on the 500 and DAX. The only issue you will have is that running BZ as I do, off the day's open (00:00), then (a) spreads will increase and (b) your broker may not even have his DAX desk open at that time of day - which is a pain, as the move you get is often off the first candle or so. Do your homework.
I don't get to The Flip much now, it's just such a weird time to be at the screens. Now, it's just a case of remembering the tendency if you are at the screens but I don't actively look for the set-up now.
There is one point you raise - the psychology of a losing trade - that brings up something interesting that may help. As a pro athlete, first as a placekicker and then a sport-climber, then the idea of losing, was not part of my vocabulary. The whole concept is banished from your mind. You will
make every kick...you will
red-point every route. Failure is not an option.
In trading, I had to learn to subvert this mind-set, as it is an impossibility. This was the one major hurdle I had to overcome. Not the fear
of losing but the actuality.You will lose trades.
So, sure, I used mental techniques and training to get over this in my trading...and managed it. You have to embrace The Zen of Losing in order to progress. It was always a kind of abstract concept, however.
Then last year sometime, my friend Billy over in The Other Place, made a comment that brought all the abstract into solid form...he announced that he goes into every trade expecting to lose. Expecting...to...lose.
Roll that around in your mind for a minute or two. It sounds idiotic and so counter-intuitive but honestly, he nailed it dead centre.
Try it. Write off the trade as you go in. Once you verbalise that, put it out into the universe, it is incredibly freeing. A great weight is lifted off your shoulders. I am sure there is a psychological paper somewhere that covers it all very well! I just know it works.
Anyway. There ya' go. Bet you're sorry you asked now, lol.
Your last paragraph with the example of countering, is pretty much on the money. You really need to run it on demo for as long as it takes to get the technique locked down. It's not something you want to be learning on the job. It must become instinctive, running it without having to think about what happens next if this or that happens.
One final, final,
thing. I would caution against treating the DAX and the 500 as one and the same animal. This is far from the case. The 500 is much more manageable and user-friendly in its movements. The DAX, my Monster, is...well...bonkers.
Good luck in your journey. We'll all be here to help if and when we can.