Space Wars

free & uncensored discussion arena for TheRumpledOne

Moderator: moderators

ZsApprentice
rank: <50 posts
rank: <50 posts
Posts: 30
Joined: Thu Nov 18, 2010 6:16 pm
Reputation: 0
Gender: None specified
Contact:

Postby ZsApprentice » Mon Jan 03, 2011 5:52 am

It looks like to me, a way to manage your position so that you can maintain your initial risk position throughout "the day" I guess.. so that if you initially risked 2%, then you create a box that defines that for your account, and then based upon how your trades shake out during the session, this method helps you maintain your 2% max risk..

Or something like that.. heck, what do I know.. heck pt 2 and nobody even asked.. :-)

Please add www.kreslik.com to your ad blocker white list.
Thank you for your support.

User avatar
MightyOne
rank: 5000+ posts
rank: 5000+ posts
Posts: 5247
Joined: Wed Dec 10, 2008 6:33 pm
Reputation: 46
Gender: Male

Postby MightyOne » Mon Jan 03, 2011 7:22 am

ZsApprentice wrote:It looks like to me, a way to manage your position so that you can maintain your initial risk position throughout "the day" I guess.. so that if you initially risked 2%, then you create a box that defines that for your account, and then based upon how your trades shake out during the session, this method helps you maintain your 2% max risk..

Or something like that.. heck, what do I know.. heck pt 2 and nobody even asked.. :-)


Yes, no matter how large the box grows the most your account can drop is x% according to the original box size.

Should your box shrink and you have to expand it by shedding a few lots then the larger size still represents a total loss of your original risk%.

An easy way to see this is by imagining making $10 on the way up and then losing $5 on the way down:

10/5 = 2, and that means that price has to fall twice as far as it has risen.

What if you lost $4 on the way down? 10/4 = 2.5, so price has to fall 250% further than it has risen:

$10 * 100 = $1,000
$4 * 250 = $1,000
(10/4) * 100 = 250.
(CurrentSize/SizeAfterAdjustment) * Space = NewSpace.

All that I am doing here is taking the seed money and focusing on its survivability by shedding lots for more space. From there I exchange excessive space for more lots and expand as needed.

I try to move from the hourly to the weekly and beyond using the original risk%.

In this way I can go the entire year without losing if losing is defined as a loss of x%.

Should the space become unmanageable (only option is to reduce to one lot and space is extremely limited) then I will start over with another box (risk%) on the hourly.

The real risk is in losing more than you intended to; your position is not a stop, you need to size properly for volatility and get out when the position is weakened as apposed to being obliterated like a SL.

Even 5 pips moving past your position at max leverage would be a sickening loss and it could go 30 or more if you do not size properly.

Keep this in mind when you are considering how much space to exchange or add.

User avatar
bacoazul
rank: 150+ posts
rank: 150+ posts
Posts: 259
Joined: Wed Sep 30, 2009 12:31 pm
Reputation: 0
Gender: Male

Postby bacoazul » Tue Jan 04, 2011 12:31 am

I was backtesting what i understand and i'm
impressed, i made 10% in a month in EU, i
know +10% is not impressive but my first
and only risk was 0.45%, and i was very
conservative in my trades.
I'm backtesting a lot, but just on 1 month
periods so i can do it slowly, lets see how
can i implement on real trading

BTW i found an application to manual
buy and sell on the default strategy
tester of MT4, so if anyone wants it
just let me know

Tx again MO
These are my principles. If you don't like them, I have others.

User avatar
poipen
rank: 50+ posts
rank: 50+ posts
Posts: 116
Joined: Wed Mar 10, 2010 4:29 am
Reputation: 0
Location: WA
Gender: Male
Contact:

Postby poipen » Tue Jan 04, 2011 10:54 am

bacoazul wrote:I was backtesting what i understand and i'm
impressed, i made 10% in a month in EU, i
know +10% is not impressive but my first
and only risk was 0.45%, and i was very
conservative in my trades.
I'm backtesting a lot, but just on 1 month
periods so i can do it slowly, lets see how
can i implement on real trading

BTW i found an application to manual
buy and sell on the default strategy
tester of MT4, so if anyone wants it
just let me know

Tx again MO


I would love to know what application you're speaking of!
Wise Men Know Their Limits, Great Men Have No Limits.

User avatar
bacoazul
rank: 150+ posts
rank: 150+ posts
Posts: 259
Joined: Wed Sep 30, 2009 12:31 pm
Reputation: 0
Gender: Male

Postby bacoazul » Tue Jan 04, 2011 11:26 am

poipen wrote:
bacoazul wrote:I was backtesting what i understand and i'm
impressed, i made 10% in a month in EU, i
know +10% is not impressive but my first
and only risk was 0.45%, and i was very
conservative in my trades.
I'm backtesting a lot, but just on 1 month
periods so i can do it slowly, lets see how
can i implement on real trading

BTW i found an application to manual
buy and sell on the default strategy
tester of MT4, so if anyone wants it
just let me know

Tx again MO


I would love to know what application you're speaking of!


sure, the .mq4 goes on expert folder, the .exe you can put
werever you want, you open the strategy tester, choose
BackTestTrader_Ron_v01c, then execute the .exe and browse
to were you have your mt4 /tester/files, then you run the
tester and buy/sell with the .exe.

hmm looks like i can't upload .exe so i let you the link to the
page
http://www.forexmt4.com/BacktestTrader/
Attachments
BackTestTrader_Ron_v01c.mq4
(11.98 KiB) Downloaded 128 times
These are my principles. If you don't like them, I have others.

Please add www.kreslik.com to your ad blocker white list.
Thank you for your support.

User avatar
PebbleTrader
rank: 1000+ posts
rank: 1000+ posts
Posts: 1632
Joined: Fri Nov 12, 2010 2:15 am
Reputation: 0
Gender: Male

Postby PebbleTrader » Tue Jan 04, 2011 4:38 pm

Now lets assume that you enter with 3 lots and exit for a 10 pip loss.

In MO notation I would write it 3/0:

Since 3/0 = 0, there is no adjustment to the size of your box and thus no space was managed.

3/2 would multiply your remaining pips (if any) by 1.5.
3/1 would multiply your remaining pips by 3.

If you exited for -6 you would have 4 pips left:

(3/2) * 4 = 6 pips
(3/1) * 4 = 12 pips


Hi MO.

I'm excited about Space Wars!

How do you determine what to use in the denominator? 3/0, 3/2, 3/1? Why 0, 2, 1 in the denominator?
Life is just a journey

User avatar
MightyOne
rank: 5000+ posts
rank: 5000+ posts
Posts: 5247
Joined: Wed Dec 10, 2008 6:33 pm
Reputation: 46
Gender: Male

Postby MightyOne » Tue Jan 04, 2011 8:23 pm

PebbleTrader wrote:
Now lets assume that you enter with 3 lots and exit for a 10 pip loss.

In MO notation I would write it 3/0:

Since 3/0 = 0, there is no adjustment to the size of your box and thus no space was managed.

3/2 would multiply your remaining pips (if any) by 1.5.
3/1 would multiply your remaining pips by 3.

If you exited for -6 you would have 4 pips left:

(3/2) * 4 = 6 pips
(3/1) * 4 = 12 pips


Hi MO.

I'm excited about Space Wars!

How do you determine what to use in the denominator? 3/0, 3/2, 3/1? Why 0, 2, 1 in the denominator?


If you have 3 lots then the only adjustments that you can make, for expansions, are: reduce to 2, reduce to 1, and liquidate.

How much space do you need? Maybe your default risk level is 7 lots over 45 pips but for this chart and period you need 60 pips of space to start.

(45/60) * 7 = 5 lots

(7/5) * 45 = 63 pips.

So if the denominator is a smaller number then you are expanding the space to be managed by reducing your lot size.

Setting Retracements:

5/7 is a 71.4% Retracement from the price at which the adjustment was made. All this means is that your position in the market was set on a 71.4% retracement or your position moved higher by 28.6%.

Example:

We have 63 pips of space to manage and 5 lots.

We decide that a 100% RET is just too much space and that we could live with a position on the 71.4% ret from the current price.

(5/7) * 63 = 45pips, our position in the market is now 45 pips from the current price (we increased from 5 to 7 lots and reduced our space by 28.6%)

What is a 100% retracement?

The Pincushion is the space between your purchase price and your position in the market.

Your position in the market is at your maximum loss.

Your position is always the 100% RET.

It is NOT a stop! When our leverage gets sky high we are going to want a lot of this thing we called space between that double edged sword and ourselves and that is why we have IF/THEN lines.

If our position weakens we get out and build up our defenses by exchanging lots for space.

The more lots we have the more expansion options to choose from:

3/2, 3/1

4/3, 4/2, 4/1

5/4, 5/3, 5/2, 5/1

6/5, 6/4, 6/3, 6/2, 6/1

As the numbers get smaller so do your options, but that is the price of more space.

You might find your self doing something like this:

6/4 for more space, price holds and stands poised to cancel out some momo, 4/7 setting a 57 Ret, there is a quick burst, 7/5 adding 40% space, or maybe 7/0/5 = liquidate and return later with 5 lots and 40% more space.

User avatar
PebbleTrader
rank: 1000+ posts
rank: 1000+ posts
Posts: 1632
Joined: Fri Nov 12, 2010 2:15 am
Reputation: 0
Gender: Male

Postby PebbleTrader » Wed Jan 05, 2011 2:09 am

Thank you MO, your explanations are a TREMENDOUS help.
Life is just a journey

User avatar
PebbleTrader
rank: 1000+ posts
rank: 1000+ posts
Posts: 1632
Joined: Fri Nov 12, 2010 2:15 am
Reputation: 0
Gender: Male

Postby PebbleTrader » Wed Jan 05, 2011 2:12 am

Image
Life is just a journey

User avatar
PebbleTrader
rank: 1000+ posts
rank: 1000+ posts
Posts: 1632
Joined: Fri Nov 12, 2010 2:15 am
Reputation: 0
Gender: Male

Postby PebbleTrader » Wed Jan 05, 2011 2:23 am

The only concept that is still a little "muddy" (unclear) is the "pincushion" concept.

You defined it as:

"The space between your purchase price and your position in the market"

When I look at the previous post chart (23 Nov 2010) with your example "4 Pip Pincushion", it doesn't seem to match that definition?

The box for the "4 Pip Pincushion" isn't drawn around the PURCHASE PRICE.

Is that what you describe as the LOS (Line on Sand)?
Life is just a journey

Please add www.kreslik.com to your ad blocker white list.
Thank you for your support.


Return to “TheRumpledOne”