The HOLY grail involves..
Posted: Thu Dec 27, 2012 12:37 am
I've posted here a long time ago about my success in a thread under the title "IT HAS HIT ME LIKE A TON OF BRICKS."
I'm back to update everybody in my progress since I've been absent.
Since then, I've developed an automated system that is profitable and trading with Dukascopy JForex and Oanda API. My returns are significant and I'm trading in excess of $100,000 in live capital. Started with $10,000 when I first came here. I can comfortably say that my lifestyle has changed drastically for the good.
I hope to encourage others on here that your research will pay off and don't give up or fall into the belief that it is impossible. I've been there before. It IS possible. You may at times feel like your efforts might be insanity but they are not. Others around you may even think that you are crazy. But you're not. You have belief for a reason and trust me, it is a good reason that will pay off more than you will ever expect. That is your SACRIFICE. When you have figured it out, you will return to the world like roaring thunder. Rewards like this are NOT meant to come easy, that is why you can't give up. Remember, you are trying to essentially build a money-making machine, do you think that is meant to be easy? The winners (and they do exist) have all been through this process, consider it as part of your initiation, paying your dues to join the club and understanding how to respect the journey and yourself after you start winning, because your efforts will remind you always that it wasn't luck, but your hard-work and strategy.
In my observations, these are the following things you should consider when trading.
- You can not predict direction. Any strategy that relies on predictive techniques will fail. Time-frames mean nothing for prediction and there is no such thing as trend. The only true thing that exists in a time-frame is the range of oscillation that remains relatively constant over the long-run. The range and where price is located in range will only give you information on how to adjust take-profits, trailing stops accordingly and how to vary the frequency of your trading. Stop-losses should NEVER be used (keep reading..)
- Good systems can trade LONG when the market is bear. And trade SHORT when the market is BULL. (Of course here, I'm making the foolish assumption that a trend exists.) Good systems don't rely on direction. They rely on profit-taking and cutting losses (after profit has been taken).
- Try to look at your trading from a holistic point of view. Don't monitor individual trades - but instead - monitor your whole portfolio as a whole. Combine your losers with your winners and look at the NET result. Cut losses on a whole, take profits on a whole. Think Macro not Micro. Be a General not a Soldier.
- Money Management and Risk Management is EVERYTHING. Knowing how to take profit and taking loss is important. However, don't use stop-losses for this! There are OTHER ways. Stop-loss is a sure way to LOSE. Losing properly should never be a static/fixed loss, i.e. same size every time, but instead should be of a dynamic size. Profit or Loss on EACH trade should NEVER be of fixed size. However, profit/loss on the WHOLE account COULD be of fixed size.
- Trade frequently. Infrequent trading strategies will never give you a large enough sample to determine it's effectiveness over the long-term. Good strategies are not afraid of the market. Consistency in a frequent strategy holds more weight than consistency in an infrequent strategy.
- Stop-Loss is NOT required and should not be used. Instead you should use other forms of loss calculation to close out losing trades - this should be automated. Stop-Loss should only be used as a simulated margin-call for benchmarking/testing to develop strategies that reduce draw-down. Stop-loss is not your friend. The truth of the market is that it oscillates it doesn't trend. Over infinite time, it behaves like a Sine-Wave, not a positive or negative line. The market WILL go back up (or back down), the question is not IF but WHEN and whether you can LAST. It HAS to otherwise one country will go bankrupt (their currency going to ZERO). The problem for most traders is, their inappropriate trade size disables them from riding out the storm long enough because their account goes into massive draw-down. To combat draw-down, the easiest way is to control trade-size. True risk is in trade-size not trade-size with stop-loss.
I believe stop-losses were deliberately invented by market-makers as a way to make people think it helps reduce risk, when really it was a stealth "take-profit" mechanism for them. I also believe the winning traders also deceptively promote the stop-loss because they know that when a trade is lost, it is WON somewhere else (i.e. one of them).
Just try to imagine a market where NOBODY used a stop-loss or closed their trades. What would happen to its' behaviour? Which way would it move? Or would it even move at all? The market moves because of people losing (or allowing themselves to lose), therby creating winners. The losers create the winners. The winners don't create the losers, hence the market moves.
- When learning, your entire account is your stop-loss. Your only stop-loss should be a margin-call. What this means is, the amount you are willing to lose should be the entire account and trade according to that. Not any % risk per trade. So if you're only willing to risk 2% per trade on 10,000. Then your account should actually be $200 and trade smaller accordingly. When you've disciplined your trading to handle the smaller balance and trade sizes, then PRETEND your account is $200 (in a $10,000 account) and trade the same way as if it was $200, now with the benefit of larger margin. Learn to defend your account, not a single trade. People that lose often trade much larger than their account can handle. 2% per trade is HUGE and they do this because they want larger gains. What they don't realize is small gains add up. Small gains more frequently, versus large gains infrequently work differently on your psychology. Psychologically, small gains more frequently is better for your psyche, because the feeling of progress, accomplishment and consistency is achieved.
- Trading in today's world should be AUTOMATED. I don't believe that most manual traders will be successful over the long-term. We get tired and with that often make mistakes thereby destroying the consistency. Automation will relieve you from temptation. Only inflated egos think they can compete in a world against computers doing the same thing.
- I understand that people will disagree about the stop-loss concept. But they don't understand that if you learn how to control your overall draw-down first and develop strategies where trades have a long longevity, then a stop-loss means nothing and mean-reversion will work in your favour (oscillation).
In other words, try to be a long-term investor that scalps.
I'm back to update everybody in my progress since I've been absent.
Since then, I've developed an automated system that is profitable and trading with Dukascopy JForex and Oanda API. My returns are significant and I'm trading in excess of $100,000 in live capital. Started with $10,000 when I first came here. I can comfortably say that my lifestyle has changed drastically for the good.
I hope to encourage others on here that your research will pay off and don't give up or fall into the belief that it is impossible. I've been there before. It IS possible. You may at times feel like your efforts might be insanity but they are not. Others around you may even think that you are crazy. But you're not. You have belief for a reason and trust me, it is a good reason that will pay off more than you will ever expect. That is your SACRIFICE. When you have figured it out, you will return to the world like roaring thunder. Rewards like this are NOT meant to come easy, that is why you can't give up. Remember, you are trying to essentially build a money-making machine, do you think that is meant to be easy? The winners (and they do exist) have all been through this process, consider it as part of your initiation, paying your dues to join the club and understanding how to respect the journey and yourself after you start winning, because your efforts will remind you always that it wasn't luck, but your hard-work and strategy.
In my observations, these are the following things you should consider when trading.
- You can not predict direction. Any strategy that relies on predictive techniques will fail. Time-frames mean nothing for prediction and there is no such thing as trend. The only true thing that exists in a time-frame is the range of oscillation that remains relatively constant over the long-run. The range and where price is located in range will only give you information on how to adjust take-profits, trailing stops accordingly and how to vary the frequency of your trading. Stop-losses should NEVER be used (keep reading..)
- Good systems can trade LONG when the market is bear. And trade SHORT when the market is BULL. (Of course here, I'm making the foolish assumption that a trend exists.) Good systems don't rely on direction. They rely on profit-taking and cutting losses (after profit has been taken).
- Try to look at your trading from a holistic point of view. Don't monitor individual trades - but instead - monitor your whole portfolio as a whole. Combine your losers with your winners and look at the NET result. Cut losses on a whole, take profits on a whole. Think Macro not Micro. Be a General not a Soldier.
- Money Management and Risk Management is EVERYTHING. Knowing how to take profit and taking loss is important. However, don't use stop-losses for this! There are OTHER ways. Stop-loss is a sure way to LOSE. Losing properly should never be a static/fixed loss, i.e. same size every time, but instead should be of a dynamic size. Profit or Loss on EACH trade should NEVER be of fixed size. However, profit/loss on the WHOLE account COULD be of fixed size.
- Trade frequently. Infrequent trading strategies will never give you a large enough sample to determine it's effectiveness over the long-term. Good strategies are not afraid of the market. Consistency in a frequent strategy holds more weight than consistency in an infrequent strategy.
- Stop-Loss is NOT required and should not be used. Instead you should use other forms of loss calculation to close out losing trades - this should be automated. Stop-Loss should only be used as a simulated margin-call for benchmarking/testing to develop strategies that reduce draw-down. Stop-loss is not your friend. The truth of the market is that it oscillates it doesn't trend. Over infinite time, it behaves like a Sine-Wave, not a positive or negative line. The market WILL go back up (or back down), the question is not IF but WHEN and whether you can LAST. It HAS to otherwise one country will go bankrupt (their currency going to ZERO). The problem for most traders is, their inappropriate trade size disables them from riding out the storm long enough because their account goes into massive draw-down. To combat draw-down, the easiest way is to control trade-size. True risk is in trade-size not trade-size with stop-loss.
I believe stop-losses were deliberately invented by market-makers as a way to make people think it helps reduce risk, when really it was a stealth "take-profit" mechanism for them. I also believe the winning traders also deceptively promote the stop-loss because they know that when a trade is lost, it is WON somewhere else (i.e. one of them).
Just try to imagine a market where NOBODY used a stop-loss or closed their trades. What would happen to its' behaviour? Which way would it move? Or would it even move at all? The market moves because of people losing (or allowing themselves to lose), therby creating winners. The losers create the winners. The winners don't create the losers, hence the market moves.
- When learning, your entire account is your stop-loss. Your only stop-loss should be a margin-call. What this means is, the amount you are willing to lose should be the entire account and trade according to that. Not any % risk per trade. So if you're only willing to risk 2% per trade on 10,000. Then your account should actually be $200 and trade smaller accordingly. When you've disciplined your trading to handle the smaller balance and trade sizes, then PRETEND your account is $200 (in a $10,000 account) and trade the same way as if it was $200, now with the benefit of larger margin. Learn to defend your account, not a single trade. People that lose often trade much larger than their account can handle. 2% per trade is HUGE and they do this because they want larger gains. What they don't realize is small gains add up. Small gains more frequently, versus large gains infrequently work differently on your psychology. Psychologically, small gains more frequently is better for your psyche, because the feeling of progress, accomplishment and consistency is achieved.
- Trading in today's world should be AUTOMATED. I don't believe that most manual traders will be successful over the long-term. We get tired and with that often make mistakes thereby destroying the consistency. Automation will relieve you from temptation. Only inflated egos think they can compete in a world against computers doing the same thing.
- I understand that people will disagree about the stop-loss concept. But they don't understand that if you learn how to control your overall draw-down first and develop strategies where trades have a long longevity, then a stop-loss means nothing and mean-reversion will work in your favour (oscillation).
In other words, try to be a long-term investor that scalps.