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I noticed a couple of recent articles here about spreads, and it apears to me that tight spread may be critical to trading these methods. If we're aiming for 10 pips (and sometimes bailing earlier), can we really afford to use a dealer or an instrument that's going to cost us 3 to 5 pips round trip, plus a pip for the signal? I guess that limits us to Spot, a very few pairs to trade, and a very few brokers.
Interactive Broker's spread on EURUSD is commonly 0.5 pip plus 0.2 pip commission, so a round trip with a decent fill would cost 1.4 pips. As I write (12.30 GMT), Dukascopy is offering 0.6 pip spread on EURUSD plus 0.18 pip commission on $25-$250K accounts - round trip 1.56 pips. Anyone know what other brokers match or better these spreads?
Just a thought about adaptive position sizing as recommended in FPAS - if you use NinjaTrader, there's an expensive ($995) third party plug-in available called Trade Manager that replaces NinjaTrader's Chart Trader, and among a lot of other stuff, it automatically sets your trade size based on account size, preferred max % risk you set, and the stop loss size you set for the current trade. I'm thinking of getting this - has anyone tried it?
This plug-in may be good but it's almost as expensive as Ninja. Does not make sense. If you want a cheaper version ($99) check this solution: High Tech Trading Analysis, LLC | Trade Plan
Thanks Trendisyourfriend - that looks like a useful indicator to work out trade size etc. in relation to risk at a very reasonable price. I might still buy the Trade Manager I mentioned, because it not only works out the size you want to trade based on your chosen risk profile, but it also sets up all the orders ready to send with one click, just by clicking the entry etc. prices you want on the chart. It also has many other features (like 9 different trail stop methods with previews) which result in what looks like a very useful improvement on NinjaTrader's already excellent Chart Trader. It is expensive, and I'm surprised I can't find anything cheaper that does the same stuff - anyone seen anything like that?
volman's book may have a lot of solid trading methods. however, i think trading the forex is quite dangerous. if he can apply his method to CL, TF, NQ or ZB those futures markets are more volatile and offer more opportunities.
herewith my tradelog. i trade cup breaks. i will load up a few tradeshots latter to see how volman's method can help me stay out of trouble or better time my entries and judge risk. i was trading for 1hr fro arud EST 14h52. i am 5 hours ahead of EST. i will load up the trades a little latter. basically, my interest is to find out whther using volman's method i can avoid some trades. i am not looking at his entries as such, but better understanding of risks.
From 13:44 to 13:48 price could have done two things - it could have broken out of the 20 pip trading range, or it could have respected the trading range boundary and retraced back to the other end of the range.
I only had to wait to find out. The later scenario played out and I shorted the IRB at 1.3769 at the 20EMA.
The next thing I had to do was wait till my 10-tick target was reached or till I could place a valid tipping point which would have taken me out.
The first scenario happened and the 10-tick target was reached instantaneously.
The second short I have marked was similarly easy to have gauged but note that I did not take it (Tilt Label: UP_ON_THE_DAY_SCARED_OF_GIVING_BACK)
For a great comparison of the trade with the Master take a look at a similar trade Bob has documented in Fig 12.1 page 180 of the book.
