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Tight Stops can give false comfort
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Tight Stops can give false comfort

  #61 (permalink)
Urban Samurai
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Lot of ABSOLUTES spoken in this thread.

Must be only one way to make money in the market.

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  #62 (permalink)
Fortitudo et Honor
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iTrade2golf View Post
This is an example of why there is more than one way to play this game, monpere knows his strengths and weaknesses, this a good example of knowing what works for Y-O-U. I think I remember you posting your chart a few posts back and I immediately thought as Lornz did about letting your profits run more.

Cheers Monpere for doing it the way that works best for you and I wish you many years of profitability, and many should learn from this post and learn themselves before they worry about learning the market or systems, I keep preaching this, hummm maybe there is something to that, I wonder!!!!!

Your point is taken, but at the same time, it's a bit like using Tiger Woods at the top of his game to illustrate to someone who's never seen golf before how easy it can be.

What works for Monpere, most likely will not work for a LOT of traders....just like I outlined. He even admitted that his system is heavily weighted on entry proficiency. Timing entries, finding tops and finding bottoms is a game that few people master. Even fewer master it consistently and even less over the long run.

Absolutes in trading are foolish....but telling someone the lottery is a solid investment just because one or two people got rich from it or telling someone he can marry a super model, just look at Tom Brady, is equally as foolish.

"A dumb man never learns. A smart man learns from his own failure and success. But a wise man learns from the failure and success of others."
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  #63 (permalink)
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RM99 View Post
Your point is taken, but at the same time, it's a bit like using Tiger Woods at the top of his game to illustrate to someone who's never seen golf before how easy it can be.

What works for Monpere, most likely will not work for a LOT of traders....just like I outlined. He even admitted that his system is heavily weighted on entry proficiency. Timing entries, finding tops and finding bottoms is a game that few people master. Even fewer master it consistently and even less over the long run.

Absolutes in trading are foolish....but telling someone the lottery is a solid investment just because one or two people got rich from it or telling someone he can marry a super model, just look at Tom Brady, is equally as foolish.

You are saying the exact opposite of what I was saying, I said to learn about YOURSELF and design a system that works for you around YOUR strengths and weaknesses, I was using monpere's as an example because in his post he explains why his system is designed as it is because of some of his weaknesses, and he plays around them. In no words in my post did I tell someone to trade like monpere, in deed, quite the opposite if you read the post again I think you will agree, if not then we will have to agree to disagree, sir

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  #64 (permalink)
Fortitudo et Honor
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iTrade2golf View Post
You are saying the exact opposite of what I was saying, I said to learn about YOURSELF and design a system that works for you around YOUR strengths and weaknesses, I was using monpere's as an example because in his post he explains why his system is designed as it is because of some of his weaknesses, and he plays around them. In no words in my post did I tell someone to trade like monpere, in deed, quite the opposite if you read the post again I think you will agree, if not then we will have to agree to disagree, sir

My point is that using monpere as a positive example is dangerous, because I think he's the exception, not the norm.

There's a fine line between telling a child "you can be ANYTHING you want to be" and having him spend his whole life trying to be a rap star or a professional athlete, not realizing that it's like 1:50,000 that make it as such....

And the opposite of telling them "you're a dreamer, it's useless, give it up."

There are no absolutes. And you are correct, that people should trade within their own capabilities, characteristics, etc....

The point of this entire thread was to give GENERAL guidance that Monpere's approach is not successful for a great many who try. It's very difficult to duplicate what he does. I certainly cannot do it (and no, that's not my basis for saying others can't.) I'm basing my assessment off the successful traders I do know and have had a chance to learn from.

Picking tops and bottoms in not an easy task. And if you can't pick tops and bottoms, then having a 4 tick stop on CL will most likely murder most traders. The only other option is identifying STRONG and unanimous trends/breakouts, which again, is difficult to do.

Liquids original post and intent was to provide some wisdom and guidance to people who might think that pulling their stops in close is a safety blanket and reassurance....when in fact, most of the time, it's not, it simply means you'll lose more often and your drawdowns will be increased.

There are very few absolutes in trading, but I find that taking an exception and proclaiming that it's possible or likely to anyone is just as foolish as saying "it must be done this way."

"A dumb man never learns. A smart man learns from his own failure and success. But a wise man learns from the failure and success of others."
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  #65 (permalink)
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RM99 View Post
My point is that using monpere as a positive example is dangerous, because I think he's the exception, not the norm.

There's a fine line between telling a child "you can be ANYTHING you want to be" and having him spend his whole life trying to be a rap star or a professional athlete, not realizing that it's like 1:50,000 that make it as such....

And the opposite of telling them "you're a dreamer, it's useless, give it up."

There are no absolutes. And you are correct, that people should trade within their own capabilities, characteristics, etc....

The point of this entire thread was to give GENERAL guidance that Monpere's approach is not successful for a great many who try. It's very difficult to duplicate what he does. I certainly cannot do it (and no, that's not my basis for saying others can't.) I'm basing my assessment off the successful traders I do know and have had a chance to learn from.

Picking tops and bottoms in not an easy task. And if you can't pick tops and bottoms, then having a 4 tick stop on CL will most likely murder most traders. The only other option is identifying STRONG and unanimous trends/breakouts, which again, is difficult to do.

Liquids original post and intent was to provide some wisdom and guidance to people who might think that pulling their stops in close is a safety blanket and reassurance....when in fact, most of the time, it's not, it simply means you'll lose more often and your drawdowns will be increased.

There are very few absolutes in trading, but I find that taking an exception and proclaiming that it's possible or likely to anyone is just as foolish as saying "it must be done this way."


The main point is, I think stops should be based on a market principle. In my case my stops are behind a swing high or low, but since my entries are very close to that swing high or low, then I can afford a small stop. But if your entry point is 12 ticks inside that swing, then your stop has to be at least 12 ticks, you should not arbitrarily choose 4 ticks.

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  #66 (permalink)
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RM99 View Post
My point is that using monpere as a positive example is dangerous, because I think he's the exception, not the norm.

There are no absolutes. And you are correct, that people should trade within their own capabilities, characteristics, etc....

There are very few absolutes in trading, but I find that taking an exception and proclaiming that it's possible or likely to anyone is just as foolish as saying "it must be done this way."

monpere is a great example because he has a system that works for him. There is no exception in this case, I used him because in his posts he is success because he has designed a system that works for him.

You have injected so many thoughts into my post that I never mentioned or implied. I never mentioned absolutes or anyone can be a trader if you do it a certain way. I never said anyone can trade with a 4 tick stop and so on and so forth.

On the contrary I am merely giving people a place to start that few have heard, and that is from within themselves. I am not here to pick and choose who can and can't trade, I am here to give some advice and those who UNDERSTAND what I am saying may find something for themselves.

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  #67 (permalink)
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trendisyourfriend View Post
To add to what i already expressed. A Forex trader once explained to me his money management. He was using the well known Martingale using no more than three steps . In other words, he would double his position up to three times if he were to lose a trade. He calculated his position size for an average risk of 25 or 35 pips i don't remember exactly. The result of this calculus represented around 2% of his entire capital. At that time he was using Oanda as a broker to be able to use fractional lot size.

So all he needed to do is to divide his calculated position size into seven parts and trade the first attempt with one part, the second attempt with two parts and the final and third attempt with four parts. So three attempts to win and never risking more than 2% of his capital. Psychologically this money management tactic is seducing even with a poor winning %. You may not become rich fast but to blow your account using this scheme would certainly be an out of ordinary event.

This kind of system is not a true martingale system since there is a cap on how many times you double down. I agree with you that this kind of system is not guaranteed to blow up your account, as is a true martingale system that keeps doubling down over and over.

In my experience however it is hard to make money consistently with this kind of "scaled in" approach because a lot of your winners will be with 1 or 3 lots, while all of the losses will be with 7 lots. It depends of course on how many ticks those winners run on average, but this kind of skew that results in heavier size on losers than on winners will become a handicap over time. It's not impossible to make money this way but not easy.

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  #68 (permalink)
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worldwary View Post
This kind of system is not a true martingale system since there is a cap on how many times you double down. I agree with you that this kind of system is not guaranteed to blow up your account, as is a true martingale system that keeps doubling down over and over.

In my experience however it is hard to make money consistently with this kind of "scaled in" approach because a lot of your winners will be with 1 or 3 lots, while all of the losses will be with 7 lots. It depends of course on how many ticks those winners run on average, but this kind of skew that results in heavier size on losers than on winners will become a handicap over time. It's not impossible to make money this way but not easy.

In the 'Systematic Trading with MultiCharts' futures.io (formerly BMT) webinar yesterday, the main trader from M3 Financial hedge fund summarized that this is exactly how he trades. He trades multi million dollar accounts, building large positions of 10's of thousands of contracts by continually adding to positions as the markets goes against him until he gets to his intended maximum position size. He says he has 140% returns. This style of trading can work when you have those kinds of resources.

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  #69 (permalink)
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monpere View Post
In the 'Systematic Trading with MultiCharts' futures.io (formerly BMT) webinar yesterday, the main trader from M3 Financial hedge fund summarized that this is exactly how he trades. He trades multi million dollar accounts, building large positions of 10's of thousands of contracts by continually adding to positions as the markets goes against him until he gets to his intended maximum position size. He says he has 140% returns. This style of trading can work when you have those kinds of resources.

If you have hundreds of million to trade, then yes, you must scale in like this. You must protect the stop that will turn the tide.

For us small fishes, we must use a hard stop, usually tight.

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  #70 (permalink)
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It is not comparable to retail traders. Institutions have to scale in... And they decide the direction first and then enter in fractions...

This is not the same as someone intraday trading off a just a chart, increasing his bet as the market proves him wrong....

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