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Mike's price action video journal.


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Mike's price action video journal.

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  #21 (permalink)
Oakley Kalifornia
 
 
Posts: 98 since Sep 2012
Thanks: 75 given, 103 received

8-9-2013

8-9-2013 Forex Journal - YouTube


Yeah if I did not take money off on this trade I would have made more than 3 times my initial risk. Maybe I am taking unnecessary risk by taking money off once it goes my way. I can see why that could be a mistake. And for me its a mental crutch.

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  #22 (permalink)
Oakley Kalifornia
 
 
Posts: 98 since Sep 2012
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I looked back at my prior trades and found that if I did not scale out of half my position early I would have in fact made more money and risked less. This week I will not scale out initially. I will mostly look to swing my positions and adjust targets as I get more information. I will be looking to get at least 2-4R most of the time but if the position does not look valid anymore I will scalp out.

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  #23 (permalink)
Oakley Kalifornia
 
 
Posts: 98 since Sep 2012
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8-12 and 8-13-2013

8-12 and 8-13-2013 Forex Trading Journal - YouTube

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  #24 (permalink)
Liverpool, UK
 
Experience: Intermediate
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Posts: 68 since May 2013
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SteveH View Post
Have you read Bob Volman's book on price action trading? Might be beneficial since he talks about the advantage Forex traders have in getting larger as the account grows.

You are trading two systems at the same time within one account where they just happen to have the same entry point. The first one has no win/loss ratio advantage so its success is highly dependent upon the winning pct. If you can get this system to a 1:1 ratio (W:L) with 70% winners or a 0.80 ratio with 80% winners, you are much better off using the advantages of Forex sizing to grow your account and forget about the second system (what you do after the first half off).

The winning pct and win/loss ratio are an inverse relationship. You either make the sacrifice of having many small losses to get to the bigger winners (i.e., lower winning pct, higher W/L ratio) or have larger losses per losing trade relative to the size of the winners but the winning frequency overcomes them (i.e., higher winning pct, lower W/L ratio). People who use the 1/2 off approach are attempting to become successful with TWO TRADING SYSTEMS (1st system is the latter, 2nd system is the former). What happens in the majority of cases (in my 10 years of full-time futures trading experience) is that the beginning to intermediate trader is blissfully unaware of these mathematical certitudes so what happens is that one of the systems is actually a losing system. The mind doesn't want to accept this until it's too late.

The moral of the trading story is to be really, really good at trading one system, not two, because at least you don't put yourself at a mathematical disadvantage right from the start. That is, willing to risk your greatest amount in a trade at the beginning when you can be 100% wrong (and have to take a full loss on two systems) but then becoming less sure of your future success (by taking money risk off) when the trade is working in your favor makes very little mathematical or common sense. It only makes sense to your emotions because one of the two systems worked out and the 2nd system feels like it's a "free ride". It's not. I never thought of this as an advanced concept but, given the amount of people who refuse to believe this, apparently, it is.

The simple advice summary is to go all-in / all-out for a trade. Your brain will pick up WAY before you come anywhere near blowing out your account that something is not right with your entry / exit techniques and you have time to rethink.

I don't post much and I don't do the PM thing. But I do know why most people fail at trading, given they've got the basic commitment to not "freak out" with what they're trying to do in the first place. The above is #1 on the list. I have met absolute human robot types in trading with unmatched discipline. But THIS is why even they can't make it.

Volman is a very sharp cookie. At least accept his opinion and you will be well on your way.

Good luck.

Added note:

It's fine to have different setups which offer different long-term stats and go all-in / all-out with each one. What I said above is that you do not want to have the same entry for multiple systems. Go with one setup at a time. Your brain likes that.

[Volman is a super lucid read as compared to Brooks.]

I don't see how the 2nd system is mathematically wrong if you move the stop to break even after the first system hits its target?

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  #25 (permalink)
Oakley Kalifornia
 
 
Posts: 98 since Sep 2012
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I have been struggling with this for a while now. Basically if you move your stop to break even after the first target is hit you will reduce the probability of the running contract. The market loves to come back and take it out.

Lets say you are trading two contracts. You take a trade and you set your first target at 1xR and the other at 3xR. The Market takes your first target out and you move your stop to BE. The market then comes back to BE.

Your total reward is cut in half and your total risk is the same. So you make 50 dollars but risk 100. The swing contract will have a low probability. So the losses will kill you. That's why I stopped moving to break even.

At least this is my experience. If you can be right 80% of the time then you will be in the green no mater what.

On a side note.... I am talking about scaling 50/50 here. I think it would be different trading 10 contracts and swinging 2 at BE like Mack.

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  #26 (permalink)
Liverpool, UK
 
Experience: Intermediate
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Posts: 68 since May 2013
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Well there is no mathematical proof of this, is there? Your conclusion is based on the losses of break even compared to the winners of the second target (which you can always move in both directions).


Let me put it in different way, if you move your stop for the second target to break even plus 1R

What could you loose? Nothing, nothing at all if the market didn't come back and continue.
What could you win? You will win as far the market goes in your direction.

So in your 2 contract example, instead of moving the stop to break even, you can move it to break even plus the first target.

Of course the market will hit the stop for the second target but it's for sure not 100%. Meaning you will get % winners when you move the stop to break even plus first target.


My point you can always control the second target, so it doesn't have to be break even, and it doesn't have to risk 2:1

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  #27 (permalink)
Oakley Kalifornia
 
 
Posts: 98 since Sep 2012
Thanks: 75 given, 103 received

I'm sure there are plenty of traders who can scale out quick and move the stop to BE. Don't get me wrong, I am not absolute and am just trying to figure out what works best for me.

I don't know about you or other traders, I am wrong a lot and a lot of those losers don't even go my way at all. Therefor if the majority of my winning trades go 1xR but come back and hit BE and the majority of my losers lose right away with both contracts, then the math is wrong. Most of my losers lose right away without the 1st target being hit. Its all about the larger initial risk. The backbone of my trading is catching swings and taking 1 off at 1R did not really help me it just made my initial risk a lot more. I consider myself more of a intraday swing trader than a scalper so taking greater initial risk on a trade does not make sense to me anymore.

I am wide open for any suggestions or opinions. My opinions could very well be 100% wrong so I am open to anything.

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  #28 (permalink)
Oakley Kalifornia
 
 
Posts: 98 since Sep 2012
Thanks: 75 given, 103 received

8-15-2013

8-15-2013 Forex Trading Journal - YouTube

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  #29 (permalink)
Oakley Kalifornia
 
 
Posts: 98 since Sep 2012
Thanks: 75 given, 103 received

8-16 and 19-2013


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  #30 (permalink)
danville ca usa
 
 
Posts: 51 since Mar 2012
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saiga View Post
I'm sure there are plenty of traders who can scale out quick and move the stop to BE. Don't get me wrong, I am not absolute and am just trying to figure out what works best for me.

I don't know about you or other traders, I am wrong a lot and a lot of those losers don't even go my way at all. Therefor if the majority of my winning trades go 1xR but come back and hit BE and the majority of my losers lose right away with both contracts, then the math is wrong. Most of my losers lose right away without the 1st target being hit. Its all about the larger initial risk. The backbone of my trading is catching swings and taking 1 off at 1R did not really help me it just made my initial risk a lot more. I consider myself more of a intraday swing trader than a scalper so taking greater initial risk on a trade does not make sense to me anymore.

I am wide open for any suggestions or opinions. My opinions could very well be 100% wrong so I am open to anything.

Saiga....

it takes a lot of chart time to improve your entries and develop your trade management and exits. Each trader is different and it takes time to finally be confident in your trading process.

I used to trade using 2 targets, but I finally ended up doing something like what ghl123 was describing. I trade futures indexes and futures currencies and use 2-4 contracts depending on the trading symbol. After entry, a stoploss and initial profit target is set. After price moves in the direction of the trade, stops and profit targets are moved up, at intervals, as profits increase depending on how price action behaves. That way the moving stop can protect profit in case price reverses and the profit target catches strong trending trades. This is something that is very difficult to do manually.

I see that you also use tradestation.... how do you like it.


cheers

toucan

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