GBPUSD short positions
Replies to This Discussion
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Permalink Reply by Peter jcp on -
Yes Rachel - its less complicated - and also less efficient - but fine if you dont mind larger stops combined to larger targets and less trades and less percentage returns per week or month.
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Permalink Reply by Rachel Downs on -
Hmmm, can you be more specific? How is it less efficient? Isn't trying to analyze indicators less efficient because they are just showing price action in a different form? I don't see how trying to find trading signals from the combination of 2 or 3 or more indicators is more efficient than just watching for price action setups? I don't understand why you assume a trader's returns will be worse each month with price action trading? I think you would need some hard evidence to back up that claim.
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Permalink Reply by Lisa on -
Hi Rachel,
I trade (candlesticks alone) what some claim is pure price with no indicators, but in reality candle charts are indicators / indication of price movement. All indicators are derived from price over time e.g. the open, high, the low and the close. When you start averaging that information, for instance, with moving averages they tell you something about past price movement. The problem that I think many traders, newer traders have is that they latch onto a particular indicator to help them make a decision on future price movement from how price has behaved in the past. Like driving forward by looking through the rear view mirror. I’m not saying that indicators, like moving averages, aren’t helpful; they are quick and fast trend filters etc. that can quickly give a trader information about how a security has been trading. But because they are averaging past price they come short in catching a trend reversals, for instance, because obviously they are calculated using past price data. I’m probably stating the obvious to most. I disagree that using naked charts is less efficient. All technical trading requires that the trader learn how to interpret what they choose to use on there price charts. The more tools one uses, the more information that individual must learn to interpret. Many traders in the past used simply / only the actual numbers without a chart. To me that’s genuine naked trading. I used to use more indicators, but over time I realized they really didn’t do anything for me. I didn’t need a moving average because I could see on my own if price was trending upwards, downwards or sideways without it. Eventually, because my site was honed onto what the price patterns through the candles was doing, I felt the moving averages were a distraction and removed them from my charts. I do not mind the zig zag lightly drawn over the candles, because I can use it to help me quickly determine the trend(s) and SUPPLY / DEMAND zones from the past and it doesn’t distract me from the price patterns I’m learning, memorizing, evaluating to decide future, likely, price movement. It comes down to personal preference. I feel the myriad of available indictors takes me further away from current price; they distract me rather than help me. I likened it to my painting. As a painter, I could purchase just about any color of oil paint know-to-man, ... but I don’t have to. I can still paint with the primary colors and I prefer to do that because I would rather mix my own colors and get exactly what I want. I also prefer to mix my own colors because it actually makes me feel closer to the painting, closer to my work. I hope that makes some sense (?) Is there anything wrong with buying pre-mixed paints ? Not at all, but for me (personal prerogative again) I’d rather not. My advice is always, whatever tools a trader decides to use, it will take a long time to master that tool / indicator. No one wakes up one morning knowing how to do anything without trial, error and determination to get better. As far as risk, each trader can risk as much or as little as they want in the market ~ there’s no rule ~ lol “whatever you like” I approach trading, in that, when I choose a positions / a swing trade I want to be able to hold onto as much of the move as possible. I do not like to get in and get out. I don’t like wrestling with the spreads and not getting exact fills. I don’t like paying a-lot in commissions. I don’t like getting whipsawed out of a trending move because my STOP was too close (it makes me crazy) In order to hold onto a trending move and because of the nature of the market, I’ve learned I need to give a trade more breathing room which equates to some traders as having large STOPs = more risk. I feel tighter STOPs introduce more risk because I have to be spot-on with my entry without any allowance for volatility. That equates more risk and stress, to me. However, I’m also able to go to sleep, leave my trading platform for several hours and I don’t feel stress and yet I understand that that would cause some traders to *fret*. Not to be trite, but each trader has to approach the market in a personal way. Even if several people played the same song or attempted to copy the same painting, each one would be different and that’s okay , we don’t all have to trade exactly the same way to be profitable. Our family routines, the hours we’re viewing the FX market, our individual requirement for sleep etc. ~ there is so many factors that are beyond our control that we personally have to integrate into our trading, not to mention how our individual minds work. Some can hear a news event and say, “okay that means that traders will SELL the EUR and BUY the USD” okay ~ frankly, that is completely beyond my grasp ! Anyhow, to make my long story short, it really doesn’t matter what another trader is doing or what they think about your busy or bare naked charts, the only thing that matters is if we can interpret the tools we chose to study and use that interpretation to make us profitable over our trading career or as Mark Douglas say, “over a series of trades”. I know this won’t end the, “my indicator is better than yours debate” but maybe … I don’t know (?) Good Fortune all y*all
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Permalink Reply by Rachel Downs on
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Wow, very good post Lisa! I read the whole thing. I tend to agree with most everything you said. Thanks!
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Permalink Reply by Peter jcp on
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Hi Rachel - I have nothing against the idea of naked charts and just using price action - but from my own experience can prove it is less efficient. I need to explain in more detail which i will do - but I would probably need a few pages to do my findings justice. I certainly dont regard myself as a Forex or Trading expert but cannot understand why other so called experts have not wanted to discuss this matter in more detail.
First - my own backgound - I have been currency trading just over 7 years with the last 3 years being full time. My previous background included an Economics degree and Accountancy training which lead me to a successful business career before semi retiring and entering the world of Forex. It took me over 3 years to realise there is so much rubbish talked about this market place and also so many untruths - so lets discuss some facts.
There is no one "holy grail" as you know - but ideally any trader would prefer to be 90% accurate rather than just 60% accurate? I appreciate some traders will say that does not matter as i can make money just getting 40 out of 100 trades correct because my Risk to Reward ratio is over 1 :5 etc. Well yet again would it not be better to be say 80% correct and still have R R trades of over 1;5?
If you say yes to these first two questions - it shows you want efficiency in your trading. If you disagree and say no - I am not bothered than carry on trading naked on a 4 hr or daily chart
See Price alone is not enough - we need to know were the price will be in say 30 mins or even 2 hrs or dare I say in 3 days - which as you probably know is more difficult to predict. So to predict we need leading indicators - but for very high probability it is no good having major support 50 or 100 pips away from were price is. Many use candle patterns etc - but alone they are still not enough. Trendlines assist but are still not enough. The visual eye and the brain needs help - although i will say if you are a really experienced trader with over 10 years and 10's of thousands of trades - you will be fairly efficient trading naked - but for any trader with less than say 2000 trades and under 5 years-- naked is not helping you.
As of today I trade all ways from monthly charts down to tick charts. I do have the odd naked chart to view but to get down to 5-10 pip stops and trades with R R's of 1.5+ i need more help. From my own experience i trade between 3 to 10 trades a day. Over 15 trades a day i am less efficient - but doing say just 1 or 2 trades a day is yet again less efficient - pip total are irrelevant - R R and high probability is the key - so you can compound and grow your account quicker with lower drawdown.
For me starting the day and being prepared to use 2% of my capital on trading - i would prefer to have a trade with a 10 pip stop make 30 pips in under 30 minutes - than a trade with a target of 120 pips needing a 50 pip stop. The first trade is efficient - because the result is know in a short term and i can make more trades etc . The second trade might take 2- 8 hrs to complete - inefficient with also a worse RR of less than 1 :3. But to have small stops and high probability trades in short time space - you cannot use naked 4 hr charts - and even on naked 1hr charts its difficult. OK say naked 5 and 15 mins with really good experience you will be OK. Its ok for fund managers and investors to use these charts - as they view 50--200 pips as "noise" - but yet again they only achieve 20-50% annual returns. Top intraday traders want that per month. Also if you are trading with larger lots sizes of over 100 per pip - your method of trading might be more restricted- but normally in retail online you can get an entry in a few seconds or certainly under a minute
I do use other factors off the charts to assist my entry and exits - the most important one being time. I achieved a trade on October 31st in the pound making a R R of 1 :15 in under 40 minutes using a 7 pip stop. Unless you are extremely experienced it would be very difficult for a naked trader to use less than a 15 pip stop and so they would not want to use the same stake -as their risk would be higher.
I will admit i have not read many articles discussing these points - many traders think if i am making money and doing ok - why change anything?. Instead due to my accountancy backgound ( forget the economics - a waste ot time for intraday technical trading ) i am looking at ways to improve my returns and my performance- and also to make trading more fun and easy. Some days i can achieve my normal daily target in 2 trades within a hour - and then stop. But I dont because i am still learning and wanting to improve. Hope this as explained more - and any more questions etc - please dont hesitate to reply - have a good month
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Permalink Reply by Rachel Downs on
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OK, I still don't agree with a lot of what you said, good luck winning 80 or 90% of your trades...
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Permalink Reply by Peter jcp on
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Hi Rachel - yes HNY and have a profitable trading year. My own win ratios lie between a poor 68% and a good 78% based on thousands of live trades last 3 yrs etc. I have never been able to get to 80-90% ratio - unless you count just taking a small sample - say less than 20 trades - but on a bigger sample of over 100 trades I think it would be very difficult to achieve over 80% on intraday trading.
I believe there are some traders who go years with no losses because thy make a smaller of number of trades - with no stops or hedging and then only exit with a profit - whether it takes a day or 2 months. Not for me as you lot size as to be very low and so not efficient.
Also i dont know whether you might be aware - but even with a win ratio of over 70% its still possible to have 7-10 consecutive trades go wrong in a period - and with ony a 50 % win ratio you may get up to 20 trades go wrong in a row over a large period or number. Thats why MM etc is so important and RR ratios to keep you in the game and make good ROI 's - all the best Peter
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Permalink Reply by Rachel Downs on
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I agree that RR ratios are key, I just don't know anyone who wins 80% of their trades. I have always been told that most traders who are very successful typically only win around 50% of the time.
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Permalink Reply by Lisa on
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According to a top trader, interviewed by Jack Schwager, ...
that runs a hedge fund, his best traders only win about 63% of the time.
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Permalink Reply by Peter jcp on
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http://learncurrencytrading.com/Micro/KOM/KOMAugust2010/CASS082010.pdf
Hi Rachel - Heres an example of a real true "retail" trader who knows what he is doing. He would not dare to try and do this every month ( ie over 1000% per month) and have over 85% success rate on well over 120 trades with low drawdowns - but there again he is a "trader" not a hedge fund investor who are happy with 25-50% per annum.
PS- Lisa - I reckon you even believe Politicians never deceive or lie ( lol)
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Permalink Reply by Lisa on
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In the spirit of not believing everything you hear / see ...
FXCM Sales Sales (?) and on a micro account *wink*
Traders always see the bait and never the hook.
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Permalink Reply by Peter jcp on
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LOL - do you know who the trader was Lisa ?? - I do - yes it was in a competition and yes it had to be on a micro account with approx $1000 and deadline in a month.
The facts are no hedge fund guys could employ these type of traders because they do not fit their criteria, This was not rigged and i can even show you further proof of another trader ( not me) who on a live account did over 150 trades in a month and had over 84% accuracy - and no loss was more than 2% draw down - and the techniques he used you would not read about in any manuel or from any gurus. PS - not a robot - a manual trader
Keep getting hooked by all your old guru guys : -) lol.
PS - am I a myth ???
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