Comment by Peter jcp on September 15, 2012 at 8:59pm

Hi Lisa and Sir Gissa - OK Lisa - lets do a bit of work on this and see what we can accomplish from our findings.

So far in less than 2 weeks you have averaged over 40 pips per day from one pair - which is very good and like you say is off one trade ( not much work needed) and that's not counting the other pairs you are in - OK 

My first conclusion would be the last 2 weeks have not been - a normal 2 weeks in trading cycles - based on 52 weeks in a year and probably traders only trading say 45-50 weeks of them.

That is due to 2 large announcements which had a fairly dramatic effect on the currency market place with over 600+ pips rises.

I chose the EU at random - but with it being the most popular pair for most traders - but I think we should do it on say 5 or 7 other pairs - including the GJ which should give you better results.

The EU proved over 17 years and average long term position/ trend trade will average just approximately 5 pips per day .

Before undertaking work on any other pairs - I reckon they might all average just between 2 and 8 pips a day ?- the GJ might be a lot more - I don't know?

I have not added up how much I have taken on scalp sells in the last 2 weeks on the EU but I am sure it would be over 150+ pips and probably under 250 pips. I have certainly achieved more on buys assisted by Francesc's Bank forecasts and following hourly bias which as been more bullish

Sir Gissa's excellent 15 min chart does have many pointers on it not visible to the normal trader's eye - but once you understand  its values - its a blueprint for movements both ways

Has any book - video - course ever mentioned that data over 10 yrs will only show trend trade average movements of only approximately 5 pips per day ?

I am sure if you choose your trend trade period correctly whether a few days / weeks or just a month - you can then average over 20 pips a day - which is far better than just leaving on ad infinitum

PS - Lisa please don't mention I am the first again ;-)))

Regards 

Peter

Comment by Peter jcp on September 15, 2012 at 9:23pm

Forgot to mention Lisa - something very important and where I differ with many other views. If you look as the 17 years of the EU - 3 trend periods - notice how easy the first 5 yr down trend was and similar with the 8 yr up trend.

However since 2008 - the market as changed and now this last 4 year down phrase as been constantly altered by all the algo's - HFT's and newer methods being adopted to make trend trading more difficult 

Jessie never had to face what we are facing today -the advancements in technology and the currency market now nearly 4 times larger in last 10 yrs as meant - "new game" - ;-0

What do they say in Tennis -

New game - new balls please 

Comment by Kkavya on September 15, 2012 at 10:03pm

Thats why they say test water before diving.....'great words Goldie... waiting for more of secret scrolls :P....kk out//////

Comment by Kkavya on September 15, 2012 at 10:07pm

Goldie: you are too lazy in accepting requests...Open the mosgate :P....Imagine your broker taking such time in accepting your trade requests....

Comment by Peter jcp on September 15, 2012 at 11:30pm

Hi Guys - those words from G are so true and wise KK. Lisa as you mention - the daily trend is so relevant - or is it ?

Looking at your daily chart with your "rainbow" ( pretty lol) - we have had 6 days of daily up candles - after breaking free out of its "gate" Now its gone up over 600 pips from your entry - it could easily drop 150 to 300 pips and be still in the up trend  ( ie still above a 50% fib or main support).

If you are happy to live with 150 -300 pip falls - then that's fine stay with what you see as the main direction.

Remember we have had many serious experienced traders who have been caught out when it carried on breaking up above 2800 and 3000. The market as a great "knack" of setting wrong sentiment and deceiving all including the very best traders at times - so imagine another scenario - traders expect pullbacks - but just say this next one drops 250 pips in a day - are you prepared to live with that?

Similarly - the traders who are looking at the 4 yr trend will say - no it will go back down below 2500 and 2000 during the next 1 to 6 months. They might be right - but they might be wrong - and they could end up like the guys who I have mentioned before - who are still in buys from years ago at 4200 or the traders still in sells under 1.1300..

All this too me is so inefficient . I just do not want to wait 1 - 3 months of 1 year to make a profitable trade with a good RR of say 5.  I want that trade within 30 mins - and if I am wrong so be it - no worries - problem over - look for another one ;-))

Why is it not too many others traders can see this - might it be misinformation - or the normal sheeple argument of the blind following the blind ?.

The Answer - become a "master trader" over many years and trade all methods with sophisticated money management techniques  - that even the commercial trader might not even be able to use - simply due to their institution's regulations 

Regards 

Peter

Comment by colinwbarnes on September 16, 2012 at 12:02am

Thanks Peter for another interesting and relevant article...as an active member of the Gate..i know that you and Gissa are highly successful and profitable traders and from what i can tell Lisa is too..although Lisa never posts losing trades...so therefore is would say that you are right Peter..and you are right Gissa..and you are right Lisa..

Personally at this stage of my successful learning career in trading..i think that the approach most preferable for me is that which carries the least amount of risk...therefore your approach Peter is my pick...it all depends on the individual traders personality and how deeply seated ones habits are...both "good" and "bad"..amongst a host of other character traits.

   regards///colin

 

Comment by sabbir on September 16, 2012 at 7:32am

 i only take a posting seriously when i see a live call made and tp and sl are posted, rest i ignore. 

Comment by Peter jcp on September 16, 2012 at 11:19am

Hi Guys - It might be worth pointing out Colin that although I generally have good trading sessions/ or days - I might also fall into the top half of number of bad trades a week. Generally I would expect  8 -12 bad trades( losing trades a week). I had one day last month when I had 5 bad calls in two sessions - but thankfully 14 good trades through out the same period.

If we are looking at 10-15 trades over the main two sessions and within say 10 hrs- 1- 4 mistakes is normal. Some of these bad calls would not happen if I widened my stop above say 5-8 pips but this leads into Gazza's point about wanting it now mantra. I generally know under 5 mins if I have a bad call - and I even pull sometimes at break even or just down 3 pips - if I think its not happening. All this is the compensated when you get one or a few nice small waves of 15-30 pip runs - which give you the RR's of 3-5 . 

I don't expect new or less experienced traders to live with ultra tight stops - but between 8 pips and 13 pips are very workable on pairs with spreads under 3 pips ( EU mostly been 0.7 -2pip max spread). Once you are in profit lock in something and also if you are up say 35 or 45 pips you might then be prepared to trail down 20 pips to allow longer runs. Personally if you can get a 35-60 pip trade of a stop under 13 pips - I think that is an excellent trade

To me - the RR ratios are important in trading. If Lisa's trade was off say a 30-50 pip stop and she ends up with 500+ pips - we all have to say brilliant and well done. If it takes though a month or two to get there - then I would say - have you missed the optimum point to pull for profit and your pips growth per day as then peaked?

Must check out the GJ over 10yrs+ and also average day timings of when to optimise your longer term trades  

Comment by Keith Shaw on September 16, 2012 at 5:47pm

"Remember - the trend is your time frame and your experience level" , I think that is the real pertinent point in your post Peter. That and having a Trade Plan and understanding Reward / Risk as part of your Money Management.

Regardless of whether you are a with trend or counter trend trader, long term or short term if you don't have a methodology that suits your personality and one that you can stick to and repeat time and time again then it really doen't matter what the trend is, you're always going to get your butt kicked. 

Comment by 2ndSkiesForex on September 16, 2012 at 6:28pm

I think there is a misunderstanding here the way you present the numbers Peter and that you really present it in a myopic way.

Sure, when you break 6500 pips down per year it comes down to 25pips per week which is only 5pips per day.  True - no argument there.

But where you miss the point is pips are by themselves meaningless in terms of your trading without factoring in risk and rate of return.

For sure, if you only made 5pips a day and traded at least once a day, that is nothing, especially since your spread costs are about a pip per day, and if you were risking 3pips total, then your still not making much with a 1.6:1 reward/risk per trade.

But what if that 1300pips was done on say one trade, with a risk of say 1% and a stop of say 50pips?  Then what?  

Then you are talking a 26:1 reward to risk play with a 1pip transaction cost.
So a 26% gain on 1% risk.  Now does that mean they only have to trade that one play?
No - and other methods can be applied to add other gains.  But, 26:1 is impressive.

What if that trade was also carry positive?  Now you have two equity curves - something you can never have scalping.

That's a very different picture.  Same amount of pips, same amount per day/week, but a totally different return.

Again, to break it down the way you do is myopic.  To paint it as the only picture regarding trend trading is manipulative and not showing the whole picture.

I'll be writing about this in the near future, but keep this in mind:
All systems have their strengths and weaknesses.  

To paint any one system or paradigm as the be-all-end-all of systems and the best way to make money is narrow-minded.

Instead of painting the picture that trend trading is not profitable or not the best way to make money, it would be far better to talk about how this particular strategy can be best leveraged for one's trading and when you pull it out of the toolbox.

I look at trading like I do MMA (mixed martial arts).  You cannot just employ one martial art and expect to be a champion.  Maybe you're really good at jiu-jitsu, but if you cannot get your opponent on the ground, and they have superior striking and reach, its going to be a long day for you.

You have to be well rounded to be a really really good fighter and trader.

For most traders, being consistently profitable is tough, so best to just get comfortable with one system and make that profitable, then leverage that as much as possible.  If you cannot branch out, then just stick with that.

But if you can diversify your tool set, then look at developing other tools for their optimal environments.

So there may be times where short term trading is highly effective, or the most effective strategy available.  But then other times where you will miss an opportunity for make 30, 40 or 50:1, 100:1 reward to risk with little time management.

Case in point:
Peter Thiel made a 2000% return (so far) on his initial 500k facebook investment.  You'll never get that scalping or short term trading.  Not even flipping companies and he still has FB stocks left, so more to go for him.

Anyways, I'll say more about this later in the week as I'm currently in my largest Reward:Risk play currently up 47:1 R:R on my play, and targeting 121:1 R:R

To be continued, but if you are going to do the numbers, try not to have such a myopic way of looking at it as it really does a dis-service to educating traders.

Kind Regards,
Chris

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