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| Logic^2 https://www.stevehopwoodforex.com/phpBB3/viewtopic.php?t=856 |
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| Author: | squared [ Wed Oct 03, 2012 6:24 am ] |
| Post subject: | Re: Logic^2 |
thank you garyfritz for your discussion, and George for your explanation. whatever George said is what i meant. the tree major conditions are set to give you more confidence. the more strick conditions are, the more points in one direction ea can withstand. if this ea is capable of withstanding 400 or 500 points without a pullback, I will take it and accept it if something like what happened in 2008 happens again. why to open two trades in two different direction? "So instead of "open one L1 long and one L1 short at P0," do nothing at P0. At P0+10, instead of "close L1 long in profit, open L2 long and L2 short," open one L2 short, and so on. That will dramatically reduce your trading costs and might leave a few of those pennies for you." then what if after opening L2 short, price goes up again ? that's why we need to open in two directions to surely gain from one of them, and wait for a pullback to gain profit from sencond direction. |
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| Author: | glabbeek [ Wed Oct 03, 2012 6:49 am ] |
| Post subject: | Re: Logic^2 |
Hi Squared, I presume that you know that you can't buy and sell for the same price. For the buy you start out with ask prices and for the sell you get bid prices. The Empty4 charts are sometimes a bit misleaden because they only display bid prices. |
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| Author: | NeoTrader [ Wed Oct 03, 2012 7:05 am ] |
| Post subject: | Re: Logic^2 |
hi glabbeek, You are right with your statement...just for your information... it is easy to show the ask price in Empty4. Right click on the chart and select properties. click on the common tab. on the right side you find "show Ask Line" click in the box before it to activate it click ok. You should now also have the ask price shown. I have saved this setup as my default template so I have always both price lines when I open a chart. happy trading, NeoTrader - |
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| Author: | squared [ Wed Oct 03, 2012 8:35 am ] |
| Post subject: | Re: Logic^2 |
it is ok. 2, 3, or even 5 points between buy and sell will not cause a big difference. each direction works independently. |
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| Author: | garyfritz [ Wed Oct 03, 2012 2:15 pm ] |
| Post subject: | Re: Logic^2 |
I think you're not understanding my point. "Open L1 long and L1 short at P0" is ***EXACTLY THE SAME*** as "do nothing at P0," except you're paying spreads &etc. Your broker will love you but it doesn't change your system logic at all. Then at P0+10, your strategy says to close L1 long, then open L2 long/short. I'm saying "after doing nothing at P0, open one L2 short at P0+10." Again, the net result of this is ***EXACTLY THE SAME*** as your strategy. Look what happens: you enter long/short at P0. At P0+10 (or at any OTHER price) your net profit from the L1 long/short is ZERO because the position is hedged. So it's the same as doing nothing at P0. Now at P0+10 you exit L1 long, enter L2 long/short. You've closed 10 pips profit, but you have 10 pips loss on L1 short, so at P0+10 you still have a net of zero. Meanwhile you have 2 short (L1 and L2) and one long (L2). So at P0+10 you have a net profit of zero and a net short of 1. It's EXACTLY the same as doing nothing at P0 and going short 1 at P0+10. You asked, "What if price goes up after opening the L2 short?" In your situation, you're short 2 and long 1. If price goes up 10, your shorts lose 20 and your long makes 10, for a net loss of 10. That's EXACTLY the same as if you just shorted 1 at L2. People seem to think that there is something magic about hedging. For your crim it's magic, because you're paying him a lot more spread/commission. But for you it gains you NOTHING. Hedging a long with a short is a FLAT position, the same as not having any position at all. Save yourself some spread, commission, and possibly swap. Simplify your positions to the net position, instead of stacking up these useless and expensive hedges. |
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| Author: | glabbeek [ Wed Oct 03, 2012 2:36 pm ] |
| Post subject: | Re: Logic^2 |
I have to agree with Gary. Maybe I'm missing something, but to me it looks like a waste of money to start of at the L0 with this hedge position. Again, maybe I'm wrong, but I just don't see this working. |
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| Author: | squared [ Wed Oct 03, 2012 6:36 pm ] |
| Post subject: | Re: Logic^2 |
I have to admit ... Gary, I like your discussion. However, it is not as what you think. let me explain why opening two positions in different directions WILL have its effect. if I follow what you said, then i will have only one kind of trades, let say sell trades. lets assume price is going up for 300 points. your basket of sell trades will keep adding new sell trades until price goes down for x points. then you will close the basket. however,... assume that between each two sell trades, there was a buy position that was closed on a 10 points profit. So, if price goes up for 300 points then down for 30 points. yes you will close your sell basket same as previous scenario, but, in addition, there were 30 buy positions closed on 10 points profit each. then after prices went down, a buy basket is being established while sell trades are going to be closed. I hope I could explain the main difference |
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| Author: | gaheitman [ Wed Oct 03, 2012 7:22 pm ] |
| Post subject: | Re: Logic^2 |
To keep the thought experiment going, how about you walk us through the following scenario: Since I live in the US, I can't hedge, but I really want to run this system. So I set up two accounts, one for buys and one for sells. Walk me through what happens in each account if price goes up 45 pips, down 90 pips, and back up 45 pips. We'll assume there are no significant retraces within the moves, and price moves exactly 10 pips a minute. We'll also assume that we start with a lot size such that 1 pip = 1 unit of currency. So, at T0 for both accounts we enter a single trade. At T1, in the buy account we'd close a buy for +10 and open another buy. At T1 in the sell account, we'd open another sell, and have -10 equity. George |
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| Author: | garyfritz [ Wed Oct 03, 2012 7:52 pm ] |
| Post subject: | Re: Logic^2 |
If the market only goes up, yes. That's the net result of your hedging strategy. Obviously it gets more complicated if the market goes up and down, but we're just talking about "market moving up" in this example. You're confusing yourself with the complexity of all your trades. You're getting all wrapped up in 1+1+1+1+1+1 and forgetting it's just 6. Simplify them and it will be clear. Do you agree that "buy at 0, close it at 10, buy at 10, close it at 20, buy it at 20, close it at 30" produces 30 pips of profit? If so, then how is that any different from "buy at 0, close at 30" except for your trading costs? Similarly, if the price goes up 300 and you buy/close every 10 pips, that is the SAME as buying at 0 and selling at 300 -- it produces 300 pips of profit. So instead of buying/selling every 10 pips, just buy at 0 and sell at 300 and it's the same result. You also short at +0, +10, +20, etc. At +300 you have the net open loss of all those shorts. So now you're buying at +0, HOLDING that long until price hits +300, and shorting at +0, +10, etc. Do you agree that produces the same result as your strategy? NOW don't do anything at +0. You never enter a long position on this market run-up, AND you also don't enter the short at +0. You no longer have the 300 pips of profit from your longs. BUT you also don't have 300 pips of loss from the short at +0. They cancel out. "Do nothing at +0, and add 1 short at +10, +20, etc" is the SAME as your "buy 1 / short 1 at +0, close 1 long and buy 1 / short 1 at +10, etc." Maybe I don't understand the details of your strategy, so my example might not match your idea exactly right. But the basic concept I'm illustrating here still holds: any hedged position is FLAT. You can remove it without changing the results at all. |
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| Author: | squared [ Wed Oct 03, 2012 8:47 pm ] |
| Post subject: | Re: Logic^2 |
OK, in the "buy" account: 0 - T1 10 - close T1 (10 points profit) - open T2 20 - close T2 (10 points profit) - open T3 30 - close T3 (10 points profit) - open T4 40 - close T4 (10 points profit) - open T5 45 - nothing happens 30 - open T6 - now T6(0) and T5(-10 points) 20- open T7 - now T7(0), T6(-10) and T5(-20) 10-open T8(1.5*T7) - now T8(0), T7(-10), T6(-20), and T5(-30) 0- open T9(1.5*T8) -10- open T10(1.5*T9) -20- open T11(1.5*T10) -30 open T12(1.5*T11) -40 open T13(1.5*T12) -45 nothing happens --- now we are down 90 points and this is the status: T5 = -85 T6= -75 T7= -65 T8= -82.5 (1.5*55) T9= -101.25 (1.5*1.5*45) T10= -118.125 (1.5*1.5*1.5*35) T11= -126.56 (25*1.5^4) T12= -113.9 (15*1.5^5) T13= -56.9 (5*1.5^6) now, breakeven equation will be as follows: (85-x)+(75-x)+(65-x)+(1.5*(55-x))+(1.5*1.5*(45-x))+(1.5^3*(35-x))+(1.5^4*(25-x))+(1.5^5*(15-x))+(1.5^6*(5-x))=0 --> x= 24.1 points lets continue -40 nothing -30 nothing -20 nothing - now we are break even ( 45-20=25 points) -10 close basket - 340 points profit - open T14 0 close T14 - 10 points profit. result: 10+10+10+10+340+10 = 390 points profit. same thing for sell basket, i mean idea is the same. NOW, whatever you have read is classic or traditional. what makes my strategy more and more secure are strict conditions i mentioned. lets go back to "Candlestick size" condition. you assumed 10 pips a minute. which means around 150 pips in 15 mins. which means that all these trades will not be opened at all, because market is not stable at all. it will wait untill 15 min candle size is less than 40 or 50 pips. So, instead of opening a trade each 10 pips, 9 trades in 90 pips movement, you have maybe 2 trades only. one at the start and one at end. Condition #2: Time each hour ea will open 1 trade in European market. which means, only one trade will open after 60 min instead of 9 trades. I know when you read negative hundreds points, you wanted to finish me with couple of words. But i preferred to remind you with conditions later in this post. all -ve points will not be seen ! I hope i did well explaining the strategy |
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