James Roscoe wrote:nanningbob wrote:I play small lots and big SL so I dont get stop hunted. Basically stop hunting is not the brokers fault in many cases. People, businesses, and governments are exchanging money all day long so price bounces all over the place. So I play the long term trends and only close out if the long term trend changes. So far in the month of November I have stopped out one time. 22 other losses were from profitable or breakeven trades where I use a 2nd trade to nullify the first trade. All my other loss closes were done manually. I choose when to close a loss not the broker or price. I dont talk about it much anymore but I multi level trade because price is not predictable on the short term but can follow a trend long term. When I talk about lot size proportion I tripled the amount of funds I had at the beginning of the year and trade 3-4 cents per thousand dollars of account. That means if I have 1000 dollars I trade 3-4 cent lots. 10,000 dollars that means I trade thirty to fourty cent lots. I have 0 chance of wiping out my account that way or even seriously damaging it. It would take 40,000 pips in losses to wipe out an account. I do trade 20-40 trades at a time and am constantly pocketing winnings almost every session. I then take some of my winnings and close out any losing trades I think wont retrace anytime soon. By doing this I will show a profit almost every day and still keep the losers to a minimum number. I also balance my trades so if something moves strong against me something else will move strong for me. Kind of like hedging but not. I used to talk openly of trading that way but got so harassed by it so much I no longer talk about except on occasion.zimezoom wrote:Bob, how do you handle the situation, when your pending order above/below a pivot or xx.00 line has been hit and the price immediately reverses to the other direction (just like stop-hunting)? This happens to me many times...
Traders will argue against it by saying two things about this kind of trading.
1. Your lots are too small to make money, but I do. 5-20% increase almost every month.
2. You stand a chance of price going against you so big you wipe out your account. Well, have never seen a 40,000 pip move yet.
In October while testing the 10.6 system I had 7038 winning pips and 4772 losing pips for a total 2266 total pips and increased my account almost 11%. That was testing the system. I expect to do better in the future.
It took me years to understand and comprehend to trade that way. But to answer your question, I take the loss and go on. I have many trades going so taking losses is not problem because I bank so many winning trades. My winning percentage per trade is over 70% I never agonize over a single trade and if I am wrong and take a 2, 4, 600 pip loss I usually can make it up in a couple of days. Traders absolutely freak out when I post this stuff and it drives them nuts but I have been able to do it for years. The 240 line is my absolute loss and often take it long before then but to play tight stop losses, I find all you do is get them hit and then price goes in your favor. The times that I am wrong are few enough that my winners always over come those occasional bad times.
Basically what I am saying is, I am not afraid to hold a trade for a week or more if I think I have the fundamentals on my side. I close when it becomes clear to me the trade will not be good any time soon, hit the 240 line, or I have more than enough profits to close out some of my losers.
I got crucified at Forex Factory for teaching this so this is all I am going to say about it here. If you comprehend it and can do it great. If you dont comprehend it, skip because you have to think multi-level and multi-dimensional to do this.
So to answer your question, what is the CSS telling you? Is it telling you that the currency is weak, strong, or middle of the pack. I do a sell, and the currency is weak, I will ride the move out. Strength of currency compared to the others tells you a lot.
So you have a choices to make:
1. Take a loss
2. Ride it out to profit
3. 2nd trade to break even
If you trade small lots to account size you can do #2 and #3. If you trade larger lots to account size you have to do #1. So that is how I handle it.
I have noticed that this format of trading is poorly understood by traders. I never understood why until you brought up the need to be able to think at a multilevel and multidimensional level. It never occurred to me that it was a processing issue in the mind of the trader.
I dont think in one trade in one trade out. I think in multiple trades. If I think the direction is going to be up and the first trade doesnt do it. Then I will try a second maybe even a third. The first trade may hang in negative territory for a while but the other two made a profit. Price retraces so I enter back in the direction again. I keep doing this and taking profits until my first trade clears into my direction or reality sets in and I have to clear it out.
For example the gbp/nzd opened for the month dropped 220 points ranged for a couple of weeks and shot up almost 700 pips. During this series of trades I have garnered 920 pips. There were 33 winners and 6 losers. average win 31 pips. To me trying to catch that 700 pip move is how most traders try to trade. I dont look at it that way. The CSS showed them running parallel during the month with both going up so they ranged and I range traded. Then the NZD went down and the gbp went up so I went with buy trades and hit a bonanza. However, I kick myself for not catching the 2nd good move up which is almost another 500 pips. I am catching some of it at the end here. So how do I look at my trading.
To me it is not did i catch the two moves when they came out of trading but home many pips did I catch catching the retraces and reentering back in time after time. It would go up 300 pips, retrace 150, go up 300 pips, retrace 150, etc. How many of those did I catch and how much of each one did I get. Then when it is done I look at my series of trades and decide whether it was a successful trading run or not. There are many times I will catch more pips than if you just played it from bottom to top. So gbp/nzd went up over 700 pips from bottom to top and I got 920 of them. That is a successful capture or series of trades.
So I dont think in one trade in one trade out. I think of how did I do when price was running or price was ranging. This also changes how you enter. I dont enter my full position. When I am fully into a currency I trade 10 cents per thousand. But I start at 2-4 cents per thousand. If price goes with my direction I add. If price goes against me but I think I still have direction right I add positions. This greatly helps my MM. If I enter only 1/3 of my total position I only lose 1/3 instead of my entire position if I have to close. If price goes in my direction then I can add positions until I am comfortable with being full into a trade. So my losers are smaller and my winners are multiples. That is how I get over 920 pips profit on a 700 pip move. It takes multi-dimensional thinking to do such a thing and many people just cant do that. They want their rules. When do I get in and when do I get out? Where does my SL go and where does my TP go? What is my win to loss ratio? I dont think in those terms but you can use my system that way. So I probably have totally wiped out a bunch of traders but I teach this every once in a while because some of you will understand this and will get it.
