FX banter

[willoneau]

I will only blow up if I have one hell of a losing streak, the start of each day I adjust my position size to suit the available realized capital (anti martingale).
Or heaven forbid Black Swan.

 

[willoneau]

USD/CHF short
GBP/USD long
USD/JPY short

These three trades make you short the USD x3. You're risking 3R (3%) account in one currency.
Have you considered any limits?

Currently getting hammered by GBP/USD and USD/CHF which hi lights exactly what you are talking about

disregard EUR/CHF.

 

[willoneau]

I intend to close all my positions that are open tomorrow at some stage as I do not want to hold positions over the weekend.

 

[willoneau]

I have removed GBP/USD and substituted it with GBP/JPY.
giving me CHF 2, USD 2, AUD 2, JPY 2, GBP 2, NZD 1 and EUR 1.
So thanx to peter2 for pointing it out.

 

[willoneau]

When day trading US stocks I have a -2R limit / day. No more trades if I hit -2R overall or have three small (<1R) losses. Last night the US market went sideways for hours and I took three small losses. That's it for me. Close up and come back tomorrow. If I hit -4R in a week, that's it for the week. Use the SIM platform for the rest of the week to work on improvements.

I understand the idea of maximum daily drawdown, but at this stage I am unable to see how to incorporate it in my trading style.

 

[barney]

I apologize if I gave the impression I was dismissing the advice you gave as that was not my intention.

Its a common problem on Forums that posts are often misinterpreted for a variety of reasons. Hopefully the thread will continue on in good spirit.

until you get hit by a sudden adverse price movement (news) and then, wham, you're down -3R in the blink of an eye..

Agree. The importance of (News) to our Trading account is super important. The quickest way to blow an account is disregard it.

The good old stop loss may not save you … in fact it could compound the loss depending on which "FX Broker" you use Me being a "poor b@stard" always used to use Bucket Shops so the slippage was large and meaningful lol …

A quick glance at FF news before getting serious is a good habit to employ.

https://www.forexfactory.com/
​

At the time of writing this reply @peter2 is the only person that has made an attempt to give you some guidance on this thread (p.s. to other Forum members please do not take this comment as criticism in any way, shape or form). Rob

I thought I had offered something Rob ... I had suggested listening to Peter

Cheers all.

 

[willoneau]

A quick glance at FF news before getting serious is a good habit to employ.

https://www.forexfactory.com

Thanx barney, I will take a look into it
What is usually the process when regarding the news?

 

[willoneau]

Yesterday was a busy day and very educational and I am learning more as I go along.
I thought hard about peter2 and daily limits but still working on it. One thing I am going to do is lower my SL as position moves in my direction as I have been leaving it until target reached at this stage. By moving it down to BE then waiting for my target the trade will be scratched if it turns around in stead of a loss.
Yesterday's return was 1.03% but mainly due to the large EUR/CHF position I closed.

 

[peter2]

A daily loss limit is one that applies to your trading style. It shouldn't cramp your style. It's only there to prevent a disaster. Your daily readjustment of trade risk is another technique to ensure you won't have a large DD.

An intraday scalper won't have a limit on the number of losers but may have a $ or % limit.

If your trading style requires you to start many trades, cull the losers quickly and let the winners run then you may decide to use a $ or % limit. The limit should allow you to trade normally but prevent a really bad day.

If you average 6T/ day and you're comfortable risking 3% / day then each trade should risk only 0.5%. Have few winning trades early in the day and you're allowed more later on if they setup again. The numbers you use should be comfortable to you. I would be concerned if you're happy risking 10% or more per day though.

Whoa: Don't move your iSL unless you've researched the effectiveness of doing so. The FX markets are littered with the corpses of traders who moved their SL too close to the market action. Any of the major FX price providers can move any FX market 25 - 40 pips whenever they want to. They do this around session opening and closing times when the volume is much lower. They do this to catch the inexperienced retail traders who don't know when the major sessions open and close.

The impact of news can be HUGE. Just before very important news announcements the volume dries up as the market makers pull their bids. They don't want to get caught if the news is not what they're expecting. Prices can get very volatile immediately after important news as the market makers reinsert their bids. They're trying to scalp against each other and get as much of the retail volume as possible.

So how do we retail traders adapt to this? We have to know when the news is scheduled. We have to know if someone important is speaking because they may say something that spooks the market. We can decide to manage our open trades differently if news is scheduled soon.

If you're trading daily time frames then there's nothing to worry about. If you're trading 1hr charts or lower then you've got to take precautions (if you don't want to gamble on the news). If I've got above average profits in a trade that might be effected by news I'll exit all or half before the news. Sometimes I've let them go and they've been boosted by the news while some have been slaughtered. The important aspect is to know what's scheduled in the markets you're trading.

 

[willoneau]

An intraday scalper won't have a limit on the number of losers but may have a $ or % limit.

It never dawned on me that I was a scalper but looking at the number of trades I am making it makes sense. I have been thinking about the wide swings and 0.5% trading Risk is making more sense. You suggestion of a dollar daily risk would work well and force me to stop and re assess what I am doing or if it is just the market condition. The iSL was an observation when going back over my trading results this week and something to look into. I remember tech/a saying that he moves to BE as quick as possible in one of his threads.
The use of news is something very new to me, I know about it and how it is important just need to figure out how to interpret it in a way to help how I trade. After you mentioned about trading below the 1hr chart I wonder if using the 4hr chart tighten any open positions would help with the effect of news?

 

[willoneau]

Moving my Risk to 0.5% also helps with my emotion and capping my daily DD to 3% will also stop the urge to over trade or revenge trade as peter2 mentioned.

 

[peter2]

We seem to have an ongoing mis-communication. I did not suggest that you're a scalper. In fact you are definitely NOT a scalper. From what I've seen (and it's not much) you're trading swings in the direction of a trend, as you say, a trend trader.

The daily limit is one tactic to prevent a trader from having a really bad day. If you lost your first 4 trades how would you feel? Would you be unaffected by the losses? Every trader will have a bad day. This could be from making poor decisions or it could be just a crappy directionless market day.

If we limit our losses on these bad days then we survive to trade on the good days. The good days will come but only if you trade consistently and with discipline.

 

[peter2]

re: Trade management. tech/a trading style is to move his stop to BE asap. That's his style. I've tried it but it doesn't suit me. This idea clashes with my beliefs about support/resistance. When I try it I don't apply it consistently and the results suffer. My results are poor because of my poor application not that the technique is flawed. The technique is perfect, it's just that I can't apply it perfectly.

I don't know if you'll profit from applying the technique as I don't know you. It's worth researching by going back through your results and seeing how it effects the P&L.

Moving your exit stop closer to the market will reduce your W%. How would you feel about that?
Everyone is different, that why we state that we all have to find a trading style that fits our personality and our beliefs about market behaviour.

 

[willoneau]

A reminder to myself to keep accurate records as I trade during the session.

 

[barney]

A reminder to myself to keep accurate records as I trade during the session.

I think that is where screen shots come in handy … If you are in the middle of an FX assessment/trade that you may want to revisit/critique later on … just hit the screenshot and come back to it when you have more time

 

[willoneau]

Review,
well too good to be true, yesterday's loss was 4.68%. Lucky I reduced my risk to 0.5% could have been worse, emotions got the better of me. 15 losses 7wins overtraded, got it in my head that I wanted no losing day's this week and found out my main trend direction wrong and took wrong side every time.
One of the few good points I can take out of it was that I never broke my iSL. I now need to look at how I determine the trend direction and how much it lags, I never changed my entry criteria just was wrong side. But the silver lining is that I start next week with 3.7% in profit.

 

[Warr87]

Loving it @willoneau . A profit of 3.7% is still good. Don't need to say that this kind of profit in a week is very good. FX has a history of bringing most to ruin, but others with a ridiculous profit by any standard.

I will be watching. Life has got the better of me with my FX demo account as I had more important things to deal with. I am still interested in FX and will be watching to see how your journey works out.

 

[peter2]

Great. Why would I say great? Because I hope you learned a few things from the bad day.

1. Bad days - we're going to have them, they're unavoidable and we never know when
2. Ego is a problem - no losing days this week
3. Emotions are a problem if you let them be.
4. Trend indicators always lag. This can be both an advantage (pull-backs) and a disadvantage (deeper pull-backs or trend changes)
5. Money management is important. You're still in the game.

Thanks for owning up to your bad day. It's important to acknowledge them and I know it's hard to do it publicly. This is evidence of a growing maturity for a trader. This adds to your trading experience and should make you more determined to avoid days like yesterday in the future.

It takes time to improve so don't think you'll be able to fix everything next week. I suggest you focus on one problem that you noticed yesterday. Next week try to avoid repeating that mistake all week.

After that bad day I think you're doing OK.

 

[rnr]

Review,
I never changed my entry criteria just was wrong side.

Hi @ willowneau,

Surely your entry criteria must include the direction (long or short) for the trade your about to take. Therefore you need to alter your entry criteria.

Cheers,
Rob

 

[willoneau]

Hi @ willowneau,

Surely your entry criteria must include the direction (long or short) for the trade your about to take. Therefore you need to alter your entry criteria.

Cheers,
Rob

Hi rnr , what I meant by my entry criteria was the trigger.