The Active Forex Traders Discussion

[garyfritz]

A basket of uncorrelated systems is a good way to protect against a drawdown in any single system, but it doesn't affect the risk issue. Whether you trade one pair/stock/contract or a basket of them, you still need to control your risk on each trade. If you don't have any discipline and you let trades get away from you -- "I'm sure the market will turn soon, I'll hang on a little longer" -- then any one trade can do huge damage to your account.

I believe in understanding and characterizing my trading systems very carefully. I look at the history of trades -- either live trades or a backtest -- and observe the patterns of wins & losses. Based on the #/size of wins vs. losses, you can tell how much is safe to risk on a trade. Risk too much, and you can turn a winning system into a loser. Extreme example: heads you win $2, tails you lose $1. That's a huge winning system, with an expectation (average trade) of $0.50 per coin flip. So you say great, I'll bet 100% of my account! And then you get tails, and you're busted. 100% was too big a risk. The "optimal" bet size can be calculated as AverageTrade / AverageWin, which is $0.50 / $2.00 = 25% in this case. Betting less OR MORE than 25% will produce lower profits. But that "optimal" level will have huge drawdowns, like 90-95%, on the way to making the "optimal" profit. Trading at 1/10 to 1/4 of the "optimal" level is a lot safer and a lot less likely to drive you to jump off a bridge!!

So if you're trading a basket of pairs/systems and your "optimal" bet size (called the Kelly value) is 25%, then you might risk 2.5% (Kelly/10) on EACH trade.

 

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[CarrieW]

I did not know about correlated pairs for quite some time... I lost a lot more of my account than I would have if I had known... since changing my time frames (and trading style) and picking which pairs to trade more carefully, I haven't closed a losing trade...(its been over a year and a half) I currently have 2 trades that are out of the money but my money management is such that I can let them go another 100% against me and not hit a margin... hopefully they come back my way before that happens (I know about risk to reward so please no lecture it was an experiment

whether you exploit the correlations or avoid correlating pairs is inconsequential... knowing they correlate at all is winning the battle imo

 

[garyfritz]

How are you using correlated pairs, Carrie? Are you pair-trading them (e.g. long pair, short the other, expecting them to mean-revert), or...?

 

[CarrieW]

I am actually staying away from them right now... once I figured out that they were doing the same things essentially I changed my pairs to ones who have no correlation to each other... or at least one that I noticed... obviously they are all interconnected by something...

I think you were the one who informed me what I was doing... I was trading a lot of pairs and they were all going up or down and I was compounding my losses... I was essentially doing the same trade thinking they were different

 

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[CarrieW]

so my 2 experimental trades are still open (down from 3) I cant really trade in my account until they close either by margin or in profit
lol

either way my experiment was successful for the most part. now I just have to end it...

I have discovered a lot of things since I started trading. one day I hope to be able to put everything into words. I am not able to do that yet here.

I have been waiting so long to be able to close them out I am considering opening a new fresh account. I really don't want to do that as I would really like to continue on in my original account. every trade I have ever done is in this account

it would be like giving up one of my children at this point LOL

 

[Shuffle]

so my 2 experimental trades are still open (down from 3) I cant really trade in my account until they close either by margin or in profit
lol

either way my experiment was successful for the most part. now I just have to end it...

I have discovered a lot of things since I started trading. one day I hope to be able to put everything into words. I am not able to do that yet here.

I have been waiting so long to be able to close them out I am considering opening a new fresh account. I really don't want to do that as I would really like to continue on in my original account. every trade I have ever done is in this account

it would be like giving up one of my children at this point LOL

I'll be waiting for those words. I moved my SL on EURNZD sell too quick and got BE. Shouldve held tight

 

[loop101]

When you see currency correlation's, remember how it works. A +1.0 correlation means the two pairs move together. A -1.0 correlation means the two pairs move exactly opposite. A 0.0 correlation means they are uncorrelated, or correlated perfectly randomly. The correlation charts show these correlations for the various pairs and for different time periods. Some pairs are highly correlated on daily/weekly moves, but uncorrelated on monthly/quarterly moves. Make sure you are using a correlation coefficient for the time-period in which you are trading. The correlation coefficients also change over time, so you need to recalibrate them.

 

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[CarrieW]

see I should have known that you can see it on a chart LOL

I just took notice after someone mentioned it to me... then I started watching what they did

this is what happens when you teach yourself things. things that are obvious to other traders I really still don't know. LOL oh well if you aren't learning, your dying

 

[Gaspar]

no one else is still kicking? anyone?

I currently trade options against the Russell 2000 index. It is a liquid market and offers enough volatility to make a decent return.

 

[Nur]

I currently trade options against the Russell 2000 index. It is a liquid market and offers enough volatility to make a decent return.

Using thinkorswim? Options is still too complex for me

Sent from my HTC Desire using Tapatalk 2

 

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[BlokeInProgress]

Hi everyone, good day!

First of all sorry if I have to ask, although I promise I will read through every page of the thread (which may take a while ), do anyone of you do trading full time? Or do you trade with your free hours? Do you see forex trading as a substitute income?

I got really interested in forex a couple years back and attended some trainings, unfortunately, my job was really demanding of my time so my forex journey was set aside. Now that I have decided to resign and go on my own and because forex trading really really appealed to me, I was wondering if some of you had the experience of making it full time. How was it?

Thanks in advance.

 

[CarrieW]

I trade everyday I do not make a living from it... if I had to live off my profits id have died a long time ago lol.

I have been trading for awhile now but still learning. My account while live is very small just to practice. I haven't closed a losing trade in over a year but because I lost so much in the beginning I am still playing catch up

Sent from my SCH-I200 using Tapatalk

 

[BlokeInProgress]

@CarrieW thanks for the insight, i was lol with your 1st line, but do you plan to do it full time in the long run or have already decided to make it part time?

 

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[CarrieW]

@CarrieW thanks for the insight, i was lol with your 1st line, but do you plan to do it full time in the long run or have already decided to make it part time?

the idea for me in general is to generate capital that I can funnel off into completely passive investments. trading was one of the ways I was thinking I could generate capital.

I trade everyday, when you say full time I assume you mean replacing my full time job income?
I am already not working. not because I am a savvy investor living off assets tho. I am a disabled stay at home mom. My husband works. I will trade probably everyday for the rest of my life. I love trading.

I went from 20-30 trades a day scalping to now long term trading. I am looking for a happy medium. I would ideally like to intraday or intraweek trade. I have a few other plates spinning right now so I don't get to trade as often as I like.

if you ask me can it be done... live off trading profits. sure it can. can I do it? nope not yet... that again wasn't my intention... I am using forex as a tool, its not my plan.

 

[BlokeInProgress]

Thanks again @CarrieW, I think you are right, trading can be one way of making profits...a vehicle.

I trade everyday, when you say full time I assume you mean replacing my full time job income?

Yep, that is correct, been seeing and hearing people replacing their incomes from trading and I guess it can be but will take some time (unless someone is really really really gifted).

I do feel the rush when I trade which is why I can also say I love trading. Will post updates when I get started.

 

[Shuffle]

It'd be cool to see how other people trade. I'd love to see other peoples charts!

As for me my last trade was GBPUSD off of a pinbar on the 15th of April. Nailed that upmove. Anticipating a large move on the CAD pairs! Is anyone else in anything?

 

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[CarrieW]

I am stuck in the 2 trades I posted about earlier LOL... for frickin ever now.

I refuse to close them LOL I am going to just wait and watch... I will probably open a new account soon under the c corp and start over.

I cant even see the dates easily on my phone. but the trades I am in are eur/usd and eur/jpy. and they are down a lot and I mean a ton of pips LOL

 

[Shuffle]

Hahaha it happens to the best of us! what pairs are they? You sound like you've been watching them so long it's now considered investing and not trading lmao. If it was in the discussion about the basket/correlated pairs, I actually don't take correlated pairs into consideration. Although I do keep it in the back of my mind.

On another note, I just entered GBPCAD sell position.

 

[CarrieW]

I wish I could get my bridge to work so you could see. it is impressive in itself that I could be down so many pips and not hit a margin LOL

its so shameful but funny so I am going to post it LOL

eur/usd 1.28342---> its 1.38644 LOL sell

eur/jpy 129.994---> 142.092 sell LOL

it is an investment totally at this point. theres not much money in the account and I still have over 50% available so I am going to see

I had a 3rd open that I closed for usd/cad 1.05784---->1.11364 buy that was just as far out as these so I am sitting tight for now LOL

 

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[CarrieW]

heres a link to my chart the trades aren't up to date I cant get the bridge to connect to read it

https://www.ibfxconnect.com/profile/carlen19/A/trades

the 3 open trades at the top are the 3 I posted above when I logged in the last time on my old pc

 

[Shuffle]

I wish I could get my bridge to work so you could see. it is impressive in itself that I could be down so many pips and not hit a margin LOL

its so shameful but funny so I am going to post it LOL

eur/usd 1.28342---> its 1.38644 LOL sell

eur/jpy 129.994---> 142.092 sell LOL

it is an investment totally at this point. theres not much money in the account and I still have over 50% available so I am going to see

I had a 3rd open that I closed for usd/cad 1.05784---->1.11364 buy that was just as far out as these so I am sitting tight for now LOL

omgoodness hahahaha. How did you enter those trades? As in, what's your methodology? sounds like you can still save the account but you got the emotional attachment to the trade hahaha.

It's alright Nothing to be ashamed of as it does happen more than we know. I know a guy who just went 70k deep into the stock market with no knowledge and expected great things to happen LOL.

 

[CarrieW]

I was watching how certain pairs were swinging around and how it was that I was losing money and I decided to stop using a stop a while ago.

I had been watching the pairs swing back and forth in what I thought looked like a pattern I could really see so I started trading it and it would go against me some but everytime I was getting stopped out it would swing back my way. so I started tracking how large the movements were relative to any given pair.

and I always traded in the direction of what I thought the way the trend was moving never on the counter move because you never know how large a correction is going to be so you always trade in the direction of the over all trend, and so I did that a few times successfully and then decided to see what would happen if I changed it up.

I had been waiting for the correction to reverse itself and go back into the direction of the determined trend and then enter... instead on the 2 I had going I closed out the profit and then reentered right away to see If I could get more of the profit but the market turned and here I am

and somewhere in the middle of it all I decided to add the jpy trade and I shouldn't have... idk wth I was thinking there...

LOL

edit to add. obviously I picked the worst time to change up... if I had waited for the reversal correction (which never happened) to enter I wouldn't have entered ever LOL SMH

 

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[Shuffle]

Just writing down thoughts as I read your post.

1. I'm a Daily swing trader (you mention swinging often) Have you looked into that? I trade using Price/Support and resistance, Price action, Volume, Trend and slow Stochastics.
2. Are you currently still not using stops?
3. Where did you place your stops / How did you determine where to place them?
4. A lot of people speculated brokers stop hunting because of what you described. Trades going your way after getting stopped out. I believe a "Non dealing desk" was offered to traders for that reason.
5. Trading in the way of the trend is SO important as you did. We all have different brokers and feeds so what we see objectively (Price) is now subjective as we aren't all looking at what is supposed to be the same (compared to central exchanges like stocks). TREND HOWEVER, which is supposed to be subjective is now objective (Yes I know confusing) across all charts no matter what feed we receive if that makes any sense But then again I view about a years - 3yrs worth of chart.
6. You say correction so am I safe to assume you swing trade? or use some form of indication that a pair is overbought or oversold?
7. Did you enter those last 2 on anything concrete? or was it purely speculative and based on the correction you were anticipating? What did you base the reversal off of?
8. We all make those mistakes hahaha. Why did I do that lolll. I remember thinking "holy snapples I found the holy grail. Look at all the things I can buy" BAM where is my money. For example I thought I had it with something called Center of Gravity by some guy named Mostafa Belkahyete. Biggest mistakes of my life lmao. Although the principle behind it was a good one, I failed to see that and only saw the indicator.

NFP is tomorrow so expect some huge moves

Edit: Sorry it's so long. Just some thoughts that ran through.

 

[CarrieW]

I will answer in more details tomorrow

if you go through the history on my account there is every trade I have ever made live... I think its all available on that link. maybe not 100% tho.

I used to trade a lot. I had some personal things change and I was no longer able to dedicate the time I had been to trading so I had to look at other ways to trade

my favorite is scalping. one day I will go back to actively trading hopefully soon.

I don't think anyone was hunting my stops. I just think it was the size of my account and trying to follow very rigid rules. they work extremely well in larger accounts but when your trying to do what I was attempting you have to be open to bending some things

the last thing I was studying when I was still trading intraday was that ichimoku indicator I watch candles and rsi and volumes etc but nothing really fancy... and really like using my judgment in real time over picking a random stop. I have picked up so many things from so many places It would be hard to say exactly wth I am doing but I think I understand it myself but I cant explain it easily

I will go back to my notebook because honestly its been so long since I used the stops I cant remember the rules I was using for placement LOL

 

[Shuffle]

Nailed the sell on GBPCAD although wished i was in the USDCAD also as it would have hit my tp already. Anyone take these as well or anything else?

Sent from my DROID RAZR using Tapatalk

 

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[CarrieW]

no comment excellent for you

 

[CarrieW]

I believe the eur/usd is going my direction for now not sure the other eurjpy seems to stay around the same. I don't expect too much from that yet

Sent from my SCH-I200 using Tapatalk

 

[MWizard]

What do you think about yeasterday pinbar on EURUSD?

 

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[MWizard]

Yeasterday I traded pinbar but I set 1:3 risk reward ratio and my price didn't hit my TP. So I made a good forecast but I am break even Maybe you think that I made a mistake because I didn't trailed my trade. But after reading this ebook I trade only daily charts. It saves me a lot of time and my trading account grows.

http://www.amazon.com/dp/B00HOPBAEY/?tag=tff-amazonparser-20

 

[CarrieW]

what is in that book about forex trading?