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Are monster returns even possible?

 
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hakchinoy

Are monster returns even possible?

There's a lot of disinformation about trading in general and FX specifically. The claims regarding the potential yields of trading span from meager to monster returns. Plus, lots of folks are spewing various stats to back their claims. The irony is that many of those folks truly don't fully understand the underlying math, so they end up twisting various facts--while glossing over various details--to make their arguments.

So what's the real truth: are monster returns even possible?

Before tackling that question, perhaps I should qualify my notions of meager and monster.  Many financial planners advise their clients that an annual yield between 5% and 8% is a good return;  hence, a meager return for me is one that doesn't match that baseline.  In 2005, I learned from a friend, who was starting his own hedge fund, that decent hedge fund managers expected to beat the (stock) market;  he qualified beating the market as getting annual returns between 20% and 50% annually;  and he showed me trades and P&Ls.  On the other end of the spectrum, I learned in 2011 that some elite bank traders were averaging between 30% and 60% per month;  I saw several trades and P&Ls backing those claims;  hence, a monster return for me is one that at least matches the performance of those elite bank traders.

Please keep in mind that 1 month essentially has roughly 20 tradable days, so 30% per month averages out to 1.5% per day (30 / 20 = 1.5).

Incidentally, Shawn shared in a webinar (sorry, I forget which one at the moment) a few years ago, that he averages between 1% and 2% per day.  ;)  As a scientist, I love it when I see facts and figures cluster;  that clustering gives me more confidence in the data and the analysis.

Clearly, monster returns are possible.  Yet, although I don't intend to rain on anyone's parade, most traders unfortunately won't achieve those monster returns.  Why?  They won't achieve those kinds of returns, because they lack at least 1 of 2 things (in this order):  the confidence and the discipline.

I don't care whether a trader prefers short-, intermediate-, and/or long-term trading.  Numbers don't lie, and the charts provide us the road maps for getting those returns.  Yet, if a trader doesn't believe that earning 1% in a day is possible, then he or she will never achieve that goal.  We first have to believe that a particular trading goal is possible, before we're willing to develop and nurture the discipline to accomplish that goal.

The Benjamin Formula (BF) gives us all of tools that we need to figure out what we need to do to earn that 1% in a day.  Unfortunately, since it's an Apiary beginning concept, most traders here gloss over it while searching for that Holy Grail strategy that will crank out trillions of pips in 1 shot.  Just because Apiary introduces the BF in the beginning, that doesn't mean it's the trading equivalent of baby formula.  The BF essentially boils several, basic money/risk/trade management concepts down into a simple, reusable system.

Let's get down to brass tacks.

Yesterday, Todd (in the DFF class) briefly discussed several different strategies, and I'll pick one:  the Bankers' Close.  We discussed the Bankers' Close with respect to a few different pairs:  including U/J.  One could have taken down roughly 26 pips via that strategy, but let's assume one actually took 20 pips.  One could have put 0.3% at risk to earn roughly 1% via that trade by structuring that trade with at least 6.11:1 leverage (meaning a position size of 6K for $1K of equity, 15K for $2.5K of equity, or 61K for $10K of equity).  That's only 1 of many ways that a trader could have traded the Bankers' Close to yield a 1% profit from U/J yesterday.

Sat, 04/01/2017 - 9:17am
 
Snowboarder

Outstanding post. Thank you.
For intuitive-aggressive traders like me, this is very helpful, as I am not a numbers guy.
And for anyone needing a refresher on the Benjamin formula, here's a video from Shawn.
https://apiaryfund.com/training/video/2013-september-summit-placing-trad...

 
hakchinoy

Thanks. :)

Trading is all about exploiting various patterns. For folks who aren't as into the numbers as I am, various position sizing apps and spreadsheets are available. Jeff provides one of them in his CATT classes. :)

My primary reason for sharing all of that is to show that one can make great returns--without jumping through hoops--doing plain vanilla trades.

 
Nkosinathi M.

I agree with the confidence and discipline thinking. I think confidence develops from one's drive/ambition/determination. I find that I get very discouraged and feel defeated after a bad trading day. But the following day, I start with the aim to make money and if that aim, that drive is not there, I would give up and find something else to do. So when we fall, we need to pick ourselves up, dust the 'failures' off, and get going again. As we do thus, we learn from our mistakes, leading to better performance, building confidence, sharpening the discipline and reeling in those monster returns. Great post Hak..

 
jhjbmvdm

From what I've learned so far (continue to learn), is that any 20, 30% monthly result will be the sum total of losing, break even and very profitable days. The mistake (I regularly still make) is having a preconception each day about how much is to or will be gained, as that is impossible to forecast.

This thought pattern can be detrimental in at least two ways: frustration (and fear) when not reached during the trading day (or week), and tendency to limit expectations during (occasional) days / weeks when the strategy used will produce much larger wins (by stopping unnecessarily early).

This is in my view a major part of the discipline: avoid getting drawn into results of today or yesterday below 'expectations', not seeing the larger (statistically based) picture.

 
hakchinoy

"I think confidence develops from one's drive/ambition/determination."

I agree 100%.

I'm an Analytical-Aggressive trader just like Jeff and Shawn, so we share similar strengths and weaknesses. Like both of them, I've blown up my fair share of demo accounts; I've been stung by "The Risk Bot" (borrowing Elijah's parlance :D) more times than I could count; yet, I kept fighting, building, and tweaking until I figured out my own way to generate monster returns.

Failure simply isn't--nor wasn't--an option.

I still am chasing Jeff and Shawn in many ways, and I'm going to catch up to them soon. :) My approach won't be exactly the same as theirs, because God didn't wire us exactly the same way. Yet, that doesn't matter, because I have plenty of experience--from music and sports--of converting goals into accomplishments, and I'm determined to not lose.

"From what I've learned so far (continue to learn), is that any 20, 30% monthly result will be the sum total of losing, break even and very profitable days."

Yes, averaging 1% (or possibly more) per day doesn't mean one has to win everyday. Jeff and I independently verified via our analysis that the key to growing equity aggressively comes via aggressively and strictly controlling one's LOSSES. The gains take care of themselves. Stated another way, solid money/risk/trade management is the key--not only to consistent profits--to aggressive growth.

The first time, that I had ever achieved 10% (or more) in a day from my trading, came as a result of me following my rules. I had no idea of how much I was making while I was trading; rather, I simply knew that I was winning more times than I was losing. On the other hand, I find sometimes that if I focus too much on getting a particular return, then I won't get it, and those tend to be the kind of days when I tend to lose big if I don't stick to my rules.

"Know thyself."

 
tmcc

thanks for the wise words!

 
FXGold54

Hak;

As usual my friend you are right on point.

I would be remiss not to thank you as you pointed out similar stats to me several years ago which set me on the goal of 30% monthly returns. Mind you at the time, I was far short of that in both my skill set and belief that it could be done. However, not lacking in confidence or work ethic (pat on back here) I sought to improve my methodology and progressively increase my returns. And I think it is important to remember and understand that improvement in trading, as in most things, is a progression. ie it does not happen overnight.

While the Apiary family has grown and unfortunately I have not had the opportunity or pleasure to meet/chat with many of the new Bees, I would echo Hak's words and like to inspire everybody to set realistic goals but also to strive to continually improve upon them. Keep pushing the ceiling :)

Stay green my Friends :)

 
don_johnson

For a long time in the journey within Apiary , I consistently moved my stops out farther from the market price looking for the reversal , now I move stops toward the market price to reduce the loss that appears imminent, then if the reversal happens it has to happen sooner or I am out of that trade and forced to rethink my entry/exit . Simple change in attitude . I have learned it is easier to offset smaller losses with adjustments in my approach , than swing for the fences (MLB starts today ) jto get back to break even .

 
hakchinoy

I forgot to mention something earlier. A few years ago (in DFF), someone asked Todd to show us a multimillion-making strategy. While answering that question, he said 2 things that forever changed my trading.

First, he boldly proclaimed that one could make a fortune--literally millions (or more)--if one were willing to put in the effort required to master at least 1 strategy, and that strategy could be a simple just like the one that he taught (his HMA crossover strategy). Afterward, he presented a compelling case SHOWING how one could use that strategy with solid money/risk/trade management to grow an account from a few thousand dollars to roughly 1 million dollars.

Second, he asserted afterward that many traders wouldn't make that kind of money with that--or any other--system, because they'd overthink things, come up with various excuses for why certain things didn't work, etc. He sliced through all of the nonsense, and told us "if you want it, then come and get it." I wanted it badly, so he just gave me the kind of encouragement that I needed/wanted to hear.

 
okmortgageteam

I also believe, most retail investors don't believe monster returns (12%/yr or better) are available over the long haul because they get sold on the "if it sounds to good to be true, it probably is not true" dogma. That has always annoyed me as a cop out to pursuing or believing, achieving. The issue is, where & who will teach you how to achieve monster returns at a value you can afford to take the leap of faith. That is what landed me here and so far, I am for ever grateful. I have always believed, those monster returns are available in the investment world but how do you get access to learning the skills or the vehicle, without going to Harvard (I could never afford it OR ever had the skills to attempt)?

I love reading many of the points made here & thanks for starting this thread Hak. Your contributions, among many others, to this forum are invaluable and inspiring IMO.

But If someone thinks they are just going to show up and start trading and reach such a lofty goal, I question it will ever happen. As with any successful venture, hours & hours are involved. You must start with commitment, which turns to confidence as fear slowly erodes and then is topped off with discipline. But I doubt the journey of learning ever ends. Once that foundation is built, you got a shot and I for one am grateful someone has supplied the ammunition.

I am now starting to believe 3%/wk is attainable with my sights set higher. But 1st I had to figure out how to make 1%/mo never mind 1pip/day consistently.

Everyone's goals will not be monster returns but I sure take solace in the fact I can be in control of where I am going.

 
markpowers80

Great subject - confidence/psychology are huge potential drawbacks that most of us have difficulty with (and that is why psychology is part of the coursework here at Apiary. I know that I have seen several bees mention that they achieved funding and then were unable to make profits.

I have not yet been funded, so there is some concern in the back of my head about being able to perform when the time comes.

One part of the answer to my concern is that, when that time comes, I will know (already am beginning to feel comfortable) that I have gone through serious training and have been able to show some competence in trading. It may help me to download my trades once in awhile (once a week, at least) and calculate my expectancy, my average winners number compared to average losers number (last twenty or forty trades) and average profits versus average losses. IF MY NUMBERS SHOW IMPROVEMENT, MY CONFIDENCE MUST GROW. Does anyone agree?

By the way, thanks for the link to Shawn's talk on applying the Benjimin Formula. In addition, here is a link to the document on the Formula:

https://apiaryfund.com/training/document/benjamin-formula

Thanks all!

 
markpowers80

Psycho-Cybernetics is an old book that still has much value for me. It helps me to recognize that this "old dog" can still learn new tricks. Don't let the look dissuade you; some say the self-help industry started with this!

A few pages out of this book and I am ready to fight dragons!

Here is a link to it in Google Drive:

https://docs.google.com/file/d/0B4_m-cpc1s7MWF9UOXlCNFp3ZUk/edit

Enjoy!

 
lumir.filip

Hello All,

So great to read those comment here, shows me that I am not the only one who believes that proper trading can really pay off. I am from middle Europe and not many people around me believe that anyone can make money by trading, however that fact is actually pushing me more to succeed.

 
don_johnson

All things are possible ...at least in your practice account , real world still to be determined , looking forward to going for it

Practice Account update.png
 
don_johnson

Done for the day ...20% gain in an acct I use for a Test Kitchen and there have been many " fires" in this one ....Enjoy Trading today

Practice Account 20% Gain March 4 17.png
 
TruckingNTrading

I like to put my gains in goals. For example I aim for 3% a month. With just 3% I end the year anywhere from 25-36% give or take a few months that i did not make 3%. To some those may not be monster gains but to me 25-36% is a monster gain compared to most investments out there. Aiming for 3% in the gold 3 1000 account will start out at just going for $30 in 30 days. 3 trades at .10 lot sized closed out for 8-10 pips will get you to or close to $30 and then the remaining trades for that month should be between .01-.03 in lot size. There should be only 3 .10 trades in the month and the rest at low lot sizes to prevent from over leveraging your account. Eventually one of those .10 trades wont be a winner so I wouldn't place to many of those trades unless you are absolutely sure your trade will work in your favor.

 
greenbackman59

This is a great thread about what is possible when you have a strategy mastered and the confidence to go with it.

cdw4president, although you have a modest 3% goal per month, you need to focus on being consistent and confident with the proper money management technique. You are selling yourself short trading larger positions 0.1 at the beginning of the month then trimming back to 0.01-0.03. If you have a consistent strategy your wins would out weigh your loses and you could easily grow your account past 3% a month. It has taken me a long time to learn this lesson.

 
Andy10e6

I'm reminded of the old adage about how to eat an elephant. I got it wrong the first time I was asked, I said "On a large barbecue". The second time I was a bit wiser so I said "With a lot of friends". The more correct answer is to break it down into bite sized pieces. In trading, all three answers are correct. The Forex market provides us with the elephant and the large barbecue, Apiary Fund provides us with a lot of friends to work with towards common goals and words of wisdom from Hakchinoy show us how to break down the large tasks in to bite sized pieces. The elephant doesn't stand a chance.

 
tomwebbpe

As always Hak, you have a great post. I always learn something from reading your posts

 
hakchinoy

cdw: Everyone has his or her definitions for meager and monster profits. In fact, some folks here are only looking for supplemental income, and that's cool too.

A10: You had me at BBQ. :)

Besides, the ability to dissect an elephant sized goal into bite-size pieces is a life skill. Most folks (outside of Apiary) check out the Wall Street Journal, CNBC, Financial Times, etc, and they are awestruck and overwhelmed by all of that info. The irony is that we don't need all of that for making informed trading decisions. :)

 
lanus9

It takes a lot of effort, discipline and experience to make monster returns. It cannot be rushed or you get your fingers burnt. I will say being systematic, consistent and robust money management is the way to get there.

 
markpowers80

cdw, you have some interesting thoughts on trading size.

To me, a large Take-Profit combined with a smaller Stop-Loss (TP two or three times as large as the SL) together with a good trading-picking strategy will take care of risk. Dropping the lot size after reaching a goal does not protect one from losses, IMHO. Rather, it restricts profits.

Best wishes to you!

 
markpowers80

jhjbmvdm, I agree that sitting at one's trading desk with the expectation that one will make 'x' amount of pips or money that day can lead a person to frustration and a "now I have to make 'x+1' pips because of the last loss" attitude.

Rather, a person can sit down to trade with the *intention* of looking for *setups* that can lead to plenty of pips. Just look for the proper setups, and take as many as you find (within your risk level). Of course, if frustration arises, one should take a break and perhaps review some strategies or trading principles (or just get some fresh air).

I enjoy reading these forums, as often I find some positive viewpoint or encouragement. Reading this thread is definitely encouraging!

I believe that if I keep at it, I will learn to make half-a-percent per day or more! Starting at the $1,000 account and doing that, I will not need to change my trading style as the account grows to $2,500 and to $5,000 and more. All that I need to do is increase my lot size as the account size increases. Of course, I expect that experience will help me improve, as well.

Guys, the future's so bright I gotta wear shades!

 
hakchinoy

MP: Revisit the Benjamin Formula, and use it to explicitly determine what you'd need to do to generate that 0.5% (or more). :)

Each of my trading strategies/techniques is a chess piece. On the average, I know what to expect (loss or profit) from each piece (for each pair that I trade).

Trading also is similar to Battleship. Each return that I want to make is an opposing ship that I intend to blow up--before the MMs can blow up all of my ships. ;)

 
melavalt

Last weekend I moved from copper 1 all the way to bronze 2.

 
markpowers80

melavalt, keep it up!

Moving that fast will not always be possible, but the Apiary homework assignments are many times doable in less time than one first thinks.

If you get stuck, search the forum - there are answers out there somewhere!

My hat's off to all you bees!

 
handyretired

Thank you Don-J

for saying:

"I consistently moved my stops out farther from the market price looking for the reversal , now I move stops toward the market price to reduce the loss that appears imminent, then if the reversal happens it has to happen sooner or I am out of that trade and forced to rethink my entry/exit "

I can so relate to this. I am adding this passage to my trading Bible.

Because waiting for that "reversal" even if it does finally happen, it excruciatingly wastes tons of valuable time, and ties up resource that could have been in a good trade by making a fresh start following the plan.

It is painful taking a loss only to watch it come back ITM, but not nearly as painful as watching your pips erode with a bigger and bigger loss. I don't know why it is but losses always seem to pile up so much faster than the gains. Winners going 1, 2, 3, 5 pips and and loses going 10, 15, 20 pips at the same time. Go figure.

And riddle me this? Why will it always just touch the s/l and then back away, and stop a pip or 2 short of your t/p.

 
FXGold54

Might I suggest to treat every trade as "just another transaction" in your business. Just like every commercial en-devour, one cannot reasonable expect a 100% success/satisfaction rate

Personally, my entries, Sl and Pt's are thought out and set before price gets to my entry and I do not change them. That said, I have had trades decided, both negatively and positively, by fractions of a pip whether it be my entry (where I did not get triggered on what would have been a successful trade or entered perfectly), my stop (where I got taken out before the trade turn favorable or where it held and then went in my favor), or profit target (where price comes up just shy or on the positive side where it hits it exactly).

My point is, I believe it is important to not get too high, or low, with an individual trade. just rock 'em out according to your methodology and let let your expectancy do the heavy lifting.

Stay Green my friends :)

 
hakchinoy

Thus far, we've discussed what's possible, and we briefly touched upon some trading psychology issues. Although some might find it cool if I (and others) were to post more examples of past trades with nice returns, I figure that it might be more helpful to touch on "the before" rather than "the after".

In other words, since 1+% returns don't materialize out of thin air, I think it would be helpful to discuss various approaches. After all, my approach most likely will differ from DJ's and AG's approaches. That's "A Good Thing (TM)" (thanks Martha :-) ). Yet, I certain that each of us could learn a thing or 2 from this, and that thing could be one of the keys that will help to take our trading to the next level.

I'll stop here for now to give others a chance to digest this, and I'll do a follow-up post. I want to write it in parallel with placing a trade, so that my language would tend to be more in-the-moment. Plus, I think it also might be nice post the results of that example. I hope others also will join in the fun. :)

 
michaelj

I’ll join in the fun. Here’s a strategy that is about as simple as I can make it.

Look for four red candles to form on the chart with lower highs. Place a buy stop order just over the high of the most recent candle. If another candle closes with a lower high then move the order to just over that high and continue until the order is filled. Place a stop loss order at 110% of the 20 period average range. You can use the Alveo ATR indicator for help with this. When the price moves to 110% of the risk plus the spread plus the commission, trail the stop closely behind the price until trailed out. Short trades are just the opposite.

DO NOT, under any circumstances, take an early exit with a profit that is less than your risk on the trade. This strategy will consistently produce average gains that are larger than average losses. Avoid news events, times when the market is overly volatile or when the market is too quiet and you will also have more gains than losses and thus positive expectancy. Position size based on your account size and you will be well on your way to monster returns.

I’ve attached a short video clip showing a trade using this strategy as well as a screen shot from after the trade closed. This trade is short the USDJPY pair after seven green candles. At the start of the video six green candles have already formed and a sell stop order is in place under the low of the sixth candle. After the seventh candle closes the sell stop is moved up to just under the low and the order is triggered.

If you watch closely at about 3:30 you will see the stop moved to just over the high of the last candle and then trailed closely until the stop is hit. This trade was totally automated with an EA. Toward the end of the clip four red candles have formed so you may notice my EA entering an order to go long. Simple!

2017-04-17-2134_USDJPY_M1.PNG
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Cynthia

Just trying to keep it simple and find a way to bring in a little extra each month. Not overly concerned about monster trades, but consistency and confident are my two goals.....
Cynthia ;)

 
imranpaji

Trying my best making consistent pips every week
As you grow your account, then and only then
We can play with bigger profits or even Monster one
Good luck and Happy trading

 
edbernard

Thanks Hak for starting this thread. Shawn once said at a class he was teaching that it is possible to make a very good living in Apiary if you can average a profit of 10 pips a day. I figured out if you pick your trading time correctly when there is reasonable volatility it is possible to make 10 pips in about an hour or less and call it a day, or night. Then repeat the next day or night.

The issue for many folks is 10 pips doesn't seem like much. Greed takes over and when trying to make more profit the trade goes against you and then it becomes an uphill struggle. Fear now takes over making the situation worse. It is very hard to leave money on the table. Ok so what if your very first trade incurs a loss. Here is where training, discipline and the skill to set correct TP and SL levels comes into play. If I feel the trade is going against me I get out and recalibrate my thoughts before entering another trade. If you don't have confidence stop and get back the next day after a good nights sleep.

Here are the averages I have found. At 0.01 lots the value of 10 pips is about $1.00. Hence for 1 lot, 10 pips is approximately $100. When one reaches funding at the $10,000 level with confidence in your strategy you can set your trade at 10 lots. Now you are talking about $1000 for a 10 pip profit. Off course what I am saying is an over simplification. But I think you get the idea. Demo accounts are a great place to experiment and fail. To be successful you must fail a lot. The most successful people in the world also happen to be the biggest failures. Eventually they succeeded and it was BIG. Off course, analyze why you failed and learn not to do the same thing again.

If at a funding level of $1000 one can make a profit of 10 pips a day consistently on average, Apiary will eventually graduate you to a $10,000 funding level and more. It will take the same effort to earn $1 as it will to earn $1000. Well stated imranpaji.

This will only work once you prove to yourself you can make small pip profits consistently. My suggestion is to aim for a daily profit of 10 to 20 pips to provide some margin. There are times you can let your profits run buy raising your SL levels to lock in greater profits. Those situations are priceless when they occur. Take advantage of them.

This gets back to what has been said several times here. It takes a combination of confidence and discipline to make money in trading. Or anything else for that matter.

Happy trading!

 
hakchinoy

"Shawn once said at a class he was teaching that it is possible to make a very good living in Apiary if you can average a profit of 10 pips a day."

That notion also is a core principle of the BF. When taken at face value, that notion is quite disruptive (like disruptive technologies) to trading.

Many traders tend to equate tons of pips to monster returns; however, that might not be the case. Every trade, whether it's a scalp, swing trade, or position trade, and whether it's a loser or winner, has a particular market structure. That market structure contains an open, a close, and some pips in between. Some traders structure and/or manage their trades to use those pips more efficiently. The more wiggle-room that a trader gives to a trade, the less efficiently that the trade will use its pips. Conversely, the less wiggle-room that a trader gives to a trade, the more efficiently that the trade will use its pips.

Why is ANY of that important? Before I address that question, I need to introduce another notion to help set the stage for the answer.

My next statement also is disruptive to trading: monster returns have ABSOLUTELY nothing to do with the specific amount of one's equity. Whether one's equity is $100 or $100K, a 1% or 2% return still is a 1% or 2% return respectively; similarly, doubling or tripling one's equity (over a certain span of time) is what it is.

Apiary initially teaches lesser experienced traders to focus more on the pips than the money, and Apiary initially encourages them to trade with smaller (1 micro lot) positions. Yet, once a trader matures more, continuing to follow that same advice is like using a scimitar to slice and butter some bread (which isn't the best and highest use for that tool). Leverage is a trader's scimitar. Learning how to wield that leverage effectively enables a trader to give less or more wiggle-room to each trade.

The primary reason, why any of that is important, is that each trader has a different investing time horizon. Some traders need/want to make money yesterday; whereas, others might be willing to wait X amount of time to receive that money. The ones, who have shorter investing time horizons, ultimately will need to learn to trade more efficiently: meaning they'll need to make every profitable pip count.

It's that "making every profitable pip count" notion that produces the creativity that's responsible for working those trades to get the returns that we need/want.

Let's circle back to those 2 aforementioned statements that are disruptive to trading: monster returns don't depend on a specific amount of equity, and one could make a good living via averaging 10 pips per day. Why are they so disruptive? They're disruptive, because they simplify trading by weeding out all of the nonsense. One doesn't need a ton of pips to make serious money. One also doesn't need to hire a NASA team for building one's trading system. One could use any arbitrary strategy--including those quick 3-pips scalps (from the 3 for 3 challenge)--to make monster returns.

Next, I plan to take a closer look at what MJ was doing, and I'll approach it from my (money/risk/trade management) perspective. I also intend to do something similar with at least 2 of my strategies.

 
Orock

hakchinoy. . thanks for charing . encourage me to continue to learn. as the road is bumpy. i agree, giving up on my quest for the goal is not in the plan. stop for planing is, recharge my battery. then continue for as long as it takes. i will get there

 
michaelj

Many traders here at the Apairy Fund, myself included, find it a challenge to maintain average gain greater than average loss. It is one of the requirements to advance through the beeline gold levels so it is a significant hurdle for getting funded.

Once you are funded you no longer have that as a requirement but if average gain < average loss then you must have # gains > # losses to have positive expectancy and that is a requirement to be consistently profitable and move up in the funding levels. Maintaining # gains > # losses can also be a challenge, depending on your style of trading.

The most simplistic method to ensure average gain > average loss is to add a rule to your plan, and follow it, that says you will never exit a trade early with a profit that is smaller than your risk on the trade. The strategy I described above includes this rule. In all of my testing this one rule has had the most impact on profitability regardless of strategy.

I’ve attached another video clip and screen shot showing my first trade from this morning, just at the London open. This strategy is a variation on the theme, and uses the 64 period HMA as a trend indicator. Since I’m trading with the trend my setup rules are less strict. I’m looking for three higher lows in a downtrend or three lower highs in an uptrend. The color of the candles doesn’t matter. This trade is also short the USDJPY. The rest of the rules are the same. SL = 110% of the 20 period average range. Trail the stop when price reaches 110% of risk plus spread plus commission. Watch closely at about 1:30 and you will see the SL move to just over the current ask price.

This trade was fully automated with an EA.

2017-04-20-0659_USDJPY_M1_chart.PNG 2017-04-20-0659_USDJPY_M1_Order.PNG
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brianj2

hakchinoy, and others... this is such a great thread. I extend my thanks to everyone contributing to this discussion. I'm going to read this over, very slowly, and study it, because I feel like I improved as a trader simply by reading the portion of it which I have read so far.

 
hakchinoy

IMHO, most traders (including many Apiary traders), who are pursuing monster returns, are going about them the wrong way.

That's a bold statement; however, before I back it up, please realize that I didn't make that statement as a finger wagging know-it-all. I used to be a proud, card-carrying member of that group for several years--before I initially saw the light.

Here's the revelation (which is a part of my core trading philosophy) that opened my eyes: pips are for measuring price moves--not profits.

Let that one sink in for a moment, because it's another statement that's disruptive to trading. Combine that with the 2 aforementioned, disruptive statements, and the result is the skeleton of a simple trading system that can generate monster returns.

Monster returns--like consistent profits--come from solid money/risk/trade management. I stated before that Jeff and I independently verified via our own R&D that controlling one's losses has a SIGNIFICANTLY greater impact upon the magnitude of one's profits than the actual profits. I repeated myself here, because this principle is critical if one truly intends to go for the gold.

Shawn ruthlessly cuts his losses, and his (high) returns reflect that fact. We see that over and over every week during those Trading Room sessions. Yet, don't take my word; rather, try it out for yourself.

That's enough of the theory for now; let's put that theory to work.

Earlier, I promised to briefly walk through a few examples that illustrate my approach; I'll do that now. Please keep in mind that I tend to structure my trades as described in the BF materials. MJ graciously shared 2 examples of his strategy (which essentially is to wait for a pullback, and trigger off a 3-bar reversal). I'll focus on his 2nd example, since it featured a closed trade (structured with SL = 5.5 pips and managed until TP = 21.5 pips [roughly a 2.6:1 reward:risk]).

Please note that MJ initially stated that he structures his trades with 1:1 reward:risk; yet, he managed that trade (in his 2nd example) to a higher yield. This is very important; I do that too; yet, I need to circle back to this later.

For me, the specific entry, potential exits (SL or TP), or strategy of a trade doesn't matter as much. I manage my trades like a baseball manager manages his hitters, or like a chess master manages her chess pieces. If I had analyzed MJ's potential trade setup, then I would have check some higher TF charts to see if price had any more room to run. I also would have assessed the market structure and volatility to determine whether or not scaling into a larger position might be feasible.

The amount that I'd be willing to put at risk would depend upon the confidence that I'd have in that potential setup. With MJ's setup, I'd have been willing to put 0.5% to 0.6% at risk (over that SL). Although my potential profit initially would have been similar, my actual profit would have been 1.3% to 1.56% respectively.

Yesterday around 6:45 GMT, I noticed a U/J M5 H&S forming. I noticed that if I were to place a trade, then I could go with a SL = 9 pips (placed a few pips above the H of the head). I also noticed that the measured move was TP = 9 pips; H1 was making LHs and LLs; and I noticed that price appeared to have more room (at least 32 pips) to run off H1. I was more confident about this potential setup, so was willing to put 2% at risk with 3:1 reward:risk. I ended up with a 6% profit from that trade.

Actually, I've been (and still am) working an E/U H1 H&S setup (which currently is consolidating). I'm only taking quick scalps off this, because I've had some bad experiences trading H1 H&S off E/U during Friday afternoons, and I don't want to hold anything over the weekend. Yet, I have successfully trade a few of them for profits on Fridays, so I'm still waiting and watching for a potential break. If that happens, then I might be able to take down 3% to 6%.

Please note I'm not doing anything that's complicated or fancy.

 
brianj2

I'm being serious here, when I say I am contemplating shortening/simplifying my trading plan to one thing...

"control risk by keeping losses small"

I have developed a *pretty good* eye for spotting good trading opportunities. Of course, we all know "past performance does not indicate future results." Which translated means, you never know what is about to happen, no matter what. You can make pretty good guesses, but you can also be wrong a lot. Well, "I" can be wrong a lot anyway.

To overcome the Silver 3 requirement to keep (AvgWin > AvgLoss) and (#Wins > #Loss) required me to really be disciplined about tightening up my stop loss which also means being disciplined to take trades only when the shorter stop loss makes sense (by being very mindful of support/resistance levels.)

The result was a steady increase in profitability.

It also helped me discipline myself to quit while I'm ahead. Something this thread, actually, also helped me do. Namely, if I'm 10-20 pips up, there's nothing wrong with calling it a day.

For example, today was my first day as a Gold 1 trader. I got 6.5 pips, decided to quit. Went against my own advice and found myself about 10 pips in the red. Got into another trade that brought me to 6.9 green. So I closed my computer and am taking the rest of the day to do other things. It wasn't quite 10 pips, but I finished day 1 on a positive note.

So maybe that is a simple plan:

1. Control losses.
2. Take trades that allow short stop losses.
3. Go for 10-20 pips per day, and quit while I'm ahead.
4. Control losses.

Nice, simple, and clean. As a software developer I've long been a fan of a particular quote, "Perfection is not found when there is nothing else you can't add to the software, rather it is found when there is nothing else to remove." Or something like that.

Comments?

 
alexkrov

It took me some time to learn how to discipline myself. When I am in green(both pips and profit ) i always think " maybe I can do one more trade to earn some more pips" ,or "yeah I'm on fire just one more". When I give in to this kind of thinking I always end up in red. So :
1. Control yourself
2. Know your goal for the day
3. Set your goals on the level that you can reach

What I learn so far : it always comes down to control yourself

 
hakchinoy

BJ2: You're in good company. :) I greatly reduced my trading plan and simplified my trading system by relentlessly focusing on controlling my losses. One of my loss related rules is to not lose more than I realistically could recover via a series of X trades (where X depends upon the technique). Initially, that was roughly 10 of my 3-pips scalps, but I've since mastered the ability to take out multiple losses via a single "rifle shot" swing trade too.

I used to work much harder at my trading, and I recently have begun to work smarter at it.

AK: Setting achievable goals also promotes HEALTHY growth, and helps to avoid overtrading.

 
brianj2

Hak that's great feedback. Makes me feel like I'm on the right track.

 
mtrade

I read a book from a professiona Forex trader (and coach) and he stated that his aim is to look to make somewhere between a 1% to 2% gain on average return per week!! I was shocked as I have always been expecting the professionals to make much much more than that..
This is coming from a professional so it was a real eye opener from me. Forex trading is all about hard work and consistency!

It also (I hope) makes sense that I have been working hard for many months now and haven't found out how to execute a profitable strategy yet. I guess it just requires hours and hours of practice.

 
Snowboarder

@HAK,

I also use a "rifle shot" big gain type trade to recover my scalping blunders. Recently, as I am about a week from being funded, I might just stop scalping for a while and stick to a few big gaining trades per week. I like the London open, I just have to rise and shine at 4 a.m. I don't like letting my trades run unattended overnight.

 
hakchinoy

In every other profession, the specific performance varies from person to person. If he's happy with only averaging 1% to 2% per week, then that's cool for him. Yet, I don't--and I'd recommend that you wouldn't--allow others to constrain what is possible.

SB: Understood. I did the opposite (focus on my scalping) prior to being funded, and then I eventually acquired/honed my swing trading skills to the point that I can do the "rifle shot" trades. The benefit of having both is that I have more flexibility, and I can maneuver in a larger variety of market conditions.

 
brianj2

Where does one obtain one's rifle, so to speak?

 
hakchinoy

"Where does one obtain one's rifle, so to speak?"

Unfortunately, neither I nor any other trader could answer that for you, because we're not you. Yet, I can touch on what works for me: I have a few candlestick and chart patterns that I use for mine.

Please keep in mind that I trade ranges primarily and trends secondarily. Range trading is all about trading reversals. The 3-bar reversal, engulfing, and pin-bar candlestick patterns are among my favorites. Combine that with Alignment off a bounce from a key S/D zone (off a higher TF), and correlation; the result is a "rifle shot" trade. When trading trends, I focus primarily on breakouts and secondarily on some pullbacks. In both cases, I also look for Alignment as well as accumulation/distribution from a key S/D zone with correlation.

Check out my Hakinator GT Microburst Breakout strategy thread for more details (and specific examples).

 
brianj2

Ok HAK... well, for this morning's session, the rifle wasn't much use for me. But I managed to use my handgun and fists, got my 10.6 pips, and I am outta here! (Still neg on the $ but at least I got my pips. Will need to work on the other.)

Thanks for all the feedback. It's helping. Gonna go update my trading plan, per my previous post.

Happy trading!

 
brianj2

@Snowboarder: I'm so glad you posted your comment early on in this thread about revisiting the Benjamin Formula. You always add good things to any discussion!

I actually thought I had viewed that, but decided to review it based on your comment. Well, somehow I must have missed it, gotten interrupted and never made it back, or something, I don't know, but I had not watched that.

Wow that is good stuff! I feel like I'm only just starting to get a good foundation. Very interesting the effect I'm experiencing from achieving Gold 1. Not a plateau at all, but a feeling of, "okay, I've accomplished so far, but only by the seat of my pants." Now I feel like I have enough experience to understand more of the things that are talked about, and a feel for what my strengths and weaknesses are. Now I can get down to developing some methodologies and formulating a plan of attack.

That $2 TRILLION per day Forex market better watch out, cuz we're fixing to come in guns a'blazing!

 
hakchinoy

BJ2: I attached 3 screenshots (W1, D1, and H1) of U/J that I currently intend to exploit using 1+ of my "rifle shot" trades. The W1 chart shows me that U/J still is trending downward intermediate- and long-term; plus, price broke a W1 S earlier today. The D1 chart shows me that the coast looks pretty clear for a nice downward move, and that I shouldn't run into much interference. The H1 chart shows me that price is moving from a supply zone towards a demand zone, and confirms that my trade still is in the clear.

The pattern that I'm exploiting is the gap (U/J opened at a considerably higher price than it closed on Friday). At the time, that I'm writing this post, I estimate that this pattern still has roughly 50 to 66 pips left. So that's more than enough pips for me to work with to harvest some nice profits today. :)

I'm using a combination of scalps and swing trades to trade the consecutive waves off M1 or M5, and I'm building and holding a position trade concurrently off H1. I like to use several smaller size positions (1-3 micro lots) for scalping or swing trading the waves, and I started building my position trade with a smaller size position (2 micro lots) too. That way I could be more nimble, and I could fire off more trades per my rules.

Had I simply placed a position trade and held it for my target range, then I'd take down somewhere between 1% and 4% via that "rifle shot". If I can exploit some interesting volatility off M1 and/or M5, then it might be possible to boost that potential yield further.

ujRifleShot_W1.png ujRifleShot_D1.png ujRifleShot_H1.png
 
Bob B.

Sure they are. But not necessary. You can make a killer income on 20 pips a day with good Money Mgt.

If you are a fan of American baseball, ( which I am not), look at the record of Babe Ruth. He also was the king of strike outs.

For me, I can eat my Elephant one small bite at a time.

Best of Luck!!!

Bob B.

 
brianj2

@HAK I'm reading this as a reversal of the ~1y trend, with the top of the gap providing a new support level. I'm going to follow this. If price tests the support and rebounds that will provide confirmation, but if it breaks through then I see a lot of downward potential. Either way it looks to have some potential for some healthy profitability.

I figured out some time ago something that has really helped me. That I never know. You might be right about the down trend. Or, I might be right about the reversal. Only the $2T oil tankers know. So I will probably play it by setting a sell stop below that bounce off the gap, and a buy stop a couple pips above the next logical resistance level.

That way, if I'm wrong, I can still be right. And if I'm right, then I won't be wrong. Right?

 
brianj2

@HAK looks like we might not have to wait long to find out, either. The gap as support theory is being tested as I type this. Watch how it keeps hammering on the line! But with successive higher lows.

 
hakchinoy

BJ2: It looks like your analysis was more correct short-term. :) Yet, I still ended up scratching out nearly 1% (with a few zigs and zags). :)

Yet, U/J (and G/J) totally caught me off-guard for a while earlier today (during part of the Asian session). I'm used to relying heavily on the historical correlation between E/U and U/J as well as E/U and E/G as filters, and those pairs currently and temporarily are uncorrelated. I ended up having to lick my wounds after having taken 2 quick losses unexpectedly in one of my live accounts. At least I obeyed my rules, but I caught myself right before I began to revenge trade. (I still had to let it out, but I did so in a demo account.)

Anyway, I stepped away for a few hours after having released some steam (in a demo account). That helped a lot. After I woke up, I decided to demo trade for a bit first. I got in on some of those lovely G/A M1 ranges :) and generated 2% from that, then I switched to several other accounts generating somewhere between 0.5% and 4% per account.

I didn't write that to brag, rather, to illustrate that all of us can have a bad trading session, and we can turn around and follow that up immediately with better trading sessions.

 
brianj2

@HAK - "short-term" being the operative word. I see a key resistance just north, in the 111.50-112 range. The 112 would be a significant one; if PA goes through that it could likely blast through before retracing back to it. But if 112 is too strong resistance, we might see price get up in that area and then head southward, toward your former prediction.

Ok so I can't resist - I'm predicting there is a very strong possibility U/J will go either up or down. ;-)

I guess, to me, the key takeaway is that we don't know which direction. HOWEVER what we do have is an educated-guess "framework" that helps us identify the key points at which the twists and turns are most likely to occur, so we can setup accordingly.

Its only fair to admit as well that although I might have had some measure of rightness in my prediction, I've been having a terrible losing streak the past two days. I've been testing the Bankers Close strategy, and I think I may be jumping in too early. My timing is off on so many trades lately - being right on the direction, but being stopped out before it heads off.

I'm curious about your multiple accounts. That does sound like a grand approach to letting off steam! Do you go back to using your bronze/silver accounts? I just haven't gotten to doing that yet. Maybe it is something I should try.

 
michaelj

Thanks for sharing this Hak. Great information.

brianj2, in addition to your bronze and silver accounts you have your Gold I and your Gold II accounts (once you get to Gold III), plus you can have four more simulated accounts which can be reset just by contacting support.

I practice every day in my simulated accounts and I also switch to "demo" if I'm tempted to do some revenge trading. My rule is if I take three losses in a row I switch to demo for a cooling off period, even if I was following my plan. If I break my plan I get to immediately spend some time in the demo "penalty box" contemplating my errors.

 
hakchinoy

MJ, you're an IT guy like me, so that makes us skeptical by nature. Discussing monster returns without also discussing taking losses isn't realistic. IMHO, that also isn't very helpful.

I've learned from experience that sometimes taking a strategic loss could set me up for snagging a monster gain. For example, I have taken losses on some trades that I know that I would have won (had I waited longer for them to develop), but doing so would have tied up capital that I could have deployed into a better opportunity. For me, sometimes the 2 birds in the bush are worth pursuing more than the one in my hand--especially when the 2 are ostriches and the other is a humming bird.

BJ2 you might be right. I'm looking at those levelso too.

 
michaelj

I completely agree with that. I have enough backtesting and forward testing results now to see that even my best strategies have less than a 60% win rate. It is not only possible, it is a certainty, that I will have strings of 10 losses in a row, or more, and the strategies are still working. Psychologically that's still a challenge for me so I've found it helps to take a step back from the market, take a few deep breaths, and do some practice in a demo account, before I go back to work in my live account.

I just checked and so far my longest run of LIARs in my live account is 11. That was tough but at least they were all small losses. I didn't double down and try to get even, just took a break and kept following the plan.

 
CurtB

I agree with you MicaelJ, that psychological struggle with LIAR's can be difficult. The key is to remain confident in the strategy. I;m dealing with some of those same challenges.

 
brianj2

I've called in to reset my simulated account. @HAK I really like what you said about the penalty box. Based on my past three days, I think I might need to move some furniture into mine.

@michaelj your words are timely on the string of losses. I've had three brutal days in a row. I keep the losses small, but they add up. I've kept my emotions under control, but the losses keep coming. It has taken its toll on me, psychologically speaking. I can't see a way out right at the moment.

@HAK - I think we might be reaching the southward turn of U/J. It shows signs of weakness as it tests resistance. So I won't be surprised to see it fall back to the 110.25 area of support. Be sure to look at the weekly and monthly charts, cuz in my mind, I'm a lot more bullish from that perspective than I am from the D1. There's plenty of room to fall back to the 110.25 range and find support for a very bullish run. If it does break through those support levels, then I think the market structure is broken. That's when I'll turn bearish. I'm also keeping in mind recent comments, outside the world of Forex, indicating a desire to weaken the USD as a matter of policy.

My own personal takeaway from all this: Being able to read charts and being able to trade successfully are two different skill sets.

I don't know what LIARs y'all are talking about, but I think I'm tangled up in a patch of them.

 
markpowers80

bj2 - that's Losses In A Row - LIAR's - a term that Jeff Crystal, who hosts the CATT webinars, likes to use.

 
brianj2

Thank you for that @markpowers80

 
brianj2

So an update is in order. On April 27, I posted about having experienced a run of LIARS (which acronym I did not know at the time) and had a few of the worst trading days I've had since I started. I was pretty discouraged.

With all the great comments on this forum, in just this thread alone, it really got me thinking. I was getting whipsawed to death. And a lot of it stemmed from being too short-sighted.

I started being more selective about my trades, and paying a lot more attention to where it is in the price cycle, swing cycle, whatever you want to call it. I've also gotten more picky about how many pips I'm willing to risk, versus the potential for reward. Which also means I'm looking for bigger trades and not doing so much scalping.

This is also less stressful, because I choose more carefully, then I setup and then I quit looking at it every 10 seconds.

The result is that I have had some of the best trading days that I've ever had. I'm concentrating on the Beeline task of More Winners than Losers, Average Winner > Average Loser, and also working hard to bring my Expectancy out of the red and into the black, and making steady progress.

Just wanted to share that, and to say thanks to everyone who has shared their input, which helped me tremendously.

 
hakchinoy

Sometimes making a monster returns means giving up on one trade in order to place another, better one.

Last Thursday, after the Tokyo open, I stumbled upon a potential trade setup: a G/U H4 bull flag (that had just broke out roughly 2 hours before I stumbled on that setup). It had (and still has) a measured move between 250 and 350 pips (depending upon whether one measures that move from the R [a more aggressive target] or S [a more conservative target] of the rectangle portion of that flag). I planned to work that setup with a position trade and a series of scalps; I risked 2% to potentially gain between 20% and 48% (depending upon whatever the market would give me). So I scalped into a core position, and began to build that position after the Tokyo open. I continued working that setup through the London and New York opens, but I went flat around noon on Friday, because I don't like to hold positions over the weekend.

Starting on Sunday, PM Theresa May, EC President Jean-Claude Juncker, and several other politicians began making a series of comments that negatively impacted the European markets (including FX and equities). Those comments have been torching everything I tried to do with any GBP pair (G/U, E/G, G/J, G/N, and G/A). Yesterday, I gave up the ghost on my G/U position trade out of frustration, because all of that back and forth kept G/U hostage in consolidation.

For me, that's a pretty powerful statement: I, who primarily prefers to trade ranges, bailed out of trading during THAT consolidation.

After having taken a break, I scanned several pairs for any potential opportunities, and I noticed--slightly before the Sydney open--that price was near the weekly low for E/U off H4. Plus, I realized that this weekly low also happened to be the new monthly low; I noticed E/U making higher Hs and Ls off the monthly chart; hence, I expected to see price test that S and move higher. I noticed H of the previous day, and structured another position trade (off H1) using that H as my TP.

Price did everything that I wanted, and I ended up taking down 19% (on the position trade alone) in exchange for the 2% that I had put at risk.

Upon second thought, perhaps I also should mention--for the sake of money/risk/trade management--that I also placed a few parallel scalps with the initial leg of my position trade to build a 2% buffer. Doing so helped make my position trade a free trade. :-)

 
brianj2

@hak - and there ain't nuthin like a free trade! Great story, thanks for sharing. :-)

p.s. I recently submitted my simplified trading plan. But after several days of deliberation I'm going to update it again, to remove the restriction that says "Quit while I'm ahead."

The reason is that is an arbitrary mental limitation. It is true that I need to know when to quit. But if there is a strong trend or other conditions conducive to making pipeage, then it makes sense to keep going. I don't think it makes sense to have a rule that I'm going to break if conditions warrant it. I haven't decided yet whether some other rule goes in place of that one. I'll let that stew for a while before I actually edit my plan.

 
lpaviajr

Interesting stuff--thanks for sharing!

 
Paakay

So true!

I threaded water for a very long time in trading because of over-analysis then something happened from Silver I to Silver II. For a long time (think years), my chart analysis were great but I couldn't trade them to be profitable. Spent more than one month in Silver I and was borderline frustrated.

I am usually a calm person so I decided to do something about my lack of progress. My first order of business was to re-read the Benjamin Franklin formula and IMPLEMENT the concepts. I then watched the Trading Psychology and Money/Risk Management videos over again. Took down notes, simplified my trading strategy and included a filter before triggering a trade.

Since then, my trading results have improved tremendously. With the discipline comes better results. With better results comes greater confidence.

Currently, I am averaging over 5% per week since Silver II and even on days that I lose I am able to make it back in subsequent days. Trading is fun when you know what you are doing but it takes a lot of effort, dedication and discipline to get there.

Hit GOLD II today according to schedule given the time-bound (3 weeks of trading) achievement level.

I am excited and can't wait to get to GOLD III.

So I believe monster results are possible and BEELINE helps if you are willing to forego your assumptions.

Happy trading!!!

 
brianj2

@Paakay - congratulations are in order for you today, for reaching Gold II. Keep going!!!

 
hakchinoy

"I am averaging over 5% per week . . . I believe monster results are possible . . ."

Great job!! :-) You already are making monster returns; keep it up. I wouldn't be surprised to hear about you averaging around 10% per week relatively soon. :)

Additionally, I probably should have mentioned in my prior post that I had back-tested that position trade several hundreds of times, with 20 different pairs, off multiple TFs. I also had several months of prior experience--including several, spectacular crashed and burned (perhaps scorched is better), bungled trades (some of which lost real money)--building position trades that way (and several years of experience with position trades in general). I also started position trading with significantly smaller target yields (1%); I iteratively increased my target yield as I continued to grow as a trader; and I haven't finished growing yet! :D

In IT circles, I'd say that I had to fail my way to success, in order to become confident enough to execute the way that I did.

Stopping while one's ahead . . . "that is an arbitrary mental limitation".

I agree; it was a limitation that I had to work through; and that is one of the reasons which inspired me to start this thread.

 
jeff.b.carter

THIS IS INSPIRATIONAL

 
brianj2

@HAK - I think we might have just witnessed U/J making its U-turn and heading south. Had a trade +27 pips thereabout, and managed to stop out with 2.5 when it decided to dive bomb. I did manage to get 35 pips out of U/C, so I can' complain.

 
Paakay

Thanks @brianj2

 
hakchinoy

"THIS IS INSPIRATIONAL"

That's was (and still is) my original intent: to inspire other Apiary traders to think bigger. This already has been paying off dividends, because other here are contributing ideas that also are inspiring me to tweak a few things here and there. :)

BJ2: I agree regarding U/J especially since it has formed a H1 double top. :) Now to look for some correlation to help confirm that move.

 
brianj2

@HAK - well, I don't know (again!) All it did so far was come back down to test 112.089 and is back well above 112.650 as I write.

Anyway... I came back this morning and found U/C making some nice waves, predominately in a downtrend for the time being. I made 35 pips (last night) going up... and I caught 30 pips coming down. I have finished the week in positive territory for the first time ever!!!

Time to shut it down for the weekend. Happy trading everyone!

 
Cynthia

I really loved reading your posts. The post from April 2.17 last paragraph really resonated with me. Thank you for all your words of wisdom in the training room as well. I learn a lot from them!

 
stwilliams21702

Thank you for sharing your comments! I need to visit more often.

 
Norma Jenner

This post (to BC Momentum''s thread) does not show up in list of my posts, so my apologies for posting it again, here. Maybe posts are not updated over weekends. The posts I tried to put on software suggestions also have not shown up.

A few things that I often read on these forums keep twanging my wonderings.

One is what a huge help it can be in adjusting plans to attain profitability if for every trade we have a record of MFE and MAE ( max. favorable excursion and max adverse excursion). These help immeasurably w stops!!! and targets. I will put a request in to Alveo support to add these two stats to the Trading Stats. Please would you each help me out and go vote for that too? You will be so glad you did!

Another is that folks seem often to be risking 1% or attempting 1% which would be great provided consistency and profitability had first been established, but I don't read that. I read a lot about home-run hitters.. for a while......then dead quiet. A tiny % can do it, but only if consistently profitable w no grave digger trades

Wouldn't it be easier to establish and prove and maintain consistently profitable stats on the minimum lot size, then simply increase lot size? I'm not seeing the value in any other approach. I think, am hoping it can prevent tarnished gold. There is an excellent compounding build plan one can establish called Fixed Ratio, based on one's own stats, which may be the best for early building up to $50-80k, when some percentage methods may be better after that. I'm not a math person and do not want to be, so don't ask me about these methods, but do check out different methods. Fixed Ratio does preserve capital...my first goal.

Another thing I hear often is to enter multiple lots and peel one off as soon as it makes the whole trade at least b/e. If you have no stats for stops/targets, that approach has some emotional appeal. But two caveats I think should be borne in mind. First, if your stats show a target range that will capture, say, 80-85% of your wins and win% is high, then for results, nothing will beat all-in/all-out at one target. The other caveat is that if your win % is < 50%, you will almost be obliged to have a losing record by taking 1/2 lots off at b/e. So it's fine to take some off early IF you have a high win% AND you know mathematically where you end up, but make sure to learn a little about probability so you really know.

These are my own dilemmas as well. Tough business. Warmest wishes for good stats.

Sat, 05/20/2017 - 7:48pm
edit

 
hakchinoy

Without consistency, one can't establish a baseline for one's profitability. So one would have no foundation upon which to build.

"Wouldn't it be easier to establish and prove and maintain consistently profitable stats on the minimum lot size, then simply increase lot size? I'm not seeing the value in any other approach."

I'll play Devil's advocate for a moment (hoping to help flesh out another point). Are you implying or inferring that one can't hit home-runs via trades with a small position size? Please keep in mind that a trader has multiple options for structuring and managing profitable trades. Whether a trader opts to use more or less leverage, all that really matters is that he/she has the discipline to enforce the appropriate SLs.

"There is an excellent compounding build plan one can establish called Fixed Ratio"

I'm not familiar with that technique; however, I'm VERY familiar with compounding as it pertains to trading. Equity compounds (or grows/shrinks exponentially) over a series of trades.

"if your win % is < 50%, you will almost be obliged to have a losing record . . ."

That isn't always true. Trading profitably with a lower win-rate would require that trader to structure/manage those trades with higher reward:risk.

 
DaleB

I found this entire thread to be of particular interest. There is a bunch of great input from quite a few folks here. As a result I am going to revisit the Benjamin formula....try to simplify things and maybe get back to basics.

 
Norma Jenner

Hak, my thoughts were in behalf of folks who have not yet established a long enough record of consistent profitability without large drawdowns. A lot of folks are hitting daily loss limits or burning out of gold. Why? Would that happen if they used minimal lot size until they could consistently trade well?

If a trader does not perform with a system well enough to have good stats (consistently profitable w/o big DD) using minimal lot size, to me it only makes sense to fix the trading errors before messing with the wonderful advantages we have of ways to leverage and manage good trading, rather than losing more money than is necessary to get right with the basics. If a trader cannot earn good stats using minimal lot size, why throw good money after bad? Why not fix the trading errors first? The point is to become a reliable good trader.

I didn't say or imply anything about home runs. They are a consequence of good focus, planning, good trade execution & management at any lot level.

Regarding my comment on win rate < 50%, please understand that that referred specifically and only to the practice of taking off half a position at b/e. The variations are infinite and will give different results from those below, but my point was that if we r going to be peeling off ½ position, we NEED to have looked at the math first, based on our win %, W/L ratio or we could be shooting ourselves in the foot without realizing it. I first saw this on Woodie’s CCI site, written by therookie but any basic probability calculations help. He used a 1.6:1 W:L which is minimal.
Example 1 (no move to b/e):

Assuming we have a 50% profitable system (or method) and calculating with 10 trades. Using a 10 tick stop, and 16 tick profit target with 2 contracts.

2c x 5 losses x 10 ticks = 100 tick gross loss

1c x 5 wins x 16 tick = 80 tick gross profit (half the position)

1c x 5 losses x 10 tick = 50 tick gross loss (other half)

Net loss would then be 70 tick

Example 2 (move stop to b/e when profit target hit):

Assuming we have a 50% profitable system (or method) and calculating with 10 trades. Using a 10 tick stop, and 16 tick profit target with 2 contracts.

2c x 5 losses x 10 ticks = 100 tick gross loss

1c x 5 wins x 16 tick = 80 tick gross profit (half the position)

1c x 5 b/e x 10 tick = 0 tick (other half)

Net loss would then be 20 tick

OK? Compare that with a normal all in/all out example with 2 contracts.

Example 3 (conservative w 2 contracts):

Assuming we have a 50% profitable system (or method) and calculating with 10 trades. Using a 10 tick stop, and 16 tick profit target.

2c x 5 losses x 10 ticks = 100 tick gross loss

2c x 5 wins x 16 tick = 160 tick gross profit

Net profit would then be 60 tick

 
mwfinad1211

Legendary trader Tom Basso (IMO arguably one of the best ever and one my personal favorites!) opines that there are 3 parts to trading. Strategy (buy/sell), Money Management (risk management/position sizing), and psychology. They are listed in opposite order of importance according to Tom.

Dr. Van K. Tharp offers us the opinion that returns are simply a function of risk sizing/money management/position sizing. Each trading strategy/system has a mathematical expectancy. Using that expectancy as a beginning point, we use position sizing to then determine and more importantly target risk/return metrics. Risk being the more important metric.

Tom Basso targets a max drawdown of 20% in a month, of which he admits is the max pain point for most clients. Does he have certain months where drawdown is above that? Yes, however statistically speaking that occurrence is very rare. Based on this his position sizing and thus profits/returns are a function of that targeting.

Based on the work of these two men I have adopted a money management/position sizing strategy that is adapted to our performance metrics at Apiary.

With the target in mind that we need three contiguous months of profits to increase funding, my trading plan takes a different risk/money management/position sizing strategy for each of the three months in a rolling quarter. In the first month after a capital increase my trading plan allows me to take maximum (within parameters of my expectancy and prevailing market conditions) risk and position (sizing)[including scaling in and pyramiding]. After one month of profits is achieved however, my plan tactically reduces positions sizes for months two and three (two less then one, three a minimal amount of risk) with the tactical goal of being profitable for the rolling three months and understanding shooting for moon on the second and third months are counter-productive to the over all goal of increasing my capital under management and hence overall long term profits.

In my opinion (and based on experience) depending on position size targeting returns and risk, Hak's metrics for "monster returns" are very possible. But it all comes down to fundamentally and intimately knowing your trading strategy(ies).

For me (hopefully without violating NDA :) I attempt to target approx 50% per year. Some months make that goal look unreasonably small. Some months make that goal look unattainable on an annual basis. Bottom line, in my honest opinion, "Monster returns" are possible provided one understands their system, is comfortable with it and the drawdowns it produces, and that they understand the more return they target, proportionally the more risk they target.

My 2 Cents

 
hakchinoy

For me, position or SL sizing (essentially the same thing) is a component of money management, trading psychology is a component of trade management, and SL or TP sizing as well as trade frequency are components of risk management.

"it all comes down to fundamentally and intimately knowing your trading" system.

"[Home-runs] are a consequence of good focus, planning, good trade execution & management at any lot level."

That's exactly my point. :) I think many folks overcomplicate that notion with mantras about trading with the smallest position size, going for TPs of at least X pips, etc. Each trader eventually will find his or her own sweet spot. Whether one opts to swing for home-runs or bunts, both types of trades require exactly the same amount of planning and money/risk/trade management.

"the more return they target, proportionally the more risk they target"

That isn't necessarily true. One could structure or manage one's trade such that only a fixed amount is at risk regardless of the amount of the yield of one's potential profit. Plus, one could structure or manage one's trade such that it would become a free trade at a certain point. (I love to do that with my position trades.)

 
jrh

Thank you for sharing this very challenging and relevant topic!

I sincerely believe that Monster Returns are Possible and that the secret to achieve this is to revive the sleeping giant
within every one of us. We must search an find that "X" factor which shall emerge as we actual focussed practice apply the basic fundamentals we have learned. We need to apply a strategy/s which suite our personality best (one shoe doesn't fit all).

The Pink Elephant we all need rid ourselves of is "the fear to act" - FEAR = False Evidence Appearing Real.

I wish all of you every success in you quest to achieve Monster Returns!!!

 
olaag

If contributing as a realist, monster returns may be possible if one can find a winning strategy and be consistent at it. (this will include rules on which market conditions to trade and which to avoid). Good luck.

 
hakchinoy

Traders don't need to FIND a winning strategy, because so many of them already exist. Instead of searching for the Holy Grail, each trader simply should select a strategy and master it. After having mastered it, one could tune it to perform more efficiently.

Obviously, going for monster returns before trading consistently is putting the cart before the horse. Consistent profitability clearly is a prerequisite.

I've found that most lesser experienced traders struggle with the anatomy of a monster gain, because that anatomy manifests in many diverse forms. So one size does not fit all, and an approach that works brilliantly for one could fail miserably for another.

Every aspect of trading is a journey in self-discovery.

 
Norma Jenner

Hak, so well said. Your thread here, with encouragement to think all things are possible has been a daily source of uplift.

 
nickfx153

Thanks for sharing that anybody can achieve excellence in trading if we put the time and effort necessary! I m still working on how letting profits run to the max through the 1m TF.

 
gaelsorc

Hak,
Thanks for carving up the elephant. It's clear that I am not the only one learning from your posts. :) :)

 
joed53

The pairs that offer big gains ( and losses!) are GPB/JPY and EUR/JPY. I had a 199 pip loss last night that Alveo shut down. I was waiting for the trend to reverse and it didn't happen. I then put up two trades that got 199 and 203 pips. The first just missed exceeding the loss, so I had to do it again with the second. Now I've got to master 3 wins on trades lasting 3 minutes, or less.

 
daabone

Big returns can happen. News items can certainly bring them on if you hit them right

 
jrh

If we were to combine the comprehensive and invaluable input from all of you, we could easily produce a best selling book on trading!

If I may add my point of view as follows:

#1. The only way to achieve monster returns is to capitalize on big moves and market reversals - ensuring that the reversals are not benign - If we don't take on the instruments with the largest ranging targets it becomes difficult absorb losses which are inevitable and still make above average profits. Short scoop outs are not my main focus. I do scalp but mostly within the parameters of the big movers where there is less risk and better control. Stay in lockstep with the Trend.

#2. Understand the 5 phases of the market

#3. Review the historical precedent (Patterns) of the market

#4 Use a lasting strategy which It will last as long as the market exists

#5. Analise the previous days close price H/O/C bars/candles which is reflective of all participants including the big players - check to see who won the week and the day (bulls or bears)?

#6. Risk Management - I use risk ratios from 0.5 to 2% - dependent on the trade selected. I use smaller lot sizes where larger stops are used

#7. We can't afford the luxury of being risk averse by remaining on the sidelines as spectators - rather be averse to system jumping - be willing to invest in yourself and your future.

"The market is like an oil tanker ship which takes up to 18 sea miles to turn fully".

 
jrh

H/O/C should read H-L-O-C

 
hakchinoy

"The only way to achieve monster returns is to capitalize on big moves and market reversals . . ."

Actually, several ways exist. Although we need at least some volatility, we don't necessarily need big price moves. Instead, we need to be efficient with capitalizing on whatever the markets are giving us at that time.

"If we don't take on the instruments with the largest ranging targets it becomes difficult absorb losses which are inevitable and still make above average profits."

It's no secret that I'm comfortable trading with pairs that have moderate to large, daily trading ranges: actually, 3 out of 4 of my "4 Horsemen" have them. Yet, I'm equally comfortable trading with pairs that have relatively narrow, daily trading ranges (like E/CHF and E/G), and one can make monster returns trading with those pairs too.

Please keep in mind that it's not the price moves of the pairs that make us money; rather, it's how we trade those price moves that makes us the money.

 
jrh

Ditto

 
samhkelleysr

For those seeking monster return go watch the movie "Money Ball". The movie is about the beginning of statistical analysis in baseball. The theme is that home runs do not win baseball games, base hits do (because the consistent getting on base leads to crossing home plate more often than swinging for the fence does). To put this into trading perspective, does Shawn make monster trades? Everytime I have seen him trade is it usually 3-5 pip wins (i.e., base hits) and he has a lot of those and they add up to a great return at the end of the month or year. My point is if you focus on consistent wins, even if they are "small", you will generate a great return over time.

 
Norma Jenner

@Sam: Ichiro!!

 
hakchinoy

Home-run trades and monster returns are 2 entirely different things.

Although Shawn hits his fair share of home runs, he routinely shows us every week how he makes monster returns 2-3 pips at a time.

Again, a pip is a pip and a win is a win; collect enough wins and you'll have a monster return.

 
brianj2

hakchinoy that is very well put!

 
jgeri

Numerous great articles on this thread. Being patient, consistent and continuoulsy reevaluate your system leads to better results. Somedays it seems so easy and then all of a sudden that perfect system doesn't seem to go to plan. I have gone back and forth from the 1 day time frame to the 30 minutes time frame, At first I was thinking that I should be trying to have a 100 pip day to make reasonable profits, these articles brought me back to reality and a lot less discouraged. Thanks for all of the advice from everyone. I will have to re-read and continue to read this thread for all of the great information. Peace guys

 
gaberperez

What a fantastic thread.

I would like to add that "intelligible" persistence has to play a the most role in trading success as well.
You must learn from your mistakes to develop your confidence and proper discipline goes hand in hand with it.

One of life's quirky truisms is that the best people at most things have made the most mistakes learning how to do it...

Thanks for the read everyone.

 
dmurph33

Yeah, this is a awesome tread just read the whole thing for the 2nd time. Lots of good stuff here!

Thxs

 
hakchinoy

"One of life's quirky truisms is that the best people at most things have made the most mistakes learning how to do it..."

I've lost count of the number of FX accounts that I've blown up. Believe it or not, I still periodically will blow up some FX accounts while conducting experiments for tweaking my trading system. Doing so keeps taking me out of my comfort zone, and this process continues to help me to grow as a trader.

Don't get me wrong: I'm not saying that I enjoy blowing up FX accounts. :-) Rather, I'm stating that I don't lose sleep over each one that I've blown up. My aggressive testing has shown me how fast I reasonably can go, and it has pointed out some glaring weaknesses in my money/risk/trade management (that I have fixed).

I'm not suggesting that my way is the best or most effective approach, but it's what works for me.

 
heidi

Thanks Hak for this thread. Very encouraging. My take away is that too often I look for the home run trades, and really haven't exploited the potential for monster returns in the consistent small pip gains. I'll start to focus more on that. Cheers.

 
Alacron

First things, first; each individual's "monster" is different. Personally, a 20 PIP winner is my monster, but that might be crumbs to others. With that being said, once we determine our monster we have to consider the pair that we are considering, the average rage of that pair, and the time frame. Take a look at the history of the pair you are considering and see if it has ever made a swing in concert with your "monster". Then consider how long it took to achieve that swing. Be mindful of your risk or drawdown when placing it - the trade could very easily disqualify you from opening other trades; we all know the hive will shut us down if we hit that magic threshold - LOL.
So, to be direct and answer the blame question - YES, monster returns are very possible.

 
KennethC

It's been a while since I posted in the forums and today I've come across this topic and was intrigued. I am also trying to pursue my monster returns through Forex. : ) Currently I'm just trying to stay positive month to month on my live fund so that I can advance to higher level every 3 months. No losing months since I was funded several months ago. two upgrades so far now moving onto my third upgrade in a couple of months hopefully.

Meanwhile, I've been trading regularly during asian and london sessions very diligently on my personal MT4 accounts. I say accounts because I'm either trading with a very small live account and sometimes even demos to perfect my trading/mm strategy, and been blowing accounts left and right. I realized that I MUST overcome the fear or hesitation that I see in myself preventing me from executing trades when my entry criteria or GUT feeling tells me to go in. That gut feeling is not a random emotional impulse, rather I've come to realize that it's coming from my subconscious level brain which was trained through years and years or staring at thousands of charts and that gut feeling is not explainable in words. Sometimes I have an almost 100% confidence that the price is going to go certain direction when I see certain behaviors of price action on some pairs, and I'm almost always right. Yet I still hesitate...

I now mostly find my entry signals in ONE minute chart while having other time frames open as well (5, 15, 1h, 4h, daily). For me 1m chart provides me with the most logical entry points possible if I can find the right patterns and behaviors. I'm looking to making 8, 15, 20+ pips and more if the situation allows it.

For me, monster returns will be trying to make 30-100 pips in a day or two in with very very high leverage. I mean 1:100 leverage. Yes, sounds crazy right? with $10, you can place a .01 lot eith plenty of margin left when you have 400:1 leverage (I live outside US, so there are reliable brokers providing that. (usually 400:1 and for really good brokers they only give 200:1) So I'm developing a strategy that allows me to enter trades often and get out fast while watching price action, momentum and behavior to maximize profits.

Why would I go with 1:100 leverage? well, it's just my persona. I like challenging the impossible and I like to see results fast. I am analytical and aggressive. I met a guy here in Korea who turned 1k into 100k in ONE week. Yes met him in person and saw the proof.

If I keep honing mycskills with a specific goal I think I can do 30-100 pips in a day or two by doing very very carefully selected precisely risk controlled Scalping. My stops are usually 4-10 pips and targets are 8-15+pips. Between 3 pairs I can find an entry quite often. Several times during one session. (GU, EJ, GN) GN is very very volatile so it's good for high number pips and maybe it's a pair that not too many people trades, so the movements are sometimes very honest; less fakes.

So my thinking is this. I will start off with $20. With 1:100 leverage, if I do 100 pips (not 100pips in one trade.. which is possible but very rare) in a day or two, that will DOUBLE the account size. 10 pips gives me 10% so 100pips %100. if I compound it every time, I can get to 100% even quicker.

Do you think you can do 100 pips every few days? I certainly can. What I'm trying to do is, I want to be able to trade without emotional hindrance. Since its a fund that I started with $20, even if it grows to be $1000s or more.. I will try to view it as an $20 investment, and trade as if it was just $20. It's not going to be easy, but that will be my goal. To stay in the same mentality when the fund grows and trade as if I was trading with $20 dollar account. If i blow it, so be it. Then I will reset at $20 again. 1:100 leverage. tight stops.. precisely chosen trades for 5-15+pips.

This will be my venture. Why do this?

How much do you think $20 will become if you do this 20 times.. 20 times of making 100pips on 1:100 leverage for the initial $20 account?

$20 will become 20 million. yes 20 million. Well, the key is, even if when the account grows to be 100s of thousands, I must be able to trade with the same mindset.. 1:100 leverage.. 5-15pips profit.. with 5-10 stops.. EXECUTING without hesitation. Keep going day in and day out. And someday.. I will get there. I certainly think it has a heck of a better chance than winning lottery.. this is an intelligent calculated effort and it will take lots of discipline.. and $20 bucks a month.

I've turned $20 into $40 and $40 into $80 by trading with leverage of 1:100. I think it's a worthwhile investment of my brain, willpower and effort. I just have to take time and do what has to be done. find good trades.. and EXECUTE when there is signal. and don't move my stops. I've been studying 1min price action till my eyes bleeds for years.. and it's fascinating to see some of the patterns and behaviors at different times of the day for different pairs. It's like reading a storybook repeatedly. it becomes somewhat predictable.

If I blow it, well I lost $20bucks. Most likely when it becomes 1k or 10k or 100k I will take some off and continue..and trade with 1:50 or a bit less leverage, but I think doing this is easier than let's say.. running a mile under 4 mins, learning how to play pro level piano or juggling five pins hopping on one foot. I saw this one chinese girl at a circus who was laying flat on her back and had her legs straight up balancing a table with her two feet and throwing and rotating the table side ways forwards and backwards and even balancing the table with one foot in the end. That for me is impossible..even if someone put a gun to my head I dont think I can master that skill no matter hiw hard I try..its jyst too hard.. harder than a quadruple jump while ice skating.. At least for me it is.. for me scalp trading 8 to 15 pips is much easier. it's just BORING as heck to watch and wait for the right signals.. well, for 20 million, it's worth it for me. twenty times of sets of 100 pips.

I just need to repeatedly do what I did when I turned $20 into $40. Maybe some months it will go down to 50% or less if I have a losing streak.. but with my 400:1 leverage I can keep on going after a break to re composure myself. Going for 20 million Sounds crazy? well I am kind of a crazy guy. Didnt some guy short the pound and made a billion in one day? Well he thought that was possible so he went for it.

I'll keep you posted on how far I get each time. : ) I will be doing this every day, every month.

This is MY monster return venture.

 
olhickory2000

"I'll be watching you"..........."Every move you make"........"Every breath you Take"....... "I'll be watching you".........

Let's Trade!

 
hakchinoy

"I've been trading regularly during asian and london sessions . . ."

Me too. The Asian session is my favorite, and the London session is a close 2nd. The Asian session--especially after the Tokyo open--is my favorite session for 2 reasons: 1) (IMHO) it's the most perfect session to trade for range traders, and 2) astute (trend) traders can use the Asian session to build relatively large position trades--with minimal risk--designed to exploit the London open.

Trading with--actually using--100:1 leverage doesn't have to be crazy or risky, but it's hard to do with proper money/risk/trade management that FULLY complies with the Apiary guidelines. Please note that I stated that this is hard--NOT IMPOSSIBLE--to do. The primary reason, why trading with higher leverage and proper money/risk/trade management is hard to do correctly, is that using higher amounts of leverage requires one to be more precise. I'll be blunt: traders who lack discipline (with their money/risk/trade management) literally can't afford to trade with higher amounts of leverage.

I've been one of those undisciplined traders, and--even now--I occasionally stumble. My equity has a way of giving me the reality checks that I need whenever I stumble. It's human to stumble; it's profitable to get back up and start doing it right.

 
jhz73

Good post, thanks for sharing!

 
williamdc

This is a great thread.

 
investmentandtr...

I find as human traders we tend to over complicate things ... I've spent 3 years of my life trying to unwind and forget all the things I learned about various indicators or methods just to end up at the very beginning of my journey: SIMPLICITY

For manual trading, I only use 50 SMA, Stochastic, and multi TF ADX, trying to master that one strategy, no longer paying attention to other new, "cooler" strategies popping out every day ... for establishing S/R I use price structure 1st on higher TFs, 100/200/300 SMA, and Ichimoku ... once I draw the S/R lines I remove these and only use 50 SMA, Stochastic, and multi TF ADX

In terms of what is a meager return? I consider everything that is being advertised to the masses as meager.

Savings/checking accounts, TFSAs, GICs, bonds, mutual funds it's all garbage to make big banks profitable, it's all about them making money not you the customer ... think about it ... most banks charge you 19.99% or more for a credit card but they're only willing to give you < 1% on your "high-interest" savings account? While you and I go deeper into debt they post $10B profits?!

But I digress, I didn't mean to rant ;-) in terms of monster returns anything better than the average interest on your credit card (19.99%) I consider a monster return, only then I can feel like I'm beating the system and getting ahead, otherwise the simple inflation will eat up all of our meager gains!

So 4 months ago I've finished coding an Ichimoku burst strategy I've read about in some Japanese publication (in English) and I have been running it in a real MT4 account with a $1000 I borrowed from my dad (+ $200 of my own) here are the results so far (see attached) do I believe in monster returns? Heck yeah! But like Hak said it's almost impossible to achieve it with 100% manual trading due to the human condition ... I monitor my EA to ensure it doesn't run amok but most trades happen when I sleep, work and do stuff with my family ...

ichimoku-ea.jpg buy.jpg sell.jpg
 
myronw204

Very interesting can you
break it down more with
more detail thanks

 
Len Funk

Some very good info here. We definitely can be our own worst hurdle. Believing in oneself is where it all starts.

 
hakchinoy

Please review some of the examples above; I broke them down and they contain plenty of details.

Nevertheless, please keep in mind that my (or someone else's) examples will only show you what's possible. You are not me, so you won't approach your trading exactly as I do, so you most likely won't reproduce my results precisely. Similarly, I also can't trade exactly the same way that you do, so I can't tell you what will work for you.

However, if you follow the process that I outlined above, then you'll figure out what's a good fit for you, and you eventually will reproduce similar results to mine using your approach. Plus, I'll provide a template.

Goal: 1% return (intraday) using E/U

1) Use the Benjamin Formula to determine the TP for a position sized with 5:1 leverage. Keep in mind that the E/U spread is between .00002 and .00005 during the London session.

2) Use the Benjamin Formula (BF) to determine the SL for that position if you want to put at most 0.5% at risk.

3) Select a TF where ATR(TF) ≥ TP. Scan that chart for previous setups using a strategy that you know (with the parameters that you determined via the BF), and note the ones that were profitable.

4) Scan that chart for a new, potential setup. If you don't immediately find one, then simply wait for one to start forming (which might take awhile). Trigger according to the rules for that strategy, and wait for that trade to close.

5) Rinse, wash, and repeat.

One more thing, . . . just because one might want to generate 1%, that doesn't mean one necessarily has to accomplish that via a single trade. One could use 2 trades that yield 0.5% each, 4 trades that yield 0.25% each, etc.

 
powerupcapital33

Agreed, great advice!

 
hakchinoy

I'm unsure whether what I'm going to share is good or bad for everyone.

In a moment, I'll briefly share on another milestone that I've reached in my own pursuit of monster returns. Please keep in mind that I'm not sharing this to brag. I don't need any accolades; the accomplishment is its own reward. Again, I'm sharing this with the community to show what is possible, and the help encourage further dialogue.

During my testing (a part of deploying my recently overhauled trading system) this week, I generated nearly 28% in one account and roughly 21.5% in another account--both over a span of 38 hours. Although I've generated similar returns before, this is the first time that I did this with an intermediate-term trade.

I scalped into a core position, scaled into a larger position, and held that position trade for a while. The key difference with my approach this time is that I didn't base this position trade off a particular trade setup or strategy. Instead, I noticed the G/J market structure off D1 (on 2017.10.03), and I noticed that I had trend alignment off D1, H4, and H1. Plus, I noticed a rising wedge was forming and a double top had just formed off W1. I concluded that my analysis was telling me that G/J most likely would have strong downward momentum this week.

So I hacked (pun intended) together a trade plan to exploit that downward momentum.

 
Norma Jenner

GJ Hak.. You've been saying you were close to deploying overhauled system. Congratulations, and thanks for sharing to prove there is no limit as small as the ones we imagine

 
triguylm1

Well done Hak.. I noticed the current price is approaching the 200 ema line on the H4 chart. So, it's possible the market may bounce there, or do you think it's more likely to increase bearish momentum as it pushes through this support level?

Love to see your system in action.

 
scott.lauckner_1

What a great thread!!! Saving this one to read over and over!!!

 
hakchinoy

TGL1: In a way, it kind of doesn't matter what price will do. Whatever price ends up doing, I'm going to adapt and respond to that move as quickly as possible.

Based on my experience, monster returns are engineered--not found. I've experimented with rifle shot orders, shotgun blast orders, and machine-gunning orders in a variety of market conditions. Each of those techniques has its own set of pros and cons.

Before tackling a goal like the one I just accomplished, I'll spend some time combing through charts to get a feel for how price is moving for 1 or more pairs, off multiple TFs. At this point, I'm less concerned about specific setups or strategies, and I'm more concerned about volatility--specifically PC+TC--and market structure. I also play a game similar to "Name That Tune" attempting to figure out how to tackle a particular goal within the least number of pips--based on the aforementioned volatility and market-structure. The whole point is to start with the end in mind, and to work my way backwards to determine the plan that I'll use.

 
noloinvest

Very inspiring thread and gives me lots of ideas for experimenting with.

 
stwilliams21702

Thank you for the input on the BF % formula. (I will review it again!)

 
hakchinoy

NJ: I exclusively based my initial trading system, which I used to get funded, off using GT to scalp ranges with tight SLs and small TPs. I've overhauled my trading system 10 times, so this is the 11th iteration. For this last iteration, I chucked everything that I thought I knew about trading out of the window; I razed my cathedral to the dirt; and I completely rebuilt my trading system--both top-down and bottom-up--from scratch.

Doing so enabled me to get back to the basics, and focus on what's working now. Doing so also enabled me to explore different trading approaches (like various trend-following ones), explore different trading styles (like intermediate- and long-term trading), explore different strategies for placing entries (using high-probability and random-walk trade theories), and explore different methods of money/risk/trade management.

I precisely followed the process that I outlined (in my comment on 2017-09-09)--only I applied it trading with each of my "4 Horsemen". It was difficult going from being able to average 10+% per day back to struggling to generate even 0.5% consistently. I've fought myself a lot throughout this process, and sometimes I--during some of my wound-licking, less stellar moments--wondered whether or not I was spinning my wheels. I wasn't; plus, I noticed several brokers and LPs institute various policy changes that irreparably broke a critical portion of what I originally was doing. So I essentially had no choice but to continue rebuilding.

I eventually even figured out some ways to reapply my GT approach in ways that fully complied with the new norm. Furthermore, I now spend considerably less time hunting for setups, and I spend more time placing and managing more trades. In other words, I let my money/risk/trade management do the heavy-lifting.

The biggest challenge is (and has been) adapting dynamically to the current intraday (mostly short- and intermediate-term) and interday (mostly intermediate- and long-term) volatilities, for each pair, at various times of day. In other words, my biggest challenge in this process is (and has been) determining when to apply the accelerator or breaks. Trust me . . . engineering a 10+% return requires considerably more mental gymnastics than engineering a 1% one--especially under the current market conditions (with certain politicians making various remarks via social media [and turing the markets upside-down every time]).

I can't control whatever I can't control, but I can control the things that are in my control.

While that conceptually sounds simple, my trading psychology periodically takes me hostage, and leads me to do things that I know better than to do. Speed is both my friend and enemy. I have absolutely no problem trading extremely fast, but that ability sometimes causes me more harm than good--especially when I'm doing certain forms of HFT. The remedy in those cases is for me to slow down; otherwise, I'd end up digging craters quickly primarily due to burning through trading capital via excessive transaction-related costs.

STW: Mastering that BF is one of the keys to generating monster returns, and it also is one of the keys for avoiding craters.

 
charrijr1

Hello I myself just trying t get use to this period. A lot of information to absorb for sure but its some fun in learning. hoping to become successful at this.

 
mwfinad1211

Thanks for the update Hak. I always enjoy reading your posts :)

 
charrijr1

Hello I myself just trying t get use to this period. A lot of information to absorb for sure but its some fun in learning. hoping to become successful at this.

 
Khloe

Dear Hak

Hak , You are awesome! you tooke a lot of time to explain all your strategie and you way of thinking. I trust you because I did the same thing but I can t say that like you because I don t know anything of coding.

Your are completly rigth. I will proove that in few weeks !
I don t know yet how to rebuild my algorithm writing with prorealtime!
I did the same thinking than you , and I swear that I was earning a lot . I did not hear someone or have a friend who...bla bla.. No it s me. I did not know anything about coding ( leaving school at 14yold) but I used '' unfortunatly'' the code of the brokers.

I earned a lot but so much than the broker called me and said that its not possible because '' old woman'' in the market less than 4 month and no school and bla bla bla...

I did not know the rules of the system because I did only few earning but many times. too much....
I did have my relevant that I was earning 10k a day after the broker closed my account . I received my relevant of my live trading during one year after the closure of my account. Someone forgot to take of the liken with my email.

So if someone can give me a link to learn how to code in Apiary or MT4 or MT5 , it will be good because I will have to earn monney again and then I will pay a sollicitor to claims against this famous broker which called me on the phone to prevent me that they already have 4 sollicitors against me. So I would not have any chance to succeed. But who knows the futur!
nice day trading for all of you !

Anne KLT from brussels

Ps If someone knows a good sollicitor in london for claims again my broker , don t forget me!

PS 2: I am not wasting my time in complaining , I gave up and I came into apiaryfund and I will learn many other ways of thinkings.
PS3 : The life is short so I have to be positive because I can die in second...

 
Khloe

Dear Hak

Hak , You are awesome! you tooke a lot of time to explain all your strategie and you way of thinking. I trust you because I did the same thing but I can t say that like you because I don t know anything of coding.

Your are completly rigth. I will proove that in few weeks !
I don t know yet how to rebuild my algorithm writing with prorealtime!
I did the same thinking than you , and I swear that I was earning a lot . I did not hear someone or have a friend who...bla bla.. No it s me. I did not know anything about coding ( leaving school at 14yold) but I used '' unfortunatly'' the code of the brokers.

I earned a lot but so much than the broker called me and said that its not possible because '' old woman'' in the market less than 4 month and no school and bla bla bla...

I did not know the rules of the system because I did only few earning but many times. too much....
I did have my relevant that I was earning 10k a day after the broker closed my account . I received my relevant of my live trading during one year after the closure of my account. Someone forgot to take of the liken with my email.

So if someone can give me a link to learn how to code in Apiary or MT4 or MT5 , it will be good because I will have to earn monney again and then I will pay a sollicitor to claims against this famous broker which called me on the phone to prevent me that they already have 4 sollicitors against me. So I would not have any chance to succeed. But who knows the futur!
nice day trading for all of you !

Anne KLT from brussels

Ps If someone knows a good sollicitor in london for claims again my broker , don t forget me!

PS 2: I am not wasting my time in complaining , I gave up and I came into apiaryfund and I will learn many other ways of thinkings.
PS3 : The life is short so I have to be positive because I can die in second...

 
danjsilve

Yes, try Dave FX Hunter, he made 34% in October, I managed to ride some of his trades.

If you need more info, please message me privately

Here is a screenshot from a couple of days ago. This is in my Silver account as I am contractually bound by Apiary not to share what funding level I am on.

current221117.PNG
 
danjsilve

I forgot to add that the above screenshot was just under 5% was in less than 2 weeks, you can see the date of when the trades opened. I have since closed 3 positions.

 
hakchinoy

"I earned a lot but so much than the broker called me and said that its not possible because 'old woman' in the market less than 4 month and no school and bla bla bla..."

Unfortunately, some LPs and brokers get ticked whenever they notice some traders generate monster returns quickly. They especially hate it whenever traders figure out ways to earn money quicker than they do, and they ALWAYS assume that those traders are gaming the system or violating those brokers' EULAs somehow--unless those traders can prove otherwise.

A few of those brokers--especially ones that trade against their clients--most likely will ban those traders anyway if they don't have a means to segregate those traders into a different pool. Yet, a few brokers (once they know that those traders are using legitimate techniques) might offer to enter into revenue-sharing agreements with those traders--provided those traders are willing to allow the brokers to publish those trades. Their thinking is that they'd make considerably more from their transaction fees if more of their traders actually are trading more and making money. It's a win-win IMHO.

Although I'm a coder, one doesn't need to know how to code to piece together a workable trading system. Yet, it definitely helps for one to know a thing or 2 about math modeling. The ability to code is icing on the cake: it gives those traders (myself included) the ability to apply those math models via automation.

 
wsims.ws

Great Post thanks for the very thoughtful words of wisdom

 
tazytam

Was just surfing around the forum and found this awesome thread, much food for thought, thanks everyone who contributed :)

 
milkthewowcownow

thanks for that post, I believe small consistent gains are the way to successful trading

 
JerryP

All a person needs from the Forex market to attain a good living is 20 pips per day, 25 would be better but also 15 pips would work....I find that the longer I stay exposed to the market, my trading suffers. Get up in the morning and get my 25 pips then I'm done for the day!

 
lefty49

thanks to all who contributed to this thread. I have gained much insight to many of the habits that are (or will be) sabotaging my success. I will be working to sinplify my trading style.

 
hakchinoy

"All a person needs from the Forex market to attain a good living is 20 pips per day, . . ."

Although I joined Apiary with some trading experience (including with FX), I hadn't determined how to set a reasonable daily/weekly/monthly trading goal. Yet, I knew what some of the bank traders--after whom I was chasing--were doing (per month). In my Apiary introduction webinar (a few years ago), the presenter claimed that one could make a decent living and build wealth trading FX with as little as 10 pips/day.

That claim was one of the primary factors that attracted me to Apiary. Reading between the lines of that claim, I parsed that Apiary was serious about its claims being scalper-friendly, and that Apiary didn't intend to use high-pressure tactics to coerce us into beating the market 24/7/365.

Back then--although I knew I eventually would be gunning for monster returns--I wanted to set a baseline: bread-and-butter returns. Bread-and-butter returns are important too, because we aren't going score monster returns during every trading session. Plus, I assert that it's impossible to set realistic goals for monster returns without first having determined a decent baseline. I haven't discussed that much in this thread, because it's a different topic which deserves its own thread.

"I find that the longer I stay exposed to the market, my trading suffers"

That is one of the primary challenges for short- to intermediate-term traders; however, long-term traders NEED to have their trades exposed to the market for longer periods of time to profit.

Even as a funded trader, I still struggle with that from time to time--especially whenever I'm working on tweaks to increase my average daily yield. I'll fight through that and continue to trade, because I've learned from several past experiences that the break-through eventually comes once I've grown enough to fit those shoes.

 
reallytwisted

Ya know it hurts me to say something nice about you, but thank you for your insights. I believe that they will help me greatly!

 
ryanski73

In my limited experience I believe that monster returns are possible, but not sustainable. I have found that it is best for me to set a realistic limit on the amount of pips I can get each day and once achieved or lost I shut it down for the day.

 
hakchinoy

"In my limited experience I believe that monster returns are possible, but not sustainable."

Any returns, that are unsustainable, are inconsistent. The primary reason why we build trading systems IS to mechanize our trading such that it yields consistent profits. Every trader has his or her own opinion on what consistent, realistic profits are; some traders haven't matured enough in their own trading approach (usually due to various trading psychological issues) to accept that (consistent) monster returns are possible.

Here's one of my favorite quotes from Henry Ford: "If you think you can do a thing, or think you can't do a thing, you're right."

Anyone, who's read a majority of the posts of this thread, clearly should see that we're not talking about trading with bravado simply to put points on the board and run the score up. Trading like that is reckless and unsustainable.

At the opposite end of the trading spectrum, some traders are so fearful that they settle for meager scraps, and justify to themselves that those returns are realistic. "When I was a child, I spoke as a child, I understood as a child, I thought as a child; but when I became a man, I put away childish things." (I Corinthians 13:11) Naturally, our trading goals will grow as we continue to grow as traders.

 
heavyman3

Wow what an awesome thread. Everyone here has such great knowledge and suggestions on growing personally as well as in the trading world. Thank you all for your wisdom. Keep them coming. Have a Blessed Day and Happy Trading.

 
Charles Moeller

Consistency is the key to all trading riches, but persistency is what gets you there.

I am still in the persistent phase, but I know that if I keep on keepin' on, I will eventually get there.

 
hakchinoy

Getting and staying in-sync with the market are 2 concepts that one has to master if one hopes to generate monster returns.

Attempting to trade consecutive swings (whether scalping or swing/position trading)--especially off M1 and M5--is very challenging, and it requires lots of mental fortitude. IMHO, one of the primary reasons, why trading consecutive swings is difficult, is that every M1 or M5 swing isn't necessarily tradable. For example, one periodically will see the following pattern off M1 and M5 charts: a consolidation with a single candle break into another consolidation. For trend-following and breakout traders (who don't also trade ranges), if the true range of that breakout candle is less than (in pips) the transaction costs (also in pips), then that swing isn't tradable. Even for range traders (who [myself included] also trade trends and breakouts), trading that swing might be difficult to impossible--provided we weren't already in a range trade that we allowed to continue with the breakout. (Shawn had demonstrated that technique numerous times during various Trading Room sessions.)

It's important for one to recognize--AS SOON AS POSSIBLE--whenever one is out-of-sync with the market, to stop trading, to regroup, and to re-enter the market after getting back in-sync with the market again. That's easier said than done, and it currently is my biggest weakness. I do a couple things to combat that weakness: 1) read/analyze more charts, and 2) work on various drills that force me relentlessly to trade multiple consecutive swings off M1 and M5 charts. Doing so helps me to think faster and be more reactive and tactical while I'm trading.

 
2terry

Great comments Hak, see you in class.

 
FriendlyBee3333

Dear Hakchinoy,

Greetings; hope you are having a great start to the new year. Always glad to read your posts, and this one helps a lot also. Looking forward to more posts by you, and once I gain more profitability, I will follow your example and write helpful posts.

Sincerely,

FFWB2020

 
zacharykamin

My brain, just glossed over this ;)
Just kidding. this is really good actually.
I'm averaging .5 percent. but I jus
got start and as I said at the offset. I don't want to get rich, that would destroy me and my family. I just want to make a little bit morning every year than the year before.

 
robunited

A lot to read in this thread, very interesting!

What I noticed the past couple of weeks is Shawn emphasizing a lot on his trading philosophy:

"We are trading for income! We take many small profits, they all add up and are our income"

This became very clear in the Street Trader series, where the aim is to get an average daily income in only 1 or 2 hours trading.
(something like 175$).

What that "income rate" is differs for everybody of cause.
But it sets the mindset on what the return should be for you, not an expected monster, but your income.

 
Rookie

Rob when eating the trading room videos if you notice the accumulated pips in the info bar Shawn often started out with anywhere from 1,000 to 3,000 pips from his evenings trading.

 
hakchinoy

RU: Please note that Shawn has stated numerous times before that he tends to average between 1% and 2% per day with his trading: those ARE monster returns and his income. :)

Roo7: His pips counts infer that he's placing lots of trades--especially since we already know how he scalps (based on what we've seen during those Trading Room sessions). I focus less on that and more on his yield.

 
DC Capital Cons...

Hey Hak... it's been awhile, I've been absent for some time. Are you funded yet? How are your returns? Making any money?

I don't remember if you recall my $500 to 10k challenge from 2016, I posted some stuff on here and in the honeycomb. When I came back I found out I had lost my funding, due to lack of trading. LOL So I had to qualify again. 30 days on the EURUSD.. haha..

Hope things are going well for you, hope to see ya around here. :)

DC

 
Rookie

Morning Hac, is your reference to yield in in pips vs yield referring to specifically Shawns lack of losses or put another way extremely high win rate?

In finance, the yield on a security is the amount of cash (in percentage terms) that returns to the owners of the security, in the form of interest or dividends received from it. Normally, it does not include the price variations, distinguishing it from the total return.
Yield (finance) - Wikipedia
https://en.wikipedia.org/wiki/Yield_(finance)

yield vs return
https://www.investopedia.com/ask/answers/04/090304.asp