a few errors...proposal looks like this: $3,500.00 System #1 (flow) $1,300.00 EUR/USD Long $1,300.00 EUR/USD Shorts $225.00 AUD/JPY Longs $225.00 AUD/JPY Shorts $225.00 GBP/CHF Longs $225.00 GBP/CHF Shorts $1,493.50 Cash USD sub account cash ----no trading----approx 1.9% apr $400.00 System #2 (carry) AUD/JPY GBP/CHF EUR/HUF Every effort will be made to rebalance at the optimum ratio's earlier discussed. This above should be like this, but its not possible right now unless I just go flat and start over: $897.96 System #1 (flow) $149.66 EUR/USD Long $1,49.66 EUR/USD Shorts $149.66 AUD/JPY Longs $149.66 AUD/JPY Shorts $149.66 GBP/CHF Longs $149.66 GBP/CHF Shorts $3,597.58 Cash USD sub account cash ----no trading----approx 1.9% apr $897.96 System #2 (carry) AUD/JPY GBP/CHF EUR/HUF
All this is so complicated! When money flows through your "Funnel" I hope its not a "spaghetti strainer" instead. What do you want for Dinner tonight Electric? What do you bet (if your a gambler) he says. Wifey
I was referring to the above, which is incorrect, since you have positions all throughout that range. During a 6200 pip range from bottom to top (or vice versa) you would have an unrealized loss of 387,500 pips, assuming 50 pip incremental trades. Increase the pip spacing and you reduce the number of realized trades. Increase the trade ticket and the unrealized increases propotionately. Using the 387,500 pips unrealized as an example, in order to break even during those 10 years, you would need to cash in 38,500 pips per year, or 161 pips per day. During my brief forward testing, 160 pips were not guaranteed per day. And that is to breakeven only. Would you want to maintain this for 10 years to "set the pool"? Trading with a size of 1pip=$1, you would have $387,500 in unrealized at the end of that range. Let's say the range per year is 3000 pips or less (just a guess), and that the up\down wiggles during a year amounts to 3-4x the range. If the pool has been established, you would be looking at up to $12,000 per year in additional realized. I personally think there are better ways to trade, but I think I've made my point, so I won't interfere any more! Happy trading!
But the increase in the "pool" each year is not the same. The question might be from year to year does the realized increase more than the NEW unrealized, in this progressive labrynth. I hope I am not wasting your time. Wifey
Newbies. I think you should set up and take notice of the dialogues and thought processes here. It is ESSENTIAL to your future. There are many talented traders competing with you in the marketplace. This Journal should be REQUIRED reading and part of Trading 101. Wifey and I, along with others will get into other "segments" stay tuned...Please tolerate some of the methods used here to illustrate. Break out of the box and soar with the eagles! Thanks Mogul! Happy trading to you too! Michael B.
Well, if your 6200 range increases to a 9000 range your unrealized increases from 375,000 to 814,500 pips.
Infinity is a big number..... Can flow keep up with it? or... is capacity>flow and not flow>capicity..this really is the question isn't it (as stated from day one)? If staying power is built in, this can be a really powerful system. (hint: especally when you are in the middle of the 1Y range or longer ranges according to your perspective) Michael B.
From today's entry point the next ten years would need to be record breaking for this to happen. Don't we have the luxury of the past ten "rolling forward " years of history to understand where our entry point is in the range of things to come? Lets not discuss the "sky is falling is possible" type of mentality to support "gambling or not"... I find currencies a balancing act by governements and positioning due to trade balances and speculation by big players. Every action has a seemingly noticable reaction and the balancing continues. I will attempt to diversify at the right time using this method in this Journal to "follow the juggle" lord willing. Time to capture the flow is all that is needed to reverse accelerate the drawdown in dollars not PIPS... Michael B.
I'm glad you've kept this journal going. I realize you are asking many questions looking for answers and opening this up for others to jump in. I salute your effort. I have been lurking, and have read most of the journal, and some of it more than once. I may have more time later this week. For now let me just say that before this journal started I tested a version of this system though it lacked the martingale component and wasn't exactly this system. Some of the conclusions I came to after these tests: backtesting this system can be tricky because there are so many exits and entries. It should be easy but it is more subtle than it seems - even though the core concept is simple. Because of the subtle complexity of the system when backtested I didn't have confidence in the results I came up with, nor was I particularly excited about trading a long term system. I was really looking to find out: "What can I learn?", from this system. Even with my reluctance to trust the results based on the subtle complexity of the backtesting, I also came to the realization that 100 pips was a very good parameter for a take profit (at least on EUR/USD) - much the same as two others have posted, though 30 also tested decently (from memory). The fact that others have gotten the same results makes me wonder if my testing had some merit. The basic concept is that if you can keep juggling the balls in the air long enough, without running out of funds, at some point in the future you will be able to cash in handsomely. You can also profit from the juggling along the way. But there is the specter of a 10 year move that could potentially wipe you out or at least put you in serious hurt, even with miniscule position sizing. Another poster on another board criticized you for using such a small position size - stating that he wanted to make it worthwhile. I can understand what he is talking about. Being ultra conservative in position sizing still won't eliminate the 10 year move specter, and it will limit the amount of short term profits you are able to make along the way. This one poster is systematically increasing trading size, while withdrawing initial capital. I presume he is attempting to get to a certain critical mass, from which he will level off and just withdraw like crazy for a while before increasing size further. This philosophy is "get while the getting is good" and even if you lose it all on one of these 10 year moves you have come out ahead in the venture by systematically withdrawing profits as you went along. There is something to be said for this idea, however it does increase the short term risk of ruin. The big risk is in when the 10 year move will start. But if I started trading this system as you are, I would probably be as conservative or more conservative than you at the outset - and then build it up as confidence grows. The other big risk of this system is that the market maker eliminates 1 unit position sizing . Is the statement flow > capacity the same as whether the sum of the small moves is always bigger than the sum of the large moves? If it is, then I would say this statement is true, but this depends wholly on how you small moves in this case (your take profit). However it is true in the long run. In the short run the large moves can be bigger than the sum of the small moves. Over time this trend will reverse itself - the question is whether you can withstand these times in the short term.