Elite Trader's Gambler's Anonymous ETGA

Discussion in 'Journals' started by ElectricSavant, Apr 18, 2005.

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  1. jasonjm

    jasonjm

    Heya Electric

    I been following these "trade without knowing direction" threads for months now.....

    reading through your thread I pretty much I think I understand it all except for 1 part, when you are drawing 2 to 2.5 months of horizontal trendlines from pivots, are you deleting the older ones as time passes? (the horizontals older than 2.5 months?)

    seems like after a year you might have a bazillion lines otherwise!

    just a thought I would like to add; perhaps it would be possible to prevent extreme losses due to a runaway currency (like a HUGE one way move, such as the pounds / Soros 1992) by buying way out of the money call and puts as insurance?

    yes it will eat into profit, but maybe it could be a cost effective acceptable insurance? this is just an idea, it may be totally unrealistic

    the potential for runaway losses is the only thing that really bothers me about this idea.

    Thanks!
     
    #31     Apr 25, 2005
  2. The only time a line gets deleted is when a new one is closer than 10 pips. They are drawn on the Daily bars so its down to about a billion lines now :)

    In the beginning when first jumping into this, there is a lot of labor drawing all these lines that extend to the right only. But the auto scaling of the Oanda charts hide them.

    You and others concerns about the slow bleed or the Soros Jump is valid. I do not know that much about options. Perhaps as the days pass, by increasing the cash in the subaccount will turn the "gambling meter" down. I draw a couple of hundred dollars out the system every month, so that I can feel I am getting an income for my work. I have a full time job and really don't need it. It's is just representative of making my trading real and tangible in my life.

    I plan on posting to this Journal for a long time, so please stop in from time to time and check out the progress.

    Perhaps, other currency pairs could be used and by placing pivot point entries without targets an offset could be put on. Just a thought. I have not really thought it out completely.

    For now the variable trade ticket seems interesting to test and grid spacing, layering...etc

    Considering the current amount of trades that are on and another widening of the pool could require a lot of cash. I need to time to get to positive parity (see spreadsheet) to bring all this togeher.

    Michael B.


     
    #32     Apr 25, 2005
  3. jimboc

    jimboc

    Hi Electric,

    First, I'd like to commend you on so generously sharing the details of your system (system #1). Your contributions have been considerable. I recognize the great potential merits of these grid-type systems. I've read Mark VH's entire post, as well as SimSpeed's, and have studied all of Sympatico's cryptic comments. And now I've just read through all of your posts on ET. I just have a general question for you:

    You have obviously opted for the two-way simultaneous long/short variation (or simultaneously buying two anti-correlated pairs) as Mark VH describes, rather than SimSpeed's variation of shorting on the way up and buying on the way down. Why is that? I can see that realized profits can be made more quickly with the former variation because whichever way it goes (up or down), you will be making immediate profits. But don't you think there is more risk involved doing this? With SimSpeed's variation, in order to reach zero (after making many profits along the way), all you need to do is wait for the price to come back to your median point, or the place where you started the grid. But with MarkVH's variation, although you are always making a profit on the chop (either way it goes), if the price goes to one extreme, you will need to return all the way to that extreme in order to reach zero again (instead of just having to reach a median point). So I see much more risk of having large losing positions. I have been experimenting with both, but the verdict is still out as to which strategy is working better. What is your take on this? Thanks in advance for all your help.

    Jimbo
     
    #33     Apr 26, 2005
  4. Jimboc,

    Thank you for reading. You think the same way I do, and your contribution is excellent. Pulling all of this together is essential.

    If I remember, there was an issues with stragglers. But now that I visit this again, I got to find out why?

    Folks, for those of you that have not read the Simspeed thread at another forum, it entails starting at the current price and entering limit orders going short above the current price and long below the current price. I suppose the pivot point method discussed here could be used. I suppose the two pairs could be used too. Interestingly, I just got an idea. Why not use both pairs? For some reason when I was choosing between the two systems, it was more important to have a constant stream of income. I remember trying to inverse the order of entries on the inverse pair (usd/chf) like going long above current price and short below. But that would leave a straggler at each end...

    Simspeeds system needs range or chop when Mark's system does not necessarily. BUT and a big but, which system will need more cash?

    Jimboc, I think your point is valid and when parity is reached in this current publicly traded system, hopefully, I will be ready with more comments. I need to re-visit the Simspeed thread and go through the thought process over again. This is very difficult to visualize, and I think there was another reason why I chose going long in both inverse pairs. Something about trends being longer than retraces...and rebalancing cash from one account to another could achieve greater results.

    Thank you so much for your insightful, well though out, post. Perhaps you are correct. There could be six pairs used. One that goes up while the other goes down, in each of the three sub-sessions (European, Asian and North American)

    Jimboc, again it is a real pleasure to work with you :)

    Michael B.

    P.S. If trading two pairs, the distance is the same in both systems, isn't it? or wait....one is gathering and one is profiting...sheeesh
     
    #34     Apr 26, 2005
  5. Jimboc

    Could you please comment on using the two pairs illustrated in this thread, to trade Simspeeds method. I would be interested in your input.

    You must excuse me right now, as I am freaking out. Too much too fast...I overdosed on B-12, I think..

    Michael B.
     
    #35     Apr 26, 2005
  6. mogul

    mogul

    I tested with two accounts, so both adding to shorts (if rates go up) and taking profits on longs in incremental units in the same currency pair.

    The main thing you have to keep in mind is that considerable time can pass where you are breakeven or a little better than breakeven, but when the trend gets some wind it will flip and your unrealized will take over.

    The gamble is that the spread will return or close in on the level where you started sufficiently enough that your realized will gain over your unrealized.

    Unfortunately that point may never materialize and you will end up treading water for years.

    Reward does not outweigh the effort in my mind...

    Sorry for the negative outlook but that is the essence of system bulding, "why won't it work".
     
    #36     Apr 26, 2005
  7. Mogul,

    Why would the trend take over if the flow was larger? I don't get it. I do not view your posts as negative, when in fact they could be a lifesaver...

    Michael B.

    P.S. I am going to open up a monthly chart and take a longer term look at these pairs again in another program that I have...


     
    #37     Apr 26, 2005
  8. The EUR/USD from 1992 (the eur did not even exist then, did it?) experianced the highest high of around 1.4528 and the lowest low of around 0.8222. This is a range of 0.6306 This is 126 entries at 50 pip increments.

    The USD/CHF from 1992 experienced the highest high of around 1.8323 and the lowest low of around 1.1087. This is a range of 0.7236 This is 144 entries at 50 pip increments.

    Mogul or others, what trade size would be needed?
    Would the yield on the cash be enough with the appropriate trade size? Would a rebalancing and a taking of loss or a restart be essential to this flow system? With reverse engineering maybe the appropriate question might be: What increment and trade size is needed to yield an acceptable 25% plus labor per year and set the gambling meter to zero?

    Michael B.

    P.S. We are forgetting Pivot points and the slight martingale for this illustration and discussion..I am thinking out loud here...

    P.S.S. Traders this is not an ego thing. Perhaps learning HOW to think and experiencing this live will help you. The thought that I have, is how do I get enough time to get the realized?

     
    #38     Apr 26, 2005
  9. For instance:

    If all the Majors and "non exotic crosses" were traded. Long on the correlated pairs and long/short on their corresponding inverse pairs (no long and short in same pair, weighting would be necessary) would this be whole market approach to taking flow out of the Forex market with a more frequent flow of incoming profit? Forget about capital needed, Oanda allows one unit increments.

    Michael B.
     
    #39     Apr 26, 2005
  10. jasonjm

    jasonjm

    why no long and short in the same pair?

    can someone explain in simple terms why this would be bad?

    why not just do the long side of the trades in one account and the short side of eurusd in another account?
     
    #40     Apr 26, 2005
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