A very powerful fut's strategy

Yes, the most important ingredient is definitely missing. The most I will tell you is I will only begin using this method after and extreme price movement that can be measured using statistical methods. It's a mean reversion technique but as we all know, the market can stay extreme for an extended period of time, which is why the DD method is so important and useful at these levels.

Another thing that's pretty important to consider......let's assume your normal trade is a 10 lot. I don't start the DD strategy with a 10 lot. In fact, I've started it with a 1 lot and gone to 2, then 4, then 8. If I win on 8 I'm still short of my comfort zone so I am not risking a large sum of money and I'm not even at my normal position size yet. You have to have a full appreciation of risk before you execute any strategy. When I drew this plan up the first thing I asked myself, is how much am I willing to lose and risk. I start very small when I do this so it's highly, highly unlikely that I will ever come close to an obscenely risky position size. Trading is all about understanding and managing risk.



Quote from xiaodre:

Oh, I agree. I absolutely agree, you could make alot of money with this as the money management part of your strategy. The thing is, you haven't given us the rest of the strategy, though. What are your triggers? What are your setups? How do you determine your stops?

I mean, aren't you leaving out most of what you really need to make the Martingale work?

And given a very successful trading method, couldn't you actually make most traditional money management techniques work, except perhaps the all in approach?

And doesn't a truly sound money management plan actually help those traders who have only marginally successful trading methods, more than, say, the Martingale would?
More...
 
Epiphany,

This is exactly what I'm doing. I'm taking a bigger position on a higher probability trade. If trade A has a 50/50 prob would you put your full line on it? No. What if it had a 95% prob? Yes. The problem here is.....when you see setup A (the 50/50) trade you don't know ahead of time that setup B (the 95%) will even appear. You could either sit there all day and do nothing or take small positions on the moderate setups and strike if the high prob's appear. Your explanation here is spot on!


Quote from Epiphany:

In plain english, what the OP is saying is that setup A is not very reliable so he takes a small position, if setup A fails, that is actually a signal, a signal that setup B has a very high probability of working, therefore he doubles his size on the 2nd trade.

So he is basically betting more when he has better odds.

The multiple accounts is just a way to 'segregate' the money in his head, it is more for psychological purposes.
More...
 
P,

Which is the 95% probability play that you search for that merits the double down approach time after time ? I could even wait for the initial one to fail because man, I really want to bet on the 95% one.

If you share that then we can simply use whatever money management technique we see fit and everyone is happy :)

Anek

Quote from ProfitTakgFool:

Epiphany,

This is exactly what I'm doing. I'm taking a bigger position on a higher probability trade. If trade A has a 50/50 prob would you put your full line on it? No. What if it had a 95% prob? Yes. The problem here is.....when you see setup A (the 50/50) trade you don't know ahead of time that setup B (the 95%) will even appear. You could either sit there all day and do nothing or take small positions on the moderate setups and strike if the high prob's appear. Your explanation here is spot on!
More...
 
Quote from Anekdoten:

P,

Which is the 95% probability play that you search for that merits the double down approach time after time ? If I must wait for it to fail, then I could simply play the 50% one on paper because man, I really want to bet on the 95% one.

If you share that then we can simply use whatever money management technique we see fit and everyone is happy :)

Anek
More...
You don't know if it is 50 or 95 up front but you know usually the 95 come after the 50. If not then he has the daily max loss to take care of it. If I read him right.
 
Quote from nkhoi:

You don't know if it is 50 or 95 up front but you know usually the 95 come after the 50. If not then he has the daily max loss to take care of it. If I read him right.
More...

In that case I say always skip the first call, better odds no?

Anek
 
Quote from Anekdoten:

In that case I say always skip the first call, better odds no?

Anek
More...

Sounds logical to me. Why even take any risks when you have a 95% trade just waiting for you. Even if it only occurs once a day just load up.
 
Quote from HolyGrail:

Sounds logical to me. Why even take any risks when you have a 95% trade just waiting for you. Even if it only occurs once a day just load up.
More...

For the sake of argument, let's assume a V-bottom has a 50% win rate (it's actually less but this is just for the sake of argument), a double bottom with a lower low has a 75% win rate, a triple bottom with lower lows has an 85% win rate and a hard bottom with a falling wedge or falling rectangle has a 95% win rate.

The market is falling hard and you sense a hard bottom coming. The market is going to reverse but ahead of time which of the bottoms mentioned above will form? Can you answer that? Obviously not because that answer is based on randomness. So you see a V-bottom in the works, do you take it? For me yes, with a tight stop. You get stopped and now a double bottom is in the works do you take it? For me yes, with a DD and a stop. You get stopped and now a triple bottom is in the works do you take it? For me yes, with a DD and a stop. You get stopped and now a falling wedge is in the works, which, by the way, has about a 95% win rate - could be slightly more or less than 95%. Do you take that trade? Yes, with another DD and you wipe out the losses you took on the 3 previous trades. This scenario right here seperates the winners from the losers because the winners, even though they accept technical analysis principles, realize that the way the market will reverse relies 100% on randomness. The market is in fact random. You just don't know what will happen next but if you have a contingency plan for ALL scenarios you will improve your trading dramatically. Keep an open mind and just trade what happens.

Read "Trading in the Zone," by Mark Douglas -- easily the best trading book I've ever read. Not a single chart in it.
 
He was laughing at you....



Quote from notouch:

Great strategy bro = $$$

My strategy is when the first account is up $600 then move to double sixth account down for up move in triple wedge. EXCEPT if the loss on the fourth account went below triple the third ($600 x 2 x 3 = $3600) in which case we double down for the 7th for total profit of 12 x the original stake. Using this strategy my account is up 9473% in 3 months.

ProfitTakgFool

That's amazing! Nice work! The biggest I ever had to go was 5x and that was early in my trading career when I didn't have the timing down that I have now. I rarely have to go over 3x nowadays.
 
Here is an example of a DD trade from this AM.

To keep the math easy let's call the first trade a 1 lot and the 2nd a 2 lot.

Trade 1: Short at 1446.00. I had a 2 pt stop in and they took me out at 2.25 - the high tick of that candle, those bastards, lol. The loss on this is 1 x $50 x 2.25 = -$112.50

Trade 2: Short at 1446.00. Yep, the exact same price. Some people are assuming you you always get to short at a higher price because the price will keep going, right? Obviously not. Sometimes you even have to short at a lower price. Tuff, I know. Anyway, as you can see, my target was 1439.00 (beginning of that blue line). I sensed it wasn't going to fall that far so I was moving my cover up. I got a bit lucky and got out at the low tick of that candle, at 1442.00. Pay back is a bitch market! You took me at the high last time, I took you at the low this time.

The profit on this: 2 x $50 x 4 = $400. Total profit: 400 - 112.50 = 287.50. W/O DD: 1 x $50 x 4 = $200 - 112.50, or $87.50. Still profitable but which is better?
 

Attachments

This is a technique that works until it doesn't.

If you have a nice amount of cash in the bank when it stops working, fine.

If you try that technique and the market keeps moving against you you're going to be in a lot more trouble, especially if it's your 3rd or 4th trade (instead of your 50th).
***
The money management is also sub-optimal.

What if the first trades works for a minor profit, but then the next three go bust?

You're substantially in the hole on the day.
***
But it takes all kinds in this world, and if you want to keep toting this horn, go right ahead ... just don't call it a very powerful fut's strategy.

It's a strategy traders use when they don't know what they're doing.

Jimmy Jam
 
You must log in or register to reply here.
Back
Top