Daily EUR/USD trades
- Thread starter romik
- Start date
1500+ pips drawdown? Forget about compounding your account with that -- you can do better. Remember, when trading your own coin, limiting absolute drawdown is key no matter what the time frame.
But hey I'm not here to tell you what to do, where to go or how to get there. Just to give you a warning that achieving apparent profitability is just step 1. I'll stop mucking up your thread now, good luck!
But hey I'm not here to tell you what to do, where to go or how to get there. Just to give you a warning that achieving apparent profitability is just step 1. I'll stop mucking up your thread now, good luck!
Romik, the PSAR works in any market and on any time frame. It will give numerous false signals and then will give the big winner. It is a system that one can use if they don't want to make any decisions ie it's a system for idiots who can't make up their minds. It forces you into taking positions and takes the guesswork out of it. Rest assured, it is profitable in any market on any time frame. Here's the issue with it: Human beings will not be able to follow this kind of system. A human starts asking themselves after the first or second whipsaw " Why am I taking a position here?--This system didn't work last time--I don't think I want to have my stop that far away etc etc etc". At that point, you are back to trying other signals and systems to try and find a better way. Meanwhile. the third or fourth PSAR signal is a good one and you missed it because you gave up on it. Bottom line --forget PSAR OR use it to establish reaction lows/highs. When the price penetrates and the dots switch in a trend, then use those lows as the new reaction low (or high).
As an example, someone buying the SP on the Monthly chart right now would be setting their stop/reversal at 1228. That's ok for a 401ker.
As an example, someone buying the SP on the Monthly chart right now would be setting their stop/reversal at 1228. That's ok for a 401ker.
As an alternative to the PSAR, back test the following system which is also for folks who don't want any guesswork or hemhawing:
If the histogram rises for 2 weeks in a row, go long, if it declines for 2 weeks in a row, go short. My belief is that the result will be much greater. Also, take both the PSAR and this 2 week Histogram system and do this: Start with 1 contract and add one on the next trade until you have the big winner. (No martingale--that would be doubling, so just add one each time). What's the result?
If the histogram rises for 2 weeks in a row, go long, if it declines for 2 weeks in a row, go short. My belief is that the result will be much greater. Also, take both the PSAR and this 2 week Histogram system and do this: Start with 1 contract and add one on the next trade until you have the big winner. (No martingale--that would be doubling, so just add one each time). What's the result?
Quote from romik:
Here is a monthly chart of GBP/USD since 1982 (24 years). It is pretty obvious that no matter how bad drawdown periods could have been a Net end result is still very green. I've done a very basic calculation and the succession of drawdowns doesn't look too bad, yes there are very large losses of up to 1500+ pips involved, but gains offset any consecutive historical drawdowns/realised losses. But I know you will say that all that can change and when does one establish that fact? The answer is I don't know, but than again nobody does until PF starts declining to 1 or less, I guess that would be the time to realise that it does not work any more. When you run any other business you keep using same old formula year in year out, until the time profits start slipping away. But if one was to trust historical performance based on this monthly chart, then there is positive expectancy present, for sure. Ball in your court
If you look at the volatility between say for example 1982-1994 and 1994-2006 there is a vast difference. By any chance do you know the reason to that. Might it be the trade deficit? Any ideas?
Thank you for all comments, but I do not wish to take it further as I made an observation and commented on it, I did say from the start 'for Dummies', didn't I? I killed some free time on it I think as B1S2 pointed out and Illiquid, that basically it works, but by no way represents a solid way to make trade decisions. I agree.
I think as B1S2 pointed out and Illiquid, that basically it works, but by no way represents a solid way to make trade decisions. I agree.