No Brainer Breakouts or How An Early Bird Catches A Worm

[shikantaza]

Quote from xburbx:

that was a nice call regardless. how deep can you let the whips go on the 2x? For instance if you take a micro account on forex which starts at .10/pip. If you take a range of about 30pips, you still suffer $3.00 DD to start. The progression is so fast that it seems small, but around 8 or 9 you have gone to a sizeable trade that could easily wipe out all prior trades in the month. I'm not doubting this method, I'm just curious to know how you would deal with it. I think the approach is very interesting.

Entry - $3.00
1touch - $6.00
2touch - $12.00
3touch - $24.00
4touch - $48.00
5touch - $96.00
6touch - $192.00

By your 6th touch on a $2,000 account you have gone from a .25%ish DD to a 10%DD.

Any ideas ?

The most obvious idea is to triple the stakes everytime instead of simply doubling them. That way you save some time blowing up.

 

[JSSPMK]

Quote from xburbx:

that was a nice call regardless. how deep can you let the whips go on the 2x? For instance if you take a micro account on forex which starts at .10/pip. If you take a range of about 30pips, you still suffer $3.00 DD to start. The progression is so fast that it seems small, but around 8 or 9 you have gone to a sizeable trade that could easily wipe out all prior trades in the month. I'm not doubting this method, I'm just curious to know how you would deal with it. I think the approach is very interesting.

Entry - $3.00
1touch - $6.00
2touch - $12.00
3touch - $24.00
4touch - $48.00
5touch - $96.00
6touch - $192.00

By your 6th touch on a $2,000 account you have gone from a .25%ish DD to a 10%DD.

Any ideas ?

First of all I should have clarified it is £2000 so $3200. I am dealing in GBP, just converting as this is mainly a US board.

You should never play with leverage whilst being undercapitalised. That's how FX people make money offering low margins.

 

[xburbx]

dont take it the wrong way in trying to debunk the method because i think it is very interesting. never really looked at the market in that way, so i do like it. just trying to see potential issues. i do see that leverage as being an issue. just curious to know what you feel a reasonal amount of capital is to implement this method. When you get to the 10th whipsaw area, the DD is still heavy into the over 1k area.

 

[Now is Now]

Quote from xburbx:

dont take it the wrong way in trying to debunk the method because i think it is very interesting. never really looked at the market in that way, so i do like it. just trying to see potential issues. i do see that leverage as being an issue. just curious to know what you feel a reasonal amount of capital is to implement this method. When you get to the 10th whipsaw area, the DD is still heavy into the over 1k area.

I think the most important aspect to this exercise to understand is that is FUN MONEY...the potential being that it could be lost and nobody gets hurt...drawdowns are irrelevant...it is either PROFIT or GO BUST...period.

This is not rocket science.

The only "technical issue" is proper determination of range and firm profit goals....but ...to each his own.

NiN

 

[JSSPMK]

Quote from xburbx:

dont take it the wrong way in trying to debunk the method because i think it is very interesting. never really looked at the market in that way, so i do like it. just trying to see potential issues. i do see that leverage as being an issue. just curious to know what you feel a reasonal amount of capital is to implement this method. When you get to the 10th whipsaw area, the DD is still heavy into the over 1k area.

How you progress is up to you. You can borrow certain good points & leave out the risky ones. Trading without an edge, is it possible or is it a fairy tale?

Amigo, the poll asks - will I win or lose by end of November 2009 using this method. I believe that I won't lose

 

[JSSPMK]

Here is a question that will prove me wrong if answered.

Can anyone find a chart of ES whipsawing 10 times within a 1.5 point range? Range starting 9.30 Eastern

 

[shikantaza]

Quote from Now is Now:

I think the most important aspect to this exercise to understand is that is FUN MONEY...the potential being that it could be lost and nobody gets hurt...drawdowns are irrelevant...it is either PROFIT or GO BUST...period.

This is not rocket science.

The only "technical issue" is proper determination of range and firm profit goals....but ...to each his own.

NiN

I'd say that the only "technical issue" is the dubious existence of enough liquidity at the moment of "stop and reverse" creating enormous slippage. But who cares about slippage right?.

 

[Now is Now]

Quote from JSSPMK:

Here is a question that will prove me wrong if answered.

Can anyone find a chart of ES whipsawing 10 times within a 1.5 point range? Range starting 9.30 Eastern

I don't think you find it in the pickpocket period 11.30 till 2 pm...so chances of happening @ 9.30 infinitesimal.

NiN

 

[Stok]

Have you ever look at using the opening 30min as your range, then basing the trades from there? Seems to be better for just liquidity and normal hours (at least for me in USA).

Again, good work!

 

[JSSPMK]

Quote from Stok:

Have you ever look at using the opening 30min as your range, then basing the trades from there? Seems to be better for just liquidity and normal hours (at least for me in USA).

Again, good work!

I have not. And the reason is that first 30 minutes can be quite volatile. But I would say it is pretty doable using 1-1.5 points opening range, forgetting the 30 minutes. For example, price opens 1000, goes to 1001, you go long 1001.25 & short 999.75. Long target 1004.25 & short target 996.75. Basically, the idea is to be on the right side prior to momentum acceleration.