Successful Stop & Reverse - Semi Martingale Trend Following Strategy

From google search looks like Kagi may be available in ninjatrader 7 and multicharts. Ichimoku clouds are currently available in NinjaTrader, but I have not found them that useful yet.

Do you use Kagi chart as default or how do you suggest setting the configuration and what about them is so special in capturing the trend?

If you plan to trade forex with high amounts of money, I would suggest switching to currency futures, since most bucket shops can see your order, and may trade against you to try to run your stops.

If Kagi actually shows trend then it will help avoid chop, I assume you would still use some percentage say 10% movement against you to reverse. Another option that I would suggest to try, is say after a 5% or whatever % you want to use, place an order in a similar currency, for example, long EUR/USD, short GBP/USD so if you are stuck in chop, you would not need to take a loss, just take profit as each side hits the target until a breakout of the range occurs. I think you used to be able to have 2 orders in the same currency, but they now changed that rule, so the other option would be to use 2 accounts with the same currency, and have a short and long position.
 
If you want to do this with stocks and have around $ 25,000, I heard Bright Traders is a good prop shop and they also allow some overnight positions. I may trade there in the future after I have enough data with my current strategy to see if they will give me the leverage I require after I provide proof with broker statements.
 
I got caught up with a s&r strategy and demoed it for a couple of months, now I've been doing it live for half a year.

As mentioned before, the real problem of these strategies is the huge amount of loss -- coming from time to time to time...

You can't even backtest a s&r system. It's pretty obvious now, but I did not realize it, having no previous knowledge in trading. I bought this bloke's crap about his s&r system being profitable. I can tell you, the best you can achieve is b/e!

Why? Even if you start out with the conventional "1pc risk on every trade" (i.e. 1pc s/l and 1pc t/p in this system) getting caught by the wrong side, you'll end up losing 7pc (!!) of your account just by the third reversal, as you'll have to douple up your s/l in every single turn. You can't tighten your s/l if you're not in profit! Unless you want to get stopped out & reverse quicker and quicker than hopefully reaching t/p...

My best was being up 10pc in my account, now I'm down nearly 30pc. Imagine, this means now I have to win 30 trades to b/e. Note: I never had a chain of 3 winning trades with this random entry strategy!

Not to mention the fact that your next order might not get filled at reversal, or in times of increased volatility you simply miss placing the order so you simply get stopped out and have to start all over again. Major news events with increased spreads and whipsaws are especially dangerous.

To sum up: I ended up "chasing the market" with this strategy, which is a very bad thing, as all the pros can tell.
 
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Quote from jones247:

I'd like to introduce a strategy that I've had success with in the forex market. I received the essence of this strategy from another individual to whom I'm very grateful. Thus, I'm willing to pass this blessing on...

This strategy is based upon the premise that one does not KNOW where the market will go in the short term, especially when intraday trading. It's designed to be successful regardless of where the market goes. You can be wrong and still win with this positive expectancy system.

I'm interested in transitioning this strategy to the equity market via a prop firm (for leverage purposes). I am sharing it with members of this forum for feedback, especially if someone has experience with it in the equity or futures market.

Constructive comments/criticisms are welcomed...

In summary the strategy is as follows:

At the opening of the market enter in a given direction. It is not critical to be right on your initial entry. Therefore, you may choose any indicator or fundamental as your preference for direction at the opening of the market. If the trade goes against you by 10% of the ATR, then reverse the direction by stopping out the existing order and entering a new order in the current direction. Continue this stop & reverse trend following sequencing until either 7 sequences are exhausted or you reach your profit target. The profit target is about 50% of the ATR for the given instrument. The "semi-martingale" aspect comes into play by increasing your order size for each stop & reverse sequence.

Depending upon the leverage, a $25k account can easily earn over $100k per year in profits.

thoughts...

Walt
More...

Every newbie has uncovered this strategy fairly early in their research. :)
 
Remember, markets are NOT normally distributed. You can't assume that a "standard deviation" means anything. You also can't know that if a market is trending or not (unless you are great like me ;0).

Yet, there is some truth to this logic. The guy at Futures Truth wrote that the most successful futures systems have both a breakout and a reversal mechanism.

Why? Because breakouts and failed breakouts are very fundamental.. There may be some cases when it makes sense martingale, as well. But I can't share them and in general those who martingale do so because they can't trade.


Quote from jones247:

I'd like to introduce a strategy that I've had success with in the forex market. I received the essence of this strategy from another individual to whom I'm very grateful. Thus, I'm willing to pass this blessing on...

This strategy is based upon the premise that one does not KNOW where the market will go in the short term, especially when intraday trading. It's designed to be successful regardless of where the market goes. You can be wrong and still win with this positive expectancy system.

I'm interested in transitioning this strategy to the equity market via a prop firm (for leverage purposes). I am sharing it with members of this forum for feedback, especially if someone has experience with it in the equity or futures market.

Constructive comments/criticisms are welcomed...

In summary the strategy is as follows:

At the opening of the market enter in a given direction. It is not critical to be right on your initial entry. Therefore, you may choose any indicator or fundamental as your preference for direction at the opening of the market. If the trade goes against you by 10% of the ATR, then reverse the direction by stopping out the existing order and entering a new order in the current direction. Continue this stop & reverse trend following sequencing until either 7 sequences are exhausted or you reach your profit target. The profit target is about 50% of the ATR for the given instrument. The "semi-martingale" aspect comes into play by increasing your order size for each stop & reverse sequence.

Depending upon the leverage, a $25k account can easily earn over $100k per year in profits.

thoughts...

Walt
More...
 
Quote from jones247:

I'd like to introduce a strategy that I've had success with in the forex market. I received the essence of this strategy from another individual to whom I'm very grateful. Thus, I'm willing to pass this blessing on...

This strategy is based upon the premise that one does not KNOW where the market will go in the short term, especially when intraday trading. It's designed to be successful regardless of where the market goes. You can be wrong and still win with this positive expectancy system.

I'm interested in transitioning this strategy to the equity market via a prop firm (for leverage purposes). I am sharing it with members of this forum for feedback, especially if someone has experience with it in the equity or futures market.

Constructive comments/criticisms are welcomed...

In summary the strategy is as follows:

At the opening of the market enter in a given direction. It is not critical to be right on your initial entry. Therefore, you may choose any indicator or fundamental as your preference for direction at the opening of the market. If the trade goes against you by 10% of the ATR, then reverse the direction by stopping out the existing order and entering a new order in the current direction. Continue this stop & reverse trend following sequencing until either 7 sequences are exhausted or you reach your profit target. The profit target is about 50% of the ATR for the given instrument. The "semi-martingale" aspect comes into play by increasing your order size for each stop & reverse sequence.

Depending upon the leverage, a $25k account can easily earn over $100k per year in profits.

thoughts...

Walt
More...


This will lead to burnout, get 3 out of 6 days with max 7 loss and you wont feel like opening up your computer.

If you can make it work, more power to you.
 
Remember, markets are NOT normally distributed.
More...
Can't agree more.

S&R stems from the naive idea that you can "catch" a trend. All S&R does is chasing a trend. If you win by the first trade, it means you left it too early. If you have to reverse two or three times, you might catch a trend but it comes with a huge loss by then. At the end, you will likely to leave your "trend" too early in the fear of swallowing more loss! Don't forget, once got caught in a choppy sideways market with a chain of 'reversals' (translation: losses), it can take weeks for you to get out in profit. But who wants to wait a month for 1pc profit?

It took me some practice to realize that my winning trades came from well-picked (i.e. low-risk) entries. In the case of a failed entry, simply one reversal was enough to win back my loss and grab a profit.

Hint1: Hence, there's absolutely no point in reversing more than once as you will just lose control of your position! Plus lose your hair in the weeks of stress. :D

Hint2: I came to the conclusion that you need well-defined support/resistance levels. Without those, you will randomly reverse your position just to see the price action turn against you again and again. (I suggest point and figure charts.)

Hint3: do not use U.S. brokers! Why? They banned hedging! If there's a slippage, your prices might not get filled. If you don't get the right price, your reversal order might try to activate before your current position's s/l gets hit. When that happens, both positions are KO'd as the broker takes it you've tried to open a long and a short position at the same time.

Hint4: If anything, you will definitely learn what money management is when you use s&r.
 
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