Some food for thought: It all comes to this! - page 2

To add comments, please log in or register
[Deleted]  
pip_seeker:
Everything happens for a reason? If the spike bar happens for a reason then an indicator will not work? It would give a false signal no?

Or is it that when the spike bar occurs it is as an accident on the freeway. We drive the freeway every day to work, and we don't always see an accident on the freeway even though we do see them reported on the news.

So if we can avoid the car wrecks on the freeway, can we avoid the spike bars in the 4x. Or do we want to avoid them might be the better question.

Spike bars are only one phenomenon we must get over or deal with in some sort of fashion.

Another thing that can be very confusing is if you look on one chart you think the trend is down when on a larger time frame the trend is up. Well we all know the story about trading against the trend. So if you are trading long on the H1 and the W1 is short you better hope it keeps going your direction.

The above problem is complex and we could probably generate pages of discussion just on that one thing. I'm sure you've probably tried various EA's on several different time periods in hopes of unlocking some sort of key. I can say without a doubt that there is more "noise" on the smaller time periods.

However, this noise can be used to your advantage... depending on how you interpret it or the EA interprets it. You don't want too much noise, but you don't want too little either. If you are trading an EA on a higher time period it will generally mean higher periods of DD. [DrawDown] There are many different market cycles. Certain pairs can go long or short for extended periods of time.

Take for instance the USD. It will likely be short for some time to come. Why? because monetary policy. Interest Rates decide where central banks park their money. ECB will likely be long for some time to come... why? because monetary policy. If you don't understand this your trading would probably get a little better if you did.

Does this mean the USD will not have any long days? { I wouldn't count on it.} But prolonged long moves for poor dollar is rather unlikely. This could change if the Fed changes course and increases the interest rates or the ECB changes course and loosens theirs. {monetary policy}

These are just a few things. The thing we must deal with as traders is mostly psychological. Because if we take a trade we want to win. If the trade goes for a loss it's a psychological blow to our ego.

While the EA takes away a good part of the psychological hindrance it's when we sit there and watch the EA and judge it by how good or bad it's doing. It only knows to do what you've told it to do.

If you don't account for every single thing that could occur during the trading day with the EA then it will most likely destroy the acct. or destroy the trust you had in it.

Sometimes our best medicine is to stay with what we got and be happy, but it's human nature to always look on the other side of the fence... because it's always greener over there. If we could learn this lesson, it might be the most important lesson of all.

It is also dependent on how you define noise. There are people out there that don't believe such a phenomenon exists.

There's a lot to learn indeed. But I'm not sure if there is a special learning curve, i.e., novice traders start out with smaller pip gain attempts (scalping their way to possible profit), but they find it is not easy, so they revert to intraday trading using some technical strategies, which ultimately fails, so they revert to higher time frames using more sophisticated multi-day trades. Ultimately, they end up trading the news, which most successful traders do.

Does that mean the short cut is to trade the news with a bit of pivot data assistance and abandon EAs alltogether? That's a valid question. but only and experience will answer it.

pip_seeker
13
pip_seeker  

Well I think I would define "noise" as no defined movement or a market that is not going anywhere, except up and down back an forth. If you trade such a market your odds are less than 50%. Another example of "Noise" is look at the daily chart of the GBPUSD there's probably about 30 days worth of "Noise". To say it doesn't exist, doesn't mean it's not there.

If you look at the daily of the GBPUSD can you tell what the trend is? Now that's noise! The good news is we have a well defined chanel and sooner or later it will break. {possibly as soon as this Friday -NFP-}......

There are alot of brokers out there who don't allow scalping or just trading the news. If you're flagged as a scalper you will be severly crippled by the Broker / Liquidity partners. So to be successful doing this you'd really have to be crafty to get away with it.

I don't think abandoning EA is the answer. The EA is the best thing since teaching the dog to get the news paper. [ one less thing I have to do.]

Plus there are many ways an EA can Trade that a human would make to many errors / two slow etc.

[Deleted]  
pip_seeker:
Well I think I would define "noise" as no defined movement or a market that is not going anywhere, except up and down back an forth. If you trade such a market your odds are less than 50%. Another example of "Noise" is look at the daily chart of the GBPUSD there's probably about 30 days worth of "Noise". To say it doesn't exist, doesn't mean it's not there.

If you look at the daily of the GBPUSD can you tell what the trend is? Now that's noise! The good news is we have a well defined chanel and sooner or later it will break. {possibly as soon as this Friday -NFP-}......

There are alot of brokers out there who don't allow scalping or just trading the news. If you're flagged as a scalper you will be severly crippled by the Broker / Liquidity partners. So to be successful doing this you'd really have to be crafty to get away with it.

I don't think abandoning EA is the answer. The EA is the best thing since teaching the dog to get the news paper. [ one less thing I have to do.]

Plus there are many ways an EA can Trade that a human would make to many errors / two slow etc.

I have also found an interesting article about brokers and how they deal with the market. Here's a quote about scalping with brokers:

Situation when the trader's attention is fully locked on his or her trading account and its events, including trading strategies, experts, etc., is most commonly encountered. However, beside the trader's concernment, there is the dealer's economic concernment.

At "normal" trading, both parties can win: the trader who uses a well-thought-out strategy and dealer who gets interests from trade operations performed by the trader. In this case, both parties are concerned in each other and both are ready to support each other.

However, there can occur situations where activities of one party oppose interests of the other party. For example, if the dealer increases the spread, disables automated trading, or does not open (close) orders at the price's first touch unilaterally, this opposes the trader's interests.

At the same time, there can be some trader's activities that oppose the dealer's economic interests. One of such activities is frequent trade operations with small amounts of money.

The dealer's wroking technology is in whole rather simple. The dealer collects the traders' orders to buy and to sell and enters into relations with a bank or other financial institution to process the differences in their prices. Let us examine a simple example. Suppose, the dealer serves for totally 100 traders, 60 of which have bought by 1 lot EURUSD, and 40 have sold by 1 lot of the same currency pair. In this case, the dealer must buy 20 lots (the difference between 60 and 40) from the bank. At that, it is the same for the dealer in what direction the price will move. In any case, the dealer will get the full spread for 80 lots (40+40) and a partial spread of 20 lots (some part will be given to the bank for its services).

In this case, the source of profit/loss for 40 traders is the loss/profit of other 40 traders. The source of profit/loss for the resting 20 traders is the bank or, to be more exact, legal persons served by the bank and selling/buying currencies for their export-import operations. This is a normal way of how the participants of money-market interrelate.

But there is one more detail od how the dealer interrelates with the bank or financial institution. The matter is that the dealer does not interrelate with the bank at each sell or buy operation if the trader sells or buy an insignificant amount of money. Trade operations between the dealer and the bank are performed a bit less frequently than the traders' clicks in the МТ4 terminal. Normally, the minimum amount in the relations between the dealer and the bank does not exceed US$50 000, which translated into the order price with a leverage of 1:100 makes 0.5 lot. This is why, if the trader always works with a small amount of money, he or sheб in effect, trades with the dealer. In this case, the source of the trader's profit is the dealer's money!

The dealer is as much the participant of the money market, as all others. The dealer must watch and analyze the work of all traders. Of course, dealers, within their economic concernment, can close eyes to irregular repeated investments if they result in the trader's evident losses or its total result for a certain period (for example, the daily result) is neutral. But no reasonable dealer will aloow the interrelations continue if these interrelations result in the dealer's losses. In this case, the dealer has to react somehow, otherwise there is nothing for this dealer on the money-market economic territory.

Please note that the modern routine on the money market is not a dealer's freak or ill will. The dealer's relations to the bank are contracted, as well. And the dealer strives to earn the spread by fair means (abuses on the dealer's side are not discussed within this present article). The dealer would probably be glad to trade with the bank every second, but there is no such possibility for the moment.

Under conditions of frequent small trade operations performed by one trader, the dealer has to take some measures. It can be a notification sent or said to the trader that this specific trader works on the brink of a foul. The dealer can, as well, disable automated trading for this trader or increase the amount of requoted operations.

That gives an idea why scalping is not a good idea, but yet again, the idea that online trading is like paper trading is more of a myth because dealers actually don't trade directly (live) but use a dealing desk. I wonder if there are any who trade live.

pip_seeker
13
pip_seeker  

I think you have it wrong when you say the broker doesn't want you to trade small amounts. That is not what triggered the whole... "Scalping is not allowed tirade" at just about all brokers I can think of except for a select few like FXCM and possibly Refco which is more or less FXCM in another package.

The lot sizes traded by these scalpers were big time lots... like 10 or more Standard lots. They traded the news and most of their trades were in an out of the market very quickly.

It wasn't the broker that made the fuss as these trades were directly handed to a Liquidity provider. It was the Liquidity Provider who freezes the acct. or so the broker says. I would like to believe the broker, because I have not had such a problem.

Scalping has many definitions, but the liquidity providers do not like big trades in and out very quickly. That is what will flag you quicker than anything else. The broker shouldn't care as long as they make the spread why should it matter to them? Unless of course they have a dealing desk and are trading against you. But that's a whole 'nother discussion....

If you want some research on the scalping subject go to www.interbankfx.com and click on their forum board and do a search.

[Deleted]  
pip_seeker:
I think you have it wrong when you say the broker doesn't want you to trade small amounts. That is not what triggered the whole... "Scalping is not allowed tirade" at just about all brokers I can think of except for a select few like FXCM and possibly Refco which is more or less FXCM in another package.

The lot sizes traded by these scalpers were big time lots... like 10 or more Standard lots. They traded the news and most of their trades were in an out of the market very quickly.

It wasn't the broker that made the fuss as these trades were directly handed to a Liquidity provider. It was the Liquidity Provider who freezes the acct. or so the broker says. I would like to believe the broker, because I have not had such a problem.

Scalping has many definitions, but the liquidity providers do not like big trades in and out very quickly. That is what will flag you quicker than anything else. The broker shouldn't care as long as they make the spread why should it matter to them? Unless of course they have a dealing desk and are trading against you. But that's a whole 'nother discussion....

If you want some research on the scalping subject go to www.interbankfx.com and click on their forum board and do a search.

I have developed a scalping technique that works quite well, but I never went live with it fearing the repercussions if I am blacklisted, which is not going to be a good start. Nevertheless, I am finetuning the strategy so as to forward test it in the near future. You never know when a good broker would come.

BTW, may I ask if you have traded live and which broker you recommend?

pip_seeker
13
pip_seeker  
investor_me:
I have developed a scalping technique that works quite well, but I never went live with it fearing the repercussions if I am blacklisted, which is not going to be a good start. Nevertheless, I am finetuning the strategy so as to forward test it in the near future. You never know when a good broker would come. BTW, may I ask if you have traded live and which broker you recommend?

Well there are ways around the scalper threat. There are loop holes in anything if you look hard enough.

Yes I have traded live. As far as broker recommendation I have none. I will tell you I use Interbankfx. But you should try them for yourself, there are pros and cons to any broker.

The bigest con with Ibfx is spreads can go really wide sometimes, so if you're EA trading you should have some way to deal with this issue. I've heard some good things about Velocity4x as well, but have never used them yet.

[Deleted]  
pip_seeker:
Well there are ways around the scalper threat. There are loop holes in anything if you look hard enough.

Yes I have traded live. As far as broker recommendation I have none. I will tell you I use Interbankfx. But you should try them for yourself, there are pros and cons to any broker.

The bigest con with Ibfx is spreads can go really wide sometimes, so if you're EA trading you should have some way to deal with this issue. I've heard some good things about Velocity4x as well, but have never used them yet.

It does make sense that most brokers have losing traders more than winning traders. After all, it explains why so many are eager to get more clients I guess. I'm not sure about the 90% to 10% (failing to successful traders') ratio is correct, but if that is the case, then brokers are doing good business, particularly out of novices !

But it is good to know that you have traded -and continue to?- trade live. I have used marketiva in the past just to get a feel of trading live, but I think Oanda is a better alternative for manual trading. I haven't started trading live with EAs as I am still reluctant to do it -given the negative assessments I find elsewhere in this forum.

pip_seeker
13
pip_seeker  

Well there is big money in spreads alone so to think that broker[s] won't look to enhance their base any way they can? It's what spins the world you know.

The problem with most brokers is they feed off the newbies taking the other side of the trades so they can make the full thing spread + return. This won't change anytime soon unless people wise up. But the lure of EZ money won't stop the flow anytime soon.

The reason EA's don't appear to work at first glance is because people don't understand how to use them / and or the developer failed to write the script to handle everything the market can dish out.

You have to remember a script is only as smart as the code making it perform. If there is any bug in a script it will be found out usually in the form of a loss or poor performance. The only way to get a script 100% golden first and foremost have a solid idea. Next you have to forward test many months [ at least 2 imo].

Even after forward test you may have to fix bugs along the way even after trading live. So really you are never through because the market has so many different cycles and looks to it that when you originally coded it... the market may have changed that will lead to higher DD if you don't adapt a new change to it etc.

People are misguided to think they can just place a script on a chart and money will fall from the heavens.... while this could happen it rarely does and if it does people want more, they up the risk settings and blow the acct.

With that said people get fickle too. The script they are using isn't doing so well so they jump to the next best thing.... nothing ever gets resolved because they keep jumping.

[Deleted]  
pip_seeker:
Well there is big money in spreads alone so to think that broker[s] won't look to enhance their base any way they can? It's what spins the world you know.

The problem with most brokers is they feed off the newbies taking the other side of the trades so they can make the full thing spread + return. This won't change anytime soon unless people wise up. But the lure of EZ money won't stop the flow anytime soon.

The reason EA's don't appear to work at first glance is because people don't understand how to use them / and or the developer failed to write the script to handle everything the market can dish out.

You have to remember a script is only as smart as the code making it perform. If there is any bug in a script it will be found out usually in the form of a loss or poor performance. The only way to get a script 100% golden first and foremost have a solid idea. Next you have to forward test many months [ at least 2 imo].

Even after forward test you may have to fix bugs along the way even after trading live. So really you are never through because the market has so many different cycles and looks to it that when you originally coded it... the market may have changed that will lead to higher DD if you don't adapt a new change to it etc.

People are misguided to think they can just place a script on a chart and money will fall from the heavens.... while this could happen it rarely does and if it does people want more, they up the risk settings and blow the acct.

With that said people get fickle too. The script they are using isn't doing so well so they jump to the next best thing.... nothing ever gets resolved because they keep jumping.

All I can say is that I agree with you 100% and can relate to what you said. It is interesting to note how losing of one's money could be a profit to another (novice trader & broker).

So far, I am convinced that making money is possible, but it does not happen by chance. It is rather an accomulation of experience. It is no shame to fall in a ditch because next time around you would learn how to avoid them. I feel it is essential to do live trading at one stage -even with a microlevel account- to get really involved in getting experience. The demo forward testing is useful (that's what I do), but it may be misleading (e.g., since yesterday, I got a hike of 10% of my balance in a forward test) because it does not take into account several key factors in real trading. also, we -programmers+traders- tend to try curve fitting in our tests perhaps out of wishful thinking that the market will stay the same, hence our parameters will be optimized in a way that we think will work out well, while the reality may be totally different.

Yesterday I was thinking about abandoning scalping altogether and reverting back to swing trading. I recall that statistics of the MT4 championship (http://championship.mql4.com) showd that the fewer the trades the higher the profit (interestingly, that was opposite to my earlier beliefs). That may mean that greater profitable trade opportunities happen in higher timeframes. Then I went back to my old archive of EAs I wrote for swing trades and tried them out, and guess what? They worked. But the problem is that they had very few trades, ie, three or so every month, but end result was that they were good results. In other words, different trading techniques may be used to achieve the same objective (making money), and that's what we are at.

I'm happy to get your insightful opinion about online trading, particularly intraday or swing trading, because that's what I am focusing on now. Believe me, you convinced me not to jump into another project until one is done with, so I'll stick with swings for some time.

happy pip seeking!

pip_seeker
13
pip_seeker  

Personally I am not a scalper, tried it once made some money / lost some money... lost some more money and threw in the towel.

I use a hedging based system that is fully long term... no quick wealth, or get rich quick scheme. I use anything and everything at my disposal. Alot of things can help you if you look at it in terms of a chess match and you don't become too greedy.

This doesn't exempt me from bad days. Anyone can have a bad day no matter if you trade an EA or Manual for that matter. While I currently have losses I am slowly recouping them with my current strategy. I am looking for long term gains and in the process I take the tax advantages of trading as a bonus to where I actually make a living.

However, if you have more losses than wins this plan will never work. It's very easy to slow the burn if you have to... IE nano lots. Any business has startup costs and that's the way I look at it. It is long term.

Most people don't look at it from that perspective and they blow their wad in a few months. It's very easy to get excited over a Demo EA. I can't tell you how many times I've had that happen.... only to get burned when going live.

With that said my performance since Oct 06 is 2150 pips / over all high was 9850 pips, but Dec NFP really screwed me up. While these numbers look impressive the trades are only 2 pennies a pip, but a pip is a pip and I'll take it and every day I look as a new learning experience.

So it can be done if you have time and patience and understand the operation of an EA and have a little market savvy otherwise you might as well go to the race track. Because it's not as easy as sticking an EA on a chart and walking away from it.... at least in my experience.

123
To add comments, please log in or register