daedalus

Most of the systems that are running on their own are done on servers rather than home computers and have redundancy.

I have been on a journey to rethink and re-examine everything i've "learned" about trading. So much of my career has focused on getting 10-100 pip swings out of the markets, keeping optimum risk:reward setups in my arsenal, hold for gold, all of that. And if i'm honest I can't really say i'm living the life I thought I would be when I started out 5 years ago. Now granted we all think (even if we don't want to admit it) that we'll figure this thing out in a couple months and the Ferrari will be in the new mansions garage by Christmas. I'm under no illusion that its that easy - however I do think there are a few concepts I instantly threw out of my trading ideas, and it is those concepts I want to talk about. I apologize in advance for the length of this post, hopefully there will be something constructive in it for us all. I guess what i'm rethinking is the idea and the application of scalping. I stumbled onto a thread on babypips today and this was a snipped of the post I found intriguing: Basically this guys "edge" was to take small profits out of the market and just add size. Not swinging for big gains, but simply taking signals that were there and taking what the market offered, be it 1 tick or 10. I think there is a bit of contrarian genius at work here. Now its usually at this point where someone jumps in and says "BUT WAIT!!! YOUR NOT RISKING 10 PIPS TO GET 890!!! THIS WON'T WORK!!!". In fact, I never said it but thats what I have been thinking while I read every scalping thread on trading forums. What i'm coming to terms with is that a scalping edge isn't defined by risk : reward - its defined by expectancy. And therefore, you can't apply to same typical constructs we try to beat into trader with our typical "cut losers short and let runners work" and "you need to a minmum of a risk 1 to get 3 profile to be a successful trader". The point is, if you're scalping your edge is expectancy of returns, not the size of those returns. This one little light clicked on in my head and got me thinking... Now the guy who posted that initial quote of his results and compounding i'm pretty sure is legit... Another guy who uses a similar philosophy is the loved and hated Avery also known as TheRumpledOne and his Never Lose Again threads that lets be honest, have been posted on every trading forum under the sun and threads have typically gone to hell quickly due to a combination of stated success, thread title, the typical bantering about risk: reward, and avery's very combative personality. But all of that aside - I think hes legit and is making serious money. I mean the guy got his group of disciples to meet in Monaco for the F1 grand prix this year.... I don't care which way you slice it that city is one of the most expensive in the world and the most expensive time of the year there is for the F1 race. Somehow I don't think he footed the bill from his donational indicator payments. REGARDLESS - his edge again is quite explicitly not one of risk:reward, but simply of taking whats offered, an edge of expectancy. Last week I was contacted by a firm about a trading related job only to find out it was a person selling MT4 operated black box systems (more or less). Now unlike the heavily advertised systems you have all googled at one time or another this lady had put this together herself and was very blatant in telling me exactly how the system was pulling in 1000-3000 pips a month (running on 4-5 pairs simultaneously 24/7). I've always thought these things were bullshit (and a lot of them are just that) but we got into talking and she put it to me point blank as I asked more and more about the mechanics in the system - she used wide stops and aimed for smaller profits (300-400 pip stops, and 40-50 pip targets). Now even I will admit I think thats a bit on the heavy side of getting R:R... but the point is this... the equity curve of these systems slopes upward and thats because their exploiting expectancy, and not risk:reward. And quite frankly I think it probably works. Everyone says to be a contrarian in the markets right? We are all supposed to run against the pack, yet we all go into the markets trying to exploit the same pre-conceived notion of risk:reward being the holy grail regardless of your entry signal and we all know that 90-99% of traders lose money right... so whats preventing us to taking a step back and supposing there might be a relation between the two figures? Failure and trying to trade to optimal risk : reward? Maybe the contrarian view here has nothing to do with market analysis, but the edge we try and exploit... expectancy rather than risk & reward. All those billions being made on black box systems and quantitative systems used by all the new trading firms - I don't know whats in them but i'll tell you what I suspect is. I suspect their edge is 1. data speed and execution, and 2. expectancy. I doubt those orders beating all of us into the markets taking advantage of the smallest pricing inequalities are doing so in a way that risks 1 and gains 2. Rather i'd wager they are built to exploit the areas where something is guaranteed almost every time. Think of how a casino is run... yes its run on odds, but those odds aren't 1:2 or 1:10... casinos make consistent money because they have expectancy. yes there is going to be outlier outcomes that hurt the bottom line when someone hits a jackpot, but 9x's out of 10 they are taking your money from you each and every time and its got nothing to do with risk:reward - its got everything to do with expectancy. So what do you guys think? Is it bullshit? Is there potential here? Lets dig into it. Personally I started looking at charts today for a new kind of edge, not one where I could risk 20 pips and get 40, but one where I could reasonably expect to get a couple pips each and every time. Frankly I know what my results have been trying to do things the 'correct' way. I'm still not rolling in it. So i'm throwing that out for now and trying to look at things from a completely different standpoint. If nothing else its exciting and thought provoking and to be honest I haven't been excited about trading for a long long time. Cheers!

Can't wait to see and join in on the new blog. Maybe we can all make the new venture even better than the original.

^^ Appreciate the OEC conversion... Gonna take a look at it today. Cheers!

This kind of stuff seems very similar to a concept I played around with using the ADX... except that it was really looking for areas to enter at when there was no momentum (thus trend reversal might be more probable). I'll repost it here and see if you can see some of the parallels. Its using the same kind of momentum principals but I suppose in the opposite way. I guess what I would bring to the table as a question is what is the benefit or advantage of the momentum indicator over a standard 14 period adx? Please bear in mind I made this post years ago and does not currently represent how I trade.... I still find the concept interesting though.

Excellent thread. I think the LH/HL stuff is the "holy grail" as far as trading goes... thats all the market can do, and when you can learn to read those turning points its can be very profitable. I have some questions though about your charts and where your entries actually are because the line overlaps a lot of places on the chart... Can you specify like on your last post at what time the trade was entered? It seems like you place your buy/sell stops slightly inside of the LH/HL patterns rather than 1 tick outside of them? ANy reason for this? Are you concerned you'll catch a double bottom/top that would otherwise not break in favor? Also, where are you placing your initial stops and managing them during the trades? My biggest issue with these trades is that if I place a buy/sell stop outside the H/L of the LH/HL and then place my stop loss order on the opposite side of the LH/HL then I have HUGE amounts of risk and its very difficult to get 1:1 in a lot of instances, let alone 2:1 or greater. Any insights?

General rule I always heard was that things fall 2x's as fast as they rise... ie bear markets last 1/2 the time of bull markets, but it takes the bulls 2x's as long to make it back. I think to some extent the same rules apply in daytrades... the sharp fast moves always seem to favor the downside.

You seem to like shorting... Coincidence or is that part of your trade plan?

^+1 I've been with them almost a year now and i've only remembered them going down once in that time period. But to put that in context for you previously I was with TradeStation and they would be down almost weekly at some points.

+1. Huge props to you for continuing to post your statements. That's more than 99% of us were willing to do on here which means one way or another you've got something most don't and if that's nothing more than the determination to fight through it then that's something very valuable. Keep at it!

^^ I have to agree with this. I have a defined rule set for a trade entry these days, but it is a very basic concept, rather than a set of X, Y, Z, doing something, and this and that have to happen by the 3rd bar, and if it doesn't do Y by the 10th bar I need to bail... Just like its easy to fall down the rabbit hole of indicators and technical analysis, I feel its equally easy to fall down the hole of constraining the market into predefined rules. I've had much better success with a general concept mildly defined for entry and trying to let the trades work without my interaction. Thats not to say that you don't use money management, or don't have rules in place to allow for par stops and taking profit, but like most things in life there is a delicate balance that needs to be reached for optimum effectiveness IMHO.

Couldn't agree more. How that place remains open and active considering the usual average post quality and content baffles me to this day.

DAH! I just tried to do it and its fixed!!! Must've been done in one of the recent updates because I swear 3.5.0.9 it was still broken.

Does anyone know if they are ever going to fix the bug that doesn't allow the import of other exported layouts?

They are Hanns-G 23" Widescreen monitors. Hanns-G had great (the best one) reviews in consumer reports and more importantly on Newegg. I went with the 23" because it seemed like the most screen for the money, 24" monitors can be like a 50.00-80.00 bump over the 23" size and I thought that was pretty pricey for 1" of real estate. Not to mention I have a big ass desk and these things take up a LOT of space as it is. This is the exact monitor off of newegg.com: Newegg.com - Hanns·G HH-231HPB Black 23" 5ms HDMI Widescreen Full HD LCD Monitor 300 cd/m2 DCR 15000:1 (1000:1) Built-in Speakers

Very important as well! I used to work in the basement and it just wasn't cutting it. If i'm going to spend hours someplace I want it to be somewhere with a nice view and natural light. Keeps me in a nice place mentally.

Lets try not to read too much into a word (truth) that I pulled out of my ass when I posted a thread title for content I found on a blog somewhere folks...

Multiple.... for sure. Especially when your having to run different platforms for charting/order entry, etc... its just easier to organize everything. Just finished up my new rig yesterday. Eyefinity kicks ass!

I updated today and now one of my login's says its been disabled and the other says my password is wrong (which it isn't because I used it to login to the website with it). Anyone successfully on 3.5.0.10 today?

I just upgraded my trading (and lets be honest, gaming) rig and went with 3 23" widescreens running off an ATI eyefinity card. I had previously been trading off a 15" laptop for years. Holy smokes i'm in heaven. I can see everything so clear, have charts up, dom's on a different screen, and the internet/movie/whatever on another. Best investment i've made in a long time. But until I get you a picture of my new setup (I had to RMA the motherboard) heres a photo I found awhile back and saved... Probably the only thing that can trump UrmaBlume

dah.... i totally had one but I never used it so literally last week I deleted it... i'll try looking for the code but don't hold your breath!

I believe his reward is 120.00/contract, which means his risk on 3 contracts is 300.00 and his reward is 360.00. Not great, but not 1:3 as you stated.

The thing I find interesting about the Piker Trader document is that its VERY applicable to whats going on in this thread (and dare I say what every trader has pulled up an excel spreadsheet at one time or another and dreamed about). To make it more applicable to us (less than 3K account)... They roughly assume that they have 1,600.00 for each contract (or 5k for 3). Which means for most of us starting in this thread we should be trading 1 lot for starters. The only part I slightly disagree with the simulation is on the choice of the market. I personally think its much easier to get 8-9 ticks out of the 6E/A/J than it is to get 24 out of the NQ. 9 Ticks in the 6E is still 112.50, and god knows that market moves 9 ticks like nobodies business. Anyone disagree? And frankly you could still use a 8 tick fixed stop most of the time and get away with it keeping that 100.00/contract fixed risk in tact within the piker simulation. I also really like the idea of trading to a fixed $ goal and quitting. I have never traded like this before but I think i'm going to start. I like the idea of doing my job and quitting when its done, rather than lingering around continually looking for trades. I don't know about you guys but it seems for me (and even in this thread) that the less trades we are taking the better we do. Thus, it seems only logical to achieve our daily targets and quit while we are literally ahead. Less commissions, less risk, less time in front of the screen, more time sipping margaritas. Good compromise eh? Forgive the pointless meanderings of this post... just thinking of ways to more realistically apply that simulation to those here (and for myself).

I prefer OEC to Ninja myself. Unless your doing very complicated things in code I don't see an advantage to ninja personally. There will of course be those that tell you anything but ZenFire is crap, but frankly i've been impressed by OEC's data in the recent volatility and between you me and the wall, I execute trades through Infinity anyway so i'm no impacted anyway.

I can help you out with the Hull MA... Cut and paste this into a new easylanguage indicator and compile: Inputs: price(Close), length(21), zeroLine(0.0), zeroVisible(false), upColour(Blue), downColour(Red), sideColour(Yellow), colourDeltaBar(1); Value1 = jtHMA(price, length); //Plot1(Value1, "jtHMA"); If ZeroVisible = true then Plot2(zeroLine, "Zero"); { Color criteria } if (Value1 > Value1[1]) then Plot1(Value1, "jtHMA", upColour) else if (Value1 < Value1[1]) then Plot1(Value1, "jtHMA", downColour) else if (Value1 = Value1[1]) then Plot1(Value1, "jtHMA", sideColour); #function jtHMA Inputs: price(NumericSeries), length(NumericSimple); Vars: halvedLength(0), sqrRootLength(0); { Original equation is: --------------------- waverage(2*waverage(close,period/2)-waverage(close ,period), SquareRoot(Period) Implementation below is more efficient with lengthy Weighted Moving Averages. In addition, the length needs to be converted to an integer value after it is halved and its square root is obtained in order for this to work with Weighted Moving Averaging } if ((ceiling(length / 2) - (length / 2)) <= 0.5) then halvedLength = ceiling(length / 2) else halvedLength = floor(length / 2); if ((ceiling(SquareRoot(length)) - SquareRoot(length)) <= 0.5) then sqrRootLength = ceiling(SquareRoot(length)) else sqrRootLength = floor(SquareRoot(length)); Value1 = 2 * WAverage(price, halvedLength); Value2 = WAverage(price, length); Value3 = WAverage((Value1 - Value2), sqrRootLength); jtHMA = Value3; And it looks like OEC just rolled out a 3.5.1.0 chart package... and the "save as default" option for imported indicators works again. Yay!!!