I found that the mt4pips website that I was using to display my results wasn't that good; it has a lot of useful looking 'bells and whistles' but its functionality for updating the data is absolutely useless. After a quick google search I found the alternative to host my results with... www.mt4i.com
You can see my newest results at http://www.mt4i.com/users/lasoi/
Thursday, May 20, 2010
Wednesday, March 10, 2010
Missed opportunities?
It's annoying in some ways, but despite some of the trading opportunities that have popped up over the past few days, I have not traded. This is mainly because the best opportunities occur when I am at work and I can only keep half an eye on the market. Nevertheless, I do at times spot something while at work and will figure out a set-up and place that trade. Today was an example of that.
When I think about it I really do prefer to miss some of those opportunities, rather than dive in with a bad set-up and lose money. My main thing at the moment is to get better at trading well; although I obviously want to make profit, it is more important to me that I trade well. Trading well and making profit are not necessarily the same thing in my mind: I can trade well and lose money, and I can equally make money but not trade well.
'Trading well' for me means some of the following:
* I have assessed the trade set-up to make sure that the reward to risk ratio is in my favour
* I am risking a percentage of capital that is in-line with what I believe the probability of being right will be. I guess this is really down to a gut feeling, with <1% risk of capital being an experimental trade and at the other end of the scale a maximum of 5% risk of capital being quite confident in the set-up.
* Following my entry and exit rules. This can can often mean getting out slightly less than the initial profit target. I will often get out before a profit target is hit if I feel that the market has displayed the action that I thought it would but then reversed a few pips short of my designated profit target. I generally get a sense of when this is because the price will probably move more erratically when it's 'bouncing' away from the target area. I guess this is where it comes down to being a art rather than a science, especially with FOREX. I see no point in being 'pip perfect' in FOREX, especially as the market is not centralised and various data providers will all have different price information anyway; if the market has shown what I feel are it's 'intentions', I will get out of the market. I've focused on the profit side of things there, but that goes equally for losses: if I feel that the dynamic of the market has changed so that my initial stoploss no longer makes sense then I see no shame in admitting to myself that I was wrong and removing myself from the market in order to preserve capital.
When I think about it I really do prefer to miss some of those opportunities, rather than dive in with a bad set-up and lose money. My main thing at the moment is to get better at trading well; although I obviously want to make profit, it is more important to me that I trade well. Trading well and making profit are not necessarily the same thing in my mind: I can trade well and lose money, and I can equally make money but not trade well.
'Trading well' for me means some of the following:
* I have assessed the trade set-up to make sure that the reward to risk ratio is in my favour
* I am risking a percentage of capital that is in-line with what I believe the probability of being right will be. I guess this is really down to a gut feeling, with <1% risk of capital being an experimental trade and at the other end of the scale a maximum of 5% risk of capital being quite confident in the set-up.
* Following my entry and exit rules. This can can often mean getting out slightly less than the initial profit target. I will often get out before a profit target is hit if I feel that the market has displayed the action that I thought it would but then reversed a few pips short of my designated profit target. I generally get a sense of when this is because the price will probably move more erratically when it's 'bouncing' away from the target area. I guess this is where it comes down to being a art rather than a science, especially with FOREX. I see no point in being 'pip perfect' in FOREX, especially as the market is not centralised and various data providers will all have different price information anyway; if the market has shown what I feel are it's 'intentions', I will get out of the market. I've focused on the profit side of things there, but that goes equally for losses: if I feel that the dynamic of the market has changed so that my initial stoploss no longer makes sense then I see no shame in admitting to myself that I was wrong and removing myself from the market in order to preserve capital.
Sunday, March 7, 2010
How can you be wrong about a trade and still make a profit?
My main points of reference are the daily charts, the four hourly, and maybe the hourly chart when my trade has been entered to manage the exit. So scalping really isn't something that I consider as a part of my strategy, or something that even appeals to me at the moment.
However, if you look over my trading statement on the page www.mt4pips.com/lasoi you'll find that there are quite a few trades where the profit or loss is only a few pips. Those trades are not my attempts to scalp the market (that much is clear simply because of the period of time some of the trades are open; if I was trying to scalp the market for 1 or 2 pips, leaving the trade open for several hours would just be maddest!). What they represent are my decision to get out of the trade because it did not react in the way that I thought it would. I find this useful because it can mean that even if I was wrong about what I thought the market was going to do, I can still make a profit, or reduce my loss to less than 1R and preserve capital.
That last point about not losing more than 1R is very important to me. Typically my objective is to make a minimum return of greater than 1.1 times what I am risking (mostly a lot more than 1.1R). What that means is that for every unit of risk (or 1R), I would expect to have the potential to make at least a return 1.1 times that risk. So, if I am risking losing £100 on a trade, at the very least I would need to have a reasonable probability of achieving £110.
The monetary value of what the 1R will be depends on what percentage of capital I have decided to risk. For example, when getting into a trade I know that the maximum I'm willing to lose is roughly between 1% and 5% of my capital (the exact percentage amount depends on my confidence in the probability of the trade set-up being successful; but the risk is never more than 5%). So if I was going into a trade trade where I was willing to risk 3% of my £5,000 capital, it would mean that the 1R would equate to £150 at risk. Going from that, it would mean that I'd be looking for a profit of greater than £165 (i.e. £150 x 1.1). Nevertheless, I would still consider getting out at less than that or at a loss less than 1R if I thought that the dynamics of the trade had changed i.e. the market did not move in the way I thought it would.
However, if you look over my trading statement on the page www.mt4pips.com/lasoi you'll find that there are quite a few trades where the profit or loss is only a few pips. Those trades are not my attempts to scalp the market (that much is clear simply because of the period of time some of the trades are open; if I was trying to scalp the market for 1 or 2 pips, leaving the trade open for several hours would just be maddest!). What they represent are my decision to get out of the trade because it did not react in the way that I thought it would. I find this useful because it can mean that even if I was wrong about what I thought the market was going to do, I can still make a profit, or reduce my loss to less than 1R and preserve capital.
That last point about not losing more than 1R is very important to me. Typically my objective is to make a minimum return of greater than 1.1 times what I am risking (mostly a lot more than 1.1R). What that means is that for every unit of risk (or 1R), I would expect to have the potential to make at least a return 1.1 times that risk. So, if I am risking losing £100 on a trade, at the very least I would need to have a reasonable probability of achieving £110.
The monetary value of what the 1R will be depends on what percentage of capital I have decided to risk. For example, when getting into a trade I know that the maximum I'm willing to lose is roughly between 1% and 5% of my capital (the exact percentage amount depends on my confidence in the probability of the trade set-up being successful; but the risk is never more than 5%). So if I was going into a trade trade where I was willing to risk 3% of my £5,000 capital, it would mean that the 1R would equate to £150 at risk. Going from that, it would mean that I'd be looking for a profit of greater than £165 (i.e. £150 x 1.1). Nevertheless, I would still consider getting out at less than that or at a loss less than 1R if I thought that the dynamics of the trade had changed i.e. the market did not move in the way I thought it would.
DDE in MetaTrader 4
I really like the DDE feature on MetaTrader 4. It means that I can stream data into an Excel spreadsheet in real-time. This is important for me because Excel helps simplify the calculation for my position sizing in any one trade, and helps me decide whether I should take the trade or not. For example, if a set-up has a reward to risk ratio of less than 1:1, then I would not trade it.
You can enable DDE in MetaTrader 4 by going to:
Tools > Options > ‘Server’ tab > select ‘Enable DDE Server’
You can then get an example DDE spreadsheet by going to:
[your local disk]\Program Files\MetaTrader
In there you will find the DDE-Sample.xls file which you can experiment with.
The spreadsheet I use has some of the following variables in it:
• the percentage of capital I wish to risk (typically between 1% and 5%)
• the currency pair I am trading and its bid price (streamed in real-time)
• the GBPUSD exchange rate
• long or short in the market
• entry price
• stop loss
• profit target
The output which is of use to me from this is:
• the R-value (or Risk Value, which is essentially the reward to risk but as a single number e.g. 2:1 reward to risk is the same as 2R… more on that in another blog though). If this is less than 1R, I leave it.
• required lot size
• approximate stoploss (accounting for spread)
• approximate limit order (accounting for spread)
You can see from the example screen shot that this is a trade that falls short of my entry criteria because the R value is less than 1. In reality, I normally only go for set-ups which have a R value of >1.10 (which gives a bit of wiggle room for the spread and slippage) and with good enough reason I might take a trade that is between 1R and 1.10R; but generally never less than 1R.
It’s a shame because looking at the releases of MetaTrader 5 it appears as though MetaQuotes have decided to remove the DDE functionality. Nevertheless, I have no intention of using MT5 just yet.
You can enable DDE in MetaTrader 4 by going to:
Tools > Options > ‘Server’ tab > select ‘Enable DDE Server’
You can then get an example DDE spreadsheet by going to:
[your local disk]\Program Files\MetaTrader
In there you will find the DDE-Sample.xls file which you can experiment with.
The spreadsheet I use has some of the following variables in it:
• the percentage of capital I wish to risk (typically between 1% and 5%)
• the currency pair I am trading and its bid price (streamed in real-time)
• the GBPUSD exchange rate
• long or short in the market
• entry price
• stop loss
• profit target
The output which is of use to me from this is:
• the R-value (or Risk Value, which is essentially the reward to risk but as a single number e.g. 2:1 reward to risk is the same as 2R… more on that in another blog though). If this is less than 1R, I leave it.
• required lot size
• approximate stoploss (accounting for spread)
• approximate limit order (accounting for spread)
You can see from the example screen shot that this is a trade that falls short of my entry criteria because the R value is less than 1. In reality, I normally only go for set-ups which have a R value of >1.10 (which gives a bit of wiggle room for the spread and slippage) and with good enough reason I might take a trade that is between 1R and 1.10R; but generally never less than 1R.It’s a shame because looking at the releases of MetaTrader 5 it appears as though MetaQuotes have decided to remove the DDE functionality. Nevertheless, I have no intention of using MT5 just yet.
Saturday, March 6, 2010
Tracking my progress with MetaTrader 4
I have just set up this blog and configured my MT4 demo account with a free app from www.mt4pips.com which is used to show a MT4 statement on-line. You can track the progress of my account on the page http://www.mt4pips.com/lasoi . It shows all of my progress so far since around September 2009.
There was a lot of experimentation with this account over the 6 months or so I have been running it (bare in mind that I am still holding down a full-time job while doing this so I'm not trading nearly as often as I would like to!).
If you look over the statement you will see that there are much smaller position sizes September through to December 2009, but in January 2010 I became a little more confident with my observations as to how the market moved and decided to increase my position sizes. Of the £5,000 account, the maximum I would risk on a trade was less than 1% to begin with, but since January I would risk a maximum of up to 5% depending on how well I knew the currency pair and how likely I thought the trade was to meet my profit target (typically I would be risking between 2%-3% of capital).
I hope to write some more about my thoughts on position sizing and the characteristics of the different currency pairs in the posts to come.
There was a lot of experimentation with this account over the 6 months or so I have been running it (bare in mind that I am still holding down a full-time job while doing this so I'm not trading nearly as often as I would like to!).
If you look over the statement you will see that there are much smaller position sizes September through to December 2009, but in January 2010 I became a little more confident with my observations as to how the market moved and decided to increase my position sizes. Of the £5,000 account, the maximum I would risk on a trade was less than 1% to begin with, but since January I would risk a maximum of up to 5% depending on how well I knew the currency pair and how likely I thought the trade was to meet my profit target (typically I would be risking between 2%-3% of capital).
I hope to write some more about my thoughts on position sizing and the characteristics of the different currency pairs in the posts to come.
Subscribe to:
Posts (Atom)
Posts
