Quote:
Originally Posted by Mr.Marketz
Kenny,
I don't want to turn your thread into a mess by discussing strategies, but here's all I can offer regarding EA trading.
1. Forget the auto pilot 2-way bullshit. YOU must set it for "unidirectional" -depending on your personal market sentiment (a.k.a - hunch).
2. Having said that (and considering my market theory), forget all the EA's with directional logic...they're useless to you if you're good on the price direction. (If you're not good on price direction... any EA will take a loss).
3. Bust out a grid, and figure out a safe spacing ratio. Then, skinny down on the sizing, and wait for a nice 4 hour pull back. Set up some limit orders, and let the little F'er run.
4. Profits... check back in 4 to 8 hours... if you got em, take em. Then repeat.
5. No profits, no problem. Simply close at (your) predefined equity DD, double the sizing on a new directional change. Losses made up, and new money in the bank.
6. Keep a tally of the losses for every close. This way you'll know when your back in the money from the double down.
Initial 1:1 is strongly recommended. Let us never get to the point when we start fooling ourselves into thinking that we're getting pretty good at picking direction. Being right on a move is a seasonal phenomenon. You might be on for Spring and Summer, but Winter and Fall might really suck. The only edge is the creative use of leverage.
MM
Sorry for the verbal mess above, here's a picture that should pretty much sell the concept...
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There is no need to apologize for articulating yourself in a very detailed manner. I appreciate the thought and insight that was put into the post, unlike most of the rants populating the forum. So as I had assumed from experience, you are basically using a grid and money management to capture most of the volatility.
And I strongly agree that picking a single direction is the most profitable way of trading. The grid is a novel idea when first introduced, but I have only seen a few instances where people actually applied it in a sensible way that actually has a chance for profitability. Most people try to trade micro lots to dumb down the risk, or let the grid just keep trading like it is a cash machine for the long haul. Both will face grim realities when the market goes into its price pattern to kill grids somewhere between a trend and a range. So I see you have mitigated this somewhat with your strategy. Although you do realize you are practicing semi-martingalish money management.
So what happens when you have 6 losses in a row? Are you doubling down each time? That can get painful real quick.
I also have a pocket grid strategy that I have playing with in my mind. I just might code it up one of these days.
BTW, I have funded a second account with $5K to trade high risk, high return strategies. This will get interesting because I believe it will mostly depend on luck.