Originally Posted by EMMA1411

IGOR,
Another of your axioms who is wrong,market do NOT move random ,that is what stated in Larry Williams last book:"Long term secrets to short termtrading".I suppose he knows it better than you do, who never proofed to be trader by any real statement.

Originally Posted by iGoR

EDITED 28 june 2008


Recap on June 2008:

This recap is most likely the most important recap in my current and further trading career. There for it is a extra long recap and hopefully you will make it to the end.

This month me and the members realized that we will never come closer to the “perfect” trading system or the “Holy Grail”.
Be aware that I don’t claim to have developed the Holy grail.
But the fact is that if someone would have shown the technical aspects or characteristics to me a couple of months ago I would have said that this is impossible and that numbers like that are just a Holy Grail.
Many people understand by Holy Grail a system that makes continuous profit. For someone like me who developed many many systems and did thousands of tests on hundreds of systems, a Holy Grail is a system that has a positive hit rate that is more then 50% and has an average winning trade that is +/- equal to an average loosing trade.
People who done a lot of back test know that this is normally impossible. A system that has more then 50% hit rate will have automatically a stoploss that is many times bigger then the average winning trade.
If someone would have come to me a couple of months ago and say that he has a system that makes profit 9 out of 10 days I would have said impossible that is a Holy Grail.
If someone would have said that he has a system that he can trades whenever he feels like trading for a couple of hours and make some profit and call it a day, I would have said impossible.
If someone would have said that he has a system that never accepts a loss. If a loss is made then it will start to make adaptations till it has immediately recovered from that loss before it will start to trade in a normal way I would have said, impossible.
If someone would have said a couple of months ago that he has a system that makes every week profit and most certainly every month profit I would have said that this is absolutely impossible. That one needs to accept bad periods and longer periods of drawdown on the equity curve.
If someone would have said a couple of months ago that he has a system that performs well in trending as in consolidation markets, I would have said absolutely impossible. Because a system will work or good in trending markets or is designed for consolidation markets but impossible for both markets because if you find such a system you found the Holy Grail.

All these elements are now combined in our Super-Safe Stop and Reverse MaTRiX_ZoRRo scalping system. The name is a mouth full but that comes because of the different developing stages the system went true over the last month and especially the last few weeks.
We started of commercially with the standard ZoRRo system on 15min chart. A good system that was based on trend but tried to get in as quick as possible after a top or bottom. It performed good but needed sometimes big stops and missed some good moves when the reversals occurred before 06.00gmt. As most of the systems it made nice profits in nice trending markets but we knew if the average daily range would start to drop to much we would get in trouble. The problem was also that one could have some very serious losses after 1 day trading and hope to recover from them the next days or could take maybe some weeks.
Then I developed the MaTRiX scalping system. It was clear when one looked to an intraday chart that the overall majority of the entry signals (arrows) were in line with the trend. It could produce easely 15 wining trades per day out of 20 signals. But the problem was that the 5 losing trades could eat up the profit of the 15 winning trades.
Then we came to the combination of MaTRiX and ZoRRo system that was again designed for intraday trading but had again the problem that one felt stuck to his pc al day long and if the market did not want to move or staid flat that no profits would be made. On the contrary, typical for trend following systems you will end a day more likely with a loss.
Then I developed the Stop and Reverse system from the MaTRiX_ZoRRo template. We all saw that nearly each entry went into profit but when one waited for a next reversal, nearly all the profit was gone again. It had a very high hit rate on open trades but once closed by the exit rules the profit disappeared. It was again a system that would perform well in trending markets but would fail in consolidation markets.
As last step I developed the new Money Management plan and the “perfect system” was born.
The combination of this “never seen” money management with the stop and reverse MaTRiX-ZoRRo system is an absolutely amazing and robust trading system.
I have given demonstration on an on-line casino in the Video room to proofed that this Money Management works even fantastic when one playes black or red on the roulette table.
The trading system has all the elements that I mentioned earlier and that I would have held as absolutely impossible till a couple of weeks ago.
To summarize the characteristics again:
- It has a positive hit rate that is +/- 70%.
- A stoploss that is equal to the profit target.
- Every loss that happens is immediately dealt with true the new MM plan in this way that the loss most be taken back before the system will continue trading in a normal way. Other systems will continue to trade in a normal way and can stack up loss after loss and that results to serious drawdowns on the equity curve. Some people will think that we use a Martingale technique but I can assure you that this is absolutely not the case. When one would have 7 consecutive losses with a martingale technique one would be at 64 contracts. Witch is absolutely ridiculous.
- Because every losing trade is immediately taken care of or solved that makes that 9 out of 10 days end up with a profit. If the loss is not solved at the end of our trading day (16.00gmt) then we will continue to solve the loss first thing next day. Only then the system will continue to trade in a normal way.
- One can start trading whenever he wants during the day. It is preferably to start of the UK session. Because this way if one starts of with a loss you have all the time of the world to solve the loss and to ad profit on top of it. When one starts of with profits, he can call it a day after he made his daily target. When one starts of later on the day and takes a loss it could be that has not enough time left that day to solve the problem. But also here one would solve the loss the next day.
- The realistic average daily targets or profits that one can expects with a safe leverage and very safe MM is 1 to 1.5% profit on the account balance. In the room we proofed already severall days that this target is reached after 2-3 hours trading.
- Because the system can produce very safe but very nice profits over a couple of hours one does not need to stay at his screen all day long. When target is reached he can call it a day and do other nice things in life.
- Scalping systems sound and look nice on paper but once traded one sees that spread and most certainly slippage makes those systems to fail completely. The trades or S&R entrys are taken in true limit orders that are waiting in the market. So we do not have any slippage problem and the spread is taken in account on every profit target that is also taken out true a waiting order.
- The principle that is used works on every pair and every future or commodity. Of course some pairs will produce better profits then others. Some pairs just move nicer then other pairs. But the system with the MM works on every possible financial instrument.
- And the overall best element is that the system performs good in trend as in consolidation markets. The biggest fear of an intraday trader is that when he starts off in the morning with his system (and 99% of the systems need trend or bigger market moves) is that he will be caught up again in an narrow or consolidation market. That will automatically lead to a lot of false trades or trades that are in profit but give there profit back wich leads to a lot of frustration and is nearly a guarantee to end up the day with a loss. Needles to say if the market moves a couple of weeks like this that one can have major losses and serious drawdowns on the equity curve. The results of the Super Safe S&R MaTRiX_ZoRRo system hardly suffers from the difference between a trending market or consolidation market. Of course a trending market will cause cleaner entry’s and will have as effect that every trade taken in will move immediately in profit but not in this way that a strong consolidation will automatically result into a loss at the end of the day. On the contrary. In the room we checked at some point the eur/gbp. It was sitting in a range of 27! (twenty seven pips) UK and US session combined and still got away with 15 pips profit.

END OF PART I