Print

Please login or register.
1 Hour 1 Day 1 Week 1 Month Forever
Login with username, password and session length

[HC]

... by the time that the trend was in line with the scout again, I am already making a good profit.  Sometimes, I am already in the money even though the scout is still losing.

Yes, this a real plus point of this method.  But got to becareful and keep an eye on the higher time frame - if trend change, I would just  scratch the trade.

What I am trying to reconcile at this point in time is that, by using this method, my swings were in the region of 6-10% either side of breakeven, ie my open DD could be as much as 10% whereby I'd close my trade (my only failed rescue).  On the other hand the profits were as high as 10% on a successful rescue attempt.  I bear in mind that these trades were made when I was still grappling with the method (actually I was just guessing that this was the correct way of doing it) and that the DD could possibly be much better improved.  My demo account is currently up 25% from about 4 maybe 5 actual days of trading, number of trades made was 6 if I can remember correctly.

Somehow I got a feeling that bug me to respond on this: I think you are trading a lot size too big for your account.   I just wish to point out that during this period, the currency is moving mostly in range bound zone, which make rescue easy.  However, if you look at Sept, Oct 08, days where impulsive move of 100 pips within minutes is common, once caught on the wrong side of the move, it can become very painful.

This bring me to another point which I have not make: don't underestimate the 1% a day's profit.  That is some 20% a month (assuming 20 trading days a month) if you can consistently do that, already beating many fund managers.

... when I log in onto my trading platform, I was actually looking forward to a mis-timed entry so that I could practice the rescue (crazy) 

Yes, I got that feeling too, especially when I have not a single losing day for a month now and end most trading cycle at worst  small losses, wanting to "anyhow" enter and rescue if necessary.  But I don't think this is the right way to mess with my real money .  Got to watch my ego and stop looking at that uptrending equity curve.

In fact, if you are reading TAF thread, there is a forumer called Leigh (http://www.forexfactory.com/showthread.php?p=2117282#post2117282).  She made a variation out from this trading method that do not required baby sitting so much:

Enter a selected direction of various pairs (at pre-determined lot size for MM), key in profit target and go to sleep.  When she wake up and loggin to her platform, some pairs will close out when target profit is reached, some pair will still profit which she can close out.  For those that is in a loss, she perform rescue one at a time while hedging the others.  This way she is rescuing a fraction of the size that she would trade just a single pair, and can mount a bigger recuse size, making a better rescue success rate.

But I like the original fti's method better, and if I can consistently doing what I am doing now is good enough.

[HC]

I also notice there are some similarity on fti's teaching to Turtle Trading Rule:

1. Scaling in of positions, so that when the 1st entry is wrong, the damage is small; and when entries are right, the profit is multiplied.

2. Risk control as price move in our favour - Tutle Rule uses a trailing stop, here we use scaling out and baby sitting.

[jjs]

Hi HC

You're right about my position size in a way:  I've followed the advice of breaking up the account into 20 units and only 1 unit was deployed at a time.  What happened or lack of on my part was PATIENCE.  The attack was carried out too early.  This resulted in too many units being deployed relatively close together.  Coupled with the big swings that you've mentioned, rescue efforts had to be made to recover a few units instead of just the scout.  The few units (about 3) had effectively become one big unit.

What really took my breath away was the profit.  You're right about the returns and seeing how this method has penned out, it has made me even more fearful.  Fearful of whether I got the MM correct, whether I've been overtrading, whether the demo period would be too short (fluke).  They say in trading you'll find out more about yourself.  How true!  I feel that even if the MM is correct, the lack of patience will eventually destroy everything.

[jjs]

A few things that I've noted in the last few days:

1.  fti spoke about observing the market form in the charts.  I find it easier to use bar charts than candlesticks for this.  With candlesticks, I am distracted by the "noise" at the lower TF.  With bars, I find it easier to focus on the chart as a whole.  It's a minor matter that's really up to individual's preference.

2.  I find the U/J a relatively "less" risky pair cf to E/U or cable.

3.  Hc is right that any mistake can take out a week's or even moth's worth of effort.  The concept of no stop loss can easily fester the mind into thinking that there is no need to cut loss.  fti has advised on a 3 x daily average P/L as the limit.  I'll keep that in mind.

Am still reading and continuing to learn...

[HC]

jjs:

1. I trade EU mostly, and sometimes UJ.  I prefer EU because of smaller spread.

2. Yes, the risk/loss control part is very critical, and very often it is our mindset (ego, fear, greed, revenge) that get in the way and blind us from the danger.  The rescue operation is something not to be taken lightly, no matter how many times we have successfully performed it.  Due the the snowballing effect, the open DD can escalate exponentially very fast.  So my take is not to recuse too soon, and always have a second thought on "what if this rescue is stuck".  I try not to overstay my rescue army especially when the size is large.  I will quickly exit my recuse army in sight of any trouble, even at zero profit of that recuse position.

3. My objective of rescue operation is to get the whole cycle in breakeven, or a small profit.  Once reached, usually the scout and army are all take out from the battle field and the chart is re-access without a position.  Only when I am quite certain of the chart is in my favour then I stay slightly longer, even then usually I am more incline to just leave the scout and close out the army (first).  My reason being that if a trade that required multiple rescues, the chart landscape may have changed sufficiently to raise a red flag, and closing all out to have a clear mind is better.  Missing profit is much better than has to do further rescue.

4. If I am doing a counter trend trade on a "seemingly extended trend" (ie, trading a pull back), I usually use a smaller lot size, don't do attack, and don't recuse but just cut loss.

5. If I wish to establish a position in a place that is less than ideal (because I am afraid that I may miss the move), I enter at a reduce size.  This will make the rescue/cut loss easier.

6. Even though fti advocate using only price chart, till now I still cannot get rid of the MAs.  I am still using them to gauge the correct side of trade.

Still learning...

[jjs]

Hi Hc

Thanks for sharing your strategy.  Hope, fear, greed and ego are indeed monsters that can be difficult to tame.  For me, I have to add the lack of patience as well.  fti's 3 x daily average P/L is basic but very good tool for me.  I am modifying it to 3 x daily min for USD.  Will see how that'd work out and fine tune from there.

I am also using the 12sma.  If fti is using it, I suppose I should be entitled to it as well 

BTW, and dont laugh, I find squinting at the charts help    Perhaps it's the same as when fti said he see the patterns better the morning after being drunk.

[jjs]

Hi Hc

From what was read so far, the rescue units were deployed throughout until the rescue was successful.

There was no mentioning of extricating the initial rescue units when they failed, so that the sebsequent levels of rescue would be made easier.  Would that be an acceptable MO?  I remember that fti has said that the rescue units should not be deployed for too long.

Thanks

[HC]

jjs:

This is what I understand, and has been doing so far (so far so good):

1. Scout (1x) is in trouble, and rescue 1 (2x) is initiated. If subsequently price move favorably, there are a few possible scenario:


1a. The best scenario: both scout and recuse 1 are profitable.  In this case I will look at the chart to decide to exit all, or exit recuse 1 first, or just hold on for a little longer (rarely).


1b. Recuse 1 is profitable while scout still in the red, but the nett is a plus for this session.  Again I gauge the price action to see how likely is scenario 1a going to happen, otherwise I will just close scout and rescue 1 at the same time, closing this session; re-access the chart and look for next entry opportunity for a new scout.


1c. Rescue 1 is profitable while scout still in the red, but the nett is a minus for this session.  Again use price action to gauge the possibility of scenario 1b and then subsequently 1a, otherwise I would just close rescue 1 just to bank in whatever profit this position has, to reduce my exposure. I will even close rescue 1 at breakeven (ie zero profit) if it is badly deployed. This can result in 2 outcome:

1c(i) price continues to go against the scout, then another rescue has to be initiated and the process is repeated till the whole session is closed with small losses, breakeven or profit.

1c(ii) price continues to go in favour of the scout, and we had exited rescue 1 a little too early. Never mind, in this case the loss of scout continue to shrink, we can decide to close this scout if the favorable movement has shrunk the nett loss of this session to small losses, breakeven or profit.  If the loss on scout is still too big to scratch this session, I would initiate another rescue if price action allows it.


1d. This is the worst case scenario, both scout and rescue 1 are in the red.  I would wait for another opportunity to initiate recuse 2 (4x).  While waiting for this opportunity, price may move in favour of rescue 1, then scenario 1c applies.  If I don't have opportunity to get rescue 1 out then we are in scenario 2.



2. Scout (1x) and rescue 1 (2x) are in trouble, and rescue 2 (4x) is initiated.  The whole process of 1a - 1c is repeated, except that now I have 1 more position of rescue 1 to handle.  My intention then would be getting out quickly and breakeven or small profit, while trying to reduce my exposure once the favourable momentum is lost.  If I can get all out at once, fine.  If not I try to get all rescue armies out (except scout).  If still not possible, I try to get rescue 2 out with profit.  If still not possible, when we are at scenario 3.



3. Scout (1x), rescue 1 (2x) & rescue 2 (4x) are in trouble, and rescue 3 (10x) is initiated.  Same as 2, but now I got 2 more positions (R1 & R2) to handle.  the whole process of 2 is repeated.  If this still not successful rescue 4 (20x) has to be initiated and it keep going on.



4. As you can see, keep averaging down is dangerous.  With the rescue armies we deployed in battlefield, the P&L $ changes very fast, BOTH way.  This can be advantageous to us as we can get the stuck session out at breakeven, it can also bust our account.  This is where I think the use of the hard dollar amount or fixed % of account balance as stop loss is needed.  Once reached, just get out to preserve the account balance to fight another day.



5. From my limited experience, I got hairy if my rescue 3 still failed.  This usually means that I am (deeply) on the wrong side of the market.  I will then try to get everything out, even at a reduced loss that can be 2-3x my average daily wins.



6. All the multiples (1x, 2x, 4x etc) are for illustration purposes.  The actual multiples deployed will depend on the price action, chart pattern, how big is the current total loss and exposure.



7. I also find waiting for an appropriate opportunity to deploy scout, rescue and attacking force very important.  Don't do it too soon and let the price trace out its randomness.



Hope these help.

[jjs]

Hc, thanks for the detailed description of the rescue deployment.  真的很感激。 感觉上fti师父是在闭关练功。 你是大师兄， 代师父传授功夫。

What I faced was the worst case scenario where both scout and rescue units were in trouble.  I stood with the deployment and took the loss.  Perhaps that's the benefit of hindsight.  At that point, there was really no telling how the battle would unfold.

As you can probably tell, the past week has been very challenging for me.  I see them as learning opportunities before going live.  Thanks for being there to mentor me 

[HC]

Ha ha, I am not 大师兄 ok, but just someone who came to fti 师父 clan a few months earlier than you.  There are many 大师兄 in those original threads and they are far better than me.  And who know, you may be able to learn/perform better then me? 学无前后，达者为先。

And yes, I find that the market has been challenging last week too.  I just ended my string of consecutive winning day with a loss of 1.5% yesterday.  No big deal, as even on weekly basis I am still up.  The same sentiment was echoed in  TAF Lounge thread too.

Still learning...

[HC]

Here is a session recap I did on 02 Jan 09 that shows how I did rescue (yes, I am putting myself on dartboard here).

Yesterday in London session, I saw a break down from congestion zone/triangle formation of EURUSD in H4 chart, and I think a continuation of price fall will follow.  In M5 chart, I look for an entry on break of support.

S 0.5 x 1.3841 - scout - black candle expands and support breaks, size halved as I am chasing
S 3 x 1.3908 - rescue 1  - price bounced off the resisting trend line, dark cloud cover
S 10 x 1.3943 - rescue 2 - price retrace after hitting previous high, bearish engulfing, support breaks
L 10 x 1.3941 - exit rescue 2 - price did not move as expected
S 10 x 1.3942 - rescue 3 - price break congestion zone support
L 13.5 x 1.3931 - exit all at BE.

Session profit: 16 pips
Open drawdown: 220+- pips max.

Session Review:
1. Poor timing of scout and rescue 1 entry.  Luckily the half size scout entry make rescue easier.
2. Rescue 2's exit is timely
3. Rescue 3 implementation is good.
4. The "exit all" was done by calculating my average price and then adjust the price to a nearby logical chart point (high of white candle before rescue 1) and keying in a take profit orders for all positions.  I do not wish to hold on further because I have no more time to watch.  If I keep watching, I may initiate a scout short on break of  support at 1.3924, but that is another session.

Note:
1. 16 pips profit is nothing to shout about, but the point here is this losing trade has got out profitable.
2. I kept an eye on hourly chart all the time to make sure that the down trend still intact.
3. All entries were made with reference to the price action.

[jjs]

Hc, thanks for sharing your invaluable experience in the “fti’s method”.

I am still demo trading at the moment and one of the issues that I’m grappling with is whether to extricate the rescue unit even though that position has taken some losses.  My limited experience in the past few days have shown that these positions, if left in the battlefield for too long, would quickly snowball to my cut-loss threshold whereby I had to bite the bullet and exit the trade.

As far as the dance is concerned, I discovered that I am very similar to one of FF’s forumer, Lusan.  His journal is posted here http://www.forexfactory.com/showthread.php?t=72993

Like him, I have a very narrow window trading opportunity, especially if some of the news announcements come as late as 11pm sg time.  Most of the time, I would only dance one leg and I would finish the trade within 1.5 hours at most 2.  Any trade that lasted longer than that was usually a rescue operation and would mean that I woke up the next morning looking like a panda.

Given such a narrow window, the dance steps were necessarily quick and short.  Positions were entered and exited within a few bars, sometimes within the bar itself.  Almost like scalping, taking 1 pip only if I had to.  The 1M chart was sometimes used to assist in the entry / exit.  However, I have come to regard the 15M chart with a 48sma as the bread-and-butter.  The close reading of the 15M PA is crucial and critical; and the 48sma is not so much of an indicator of trend but the PA tear.  Although reversion to mean is not a norm, the PA tear would give some hints to the risk involved in following the current trend.  A good example was last night’s EU.  I’ll see if I could retrieve the charts and post them here this evening.

I’ve stopped at fti’s thread at pg 141 due to the holidays.  Will continue…still learning.

[HC]

jjs:

1. My method is also similar to Lusan, trading on a shorter time frame, and look at M1 chart for entry.  The usual session won't last that long as previously shown.

2. In the previously shown session, after successfully performed rescue 3, I brought my scout price higher, I actually had the option of letting the scout stay put to see.  But I run out of time and got to use a predetermined point of taking profit order to closed all.

3. Here is another session that I did on 2009-01-07; and the reverse order is normally my preferred way of closing the the rescue.  This time I got time to let the remaining position ride for a little longer, and rescue 1 become sort of attack (but was later closed as price action don't allows to stay long) after rescue 2 exit made the whole position BE.

S 1 x 1.3456 - scout
S 2 x 1.3470 - rescue 1
S 5 x 1.3488 - rescue 2
L 5 x 1.3479 - exit rescue 2 when price hit BE for all & reduce overall size, while I reserve my chance to ride any more down move.
L 2 x 1.3475 - exit rescue 1 as price lost momentum
L 1 x 1.3477 - exit scout as price action don't look right.

Session profit: 14 pips
Open drawdown: 100+- pips max.

[HC]

Master fti has just commented on his recent performance: > 100% in less than 1 month!

If I remember correcly, he did mentioned many months back when he demo traded, he also double his account within 3 weeks.

[jjs]

Master fti has just commented on his recent performance: > 100% in less than 1 month!

If I remember correcly, he did mentioned many months back when he demo traded, he also double his account within 3 weeks.

It's entirely believable.

I started using Leigh's spreadsheet to demo trade according to the progression suggested by the spreadsheet on 17 Dec 08.  Done 26 trades as of last night and the account is up 19.3%.   You'd probably discount the performance because it's demo trading...all I can say is that I am taking it very seriously even thought it's a demo.  The trade sizes were in micro lots and most of the time only a few ten dollars were involved.  But I still feel my stomach juices flowing and biting my nails.  And I still have problem cutting losses when the occasion called for it.  It's as real as live for me.  My results started with about 1+% each night.  Last few sessions, I have moderated the pace and have bagged about 2+% each night.  But that also meant that the trading sessions lasted at least about 4 to 5 hours.  I have not traded like this before so I dont know if the results are good or not.  One thing I am sure is that given the Master's experience and training, doing 5 times or more better than I did should be easy.

I've promised to post a chart on the PA previously.  This is the E/U 15M captured a few minutes ago.  Notice that how the PA retrace against the trend for several bars after straying  off from the 48MA.  If my trading session is limited to only a couple of hours, I wouldnt want to be caught in this situation.  For me, when the 15M PA moves strongly away from its 48MA, the trade becomes more risky given the amount of time that I have to trade.