Walter`s Forex "Trend Trades"

[walterw]

Originally Posted by ztrader Walter, Felicidades! nice thread on Trend Trades. I did a quick improvised over RMMA on NT to plot the VMAs. Take a look at the trade chart on ER2 today. BTW, RMMA and VMAs are not part of my system (yet), I just thought I get a quick visual overview of it. Gracias, ztrader

They look pretty good ztrader ¡¡... I did test NT with forex data, some time ago quite friendly chart platform... even with tick charts, unfortunately I am not good programing on their language... how do you find the prospect potential of this horizontal VMA lines ? cutting down noise... cheers Walter.

[walterw]

I will start posting here on the topic "Closing Positions" ...

This includes :

_Stops

_Exits


I always consider this topic more individual, thought to really make a system we must actually include how are we going to close our trades...

but why more individual ? because believe it or not closing a position is where you can see the traders personality, you can see how much tolerance he has to certain type of risks, from his $ amount on acct, his psiche and his character (patience, faith, optimism, etc)... its quiet subjective a traders profile in this arena... but anyway its good to have one good clear TECHNICALL criteria to stick too and trade by the rule...

I want to make clear that at this point this thread still is on a research process, wich means I am still open to modifications...

What I will present here in terms of exit methods its what has until now pleased me the most... but by no means this can be the best way of exiting...

Remember that I am very biased to make $20 per contract/ week on a consitent basis... so that really has some impact on my exit systems...

I think today Momentom has made some advances of how we can read an exit... its pure logic... the inverse movement has to be taken into acct here...

Now remeber when we talked about expansion/contraction ? well if your trade will succeed, she actually needs expansion to happen... so contraction after that will be the sign that she is probably over...

Now let me give a word on RRR (Risk Reward Ratio )... this is the backbone of trading... it is the reason you can take relaxed stops... so the ideal trade is one that actually takes good profits...

Dont get me wrong when I say that I aim $20 contract/week, this doesnt mean that I will limit my profit potential... its more of a bussiness target that organizes my vision of my trading... so letting a wining trade keep running its not conditioned by my fixed target... yes it afects wich trades I take, and wich trades I simply dont take... I like more the "shurefoots" wich we will talk later...

so I will take some cofee and continue on next post... cheers Walter.

PD : I love cofee ¡¡

[walterw]

So lets first talk about _Exits ... that is from a succesfull trade...

I am more of a scalper minded... so I like to lock in some good profits when they are there...

Now taking an exit I am convinced its directly related to momentum conditions and here comes into play the traders discretionary reading of momentum and his experience in sensing this..

The first basic exit criteria is when the bar gets inside the rainbow crossing the black line... lets call that the "scalper exit"... its the most sensitive and fastest exit, normally leaving a lot of money on the table, but it can be usefull when we sense there is not much momentum in the market..




The second basic criteria is more of the "Traders Exit" ... in this case is the inverse action to our entry criteria as the black line crosses back the thick darkgreen line...



in this case we stay inside much more, we have the expectative of having a big move... if we can sense momentum on the market, this is the best shot...

So both exits have to be discretionally used... depending on momentum conditions, if small momentum is perceived "scalper exit" its the most recomended, if strong momentum conditions are perceived it would be wise to use "traders exits"...

I know we can develop some intermediate alternatives... would be nice to hear what your creativity tells you on this manner...

So with that sayed we have two exit criterias to be used according to momentum conditions... remember that the rainbow on the 5 min chart gives us very clear hints on momentum as previously discussed... cheers Walter.

[walterw]

And here goes a video on exits... there is also some small info about a paralel research I am doing... cheers Walter.

[Don4]

Excellent, walter!!!!

[dupaski]

Walter,

Very informative thread, thank you for sharing. I was wondering if you ever got any clarification on the use of the ADX in the original formula by Bemac?

BTW I'm partial to mate

-Derek

[walterw]

Originally Posted by Don4 Excellent, walter!!!!

Glad to hear that Don ¡¡

Originally Posted by dupaski Walter, Very informative thread, thank you for sharing. I was wondering if you ever got any clarification on the use of the ADX in the original formula by Bemac? BTW I'm partial to mate -Derek

Hi Derek, glad you like this thread... about Bemac`s formula I had open this thread on TSD http://www.forex-tsd.com/indicators-...l-vma-mt4.html asking for help coding into MT4 ... I hope some charitable coder can help us... so we can have it on MT4 wich is a much more friendly platform... in that thread you can see Bemac`s formula being posted... so far here Blu-Ray has been able to code it into TS... so I think he is more enlighted into how the formula really works...
cheers Walter.

[walterw]

So now I have to talk about _Stops ... and with that definition we basicly would had covered the entire presentation of the classic structure of a trend trade...

Stops for me at least is the absence of the original argument for wich you opened a trade... in simple terms, you opened a trade because you had an argument, that argument disapeared, why should I still be on the trade ?

Staying because of hope, tolerance, balls... bla bla bla its not really intelligent if actually your argument clean disapeared...

If you get disapointed maybe its time to mature and understand that you have to love them, show them your apreciation and greatfullnes to stops, as they are responsable for your survival on this bussiness without them chaos and defeat is present... stops are our friends, and friends some times can give you some headaches... still your friends...

So let me give you an example of a stop criteria that for me makes sense... if crossing the black line to the darkgreen was my entry... the oposite cross its telling me that things just did not work.. so get out.

On this example I probably would not had taken this trade since I dont like the potential "exhaustion" as I already explained on previous post.. but lets say for example I went long on our Timing entry criteria...



well the oposite cross would tell us that the argument for wich I took the trade its not any more there, there are no more reasons to stay in the trade and your friend mr Stop keeps your equity protected from a real serious drawdown in the case you become stupid enough to stay inside...

So that would be in this case my stop definition... cheers Walter.

[walterw]

And a short video on Stops... cheers Walter.

[walterw]

At this point of the thread we had covered this definitions from a "Trend Trade " :

To open position :

_Trend Definition

_Pullback Definition (dips and rallys)

_Timing Entry Definition

To Close Position :

_Stop Definition

_Exit Definition


We explained the simplicity and optimization we had been able to get thanks too the VMA rainbow... wich I consider it a very powerfull indicator...

Now this "trend trades" have some tricks in terms of selecting the ones with the most potential success... you DONT need to trade all the setups you see... its better to be selective and trade the best ones, the ones that offer more potential of success...

For example let me make you reason on how you can work so little every week (being selective ) and have a very decent lifestyle trading forex... if you make (like my target) $20 per contract/week with 5000 contracts (low volume on forex) you can make 400k per month... not bad for any normal lifestyle... so why bothering trying to trade everything ? its much more smart to focus on the most classic trades... I call them the "surefoot" trades...

on the next post I start talking about the "surefoot" trend trades... cheers Walter.


PD: any conventional "Tokyo Gang" member should be able to make without any stress this monthly figures
anyway if you manage to make 5 digits you will be accepted jejeje