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  1. Ha, Funny! I haven't been on this forum in too long a time, which isn't meant as a commentary of what I feel about this forum because I think it's great, but I have been a bit preoccupied with other projects. Nice to see Wout coming in here and reviving what could and should be an important thread. I'm sure many on this forum aren't too familir with Trend Jumper but just to respond to Wout's comment about needing a reversal setup, I would just suggest using the crossover trade and turning off the ema filter on that setup. Team it up with some sort of overbought/oversold indicator like the OSOB that comes with SST or some other histogram, like what Foxstamp suggested. His use of the MACD with the custom settings could work well, or a number of others. That would give you your reversal setups when the odds are at their best. Trend Jumper does have that ability but you have to move beyond the vanilla training which is meant to cater to a wide range of trader skill levels, as far as a training program goes. Also, you could use my idea where I just measure the distance between the EMAs in relation to the Jumpline and the price combined with good 'ole fashion chart pattern recognition; failed swinghighs/lows, the rolling over the EMAs a la Trend Jumper, etc.. Cheers!
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  3. Those interested in learning about the SST can register for a free webinar that is being held this Thursday, Sep 8th. You will find the link to register at trading system | Seven Summits Trader.
  4. Since this forum has kind of taken on a life of its own and morphed into a UTA / SST theme, I thought I would take the time to write a brief description of what the SST is, for those who are curious or who would like more information. As you may or may not know, I am to co-developer of the UTA. It was that tool that led me to being able to come up with the SST. I am the author of the trade strategy that I co-developed with NetPicks and which then later became known as the SST. The Seven Summits Trader (SST) was named after what we believe to be the seven keys to successful trading. Moreover, each continent on Earth has its highest mountain range, or summit and only the best of the best has ever scaled all seven. So with that in mind, we gain an additional benefit -- inspiration. Succeeding as a trader is one of the hardest things to achieve as well, and only becoming the best of the best will suffice if one truly hopes to conquer trading. By incorporating the seven keys (summits) to successful trading, you can put yourself in the best position to succeed. At least, that is my opinion and is what the SST Trading System philosophy is all about. In brief, the seven summits are: 1. The ability to trade multiple markets and timeframes with one system. This eliminates the need to continually learn new trade strategies as markets change. One effective strategy to learn and use for a lifetime. Markets change all the time. Many of the markets we were prospering with back in 1999 and 2000 for example (dot.com stocks), no longer exist today. In those days, no one even knew what an eMini was! 2. Dynamic Trade Setups; market conditions change moment to moment. The SST constantly 'tunes' itself in real time, and presents trade setups that are tuned to the current market condition. It calculates a fixed target with the highest liklihood of being reached, while also placing the stop where it needs to be for the trade to have the space it needs to develop. Then it dynamically reduces risk and seeks to put us into a risk free position as quickly as deemed possible by its 'self tuning.' This lets us take what the market wants to give us rather than what we want from the market. The SST operates under the assumption that the market is king and that we need to be in tune with it. 3. The Ability to Scale and Trail; The SST lets us scale in and out of positions. It also incorporates very effective trailing stop techniques that are built right into the SST Toolset. Not only do we get the benefit of pretuned high percentage fixed targets to hit those steady singles and doubles, but we also have the chance to hit the big homerun trade with the trailing aspects of the strategy. 4. Precise Tradeplans; A system is only as good as the rules that are applied to it, and the ability to trade it with 'ownership' and 'discipline.' Markets are 24 hours per day but that doesn't mean we should be trading 24 hours. Trading should be a means to and end, not the end itself. We want to trade to make money, so that we can have freedom and a better life. SST Tradeplans are designed to have you trading during the best times, dynamic goal setting strategies that once again, allow us to take what the market wants to give us vs. what we want from the market, AND, a winning edge. You've heard the adage, plan the trade and then, trade the plan? We are strong believers of that but we not only plan the trade, we plan how we trade, when we trade it, when we quit, etc.. We try to allow for the 10% art part of trading by reducing much of the 'art maneuvers' down to mechanical rules as well. In essence, we want to remove the human element as much as possible so that we can be completely objective and NOT emotionally attached to our trading. 5. Full Immersion Training; The SST philosophy wants the trader to be fully immersed in high end training to not only learn how to properly trade the SST way, but how to trade in general. There is a very active owner's club which offers a live traderoom where one can really learn the strategy and be surrounded by other traders who are also learning or experts of the strategy. The SST Owner's Club also has a website where one can find numerous tradeplans, trainings, etc.. 6. Capital Preservation; The SST philosphy states that one should never over leverage. But on an individual trade basis, the SST has powerful tools that dynamically cut risk and then moves to put our trade into a risk free position. Moreover, the best defense is a good offense. The SST has its high percentage target and the ability to trail a second position for bigger profits. It also identifies when price momentum is increasing and signals a place to add to our positions. These are highly offensive moves but they are also very profitable. What better way to preserve your capital than to grow it steadily, with high percentage, profitable trading. 7. Consistent Profits; What more needs to be said about #7. Consistent profits means you have reached the highest peak and are succeeding as a trader. The SST has been available now for over a year and continues to ring the cash register. Moreover, it has developed into a 'family' of strategies and effective tradetools. There now is an SST Simple version, which is actually a distinct strategy unto itself. There is also a specialized SST FX Edition. What's more, a new and highly effective setup has been added to the SST called 'GetBob.' GetBob stands for 'Get Back on Board,' and tools have been developed to incorporate this highly profitable trade setup as a plug-in. It's a very unique trade setup, kind of a trade setup within a trade setup. It sounds complicated but it actually is very easy. There's more on the horizon for the SST as well. It has been so successful that rumor has it, that an SST Pro version might be in the cards. I can't divulge anything else about it because it is still in the planning stages but it will be above and beyond what the SST has already become. I hope this post satisfies those who were curious about the SST. You can find out more information on it by visiting the SST blog, www.SevenSummitsTrader.com, as well. There you will find an entire year of history and can learn a lot about it. You can also get on an invite list where you can attend a free webinar and/or get free demo time in the SST Live Traderoom where you can actually see it in action for yourself, ask questions as live trades are called out and traded by the active SST Membership, etc. Thanks UTA!! Without it, there never would have been an SST.
  5. Thanks for the post Jayman. What would really be useful is a plug-in that would allow us to use the SST with tick charts. Also, different time based charts beyond what the standard MT4 provides. That would open up a whole world of new SST opportunities.
  6. Sorry for the delay in responding to your question. I haven't visited TL in a while. The SST is so dynamic and one of the things that make it as effective as it is, is the ability to place the stops in locations that allow the trade the room necessary to develop the way it needs to. It then seeks to cut risk asap, and ultimately put you in a risk free position as soon as the price action permits. So.. with that in mind, I always look at the size of the avg losing trade to determine the correct position size, not the starting risk level. It is very rare that the SST will stop out with a full loss, although once in a while, it will happen. Remember though, the SST is quick to recover too. It really pays to use the UTA and do a good amount of manual backtesting, so that you can develop a good win/loss column and experience the trades that way, first. You will then see the avg losing trade and it will help you determine the proper risk level for you. That's what I always call, the 'ditch digging' of trading. Those that take the time to go through such an excercise, will lay a good strong foundation that will help you succeed when you begin trading for rea. Hope that helps.. Great question!
  7. I recently closed out of some puts for a nice triple digit percent gain on both SLV and GLD. Not sure if I'll be getting long or short at this point. Waiting for my system to give me a set up.
  8. A lot has happened since I posted the last time regarding Silver. I thought I would do a follow up and share with you today's blog post I put up in the Seven Summits Trader Blog. Notice where the price is today vs. the price on the trade examples above. This post also highlights a new setup that we are very keen on. It's worth taking a close look at because it is based on pure price action and continues to work across multiple markets and timeframes. You'll see the example in the post below. Got Bob? In yesterday's post, I showed you a GetB.o.B. trade that was forming on the iShares Silver Trust ETF, SLV. Did you get it? Today, we exited fixed positions at both the 2nd and 3rd targets and are now trailing the remainder of our position with guaranteed profits locked in. I personally Got B.o.B. (got back on board) using May 42 call options. The entry was at 42.67 so I bought slightly in the money calls. The price for each call option was 2.24 each. I exited my first position when SLV hit its middle target at 43.56. That's an .89 gain on the straight ETF (stock), which is a 2% gain. Not bad for a quick trade but if you bought 100 shares per position, you'd have to commit a bunch of your trade capital. Still though, if you could make 2% on every trade, you could conceivably trade yourself to riches. Check out the options result though. I exited my first position when the ETF hit its middle target. My options were now worth 2.75, which is a .51 gain. It's a smaller gain from a point total point of view but consider this. Each option only cost $224. When I exited with a $275 proceed, $51 profit per option, my percentage return on my invested capital was 23%! That's over 200% better and a 200% better use of my capital from a pure ROI (return on investment) basis. The story gets better though. I exited the 2nd third of my position at the 3rd target of 43.93. The option sold at 2.90 (I actually exited a few pennies below the full target when it stalled at 43.90. I'm a firm believer of 'trading for profit' and not fighting over a few ticks). The 2nd position gained 29%. I tightend my stop on the 3rd, trailing part of the trade to give this a chance to hit a homerun. I have profit locked in no matter what, and in spirit of the SST, I have a pure risk free trade that is live and still going. See SLV Chart with GetBob Trade Example; (You can see the setup from yesterday. Here is the current chart from today.)
  9. In this post, I want to call your attention to two different equity curves. Actually, they're really the same curve. The first one is the curve of just this year's trades. The 2nd curve is the compilation of all the trades since going live a year ago. I think much can be learned by studying both. Current Russell eMini Equity Curve; 2011 Trades Only -- Notice how this curve looks remarkably similar to the beginning of last year's equity curve (see the very beginning left side of the other, longer curve) where it grinded along, up and down, somewhat sideways, before it broke out to the upside. Take a close look at last year's curve and see what happened for the rest of the year. Are we poised for another long run to the upside? History teaches us a lot. The biggest lessons to be learned however are how perseverence and staying disciplined with a tried and true tradeplan ultimately wins the day and delivers on why we are trading in the first place. To make money! This is a business and we need to expect various cycles to come around at times, including the need to just hang in there and grind it out. That's what the first few months have been for us this year. But if you were around last year, you should remember that we had to grind it out the first few months last year as well, (even prior to going live with the SST, the TF was a very difficult market to trade the first few months) before a +500 point explosion to the upside with the SST. Some trees fall but our forest grows bigger. And sometimes, a growth spurt cycles around too and we need to be in the business, trading our tradeplan, to benefit from that as well. Running Russell eMini Equity Curve Since April 5th, 2010 -- This is it everyone. I have hit the limit of how large I can run my spreadsheet. From now on, I'll need to manually combine ongoing Russell eMini trades with this running result. (see today's final entry in my running UTA sheet for grins). My system won't let me add any more lines of data. lol.. I was wondering why smoke was coming out of the back of my computer. Anway.. All new profit levels!! + 533 Russell eMini points and running. This year alone, we have added +70.4 points in a difficult gringing market. Imagine what will happen when the market opens up and the moves start taking off, like we saw last year. Patience, perseverence and staying with the tradeplan will carry us upwards and onwards again. Finally, I'll leave you with a last thought. The Russell has been the market I decided to meticulously track since it was one of the pioneering markets that led to the creation of the SST. It is just one example of how to use the SST, in conjunction with a well thought out and tested tradeplan, to gain an edge in the market. We are finding amazing success on many different markets as you know by now. The important thing is to learn from the Russell eMini experience and apply this model to your SST trading. It's all about a strong foundation and a broad enough vision to put your trading in the proper context. It's a business and you need to just operate it appropriately. These results don't even consider the other critical part to successful trading as a business, money management. The UTA gives us some tools to help us determine good money mgt practices. I ran the fixed fractional money mgt tool with the UTA on all the live Russell trades as of April 5th, just a few days ago. I haven't updated it with these last 4 positive sessions. But just to give you an idea of the results that might have been achieved by anyone really operating their trade business at the highest level, here's some food for thought. The exact trades found on this spread sheet, most being called live in our traderoom, if traded using a 2% risk profile per position, and beginning with a $20,000 account would have netted in 1 year, April 5 thru April 5, over $198,000 net (after subtracting out trade costs). This is provided that we capped each position at 10 contracts and never let it get above that size per position. It's just one way to look at it. There are others of course. But it tells the real story and suggests what every serious trader should really be thinking about at all times. Isn't this really, 'why' we are trading in the first place?
  10. It's been a few weeks since I last updated this thread. If you've been following along, you would know that there has been quite a history of TF trades with the SST. Just click back and look at some of the earlier posts and equity curves. I wanted to do an update now for two reasons. One, because a few weeks ago, we had the hardest -- NO -- let me rephrase, downright WORST, weekly result since going live last April 5th, 2010. Please review the long post a few above this one for a comprehensive review of where we came from, where we ended at the time of that post, and where I said we were going. Since the conclusion of that ugly week, the TF launched itself on a huge winning streak the following week, actually making back the entire loss of the week before, and even more. In fact, it has just strung together, a multi week winning streak and has broken out to all time new profit levels, on very week of my one year anniversary, calling live TF trades with what later became the SST (Seven Summits Trader). It has been a wild ride, but the Russell eMini just strung together 3 winning weeks in a row and a breakout to all new profit levels since calling the TF 377 tick live in a traderoom, beginning last April 5th. Today was the toughest of the sessions but it eeked out a winning session. We hit our power of quitting goals with a +.5 result. I did call one additional trade that gained another +2.3 points for a net on the day of +2.8, but I'm not including the final trade in my records preferring to stick to the consistently reliable 'Power of Quitting' results. We ended the week up, +17.2 points, breaking out of our recently sideways moving equity curve to hit all new profit levels. Here's a play by play of today's trades. Please see the first chart below to see the actual trades referred to here. I numbered the Russell (TF) trades, 1 - 6. It took 5 trades to hit our goals today. The first trade was the new setup, Get 'Bob,' that I've added to the tradeplan recently. It has performed very well but today, as the first trade of the day, it was an 11 tick loser for a -2.2 net. Trade number two was a reversal short trade and our tight trade management technique stopped us out at Break Even. The 3rd trade was the same setup as the first losing trade, allowing us to get back on board the short and it was a winner, going to the middle target of 848.6. The Trailer only picked up 4 ticks. The 4th trade was actually an add on position that got caught up in some noise and had to stop out for a 7 tick loss for a -1.4 net loss on the two positions. The 5th trade got us short again, allowing us to reenter the downtrend. It hit it's full target but we did make a small 3 tick adjustment on the entry, to make the price break the support level so we only got +1.6 on the fixed position. The trailing position got even less, stopping out with only a 1 point gain. Still though, we picked up +2.6 on that one. Finally, we reentered short again on trade number 6. We incorporated a nuanced rule which had us going for the 3rd target this time, picking up +1.4. Again, the trailer couldn't deliver the home run and we exited that one with only +.9. We gained +2.8 points on the session, excluding trade costs. That's what the market wanted to give us today, based on our consistent tradeplan. We ended with 5 winning sessions in a row and a breakout to all time profit levels, over 530 Russell points with this strategy so far. For anyone interested, I posted a screen shot of all the TF trades this week as posted in my UTA log. In order to not let this post get too long, I will follow up with a subsequent post to discuss the equity curve.
  11. Ok, well, I just finished my session today and final session of the week, and thought I would just add to this thread with a real life example of trades being called in a real trade room service. It was a rather slow market but patience and discipline, sticking with our daily tradeplan, won the day for us. I have posted two charts. Our Russell eMini trades and our Crude Oil Futures trades. Let me set it up by explaining that each trade is designed to be a two position approach. The first position exits at a predetermined fixed target and the 2nd position stays on with a trailing stop technique. I apologize that I can't show the charts exactly as I would in the traderoom. I'm just not at liberty to share everything in a public forum, unfortunately. I numbered the Russell (TF) trades, 1 - 6. It took 6 trades to hit our goals today. The first trade was a new setup that I've added to the tradeplan recently. It has performed very well but today, as the first trade of the day, it was an 11 tick loser for a -2.2 net. Trade number two was a reversal short trade and our tight trade management technique stopped us out at Break Even. The 3rd trade was the same setup as the first losing trade, allowing us to get back on board the short and it was a winner, going to the middle target of 848.6. The Trailer only picked up 4 ticks. The 4th trade was actually an add on position that got caught up in some noise and had to stop out for a 7 tick loss for a -1.4 net loss on the two positions. The 5th trade got us short again, allowing us to reenter the downtrend. It hit it's full target but we did make a small 3 tick adjustment on the entry, to make the price break the support level so we only got +1.6 on the fixed position. The trailing position got even less, stopping out with only a 1 point gain. Still though, we picked up +2.6 on that one. Finally, we reentered short again on trade number 6. We incorporated a nuanced rule which had us going for the 3rd target this time, picking up +1.4. Again, the trailer couldn't deliver the home run and we exited that one with only +.9. We gained +2.8 points on the session, excluding trade costs. That's what the market wanted to give us today, based on our consistent tradeplan. We ended with 5 winning sessions in a row and a breakout to all time profit levels, over 520 Russell points with this strategy so far. The 2nd chart is much easier to explain. Two Crude Oil trades. The chart tells the story so I'll let whoever is interested take a close look at it. I just thought since this thread asks about charging for trading courses and systems, it might be helpful to actually see a real traderoom, using a course and system that has been offered to the public for real. Perhaps it helps put the question into a more realistic context and gets one closer to thinking about a fair value for such a service. Real trades from a real course from a real trade system called live today in a real trade room. Winners, losers.. It is what it is. Not all sessions end positive. CL was a tough trade this week but ended on a positive note today. Had to 'grind it out.' What is it worth? dunno.. But now it's part of the conversation..
  12. I agree with some of your comments MM. Courageous Cat and Minute Mouse were great cartoons. I can't speak on a lot of guys who have rooms but I do believe that trading can be a grind if you let it become one. I run a very tight room, typically trading for about 2 hours and that's it. The tradeplans I use are also very tight and clearly defined. I focus mostly on futures since it gives us a chance to hit our goals on most sessions, often very quickly. We do follow some fx charts too, for those who are interested. The grind factor can and should be mitigated and it is something I remain mindful of. You can't always avoid it. Sometimes you got to slug it out. Other times, like today in Crude Oil Futures, we hit our goals quick and to the point. We were done within 51 minutes. Making money is never easy but if the tradeplans work, it becomes a matter of money management, patience and disciplined professionalism. God save the poor souls who find themselves emotionally attached to the outcome of any trade. No sugar coating allowed. It is what it is. You have to be able to take the good, the bad and the ugly and put it into the bigger context of your overall business of trading. I'm in the middle of my traderoom right now waiting to hit one more trade in the Russell eMini. It's a slow yawner of a session. We just hit a winner. We've had an earlier winner, a couple losses and a breakeven trade. One more winner will give us the positive result we are looking for and a nice end to a white knuckled week of trading. If we do pick up one more winner before our stop time, we would have strung together 5 winning sessions in a row and a breakout to new equity highs. But it has not been an easy road these past few months, that's for sure. Just got triggered into what could be our final trade. I'll post a follow up with some charts to illustrate what we did this morning.
  13. Very provocative thread. Like WorldTrader and Shakespeare, I too host a live trade room, develop trade systems and have taught many people how to trade. I can say a lot on the subject having put in a lot of market time over the three years that I have called live trades (and of course, way more than that trading since the early 90's). The main point that I would like to add though is that I feel a huge responsibility for every trade I call. I know that my clients are hanging on my every word. Like anyone else, I do not know the future nor the outcome of any trade. The fact is, no one does. If it were so easy, it would not be legal because we'd all be printing money. What I have learned (and I had to learn it quick when I first started) is that I have to have a method I can rely on, and then, trade it as intended. Price action, in my opinion, is infinitely challenging. From my point of view, all I can do is put the odds in my favor on every trade and then utilize smart money management techniques. I spent a lot of time doing the necessary work to take 'ownership' of the method I use. I need to be able to believe in it enough to have the confidence to trade it as intended. Getting to that level was hard work. The method I rely on would not work for any other random person who did not do the same work. They could see the results but would run for the exit at the first sign of trouble. Not doing the necessary 'taking ownership' work means you can't know if you are just going through a typical one step back before you launch yourself on the next two steps forward and new equity high. You'd head for the exit right when the winners were about to pile in. You wouldn't even know that you had a great system. Since I did that work, I just need to lean on my system and good things end up happening. And as to the point of this thread, How I Would Charge for a Trading Course/System, and I believe someone said this earlier, you need to make sure the student/buyer is trading your system/course as intended and that's a tall order to require. They too would need to do the necessary work to actually take ownership of the system so that they had the confidence to take the next trade according to the rules. That's not something anyone can just talk themselves into. Not sure how you'd charge for that but you need to factor that into the equation. (The trading group considering how they would run a trade room offering a mentor has some interesting ideas.) ps: To answer a couple of the other questions/statements found throughout this thread I offer the following: 1) I have learned a lot by hosting a live room and have become a much better trader as a result, responsibility for my trade decisions being one biggie but not the only biggie.. 2) A reason for offering an effective trade system to the general public vs. keeping it secret is simple. It is good business. Income diversification should be an obvious benefit. I too would insist it was a good one and not some pie in the sky 'sell me the dream not the substance' system. Integrity comes back around as does the alternative. 3) Not all bad traders turn to teaching (some are brokers.. lol..) and not all good traders shy away from teaching. Again, it can be a good business, amongst other things. But also, there's always something to learn, even from the beginner. Especially from the beginner, actually. No bad habits to unlearn and a fresh naive perspective can lead to a fresh new idea. It did for me -- more than once. Thanks for the great thread. Mighty Mouse was my childhood hero growing up, by the way. "Here I Come to Save the Dayyyy...."
  14. I received an email today, with some excellent questions regarding risk, the SST and using the UTA (Ultimate Trade Analyzer) tool. I thought it touched upon an important subject so I figured I would share the conversation here. Questions 1. Can you help me on what to input in the cell H1 if I'm using $800 capital with leverage of 50:1, and a .01 lot size? What value or point should I put using the EURGBP as the currency I'm trying to test? For those of you who don't use or know the UTA, cell H1 is where you would determine the pip value for the trade data you log into the UTA. 2. In the setup type column, what is the meaning of OSOB and RE? Answers In response to your questions, I would first advise you to never use 50:1 leverage. Just because your broker allows it, doesn't mean you should. In fact, in most cases, you should not. With that being said, try to always keep your position size around the 2% of your available capital range. So if you have $800, you would not want to put on a trade that risked more than $16. That might not sound like a lot, but it is all relative. As your account grows, so will the 2% risk level. Remember, Chris 'Jesus' Ferfuson turned $1 into $20,000 in two years, playing online poker tournaments. He did it by never risking more than 5% of his bankroll on any tournament. He did the math, and based on his skill level, and his estimate of how often he would make the money round on any given tournament, he decided that a 5% risk model would keep him in the game. And it did! His first tournament he entered had a 5 cent buy in price. He didn't raise that level until he doubled his bankroll to $2. Then he began entering 10 cent buy ins, etc, etc.. In two years he built his bankroll up to $20,000. This is the type of mindset you need if you want to succeed as a trader. The SST gives you a serious edge. In fact, it's better than 50% by a long shot. Still though, we are recommending a 2% risk profile based on the average size loss over a period of 100 trades or more. What that means is that once you have over 100 trades entered into the UTA, you will be able to determine the average size loss and from that detail, determine the proper risk (2%) that you should put on a trade. (I forgot to mention, that you would also need to convert the underlying currency of the forex pair into the currency of your trade account so that you could determine the proper pip value and thus, the proper lot size to stay within your 2% risk parameter.)[/i] If you want to get a .01 lot value for each trade's wins and losses, first you have to decide if you will be using the decimal point or not. When I enter a trade into the UTA for forex, like the EURUSD for example, I don't want to enter a price 1.3318 for example. I like to just enter 3318. It saves me 2 key strokes on every price entry, which adds up to a lot of saved manual work for me. In this case, if a pip is worth 10 cents, I would enter .10 into H1. That way, each digit would gain or lose .10. Don't worry about multiple quantities when backtested with the UTA. It is not designed for that. Backtest as if each trade is 1 lot per position. If you want two positions, you have to enter two trades, one on each line. They would get the same date, dame time, same entry price but different exits and different SetupType labels. As far as your 2nd question, OSOB (overbought/oversold) is what I used to label reversal trades and RE is what I used to label Reentry trades. You can edit those labels and use this powerful feature any way you like. With the SLV tradeplan I made available to the Live SST Workshop Attendees, I offered a variation where I used that labeling technique to label various targets instead of trade setup types. You can use it for anything you want, really. The benefit is that it will pull out specific sets of statistics which can really open up important insights and help you with your tradeplan. There is a fine line between not enough risk and too much risk. Trading does involve risk. Without risk, we could never make money as a trader. Risk is an important part of trading, right? But how do we determine the appropriate amount of risk? This is always a question that befuddles traders. It's a razor's edge that doesn't stand still. One's risk exposure is as dynamic as the price movement itself. The SST philosophy, which incidentally, was determined by extensive work with the UTA, is to cut risk as quickly as possible, while still giving a trade the space it needs to develop. In other words, it is handling risk in a dynamic way, constantly retuning its risk profile with the close of every new bar. Pretty cool, huh? Next, its goal is to eliminate risk altogether by getting our trade to a risk free position. In other words, at the strategic price level or strategic stage of the trade's development, it will move the stop to lock in a pip/tick or few. It is trying to mitigate risk by skirting the fickle razor's edge line between too much risk and not enough risk. It is not 100% perfect. Nothing is. But it definitely puts the statistical edge on our side and really, that's all we can ask for as traders. That IS, the holy grail, by the way.. Harnessing risk so that it works for you on most trades but also being able to control it, when it works against you. While doing that, it also calculates a fixed target, dynamically based on the current trade setup, that has a high likelihood of being reached. Sometimes that fixed target is too small and would cut short the overall potential of the trade. The SST answers that problem by allowing us to keep a seperate position on, incorporating its trailing stop techniques. That way, we are able to strike a great balance between not enough risk, too much risk, and a great chance of having just the right amount of risk from a trade profile perspective. It elegantly takes into account the 7 keys to successful trading, or as we call it, the 7 summits, tying together dynamic trade profiles, the dynamic ability to apply the strategy on multiple markets and timeframes, the ability to scale position size in and out of trades, the ability to trail while also being able to exit at high percentage fixed targets that have been dynamically tuned to the current market condition, capital preservation and consistent profits. As traders, the rest is up to us. It is the trader who shoots himself in the foot by putting on too much risk on any given trade. It is the trader who makes decisions that are outside the realm of the tradeplan or the methodology of the trade system. We have the tools. The UTA can be used to determine the 'soundness' of a tradeplan and to build your confidence to the point where your vision is broad enough to believe in the tradeplan and methodology. Once you have that belief, you can responsibly put on the proper risk, and trade the system as it is intended. Thus, you can achieve the statistical edge that the SST gives you and grow your account accordingly, as you facilitate the tradeplan with confidence and professionalism.
  15. Most people probably don't think of their 'point of view' being very important to their overall success or failure as a trader. When we talk about the 'edge' that our system gives a trader, we are talking from a larger point of view. But traders, while in a live trade, are usually most concerned with the live trade they are currently experiencing. Especially if the trade has moved against them or is the next trade in a sequence that hasn't gone very well for them. All of a sudden the instincts for survival assert themselves and we often find ourselves making split decisions that are not part of the tradeplan nor will serve our overall trade performance very well. We might exit the trade and avoid a further loss. We might even exit the trade only to watch the trade turn on its heels and move towards its target objective. If the trade moves towards its target objective, and we bailed out of the trade due to some emotional human response, we would feel pretty bad about our decision. "Why couldn't I just stay with the trade? I'm sooo stupid!" In fact, it would be hard to not think of even harder phrases to berate oneself for making such an error. "Why couldn't I just 'lean' on the system?" An even worse result would be if you made the 'right' decision on that trade by bailing out and avoiding a deeper loss. You would breathe a sigh of relief perhaps, and feel good in knowing you were able to make the 'right' decision and save some money. Unfortunately, while saving money on that one trade and feeling proud of yourself for being 'so smart,' you actually hurt yourself in a much more profound way than you probably realize. What are you going to do next time? How about the time after that? We're traders right? We have to take another trade. Bad habits are very hard to break, especially when you reinforce them with short term 'righteousness.' Before long, we're not even trading our proven trade method any more. We're trading something else and who knows what edge that gives you over time? Making an emotional or human decision that proves to be 'right' on a particular trade will most likely prove to be very 'wrong' for your trading in general. One of the things you'll hear me (and the rest of the NetPicks team) harp on all the time, is the importance of sticking to your tradeplan. If you are truly trading to make money, which in my opinion IS the only valid reason to trade in the first place, than you MUST practice your trade business in a manner that WILL make you money. The only way I know to achieve that objective, is to allow the edge that your trade 'method' or 'system' or 'tradeplan' (whatever you want to call it) gives you. It is NOT what happens on this particular trade or series of trades. Because guess what.. Now we have to take another trade. That's what we do. We trade. So much can be written (and has been) about this very subject. Rather than rewrite another 'book' on this critical subject, I want to tell the story in another way. Below are two examples of our Russell eMini trades. The first, is an equity curve showing our system trades (most being called live in our traderoom) with the SST for 2011. It follows the very same tradeplan that I began using back on April 5th of 2010. In fact, the second example is the equity curve that includes all the trades from April 5 up to the end of yesterday's trading. These two equity curves show you the same trades made this year, 2011, but from an entirely different point of view. Equity Curve (see below); 2011 Trades: The Russell eMini is always a challenging market and like this same period of time last year and the year before, these first few months of 2011 have been a real challenge. You can see by this equity curve that there have been some tough sessions and tough losses. The curve peaked near the beginning of February, and then has been up and down and up and down ever since. There have been some downright difficult sessions, for sure. In fact, last week (the week prior to this one) was the worst performing week since going public with the SST and the TF. Wow! If you were a trader who just began trading the TF with the SST, you might have finished the week quite shell shocked. You can see the drawdown that happened, following the 3rd peak on the equity curve. Anyone who did not follow our ongoing advice to create a strong foundation by digging your 'trader ditches,' that is, backtesting and practice trading prior to going live, would have been seriously damaged by the experience. Not because of a tough losing week, although that is the immediate, apparent damage. No! The real damage is the result of a very narrow point of view. Those that quit as a result of a tough week, without having the broader perspective and higher level 'vision' will throw a way an amazingly effective tradeplan, quit with their losses and will completely miss the next 'two steps forward' that lead us to all new record profit levels. This is the ongoing cycle for most traders. Always behind the curve, chasing the performance that already happened and reacting to the 'one step back' that again, already happened. What comes after one step back? Two steps forward! This current week that just ended, turned around rather dramatically and we went on a 14 out of 16 trade winning streak, completely erasing the prior week's losses. You can see that on the equity curve too. Notice how we are just a few trades shy of making a new equity curve high. What a roller coaster! Especially if you did not already experience the 1000 or so trades that happened prior to these two weeks. Take a look at the next equity curve. Equity Curve (see below); all trades since 4/5/10: Do you see the last part of the chart on the right? Notice the zig zagging up and down of the equity curve. It looks like a few bumps in the road when you put it in context to the overall curve that dates back to the beginning. In fact, it doesn't look like a roller coaster at all. You'll see other parts of the curve that also steps down. One step back leads to two steps forward. I don't care what market or timeframe or trade method you use, a healthy and profitable equity curve WILL contain tough sessions. There's no such thing as a straight line to ongoing profits. The road is always bumpy. If you keep chasing, you'll end up losing all your money even though you have a winning system. Yikes! Sadly, those that quit will continue to experience this exact pattern. They'll see something they like and will begin trading at the end of the two steps forward. They'll catch the beginning of the one step backwards and their account will take what should be, a momentary drawdown in equity. But as the cycle continues to unfold, the same trader will quit, right at the moment they have experienced too much pain, and unfortunately for them, right at the END of the one step back. They'll quit with their losses and run for the exit, just when the two steps forward is about to get underway. They keep jumping on board the equity curve at the wrong places and continue damaging themselves by hopping off, also at the wrong place. Is this YOU? Hopefully you can see and understand the theme of this article. Point of View is EVERYTHING! Are you the person lost in the forest, running around dodging a bunch of falling trees? Or are you the person taking the bigger birds eye view of your entire forest? The individual trades you take, the very trades that have you fretting at the right edge of the chart, making very human (and WRONG) decisions, are the trees in your forest. You are lost in the trees and can't comprehend your forest. Sure, you might successfully jump out of the way and avoid a falling tree, but you are lost in your forest. You can't find the edge. You can't benefit from the edge of your tradeplan, system, method.. whatever you call it. Your equity curve IS your forest. If you can't be at peace with sacrificing 1/3 of the trees in your forest in order to grow your forest 2/3rds larger, than you will experience complete deforestation! It's all about point of view. The longer term equity curve is sitting a mere 8 points below its all time profit levels, despite the last several weeks of difficult trading. At some point we will look back at this article and we'll be addressing these same issues again. Only next time we'll be on the verge to breaking our 800 point level, instead of skirting around our 500 point level. We will have grown our forest 2/3rds larger. Again. Where will you be? Note: It doesn't matter if you are a forex trader, or a gold trader. It doesn't matter if you trade stocks or options. This is a universal theme. Do what is necessary to achieve the higher level point of view and you will have taken the first and most important step towards ongoing success as a trader.
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