Terminator v2.0 - page 32
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We are in another historical movement without pulback
GBPUSD is already up 600 pips without pulback
USDCHF is already down 500 pips without pulback.
EURUSD is already up 344 pips without pulback.
USDJPY is already down 280 pips without pulback.
When it happen there is not way to accept only 15% losses, your account is gone well before you undestand what happen.
Of course maybe you are not in the wrong side, but you can count with it if you run many pairs ?
There is a magical indicator to take always the right side in ALL pairs ?
The only way to deal with it, is accept a lossing account when its the time. and keep your profits in the other pocket to start again.
My Thoughts on protecting your account.
What do you guys think of this idea?
I think this would work well if you are only trading in the direction of the swap.
Once your last order in the progression has opened and the price has not retraced, place a hedged order of equal size to all of your open orders in the opposite direction.
I am thinking about opening the hedge when the price is 50 pips below the largest order. If you are using InterbankFX the hedged order will not count against your margin requirements, so it is basically a free order.
If the price does not return for awhile close the hedged order for profit and then immediately open it again. That way you are slowly pulling the break even line back towards the run against you.
What do you guys think?
Pardon me if I am not making much sense right now as I am starting my second bottle of Merlot tonight.
If I remember fine a similar approach was already done with Firebird with not good results.
I really don't like Hedge trading, it is not a really free order, you have a spread cost. but maybe i don't know enough about how to trade with an hedge.
Can anyone post the results of Firebird Hedge ?
Anyone with hedge experience can explain if this approach can work ?
and when close the order ?
What to do if the price start to come back after you open the hedge and it never reach profit ?
I really don't like Hedge trading, it is not a really free order, you have a spread cost. but maybe i don't know enough about how to trade with an hedge.
The spread cost on euro is only two PIPs, trading this strategy starting with 0.1 mini-lots would result in a spread cost of $204.60 (at the last order in the progression you would have 102.3 mini-lots open), I would gladly give up a couple of hundred bucks to protect my account.
Anyone with hedge experience can explain if this approach can work? and when close the order ?
I would personally close the hedge order after it has gone 100 pips into profit, and then open another one with the stop loss 100 points less than the last one. This amount of pips required to go back to breakeven on the grid would be less than when you started. This would virtually eliminate the possibility of your account crashing and would require less starting capital to trade a larger initial lot size.
What to do if the price start to come back after you open the hedge and it never reach profit ?
I would use the profit point in the progression as the stop loss for the hedge order. This would result in an overall loss for that progression but would not blow out the account. That way you live to fight another day.
Hedging Martingale EAs
Altapowder,
I think it is a good idea. I have also been thinking about a similar solution and perhaps it can be programmed into the EA. (Unfortunately, I cannot code it
) It could rather be a defensive tactics than a profit increasing one to preserve our account from the big loss and give us a chance to survive and gain back the endurable loss later when the market gets back its usual behaviour.
Project1972,
Hedging at Firebird was not successful since they programmed it to place a market order for a hedge pair at all the pipstep orders. In that way one part of the pair always grew the float at every order in a trending market. Instead of the market oders for a hedge pair they should have placed a pair of pending order and when one part of the pair became live the still pending other element of the pair should have been cancelled.
Altapowder,
I think it is a good idea. I have also been thinking about a similar solution and perhaps it can be programmed into the EA. (Unfortunately, I cannot code it
) It could rather be a defensive tactics than a profit increasing one to preserve our account from the big loss and give us a chance to survive and gain back the endurable loss later when the market gets back its usual behaviour.
Project1972,
Hedging at Firebird was not successful since they programmed it to place a market order for a hedge pair at all the pipstep orders. In that way one part of the pair always grew the float at every order in a trending market. Instead of the market oders for a hedge pair they should have placed a pair of pending order and when one part of the pair became live the still pending other element of the pair should have been cancelled.Would anyone around here be able to code this hedge function into this EA so that we can test it out?
Leverage
I am using in my live account also the "positive swap" direction trade strategy and a maximum of 8 trades and with a 1:100 leverage in a standard account.
The account is trading with a 4x lower leverage than by many others suggested and survived very well the last week, even though in 5 pairs the maximum size was taken(USD/JPY,USD/CHF,EUR/CHF,GBP/CHF,EUR/USD).
In all but, USD/CHF(200 pips away), the system exited at TP(which i have at 25), either yesterday or today.
That would compare to the Tom M. master demo account of having far more than 1,0 Mio USD in it(higher margin at that account size+possible weekend adjustments by the brokerage firm, depending on positions), but restricting max. trades at 8 instead of 10.
Reasoning:
With that leverage, you trade maximum total position per pair 4:1 on equity.
This is in my opinion the only way to survive markets like last week.
Unfortunatly the return over time is not astronomical(about 45% p.a. maximum), but since i personally consider this return as outstanding, i rather take it, than blowing my account.
14 pairs traded, max trades 8, TP 25(no account protection with this setting and to adjust for weekend gaps).
NO GBP/USD and GBP/JPY
Leverage example:
1. on a mini account like IBFX, with 1:200 , 0.01 lotsize per 7500USD
2. on a standard account with 1:100 leverage.......0.1 lotsize.....7 figures
This EA or its other hybrids are excellent tools, if you are patient(collect swaps and time horizon weeks on several positions) and seek for a normal return vs risk with low leverage.
Anybody looking for a get rich quick play with high leverage will blow the account for sure, if not last week, than rather sooner than later.
Janus
Well, forgot to mention the following fact:
Max. open draw down last sunday was still 13.8% of initial account equity with these settings
Dear JanusTrading
Your trading leverage is ok and it give a good level of protection, but it didn't fix the problem.
Let me explain
Currencies, normally keep ranging between one level or box, but sometimes a change in the fundamentals push currencies to another level or box, that's when Terminator is unable to deal with.
example:
EURUSD was ranging between 1.17 to 1.22 between Oct 2005 to April 2006
but during April-May of this year it broken to a new box of 1.25 to 1.29 and it never come back to the old box. what would happen if you had a shorted position at 1.21 ? a few days after EURUSD touch the upper level of 1.2970
Although with your low leverage and max orders of 8 if you get stuck with the max lot at 1.21 your account is gone.
Now EURUSD, GBPUSD and USDCHF technically broken to a new level and we are nearly the bottom of the new level although a pullback will happen maybe it will be no enough to reach a level to make Terminator close the orders.
When a pair change levels there is not pullback to the level before.
What if the USDCHF only retrace 100 pips and start to drop again ?
Although this is unlike considering the high rate differential of USDCHF this scenario if highly probably if USD start to drop interest rate at the same time CHF start to raise it.
Working in a underleverage condition is a great protection but it don't fix the problem.
And potentially the possibility of a busted account is the same, you are adding resistance (in the form of time and leverage) to the system but not more strength , if many pairs start to change levels you are gone.
Fortunately the market give to you plenty of signal before a change in the trading box, you should use your discretion to stop this system before it happen, and start a strong breakout strategies when volatibility start to raise.
Personally I use breakout Strategies and when I saw breakout systems start to make money consistently, it is the first sign of high volatibility, I stop all ranging strategies. Also I never trade ranging systems on Friday and Holiday days because a lack of liquidity tend to make prices too volatile, but they are good days for breakout systems.
We still need to define the limits of the new trading ranges, the new support levels should be the place of the old resistance levels in the case of EURUSD the new support should be 1.30 and in the case of GBPUSD it should be 1.91 a drop below those levels is highly unlike.
Dear JanusTrading
Your trading leverage is ok and it give a good level of protection, but it didn't fix the problem.
Let me explain
Currencies, normally keep ranging between one level or box, but sometimes a change in the fundamentals push currencies to another level or box, that's when Terminator is unable to deal with.
example:
EURUSD was ranging between 1.17 to 1.22 between Oct 2005 to April 2006
but during April-May of this year it broken to a new box of 1.25 to 1.29 and it never come back to the old box. what would happen if you had a shorted position at 1.21 ? a few days after EURUSD touch the upper level of 1.2970
Although with your low leverage and max orders of 8 if you get stuck with the max lot at 1.21 your account is gone.
Now EURUSD, GBPUSD and USDCHF technically broken to a new level and we are nearly the bottom of the new level although a pullback will happen maybe it will be no enough to reach a level to make Terminator close the orders.
When a pair change levels there is not pullback to the level before.
What if the USDCHF only retrace 100 pips and start to drop again ?
Although this is unlike considering the high rate differential of USDCHF this scenario if highly probably if USD start to drop interest rate at the same time CHF start to raise it.
Working in a underleverage condition is a great protection but it don't fix the problem.
And potentially the possibility of a busted account is the same, you are adding resistance (in the form of time and leverage) to the system but not more strength , if many pairs start to change levels you are gone.
Fortunately the market give to you plenty of signal before a change in the trading box, you should use your discretion to stop this system before it happen, and start a strong breakout strategies when volatibility start to raise.
Personally I use breakout Strategies and when I saw breakout systems start to make money consistently, it is the first sign of high volatibility, I stop all ranging strategies. Also I never trade ranging systems on Friday and Holiday days because a lack of liquidity tend to make prices too volatile, but they are good days for breakout systems.
We still need to define the limits of the new trading ranges, the new support levels should be the place of the old resistance levels in the case of EURUSD the new support should be 1.30 and in the case of GBPUSD it should be 1.91 a drop below those levels is highly unlike.Project -
Good explanation. Do you use Darvas Boxes?
Strategy
Project 1972:
I totally agree with your statement and the only solution in stuck situations is to further trade the position manually and eventually exit(which i do) or close it with a hughe loss.
With my leverage used and my overall trading strategy this worked fine so far in the past, but might not be the trading spirit of other traders.
Carrying a looser always requires patience and additional position management+spare equity, which each trader masters differently.Therefore there is no general solution.
My post was not designed to solve any of your mentioned market problems, but rather to show what leverage and position size i am using in a real account and make folks again aware of the necessary underleverage(this was stressed before, but was in my opinion still way overleveraged)
Rather than a solution, i was trying to point out what worked so far for my account with real money.
A pretty good approach with Jurik indicators is used by Blutos new EA Goblin, which adds the Jurik Velocity indicator for trend detection.
This has prevented in my Demo account so far trades in the wrong direction, but might lower overall performance even further, if traded in the "swap" model.
This needs to be seen over a few month of Demo trading.
Janus