Education
Now Reading
Perception Versus Reality
125

Perception Versus Reality

by The MoleOctober 16, 2013

Our resident Heisengerb posted an inspiring video by Nick Rage this afternoon. As I was watching it I thought it to be the perfect segue into covering one of the most glaring but at the same time most ignored hurdles standing in the way of becoming (and remaining) a successful trader. I meant to write a post about it for a while now and Nick’s video succinctly covers many of the basic lessons I wanted to convey. So I let Nick to the heavy lifting now after which I’ll catch up with you and apply his lessons to the very path we are pursuing here at Evil Speculator:

Still with me? Watched the whole thing? Good!

Now in that video you just watched you probably recall the part on the turtle trend system, which is actually a system I actively used to trade until about 2009. It’s boring as hell and the reason why I’m not recommending here on Evil Speculator is that I know that 99% of my readers would not be able to follow it for more than a month or two. Nick has done a great job of elucidating why that is and how many retail traders use incredibly small sample sizes to dismiss a system that on the surface most of you would be certain about wanting to trade over the long haul. Until you actually do that is.

Some of you may recall Scott’s ‘Nuts And Bolts‘ post in which he posted some of the stats he collected for CrazyIvan – both on the 480 and the 30 – without and with filters. The filtered versions, which are the ones we wind up choosing (after a pertinent blog poll), actually are very comparable to the ASX Turtle system. The average per year for the 480 is about 35R which comes out to >40% per year compounded. The 30 does a bit better with over 45R on average which would put us at around 50%+ compounded per year. Max drawdowns are also comparable to the TT system – less than 10R max for both filtered versions.

And here is the profit graph for the first month of CrazyIvan FX since its launch. The entire Google spreadsheet is available here, you may want to bookmark it as we update it regularly. This is not back tested, mind you, this is forward traded with real entries and exits including slippage. Given the horrific tape we’ve had to endure over the past few weeks one may look at this and say – heck, not bad – that’s a pretty good start. CrazyIvan eked out 3.5R which is statistically in line with its 30R+ target on an annual basis.

Nevertheless over 30% of my CrazyIvan subscribers already quit after the very first month. I’m not embarrassed to publicly state that as it has no bearing whatsoever on the quality of our system. And I’m not posting this here to embarrass anyone or to point fingers. Look guys – frankly speaking I couldn’t care less. The system works and Ivan has traded the very same rules (in one form or the other) for over 30 years. Scott has been trading the very same rules discretionary for over 10 years now. Through a variety of markets and it has maintained its edge.

So why would people leave a winning system after just one month? Well, obviously it has nothing to do with CrazyIvan per se and everything to do with perception vs. reality. More specifically it is due to a cognitive bias we traders call recency bias. Maybe you missed a few trades for various reasons and instead of attempting to follow the system more closely it’s easier to just give up. You just don’t think it’s going to work. You feel more comfortable trading your own rules. The notifications are a bit confusing. Mole is an idiot. Etc. etc.

Actually it’s quite possible that CrazyIvan may have scored a losing first month and that we may have been down 5R for the month. Fortunately it didn’t (despite the shitty tape) but if it had I guarantee you that over 50% of my subs would have quietly departed. Again, I’m not saying this to shame any of you subs into staying subscribed – it’s all the same to me. But I thought this to be a great opportunity to remind all of you of the big picture and what it takes to be a successful trader over the long term.

When I started trend trading way back when I read one of Michael Covel’s books on the subject matter. I don’t recall where exactly but in one of Michael’s books he tells the tale of a pretty successful trend trader who ran a fund and was producing 30% plus returns every single year for over a decade. At some point he had his folks run some stats. Much to his surprise he saw that the majority of his clients were losing money. He first thought that there must be some mistake in the numbers but it turned out that many of his clients would leave during major drawdowns and then return when they saw him rack up profits again. Of course that just led them into missing out on the rebounds.

I don’t care what system you trade – CrazyIvan, Turtle Trending, your own evil concoction – it doesn’t matter as long as you can prove that it has a statistical edge over the long haul. What does matter however is that you stick with it – period. Your short term perceptions will constantly challenge reality – that is part of being human. And it is important that you resist your emotions and remind yourself of that fact every single day. As Nick said in the beginning of his video – to trade successfully is actually rather easy. There are a ton of good/proven systems out there. The problem is us. Most people don’t fail at trading because of the systems they are trading. They fail because they jump from one winning system to the next and keep losing by ignoring the rules.

It’s not too late – learn how to consistently bank coin without news, drama, and all the misinformation. If you are interested in becoming a subscriber then don’t waste time and sign up here. The Zero indicator service also offers access to all Gold posts, so you actually get double the bang for your buck.

Cheers,


About The Author
The Mole
Mole created Evil Speculator amidst the chaos of the financial crisis in early August of 2008. His vision for Evil Speculator is a refuge of reason, hands-on trading knowledge, and inspiration for traders of all ages and stripes. You can follow him and his nefarious schemes at various social media waterholes below.
  • http://evilspeculator.com molecool

    By the way – nice Mole signals today….

  • AcoBrasil

    It looks like we’re setting up for inside days on $GOLD and $Silver.

  • Peter Levchenko

    Great post Mole! I have observed a similar tendency in discretionary trading and have surely made this same mistake myself again and again. I believe what you are discussing is actually one example of a more general mistake in trading which is NOT STICKING TO YOUR GAMEPLAN. Say you are applying the same strategy for timing entries into your view (or a trend) and some little piece of price action, or a headline, or other people’s views (especially if you are part of a trading desk) spoofs you into altering your initial gameplan. This is much more likely to happen during a drawdown, as it frequently affects one emotionally and makes one lose confidence in the trading approach – which is of course simply recency bias. Note that I am not referring to the case whereby one of the inputs into the decision making which you systematically take, as you have established it is part of your edge (empirically), tells u to alter your position. The problem is during a drawdown and emotional involvement you act on signals and “noise” that isn’t originally part of your discretionary rules. You alter your approach because the “psychological weight” of losses takes over and you throw the approach out of the window. Every time I came back to the realisation that you then end up missing the big moves once the market phase changes into favourable again. And the end result is an even bigger loss, whilst consistent following of your approach would have resulted in a smaller drawdown and eventually a complete recovery to new equity high, which you have now missed due to morronic breaking of your discretionary methods.

  • Peter Levchenko

    Lack of consistency in application of the trading approach is perhaps the biggest reason for downfall in trading, and also the reason for pyramiding of losses that ultimately decimate your trading limits to an irrecoverable point

  • Peter Levchenko

    The tape today in FX is a perfect example of one that simply rinses “macro” discretionary traders out if they don’t stick to their position management principles.

  • Peter Levchenko

    Interesting reversal in cable today. It’s an OP Lower off a key 25day ma level and what’s more after a STELLAR unemployment print. This is one of the most bearish Cable days I can recall in recent months and also on dailies the message is clear as expansion of range and momentum still prevails on down moves ever since it printed the 1.6260 highs. I am not sure I can justify selling the break of 1.5890 now cuz the stop would have to sit above 1.6065, as the follow through would have to be massive and swift, which is hard to see before some kind of US resolution. But I have squared up my EURGBP short from 0.8505 as trade weighted sterling today traded very bearishly.

  • mugabe

    Great post. I employ two exceedingly simple trend systems, one slightly longer term than the other, both mainly mechanical with a small discretionary element, and both based around price and just one moving average. They’re boring and require very little thinking on my part.

  • Peter Levchenko

    My market positioning indicators show that the market is already pretty loaded up on risk-on plays, ie sitting very long of Emerging market ccys, and long aud and kiwi against usd, JPY and CHF in fx. So beware of a sell the fact reaction even if we get a positive US resolution.

    In USDJPY we have had a key bounce off 200dma 96.60 since last week, but most macro accounts have chased the price and got long 97.80-98.50 levels leaving them vulnerable to a sell the fact move on a positive resolution and total carnage on a negative move such as a delay to debt ceiling resolution. Spot is still trading quite bid and I don’t see any reversal syndromes just yet. But the risk reward of buying up here seems very poor to me into the event risk coming up

  • Fearless

    It has to do with the one simple reason retails get into trading in the first place – greed – period.

    When I first got into trading, I was looking for a method to double my money instantly and quickly become a millionaire or billionaire. Then as time went on, I quickly realized that’s an unrealistic goal, and instead started to develop my own trading system. Over time, I gave up on short term trading and focused more on long term trading as it fits my style and risk tolerance better. The type of trading you do shall not matter, as long as you are profitable long term.

    If one consistently gains 2% of one’s trading account every week, starting with $2000, at the end of 10 years, one would have $59M. Everyone reading this should step back and realize that they don’t have to make quick bucks, just steadily win the race. Success in trading means being the last person standing.

  • convictscott

    Great post. If I may add a few things.

    What seems like the most important thing to our minds is the success or failure of the most recent trade, while what is in fact the most important thing is the long run positive expectancy of the system. You are NOT your mind, your mind is like a separate retarded child inside you, constantly wanting anxious and scared. Time and time again your mind will tell you that it knows better than you, that you lost your last trade so surely you should listen to the monkey chatter of the mind and just let it trade.

    Letting your mind trade is disaster. Letting your mind alter your trade plan is disaster. Letting your mind trap you in trade/screenwatch obsession is disaster. Your job as the adult in the equation is to keep your mind out of the game. If you do that you are avoiding MOST of the common psychological traps all at once.

    Crazy Ivan is designed for MINIMAL time at the screen. Not only does it not help, it HURTS your performance to watch the screen. Every 8hrs when the filters are off you check email for a trade. If there is a trade (there wont be trades for days at a time) you dont go near the screen when it is on. You can do it from a phone or ipad if it is easier (use logmein, I do). You go about your day as normal, and take 5 mins to do your trading when required. Then leave it alone.

    If you are one of those guys who says “oh I couldn’t take a trade and not watch it” then I say to you – HARDEN THE FUCK UP!

  • convictscott

    Exactly. 98% of people lose all their cash trading short term. They all are after the same thing. If you want to be the 2% you have to concentrate on NOT LOSING and compounding for the long term.

  • Peter Levchenko

    Ekhart Tolle’s teachings resonate a lot with what you said about the mind. It was life changing for me. “Power of now” and “new earth” I can recommend as some of the best books on how to live ever written. It is amazing how this same syndrome which leads to failure in trading is really no different to living In general. Letting your mind guide you unconsciously is the reason for depression, and lack of achievement and disappointment in life in general

  • convictscott

    Could still go either way, its either a last kiss goodbye OP and should fall off the plate, or will reverse hard in line with the daily trend. I don’t see betting odds yet, but those sort of OP’s typically come leading up to change of trend.

  • Peter Levchenko

    Agreed. As I said I don’t see an attractive trade in cable yet but I considered it prudent to square up my EURGBP short and bank the profit. This move today is not at all in alignment of how I envisaged sterling to trade today, therefore my “edge” is eliminated at this stage so I ran to the sidelines :)

  • bullregard

    Scott, I totally agree with all your points. I have a question: how do you manage your trade if you’re at the screen only on the entry time frame, i.e. every 8 hours. I was thinking that the better exits for Crazy Ivan are set as incremental stops on a lower time frame.

  • http://dartht.blogspot.com/ Heisen_Gerb
  • Peter Levchenko

    Have you backtested these exits? CI is called a mechanical system for a reason 😉

  • convictscott

    Tolle’s stuff is excellently written buddhism lite. Unfortunately his conclusions are all wrong. His idea (correct and indisputable) is that everything good happens in the present moment, there is no pain or fear and life becomes easy to live. Fucking great, sounds good, sign me up!

    His solution – just live in the present moment! Except it’s easier said than done. Learning to stay present is HARD. It is physically and emotionally painful. The mind needs to be trained like a dog, through repetition and reward.

    Tolle promises all the benefits of a classical spiritual program (most major meditative traditions are similar) without doing any actual work. He himself spent 8hrs a day meditating in a buddhist monastery for years, but you can get the same benefit by reading his book – rubbish! But appealing rubbish. If you want the benefits of mind training, you must do the work.

  • convictscott

    Bullregard, it’s a SYSTEM. It has a set of rules if you follow the rules on average the end of 8hr exits will be, on average 59% of an optimal exit. If you think you can beat that by screenwatching – go ahead and try, I double dare ya! You might, but having tested hundreds of systems the exits on CI are actually pretty good.

    Before you change to something you have to be sure it is better.

  • bullregard

    k, thanks. I didn’t know the exits are on the same time frame. Makes sense for me now.

  • http://dartht.blogspot.com/ Heisen_Gerb

    Great. I got in based on fear. Can’T I do anything right!?!
    LOL

  • convictscott

    Small world. Nick Radge is a very cool guy and legit who lives where I have my beach house in Australia

  • convictscott

    We only ever exit at the end of the 8hr period, or your stop gets hit during that period.

  • http://dartht.blogspot.com/ Heisen_Gerb

    Crikey. given you’re nefarious past, me thinks we need a bit of proof.
    hell, invite him onto the forum!
    Guest Posts!

  • Peter Levchenko

    Disagree. You yourself say his conclusion is right – live in the present moment. He correctly and concisely states the goal. Where you are right is that he does not specify a mechanical plan for achieving that. I would argue that it is impossible to define one plan for every person. I believe that overcoming one’s mind is ultimately one’s purpose for existence as that is the only way to achieve true happiness which is an inner spiritual state. It is a never ending process of true evolution. He gives tips etc but ultimately it is up to you to figure out what works for you. And I agree with you it is fkin hard but it is a process (perhaps never ending). Your “consciousness” is only as good as your last moment of weakness much like you as a trader is only as good as your current trade. You do not at some point become a good trader forever. It is not a permanent state as one is always one trade away from trading like a moron.
    Re conciousness I have found that it is much like the markets – you have to continuously and vigilantly spot patterns of thinking and emotional spiralling that your mind uses in an attempt to take you over again and again.

  • Peter Levchenko

    I believe that people that are CONSISTENTLY successful in trading, poker and betting in general are much closer to that goal than people who aren’t.

  • BobbyLow

    “Concentrate on not Losing” and do so without freezing up.

    Sounds easy but can be a challenge. If I can make a bit of an analogy here it would be like when I first began riding a Motorcycle many years ago. I took a riding safety course and can remember the instructor screaming about going through intercections. He said to assume every vehicle in the intercection is going to do something you don’t expect it to do. He also said that I would have always be alert and look for where I would go if any one of these vehicles put me in danger.

    So the bottom line is that if I can’t do this unconsciously in split seconds and without fear, I would either put myself in more danger than necessary or I couldn’t ride because I would be too fearful.

    Kind of like working toward “unconscious competence” as a trader. :)

    BTW, still modifying plan to be more efficent. Only took two trades today. Both were winners with no mistakes.

    One day at a time. . .

  • convictscott

    He posts everyday on aussiestockforums.com.au

  • bullregard

    No, I haven’t, that’s why the question. I am still working on my tools, will be able to do it soon…

  • SW6

    Greed!? Can’t we just call it “Greenback Admiration”. 😉

  • bullregard

    Gerb, thanks for the video. It’s enlightening.

  • convictscott

    I have quite a bit of experience in this area :) Most major meditative traditions (hindu, buddhist, christian to a certain extent) are extremely similar on how they achieve their goals, and the work required. Surprisingly enough, the benchmark for attaining happiness through control over the mind is 10,000 hrs of focused practice.

    In other words, the same amount of effort you would put into becoming an NBA basketballer, chess grandmaster, world class trader or formula 1 driver. Of course I love the idea of reading a book overnight and getting those same benefits.

    Unfortunately it’s just not possible. Tolle actively states that you don’t have to do any work other than read his books/tapes/videos.

    Our society conditions us, virtually from birth, to give in to the tantrums of the mind. Feeling anxious, distract yourself with some TV. Stressed? Eat some KFC. Bad day, don’t worry a blowjob will fix it. Not happy? Buy something, the solution is obvious. Get more, consume more, have more… be happy. The idea that you can overcome a lifetime of daily conditioning through anything other than hard work is laughable.

  • convictscott

    agree

  • convictscott

    Pencil + paper = backtesting

  • bullregard

    I have to try it. You mentioned it before and I thought of it. I see the educational value in it now, and the commitment buildup. Having a computers background it was difficult for me to come to this conclusion on my own.

  • BobbyLow

    I’d like to add that when I back test with pencil and paper, I absorb what is happening a lot better than if a computer does all the work.

  • Peter Levchenko

    See I agree with almost everything you say, and I also have a little bit of experience in this area. But I never got the impression that he claims that you do not have to do anything yourself other than just reading his stuff and “staying in the present”. I think he adds value by unifying the traditional teachings such as buddhism, but waving away the unneccessary religious bullcrp that people have added to the original messages of the prophets over time. He also interprets what those original messages actually mean in a modern life for a modern person in the purest and very eloquent and concise form. His reasoning is clearly one that comes from someone who is concious for it is so transparent and obvious, that it requires no proof to accept. It is merely exhibiting what has actually always been in front of one’s whole life, but as an unconcious person one never stepped out of the box to observe it. Furthermore, I think through his live tutorial sessions he does as much guiding as one can possibly do on the way towards attaining the goal of becoming concious. and the only way you can realistically do that is by taking individual person’s experience and outlining how to tackle a problem in a concious way, ie how to practice conciousness.
    But to conclude, I think Tolle actually agrees with you and me in that it is a constant process that requires vigilance, patience and self-observation which is what conciousness really boils down to. It is not like you magically become numb to everything, it is just through self-observation you minimise the damage on your life from your ego by simply identifying the second-order thought-based and emotional side effects that your ego instantly injects as a reaction to some form of adversity in life.

  • Peter Levchenko

    Mole is thinking this is going off-topic on a trading forum, but I would suggest to everyone here that attaining conciousness at least to some extent is a CRITICAL element for becoming a profitable trader. In fact, I would take this further and say that in trading losses are inevitable. But what differentiates a “good loss” from a “bad loss” is the absence of concious decision making in the case of the latter. Not following a system, reacting to noise, following someone’s tip, panicking etc – all those are traits of unconcious behaviour. Which from my experience of trading FX intraday, I can say that a split second of unconciousness in trading can cost hours or even DAYS of hard earned PNL, which you have accumulated through concious practice.

  • http://www.ProfitFromPatterns.com/ Ivan K

    It seems the old-fashioned penny is finally beginning to drop … one step closer … there certainly is a time to harness the power of 1’s and 0’s … yet the early stages are served much better by harnessing the awesome power of your subC … it is all about the FA factor (Focus + Aware).

  • convictscott

    Exactly so!

  • convictscott

    Agree on all points. This stuff is critical for becoming a profitable trader.

    This is my trading log for this month. You can see that last week when my mental state was not right (according to the log not my stupid memory) there were numerous mistakes made and my expectancy went way down.

    I took the time to get my mind right over the weekend, sat down on Monday to do everything in a very conscious fashion, and I’m up a little over 10R for the week so far.

    https://docs.google.com/spreadsheet/ccc?key=0AoXS3XGUhq1rdFlDSkpqOTY0Yl9FVURBOEZNRG12cVE&usp=drive_web#gid=0

  • Trendd trade

    great video

  • convictscott

    The no mistakes is more important than the winners. In a perverse way my early experience as a losing trader (but for big money R values) is helping me now because I don’t have that pause before firing that most people do.

  • convictscott

    You can never get the intuitive feeling of comfort with a set of rules that you need to trade a system live with computer backtesting. I recommend and use ninjatrader’s market replay feature, so does Mole. It’s free for daily charts.

  • http://evilspeculator.com molecool

    Actually a blowjob DOES wonders for me :-)

    Conditioning – what Scott said. I’ve done a lot of meditation in my life as I had a pretty horrible childhood. Took me a lot of time and quite frankly for me personally combat and getting hit works better. So yes – it MAY take you only a week once you come across what works for you. But it is probably going to take you 10,000 hours finding that one thing. When i was a kid I was afraid of fighting and avoided fights as much as I could. Later in life I realized that I’m a crazy motherfucker who doesn’t really mind pain that much. Actually it relaxes me and acts as a stress relief. It also resets my mind so that I don’t really give a flying fuck about banal things like a few bad trades. I started to teach Systema here in Spain for that very reason – without some combat training at least once per week I go loco.

    So, go out there – find something that changes your perspective. Meditation, skydiving, flying, petting kitties, volunteering, who knows – you have to find what works for you. But it needs to alter your perspectives and your sensory input – if it makes you feel like you just came back from a mini-vacation then you know you found it.

  • http://evilspeculator.com molecool

    There are some problems that you cannot address in a conscious way. Behavioral patterns need to be shifted by altering input and response. It’s all about peptides – look it up.

  • http://evilspeculator.com molecool

    Really enjoyed the comment section today. Great input everyone.

  • http://dartht.blogspot.com/ Heisen_Gerb

    “I can guarantee you a purity of ninety-six percent. I’m proud of that figure… However, that other product is ninety-nine. Maybe even a touch beyond that.”

  • http://dartht.blogspot.com/ Heisen_Gerb

    I especially like row 38. “profitable but probably got lucky to get away with it.”
    Honest to yourself.

  • convictscott

    Ditto – I learned some stuff

  • convictscott

    Highly recommend an excellent book called “the talent myth” by daniel coyle

  • convictscott

    This was the trade. The stop I chose had quite a lot of inherent protection and I was trading with the trend… but still.

  • http://www.ProfitFromPatterns.com/ Ivan K

    Correction: I was but one of a small group who realised the time was right for TA to gain a higher profile than that of reading chicken entrails in a world of random walk-itis … by that time I had been conducting my workshops for about 6 years, both inhouse for banks and brokers, as well as under the auspices of ‘the system’ … aka the Sydney Futures Exchange and the Securities Institute of Australia as well as privately.

  • http://www.ProfitFromPatterns.com/ Ivan K

    The other side of successful risk-taking

    Part of the quest in attempting to achieve your trading goals of being able to call your own shots via your own approach or RBT is to recognise some of the lessons that come along … the following breakdown has helped many who have across my path over the years.

    Trade ideas / signals can only come from one of 2 sources ,,, internal (your own system or RBT) or external (newsletters, blogs, TV and a host of other non-RBT stimuli). Intuition and guts calls can be also seen as external, despite obviously coming from within.

    From internal > Take signal > Loss = Positive lesson
    From internal > Take signal > Profit = Positive lesson
    From internal > Ignore signal > Loss = Faulty lesson
    From internal > Ignore signal > Profit = Positive lesson

    From external source > Ignore signal > Loss = Positive lesson
    From external source > Ignore signal > Profit = Faulty lesson
    From external source > Take signal > Loss = Positive lesson
    From external source > Take signal > Profit = Faulty lesson

    As many discover, success in trading is more than having the knowledge of a few setups, or indicators or even RBT’s … the impact of the mental / mind aspect cannot be stressed enough.

    The adversary in trading is neither the market nor the person on the other side of your trade … the adversary is YOU.

  • convictscott

    I banked a short yesterday now long 8482 stop 8473

  • saltwaterdog

    Interesting commentary Ivan… so internally generated signals result in positive outcomes 75% of the time, while when generated externally, only 50% and only for losers.

  • captainboom

    It’s unfortunate that the instructor was screaming at you. Poor coaching form, but he does have a point. Intersections are dangerous.

    I’m a rider coach, and I really like the way the program is structured. We begin the class by pointing out that riding a motorcycle has certain risks, that those risks can be managed, and that only you as the rider can choose the level of risk you want to accept. i.e. You can choose whether to wear a helmet, wear protective gear, ride over the speed limit, ride after drinking alcohol, etc.

    I think the analogy works well for trading. Thanks.

  • http://www.ProfitFromPatterns.com/ Ivan K

    Chase have announced capital controls starting November 17, 2013 … in the land of the free and the brave … hmmm

  • http://www.ProfitFromPatterns.com/ Ivan K

    Bearish with a close in the middle third … closing back inside the range of the previous day is ‘one of the most bearish’ … perhaps.

  • convictscott

    Is there a source on that? My understanding is this is illegal under banking law. You are allowed, as of right, in most countries to withdraw your funds on demand in cash.

  • neowave

    I have a question on theoretical R vs R in an oanda account

    Yesterday we had a trade on aud/jpy

    LONG SIGNALS: IP-L
    IF BUY AUDJPY STOP @93.925.
    THEN SELL AUDJPY STOP @93.635.

    RISK: 29 pips.

    Taking into account that there is usually a 2 point spread on oanda I place my order on 93.945

    In my fx calculator, I also take into account that I don’t have 29 pips risk, but 31pips risk

    Every trade is worth 300 euro = R

    The trade goes in our advantage and it’s time to raise the stop 94.215
    the trade falls back and theoretically you have 1R

    What happened in real life
    I got into the trade at 93.946 and got stopped out at 94.214
    all in all I made 26.8 pips profit in stead of the theoretical 29 pips
    so I loose 2.2 pips on spread and market gyrations

    However since I also calculated with risk = 31 pips every pip I make is worth 9.67 euro

    26,8 pips * 9.67 euro = 259.353 euro
    which is 40 euro difference with the theoretical 300 euro I should have made

    First question,
    this is the correct way of working?

    Second question,
    If you loose every trade on spread and market gyrations
    in the end this will not eat away all profit the system will eventually make?

  • convictscott

    Your broker is fucking you mate. This is my real world slippage with interactive brokers on Crazy Ivan 360, both individual entries and per trade measured in both pips and R. Spread should be 1/2 pip on the majors all the time, 24/7.

    You are right this will eat at you over time and fuck you up. Measure it in R and you can see the real effect.

    My slippage per trade is -.021R (1/50th of an R per trade)

    https://docs.google.com/spreadsheet/ccc?key=0AnoLrBrHqLX1dFBmZkVQRURBeHdwQ1hYMjF6cXJYdlE&usp=sharing

  • convictscott

    If you view the above file you will see that with IB I experience a significant amount of positive slippage (when flip flopping long to short mostly)

  • neowave

    ja I am fucked, I always thought oanda was quite good. … NOT apparently. SHIT
    but IB works like oanda in the sense that you don’t pay a monthly fee just to be a member?

  • http://evilspeculator.com molecool

    Neo – fire your broker, find an ECN or straight through processing broker.

  • http://evilspeculator.com molecool

    They probably just rewrote that law. Banksters are running the Western world at this point.

  • http://evilspeculator.com molecool

    Why do you think I post setups and not trades. I inform you guys about inflection points so you can find your own setups based on your own time period and other internal requirements.

  • phylum

    Geez Louise …. you, Scott, even Ivan being congratulatory, no wonder the whole thing’s in a mess:) More cowbell!

  • SS_JJ

    Hehehe, PM on fire this a.m. :-)

  • Skynard

    Wait for this market to catch up:)

  • neowave

    Ok I found something linked with interactive brokers
    So I got those 1/2 pips spread
    but they charge me 5$ commission per transaction
    do you also have this with interactive brokers?

  • neowave

    scott

    so in your world the order that I discribe above

    you fill in go long at 93,93

    and your fx calculator is basis 29,5 pips?

    or do you fill in go long at 93,925
    and your fx calculator is basis 29 pips?

  • BobbyLow

    I just noticed the bike on your avatar.

    The word screaming was perhaps not the correct word to use but whatever the term, it was very effective because I can still “hear” it and still look for hidden risks at intercections after over 60,000 Miles of riding. Through the years, I’ve also taken the Advanced MSF Course, a Two Up Course and a Course just for Trikes when I owned a Trike.

    No matter how many courses I’ve taken, I realize that nothing makes me “Bullett Proof”. But I just wanted to increase my odds of being safe.

    And yes it certainly does relate to trading. :)

  • http://ibergamot.blogspot.com/ i Bergamot

    A little over a year ago I was helping a relative to buy a used car. It took him 4 days to withdraw 12,000 cash from his own checking account. Several papers and releases where sighed, explanation was demanded(!), the branch manager was supposed to get a “release” from somebody higher-up.

    This is not a tale, I was involved personally

  • BobbyLow

    $5 Commision in order to get 1/2 Pip Spread is Brutal. I use TOS and for the most part the Spread is between 1/2 a PIP and 1 PIP depending on the time of day and order flow. However, there are certain times of the day when the Spread can be higher when it the order flow is very slow. One little thing that I do is to put my Stop Losses in at the Opposite of Standard between Bid and Ask. This could put me at risk for as much as an additional 2 PIP loss but it has saved me from numerous Stop Runs that would have hit me at Standard but not at the opposite before price resumes its previous trend.

    Edit, TOS does have a Commision Based Trade for Micro Lots (Under $10,000) and the Commision is $1.00 Per Trade but is still reasonable when compared to $5.00 from Onanda

  • captainboom

    Well said. I’ve had my cycle endorsement since I first got my license, have had the MSF basic course 3 or 4 times, and the advanced course a couple of times. Been coaching for 11 years now. I *know for a fact* that the training and constant practice has literally saved my life on more than one occasion. e.g. I hit a full grown tom turkey at high speed about 10 years ago, and did not get injured or fall down. Not sure what the impact speed was, but was doing 70+ mph shortly before. There were three factors that contributed to the incident. 1.) It was an intersection problem, as the turkey was walking out of a farmers driveway onto the road from a corn field, 2.) Excessive speed. Yep, I like to ride fast, and I accept the risk. 3.) It was an animal problem. I’m certain that I didn’t fall or get injured otherwise due to the quick stop training I’ve had. It was instinctual.

    The avatar pic was taken last year while riding the Dragon, US 129 on the TN/NC border. Nice road, but busy. Many good roads in the area to be enjoyed. My bike is a 1986 BMW R80 G/S.

  • SS_JJ

    Nice 5min zl signal since the open

  • http://dartht.blogspot.com/ Heisen_Gerb

    UUP, that’s like a new kind of low for the year. maybe I should buy a car wash.

  • Skynard

    Think that a very large move is coming to the downside here with OPX. Time to F*** the bulls, currencies showing it now:) Have a good day!

  • neowave

    actually the $ 5 is not on oanda

    that’s on tradersonly => a dutch company linked with IB

    so it has the spread of IB, but I don’t know if this $5 is something they charge or if IB also charges it?

    anyway, how do you fill in this order?

    so in your world the order that I discribe above

    1.a.you fill in go long at 93,93
    b. and your fx calculator is basis 29,5 pips?

    2.a.or do you fill in go long at 93,925
    b. and your fx calculator is basis 29 pips?

  • SS_JJ

    It has well started already, thanks. Same to you.
    Notice all gaps on VIX since Sept 21st have been filled over the last 2 days
    http://stockcharts.com/h-sc/ui?s=$VIX&p=D&b=5&g=0&id=p95035082040

  • SS_JJ

    Do that. I need a reliable place to have my (future) spanking Maserati cleaned. ;-P

  • ridingwaves

    first, I’ll eat my lunch, stopped out for loss on vix, though sell the news did take place…

    JJ, I noticed huge short position reduction in many miners symbols in Sept. via WSJ market page…

    see here..

    http://online.wsj.com/mdc/public/page/2_3062-nyseshort-highlites.html?mod=topnav_2_3022#shortE

  • SS_JJ

    nice link. thanks.

  • AcoBrasil

    I am waiting for the front month options to tighten around the spot.

    Its been a nice PM ride so far this morning following an inside day on Silver.

  • http://dartht.blogspot.com/ Heisen_Gerb
  • Ronebadger

    As is charted below (see SS_JJ), the VIX is down 10%. Down another 10% brings us to the lower BB.

  • SS_JJ

    Black Mr. G. Now make sure they shine. 😉

  • http://dartht.blogspot.com/ Heisen_Gerb

    F your damn eyebrows. 😉

  • BobbyLow

    Actually under this type of circumstance, I’m pretty lax. I can understand that 1/2 of a PIP can and will add up over time. However, it’s not enough of a problem for me to worry about right now because I’m not trading Full Lots and my Size is much smaller.

    It looks like you are trading at least one full lot (if I did a quick conversion of the EURO to USD correctly) so I would call them to see if you can get a better deal. But in the mean time, I would put the order in as is suggested rather than add an additional calculation. Another thing you could possibly do is to adjust the FX Calculator itself in Account Size or Risk Ratio to account for this Shrinkage so that you don’t have to do an additional calculation each time.

  • SS_JJ

    Gold bugs have been so bruised over the last 6 weeks that I think the move might have legs.

  • SS_JJ
  • AcoBrasil

    A lot of the sharp moves on PMs were attributed to a HF liquidation. PMs have been dropping recently on fears that there would not be a default. Paradoxically, the debt limit agreement created a “buy the bad news” event for the PMs. The fact that Congress scheduled another potential conflict in early 2014 indicates more currency-related fear to come.

    I like to trade parallel channels. $GOLD bounced off two a couple of days ago. I think its good to go up to its 50dma, which co-incides with the upper line of a down channel. I’ll be watching closely to see if it can break through those barriers for a run higher.

  • ridingwaves

    Vix push down today seems like a misnomer…somethings doesn’t smell right..

  • omelette

    Simple ForEx question as I’m fairly new to it…Ameritrade allows market, stop, limit and trailing stop orders. Doing some reading this seems standard for ForEx. What I’m missing and usually make heavy use of is a stop limit. With slippage and stops on long orders being triggered by the Ask price and not the Last price, is it generally good practice to put the stop price at your desired stop trigger + the spread to avoid a trade from triggering too early?

    Thanks in advance.

  • ridingwaves

    the jpm capital controls and the fed news item of surcharge on physical storage at banks kind of got lost in all the default hoopla

    http://www.marketwatch.com/story/fed-mulls-surcharge-on-bank-physical-commodities-2013-10-16

  • SS_JJ

    Yep. VIX ain’t buying the market ramp this a.m (so far)

  • BobbyLow

    I’ve been very fortunate to have ridden in about 35 of the Lower 48 States and parts of Canada. So I think I’ve probably ridden around the area you spoke of at one time or another.

    It doesn’t take much of an impact to take somebody down even a Turkey. I’ve had close calls with a Fox, Deer and I unfortunately could not avoid hitting a small dog once.

    I ride mostly 2 up with my wife and have had a number of Bikes and a Trike over my lifetime and did most of my touring of the country on Goldwings. My last Wing was a 2005, 1800CC.

    In 2012, I decided to drop some of the weight and traded down to a 2007, 1500CC Kawasaki Vulcan Cruiser which suits me just fine right now.

    Riding my bike is what I use to clear my head of the day to day stuff that goes on in the market and everything else. :)

  • AcoBrasil

    Great find.

  • SS_JJ

    Let us see how the tape can defy gravity with all those signals and volume abyss.

  • BobbyLow

    “With slippage and stops on long orders being triggered by the Ask price and not the Last price, is it generally good practice to put the stop price at your desired stop trigger + the spread to avoid a trade from triggering too early?”

    I just mentioned something about this in another comment. What I do is if I’m Short, I’ll but my stop loss order in at Bid and if I’m long I’ll put my stop loss in at Ask. This is the opposite of of what happens under Standard Stop Loss orders. This stretches my actual Stop a little bit but over time, it has helped me more than hurt me.

    Also, I think you are talking about TOS which also has OCO (One Cancels the Other Orders and other variations =)

  • SS_JJ

    I just love parabolic moves

  • newbfxtrader

    There is nothing bearish on the zero now. Stand aside if not long.

  • SS_JJ

    I think we’ll breach the previous all time high by a hair, trigger stops and then drop.

  • omelette

    In this case i’m asking about a stop buy trigger rather than a stop loss. I want to enter the trade if the price goes above X.

  • bdoone

    Interesting that TRIN also trending higher all day from .60 to 1.38

  • SS_JJ

    I’m about to go long VIX

  • BobbyLow

    In this case if this is a Buy Stop at Market, I would use the Standard Order which should automatically be triggered off of ASK. If you put it in to be at BID then you would actually pay more because your Price would have hit ASK first.

    This can sound more confusing than it really is. Just
    look at your prices going off at Bid and Ask on your Quote list and I think you will see what I mean.

  • http://evilspeculator.com molecool

    There is no trendline without at LEAST three touches. Don’t let your mind see what it wants to see.

  • http://dartht.blogspot.com/ Heisen_Gerb

    /ES 1723, just a few points from Sept high.

  • newbfxtrader

    I am trying to make him see the light….

  • Fearless

    How many up trend days have we had since October 9?

    Take out the 20 DMA in three bars or less from the low – check
    Six of the first seven bars (including the low) green – barring any surprises today, check

    I don’t see anything bearish on the horizon, except a bearish divergence on the daily and weekly time frames. Until the trend changes and confirms, divergence will remain just that and nothing more.

  • BobbyLow

    It’s not every day we get a 1% move in the DX so I’m not chasing Pair Directions most effected by this – at least not right now. Might consider small counter move later on but this could be a day where I go home with no fish. :)

    In any event, I’m waiting for the last of the smoke to clear from the conclusion of our latest Political Bullshit. Tommorrow’s another day.

  • http://evilspeculator.com molecool

    Yes, I just heard that Chase is now preventing U.S. citizens from sending international wires. This is fucking insane – I have no idea why I should keep my money in the bank. Those fuckers aren’t even giving me interest. As a matter of fact I’m going to the ATM every other day to pull out cash.

    I completely am refusing this whole ‘cashless society’ bullshit. Cash is still king here in Spain and I hope it’ll stay that way.

  • http://dartht.blogspot.com/ Heisen_Gerb
  • SS_JJ

    Long vxx now

  • SS_JJ

    Don’t tell me autobots failed to make a new high on SPX. 😉

  • ridingwaves

    they did…new high..good luck on vix trade, the last 2 weeks it was great if you timed it right, my only stop out was yesterday…Earnings are looking ugly…that link below on WSJ short data also contained some huge short covering on emerging market funds….

  • BobbyLow

    I don’t know JJ. I’m thinking (which is not necessarily a good thing), that the market is still fucked up more than usual in the aftermath of the political crapola that’s gone on over the past few days. It needs at least a day to catch its breath and get back to just being its “normal” fucked up self.

    Even the Oil market is screwed up more than usual and I’m still glad I’ve stayed away from it in recent days. For example, I got a Buy Signal yesterday afternoon and a Sell Signal this Morning. I didn’t take either one. For quick in and out trades, these signals might have worked out quite nicely. But for a Swing Trade meant to last for more than a Day, it would have sucked.

    In other words, I’m longing for the “Normal Bullshit” that goes on in the markets. :)

  • bdoone

    Depends on what SSJJ means by ‘new’ high: fell just short of previous intraday high of 1729.86, but trading above previous closing high of 1725.52.

  • SS_JJ

    I meant what Bdoone said below. Now let us see how the retest of today’s high plays out.

  • SS_JJ

    I don’t have a crystal ball but I’m betting now that Johnny came lately “investors” are going to get screwed chasing this move.

  • http://evilspeculator.com molecool

    ¤ø„¸¸„ø¤º°¨¤ø„¸¸„ø¤º°¨

    ¨°º¤ø„¸ N E W „ø¤º°¨

    ¸„ø¤º°¨ P O S T “°º¤ø„¸

    ¸„ø¤º°¨¤ø„¸¸„ø¤º°º¤ø„¸

  • http://evilspeculator.com molecool

    I think you mean exponential – unless it previously fell hard and then rose the very same way:

    http://www.math.utah.edu/online/1010/parabolas/prob/parabola.gif

  • SS_JJ

    Yeah. You got my drift. Reminds me of AAPL stock.