These are the 3 Trades that helped Pass the Challenge - Can you spot the similarities? Can you tell that there is common theme going on here?
Have a look at these 3 trades. 12K, 6K and 6K (almost) trades.
1.
2.
3.
4. Bonus Trade 4 (Had I taken the full 1% risk on this, this would have been a $10,000 Trade.
Discussions and Chat
-
immy
- Founder
- Posts: 9654
- Joined: 22 Nov 2010, 16:46
- 14
These are the 3 Trades that helped Pass the Challenge
You do not have the required permissions to view the files attached to this post.
What is the Secret of Successful Trading?
The Consistent Pursuit of DS1
The thing that makes me money in trading is when I "Objectively Follow my Trading Plan".
I understand that I can't catch all the moves or all the signals but my objective is to catch THE VALID SIGNALS & ONLY the Valid Signals.
My Deathbed Advice "5:1 Reward to Risk Ratio".
Yo, banana boy!
The Consistent Pursuit of DS1
The thing that makes me money in trading is when I "Objectively Follow my Trading Plan".
I understand that I can't catch all the moves or all the signals but my objective is to catch THE VALID SIGNALS & ONLY the Valid Signals.
My Deathbed Advice "5:1 Reward to Risk Ratio".
Yo, banana boy!
-
immy
- Founder
- Posts: 9654
- Joined: 22 Nov 2010, 16:46
- 14
The Power of 3 Charts Trading on M5
This is what you can get a few times a week on FOREX M5.
You do not have the required permissions to view the files attached to this post.
What is the Secret of Successful Trading?
The Consistent Pursuit of DS1
The thing that makes me money in trading is when I "Objectively Follow my Trading Plan".
I understand that I can't catch all the moves or all the signals but my objective is to catch THE VALID SIGNALS & ONLY the Valid Signals.
My Deathbed Advice "5:1 Reward to Risk Ratio".
Yo, banana boy!
The Consistent Pursuit of DS1
The thing that makes me money in trading is when I "Objectively Follow my Trading Plan".
I understand that I can't catch all the moves or all the signals but my objective is to catch THE VALID SIGNALS & ONLY the Valid Signals.
My Deathbed Advice "5:1 Reward to Risk Ratio".
Yo, banana boy!
-
Minsk
- AIMSter
- Posts: 498
- Joined: 11 Nov 2021, 16:11
- 3
Re: These are the 3 Trades that helped Pass the Challenge
ongoing trend, trade with the trendimmy wrote: ↑04 Jul 2022, 21:13 These are the 3 Trades that helped Pass the Challenge - Can you spot the similarities? Can you tell that there is common theme going on here?
Have a look at these 3 trades. 12K, 6K and 6K (almost) trades.
1. The-3-Trades-That-Won-The-Challenge.jpg
2.The-3-Trades-That-Won-The-Challenge2.jpg
3.The-3-Trades-That-Won-The-Challenge3.jpg
4. Bonus Trade 4 (Had I taken the full 1% risk on this, this would have been a $10,000 Trade.
2022-07-04_21-16-55.jpg
-
immy
- Founder
- Posts: 9654
- Joined: 22 Nov 2010, 16:46
- 14
Should You go for 1:5 on the 1 Minute Chart?
When it comes to trading, the one thing that most traders ignore is the risk to reward ratio and its relation to the win rate of the trading system.
Traders often trade a method without solid backtesting and without understanding the simple , very simple basics mathematical or statistical calculations. Things like Ratios and Win Rate are taught in secondary school (at least in the UK).
The formula is simple, my son Adam, was stood behind me and he came up with simple formula.
How do you know what is your Break-even Win Rate for a given risk to reward ratio.
As explained in my other posts, simply add the ratios and divide 100 by that number. So 1:5 = 100/ (5+1) =16.66% is your break-even win rate.
Now that we have that out of the way, we understand that if you keep your risk to to reward ratio higher, you will need only 25-30% win rate to be profitable over the longer term. But there is another question.
The question is, can you apply this to any time frame? Can you go for 1:5 Winners on the M1?
Unfortunately NOT. Because not all the time frames behave the same way. The M1 chart has its limitations. OFten the spread n the buffer will take more than 25% of the average swing on the m1 chart. e.g. a market moves around 15-20 pips per swing, then you can't taken more than say, 10-12 pips of profit from such small swings. And then, 2-3% (20-30%) of your profit will be taken away by spread and buffer.
They will tell you that markets move the same on all the time frames, but it is not entirely true. When there is a powerful injection of cash or volume or trading, as the volatility suddenly spikes, the effects will be very different on all the time frames at a "given time".
E.g. an FOMC announcement might move the 1 minute chart 100 pips but that could be slightly different or sometimes the same for 1hr chart, however how that h1 candle gets printed is different. At the same time, this might not have a significant effect over the daily or weekly chart. Sometimes, you see a 100 pips H1 andle, but when you drop to lower time frame,e.g. the m5 chart, you find that 11 of those 12 candles were very small 5 pips candles. Only one candle was 100 pips because it was news. Drop further to m1 and you find it was just 1 candle of a 100 pips.
When you look at the charts , in hindsight, they all look the same, but when you trade them, they form in very different manner because as you switch the time frame, you are NOT changing price but you are changing the X axis only, RATE of Change of price per time, that is TIME.
On the other side, you have some constants, such as spread and commission. The smaller the time frame, the HIGHER the spread and the higher the commission you pay in relation to the number of pips or points you again or risk. Lower time frames have a higher spread to swing ratio.
The lower the time frame, the more chances of dealing with "shakeouts" , blips and spikes. In other words, the lower the time frame the more the chart is prone to sudden changes thus creating "NOISE". Noise in other words is RANDOMNESS. Nobody wants randomness. We want structures that we can rely on.
So, because market is very chaotic (not in the sense of the Science of chaos) and noisey one has to be very selective and select the times when there is higher probability of the market finding a STRUCTURE and move in an organised manner. As we all know, here at AIMS at least, that those times are often near the open or news times. ( CIP)
If you trade on random times, your chances of success are close to zero because you're dealing with noise. Now let's come to the final conclusion. Can you go for 1:3 or 1:5 trades on the M1?
Yes, you can but the chance of hitting 5R trades is far lower on m1 than say, H1 or D1 chart. It's actually 3 times lower compared to the M5 chart. That is got a lot to do with finding very tight low risk entries and slightly less with finding big winners.
e.g. look at this GBPUSD Daily Chart. Picturewise, it looks exactly the same as any m5 or m1 chart. But look closely, the swings have alot more pips packed inside it. Swing Down has 660 pips, the bullish swing has 450 pips an the next swing low has 500+ pips. Yet, if you look athe bullish swing, it is only made of 2 candles. Can your m1 chart, produce 400 pips within two normal candles? Notice, that the spread and buffer remain the same and your winner are now in hundreds of pips. The commission goes down since your lot sizes on D1 chart are far smaller than M1 chart.
The H1 chart can go say, 200 pips in 2 days or 1 day in your favour. On USD/JPY you can find a 5 or 7 pips entry for that 200 pips move. But it will be VERY hard to find a 5 point stop loss on m1 and then catch a 200 points winner.
The chance of 1:3 trades is still high. The game of M1 cannot be played like swing trading. You cannot rely on big winners on the M1 chart. It is technically possible, but there is a problem. It is more of a mental problem than technical.
The Mental Limitation of 1:5 Win rate and M1 time frame
The day trader sits down watching 1 minute chart, adrenaline levels goes up, cortisol are getting pumped the excitement is building. The fear and greed factors are at play. On top of that you have the "cures of m1 looming over your shoulders".
Imagine now, going for 1:5 winners, that means although your winners are very big, in doing so, your win rate has (in effect or automatically) fallen down to 25%.
That means, that nearly every session, or 1 in 4 sessions you will lose money. Only 1 in 4 sessions, that is just once a week, you will and win big and that one session will recover the losses.
Traders on the M1, day traders, CANNOT live happily with these arrangements. So you need to have a win rate of 50% (60% ideal and 1:1.5) with a 1:2 or 1:3 average winners. That is , so that you can finish a day up or breakeven and remain happy and sane.
The M1 chart is used for scalping so that you get in and out quick. Which means, you MUST try to keep a win rate above 40% at least, or else, you'd be better off trading slightly higher, swing time frame.
That is because it is relatively easier to keep a 30% win rate on H1 than on m1. If you keep a win rate of 30% on m1, you'd need at least 1:3 average winners to remain in profit. For 1:2 risk to reward average you need a 40% win rate. for 1:1 trades you need a 60^ win rate.
Traders often trade a method without solid backtesting and without understanding the simple , very simple basics mathematical or statistical calculations. Things like Ratios and Win Rate are taught in secondary school (at least in the UK).
The formula is simple, my son Adam, was stood behind me and he came up with simple formula.
How do you know what is your Break-even Win Rate for a given risk to reward ratio.
As explained in my other posts, simply add the ratios and divide 100 by that number. So 1:5 = 100/ (5+1) =16.66% is your break-even win rate.
Now that we have that out of the way, we understand that if you keep your risk to to reward ratio higher, you will need only 25-30% win rate to be profitable over the longer term. But there is another question.
The question is, can you apply this to any time frame? Can you go for 1:5 Winners on the M1?
Unfortunately NOT. Because not all the time frames behave the same way. The M1 chart has its limitations. OFten the spread n the buffer will take more than 25% of the average swing on the m1 chart. e.g. a market moves around 15-20 pips per swing, then you can't taken more than say, 10-12 pips of profit from such small swings. And then, 2-3% (20-30%) of your profit will be taken away by spread and buffer.
They will tell you that markets move the same on all the time frames, but it is not entirely true. When there is a powerful injection of cash or volume or trading, as the volatility suddenly spikes, the effects will be very different on all the time frames at a "given time".
E.g. an FOMC announcement might move the 1 minute chart 100 pips but that could be slightly different or sometimes the same for 1hr chart, however how that h1 candle gets printed is different. At the same time, this might not have a significant effect over the daily or weekly chart. Sometimes, you see a 100 pips H1 andle, but when you drop to lower time frame,e.g. the m5 chart, you find that 11 of those 12 candles were very small 5 pips candles. Only one candle was 100 pips because it was news. Drop further to m1 and you find it was just 1 candle of a 100 pips.
When you look at the charts , in hindsight, they all look the same, but when you trade them, they form in very different manner because as you switch the time frame, you are NOT changing price but you are changing the X axis only, RATE of Change of price per time, that is TIME.
On the other side, you have some constants, such as spread and commission. The smaller the time frame, the HIGHER the spread and the higher the commission you pay in relation to the number of pips or points you again or risk. Lower time frames have a higher spread to swing ratio.
The lower the time frame, the more chances of dealing with "shakeouts" , blips and spikes. In other words, the lower the time frame the more the chart is prone to sudden changes thus creating "NOISE". Noise in other words is RANDOMNESS. Nobody wants randomness. We want structures that we can rely on.
So, because market is very chaotic (not in the sense of the Science of chaos) and noisey one has to be very selective and select the times when there is higher probability of the market finding a STRUCTURE and move in an organised manner. As we all know, here at AIMS at least, that those times are often near the open or news times. ( CIP)
If you trade on random times, your chances of success are close to zero because you're dealing with noise. Now let's come to the final conclusion. Can you go for 1:3 or 1:5 trades on the M1?
Yes, you can but the chance of hitting 5R trades is far lower on m1 than say, H1 or D1 chart. It's actually 3 times lower compared to the M5 chart. That is got a lot to do with finding very tight low risk entries and slightly less with finding big winners.
e.g. look at this GBPUSD Daily Chart. Picturewise, it looks exactly the same as any m5 or m1 chart. But look closely, the swings have alot more pips packed inside it. Swing Down has 660 pips, the bullish swing has 450 pips an the next swing low has 500+ pips. Yet, if you look athe bullish swing, it is only made of 2 candles. Can your m1 chart, produce 400 pips within two normal candles? Notice, that the spread and buffer remain the same and your winner are now in hundreds of pips. The commission goes down since your lot sizes on D1 chart are far smaller than M1 chart.
The H1 chart can go say, 200 pips in 2 days or 1 day in your favour. On USD/JPY you can find a 5 or 7 pips entry for that 200 pips move. But it will be VERY hard to find a 5 point stop loss on m1 and then catch a 200 points winner.
The chance of 1:3 trades is still high. The game of M1 cannot be played like swing trading. You cannot rely on big winners on the M1 chart. It is technically possible, but there is a problem. It is more of a mental problem than technical.
The Mental Limitation of 1:5 Win rate and M1 time frame
The day trader sits down watching 1 minute chart, adrenaline levels goes up, cortisol are getting pumped the excitement is building. The fear and greed factors are at play. On top of that you have the "cures of m1 looming over your shoulders".
Imagine now, going for 1:5 winners, that means although your winners are very big, in doing so, your win rate has (in effect or automatically) fallen down to 25%.
That means, that nearly every session, or 1 in 4 sessions you will lose money. Only 1 in 4 sessions, that is just once a week, you will and win big and that one session will recover the losses.
Traders on the M1, day traders, CANNOT live happily with these arrangements. So you need to have a win rate of 50% (60% ideal and 1:1.5) with a 1:2 or 1:3 average winners. That is , so that you can finish a day up or breakeven and remain happy and sane.
The M1 chart is used for scalping so that you get in and out quick. Which means, you MUST try to keep a win rate above 40% at least, or else, you'd be better off trading slightly higher, swing time frame.
That is because it is relatively easier to keep a 30% win rate on H1 than on m1. If you keep a win rate of 30% on m1, you'd need at least 1:3 average winners to remain in profit. For 1:2 risk to reward average you need a 40% win rate. for 1:1 trades you need a 60^ win rate.
You do not have the required permissions to view the files attached to this post.
What is the Secret of Successful Trading?
The Consistent Pursuit of DS1
The thing that makes me money in trading is when I "Objectively Follow my Trading Plan".
I understand that I can't catch all the moves or all the signals but my objective is to catch THE VALID SIGNALS & ONLY the Valid Signals.
My Deathbed Advice "5:1 Reward to Risk Ratio".
Yo, banana boy!
The Consistent Pursuit of DS1
The thing that makes me money in trading is when I "Objectively Follow my Trading Plan".
I understand that I can't catch all the moves or all the signals but my objective is to catch THE VALID SIGNALS & ONLY the Valid Signals.
My Deathbed Advice "5:1 Reward to Risk Ratio".
Yo, banana boy!
-
immy
- Founder
- Posts: 9654
- Joined: 22 Nov 2010, 16:46
- 14
NO MORE TRADES TODAY - NFP DAY
Remember today is NFP day and this news is like a beacon or a milestone.
Every month this news of fomc can set new directions for the forex market
So we want to stay away from this, if already in trades and well in profit, we consider taking profits or keep stop loss at a reasonable spot so that we don't give away everything. Managing drawdown is VERY important.
So I'm off for the week. See ya Monday
Every month this news of fomc can set new directions for the forex market
So we want to stay away from this, if already in trades and well in profit, we consider taking profits or keep stop loss at a reasonable spot so that we don't give away everything. Managing drawdown is VERY important.
So I'm off for the week. See ya Monday
What is the Secret of Successful Trading?
The Consistent Pursuit of DS1
The thing that makes me money in trading is when I "Objectively Follow my Trading Plan".
I understand that I can't catch all the moves or all the signals but my objective is to catch THE VALID SIGNALS & ONLY the Valid Signals.
My Deathbed Advice "5:1 Reward to Risk Ratio".
Yo, banana boy!
The Consistent Pursuit of DS1
The thing that makes me money in trading is when I "Objectively Follow my Trading Plan".
I understand that I can't catch all the moves or all the signals but my objective is to catch THE VALID SIGNALS & ONLY the Valid Signals.
My Deathbed Advice "5:1 Reward to Risk Ratio".
Yo, banana boy!
-
Minsk
- AIMSter
- Posts: 498
- Joined: 11 Nov 2021, 16:11
- 3
Re: NO MORE TRADES TODAY - NFP DAY
thanks for the warning, yes agree, I have been in it with a trade once and don't want that againimmy wrote: ↑08 Jul 2022, 10:10 Remember today is NFP day and this news is like a beacon or a milestone.
Every month this news of fomc can set new directions for the forex market
So we want to stay away from this, if already in trades and well in profit, we consider taking profits or keep stop loss at a reasonable spot so that we don't give away everything. Managing drawdown is VERY important.
So I'm off for the week. See ya Monday
have a nice weekend Aimsters
-
immy
- Founder
- Posts: 9654
- Joined: 22 Nov 2010, 16:46
- 14
CONSISTENCY IS THE KEY TO PROFITS
Consistency is Everything
You do not have the required permissions to view the files attached to this post.
What is the Secret of Successful Trading?
The Consistent Pursuit of DS1
The thing that makes me money in trading is when I "Objectively Follow my Trading Plan".
I understand that I can't catch all the moves or all the signals but my objective is to catch THE VALID SIGNALS & ONLY the Valid Signals.
My Deathbed Advice "5:1 Reward to Risk Ratio".
Yo, banana boy!
The Consistent Pursuit of DS1
The thing that makes me money in trading is when I "Objectively Follow my Trading Plan".
I understand that I can't catch all the moves or all the signals but my objective is to catch THE VALID SIGNALS & ONLY the Valid Signals.
My Deathbed Advice "5:1 Reward to Risk Ratio".
Yo, banana boy!
-
immy
- Founder
- Posts: 9654
- Joined: 22 Nov 2010, 16:46
- 14
My Weekend Thought was this
I was contemplating over whether to add the H1/M5 entry method into my trading plan.
Today, once again, the opportunity presented itself. The H1/M5 on the USD/JPY while I was waiting for a limit buy order.
That did not happen but had I looked at the M5 after the last Trend Candle, I'd have seen this.
The trick is to NOT be looking for M5 trades. Instead of that, I will do this. When I am SURE this pair is going up or down, and all I need is an entry then, and ONLy then, will I use the M5 or M15 for entry.
ps: but in the end I always say, if you had just taken the USD/JPY Entry on the seed, the 2 legged pullback, that would have been enough. I was not keen, because I wanted to see a new breakout, and then I a signal. Nevermind NEXT
Today, once again, the opportunity presented itself. The H1/M5 on the USD/JPY while I was waiting for a limit buy order.
That did not happen but had I looked at the M5 after the last Trend Candle, I'd have seen this.
The trick is to NOT be looking for M5 trades. Instead of that, I will do this. When I am SURE this pair is going up or down, and all I need is an entry then, and ONLy then, will I use the M5 or M15 for entry.
ps: but in the end I always say, if you had just taken the USD/JPY Entry on the seed, the 2 legged pullback, that would have been enough. I was not keen, because I wanted to see a new breakout, and then I a signal. Nevermind NEXT
You do not have the required permissions to view the files attached to this post.
What is the Secret of Successful Trading?
The Consistent Pursuit of DS1
The thing that makes me money in trading is when I "Objectively Follow my Trading Plan".
I understand that I can't catch all the moves or all the signals but my objective is to catch THE VALID SIGNALS & ONLY the Valid Signals.
My Deathbed Advice "5:1 Reward to Risk Ratio".
Yo, banana boy!
The Consistent Pursuit of DS1
The thing that makes me money in trading is when I "Objectively Follow my Trading Plan".
I understand that I can't catch all the moves or all the signals but my objective is to catch THE VALID SIGNALS & ONLY the Valid Signals.
My Deathbed Advice "5:1 Reward to Risk Ratio".
Yo, banana boy!
-
Minsk
- AIMSter
- Posts: 498
- Joined: 11 Nov 2021, 16:11
- 3
H1 - m15/m5
I might want to add this strategyto my next batch, I missed opportunities today, and also last week.
Which I could have taken if just "find an entry" strategy on m15 or m5 was in my trading plan. I don't want to trade m15 or m5 itself.
Also break of Aims Box I should add in next batch, that would also help not missing these opportunities.
Which I could have taken if just "find an entry" strategy on m15 or m5 was in my trading plan. I don't want to trade m15 or m5 itself.
Also break of Aims Box I should add in next batch, that would also help not missing these opportunities.
-
Minsk
- AIMSter
- Posts: 498
- Joined: 11 Nov 2021, 16:11
- 3
Office day tomorrow tuesday 12-7
I thought I could escape it this week, but a collegue is sick, so now I need to go.
Meaning: only work laptop and no trading
Meaning: only work laptop and no trading