There is nothing frustrating than asking your lecturer a question to know she is repeating it back to you with an attachment… what?
Wasting my time in school!
Filed under: Random Thoughts
April 20, 2008 • 9:21 pm 0
Standard Deviation and Coefficient of variation
If the standard deviation is going up and we see a pullback on the price 99 out of 100 times the price volatility will carry the price to the initial direction. I figured this out in the late 2006. The problem i’m facing is caculating how far on average the price can go after it resumes the trend.
What could be the answer?
I’ve tried ATR and its absolute bullock. I’m trying coefficient of variation to find the percentile range. I asked to create an indicator on FF couple of days ago and the code was not done properly so no progress on that either.
Looking forward to it.
Filed under: Random Thoughts
April 15, 2008 • 5:37 pm 0
My problem is I’m under capitalized
After 5 months of continuous profit riding I’ve come to the conclusion that I’m wasting my time trading with a mini account. I’m severely under capitalized and just because of this I’m not being able to compensate my hard work with satisfiable return.
However in terms of ROI and win percentage (with the kind of low leverage I use) perhaps I’m not doing that bad. Actually, I’m going to suspend my primary trading account till the end of this semester and look for investors instead. Its really not worth it making $200 a week with the kind of effort and workable hours it requires to trade currencies.
I’m very confident at this moment to become fully dependent on my trading capabilities in the future instead of seeking a 9 to 5 job. But right now my priorities are rather different than earning money. I want to finish my graduation first, not because I need it but because I’ll never get this chance again.
And it is very expensive to go to school in one of the top Australian universities from being a 3rd world citizen. My opportunity costs for trading right now is higher than the amount I’m paying to attend college. It is not viable from a economics sense.
However, I’ll continue my ZuluTrade account as a demo with swing setups with same enthusiasm as of my live account as well as updating this blog.
Filed under: Random Thoughts
• 2:55 pm 0
Rich Dad Poor Dad
Rich Dad Poor Dad by Robert Kiyosaki’s and Sharon Lechter is one of the best books I’ve read this year. As my semester mid-term break is on, just needed to lay my eyes on something interesting. RDPD, certainly made some sparks in my brain.
Filed under: Random Thoughts
April 8, 2008 • 3:39 pm 2
Drawdown – and Management
Being right about the market doesn’t mean you will make money out of it. Last week, I was heavily short on GBP/JPY. My ZuluTrade account suffered a wonderful -2000 pips position at one point. Even though my fundamentals were in place, my timing was out of place. Today I closed all of short trades with a total +170 pips worths 450 pips in scaled in positions.
Getting regular profit but having a bad week can wipe an entire account out. I’ve faced that and this time I was eager to focus on management so that I can get out of it with a functional account which will not require to fund from my previous profits.
Trading is all about equity management. Entry and Exits are really formalities. My strategy gives me some great flexibility over my capital management. Because my weekly ROI is high up in the 3-5% region I stick to, up to 50% drawdown. At that point my Plan B kicks in. Plan B is cutting my losses short not quitting the position all together.
How is that?
Lets say I’m down -400… and I’m seeing there is a lower time frame retracement is about to move it to -300… I’ll scale in and get out at -300… which will ultimately become -100 pips. Why?
That’s the art of scaling in and scaling out. At -400 I’ll add same quantity of position to the same direction. That will bring the entire position to -200. With a 100 pips retracement I can close 50% of scaled in position at -100 pips so my actually loss becomes -100 pips. Then I’ll let the rest of 50% ride. If it goes to +10 I’ll evaluate the situation again and think if the trade is still valid or not.
This is one of my major tactics to manage drawdowns. Well it will only work if you use a very low leverage. With high leverage there is hardly any chance of manipulating your positions. That is why professionals don’t use 10% margin but stick to 1% or less.
Filed under: Uncategorized
