Here is an update to my previous idea on entries. I kept rambling on and on so this was too big for an update. Since you can't possibly cover the entire subject even in an entire book, let's go with 2 examples live, not in hindsight. They might (probably maybe even) just fail. Maybe I'll start a new idea with more 3-4 new ones, so we can look at entry + getting stopped (-1R) + trailing + target etc.
Or maybe markets start trending a lot and I'm absorbed and can't be bothered posting. I don't know. Don't have a crystal ball.
I want to update this with 2 live examples, and see how they go (probably both lose)
1-
Here is an example where you only need a 15% winrate to make money.
Price sometimes consolidates, stays within a range, and then goes down, at least often enough to breakeven right?
Oh ye this goes beyond entry but basically before analysing much, the "pattern" or "price action" in itself should at least breakeven, it should have a chance to work.
The risk being limited is what matters, like George Soros with the bank of England, he entered where he was close to "being wrong" (without being greedy trying to enter 5 pips from stop), same with Buffett, he enters when things look bad and could be about to turnaround or it could just be "the end" so he enters close to "being wrong". I don't like the words being wrong because this is not what it is, call it instead "trade invalidated". If I say something happens 20% of the time and it happens 20% of them that does not make me wrong 80% of the time, but rather right 100% of the time.
This is something I did not mention before: as far as I, and everyone who isn't a troll, can tell: the price in sideways is random. So it does not matter where you enter in that area. How dense is it to try to catch the "magical perfect entry" in a RANDOM price action? You don't know where when why the price will go. If there was a magical entry then people could trade these sideways and make money, and to my knowledge the only people that do are retail day traders on the internet.
This is not the best setup, but no setup is ever the best anyway so...
Disclaimer: I am short NZDUSD. Net position will be short EURUSD actually XD
But the EURUSD price action was just bad ye I don't know where to enter so it matters. The NZD isn't looking that bad after all. The EURUSD I think goes down, but chart looks disgusting, no way I can tell where to enter. Random sideways in a small area versus random sideways in a giant area. The different is risk to reward.
Find the tool to express your ideas with the best RR. Now there are some added spreads but it's fine, not like I day trade with a stop 3 times the size of the spreads.
And I might rotate back to being short the NZD, I kind of adapt all the time. If I get stopped on EURNZD and I have no good opportunity to short EURUSD or my opinion of it going down diminishes (it's not binary by the way you have to think in probas), and NZDUSD continues down, well in that case I won't be short EURUSD anymore, and might even increase my NZDUSD size (but only when a pullback happens).
So ye that part is binary for me, and for Warren Buffett too by the way:
Me: No pullback I don't buy
WB: No discount, no PE below 10 (or something) = I don't buy. But I don't care about catching the very bottom or having an exact precise entry.
Since Warren Buffett does it that way, and made billions, I think it's safe to say it's ok to do it that way too, even if he traded "investing" markets and we are talking about "hedging" markets here.
2-
FOMC on the 22. Might have to wait until then, or Monday at least (market could move Monday in anticipation).
Here I think the entry matters :p The number might not (oh yes actually it does) but the date does (or more). Odds of it being a coincidence are really low.
Statistically this has absolutely NOT been a coincidence.
Here I'm supposed to emphasize the "been", and go "past performance does not bla bla bla" I mean... If I have to explain this in the first place... If an "individual investor" needs this explained to them, well this is the wrong job for them. This is so trivial.
Ye, the stupid pattern might repeat itself, I'm willing to risk 1 to make ??? 10? If it keeps going? Past bull markets lasted 1.5 - 4 years so statistically I could make 10 or more.
I don't have any clear stats on this pattern, how often do they repeat themselves, would be too simple, anyone with more than 2 fingers and the ability to spell their name and count to 10 would make money. Which is not everyone, USA universities have "special classes" for "high school graduates" that are illiterate and have a lower math level than ravens.
So... with everyone becoming suprisingly dumb, AND the "dumb money" getting interested in the market... my odds of winning and making money go up.
There is much more to take into account, like the FED manipulating markets.
But here the entry matters. Like when you have something that had 1/65 million odds of happening, you can't ignore it. You could say "hey maybe they created this on purpose to trick people"... That isn't a real thing. By experience it does not happen, again, statistically.
FOMC is the 21-22. FX & commodities should move too once "certainty" comes back. Inch'allah things get moving on the 20 (monday), but either way we should go allelujah on the 22. Praised be Yahweh for making some people smart and some people dumb. And Dionysus if things don't work out.
Or maybe markets start trending a lot and I'm absorbed and can't be bothered posting. I don't know. Don't have a crystal ball.
I want to update this with 2 live examples, and see how they go (probably both lose)
1-
Here is an example where you only need a 15% winrate to make money.
Price sometimes consolidates, stays within a range, and then goes down, at least often enough to breakeven right?
Oh ye this goes beyond entry but basically before analysing much, the "pattern" or "price action" in itself should at least breakeven, it should have a chance to work.
The risk being limited is what matters, like George Soros with the bank of England, he entered where he was close to "being wrong" (without being greedy trying to enter 5 pips from stop), same with Buffett, he enters when things look bad and could be about to turnaround or it could just be "the end" so he enters close to "being wrong". I don't like the words being wrong because this is not what it is, call it instead "trade invalidated". If I say something happens 20% of the time and it happens 20% of them that does not make me wrong 80% of the time, but rather right 100% of the time.
This is something I did not mention before: as far as I, and everyone who isn't a troll, can tell: the price in sideways is random. So it does not matter where you enter in that area. How dense is it to try to catch the "magical perfect entry" in a RANDOM price action? You don't know where when why the price will go. If there was a magical entry then people could trade these sideways and make money, and to my knowledge the only people that do are retail day traders on the internet.
This is not the best setup, but no setup is ever the best anyway so...
Disclaimer: I am short NZDUSD. Net position will be short EURUSD actually XD
But the EURUSD price action was just bad ye I don't know where to enter so it matters. The NZD isn't looking that bad after all. The EURUSD I think goes down, but chart looks disgusting, no way I can tell where to enter. Random sideways in a small area versus random sideways in a giant area. The different is risk to reward.
Find the tool to express your ideas with the best RR. Now there are some added spreads but it's fine, not like I day trade with a stop 3 times the size of the spreads.
And I might rotate back to being short the NZD, I kind of adapt all the time. If I get stopped on EURNZD and I have no good opportunity to short EURUSD or my opinion of it going down diminishes (it's not binary by the way you have to think in probas), and NZDUSD continues down, well in that case I won't be short EURUSD anymore, and might even increase my NZDUSD size (but only when a pullback happens).
So ye that part is binary for me, and for Warren Buffett too by the way:
Me: No pullback I don't buy
WB: No discount, no PE below 10 (or something) = I don't buy. But I don't care about catching the very bottom or having an exact precise entry.
Since Warren Buffett does it that way, and made billions, I think it's safe to say it's ok to do it that way too, even if he traded "investing" markets and we are talking about "hedging" markets here.
2-
FOMC on the 22. Might have to wait until then, or Monday at least (market could move Monday in anticipation).
Here I think the entry matters :p The number might not (oh yes actually it does) but the date does (or more). Odds of it being a coincidence are really low.
Statistically this has absolutely NOT been a coincidence.
Here I'm supposed to emphasize the "been", and go "past performance does not bla bla bla" I mean... If I have to explain this in the first place... If an "individual investor" needs this explained to them, well this is the wrong job for them. This is so trivial.
Ye, the stupid pattern might repeat itself, I'm willing to risk 1 to make ??? 10? If it keeps going? Past bull markets lasted 1.5 - 4 years so statistically I could make 10 or more.
I don't have any clear stats on this pattern, how often do they repeat themselves, would be too simple, anyone with more than 2 fingers and the ability to spell their name and count to 10 would make money. Which is not everyone, USA universities have "special classes" for "high school graduates" that are illiterate and have a lower math level than ravens.
So... with everyone becoming suprisingly dumb, AND the "dumb money" getting interested in the market... my odds of winning and making money go up.
There is much more to take into account, like the FED manipulating markets.
But here the entry matters. Like when you have something that had 1/65 million odds of happening, you can't ignore it. You could say "hey maybe they created this on purpose to trick people"... That isn't a real thing. By experience it does not happen, again, statistically.
FOMC is the 21-22. FX & commodities should move too once "certainty" comes back. Inch'allah things get moving on the 20 (monday), but either way we should go allelujah on the 22. Praised be Yahweh for making some people smart and some people dumb. And Dionysus if things don't work out.
So I posted this long idea 10 days ago
I did not get filled. The price showed it did not want to go lower, it could have been the bulls being bagholders and not managing to push the price up, but they did manage.
The price was ranging slightly above where I wanted to enter.
I am not really sad, from the moment where I posted this long I explained I did not like it, those are the reasons:
a- It is small. The spreads ruin the risk to reward. Slowest way to make money, or fastest to turn a winning investor into a loser, is too zoom in too much and trade tiny moves
b- The price was in a "meh" ranging market, sure it was bouncing in a repetitive manner which is very attractive to any serious trader, but the area where it kept bouncing was sort of random that's the thing. It was in a grey area between "I clearly can't exploit it" and "Oh this is great a monotonous repetitive pattern let's go"
Maybe I was greedy trying to enter too low?
Maybe I should have averaged in? Oh well, as I said small micro trade spread eat up like 1/5 of the stop so it's bad anyway. It would have to be absolutely perfect for me to ignore the high costs.
Even with all the stats in the world (like the medaillon fund?) it's still not going to be an exact science anyway. I stick to my guns here.