Chapter 2: Losing with Aaron

[outthislife]

You keep bragging about $400 per pip. Reduce that risk so you don't experience emotional breakdowns, maybe?

 

[the golden gun]

You keep bragging about $400 per pip. Reduce that risk so you don't experience emotional breakdowns, maybe?

Risk is Acceptable.

Loss is Acceptable.

Emotions are Unacceptable.

RINSE & REPEAT

as some might know, I have a pepperstone account, GBP-denominated, that I funded in September. I live in Canada, so my expenses are in CAD.
For this Reason, I watch GBP/CAD.

 

[the golden gun]

Goal Chart. It's not my fault I'm competitive.

 

[sqa]

Shoot for Hawaii.. then move there.

 

[the golden gun]

I'm currently working on a project to systematically and objectively reach incredible returns using "proprietary" ADR analysis combined with the stunning accuracy of Michael's price action concepts...

The process is rigid, and that is its weakness. It leaves pips on the table, but it still could be what you've been "missing" in your trading. Some will see the value in it, and some will see it as irrelevant, maybe a joke. While the calculations produce exact numbers, it is not necessary to be "pip-perfect" in applying them to your charts. You will get largely similar results, regardless.

There are some parameters that can be adjusted trader to trader, but the example I will be sharing will be what I believe to be Optimal parameters based on my experience. That said... it is still an Ideal, and even Great Plans can fall apart, sometimes.

and that is my preview... I promise the final presentation will be crystal clear! Patience, Folks

 

[Golden Bull]

... the stunning accuracy...

you mean like this?

 

[the golden gun]

This requires homework on the HTF, there is no substitute for that.

When combined with a monthly outline, and the reasonable expectation of a few losses, this becomes very realistic and very powerful.

12R in Two Days?
Even if Risk = 1%, that is still 12% in Two Days
Turn Risk up to 1.5% and the total becomes 18%

This becomes a month worth of gains, made in a matter of a few days. If you're not perfect, don't catch them all, no problem, you have the rest of the month to catch double-digit gains, so long as you are holding for those ADR-derived rewards.

As a disclaimer, I created this to help myself overcome my personal weaknesses. Especially that of not holding for big wins when the potential is clearly there. You might not have these problems, and you might find this to be a worthless method of defining risk & reward. That is fine, just move on if that is the case.

Here is a Sample of the "system" in action! Enjoy 8)

 

[Golden Bull]

Gl in the trades! Hope to see the name of the thread changed to winning with Aaron.

 

[sqa]

I'm always curious for more details. You're using your normal setups with 1R based on a percentage of the ADR, then fixed exit points? Is there another framing device for the entires, or just what you would normally trade?

(I'm switching to a 2/3rd off at 2R fixed TP1 for the next stage of my trading, so I see a lot of the value in what you're up to. I was just curious if there was something else framing this approach.)

 

[the golden gun]

I'm always curious for more details. You're using your normal setups with 1R based on a percentage of the ADR, then fixed exit points? Is there another framing device for the entires, or just what you would normally trade?

(I'm switching to a 2/3rd off at 2R fixed TP1 for the next stage of my trading, so I see a lot of the value in what you're up to. I was just curious if there was something else framing this approach.)

Entries are just normal setups that you would determine using ICT concepts. Order Blocks, Retracements, Liquidity Pools, etc.

The purpose is to OBJECTIVELY define stops and targets. It acts as a guideline, to ensure you are getting Multiples of what you are risking, which is what profitability is all about. This can help you pick high probability places to put your stop and target because it is directly derived from up-to-date range data from the market you're trading. Even when you switch from pair to pair, you can be sure that your Stop and Target will be adjusted for the difference in volatility, and is simply a mechanical method of overcoming fear and greed. If on a particular day you want to wait for 18:00GMT for a time-based exit, you could just do that. It just helps to VISUALIZE the ratios.... sometimes it can be too easy to just take profits way too soon, and miss out on the potential that you were initially invested in, the potential you essentially paid for by taking on the Risk of Entry.

 

[the golden gun]

Part 2: The Scavenger Hunt


There is a 2nd half to this project, and it is just as important as the first. We now have a method to objectively define 2R or 3R (even 4R sometimes) trades. This is what we are hunting in our scavenger hunt. All we need now is a LIST.

The list is populated by a set number of trades of each type.

Let's define the 2R setup as an "Intraday Scalp" because generally it doesn't require full range potential to achieve
Let's define the 3R (or 4R) setup as a "Trend Trade" because generally it requires the power of the HTF flows in order to achieve

Now we have definitions, names, and conditions for these trades. But how often can we expect to find each type of trade? This part becomes SUBJECTIVE, but having a wealth of personal trading experience, I have come up with what I believe to be an achievable number of trades per month.

Monthly List:

a) 6 Intraday Scalps = 6 X 2R
b) 3 Trend Trades = 3 X 3R (if one or two happens to be a 4R because you got a tight stop, that is just a Bonus)

Sum = 12R + 9R = 21R

c) 3 - 6 Losses (see, we're being realistic after all )

Monthly Net Sum = 21R - 3R = 18R (optimistic scenario)
Monthly Net Sum = 21R - 6R = 15R (pessimistic scenario)

So in the end... finding a total of 9 winning trades in a month (that's less than 3 per week) can give you results of 15R-18R INCLUDING a realistic amount of losses, because we can guarantee that we won't be perfect.

I can't define your risk for you, so the "R=???" is something you have to determine yourself. That said, I don't think it unreasonable to expect your average R-value to be in the 1-2% range... which works out to a very impressive % monthly gain...

Wouldn't you all agree?

 

[the golden gun]

Conclusion:

So what happens when you complete your list of 3 Trend Trades, and 6 Intraday Scalps in a given month?

Easy...

Close the charts and Crack a beer :cheers:

& get ready to do it all over again Next Month

RINSE & REPEAT

This concludes my public presentation of this project. If I had made a video series about this stuff, I probably could've stretched it out over 2 years and collected 1500 twitter followers in the process, lol

 

[the golden gun]

for completeness sake, an example of a recent 4R trade on EUR/USD.

I remember seeing at least a few people that literally took this trade. To all those who did... did you get 3R or 4R out of the trade?

 

[rod178]

for completeness sake....

try this http://www.personal.psu.edu/~j5j/IPIP/

 

[the golden gun]

try this http://www.personal.psu.edu/~j5j/IPIP/

very helpful, thank-you!

I got 100% ;D

 

[Golden Bull]

try this http://www.personal.psu.edu/~j5j/IPIP/

Thx,sood stuff!!
Made me realize a few things..

 

[Golden Bull]

Play to win, be disciplined, and don't give a f*ck. Aced this sucka' 8) 8) 8) 8)

 

[the golden gun]

I just took 4 scalps on Cable and held them until they stopped out. I used tight stops to ensure they'd get stopped out in a reasonable amount of time.

My account experienced drawdown totalling 1.60% as a result of this event.

I feel no emotions regarding this event.

How to recover from Drawdown:

I've always wanted to see another trader actually recover from drawdown. We talk about it, and do it all the time, and even know the ICT-approved strategy for doing so. But despite all the charts, and videos of charts, and even trade tickets... we never get to see the actual trade-to-trade process of drawdown recovery. Until now...

This is an unedited screenshot directly from my trade records. You can see how I started the week at 1.60% and then recovered to the point where 2% risk was "allowed", and then had a smashing win to close the week.

I'm not saying this is impressive because I made a few hundred bucks, obviously it's not, but take a moment to appreciate the rarity of what you're actually seeing, lol

 

[marzullo63]

hey that is a penny account! 8)

 

[the golden gun]

hey that is a penny account! 8)

I'd rather start small and give myself lots of time, rather than putting all my money into the account and be forced to make withdrawals right away. Compounding, baby! 8) :thumbsup: :thumbsup: