Going With The 60min Flow!!!

[Saint]

Hi Saint,

I am a new member into this forum.........i have gone through this system......which is really good ..........and i would like to participate in this.,.........
Regards
KRS

Welcome to Traderji and to this thread,Shnamugam.

All the best!
Saint

 

[Saint]

Saint,
I have a very basic doubt...actually not a doubt, but a basic non-understanding of a key factor here.....position sizing.

See...in the current trade, we added to our shorts at 4279, with 4360 as a stop. So, we risked 81 points...lets say we risk 1% of our capital on it.
Now we get another add at 4249, with the stop moving down to 4352...which is we risk 103 points.

Now, the risk from the earlier add (4279) still stands at 73 points, which makes the total outstanding risk of this trade at 176 points(73+103). Now in such a scenario, how do we position size???? (No, we cant position size a new entry by taking 173 pt risk for this position. Our earlier position of 1% risk would have at best come down to 0.85% risk on capital..and risking the leftover 0.15 odd % of cap for 103 pts would make the position really miniscule.)

I hope I am able to express my problem correctly...if yes, please let me know your views.

Thanks as always,
Rakesh.
ps: Due to this dilemma, I skipped taking an add at 4249.

I have roughly understood the question,Rakesh.......may not be exact in the undertanding.

But just communicating what I do........I don't want even the position sizing to get too much of a rocket science and would like to keep things as simple as possible.

Let us presume I am trading with 10lakhs.Simplistically,I don't mind risking 1-1.5% in that trade.Let us put it at 1%.1% of 10L=10,000.Meaning max.risk in that trade is 10k.

Now,I short the market at 4425 with my stop loss at 4508.Difference of 83 pts.Meaning 10,000 divided by 83=120 shares.So,the max I can short is 2 lots.So we short 2 NF at 4425.......if stops are hit,loss=8,300

ADD 1 is at 4324,now I want to short 2 more lots.Stop loss at 4387,average of 4425 and 4324 is 4375.Difference is 12 points.....if stops get hit,loss=12 x 200=2,400.Is it less than 10,000?Yes it is......so add the shorts at ADD 1.

ADD 2 is at 4280,stop loss at 4360,Average of 4425,4324,and 4280 works out to 4343,.....Difference between avg and stop=17pts....if stops get hit,loss=17 x 300=5,100?Is that less than 10,000?Yes it is......add the shorts of 2 lots more at 4280.

ADD 3 is at 4246,Average now is 4319,stop loss at 4352.........Difference is 33 pts....if stops get hit,loss =33 x 400=13,200......Now I am not overly concerned with the mild peep over the 1% mark,I would take that 2 lots.But if you are uncomfortable,short only 1 lot,your avg now works to 4329.Stops at 4350.Difference is 21 pts....If stops get hit,loss =21 x 350=7,350.

For me,I would take both the 2 lots....but up to your Rules of your Plan that you have drawn up.

Saint

 

[Czar]

Naughty boy,m4uh......See,Czar,what you've gone and started.

Saint

ps:But thanx anyway for the support

Ahh but my concern was for your genuine well being & time saving & space saving, well

 

[Saint]

Ahh but my concern was for your genuine well being & time saving & space saving, well

I know,my friend.......and love those smileys

Saint

 

[Saint]

Hi,
No, I did not miss any position except the last one at 4249(not 4240 as per my understanding)....starting from the first one at 4324.
I think i have not made my problem clear...let me give another try. From what you are saying...when we get a trend and enter as per the system...our overall risk will always REDUCE as we go ahead in the trend....like in the present trade, it has come down from a risk of 83 points in initial position to 34.75 (as quoted by you) currrently.
Now this is the problem....a lower risk will assume that we take a bigger position...isnt it?. So practically..what we are doing is "reverse pyramiding"...where our initial position is 100...and the LAST add is 350.....(and this will in turn make the average price calculations change...resulting in an "unending loop"....). Even without this problem....think it this way....we will be sitting with our biggest positions CLOSE TO THE REVERSAL POINTS..whenever they come.

Hope I have made myself clear now.....all suggestions/approaches are welcome.

Thanks again,
Rakesh

No,Rakesh.......that can get painful.Add in equal positions,and to keep things as simple as possible,just 3 adds to the initial and just keep it roughly around your Risk % or less.

Add in equals or lesser (if the risk on the latter ones get out of whack.)

Usually I notice that entry is roughly the same no.of lots each time,let us say 2 lots........ when you have narrow stops,and you take 4 lots instead of 2 on an initial posn,fine,but ensure that your adds do not put the trade into high jeopardy.If the adds have to be lesser so that you keep the risk percenatge roughly even,then do that.

When your stops are too far away,and taking the example of the 10L acct again and the 1% risk again,.................Let us presume that 90% of the trades are going at 2 lots initial positions.In this particular scenario,thanks to a gap up,the stop loss is too wide,I calculate that I can buy only 1 lot as an initial position.2 lots start off the initial with a risk of greater than 1%,I calculate it and I get the answer as 13500.........I would assume that slight higher risk and go ahead with the 2 lots.Not if the risk is 20,000 though!!
This slightly higher risk is taken because I realise that we are Flow Traders and when a reversal happens on a gap against the Flow,then that trade is going the other direstion in a hurry.Within an hour,I would be moving my stop to the high of the gap down day and minimising the risk per trade,and even if that trade doesn't do that,we would still be able to move stops to the high of the day.........so,I would go ahead and take that 2 lots.

So basically,after that,all adds in equal quantities or lesser.....no going higher.

Saint

 

[Czar]

Just a thought / query, has this system been back tested in a post bear market / pre bull market scenario ? the reason I ask is that this method is perfect for trending markets, but say in a scenario stated above the stocks & index go in a sideways slumber... like in the year 2002... Hence the need to prepare as after this mayhem happens, we have to be ready for this period...

 

[senty]

No,Rakesh.......that can get painful.Add in equal positions,and to keep things as simple as possible,just 3 adds to the initial and just keep it roughly around your Risk % or less.

Add in equals or lesser (if the risk on the latter ones get out of whack.)

Usually I notice that entry is roughly the same no.of lots each time,let us say 2 lots........ when you have narrow stops,and you take 4 lots instead of 2 on an initial posn,fine,but ensure that your adds do not put the trade into high jeopardy.If the adds have to be lesser so that you keep the risk percenatge roughly even,then do that.

When your stops are too far away,and taking the example of the 10L acct again and the 1% risk again,.................Let us presume that 90% of the trades are going at 2 lots initial positions.In this particular scenario,thanks to a gap up,the stop loss is too wide,I calculate that I can buy only 1 lot as an initial position.2 lots start off the initial with a risk of greater than 1%,I calculate it and I get the answer as 13500.........I would assume that slight higher risk and go ahead with the 2 lots.Not if the risk is 20,000 though!!
This slightly higher risk is taken because I realise that we are Flow Traders and when a reversal happens on a gap against the Flow,then that trade is going the other direstion in a hurry.Within an hour,I would be moving my stop to the high of the gap down day and minimising the risk per trade,and even if that trade doesn't do that,we would still be able to move stops to the high of the day.........so,I would go ahead and take that 2 lots.

So basically,after that,all adds in equal quantities or lesser.....no going higher.

Saint

Saint...

I have read your 'teach a man to fish' and 60-min flow thread right from post#1... and sometimes I feel some questions by our fellow members are repititive for which the answers could be found few posts/pages back[not whining about the fellow members as even I tend to ask you the same question/clarification again]...

but it requires such a passion and dedication and an unrelenting heart to help others to sustain such a great effort as you do in this thread... Am really amazed at seeing such wonderful people like you, asishda, czar, satyada... Well, am way younger, but what you are doing is truely priceless.. Wish the God bless you and the other good hearts in this forum, all the goodness in the world...

Thanks for your efforts...

 

[Saint]

Just a thought / query, has this system been back tested in a post bear market / pre bull market scenario ? the reason I ask is that this method is perfect for trending markets, but say in a scenario stated above the stocks & index go in a sideways slumber... like in the year 2002... Hence the need to prepare as after this mayhem happens, we have to be ready for this period...

Czar,

Have a look at the above..........still a trend in 2002 isn't it?

Weekly uptrends and Daily uptrends create huge moves on the 60........but even if the Daily is in a range,the 60 still has a move up and down....there still is a Flow.And if there 's a Flow,we can follow it!

Saint

 

[Czar]

By jove, you are armed to the teeth & ready I was thinking about a year ahead but looks like you've checked out till 2020, kudos & Salute.

 

[Saint]

One look at the charts of 2002 tells that we would have had greater profits then,than now........simply because of the lack of too many Gaps then.

Saint