Advanced strategy #10 (Trend Line Trading Strategy)

Up another 25%.
oh yeah!

Here is a *great* setup on EUR/CAD.
I am risking 10% on this one.
Long term trendline,excellent R:R,very very good price action at the trendline.
I've included close up snaps and snaps from a longer term perspective.
This is not for people with ulcers :P

Btw,regarding the EUR/JPY setup,be careful because this is what shows up in the dailys.

So make sure you have fairly tight take profits.

Another thing that you guys should definitely do is add this clause to your trading business plan:

"I will not trade any currency pair or closely correlated pair,especially the more volatile ones,for at least a week after 2 consecutive losses within a week".
This will help you avoid revenge trading witch was also a factor in blowing up my demo account.
The clause applies to longer term trades based on the hourly,four hour and daily charts.

Too bad Myron is no longer with us to share his longer term experience trading this way.

Also in my trading business plan I have added a provision where I will stop trading if at any week losses exceed 20% of account equity.
When I resume trading after such a loss all positions are limited to 1% equity at risk per trade until the previous high point in the equity curve is reached.

I have also developed some pretty elaborate techniques to reduce market risk when having positions open.
I would never have positions open that if in aggregate were all to be stopped out would result in an account drawdown of more than 20%.
This will protect you (me,lol) from any news coming out that can change market dynamics and suddenly make all pairs change direction since all currency pairs we trade are correlated to the dollar somewhat.
When a currency pair like EUR/USD has a setup very often a closely correlated pair like EUR/CHF will often have a similar setup going on.
In that case,I will either take the setup with the best price action and R:R or another thing that I might do is to divide my position between the two but under no circumstances will I take a full position on both at the same time.
I did that trading the GBP pairs initially with huge lots,I turned that 10k demo to $750 in 24 hours.

msn: ablearcher (at)zappmail.net .
As you can tell,I am pretty damn excited about this :P

EUR/JPY potential setup is underway.

And as you said,I am trying to make a big big account relatively fast,I will be in fact trying to add 500 EUR of extra capital to the account every week if I can sustain earnings from other ventures I am currently involved in.
After the account reaches a more comfortable level I will decrease risk to about 4% per trade.
I am not planning to withdraw any funds from the account for at least a couple years,I want to squeeze everything I can out of the power of compounding and this is really a strategy that makes sense in this aspect.
People might be skeptical in the sense that "if this guy can make 1000s of % by trading this strategy why don't hedge funds to do it?".
That's a legitimate question and in defense of Myron's strategy I would like to say that this is not a free lunch in any sense of the word,the price you pay for such returns is the huge volatility,a losing streak will set you back quite a bit.
Everyone trading this MUST READ VAN THARP!

I would also like to share a couple other neat things about this strategy with you guys.
First of all I would like to talk about how I modified myron's stop placement.
I try and divide my trade in 2 equal percentage portions.
One portion will have the previous swing high-low as a stop and the other will use the trendline reversal bar high/low as a stop.
The first portion of the trade will have a win ratio of about 50%-60% and an R:R of 3 or better usually but the second part will have about 30%-45% win ratios but that is often compensated by sometimes as much as 10-15 R:R so when you get it right,you get home runs.
There are ways to identify those few trades that are very very high probability.
Confluences of fibs,trendlines,weekly/daily pivots etc,when they occur at trendlines I often times increase my position size to as much as 8-10% depending on how confident the price action makes me feel,I will often times divide that 10% position into 7% tight stop with crazy R:R and 3% previous swing high.

I might start a forum/chatroom for people trading this strategy exclusively to help each other identify potential setups.
So many pairs,timeframes and other factors to take into consideration that having a trading group and helping each other at this task around the clock through all the timezones would really reduce everyone's workload.

A special note,I started the demo account by trading 10lot positions and very quick turned a 10k demo into a $750ish account.
I then turned that $750 to $3000+ using Myron's strategy.

Regarding the charts I uploaded,as you may notice the EUR/GBP trendline doesn't exactly obey the price action and when doing this,you have to have some experience.
Although the trendline was penetrated somewhat the candlesticks at that penetration where obviously reversal candles so it made sense to ignore that false break of the trendline but when I do take such trades I generally take only a half or a third of the normal position size and they must have a very very good R:R.
There are also other criteria I take into consideration when taking trendline trades,I will not risk 6% unless there is a fractal at a bar really close to the trendline,as you can see in the charts the fractals tend to pinpoint really really nice the reversal points.
Another indicator I use,altough I have to admit I hate indicators but Ive found it to be a good coincidental indicator is stochastics,SSD.
Very often at the touch of a trendline stochastics will be oversold or overbought,this gives me somewhat more confidence but is not a determining factor on weather I take a trade or not.

Add me on msn/yahoo ablearcher (at) zappmail.net - everyone is welcome.

Thanks for the reply. I will have to set up a messenger etc which i will do soon. Until i do, could you possibly post pictures? Also just keep in mind that even Myron had 4 losses in a row so you have to be ready to possibly lose 1/4 of your account @ 6% at some point or even more. I hope you are prepared for that. Personally, if you start risking that much live, I'd do it for some time then drop down to 3 or 4% once you have accumulated a good amount... but.... we all have different tolerances.
Also i am trying something extra (but simple) that hopefully will increase the odds with this method but it is way to early to bother saying. I will see how it goes this week and if it looks good I'll let you know to test.

Matt

Hi guys im following this method now as well on a demo account and im very impressed so far. I had a look at the EURGBP as you suggested Zappmail and I cant see a trade there at all, am I missing something? If you could upload a screenshot of your trendline on this chart that would be great, if not could you explain your entry price?

Also Matt,I am getting around 50-60% win ratio,but I could do better with better discipline,lol.
The secret sauce that makes this such a great strategy is the truly awesome R:R.
Oftentimes you will get 3:1 or in some instances as much as 8+ R:R.
Even with a 50% win ratio your edge is huge,you can afford 3 losses for each win you have and in some cases even more.