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TOPIC: So, is anyone trading Forex using Joe's methods?

So, is anyone trading Forex using Joe's methods? 8 months 3 weeks ago #113

  • nemrod
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Is it working long term? I tried trading for a few weeks using the method described in Joe's Forex manual and it seems to work fairly well (I posted the results below). There were some adjustments that I made:
First, I decided not to trade breakouts from trading ranges. I read somewhere that a lot of professional traders like to fade those breakouts and I don't want to be on another end of professional trader's trade... I traded breakouts from clusters, ledges and congestions. I also traded 1-2-3 highs and lows and Ross Hooks with TTE. I traded on pairs that have small spread: EURUSD, GBPUSD, USDJPY, USDCAD, USDCHF, EURGBP. I was always scalping (using one contract with 10 pip TP and SL based on ATR). Default timeframe was 15 minutes. I was using 8 pip trailing stop, because I didn't want the price to go 9 pips in the profit and then turn around and hit SL. Was that a good idea? I didn't notice any negative effects of this adjustment yet. Here are the results of my trading experiment:

Number of trades: 50
Winning trades: 36
Losing trades: 14
Percentage of winning trades: 72%
Pattern: Breakout from consolidation: 17 winning trades out of 24 (70,8%)
Pattern: Ross Hook: 15 winning trades out of 21 (71,4%)
Pattern: 1-2-3 low/high: 4 winning trades out of 5 (80%)
Average winning trade (in pips): 10 pips
Average losing trade (in pips): 13,86 pips
Net pips made (deducting commissions, spreads and slippage): more or less 130 pips.

Some final thoughts – Joe claims that his accuracy with these setups is over 80%. TLOC is a discretionary method, not a mechanical system. So it's very probable that Joe would ignore some of the setups that I took or that he would take some setups that I didn't even notice. Also, the sample of 50 trades is very small. Volatility was also pretty small in that period, hence the average losing trade is only 13,86 pips. I'm not sure whether this kind of volatility is normal in the long term. With average losing trade at 13,86 pips you only need to be correct 59-60% of the time to break even.

Anyone who has been trading Forex with TLOC regularly for a longer time period (6 months+) interested in sharing their results? I wonder whether the numbers look similar after large number of trades.
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So, is anyone trading Forex using Joe's methods? 8 months 3 weeks ago #114

  • marco
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Hi Nemrod,

It's been a while since I've been trading on a 15 min chart, but let me share some suggestions with you that might help.

1) Make sure you get the lowest trading costs possible, otherwise these will eat up your profits quickly (There will be an article about that in todays Chart Scan). Trading on such a low timeframe, I'd also suggest you switch to trading currency futures as soon as possible.
2) In my experience, EUR/USD, GBPUSD, USD/JPY and sometimes AUD/USD are the markets to focus on. USD/CAD, USD/CHF and EUR/GBP are tough to day trade and trading costs are much higher.
3) Trading on such a short timeframe, focus on the most active market hours (early London/European and early US session). That's probably the best advice.
4) Scalping is tough, you might want to consider looking for trades where you can stay in longer and look for larger profits. Also right now your average losing trade is bigger than the average win. I personally like to see that the other way around, otherwise you can quickly end up in very hard to recover drawdowns once you get into a losing streak.

But hey, you came out 130 pips ahead so whatever you're doing seems to work pretty well for you. So congrats and just keep on doing what you're doing!

Happy Trading!

Marco
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So, is anyone trading Forex using Joe's methods? 8 months 3 weeks ago #115

  • nemrod
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Hi Marco, regarding your nr 4 point - I stuck to what Joe teaches in his Day Trading Forex ebook. Joe wrote:

"If I can earn 10 pips on 15 lots 80-85% of the time, why not trade for 10 pips? Do the math. If I risk 20 pips to make 10 pips and win 8 out of 10 trades, there's no way I'm going to lose".

I had (and still have) my doubts about negative risk/reward ratio as well, but since Joe claims that it's ok, I thought I'd test his method out. I was interested to see if anyone else tested it over a much longer period of time than I did and was able to come out ahead. I came out ahead, but 50 trades is a small sample and my winning percentage was 72% (so lower than Joe's 80-85%). Not sure how much of this difference is due to my lack of skill and how much due to market behavior. Thanks for your reply.
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So, is anyone trading Forex using Joe's methods? 8 months 3 weeks ago #116

  • marco
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nemrod wrote:
Hi Marco, regarding your nr 4 point - I stuck to what Joe teaches in his Day Trading Forex ebook. Joe wrote:

"If I can earn 10 pips on 15 lots 80-85% of the time, why not trade for 10 pips? Do the math. If I risk 20 pips to make 10 pips and win 8 out of 10 trades, there's no way I'm going to lose".

I had (and still have) my doubts about negative risk/reward ratio as well, but since Joe claims that it's ok, I thought I'd test his method out. I was interested to see if anyone else tested it over a much longer period of time than I did and was able to come out ahead. I came out ahead, but 50 trades is a small sample and my winning percentage was 72% (so lower than Joe's 80-85%). Not sure how much of this difference is due to my lack of skill and how much due to market behavior. Thanks for your reply.

At the end of the day I suggest you keep track of your trades, and then check which way you come out ahead. And more importantly you'll know what kind of drawdowns you'll have to go through. This way you'll actually know for yourself and don't have to rely on anyone else.
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