Turkey Penis: Postcards sent Escaping from Hell

by Matt Romantech on November 19, 2017

I wake up paranoid again like I just can’t manage things. I have to go get the mower.

And now, this is the worst night I’ve had trading since I blew my account, we have again somehow lost $4k in one day and it absolutely baffles me that this could even happen.

It’s because when the NZD drops the whole value of my account is dropping, because it’s in NZD.

Now that I feel the relief that the whipping has stopped, it is in only momentary before the pain sets in.

My dreams have been crushed tonight and I feel glad for a lot of things.

I have experienced what it feels like again to feel you are hitting the wall. I feel I know what to do when your account is melting down, hedge up. HEDGE. UP. NOW.

I feel lucky I got to have my trip and 3 weeks to ruminate over the situation where I was already starting to see the dark light – before I was finally dealt this critical blow.

I know now things have to change. The only way out of this situation is going to take so long, I will give myself the $2k spending money as a reward for keeping my account afloat for 6 months.

It’s still possible I could draw down some money by then, but you simply can’t expect it.

It’s one of those situations where I have to accept things have gone badly and your hopes have to be recalibrated.

In order to keep my trading alive I have to make my plans longer term.

***

I am lucky that I had already begun to see the light, because the trading was getting so down, I knew it wasn’t right.

Like I said, maybe this is the lesson I have to learn here, I already sensed this, it’s not to stop trading, it’s to trade in a way that you never have these problems.

Write off heaps of debt, bring your carry costs down, and begin building slowly again, $500 p/week

What I mean about trading, the way it used to be, was that our margins and our hedges were appropriate to the amount of capital we had and the equity in that capital. Now the equity is way down and the margins and the hedges have grown as it’s pushed over the edge of the ranges into new territory.

We were beginning to see, now we have to see.

You need to keep your trading alive. This is true, but you also have to get real. To keep your trading alive, there will be sacrifices, you have to trade in a way that you don’t have to sit here all day, obsessed and messed up.

How you do that is by lowering your risk. You lower your risk by hedging up, but when the hedges are always tight, your equity barely ever rises. It barely drops either.

But when it peaks, you let it run, you even add to it but you wait until it drops backwards to start adding more to the point that within 1% the hedges match. Then if it continues to drop, instead of adding more, you actually removing profitable positions until there are none left.

During this stage, the equity shouldn’t move. Eventually you run out of profitable positions, now you begin ever so slowly to add as the other side goes down, knowing right now $40k is our maximum hedge gap, which quickly gets filled within 1% retrace. If it takes another shot, it will be usual business, take profit and replace with a slightly smaller position, until $40k, then hold that line until the retrace and fill it in over 1%.

That’s $4k per percentage point. Maybe trail it off so it meets parity around 1-2% depending on circumstances.

Here is where overnight, there could be a drop and profits get taken on the other side – this way you know when profits are taken its never a bad sign, as it has come to feel like.

When profits are taken the hedge remains, equity remains the same. So you have to have some hedge gap or you never realise your profits. You have to remove profits and replace them with smaller positions to unwind.

If it continues to unwind youve saved profits you would have lost. If it reverses, you keep the new profit, and the hedge gap begins to grow again.

What this means is you let it ride until it reverses, then you add bigger positions, and only if it hedges up do you then take profits. It is designed so you don’t get caught taking profits on the edge.

It also means when it inevitably retests, you’ve put some decent secondary positions down that you can then take profit on, knowing you can open up the hedge to it’s widest point again.

You only have take-profits on the bigger side.

That way you can still profit from quick swings, just only in one direction, against the trend.

CADNZD is a good one to try on, because CAD will always want to come back and kick the kiwis ass.

Then when it falls back, soon it will match, and there will be no profits left. Then you must begin the painfully slow process of opening up the hedge on the other side, the positions are so fractionally less on one side, and you are taking a loss as you replace the position. What this means is if it keeps going down, you don’t accumulate debt.

You do accumulate profit you take on the other side, as you replace the positions with something smaller. When it reverses, not only is the gap unwinding, but you’ve put in a new position, not only does it unwind put you have a bigger position moving forward to take profit, this would continue until the hedge gap is $40k again and you go to a riding phase.

similarly if it continue to reverse this whole process would see the investment shrink on both sides, but at some point you have to let that hedge grow out, until it is at the $40k ride point.

This could lower carry costs but you would definitely end up spending more on broker costs but perhaps it’s not comparable.

This is the most radical concept I’ve had in a long time in my trading and it all comes from that mistake I made with the EURAUD. That has been one of the pairs that has pounded me, and I benefitted fractionally from that mistake but it made me think for the first time about how I could jump out of positions to protect myself and now, how I can do it strategically.

The cost I pay in extra broker fees is an insurance against exactly what we have had to deal with – massive unhedgeable accumulated debt heaping down as currencies get away from us

It suddenly strikes me I’ve got myself into all this trouble because I didn’t want to pay extra broker fees.

What is stopping you from closing the whole position and opening it again?

You’ve already lost the money. It’s that you open a new $100k position it’s going to cost you $20.

This feels like a massive breakthrough just at my worst moment in the last 2 years.

There’s been a nice healthy reversal that’s picked my ass out of the gutter, it’s still an awful night but this realisation seems huge, as if there has been a number of significant discoveries I’ve made in trading – such as the whole hedging thing – and this is one of them.

If a position is in profit and hedging, then you won’t close it, you’ll let it ride adding as it rides, but when it goes backwards, you will clip some of the profit and add a new position to even up the hedge, and continue this method, but if it then goes forward, yes, could close all the positions in debt and replace them with a new, smaller position, until you get to $40k, and you are riding it again.

why not close the whole position? Because the main trade is still in profit. We’re going to take profit whether it rises or falls, why pay the broker extra money?

Just re-establish the positions in debt, so if it moves up, you’re picking up on a $10k move rather than a $2k move. When it takes profit, you replace it with more, when it dips down, you snip a bit of profit and put in a new position to make it smaller, it’s only when you run out of profit to snip, that you begin zapping old positions as it continues to move down – instead of profit – and replacing them with smaller positions, so the whole pair is shrinking in size as it declines, not growing.

But why aren’t you waiting for the profit to run out, and then snipping the whole damn thing, knowing if you make a profit, you make a profit on a big number?

I clear out my $66k swiss position, and replace it with a $50k position that seems smarter.

If it goes up, I miss out on the money I would have made on the $17k difference and the cost of the broker fees, $10 or whatever. But I have a $50k position moving up, it’s made $100, I take $2 of that, and put a position on the otherside, so I shave it until the hedge is even, or until there’s $30k gap on the otherside.

If it goes down, I will be making money on the $17k. I will add another position descending, but the moment I take profit, we start again.

I rubbed out $17k, if it went down by just .1% the money it saved on the $17k would be more than the brokers fees.

So you have the $50k position, a few drops of $1k down .5%, then it goes up and you take $1 on your drop positions, maybe if you’re away from the computer, the little drops take profit and the big drop goes into profit.

But otherwise, it drops down to $55k, the goes up, takes a $1 on $1k, and you replace the position again with $50k

again $10 brokers fees, you could say well, we saved $85 when that $17k didn’t drop .5%, and when it all happens again, it will be 1% of $17k and .5% of $5k

Meanwhile on the otherside, when it moves up and takes profit, it is replaced by a slightly smaller amount. as long as it’s not more than $40k less. But if it’s always becoming $50k on the other side, that amount is eventually going to be only $10k.

When it gets to the otherside it will no longer be taking much profit, but there’s only $50k and some droppings on the otherside.

The hedge is $40k, You’re only losing $400 on each percent, $4k on 10%, that is manageable, and when we are back into $30k+ equity we can make that gap $50k again, so it provides the equity unwind in the old way more effectively.

Wait – as long as it’s always increasing, we will be putting bigger positions, it’s when it decreases, that we do the same thing – take some profit, put up a lower number so it decreases, and then put in lower numbers until it takes profit, then do the same thing, eliminate all positions in debt and replace with a new, larger number.

It’s a larger number when it’s closer to the top, and other positions are already in profit. It’s a lower number when you scrap the whole thing and keep that $50k bouncing down.

What I see is you would save money on carry costs, though probably not enough to offset the broker costs, but you wouldn’t see those costs eating your profits, because you pay them upfront.

the point is if you have a $50k position and it goes down you are doing what I’ve done well – adding those little place mark positions as we fall back, but then the moment it takes a profit, we replace it all with the new $50k position. This means if it keeps falling, it’s reverted, it isn’t snowballing like we lived with for three years, every nightmare is this gigantic snowball chasing us.

It’s falling but at a lesser rate, and other side remember we would have put out a fat one, as well as grabbing that little snip of profit.

If it turns around and starts taking profit, we not only have $50k rolling, but, it’s doing the main thing I’ve always talked about – going back over the same ground.

Doesn’t this mean, since it’s the bigger side, that should it then make money you just business as usual take the profit – no. We have advanced now, we will simply shave it off as we go.

$1k off on side for a $1, $1k off the other side for a dollar, $1k added to the side that’s dropping, to balance the hedge. each time it drops, it’s descending to a lesser amount, until it switches, this is how we draw out these strong, quick, trend based moves and make them work for us,

it falls half a percent, and then comes back, we put in the $3k position, then it falls another half a percent and we put in the $6k position, when that falling ball finally reverses, we’ve got a big start position pushing forward, and we’re adding and adding, we only stop adding when the green light profit runs out, and there’s no reason not to just knock it on the head like this swiss trade for $80 and put in the new $35k trade, that was a $37k trade.

***

I have awoken today joyous – it doesn’t matter that the punishment I was given last night has reversed half way and gone back $2k.

I feel like I have found a way to keep my trading alive so that my goal of having $200 p/week in 6 months, $500p/week in 12 months, and basically doubling every 6-12 months is realistic.

How would your new technique have stopped all the shitty things that have happened in the last few months from happening?

For this week, as the euro and canada moved up, we would have added to the position, only taking profit when it was reversing, and adding bigger positions.

All the AUD pairs we managed so carefully and NZD we would simply close the moment they reversed, and replace with a smaller amount – a position that is smaller than it was, but still bigger than the other side.

This locks in losses, but it prevents the situation getting worse, as we trim the hedge to almost nothing.

When NZDCAD was getting hammered, we would have replaced the $100k position with say, an $80k position, now as the canada kept rising, the kiwi would not have been falling so hard. If it reverses, yes we don’t make up the profit.

It’s possible on the sort of run EURNZD was on, the euro would have been higher at a point, and it’s only once the NZD started advancing again, that extra positions would be added as it moved forward, and profit trimmed from the euro side, that the hedge kicked back into correct balance.

Yes we would have lost some money when the NZD came down and again when it came up, but according to the ranges, there would be no chance of the EUR running away like it did, sitting here pleading for the trend to reverse and once we’d paid for our hedge coming back the other way, we are back towards the middle with hedges set, ready to make some money once again.

This system is designed so that although we only make smaller profits and not on every move like we used to, the possibility of these kinds of events – the euro move both in former ussr and this week, the NZD fall in thailand and again this week along with the AUD – doing what it’s done and stripping grands and grands from my account is totally forestalled.

In thailand, the AUDNZD would never have had all those take profit stops on the smaller side, so when it went flying, the full move would have taken us down 2-3 grand, not over 6.

AUD would have been added to once it started moving, and only when it reversed would we have pulled the major move of not only putting in a lower hedge, but actually putting in a hedge related to what profit we could shave off the other side. We could have easily taken profit on the $450k leaving us with a $180k position, and then putting in a hedge on the otherside for just $200k.

as the NZD further declined from 1.116 to 1.129 we would only have lost $200, not fallen from $37.3k to $33.8k –

The problem this wouldn’t have fixed is the turkish. We could play the same game but then it raises another question – the money we’re taking still needs to cover the carry costs.

But when the AUDNZD pair was wound down from $1.3m to just $400k, my carry costs would have dropped by $20 a day right there.

What determines these sizes now, given we have the choice how far we ramp?

carry costs and broker costs, and broker costs are bad for NZD pairs.

How it works as I have described is that although we are not making money on every move as before, we protect ourselves from big swings, and what’s more, we fall into line with trends. When a trend fades, it is quickly cut off before it causes problems such as with the EURUSD and EURGBP with huge $50k+ positions sitting on the edge.

It begins to reverse past the profit point, you shut down the whole thing and come in again with a smaller position, opening up the hedge again, so as it continues to reverse we get our money back just like the old system without wearing the pain from the hedge. If it begins moving forward again, we are losing equity, but gaining a profit at a much higher level which we won’t take until the trend concludes again. If it continues to reverse it unwinds our money back to us. If it takes another tilt and retesting the high, we build another head of steam, and close the hedge on the other side so it’s not running away should the retest break out.

Where do you make money instead of losing it?

When it unwinds from the high, not only is our money unwinding back to us, and a big position now moving with it from the bottom, that’s slowly being shaved as it moves back towards the middle, but profit is also being shaved from the other side, we shave profit on $1k, but we add a position of $2k.

As we mentioned the hedges come to match pretty swiftly. When it retests, that’s fine, that works. If it continues to reverse, we just cash in all the profit, replacing with smaller positions instead of bigger ones and then finally when we fall back beyond the profit point, you cash in your loss on the whole position and come back in smaller. You never cash in a big position in profit like we have done this week, taking a punt on whether it will reverse.

Either it moves forward and we add another small position if we are on the smaller side, or shave off a small profit if we’re on the big side; or it moves back and we shave off a small profit and replace with a bigger position if we’re on the top edge side, or we add a small position if we’re on the bottom edge, waiting for it to reverse so that we can knock out the whole position and replace with a smaller one – that’s where we lose money.

Why do you even bother with the small position? Because it works with my theory and if nothing else helps me to think strategically about how the price is moving. It was this technique watching how the AUD has dropped 2%+ and I’ve gotten away with only adding $10-20k to it, whereas on the top edge side, we’ve had moving slabs of $100k.

It made me realise.

I don’t have to put in a new position. I can set up an automated trade so that if it breaks out or breaks down, I buy a new position, if it breaks down to support it is a smaller position, if it breaks out it is a bigger position.

Only the bigger position has a stop. so that if there is some super squirrely price action and you end up taking both positions, and then they drop, the bigger position stops out, so that if breaks down again, you’re actually profiting.

Unfortunately if it then reverses once more then you’re losing money – but only losing money to go back to the middle which is a better place to trade from, this range pattern would also suggest a third break that actually breaks out is obviously possible but not very probable.

You only lose money if it’s a double false break followed by a true break. And I’m talking about losing a few hundred bucks here, not grands.

Most likely it would either break out or break down first attempt and you’d make money in the most unlikely way, having biased your hedge on the edge

***

I rake the mulch up from yesterday, mowing the lawn.

I can’t help but think about last night, that’s why I haven’t done any training or russian or anything today, last night wore me out, but I can’t help but think of the giddy ride.

There was this moment last night after I’d been forced to hedge so hard to stop the madness of this falling NZD wrecking my account where my new idea suddenly took hold, the reversal and this idea and this song in my head, it all just took over me and suddenly I felt like everything was going to be fine.

It’s all about not getting caught in the wrong place. Losing money on old positions as it breaks to the top side, or losing money on a freshly hedged top you were desperately committed to defend.

What’s happened with the EURUSD and EURGBP

There is an $80k and $57k position I put in the night I met darya. They have lost $3k. Under the new system, as they fell from profit at their highs, the whole position would have been replaced with something slightly smaller, so that as it kept falling, the snowball was not accelerating, but on the otherside, the moment it took profit again from the reversal, it would have been replaced fully with a new position that was more manageable, but no more than $40k than the top side, that’s our hedge level.

We would have put down $177k

As it went down, we are shaving the profit off so slowly so that the hedge is winding down – $176k, $175k, while the EURUSD is $137k, 137.5, 138 – it is retracing but at half the value until the moment it takes profit.

When it stops and pauses to retrace slightly, Then you are likely to close the whole trade and replace with a smaller trade, back to $135k, the $40k hedge. If it starts advancing again you are only taking the same loss, $400 for each full percent point.

You are adding $1k – $136k, $137, 138, 139k, – while on the other side, $175.5, 176, 176.5, 177 – now the hedge gap has reduced to $38k as the trending side picked up gas, as it falls off it’s new high, we take $1k profit and replace it with a $2k position – now it’s $140k, we take a loss on the full $177k, and replace it with $175k – $20 broker fee hits the account. as the $175 moves forward, we gain equity and shave off profits

174, 173, 172, 171 – on the other side, the profits have been cashed at $141k, now we go 141.5, 142, 142.5

The gap is now 28.5k and we have gained back equity. when it turns again, the loss is taken, and 142.5 is now something like $134k vs 172k now it’s a $38k gap.

But’s also gone from $308k down to $306k – not a significant reduction, but still. the pair is now $482k so tell me what worked out.

If it starts retesting, here we go: 135, 136, 137, 138 vs 172.5, 173 – 174 – now once again the gap is $36k, as the trend extends we are curtailing our loss. Rejecting the test, we take that slither of profit and replace with $2k, going 139, 140, 141, 142, we replaced the 174 with a 172, which we then shave down to 169.

Now see my 27 gap and the leverage is for $311k the gap means as we shave that boy down and take profit, we are still getting equity too.

When the profits are dry, the boy can fall down to 147, while on the flip of the downside going up, we’ve shaved our boy down to 159 for profits, now we’re back on $306k – but we’re a good 2% off the high now. the hedge is $12k, the thing barely ripples.

When it does reverse, that $147k can return as $139k, now you just turned up at $298k, with a $20k gap.

it goes against the gap, you lose money. You lose money faster than you would have, but you are building for the trend. you’re on 143k, you reverse again and cut the other guy down to 155k – if it ranges you still make money, shaving the profit and unwinding a tiny bit of equity, but now your leveraged for 288k, you really are bringing the exposure down, and therefore lowering the carry cost.

It seems amazing you can deleverage and still make money, saving yourself from the wrath of severe moves or grinding carry costs.

I am so curious to see how this will work. I think you see your equity and your capital increasing ever so slowly, but every day comes the carry costs, and they smack you for $140. You have days every month where you don’t make the carry costs, but then you can wind them down.

It makes me see that because the hedges are so tight, it may not move much at all in value, but the money your account is gaining, is almost real. It can reverse of course, but you should see a clear trend of your account increasing, and when your account decreases it is an honest account that the volatility is not enough to justify the carry cost of your exposure. You may be able to see your account slowly increasing by a few hundred dollars each week,

that money that you shave off in profit has to be more than the carry costs. I can’t see how it’s much different than what we do now except you’re only shaving off $1-2 at a time – which will diminish my broker costs – I think you need to ready for a massive paradigm shift, that is, a whole different relationship between the capital value of your account and the equity. The capital may not grow, but the equity will.

When it’s riding a high, you’re equity is falling and your capital isn’t rising. when it falls back, equity increases and so does capital, so the account valuation action is always a more accurate representation of whether you’re doing good or not. On the edge you’re not doing so good, but no threat exists that the situation will be come overwhelming.

The hedge only appears when we’re on our way back, retracing. As a wild swinging break out appears, we are adding more and more, and the hedge is shrinking, then it reverses and as we’re taking profit, the hedge is shrinking even more, then after the reversal, the opportunities to reset come.

You get to call it. Will there be a retest? $10k hedge, buckle in. Have we had a couple of failed retests, $40k hedge time to ride down.

What if we’re wrong? $10k hedge, is a slow unwind of equity. $40k hedge, we take the full damage of the next break out. Again we retain the ability to work through potential mistakes. full damage from the next break out is a couple of grand maybe.

Our secret weapon remain big streaks that happen when we not here. A 1% move gives us the chance to shave off $5k for $50. A long 2% move with a lot of place mark trades

basically ranging isn’t our friend as it once was.

Clearing out a big position after hitting it’s support line costs capital and equity in brokers fees. When it moves forward, we are not recovering the same equity we just realised as a loss – if we are on the downside of the reversal trend, we do get to shave profit, but if we are retesting, and it stalls, it’s just going to go back down again, and there will be no profit it will dip down and you have the choice of paying again to replace it with a smaller position, but it will again fail to revive your equity if it then plays the same range again.

This isn’t ideal but you can see that tight ranges will become extremely annoying and underline the philosophical principle here – there are times you just have to take the carry cost and turn your focus elsewhere.

what unwinding the position does is limit your exposure to carry cost, in such a tight range where each position was being replaced by a smaller position but never growing,

So here now you see. ranges in markets that are trending get leveraged up, whereas tightly ranged markets deleverage which works because it means you’re paying less carry cost when markets are sluggish and range bound and not giving you any decent back and forth action.

ranging is a friend when worked with, you can deleverage, albeit at a cost. Deleveraging may leave you slow to pick up on the next trend. Or not if it means you can start bringing in big positions immediately when it shoots off, knowing that when they reverse you’ll be deciding how to play the hedge on the other side, if it did move to the middle then a tight hedge is justified.

In any case what it does mean is that high broker fees and carry costs have now been eliminated – this seems great because it means when times are quiet costs are eliminated, but when markets are volatile, sitting on bigger numbers can create bigger profits that justify paying higher carry and broker costs.

Now we turn to the AUDNZD, and what would be done.

You wait for the fall to reverse and on the AUD side you knock out the whole position and replace with $638k, a position likely to cost you $300 on it’s own.

If it should start to rise, you are now losing equity, but you are adding new positions to hedge, as it keeps rising, and even when it’s dropping the hedge is being filled in.

Now the otherside is to get filled in. we are dropping down to $658k, and this, similarly, costs $300, a god damn bomb.

Here you’re starting to realise where there’s a problem, those are immense brokers fees for a purpose that can’t really be conceived of.

replace them with one position that is $138k and another that is $158k, and you save yourself $500 in brokers fees and $30 a day in carry costs, and you’re not in any different a position. You’re not worried about those crushing carry costs, start cleaning up the whole operation and soon your carry costs are back to $50.

How would leverage grow any way? If you knocked them down to $38k and $58k, and the $58k started gaining gas, pretty soon it would be on $68k, and when the $38k which was by now $43k reversed, you’d put in a hedge that represented it’s more middle range status, now you’re on $48k and $68k and this is where the ranging comes in.

should it then reverse and range, the $68k would become a $63k, if it reverses and ranges again, the $48k would have gone up, taken some profit and then get reduced to $43k, now we’re moved down $10k

The process has not made us richer, this type of ranging just doesn’t, but what it allows is us to purchase insurance for $20-30 not only protecting us from wild ranges with gigantic positions such as whats happened with AUDNZD, but with the carry costs that have become a part of the problem, knowing that AUDNZD trade is costing us $200 a week and is barely making that.

The solution is to have a new strategy to deleverage safely.

I think at the bottom of the range, we eliminate $100k of positions, and buy a $23k position so it’s $600k

On the other side we eliminate $68k worth of positions and buy a $10k position so we have deleveraged, down to 1.19m.

this is a start, flushing out the first $100k. If it stays in the range we are hedged up, hitting the top of the range, we are say, $610k, and $570k and in this way slowly trying to find a range we can break it down.

I can see now this will be difficult but this is just blowing my mind to think we have wasted hundreds of dollars in carry costs unneccessarily.

There may be a strong argument for just taking the hit now, because the carry cost is out of control in relation to how much the pair can generate.

We may need to retool the technique so that no position is ever added the whole thing is a process of jenga, removing.

When an range that is too large and unweildly reverses, $1000 is written off and $500 is added. when it turns around, a play can be made to transfer a $10k slab to the front, then back to business.

If the slab is rising, we don’t add to it, we pull $1000 off the other side. and replace with $500 – so there is a deleveraging technique.

instead of adding $500 when it falls back, add $500 and subtract $1000. When it moves up again, instead of writing off the whole position and having to eat $300 in brokers fees, pull out $10k from the back and bring it too the front. don’t add to it at all when it is rising, only reduce off the other side.

The same principle is working but cycling down with every reduction.

That is so smart. It means we are only continuing to reduce a position when the trend is in our favour. when a pair is trending up, we are not adding to it at all, only pulling more off the other side as it falls.

It will be a magic journey to watch for AUDNZD albeit while the carry costs squeeze me and any wild moves force my hand to get the situation managed.

***

Yes I can go on about this crap forever but is it realistic to think I will hit my goals?

I can’t help but feel with 6 months to consolidate the situation, we will pass through periods when the account doesn’t seem to be progressing and the carry costs are hurting.

The point is we don’t have to get to $40k to see that it is working, this is a system that should show signs of working with a little period to bed it in, and work through the issues we have.

We need to make it look as if we can make $200. As soon as we can do that, a new promise has unfolded.

A new system that actually might work.

I see the brokers costs, and I see the huge positions we’ve built up that need to be worked on, while the carry costs keep thrashing us, but then slowly seeing the pattern emerging, a rising trend.

The problem is no longer making our money from the swings and getting smashed when they swing too far while trying to beat the carry costs as well.

It is when we are slowly waiting for trends to form, and this is a major part of the new strategy, because ranging is pretty meaningless to us now, there is less to do, it is much better for us to let the trends take their course.

When we are no longer fighting the carry costs, if trends take awhile to form, we’re not there screaming how we need to make $200 a day. As long as we cover the carry, we don’t even need to make $100 a day for at least a year.

This is very important, that we now learn to get on with our life without this bullshit being the whole focus.

You to understand that there will be weeks where the trends just won’t form and sitting here watching it becomes pointless because nothing will really be happening.

It will take some work to learn to not obsess over it but I think there is something to discover – that there really isn’t much else to do, and you know what is waiting for you.

The videos, the music, all of that. I think you need to accept that on days where you make jack all trading, that you can give your attention to other things that are also very valuable.

The bigger the position size, the easier it is to shave off profit, when you have big $200k positions, a 1% move can easily mean you can shave off $10k and take $100 profit. You might be adding up to $5k on the other side to make up for the hedge.

Then you bring the value of that side back down when you replace the position, it is seeming fairly easy to make the opportunity to deleverage when carry costs get too high or you are making a lot of capital gains without equity gains that suggest your strategy is too aggressive and you need to let it drift.

But to keep the dream alive is what matters, to believe I can make it work is to believe that we can spend our money developing things because the days of thinking we will ever need to prop up our account are over.

We know we can deleverage and start building up back right again.

If I honestly believed I’d worked out how I would never need to prop up my account, I would make $10k available for projects and say my next trip is covered.

I think it will be months before that is apparent but I am more hopeful than ever. I had simply lost my faith in it these last few weeks, and it was really getting to me, not being able to believe any more that this would make me all the money I needed.

Now I am feeling as if I can work out how to get some money happening out of this even if it takes years to get to the places I thought I’d be by now. I would think that initially we could make $500 that is added to the account,

***

We have to go in with a hybrid strategy in order to manage transition. I will be knocking out the furthest positions and allowing for the idea nearby position can be neutralised.

remember ranging is always the opportunity to deleverage.

AUDCAD is too big too fully reload. start moving positions from the back to the front and close up the hedge, because we need to start creating opportunities to deleverage but making choices to buy at the lower range.

AUDEUR is the prototype god child of this set up, discovering this all by making what I thought was a mistake. We will begin transferring from the back to the front.

I’m not going through them all. My very main pairs I will keep on the old system, mainly because they are large which makes the hard to work, and I want to see how it compares. I think the old system makes more money but it’s way riskier and always turns into a snowball.

Under the new system anything on a strong long term trend would just charge.

If it never dropped past the profit point, we would always be adding bigger positions, and dropping the other side down, so it was possibly even lower that the top side edge, and we would be killing it, locking away those profits.

This is why the new system works because it is responsive to either a trend or a range, if it trends hard or ranges hard, we are responsive to that. Fully responsive.

It feels like there will be some risk for a little while while we transition. The concept is a $40k hedge, but that’s still going to be $150k all up for the euro, can you protect a 10% move on that? With back up funds, yes I can.

But the new system will jump on any big moves, any move that big would be balanced in it’s favour. I am so excited again, I am excited that I can look after my russian girl properly and I can do some shit with containers and my basswave idea and my co-op, these dreams now have life again and it’s almost good that a cold frost came over my dreams and destroyed so many of them – I was able to see how many of my dreams just couldn’t stand the cold and they were simply fluffy grand nonsense. Maybe one day those dreams will make sense but right now I know I only need the dole this year, growing weed is something I can do in my own time.

If I knew I could make $200 p/week when I left next year, I would only need my travel costs, and $1000 saved, it would be fine.

It’s about being more confident for the future, knowing we can make money going forward, that’s why the last 3 weeks have been so hard, I gave up believing the trading would ever work and I felt lost with it.

Only because I’m getting ass kicked am I forced to realise how I’ve messed it up.

There was always a way of protecting my ranges but I just didn’t see it.

I thought that closing a position in loss was only going to confuse what I was trying to do, until I realised it’s so easy to create a system that is only responding to which way the trend is going. I thought of something like this before, but I may have sensed it was a slow method.

***

I just realised, I must have reached my 10,000 hours in trading. The conceptual 10,000 hours.

How are we going to learn to not be obsessed? It will take time. The main thing is to see my new system working and not having these panic days like I’ve had this week.

Remember how I was beginning to sense deep down that this was robbing me of more freedom I need to simply wander into things.

That’s why I’m having a write off day, last night absolutely slayed me, and i’m trying to take the time today to understand if I’ve really got it right now and I really do have something that will work.

I do, but it will be slow, and the idea of hanging on it all day, you have to end that. Like I keep saying it will be hard this year, but I will learn slowly. It’s clear there is not a lot being demanded of me. Training, trading and tunes, getting it right is patient work, but it will be worthwhile.

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