Absolute Simplest KISS Method. Also, how do we measure risk reward?

You're right. We were just trying to help.

I Thought This Was A System...

it's an imcomplete system :wave:

Ha. Sorry Hanz -

Yea this was another one of my threads I started to discuss theory of trading. I'm doing too much of that lately. Sorry to waste your time?

Hello permanentjaun,

I've run across a very similar method to yours on another forum.. I'm attaching some indicators that might be of help to you. The first one is the HedgeTest, which basically takes the closing price of the day and draws two lines in the following day.. one 14 pips above the close of previous day and one 14 pips below (10pips profit plus 4 spread). The second indicator is something I found that could help in choosing the correct side of the trade. What I was thinking about was to only place the trade in one direction at the close of previous day after having figured out which direction will the market likely go. I.e. if in downtrend, you only go short and vice versa. That way, you can take the bigger portion of your trade out for 10 pips profit and leave the remaining part to gain some more. Now, the only two problems I see is how do you find what the bias for the day will be (bullish or bearish) and as you already mentioned the SL. Let me know what you think about this. Thanks

I'm working on a system that employs the philosophy I explained earlier. though it's not a completely random entry system. it's hard to be consistent in randomness. so in order to be consistent my system does employ a few common indicators to give signals. I've made an EA to do backtesting, and I'm quite happy with the results. But a few elements of my trading beliefs are left out, because I'm still new to programing I found it hard to program some things in. for example, I believe that time is one of the most important element in my trading system, if a trade haven't gone my way for a length of time, I'd like to close it out at whatever price before it touches my stoploss. but I haven't figured out how to program that in, as well as a few other things. so my system has not been completed. I won't post an incomplete system. to be honest, I'm not sure I'll disclose my system even if I completed it. I'm quite selfish in natue so I probably won't do that until it has made enough money for me :-). What I don't mind to share is my belief that led to the system. and probably the EA as well. I also believe that the only system that works for you are the ones you've deleloped yourself. so maybe it's better that we share more ideas that could lead to successful systems for each person who develops it, instead of complete systems that only works for the developer himself. just a thought.

Hey everybody. I read through this thread with some interest... I'm not sure if or how it could be made profitable, but I spent some time calculating a few things for consideration:

For the year 2006 the following occurred:

My feed (Alpari) shows a total of 222 candles for EUR/USD (1 Jan to 22 Dec 06).

The number of candles that broke only one of the previous candles high or low: 165

The number of candles that did not break out either way: 29

The number of candles that ranged (broke out) of both the high and low of the previous candle: 28

The figures look great! There are, however, some problems that I can foresee. I did not count the number of pip gain for the 165 good breakouts. Let's say 50% of them give us 14 pips (3+1+10pip profit). That's a positive dount of 165/2 x 10 = +825 pip gain!

How many of them will trigger our buy stop and then retrace before giving profit?

Then there's the 28 candle's that ranged, breaking out both ways. I think a stop is definitely important to control our losses giving the facts. Even with a conservative 10 pip stop that's 280pip loss. To be honest, I think the stop should be placed at the previous candle's low or high which in a lot of cases will add up to be a lot more than a 10 pip stoploss. One of the less-than-average candles I just looked at had a range of 71 pips. There were tons of large candles. The problem is if we make it smaller, we again bite into our profits by stopping out prematurely in a certain percentage of our possible wins.

This is all just food for thought, but I am wondering if it is a feasible method of trading. If there was a way to limit risk/reward without limiting your profit potential too drastically, this could work. I cannot for the life of me think of how to do this, however.

Just some food for thought! All ideas/comments are welcome.

Merry Christmas everybody!

Hi Permanentjaun,

I once read that any idea thought by one person, can and will be thought by another person as well. I thought about a strategy very similar to this after a long discussion with another fx friend. Did some manual forward testing and entering data into excel on every daily candle of gbp/usd. I came up with the following rules:

1. Set limit entry 7pips + spread above and below previous day's candle.
2. TP was 10 pips, including spread (so if your spread is 4 pips on gbp/usd then tp was only 6 pips)
3. No sl.

The results were pretty good actually for the time frame that I did the testing. However, the drawbacks of this system were the following from my testing:
1. You need to bet big to make it worthwhile.
2. You need enough $$ to sustain negative floating dd while the pair swings up and down with the previous day's candle
3. Your data feed will affect your high and low of candle, hence giving you different entry points
4. You need a certain type of psychological profile to weather the negative dd (which I did not have)

The testing got too much for me, as it was taking a lot of time from actually understanding other systems which seemed to do better etc.

There must be someone around who can make a simple EA based on the above rules and do a backtest.

I think the best way to implement this would be to take a portion of your account and allocate it to this strategy. I have found that taking your forex trading capital and allocating different amts to different strategies works better in the long run, rather than allocating your entire capital to one system/strategy, esp a non-discretionary one like this.

Hopefully someone out there can optimize this.

Cheers,
Kermut.

This is a system... Big Ball System... LoL :o)

Check it out...