Hello! Thank you for stopping by this thread. In here I would like to share with you a simple method that I have been studying and backtesting. I have had issues with overtrading and not setting realistic profit targets, as a result my trading has sucked. To combat the overtrading I started committing to a single trade a day, if it failed, that was it. Obviously, that reduced my drawdown, but didn't help my profit taking.

That's where the Daily Pivot Point (DPP) comes in. With the DPP I can determine a daily bias (long or short) as well as reasonable SL/TP. What's better, it is easily backtested with just the daily high, low, and close. And that is exactly what I did using Oanda MT4 historical data for the GBPUSD going back to 2005.

My testing rules were as followed:

Using the High, Low, Close, calculate the R3, R2, R1, Pivot, S1, S2, S3

R3 = High + 2*(Pivot - Low)

R2 = Pivot + (High - Low)

R1 = (2*Pivot) - Low

Pivot = (High + Low + Close)/3

S1 = (2*Pivot) - High

S2 = Pivot - (High - Low)

S3 = Low - 2*(High - Pivot)

If the Close (aka, the Open) was lower than the Pivot, then it was a short bias, higher meant a long bias.

For a short bias day:

If the new high was higher than R1, it was a loss, otherwise it was a win.

If a win, Pivot - Low was listed as the pip change

If a loss, Pivot - R1 was the pip change

Other way for a long bias day

At the end of the year added up the pip change row and got a result. With some simple excel data analysis I got the results that are attached.

I did no optimization, just took every trade. On the table and the graphs I labeled three outcomes: Optimal, Expected, Worst. Basically, "optimal" is the best case, sold at all the highs and didn't lose any more than the initial SL. "Expected" is just 75% of the winning pips and the initial losses. "Worst" is 75% winning pips, and 125% losing pips.

To trade this manually I just get the next days DPPs at midnight EST (you can get those values online, no need to calculate) and put in a buy/sell order based on the bias and a SL of R1/S1, no TP. Since I am in Texas, I then go to sleep. When I wake up in the morning, I check my order to see if it took, if not, I cancel it. If it did take and it looks good I let it go until about an hour before the London market closes.

Anyways, there you have it. I know there are optimizations that can be made like don't trade on certain news releases, but for a pure mechanical system it doesn't get easier than this.

I'd love to hear comments, suggestions, complaints. If you would like my spreadsheet to do your own analysis pm/email me and I will send it to you. It is set up where you can stick in your own favorite currency and it will generate everything automatically.

That's where the Daily Pivot Point (DPP) comes in. With the DPP I can determine a daily bias (long or short) as well as reasonable SL/TP. What's better, it is easily backtested with just the daily high, low, and close. And that is exactly what I did using Oanda MT4 historical data for the GBPUSD going back to 2005.

My testing rules were as followed:

Using the High, Low, Close, calculate the R3, R2, R1, Pivot, S1, S2, S3

R3 = High + 2*(Pivot - Low)

R2 = Pivot + (High - Low)

R1 = (2*Pivot) - Low

Pivot = (High + Low + Close)/3

S1 = (2*Pivot) - High

S2 = Pivot - (High - Low)

S3 = Low - 2*(High - Pivot)

If the Close (aka, the Open) was lower than the Pivot, then it was a short bias, higher meant a long bias.

For a short bias day:

If the new high was higher than R1, it was a loss, otherwise it was a win.

If a win, Pivot - Low was listed as the pip change

If a loss, Pivot - R1 was the pip change

Other way for a long bias day

At the end of the year added up the pip change row and got a result. With some simple excel data analysis I got the results that are attached.

I did no optimization, just took every trade. On the table and the graphs I labeled three outcomes: Optimal, Expected, Worst. Basically, "optimal" is the best case, sold at all the highs and didn't lose any more than the initial SL. "Expected" is just 75% of the winning pips and the initial losses. "Worst" is 75% winning pips, and 125% losing pips.

To trade this manually I just get the next days DPPs at midnight EST (you can get those values online, no need to calculate) and put in a buy/sell order based on the bias and a SL of R1/S1, no TP. Since I am in Texas, I then go to sleep. When I wake up in the morning, I check my order to see if it took, if not, I cancel it. If it did take and it looks good I let it go until about an hour before the London market closes.

Anyways, there you have it. I know there are optimizations that can be made like don't trade on certain news releases, but for a pure mechanical system it doesn't get easier than this.

I'd love to hear comments, suggestions, complaints. If you would like my spreadsheet to do your own analysis pm/email me and I will send it to you. It is set up where you can stick in your own favorite currency and it will generate everything automatically.