Good morning all! I’m sharing this simple system in the hopes that I can help some of my fellow retail traders collect some pips and maybe even spark some creative ways to improve this system. This system has been through some rigorous back testing and has been consistently profitable for me in live trading.
· 5 min Chart (Main Chart for system)
· 10 SMA of the High
· 8 SMA of the Low
· Parabolic SAR at the default
Entry : 2 closed candles above/below the SMA channel explained earlier. The 15 min Stochastic is used mainly to filter trades.
Stop Loss: Should never be over 20 pips
Exit: Trailing stop with Parabolic SAR.
Thanks for sharing.
So you are using
Maximum 0.02 ?
default looks better, but since you typed it as 20, I better ask.
The same questions- plus- how is the stochastic used on the 15M as a filter?
Pictures are not visable! Try to attache new ones.
Sorry guys obviously jacked up the pictures I will try to edit the main post.
@FXTR51 Yes, your setting are correct .20.
@ Billbss I'll get the pictures up it will make more sense.
Ok the pictures have been uploaded.
Please understand that the GBP/USD doesn't do 450 pips on a daily basis. This is an ideal scenario. You're risking no more then 20 pips with the reward being unlimited.
Yes, there are whipsaws obviously. However, you are also jumping on the trend well in advance of the bigger moves.
I found this strategy interesting, so i coded it. Sadly, the backtest didn't bring positiv results with standard settings. If you want to test is further or have some modification to apply, here is the mq4 file.
Here is the backtest graph from 2012.08.07 to today:
I think 20 pips is too small for GBPUSD, because they swings at least 25 pips average.
But I like your system
Thank you all for replying to my strategy.
That said I do have a new more logical trading strategy. After a ALOT of frustration with slow moving markets and range trading I've created a great mechanical strategy that I would like to share.
Here were the 3 goals I had for this strategy:
1. "Easy" money- It's well stated that when big moves occur everyone is in agreement (retail, small time, big banks, small banks) all agree on the demand to buy or sell a pair. So I'm willing to give up the "best" entry into a large move to confirm a breakout of the daily range. You can bet that numerous traders have their stops at or near these levels and I'm looking to take advantage of this.
2. Take profits when the market makes it available.- It is my belief that Parabolic SAR is one of the best indicators around. I never use it for entries but as a easy way to manage trades. As the market moves in my favor I'm paying myself (a la Mark Douglas, of Trading in the Zone fame.)
3. Avoid Range Bound markets - I'm trading at the break of that day's range. So I'm able to avoid most of the insanely frustrating chop, whipsaws or whatever you want to call it.
Here are the benefits:
-Keeps you from overtrading
-Small Stop Loss
-Can be a "Set and Forget" strategy if you want to use a Take Profit.
-Use of Buy/Sell Stops keeps you from having to watch the charts constantly.
Here are the Downsides
- Because of use of Buy/Sell Stops execution of trades during the news events can be all over the place.
- 20 pip stop loss can lead to a smaller winning percentage.
- There will be days when a trade will not get triggered.
Here is the setup:
*5 min (only)
*Parabolic SAR (at default)
*Horizontal trend line at the top of day's range
*Horizontal trend line at the bottom of day's range
Buy Trigger: 2 pips above the "Top of the Day's" range with a 20 pip stop loss. A Buy Stop would be recommended.
Sell Trigger 1 pip below the "Bottom of the Day's range with a 20 pip stop loss. A Sell Stop would be recommended.
Again, I'm trailing my stop with the Parabolic and I let the market take me out.
I again trade from 12 GMT to 18 GMT and this strategy has worked great especially at limiting draw downs and catching decent size moves. I posted my "Explorer" at the top of the page so if you want to follow me with this strategy please do. Any comments are appreciated even the critical ones.
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