Set and Forget

I'm sure there were a few people rolling their eyes and having a good laugh at my expense with that title, but I couldn't resist!

(This thread was originally named "The Holy Grail No-Stop-Loss System" but I guess the Admins didn't find that as funny as I did)

I've been trying to find a profitable way of trading that truly fit my style. Dare I say it, but after quite a lot of trial and error, I feel I have have developed something that works for me. It was prompted by a few threads on here, which got me thinking, and I first did quite a bit of manual back-testing, then traded it live for a while last year, and since the start of the year have been applying it with some good results. I have a set of rules, study certain pairs on Sunday, set my trades, and check them every evening. Risk is very manageable, DD so far has been about 6.5%, and should never get to more than 10% if that. Expected profitability is about 0.5% per week on average, somewhere between 20%-30% per annum. I can live with those figures.

There are many good traders out there, and I am not one of them. I was doing OK with some divergence trading, but in the end it just didn't suit my style. I needed something that could work for me.

No more watching the charts, no more trying to pick entry and exit points, no more getting stopped out only to see the trade bounce right back, or see a trade in good profit lose it all. It is quite mathematical with just an ounce of "feeling" for the market. And the last few months has been quite relaxing trading. No explosive returns, but more winners than losers.

I can trade this way for quite a while, and I will need a while to prove its profitability.

EDIT 05NOV17 As per posts #44 & #45, annualised IRR for the last 9 months is approximately 36%pa. As such, I have increased the Take Profit targets per trade for a second time, and expected profitability per week is now 0.75% per week on average, with a revised target of 30%-40% return on equity per annum. Drawdown has averaged about 5%, with a maximum of 10.1% to date. With the revised targets, this could reach 15%-20%, possibly a little higher. Furthermore, to mitigate broker risk, while I intend to continue increasing the account size, funds with the broker will be limited to A$20,000. Once the equity in the account surpasses that amount, sporadic withdrawals will be made and kept in a standard bank account.

EDIT 23DEC17 All trades closed out, system "reset" and I will start again on 08Jan18. Annualised IRR YTD is 33.7%.

EDIT 02JUL18 All trades closed out (except Corn) and system "reset" (post #106). Take Profit target per trade increased again to 0.165% per trade, so expected profitability now at 0.825% per week (on average). Highest ever drawdown to date has been 13.2%, so I'm comfortable increasing the risk slightly. IRR on AUD account for last 12 months is 25.3%

EDIT 19JAN19 Return on the AUD account was under expectations last year, at only 8.0% gain on Equity for 2018. All open trades were closed out. Trading to commence again on 21Jan19.

EDIT 31Mar19 While account is gaining, it is performing below our target. Drawdown from HWM to date this year has been no higher than 6.4%, so I feel comfortable increasing risk slightly. Take Profit target per trade is now 0.2% of NAV.

There is always a stop. No stop means stop is 100% of capital. Risking 100% every week to make 0.5% is ridiculous, and calling it a holy grail is even worse.. I hope you get the point. With good chance, you can stay above water for a few years, but think very carefully if you have a sustainable edge. Because losing a lot of time is even worse than losing a lot of money. Systems with such parameters are very tricky and play with your mind. The market give a little many times, but eventually takes what it has to take with some delay. Wish you good luck!

Feline207 does have a point here....

Right now, your max DD is 6.5% but that WILL increase over time. The higher you get into DD the harder it will be for you to recover. If you haven't already, you should try to expand you're plan when you do get hit with higher DD numbers of 20-30% or more.

Trust me, I've been testing no SL strategies for over 3 years. Believe it or not...I made a strategy into an EA and the EA backtested for over 22 years. Because pair behaviors are always changing, my EA/strategy was not able to adapt to this change and lost 100% of luckily just my demo account in late 2015. This was mostly caused by the the Brexit. The Brexit situation is just one example of a major event that can completely change the behavior of a currency pair. We need to try to prepare for these types of events because no SL strategies can get hit hard.

Some advice for you would be to backtest your strategy as far back as you can so you are prepared for the worst. I didn't do that well enough and my EA lost big. I did realize that over time that a SL was what I was missing. Whether big or small it should be implemented as a fail safe for most if not all trading strategies. Where this SL should be placed is something you should think of carefully.

Best of luck.

Brexit was not a Black Swan event. Trump becoming president was not a Black Swan event. These were real possibilities that we had forewarning of and time to prepare/position ourselves in (or out of) the market. I made some money with the Brexit vote. I lost a little with the US presidential election.

The earthquake in March 2011 in Japan is something I would class as a Black Swan event. And that may have taken me to 10%DD.

EurUsd is currently at 1.0550. If the Euro tanks tomorrow, and assuming I stay in the 3 different Eur trades I have at the moment (which is unlikely) my current profit will be wiped out around the .9100 mark. If I continue to hold these trades (again, unlikely), I'll get a margin call around 0.4000. I am not highly leveraged.

And if the EurUsd falls to 0.4000 overnight or in the space of a few days, with no retracements along the way, losing a few thousand dollars on the FX market is probably the least of my worries, and no doubt there would be some sort of global meltdown with long term consequences, depending on what the cause of this event was.

We should also have in mind that there are different "drawdowns" and he has not specified what exactly he is talking about so I am blindly speaking about this. But.. In any case - when someone trades in such way, he has to know exactly what is the edge, from what it comes, how and why is it sustainable despite the very poor risk to reward. If it does not happen, market gives a lesson through the hard way and before you have time to realize, you are already digging a hole in your account erasing hardly earned money, a painful experience.

Hi Feline,

I think you have taken the original title a little too literally - the risk to reward is actually not too bad at all. The risk on each trade is actually minimal, and as I said above it would take a MASSIVE move OVERNIGHT - I'm talking 5000, 8000, or 10000 pips to take me anywhere near a margin call. And if that happened a lot of the stop-losses you and others had may prove to be all but useless anyway. And a greater concern for me (and likewise for everyone) would be my brokers liquidity and actually getting any funds back.

I take losses. I just don't set a concrete stop loss at a given point, S/R line, pip amount etc. at the time of entering a trade anymore.

The fact that there are 50-70pip moves is exactly what I'm am trying to take advantage of. I am not flipping a coin and taking random trades. Below is my equity growth line. Up to Xmas I was playing with a few ideas, some worked, some didn't, some had good luck, some had buck luck - you can see it was quite choppy at times. From the start of this year it has been purely my "set and forget" trading, which showed consistent returns last year (albeit not high, as mentioned previously), but more importantly this style of trading suits me, and works for me. That's all I'm saying.

Good luck with your trading

fine then taking losses is the hardest part in trading (I think for everyone).

Start of March, current DD at 3.53%, last 2 weeks have gone quite well, although the last 2 days has seen the equity drop back a little. Still in a few trades, so there may not be as many new trades able to be entered next week.

The last two weeks have gone reasonably well, with 5 TPs hit week ending 12Mar and 9 TPs hit this last week (target per week is 5). DD was at 6.5% last weekend, now at 3%, which is a little under the average. I currently have 10 positions open, and I have placed 12 new orders today. I have most exposure to GBP (long), and that is about 31% of total exposure, which may be a little on the high side.

I've made another $500 deposit today and the new orders placed have been taken based on the new balance. Of course, this affects the stats/percentages in FF, but my IRR since account creation is currently 30.27% (still exceeding target of 25%)

Mixed results this week, with 16 TPs hit, and 1 SL, so in that regard an extremely good week. Equity dropped 1% this week though despite all those TPs, and I'm currently sitting on about 4%DD (so thats about average). I currently have 11 Positions open, with 13 orders placed today. Highest exposure is still GPB (long), but down to around 20%.

Equity gain MTD has dropped to about 0.8%, so under the 2% monthly target, but annual IRR is still over the 25% mark at 29.4% so things are still coming along nicely.

Hi Xeniz

I find this interesting. I would love to hear move on how you approach trading, could you give a few examples? perhaps of a good and bad trade and why you took them?

Hi,

Happy to go through it, hope the info I have sent you gives you an idea. I think the EURGBP trade is a good example of how it works. I am expecting something similar to happen with Soybeans, which is currently about 1% of the 3.5% DD.

Cheers,

X.

I had a quick look at a few posts on BWILC, and I will read up on it a bit further. Cheers

Another reasonably good week, with 11 TPs hit and 1 SL. Equity levels regained the loss from last week - in particular with the EURGBP tardes closing in a small profit - and continued upwards, although the Soybeans trade reduced those additional gains somewhat over the last couple of days.

I currently have 12 open positions with only 5 orders placed today, so will probably be a quieter week over all. Drawdown is currently at 4.16%, so still about average, with the Soybeans trade counting for just over 1% of that DD.

Overall equity gain was 1.7% for the month, so just a little below the 2% target, although IRR is over 30% so still tracking very nicely above target.

These last two weeks haven't seen much movement, with 9 new positions opened, 1 SL and only 5 TP taken. Equity has stayed dropped about 2% MTD, and while current DD is about 6.7%, a little over average, it did get as high as 8.5%.

With this drop in equity over the last couple of weeks, IRR has dropped under the 25% target, sitting at 24.3%.

I currently have 15 positions open, with 6 orders placed today. Hoping for a volatile week!

Last week was another quiet week, with 6 positions opened and 5 TPs hit. Not all open orders placed were hit either, which is unusual. Equity dropped a little over the week, DD back up to about 7%.

Unfortunately I didn't have time last night to place any orders, and the market opened today (Monday) with some good movement around the French election, and I missed a few opportunities. However, 4 older trades closed at their TP or past it, taking some good profit, and other trades gained good ground, so that's fine. I have just opened another 7 positions, taking total open positions to 19

Currently at 5.1% DD, so well within average, and hoping for the volatility to increase once the US markets open

With this mornings movement MTD profit is at 0.5%, so under the 2% target but back in positive numbers, and IRR is back over 25% target at 28.5%.

A little more active this week, with 13 TPs and 1 SL hit, with some good gains on EUR and GBP. Overall though, equity dropped over the week, mainly through CAD and AUD, and current DD is 7.7%.

So this has been a losing month all up, with a 1.5% decrease in equity. IRR for the last 12 months is now at 24%, just slightly under the 25% target. In general though, I am pleased with our the system is going, DD has been between 4% and 6% on average, with the highest at 8.5% and the lowest in the last few months at around 1%.

Main exposure currently is CAD (long) at around 25%, and AUD (also long) at about 17%. There are currently 11 positions open, and I have placed 10 orders tonight.

I have deposited another $1000 into the account this month and I will try to keep doing this for the next few months to have a good account balance by the end of the year.

Not sure what is going on with FF, looks like I've got some sort of bug, stats have been all over the place the last few weeks, so nothing is showing correctly any more. For some reason, no matter what I change in the settings, it only shows account from 03Feb17 and it somehow includes a 40% loss at the start of Feb, for an amount of about $4000, which is more than I think I had in the account at that time. So stats & graph way out of sync now....

I've added the MyFxBook graph as well, which is accurate (although only the last 5 months or so is purely "Set and Forget")

Seems like FF can't fix the issue I am having with my TE - I've even tried deleting and resetting and no joy, so until I can find a solution I will just keep importing the MyFXBook chart.

It has been quite a slow few weeks, with the last week of May see some previous gains reduced, and my drawdown blow out to just over 10% (from an average between 4% to 6%). In fact, equity-wise, I had another losing month with a 2% decrease in equity and IRR down to 15.5% over the last 12 months.

June started slowly, and has picked up very well: quite a few trades taken this week, and a few older trades closed too, albeit a couple at a slight loss. Soybeans bounced back a little but continues with 2 trades in the negative, so holding time on that will be a bit longer.

Month to date I am up 8% on equity from the end of May, and IRR is at 17.6%. What is really encouraging is that the annualised IRR for the 4.5 months of my "Set and Forget" method is at 36% - well above the 25% target.

Another mixed week this week - while I had 7 TPs hit, the lower AUD and to a lesser extent the GBP meant some of the good equity gains made in the first half of the month were reduced.

MTD equity is up just over 4% with 1 more week trading left. This means annualised IRR has dropped to just below the 20% level - so while still a good return it is under target.

I currently have 16 open positions (20 trades) and I have just placed another 8 trades. Average open has been about 16-18 over the these last few months, so getting up there.

Current DD is at about 4.9%. However, as this strategy is looking pretty robust so far, I have made another deposit, this time of $3000. DD would be sitting at around the 7% mark had this deposit not been made. The new trades placed have increased lot sizes to reflect the new Equity position.

Some downward movement in the NZD (especially against the AUD and GBP) over the next few weeks would see some good gains. In my opinion, with AUDNZD sitting at almost historic lows, it is just a matter of time before it regains some ground. There is possibly further downward pressure on the AUD towards parity, however I feel that in the not too distant future we will see it back up at 1.05 and then 1.10, especially with the NZ election just around the corner.