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Previous Day Breakout Edge System

  • #21
  • Apr 23, 2021 2:48pm Apr 23, 2021 2:48pm
Interesting idea but scared of dealer manipulating trades in.Will backtest it 100 times and let you know.
  • #22
  • Edited 2:47am Apr 24, 2021 1:44am | Edited 2:47am
Quoting Maddin
Proc, I did a quick backtest on EU over the last 13 month and the result is -3R, so I cannot see an edge with this strategy, what is the result of your statistic?
Hello Maddin,

I am not taking every single signal I get, I have mentioned that I do mix fundamentals within my approach and certain components need to be lined up before the trigger is pulled, even though I keep it as simple as possible.

Not sure how you have backtested this, but I would be interested in the results and to correct anything that seems off, personally according to all the trades I have taken up till now using this way of trading is sitting around 57.3% win rate, which statistically speaking with a 1:2 R/R (or higher) I will always be in profit.

Quoting klw
Maddin -- There wont be an edge using a popular static bet. You've done the first step in analysing past data which gives you an idea of strike rate / losers etc. Now you need to dig deeper and look at filters. Does time of day make a difference ? Trend ? Statistics ? Fundamentals ? Volatility ? Money management ? etc , etc , etc. Only then with some hard work will you be able to see if the trigger is worth the effort. The OP seems to think it is and that's a start. Good luck.
Might be worth noting as well that I have a preference for setups occurring in the London Session, rather than the New York or Asian session - not saying I wouldn't take those, but it's more of a preference for me personally.

And you've made some very interesting points in there in regards to other factors, which I believe also have a great impact. At the moment I guess I am slightly biased to an earlier morning session as well as fundamental impact as I've mentioned before, compiled with a 34 SMA - but I might be worth looking at other things such as the volatility, order flow, market sentiment to give us a bigger edge.

Determining trends can also be important factor, sometimes I like to use a technique I call "3 Day Levels" where I basically identify the last previous 3 day's High's/Lows and if price today (on the 4th day) for example breaks above minimum 2 levels then the trend is up, the same also applies for Shorts but instead you are looking at breaking 2 lows in the previous 3 days before

Money management also plays a big role, you need to be disciplined and not deviate whichever method you use, I have experimented with regular fixed percentage risk as well as half kelly, everyone will be different when it comes to this and finding the risk money management system that fits your appetited is what's important.

Personally, I prefer to stick to a 1% risk per position, but if I am in a winning position I will scale positions in up to the target level of the first trade
  • #23
  • Apr 24, 2021 5:01am Apr 24, 2021 5:01am
I backtested 25 times.Only 3 losses in a row.Good system.
  • #24
  • Apr 24, 2021 7:02am Apr 24, 2021 7:02am
Hey Proc,

Really nice, clean, and simple edge!

Are you drawing those previous day high/low lines manually? As Trading view has plenty of excellent indicators that will map these for you automatically. Also, don't forget to consider previous weeks' and month's high/lows also!

All the best
  • #25
  • Apr 24, 2021 9:15am Apr 24, 2021 9:15am
Hi Proc, thanks for your reply. What I wanted to find out is if this system will be profitable with your simple rules mentioned at #1. Surely one can start to find further filters and sub-rules to get better results. But this would mean that the results are very personal and dependent on how you see the market, the situation, the news impact, the candle length and so on. And this will create not comparable results, not even for yourself because it is very different how you see the market conditions today or tomorrow, after some winning trades or after a series of losses. Hence best would be to have fixed rules valid for every day.

I tested the market with this simple setup:

  1. M30 timeframe (I know you mentioned H1 but basically there are only minor differences)
  2. entry after 1st close behind previous D1 high/low
  3. only trades from 6.00 am till 5 pm GMT-1 (basically extended London session)
  4. only 1 trade per day
  5. SL 13 pips / TP 26 pips

You can find my test result in the pdf. Days without trades are 5-0 combinations.

Attached File(s)
File Type: pdf Backtest D1 HL Breakout.xlsx - EU 2020-2021.pdf   142 KB | 828 downloads
  • #26
  • Apr 24, 2021 10:29am Apr 24, 2021 10:29am
Quoting Maddin
Hi Proc, thanks for your reply. What I wanted to find out is if this system will be profitable with your simple rules mentioned at #1. Surely one can start to find further filters and sub-rules to get better results. But this would mean that the results are very personal and dependent on how you see the market, the situation, the news impact, the candle length and so on. And this will create not comparable results, not even for yourself because it is very different how you see the market conditions today or tomorrow, after some winning trades or...
I mean bruv did u backrests his initial strategy though. Don't fix something that isn't broken ye. Also did you use sma to filter out bad trades.You should maybe revisit this using the original method.
  • #27
  • Apr 25, 2021 2:06am Apr 25, 2021 2:06am
Quoting SWGamer
{quote} I mean bruv did u backrests his initial strategy though. Don't fix something that isn't broken ye. Also did you use sma to filter out bad trades.You should maybe revisit this using the original method.
SWGamer, would you mind to share your results per day here? Which pair? It would help to compare, also 25 days back is not enough to validate a strategy. You need to backtest far more.
  • #28
  • Apr 25, 2021 2:31am Apr 25, 2021 2:31am
Quoting Maddin
Hi Proc, thanks for your reply. What I wanted to find out is if this system will be profitable with your simple rules mentioned at #1. Surely one can start to find further filters and sub-rules to get better results. But this would mean that the results are very personal and dependent on how you see the market, the situation, the news impact, the candle length and so on. And this will create not comparable results, not even for yourself because it is very different how you see the market conditions today or tomorrow, after some winning trades or...
Hello Maddin,

You have losses in that spreadsheet, that weren't losses for me such as the 20th April 2021

Would be interesting to see you backtesting this with the original guidelines with no further filters, and then we can discuss what tweaks we could do, to keep it as systematic as possible from there

Regards,
Proc
  • #29
  • Apr 25, 2021 2:47am Apr 25, 2021 2:47am
Quoting Proc
{quote} Hello Maddin, You have losses in that spreadsheet, that weren't losses for me such as the 20th April 2021 Would be interesting to see you backtesting this with the original guidelines with no further filters, and then we can discuss what tweaks we could do, to keep it as systematic as possible from there Regards, Proc
sure, here the 20.4.21 picture:
Attached Image (click to enlarge)
Click to Enlarge Name: 97148916fa37ba8c3b5c95024019167f.png Size: 63 KB
  • #30
  • Edited 7:50am Apr 25, 2021 6:26am | Edited 7:50am
Quoting Maddin
{quote} sure, here the 20.4.21 picture: {image}
Hello Maddin,

That 3PM is not valid, because for a short position you would have had to wait for it to break below the previous day low, not the previous day high

Regards,
Proc
  • #31
  • Apr 25, 2021 8:42am Apr 25, 2021 8:42am
Quoting Proc
{quote} Hello Maddin, That 3PM is not valid, because for a short position you would have had to wait for it to break below the previous day low, not the previous day high Regards, Proc
Ye I think this dude tested something else.Also I did EURUSD.
  • #32
  • Apr 25, 2021 3:10pm Apr 25, 2021 3:10pm
EA me please
  • #33
  • Apr 26, 2021 3:23am Apr 26, 2021 3:23am
Quoting Proc
{quote} Hello Maddin, That 3PM is not valid, because for a short position you would have had to wait for it to break below the previous day low, not the previous day high Regards, Proc
Proc, you are right, I did a mistake here. Please delete my post #25, I cannot edit it anymore. I don't want to mislead others. Let's wait for your and other people statistic.
  • #34
  • Apr 26, 2021 9:02am Apr 26, 2021 9:02am
does a retest of previous day low break count?
usdcad h1.
Attached Image
ITB - Seeing Orderliness amongst 'Randomness'
  • #35
  • Apr 26, 2021 12:43pm Apr 26, 2021 12:43pm
Quoting Inthebox
does a retest of previous day low break count? usdcad h1. {image}
He said close below or above.
  • #36
  • Apr 26, 2021 1:27pm Apr 26, 2021 1:27pm
Hello from italy..nice system...but ..what kind of hedge do you use for cover the bade trades?this is the juice of thr talk...
  • #37
  • Apr 26, 2021 11:05pm Apr 26, 2021 11:05pm
Quoting SWGamer
{quote} He said close below or above.
technically if generic there are many candles that closed below previous day low in the example.
if we are talking particularly about the 1st h1 candle close break, then one would be most likely not looking at the chart at that moment.
ITB - Seeing Orderliness amongst 'Randomness'
  • #38
  • Apr 27, 2021 3:40am Apr 27, 2021 3:40am
Quoting Inthebox
{quote} technically if generic there are many candles that closed below previous day low in the example. if we are talking particularly about the 1st h1 candle close break, then one would be most likely not looking at the chart at that moment.
I used in my back test body closes not wick retests.
  • #39
  • Edited 5:36am Apr 27, 2021 5:25am | Edited 5:36am
Quoting SWGamer
{quote} I used in my back test body closes not wick retests.
no wick here when the red candle closed. entry was at the green candle open upon the red candle close before.
anyway if entry is to be at 1st candle close, then any subsequent candles close after that below previous day low is irrelevant.
ITB - Seeing Orderliness amongst 'Randomness'
  • #40
  • Apr 27, 2021 7:17am Apr 27, 2021 7:17am
Quoting Inthebox
{quote} no wick here when the red candle closed. entry was at the green candle open upon the red candle close before. anyway if entry is to be at 1st candle close, then any subsequent candles close after that below previous day low is irrelevant.
Ye those are irrelevant. What pair are u backtesting. I did eurusd 25 times can ya do another pair.
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