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M1 Countertrend Scalping Strategy

  • #3,241
  • Feb 15, 2023 1:48pm Feb 15, 2023 1:48pm
josh1111,
Why 4 pip stop loss ?
Too tight for any balance above 25 usd... SL above or below the zz pip number, yes to allow breathing room.
But we should focus on the winning and not the losses.
Very few people can hedge good enough, so I would just focus on trend or countertrend trades per day.
cpfleger
  • #3,242
  • Feb 15, 2023 1:49pm Feb 15, 2023 1:49pm
Quoting josh1111
I am trying a new experiment you guys let me know if you want me to post the results as I am changing the program from our thread. No more cost averaging or hedging. 4 pip SL on every order. My hypothesis: In the end cost averaging is going to kill any Prop Firm Account as the rules are just too tight to work. Using Hedging to deal with cost averaging when it gets out of control will eventually amplify to a point that accounts will be blown as well. cpfleger's entry conditions are accurate enough to not matter about the few losses compared to the...
Trading mean reversion with fixed stop-loss will get you a lot of whipsaw, especially with a 4 pip stop-loss which is too tight.
  • #3,243
  • Feb 15, 2023 1:52pm Feb 15, 2023 1:52pm
charli86,
Did you see my Tough Trend screenprint today, go to page 1 and watch KoF Video, you will be amazed.
Latest view but go back a few pages and find the earlier screenprint too.
cpfleger
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  • #3,244
  • Feb 15, 2023 2:44pm Feb 15, 2023 2:44pm
Quoting cpfleger
josh1111, Why 4 pip stop loss ? Too tight for any balance above 25 usd... SL above or below the zz pip number, yes to allow breathing room. But we should focus on the winning and not the losses. Very few people can hedge good enough, so I would just focus on trend or countertrend trades per day. cpfleger
I remember you mentioning earlier to people just starting with the system to try setting 3 pip SL's. Also being we are often only targeting 3 pip movements the RR ratio was at least 1:1. So I tried that for a bit and found it to be to tight as the signal often needs some wiggle room. So I figured why not try 4 and have been trying that for a while since it has not been doing so well. Not sure what the magic number is. I am also programming a feature to set SL to Break Even at a certain amount of profit + spread. This will kill many orders prematurely but will reduce losing on trades that go positive(we will see if it helps).


Abade I will try 5 pip then since you think 4 is too tight.
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  • #3,245
  • Feb 15, 2023 3:19pm Feb 15, 2023 3:19pm
josh1111,
Your mixing your drinks my man.
3 Pip or 30 Point Trailing Stop Loss and not SL, big difference. TSL is just about your only guarantee as a SL is a Loss.
The majority of time, our system indicates a good buy or sell, the 3 Pip TSL is a good way to get one's performance scorecard above 85% and boosts the morale of a Trader. Sad to say, but Trading is a one man band or a lonely hearts club member, arhhhhhhhhh.

Also, BE plus 1 to 2 Pips, I have never understood why people say Breakeven after all that time waiting for a trade to be a winner or looser. BE plus 2 Pips is another partial guarantee like TSL, use them on every trade.
cpfleger
  • #3,246
  • Edited 4:00pm Feb 15, 2023 3:46pm | Edited 4:00pm
Quoting josh1111
{quote} I remember you mentioning earlier to people just starting with the system to try setting 3 pip SL's. Also being we are often only targeting 3 pip movements the RR ratio was at least 1:1. So I tried that for a bit and found it to be to tight as the signal often needs some wiggle room. So I figured why not try 4 and have been trying that for a while since it has not been doing so well. Not sure what the magic number is. I am also programming a feature to set SL to Break Even at a certain amount of profit + spread. This will kill many orders...
In a prior post my friend Cpfleger helped me with a similar experiment using 1:1 risk/reward ratio and adaptative targets with his own entries (the 24 wins-in-a-row challenge). After a few trades the stop-loss and preset 1:1 risk/reward ratio destroyed the performance of the original strategy, so we concluded that the original (fully dynamic) exits are better for this approach.

If you want to eliminate cost averaging and hedging while using 1:1 ratios you could try breakouts (catching fast movements) or pullbacks instead, as they make better use of break-even and stop-loss by design. However, keep in mind that adding this type of complexity to your system requieres some type of optimization to find these magic numbers (i.e. whether a 4 pip is better than a 5 or 6 pip stop-loss), and this creates new problems to solve, A.K.A overfitting and a loss of stability as the volatility of an instrument is never set in stone.

Anyways, every idea is worth studyng so don't let other people discourage you from experimenting with anything that comes up to your mind and let your backtests speak for themselves.

Best regards!

Edit: You could try the trailing stops with a single position, I think they worked well in the experiment! However this skews the initial 1:1 in a way that you are actually reducing the rewards in the long term.
  • #3,247
  • Edited 7:17pm Feb 15, 2023 6:21pm | Edited 7:17pm
if your risk management plan does not allow for drawdown, then you must exit EACH AND EVERY TIME you think you got it wrong, even if you didn't get it wrong - it doesn't matter, re-assess and get it right the next time! and if you did get it wrong and exited at the right time, you just saved yourself a whole lot of work...

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if your system does not have a risk AND money management plan, then it is not a complete system - EVERY situation needs to be accounted for in a solid strategy
every minute matters!
  • #3,248
  • Feb 15, 2023 6:22pm Feb 15, 2023 6:22pm
Pre setup....
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  • #3,249
  • Feb 15, 2023 6:25pm Feb 15, 2023 6:25pm
First trade for Thursday....
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  • #3,250
  • Feb 15, 2023 6:27pm Feb 15, 2023 6:27pm
Its ART...
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  • #3,251
  • Feb 15, 2023 7:01pm Feb 15, 2023 7:01pm
Quoting cpfleger
josh1111, Your mixing your drinks my man. 3 Pip or 30 Point Trailing Stop Loss and not SL, big difference. TSL is just about your only guarantee as a SL is a Loss. The majority of time, our system indicates a good buy or sell, the 3 Pip TSL is a good way to get one's performance scorecard above 85% and boosts the morale of a Trader. Sad to say, but Trading is a one man band or a lonely hearts club member, arhhhhhhhhh. Also, BE plus 1 to 2 Pips, I have never understood why people say Breakeven after all that time waiting for a trade to be a winner...
I've had a discussion via PM's regarding SL for this system ( trade against the dominant trend 200 EMA and targeting 20 EMA on "reversion to mean" )and my RR is inverse. To obtain a high percentage of winners ( 90% ) my Risk Reward is predominately 2:1.. not 1:2 not 1:1. Scalping is a style where a skewed RR is something you have to factor in whilst aiming for high win %.
Stop loss and Risk/Reward is critical in this sytem as in any trading. Entries take care of itself....
  • #3,252
  • Feb 15, 2023 7:36pm Feb 15, 2023 7:36pm
Quoting Darwati
You can download my System Here This is my latest system, using LWMA as trigger signal before that you have to understand cpfleger or LWMA 6 pre-setup you can read in the Abade/cpfleger thread you can read here https://www.forexfactory.com/thread/...lping-strategy EA's and indicators are just trading tools, you must mobilize all your skills and experience in reading and using these...
Thanks for your system. I have some questions. But first, I will look at the chart for a day or so and try to decipher what's going on. (as you said to do).
  • #3,253
  • Feb 15, 2023 7:53pm Feb 15, 2023 7:53pm
I agree with both @niks and @HitTheBid!

Mean reversion (counter-trend) systems have an implicit "negative" skewed risk/reward by design, so 2:1 would make more sense than 1:1 (if you had to pick one). However, I'd rather have "smart" and dynamic market exit over an arbitrary static level or a pre-selected ratio, even if that adds some degree of uncertainty.

This dilema is as old as trading itself and there's no "right" answer:

Inserted Video
  • #3,254
  • Feb 15, 2023 8:05pm Feb 15, 2023 8:05pm
Quoting Abade
I agree with both @niks and @HitTheBid! Mean reversion (counter-trend) systems have an implicit "negative" skewed risk/reward by design, so 2:1 would make more sense than 1:1 (if you had to pick one). However, I'd rather have "smart" and dynamic market exit over an arbitrary static level or a pre-selected ratio, even if that adds some degree of uncertainty.
that's right Abade, the market is ALWAYS uncertain, accepting and dealing with uncertainty is essential, applying fixed rules to it has never worked for me...
every minute matters!
  • #3,255
  • Feb 15, 2023 8:09pm Feb 15, 2023 8:09pm
Quoting Abade
{quote} Outstanding performance! You got the hang of it already. {quote} In my experience AUDUSD, USDJPY, EURAUD, GBPJPY and commodity related instruments have "momentum-friendly" tendencies in the lower time-frames. The "full" approach is not mandatory IMHO. If price is trending hard, preparing for a breakout or not getting back to the EMAs you simply stand aside, keep it simple. {quote} Thanks for sharing my friend! And of course you are free to share your system variants and examples in this thread. This is a very interesting semi-automatic (mechanical?)...
Dont run EA full automaticaly , EA must have user intervension

use EA as a manual trading tool, keep using the kof strategy,

click to true for "open orders" & "closebysignal" if your analysis is buy and there is a blue arrow under the candle

and if price have new HH you can click open order to false

then click closeprofit to true

Dont used the EA on ZERO/RAW spread Account , EA used spread as TakeProfit
  • #3,256
  • Feb 15, 2023 8:15pm Feb 15, 2023 8:15pm
Couldn't agree more with both Niks and Abade. A fixed RR is denying the reality of the prices printing on the screen in front of you and imposes your reality/will on a dynamic market hindering the performance of the system.
  • #3,257
  • Edited 9:39pm Feb 15, 2023 9:21pm | Edited 9:39pm
Quoting Abade
I agree with both @niks and @HitTheBid! Mean reversion (counter-trend) systems have an implicit "negative" skewed risk/reward by design, so 2:1 would make more sense than 1:1 (if you had to pick one). However, I'd rather have "smart" and dynamic market exit over an arbitrary static level or a pre-selected ratio, even if that adds some degree of uncertainty. This dilema is as old as trading itself and there's no "right" answer: https://www.youtube.com/watch?v=2LTIlpXfpLs
Thanks for posting this.
I also watched this one he had about Stop Losses on Mean Reversion strategies:
Inserted Video
  • #3,258
  • Feb 15, 2023 9:41pm Feb 15, 2023 9:41pm
Quoting josh1111
{quote} Thanks for posting this. I also watched this one he had about Stop Losses on Mean Reversion strategies: https://www.youtube.com/watch?v=XUWs4XtsG_w
the spring analogy is great, stretch it too far and it fails to retract!
every minute matters!
  • #3,259
  • Feb 15, 2023 10:53pm Feb 15, 2023 10:53pm
Quoting josh1111
{quote} Thanks for posting this. I also watched this one he had about Stop Losses on Mean Reversion strategies: https://www.youtube.com/watch?v=XUWs4XtsG_w
I am glad you find it helpful! He's got a lot of content you can trust.

Quoting niks
{quote} the spring analogy is great, stretch it too far and it fails to retract!
We've seen the spring fail during NFT, US elections, war, important economic announcements and (almost) always moves against the majority of retail traders.
  • #3,260
  • Feb 15, 2023 11:31pm Feb 15, 2023 11:31pm
however, if your risk management plan does allow for drawdown, then take advantage of it using cost averaging!

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but most importantly, you must have a plan for a broken spring, Abade has gone to great lengths to highlight many examples where the weary trader can and will get caught out
every minute matters!
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