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The Daily Fozzy Method

  • #2,241
  • Jun 5, 2007 9:17am Jun 5, 2007 9:17am
There really is no pleasing some people.....

I for one have to add to BB comments ....

I have been studying forex/futures et al for two years , i've had the odd trade here and there (live) but mostly demo as i've never had the confidence before discovering the fozzy method.

Now your argument is that this is another system dressed up which it isn,t and guess what even if it did turn out to be another system ( fozzy never hid the fact that this was an amalgam of his study time ) it reall y would not matter one iota, because for me and i'm sure hundreds like me who didnt have a comfortable way into trading with risks that for once you could understand...this has been an excellent addition to my learning curve.

It also negates all the time and effort contributed during the thread.

So my point is how could Exposing a system (or not in this case ) possibly benefit anyone if it was proving successful.

my account ( live ) is up 867 pips in four weeks and i know there are traders doing much better than that, but these are still early days live for me ..

fozzy you rule !!!

cheers

Rye
  • #2,242
  • Jun 5, 2007 9:53am Jun 5, 2007 9:53am
also i should add that prior to fozzy and also a daily perspective i was struggling to hold on to any pips at all.....

then the lights went on

Rye
  • #2,243
  • Jun 5, 2007 9:53am Jun 5, 2007 9:53am
Quoting bogdan
I am sorry to post this but I recently discovered that this FOZZY METHOD is nothing but a "Trading System" from VT Trader called "Bollinger Bands of Ultimate Oscillator". I doubt that CMSFX incorporated Fozzy without asking permission or refusing to name it Fozzy so this method for me is not anymore called Fozzy Method.

See ya.
Hi bogdan, I use VT Trader as my platform. The configuration and signal of this trading system is totally different from Fozzy. "Bollinger Bands of Ultimate Oscillator" system is based on the crossing of the Ultimate Oscillator MA crossing above and below the middle bollinger band.
  • #2,244
  • Jun 5, 2007 8:58pm Jun 5, 2007 8:58pm
A big thumbs up to Fozzy, Beach Bum and everyone who contributes so tirelessly to making this a great thumb. No one ever attempted to claim originality with this method, everyone just adding and tweaking, trying to make it better. So long with that guy, good bye and good riddance. Back to the actual method, are you still using your original rules Fozzy? You've been quiet lately, just wondering, or are you napping on a sunny beach somewhere?
Everyone keep contributing and we'll keep this the best forum on the web

Jimbo
  • #2,245
  • Edited 3:46pm Jun 7, 2007 3:17pm | Edited 3:46pm
I love backtesting................

OK, not really, but I do learn a lot!

Let's assume (I know, dangerous word) someone wanted to trade Fozzy very conservatively with very little time spent managing his/her trades.

Look back for one year at the EUR/USD. Now remember I use FXDD and the AO_FozzySignalALL to get my attention, but I always confirm a "clean" cross, no bounces. AND NO OTHER INDICATORS! RSI/MA cross only!

55 Trade-able crosses
S/L = 40
T/P= 60
19 losers
36 winners
Total net pips gained = 1400

Not bad you say?

Add a second lot to each trade with a T/P = 100
Move second lot to B/E when first T/P of 60 is reached
19 losers
36 winners @ 60
26 winners @ 100
Total net pips gained = 3240

Want me to keep going?

You get the idea!

Backtest and see for yourself............and this test left A LOT of pips on the table!

Try some other pairs................I have..............see what you get!
  • #2,246
  • Jun 8, 2007 9:52am Jun 8, 2007 9:52am
In my last post, I put forth a suggested simple way to trade the EUR/USD with the Fozzy method.

In essence I was giving an example of what Fozzy discussed in his very first post: spend a few minutes each day looking the Daily charts and deciding about possible trade entries. Fozzy wrote that he would check his trades and the charts later in the day and adjust as necessary.

However, it is possible to Fozzy trade without doing anything other than entering the trades and waiting for them to close, either at T/P or S/L. In my example, I suggested moving the second lot to B/E when the first T/P is reached. BUT if a trader made the choice NOT to do this, but simply let all of these trades run-out, the net result in my example would be 2840 pips. Thats one trade a week on average, netting 55 pips per week on one currency pair.

What more could you ask for?
  • #2,247
  • Jun 8, 2007 10:06am Jun 8, 2007 10:06am
Quoting BeachBum
Look back for one year at the EUR/USD. Now remember I use FXDD and the AO_FozzySignalALL to get my attention, but I always confirm a "clean" cross, no bounces. AND NO OTHER INDICATORS! RSI/MA cross only!
I hope that any newbies (and even some of the established members) will understand just how insightful your last post was. This has sparked a lot of thought from me and has coincided with some of my recent findings. I'm going to share them here, but it's going to take me a few posts to do so.

First of all, I want to highlight what you have said above about NO OTHER INDICATORS. Like many other fozzy followers, I have been on this long quest for the Perfect Fozzy Filter. I want something mechanical (because the original fozzy system is extremely mechanical) and, ideally, I want something that filters out bad trades - especially those pesky back-to-back crosses.

I have now come to a stark conclusion about these mechnical fozzy filters - they don't work. I haven't been able to find any single mechanical filter that increases the return on the fozzy method.

I'm not saying that all the mechanical filters will hurt your fozzy trading. Any filter - by definition - will keep you out of some trades and some people just prefer to trade less. I've seen a number of filters that lower the trade count while still maintaining the same overall win percentage. But I haven't found one yet that actually makes the fozzy method more profitable.

Think about this "historically". Fozzy himself was using the Bollinger Bands on the RSI to filter trades, but I don't think anyone is using that filter anymore. BeachBum has posted a series of great test results using NO filter. One of the more popular filters - the "willf fozzy" - is now no longer being used by its founder. It seems that the "beach fozzy" was in vogue for a while in this thread, but it's been a long time since I saw anyone post a chart with this setup. I played around for a while with the Parabolic SAR as a filter and this worked just like all the other filters - it kept me out of trades but did not increase my expectancy.

With all this being said, I want to acknowledge that a number of members profess to successfully using their own discretionary filters. I have no doubt that with the proper experience in the markets, you can probably increase the expectancy of this system with the use of proper discretion. But if you're like me, you're trying to first find a system that you can trade mechanically and profitably. Once I've started locking in profits (even if they are modest profits), I would be more interested in trying to apply proper discretion.
  • #2,248
  • Jun 8, 2007 10:20am Jun 8, 2007 10:20am
In the context of what has just been posted by Bb and myself, this post bears a very close second look:

http://www.forexfactory.com/showpost...postcount=2225

willf says: "a lot of discretion is required"....................IMO that discretion applies to structuring HOW you will trade Fozzy basics, hence my previous posts. Forget the filters and trade the basics!
  • #2,249
  • Jun 8, 2007 10:50am Jun 8, 2007 10:50am
Quoting BeachBum
55 Trade-able crosses
S/L = 40
T/P= 60
19 losers
36 winners
Total net pips gained = 1400

Not bad you say?

Add a second lot to each trade with a T/P = 100
Move second lot to B/E when first T/P of 60 is reached
19 losers
36 winners @ 60
26 winners @ 100
Total net pips gained = 3240
I have been through a spin cycle of emotions with my trading over the last couple of months. I was initially extremely excited about the fozzy method but then I cooled on it when I wasn't able to settle on the right filters and exit strategy. But then my backtesting gave me newfound faith and I began trading it live about a month ago. Initially, I hit several home runs and I was ecstatic. Then I went on a horrific losing streak, with my overall fozzy record being 4 wins and 19 losses.

At first I rationalized this by thinking that it must just have been a bad month for the fozzy. But then I peruse the forums and others are claiming to have had good results - a few members are even reporting stellar results. So I was confused and extremely frustrated.

This forced me to really pick apart my methods. I was setting wide SLs and then letting my winners ride for a long time. This seemed to be in line with everything that I had read about "holding onto your winners". However, the win rate was attrocious and my winners - even though they were large - weren't making up for the frequent losers. More confusing was the fact that other fozzy traders don't profess to having such a low win rate offset by an occasional home run. In fact, some have posted winning percentages in the 70%+ range. So what was I doing wrong?

For one thing, I was spending WAY too much thinking about filters (see my previous post). The filters are like sirens tempting you to crash on the shore. You can drive yourself insane searching for a better fozzy filter.

For another thing, I think that my SL/TP strategy was far too slow to lock in profits. I thought I was being wise by trying to let things run as long as possible - but just because you are trying to "let it run" doesn't mean that you can't lock in some of those profits.

I am really starting to see that the fozzy method - like almost any method - is really only as good as your R:R strategy. I always knew that R:R could have a big impact on a strategy, but I didn't honestly believe that poor R:R would turn a good strategy into a poor one (or vice versa). This is why I liked Beach's post so much - because it gave some simple and concrete suggestions for how to handle SL/TP.

Now if you're like me, you loathe the idea of just using an arbitrary number to set SLs or TPs. I mean, why take profit at 100 pips? Would 50 pips be better? Why not 200? What is so magical about 100 pips? Or any other number for that matter.

But I have been doing a lot of research lately into ATR. ATR has already been mentioned plenty of times in this thread, but I think it's a great measuring stick for how much you can reasonably expect to win/lose on any given pair in a given period of time.

If you look at Beach's post, he gives a suggestion of using a 40-pip SL on EURUSD. I read that as: ATR(30) x 0.7. 70% of EURUSD's current ATR(30) value is actually 48.

He also suggests using a TP of 60 pips. I read that as: ATR(30). EURUSD's current ATR(30) value is 69.

Finally, he suggests using a 2nd TP level of 100 pips. I read that as: ATR(30) x 1.7. 170% of EURUSD's current ATR(30) value is 117.

So now I have SL, TP1, and TP2 values that don't feel nearly so arbitrary to me (this is very important for someone like me who really wants to be mechanical about his trading). This also allows me to set SL/TP levels that are appropriate for each pair. I am also going to set my initial SL as a trailing stop. This means that I will almost never get stopped out for the full value of the initial SL.

Now I don't want to sound too boisterous about this approach. Results will ultimately determine if it's effective. But this is exactly how I am going to trade the fozzy for the foreseeable future.
  • #2,250
  • Jun 8, 2007 11:10am Jun 8, 2007 11:10am
#

hear,hear..

Quoting Bytebodger
I hope that any newbies (and even some of the established members) will understand just how insightful your last post was. This has sparked a lot of thought from me and has coincided with some of my recent findings. I'm going to share them here, but it's going to take me a few posts to do so.

First of all, I want to highlight what you have said above about NO OTHER INDICATORS. Like many other fozzy followers, I have been on this long quest for the Perfect Fozzy Filter. I want something mechanical (because the original fozzy system is extremely mechanical) and, ideally, I want something that filters out bad trades - especially those pesky back-to-back crosses.

I have now come to a stark conclusion about these mechnical fozzy filters - they don't work. I haven't been able to find any single mechanical filter that increases the return on the fozzy method.

I'm not saying that all the mechanical filters will hurt your fozzy trading. Any filter - by definition - will keep you out of some trades and some people just prefer to trade less. I've seen a number of filters that lower the trade count while still maintaining the same overall win percentage. But I haven't found one yet that actually makes the fozzy method more profitable.

Think about this "historically". Fozzy himself was using the Bollinger Bands on the RSI to filter trades, but I don't think anyone is using that filter anymore. BeachBum has posted a series of great test results using NO filter. One of the more popular filters - the "willf fozzy" - is now no longer being used by its founder. It seems that the "beach fozzy" was in vogue for a while in this thread, but it's been a long time since I saw anyone post a chart with this setup. I played around for a while with the Parabolic SAR as a filter and this worked just like all the other filters - it kept me out of trades but did not increase my expectancy.

With all this being said, I want to acknowledge that a number of members profess to successfully using their own discretionary filters. I have no doubt that with the proper experience in the markets, you can probably increase the expectancy of this system with the use of proper discretion. But if you're like me, you're trying to first find a system that you can trade mechanically and profitably. Once I've started locking in profits (even if they are modest profits), I would be more interested in trying to apply proper discretion.
  • #2,251
  • Jun 8, 2007 11:16am Jun 8, 2007 11:16am
Quoting Bytebodger

I am also going to set my initial SL as a trailing stop. This means that I will almost never get stopped out for the full value of the initial SL.

As you are aware ( I learned the hard way so I want to let newbies who maybe reading this post) a trailing stop only triggers when you are so many pips in profit. Remember to set that initial stop loss. And if you are using metatrader, you need to leave it running for the Trailing Stop to work. I love your posts man so keep them coming!

Chris
  • #2,252
  • Jun 8, 2007 11:36am Jun 8, 2007 11:36am
Quoting Cmartin371
As you are aware ( I learned the hard way so I want to let newbies who maybe reading this post) a trailing stop only triggers when you are so many pips in profit. Remember to set that initial stop loss. And if you are using metatrader, you need to leave it running for the Trailing Stop to work. I love your posts man so keep them coming!

Chris
Wow, that's weird behavior. I use MB Trading and when I set a trailing stop it immediately creates a SL X-pips behind the current price. Also, MB's trailing stops are server side - that means that my computer can completely blow up and my trailing stop will still be active.

But it's good to know that other brokers do not have the same functionality.
  • #2,253
  • Jun 8, 2007 1:47pm Jun 8, 2007 1:47pm
Dear BeachBum, Wilf and Bytebodger,
thank you for your great posts! Interesting ideas, helpful info.

You gave us brilliant SL and TP rules. But one thing is still open if we talk about absolutely mechanical decision-making. You talk about not using filters (now, after these posts, I agree with your opinion absolutely) but still - about discretionary in the problem of taking signals.

So... For adding the final dot to the technic of mechanical Fozzy trading - can you formalize 2 rules: "If ... then I take this signal", "If ... then I don't take this signal"?

My current base for this variants are S/R lines, bigger TF trend and candle formations. Let's make it more complete?

Thank you for your additions to this system!!!
  • #2,254
  • Jun 8, 2007 2:02pm Jun 8, 2007 2:02pm
  •  TPO
  • | Joined Sep 2006 | Status: One Life, One Chance | 68 Posts
Thanks for the excellent posts Bytebodger!

-TPO.
  • #2,255
  • Jun 8, 2007 2:03pm Jun 8, 2007 2:03pm
Quoting aktaurus

My current base for this variants are S/R lines, bigger TF trend and candle formations. Let's make it more complete?

Agreed! Price Action and Fozzy combined could be a killer. I have seen BB mention this in his posts....specifically candle formation
  • #2,256
  • Jun 8, 2007 2:32pm Jun 8, 2007 2:32pm
Quoting aktaurus
Dear BeachBum, Wilf and Bytebodger,
thank you for your great posts! Interesting ideas, helpful info.

You gave us brilliant SL and TP rules.
Just to be clear, I am NOT trying to claim that those SL/TP rules are actually rules at all. I took BeachBum's empirical numbers and translated them into ATR values. But there is still plenty of room for debate whether the initial SL should be 0.7 x ATR(30), or some other multiple. Whether the initial SL should be a simple stop or a trailing stop. Whether you should use 1, 2, or more TP levels. Whether 1 x ATR(30) is appropriate for the 1st TP level. Whether 1.7 x ATR(30) is appropriate for the 2nd TP level. Whether ATR really is the best metric for setting these levels and whether 30 is the best value for ATR periods.

In other words, this is all up for debate and is best answered by your own backtests. Don't take any of this as gospel. I'm just telling you that this is how I am going to trade from here and I have, up to this point, lost a lot of money - so consider that carefully before jumping on my bandwagon.

Quoting aktaurus
You talk about not using filters (now, after these posts, I agree with your opinion absolutely) but still - about discretionary in the problem of taking signals.

So... For adding the final dot to the technic of mechanical Fozzy trading - can you formalize 2 rules: "If ... then I take this signal", "If ... then I don't take this signal"?
Maybe I'm misunderstanding you, but this sounds like you're trying to quantify the discretionary elements employed by some fozzy traders. Forgive me for pointing out the obvious, but you can't truly quantify a discretionary element. If you could, it wouldn't be discretionary now, would it?
  • #2,257
  • Jun 8, 2007 3:12pm Jun 8, 2007 3:12pm
Thanks for the detailed answer!

Let me return again to the main theme.

Quoting Bytebodger
Maybe I'm misunderstanding you, but this sounds like you're trying to quantify the discretionary elements employed by some fozzy traders. Forgive me for pointing out the obvious, but you can't truly quantify a discretionary element. If you could, it wouldn't be discretionary now, would it?

I'm afraid that it's me doesn't uderstand you. I'm just trying to gather all the reasons for ignoring some signals. As I see it, this addition will make aviable complete the idea of mechanical trading process in this system. So we need to formalize all discretionary elements. My 2 of them I wrote. Am I wrong?

Thank you!
  • #2,258
  • Jun 8, 2007 3:38pm Jun 8, 2007 3:38pm
The last few posts about mechanical vs discretionary trading is nothing new, and IMO there is no solid answer that fits every trader in every situation.

This is one of the reasons yesterday I posted a suggested, 100%, purely mechanical Fozzy method to be used with the EUR/USD.

Discretionary elements are just that; discretionary. One man's discretion is another man's grief.

As far as Fozzy trading is concerned; I don't think we can quantify, list and post a list of these.

My own personal experience and the comments of others leads me to the conclusion that most of us get into trouble when we "try" to be discretionary in picking trades. How many times have you used "your discretion" to pick the wrong trades and pass on the good ones? Or read the confessions of others who have done the same? It's an art, not a science.

Establish "rules" and stick to them; come hell or high water! Your trading acount will thank you!
  • #2,259
  • Jun 8, 2007 3:44pm Jun 8, 2007 3:44pm
Quoting aktaurus
So... For adding the final dot to the technic of mechanical Fozzy trading - can you formalize 2 rules: "If ... then I take this signal", "If ... then I don't take this signal"?

When 8 RSI crosses 8MA; trade in the direction of the cross. Use S/L and T/P values gleaned from thorough backtesting. Allow trades to close at either T/P or S/L. DO NOT DEVIATE from your rules. Watch your account grow!
.
  • #2,260
  • Jun 8, 2007 3:45pm Jun 8, 2007 3:45pm
Quoting aktaurus
Thanks for the detailed answer!

Let me return again to the main theme.




I'm afraid that it's me doesn't uderstand you. I'm just trying to gather all the reasons for ignoring some signals. As I see it, this addition will make aviable complete the idea of mechanical trading process in this system. So we need to formalize all discretionary elements. My 2 of them I wrote. Am I wrong?

Thank you!
If you're looking for reasons, they can generally be listed as price action, candlestick patterns, support/resistance, long-term/short-term trends, fibonacci levels, etc.

But if you're looking for specifics, then that goes against the whole idea of "discretionary". "Discretionary" means that someone is making a judgement call. Asking someone to formalize their discretionary trading process is like asking someone to formalize the process that one uses to pick a dinner item off a restaurant menu. Exactly why did I choose the cordon bleu last night over the fried chicken? That's almost impossible to define, and even if I could, I could eat at the same restaurant tomorrow and make a completely different choice.

So my point is that it is logical to ask "What are the discretionary factors that you use to make trades?" but it is not logical to assume that you can formalize these factors into a consistent, repeatable system. If you could formalize those factors, then it wouldn't be discretionary.

And if you want to know what discretionary factors people are using to trade the fozzy, you will be escorted back to Post #1. There have been numerous posts throughout this thread that have listed the discretionary elements that some traders use when considering fozzy trades.
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