Pip Farming: An Experiment | Forex Factory

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Pip Farming: An Experiment

  • #1
  • First Post: Jul 15, 2007 12:04am Jul 15, 2007 12:04am
An idea came upon me recently that in theory seems like a great idea: Pip Farming.

My goal is to create an artificial trade that has no Stop Loss. In order to do this, it will require that I trade pretty long-term; after all we are farming here.

Essentially, I will never move my stop and just enter with the REALLY BIG trend. Over time, I believe that the pips will be raked in. Also, along the way I will create multiple entries on dips and create a little pyramid scheme. When the trade moves against me for a while, it won't matter since it's all profit.

The downside is there are a lot of losses and you carry a lot of unrealized gains. It's psychologically confusing, but I believe it will be worth it.

Anyway, this is intended to track my harvesting season, and as to the method of entries, there isn't really any, but maybe I'll explain as I go.

So far, I have lost 392 pips

Current trades equate to 406 pips. They are shown below. Although I am about breakeven, I have planted the seeds for my Pip garden, and by not moving my stop, I am not prone to whipsaws as I ride the big wave. This is how it works in theory. We'll see how it goes.
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  • #2
  • Jul 15, 2007 12:14am Jul 15, 2007 12:14am
Are you doing this live? If so, you've got guts! In theory it should work, the trend is always right, as long as it doesn't change, which can take a very long time anyways. I agree, most people can't psychologically handle being down half their account, even though there is a good *chance* they will end up positive. patience is key. and there always is the possibility of losing it all, as little as it is, it does exist.
  • #3
  • Jul 15, 2007 12:23am Jul 15, 2007 12:23am
Great minds think alike.....I too have been doing a similar strategy.....was down nearly 50% midle of last week and regained it with 4% profit since....this combined with jacko's longterm strategy should work out very well.
Same Whore .... Different Dress
  • #4
  • Jul 15, 2007 7:26am Jul 15, 2007 7:26am
Good luck kharvell
Trade what you see, not what you think.
  • #5
  • Jul 15, 2007 9:23am Jul 15, 2007 9:23am
Quoting ScottH
Are you doing this live? If so, you've got guts! In theory it should work, the trend is always right, as long as it doesn't change, which can take a very long time anyways. I agree, most people can't psychologically handle being down half their account, even though there is a good *chance* they will end up positive. patience is key. and there always is the possibility of losing it all, as little as it is, it does exist.
I guess I've got guts then! Really what I am doing isn't the riskiest thing in the world as I only use about 1% risk per trade. Right now being 392 pips in the hole, I am only down 7%. Let's hope I never see -50%.

Paitience will be key indeed and I must always be mindful of my purpose: Pip farming. If I deviate from this idea, the whole experiment could be ruined.

Quote
Great minds think alike.....I too have been doing a similar strategy.....was down nearly 50% midle of last week and regained it with 4% profit since....this combined with jacko's longterm strategy should work out very well.

Nice recovery! As I say above, I'm definitely not expecting -50%, but who knows with forex. I totally agree with you about Jacko's strategy being grrrreat!

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Good luck kharvell

Thanks karmostaji
  • #6
  • Jul 15, 2007 9:32am Jul 15, 2007 9:32am
Quoting kharvell
Right now being 392 pips in the hole, I am only down 7%. Let's hope I never see -50%.
so you're risking 7% of your account size all at once?
  • #7
  • Jul 15, 2007 9:37am Jul 15, 2007 9:37am
Quoting Trumpcard
so you're risking 7% of your account size all at once?
No sir. I'm risking 1% per trade. Right now I have 11 trades open so I am risking 11% of my account at once right now. I plan to have an accuracy greater than 50% and a R:R hopefully around 15:1. If I hold on to some of these positions for long enough, that kind of R:R is certainly possible.

As far as the 7%, those are just trades I have lost before the fact. Just trying to keep it honest.
  • #8
  • Jul 15, 2007 12:24pm Jul 15, 2007 12:24pm
Looks like your play 11 pairs. Why not play only one pair, and add or remove positions as you see fit? My friend tried a similiar strategy, scaling in his trades, but he couldnt handle large drawdowns. You need a strong stomach for it, good luck!
  • #9
  • Jul 15, 2007 1:32pm Jul 15, 2007 1:32pm
Quoting Xenjin
Looks like your play 11 pairs. Why not play only one pair, and add or remove positions as you see fit? My friend tried a similiar strategy, scaling in his trades, but he couldnt handle large drawdowns. You need a strong stomach for it, good luck!
Thank you. We'll see what happens..
  • #10
  • Jul 15, 2007 9:59pm Jul 15, 2007 9:59pm
How can you only risk 1% per trade? If the trend turns against you and you are down 500 pips before realizing the trend has changed, if you close you will lose more than 1% of your account. No stop losses are risking 100% of your account.
  • #11
  • Jul 15, 2007 10:37pm Jul 15, 2007 10:37pm
I like the idea.
After wiping a couple of demo accounts with some hit and miss strategies, i have come up with a very similar approach. I am currently only trading in AUD/USD and have several longs ranging from 0.8613 to .8707. Rather than have no stop loss. I have put mine in profit taking position some 20pips below close price of the previous day's close.
My intention is to keep placing longs every 50pip or so in positive direction. Placing at most 3 trades per day.
If there is a big swing aginst me, then i will not make a loss, just not as big a profit.

Does it work??

Dont know yet. Its only been going for 3 days...

wait and see
  • #12
  • Jul 15, 2007 10:44pm Jul 15, 2007 10:44pm
another carry trade aboard.....

welcome,,, welcome......
  • #13
  • Jul 15, 2007 11:04pm Jul 15, 2007 11:04pm
Quoting ScottH
How can you only risk 1% per trade? If the trend turns against you and you are down 500 pips before realizing the trend has changed, if you close you will lose more than 1% of your account. No stop losses are risking 100% of your account.
yeap, just wondering how did you size your positions without any stops being placed, which comes to a conclusion...how is the 1% risk per trade being derived?
  • #14
  • Jul 15, 2007 11:18pm Jul 15, 2007 11:18pm
Ok...

Everyone seems a little bit off on their facts, so this post is intended to set the record straight.

The first post lists all my trades and if we avert our eyes to the column denoting "S/L" there appear to be prices for all my trades. I have included another pic shown below for your convenience.

Usually this stop is about 50 pips + spread.

My goal is to get 1000 pips per trade or more.

My strategy making it a no stop loss trade is never moving the initial stop. So essentially if I am up 100 pips, I have a 150 pip stop cusion because of my original stop( That's 100 pips profit + Initial S/L of 50 pips+Spread). When the currency dips, I will just buy more and keep my existing position because I have determined the trend in my opinion.

Quote
another carry trade aboard.....

welcome,,, welcome......

I used to carry a lot more... Don't know why I got away from it...I think it's where the pips are at.

Good luck to ya
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  • #15
  • Edited Jul 16, 2007 1:49am Jul 15, 2007 11:33pm | Edited Jul 16, 2007 1:49am
I am planting more seeds in AUD/JPY and AUD/USD. I figure I will do this around 100 pips or so when it looks good.

Here is an example of why I like it. I've been using rainbows a lot on a very zoomed out time frame. Typically I use the hourly for entries. Mine is a little more zoomed out than this but just for show I will post what I like to see. On the left lists all my EMA's and colors...

This is AUD/USD and I have changed my outlook to include 250ish candles on my chart. It shows an alright outlook on the hourly, but 3-hour and Daily trends look really good. (Most of this applies to AUD/JPY as well). I usually watch the green EMA's. When they cross each other(or flirt) and open back up like they have done here, it is a good time to get back in. Usually we don't want to buy when the green EMA's are hiding behind the dull grey ones. If they are piercing through the grey ones though, sometimes that can be good. Maybe we'll see some of those later.

Long AUD/JPY @ 106.40
S/L = 105.86

Long AUD/USD @ .8726
S/L = .8674

EDIT:

Short EUR/AUD @ 1.5781
S/L = 1.5840
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  • #16
  • Jul 16, 2007 12:55pm Jul 16, 2007 12:55pm
I have entered another lot in Short USD/CAD since I am nearly 100 pips up in profit, and it came from a small retracement, showing some more bearish movement.

Short USD/CAD @ 1.0428
S/L = 1.0481

Also, I entered Long CAD/JPY due to good looking 3-hour and Daily charts and a somewhat decent hourly chart. Below is a chart of my entry called HourlyCADJPY. This is an entry that occurs when the green EMA's come out of hiding from all of the grey ones. I'm a little late, but I'm getting a good deal.

Also, I have attached a picture of my trades for an update on what I currently have.

As of now,

Total UNREALIZED Profit -- 484 pips
Total REALIZED Losses -- (392 pips)

Best of luck.
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  • #17
  • Jul 17, 2007 12:05am Jul 17, 2007 12:05am
I may have entered another lot or two since last time. Definitely another one in NZD/USD.

But here are my trades as of now.

Total UNREALIZED Profit -- 624 pips
Total REALIZED Losses -- (392 pips)
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  • #18
  • Jul 17, 2007 1:25am Jul 17, 2007 1:25am
Hi kharvell,

What is your total outlay so far for seed? (spread)

I see you work out of O an da Farms.

Lou
  • #19
  • Jul 17, 2007 8:46am Jul 17, 2007 8:46am
Quoting Lou
Hi kharvell,

What is your total outlay so far for seed? (spread)

I see you work out of O an da Farms.

Lou
I'm not sure what your question is Lou. Maybe you can put it in simpler terms for a simpler guy. I will tell you that spread is one of the most trivial things to me. When I am shooting for 1000 pips, 3 pips of spread is the least of what I think about.



Alright GBP/USD turned out to be a good pair to be involved with so I entered another lot moving the total up to 3. This pair has yielded my first successful "crop". Since GBP/USD is up 200 pips + 50 pips S/L, then I have a 250 pip cushion to play with. Given the current trend, I think it is unlikely I will be stopped out.

Also, EUR/CHF stopped out for -53 pips.

Total UNREALIZED Profit -- 919 pips
Total REALIZED Losses -- (445 pips)
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  • #20
  • Jul 17, 2007 9:04am Jul 17, 2007 9:04am
Just wondering if that was a consideration for you... apparently not.

Hope you have a good harvest.
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