Absolute Simplest KISS Method. Also, how do we measure risk reward?

I believe that a system's profitability does not depend on the success rate of every single trade, instead, it has more to do with how much bigger its winning trades are than its losing trades. for example, a system with a 30% Win/Loss ratio can be very profitable if its winning trades are 4 times bigger than its losing trades. such a system in the long run will make a lot of money. And I believe that a random entry method can be turned into a successful trading system with a proper set of rules. such as,

1. you have to be consistent with your 'randomness'.
2. you must have a consistent exit strategy. it can be as simple as 'exit as soon as you've lost 30% of your floating profit.'
3. you can not use a fixed profit target. because the point of such a system is to capture the really big moves.
4. you have to use a stop loss.
5. don't wait for your stop loss to be hit. define rules that help you recognise when a trade is not going your way. for example, if after 2 hours you do not have 20 point floating profit, exit at market with no exception.
6. you must have consistent money management rules.

the more I learn about the market, the more I start to feel that entry is really the last thing you should worry about in your trading. I believe that when developing a trading system, only 10% of your energy should be spent on finding a good entry. the majority of your effort should be put to refine your skills on recognising when a trade is not working. and by doing that, minimising your loss for each and every trade. once you have done that, profit will take care of itself.

Why doesn't someone please post a system with a completely random entry that is profitable? Everyone in this thread says it can be done; why isn't anyone doing it?

There is one. I'll debate that the daily range strategy is a random entry system even though they base their price/trigger combination off of a set time. I don't think it affects the system much though. I think it's the simple idea of waiting for so many pips from a certain point that makes it successful, because you know that price has a pursuasion to continue in that direction. Exactly why I started the probability system theory thread.

How often would you be able to wait 50 pips from a certain point and get 10 pips profit? Take any point on a chart and try it. I bet you would be able to get the 10 pips more often then not. Which is again why I need to learn MT4 programming language to code an EA to test it out rather than taking "it isn't possible" as an answer.

I havn't read that thread, but I think it's based on the london open of 3am. So if I change that time to 3pm it won't affect it? If it's truely a random entry, every parameter could be changed, and it would still have to be profitable. I guarantee it would not be profitable if the time was changed drastically in the "daily range".

Please, I would like to see it.

Where did I write "3 of that 5"? You seem to be highly confused. Are you a novice? Please learn the basics of FX first. Thank you.

Yes, I am a novice. I have been trading for 3 days now, but in that time I have realized some basics that apparently you have not. I'll even go out of my way to teach you them.

First of all when you open a trade you are immediately at a loss because of the spread. You see, if you have a 3 pip spread and you open a trade, you are at a 3 pip loss as soon as you open that trade. Furthermore, this spread is also counted in your stop loss. Therefore, if you open a position that has a 3 pip spread and set a 5 pip stop loss, you are giving yourself 2 pips of leeway since you are immediately at -3 on the trade and if it reaches -5 the position is liquidated. I'm not sure where you learned you start a trade +3 and not -3 as apparent by your so called 8 pips of leeway.

Is there anything else that you want the novice to teach you?

You'll be waiting a long time since I haven't the slightest clue how to program an EA myself.

Yes you could change every parameter and still be profitable, except for the TP and SL. No matter how good your system is it's not going to win in the end if you have a 10 TP and 60 SL or some drastic imbalance like that.

You don't need an EA to look at how often 5-10 pips are available when you wait 50 pips from any point on a chart. It works on all time frames, but for different proportions. 2 hour chart, wait 100 pips, look for 15-10 pips, but that is only so you can see market movement. In reality, since it is random, you could wait 100 pips on any chart and look for 5-10 pips. I'll get back to this later.

The only times it wouldn't work would be when you were unlucky enough to enter a position at the peaks or valleys. In which case it could still be profitable if you only looked for 5-10 pips and the general market activity would give you those pips. Or it would be unprofitable if you're SL was too close and didn't allow for that general market noise.

In the daily range thread I later came up with the idea that you could increase the success rate by using hindsight. Look for the peaks and valleys that form. If you use a system that uses a 50 pip trigger, then you should have enough time to see where the low formed and base your 50 pip trigger off of it. This way you're unlikly to have the problem of a peak or valley forming against the direction of your trade. Is it random? I guess you could say it's not entirely random, but I have no set price for where I'm basing the trigger off of. Does it care about indicators, chart formations and the like? No. It's only concerned about current price and the probability that price will continue in that direction.

Which brings me back to the point that it doesn't matter how many pips you wait, there will always be pips available. The only thing waiting 50 pips, 100 pips, or 200 pips does is give your trade an edge at being in the right direction of the current trend. It doesn't matter if you set it only off of a specific time, or look for 50, 100, or 2000 pips. The daily range thread has bad days/weeks just like any other system. Whats the point of waiting for a specific time on a chart when a trigger off of any price will do the same? Get what I'm saying?

I'm really not trying to argue with you here. I am just asking for a random set of entries that would be profitable. There would have to be no basis whatsoever for entering a trade.

The best random set of entries that I can think of would be to buy at the beginning of a set of data. When that trade is either stopped out or the limit is reached, you would sell next bar. After that trade is closed, immediately buy again. These are completely random because you have no idea how long each trade will last, hence, you have no idea when the next trade will open. Rules such as buy/sell at a specific time is not random. Rules that take into account in indicator value is not random. Rules that take into account hindsight is not random. Get what I'm saying?

@ twinchell

8 - 3 = 5

SL = 5

Do you finally get it now? Oh dear, oh dear ...

I'm sorry, I still don't get it, but goodluck with your 5 pip stop loss and your 8 pips of leeway. I'm sure you'll be very wealthy one day.

anyone tried with GBP/JPY?

Yes I understand.

I can only speak for those systems and their probabilities. Your buy/sell random entry is possible. For that to be profitable it would have to have the smallest TP/SL allowed; maybe look only for 1 or 2 pips profit on each trade. This way the system wouldn't know if the market was ranging or trending, the movement, on a small time frame, would appear the same.

Although, I don't think even your buy/sell pattern is random. It's just that, a pattern. A coin flip is random in that you can have heads several times in a row. Tails several times in a row. There wouldn't be anything random about just going buy, sell, buy, sell, buy, sell.


So this is why I think the only truly random entry is one dictated by price; a grid system. This is how I wanted to program my EA. Enter a position at any price and place a straddle of TP and SL that is equidistant from the entry to give us a 50/50 shot. Then let price action dictate the next entry. Will it be buy or sell? Well if im originally long and it gets stopped out then immediately reverse the position and enter a new short position which again has SL/TP equidistant from entry. I still don't know where price will go. The ideas are somewhat discussed in my thread titled "probability system theory and money mangement."

I can't discuss actual outcomes to the system since it would require an EA to evaluate effectively. We can assume though, that the market would produce a profit since it does not stay in the same 100 pips forever. The TP/SL would have to be large enough to avoid whipsaws and small ranging markets, but not be too large that trends can occur inside the TP/SL straddle and reverse more often on us than continuing a trend.

You're probably right. I guess it would be interesting, but I still think that your time would be better invested in other endeavors, such as actually having a reason to take a trade.

Hot chicks?

But anyways, I'll be trying to learn EA programming. Hopefully shouldn't take too long to find a way to enter buy/sell positions on a grid.

You have this really confused.

Twinchell explained it to you perfectly in his previous post.

Another NOVICE?

Ok...

1st. Do you know what a spread is? If not then here you go...

http://www.investopedia.com/terms/s/spread.asp

2nd. Do you know math? If not then you might find this interesting...

http://www.kidport.com/grade1/Math/MathIndex.htm


Hope that helps.

Kidport.com. That's a great site.

On ignore.

You guys are going to have the thread closed. Please stop. Take it to PM at least.