FXTradepro: Strategy using a “Semi-Martingale” Position Sizing

Quoting lcfxtrader

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Dan,

Have you tried turning off the hibernation mode on the JPY crosses and let it trade for the week and close up shop on Friday? If so, can you please share your experiences? Also, what are your intentions for the FF members after the EA expires on 9/24? Thanks, lcfxtrader

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Quoting FXTradepro

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As of this moment, the FXTradepro Manager EA has been downloaded 391 times, yet only a handful of Traders have commented on its use.

Come on folks....Let's hear what you have been doing with this tool.

Thanks all,

Dan

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Quoting jones247

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I'm focusing on the timing of my entry. Trying to determine the appropriate price point and direction is virtually impossible. Correct me if I'm wrong Dan, but I understand that this impossibility is the basis of why you developed this system.

Thanks,
Walt

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Quoting FXTradepro

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Hello Traders:


I am a long time lurker at Forex Factory and I would like to open a thread to discuss a Profitable Trading Strategy that I have been using for more than 1 year. I have been hesitant to Post in the past regarding this Trading Method as it employs a “Semi-Martingale” position sizing and most of the Threads that I have read on “Martingale” methods here at Forex Factory advise against this concept.


The basic premise of the Strategy is not entirely new, nor do I claim that it is 100% original, however, I have “made it my own” and found a way to trade it profitably. Having said that, I am willing to share the Strategy, but I would first like to determine the level of interest that Factory Members would have concerning such a method. If interest is strong, I am willing to invest the time necessary to explain the method in detail. I will share the basic concepts of the Strategy below and await feedback from Members.


INTRODUCTION: The FXTradepro Forex Trading Strategy

Having actively traded the FOREX Market for more than 5 years, I have learned that PREDICTING what the Market will do, particularly in the short-term, is virtually impossible. We can certainly have an idea of what MIGHT occur, however, we can never be sure. Probability is the key along with a system that helps to exploit this probability.

The FXTradepro Forex Trading Strategy does not rely on our being consistently correct on the Market's direction, but enables us to profit both when we are RIGHT and also when we are WRONG. The Strategy relies on volatility, not on making correct predictions. This is essentially a Day Trading Strategy with trades generally lasting less than a day or two at most.

The Strategy can be traded manually on virtually any Broker's Platform, however, you would need to be at the Trade Terminal constantly to manage and monitor your position, therefore, I highly recommend using a MetaTrader 4 Broker along with my "FXTradepro Manager" Expert Advisor (EA), which I have had programed for me by a professional Coder. Unlike many EA's, the FXTradepro Manager does not trade as a fully automated system. What it does is trade the System or more precisely, MANAGE and monitor our position once we have decided on a solid entry. Essentially, we tell the EA when to enter the market and once that is done the EA will do the rest until the conclusion of the trade.

The Concept:

The FXTradepro Forex Trading Strategy is a probability (expectancy) based System using what I call a "Sequence Of Trades" that runs until a Profit Target is ultimately reached. Below I will break down this idea into the pertinent details:

1) We open a trade (set the EA) based upon our Entry criteria. For example, we open a BUY on EURUSD at 1.3500. Our Stop Loss is set to 10 Pips at 1.3490 and our Take Profit is set to 40 Pips at 1.3540. This is called our INITIAL ENTRY in the Sequence.

2) If our Take Profit is hit we then wait for a new Entry Signal and begin again.

3) If our Stop Loss is hit, then our next trade would be a SELL (assuming our first trade was a Buy as above) which we would enter at Market Price as soon as our Stop Loss is triggered. This new Sell position would have the same Take Profit = 40 and Stop Loss = 10 settings as the Initial Entry. This Sequence Of Trades continues each time our Stop Loss is hit, with the resulting trade going in the opposite direction of the previous trade. The Sequence Of Trades is complete whenever a Take Profit is reached. When using the FXTradepro Manager Expert Advisor, the EA will automatically open and close all trades once we set it for the Initial Entry.

http://aycu35.webshots.com/image/249...1327585_rs.jpg

4). In the above example our Initial Entry was a Buy. Alternately, if our Initial Entry had been a Sell, then the next trade in the Sequence Of Trades would be a Buy, with a 10 pip Stop Loss, and a Take Profit of 40. To summarize the above:

A Sequence Of Trades means that each time our Stop Loss is hit, the next trade would be:

1. In the opposite direction

1. The Stop Loss and Take Profit settings would remain the same as
   our Initial Entry at TP=40 and SL=10 for all trades in the Sequence

1. Lot sizes increase as follows:

http://aycu31.webshots.com/image/245...5862261_rs.jpg


In Summary, the Sequence Of Trades continues, Buying or Selling, while increasing Lot sizes on each position until the Take Profit is ultimately hit. We never have more than 1 position open at a time during a Sequence Of Trades (unless we are trading more than 1 pair at a time). In my experience trading the Strategy over a period of more than a year and using highly selective entries, the vast majority of my trades close by the 12th entry or sooner, leaving plenty of room for unexpected market events.


The FXTradepro Forex Trading Strategy - Trade Example:

Below is a Chart that shows how the Strategy works on a EURUSD Trade. The Take Profit and Stop Loss Settings were the Default Settings of TP=40 & SL=10. The "Sequence Of Trades" was set at 24 Entries using the following Lot Size progression: 0.1 - 0.1 - 0.2 - 0.3 - 0.4 - 0.6 - 0.8 - 1.1 - 1.5 - 2.0 - 2.7 - 3.6 - 4.7 - 6.2 - 8.0 - 10.2 - 13.0 - 16.5 - 20.8 - 26.3 - 33.1 - 41.6 - 52.2 - 65.5.


http://aycu35.webshots.com/image/249...4349205_rs.jpg


This Trade hit the Profit Target on the 5th Entry in the Sequence with a 0.4 Lot position size. The first 4 trades in the Sequence, with 0.1, 0.1, 0.2 and 0.3 Lot position sizes respectively, were stopped out with a 10 Pip Stop Loss on each trade.

Here is how the Trade worked out PROFITABLY starting the Sequence Of Trades with 0.1 Standard Lot which equals 10,000 Units (1 Mini Lot):

#1 - Initial Entry - SELL 0.1 Lot: SL hit -10 Pips @ $1. per Pip = -$10.
#2 - 2nd Entry - BUY 0.1 Lot: SL hit - 10 Pips @ $1. per Pip = -$10.
#3 - 3rd Entry - SELL 0.2 Lots: SL hit - 10 Pips @ $2. per Pip = -$20.
#4 - 4th Entry - BUY 0.3 Lot: SL hit - 10 Pips @ $3. per Pip = -$30.
#5 - 5th Entry - SELL 0.4 Lots: TP hit +40 Pips @ $4. per Pip = +$160.

TOTAL = $160 - $70 in aggregate losses = $90 PROFIT for the Sequence




Currency Pairs to Trade:

The FXTradepro Forex Trading Strategy can be traded on virtually any Currency pair. Since my Stops are tight on each trade (10 pips), I generally prefer to trade Pairs with a pip spread of 5 or less. For pairs with a bigger spread, TP and SL settings, as well as the Sequence of Lot Sizing, need to be modified to accommodate the larger spread.


Expert Advisor & Indicators:


I will post the .ex4 version of my Expert Advisor if there is a suitable amount of interest in the concepts that I have outlined above. There are also several Indicators that I keep on my Charts, however, I focus mainly on Price Action, Support and Resistance and Average Daily Range to decide when to enter the Market and begin a Sequence Of Trades.




The FXTradepro Forex Trading Strategy will not make anyone a millionaire overnight or provide the ridiculously high annual returns that many Traders are hoping for, however, I have been able to make consistent gains using a method that I AM COMFORTABLE with. Please Post your comments and let me know if anyone is interested in learning more about this method. If interest is strong, I will invest the time to continue in more detail and consider the possibility of starting a Journal detailing my Entries and Results


Thanks,


Dan

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Quoting jones247

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I'm focusing on the timing of my entry. Trying to determine the appropriate price point and direction is virtually impossible. Correct me if I'm wrong Dan, but I understand that this impossibility is the basis of why you developed this system. You are correct! Predicting direction is not important. Finding the volatility needed for a market move of 40 pips in your selected direction or 50 pips in the opposite direction is what we are looking to achieve.

Thanks,
Walt

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Quoting jones247

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I have determined that it would be too risky to go past the 15th or 16th progression. Also, for the 1st 4 progressions I enter at 0.01 pips. By the 15th progression I'm only risking 5.4% of my capital. Furthermore, the capital requirement is only $31.9k, as opposed to $47.5k by entering the first 4 progessions at 0.01 pips each. Even with a "blowout" as much as 5% of the time, this would still be very profitable... and I would sleep easier at night knowing only $1,582 is at risk (15 progressions) for a total drawdown vs. having a potential drawdown of more than $31k. The system allows for each trader to determine their own risk tolerance. I like the ability to trade this to 24 Levels, but that does not mean that this is absolute. You can trade in the manner that works for you.

Thanks,
Walt

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Quoting jones247

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Based on the London market's volatility, I believe entering at or after 11:00 PM (EST) will ensure a breakout before a blowout, providing that no major news is being released during the trade sequences.

I'll let you know how this turns out... The UK Session is about the best time to enter. I like to look for my entry parameters beginning around 10 or 11 PM EST.

Thanks,
Walt

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Quoting Plutonite

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Hi there,

You are not alone making money on this stuff, I have friends who trade a far riskier model with dynamically changing TP and SL settings, and there is only one problem with all these systems: depending on how fast you accelerate the lot increases, you may face closed margins sooner than regained losses. It only takes ONE sequence-of-failed-trades to bring this sort of system down, and it can eat away the money you've made over several months in one day.

But stop and reverse (as you are using it) on discretionary entries is going to put the odds in your favor. My suggestion is to make all the entries and exits discretionary, even if you do a stop-reverse yourself. This would then mean that you are trading normally with the hope of not getting 15 losses in a row, and making up some losses on the way.

Best of luck,
-P

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Quoting FXTradepro

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So how did everybody do last week trying out the Strategy? Let's keep the discussion going folks....

Dan

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Quoting EATrader

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Hi Dan,

I think the traders are busy making money with your EA so that's the reason why they don't have time to post :-)

The key to this EA is to have a decent entry or as good entry as possible. Users are trying to figure out the entry. Finding a good entry is not easy. One false move and then get caught in a range can increase the progression level quite high which lead to large drawdown. Thus, good entry is crucial to be successful with this EA. Perhaps, someone can post with method or technique to find good entry (it doesn't have to be the absolute best which is impossible).

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Quoting findcount

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FXTradepro,

so you're getting 40 pips profit every day ? i've never played with gbp/usd before so very ignorant........

so how much would i be risking on the very 1st trade.........

mmmm.........if i start small...it's safer but the profit is less........unless there's always more than 1 profitable trade per day ?

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Quoting criss73

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hey fxtradepro, playing with your EA for 2 weeks now i find, as you trade it, the best entry is around S&R areas and the opening of the EURO markets.

thank you for your contribution and simplicity of the EA!

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