Geico strategy---so simple a caveman can do it! | Forex Factory

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Geico strategy---so simple a caveman can do it!

  • #1
  • First Post: Sep 13, 2007 8:32am Sep 13, 2007 8:32am
This is my first post, but I have enjoyed this forum for almost 2 years-- it is the best of its kind on the net!!!

I have been trading a simple Eur/USD system for almost 10 months (180 trading days) on my mini account. It has been profitable, my average is just over 9 pips per day. I am considering using it in my regular account, but I thought you guys might have a look and give your opinion. I am a little embaressed at how simple it is, but it has been producing consistent profits. I have tried things a lot more sophisticated, but they have lost me a lot of money!
Geico Trading--
1. Start with the price at the 6am est candle close
2. Straddle that price with entry 20 pips above and sell 20 pips below. If no
entries hit by 10:30 am est, I am out-- no trades for the day.
3. No limits set, stops are 40 pips away from entry
4. Once a trade is in the money by 10 pips I engage a 10 pip trailing stop--
let it run until stopped out.
5. If trade is still open at 12pm est, I close it at market.
6. I match my pip size so that a 40 pip loss will cost me 3% of my account.


I know that this is ridiculosly simple----have I just been lucky? Will this eventually cost me another 30K (the size of my regular account?) I would appreciate any comments you have--- there is a lot of talented people that post on this forum
  • #2
  • Sep 13, 2007 8:40am Sep 13, 2007 8:40am
Quoting FX-Petra
This is my first post, but I have enjoyed this forum for almost 2 years-- it is the best of its kind on the net!!!

I have been trading a simple Eur/USD system for almost 10 months (180 trading days) on my mini account. It has been profitable, my average is just over 9 pips per day. I am considering using it in my regular account, but I thought you guys might have a look and give your opinion. I am a little embaressed at how simple it is, but it has been producing consistent profits. I have tried things a lot more sophisticated, but they have lost me a lot of money!
Geico Trading--
1. Start with the price at the 6am est candle close
2. Straddle that price with entry 20 pips above and sell 20 pips below. If no
entries hit by 10:30 am est, I am out-- no trades for the day.
3. No limits set, stops are 40 pips away from entry
4. Once a trade is in the money by 10 pips I engage a 10 pip trailing stop--
let it run until stopped out.
5. If trade is still open at 12pm est, I close it at market.
6. I match my pip size so that a 40 pip loss will cost me 3% of my account.


I know that this is ridiculosly simple----have I just been lucky? Will this eventually cost me another 30K (the size of my regular account?) I would appreciate any comments you have--- there is a lot of talented people that post on this forum
Yep a good one... There are many other similar methods around and you are right it is working. That you have done it so long it is even better. All my calculations showed success. I wish you goog luck. I use a similar method and included RSI to improve.
.
  • #3
  • Sep 13, 2007 9:04am Sep 13, 2007 9:04am
Hi FX-Petra;

Thanks for sharing. Its sound simple and nice, will try it..

May I know the entry point 20pips above / below is it apply to the closing price at 6am est ?
  • #4
  • Sep 13, 2007 9:16am Sep 13, 2007 9:16am
Oh... people would be surprised just how simple profitable strategies are...

My question, of which the answer is not apparent, is have you backtested this with a good amount of data, as well as fowarded it?

These kinds of strategies, while they won't kill you quickly, can make you bleed a long time, which means you'll probably ditch it after a bad month (provided you didn't do good testing)...

Just a thought/question.
Mr. Trend
  • #5
  • Sep 13, 2007 9:17am Sep 13, 2007 9:17am
Why 6am est?--- well, I hand tested 3 years of Eur/Usd (took me 2 weeks!) and I found this to be the most "neutral" point of all the candle closes, as it relates to the NY session. 1am est was also a good time was also a good time, but man, I gotta sleep sometime--I also have a full time job! 6am also makes intuative sense. London has been open for a while, and NY will join the party soon. There are not very many stong 6am candles with a big range, but when they do occur it is very likley that the trend will continue into the 7am candle
  • #6
  • Sep 13, 2007 12:15pm Sep 13, 2007 12:15pm
Quoting FX-Petra
1. Start with the price at the 6am est candle close
What time frame are you using? It would make a difference.
The 6AM EST 15M bar closes at 6:15AM. The 6AM 1H bar closes at 7AM etc. At least they do on MT4.
  • #7
  • Sep 13, 2007 12:45pm Sep 13, 2007 12:45pm
This looks like a good candidate for an EA....
  • #8
  • Sep 13, 2007 12:58pm Sep 13, 2007 12:58pm
Quoting blueruby
This looks like a good candidate for an EA....
Yep it does.
It would be better than getting up at 5AM. I'm Central time.
  • #9
  • Sep 13, 2007 1:04pm Sep 13, 2007 1:04pm
Quoting FX-Petra
This is my first post, but I have enjoyed this forum for almost 2 years-- it is the best of its kind on the net!!!

I have been trading a simple Eur/USD system for almost 10 months (180 trading days) on my mini account. It has been profitable, my average is just over 9 pips per day. I am considering using it in my regular account, but I thought you guys might have a look and give your opinion. I am a little embaressed at how simple it is, but it has been producing consistent profits. I have tried things a lot more sophisticated, but they have lost me a lot of money!
Geico Trading--
1. Start with the price at the 6am est candle close
2. Straddle that price with entry 20 pips above and sell 20 pips below. If no
entries hit by 10:30 am est, I am out-- no trades for the day.
3. No limits set, stops are 40 pips away from entry
4. Once a trade is in the money by 10 pips I engage a 10 pip trailing stop--
let it run until stopped out.
5. If trade is still open at 12pm est, I close it at market.
6. I match my pip size so that a 40 pip loss will cost me 3% of my account.


I know that this is ridiculosly simple----have I just been lucky? Will this eventually cost me another 30K (the size of my regular account?) I would appreciate any comments you have--- there is a lot of talented people that post on this forum
When a trade is triggered do you cancel the other order?
  • #10
  • Sep 13, 2007 1:32pm Sep 13, 2007 1:32pm
Do you do this on heavy news days, or do you pass on those days?
  • #11
  • Sep 13, 2007 1:41pm Sep 13, 2007 1:41pm
Hmmm. Good question. Lots of news releases happen at 0830, 1000 and 1030 EST
You are in a maze of twisty little passages, all alike.
  • #12
  • Sep 13, 2007 2:47pm Sep 13, 2007 2:47pm
Thanks for all youir replies!! I will try to answer a few questions.
Do I cancel my other order when one is triggered?
Yes I do...unless I am stopped out within 15min of my entry. If there is a strong 40 pip move in 15 minutes then it is likley that my first order was taken on a "fake out" move. In that case, I will let my second order run with the same 10 pip trailing stop. This has only happened to me 4 times in the last 180 trading days. All 4 times the second order has finished in the money (to varying degrees).

What time frame do I use?
It is 5:05 central time where I am, and the candle that just closed says 6am est. The new candle that has just opened says 6:05 when I point at it. Hope that helps.

Do I trade news days?

Yes, except for NFP Friday. I think I should trade this day...but the whipsaw action we saw last year would beat the stuffing out of me. However, the last several months have been pretty smooth and I would have made some good pips.


Can anyone give me a solid reason why this wouldnot work? Maybe something obvious that I am missing. Obviously, all fx has risk. This has been profitible on my mini for 10 months.
  • #13
  • Sep 13, 2007 2:51pm Sep 13, 2007 2:51pm
Well, if the bid/ask spread widens during news events as it does with Oanda, then you could get goofed up. Some brokers have fixed 3 or 4 pip spreads at all times.
You are in a maze of twisty little passages, all alike.
  • #14
  • Sep 13, 2007 3:30pm Sep 13, 2007 3:30pm
FX-Petra,

I think you would have been even more profitable if you omitted such a tight TS or entirely replaced it with strong SL (i.e. 75 - 100+ pips). Instead of a straight 40 pip TP, perhaps a range of TP from 20 - 75 on multipe trades would help secure some profits as well.

Thanks,
Walt
  • #15
  • Sep 13, 2007 3:37pm Sep 13, 2007 3:37pm
Ironically, I tried a similar method earlier this week. I added 25 pips to the close price as of 0:00 GMT (8:00 PM EST) and went long. Likewise, I subtracted 25 pips from the same close price and went short. My TP-60 & SL-50 were the same for both directions. As a result of this method I lost 5 of the 6 trades that I entered. I believe that my fundamental problem was SL too small & TP too large. Perhaps I will reconfigure and test accordingly.

thanks,
Walt
  • #16
  • Sep 13, 2007 3:52pm Sep 13, 2007 3:52pm
Quoting jones247
Ironically, I tried a similar method earlier this week. I added 25 pips to the close price as of 0:00 GMT (8:00 PM EST) and went long. Likewise, I subtracted 25 pips from the same close price and went short. My TP-60 & SL-50 were the same for both directions. As a result of this method I lost 5 of the 6 trades that I entered. I believe that my fundamental problem was SL too small & TP too large. Perhaps I will reconfigure and test accordingly.

thanks,
Walt
You might want to try multiple TPs and put to breakeven to SL when like you have 30-40 pips in gain. You might also try to use a filter like RSI. So if RSI>50 just go long and if RSI<50 just go short... Just some ideas.
.
  • #17
  • Sep 13, 2007 4:06pm Sep 13, 2007 4:06pm
Quoting FX-Petra
Thanks for all youir replies!! I will try to answer a few questions.
Do I cancel my other order when one is triggered?
Yes I do...unless I am stopped out within 15min of my entry. If there is a strong 40 pip move in 15 minutes then it is likley that my first order was taken on a "fake out" move. In that case, I will let my second order run with the same 10 pip trailing stop. This has only happened to me 4 times in the last 180 trading days. All 4 times the second order has finished in the money (to varying degrees).

What time frame do I use?
It is 5:05 central time where I am, and the candle that just closed says 6am est. The new candle that has just opened says 6:05 when I point at it. Hope that helps.

Do I trade news days?

Yes, except for NFP Friday. I think I should trade this day...but the whipsaw action we saw last year would beat the stuffing out of me. However, the last several months have been pretty smooth and I would have made some good pips.


Can anyone give me a solid reason why this wouldnot work? Maybe something obvious that I am missing. Obviously, all fx has risk. This has been profitible on my mini for 10 months.
Ok- so you are working with the price at 6:05 ET.

I can't tell you any reason it won't work. I can only say that breakout systems are notoriously fickle. They will work for a year or two and then go sour.

This one may well be an exception.

I would also suggest you fight the temptation to add filters and indicators to it. I would leave it like it is and play with the SL and PT , if anything, to try to maximize it. That's just my opinion and it's no better than anyone elses:-)
  • #18
  • Sep 13, 2007 5:51pm Sep 13, 2007 5:51pm
well said, billbss. I came to this simple strategy after using a number of indicators with it.... and I concluded that they just confused me and cost me money! I found I was not getting in a lot of trades because my "indicators" did not line up. I do like the idea that some have mentiond to perhaps look at RSI as a potential guide to exiting profitable trades---not just wating to give 10 pips back on the trailing stop. My RSI problem is this--What time frame to use? There are times when the 5min RSI says get out, and the 1hr RSI still has room to run.
Some have also suggested not having such a tight trailing stop. I agree I might well do better by having more "breathing" room, but I hate seeing winners turn into losers!! I know I should be a robot and have no emotion, but seeing a 20 pip win turn into a 40 pip loss tends to make the rest of my day go foul!!!
  • #19
  • Sep 13, 2007 5:55pm Sep 13, 2007 5:55pm
Quoting FX-Petra
well said, billbss. I came to this simple strategy after using a number of indicators with it.... and I concluded that they just confused me and cost me money! I found I was not getting in a lot of trades because my "indicators" did not line up. I do like the idea that some have mentiond to perhaps look at RSI as a potential guide to exiting profitable trades---not just wating to give 10 pips back on the trailing stop. My RSI problem is this--What time frame to use? There are times when the 5min RSI says get out, and the 1hr RSI still has room to run.
Some have also suggested not having such a tight trailing stop. I agree I might well do better by having more "breathing" room, but I hate seeing winners turn into losers!! I know I should be a robot and have no emotion, but seeing a 20 pip win turn into a 40 pip loss tends to make the rest of my day go foul!!!
Petra, how about using breakeven? Say after 20 pips gain you trail your SL to breakeven. If it is hit oh well. You still can reenter the trade later if the price falls below your original entry if it was a long order?
.
  • #20
  • Sep 13, 2007 6:02pm Sep 13, 2007 6:02pm
I will give this some thought, Bullrock. As I look back over my trades I see at least 6 or 7 days that a 20 pip trailing stop would have turned good trades into GREAT trades. This is something that I will consider... maybe 10 pip stop loss until it gets to 20 pips, then changing to 20 pip stop. I will really have to go over my trades to see how this would affect my performance. You have given me a good idea to explore....thanks!!
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