Thanks to everyone for their dedication to this thread. Very enlightening.
I've been toying with a number of different "systems" over the past couple years with marginal success, mostly indicator-based. The thing I like most about this approach is the predetermined T/P levels (as opposed to waiting for an indicator to tell you when to exit). I had recently adopted that approach based purely on S/R in my current favorite system.
Took me a few days to get through this thread, and it is certain that I missed a lot of the meat. But you've got to start somewhere, so I did today.
Went back to 1/1/07 and tested through approximately 4/30/07 on a daily GBP/USD chart. I set my fibs on the previous day's high and low took the trades at the break. S/L was set at the opposite end of the range. The win/loss (60/18) ratio was impressive, but the fact that you lose 100% of the range when stopped out and only win 38% of the range when you win just kills the profit level to basically break even.
So I went back and found something interesting (and you all probably already learned this) that I thought I would share:
When the short or long level is penetrated (initiating a trade) and fails to immediately hit the T/P level, if it re-traces past the 50% fib, it rarely hit the T/P before it reached the S/L. In other words, it almost always ended up with a loss. Thus, the strategy for setting the S/L could be changed from the full range to the 50% fib, immediately cutting the losses in half (with no impact on the winners), and making the simple strategy profitable. If there was no re-trace past the 50% fib, it virtually always eventually hit the T/P.
I also considered setting the S/L even tighter, but that turned too many of the winning trades into losers.
So I learned something today, but was left wanting more, thus my questions:
1. There hasn't really been too much discussion about what has been learned about PA. A lot of charts showing Fib placement. Any of the veterans care to share what they have learned about what to look for in PA when approaching a break? Gotta be a way to filter out some of the losing trades based upon PA (without killing the winners).
2. I've noticed that in many posts that people talk about setting tight stops. So far in what I've observed, this is very difficult to do without sacrificing a lot of winning trades that are turned into losing trades. Again, some comments on this subject would be welcome.
Thanks!
I've been toying with a number of different "systems" over the past couple years with marginal success, mostly indicator-based. The thing I like most about this approach is the predetermined T/P levels (as opposed to waiting for an indicator to tell you when to exit). I had recently adopted that approach based purely on S/R in my current favorite system.
Took me a few days to get through this thread, and it is certain that I missed a lot of the meat. But you've got to start somewhere, so I did today.
Went back to 1/1/07 and tested through approximately 4/30/07 on a daily GBP/USD chart. I set my fibs on the previous day's high and low took the trades at the break. S/L was set at the opposite end of the range. The win/loss (60/18) ratio was impressive, but the fact that you lose 100% of the range when stopped out and only win 38% of the range when you win just kills the profit level to basically break even.
So I went back and found something interesting (and you all probably already learned this) that I thought I would share:
When the short or long level is penetrated (initiating a trade) and fails to immediately hit the T/P level, if it re-traces past the 50% fib, it rarely hit the T/P before it reached the S/L. In other words, it almost always ended up with a loss. Thus, the strategy for setting the S/L could be changed from the full range to the 50% fib, immediately cutting the losses in half (with no impact on the winners), and making the simple strategy profitable. If there was no re-trace past the 50% fib, it virtually always eventually hit the T/P.
I also considered setting the S/L even tighter, but that turned too many of the winning trades into losers.
So I learned something today, but was left wanting more, thus my questions:
1. There hasn't really been too much discussion about what has been learned about PA. A lot of charts showing Fib placement. Any of the veterans care to share what they have learned about what to look for in PA when approaching a break? Gotta be a way to filter out some of the losing trades based upon PA (without killing the winners).
2. I've noticed that in many posts that people talk about setting tight stops. So far in what I've observed, this is very difficult to do without sacrificing a lot of winning trades that are turned into losing trades. Again, some comments on this subject would be welcome.
Thanks!
here's my take for GJ today:
.
