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Sharing a method which has been profitable so far

  • #21
  • Feb 8, 2008 1:59pm Feb 8, 2008 1:59pm
Quoting leeb
Hi everyone

THE RULES:

  1. Open positions at midnight GMT (I have been using InterbankFX)
  2. Entry position is yesterdays (high+low)/2 this is the midpoint
  3. Take profit is ATR(14) / 2
  4. Stop loss is ATR(14)/4
  5. Close all open positions at midnight GMT next day

So far I have been using 0.5 lots but am now starting to use 1.0 lots on each position

Any feedback is welcome !
Hope you enjoy it :-)

You are basically hedging, based on previous day's midpoint as entry. If the price ranges between the sl on both position then the cost for each day is 2x the spread. If only one sl is hit then loss/gain would be profit/loss on open position plus loss on closed position. If both sl are hit then it's a bad day.

Your equity chart shows it's a viable system. Thanks for sharing.
  • #22
  • Feb 8, 2008 2:01pm Feb 8, 2008 2:01pm
smjones,


Very good input!
  • #23
  • Feb 8, 2008 2:05pm Feb 8, 2008 2:05pm
Quoting smjones
you know, if you waited until the price went to the median and then placed a sell stop entry where your original buy stoploss was and also a buy stop entry where your sell stoploss was, you could save one side of the spread and only have one position open, at a time. This would increase profits by the amount of one spread cost, and not put you at any more risk. It is an instant increase in profit with no increase in risk.

This creates the exact same trade without the need to have a buy and sell open at the same time. It also accomplishes the idea, that you do not know which way the market will go.
Not trying to put word in Leeb's mouth, but I think this system was intended to be a set and forget it...at least that's the way I read it from his instructions.
  • #24
  • Feb 8, 2008 2:11pm Feb 8, 2008 2:11pm
Quoting fxtrader2k7
Not trying to put word in Leeb's mouth, but I think this system was intended to be a set and forget it...at least that's the way I read it from his instructions.
Yes, I agree. However, he did suggest this be made into an EA and either way would be quite easy to do. Then it is set and forget with a slightly better profit potential...
  • #25
  • Feb 8, 2008 2:48pm Feb 8, 2008 2:48pm
Thanks to the generous mind sharing this system. I will appreciate it if the entry point, stoploss and take profit can be well explained by using figures. This will help in knowing where to place stop orders.
Thanks in advance
  • #26
  • Feb 8, 2008 4:14pm Feb 8, 2008 4:14pm
Quoting abiolade
Thanks to the generous mind sharing this system. I will appreciate it if the entry point, stoploss and take profit can be well explained by using figures. This will help in knowing where to place stop orders.
Thanks in advance
I don't know how to make it more simple. I even posted indicators that print out the stoploss and takeprofit. and draw a big blue line where the entry is.
  • #27
  • Feb 8, 2008 4:20pm Feb 8, 2008 4:20pm
I like smjones' approach too, that is very good thinking. But everything gets a bit more complicated when the open is beyond the calculated entry points for both long and short positions. In that case you would need to wait something like the original plan... wait for the price to return to some point between the two calculated entries. And that leads to the question, how far does it have to come back? To the median price? Or maybe you calculate something like +/- ATR(14)/8 of the median price. If the price enters that range, both entries become live.

By the way, when someone starts trying to do back testing on this strategy I'm going to unsubscribe ... ... There is just no way I would have any confidence in whatever that analysis is because this system is completely independent of bar closings aside from setting entries and goals. There is no fixed time factor, so there is huge room for error in backtesting calculations. I was doing it by hand and had to do some serious zooming in on timeframes to figure out just a week of data.....

I also took a quick look at 4HR GBPJPY to see what that looked like (by hand). 27 pips net in about 2 days with a position still open. I assumed if the first position established was a loss, you would allow a second trade but only in the opposite direction. Hardly conclusive with just 7 datapoints. Still looks like this restriction on second signals might be wise. The whole system is very interesting though. Good thinking
  • #28
  • Feb 8, 2008 4:51pm Feb 8, 2008 4:51pm
Quote
Thanks to the generous mind sharing this system. I will appreciate it if the entry point, stoploss and take profit can be well explained by using figures. This will help in knowing where to place stop orders.
Thanks in advance

Omo Iya, I think this strategy is clear and simple enough for you to grab, but if you are still finding it difficult. holla me on 08056905612 or mail me choicevine_ng[at]yahoo.co.uk

it is well
  • #29
  • Feb 8, 2008 6:24pm Feb 8, 2008 6:24pm
Nice thinking leeb, what timezone are you looking at? This can make a difference on occasion.

The 50% point is a great level for entries, but here's what I think (based on my gbp/jpy stats):
Let's assume we're using the GMT timezone. If price is approaching the midpoint from above, it is statistically more likely to bounce from there for a long, and if it is approaching from below, it is more likely to be rejected; for a short. If price did not bounce but hit the SL, a stop&reverse is likely to work well. A confluence with the previous week's 50% & the previous day's 50% increases the probability for a bounce even more.

I'll do some analysis for 2007 over the weekend on EURUSD and post some stats on monday.
  • #30
  • Feb 8, 2008 10:13pm Feb 8, 2008 10:13pm
Scott, thanks for these indicators. However the moving average (blue line) does not plot properly for an entry, at least on my IFBX chart. For example, just look at todays EUR/USD chart, for the trade that will be placed on Sunday evening. The blue line is at the very top of the bar, that is, at the high for the day. We want to place the orders at the middle of the bar, not the high. Am I not understanding correctly? Thank you.

Quoting smjones
I don't know how to make it more simple. I even posted indicators that print out the stoploss and takeprofit. and draw a big blue line where the entry is.
  • #31
  • Feb 9, 2008 1:49am Feb 9, 2008 1:49am
Hi,

I have done a backtest since October 1, 2007. You're winning streak is visible at the end, but the other part of the graph doesn't look that promising.

Cheers!

Max
[IMG]file:///C:/DOKUME%7E1/veltink/LOKALE%7E1/Temp/moz-screenshot.jpg[/IMG]
Attached Image (click to enlarge)
Click to Enlarge Name: backtest_10_2007.jpg Size: 48 KB
  • #32
  • Feb 9, 2008 2:06am Feb 9, 2008 2:06am
I traded with a system like this before.

The method works in a trend, but dies in a range.
"One Grows Tall After Walking Through A Forest Of Tall Trees."
  • #33
  • Edited 5:00am Feb 9, 2008 3:21am | Edited 5:00am
If this system works only in a trend, then the question comes to mind: why would you open a position against the trend anyway?

If you catch an entry at the midpoint in a trending market this is like hitting the jackpot.

The answer to this system can only be:
Find out whether we are in ranging market or trend.
If we are in a trend: Find out the direction of the trend.

However, the midpoint idea could be good filter for range or trend: In a ranging market price is around the midpoint most of the time, so you have good entries, but only loosers with this system.
In a trending market price will not often retrace to the midpoint. In this case you will have no or seldom entries = only sometimes winners.

IMHO Conclusion: price behaviour between the close and the midpoint would be the most interesting play to focus on.

Also the spread between close and midpoint could be useful information.
However, a tight spread between close and midpoint could mean congestion befor major breakout or range.

2nd Conclusion, there is no alternative to understanding what's really going on.

Anyway, does this calculator do the job correctly?
Attached File(s)
File Type: mq4 #!eeb-settings.mq4   3 KB | 462 downloads
/ ... clarifying decisions ... /
  • #34
  • Feb 9, 2008 3:40am Feb 9, 2008 3:40am
Quoting Naijafx
Omo Iya, I think this strategy is clear and simple enough for you to grab, but if you are still finding it difficult. holla me on 08056905612 or mail me choicevine_ng[at]yahoo.co.uk

it is well
Oro awon people yi oye mi rara. Is it possible to set buystop and sellstop at the same point? That is where my problem lies. How profitable is this strategy?
Omo forex traders don yapa for naija o. Chop up brother!
  • #35
  • Feb 9, 2008 6:38am Feb 9, 2008 6:38am
Thanks for the interesting variation on the system smjones - it was designed to be a set and forget system. Qman I have to agree that backtests and EAs don't seem to be as reliable as manual trading. Cheers
  • #36
  • Feb 9, 2008 6:40am Feb 9, 2008 6:40am
Hi this system should keep you out of ranging markets, lets see... I understand your concerns about it only working in a trend..
  • #37
  • Feb 9, 2008 6:42am Feb 9, 2008 6:42am
Qman - yep I agree backtests are very often unreliable
Smjones - thanks for your contribution and interesting variation however I did design it to be set & forget
  • #38
  • Feb 9, 2008 7:33am Feb 9, 2008 7:33am
Quoting effilang
I traded with a system like this before.

The method works in a trend, but dies in a range.
Leeb, I think Effilang is correct on this one.

However, it needs to be further tested, possibly with SMJones' idea. Backtesting like you said is unreliable.
  • #39
  • Feb 9, 2008 8:15am Feb 9, 2008 8:15am
Why does it matter if we are in ranging or trending? All we care about is whether daily high and low are of sufficient number of pips to take a loss and a win. This doesn't care if it trends or ranges.

Quoting walb99
If this system works only in a trend, then the question comes to mind: why would you open a position against the trend anyway?

If you catch an entry at the midpoint in a trending market this is like hitting the jackpot.

The answer to this system can only be:
Find out whether we are in ranging market or trend.
If we are in a trend: Find out the direction of the trend.

However, the midpoint idea could be good filter for range or trend: In a ranging market price is around the midpoint most of the time, so you have good entries, but only loosers with this system.
In a trending market price will not often retrace to the midpoint. In this case you will have no or seldom entries = only sometimes winners.

IMHO Conclusion: price behaviour between the close and the midpoint would be the most interesting play to focus on.

Also the spread between close and midpoint could be useful information.
However, a tight spread between close and midpoint could mean congestion befor major breakout or range.

2nd Conclusion, there is no alternative to understanding what's really going on.

Anyway, does this calculator do the job correctly?
  • #40
  • Feb 9, 2008 8:58am Feb 9, 2008 8:58am
Quote
Oro awon people yi oye mi rara. Is it possible to set buystop and sellstop at the same point? That is where my problem lies. How profitable is this strategy?
Omo forex traders don yapa for naija o. Chop up brother!

http://www.forexfactory.com/images/buttons/quote.gif


Am sorry if u don't like my approach, am only willing to offer help as i have been doing FOC.

meanwhile i don't understand wot u meant by 'chop up brother!'

knowing how profitable the method is, i will advice u do a visual backtest as it is the most reliable. thanks
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