GBP/JPY Hedge Double Knockout Strategy

Hey,

this is something that I've come up with just 10 minutes ago.
The idea is that on G/J the High and Low is almost every time at least 5 pips away from the Open. So if we initiate a buy and sell when the new Candle opens with TP 5 pips each. Chances are very high that it will take out one after another giving you 10 pips. This works best on larger timeframe candels and pairs with good volatility.
Even if you look at a doji on the Daily Chart the H and L are 15 pips away from the Open.
Could somebody get this into and EA?

If we use 4H Candles we should get 50 Pips with little risk.
24h/4h = 5
5*(5pips Long + 5pips short) = 50 a day or 1000 Pips a month.

How's it working so far?

spread is usually higer than 5 on GJ, does the system work including spread?

No stop loss?

No would not use stops. If you catch a trend and only one of your limits gets taken out with profit the remaining order should be closed with the open of the new candle. This drawdown should be recovered by the large winnig streaks.
You could also test this on EUR/USD Daily Chart with a non bandit broker for lowest spreads.
Feel free to develop this idea.
Feedback positive and negative very well appreciated!

I placed a Buy Stop and Sell Limit at the same price just some pips away from current price with 5 Pips TPs just a few hours ago.
It did take out every order with profit. As long as price moves inside the candle couple of pips this should work.

How can you place an order whith TP 5 pips when spread on g/j is usualy 8-9 pips?
and...when you set a TP of 5 pips there is no hedge because the other order is loosing.

As long as nothing is hit you're hedged. The trick is that it should knockout
every TP because the candles moves up and down.
How to buy and sell at the exactly same price? Easy.
There is BID and ASK. If you want to sell at 123.45 ask price has to be there if you want to buy at 123.45 BID price as to be there.

OK, this sounds like fun!! any idea as to when you do this, every 4hr candle??

But you could lose 100p fairly easily if the price does not get 5p+spread away from the open one direction or the other... example: open at 210.90. with say 8p spread on the GJ, you would need to get 211.03 to get your long 5p profit... but say it only gets to 211.00.... then drops like crazy...happens a lot. (could minimize by not trading over news...)... but still, you would get your short profit, +5p, and could lose say, 80p on the long when you close it at the open of the next candle... now, we have to get 16 WINS just to make up that one loss....???

I guess the question is, how often does the price NOT move 5p+spread one way or the other...

One solution might be to just trade a low spread pair... at 3p say... then, you only need 8p off the open both ways to get you profits... the hard thing would be to hold onto losing positions hoping for retracement to get your 5p...

Very interesting...

PS alot of brokers won't let you set a stop less than 10p from your entry, so we have to find a broker that would let us do that....

Your understanding is a bit wrong. Of course if you just hit "open order" click buy and sell you will have to overcome the spread because you are entering at the quoted BID/ASK prices. But if you place orders that's another story. They will only be activated if BID or ASK is at that level depending on your trading direction. BUY Bid SELL aSk

Tjpld:Hi,

let me show you one example:
candle moves up and down thats true,but if you look back you can see some candles with same price on open and high,open and low.
So...on gbp/jpy i can easy lost 200+ pips without stoploss when i opened two trades.
Buy and sell order,for example sell is runing and buy is runing too...but price move still down because open price is (example) 110.00 ,buy is already opened at 110.10 (TP:110,15) ,but 110.12 is HIGH for candle,and price come down 109:90 so sell order is runing but,price is still going down...around 200 pips....close price is 108:00 ,TP:for each trade is 5 pips,SL:nothing.

Effect:sell is good trade (5pips),buy is very looser trade(-200pips)
This situation isnt normal,but can be.

If i any your mind understanding wrong,tell me please

PS:sorry for my english,not my primary language.I hope you knov what I think.

maybe look at daily chart this should work most of the time and do trail stop 10pips with no stop loss both ways at the open and if it doesnt tp both ways then maybe wait for following day candlestick and set stop loss on the one still open past the top or bottom of the candlestick the order was actually opened?? hopefully this makes sense... anyhow it may tp next day anyways or just take the loss and use good money management...just an idea..also may be look at last year or two and see the daily spread of open to high and then open to low and see if there is enough pips to manage this deal

I made an Excel Sheet with 500 Days of Charting Data to calculate how much the average day moves both up and down from the Open.
Looking back 500 Days the average EUR/USD Day moves up 49 Pips and down 44 pips from the Open.
Does that mean if I buy and sell at the Open and have a TP of 20 Pips for both I'd be profitable on the long run?
Sure there are days where it moves only down.
I still have to come up with a way to test if the TP gets taken out the next day and what the max drawdown is.
Just need the right formular. IF next days high is >< Open or something like that. Than I could find out what the perfect TP is.
http://www.2shared.com/file/3101267/.../DoubleKO.html

I finished a simple calculation.
The sheet takes the downside and upside range checks if the open is more than 1 Pip Spread away. If both orders get taken out the result is labeled
as GAIN. The hitrate is 88.2% out of 500 Tests. I think this might get even better if we take in persective the next days high and low.
Still I need to find a way to manage the draw down.
Keep in mind that sheet is one order ever 24 hours. Pair is EUR/USD


Argh wrong button.
http://img247.imageshack.us/img247/3961/hitrateip7.jpg

On this candle you can see how much can be this method dangerous...Sell TP was hit but Buy TP not and you win 20 pips and loose 149.
This is not one candle for many months...You can see another horror candle a few days later 5.2.2008 again big loose...And another one 14.1.2008.This strategy is very good idea,but must fix it,because this is very dangerous.

Thats my opinion.

thats a good start , maybe look at starting at 20:00gmt to start because i was looking at that too....to be safe after looking at this timeframe use maybe no stoploss but a trail stop of 8-10 and trail every pip after that on both buy and sell... or if gonna use stoploss with trailstop maybe 50 or 60??
probably need forward test on the stoploss deal and only use eur/usd for low spread.....just another idea

try using gmt 00:00 sorry and maybe 75-80 stop loss

Just wondering what time the 17:00 on your spreadsheet correlates to. Is the 17:00 listed GMT?
Also listed in the chart are some different things that I need a translation for
Eröffnung
HochTiefSchluss

Could you help me out here with what the words mean? Thanks

17:00 EST that the open of the day when I past chart data from CMS Fx into an txt file.

Eröffung = Open
Hoch = High
Tief = Low
Schluss = Close

only went 15 pips both ways 59% of time so would result in loss at 60 pip s/l
maybe look at buy stop sell stops at 0:00 gmt??? but only go 10 pips tp on each...place buy and sells 1 pip above the high and low of prvious day??