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Super Carry Trade Trading System

  • #421
  • May 9, 2008 1:19pm May 9, 2008 1:19pm
Quoting Richard7
Scottie, I notice you're a civil engineer. I'm a guitarist, so the extent of my math is six strings, twelve scale notes, and twenty four frets. Beyond those numbers I am in uncharted territory, so it may take a little time for me to reach geek status.

Presently I am running a forward test on Dreamliner's original, and am awaiting a long entry a'la Scottie. I'm only trying longs until I get the hang of it, then I'll work on the hedge thing. I am also waiting for one of the usual naysayers to come along and p**s on the campfire, telling us it won't work. As of now, I'm pretty much sold on this and am looking for reasons why it won't work.

In the meantime, I'll be backtesting this till I get it, and any further tips or help will be appreciated. Thanks for helping us (me) out Scottie.


Cheers,
Richard


PS--- Remember the movie "Revenge of the Nerds"? Maybe there should be one like "Day of the Geeks" or the like. I dunno. Thank God for geeks.
Richard, math and music go hand in hand. i'm a cellist.

You will have no trouble reading charts, the market has rythm and timing. Practice makes perfect and that (practice) and a little help from my friends is the only reason that i've started to become profitable.
  • #422
  • Edited 1:29pm May 9, 2008 1:28pm | Edited 1:29pm
Quoting PTOURNIS
It won't work. Sorry I could not help myself.
hehe, thats funny.

be very careful with capital and draw downs with this system. that is one reason that this won't work.

and probably most importantly why it won't work, knowing how you handle draw downs psychologically.

some people are wonderful scalpers. I'm not too bad at it and can make a profit with it. I want something that i can put to work for me while i'm still working the day job. this is a real low maintenance system. and when it comes right down to it, we all eventually want a low maintenance system that you don't have to sit in front of the monitors all day. Some people are such good scalpers though, that they can set down for an hour and pull in their daily goal and go on about their life. that is their system and it fits them.

the more i try other systems, the more i realize its about how you want to do business. when you find one that fits you, you are there. most likely, you will have taken bits and pieces from all over and create your own.

just my 2 cents worth.

Scott
  • #423
  • May 9, 2008 6:44pm May 9, 2008 6:44pm
Quoting Scottie
Abnormalone, i think that it would be best to close the first position. in the end, it really doesn't matter, but the first one could be quite negative against you or quite positive in your favour. it just seems like you would like to clean that up so that your averaging is easier to calculate. if you have an aggregate style broker, it wont matter at all because they average everything.
I just tried back testing EUR/JPY and saving the lowest cost position did cause a problem with the averaging.
Another question on the attached chart. The first arrow was a second buy in point and also the high. Price dropped 200 pips but recovered above that point before the MAs Crossed over. Do you buy at the 2nd arrow or wait for the price to drop again before making another entry?
Attached Image
  • #424
  • May 9, 2008 7:12pm May 9, 2008 7:12pm
Quoting Abnormalone
I just tried back testing EUR/JPY and saving the lowest cost position did cause a problem with the averaging.
Another question on the attached chart. The first arrow was a second buy in point and also the high. Price dropped 200 pips but recovered above that point before the MAs Crossed over. Do you buy at the 2nd arrow or wait for the price to drop again before making another entry?
Abnormalone,

let me digress just a bit here. if i'm going to use another pair, and i will when i put this to a much higher account size, then instead of 200 pips, i'm going to use a round number close to the bottom of the average true range of the daily chart using about a years worth of data. so it looks like i would use about 100 pips as the range here. if you weren't comfortable with 100, you could use more, i don't think it matters.

the first arrow there, i personally would have bought at 156, because i buy when the price returns to the moving averages after convincingly crosing them.

in this case, you could use the high of 156.5 area to use as the high average because it doesn't matter if you are on the front side or the back side just so long as you use the number only once, unless you truely bought at the same level and had a double top.

so, the entry at the second arrow is a retouch of the ma's and it is 155.35 area. only about 50 pips below the first arrows entry and barely 100 off the top. i would wait unless the high after the first arrow were at least 100 (ATR) pips above the second entry point. if the high between the two is at least 100 pips (ATR) up, then i don't mind taking the entry even if it is at the same place.

Scott
  • #425
  • May 10, 2008 7:36am May 10, 2008 7:36am
Here's a crossover indicator based on EMAs for anyone interested.
Attached File(s)
File Type: mq4 EMA Crossover Signal.mq4   4 KB | 499 downloads
  • #426
  • May 11, 2008 7:55am May 11, 2008 7:55am
Quoting lcfxtrader
Here's a crossover indicator based on EMAs for anyone interested.
Thanks LC, I was able to modify it for the pivot moving averages.

Scott
  • #427
  • May 11, 2008 11:23am May 11, 2008 11:23am
I started a skype chat for this topic. i'm going to be teaching a couple of new traders. but anybody interested in this topic may join. just pm me and i'll bring you in.
  • #428
  • May 11, 2008 7:20pm May 11, 2008 7:20pm
Scottie,

Count me in. Here is my Skype ID: TimeFreedom.

Thanks in advance,

TimeFreedom

Quoting Scottie
I started a skype chat for this topic. i'm going to be teaching a couple of new traders. but anybody interested in this topic may join. just pm me and i'll bring you in.
  • #429
  • May 13, 2008 6:52am May 13, 2008 6:52am
Hi,

I'd like to join in on the Skype chat.
My ID...petero0000

Thanks.

Peter O
  • #430
  • May 16, 2008 7:45am May 16, 2008 7:45am
Hi,

How do i join the skype chatroom?

Thanks
Patience, let the market come to you!
  • #431
  • May 17, 2008 7:40am May 17, 2008 7:40am
Quoting TimeFreedom
When my equity is in 15 - 18% DD I will turn off the Aphids EA and hedge with a sell order the equivalent of the open buy orders. Once the sell order is +200 pips I put in a SL of BE+100 and once price moves down another +200 pip I move the SL to BE+200, etc... When price retraces it will close out the hedge and I am back in the game again. Sometimes price will close out the hedge and then start to drop and I will have to open the sell hedge trade all over again. This is called discretionary trading and at one point or another we have to step in and make these critical decisions.

Note: I need to code this hedging concept into Aphids.

TimeFreedom
That's interesting about the hedge, but what do you do if the hedge doesn't obey and instead of the price continuing down to and beyond 200p, it reverses and climbs to a minus 300p? I mean how do you manage this two headed beast if it doesn't follow the path you just described above? What is your original stop when you open the hedge? Forgive me if I show a complete lack of hedge strategy.
  • #432
  • May 17, 2008 8:26am May 17, 2008 8:26am
Quoting FXHOUND
It seems so silly that people would trust the EA while this strategy takes only ten minutes to set up daily manually. Dump the EA and do it like a man and be proud of your effort.

I don't want to criticize those who want to make an ea. I sure wish I could understand why they think it's necessary in this method. It seems to me this method is flexible and only requires a few minutes of evaluating the price and deciding what to do. What to do is simple, and it can't take more than a few minutes a day. (I have been trading this the past week on NZD/USD and .3% positions) No matter what your work schedule, I think anyone can choose a personally convenient time to do what's required. I'm using OANDA, so maybe that's why it's easy. I can't speak to using another broker with MT4.
To me the most important issue may be choosing the right cross where the base currency has higher interest and hawkish central bank and second currency has dovish central bank bias and lower interest rate. So far I really like this method.
  • #433
  • May 17, 2008 8:58am May 17, 2008 8:58am
Quoting bhale
No you won't. It's not possible. If the spread is 3 pips, you place orders 13 pips apart with TP of 10. One will close and the next open at the same time. Never more than 1 dangler.
Not on OANDA because the spread can vary and it gets pretty wide during news. The normal spread might be 3 pips, but when there is a volatility spike, the spreads go to 10 pips or more depending on the pair. On NFP day I've seen it go to 24 pips on GBP/JPY. Also, on weekends, the spread is 10 pips plus beginning a few hours before close and for a few hours after Sunday night (USA time) open. In these cases, a new trade will open on the ask, but the take profit will not get hit because the bid price is now 10 pips instead of 3 pips lower. What you say is absolutely correct for a broker that has a consistent spread that never fluctuates.
  • #434
  • May 17, 2008 9:20am May 17, 2008 9:20am
Quoting Qman
No, that is exactly what I thought, and what I was doing. I was salivating at the thought of tearing in and explaining how wrong somebody else had it... ... I know so much.... Well, I also know myself well enough to know I needed to re-read the rules.... Shoot.... I was wrong all along.... And the rule is pretty explicit too. I can't blame how it was presented, or anything. I just flubbed it.

Oh well.... NEEEXXXXTTTT!!!!!
Hey man, you do put in the 10 pip increment trades above the "average down" trade. You just don't put a 10 pip TP on THE "average down " trade. Only put TP on the 10 pip increment trade's.
  • #435
  • Edited 9:48am May 17, 2008 9:48am | Edited 9:48am
Quoting jones247
Why did this thread "die" so abruptly? Aren't others finding success with this system, even remotely similar to the numbers that Dreamliner is reporting?

Dreamliner... would you be willing to post your trade results for confirmation of your assertions? Perhaps that would spark more discussion.

Thanks,

Walt
It didn't die abruptly. I think you just have a unique view of things compared to some others....perhaps.
  • #436
  • May 17, 2008 9:56am May 17, 2008 9:56am
Quoting gnllr
I've been following the original thread at another forum too. This post from tiklado caught my eye:

I haven't gone back that far yet in my price history study, but I think it's not likely for G/J to move 35,000 pips (or 15,600 or 9,000 even) without a significant retracement.

However, it does raise a few questions. How far, using 0.5% Net Asset Value trade sizes, can the market drop without a retracement and not have a margin call (or other 'uncomfortable' level of drawdown).

Fxknighttrader, on the other forum, originally traded 1% NAV, 100 pip drops, on two currency pairs since Dec 2005 and was able to withstand the drops since then (though he did switch to 0.5% NAV, and 200 pip drops like Dreamliner's method here).

I like Timefreedom's idea of hedging all the long trades with one big short trade if the DD is at a certain level, but OANDA will not let you do this.

So I'm thinking about ways to eliminate more danglers, like using the ladder of pending orders, but when the price drops a certain amount below the topmost dangler, then I'll not use the pending orders. I don't know yet what that level is. At some point the dollar and the pound have to bottom out and then we're in business again for a while. Any thoughts or suggestions?


Create a subaccount and transfer part of your balance to it. Click on account tab at top of oanda platform and one option is open subaccount. you can trade short in subacccount and long in primary at same time. a tiny bit cumbersome , but possible.
  • #437
  • May 17, 2008 10:20am May 17, 2008 10:20am
Quoting Jared
I have been backtesting this method on VHands over and over through the big carry trade unwind from the middle of July to the beginning of Oct and I am getting a huge drawdown. Even spacing buy orders apart by 500 to 1000 pips the drawdown is huge. I am getting 50% drawdowns or worse. This is just the FXKnightrider method without the buy stops btw.
The rule is not to space the buying orders apart, the rule is to buy 1 position every day the price is 200 below the average price of your total position. The idea is NOT to buy every time the price MOVES 200 pips It doesn't work like THIS:

price 220 buy, price 218 buy, price 216 buy, (nervous so widen amount to 400) price 212 buy, price 208 buy. This completely defeats the ability to close out the position break even when you have a reaction and price recovers before continuing down. THIS is how it works:

price 220 buy, price 218 buy (average price now 219) if price is 217 or less now buy(average price now) 218.33. The idea is to keep the average price within 200p of actual price so when price recovers 200 pips you exit break even and start over. You must keep the average price near the real price to exit on a reaction where price climbs 200 pips before resuming downtrend. Meanwhile you are collecting alot of interest waiting for the price to temporarily recover.

The way you describe leaves higher average price that is less likely to give you a chance to get out. The way you describe seems to me you are likely to ride all the way to the bottom before price recovers enough.
  • #438
  • May 19, 2008 5:57am May 19, 2008 5:57am
Dreamliner,

I wonder if you know the ballpark drawdown if you only set the limit buys with 10 pip PTs when you first establish a position. This excludes average down buys. Only initially and after closing out breakeven and starting again. You mentioned 37% drawdown which is a little rich for my tolerance. Also, I can't find the knightrider thread on OANDA.

Thanks
  • #439
  • May 19, 2008 6:28am May 19, 2008 6:28am
You can find the link here:

TimeFreedom

Quoting ftraderx
Dreamliner,

I wonder if you know the ballpark drawdown if you only set the limit buys with 10 pip PTs when you first establish a position. This excludes average down buys. Only initially and after closing out breakeven and starting again. You mentioned 37% drawdown which is a little rich for my tolerance. Also, I can't find the knightrider thread on OANDA.

Thanks
  • #440
  • May 19, 2008 7:57am May 19, 2008 7:57am
Quoting TimeFreedom
You can find the link here:

TimeFreedom
Thanks a million. Dreamliner called the guy "knightrider" in the first post of this thread but the real name is "fxnighttrader." I was going page by page through a search of "carry trade" which is considerable on oanda.

Thanks again
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