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Daily Breakout 500% yearly return

  • #1
  • First Post: Jun 9, 2008 8:47am Jun 9, 2008 8:47am
Hello Fellow Forex Fanatics,

I just wanted to drop by and post a manual trade I have been working on. It is a simple trade that could be made into an EA if someone would like.

The reason I am sharing is I want some input. I know that when ideas are put on these forums people will come from all angles to prove or dis-credit the concept, which is good.

I started to think about a way to make some pips during the 8amEST to Noon time frame. I then remembered my internet buddy that traded the SP500 emini with great success. Well I adapted his method to forex, at least the basis of it.

At 8amEST to 830amEST a trading range on the EUR/USD is created. I buy the break of the high or sell the break of the low as the trade. My pip target is 15 so that means the market needs to move 18 with a 2 pip spread. The stoploss is set to the opposite breakout or 31 pips whichever is less.

I was able to test from March 10, 2008 to June 9, 2008 so far with:
66 trades
276 pips gained
115 pips drawdown max
trade 1 lot per $2000
500% yearly return

I was wondering if anyone was interested enough to create an EA for some demo testing. I am not always able to live test it since I end up oversleeping so an EA would be useful.

Thanks,
Aliassmith
  • #2
  • Jun 9, 2008 8:52am Jun 9, 2008 8:52am
Quoting Aliassmith
Hello Fellow Forex Fanatics,

I just wanted to drop by and post a manual trade I have been working on. It is a simple trade that could be made into an EA if someone would like.

The reason I am sharing is I want some input. I know that when ideas are put on these forums people will come from all angles to prove or dis-credit the concept, which is good.

I started to think about a way to make some pips during the 8amEST to Noon time frame. I then remembered my internet buddy that traded the SP500 emini with great success. Well I adapted his method to forex, at least the basis of it.

At 8amEST to 830amEST a trading range on the EUR/USD is created. I buy the break of the high or sell the break of the low as the trade. My pip target is 15 so that means the market needs to move 18 with a 2 pip spread. The stoploss is set to the opposite breakout or 31 pips whichever is less.

I was able to test from March 10, 2008 to June 9, 2008 so far with:
66 trades
276 pips gained
115 pips drawdown max
trade 1 lot per $2000
500% yearly return

I was wondering if anyone was interested enough to create an EA for some demo testing. I am not always able to live test it since I end up oversleeping so an EA would be useful.

Thanks,
Aliassmith
Do you take only one breakout per day?

Thanks
  • #3
  • Jun 9, 2008 8:56am Jun 9, 2008 8:56am
What leverage are you using to calculate your return?
  • #4
  • Jun 9, 2008 9:24am Jun 9, 2008 9:24am
***It is only one breakout per day.

***trade one lot per $2000 and I would use 100:1 or better leverage because of drawdown.
  • #5
  • Jun 9, 2008 10:17am Jun 9, 2008 10:17am
8AM EST is that new york time?
if so what is europe time then?.... 13.00?
always confusing with EST or GMT

but thanks anyway for this little observation
  • #6
  • Jun 9, 2008 10:34am Jun 9, 2008 10:34am
Quoting Aliassmith
My pip target is 15 so that means the market needs to move 18 with a 2 pip spread. The stoploss is set to the opposite breakout or 31 pips whichever is less.

I was able to test from March 10, 2008 to June 9, 2008 so far with:
66 trades
276 pips gained
115 pips drawdown max
trade 1 lot per $2000
500% yearly return
Your target is 15 but your stop loss is 31? Doesn't that make your risk:reward ratio exactly opposite what it should be? IOW, your potential loss is greater than your potential gain.

Unless I'm misunderstaing something here, your MM sounds foolhardy to say the least. A 115 pip DD would wipe out over half your account. Even hitting your 31 pip SL, @ 1 lot per $2,000, would blow over 15%!! I guess this would be ok as long as you have a very high percentage of winning vs losing trades.

Anyway, interesting post. Do you play much with ATR indies?
  • #7
  • Jun 9, 2008 11:00am Jun 9, 2008 11:00am
there were 20 losses out of 66 trades

4 of the losses were for 31 pips
  • #8
  • Jun 9, 2008 11:09am Jun 9, 2008 11:09am
Quoting opie999

Unless I'm misunderstaing something here, your MM sounds foolhardy to say the least. A 115 pip DD would wipe out over half your account. Even hitting your 31 pip SL, @ 1 lot per $2,000, would blow over 15%!! I guess this would be ok as long as you have a very high percentage of winning vs losing trades.
How often does the range allow a 31 pip stoploss?

I'll try to get some code together for a preliminary EA--once I get home that is.
  • #9
  • Jun 9, 2008 11:49am Jun 9, 2008 11:49am
Quoting Aliassmith
there were 20 losses out of 66 trades

4 of the losses were for 31 pips
Ok, that sounds better. 3:1 win/loss is good in anyone's book. That would seem to make up for the inverted TP:SL ratio.


You've been forward testing this since March?

EUR/USD only?

What time frame?
  • #10
  • Jun 9, 2008 1:04pm Jun 9, 2008 1:04pm
Quoting opie999
Ok, that sounds better. 3:1 win/loss is good in anyone's book. That would seem to make up for the inverted TP:SL ratio.


You've been forward testing this since March?

EUR/USD only?

What time frame?
Time frame wouldn't matter on a breakout.
  • #11
  • Jun 9, 2008 1:07pm Jun 9, 2008 1:07pm
It would be a factor in handling MM and determining your exit, wouldn't it?
  • #12
  • Jun 9, 2008 1:14pm Jun 9, 2008 1:14pm
Quoting opie999
It would be a factor in handling MM and determining your exit, wouldn't it?
I don't think it would.
The breakout values are the high and low from 0800EST throgh 0830 EST. It would be the same H and L whether on a 1M, 5M, 15M or 30M chart.
The breakout will occur, above or below these values, no matter what TF you're looking at.
  • #13
  • Jun 9, 2008 1:31pm Jun 9, 2008 1:31pm
Hmm. You're right. Since exits are more or less pre-determined by TPs and SLs, I guess it would be a personal preference whether you like to set it and forget it or if you like to sit and watch the bouncy pips on 1M or 5M charts.
  • #14
  • Jun 9, 2008 7:14pm Jun 9, 2008 7:14pm
Quoting Aliassmith
I was able to test from March 10, 2008 to June 9, 2008 so far
Backtest it further, and don't be surprise if you found some months where your account is wipe out by this system.
  • #15
  • Jun 10, 2008 8:14am Jun 10, 2008 8:14am
you can explain your system more
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  • #16
  • Jun 10, 2008 8:28am Jun 10, 2008 8:28am
Quoting Dr.TofyGuy
you can explain your system more

I could explain my system more, how? All the information is in the first post. It really is that simple. A range is definded. An order is placed on the first breakout of that range. A stop is set at the opposite breakout (or 31 whichever is less) and a TP is set for 15 pips. It was looked at on the EUR/USD only. Up to today the win/loss is 46/21.
  • #17
  • Jun 10, 2008 8:41am Jun 10, 2008 8:41am
the system sets the breakout levels just prior to news time at 8.30 . The news then causes the breakout. There are a few variations on this theme that do work but I would take less winners for bigger gains and much less risk per trade. No way are you ever going to get 500% return out of it and trying to do so will toast your account in no time during a losing streak which this system is bound to have sooner or later
BTC Return This Year: na
  • #18
  • Jun 10, 2008 9:14am Jun 10, 2008 9:14am
Quoting M.A.C.Doug
the system sets the breakout levels just prior to news time at 8.30 . The news then causes the breakout. There are a few variations on this theme that do work but I would take less winners for bigger gains and much less risk per trade. No way are you ever going to get 500% return out of it and trying to do so will toast your account in no time during a losing streak which this system is bound to have sooner or later

I do fear there are some issues as you have mentioned about the news. Also the account size would need further testing. So what are the few variations on this that "do work" as you mentioned?
  • #19
  • Jun 10, 2008 9:34am Jun 10, 2008 9:34am
ok there is one variation that uses the whole hour to define the break out levels from 08.00 to 09.00 EST. this way the news is allowed to come out and help determine the breakout levels. The theory is that once it has broken out of the post news levels it usually trades in that direction for the rest of the day. Like most systems it doesent work all the time and can have extended losing periods during choppy sideways conditions. I think the stop and tp was discretionary based on technical levels but you had the potential of some very big winners. It isnt going to produce 500% but is supposed to be profitable overall. There is no rule based once a day system that will produce returns like that. 10% of that puts you among the top performers. If your expectations are to exponentially outperform the best of the best on a consistent basis be prepared for disappointment
BTC Return This Year: na
  • #20
  • Last Post: Jun 10, 2008 9:45am Jun 10, 2008 9:45am
Actually I did start looking at a one hour breakout with the same start time right before you posted. It may take the news noise out of the picture. I'll lower my risk to about 3% max per trade to see what I get.
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