just some stupid thought

Hi folks,

I read alot about trading here and there. This forum helped me and I tried a lot of systems from here. Some worked out ok, some miserable failed. It had to do with my mm and style of trading but in the end I came to the point that everybody should believe: you can't predict the market. You can't predict the direction the price will go.

I got inspired by FXTitan and his thread:
http://www.forexfactory.com/showthread.php?t=70464

I though about it and what if we would follow the following system:

You trade EUR/USD (spread: 2pips) and open
2 positions (1long, 1short) at the same price with T/P 5pips.
Once one of them gets hit you open another 2 positions at current price (same T/P) level.

And this goes on and on and on. You're right, there is no S/L at all that's why the T/P is so little. Eventually the position comes back and if so it doesn't have to hit a high level, 5 pips should do.

Hard part is the MM because you have to set the lot size as small as possible that you can easily handle 20 negative positions with e.g. 1000pips. So lot size as little as possible than you can let the pair swing as wide as possible.

Your account will constantly grow and after a while you will make your lot size bigger. This way you don't care whether your first positions are in the red.

I forward tested this system already and got amazing results. The thing is that you never loose and that the price very often does come back - if not, don't worry because you keep booking profits and as your account balance will grow you will wipe out the negative positions someday.

What do you think? Can it work? As I tried it manually I think it can only work if you do it via an EA. Why? Because you can't trade 24/5 and it will get really boring. It also doesn't have any entry rules, so you simply would click yourself to death

Does somebody has an EA for that already? I will look for one and if not maybe I will code one.

Let's discuss that and if there could be a chance of winning with such a system. Does somebody has expirience with this kind of sys already?

Cheers and Happy Trading

No SL means this... the system will work great for a time until, one day, the statistically unlikely thing happens... price never reaches your TP. Days go by, weeks, months, at some point you realize it's never going to get hit. Do you let it blow your account or do you climb out and wipe out a thousand prior trades?

Then there are the times where both trades get opened, one TP gets hit and the market keeps moving against the other trade. Then there are the technical problems of slippage, variable spreads and what-not.

I'm of the mind where small pips are no more likely than larger pips, but I suppose any system that follows the trend of the market can be made to work if you're good at cutting your losses.

That's why you always open two positions. If if it goes against you, you always book profits (even if it's just one direction).

Sure, the price could never come back - and to be honest: it will happen for sure, that some position eventually never ever come back! But as your account will grow you can take larger losses and open larger positions.

Theoretical you always loose 5pips and at the same time you win 5pips. But there is the spread, so you always loose 4pips more. But very often you win twice and sometime you win back these 5pips after 1 month or so.

I think for this kind of strategy you need a lot of capital, even with small lot sizes. Does anyone have examples or expirience with that? Are there any people interested in this kind of trading?

If you're opening hedged positions at the exact same point there's no end profit potential. You're just building a bunch of paper losses and cutting your gains short w/ the 5 pip TP, all with a spread cost. Merlin actually proved this in another thread.

If those losses never come back then they keep running, what you're banking on is those losses coming back again. If it doesn't, it could continue against you indefinitely and wipe out your entire account... growing or not.

An alternate approach to this would be what Jacko (IIRC) does, more or less. He uses very small lot sizes and very large stop losses, several hundred or a thousand pips. That way if the pair does eventually do what, eventually, it will... the amount of loss is quite quantified and drawdown is kept to measurable levels. If you were to use a buy stop and sell stop straddle around, say, the opening of the current bar, you could enter a position with the current trend without being forced into all of the losing hedges.

The risk to reward is pretty high per trade, but from what I understand the win/loss rate tends to offset that. It might not make you rich (because of the low lot sizes) but it might be consistently profitable provided you aren't trading too many correlated pairs (consider using a low correlation basket to reduce pair risk).

I tested this with an EA wich opens a buy position TP2 ever x minutes with minimum lotsize on 100k. All works fine untill one countertrend rapes your account.
Doesn't work. Live with it.