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Super Carry Trade Trading System

  • #601
  • Aug 19, 2008 9:44am Aug 19, 2008 9:44am
The limit ladder is there to lock in profits on the way up. Until we have hit the top and the market goes down and we have to average down. The limit ladder use 4-5 pips spread on each 10 pips profit (or 15 pips profit if you use FTRADERX method). 40-50% of your profit is lost in spreads.

Why not keep the order open and have no profit target. Use the highest position when the market retracts for your to calculate your average.

Example you buy at 204.20 market goes up till 206.20 and retracts. The 206.20 is now the starting point for averaging in. So the market retracts 200 pips as per original strategy and you buy in. Also here forget the limit ladder and use the highest range in the day for use to calculate your average. The limit ladders would have exactly done the same but with trading cost of 4-5 pips for every trade.

Your profit will come in at the time you sell out all your trades when you have hit the average (based upon intra day highs when you placed the order).

Only problem is you have to calculate the average yourself. The Oanda average will only show the average of your market orders not of the intraday highs you would have captured with limit ladders.

I believe this will save you money by doing fewer trades. The spread pips saved from the limit ladder can be used to bank as additional profit or to lower your sell target when you have a lot of open trades thereby reducing drawdown. You get out of all trades earlier.

Can anyone follow my logic and can anyone see negative side effects? Maybe I am completely of the mark here.
  • #602
  • Aug 19, 2008 10:50am Aug 19, 2008 10:50am
@ FTraderX;

How many short positions did you open and when did you open the short positions, e.g. every 100 pips? Did you stop opening longs once you started opening shorts? What was the trigger to start opening shorts?

Thanks in advance,

TimeFreedom

Quoting ftraderx
I went short when the fundamental situation changed on the NZD and EUR. And maintained my long positions. Instead of buying when the price drops, I close short position and remove top long. This reduces my position size and lowers average price of long position. Each time I do this my overall risk drops.
  • #603
  • Aug 19, 2008 3:12pm Aug 19, 2008 3:12pm
Quoting soldintime
The limit ladder is there to lock in profits on the way up. Until we have hit the top and the market goes down and we have to average down. The limit ladder use 4-5 pips spread on each 10 pips profit (or 15 pips profit if you use FTRADERX method). 40-50% of your profit is lost in spreads.

Why not keep the order open and have no profit target. Use the highest position when the market retracts for your to calculate your average.

Example you buy at 204.20 market goes up till 206.20 and retracts. The 206.20 is now the starting point for averaging in. So the market retracts 200 pips as per original strategy and you buy in. Also here forget the limit ladder and use the highest range in the day for use to calculate your average. The limit ladders would have exactly done the same but with trading cost of 4-5 pips for every trade.

Your profit will come in at the time you sell out all your trades when you have hit the average (based upon intra day highs when you placed the order).

Only problem is you have to calculate the average yourself. The Oanda average will only show the average of your market orders not of the intraday highs you would have captured with limit ladders.

I believe this will save you money by doing fewer trades. The spread pips saved from the limit ladder can be used to bank as additional profit or to lower your sell target when you have a lot of open trades thereby reducing drawdown. You get out of all trades earlier.

Can anyone follow my logic and can anyone see negative side effects? Maybe I am completely of the mark here.
It works. This has already been proposed by Scottie. Just look up his posts on this thread and you'll find the discussion.

Glen
  • #604
  • Aug 20, 2008 6:07pm Aug 20, 2008 6:07pm
I have a question on Scotty's interpretation...


I am trying to put all into an EA, and have quite an idea to do so, i just miss the case of a big uptrend just after the first buy...
AS I UNDERSTAND IT AND THE METHOD I'LL USE IN MY EA:

if the price goes up, let's say 500 pips (slowly so ATR is still low), then price retraces, the EA would then consider that top market as the position to consider as top dangler when averaging.
as said market falls down the ATR level of the currency, and EA triggers 2 buy orders, of the same amount lotsize.
As the first set of 2 orders are set, the EA calculates it's profits doing: AveragePrice-marketprice, if positive, close positions leaving just one of the two last opened orders.

In our condition, even if we are in profit of 500-200 pips as the 2 positions are opened, the system as is thinks to be in loss, waiting to close the positions.
the price needs to go up a bit more to trick the system into thinking that we are in profit, then all positions are closed.

Do you confirm this procedure? i think that in the long run this could still be profitable, but the very start of it it's a bit flawed...

The top gain against the other method are spreads and here comes if the market goes up just a little after the first buy, then the retracement forces you to put next buys below the first market order.

i eager to discuss with you directly, i've seen you've done it in the past.

Skypeid: gennagiei
  • #605
  • Sep 1, 2008 9:30am Sep 1, 2008 9:30am
I am demoing this strategy whilst experiencing a huge cary trade unwind.

* 100K - 50:1 leverage
* Started of with 0.5% initial trade at 206.265 at 17 August 2008
* Averaging in with 2 trades of 0.5% every day once average has shown a 200 pip drop.
* Only long trades.
* Aim to sell at average position plus 100 pips.
* Today bought at 194.406 1 september.
* Drawdown today 10.33%
* Average position is 201.168 - so a good 650 pips to go before hitting average.

I want to show other traders how this strategy performs in a huge unwind.
  • #606
  • Sep 2, 2008 2:13pm Sep 2, 2008 2:13pm
Update 2 september.

* 16 positions open at $25K
* Average 200.294
* Bought today at 193.745 (approx 650 pips from breakeven)
* $510.55 interest payments
* Drawdown 12.33%
  • #607
  • Sep 2, 2008 3:19pm Sep 2, 2008 3:19pm
Hi,

I am a newbie in Forex, and decided to start demo trade with Dreamliner's strategy a few weeks ago. Here are the screenshots of my 3 demo accounts (all 3 started with $5000):

AUD/USD
http://img373.imageshack.us/img373/6...dusdsc5.th.jpg

GBP/JPY
http://img54.imageshack.us/img54/1189/gbpjpyrc5.th.jpg

NZD/USD
http://img524.imageshack.us/img524/1...dusdek6.th.jpg

This is my first try in Forex. I hope it will eventually turn into positive, because watching my equity dropping every day is a bit disappointing

By the way, as a beginner, I am not exactly sure that I trade it correctly... If you see something incorrect or strange on the screenshots, please tell me.
  • #608
  • Sep 3, 2008 5:50am Sep 3, 2008 5:50am
3 September

* 18 positions open
* Average 199.494
* Bought today at 192.579 (600 pips from average)
* $553.87 Interest from swap
* Drawdown 14.69%
  • #609
  • Sep 3, 2008 1:52pm Sep 3, 2008 1:52pm
SoldinTime:

Interesting exercise. does your report contain "danglers" or just new average positions? When you established the new average position did you include the takeprofit ladder?

DrZ
  • #610
  • Sep 4, 2008 4:53am Sep 4, 2008 4:53am
4 September

* 20 positions open
* Average 198.906
* Bought today at 193.303 (560 pips from average)
* $601.46 Interest from swap
* Drawdown 13.59%

I aim to sell at average plus 100 pips as I have not setup any take profit limit order ladders. I feel these ladders waist a lot of pips in spread. It is better to take profit when you come to sell.

Lowest price of the whole testing period was 191.50. Top price for initial position was 206.265. That is 1476 pip drop in about 3 weeks.
  • #611
  • Sep 4, 2008 5:40am Sep 4, 2008 5:40am
soldintime:

So, let me recap for clairty.
You take one position per day if the average of the position is less than +100 pips.
The position has no take profit or stop loss.
The position size is 0.5% of portfolio at 50:1 leverage
You do not establish a limit ladder when you establish your new position.

A couple of questions regarding your positions.
How do you determine at what level to take a position?
Time of day? Even number? etc etc???
You only take one new position per day? or one position per day per pair?
(I ask because your post of sept 3 indicates that you have 18 positions open and one day later on sept 4 you now have 20 positions open. )

By way of background, I am trading a live account with a modification of the original DreamLiner system. Since march 08 my return has averaged about 5% per month interest and realized profits while enduring a maximum of 20% drawdown.

I look forward to your continued testing.

DrZ
  • #612
  • Sep 4, 2008 7:04am Sep 4, 2008 7:04am
Quoting kvzambo
soldintime:

So, let me recap for clairty.
You take one position per day if the average of the position is less than +100 pips. no two positions of 0.5% drop needs to be 100 pips from average (as i have upped the sell target to average plus 100 pips due to having no limit order ladder)
The position has no take profit or stop loss. yes
The position size is 0.5% of portfolio at 50:1 leverage yes
You do not establish a limit ladder when you establish your new position. Yes

A couple of questions regarding your positions.
How do you determine at what level to take a position?
Time of day? Even number? etc etc??? 11AM GMT
You only take one new position per day? or one position per day per pair? Trade one pair only
(I ask because your post of sept 3 indicates that you have 18 positions open and one day later on sept 4 you now have 20 positions open. ) Yes opened 2 new positions as drop was still 100 pips below average.

By way of background, I am trading a live account with a modification of the original DreamLiner system. Since march 08 my return has averaged about 5% per month interest and realized profits while enduring a maximum of 20% drawdown.

I look forward to your continued testing.

DrZ
When todays position (around 11GMT i normally look )is 100 pips below average of all positions I will buy 2 market orders of 0.5% of NAV. Once the difference is less than 100 pips below average, I will do nothing.

I only trade the GBP/JPY pair. Too many pairs in the account and you will get a margin call. I have noticed too many blown up accounts on the Oanda forum of people trying to trade 4-5 pairs this way.

Take profit for all positions if price hit average + 100 pips. This is because I have removed the limit order ladders Limmit order ladders push the price of the average up but you loose a lot of money in spreads.

In the thread scottie has mentioned the benefit of removing the limit order ladder and instead sell at higher price than the average position.
  • #613
  • Edited 6:38am Sep 5, 2008 4:56am | Edited 6:38am
5 September

* 22 positions open
* Average 198.066
* Bought today at 187.640 (1040 pips from average)
* $653.58 Interest from swap
* Drawdown 27.26%

Now we clearly see the dangers of this unhedged strategy. I have had an almost 2000 pip drop. I will continue with this strategy and see what will happen.
  • #614
  • Sep 5, 2008 6:28am Sep 5, 2008 6:28am
After a 40% DD on my account, I have come to the painful conclusion that these methods are not for me. I cannot be a no S/L person anymore. The psychology just doesn't fit me. I can't stomach a large drop just to make a few percent at a time. I know that I pushed for a 5-star rating on this thread, and it still may be. There have to be new ways to limit DD, which I haven't learned yet. I'm taking my loss, learning more about myself and my trading style, and moving on.

Good luck to Dreamliner and everyone else here.

Glen
  • #615
  • Sep 6, 2008 6:59pm Sep 6, 2008 6:59pm
before trading it live i tried at least to develop an ea to suit my needs of hedging. i've come to conclusion that you should play this system just in uptrend, after drawing your trendlines.
And it's better to have a system with SL, or at least perfectly hedged. Otherwise you will be always in danger by the market sudden moves.
try another way, learn another time.
  • #616
  • Sep 7, 2008 3:16am Sep 7, 2008 3:16am
Quoting soldintime
I am demoing this strategy whilst experiencing a huge cary trade unwind.

* 100K - 50:1 leverage
* Started of with 0.5% initial trade at 206.265 at 17 August 2008
* Averaging in with 2 trades of 0.5% every day once average has shown a 200 pip drop.
* Only long trades.
* Aim to sell at average position plus 100 pips.
* Today bought at 194.406 1 september.
* Drawdown today 10.33%
* Average position is 201.168 - so a good 650 pips to go before hitting average.

I want to show other traders how this strategy performs in a huge unwind.
The unwind started 7/29 when price was 214.78, and if you started at that price account blown, using any method you choose.

My alpari demo on this using the EA posted about 4 months ago, that says demo only, was blown last week, September 2nd, down to 0 (alpari doesn't protect your margin), when price reach 192.xx.
  • #617
  • Sep 8, 2008 3:59am Sep 8, 2008 3:59am
all my demo accnts using this strategy have blown up; doesnt matter how the strategy have been varied; have used it on eurusd, which I didnt expect it to drop so much!
  • #618
  • Sep 8, 2008 5:49am Sep 8, 2008 5:49am
8 September

* 24 positions open
* Average 197.529
* Bought today at 191.206 (620 pips from average)
* $828.02 Interest from swap
* Drawdown 17.56%

Massive spike today from 190.50 to 195.50. just the volatility in this pair is enormous.
  • #619
  • Sep 8, 2008 5:50am Sep 8, 2008 5:50am
Quoting ronaldosim
all my demo accnts using this strategy have blown up; doesnt matter how the strategy have been varied; have used it on eurusd, which I didnt expect it to drop so much!
Shows the value of demo accounts and also what effect massive currency movements have.
  • #620
  • Sep 8, 2008 6:12am Sep 8, 2008 6:12am
please how do i get your system?
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