the Set and Forget Pivot Net system

NEWEST UPDATE 8/13/09

This method has been reworked and is best understood here http://www.forexfactory.com/t/102967...-system-1.html



UPDATED on 9-20-08

The “set and forget pivot net” system

I have been trading forex for about a year now and I found that ‘picking bottoms or tops’ is my sure-fire method of making my broker money.

The less I tinker in the market the better I do.

I DO USE STOP LOSSES. I have had plenty of the no Stop Loss kool-aid and it tasted good for a while, but eventually the poison killed my account. Unless you have a huge account or are willing to trade where 1 pip = $0.01 then it’s not worth your time. You can make money doing it, but it will take a long time and you’ll have plenty of sweating to do.

On to my system (I’ll leave my opinions to my blog).

UPDATE!
This is a set and forget system. Used on 2 pairs. EU, GU. It uses one of the few predictive indicators the Pivot Point. The system has been updated to only use two recommended pairs. EU and GU. The system used to include GJ, EJ and UJ, but after 7 months of forward testing I have concluded that the risk involved with the other three pairs outweighs their potential profits.


At 00:00 EST/23:00 CST (my time) / 4:00 GMT calculate the daily PP. I use Oanda and that is when they begin a new daily candlestick. Oanda also has a function where you can easily add the daily PPs. Though for some reason the S1and R1 is usually 1-2 pips further out from the actual PP and the S2 and R2 are 2-3 pips further. I cannot figure out why. So if you know please let me know, but so far I’ve used their PPs and they have always worked. Cancel all orders by 11:00 EST the following day. Usually orders triggered with one hour to go in the London/US market overlap do not have much movement.

Calculate the distance between R1 and R2 and then multiply the distance by .667.

For example if the distance between R1 and R2 is 50 pips then the multiplied distance would be 33.3.

So you have R2-R1=X Then X*.667=Y

X=TP and Y=SL

This works the same way for S1 and S2.

The set ups are on Monday, Tuesday and Wednesday evening.

The reason for this is Tuesday, Wednesday and Thursday night have the best movement. I have found that trading on Sunday, Monday and Friday for this system provides poor results.

Calculate what percentage of your account you wish to risk (I recommend no more than 1-2%) and divide that by the SL. That will tell you how much each pip should be worth. It will also provide an outcome of Risk:Reward of 1:1.5 (in a perfect world without spreads it would be 1:1.5 but tends to actually come out as 1:1.30-1.45)

Update:
1) I will leave both orders open for any given pair until 11:00 EST. There are times when the market will give you TWO TPs, TWO SLs and sometimes both a SL and TP. In the end they balance out and this is after all a Set and Forget system. I really do try to forget it until it's time to check again.
2) If an order has been triggered and is still live after the London market closing AND the current price is halfway to the TP I would then move my SL to break even.

The way you decide to set these up are ONLY if the previous day’s closed candle movement is less than the previous weeks daily movement average. (Do not count Sunday in the weekly average)The reason I leave out Sunday is I have found it is usually a corrective day or has very small movement which makes for very small PPs on Monday and they are just not very accurate.

One more tweaking detail.
I add 2 pips to the spread to each entry and exit position. But I leave the SL at the same spot. It saves me the frustration of those days when the price action tags the S1 or R1 and fully retreats.

Here is my formula:

R2-R1=X
X*.667=Y

R1 + 2 pips = BUY
R2 – 2 pips = TP
Y – R1= SL

Money Management
Y=1-2% of account

All formulas are the opposite when using S1 and S2.


Below is a screenshot of this trading system.

The previous day’s movement from HH to LL was 112.2 and the previous week’s average was 137.9. Therefor the previous night’s only valid signal was for EU.

I set a Sell signal at 1.46652 with a SL of 1.46952 and a TP at 1.46272.

I also set a BUY signal at 1.47823 which was on another account. Pictured below. It was obviously not triggered. The TP was at 1.48494 and the SL was at 1.47329

I hope this helps some people. I scoured the internet looking for set and forget systems and found one that I made myself to work just as well or better than most. It’s all price action and uses one of the very few predictive indicators. The old school Pivot Point.

Since this is the first system I have shared I’m sure there are some details I have left out, but I will do my best to make

This is my thanks to everyone on this forum and all the information I have learned here at FF.

-blueace-

Hi blueace thanks for sharing, i think i understand the system, but i just have a couple of questions.

1 Lets say that the buy order was triggered do you cancel the sell order or do you let it run till 11 est? (im guessing you let it run but i just want to make sure)

2 I understand that you cancel pending orders at 11 est, but if you have an open position do you close it , or do you wait for it to hit your sl / tp.


Again thanks for sharing, i love the set and forget style of trading, its just hard to find something that actually works.

Hey nick

1 Lets say that the buy order was triggered do you cancel the sell order or do you let it run till 11 est? (im guessing you let it run but i just want to make sure) You're right I let both trades run until 11EST. There have been times when both are taken out with a SL and both are TPed. I've found it's easier to just let them run. They balance themselves out in the long run with having both triggered.

2 I understand that you cancel pending orders at 11 est, but if you have an open position do you close it , or do you wait for it to hit your sl / tp. If an order is triggered I let it run until it either hits the TP or the SL. The only time I close one of the trades is if it is stil alive once it's time to set up another trade. One more tip I forgot to add. If the Price Action has moved more than halfway to the TP and the 11 EST has passed I will move the SL up to breakeven for a free trade.


Again thanks for sharing, i love the set and forget style of trading, its just hard to find something that actually works.[/quote] I have found a few Set and Forget systems that I really like and have taken the stress out of trading for me. The link in my signature has the links to them.

Best of luck to you!

Thanks for the trading strategy and the links. I will give a look to both.

Thanks for clearing that up Blueace, i think i will start demoing this next week, along with the weekly breakout ive been testing (another set and forget).

I saw one trade with this last night.
Long USD/JPY

It's still open - 10 pips.

Actually I only had one trade opened for last night which was GBP/USD and it did not trigger by 10:00 CST.

The reason I did not trade UJ yesterday was because using last weeks M-F Trading rage with Oanda's feed gave me an average daily range of 101.8 and yesterday's UJ moved 102.6. Therefore it was invalid. I know this seems like splitting hairs. But I have learned I should look for reasons not to trade.

This week has been slow with this system and I had one trade on Monday night with EU which was a win.

FYI I did set up the GU trade because last weeks average was 168.1 and yesterday's movement was only 143.

Hope that helped.

So far there are only 3 possible pairs available to trade tonight.

EU
GJ
EJ

The reason is because they have not yet violated last weeks daily average. EJ is getting close at 147.1, I have last weeks average as 150.1.

I realize that if you use MT4 the +2 GMT plays havoc on figuring these numbers. That's why I'm here to help.

Last weeks averages as I see them are:
EU - 137.9
GU - 168.1
GJ - 179
EJ - 150.1
UJ - 101.8

As I mentioned before I have been using this system for a while and it is one that can be backtested pretty easily. The pairs I use are the most consistent. You will find that you will have success from time to time with any other pairs, but these preform the best.

My broker's data showed last week's average to be 102.2 pips.
Yesterday's range was about a pip less than that.

I have noticed that Oanda's pip range is usually a pip or two further than most brokers. Meaning a little higher and a little lower. But as I mentioned I look for a reason not to trade. So it might be a good addition to the system to void a trade it it comes within 5 pips to play it safe since all brokers have slightly different numbers.

Hi Bluelace, and thanks for introducing your system. I love set and forget systems, and especially systems that are based on mathematical equations. Here's the inevitable question that will be asked, so I'll be the first.
What has been your results? It appears you've been trading this live.
Do you have a history for each pair?

BlueLACE?? haha...

here are the results for the past month starting with week 7/28

Keep in mind I don't count pips but rather wins vs losses. All results are shown as though I risked 1% for a reward of 1.5%

(This obviously only works with a set amount for the account balance or rather a set 1% risk. I figure this number at the beginning of each month and for round numbers sake I realize that while taking at least 4 pips from the reward side my R:R isn't perfectly 1:1.5 but more like 1:1.4.) For sanity sake I have rounded up. Forgive me.

EU (4.5 wins 2 Losses) +6.75% -2% = +4.75%
GU (6 wins 2 Losses) +9% -2% = +7%
GJ (2 wins 4 Losses) +3% -4% = -1%
EJ (3 wins 0 Losses) = 4.5%
UJ (3.5 wins 2 Losses) +5.25% -2% = 3.25%

This gives a total of 18.5% for the past month.

another interesting set and forget system... i love set and forget system, thx for share it

can't wait to test forward it

Interesting strategy. Just a couple of thoughts.. Technically, daily pivots should be calculated based upon the 24-hr session that closes at 17:00 ET / 21:00 GMT. Using that setup could strengthen your results.

Also, with such straightforward order rules, your system can backtested relatively easily. I would caution trusting the results of a single month's performance, or even a year's performance. I would see how a 5-10 year backtest performs.

Good luck with your system!

Actually I have 8 months of backtesting results which were forward tested at the time. I'll post them soon enough. But I did backtest for 2 years previous. I just don't have those results to post as I did those manually on paper.

As I mentioned before the Pivots from Oanda have worked stellar for this system that's how I discovered it in the first place.

blueace,

thanks for posting. about how long have you been trading this particular strategy?

My pleasure to post it. Been trading it for 8 months.

I started to come up with it when I noticed the correlation between a below average daily movement (usually the market waiting for news) and how the market would blow through the S1 or R1 and make it to S2 and R2. So I did the math backwards to create the correct R:R of 1:1.5

I searched for a long time to see if this was an original system because I thought it was too simple for someone not to have noticed before. I never found one like it. I felt compelled to share it. I know that it has worked for me and I wanted to see if I could help others out.

Being in this time zone it makes it difficult to trade the London open. So I lean toward Set and Forget systems.

The only Pair that qualified for a set up tonight was EU. The Daily range was 126.2 and last weeks average was 137.9.

For argument's sake I am going to post my numbers. I implore you to only DEMO these numbers if you use them at all.

Here are the Pivots I am using

R2 - 1.48773
R1 - 1.48347

S1- 1.47076
S2 - 1.46232

Therefore my set ups are:

Long: 1.48367
SL: 1.48063
TP: 1.48753

Short: 1.47056
SL: 1.47639
TP: 1.46252

Fingers crossed

How do you calculate last week average?
And what indicator can i use for daily PPs in MT4?

blueace, your strategy makes sense as a whole and that is not so often the case for strategies we see on the forum.
The points that I like are:
- wait for a day with a lower range as usually consolidations will be followed by bigger movements
- avoid the extreme days, Mondays because usually it doen't move much and Fridays because they are the days usually with the big releases
- take action on the sense of the move above / below pivot
- low leverage

I have not tested your strategy but I will most probably do it as it makes sense.

The only thing that I didnt get from your original post was the time zone, you said "At 00:00 EST/23:00 CST (my time) / 14:00 GMT", EST is GMT-5 and CST is GMT-6 so I guess it is not 14:00 GMT but more 05:00 GMT