US News Scale-Out Strategy

Here’s an idea I had toyed with back in the day, trading the GBP/USD. I brought it back out of my old notebook after seeing the NY session breakout strategy. While this performed brilliantly back in the day, it may have just been luck. It has not been back tested, and can certainly can be changed to implemented more intelligently. But for fun, I’m going to stick with my very cryptic rules and see what happens. Why not?!

Disclaimer: This is NOT a proven system. Do NOT place real money on this. I am a bored trader that is looking satisfy the gambling side of my personality. I will simply be testing this for fun.

KEEP IN MIND – THIS COULD FAIL MISERABLY

Ok… Rules:

1. Look at the News Calendar. If no significant news exists for the US between 8-10 am est, then set a box on 8-8:30.
2. If there is news at 8:30 and nothing significant after, set the box at 8-9:00.
3. At 10… Set the box 10-10:30
4. One other note… I don’t like mornings with no news, so I cut the lots to five and try to scalp 5 pips. That’s all… no volatility is too risky for this type of trade. If scalping 5 pips for you with the large stop loss is too risky, you are probably smarter than me. We’ll see how it does.

*Basically, we start the session at 8:00. After the last significant news item of the morning, we want to give it a half hour to settle down and relax.

At this point, place 10 lots (or 10 units – do your own money management) at the break of the box. Set your TP’s (take profit) at 5, 10, 15, and 20 away from box breakout price. At 1 hour past the breakout time, take profit on 1 more lot, leaving 5 lots open. Eg. If your breakout box was 8-10:30, but a trade wasn’t triggered till 11:15… take profit at around 12:15 (or whatever works for your schedule)… but about an hour.

*If at an hours time, the price has retreated back to within the box, let the trade run until it either hits your stop loss, or it closes outside of the box and you can take profit on one more lot, and set your remaining five to breakeven.

Set the remaining 5 lots to breakeven… (Stop loss at the price you bought or sold at.) Let the trade ride. I will explain what I was doing with these when the time comes that we catch a trend.

Stop loss… 50 or the other side of the box +10… whatever is GREATER.

I know, I know… This doesn’t help us determine expectancy or risk/reward. I’m just going to experiment with this and see what I find out and learn. And like I said, I’m bored.

So as I probably did a crappy job explaining, I will go through the previous week and explain what would have happened everyday if we were already testing this strategy. If you are interested, I suggest you follow along to better understand what I am doing.

9/8 – No significant news… Set the box at 8-8:30 ---1.7585 – 1.7655… Broke in three bars (M30) and went long to 1.7667.
Results… +25, on the scalp. As you can see, this WAS risky, as it broke short quickly there after.

9/9 – Pending home sales at 10:00… Set the box at 8-10:30 --- 1.7570 – 1.7637… Broke the next bar and went to take profit at 5, 10, 15, and 20. The bar one hour later closed at 1.7661, so that’s an additional 20 pips (taking into account the 4 pip spread). Moved stop to breakeven and we were stopped out on the five remaining lots a few hours later.
Results… +70

9/10 – No significant news… Set the box at 8-8:30 ---1.7551 – 1.7592… Broke in two bars (M30) and went long to 1.7622.
Results… +25, on the scalp. As you can see, this WAS risky AGAIN, as it broke short quickly there after.

9/11 – Trade Balance at 8:30… Set the box at 8-9:00 --- 1.7527 – 1.7588… Broke short in less than hour. We took profit at 5, 10, 15, and 20, but the price retreated back to within the box. This is an instance when you are going to wait and see if your remaining lots will be stopped out or if you can grab some more profit. Soooo… The next M30 block did in fact close below the box at 1.7501 and we were able to book an additional 22 pips and set the remaining lots to breakeven. These lots would be stopped out later in the afternoon.
Results… +72

9/12 – UofM Consumer Sent. (last news of the morning)… Set the box at 8-10:30 --- 1.7651 – 1.7815… Broke long within the next half hour. Booked 5, 10, 15, 20 and when the bar closed an hour later at 1.7920, an additional 101. Right now, the remaining five lots are at a breakeven stop. THIS is when this system can get interesting. We can be getting lucky now and catching a trend, or we may get stopped out right away next week. I will update you how I handle the “runners” if we in fact, get lucky and the pound keeps heading north.
Results… +151

*So for the week, we booked 343 pips… or $343 if you are using mini-lots. That may not be enough for the risk involved. That depends on your bank account.

I look forward to updating this experiment daily. If I have to travel, I will do the best I can.

this sounds very interesting for a risky system, i look forward to hearing more

Ok... This morning we will do an 8-10 box because of the two news events at 9:15. Personally, I don't think the volume will be there, but personally the market the doesn't care what I think. We'll see how this goes in forward-testing.

Alright, so far we have had a breakout long and collected pips at 5 and 10 pips away. Then we reentered the box. At this point we have 8 lots open. If at the end of the 11:00 box we are above our entry point of 1.7926, I will close three lots, and set the remaining five to breakeven. If it isn't, I will keep all lots open until one of two things happens:
1. The stop loss at 1.7776 is hit (10 pips below the box low).
2. One of the half-hour bars closes above the box.

*Just keeping you updated on my thoughts and how this system works... going forward.

Alright... It's 11:01. The last bar closed at +2 in the profit, so I am closing out 3 more lots, and setting the other five to breakeven. These will surely be stopped out. Oh well.
The discretionary part of me wants to let this trade run, as it looks like it may continue to move higher.
So here's the measley results for the day...

+21

9/16 - Today we took a box from 8-9:30 est since there was TIC Transactions at 9:00... keeping in mind we want the currency pair to pick a direction 30 minutes after the last news of the morning.

We have action as it has broken the box, and we have a trade short at 1.7799. I will update this as the trade unfolds.

Well... another skimpy day. We took profit at 5 and 10. The bar closed at 10:30 at 1.7790, so with spread we closed another three lots at +5. Then our breakeven lots were stopped out.

+30

...Not much volatility again. Not to worry though... this is simply a test, and we have only forward tested for two days.

Basically the premise of the system is to turn a scalp into something longer time framed by leaving the last five lots open. Time will tell if the rewards outweigh the risks. The losses will be very few, but when they happen - will hurt. We just need to see if we can catch some more long runs than losses. Shutting our trades down early reduces our risk.

From my initial testing it was my finding that you had to get lucky to catch a strong move and not have your breakeven lots stopped out. However, you had to be MORE unlucky to have your trade turn and hit your stop loss before getting out with a few pips. Like I said... we'll see.

9/24
Ok... This morning we are only using a box of 8-9:00 due to the only major news being at 8:30. It looks like it could break short, but nothing has been triggered yet.

Well, we had another stop out, but we booked a few more pips this week. I took profit at 5, 10, 15, and 20. Then I closed the 5th lot at the close of the 10:30-11:00 candle for an additional 34 pips... set my remaining to breakeven and the price turned around and stopped them out.

+84

This morning, I am looking for a 5 pip scalp off the 8-8:30 candle. The only news is the Philly Fed at 10:00. I don't see that as a worthwhile news item to play with an 8-10:30 box.

...Correction... I will be playing the 8-9 box. I missed unemployment at 8:30. I will play this like a normal trade (no scalp).

Today is done... still waiting to catch a trend. Took profit at 5, 10, 15, and 20. Lot #5 was closed at the close of the 9:30-10 candle with an additional profit of 15. The remaining lots were stopped out at breakeven.

+65

With no news this morning, we are looking to scalp 5 pips off the 8-8:30 box. We are in a trade long at 1.8085. At the time of this writing it has made it to 1.8088. I will update when we reach our target.

That was easy.

+ 25

I'd like to mention something I've learned along the way. If you've been following my system, it's very easy to see how many pips I've left on the table. Situations like this have tempted me to optimize plenty of systems along the way. This is very tempting and I believe leads to the downfall of a lot of traders.

Its the greed factor. Seriously, I cringe when I see the way price runs up like it did this morning. I could have easily optimized my system to keep some lots on. As a matter of fact, I was thinking of saying I was going to treat this morning as a normal trade since it was the end of the week and it was odd that there were no news events. Sure it would have went my way this morning, but that's greed. Greed will kill you when the market doesn't react this way.

My point is if you have something that works, stick with it. The grass will always look greener. I have something that works (not this system). As a matter of fact, I started this thread because I knew I was getting bored and looking for that GREENER GRASS. This thread cured my boredom and my real account and proven strategy that fits my personality is safe and will continue growing.

Boredom has killed me in the past.

Results for 9/15-9/19

+225