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euroyen Gappy system

  • #1
  • First Post: Edited Oct 19, 2008 3:47am Oct 16, 2008 6:21am | Edited Oct 19, 2008 3:47am
Hi all,

Just want your imput on a new system im developing. It is the euroyen pair on candle. The bottom indicators are the ATR and BBW. These show when the volatility is high enough to trade. Theindicator named Gappy shows the blue equiety curve for 2008. the red bars are triggers of the system and the green partial bars are the profit/loss.

Thoughts?
Attached Image (click to enlarge)
Click to Enlarge Name: Spot FX EUR_JPY (-).png Size: 14 KB
  • #2
  • Oct 16, 2008 6:38am Oct 16, 2008 6:38am
It is bassed upon gaps in the close and open values. The wider the better. Say it is friday night and the market is about to close......THEN, you place a market order to buy and sell the euroyen with guaranteed stos each way. The absolute amount of loss that can happen is 6 pips. This is if the move over the weekend did not move more than 18 pips fro fridays close. If, say it was like last weekend and the gap was very large, than one position is closed out for a guaranteed value while the other is sitting high.

Can anyone see any holes in this possible strategy?
  • #3
  • Oct 16, 2008 6:59am Oct 16, 2008 6:59am
Looks good man Is this an end-of-week system?
  • #4
  • Edited 12:05pm Oct 16, 2008 11:45am | Edited 12:05pm
Hi Brother.. Thanx for this subject.
i am already search for GapTrading..

i am looking for indicator show me or give me signal for which direction will Gap may happen (North or South)

then i can Entry position on last min befor market close ..

If Trade go right direction ( we will get easyProfit )

But the worest thing is when direction go wrong, what will happen is the loss will not stop on SL , it will stop on the first price of market when its open.

So the problom with SL..

is ur system can help me??
Never sell @ lower upward channel unless breacked and vise versa .
  • #5
  • Oct 16, 2008 11:50am Oct 16, 2008 11:50am
Quoting GCTrader1
It is bassed upon gaps in the close and open values. The wider the better. Say it is friday night and the market is about to close......THEN, you place a market order to buy and sell the euroyen with guaranteed stos each way. The absolute amount of loss that can happen is 6 pips. This is if the move over the weekend did not move more than 18 pips fro fridays close. If, say it was like last weekend and the gap was very large, than one position is closed out for a guaranteed value while the other is sitting high.

Can anyone see any holes in this possible strategy?
As I said
the worest thing is when direction go wrong, what will happen is the loss will not stop on SL (not 6pip) , it will stop on the first price of market when its open.

so if Gap 100 pips your loss 100 pips , not 6 pip

So the problom with SL..
Never sell @ lower upward channel unless breacked and vise versa .
  • #6
  • Oct 16, 2008 11:57am Oct 16, 2008 11:57am
Quoting GCTrader1
It is bassed upon gaps in the close and open values. The wider the better. Say it is friday night and the market is about to close......THEN, you place a market order to buy and sell the euroyen with guaranteed stos each way. The absolute amount of loss that can happen is 6 pips. This is if the move over the weekend did not move more than 18 pips fro fridays close. If, say it was like last weekend and the gap was very large, than one position is closed out for a guaranteed value while the other is sitting high.

Can anyone see any holes in this possible strategy?
I don't know about other brokers. IBFX does guarantee stops- so far so good.

BUT

They have ridiculous spreads for the first 30 minutes, or so, on Sunday night.

I mean spreads like 30 pips.
  • #7
  • Oct 17, 2008 5:31pm Oct 17, 2008 5:31pm
Well this weekend will be the test. I have entered long and short trades in the euro/yen at market close with guaranteed stops at 18 pips(the minimum allowed with guaranteed stops). So come monday morning I will find out if this works out in practice.

I will post results and hopefully they will be good!
  • #8
  • Oct 18, 2008 5:20pm Oct 18, 2008 5:20pm
Quoting WedWed
Hi Brother.. Thanx for this subject.
i am already search for GapTrading..

i am looking for indicator show me or give me signal for which direction will Gap may happen (North or South)

then i can Entry position on last min befor market close ..

If Trade go right direction ( we will get easyProfit )

But the worest thing is when direction go wrong, what will happen is the loss will not stop on SL , it will stop on the first price of market when its open.

So the problom with SL..

is ur system can help me??
Unfortunately there is little way to tell which way the market will gap as the reason for the rather large gaps lately is due to government announcements taking the market by surprise. This is why I am using the covered straddle strategy.

With GUARANTEED stops and the straddle, my possible loss is already locked in with the straddle. It must open more than 21 pips gap for me to profit since the min stop is 18. Any less and its a 6 pip loss.

I did use this system for news trading and it was working very well but IGMarkets made their minimum guaranteed stops 50 PIPS 30 minutes before any announcement. Obviously they didnt like me continuously making money that easy! So this is Straddle system #2.

GCT
  • #9
  • Oct 19, 2008 1:59am Oct 19, 2008 1:59am
Quoting GCTrader1
Unfortunately there is little way to tell which way the market will gap as the reason for the rather large gaps lately is due to government announcements taking the market by surprise. This is why I am using the covered straddle strategy.

With GUARANTEED stops and the straddle, my possible loss is already locked in with the straddle. It must open more than 21 pips gap for me to profit since the min stop is 18. Any less and its a 6 pip loss.

I did use this system for news trading and it was working very well but IGMarkets made their minimum guaranteed stops 50 PIPS 30 minutes before any announcement. Obviously they didnt like me continuously making money that easy! So this is Straddle system #2.

GCT

As I said
the worest thing is when direction go wrong, what will happen is the loss will not stop on SL (not 6pip) , it will stop on the first price of market when its open.

so if Gap on oppsite trade is 100 pips your loss 100 pips , not 6 pip

So the problom with SL..

If i am wrong please let me know..
Never sell @ lower upward channel unless breacked and vise versa .
  • #10
  • Oct 19, 2008 3:19am Oct 19, 2008 3:19am
Quoting GCTrader1
Unfortunately there is little way to tell which way the market will gap as the reason for the rather large gaps lately is due to government announcements taking the market by surprise. This is why I am using the covered straddle strategy.

With GUARANTEED stops and the straddle, my possible loss is already locked in with the straddle. It must open more than 21 pips gap for me to profit since the min stop is 18. Any less and its a 6 pip loss.

I did use this system for news trading and it was working very well but IGMarkets made their minimum guaranteed stops 50 PIPS 30 minutes before any announcement. Obviously they didnt like me continuously making money that easy! So this is Straddle system #2.

GCT
What are the minimum guaranteed stops on a Friday night for IG? And do they close at 9pm UK time on a Friday or 10pm? Some UK spreadbetting firms close at 9pm, an hour before the market, possibly to avoid this kind of trading

Andy
  • #11
  • Oct 19, 2008 3:28am Oct 19, 2008 3:28am
They close market at 7am Sat local time (GMT+10). If it gaps down to 0 cents my short will make a killing while my GUARANTEED STOP on the long position will be closed out at -18 pips.

Definition:

In law and common usage: to undertake or engage for the payment of (a debt) or the performance of (a duty) by another person; to undertake to secure (a possession, right, claim, etc.) to another against a specified contingency, or at all avents; to give a guarantee concerning; to engage, assure, or secure as a thing that may be depended on; to warrant; as, to guarantee the execution of a treaty.

So it comes down to will IG honor its guarantee... I havent had a problem yet with my first system which utilized it!

Find out in about 12 hours!

GCT
  • #12
  • Oct 19, 2008 3:38am Oct 19, 2008 3:38am
I used 0 cents as an extreme example. Im hoping for anything over 30 pip gap...
  • #13
  • Oct 19, 2008 3:39am Oct 19, 2008 3:39am
Quoting GCTrader1
They close market at 7am Sat local time (GMT+10). If it gaps down to 0 cents my short will make a killing while my GUARANTEED STOP on the long position will be closed out at -18 pips.

Definition:

In law and common usage: to undertake or engage for the payment of (a debt) or the performance of (a duty) by another person; to undertake to secure (a possession, right, claim, etc.) to another against a specified contingency, or at all avents; to give a guarantee concerning; to engage, assure, or secure as a thing that may be depended on; to warrant; as, to guarantee the execution of a treaty.

So it comes down to will IG honor its guarantee... I havent had a problem yet with my first system which utilized it!

Find out in about 12 hours!

GCT
Well let us know!

I think this system could also be used on AUDJPY and GBPJPY, both have been sufficiently volatile of late to cover spreads

What time do IG re-open on a Sunday?

Thanks
Andy
  • #14
  • Oct 19, 2008 3:43am Oct 19, 2008 3:43am
Quoting WedWed
As I said
the worest thing is when direction go wrong, what will happen is the loss will not stop on SL (not 6pip) , it will stop on the first price of market when its open.

so if Gap on oppsite trade is 100 pips your loss 100 pips , not 6 pip

So the problom with SL..

If i am wrong please let me know..
You are right as a general rule, but in the UK some spreadbetting firms offer guaranteed stops (the price being an extra spread), so even if the market gaps through the stop they should still honour the stop loss

Andy
  • #15
  • Oct 19, 2008 3:46am Oct 19, 2008 3:46am
Thats right, it can be used on many pairs but what one has to look out for are the spread and the guaranteed stop loss minimum. Also it has to be a pair with sufficient volatility. euroyen works well because of the low spread and increased volatility around this time.

If it gaps enough to cover the min stop and spread then it will work.

It opens again at 6am here (Australia) and with live trades already taken from close on sat morning, I will definitely find out if it works or not. I remain skeptical myself but had to live trade it to be sure. If it works, next weekends trades will be much larger.

Will post update in the morning after open...

GCT
  • #16
  • Oct 19, 2008 3:53am Oct 19, 2008 3:53am
I have used it in the past. Worked really well last weekend. Sometimes it doesn't gap but does move quite quickly when opening so you can lose more than your 6 pips as you try to get out of positions. I would base your money management for the trade on being stopped out of both positions.

Didn't do it this weekend, slept in. I have a more relaxed weekend when I don't do it as well. But last weekend it was very worthwhile.

Good luck with it, we need all the advantage we can get over firms like ig.

cheers
  • #17
  • Oct 19, 2008 4:59am Oct 19, 2008 4:59am
Well thanks for sharing before last weekend Aussiepipe!!!

Yes looked like it would have worked very nicely, that was what led to me to covered weekend straddle. Be very interesting indeed tomorrow morning. I am currently writing up code so it can be backtested and optimized although I know that past results do not guarantee future profits! (we are being drilled that from our lecturer at uni at the moment)

6am tomorrow morning...I will be here

GCT
  • #18
  • Oct 23, 2008 5:24am Oct 23, 2008 5:24am
Ok, well the euroyen did not gap at all monday which means that i took a hit of 6 pips. Not exactly much. I still think the theory is sound. They did not widen the gaps or not allow me to trade at open. This makes it very promising if the volatility remains high and announcements are made on weekends, then this kind of strategy is a low risk high reward setup.

With an absolute maximum risk of 6 pips and an upside that could be substantially more, it is one I will continue to look at. It is a no-brainer as well. If the volatility is high then you enter the trade at close on friday. Monday morning, you exit hopefully with profit.

Does anyone have any thoughts on this system?

GCT
  • #19
  • Last Post: Edited 7:52pm Oct 26, 2008 7:42pm | Edited 7:52pm
Ok, Since the volatility was very high on friday, I entered in a covered weekend straddle with 5 mini's each way on the euroyen and the aud/usd (since im still testing it, im only going in light). It worked beautifully with the euroyen the main gainer of 100 pips! With absolutely minimal effort I got the following results:


_____________________Opening #units Closing P/L
Spot FX (mini) EUR/JPY - 11906.4 ¥ +5 11888.4 ¥ -9,000
Spot FX (mini) AUD/USD - 6224 $ +5 6209 $ -75.00
Spot FX (mini) AUD/USD - 6216 $ -5 6199.5 $ 82.50
Spot FX (mini) EUR/JPY - 11896.4 ¥ -5 11797.4 ¥ 49,500

All in all, a very nice monday morning!

GCT
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