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Winners And Losers Trading System

  • #21
  • Mar 22, 2007 11:33am Mar 22, 2007 11:33am
Quoting Darkstar
That would make the system even worse. Don't forget that the second trade starts out down 79 pips. With a 30 pip stop it needs to move in your favor 80 pips to make 1 but only 30 against to lose 109. Thats a massive loss bias hurdle to overcome.

The system would be much better if you just avoided the initial hedge criteria all together. Use the rules to establish entry criteria and you can get in at exactly the same place at lower cost...
Slow down, man.

Yes, the second position is 79 pips out of the money. But the first one made 79 so you're even. If you take 30 additional loss on the second, total 109, you're down 30 total on the trade.

The point is that you can be wrong on direction, bank the profit one way, and, the market comes back usually. If you don't believe the market comes back, then don't trade this system.
  • #22
  • Mar 22, 2007 11:35am Mar 22, 2007 11:35am
Megaleds I don't get the method as you described here , could you make an example directly on a chart ?
  • #23
  • Mar 22, 2007 12:29pm Mar 22, 2007 12:29pm
Quoting skyline
Megaleds I don't get the method as you described here , could you make an example directly on a chart ?
Well, I don't know how to post an image. Looks like it has to have its own URL.

But, pull up a chart of the GU right now. Good example.

You put it on this morning just before the news, at 1.9670, 5:30 am EDT. It goes up to 9725, or 55 pips, which triggered the trailing stop on the long. It comes down 5 pips to 9720 and the long is closed (50 pips profit), the trailing stop gets put on the short.

Price goes to a low of 1.9666 and retraces upward, and the stop is hit at 9671. That takes you out close to even on the short at around 8:30.

Easy huh?

Except for one thing. Go back to the part where "the trailing stop opens on the short". Price action would have stopped out the short before price came on down, if there were a 5 pip stop.

That's where the risk is on this, as on any trade, the stops have to be wide enough to allow for normal action. From 5:50 am until 6:02, price went up 32 pips. There were several other 20 - 25 pips excursions before getting to the thoretical 8:30 exit point. So, to hold position through those, the stop would have to be 33 or better, which means you would not be stopped out at 9671, you'd be stopped out 28 pips higher, at 9699, for 29 pip loss.

50 - 29 = +21 on this one. Not too bad.

Now, if you could have stood a 37 pip stop, you'd still be in the short, and would have another nice 50 pipper to go along with the first!
  • #24
  • Mar 22, 2007 12:38pm Mar 22, 2007 12:38pm
Quoting blueruby
Well, I don't know how to post an image. Looks like it has to have its own URL.

But, pull up a chart of the GU right now. Good example.

You put it on this morning just before the news, at 1.9670, 5:30 am EDT. It goes up to 9725, or 55 pips, which triggered the trailing stop on the long. It comes down 5 pips to 9720 and the long is closed (50 pips profit), the trailing stop gets put on the short.

Price goes to a low of 1.9666 and retraces upward, and the stop is hit at 9671. That takes you out close to even on the short at around 8:30.

Easy huh?

Except for one thing. Go back to the part where "the trailing stop opens on the short". Price action would have stopped out the short before price came on down, if there were a 5 pip stop.

That's where the risk is on this, as on any trade, the stops have to be wide enough to allow for normal action. From 5:50 am until 6:02, price went up 32 pips. There were several other 20 - 25 pips excursions before getting to the thoretical 8:30 exit point. So, to hold position through those, the stop would have to be 33 or better, which means you would not be stopped out at 9671, you'd be stopped out 28 pips higher, at 9699, for 29 pip loss.

50 - 29 = +21 on this one. Not too bad.

Now, if you could have stood a 37 pip stop, you'd still be in the short, and would have another nice 50 pipper to go along with the first!
To post an image, just scroll down in your edit screen and you will see a button Manage Attachments. just press that and follow the instructions.
  • #25
  • Mar 22, 2007 1:42pm Mar 22, 2007 1:42pm
Very interesting strategy because price does indeed retrace each day after the market establishes a low or high. It's an extremely rare day in which a daily candle has no wicks. I wonder what would happen if you opened the hedge at 17:00 EST, and set the variable values to some multiple of the ATR for a specific timeframe.
  • #26
  • Mar 22, 2007 1:58pm Mar 22, 2007 1:58pm
Perhaps I don't understand the method correctly, but why does one need to set a profit target for variable B. If you have a trailing stop for the winning trade, which theoretically would be triggered once price hits its zenith or nadir, then after price begins to retrace, which it will, (it always seems to revert to a mean) would not your profit be equal to the amount of the retracement, minus the spread?
  • #27
  • Mar 22, 2007 2:08pm Mar 22, 2007 2:08pm
i want to see this tested out
  • #28
  • Mar 22, 2007 3:06pm Mar 22, 2007 3:06pm
Quoting skyline
Megaleds I don't get the method as you described here , could you make an example directly on a chart ?
Earlier This Week: FED Interest Rate Statement.

http://workdigital.com/images/fed_rate_statement.gif

A= 2 lots
B= 20 Pips
C= 5 pips
D= 5 pips

Started at 1.3305
went up to 1.3343
Stop Loss Kicks in at 1.3338
(Gain of 33 pips)
D entered @ 1.3338
Exited loosing position at 1.3332
(Loss of 27 pips)

NET = +5 pips

Started over 1.3332
went up to 1.3375
Stop Loss Kicks in at 1.3370
(Gain of 38 pips)
D entered @ 1.3370
Exited loosing position at 1.3359
(Loss of 27 pips)

NET = +9 pips

TOTAL = 14 pips in a medium size news release in 14 min time....
  • #29
  • Mar 22, 2007 3:08pm Mar 22, 2007 3:08pm
It's a good example, but you may be optimizing the system to fit this specific set of data. That is to say, would those variables have worked over the last 6 months.
  • #30
  • Mar 22, 2007 3:13pm Mar 22, 2007 3:13pm
Quoting SisterCurare
Perhaps I don't understand the method correctly, but why does one need to set a profit target for variable B. If you have a trailing stop for the winning trade, which theoretically would be triggered once price hits its zenith or nadir, then after price begins to retrace, which it will, (it always seems to revert to a mean) would not your profit be equal to the amount of the retracement, minus the spread?
"B" is just used as a method of initiating the trailing stop so that direction can be solidly established.

If you were to only have a trailing stop... then the opposite trade would reach stop loss before your winning trade would be complete... This is because you do not know the direction of the market - and placing the identical stop on the hedge does not make sense. the loosing side would stop out before the winning side found the top of the trend....
  • #31
  • Mar 22, 2007 3:14pm Mar 22, 2007 3:14pm
Quoting SisterCurare
It's a good example, but you may be optimizing the system to fit this specific set of data. That is to say, would those variables have worked over the last 6 months.
There is only 1 way to find out.... Does anyone want to take a crack at this ea - the code seems like it would be easy to do...

Any coders... Please advise.
  • #32
  • Mar 22, 2007 3:15pm Mar 22, 2007 3:15pm
Quoting SisterCurare
It's a good example, but you may be optimizing the system to fit this specific set of data. That is to say, would those variables have worked over the last 6 months.
I think so. From my limited experience, when you get a big news spike, it usually retraces a good deal more than the one yesterday. So this strat would work much better in that case.
  • #33
  • Mar 22, 2007 3:16pm Mar 22, 2007 3:16pm
Quoting megaleads
There is only 1 way to find out.... Does anyone want to take a crack at this ea - the code seems like it would be easy to do...

Any coders... Please advise.
I'll take a crack at it.
  • #34
  • Mar 22, 2007 3:18pm Mar 22, 2007 3:18pm
Quoting SisterCurare
It's a good example, but you may be optimizing the system to fit this specific set of data. That is to say, would those variables have worked over the last 6 months.
You would have to optimize the EA from back testing and forward testing to get to know the best settings for each market condition of a currency pair.
  • #35
  • Mar 22, 2007 3:19pm Mar 22, 2007 3:19pm
Quoting megaleads

TOTAL = 14 pips in a medium size news release in 14 min time....
Not to be critical because some pips are better than no pips, but that was at least an 80 pip move, 14/80 is just around 18% of the move. If this is your best example of this system in action then that's not so great.
  • #36
  • Mar 22, 2007 3:19pm Mar 22, 2007 3:19pm
Quoting blueruby
I'll take a crack at it.

My hat is off to you!
  • #37
  • Mar 22, 2007 3:24pm Mar 22, 2007 3:24pm
Quoting aicccia
Not to be critical because some pips are better than no pips...
No - this was not a best example - but it was a real example on how NOT to get hurt during news...

Often times during the day the pair will just sit there and oscillate back and forth 40 pips up and down.... you could make much more money on that action - the point of this example is to show not only function but also account protection THROUGH news - many people have to turn off the EA BECAUSE of news - Since this is Hedged - there is now no need... this could run all the time...

Comments?
  • #38
  • Mar 22, 2007 3:25pm Mar 22, 2007 3:25pm
Quoting blueruby
I think so. From my limited experience, when you get a big news spike, it usually retraces a good deal more than the one yesterday. So this strat would work much better in that case.

Yes - this is my point exactly.
  • #39
  • Mar 22, 2007 3:45pm Mar 22, 2007 3:45pm
Your reasoning seems sound. You just need to come up with values for the variables without overly optimizing the EA. We need some divergent opinions in here because I can't seem to see a weakness. Darkstar? MrMikal?
  • #40
  • Mar 22, 2007 3:57pm Mar 22, 2007 3:57pm
Just opened a demo account to forward test on cable, I'll let you know how it goes around this time tomorrow.
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