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Winners And Losers Trading System

  • #41
  • Mar 22, 2007 4:04pm Mar 22, 2007 4:04pm
Megaleads!

Strategy makes sense in the surface, and I very much like the idea of the hedge strategy since we never really know which direction the market is going. I like the foundation of this strategy but just trying to help find/fix a potential flaw:

I think this strategy is probably ideal for when the market is ranging. So, my question is, what will happen when a market is in a very strong trend. The winning position is profitable, but wouldn't your losing position get margin call, and broker will automatically close the trade for you?? I actually do not know this 1st hand, but just something to think about. Any idea guys?

Actually, that would be ideal for the broker to auto close your losing trade, probably just need move your hard stop loss at break even price. maybe?? yeah??

Good luck with the EA, hope it works out as planned.
  • #42
  • Mar 22, 2007 4:09pm Mar 22, 2007 4:09pm
Quoting lkwd2000
Megaleads!

Strategy makes sense in the surface, and I very much like the idea of the hedge strategy since we never really know which direction the market is going. I like the foundation of this strategy but just trying to help find/fix a potential flaw:

I think this strategy is probably ideal for when the market is ranging. So, my question is, what will happen when a market is in a very strong trend. The winning position is profitable, but wouldn't your losing position get margin call, and broker will automatically close the trade for you?? I actually do not know this 1st hand, but just something to think about. Any idea guys?

Actually, that would be ideal for the broker to auto close your losing trade, probably just need move your hard stop loss at break even price. maybe?? yeah??

Good luck with the EA, hope it works out as planned.
No, there would not be a margin call, because the stop loss/trailstop on the losing side would take you out at the predefined amount.
  • #43
  • Mar 22, 2007 4:10pm Mar 22, 2007 4:10pm
Quoting lkwd2000
Megaleads!

find/fix a potential flaw:

I think this strategy is probably ideal for when the market is ranging. So, my question is, what will happen when a market is in a very strong trend. The winning position is profitable, but wouldn't your losing position get margin call?
The winnings from the winning position equally match the losses from the loosing position. this means that you could NEVER get a margin call from news.
  • #44
  • Mar 22, 2007 4:16pm Mar 22, 2007 4:16pm
Quoting smjones
No, there would not be a margin call, because the stop loss/trailstop on the losing side would take you out at the predefined amount.

there wouldn't be a stop loss set for the losing trade at this point. From the way i understood the strategy is, we only set the losing trail stop, when we close the winning trade. It is still moving to the winning side, and currenly thats the only trail stop set in place.
  • #45
  • Mar 22, 2007 4:36pm Mar 22, 2007 4:36pm
Quoting megaleads
Earlier This Week: FED Interest Rate Statement.

A= 2 lots
B= 20 Pips
C= 5 pips
D= 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....
Hello,
I still don't understand your "D", otherwise it is a very easy EA to code.
However from your example above, when I look at the "candles"
You started over at 1.3332, then price went up to 1.3352, the trailing stop should already kicks in with 5 pips, then what happened was the price went to 1.3358 and the next minute went back down to 1.3350 so you already get stopped out at 1.3353 with 21PIPs profit......then.....what's the story with "D"??
Another flaw in the example is you only look at the "Bid" price from the chart - from my memory with IBFX during that time the spread was 10PIPS, NF was 8PIPs....If you set your stop of "D" with 5 pips, you get stopped out straight away or you haven't even been stopped out at that time and wait for the retracement which will stop you out higher or you waited for another day and only just stopped out....

Sorry, not to be critical.....I just have difficult understanding of your logic behind the method.
Anyway, wish you a good trading...
  • #46
  • Mar 22, 2007 4:40pm Mar 22, 2007 4:40pm
Quoting lkwd2000
there wouldn't be a stop loss set for the losing trade at this point. From the way i understood the strategy is, we only set the losing trail stop, when we close the winning trade. It is still moving to the winning side, and currenly thats the only trail stop set in place.
well under this case, both sides are still open, so there is no gain and no loss and no margin call. at least FXsol and IBFX handle hedged pairs like this.
  • #47
  • Edited 6:34pm Mar 22, 2007 6:21pm | Edited 6:34pm
First successful backtest. And no, it wasn't nearly easy to code as one would think, but then, I'm a hack.

The values inputted will be very discretionary. Here's a nice little profit on both sides, 27 pips total, but had the profit trigger point been wider, the big move would have been caught. This was run with default values.

Anyway, it looks like it's working. I just picked Wednesday arbitrarily, and it put the trades on when the test started.

Now if I could just get that damn Tom Petty song out of my head.
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  • #48
  • Mar 22, 2007 6:50pm Mar 22, 2007 6:50pm
How about starting the EA at 4am EST. When the London Market opens. Wouldn't that make more sense? Thats when the real movement happens.
  • #49
  • Mar 22, 2007 8:24pm Mar 22, 2007 8:24pm
I was thinking the same thing last week while reading the daily saclping thread !
but there're two catches say you closed the loosing trade and let the winning one open: price may retrace and you end up at a loss even if you set the sl for the winning trade at BE you'll end up loosing the spread twice !
the problem with this strategy is it has to be applied to pairs with high volatility and those are the same pairs that can retrace at any time and the same pairs with the largest spread
I disregrded this idea mainly because I'm not a full time trader so I'm not sure if I will be around when price hits the defined no of pips to close the looser and trail the winner plus I dnt know if the broker will let you get away with this every time without hitting your stop loss with their nasty spikes and if you're thinking of an ecn, they dnt allow hedging
but I would love to see an EA and will sure give it a try
  • #50
  • Mar 22, 2007 8:44pm Mar 22, 2007 8:44pm
Might I suggest a straddle instead of a hedge. A hedge requires paying spread on both positions. Instead of a hedge, straddle the position C pips from the start, and then play the retracement with a single position. You come out slightly better, especially in a scalping situation.

Backtesting is horrible with TPs/SLs this small.... need tick data for backtests though with the interest here I bet people will forward test this quickly.

One last thing: A hedge is horrible to play during news because of widening spreads.... but a straddle gets you in after the market cools down a bit.

Just my two cents.
  • #51
  • Mar 22, 2007 9:39pm Mar 22, 2007 9:39pm
tdion you're absolutely right still the real problem is the value of "C" ...
it seems like I'll have to take a closer look at my charts maybe after my pediatric exams but it IS promising
  • #52
  • Mar 22, 2007 10:20pm Mar 22, 2007 10:20pm
Quoting Puppy
Hello,
I still don't understand your "D".....

You started over at 1.3332, then price went up to 1.3352, the trailing stop should already kicks in with 5 pips
No - Starting over means 2 more orders of lot size "A" waiting to range "B" pips before putting on stop loss "C"
  • #53
  • Mar 22, 2007 10:25pm Mar 22, 2007 10:25pm
Quoting blueruby
First successful backtest. And no, it wasn't nearly easy to code as one would think, but then, I'm a hack.
Here is to you! Good Job Coding the EA!

I'll be happy to forward test and post results day by day... we'll see - this might be a nice little EA to let running on a small account or it could turn out to be one of those myth busters.

If forward testing works out OK it would be of particular interest to traders with small accounts since there is no large draw down required to run it.
  • #54
  • Mar 23, 2007 2:16am Mar 23, 2007 2:16am
how is it possible to be short and long simultaneously with one currency pair. I thought hedge means two currency pairs which corelates each other movements. example EUR/USD and USD/CHF moves opposite to each other . I am using the hedging of these two pairs.
  • #55
  • Mar 23, 2007 2:22am Mar 23, 2007 2:22am
Quoting sanjaysingh21k
how is it possible to be short and long simultaneously with one currency pair. I thought hedge means two currency pairs which corelates each other movements. example EUR/USD and USD/CHF moves opposite to each other . I am using the hedging of these two pairs.
Hi Sanjay. Some platforms allow you to be short and long on the same pair. Fxdd is one example. Other platforms don't. If you are with a Broker who doesn't allow hedging with the same pair you would have to use a sub account.

The type of hedging you mentioned isn't a perfect hedge as they can move independently of each other so you can still lose money. If you research carry trading where interest is accrued mainly on yen positions with baskets of currencies to hedge each other you will see what I mean.
  • #56
  • Mar 23, 2007 6:10am Mar 23, 2007 6:10am
Quoting megaleads
Here is to you! Good Job Coding the EA!

I'll be happy to forward test and post results day by day... we'll see - this might be a nice little EA to let running on a small account or it could turn out to be one of those myth busters.

If forward testing works out OK it would be of particular interest to traders with small accounts since there is no large draw down required to run it.
It's not working quite right yet, logic on the trailing stops isn't right. I'll get it going this weekend.

What I have seen so far while debugging/testing is scary. Small changes in settings can make a huge difference in profit/loss, and as usual, there are a lot more ways to lose money than make it. Inputting settings in advance looks very risky.

On the plus side, it doesn't drain the account nearly as badly as any other EA I've tried.

Like any strategy, it depends on the trader. If your friend is making that much money with this, he is probably a good trader and could do the same with any strategy.
  • #57
  • Edited 6:15pm Mar 23, 2007 4:02pm | Edited 6:15pm
OK, it is working right now, and now it DOES drain the account as badly as any EA I've seen.

Here's what it does:

Opens a long and a short position on the currency pair of the chart it's attached to. Can run on many pairs, one EA per chart, one EA instance max per pair. # lots (A) set by Lots input.

When MinProfRun (B) is reached, that position gets a trailing stop, number of pips specified by TStopWin (C).

When that stop is hit, the losing position gets a trailing stop, as specified by TStopLose (D).

Once that trade is closed, IF "repeat" user input is set to "true" then it will immediately put on another set of trades and start over.

While watching it run in visual mode, I wanted to see lower settings, such as B, C, D = 30, 25, 15. Optimization results from Nov 1 until now puts them each around 50. If I go back to Jan 1, 2006 until now, I can't find any settings that are profitable. That's backtesting.

You have to watch out when optimizing, and examine the trades. Sometimes a certain setting will work out just right to catch one big move perfectly, and that's where most of the profit comes from. Then if you don't get that exact same move in real life....

I didn't see any encouraging patterns for the settings in the op results. Even during the period where it worked, settings that gave best performance weren't distinctly different from those that gave the worst.
Attached File(s)
File Type: ex4 Winners and Losers v1.4.ex4   4 KB | 520 downloads
  • #58
  • Mar 23, 2007 4:10pm Mar 23, 2007 4:10pm
I can't believe the EA is working so poorly, the logic behind the method seems sound. The only problem I have with hedging strategies is that even though you have equal and opposite positions open, you will at some point have to close one position, when your analysis of the market lets you know its direction. Couldn't you have just applied that analysis in the first place and waited to open any positions at all?
  • #59
  • Mar 23, 2007 4:21pm Mar 23, 2007 4:21pm
The Program is Perfect... but for backtesting I don't think that it is looping

I set the following settings

Minimum Profit Run = 35 pips
Trailing Stop WIN = 5 pips
Trailing Stop LOOSE = 3 or 4 pips....

Testing this month it is making money... from March 4th to March 23rd - actually it made $1484.40 (but it made this in 1 day) looks like in just one trade...

It does not look like it is repeating when back testing even though it is set to = TRUE
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  • #60
  • Mar 23, 2007 4:26pm Mar 23, 2007 4:26pm
Looking at the EUR/USD between 30 to 50 pip move does not come without some sort of a retracement.... that is what we are after


But once achieved - then we have to catch the reverse momentum very close and very quickly with this - that is why the trailing profits are set so small... because that is how it seems to work.

Fair move - then a retracement. You do not want to strangle the profits on the way up - but you have to be sharp about reducing your losses when it does reverse - those retracements are usually quite quick - therefore I set a smaller stop losses on the negative side of the trade.
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