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Tony's Two Candle trading system

  • #41
  • Jun 3, 2009 2:58am Jun 3, 2009 2:58am
Quoting NowAndLater
Interesting system Tony. One question:
You place the SL on the other side of the first candle and go for 10-20 pips, what is the typical (or average) risk:reward ratio here?
Hi, The stoploss is just for protection purposes, in event the market suddenly turns a 100 pip against you, you could exit off with a limited loss.

Ideally you should exit if the price moves 5-10 pips against you and accept the tiny loss instead of a big one. There are many more opportunities that will arrive again, so you can try again.

The old saying, cut off the losers and let run the winners.

Remember its a 2 candle strategy and not a 3-4-6-8 candle strategy, but if you feel it could trend more, its best to break even the trade to allow it to run for more.
prepare for worst & expect the best
  • #42
  • Jun 3, 2009 3:01am Jun 3, 2009 3:01am
Nice , i just made $207 on my live account. I close the trade due to new candle.
Attached Image (click to enlarge)
Click to Enlarge Name: Untitled.jpg Size: 5 KB
  • #43
  • Jun 3, 2009 3:05am Jun 3, 2009 3:05am
Quoting tony_dtrader
Hi, The stoploss is just for protection purposes, in event the market suddenly turns a 100 pip against you, you could exit off with a limited loss.

Ideally you should exit if the price moves 5-10 pips against you and accept the tiny loss instead of a big one. There are many more opportunities that will arrive again, so you can try again.

The old saying, cut off the losers and let run the winners.

Remember its a 2 candle strategy and not a 3-4-6-8 candle strategy, but if you feel it could trend more, its best to break even the trade to allow...
Losses are between 5-10 pips? So basically the r:r is 1:1 to 1:2.

Why aren't you using a SL of 5-10 pips right away instead of first using another SL?
  • #44
  • Jun 3, 2009 3:07am Jun 3, 2009 3:07am
Quoting NowAndLater
Losses are between 5-10 pips? So basically the r:r is 1:1 to 1:2.

Why aren't you using a SL of 5-10 pips right away instead of first using another SL?
becoz this system will lose if the SL is small. Discretion is the key to make it work.
  • #45
  • Jun 3, 2009 3:08am Jun 3, 2009 3:08am
Quoting fugly
Hey tony, I think you have a very simple system thanks very much for sharing it for everyone's benefit its very kind of you

I just want to ask if you make 20-40 pips a day that is indeed 2-4% gain a day but what if you lose? It appears to me the system has a reward:risk of much below one, because sometimes on the hourlies the candle formed is 60 pips so you stop would be at the low of the candle so basically you're risking 60 pips to make 10 or 20 which means you could lose 6%- 12% or more of your account on a single trade. Is my understanding...
Hey i have something to help you guys with price action on the minutely scale, just to keep you alert about whats happening inside the 1hour candle.

copy .mq4 to experts/indicators folder
extract and copy .tpl to templates folder
restart metatrader and load the template "twocandlesystem_m1monitor"
Load it on a 1minute chart.
Should look like the image attached.
Attached Image (click to enlarge)
Click to Enlarge Name: twocandlesystem_m1.gif Size: 17 KB
Attached File(s)
File Type: mq4 M-Candles.mq4   6 KB | 3,394 downloads
File Type: mq4 SweetSpots.mq4   4 KB | 2,920 downloads
File Type: mq4 HamaSystem.mq4   3 KB | 3,074 downloads
File Type: mq4 CandleTime THV.mq4   2 KB | 2,713 downloads
File Type: zip twocandlesystem_m1monitor.zip   120 KB | 4,074 downloads
prepare for worst & expect the best
  • #46
  • Jun 3, 2009 3:09am Jun 3, 2009 3:09am
Quoting tony_dtrader
Hey i have something to help you guys with price action on the minutely scale, just to keep you alert about whats happening inside the 1hour candle.

copy .ex4 to experts/indicators folder
extract and copy .tpl to templates folder
restart metatrader and load the template "twocandlesystem_m1monitor"
Should look like the image attached.
so this system is not so simple after all , more indicators coming up ?
  • #47
  • Jun 3, 2009 3:10am Jun 3, 2009 3:10am
Quoting forexisfx
becoz this system will lose if the SL is small. Discretion is the key to make it work.
He said he closes the trade if it goes 5-10 pips against him, care to explain what you mean by "this system will lose if the SL is small"?
  • #48
  • Jun 3, 2009 3:13am Jun 3, 2009 3:13am
Quoting NowAndLater
He said he closes the trade if it goes 5-10 pips against him, care to explain what you mean by "this system will lose if the SL is small"?
if u scroll back to look at USDJPY chart u know will what i mean. If we trade usdjpy with a spread of 2 pips , it means 3 - 8 pips against him. The moment he open a trade it's already 2 pips against him.
  • #49
  • Jun 3, 2009 3:16am Jun 3, 2009 3:16am
  •  Nimrod
  • | Joined Oct 2008 | Status: Energy and persistence conquer all | 168 Posts
This system reminds me of the Rumpled One.Concentrate on the hour candle and focused on psychological level.
  • #50
  • Jun 3, 2009 3:20am Jun 3, 2009 3:20am
Quoting forexisfx
if u scroll back to look at USDJPY chart u know will what i mean
I'm not following you and I'm not gonna clutter up this thread with this either as it really doesnt matter.

All I understand is what Tony has written: the initial SL is there for protection and should be on the other side of the candle, if price moves against you 5-10 pips you close the trade for a small loss, and you shoot for 10-20 pips.
  • #51
  • Jun 3, 2009 3:20am Jun 3, 2009 3:20am
Quoting tony_dtrader
if you want 99% win ratio, go with 10pip tp.
if you want 80% win ratio, go with 20pip tp.

anyways tp at close of second candle sometimes very rewarding, usually at start of London and new York sessions and news hours.
Let say he close the trade when 5-10 pips against him. With the above statement posted by tony , we have a holy grail here isn't it ? 99% winning ratio with TP 10. so it's like 1:1 RR with 99% winning ratio.
  • #52
  • Jun 3, 2009 3:28am Jun 3, 2009 3:28am
Quoting forexisfx
so this system is not so simple after all , more indicators coming up ?
Hey, have a look at the image. In that you can see a color coded system that shows the price action on a minute-by-minute basis, so you can know how good the trade is currently. You can also see the hourly candle inside the 1minute chart and i have installed an indicator where you can see horizontal levels 20pips away from each other which you can use for ideal take profit levels n stuff.

More information is more money isn't it
prepare for worst & expect the best
  • #53
  • Jun 3, 2009 3:34am Jun 3, 2009 3:34am
I'll write an EA for this to test but before I do, do you only trade USDJPY or other pairs as well (I think hourly setup would be different on other pairs)?
  • #54
  • Jun 3, 2009 3:37am Jun 3, 2009 3:37am
Quoting mikkom
I'll write an EA for this to test but before I do, do you only trade USDJPY or other pairs as well (I think hourly setup would be different on other pairs)?
Great ! Now we can see if we can get 99% win ratio with TP 10 and 80% win ratio with TP 20. Also not forgetting to close the trade when price 5-10 pips against us.
  • #55
  • Jun 3, 2009 3:39am Jun 3, 2009 3:39am
Quoting tony_dtrader
Hey, have a look at the image. In that you can see a color coded system that shows the price action on a minute-by-minute basis, so you can know how good the trade is currently. You can also see the hourly candle inside the 1minute chart and i have installed an indicator where you can see horizontal levels 20pips away from each other which you can use for ideal take profit levels n stuff.

More information is more money isn't it
Tony, thanks.

Does the price action often (what percentage of the time?) go back against the first candle quite a bit during the hour (quite a bit, even most of the hour?)...and then come back in the first candle's direction later in the hour, and then close in the happy direction?

Would you discuss this just a bit, to give us a sense of the "guts" it may sometimes take to stay in the trade?

Ron
  • #56
  • Jun 3, 2009 3:40am Jun 3, 2009 3:40am
Quoting mikkom
I'll write an EA for this to test but before I do, do you only trade USDJPY or other pairs as well (I think hourly setup would be different on other pairs)?
I trade only the usdjpy mostly with this, sometimes eurjpy. Haven't tried it on other pairs since their too volatile and would move 20-30 pip against me many times, which is too risky for me.
prepare for worst & expect the best
  • #57
  • Jun 3, 2009 3:46am Jun 3, 2009 3:46am
i suggest the TP to be 20 and when price is +10 pips we move to break. That way , we get break even 99% of the time and our RR is 2:1. Sounds great isnt it ?
  • #58
  • Jun 3, 2009 3:50am Jun 3, 2009 3:50am
Quoting ronrhodes
Tony, thanks.

Does the price action often (what percentage of the time?) go back against the first candle quite a bit during the hour (quite a bit, even most of the hour?)...and then come back in the first candle's direction later in the hour, and then close in the happy direction?

Would you discuss this just a bit, to give us a sense of the "guts" it may sometimes take to stay in the trade?

Ron
Lets take an example.

candle 1 is a bear, candle 2 is a bull... so we wait to see if candle 3 forms into a bull by 5pips. Then we enter the trade and it should start moving rightaway, if it doesn't and starts to move 5-10 pips against you, thats a alert that you may need to exit the trade since its not moving that well.

Vice versa for bear, candle 0 must be a bull, candle 1 must be a bear and we wait for candle 3 to form into a bearish by 5pips to enter.

Remember i trade usdjpy, which has a daily range of about 80-100 pips on average. so 10 pips is quite a lot on that pair and it usually takes 30-40 mins to move 10-20 pips, unlike gbpusd or eurusd that does 30-50pip in a average hour candle.

Please consider my system and high probability bet to make some quick pips, its not that i havent lost bets, but from experience i make sure strictly that my losers are less and small and make sure the winners are more and big.

As ive said before the best bear and bull candles are ones that have little to no wicks before turning bearish of bullish, that indicates a strong buying or selling.

hope this helps
prepare for worst & expect the best
  • #59
  • Jun 3, 2009 4:04am Jun 3, 2009 4:04am
Ok Folks,

I think every things explained and its quite simple. Ill have to leave to hunt down another 20 pips, call it a day and pour some fine whiskey for another happy trading day.

Wish you all the best of the best, Sharing is caring and happy pipping YO!
cya later,
Tony
prepare for worst & expect the best
  • #60
  • Jun 3, 2009 4:10am Jun 3, 2009 4:10am
Thank you for sharing Tony!

Just wondering if (when you have the time) you could post some charts and show which setups that you would take and which you wouldn't take based on the look and shape of the candles.
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