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Open-Close Trending with Hedging Discussion Thread

  • #181
  • Apr 22, 2007 3:24pm Apr 22, 2007 3:24pm
I am nearly done with testing and this certainly looks good. I will post the results by tomorrow or latest on Tuesday.

I have been reading some of the latest post and it looks as if we are getting a bit of track. IMHO we should test this system over a period of several years and not months. I have started testing from 2003 and here are some observations

1. Some trades actually took 2 years to profit
2. Sofar only therre was only 5 stopouts of 1500 pips each
3.Max open trades = 24
4. Unfortunatly i can not give ave pips/month until i am finished but so far more than 1000/month.

Please do not change the system just because it looks good short term. MM wil play a big part in this and you will get burned if you base your MM on short term stats.

Eben
  • #182
  • Apr 22, 2007 9:52pm Apr 22, 2007 9:52pm
Quoting Ebenst
I am nearly done with testing and this certainly looks good. I will post the results by tomorrow or latest on Tuesday.

I have been reading some of the latest post and it looks as if we are getting a bit of track. IMHO we should test this system over a period of several years and not months. I have started testing from 2003 and here are some observations

1. Some trades actually took 2 years to profit
2. Sofar only therre was only 5 stopouts of 1500 pips each
3.Max open trades = 24
4. Unfortunatly i can not give ave pips/month until i am finished but so far more than 1000/month.

Please do not change the system just because it looks good short term. MM wil play a big part in this and you will get burned if you base your MM on short term stats.

Eben

Thank you for all your hard work backtesting. Looking forward to seeing reading your results.

yezbick
  • #183
  • Apr 23, 2007 3:32am Apr 23, 2007 3:32am
Quoting Ebenst
I am nearly done with testing and this certainly looks good. I will post the results by tomorrow or latest on Tuesday.

I have been reading some of the latest post and it looks as if we are getting a bit of track. IMHO we should test this system over a period of several years and not months. I have started testing from 2003 and here are some observations

1. Some trades actually took 2 years to profit
2. Sofar only therre was only 5 stopouts of 1500 pips each
3.Max open trades = 24
4. Unfortunatly i can not give ave pips/month until i am finished but so far more than 1000/month.

Please do not change the system just because it looks good short term. MM wil play a big part in this and you will get burned if you base your MM on short term stats.

Eben
Hi Ebenst

Are you doing your back tests on the basis of a close of 4h bar outside the channel or just cross of the channel, makes great difference.

Thanks a lot for your efferts, great job and hopefully we will reach a great optimized point with great profits.
Regards
  • #184
  • Apr 23, 2007 8:39am Apr 23, 2007 8:39am
I am done.Next time i will think twice before saying plublicly i will test a system lol.

The test started with the first trade taken 13 Jan 2003 and the last 8 Jan 2007.Entries were as follow

Long- Price cross the + 25 to the upside. Trade was taken on close of candle
Short- The reverse.
S/L was set @ 1500 pips and no targets were set.
Trade was taken out when reverse signal occured and opposite trade was in profit.

Total trades = 325
Trades still open = 3
Nett profit = 36,007 pips
Trades stopped out = 19
Ave pips per month = 600
Largest amount of open posistion = 24 in 2004

Obeservation : With a TP in place the profits would increase and the amount of stops would decrease. Have noticed that price trace back to channel after a run, giving you eventually far less than the run itself. This however is a matter of further testing.

As you can see this is a profitable strategy, and can only be traded for long term gains. I would advise that a sound MM system be developed for this strategy and with the originators permissiom would like to invite more experienced traders than myself to give some idaes on this.

Regards

Eben
  • #185
  • Apr 23, 2007 11:10pm Apr 23, 2007 11:10pm
Quoting Ebenst
I am done.Next time i will think twice before saying plublicly i will test a system lol.

The test started with the first trade taken 13 Jan 2003 and the last 8 Jan 2007.Entries were as follow

Long- Price cross the + 25 to the upside. Trade was taken on close of candle
Short- The reverse.
S/L was set @ 1500 pips and no targets were set.
Trade was taken out when reverse signal occured and opposite trade was in profit.

Total trades = 325
Trades still open = 3
Nett profit = 36,007 pips
Trades stopped out = 19
Ave pips per month = 600
Largest amount of open posistion = 24 in 2004

Obeservation : With a TP in place the profits would increase and the amount of stops would decrease. Have noticed that price trace back to channel after a run, giving you eventually far less than the run itself. This however is a matter of further testing.

As you can see this is a profitable strategy, and can only be traded for long term gains. I would advise that a sound MM system be developed for this strategy and with the originators permissiom would like to invite more experienced traders than myself to give some idaes on this.

Regards

Eben

Thank you very very much for the galant effort. Please could answer a few questions.

1. I assume this test was for GBPJPY?
2. When you say stopped out do you mean hitting the SL of 1500?
3. Did you use 125 LWMA median + 25 on 4 hour chart?
  • #186
  • Apr 24, 2007 1:54am Apr 24, 2007 1:54am
Quoting aelimian
Thank you very very much for the galant effort. Please could answer a few questions.

1. I assume this test was for GBPJPY?
2. When you say stopped out do you mean hitting the SL of 1500?
3. Did you use 125 LWMA median + 25 on 4 hour chart?
aelimian

The test was done on the G/J
Yes, stopped out means that the SL of 1500 was hit
No, i used 25 LWMA median +25 and -25 levels

Eben
  • #187
  • Apr 24, 2007 3:27am Apr 24, 2007 3:27am
Quoting Ebenst
aelimian

The test was done on the G/J
Yes, stopped out means that the SL of 1500 was hit
No, i used 25 LWMA median +25 and -25 levels

Eben
Hi Eben

Thanks for your good job.

I am somehow confused about the stop loss of 1500 pips being hit without getting a reverse signal, in particular that you have used a 25LWMA, are you sure about it?
Regards
  • #188
  • Apr 24, 2007 4:07am Apr 24, 2007 4:07am
Quoting Ebenst
aelimian

The test was done on the G/J
Yes, stopped out means that the SL of 1500 was hit
No, i used 25 LWMA median +25 and -25 levels

Eben
Ebenst,

Thank you for your hard and effort studying this system with the H4 25LWMA and posting your results.

This is a very time consuming process, but very beneficial to all.

Thanks again.

yezbick
  • #189
  • Apr 24, 2007 4:36am Apr 24, 2007 4:36am
Quoting howard
Hi Eben

Thanks for your good job.

I am somehow confused about the stop loss of 1500 pips being hit without getting a reverse signal, in particular that you have used a 25LWMA, are you sure about it?

Howard

I only took profit when i got a long signal and the shorts were in profit. In a few cases the longs/short were not in profit thus the trades were not closed. Some of them went on to be stopped out. .
I will try to post some charts

Eben
  • #190
  • Apr 24, 2007 4:48am Apr 24, 2007 4:48am
Trade in profit
Attached Image
  • #191
  • Apr 24, 2007 4:49am Apr 24, 2007 4:49am
Trade that got stopped out
Attached Image
  • #192
  • Apr 24, 2007 6:51am Apr 24, 2007 6:51am
Thanks Eben for posting your charts for the the trade which was stopped out.

However in respect of the short trade I believe, in accordance with the rules, when the price crosses the channel and closes above the upper band this short should have been hedged with a long and another long trade opened in which case it would never hit a 1500 stop.

Maybe yesbick could clarify how the method should be working.

Thanks again for the tests and the charts.
Regards
  • #193
  • Apr 24, 2007 8:01am Apr 24, 2007 8:01am
Quoting howard
Thanks Eben for posting your charts for the the trade which was stopped out.

However in respect of the short trade I believe, in accordance with the rules, when the price crosses the channel and closes above the upper band this short should have been hedged with a long and another long trade opened in which case it would never hit a 1500 stop.

Maybe yesbick could clarify how the method should be working.

Thanks again for the tests and the charts.

From what I see from the charts you would have closed the north bound position and had no hedge in place. (only a pending position if things went against you)

Hedges are only placed when the last position you took is in the - when your next position or direction is taking place.

The more I study and see studies done, the more I realize that longer MA's have less wipsaws. The 25LWMA in H4 is the equivelant of a 100 LWMA in H1. It is possible to just about completely eliminate the wipsaws with longer MA's but the side effect is less pips and less opportunity to compound your return.

Ultimately, the length of the MA can be placed to an individuals risk tolerance. If you are a conservative investor, you will want a longer MA. If you are aggressive investor, a shorter MA will work better for you.

Perhaps if you wanted to be diversified you could have multiple Long, Medium, and Short MA's running at the same time to diversify your risk.

hope this helps. Thanks again for your input ebenst.
  • #194
  • Apr 24, 2007 8:01am Apr 24, 2007 8:01am
Quoting yezbick
The last position we took was going south and taken at 230.72. The trend reversed direction without allowing us to close our south bound position in a positive pips. This ultimately would have been a -100 pip loss. At 3-30-07 at 14:00 price broke through 231.72 our +50 level forcing us to take a north bound direction. We left our sell open with no SL and opened the north bound trade with an equal value to our south bound trade position.
Yezbick,

Trying to understand better.
When price broke thru 231.72, would we buy two units, one to hedge for the just failed sell trade and another one for a new buy trade?

Thanks.
Haste not to Enter AND Haste not to Exit !-TradeStar
  • #195
  • Apr 24, 2007 8:37am Apr 24, 2007 8:37am
Quoting TradeStar
Yezbick,

Trying to understand better.
When price broke thru 231.72, would we buy two units, one to hedge for the just failed sell trade and another one for a new buy trade?

Thanks.
Correct
  • #196
  • Apr 24, 2007 9:53am Apr 24, 2007 9:53am
Quoting yezbick
Correct
Thanks. To continue on this, would we have 50 S/L on both the units we buy?

I mean, if we place S/L of 50 on the lot that was meant for hedging and if this get stopped out, should we immediately close the sell that is sitting out there

OR

we don't put S/L for the lot meant for hedging purpose.

Thanks again.
Haste not to Enter AND Haste not to Exit !-TradeStar
  • #197
  • Apr 24, 2007 10:40am Apr 24, 2007 10:40am
Quoting TradeStar
Thanks. To continue on this, would we have 50 S/L on both the units we buy?

I mean, if we place S/L of 50 on the lot that was meant for hedging and if this get stopped out, should we immediately close the sell that is sitting out there

OR

we don't put S/L for the lot meant for hedging purpose.

Thanks again.
? 1. This is the proper setup for the basic strategy of the Open-Close Trending System.

? 2. This is the proper setup for the hedging addition to the system.
  • #198
  • Apr 25, 2007 10:21am Apr 25, 2007 10:21am
Recent findings

This system has one flaw that will need to be corrected in order for it to become more stable over the long haul.

The flaw is that when you hold a hedged position and release the hedge due to another direction change. If the direction change comes to quickly, and you don't recover your existing loss, you could possibly be opening up yourself to an increase loss on the current hedge position.

Example:

* Position short taken @ 237.00 and hedged at 238.00 with a long position. (to stop the potential loss)
* Long position closed @ 239.00 in profit, but movement continues north resulting in a potential additional 100 pip loss to your previous hedged position.
** First short could now be 200 pips down and your account could be 200 pips down in equity.

Balance with this system will grow, but your equity will be reduced every time the change of direction is to short to close your previous position in the positive.


I think tKimble might be on to something with hedging only inside the +/- 50 levels. This would have the oposite effect where balance might decrease, but equity would be increasing.

The H4 time frame does have its rewards as well. Ultimately when you are using the 25 LWMA in the H4 you are using the equivalent of a 100 LWMA itn the H1 timeframe.

Just some thoughts.
  • #199
  • Apr 25, 2007 4:56pm Apr 25, 2007 4:56pm
yezbick,

I have noticed what you point out while working on Daily Scalping. That's why I tried to find a solution based on momentum like the StdDev indicator. I'm not sure though if it's any good for G/J especially on the 1h.

Here it is in case you want to have a look at it.
Attached File(s)
File Type: mq4 StdDev.mq4   4 KB | 438 downloads
  • #200
  • Apr 25, 2007 8:12pm Apr 25, 2007 8:12pm
Quoting Scientist
yezbick,

I have noticed what you point out while working on Daily Scalping. That's why I tried to find a solution based on momentum like the StdDev indicator. I'm not sure though if it's any good for G/J especially on the 1h.

Here it is in case you want to have a look at it.

Thank you Scientist,

I'll check it out.
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