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4H Box Breakout

  • #621
  • Jun 25, 2009 2:06pm Jun 25, 2009 2:06pm
Quoting howard
Hi Ace

Do you stop trading for the week after two stop-outs, like EJ this week.
Yeah
  • #622
  • Jun 25, 2009 3:23pm Jun 25, 2009 3:23pm
G550,

You expressed some of my thinking. I am thinking of trading this system in the following way:

Trade in units of three. Take 1/3 off at PT1 (I believe it is good to take some profits - feels good). Move stop to BE on the next 1/3. Take 1/3 profit at PT2. Leave the last 1/3 to run its course (as system calls for), or move to BE after PT2.

Any thoughts from the group? I am just trying to lock in some of the profits, and I learned from a "big name" trader to always try and trade in units of three.

One more observation. I looked at this method on a 1 hour chart. It seems to work, but with more false breakouts. Anyone know of a way to make this work with an hourly chart (Ace ???). Have enjoyed reading this thread, and learning this easy trading method.
  • #623
  • Jun 25, 2009 3:47pm Jun 25, 2009 3:47pm
Quoting doctorfx
G550,

You expressed some of my thinking....
Hey DoctorFX-

When anyone undergoes any form of consideration for someone else's methodology, we should take it upon ourselves to back test that method before employing it into our own trading regimen. That being said, I suggest you back test with your method of taking profits in thirds. This will expose whether or not it's profitable.

Also, don't bother dropping down to a lower time frame. Why would you want to? What is your motivation? The system works terrific as it is. The only thing I would recommend tweaking (but only after you've tested it) is profit taking.
  • #624
  • Jun 26, 2009 2:31am Jun 26, 2009 2:31am
Quoting doctorfx
Trade in units of three... feels good.

One more observation. I looked at this method on a 1 hour chart. It seems to work, but with more false breakouts. .
'Morning, doc.

Backtesting almost always shows that scaling out reduces overall profit but increases win %, which for those of us less robust than G550 may make a system more possible to trade.

A 60min timeframe is going to require a different approach - something for another thread, perhaps ?

This method is simple - many thanks again to Ace - although the TP levels are somewhat arbitrary... but if they work, why not ? The only thing I would suggest would be to take a look at targets based on ATR and percentages thereof. If you do, you will at least be scaling exits on logical swing extensions. But as G550 says, backtesting is the answer...
  • #625
  • Jun 27, 2009 2:28am Jun 27, 2009 2:28am
As I said in an earlier post I want to try to do the end of the week TP method, but with Ace's entry method. Well, this is my first result.
Trigger candle: 4 x 1H from Sunday 23:00 GMT bar open to Monday 02:00 GMT bar close + buffers (buy: 20 pips + spread; sell: 20 +1)
Pair: GBPJPY
Sell: Stop -> buy trigger level (have not been stopped out on this pair, but it was close....) [Risk: about 87 pips + 20 pips + spread per SL, max: 2x)
Sell: TP (Friday, about 19:50 GMT): 75 pips
  • #626
  • Jun 27, 2009 4:50am Jun 27, 2009 4:50am
I've just read this thread from beginning to end.
Not much in this whole thread is'nt in the very first post of may 12 but i'm sure Ace has edited it since then.
I wish more users would read that first post on every thread before they start asking questions and reread it because the first post does get edited.
It's also the logical place for the author to attach any files and file updates.

One thing that hasn't been covered is daylight savings. It doesn't affect GMT but it affects most other times and is part of the confusion here. and some brokers do crazy things like making the first 4hr bar of the week from only one or two hrs of data. I know of a similar system that basically buys or sells at +/- n pips from the opening price. Worth backtesting for different opening times, timeframes, pairs and n.

I believe that anyone who tries to use Aces system with a low risk to reward ratio (RRR) is going to lose money. Beginers don't really understand how a good system doesn't maximise the win ratio and minimise the risk. The best win ratio has the lowest RRR and the lowest risk is by using a position size of zero.

Beginners don't appreciate that a system like this with a high RRR will have many losing weeks. If you do't do your own backtesting you won't have faith in a system and when you start seeing those losing weeks you won't stick to the system.

There are hundreds if not thousands of trading systems on the internet. If you're too lazy to backtest a system then it's unlikely you'll stick to it long enough for it to bear fruit. If it uses a RRR of 4 then losing 4 wks in a row is going to happen occasionally on a regular basis. Whether it happens in the first 4 wks or after 6 months is totally unknown - but it will happen and when it does you will ditch the system or modify it unless you have an unshakable faith in it. Faith in what strangers say on the internet is the faith of fools.

Forex gives us a wonderful sword to use called leverage. It has two sharp edges so respect it. A good system has a low drawdown compared to it's long term gain. The holy grail is to find the goldilocks leverage. Not so large that drawdowns hurt but large enough to make the profits greater than 10% p.a.

good luck not being my liquidity http://www.forexfactory.com/images/icons/icon6.gif
steve
Don't kill your dreams - execute them.
  • #627
  • Jun 27, 2009 7:28am Jun 27, 2009 7:28am
Thanks to SABTrader, for pointing out why most of us hop from one system to the other.

Regarding the RRR mentioned, as I was looking at my charts , something came to mind.

One of the most distressing things a trader faces is watching a winning trade turn RED.

To avoid such ocurences, when the trade moves a certain no of pips in your favour, you set it to breakeven or reduce your SL by 50%. That doesnt mean you are taking your profits too early. Cos you can still allow the trade to reach 1:1 level and take partial profits and if you are lucky (in this business there are no guaranties) , the rest can still run to 1:2 or 3. But at least you have been able to reduce your risk early enough.

For example in GBPUSD trade if your 1:1 is 70 pips, you could move to B/E at 40 or 50 pips but allow the trade to get to +70 before taking 1st Profit and allow the rest to run.

If the trade happens to go as far as +50 and later goes against you to hit your B/E stop at 0, from personal experience that trend is already a questionable one and most often than not, the trade is unlikely to go far in your desired direction, execept in very volatile periods or news time

There is an excellent Trade management EA created by SteveHopwood that has really helped my trading a lot. http://www.forexfactory.com/showthread.php?t=89371

I know a lot of people may have contrary opinions, but this has helped me a lot though, not particularly for this 4HR BO system. I just use different settings for the different pairs and depending on how early am able to catch the trend.
Thanks
  • #628
  • Jun 27, 2009 10:36am Jun 27, 2009 10:36am
I know a lot of people may have contrary opinions, but this has helped me a lot though, not particularly for this 4HR BO system. I just use different settings for the different pairs and depending on how early am able to catch the trend.


What settings do you use for this 4HR BO system?

Thanks...
  • #629
  • Jun 27, 2009 1:51pm Jun 27, 2009 1:51pm
For weekend analyses you can check the potential of the signals with a simple indicator.


The indicator take automatic the upper time frame:
- lower or equal H1 -> daily
- equal H4 -> weekly
- equal D1 -> monthly



- In the middle of the start bar is drawn an area with the height = 1 ATR, and three lines with the distance 1 ATR.

- Signal arrows are drawn only if the open is located between the high and low of the area, and the close crosses one of this lines.
.
Attached Image (click to enlarge)
Click to Enlarge Name: gbpjpy_h4.gif Size: 40 KB
Attached File(s)
File Type: ex4 BoxBreakout Signals_v1.ex4   18 KB | 1,089 downloads
  • #630
  • Jun 27, 2009 3:03pm Jun 27, 2009 3:03pm
Quoting fewhills
As I said in an earlier post I want to try to do the end of the week TP method, but with Ace's entry method. Well, this is my first result.
Trigger candle: 4 x 1H from Sunday 23:00 GMT bar open to Monday 02:00 GMT bar close + buffers (buy: 20 pips + spread; sell: 20 +1)
Pair: GBPJPY
Sell: Stop -> buy trigger level (have not been stopped out on this pair, but it was close....) [Risk: about 87 pips + 20 pips + spread per SL, max: 2x)
Sell: TP (Friday, about 19:50 GMT): 75 pips
Fewhills-

Not a good week for gbp/jpy obviously. There were those that took 300 pips profit and that is going to happen for those of us looking for a larger reward. The time will come when this pair takes off and might not retrace for several weeks. If you use your head a bit you can hold the position for a few weeks and pick up tons of pips. Even re-enter every week while maintaining your original position. Easier said than done, I know. But the possibilities offered by an early entry system such as this are endless.
  • #631
  • Jun 27, 2009 3:53pm Jun 27, 2009 3:53pm
Quoting G550
Fewhills-

Not a good week for gbp/jpy obviously. There were those that took 300 pips profit and that is going to happen for those of us looking for a larger reward. The time will come when this pair takes off and might not retrace for several weeks. If you use your head a bit you can hold the position for a few weeks and pick up tons of pips. Even re-enter every week while maintaining your original position. Easier said than done, I know. But the possibilities offered by an early entry system such as this are endless.
G550,

Nice idea about maintaining original position, especially when this pair takes off and keeps on going. I'll think about that. But first I just want to forward test this method by entering a trade at the beginning of the week and closing out at the end of the trading week.
  • #632
  • Jun 27, 2009 4:40pm Jun 27, 2009 4:40pm
Posting last weeks results

GBP/JPY = +48 pips
EUR/JPY = -198 pips

Total = -150 pips

Like I said before, im going to post every week, winner or loser.
Attached Image (click to enlarge)
Click to Enlarge Name: june_22_to_26.gif Size: 58 KB
  • #633
  • Jun 27, 2009 9:25pm Jun 27, 2009 9:25pm
Quoting Ace284
Posting last weeks results

GBP/JPY = +48 pips
EUR/JPY = -198 pips

Total = -150 pips

Like I said before, im going to post every week, winner or loser.
Ace,

On Oanda, I made +320 pips with GJ @ TP4. I'm assuming you let the trade run for the full week? But why didn't your trade end with more pips @ TP4?

Thanks again for all youe efforts! Really appreciated...
Bob
  • #634
  • Jun 27, 2009 9:28pm Jun 27, 2009 9:28pm
Quoting SwingMan
For weekend analyses you can check the potential of the signals with a simple indicator.


The indicator take automatic the upper time frame:
- lower or equal H1 -> daily
- equal H4 -> weekly
- equal D1 -> monthly



- In the middle of the start bar is drawn an area with the height = 1 ATR, and three lines with the distance 1 ATR.

- Signal arrows are drawn only if the open is located between the high and low of the area, and the close crosses one of this lines.
.
Hi SwingMan,

I don't mind divulging that I have no idea how to implement the use of your indicator. Could you please provide more information on how to use it?

Thanks,
Bob
  • #635
  • Jun 27, 2009 9:31pm Jun 27, 2009 9:31pm
Quoting Bobcat2
Ace,

On Oanda, I made +320 pips with GJ @ TP4. I'm assuming you let the trade run for the full week? But why didn't your trade end with more pips @ TP4?

Thanks again for all youe efforts! Really appreciated...
Bob
The trade only went to TP3 which is 3x. TP 4 = 4x.
On my chart I also have 2.5x, but I don't use that as a TP. I've just had it there when I was testing and just forgot to take it off.
  • #636
  • Jun 28, 2009 12:32am Jun 28, 2009 12:32am
Hello Swingman.

I also can use a bit more explanation on what to do exactly with your indicator.

By the way, good to see you active in the thread.
  • #637
  • Jun 28, 2009 12:44am Jun 28, 2009 12:44am
Quoting Ace284
The trade only went to TP3 which is 3x. TP 4 = 4x.
On my chart I also have 2.5x, but I don't use that as a TP. I've just had it there when I was testing and just forgot to take it off.
Ace,

I am a bit bewildered...

My FXDD numbers were the following for last Sunday night on GBP/JPY:
Box High = 159.87
Box Low = 158.02
Box Range = 85 pips
Sell = 157.81
TP4 = 154.53

Price on my chart filled the TP4 @ 154.53 which gave me 328 pips. Price continued downward even lower to 154.04 which was an additional 49 pips.

Are my calculations in error? I surely would like some correction if I am wrong, because I want to trade your strategy live again tonight (Sunday).

Thanks again...simply a great thread!
Bob
  • #638
  • Jun 28, 2009 1:06am Jun 28, 2009 1:06am
Quoting Bobcat2
Ace,

I am a bit bewildered...

My FXDD numbers were the following for last Sunday night on GBP/JPY:
Box High = 159.87
Box Low = 158.02
Box Range = 85 pips
Sell = 157.81
TP4 = 154.53

Price on my chart filled the TP4 @ 154.53 which gave me 328 pips. Price continued downward even lower to 154.04 which was an additional 49 pips.

Are my calculations in error? I surely would like some correction if I am wrong, because I want to trade your strategy live again tonight (Sunday).

Thanks again...simply a great thread!
Bob
You need to include the buffer on both sides of the box range (long & short). Since Ace uses a buffer of 20 pips, the actual box range for GBP/JPY this last week was 125 pips.

And, I agree . . . it's a great thread.
Greetings from Guanajuato, Mexico
  • #639
  • Edited 2:04am Jun 28, 2009 1:34am | Edited 2:04am
Quoting yen44x
You need to include the buffer on both sides of the box range (long & short). Since Ace uses a buffer of 20 pips, the actual box range for GBP/JPY this last week was 125 pips.

And, I agree . . . it's a great thread.
Hi Yen,

Thanks for your correction...I can't believe I missed the buffers being used to expand the size of the box (plus broker spread on the buy) in calculating the TP levels. I've been trading breakouts for a long time, now, and I STILL missed that point. And yet after rereading the first post, it was very clear in black and white...makes me feel like a rookie all over again! LOL

BTW, if the broker spread was 6 pips, wouldn't that make the size of the box 131 pips? If so, you would have to arbitrarily add your estimate of the broker spread in advance when placing your pending orders to make this truly set and forget. Otherwise, you have to wait until the box breakout occurs and note the spread at the time of the breakout.

Ace and Yen, how are you handling this issue?

Many thanks!
Bob
  • #640
  • Jun 28, 2009 5:21am Jun 28, 2009 5:21am
Quoting Bobcat2
Hi Yen,

Thanks for your correction...I can't believe I missed the buffers being used to expand the size of the box (plus broker spread on the buy) in calculating the TP levels. I've been trading breakouts for a long time, now, and I STILL missed that point. And yet after rereading the first post, it was very clear in black and white...makes me feel like a rookie all over again! LOL

BTW, if the broker spread was 6 pips, wouldn't that make the size of the box 131 pips?...
Hi Bobcat,

The way I do this, is simply to add 30 to either side of the box, this allows for the buffer and any spread. The reason I use 30, is when back testing I found this to be the best setting, it reduced the amount of false trades, where the price goes to your entry and then retraces to your SL.

Hope this helps.
Ian.
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