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4H Box Breakout

Quoting danno96
You can go to history centre under Tool and download the require data.
It looks like I downloaded.
Quoting saltydoo
I'm fine with having big boxes. However, I lower the TPs to 150 pips maximum. SL would be 75 + 20(the buffer). This way I am still in the trade with less exposure. I don't think anyone here would set there TPs as high as 300-500 pips. But I may be mistaken. That just seems a little greedy to me.
I've set my TP's much higher then 300 pips. My TP's range from 400 pips - 600 pips. TP4 is always at that range.

I have no problem with that and I do it all the time. That's the beauty of this system, low risk, High reward.

I want to address that greedy concept because I think its misinterpreted for mechanical systems. To me, the word greedy is what traders use as an excuse to why their trade failed.

"Well, I was just too greedy, that's why I didn't close earlier and that's why I lost my unrealized profits"

The real reason why their trades fail is because their targets weren't set, their SL was not set. They were not prepared before the trade, and were just letting the market move hoping that they'll get out at max profit. Before you enter a trade, you must know you're exits. If you do, then greed has nothing to with it. As far as I'm concerned this strategy as per the original rules is 95% mechanical. Every trade taken in the past is known to everyone, there are no secrets, the targets are known before the trade happens, the SL is known. There isn't any need for emotions, and greed is definetly an emotion. The market doesn't care whether you make 10 pips or 1000 pips. You have to let the trade breathe for this strategy especially if you're using the original rules as I am.
Hi Ace,

With a 400 - 600 pip TP range, would you say that your SL is typically 100 - 200 pips on average?

thanks,

Walt
Danno, I have started testing, but I already see that in those 2005 conditions there should be more than 2 trades per week. i would say up to 4.
It looks like market is making up and down move as if deciding where to go and then on move 3 or 4 it makes break out and there is TP3-TP4 there.
Hi Good day to all
I´m new here.
I was daytrader in Futures for 5 years and like to join in this group.
The best for all.
Hi Ace,

By TPs being a max of 150 pips, I meant each one of them(TP1-150,TP2-300,etc.). So the total will be in turn 600 maximum pips at TP4. I think this is a large enough pip range to grab good profits. What I meant by greedy is if the box is 300 pips, don't set TP1 at 300 and TP2 at 600 and so on. I can't imagine anyone thinking they could actually reach a TP4 of 1200 pips without being a little greedy. First rule is to preserve capital, second rule is to grab REALISTIC profits. Don't just shoot for the moon just in case you get lucky.
Hi Ace,

Could you post the results of your 4H box trades for this week?

Thanks
OK, I have finished testing only January 2005.
My idea actually was right. I mean taking partial profit and moving stop to BE.
with original rules January loses would be 6%. adding partial taking profit at 1 box and then BE would reduce loss to 5%.

with only moving to BE after 30 pips, we would be 3% down. and with taking 50% of the position profit with 30 pips and moving to BE we would be only 1,5% down.
Now, I see that market was moving in trends but very choppy. 2 trades per week rule did not work at least in January. 4 trades I think would be better. I will continue checking month by month and will post results.
Quoting Ace284
I've set my TP's much higher then 300 pips. My TP's range from 400 pips - 600 pips. TP4 is always at that range.

I have no problem with that and I do it all the time. That's the beauty of this system, low risk, High reward.

I want to address that greedy concept because I think its misinterpreted for mechanical systems. To me, the word greedy is what traders use as an excuse to why their trade failed.

"Well, I was just too greedy, that's why I didn't close earlier and that's why I lost my unrealized profits"

The real reason...
Thanks for the reminder, Ace. My backtesting of your original rules going back the past 13 weeks is strong persuasion in favor of eschewing all subsequent variations.
Quoting jones247
Hi Ace,

With a 400 - 600 pip TP range, would you say that your SL is typically 100 - 200 pips on average?

thanks,

Walt

Stoploss is typically 100 – 150 pips on average. After TP1 the stoploss is at BE. I don't trade weeks with 200 pip boxes because the target of 800 pips is usually unrealistic.


Quoting saltydoo
Hi Ace,

By TPs being a max of 150 pips, I meant each one of them(TP1-150,TP2-300,etc.). So the total will be in turn 600 maximum pips at TP4. I think this is a large enough pip range to grab good profits. What I meant by greedy is if the box is 300 pips, don't set TP1 at 300 and TP2 at 600 and so on. I can't imagine anyone thinking they could actually reach a TP4 of 1200 pips without being a little greedy. First rule is to preserve capital, second rule is to grab REALISTIC profits. Don't just shoot for the moon just in case you get lucky.

Ah, I see. Not to worry, ignoring the boxes 200 pips and over is already a rule.


Quoting geribosi
Hi Ace,

Could you post the results of your 4H box trades for this week?

Thanks

I can't see much to post on that. But the long trade was not activated. The short trade was stopped out at BE after moving the stop once TP1 was hit.


Overall week: No profits, No loss. Breakeven Week.
Danno,
Great back testing, I just had a few observations. Going through the results that you provided, i noticed a few times where P/L was about 6x or 7x or even going as high as 16x or so. Now my question is if we were trading this live, wouldn't we have set our Target at 4x meaning when we set our stop loss for our trade with our broker, we also set our TP as well. So if price hits our 4x then it will close us out. As Ace states that before going in a trade one much input their stop loss and profit target in advance and which I agree 100%.

So if we were trading it live, would you say it is safe to say most would have gotten out once price hits 4X because there is no human emotion in back testing and when it is live, we have people who are already scared to give back 50 pips to the market let alone wait and ride out a 7x box profit. So how did you come out with P/L 7x or more than 4x when as the original rule TP 4x would have been triggered by our entry we made at our initial targets.

Second:
What I have noticed and this is for anyone that wants to study Danno's great results. I am very convinced that moving to BE after TP1 is a very great variation which limits our losses. What I also noticed that if you go down the results and only look at the Stopped out trades (SL) what I notice is that it is when it has not reached TP1 and when it does reverse, it is reversing all the way to the other side of the box................So what if our stop was not on the other side of the box, what if it was 50% of the box or 61.8 Fibo retracement of the box.......From the results it clearly shows that when it reverses on us, there is a great chance that is it going to the other side of the box, so by having our initial 50% of the box, if it does reverse you are limiting your losses by 50% and when TP one is hit we are alreayd to BE anyways.

This is just something I have noticed and gone through your results and only looked at the ones that got stopped out and that is what I have noticed.

Any thoughts?
Keeping Life Simple
To the great programmers in this Thread, it is possible to modify the indicator MondayH4Box to show it in other time frames (specially daily TF!).

Many thanks in advance.

Pepe
Great work indeed Danno. I wish I had your computer skills.
Yeah, whole 2002 just 413 pips. From those losing period I only can conclude that risking more than 1-2% of the capital per trade is highly dangerous even with such a good system.
We should remember that after losing 50% we gotta trade back 100% to break even., Risking 8% per position or even week could ruin account for along time.
I will stick to 1-2% per trade.
Super job by Danno. It is also good to know that system performs even in such horrible years.
Quoting danno96
The results excluded week with +200 pips range.
Thanks Danno! I appreciate your insights and quick response to the question.
Greetings from Guanajuato, Mexico
Danno, could you answer a question.
Had you have a position size option with your broker which let you risk no more than 1% per trade even with box of 200 pips, would you trade in this case?
I simply understood that the rule to ignore 200 pips boxes is here because position size would be too big, no?

Thank you very much
  • #2,717
  • Quote
  • Edited 6:03pm Aug 27, 2009 5:58pm | Edited 6:03pm
I believe that increasing your lot size after every two consecutive losses, then reverting back to the prior lot size after a win would have turned 2002 into a very successful year...

For example, the 1st & 2nd weeks were traded at 1 lot, and both weeks were loosers. On the 3rd week, increase the lot size to 2 lots per trade. If the 3rd & 4th weeks were loosers, then the 5th week would trade at 3 lots. Assuming the 5th week is a winner, then the 6th week would trade at 2 lots. If the 6th week is a winner, then the 7th week is traded at 1 lot. However, if the 6th week is a looser, then the 7th week would also be traded at 2 lots. If the 7th week was a looser, then the 8th week would be traded at 3 lots... etc. [Again, only go up in the lot size after 2 consecutive loosing weeks]

Of course, a more aggressive option is to increase the lot size after each loosing week, then scale down after each winning week.

Walt

Quoting shiko
Yeah, whole 2002 just 413 pips. From those losing period I only can conclude that risking more than 1-2% of the capital per trade is highly dangerous even with such a good system.
We should remember that after losing 50% we gotta trade back 100% to break even., Risking 8% per position or even week could ruin account for along time.
I will stick to 1-2% per trade.
Super job by Danno. It is also good to know that system performs even in such horrible years.
Quoting time1300
Danno,
Great back testing, I just had a few observations. Going through the results that you provided, i noticed a few times where P/L was about 6x or 7x or even going as high as 16x or so. Now my question is if we were trading this live, wouldn't we have set our Target at 4x meaning when we set our stop loss for our trade with our broker, we also set our TP as well. So if price hits our 4x then it will close us out....


Second:
What I also noticed that if you go down the results and only look at the Stopped out trades (SL) what I notice is that...

1) I don't set the TP and leave open. I manually move my SL (1) to BE +20 when TP1 hit, (2) move SL to TP1 when TP2 hit, (3) move SL to TP3 when TP4 hit and finally close at last hour for the week if profit run and never retrace back to hit the TP3 SL.

2) You can't just look at the stopout trade alone, setting SL at 50% would reduce some of the SL but it also take out some of the trade where profit run, ie price retrace back to 50% and taken out SL than reverse and run to TP1, TP2, TP4 and further. The key to this system is where to set the SL but also give enough room to allow profit to run to hit TP4 and beyond.

Quoting shiko
Great work indeed Danno. I wish I had your computer skills.
No computer skill, not a programmer. I did all that work manually over the chart. That why there may be a few errors and not 100% accurate but close enough for my needs

I'm with FXDD, how does position size option work with the broker? I simply look at the range size if > 200 no trade for the week. The reason I did that is, if you look at some of the > 200+ weeks, some 300+ and even 500+ week there is low % chance that our TP4 will be hit but would risk greater than 2% per trade with my broker (min $1/pip with a standard account).

fxdd will give you 10c per pip, all you have to do is email them requesting it.
I have a live fxdd account as well.
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