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Random Auto Scalping to Profits

  • #1
  • First Post: Edited 7:06pm Aug 28, 2009 11:05am | Edited 7:06pm
Greetings all,

I've learned so much through these boards at Forex Factory. My best system so far has been the correlation hedge strategy that I'm still trading successfully.

I want to introduce a new method that has been very profitable for me for the past week. I know that is not a long time, but you have to start somewhere.

As are all my systems, this one is extremely easy to implement, does not require any monitoring of the market, and I've been increasing my account by at at least 2% per day with it.

Here it is:

Pairs:

Only EUR/USD and USD/JPY

Broker:

Oanda (or other broker where spread is close to 1)

Times:

USA open to close and London open to close
(all of the above because of extremely low spread)

Setup:

Preset your trades with a 1 pip take profit and a 10 pip stop loss. I know, horrible risk/reward ratio. But let me say it like this. In this past week of trading I have lost exactly 1 times and have won over 50. So I'm wanting to trade a system with a positive expectancy, not necessarily one with a good risk/reward ratio.

Size:

Use 20,000 units (2 mini lots) for every 1,000.00 in your account. That way you are risking 2% on each trade.

Rules:

At the top of every hour place a buy stop and sell stop order (Oanda calls them Limit orders) about 10 pips above and below the current price, on both pairs. Set the orders to expire in one hour. Walk away. Come back next hour and do the same thing. Rinse and repeat.

Be careful around psychological levels (.50 and .00) as market can run to those numbers and turn around, rather than keep going for a pip. I personally don't set orders at those levels, but choose something higher or lower.

So really, that is all there is to it. Demo this for a week and see if your account isn't up by a bunch!
  • #2
  • Aug 28, 2009 11:12am Aug 28, 2009 11:12am
Should b easy ea to create or at least a script. Programmers?
  • #3
  • Aug 28, 2009 12:08pm Aug 28, 2009 12:08pm
Hi

Thanks for posting this. A couple of questions

1. When you say "At the top of every hour ", Does that mean at the start of every bar on a H1 chart.

2. Am I correct that Take profit is 1 pip and SL is 10 pips

Thanks
  • #4
  • Aug 28, 2009 12:15pm Aug 28, 2009 12:15pm
Quoting Ashish_Ampl
Hi

Thanks for posting this. A couple of questions

1. When you say "At the top of every hour ", Does that mean at the start of every bar on a H1 chart.

2. Am I correct that Take profit is 1 pip and SL is 10 pips

Thanks
Yes, you are correct on all the above. In reality, it does not need to be at the top of every hour, I just chose that based upon the schedule of my day. I can do what I want, come and set the orders every hour and then go back to my day.
  • #5
  • Aug 28, 2009 12:27pm Aug 28, 2009 12:27pm
I was looking at the hour chart last month and had this very thought. However I was not looking at it from the point of a breakout scalp, which makes a lot more sense. I'm going to look into this more next week, maybe zoom into the 5 sec and play a break of the high / low of the previous hour.
  • #6
  • Aug 28, 2009 12:31pm Aug 28, 2009 12:31pm
Quoting Jimmy Jones
I was looking at the hour chart last month and had this very thought. However I was not looking at it from the point of a breakout scalp, which makes a lot more sense. I'm going to look into this more next week, maybe zoom into the 5 sec and play a break of the high / low of the previous hour.
Hi Jimmy,

Yes, that's where I initially started too, was a break of the high low of the previous bar. But you have to be careful doing that because sometimes it only breaks a few pips; in other words, you have to be careful around previous bars highs and lows, and around psychological levels. I've found it better to enter at .12 or .81 or some odd number (hence the term "random").

But give it a try and let us see how you do with it. I absolutely can't believe last week, it was amazingly profitable. Not to say that it will be again, I don't know, it may have been a fluke, but we'll see.
  • #7
  • Aug 28, 2009 12:47pm Aug 28, 2009 12:47pm
Quoting Dreamliner
Hi Jimmy,

Yes, that's where I initially started too, was a break of the high low of the previous bar. But you have to be careful doing that because sometimes it only breaks a few pips; in other words, you have to be careful around previous bars highs and lows, and around psychological levels. I've found it better to enter at .12 or .81 or some odd number (hence the term "random").

But give it a try and let us see how you do with it. I absolutely can't believe last week, it was amazingly profitable. Not to say that it will be again, I don't know,...
It's so simple, it can't be this easy right? Or maybe it is.
  • #8
  • Aug 28, 2009 12:49pm Aug 28, 2009 12:49pm
Quoting Jimmy Jones
It's so simple, it can't be this easy right? Or maybe it is.
All I can say is it was this simple last week. The future may prove us wrong.
  • #9
  • Aug 28, 2009 1:04pm Aug 28, 2009 1:04pm
This system plays on momentum.

If the price moves 10 pips in one direction, there is an x percent chance that it will move spread + 1 pip in the same direction, and a y percent chance that it will move 10 pips in the other direction.

Please fill in x and y

You said, 50/51 and 1/51, right?

So...

x = 98.039215686274509803921568627451% of a win
y = 1.9607843137254901960784313725490% of a loss

Takes 10 wins to make up for a loss
Winning on average 50 times for every loss.

Care to pull in more stats?
  • #10
  • Aug 28, 2009 1:10pm Aug 28, 2009 1:10pm
with ibfx the take profit has to be a minimum of 5 pips.

Is there any ea or script that i could use to close the deals with a 1 pip profit?
  • #11
  • Aug 28, 2009 1:19pm Aug 28, 2009 1:19pm
Ronald, that's exactly right. I have no way to fill in any stats, and there isn't any way I can backtest this, at least trading it the way I do. All tests have to be forward/demo tests in order to determine profitability, an EA just won't do.

And the 50/1 is just what happened last week, which gave me the "positive expectancy" I mentioned in the first post. Obviously if this goes to 20/1 it would still be viable, but 10/1 would not.

Quoting Ronald Raygun
This system plays on momentum.

If the price moves 10 pips in one direction, there is an x percent chance that it will move spread + 1 pip in the same direction, and a y percent chance that it will move 10 pips in the other direction.

Please fill in x and y

You said, 50/51 and 1/51, right?

So...

x = 98.039215686274509803921568627451% of a win
y = 1.9607843137254901960784313725490% of a loss

Takes 10 wins to make up for a loss
Winning on average 50 times for every loss.

Care to pull in more stats?
  • #12
  • Aug 29, 2009 9:59am Aug 29, 2009 9:59am
Since there isn't anything magical about checking the account once per hour or setting the trade at a particular price, why make only one trade? Why not make an entire grid of trades, spaced one pip apart with one pip take profits?.

I'm not an EA author, but the logic seems trivial. As price moves up, add shorts 10 pips below the current price. As price moves down, add longs 10 pips above the current price.
  • #13
  • Aug 29, 2009 10:01am Aug 29, 2009 10:01am
Quoting dr_zeus
Since there isn't anything magical about checking the account once per hour or setting the trade at a particular price, why make only one trade? Why not make an entire grid of trades, spaced one pip apart with one pip take profits?.

I'm not an EA author, but the logic seems trivial. As price moves up, add shorts 10 pips below the current price. As price moves down, add longs 10 pips above the current price.
Seems like a good idea, maybe you can demo test your theory this coming week and let us know.
  • #14
  • Aug 29, 2009 10:51am Aug 29, 2009 10:51am
And out of those 50 winning trades, how many of those 1 pip wins went 2, 4 or 6 pips? How many times could you have just went in the same direction as the previous closed candle without waiting for a 10 pip move? Just soooo many different variables to look at.
  • #15
  • Aug 29, 2009 10:54am Aug 29, 2009 10:54am
Quoting todd960960
And out of those 50 winning trades, how many of those 1 pip wins went 2, 4 or 6 pips? How many times could you have just went in the same direction as the previous closed candle without waiting for a 10 pip move? Just soooo many different variables to look at.
Good questions; I don't really know but feel free to demo your theories and let us know, or start a thread on what you discover.
  • #16
  • Aug 29, 2009 11:36am Aug 29, 2009 11:36am
Dreamliner,
Thank you. I have Oanda and will give this a whirl. I think I may try this on 30 minute candles, what do you think?
“The waiting is the hardest part” Tom Petty
  • #17
  • Aug 29, 2009 11:57am Aug 29, 2009 11:57am
You are using a system based on market volitility and money management. You are entering the market every hour for no particular "reason", and counting on the market's up and down nature to overcome the spread and put you in 1 pip profit. The odds are way against you. I am not going to go into all the numbers (I did that on another thread), but you have a very small chance of long term success. But forget the numbers for now, and just use your intuative sense. You are risking a large amount to make a small amount. Please believe that this approach had been tried and tried before... to the point of absurd exhaustion. If the market could be beat with volitility and money management, everyone could do it and there would be no market!! I am not being critical of you, I'm sure you are very sincere. I'm just giving you some free and friendly advice. The math is against you. The trail of wrecked accounts who have tried to employ this reasoning stands as testemant. Your experiment will most likley end badly.

Regards
  • #18
  • Aug 29, 2009 11:58am Aug 29, 2009 11:58am
Quoting SirViver
Dreamliner,
Thank you. I have Oanda and will give this a whirl. I think I may try this on 30 minute candles, what do you think?
Give the 30 minute candles a try, see what you come up with. I just use 1 hour because with all that I have going on I can come back once per hour and set new orders.
  • #19
  • Aug 29, 2009 12:23pm Aug 29, 2009 12:23pm


Quoting Dreamliner
Good questions; I don't really know but feel free to demo your theories and let us know, or start a thread on what you discover.
  • #20
  • Aug 29, 2009 12:29pm Aug 29, 2009 12:29pm
Thanks much FX Petra, I appreciate your honesty and willingness to post. As I said, I've only done this for one week, and have no confidence in the long-term viability of it. Much less so now, having read your comments here. Possibly this will be one more thread that ends up in the recycle bin.

Again, thanks much.

Quoting FX-Petra
You are using a system based on market volitility and money management....
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