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4H Breakout With Custom Stop Loss

  • #41
  • Sep 2, 2009 10:21am Sep 2, 2009 10:21am
First I will make an update, then answer your question Danno.

Ok everyone, we have an update on the short trade I missed yesterday, but for those who caught it.

Attached Image (click to enlarge)
Click to Enlarge Name: Update.jpg Size: 128 KB


The black line has crossed over BE, time to follow for profits. You'll notice that I have updated the Stop Loss location to 150.67, from now on we need to update our stoploss to follow the Black MA.
  • #42
  • Sep 2, 2009 10:36am Sep 2, 2009 10:36am
Quoting danno96
Thank Pharoah for a great system. But can you explain your method in hedging in more details maybe with an example. I've done a lot of back testing on Ace's system from current time back to 2002. I'm intested to see if your approach would save those lean years when the market is ranging , ie 2005, 2004 and 2002.


I will use this week as an example. The first trade of the week was for a short.

Attached Image (click to enlarge)
Click to Enlarge Name: current week 1.jpg Size: 149 KB


In this image, the short has already been executed, but are we 100% sure of the solidity behind the movement? Not me, Not this close to a S&R zone, so I place a pending Buy order of the same size as my original order which will be set to trigger at the BE point of my original trade (the breakout line).

In this care of whipsaw S&R, I would recommend 200% low to buffer line, or high to buffer line (in this case 20 pips) for a stoploss and a take profit equal to the original orders stoploss.

ok, so now we have an executed short order, and a pending long order.

Oh, what's this?

Attached Image (click to enlarge)
Click to Enlarge Name: current week stopout.jpg Size: 130 KB


for me in this example, I was away from my maching to update my Stop Loss on the open of a new 4H bar, so this is a perfect example of how this system can even help save you from your own self.

Here we see that the Short Order was active while the price passed back over BE, on it's was back over BE, it picked up a long order of the same size as the short. Both later got stopped out at 151.42.

Now, anybody who did not update that Stoploss, and who did not hedge, lost a total of 71 pips, with hedging, they would have lost a pip or 2 more than dealer spread.
  • #43
  • Sep 2, 2009 12:02pm Sep 2, 2009 12:02pm
ok everyone, time to update Stoploss, we are going to be putting it now at 150.18, we've now just officially locked in some pips.

Attached Image (click to enlarge)
Click to Enlarge Name: example.jpg Size: 126 KB


Happy pippin
  • #44
  • Sep 2, 2009 12:34pm Sep 2, 2009 12:34pm
Well done Pharoah for the updates, hope you keep this up for at least a week, gives us all a clear idea of the system, would like to see another few live examples of hedging..

Danny
  • #45
  • Sep 2, 2009 12:38pm Sep 2, 2009 12:38pm
Quoting rebelheart
Well done Pharoah for the updates, hope you keep this up for at least a week, gives us all a clear idea of the system, would like to see another few live examples of hedging..

Danny
The only reason I have not posted anything from my live account (that I do hedge on) is because my live account is different than FXDD.

If you would like, starting next week, I can post both my FXDD charts, and my Live Charts from a different broker just so you guys could have a better comparison in the difference in results from non-hedging to hedging.

Just let me know if you guys want me to do this, otherwise it's too much cut and paste work for me to get out 2-6 images per update post lol.

The reason I am posting an update whenever I update my stops or hedges is because I know exactly to the detail how this system works, however, I have a very hard time explaining things, so I figure if I do step by steps of my first few weeks, people will see from watching how it's done, exactly how to do it instead of misunderstanding a certain aspect of the system, and loosing alot of money.

I would hate for this system (misunderstood or not) to cause anyone any unrecoverable financial loss, and is the BIG reason I state to always test strats on demo account.
  • #46
  • Sep 2, 2009 1:02pm Sep 2, 2009 1:02pm
Hi Pharoah
Thanks for opening up a new thread to make us understand your slop loss and hedging strategy with ACE's wonderful 4H box breakout system.
I would like to see both the charts on your Demo and Live account Charts to understand better.
Looking forward to it.
Thanks again.
Bhupinder
  • #47
  • Sep 2, 2009 2:24pm Sep 2, 2009 2:24pm
Quoting bhupinder
Hi Pharoah
Thanks for opening up a new thread to make us understand your slop loss and hedging strategy with ACE's wonderful 4H box breakout system.
I would like to see both the charts on your Demo and Live account Charts to understand better.
Looking forward to it.
Thanks again.
Bhupinder
No problem, I will add a title to each post referencing which account we are looking at starting next week.
  • #48
  • Sep 2, 2009 2:27pm Sep 2, 2009 2:27pm
ok, we have an update now,, we just got stopped out at 150.18 for a gain of 53 pips, as you can see in the chart, we are nearing the Red MA (this is an optional re-entry point, use at your own discretion). I will log it as if it was a trade to display this aspect of my system.

Attached Image (click to enlarge)
Click to Enlarge Name: example.jpg Size: 124 KB


So to date we are now at -111 for the month of September
  • #49
  • Sep 2, 2009 2:53pm Sep 2, 2009 2:53pm
ok, assuming we were to go ahead and re-enter the trade when the price penetrated the Red MA, we would have entered here at 149.95, with a stoploss of the Black MA 150.18, we will continue to follow the Black MA for our Stoploss.

Note: This will not be totaled into the monthly total, this is a completely optional trade and I am only showing how the re-entry works.

Attached Image (click to enlarge)
Click to Enlarge Name: example.jpg Size: 129 KB
  • #50
  • Sep 2, 2009 4:14pm Sep 2, 2009 4:14pm
ok, here are the results of the Re-entry, and the reason it is on a use at your own risk basis.

Attached Image (click to enlarge)
Click to Enlarge Name: example.jpg Size: 127 KB


You can see here that upon the open of the new bar, the Black MA was breached by the price, this would have stopped out the trade, this tells me that there is not much action this week, as I believe this week will be a consolidation week due to the S&R, I do not expect any further action this week, but I could be wrong, I expect next week to be far more active.

This concludes this weeks look at this strategy, a rough start, but no worse than any other strategy would be at the wrong time. We'll just suck it up and move forward, we all know Ace's Breakout system is profitable.

Next week, we will focus on two separate accounts, one that includes hedging, and one that does not.

I will be keeping xml spreadsheet records of all trades on both accounts, and posting the results at the end of the every month.

remember, practice before pips.
  • #51
  • Sep 2, 2009 4:31pm Sep 2, 2009 4:31pm
Hi Pharoah,

First off, thank you for sharing your trading methodology. Looking good so far as my understanding is taking me.

I have a few questions:

1) Do you wait for the 4 hour candle to close before you make a trading decision, or do you act as soon as either the BE or PRO lines are breached?

2) You do not set any TP levels. The trade will either end with either a SL or End of Week manual close out?

3) I'm not clear on your rules for reentry following a SL. Could you elaborate?

4) I'm not clear on rules for hedging, either. Could you provide some more clarity?

  • #52
  • Sep 2, 2009 5:30pm Sep 2, 2009 5:30pm
Quoting Bobcat2
Hi Pharoah,

First off, thank you for sharing your trading methodology. Looking good so far as my understanding is taking me.

I have a few questions:

1) Do you wait for the 4 hour candle to close before you make a trading decision, or do you act as soon as either the BE or PRO lines are breached?

2) You do not set any TP levels. The trade will either end with either a SL or End of Week manual close out?

3) I'm not clear on your rules for reentry following a SL. Could you elaborate?

4) I'm not clear on rules for hedging, either. Could...
No problem, I'll answer all of that for you now.

1. No, I do not wait for a candle to close, this is a real time price action system. The ONLY thing that gets updated only at the open of every new bar is the Stoploss.

2. That's right, because if we set a TP, we are setting ourselves up to miss out on those MAJOR 800+ pip movements. Th reason we let the stoploss system stop out the trade, is because the stoploss is designed to shadow the actual price almost bar for bar, so when there is a shift in price movement, the system detects that immediatly. We close out if stoploss has not been hit at the end of the week.

3. With Re-entry, re-enter when the price re-crosses the Red MA, and use the Black MA to trailstop, if the Black MA is on the wrong side to be a Trailstop, place a trailing stop of 25-50% (your own choice really) of the breakout zone size, when the trailing stop crosses over the Black MA, follow the Black MA again for the stoploss.

4. I will be posting trades and results of those trades for both my hedging and non hedging accounts, with this you will learn my exact method of hedging, and why I feel it is an important asset to this system.
  • #53
  • Sep 2, 2009 5:34pm Sep 2, 2009 5:34pm
Quoting Pharoah
I will use this week as an example. The first trade of the week was for a short.

Attachment

.... Now, anybody who did not update that Stoploss, and who did not hedge, lost a total of 71 pips, with hedging, they would have lost a pip or 2 more than dealer spread.
Thanks again Pharoah,

Have you done any back testing back to 2002? Any chance of sharing your backtesting results?

  • #54
  • Sep 2, 2009 5:50pm Sep 2, 2009 5:50pm
Quoting danno96
Thanks again Pharoah,

Have you done any back testing back to 2002? Any chance of sharing your backtesting results?

I've done manual backtesting since Jan 2009 - now, this system this year would have been awesome, the only real backtest results I have to share at this time are from an EA by Ronald Raygun that partially utilizes my stoploss system. Those results were fantastic, I believe I may have posted those results already in this thread.

Those results turned a $5000 account into an almost $10,000 trading only .1 lots over an 8 month timeframe with a 8.5% drawdown. I am having an EA programmed specifically around this system and this will allow me to gather backtest results for both hedging, and non hedging account from as many years as I can, I will be posting this in a special post that I will have a link of in my signature. The results will be broken down into these catagories.

Overall : This will be the overall total of the entire timespan of testing.
Yearly : This will give a descriptive total on a year to year basis.
Monthly : This will give a descriptive total on a month to month basis.

I believe with the results broken down into these timeframes, I can see if there are any leaks, or something I may have forgotten.

Also, I will be going back before 2002, we have to consider the events of 2001 as this was a major impact to nearly every market in the world. Gotta see if we can handle catastrophic events.
  • #55
  • Sep 2, 2009 6:06pm Sep 2, 2009 6:06pm
Hi P, just looking through through your thread and sounds int.

Will have a look later tmw as need some kip.

Keep up the good work

Regards

ST
" Dont wait for your boat to come in ..... swim out and meet it"
  • #56
  • Sep 2, 2009 6:18pm Sep 2, 2009 6:18pm
Thanks Pharoh,

I've to agree, after looking at your hedging approach to already a great system from ACE. Have turn a great system to a dynamite system - minimise Risk and maxminise Rewards.

I think your approach will also allow for multiple re-entry as it reduce the risk of multiple 100% SL (box range) when the market whipsaw but more importantly able to catch the breakout when it eventually happen, especially during 2005 and 2002.
  • #57
  • Sep 2, 2009 6:25pm Sep 2, 2009 6:25pm
Quoting danno96
Thanks Pharoh,

I've to agree, after looking at your hedging approach to already a great system from ACE. Have turn a great system to a dynamite system - minimise Risk and maxminise Rewards.

I think your approach will also allow for multiple re-entry as it reduce the risk of multiple 100% SL (box range) when the market whipsaw but more importantly able to catch the breakout when it eventually happen, especially during 2005 and 2002.
This was my goal.

I made this stoploss system a little while ago, applying it to a couple trending systems getting rather good results, but not fantastic. I'm not about average, I'm about above average and beyond. When I found Ace's system, and after applying it's initial entry rules with my stoploss system, I saw an above average system (Ace's system in itself is above average, but I'm all about above average and beyond, lets wait and see if this system is beyond). And after noticing that even tho it has a very high profitability, there were still some flaws that could leave your account WIDE open for mass destruction, so I found solutions to that, I then noticed there were spaces where the breakout didn't cover the loss taken prior, ultimately killing the account, so I fixed that with my hedging rule.

I honestly hope this system is what I had intended.
  • #58
  • Edited 7:25pm Sep 2, 2009 6:33pm | Edited 7:25pm
I would like to let everyone here know, that I will soon have a website that will have a forexfactory member specific chat room. As this system is to my personal request, to remain here at Forex Factory, and nowhere else. So only you guys are going to be discussing it right? This chat room will allow you to discuss this strategy in real time with one another (should you choose). I would like this thread to remain perfectly intact for important information that is relivant to the system, such as resistance and support charts. I would like to keep this thread clean of any bickering, or off off topic discussion. (no, that first off is supposed to be there)

I will require that you use your Forex Factory user names for verification, however, do NOT under any circumstance use your Forex Factory Password!!!!!

Thanks,
Pharoah
  • #59
  • Sep 3, 2009 2:39am Sep 3, 2009 2:39am
I would like to take this time to point out a trade that would have occurred on this bar.

A Short would have been triggered as the price rose above, and fell below bthe breakout zone, but you'll notice with this trade, both the Black MA, and the Red MA is below the breakout zone, because of this condition, we must rely on conditional ruleset 2, and set a trailing stop of 50% of the breakout zone. One the trailing stop passes back over the Black MA we will continue to follow the Black MA.

This is NOT a re-entry, this is simply an additional breakout order.

Attached Image (click to enlarge)
Click to Enlarge Name: example.jpg Size: 125 KB
  • #60
  • Sep 3, 2009 5:59am Sep 3, 2009 5:59am
Quoting Pharoah
I would like to let everyone here know, that I will soon have a website that will have a forexfactory member specific chat room. As this system is to my personal request, to remain here at Forex Factory, and nowhere else. So only you guys are going to be discussing it right? This chat room will allow you to discuss this strategy in real time with one another (should you choose). I would like this thread to remain perfectly intact for important information that is relivant to the system, such as resistance and support charts. I would like to keep...
Really looking forward
福 子 Victor V
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