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4H Box Breakout

  • #3,181
  • Sep 2, 2009 4:18pm Sep 2, 2009 4:18pm
ya u sure will..but it sounds to me like roulete my friend. u bet black, red comes up, u bet black again for double the money.
nevertheless this system is pretty solid, been on it for a week, usdjpy is making me happy so far.
  • #3,182
  • Sep 2, 2009 4:20pm Sep 2, 2009 4:20pm
Quoting ledobedo
so the bottom line we should really only do one trade a week on this system

No, I believe you should make as many trades as possible to get that big movement, however, I think those trades should be managed on a much tighter level to reduce the amount of 1 trades loss. Normally when a breakout occurs, it occurs very nicely, there is no retrace really when the price actually bust's out and stays out.

I suggest personally, if your going to work with a % of breakout Zone for stoploss, make it like 15%, that way, if you loose out on 4 trades, you only lost a total of 60% of the box, and normally, it only takes 4 or 5 times to breakout, so instead of limiting yourself to 1 trade at 100% buffer zone, why not trade at 15% buffer zone 4 or 5 times?
  • #3,183
  • Sep 2, 2009 4:21pm Sep 2, 2009 4:21pm
Quoting krly
Like a lot of you I use FXDD. I know how to place the opening orders, stops and targets but how do you move your stops to B.E. ? If I'm awake I know what to do, but how do you handle the "midnight movers" ?
Also, ACE, are you actually placing your orders thru FXDD? Do you have a broker you recommend (for trading, not just for charting) ?
Thanks
krly
Krly one option is to use a trade manager. It's a EA that you can set-up to move your stops to BE or BE+10 or BE+20 etc whileyou're asleep. I posted one a few trades back- the Hopwood Trade manager.

Sandy
  • #3,184
  • Sep 2, 2009 4:26pm Sep 2, 2009 4:26pm
Quoting Pharoah
No, I believe you should make as many trades as possible to get that big movement, however, I think those trades should be managed on a much tighter level to reduce the amount of 1 trades loss. Normally when a breakout occurs, it occurs very nicely, there is no retrace really when the price actually bust's out and stays out.

I suggest personally, if your going to work with a % of breakout Zone for stoploss, make it like 15%, that way, if you loose out on 4 trades, you only lost a total of 60% of the box, and normally, it only takes 4 or 5 times...

Pharoah, you mean, that if box size is 150 pips, as soon as price moved 20-25 pips we set stop loss to BE?
Than if SL taken out and price breaks out again we do the same and again until we have 3-4 losses this way?
Could you elaborate?
  • #3,185
  • Sep 2, 2009 4:27pm Sep 2, 2009 4:27pm
thx for clearing that up.sound to me like a very reasonable strategy from a very reasonable man:0
  • #3,186
  • Sep 2, 2009 4:32pm Sep 2, 2009 4:32pm
Quoting shiko
Pharoah, you mean, that if box size is 150 pips, as soon as price moved 20-25 pips we set stop loss to BE?
Than if SL taken out and price breaks out again we do the same and again until we have 3-4 losses this way?
Could you elaborate?

ok, say the price breakout out in short, and retraces back in, all the way to the other side of the box (that's a 100% breakout zone movement)

if you set your stoploss to 100% of the breakout zone, then you would have lost 100% in that 1 single trade.

If you set your stoploss to 15% of the breakout Zone, then you would have lost out 15% on that 1 single trade.

another trade taken going long when it breaches, the price retraces and drops to the other side of the breakout box. if your stoploss is set to 100% on that trade, then your now 200% of the breakout zone for a loss.

if you set your stoploss to 15% of the zone, you would currently be at 30% of the breakout zone for a loss.

What I'm saying is most breakouts that stay out and profit, happen without retracing after breakout. This could occur after 3 or 4 false breakouts, but it happens 9.5 times out of 10. so cut back the fake breakout losses, 15% should be more than enough to catch the real profitable breakout.
  • #3,187
  • Sep 2, 2009 4:44pm Sep 2, 2009 4:44pm
Quoting Pharoah
ok, say the price breakout out in short, and retraces back in, all the way to the other side of the box (that's a 100% breakout zone movement)

if you set your stoploss to 100% of the breakout zone, then you would have lost 100% in that 1 single trade.

If you set your stoploss to 15% of the breakout Zone, then you would have lost out 15% on that 1 single trade.

another trade taken going long when it breaches, the price retraces and drops to the other side of the breakout box. if your stoploss is set to 100% on that trade, then your now 200% of...

Pharoah, this is very reasonable.
This is in short more extreme way of 50% of the box stop loss.
Had I had TP1 take profit, I would make 2% tonight and cover 2% out of 3% losses in 3 trades with 50% box.
What it actually does is reducing our losses and making our potential R:R out of charts. If we lose even 10 time sin a row 15% of the box it still will be only 1.5% loss, but when things pick up and we have a true break out, TP3 will cover all this and plus profit.
Obviously, we gotta think of volatility and how many times we enter on breakout in one week after being stopped once.
Interesting idea. With this system money management is a key.
  • #3,188
  • Sep 2, 2009 5:04pm Sep 2, 2009 5:04pm
Quoting Ace284
Interesting discussion going on about the amount of backtesting that's been done and the relevance of backtesting. (Thanks again, to Danno for his extensive help)

Guys to be honest, when I started trading this I didn't backtest for years. I noticed a pattern in the current market during last September until November and then jumped in. It was a three month observation in real time. Keep in mind that I just started trading back then, and didn't really see the point in testing extensively because I just wanted to make money

[b]The main question...
I am not sure of the relevance of back testing 4,5 or 6 years ago. I think what would be important with this system is being able to identify the market conditions where its not gonna work well. A method other than gettting a margin call.
  • #3,189
  • Sep 2, 2009 5:23pm Sep 2, 2009 5:23pm
Quoting Ace284


The main question with backtesting is...well is market behavior years ago really that important to me? Markets change, volume has definitely changed so should I really concern myself with 5 years ago.

Another good question is, how long in the past from today would you feel you need to backtest in order to trade this method?

....

I believe backtesting is important, not only on how the system work under different market dynamic but more importantant it build up a self belief that the system give you an edge to be able to take pips out of the market consistantly. I've backtested a number of strategies on FF and a large % don't even make profit before mid 2008 -2009. How far do we backtest will depend on each individual comfort level. For me, I'm a sceptic so it require me to backtest a numbers of years before I'm comfortable with an approach.

The self belief in an edge is important. As a trader, we want to be able to do this consistantly over a long period of time, risking 2% making 100%+ annually to give the lifestyle we want. Trading give the opportunities to not going to work for someone else and making someone else rich. Do we believe we can trade for a short term 1-2 years and make $Zillion and retire and never work again? My aim is to be able to do this for the rest of my life.

  • #3,190
  • Sep 2, 2009 5:30pm Sep 2, 2009 5:30pm
I just looked at the 2009 data from Danno and isolated whereever he identified 2 trades occurred. I focused on the second set of data where SL is moved to BE after TP1. This is a part of my strategy.

3 trade sets where the first trade was a loss
- 1 trade sets where the first was a loss and the second a winner
- 2 trade sets where the first was a loss and the second was a loss
- Net pips: -254


4 trade sets where the first trade was a BE
- 2 trade sets where the first was a BE and the second a winner
- 2 trade sets where the first was a BE and the second a loser
- Net pips: +618

4 trade sets where the first trade was a Winner
- 3 trade sets where the first was a winner and the second a loser
- 1 trade sets where the first was a winner and the second a winner
- Net pips: +947

Spreadsheet extract attached

Sandy
Attached File(s)
File Type: xls 4H 2 Trades 2009.xls   28 KB | 415 downloads
  • #3,191
  • Sep 2, 2009 5:34pm Sep 2, 2009 5:34pm
Quoting shiko
Pharoah, this is very reasonable.
This is in short more extreme way of 50% of the box stop loss.
Had I had TP1 take profit, I would make 2% tonight and cover 2% out of 3% losses in 3 trades with 50% box.
What it actually does is reducing our losses and making our potential R:R out of charts. If we lose even 10 time sin a row 15% of the box it still will be only 1.5% loss, but when things pick up and we have a true break out, TP3 will cover all this and plus profit.
Obviously, we gotta think of volatility and how many times we enter on breakout...

Exactly, if you all look back at the charts, you'll notice when the true breakout occurs, it just happens, in 1 single bar, and doesn't usually retrace beyond even the High/Low of the breakout bar, so really, you're stoploss could be set to the high/low of the first 4H bar, and then you're only risking 20 pips each trade, you can afford to loose at least 10-15 trades to get that BIG one that breaks you even, and to be honest, how many times does the price retrace 10-15 times in a week?
  • #3,192
  • Sep 2, 2009 6:47pm Sep 2, 2009 6:47pm
Quoting Pharoah
Exactly, if you all look back at the charts, you'll notice when the true breakout occurs, it just happens, in 1 single bar, and doesn't usually retrace beyond even the High/Low of the breakout bar, so really, you're stoploss could be set to the high/low of the first 4H bar, and then you're only risking 20 pips each trade, you can afford to loose at least 10-15 trades to get that BIG one that breaks you even, and to be honest, how many times does the price retrace 10-15 times in a week?

Yes, I agree on this. in this case we can take a lot more trades. risking 0.15% per trade to get 2-4% is a really good R:R ratio and it might also work in 2002 and 2005 kinds of market
  • #3,193
  • Sep 2, 2009 6:54pm Sep 2, 2009 6:54pm
Quoting shiko
Yes, I agree on this. in this case we can take a lot more trades. risking 0.15% per trade to get 2-4% is a really good R:R ratio and it might also work in 2002 and 2005 kinds of market
Not just those market conditions, it could turn loosing weeks like this one into winning weeks, because for example, this week, it only hit tp1, which means most people's Stoploss is BE or 50% into profit zone at this particular point.

The price has moved back and forth for 2 trades, making the loss a minimum of 100% breakout zone, in some cases more. So far, people have lost a total of 50% - 150% breakout Zone.

If you took the 15% rule, then you would have made 2 trades that ended is loss, leaving you 30% in the loss, with a current trade 50% stoplossed in the profit, now your 20% breakout zone profit for this week.
  • #3,194
  • Sep 2, 2009 6:58pm Sep 2, 2009 6:58pm
Quoting Pharoah
Not just those market conditions, it could turn loosing weeks like this one into winning weeks, because for example, this week, it only hit tp1, which means most people's Stoploss is BE or 50% into profit zone at this particular point.

The price has moved back and forth for 2 trades, making the loss a minimum of 100% breakout zone, in some cases more. So far, people have lost a total of 50% - 150% breakout Zone.

If you took the 15% rule, then you would have made 2 trades that ended is loss, leaving you 30% in the loss, with a current trade 50%...
actually, if to set stop loss to BE+20 pips after say half box or 100 pips we would be actually in some profit. the real breakout doe snot hit BE stop loss after it made 100 pips. I used to trade contra trend., when breakout it just goes goes goes. just watch charts. Those huge candles they stop and slightly reverse back far from BE
  • #3,195
  • Sep 2, 2009 8:17pm Sep 2, 2009 8:17pm
if u want a real breakout.. than use real support and ressistance levels not this box.. altho the box does get lucky sometimes... most of your plays won't be real breakouts.. they will be trends.. and trends will retrace back into the box.. to set the lower high (in a downtrend) for example... your biggest issue is regarding a panic that happens quite often at a certain point.. and the price spikes momentarily wiping out your stop-loss.. u could try a time activated stop-loss at 100%.. where if the market is still at stop loss, 2 hours after it reaches it.. u exit the trade.. which when u're trading 100pip+ boxes.. should be fairly safe.. as long as there ofcourse is another stop loss further down just in case.. for those once or twice a year situations.
  • #3,196
  • Sep 2, 2009 8:20pm Sep 2, 2009 8:20pm
Quoting Pharoah
I suggest personally, if your going to work with a % of breakout Zone for stoploss, make it like 15%, that way, if you loose out on 4 trades, you only lost a total of 60% of the box, and normally, it only takes 4 or 5 times to breakout, so instead of limiting yourself to 1 trade at 100% buffer zone, why not trade at 15% buffer zone 4 or 5 times?
I'm ever so jealous that I didn't think of that!
  • #3,197
  • Sep 2, 2009 8:25pm Sep 2, 2009 8:25pm
Quoting Bobcat2
I'm ever so jealous that I didn't think of that!

DUMB IDEA
  • #3,198
  • Sep 2, 2009 9:02pm Sep 2, 2009 9:02pm
Quoting Pooks
DUMB IDEA
Why is it a dumb idea? Are you jealous, too?
  • #3,199
  • Sep 2, 2009 10:47pm Sep 2, 2009 10:47pm
Quoting Pooks
DUMB IDEA
I'm not 100% sure exactly who you think you are, and how long you've been trading forex, but we don't tolerate trolling here. If you got something constructive to post, post it, don't just throw out idiocy with nothing to go with it.
  • #3,200
  • Sep 2, 2009 11:07pm Sep 2, 2009 11:07pm
Quoting Bobcat2
I'm ever so jealous that I didn't think of that!
I had the same reaction . . . if it works out, maybe in a year or so we can claim to have thought of it. By then, there will be 10,000 posts on this thread and who's going to look back through that many posts to find out we're lying.

I checked the box for this week and if SL were set at 15% of the box, it would have been 25 pips this week. That seems REALLY tight, but even if I chose to go with 25%, I could sustain a number of false breakouts and still be profitable.

Pharaoh, good going. I'm going to put it on a demo and take it for a test run next week. With smarts like that, no wonder you were King of Egypt.
Greetings from Guanajuato, Mexico
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