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4H Box Breakout

  • #3,221
  • Sep 3, 2009 11:44am Sep 3, 2009 11:44am
Quoting nubchai
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...
Good work Sandy... it appears that your testing reaffirms the notion of not entering a 2nd trade if the 1st trade was a loss. However, if the 1st trade was b/e, then it would be o.k. to enter the 2nd trade. An intuitive challenge that I see with the b/e approach is the fact that a pretty large retracement just occured. In other words, price went to TP1 or greater, then retraced to the other side of the box, where a the 2nd trade was then entered. It seems to me that if price failed to continue as a breakout on the other side of the box during times when the 1st trade was a loss, I would think that the odds of a failed breakout on the other side of the box after a b/e on the 1st trade would be as great or greater with the b/e transaction.

Walt
  • #3,222
  • Edited 3:42pm Sep 3, 2009 12:14pm | Edited 3:42pm
Here's my trading plan for the coming week:

1. Stop Loss will be set at 30% of the box. This is based on Pharaoh's suggestion of 15%, but I have doubled that to be a bit more conservative while still enjoying a much greater R:R ratio.

2. I will trade 2 lots. One will have TP1 as a target. I've been doing that throughout August and it has worked out well.

3. If TP1 is reached, I will incorporate most of Danno96's suggested changes for the second lot i.e. move trade to TP3 if price reaches TP4 and let the trade run until the weekend.

However, I will NOT use the suggestion to move the trade to BE +20 on the second lot when TP1 is reached. With the reduced SL that I will be incorporating, a TP1 win on the first lot will more than offset any potential loss on the second lot, but allows for retracement and the potential for a larger gain later.

What convinced me to try this approach is the week of August 24. As you may recall, the short trade hit TP1, at which point I closed my first lot. Price then retraced and everyone who had the SL loss set at BE or BE +20, myself included, was stopped out just before price fell dramatically. With a stop loss of 30% of the box (it would have been 43 pips on the week of 8/24), I would have reaped 300+ pips on the second trade.

Admittedly, that's only one week, but it was enough to at least make me try this approach. I'll report on the results.

Good luck to all next week.
Attached Image (click to enlarge)
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Greetings from Guanajuato, Mexico
  • #3,223
  • Sep 3, 2009 12:42pm Sep 3, 2009 12:42pm
I should have noted in the previous post that these changes are being tried out on a demo account.

If you're just starting out with Ace's system, I suggest you stick to what's worked until you feel comfortable trying some modifications. The 4H Box system works great just as it is, so please give it a try first.
Greetings from Guanajuato, Mexico
  • #3,224
  • Sep 3, 2009 1:32pm Sep 3, 2009 1:32pm
Here's two more examples of why I'm going to be experimenting with a SL of 30%. Anyone who traded this system in July knows that the last half of the month was rough to say the least.

The first example is the week of July 20. The Long trade kicked in first, barely missed TP1, and then went to SL. Then the Short trade just missed TP1 as well and then went to SL.

The combined loss with a 100% SL: 306 pips
The combined loss with a 30% SL: 92 pips

The week of July 27 is the second example. The week was basically a repeat of July 20, with the Long trade going to SL first, followed by the Short trade doing the same thing.

The combined loss with a 100% SL: 296 pips
The combined loss with a 30% SL: 88 pips

Pips "saved" in 2 weeks: 422

Obviously, both of these examples were from losing weeks. But, in a ranging market, no system that I've seen performs extremely well, and the idea is to minimize losses when conditions are not ideal. I'm hoping that a tighter SL will accomplish just that. Time will tell.
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Greetings from Guanajuato, Mexico
  • #3,225
  • Sep 3, 2009 1:38pm Sep 3, 2009 1:38pm
Quoting yen44x
Here's my trading plan for the coming week:

1. Stop Loss will be set at 30% of the box. This is based on Pharaoh's suggestion of 15%, but I have doubled that to be a bit more conservative while still enjoying a much greater R:R ratio.

2. I will trade 2 lots. One will have TP1 as a target. I've been doing that throughout August and it has worked out well.

3. If TP1 is reached, I will incorporate most of Danno96's suggested changes for the second lot i.e. move trade to TP1 if TP2 is reached, move trade to TP3 if price reaches TP4 and let the trade...

Good ideas, Yen.
I actually was thinking that 15% is too little actually. we would have been stopped way too much. Actually, if we set 30% stop loss. 2 lots. 1 TP 1 another at TP3-4 or more. It would work fine. But what I think, not every breakout should be taken but except for Sunday night it should be from Europe/ London open to London Close. Pretty much 9 hours. Pobbility of whipsaw in any other time is too much.
I made 1.32% by risking 0.25% per trade in 2 weeks with 1H box, avoiding trading any other time but 2:00 EST to 11:00 EST. I have not been checking, but I think it is good for 4H box as well.
If we use 30-50% box, we do not take only 2 trades per week. It might be more.
What do you think?
I do trade Ace rules _+Danno96 changes and this is what we can test.
  • #3,226
  • Sep 3, 2009 1:43pm Sep 3, 2009 1:43pm
Quoting shiko
If we use 30-50% box, we do not take only 2 trades per week. It might be more.
What do you think?
I still haven't made up my mind completely on the second trade, let alone additional trades. You and Walt are the ones that caused me to do some research on the results of a second trade, especially if the first trade was a loss, and I wasn't very impressed by the outcome.

I will probably continue to try second trades, but I doubt seriously that I will try any additional trades in a week. Usually, that's an indication of a ranging market, and I'd rather minimize losses when the market is ranging instead of hoping I'll catch the magic carpet ride.
Greetings from Guanajuato, Mexico
  • #3,227
  • Sep 3, 2009 2:26pm Sep 3, 2009 2:26pm
Yes, with original rules second trade has no sense.
But with smaller risk and may be partial profit taking may be it has. I think it should be tested.
  • #3,228
  • Sep 3, 2009 2:27pm Sep 3, 2009 2:27pm
Damn, my plane is on Saturday and I am still in trading stuff
  • #3,229
  • Sep 3, 2009 3:43pm Sep 3, 2009 3:43pm
Quoting shiko
Damn, my plane is on Saturday and I am still in trading stuff
I have a feeling you will be texting in a post from your plane before takeoff.
Greetings from Guanajuato, Mexico
  • #3,230
  • Sep 3, 2009 4:29pm Sep 3, 2009 4:29pm
Quoting yen44x
I have a feeling you will be texting in a post from your plane before takeoff.
Do not worry, I am out for some time I am not taking any means of communications
Unfortunately...... I bough my mom a laptop
But I guess I will be busy enough with other stuff
  • #3,231
  • Sep 3, 2009 4:52pm Sep 3, 2009 4:52pm
Quoting shiko
But I guess I will be busy enough with other stuff
We can only hope!!
  • #3,232
  • Sep 3, 2009 5:02pm Sep 3, 2009 5:02pm
Quoting yen44x
Here's two more examples of why I'm going to be experimenting with a SL of 30%. Anyone who traded this system in July knows that the last half of the month was rough to say the least.

The first example is the week of July 20. The Long trade kicked in first, barely missed TP1, and then went to SL. Then the Short trade just missed TP1 as well and then went to SL.

The combined loss with a 100% SL: 306 pips
The combined loss with a 30% SL: 92 pips

The week of July 27 is the second example. The week was basically a repeat of July 20, with the Long...
thx for the examples, it certainly supports your idea.
so are u suggesting to use different SL, lets say 50% and more for a trending market, and 15 to 30% for a ranging market?
  • #3,233
  • Sep 3, 2009 5:18pm Sep 3, 2009 5:18pm
Quoting ledobedo
thx for the examples, it certainly supports your idea.
so are u suggesting to use different SL, lets say 50% and more for a trending market, and 15 to 30% for a ranging market?
well, the only problem is we can't tell what kind of market it's going to be at the beginning of the week, so the first trade should be like 30% and second trade 15%, as it has a HUGE probability of loss according to results.
  • #3,234
  • Sep 3, 2009 5:23pm Sep 3, 2009 5:23pm
Quoting Pharoah
lol yen, it starts already
well i m sorry
  • #3,235
  • Sep 3, 2009 5:24pm Sep 3, 2009 5:24pm
Quoting ledobedo
well i m sorry
I actually read it wrong first, please read my previous post.
  • #3,236
  • Sep 3, 2009 5:31pm Sep 3, 2009 5:31pm
Quoting Pharoah
I actually read it wrong first, please read my previous post.
ya i did u sure edited it quick.
anyway u said u dun know whether its trending at the start of week. even if there is a prior trend?
i m just trying to get it right as i have taken way to much information in this week.
  • #3,237
  • Sep 3, 2009 5:40pm Sep 3, 2009 5:40pm
Quoting shiko
Do not worry, I am out for some time I am not taking any means of communications
But I guess I will be busy enough with other stuff
Quoting wrenski
We can only hope!!


Quoting shiko
Unfortunately...... I bought my mom a laptop
No, Noooooo, Nooooooooooooooooo!!!!!!!

Have a good time, shiko. If my math is correct, we'll be deprived of about 540 of your posts while you're gone, but I'm sure you'll do your best to make it up in October.
Greetings from Guanajuato, Mexico
  • #3,238
  • Sep 3, 2009 5:59pm Sep 3, 2009 5:59pm
Quoting Pharoah
well, the only problem is we can't tell what kind of market it's going to be at the beginning of the week, so the first trade should be like 30% and second trade 15%, as it has a HUGE probability of loss according to results.
More or less my conclusion . . . we only know in hindsight, and who wants to be looking at hinds all day.
Greetings from Guanajuato, Mexico
  • #3,239
  • Sep 3, 2009 7:28pm Sep 3, 2009 7:28pm
Quoting yen44x




No, Noooooo, Nooooooooooooooooo!!!!!!!

Have a good time, shiko. If my math is correct, we'll be deprived of about 540 of your posts while you're gone, but I'm sure you'll do your best to make it up in October.

Hope dies the last my friend
  • #3,240
  • Sep 3, 2009 9:14pm Sep 3, 2009 9:14pm
Hey guys, I look forward to this Sunday and taking my trades based on this strategy. The fact that Monday is a US holiday should not affect trade placement right?
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