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4H Box Breakout

  • #3,261
  • Sep 4, 2009 10:09am Sep 4, 2009 10:09am
Quoting nubchai
Yen,

What I wonder is how often the reduced SL would have been hit in the last year. 30% of a 150 pip box is small enough but we also get boxes in the 100 pip range. I do think the reduced SL makes sense. I haven't figured out the right % to use or if there are signals that indicate it's better to use the reduced SL for a particular trade (like box size).

Sandy
That's the magic question to be sure. I'm banking on what I've experienced in the past i.e. a strong trade breaks out and doesn't look back much. However, as mentioned before, I'm trying it out on a demo account first simply because I don't have a definite answer yet.

Your combination of methods is probably better. At this point, I'm trying to keep it as mechanical as possible so the changes stay somewhat true to the original concept.
Greetings from Guanajuato, Mexico
  • #3,262
  • Sep 4, 2009 10:15am Sep 4, 2009 10:15am
Quoting nubchai
After looking at the data I think taking profit on part of the trade at 100 pips improves overall success rate with this system.

P.S. Where I have 100 pips I used to have TP1. But in going back and looking at the data I'm going to try a revision of locking in profits at 100 pips.
I completely agree.

There was a great post regarding the subject of locking in profits from david4u a while back: http://www.forexfactory.com/showpost...postcount=2491 Assuming his back tests are correct, there's a lot of logic in closing one lot at 100 pips.

Locking in profits at around 100 pips on at least 1 lot or partial lot also does wonders for the psyche of a trader (at least this trader). I'm just a lot more relaxed with the remaining lots when I know my trade is a sure winner.
Greetings from Guanajuato, Mexico
  • #3,263
  • Sep 4, 2009 10:25am Sep 4, 2009 10:25am
Quoting yen44x
I completely agree.

There was a great post regarding the subject of locking in profits from david4u a while back: http://www.forexfactory.com/showpost...postcount=2491 Assuming his back tests are correct, there's a lot of logic in closing one lot at 100 pips.

Locking in profits at around 100 pips on at least 1 lot or partial lot also does wonders for the psyche of a trader (at least this trader). I'm just a lot more relaxed with the remaining lots when I know my trade is a sure winner.

I agree Yen. The very first trading course / method I studied was striving for 10 pips per day. Ten pips per day compounded over a year's time equates into six figures per year starting with a modest account. Sometimes with the scalping method, it would take hours to find that trade and execute the plan each and every day. With david4u's insight you can basically have 20-25 pips per day by entering a trade on Sunday night (for me anyway) and you are done within several hours.

Something to think about for sure especially with closing one lot and letting the other run.
  • #3,264
  • Sep 4, 2009 10:33am Sep 4, 2009 10:33am
Another advantage I see with a reduced SL is the huge improvement in R:R.

Just as an example, on the attached chart is a sample week with a box of 120 pips. With a 30% stop loss, my R:R at TP1 is over 3:1. To equal that RR using a full stop loss, I'd have to hit TP3.

What it means simply is that even if the reduced SL is hit more often, I don't have to be right on my trades as often either.
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Greetings from Guanajuato, Mexico
  • #3,265
  • Sep 4, 2009 10:36am Sep 4, 2009 10:36am
Quoting yen44x
Another advantage I see with a reduced SL is the huge improvement in R:R.

Just as an example, on the attached chart is a sample week with a box of 120 pips. With a 30% stop loss, my R:R at TP1 is over 3:1. To equal that RR using a full stop loss, I'd have to hit TP3.

What it means simply is that even if the reduced SL is hit more often, I don't have to be right on my trades as often either.
Exactly
  • #3,266
  • Sep 4, 2009 11:17am Sep 4, 2009 11:17am
Quoting yen44x
Another advantage I see with a reduced SL is the huge improvement in R:R.

Just as an example, on the attached chart is a sample week with a box of 120 pips. With a 30% stop loss, my R:R at TP1 is over 3:1. To equal that RR using a full stop loss, I'd have to hit TP3.

What it means simply is that even if the reduced SL is hit more often, I don't have to be right on my trades as often either.
Very good point.

Sandy
  • #3,267
  • Sep 4, 2009 11:33am Sep 4, 2009 11:33am
Quoting basomakm
Thanks very much for your interest ...
but i skip the 2nd week " on purpose " because this week = No entry which = No Buy - No sell

i'll back test this idea for about 100 weeks
and i'll post now the 1st...
very impresive results.looking forward to more in depth backtesting. could you just briefly explain to us who are new here your adjustments?
thank
  • #3,268
  • Sep 4, 2009 12:09pm Sep 4, 2009 12:09pm
Quoting yen44x
Another advantage I see with a reduced SL is the huge improvement in R:R.

Just as an example, on the attached chart is a sample week with a box of 120 pips. With a 30% stop loss, my R:R at TP1 is over 3:1. To equal that RR using a full stop loss, I'd have to hit TP3.

What it means simply is that even if the reduced SL is hit more often, I don't have to be right on my trades as often either.
I've been reading through most of the pages here and really like what I see. Mechanical systems tend to remove the (sometimes deadly) emotional factor from trading.

Quick question Yen44x.... is your 30% SL calculated on just the high/low of the box candle, or is the buffer included as well in that 30% calculation.

Thanks in advance.... I'm very excited to lay some trades down and hopefully contribute something to this thread as well.
Addicted and proud of it!
  • #3,269
  • Sep 4, 2009 1:17pm Sep 4, 2009 1:17pm
Quoting wrenski
I think he will be a little early for his plane....today is Friday!!

Who told I was leaving for the airport ?
I did not ... Just arranging last things before the flight
  • #3,270
  • Sep 4, 2009 1:27pm Sep 4, 2009 1:27pm
Quoting PiPsAddict
I've been reading through most of the pages here and really like what I see. Mechanical systems tend to remove the (sometimes deadly) emotional factor from trading.

Quick question Yen44x.... is your 30% SL calculated on just the high/low of the box candle, or is the buffer included as well in that 30% calculation.

Thanks in advance.... I'm very excited to lay some trades down and hopefully contribute something to this thread as well.

Yeah, I tend to agree about it. I have never were losing 1% per trade so easily But in reality mechanical system can remove emotions if wee know that following it we will be winners at the end. The problem is that not everyone is disciplined enough to follow the system through bad period and it looks like my bad luck played with me No doubt, as I jump the plane, there will be huge breakout this Sunday which will continue until my arrival
Just kidding.
  • #3,271
  • Sep 4, 2009 2:08pm Sep 4, 2009 2:08pm
I've tested an interesting variation that I noticed a few days ago. Let's just say I was completely blown away when I saw the results. Tested from Jan 09 till now. I've already looked over the numbers three times, but will quadruple...Octuple (lol) check it just incase.

The average risk:reward is 1:13. The lowest was 1:6 and the highest was 1:34. After I saw that, my eyes were pretty much glued to the screen. You guys know i'm a risk:reward fanatic.
Win rate is 40% but with rewards like that, even a 10% win rate would still make you a very nice amount of money.

It's 100% mechanical like this system. I didn't exclude holidays, major S/R levels or anything. No 'feeling' Price action type filters, no lagging indicators, none of that just plain simple breakout like this system. SL and TP levels are all known beforehand like this method. Again, I tested each and every trade from Jan 09 till now regardless of any other market conditions.

I'm going to check the numbers over and over and over again. Since Jan 09 this variation would have produced a return of +900% risking 3% on each trade. That's essentially 3 times more profitable then this original system.



I'll forward test it as well, like I did before I posted this system. I don't want to hype it up too much but, I see lots of opportunity in the coming future, not only with my variation but with a few here as well.
  • #3,272
  • Sep 4, 2009 2:36pm Sep 4, 2009 2:36pm
Quoting Ace284
I've tested an interesting variation that I noticed a few days ago. Let's just say I was completely blown away when I saw the results. Tested from Jan 09 till now. I've already looked over the numbers three times, but will quadruple...Octuple (lol) check it just incase.

The average risk:reward is 1:13. The lowest was 1:6 and the highest was 1:34. After I saw that, my eyes were pretty much glued to the screen. You guys know i'm a risk:reward fanatic.
Win rate is 40% but with rewards like that, even a 10% win...
Are you going to post your variation here?
  • #3,273
  • Sep 4, 2009 2:39pm Sep 4, 2009 2:39pm
Quoting Ace284
I've tested an interesting variation that I noticed a few days ago. Let's just say I was completely blown away when I saw the results. Tested from Jan 09 till now. I've already looked over the numbers three times, but will quadruple...Octuple (lol) check it just incase.

The average risk:reward is 1:13. The lowest was 1:6 and the highest was 1:34. After I saw that, my eyes were pretty much glued to the screen. You guys know i'm a risk:reward fanatic.
Win rate is 40% but with rewards like that, even a 10% win...

It obviously has to do something with stop loss location. Hot topic here
Ace, you have got us all hooked on this strategy and it has a lot of potential. Brain storm continues
even with 50% box, I have seen actually 1% up in losing long trade and 2% up in BR short trade before letting profits go as I followed the rules.
Hence, we have got potential to work on !
  • #3,274
  • Sep 4, 2009 2:40pm Sep 4, 2009 2:40pm
Yes, not only location but once in trade management.
  • #3,275
  • Sep 4, 2009 3:07pm Sep 4, 2009 3:07pm
Yes Ace, I have been thinking about one more trick...
Multiple positions...
What I mean. You risk say 4% per trade. But you do not risk all this 4% per one position, but open 1 position at signal and then may be another 1-2 if price retraces into the box with using probably some S?R areas, Fibonmachis, Pivots , Medians and other cr*p.

I believe it can substantially improve R:R and reduce risk too. Even when using 100% box. it all must be brainstormed. We have got a wonderful base to build upon.
  • #3,276
  • Sep 4, 2009 3:08pm Sep 4, 2009 3:08pm
Quoting Ace284
The average risk:reward is 1:13. The lowest was 1:6 and the highest was 1:34. After I saw that, my eyes were pretty much glued to the screen. You guys know i'm a risk:reward fanatic.
Win rate is 40% but with rewards like that, even a 10% win rate would still make you a very nice amount of money.
Since Jan 09 this variation would have produced a return of +900% risking 3% on each trade. That's essentially 3 times more profitable then this original system.
It's amazing what us "Less than 5 years old" forex traders can come up with when we put our minds together.

Ace's already fantastic breakout syste, which is still being improved on.

My Smarter than most Trailing Stop system, which is still being fine tuned.

A number of other variations to exit strategies, this particular thread just goes to show, trading forex IS simple.
  • #3,277
  • Sep 4, 2009 3:29pm Sep 4, 2009 3:29pm
Quoting Ace284

The average risk:reward is 1:13. The lowest was 1:6 and the highest was 1:34. After I saw that, my eyes were pretty much glued to the screen. You guys know i'm a risk:reward fanatic.
Win rate is 40% but with rewards like that, even a 10% win rate would still make you a very nice amount of money.


I don't want to hype it up too much but

You've got us on the edge of our seats, Ace with what you've told us thus far!
  • #3,278
  • Sep 4, 2009 3:49pm Sep 4, 2009 3:49pm
Quoting yen44x
Another advantage I see with a reduced SL is the huge improvement in R:R.

Just as an example, on the attached chart is a sample week with a box of 120 pips. With a 30% stop loss, my R:R at TP1 is over 3:1. To equal that RR using a full stop loss, I'd have to hit TP3.

What it means simply is that even if the reduced SL is hit more often, I don't have to be right on my trades as often either.

i cannot believe that many ppl simply applauding to your idea. with all due respect, i have no problem to any person, but serious doubt to your calculation.

i am afraid that what you claim is NOT right. if it is, why not use 1 pip stoploss and 10000 pip tp, so that your so-called RR ratio is 10000:1.

in 10000 trades, you win 1, and you'll cover all your loss. will that sound same thing as your calculation?

when ppl talk about RR ratio but without looking at possible/usual probabilities, it is simply a waste of time.

for this system, at best, you may move SL to middle of box. only 36 pips? the system is dead, you might try.
  • #3,279
  • Sep 4, 2009 3:50pm Sep 4, 2009 3:50pm
Ace, you know how to build up suspense. I'm on tenter hooks!
  • #3,280
  • Sep 4, 2009 4:09pm Sep 4, 2009 4:09pm
Quoting davidjay
Ace, you know how to build up suspense. I'm on tenter hooks!
I had to do a Google search on tenterhooks to find the meaning. I had no idea what you were talking about.
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