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4H Breakout With Custom Stop Loss

  • #81
  • Sep 6, 2009 4:04pm Sep 6, 2009 4:04pm
ok everyone, we have a bar forming, in 4 hours, we will be setting out pending orders.
  • #82
  • Sep 6, 2009 5:35pm Sep 6, 2009 5:35pm
Quoting Pharoah
ok everyone, we have a bar forming, in 4 hours, we will be setting out pending orders.
  • #83
  • Sep 6, 2009 8:06pm Sep 6, 2009 8:06pm
ok everyone, we now have our breakout zone, so we are going to place our orders, both hedging and non hedging are identical at this point.

We place our pending buy order at 153.15 and out pending sell order at 152.03, Both stoploss's should be set to 152.31 (this will change on next bar)

Here are the images for both hedging and non hedging to date.

Hedging
Attached Image (click to enlarge)
Click to Enlarge Name: Hedge.jpg Size: 139 KB


Non Hedging
Attached Image (click to enlarge)
Click to Enlarge Name: Non Hedge.jpg Size: 140 KB



Hopefully this week will be much better.
  • #84
  • Sep 7, 2009 12:05am Sep 7, 2009 12:05am
We will now update what the stoploss will be for both pending orders (both hedging and non hedging) to 152.45
  • #85
  • Sep 7, 2009 12:19am Sep 7, 2009 12:19am
Quoting Pharoah
We will now update what the stoploss will be for both pending orders (both hedging and non hedging) to 152.45
Pharoah,

Are you obtaining your data from FXDD or a different broker? Sorry..I just don't comprehend how you have arrived at 152.45 for both pending orders. Please elaborate...thanks.

  • #86
  • Sep 7, 2009 12:25am Sep 7, 2009 12:25am
Quoting Bobcat2
Pharoah,

Are you obtaining your data from FXDD or a different broker? Sorry..I just don't comprehend how you have arrived at 152.45 for both pending orders. Please elaborate...thanks.


Yup, that's the broker that I'm using for the accounts for charts.

You'll notice that no orders have been placed yet, their still only just pending. Because of this, we need to update the stoploss for both pending orders to make sure they are up to date should a trade be triggered. Because the Red MA is the one being followed for the stoploss while it is in the buffer zone, you'll notice that the Red MA is currently at 152.45 on the same bar. Here's an image explaining it.

Attached Image (click to enlarge)
Click to Enlarge Name: example.jpg Size: 141 KB
  • #87
  • Sep 7, 2009 12:58am Sep 7, 2009 12:58am
Whoops...my error! Somehow I managed to have a Period 3 instead of the correct Period 2 for the Red MA.

So...we have just 1 Long pending order and 1 Short pending order, and until a breakout, both long and short pendings use the same SL point which for this 4 hour period is 152.45

Please tell me I've got it correct, now.
  • #88
  • Sep 7, 2009 1:07am Sep 7, 2009 1:07am
Quoting Bobcat2
Whoops...my error! Somehow I managed to have a Period 3 instead of the correct Period 2 for the Red MA.

So...we have just 1 Long pending order and 1 Short pending order, and until a breakout, both long and short pendings use the same SL point which for this 4 hour period is 152.45

Please tell me I've got it correct, now.
Yes, very. Because now we have a SL which is almost 50% of the breakout box (will be on next 4H bar) so really, whatever direction it goes in from here on out, the system will follow it closely.

The reason behind using a 2 period MA is so that it goes as high/low as the price does, on a 3 period MA, we loose 5-10% of the stoploss topout. Which = lower R&R and also makes for in alot of cases, higher losses when hedging is not applied because it doesn't trail as closely. My theory is this, we only need room to breath, when there is no longer anything to loose, once we have that, we can give the market room to breath.
  • #89
  • Sep 7, 2009 2:32am Sep 7, 2009 2:32am
I am personally updating my pending order's stoploss to the next projected stoploss point, because I'm going to sleep. I recommend updating any order's stoploss to the next point if you are well into the current bar before going to sleep. The next projected stoploss point is 152.57.
  • #90
  • Sep 7, 2009 4:22am Sep 7, 2009 4:22am
Hi Pharoah,
Great that you opened your own thread for your 4H Breakout with your stoploss system.

I see your post (2 back) about the 2 shift on the red ma, allows full price movement being captured.
Do you have any particular reason for the black ma's 5 shift setting?
I recall from sometime back that you were just eyeballing variations & decided on these settings.
When you decided on the 2 shifted ma's, were there any others that had close fits to what you were looking for?

Have been playing at doctoring 1 of RRs eas to follow your system.
Of course not that much luck yet. Have had a number of restarts after binning my shambles.

cheers scalpz
Target 2 : Stoploss in the green
  • #91
  • Sep 7, 2009 9:57am Sep 7, 2009 9:57am
Quoting scalpz
Hi Pharoah,
Great that you opened your own thread for your 4H Breakout with your stoploss system.

I see your post (2 back) about the 2 shift on the red ma, allows full price movement being captured.
Do you have any particular reason for the black ma's 5 shift setting?
I recall from sometime back that you were just eyeballing variations & decided on these settings.
When you decided on the 2 shifted ma's, were there any others that had close fits to what you were looking for?

Have been playing at doctoring 1 of RRs eas to follow your system.
Of...
The reason I use 2 MA's with my system is because the Red MA is put in place to make sure we get to the BE point as quickly as possible, the Black MA is spaced farther away, because it gives the market breathing room to retrace. when looking back over YEARS of data, I've come to the conclusion that 5 shift for the Black MA is required to capture some of those major movements, the best part is, the minor difference in loss doesn't compare to the major difference in gain.

And here is the EA made by RR that semi includes my system.
Attached File(s)
File Type: ex4 4H Breakout.ex4   21 KB | 393 downloads


NOTE: This particular EA does NOT include my condition 2 ruleset, because of this I STRONGLY Advise against using this particular version with my Beta Stoploss in place.
  • #92
  • Sep 7, 2009 10:03am Sep 7, 2009 10:03am
Well, my luck shows itself again and again, Almost immediately after I went to sleep last night, there was a breakout (go figure) and I was unable to hedge my hedging account, because I was sleeping. So we have lost on our first trade of the week, yay...

Long was triggered at 153.15, and stopped out at 152.57, which was the last place I updates my stoploss.

So currently for me, both hedging and non hedging accounts are the exact same still, I'm expecting there to be another breakout about half hour after I go to sleep tonight. (just kidding)
  • #93
  • Sep 7, 2009 11:09am Sep 7, 2009 11:09am
Short was triggered at 152.03, with a stoploss at 152.65, I'm not expecting this trade to produce much, but we'll never know unless we try.

Attached Image (click to enlarge)
Click to Enlarge Name: example.jpg Size: 142 KB


At this point, the trade is in the profit, but we'll see how the market plays out.
  • #94
  • Sep 7, 2009 11:13am Sep 7, 2009 11:13am
Because this trade is in a profit, we are going to setup our pending hedge orders to buy at 152.03, with a stoploss of 151.83, and a take profit of the short orders stoploss which is 152.65.

I must note, having both bid and ask prices displayed on the chart helps quite a bit.
  • #95
  • Sep 7, 2009 11:30am Sep 7, 2009 11:30am
Quoting Pharoah
Well, my luck shows itself again and again, Almost immediately after I went to sleep last night, there was a breakout (go figure) and I was unable to hedge my hedging account, because I was sleeping. So we have lost on our first trade of the week, yay...

Long was triggered at 153.15, and stopped out at 152.57, which was the last place I updates my stoploss.

So currently for me, both hedging and non hedging accounts are the exact same still, I'm expecting there to be another breakout about half hour after I go to sleep tonight. (just kidding)
Pharoah,

Thank you for sharing your system.

Could you please help me to understand how you could avoid the loss by hedging if the price after triggering the buy stop came back immediately to breakout zone

Thank you

Alfa99
  • #96
  • Sep 7, 2009 11:35am Sep 7, 2009 11:35am
Quoting alfa99
Pharoah,

Thank you for sharing your system.

Could you please help me to understand how you could avoid the loss by hedging if the price after triggering the buy stop came back immediately to breakout zone

Thank you

Alfa99
there is no avoiding a hedging loss, the whole point of a hedge is to prevent loosing more than a hedges loss, for example, if this trade were to turn around, and go against us, that hedge would be put in place to buy at the exact same price the original order was sold at, and has a take profit of the exact same price as the original orders stoploss.

Instead of looking at it like "what happens if the price retraces enuff to trigger, then drops again to hit stoploss" in which case you'll lose a maximum of 20 pips (in a good case scenario, because that means the stoploss was hit and the price in goign in your favor) or you'll lose the dealer spread, if you original orders SL is hit, which is the hedges TP, look at it this way "If I don't place that hedge, and the price retraces and goes ALL the way, well, I just lost 100 pips or more"

It's not a matter of "Breaking even", this is not the point of the hedge, the point of the hedge is to reduce those half/full box retraces that plague the beginnings of some weeks.
  • #97
  • Sep 7, 2009 11:51am Sep 7, 2009 11:51am
Quoting Pharoah
there is no avoiding a hedging loss, the whole point of a hedge is to prevent loosing more than a hedges loss, for example, if this trade were to turn around, and go against us, that hedge would be put in place to buy at the exact same price the original order was sold at, and has a take profit of the exact same price as the original orders stoploss.

Instead of looking at it like "what happens if the price retraces enuff to trigger, then drops again to hit stoploss" in which case you'll lose a maximum of 20 pips (in a good case scenario, because...
Pharoah,

Sorry, I didn't explain myself clearly.

My question in other words is:

If you wouldn't go to sleep how and when you would set the hedge pending buy stop order on the top breakout zone if the price moved very quickly at that point?

Thank you

Alfa99
  • #98
  • Sep 7, 2009 11:55am Sep 7, 2009 11:55am
Quoting alfa99
Pharoah,

Sorry, I didn't explain myself clearly.

My question in other words is:

If you wouldn't go to sleep how and when you would set the hedge pending buy stop order on the top breakout zone if the price moved very quickly at that point?

Thank you

Alfa99
ok, so your saying "if the price touches the trigger price then retraces very quickly"?

If that's the case, then the price might be moving too fast to catch it to begin with, I normally wait until there is about a 10-15 pip profit before I place my pending hedge order (market needs room to breath), but if it touches, and instantly retraces, you may be able to hedge some of it off, but you might also not be quick enough.
  • #99
  • Sep 7, 2009 12:06pm Sep 7, 2009 12:06pm
Alright everyone, we now have a new bar, which means new stoploss/take profit parameters.

We will be updating all original orders/pending stoploss to 152.39 (except the hedge pending order).

We will update the pending Hedge order's takeprofit for our current open short trade, this will be updated to 152.39

Attached Image (click to enlarge)
Click to Enlarge Name: example.jpg Size: 149 KB
  • #100
  • Sep 7, 2009 2:14pm Sep 7, 2009 2:14pm
The Hedge was triggered and stopped out

Should have considered the holiday when placing stoploss on the hedge. This is not a good example of a hedging. I'm going to go back over my data, and include holidays as a game factor, to see if I can improve the hedging technique.
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