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4H Breakout With Custom Stop Loss

  • #101
  • Sep 7, 2009 4:09pm Sep 7, 2009 4:09pm
A new bar has formed, and according to rules, the trade would have closed out upon the open of this new bar. The last 2 weeks appear to not be good at all for this entry system. But we do know it works.

So far this month (of September) on hedging, there has been a loss of 114 pips (remember, I missed the hedge last night that would have proved VERY useful reducing at least 40 of those lost pips).

And for non hedging we are at a loss of 94 pips so far. Lets hope further weeks, or further months balance the last few weeks out.

Here is my current chart

Attached Image (click to enlarge)
Click to Enlarge Name: example.jpg Size: 136 KB
  • #102
  • Sep 7, 2009 9:01pm Sep 7, 2009 9:01pm
Pharoah,

Sure this was a disappointing week for trading so far. I was out of town with no computer access. so I was unable to make the hedge trade entries, and of course, I had a Long trade loser.

However, I just returned home and am in profit about 50 pips on the Short entry, so I will follow the BE Red MA from here on out. Because this is an odd week. I don't think I will employ the hedge portion of the strategy until I have some more familiarity with the MA's in action.

And please don't become discouraged with some losses along the way...it is expected. I'm here to trade along side of you...let me know if there is anything I can do to help out.

Thanks!
  • #103
  • Sep 7, 2009 9:10pm Sep 7, 2009 9:10pm
Pharoah,

If somehow we discern that the prevailing market conditions are choppy or ranging, would it make some sense to go back 2 candles for the MA SL intersection to provide some more breathing room?

Just my 2 cents worth...

  • #104
  • Sep 7, 2009 10:23pm Sep 7, 2009 10:23pm
Quoting Bobcat2
Pharoah,

If somehow we discern that the prevailing market conditions are choppy or ranging, would it make some sense to go back 2 candles for the MA SL intersection to provide some more breathing room?

Just my 2 cents worth...

Well, the point of the Red MA is to get your trade to BE as soon as possible, it could be moved 1 more shift to give a little more breathing room.

The shifts are entirely for breathing room only, if you feel an additional shift will do better, do so and test it out, I would advise against making it any farther than 1 additional shift each.

And no, I'm not discouraged, just takes alot of effort to manage 3 accounts at the same time (my live, and the 2 FXDD demo accounts, hedging and non hedging). I know this system can have up to an entire month of ranging conditions, so far, this strat has been tested for 1 full week, and is now being tested with both hedging and non hedging with brand new accounts that started at the beginning of this week.

I think another thing that doesn't get taken into consideration is back to school, I've noticed that this particular system doesn't really ever fair well in late august early september, but I have no actual REAL trade data to work with to verify this, just something I eyeballed while backtesting.

I'm not going to become discouraged at all, unless the EA that I'm having made around this specific system bombs account after account.

I only learned about forex shortly before being laid off (4 months ago maybe) and since then, I've been looking at system after system after system, and I notice 90% of them use lagging indicators that redraw, I lost $900 with such a system. I found ace's fantastic breakout system, did many many many many manual backtests, and it showed really good results, then I applied my Stoploss system to it (in which I've been working on since I learned how important exit is compared to anything else) and say some fantastic results, but noticed a number of flaws that could leave a single trade open to blow out an entire account, no matter how big it was, so I fixed that with conditional ruleset 2, hedging is still a "in the works" implamentation, I have yet to determine the best hedging peramaters (stoploss/takeprofit) but all of this will be known once my EA is complete.

For now, I'm personally not taking any more trades (live or demo) as I can't afford it, and the last two weeks have left me rather... dissapointed (not discouraged) and unmotivated.
  • #105
  • Sep 7, 2009 10:33pm Sep 7, 2009 10:33pm
When my account is rather depleted or I am testing some new theory, I still maintain live trades...not demo. BUT, under those conditions, I reduce my lot amount and only trade nano amounts ($.01 per pip) on Oanda. To me, any amount of real trade money invested helps to galvanize my attention on what's happening with that strategy. Demo accounts just aren't the same thing at all...and a nano amount won't materially affect your bottom line whether it's a winner or a loser, but maintains my interest much better.
  • #106
  • Sep 7, 2009 11:07pm Sep 7, 2009 11:07pm
Quoting Bobcat2
When my account is rather depleted or I am testing some new theory, I still maintain live trades...not demo. BUT, under those conditions, I reduce my lot amount and only trade nano amounts ($.01 per pip) on Oanda. To me, any amount of real trade money invested helps to galvanize my attention on what's happening with that strategy. Demo accounts just aren't the same thing at all...and a nano amount won't materially affect your bottom line whether it's a winner or a loser, but maintains my interest much better.
Yeah, my lowest live contract size is .1 which doesn't help me in that situation. Because of my limitations, I have been VERY cautious about the broker I work with, unfortunately for me, every broker either had great reviews, and no longer does because of some merger, or has VERY mixed reviews. Some talk about withdraw problems, some talk about re-quotes and a large variety of other issues, yet some say the complete opposite.

My first broker experience was... so so, but that was mainly in part of my own lack of full understanding, this is where the $900 was lost of real money, which crippled my investment funds. And caused me to strive to create the exit strategy I share with FF exclusively.

I've checked out other trading systems and strategies and I just can't understand most of them, I look at a screenshot and all I see is a jumble of confusion with a description that really doesn't work for me. Ace's entry system is fantastic, with a few flaws yes, but what strategy is flawless?
  • #107
  • Sep 8, 2009 12:07am Sep 8, 2009 12:07am
Pharoah,

As I mentioned earlier, I am still in a short trade. Please take a look for me and see if I have this correct.

Both the Red MA and Black MA have crossed the BE point, so I am now following the Black MA @ 5:00 GMT. SL is now set @ 151.84

I now have a guaranteed profit of 22 pips and my SL is currently 23 pips away from the current price.

This is good...yes?
  • #108
  • Sep 8, 2009 12:14am Sep 8, 2009 12:14am
good yes, correct no.

By rights right now, you should still be following the BE, the Black MA at this point should be 152.67 (close to the middle). Remember, the part of the MA you need to be following, is the directly above/below your current open bar.

Attached Image (click to enlarge)
Click to Enlarge Name: example.jpg Size: 135 KB
  • #109
  • Sep 8, 2009 8:09am Sep 8, 2009 8:09am
Pharoah,

Thanks for keeping me on track. When I returned home I was bleary-eyed from 6 hours of driving my car, and I misinterpretted the chart. As you stated I needed to be looking at the MA's directly above the current candle. I was incorrectly looking ahead. Lesson learned.

So...I should have been following the RED MA and left my SL at BE. The BE SL was hit on the 08:00 GMT candle...no profit/no loss.

But instead, I blundered my way into a 22 pip proft. Maybe it's better to be lucky than good!
  • #110
  • Sep 8, 2009 8:42am Sep 8, 2009 8:42am
And had I been following the hedging rule on my trade, I would have placed a hedge at the original Short trade entry, which has since become stopped-out for a 20 pip net loss?
  • #111
  • Sep 8, 2009 9:45am Sep 8, 2009 9:45am
Quoting Bobcat2
And had I been following the hedging rule on my trade, I would have placed a hedge at the original Short trade entry, which has since become stopped-out for a 20 pip net loss?
I only really consider the hedge when the original orders stoploss is beyond the high/low of the breakout bar, and on this particular trade, there would have been no loss, as your Stoploss was Breakeven or better, which means no hedge. You have to think about it this way, when you place an order, you've got to pay dealer spreads at some point right?
max dealer spread = 10 pips, * 2 (original and hedge) = 20 pips. This is why if the stoploss is more than 20 pips inside the breakout box, I place the hedge, because with hedge, 20 = max loss overall if the trade goes against you.
  • #112
  • Sep 8, 2009 9:47am Sep 8, 2009 9:47am
Quoting Bobcat2
Pharoah,

Thanks for keeping me on track. When I returned home I was bleary-eyed from 6 hours of driving my car, and I misinterpretted the chart. As you stated I needed to be looking at the MA's directly above the current candle. I was incorrectly looking ahead. Lesson learned.

So...I should have been following the RED MA and left my SL at BE. The BE SL was hit on the 08:00 GMT candle...no profit/no loss.

But instead, I blundered my way into a 22 pip proft. Maybe it's better to be lucky than good!
It's definitely better to gain than to breakeven or take a loss,, no question about that, a profitable mistake, nothing wrong with that.
  • #113
  • Sep 8, 2009 9:59am Sep 8, 2009 9:59am
Quoting Pharoah
I only really consider the hedge when the original orders stoploss is beyond the high/low of the breakout bar, and on this particular trade, there would have been no loss, as your Stoploss was Breakeven or better, which means no hedge. You have to think about it this way, when you place an order, you've got to pay dealer spreads at some point right?
max dealer spread = 10 pips, * 2 (original and hedge) = 20 pips. This is why if the stoploss is more than 20 pips inside the breakout box, I place the hedge, because with hedge, 20 = max loss overall...
Thanks...clearer, now.
  • #114
  • Sep 21, 2009 12:53pm Sep 21, 2009 12:53pm
Pharoah,

I am having difficulty fathoming your reasons behind your settings for the MA's.

Please explain why you chose the periods and the shift settings so that I have a better understanding of what the MA's in your system actually accomplish.

TIA
  • #115
  • Sep 21, 2009 12:58pm Sep 21, 2009 12:58pm
ironically smma and ema is a same thing
smma (per) = ema (per*2-1)
compare smma 5 & ema 9; smma10 &ema 19..., smma20& ema 39....
one of silly stupid things mt4 guys sometimes do
  • #116
  • Sep 21, 2009 1:05pm Sep 21, 2009 1:05pm
Quoting Limstylz
Pharoah,

I am having difficulty fathoming your reasons behind your settings for the MA's.

Please explain why you chose the periods and the shift settings so that I have a better understanding of what the MA's in your system actually accomplish.

TIA
The MA's are used only as a point of reference to adjust stoploss to active trades. The Red MA, which is the BE MA pulls the stoploss to Breakeven in a breathable manner (allows for slight retraces).

Once the Stoploss is at breakeven, we leave it there until the Black MA, which is the Take Profit MA, passes over the breakeven point, then it follows this.

The reason I used the Period: 2 is because this setting on the 4H timeframe reduces alot of chop that period 1 has, while still keeping it close to the actual price. Period: 3 tends to stay far enough away from the price that it can miss some major movements, and doesn't draw closer to the actual price in ranging markets fast enough.

The reason I use shifts, is because while I want it to have the same general movements that the market does, the market NEEDS room to breath, I shift 1-2 for the Break Even MA (Red), and Shift 5 for the Take Profit MA (Black).

If you look at the images I have provided, you can see how it captures the price movements very effectively, while reducing the loss taken when a trade goes against.
  • #117
  • Sep 21, 2009 1:14pm Sep 21, 2009 1:14pm
Quoting Pharoah
The reason I used the Period: 2 is because this setting on the 4H timeframe reduces alot of chop that period 1 has, while still keeping it close to the actual price. Period: 3 tends to stay far enough away from the price that it can miss some major movements, and doesn't draw closer to the actual price in ranging markets.

The reason I use shifts, is because while I want it to have the same general movements that the market does, the market NEEDS room to breath, I shift 1-2 for the Break Even MA (Red), and Shift 5 for the Take Profit MA (Black)....
What I need to know is whether or not you have arrived at your values mathematically or used some sort of statistical analysis to base your periods and shifts on (together with the H4 timeframe).

Otherwise, did you come to your settings just by visual testing alone? That might hold some merit, but if you did do this, then how many other periods and shifts did you also visually test and over how long a period?

Not that I'm dismissing your method, but I can't see any reasons for your choosing the settings you did other than perhaps they appeared 'ok'.
  • #118
  • Sep 21, 2009 1:20pm Sep 21, 2009 1:20pm
Quoting fxxx
ironically smma and ema is a same thing
smma (per) = ema (per*2-1)
compare smma 5 & ema 9; smma10 &ema 19..., smma20& ema 39....
one of silly stupid things mt4 guys sometimes do
How does this explain why the op is using a Period 2 SMMA (or if you like... 3 EMA) and the shift settings? How is your comment helpful?
  • #119
  • Sep 21, 2009 1:28pm Sep 21, 2009 1:28pm
Quoting Limstylz
What I need to know is whether or not you have arrived at your values mathematically or used some sort of statistical analysis to base your periods and shifts on (together with the H4 timeframe).

Otherwise, did you come to your settings just by visual testing alone? That might hold some merit, but if you did do this, then how many other periods and shifts did you also visually test and over how long a period?

Not that I'm dismissing your method, but I can't see any reasons for your choosing the settings you did other than perhaps they appeared...

This is a backtest that partially uses my stoploss system from jan 01 2008 till now.

I must note that the results using both my conditional rules (which these results do not use) you will get MUCH better results.

Attached Image (click to enlarge)
Click to Enlarge Name: Strat Test Results.jpg Size: 74 KB
  • #120
  • Sep 21, 2009 1:39pm Sep 21, 2009 1:39pm
Quoting Pharoah
This is a backtest that partially uses my stoploss system from jan 01 2008 till now.

I must note that the results using both my conditional rules (which these results do not use) you will get MUCH better results.
You are either avoiding my question, or you don't understand what I am trying to say here.

I do not doubt your back test results. What I want you to explain is why you are using the periods and shift? Did you wake up one morning having had a dream about 2SMMA and shift 1 or 5 (or whatever)?
Did someone tell you 'use 2 x 2 SMA applied to Median Price with a shift setting of 1 and 5 on H4... it's really profitable'? If so, what is their reason for using those settings?

OR...

Do your MA's and shift settings have some hard mathematical or statistical background?
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