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The Really Really Boring Forex System

  • #21
  • Nov 11, 2009 10:23pm Nov 11, 2009 10:23pm
Quoting xtraction
Are interest rates still driving forex?

When you hold a trade for days or weeks, do you calculate how many pips you made per day? Most traders forget to do that. Does your rate per day beat scalping?
Well you only have to look at Aud and Nzd against any other currency at the moment and I believe you have your answer. There are other obvious fundamental issues why these pairs are strengthening but I think the main reason is the interest rate, open to interpretation maybe though?

That calculation definitely seems worth doing but considering that my returns per day for scalping are always negative due to poor discipline I think any system that makes me pips is better than scalping for me. Anyway, if it makes me any pips at all it is better than nothing considering the amount of effort (or lack of it) that this method demands. 5 mins a week in front of the pc or 12 hours a day?
  • #22
  • Nov 12, 2009 12:57am Nov 12, 2009 12:57am
Eduardo,

Kudos on sharing your success story with us!

I am concerned that some brokers don't credit us for the full amount of the interest rate differential. Oanda used to actually credit me with interest on my account balance even when my account was idle...no longer true, unfortunately.

Obviously your broker is passing the interest earned on to you. Are you familiar with which brokers DO pass the the interest earned? Would you mind sharing the broker or brokers you use?

Keep up the good work!
  • #23
  • Nov 12, 2009 2:42am Nov 12, 2009 2:42am
Quoting Eduardo
I hope this helps?
Thanks a lot for sharing. I am going to demo it. This technique can be added to my existing strategy to filter the trades.
  • #24
  • Nov 12, 2009 2:46am Nov 12, 2009 2:46am
Quoting Bobcat2
Eduardo,

Kudos on sharing your success story with us!

I am concerned that some brokers don't credit us for the full amount of the interest rate differential. Oanda used to actually credit me with interest on my account balance even when my account was idle...no longer true, unfortunately.

Obviously your broker is passing the interest earned on to you. Are you familiar with which brokers DO pass the the interest earned? Would you mind sharing the broker or brokers you use?

Keep up the good work!
Not too much of a success story just yet, maybe more that I have worked out what I need to do to stop failing... a subtle difference.

I am absolutely convinced that there are plenty of brokers that don't pass on the full swap but unfortunately I don't know which ones are better than others. I like Alpari UK and they are now advertising interest on free margin. I like their execution and customer service too, I have a lot of positive things to say about them.

It may pay me to investigate how much of a cut of the swap that each broker takes and who the better brokers are but for now I'm definitely happy with Alpari.
  • #25
  • Nov 12, 2009 7:48am Nov 12, 2009 7:48am
Quoting Bobcat2
I am concerned that some brokers don't credit us for the full amount of the interest rate differential. Oanda used to actually credit me with interest on my account balance even when my account was idle...no longer true, unfortunately.
Oanda still pays continuously compounding interest on balances... The problem is that (in the United States at least) the Fed Funds target is between 0-0.25%, so depending on your account balance with Oanda, this daily interest credit may be very small...

Actually, i just checked and they are currently paying 0.15%, so on a $10,000 balance you'd get $15/yr or...[drumroll please] - 4c/day.

But in any case, they have a very handy tool that will allow you to figure out your daily carry (or even hourly carry) that you can access here: http://fxtrade.oanda.com/tools/fxcal...lculator.shtml

Also, here is a rundown of what they pay on all currencies:

Attached Image
  • #26
  • Nov 12, 2009 8:33am Nov 12, 2009 8:33am
Quoting Eduardo
So as mentioned above I have 4 trades open at the moment and I will wait for those to get into significant profit before I open anymore trades.

I have attached some charts for you to see the weekly chart setup.

I will post more when something happens (could be a while )
I like your style. Keep up the good work. Could you post some daily charts and where was your entry on these currency pairs?
  • #27
  • Nov 12, 2009 9:17am Nov 12, 2009 9:17am
Quoting InfinitySL
Oanda still pays continuously compounding interest on balances... The problem is that (in the United States at least) the Fed Funds target is between 0-0.25%, so depending on your account balance with Oanda, this daily interest credit may be very small...

Actually, i just checked and they are currently paying 0.15%, so on a $10,000 balance you'd get $15/yr or...[drumroll please] - 4c/day.

But in any case, they have a very handy tool that will allow you to figure out your daily carry (or even hourly carry) that you can access here: http://fxtrade.oanda.com/tools/fxcal...lculator.shtml...
Infinity,

Thanks for the post...most helpful.
  • #28
  • Nov 12, 2009 9:56am Nov 12, 2009 9:56am
Quoting lgtj
I like your style. Keep up the good work. Could you post some daily charts and where was your entry on these currency pairs?
Hi, I have shut down the trades I had for a 100 or so tick profit on each as I was not happy with the entry price. Also I think it would be more prudent to just trade the major 2 pairs AudUsd and NzdUsd to start with and move on to other pairs and open more trades once I have some profit locked in. I did after all state that as my intention when I started the thread!

I've attached the daily chart for each pair...

I have placed buy limits at or near to support as I am fairly sure of the trend but also I have used a slightly smaller stop loss than before. If I do get stopped out on these trades I will use Jacko's anti hedge strategy and wait for the price to continue down a little before entering a buy order at the price I got stopped out at but I feel I should be ok.

On NzdUsd I have used the 0.72 round number support which will coincide with the trendline. Also price keeps dipping below the 50 sma to touch that trendline so it looks like a good entry point for a trend trade.

On AudUsd I have used the 0.91 round number level where the 30 sma and the trendline will meet.

I'm not wild about not waiting for confirmation (a reversal pattern) but it will save me watching it and the worst that can happen in both cases is I lose my stop loss and have to pick a better entry when the trend does resume. Also bear in mind that I am shooting for a 1000 or so pip trade so it's good r/r.
Attached Image(s) (click to enlarge)
Click to Enlarge Name: nzdusd daily.gif Size: 28 KB
Click to Enlarge Name: audusd daily.gif Size: 29 KB
  • #29
  • Nov 12, 2009 10:17am Nov 12, 2009 10:17am
Quoting InfinitySL
A few observations about your system that you might care to consider...

First off, which rates are you looking at? There are overnight rates, one-week, one-month...all the way up to 30yr rates, corporate bond rates (based on maturity & quality), and then (probably most importantly) there are the rates your broker will actually pay you to lend/borrow the currency of your choice....
trading counter unwinding carry into carry is a good way to weight a good position at the beginning of the new rally...
  • #30
  • Nov 12, 2009 10:59am Nov 12, 2009 10:59am
Quoting Eduardo
Hi, I have shut down the trades I had for a 100 or so tick profit on each as I was not happy with the entry price. Also I think it would be more prudent to just trade the major 2 pairs AudUsd and NzdUsd to start with and move on to other pairs and open more trades once I have some profit locked in. I did after all state that as my intention when I started the thread!

I've attached the daily chart for each pair...

I have placed buy limits at or near to support as I am fairly sure of the trend but also I have used a slightly smaller stop loss...
Thanks for posting the daily charts. I read your rules, but you didn't mention how you are using the 3, 13, 30, 50, and 100 smas. Could you please explain how you are using them? Thanks.
  • #31
  • Nov 12, 2009 3:14pm Nov 12, 2009 3:14pm
Quoting lgtj
Thanks for posting the daily charts. I read your rules, but you didn't mention how you are using the 3, 13, 30, 50, and 100 smas. Could you please explain how you are using them? Thanks.
Really just to define the trend and they act as support/resistance.

I recommend any book by John Person who uses the 3 sma typical price as a reversal indicator in conjunction with certain candlestick patterns. Most notably he uses a "high close doji" pattern (or a low) which means when price forms a doji at support and the following candle closes above the top of the doji (and the 3 sma) it is a good signal to buy. Also watch the 3 sma act as support in the following up move.

The 13 sma seems to act as support and resistance too. Draw a trendline on the daily NzdUsd and then put a 13 sma on the weekly. Coincidence?

I like the 30, 50 and 100 sma's to define the quality of a trend in line with a trading system by a guy called Hector (you may have heard of him?). I recommend his work. When these 3 moving averages are moving up or down in parallel price seems to find support and resistance between the 30 and the 50 sma's and should be nowhere near the 100.

There are plenty of people who would say you don't need to use moving averages at all and good luck to them, that's fine for them. I find that they tell me a lot about the strength and quality of the trend. You will probably find your own method to determine a good buy/sell position.

I hope I have explained everything well enough?
  • #32
  • Nov 12, 2009 4:23pm Nov 12, 2009 4:23pm
Quoting Eduardo
Really just to define the trend and they act as support/resistance.

I recommend any book by John Person who uses the 3 sma typical price as a reversal indicator in conjunction with certain candlestick patterns. Most notably he uses a "high close doji" pattern (or a low) which means when price forms a doji at support and the following candle closes above the top of the doji (and the 3 sma) it is a good signal to buy. Also watch the 3 sma act as support in the following up move.

The 13 sma seems to act as support and resistance too. Draw a trendline...
Thanks for the explanation. I too love to use moving averages. I'll be following your thread closely. Your style of trading is very similar to mine.
  • #33
  • Nov 12, 2009 8:48pm Nov 12, 2009 8:48pm
I saw your AUD/USD daily charts and can see there is a limit order in place. Looking at the chart, it seems too early to place such orders. I mean you could wait for the price to reach that zone and then confirm with a proper price action. May be a stop order later on. 0.90000 is not unlikely to find a support. May be I am unable to understand but I feel the entry is quite early and not at a proper place.

Its just my opinion, its your thread by the way.

I think Jacko's anti-hedging is a big arsenel in your pocket that lets you put such bold orders. Correct me if I am wrong.
  • #34
  • Nov 13, 2009 12:03am Nov 13, 2009 12:03am
Quoting lgtj
Thanks for the explanation. I too love to use moving averages. I'll be following your thread closely. Your style of trading is very similar to mine.
Good to hear. Let's see how succesful it works out to be under scrutiny! I think I'm using sound logic but even that can let you down sometimes.

I think this thread will get a better following once I have built nice big positions in these two pairs and I can post some decent results.
  • #35
  • Nov 13, 2009 12:07am Nov 13, 2009 12:07am
Quoting The Lord
I saw your AUD/USD daily charts and can see there is a limit order in place. Looking at the chart, it seems too early to place such orders. I mean you could wait for the price to reach that zone and then confirm with a proper price action. May be a stop order later on. 0.90000 is not unlikely to find a support. May be I am unable to understand but I feel the entry is quite early and not at a proper place.

Its just my opinion, its your thread by the way.

I think Jacko's anti-hedging is a big arsenel in your pocket that lets you put such bold...
Yes, as I mentioned in the previous post I'm never too keen to just place orders but I am looking for an entry as close to the trendline as I can and using the ma's, horizontal s/r and the trendline itself I've picked the levels I am keen to be in at.

The AH strategy will get me out of trouble if I am wrong. As Jacko said, the entry is less important than tha AH strategy.
  • #36
  • Nov 13, 2009 1:50am Nov 13, 2009 1:50am
Quoting The Lord
0.90000 is not unlikely to find a support
That's why I put the stop loss below that. That will be next support IF the trendline breaks.
  • #37
  • Nov 13, 2009 2:59am Nov 13, 2009 2:59am
hi Eduardo
the trend line is far 200 pip from ur entry . as with this volatility we see these days its not so far 240 pip , why didnt u wait for a touch of the trendline and a bounce on it to enter your long ? I AGREE with u about the AH strategy of jacko , it s very important mostly when we are sure about the trend witch the case here .
have a nice day

Quoting Eduardo
Yes, as I mentioned in the previous post I'm never too keen to just place orders but I am looking for an entry as close to the trendline as I can and using the ma's, horizontal s/r and the trendline itself I've picked the levels I am keen to be in at.

The AH strategy will get me out of trouble if I am wrong. As Jacko said, the entry is less important than tha AH strategy.
Attached Image (click to enlarge)
Click to Enlarge Name: au.gif Size: 13 KB
  • #38
  • Nov 13, 2009 4:05am Nov 13, 2009 4:05am
Quoting samer960
hi Eduardo
the trend line is far 200 pip from ur entry . as with this volatility we see these days its not so far 240 pip , why didnt u wait for a touch of the trendline and a bounce on it to enter your long ? I AGREE with u about the AH strategy of jacko , it s very important mostly when we are sure about the trend witch the case here .
have a nice day
My buy order is just above the trendline, I'm not sure I understand?

Precisely... I am sure of the trend so I want an entry as close to the trendline as possible and if I am wrong I am wrong.
  • #39
  • Nov 13, 2009 4:19am Nov 13, 2009 4:19am
sorry Edi
it is my fault i thought u are in already .
nice method , i will be watching it closely as it is almost the same as the one i am trading for almost 2 years now .
thanks again and sorry
  • #40
  • Nov 13, 2009 5:56am Nov 13, 2009 5:56am
Quoting Eduardo
Ok, the main premise ..........................we get to...
Ed, i'm very happy after finding this beautiful thread treasuring small but highly important things for consistent success.
I think your concept of MM has taken the fear out of trading which is the biggest foe of a trader.
Another thing i wish to thank you for telling about a great thread of 'Jacko'. A noob like me may not have discovered so soon
You have put me on a road to start with clear vision of what mechanically can be done. thanks.
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