My experiment with the New York Breakout Strategy

This is my experiment with the 7-9 BigDog USD Breakout Strategy.

My sincere thanks to http://www.forexfactory.com/showthread.php?t=103682

After looking through, this much I know. The strategy will either pass or fail on any given day.

I tried experimenting with this idea I had on excel for at least 10 weeks.

The idea:
Every Monday: Strategy should pass.
If it fails....
Tuesday: Expect the strategy to fail again.
If it passes
Wednesday: Expect the strategy to pass.

Adjusting my lot sizes everyday so that I will end positively every week, I am hoping for these patterns every week.

Pattern (P)
Monday : Expect Strategy to pass. If it Passed I stop trading for the week (P)

Pattern (F)(F)
Monday: Expect Strategy to Pass. But Strategy Fails. (F)

Tuesday: Expect the strategy to fail again. It Fails. I stop trading for the week (F)

Pattern (F)(P)(P)
Monday: Expect Strategy to Pass. But Strategy Fails. (F)

Tuesday: Expect the strategy to fail again. But it passed (P)

Wednesday: Expect the strategy to pass again. And it passes (P)

I started the Experiment from 12 October-12 November
The experiment duration was 12 weeks.

Out of the 12 weeks
5 weeks I observed the Pattern (P)
5weeks I observed the Pattern Pattern (F)(F)
2 weeks I observed the Pattern (F)(P)(P)


I went live for the last 2 weeks which I will discuss in subsequent posts. You will get a better idea of my money management when I describe my live posts. If I get a Pattern (F)(P)(F) I would stop trading. But this has not happened yet. I have included this possibility in my money management. Will now post my live trade results for the past 2 weeks.

First my money management.

I will be trading 3 days (MON-WED)

I will use martingale to end week profitably (no preaching please on the dangers of martingale. Im aware thank you. )

So, if I open 1 lot on Mon, I must be prepared to open 2 more on Tuesday and 4 more on Wednesday. So, I will need 4+2+1 = 7 lots in all.

Then I asked myself, how much am I psychologically prepared to lose every week? This is in anticipation of Pattern (F)(P)(F) Pattern which has yet to occur in which event I would lose all my money.
Basically, I allow myself to risk $470 every month.

$470/4weeks = 117.5 per week

$117.5/7 = 16.78 per lot.

So I am psychologically prepared to risk $16.78 per lot. If the dreaded Pattern (F)(P)(F)comes about I would have lost $117.5 for the week.

Am I coming across clearly so far? Hehe. I hope so.

So my Live Trade 1:

Monday 7-9p.m. High was at 1.4978
Monday 7-9p.m. Low was at 1.4952
Including spread (5 pips), the difference between High and Low was: 34pips

I can risk $16.78 on this trade.
16.78/34pips = 0.49

My broker minimum amount per pip is $0.25 followed by 0.5/1/1.25 and so on. Since I can afford to risk $0.49 per pip, I choose the lower available amount I can trade with my broke which is $0.25

On 16 November (MON), price hit my HIGH line signaling me to buy.

So I opened a buy order at $0.25 per pip.
However, within the hour (9-10a.m.) Price plunged to the Low line.

I Lost 34 x $0.25 = $8.50

I expected strategy to pass on Monday but it failed (Pattern (F)).
So I will expect a Pattern (F) again on Tuesday.

On 17 November (TUE), this was the set-up.

Tuesday 7-9p.m. High was at 1.4910
Tuesday 7-9p.m. Low was at 1.4854

Including spread (5 pips), the difference between High and Low was: 61pips

Taking spread into account, my potential pip gain was 51 pips.

Money management:
Yesterday I lost $8.50
If I win today, I need the 51 pips to give me more then $8.50
$8.50/51 = 0.17
However, minimum pip I can trade with my broker is $0.25

On Tuesday, price hit the Low line. As per the strategy in the BigDog thread, you should sell. But I am expecting the strategy to fail today.

So I opened a buy order instead at $0.25 per pip at 1.4854.

True enough, price fell for a bit then rose all the way to hit the High line which is my TP at 4 p.m. the next day.


I Made 51 x $0.25 = $12.75

Trade 1 Summary:
This week was a Pattern (F)(F)
Net profit for the week:
$12.75-$8.50= $4.25
I have made my profit this week. I stop trade and wait for next monday.

So my monthly balance stays at $470 + $4.25 = 474.25

First my money management.

I have 474.25 in my account.
I want to keep at least half my profit. Small now but it will grow in the future.

So, I allow myself to risk $472.13 this month.

$472.13/4weeks = 118 this week

$118/7 = 16.86 per lot.

So I am psychologically prepared to risk $16.86 per lot. If the dreaded Pattern (F)(P)(F)comes about I would have lost $118 for the week which I am prepared to do so.


So my Live Trade 2:

Monday 7-9p.m. High was at 1.4981
Monday 7-9p.m. Low was at 1.4964
Including spread (5 pips), the difference between High and Low was: 22pips

I can risk $16.86 on this trade.
16.86/22pips = 0.76

My broker allows me to trade at $0.75 per pip. Since I can afford to risk $0.76 per pip, I choose the lower available amount I can trade with my broker which is $0.75

On 23 November (MON), price hit my HIGH line signaling me to buy. (Remember, I expect strategy to work every Monday)

So I opened a buy order at $0.75 per pip.
At around 11 a.m. Price hit my take profit BY THE PIP and locking my profit before plunging all the way down!

I Won 22pips x $0.75 = $16.50

I expected strategy to pass on Monday. And it passed (Pattern (P)).
So I will sto trading this week and update next weekend on next week's trade starting 30th Nov. With NFP around the corner, Im nervous. We'll see what happens.



Trade 2 Summary:
This week was a Pattern (P)
Net profit for the week:
$16.50
I have made my profit this week. I stop trade and wait for next monday.

So my monthly balance stays at $472.13 + $16.50 = $488.63
Net Profit for the past 2 weeks: $488.63-470 = $18.63

I see 6 lurkers reading my post now hee hee...do become a member so you can contribute your comments.

As a side note, Id like to add what I like about my variation.
I can set and forget till I log in the next day to check on my positions.
I will only risk $470 every month and half my total profits. If I dont lose my $470 on the first month, I put it in fundsupermart and risk another $470 the following month from my pay. this way I am disciplining myself to save as well.

Worst case scenario, I could lose $470 plus half the total profits. But I still have my $470 monthly savings and half the profits I have made to count on to break even. Does this make sense? But I guess all is just guess work until you trade live. So I will continue posting live every weekend until a) I go bust or b) I become a millionare (LOL)

I love your system, I hate the Martingale. You said not to preach about it, but I have lost my account twice with "guaranteed systems" that used a very conservative Martingale strategy. My bad! Never again!

So you probably won't get as many people posting here simply because your Martingale will scare them away; at least the experienced traders with Martingale scars. Newbies don't have those scars yet so think they can Martingale their way to profits.

The reality is that a system must stand on its own merit, without trying to win using Martingale.

Other than that, keep us posted.

I tried the similar things on EUR/JPY a month ago. With breakout of the 6am-8am (GMT+8, Asia open) box, targetting 1:1 RR. If today failed, I will double the lot size in the next day. Yes, the chance of a successful trade is high, but in reality, the stress of seeing 4 consecutive losers is very very high.

I start at trading USD$90, and end up losing around $1400 and since then I don't dare to put into another $1440 to rescue the losing streak, and the experiment failed.....

hope you get better results

and have been trading for nearly 2 years, with method like 4h box breakout, DIB, long term buy at dip,....... and still no good results. seems fx is not for me

Your story will eventually be every single person's story who uses Martingale. It's a law of science, like gravity, that cannot be broken.

Thank you for sharing your experiences.

Im psychologically prepared to lose $470 every month.

I seriously doubt that a (F)(P)(F) will happen for more then 4 consecutive weeks. If it DOES happens, then I would have lost $470 for the month then I will put in anothe $470 the following month and continue my trade.

Like I said,, this is an experiment and I will post my trade results here every Sat or Sun. I want to see how this will go forward trading for one year.

I wish you the best, your experiment is good because you know your risk and are willing to lose that, so your experiment is controlled and methodical.

Keep us informed.

By the way shouldn't your middle week be "F F"? You have two fails in that week and stopped trading on Tuesday. Is that correct? This is what I am referring to:

Pattern (F)(P)
Monday: Expect Strategy to Pass. But Strategy Fails. (F)

Tuesday: Expect the strategy to fail again. It Fails. I stop trading for the week (F)

Shouldn't this be a Pattern (F)(F)?

Also, you mentioned you trade at 7 PM to 9 PM where as the strategy trades 7 AM to 9 AM EST. Is this because you are in a different time zone?

Thank you my friend. Yes it should be (F)(F).

I have made the changes. Thanks for pointing it out!

And yes! I am refering to 7-9a.m (It will be 7-9 p.m. where I'm from. we are 12 hours ahead)

I hope this clears things up.

And of course, I will update every weekend. It is my vacation now that is why you see me lurking around here quite often. But for the long run, I will only get here every saturday or sunday to update and reflect on my 'experiment'

Great all is well then. You may also want to try this at 7-9 PM EST or 7-9 AM your time, as that is an hour before and an hour after Tokyo opens. This has done well on backtest with GBP/USD as well.

I still cringe at Martingale, detesting it with all my soul, but I do like how disciplined you are in your approach and would love to see you prove that somebody can actually make it work!

Thanks. For this experiment, I am focusing on Eur/USD only. This is the only pair I have been following for the past 3 years and I feel comfortable with it. Yes, other pairs could work too but I see Eur/USD as my...errmmm...pet? preferential treatment here...lol

Besides I work during the Tokyo open so it is not possible for me too monitor it on a long-term regular basis.

I totally understand. And I am aware of the risks. Actually, the $470 I started with are my profits. So I am psychologically willing to risk it all.

If you look closely at my trade, this is not really martingale as in, i dont really double my lots. I adjust the amount per pip i wanna trade on tuesday depending on the amount i lost on monday. If you see Trade 1 Post no. 2, you will see that I use $0.25 per pip (same as Monday) because the range on Tuesday was 51 pips (range on Monday was 35 pips). So I adjust the pip size according to how much i lost on Monday as well as how many pips there are in the range on Tuesday. I hope this is clearer to see why I still feel safe enough to continue experimenting with this. I calculate 7 lots as a worst case scenario only but in practice many times, it has not been necessary for me to double my pip size. I think this is ok for me.

Plus, it also helps me to get into the habit of saving cos every month when I get my paycheck, I will put the $470 that worked for me the previous month to rest in my fundsupermart cash account and let a new $470 work for me this month. lol. just my attempt at injecting some fun into this.

Yes I would love to prove that a controlled approach will work and those who shunned martingale will give it a re-look.

First my money management.
My profit for the last 2 weeks was $18.63
I will risk half my profit which is $9.32
My initial $470 for this month which I was psychologically willing to risk stays put.

Total I am psychologically willing to risk for this month will be
$470 + $9.32 = $479.32

Total I am psychologically willing to risk for this WEEK will be
$479.32/4weeks = 119.83

$119.83/7 = 17.12 per trade.

So I am psychologically prepared to risk $17.12 per trade. If the dreaded Pattern (F)(P)(F)comes about I would have lost $119.83 for the week.


So my Live Trade 3:

Monday 30 November 2009.
Note: Time is in GMT +800 so even though I say 7-9p.m. It refers to 7-9a.m. NY time.

Monday 7-9p.m. High was at 1.5066
Monday 7-9p.m. Low was at 1.5013

I can risk $17.12 on this trade.
17.12/58pips = 0.29

My broker minimum amount per pip is $0.25. Since I can afford to risk $0.29 per pip, I choose the lower available amount I can trade with my broker which is $0.25

On 30 November (MON), price hit my LOW line signaling me to sell.

So I opened a sell order at $0.25 per pip.
However, it went against my direction from 4-5p.m. the next day.

I Lost 52 x $0.25 = $13

I expected strategy to pass on Monday but it failed (Pattern (F)).
So I will expect a Pattern (F) again on Tuesday.

Tuesday 1 December 2009

Tuesday 7-9p.m. High was at 1.5080
Tuesday 7-9p.m. Low was at 1.5059

Including spread (5 pips), the difference between High and Low was: 26pips

Taking spread into account, my potential pip gain was 16 pips.

Money management:
Yesterday I lost $13
If I win today, I need the 16 pips to give me more then $13
$13/16 = 0.81
However, my broker allows me to trade at either $0.75 or $1. If I choose $0.75 I will not be profitable if Strategy fails today. So I chose $1

On Tuesday, price hit the HIGH line. As per the strategy in the BigDog thread, you should buy. But I am expecting the strategy to fail today.

So I opened a sell order instead at $1 per pip at 1.5080.

Unfortunately, the price sailed through and continued rising to hit my stop loss at 1.5101 between 10-11p.m.


I Lost 16 x $1 = $16

I expected strategy to pass on Monday but it failed (Pattern (F)).
So I expected strategy to fail again on Tuesday but it passed.(Pattern (P))
So tomorrow I will expect strategy to pass again (Pattern (P))

Wednesday 2 December 2009

Tuesday 7-9p.m. High was at 1.5105
Tuesday 7-9p.m. Low was at 1.5080

Including spread (5 pips), the difference between High and Low was: 30pips

Taking spread into account, my potential pip gain was 20 pips.

Money management:
So far I have lost $13 + $16 = $29
If I win today, I need the 20 pips to give me more then $29
$29/20 = $1.45
However, my broker allows me to trade at either $1.25 or $1.50. If I choose $1.25 I will not be profitable if Strategy passes today. So I chose $1.50

On Wednesday, price hit the LOW line. As per the strategy in the BigDog thread, you should SELL. And I am expecting the strategy to PASS today.

So I opened a SELL order at $1.50 per pip at 1.5080.

NFP was always at the back of my head. Price movement gave me a few scares from 9p.m.-12a.m.

However, from 12-1 a.m. the price sailed through and continued falling to hit my TAKE PROFIT at 1.5055


I made 20 x $1.50 = $30

Trade 3 Summary:
This week was a Pattern (F)(P)(P)
Net profit for the week:
$30-$29= $1
I have made my profit this week. I stop trade and wait for next monday.

Half the profit for the last 2 weeks which I risked is safe: $9.32

The other half of the profit from last 2 weeks which I didn't touch is still there: $9.32

The $470 which I was willing to risk this month is also safe.

So my monthly balance stays at $470 + $1 + $9.32 + $9.32= 489.64

Now some of you might laugh at the trouble I go through just for the $1 profit I made this week.

It is okay. Totally understandable. But this strategy I am trying out is to end my week positively ind for the 12 weeks I paper traded and the last 3 weeks I traded live, my weeks have been ending positively 100% of the time.

Total ROI of my $470 investment has been 4.179% for the past 3 weeks.

Reflecting on my money managent
I realise if I continue risking (($470 + half the total profits)/4)/7 every trade per week, I am not going to reach my million dollar goal in 6 years time.

I am going to make some changes from next week onwards.

I will risk ($470 + half the total profits)/7 every trade per week. This is based on the assumption that I will end profitably every week. If I lose, its ok, I was prepared to lose $470 for the month anyway. Only downside is I have to wait until next month (for my pay) to start again. But I feel I will reach closer to my goal faster.

Maybe it is not a good idea, but I am going to start with this new money management next week. Very risky. If I am you, I will be thinking this poster is an idiot. Like I said, this is my journal, my experiment and my journey. Don't walk behind me, cos I may not lead...Don't walk in front of me, cos I may not follow...but I hope I can have you walk next to me and discover together with me where my experiment gets me to

First my money management.

I have 489.64 in my account.
I want to keep at least half my profit. Small now but it will grow in the future.

So, I allow myself to risk $479.82 this month.

$479.82/7 = 68.54 per trade

So I am psychologically prepared to risk $68.54 per trade this week.

So my Live Trade 3:

Monday 7-9p.m. High was at 1.4813
Monday 7-9p.m. Low was at 1.4780
Including spread (5 pips), the difference between High and Low was: 38pips

I can risk $68.54 on this trade.
68.54/38pips = 1.80

My broker allows me to trade at $1.75 or $2 per pip. Since I can afford to risk $1.80 per pip, I choose the lower available amount I can trade with my broker which is $1.75

On 7 December (MON), price hit my HIGH line signaling me to buy. (Remember, I expect strategy to work every Monday)

So I opened a buy order at $1.75 per pip.
At around 1-2 a.m. Price hit my take profit.

I Won 28pips (minus 5 pips for spread) x $1.75 = $49

I expected strategy to pass on Monday. And it passed (Pattern (P)).
So I will stop trading this week and update next weekend on next week's trade starting 14th Nov.



Trade 3 Summary:
This week was a Pattern (P)
Net profit for the week:
$49
I have made my profit this week. I stop trade and wait for next monday.

So my monthly balance stays at $479.82 + $49 = $538.643
Net Profit for the past 2 weeks: $538.64-470 = $68.64

http://cdn.forexfactory.com/images/buttons/quote.gif

First my money management.

Half my Net Profit so far: 68.64/2 = $34.32
($470 + $34.32)/7lots = $72.046

So I am psychologically prepared to risk $72.046 per lot.

MONDAY 14 DECEMBER
So my Live Trade 4:

Monday 7-9p.m. High was at 1.4651
Monday 7-9p.m. Low was at 1.4616
Including spread (5 pips), the difference between High and Low was: 30pips

I can risk $72.046 on this trade.
72.046/30pips = 2.40

Since I can afford to risk $2.40 per pip, I choose the lower available amount I can trade with my broker which is $2.25

On 14 December (MON), price hit my HIGH line signaling me to buy.

So I opened a buy order at $2.25 per pip.
However, between 3-4p.m. the next day (3-4a.m. NY time) Price hit my stop Loss

I Lost 30 x $2.25 = $67.50

I expected strategy to pass on Monday but it failed (Pattern (F)).
So I will expect a Pattern (F) again on Tuesday.

On 15 December (TUE), this was the set-up.

Tuesday 7-9p.m. High was at 1.4556
Tuesday 7-9p.m. Low was at 1.4524

Including spread (5 pips), the difference between High and Low was: 27pips

Taking spread into account, my potential pip gain was 27 pips.

Money management:
Yesterday I lost $67.50
If I win today, I need the 27 pips to give me more then $67.50
$67.50/27 = 2.50
However, if I trade $2.50, I will break even. As I want to end the week profitably, I chose $2.75

On Tuesday, price hit the High line. As per the strategy in the BigDog thread, you should buy. But I am expecting the strategy to fail today.

So I opened a sell order instead at $2.75 per pip at 1.4556.

True enough, price plunged to my take profit line from 12-1 a.m. (12-1p.m. NY Time)

I Made 27 x $2.75 = $74.25

Trade 4 Summary:
This week was a Pattern (F)(F)
Net profit for the week:
$74.25-$67.50= $6.75
I have made my profit this week. I stop trade and wait for next monday.

So my monthly balance stays at $538.64 + $6.75 = $545.39

Net Profit thus far:
$545.39 - $470 = $75.39

Next trade to risk 470 + (75.39/2) = $507.695

Heads up

Will not be trading next week as I'll be going for a 1 week holiday. But I will post the pattern ((P) or (F)(F) or (F)(P)(P)) for next week's trade.

Next post onwards, I will present my trade as thus:
PATTERN:
PROFIT/LOSS THIS WEEK:
TOTAL NET PROFIT:
HOW MUCH I WILL RISK NEXT TRADE:

Please refer to post 1 if you need to remind yourself as to how I trade.

Thanks.

If you want to share about your trading, would you mind to post your live performance on some free hosting. there are the site which are free to post your performance.

mt4live.com

I took a look at your site but I do not trade on MT4. So I cant use it. Anyway, this journal is for my own reference only. Of course I welcome any other feedback or comments. It is more for me to keep track of my own performance. thanks.

As previously mentioned, Did not trade for this week.

But it was a Pattern (P) week.

Currently, my trade for week of 28 December to 1 January is still open. Will update this journal once I am done with current week's trade