Risky Business System

I've been trading this system successfully for a while and wanted to share.

The principles aren't really new, but the settings are effective.

Before i explain the chart setup, entries and exits, I want to mention that this system uses stop & reverse semi-martingale strategy so will not be to everyones taste and comes with a serious health warning. "One day it will blow your account!" There. I've said it. So hopefully it shouldn't need any further mention.

Pairs: Anything with reasonable volatility.

Time frame: 1 hour works for me. Smaller time frames are equally effective but exponentially increase the number of trades taken.

Chart setup: Envelope of 100ma and 200ma with 0.1% deviation.

First entry: When a candle reaches the 100ma and closes above the highest envelope 'buy'; when it closes below the lowest envelope 'sell'.

Stop & reverse: When a candle closes on the opposite side of the highest/lowest envelope on the chart.

Lot sequence: Typically i am increasing the lot size by 1.5 in each trade so my progression is 1k, 2k, 3k, 5k, 8k, 12k, 18k, 27k, 40k, 55k, 100k...

Exit: If it is the first trade of the sequence, i target the immediate high/low for exit. If it is not the first trade of the sequence then i target a monetary value beyond break even. Sometime if there seems to be good momentum and the trade profit is past breakeven i use the a trailing stop.

Some notes: Be wary of the gap between the opening price and the furthest envelope. Its an indication of risk, but it can also represent the strength of trend. Patience is required. Some trades can take weeks to come in to profit.


Below is image of Usd/Cad showing a chop zone and a trend.

Great job plasma you're contribution on FF has always been appreciated. I have been trading something similar for the past 5 months and so far it has more then doubled my account. your idea on having a semi martingale system is a lot safer as this will provide you with that edge without a huge DD. However, to really test this system to see which setting would be best you need a EA which would make things a lot easyer, we have some great programmers on FF maybe someone can write an EA on this system.

Hi,

Please show examples of entry and exit points on a chart as well and the number of lots chosen in each case.

Thanks

The first pic shows worst case scenario whilst price is in a chop zone.

There were several opportunities to take profit, but wanting to look at worst case scenario i assumed that none arise. Over the month of December, the sequence progressed 9 levels before it could be closed. The average distance between buy and sell orders was approx 80 pips.

The second pic shows trend situation using a break of the 100/200 for entry and re-entry.

My account is in sterling so if a sequence goes 10 levels in loss with a 100 pip stop and reverse the drawdown would be £1897. If you have a $ account where 1k = 0.10c (i think thats right), the drawdown after 10 failed trades would be $2710. (this is just a rough calculation)

The 100ma works pretty well as a trend filter, so doesn't really need any optimisation. An ea would be useful for setting take profit targets. At the moment i'm using price alerts.

I took the usdcad chart to show how this would perform in a choppy enviroment. Other pairs can be a lot more fruitful. See usdjpy below.

Thanks for your explanations. How profitable has it been since you started trading your system?

usd draw down based on average 100 pip stop and reverse.

(for gbp account * 0.7)


lot size----- trade loss ------cumalative total loss
1---------- 10 -------- 0
2 ---------- 20 -------- 30
3---------- 30 -------- 60
5 ---------- 50 -------- 110
8 ---------- 80 -------- 190
12 --------- 120 -------- 310
18 --------- 180 -------- 490
27 --------- 270 -------- 760
40 --------- 400 -------- 1160
55 --------- 550 -------- 1710
100 -------- 1000 -------- 2710

The system is built on stop and reverse martingale principles so as long as you have capital to support your increasing lot sizes, you wont have a losing sequence.

I play on eurousd, usdjpy and usdcad. Typically each pair contributes £30-40 to my account each week. I'm using mostly hourly time frame, if you switch to lower time frame you can make more money but also risk greater drawdown because price crosses the envelope more often.

The most lot progressions i've had is 5 or 6.

Because i'm monitoring the trades i use discretion in taking profit so sometimes i'll settle for 2 quid. Sometimes i wont settle for less then £20.

Chamane,

I have traded this system for the past 5 months its a good system, you will consistently win with this system but as i have said in my previous post in order to find the best setting on each pair (lot progression, ma, time frame) you need an EA which would allow you to rigorously test all pairs with different settings.

Heres something you can have a play around with. It could possibly modified.

It stops and reverses with fixed stoploss, above and below the 21ma.

plasma, are the 100 and 200 ma's simple, smoothed or expo?

The envelope is based on simple ma.

11 times! SCARY!

i've attached a spreadsheet. you can adjust the distance for stop and reverse, lot increment sequence etc. i've also added a profit factor so you can target a fixed tp as a multiple of the stop distance. should be useful for making the system mechanical.

Fortune favors the brave.

...but at the end you are slaughtered and no fortunes to enjoy!

Hey plasma, how about we take the direction of the 4 hr and instead of 11 times moves against us on 1 hr...we only had 6? Of course I am talking about my previous post on the eurusd.

I prefer it if the distance between the stop and reverse is not more than 100 pips. This way you can keep a 200 pip tp target.

Any time frame is suitable. I like the 100/200 ma combo, but i'm also looking at 34ma/55ma to see how that plays out visually on smaller timeframes.

Heres 34/55 envelope on eurousd hourly.

So Plasma, what you are saying is if the pair moves against you 100 pips you exit the trade? Even if the pair hasn't moved above or below your ma's?