0400-0700 GMT Breakout Strategy

-15 for me today

Yep -15.

I make it -30 for the month, is this going to be its first losing month since we started..... maybe.

You never know, we may bag +75 tomorrow.....

scull's is doing well this week not sure about the whole month as not been keeping a note

can someone that has please update for feb

im not sure of sculls numbers but yeah this week it has pulled things back, grants still has tomorrow as scull said, thats where a great risk/reward strategy pays off



i had -15 with grants and +30 with sculls

Hi everyone,

No trade today since the EMA was inside the box, which was lucky since the first breakout would have given us -15. Looks like it's breaking out on the other end now though.

Have a nice weekend!

Yeh no trade due to ema for me as well.

I keep a daily log of the following

a) maximum number of pips from entry (this is used to determine profit targets)

b) number of pips it moved before retracing back to the entry point (this is used to determine best point to move stop to breakeven)

c) maximum number of pips it retraced before reaching a) (this is used to determine stop loss)

You need to remember I am entering the breakout using Grant's EMA and slopes. If either indicate a valid entry I would enter (please note I stopped trading this when the results started to fall away)

I use a buffer of 4 pips excluding spread

I have been trying to establish if there was a better set of parameters that would have delivered a good return in Jan and Feb. But there does not appear to be. Here are the best trading days:

------a)----------b)---------c)
------38---------0-----------0
------37---------12-----------1
------124---------0-----------0
------61---------5-----------12
------52---------16-----------0
------45---------19-----------8
------32---------14-----------12
------33---------10-----------4
------86---------19-----------3
------33---------5-----------2

On all the other days the trades did not reach more than 25 pips above entry

What does not help is the 2 x stops at 12 pips which means that the stop loss would need to be set at about 15. Then you cannot move the stop to breakeven until the 19 pips has been cleared. Then you have a number which only reached 32 - 33 pips. So you can only really hope to shot for a target of 2 x risk. 2 x risk would delivery an ROI of 20 when multiplied by the 10 positions shown above. The problem is that there would be 15 losing days (so you make 20 but lose 15). So all in all a lot of hard work over 2 months to only make 5 x risk

It doesn't make sense to adjust the parameters to the pip using data from the previous month.
These kind of breakouts are profitable with any imaginable parameters if the trend is strong and lose big in a ranging market.

The last 2 months weren't profitable maybe because the bulk of the movements took place during the US and Asian sessions and you traded the London open. Nobody can say if the behaviour will change in the following months.

Also, the EMA has no meaning because the idea of breakout is not compatible with a lagging indicator. You don't have to believe me but backtest a few years of data and check if the EMA made some difference. It doesn't matter which EMA or SMA you use.

EMA is used here BECAUSE it is a lagging indicator.

it is only used to show the short-term past behaviour, be it trending or ranging.

Ok thanks for that.

Anyway guys, any idea how to tweak it to make it work in the current market conditions? I'm looking into a few bits and bobs, which i will share with the forum shortly, but saying that Jan was b/e and Feb was a small loss, so not the end of the world by any stretch of the imagination.

It seems to me that you have not taken the trouble to read any of this thread if you had you will have realised that this strategy using the 85 ema has been very profitable during 2009 and has delivered flat results since the middle of December because if you look at the 14 period ATR on the daily GBP USD chart the average daily range has fallen by 20%

I am not a fan of changing a system that has worked well for a long time. Having said that given that the lower volatility has been with us for two and a half months now and we do not know how much longer it will be with us I wanted to analyse my results for my benefit

It is because of people like you who just jump on a thread and make broad sweeping comments without taking the trouble to do any analysis (which believe me takes a lot of time) that people like me wonder why I should share the research that I am doing

The fact that using EMA 85 has been very profitable for some months or one year has no meaning TODAY. I need only a few minutes to find the best EMA for the last 3 years but I'm 100% sure that this will stop working in the future followed by a flat profit curve.

If you will reread my post you'll find that I'm not against this idea. I've only said why the system hasn't been profitable in the last months.

I think you chaps are having a struggle with this, time to move on to another method

Thanks.

Anytime !

guys at one time last year their was a thread called ace4hr

a weekly breakout in backtest it was superb and in forward test then somebody came along and started to sell it which pissed of ace and he left

guess what

the 4hr weekly breakout started losing to a ponit where most left
just wanted to mention that

but the daily has stood the test of time overall profitable some months better or worse than others

this may just be a jinx period due to that seller

well aleast the loses are low/be

Just a couple of thoughts

1. Gloworm or anybody else that does does not like the system please just leave. If you do not have a constructive post then........

2. I honestly dont see how Sauron can say with 100% certainty that the EMA will fail. It is a tall order to predict the forex market, the idea of the EMA is just to give us an idea of the direction of the market so as to place only one pending order and hence only risk one SL rather than bracketing the trade box and risking two SL's

3. I don't think the system is jinxed. The whole concept of a mechanical breakout system is to remove the emotional side of trading. I think that with all the turmoil in Europe now we should see a return to profitability for this system

4. Thanks to the efforts of Scullmeister, Indy, Grant, Maq and others I do see the system evolving as market condition dictate

just my 2 cents

cheers

HI all,

so feb is over and finished -1% (risking 1% per trade), not great but not a disaster. overall 2010 is -1% if you include jans BE.

so what to do........

well for me the answer is nothing. since i started live back in Sept 09 this method is +44%, which is still 40% ish better than any bank in the UK would have given me in a year.... lol

if March continues in the same vain then some slight modifications may be needed but i will let March play out first.

also, any breakout strat whether its this one, sculls or the NY version should be traded along side 1 or 2 other methods, so that if 1 or 2 months (ie jan and feb) arent great then the other methods can (hopefully) pick up the slack....

anyways here is too a pip filled March

cheers

grant

Well said.....