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my ultimate alternative method

  • #1
  • First Post: Aug 19, 2010 1:24pm Aug 19, 2010 1:24pm
This method is based on the same idea of another thread i have created and called "the alternative method (50 pips candles)".
But the rules are different here and that's why i propose you this new thread.

Our goal is not to follow the price and guess where the price is going, but to have win trades bigger than loose trades.

First, to get rid of the noise, price is shown like this :
Each time the price move 20 pips up, i draw a green candle.
Each time the price move 20 pips down, i draw a red candle.

As Renko, this system does not take care about time, a candle is drawn when 20 pips are done whatever the time to reach it.

I use only EUR/USD from 8 am (GMT+2) to 5 pm (GMT+2).
Here is today's candles :
Attached Image (click to enlarge)
Click to Enlarge Name: 10-08-19 21 59 12.jpg Size: 25 KB
  • #2
  • Aug 19, 2010 1:33pm Aug 19, 2010 1:33pm
Each time the price reach a multiple of 20 (1.28, 1.2820...), i set an order with a SL = 20 pips and a TP = 20 pips

If i buy, it is a +, if i sell it is a -

It is the alternative method, so here are my orders :

+-+-+-+-+-+-+-+-+-+-+-+-+-+

here is a uptrend (G=green candle) :

GGGGGGGGGGGGGGGGG

You can see with my orders, i win 1 time on 2 http://cdn.forexfactory.com/images/s...m/big_grin.gif
+-+-+-+-+-+-+-+-+-+-

here is a downtrend R= red candle

RRRRRRRRRRRRRRRRRRR

you can see the same, i win 1 time on 2
+-+-+-+-+-+-+-+-+-+-

here is a range

GRGRGR
my orders :
+-+-+- perfect http://cdn.forexfactory.com/images/s...yim/tongue.gif

another range

RGRGRG

my orders change like this

+-++++ i consider a range is 3 alternative symbols, in this case the 4th and next symbols will be the same as the 3rd until the range is finished.

Then, you can see the trades today :
Attached Image (click to enlarge)
Click to Enlarge Name: 10-08-19 22 05 58.jpg Size: 29 KB
  • #3
  • Aug 19, 2010 1:42pm Aug 19, 2010 1:42pm
Today, i have started by a buy (+) because the last candle before 8 am (GMT+2) was red and i play the range.

Each time i lose, the next order is X2, so it is a martingale, yes, but you will see this system has few consecutive loss.

Today, i had 140 pips.

I propose you each day, to see together how many pips the method can bring us !
  • #4
  • Aug 19, 2010 1:58pm Aug 19, 2010 1:58pm
yesterday trades : 80 pips
Attached Image (click to enlarge)
Click to Enlarge Name: 10-08-19 22 56 30.jpg Size: 21 KB
  • #5
  • Aug 19, 2010 2:06pm Aug 19, 2010 2:06pm
Hey Zebulon I think your thread is very interesting, thank you for posting your idea. I know most people frown upon martingale systems but I think in certain situations they can be useful.

The problem however is when you have a large streak of losers, eventually you can lose your whole bankroll (or whatever limit you set forself as far as consecutive losses).

For example, what if the market does this for a day, and your first trade is a short:

GRGGRGGRG G
-+- -+- -+- -

That is a streak of 10 losers, so if you started risking even .1 percent, you would lose 100% of your account. Also, even with leverage you will eventually get to the point where you can't double up on the next trade, because your account can't support the trade amount. (Small stop sizes such as 20 pips make this especially difficult.)

I know I sound like I am focusing on worst case scenario here, but it is important to understand the worst case could happen, and honestly with retracements a pattern like the one I posted is possible. I am interested by your strategy and would like to help improve it, please let me know what you think of these concerns and maybe we can find a way to make it even better.

Cory
  • #6
  • Aug 19, 2010 2:12pm Aug 19, 2010 2:12pm
hmm, its interesting, can u share what setting did u use renko chart
  • #7
  • Aug 19, 2010 2:23pm Aug 19, 2010 2:23pm
Quoting Cbh123
Hey Zebulon I think your thread is very interesting, thank you for posting your idea....
You're right, GRG GRG GRG is the worst case scenario.
in such a case, i will do this :

GRG GRG G
-+- -+- +
that means if i have GRG GRG i play + untill i win
if i have RGR RGR i play - untill i win

I agree with you, the account must be big enough to allow several consecutives losses.
  • #8
  • Aug 19, 2010 2:25pm Aug 19, 2010 2:25pm
Quoting saragosa
hmm, its interesting, can u share what setting did u use renko chart
i don't use renko charts, i draw manually

For this method, the indicators you need are a paper and a pen
  • #9
  • Aug 19, 2010 2:38pm Aug 19, 2010 2:38pm
Quoting zebulon
You're right, GRG GRG GRG is the worst case scenario.
in such a case, i will do this :

GRG GRG G
-+- -+- +
that means if i have GRG GRG i play + untill i win
if i have RGR RGR i play - untill i win

I agree with you, the account must be big enough to allow several consecutives losses.
Well what if it goes like this:

GRGGRGRRRRRRRRRRR ?

Even if you change the strategy, there is always the possibility that the market will do the opposite of each of your trades for 20 or 30 times in a row.

I think if you could find a way to change the risk to return and make more than 20 pips on a winner the martingale could be more effective.

Let me know what you think.

Cory
  • #10
  • Aug 19, 2010 4:15pm Aug 19, 2010 4:15pm
Quoting zebulon
this method is based on the same idea of another thread i have created and called "the alternative method (50 pips candles)".
But the rules are different here and that's why i propose you this new thread.

Our goal is not to follow the price and guess where the price is going, but to have win trades bigger than loose trades.

First, to get rid of the noise, price is shown like this :
Each time the price move 20 pips up, i draw a green candle.
Each time the price move 20 pips down, i draw a red candle.

As renko, this system does not take care...

i dont understand this
  • #11
  • Aug 19, 2010 4:39pm Aug 19, 2010 4:39pm
Quoting whatfx
i dont understand this
Hi Whatfx, do you have a specific question? It is pretty well explained, but it's hard to help you when you say something that unspecific. If you read through it a couple times and still can't understand it then you should post which part you don't understand.

Good luck,

Cory
  • #12
  • Aug 19, 2010 4:53pm Aug 19, 2010 4:53pm
This Money Betting Method is just like playing RED & BLACK on Roulette wheel or Baccarat Game , look for trend and patterns
But the problem is Price always exceed the range up & down before it draw the block.
interesting
  • #13
  • Aug 19, 2010 5:57pm Aug 19, 2010 5:57pm
I've been trading for 6 months a similar strategy using 25 pips stop and profit levels on a demo account with EURUSD and GBPUSD and it looks profitable. I've never had more than 8 reverses in a row during this time. One has to be cautious with such a system, like starting with 0.1 lot. I've been looking for someone to program the strategy, but nobody showed up. An EA allowing to setup the range for stop and profit levels would be useful for backtesting and find out the biggest drawdowns that occured in the past few years for all currency pairs. I wouldn't fix the range under 25 pips because of the spread.
  • #14
  • Aug 19, 2010 6:25pm Aug 19, 2010 6:25pm
Quoting zebulon
Each time the price reach a multiple of 20 (1.28, 1.2820...), i set an order with a SL = 20 pips and a TP = 20 pips

If i buy, it is a +, if i sell it is a -

It is the alternative method, so here are my orders :

+-+-+-+-+-+-+-+-+-+-+-+-+-+

here is a uptrend (G=green candle) :

GGGGGGGGGGGGGGGGG

You can see...
I'm confusing with your betting even though it is very interesting.
  • #15
  • Aug 19, 2010 11:11pm Aug 19, 2010 11:11pm
more explainations, for example today :

the last 20 pips movement was down, so i will buy at 1.2800

The next orders will be -+-+-+ (sell buy sell buy sell buy) because this sequence give me good chances to win in a uptrend (GGGGGG) or in a downtrend (RRRRRRRR) or in a range ( RGRGRGRG).
The problem is when the range is GRGRGR just opposite my order, in this case the 4th and next symbols will be the same as the 3rd until the range is finished -+------.

i hope that can help...
  • #16
  • Aug 19, 2010 11:28pm Aug 19, 2010 11:28pm
Quoting Cbh123
Well what if it goes like this:

GRGGRGRRRRRRRRRRR ?

Even if you change the strategy, there is always the possibility that the market will do the opposite of each of your trades for 20 or 30 times in a row.

I think if you could find a way to change the risk to return and make more than 20 pips on a winner the martingale could be more effective.

Let me know what you think.

Cory
there is always the possibility that the market will do the opposite of each of your trades for 20 or 30 times in a row. that is absolutely true !
The goal of this method is to reduce the probability to have a such sequence. But it will never eliminate it totally.
We know that this "tsunami" can arrive and destroy our account.
One solution is to accept this fact and to have a "cash or crash strategy".
Each month, we begin with the same amount of money, at the end of the month, we take the money and reset the account. If the "tsunami" comes the month is over but it won't come each month...

another solution when we have GRG GRG is to do nothing and wait the next day 8 am, because london open bring often volatility.
  • #17
  • Aug 20, 2010 5:35am Aug 20, 2010 5:35am
TODAY'S TRADES
Attached Image
  • #18
  • Aug 20, 2010 8:48am Aug 20, 2010 8:48am
Quoting zebulon
that is absolutely true !
The goal of this method is to reduce the probability to have a such sequence. But it will never eliminate it totally.
We know that this "tsunami" can arrive and destroy our account.
One solution is to accept this fact and to have a "cash or crash strategy".
Each month, we begin with the same amount of money, at the end of the month, we take the money and reset the account. If the "tsunami" comes the month is over...
I see where you are coming from Zebulon, but we can't be sure waiting til another day will have any effect on the probability that you will hit a target. GRGGRG is a likely pattern, since it is a move with minor retracements, so that could happen for days in a row. I like your idea of a cash or crash strategy, but your wins are so small compared to your possible major losses that you still wouldn't be able to make enough to cover the giant loss that is inevitable unless you trade such a small amount that you could handle 30+ losses in a row, which could still happen.

I'm not trying to be negative, it's just that your strategy has a 50% (less if you count the spread, because it takes 21 pips to hit your 20 pip target and only 19 to hit your stop loss) hit rate, with only a 1:1 R:R ratio. It seems like the only hope with this kind of R:R and a martingale is to trade an extremely tiny portion of your account and pray that a catastrophe doesn't happen.

Once again, I'm really not trying to be negative, just trying to help. I like the idea and I think if it could be tweaked for a better R:R it could be a useful way to trade.

Good luck and let me know what you think.

Cory
  • #19
  • Aug 20, 2010 9:48am Aug 20, 2010 9:48am
thank you Cory, i think you are right and i 'm on the wrong way to use a such martingale which will inevitabily destroy the account .

I go back to my laboratory...
  • #20
  • Aug 20, 2010 12:44pm Aug 20, 2010 12:44pm
Here is where I can not buy into your system. As a sidenote, I have worked on at least 20 Renko EAs using most of the obvious approaches and I still could not get anything other than a luke warm winner.

So let's assume we are playing at a roulette wheel where the number of red and black slots change on every spin -- OK this must be a video Roulette Wheel! AND -- the video game programmer gives us some truthful hints about the probabilities for # of blacks and the # of reds on the next spin. Now - we have the choice of playing the next spin in either of 2 ways.

1. We blindly oscillate between red and black based on 1 piece of info - the direction of the last bar before our first bet.

OR

2. We take the truthful but limited hints about the ratio of blacks and reds and make an educated guess about direction - red of black.

Isn't the answer obvious unless you have a losing attitude - i.e - you believe that you are more likely to loss than win.

The educated hints would be based on S & R, Pivot Points, Recent Volitility, Ave Daily Range left for our bets, currency momentum, currency strenght, Renko bar formations - Dbl Top, Dbl Bot, and on and on.

Sorry to be negative, but betting ( and trading is betting ) on random events occurring is just not in the trader toolkit.

KingHigh
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