Mechanical Trading

Thinking about trading 24/7 you come up with some crazy,some not so crazy ideas.Heres an idea i just thought about and decided to share it with everybody.Firstly i choose a random date in the last ten years.Then set a buy order on the eur/usd @ 8am gmt 50 pips above the open with a 50 pip stop risking 1% of my account.I also place the same sell order and only take the first order triggered.I place the same orders every day for 100 days,leaving all trades open.At 8am on day 101 i will close all open positions.Does anybody think this idea will make me any money or not?

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My guess is that you're trying to hit a longterm big run and it'll make up for pips lost. Since forex (or at least the g/u) cycles through 50-100 pips fairly rapidly, a net loss is probable.
Almost every one of those trades would hit and then stop out an hour to a few weeks later. So, if 95% of the trades did this, you're 4,750 pips down.
Of the few trades that made it through, most of them would be less than a week old. Each of these five trades have to make an average of almost a thousand pips each to break even overall.

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I walk up to a chart, study it as fast as possible, and enter a trade, repeating this process one after another to compound along the way.
Your process is better:
It might delay impulsivity and lessen the addictive push to see patterns where there are none readily available. Plus, it emphasizes consistency and restricts withdrawals to a few.


Thanks for presenting an original idea.

ha-pattern

So the best case for this idea is that we luck into a strong bull run on day one that lasts for the full 100 days giving us multiple trades that we can exit on the last day for a profit?
The worst case is we enter the market on the first day that continues in a tight range for the full 100 days then we can expect to have nearly blown the account by the last day?

demo : you should backtest this yourself. you can't simply ask people about your strategy each time you come up with something. at some point you are going to have to get balls-deep into some charts.

vhands is great for what it is once you get it running to manually backtest ideas, but it is limited in some regards... not that this will apply to you at this stage.

but to answer you question. if you just arbitrarily open a buy and / or sell order each day then you might make money, or might not. if you took the time to backtest this you would find that for the most-part you will close all orders in profit except for a handful or so which will create such deep drawdown that your account would be sunk deeper than the titanic never to see the light of day again.

so, no. yes, it's possible to luck-out and set a buy at the lower part of a range that will never be visited again, or inversely a sell at the high of a range that is never visited again... but if you sell at the low or buy at the peak then you are royally shafted.

from this, you will then start considering things like grid trading and fancy hedging schemes. all will only serve to hurt you.

keep thinking. keep being creative. also mix it up and try to think of some really simple strategies. somewhere along the way you might trip over a profitable idea.

goddamnit. i'm tired and didn't read your post properly. i now notice you mention you set a stop loss.

not having a good time with this right now.

you will not be in profit.

are you saying that each day a buy or sell will be triggered? in this case you will have orders hedging against each other, and then eventually one (and most-likely later the other) stoploss getting hit eroding potential profits on any other open orders.

if you are saying that you decide on day 1 to either only ever go long or go short then chances are that all of your stoplosses will get hit. if you have a few that do not get hit and live to survive the entire season then chances are the the distance moved from entry will not be enough to overthrow the drawdown on all the stops being hit in the meantime. even if you have one lovely little winner that somehow managed to be far away from entry, you are still going to get shafted by all the stops being hit constantly in the meantime from whipsawing price movement as well as the added cost of spread.

nubcake

I took your advise and did a little backtest.I looked at the last 100 days of the eur/usd.Their were 15 surviving trades worth 12887 pips.Say the other 85 days had trades taken with the stops getting hit,that leaves 8637 pips.This is not 100% accurate but you get the point.

nice.

do it again. and then again. and then again. until you have proven to yourself that it wasn't a fluke. usually as soon as you stumble onto something that makes you theoretical money you quickly find that it was pure luck and you can never replicate the result ever again... at least that has been my experience in the past.

you have to keep in mind things like how much equity you have available also. you may get to a point where your drawdown is too great and positions are either liquidated on your behalf or you are no longer able to open positions at the size you need to have the plusses and minusses balance in your favour at the end. if it gets the point where you discover you need to open small positions to 'stay in the game' then your profit is also likely going to be somewhat small. this is why some say that capitalization makes a big difference.

like i said, keep re-doing it and over different times and see how it stands-up in differing circumstances and keep in mind the position sizing you a) require to make any decent returns, and b) are ABLE to open throughout the course of the season and make sure you don't get to a point where you are forced to scale-back. if you reach that wall then not having enough margin will push your account into the ground, so you must stay away from being stretched to the limit with your available margin.

Whilst the market is trending like the rescent eur/usd run i will probably make money,however in a ranging market i could loose the entire account in the 100 days.So i thought reducing the bet size to 0.25% per trade.This would allow me to survive to fight another day even if i had a maximum loosing 100 days my account would only be down 25%.

yep. exactly.

unfortunately you have found your Achilles heel. your strategy requires a long trending market. if you could predict that, well, then you could use any strategy you wanted really and just take pot-shots.

keep plugging-away. don't make it too complex.