My naked trading gbpcad bar covering method

This is my experimental method visually backtested simple naked trading technique. Right now I am currently trading in a demo account. Eventually will be trading a live account soon.

I am a mechanical trader and there is no leeway in my rules except for the rules being changed to adapt to profitability and changing market conditions.


I am currently using this system with the gbpcad currency I will post my limitorders after i set them and hopefully before the trade happens.


My system is based on the previous daily bar and daily bars that go back far enough to give you the best educated guess as to if you are in a consolidation period or trending period.Which will give you the insight on where to place your limit orders.

I place limit orders because i would like to catch a trend instead of guessing a trend.My educated guess obviously is not always right.

I like to do this trade in consolidation periods as the previous daily bar is often fully covered or more then 50 percent covered (the 50 percent covered is fine because it is the 50 percent that is close to the new day entry which is close to where we set our limit order and somewhat close to our take profit.

I will set a 20 to 40 pip take profit (the daily bar can offer more as swings of over 100 pips are common). And a fairly wide stop loss as the probability of the trade offering me 20 to 40 pips is really high and do not want a tight stop to lower our chances of our take profit from happening.

I have found that this trade gives you a high probability of being in the money. Therefore if i am in the money more then 20 pips I will set my new trailing thirty pip stop or take my profit.

Now my limit order does not always hit but i fire this trade 1 time a day (when the new daily bar appears) except on friday night.

I have incorporated more then this but want to keep it simple for now.

As this system is new there probably be some tweaking as time goes on.
Also i will incorporate my strategy for trending daily markets as this thread moves forward.

Ok here we go
first trade

limit order short 1.6296

25 pip take profit

100 pip stop

First Trade

take profit 25 pips

+ 1,220.00

If i would have set my thirty pip trailing stop after being in the money at 20 pips i would have profited 36 pips.

I will try to put some charts up with my limitorders so you can see where my trades are put relative to the new and previous daily bar.

Second trade
Entered buy order at 1.62232 take profit 1.62812.

Order was set for a 60 pip profit as the daily previous bar had a lot of room to cover.

I will show proof of orders. Just need to learn how to attach them to this thread.

I also had made two trades before this thread with a 30 pip and 20 pip take profit.

+ 2847.00

previous trades
+ 2104.00 (used more leverage) 30 pips
+ 1503.00 20 pips

A lucky four good trades in a row netting 7674.00 (rounded to the nearest cent)

I used 500,000 on 3 and 700,000 on 1.

The risk reward is lopsided but I am hoping that the high probability of trades being in the money will hedge that risk through time. Since my account has only a 20 to one leverage I am also hedged somewhat that way as well. Also I will try to take a higher profit on these trades sometimes if I think they are obtainable.

There are many ways to hedge a bad rr. I probably will lower the stop loss on some trades as well

With this system I set my orders up and leave them alone with the exception of the trailing 30 pip stop after I am in the money. I wish i could set that up manually while entering the original order.
Maybe i can if anybody knows of a way please inform me. It would be highly appreciated.

Also I like the idea of maybe setting a trailing stop instead of a regular stop to help with the drawdown of the trade.

Ok here we go

sell limit 1.6200 gbp cad

The new daily bar has opened roughly in the middle the trend has been down for the past several hours now trying to reverse. I try to set my limits so that when they hit there is some momentum moving into them
since this currency pair is range bound at the moment (large range of 100 pips or more) It doesn't matter which way the current movement is because it should reverse at support or resisitance.(obviously not gauranteed). The currency has been trading for the past few days at the top of its weekly range and expect it to come back down. thus why i set my limit under the new daily entry and my take profit within the previous daily bar at 25 pips.

If the trade is in the money for 20 pips or damn close i will set a 30 pip trailing stoploss or take my profit.

Initial target 25 pips no stoploss at the moment because i am confident if it spikes down puts me in the trade and then moves up over a hundred pips it will hit resistanse and come back down.

Sell limit has not hit yet. If it does not hit within the next hour or so I will close the trade.
If the sell limit does not hit. You close order so you can fire another one when the next daily bar shows up.
A break even day to me is a good day.

Ok set a buylimit order last night at at 162.44
40 pip take profit filled at 162.89

Profit of 1,323.00

Used 300,000

My previous order never filled

The move to the upside was over 150 pips.
Feel like i should of captured more of a gain.

5 for 5 so far though.

Just set up a sell limit for 1.6319
take profit 30 pips
500,000

Plenty of room on the previous daily bar to the downside.

If in the money 20 pips will set 30 piptrailing stop.

If I were to watch this trade I might of tried to take more then a 30 pip take profit as my trailing stop is set at 80 pips.

I just set these trades up after 8 pm (when new daily bar appears)
and leave the office.
Soon here i will be setting up my live account. Before i do I will show proof of previous orders. Just have been real busy lately. Also I will set my rules the same with the exception of adding more pips to the take profit as most of these trades I have setup have only captured a small gain relative to the moves that have been made.

Cool.. I trade GBPCAD much the same way.. cheers

Thanks for the comment Drgoodvibe. I try to keep things simple here as I am not to technical when it comes to trading. I form a strategy that looks simple and tweak it till it works. I change the rules as the market adapts.

Due to the volitility I like to set a limit order in the opposite way of the trend so when it comes back down it has to break a support or resistance level before my trade hits.

Any how I will be happy to check out your journals as well.

Have a good one.

Ok last nights trade hit my take profit of thirty pips this morning for
a gain of

1,458.00

I have had several good trades in a row and if I were to only of used this trade in my arsenal I would be up roughly 100 percent with my last 7 trades at 50 to 1 leverage. I would never though recklessly use margin like that due to risk to ruin.

Keep in mind I do need a few good trades in a row per bad trade (stopped out) due to the wide stoploss that i use. At the same time the wide stoploss is essential to this strategy due to the volitility this currency pair
has to offer.

1111601641November 11 06:52:39 2010 EST Take ProfitGBP/CAD1.61817700,000 1.6181 1111523252 -7.04442,111.87672,104.8323 98,078.08
+2,104.00

1112507253November 12 02:02:10 2010 EST Take ProfitGBP/CAD1.61744500,000 1.6175 1112483548 0.00331,503.14021,503.1435 99,581.62
+1,503.00

1115299218November 15 03:20:11 2010 EST Take ProfitGBP/CAD1.62716500,000 1.6272 1115252218 0.00461,220.03021,220.0348 103,452.24
+1,220.00

1116323496November 16 09:17:31 2010 EST Take ProfitGBP/CAD1.62812500,000 1.6281 1116275299 -3.34872,850.93542,847.5867 106,910.08
+2,847.00

1118191147November 18 06:53:32 2010 EST Take ProfitGBP/CAD1.62897300,000 1.62906001118125944 -2.90421,325.85621,322.9520 109,397.65
+1,322.00
1119191686November 19 10:41:49 2010 EST Take ProfitGBP/CAD1.62889500,000 1.62891,0001119152755 0.00321,458.61071,458.6139 111,079.28
+1,458.00

These are the trades from my bar covering technique. My November 17 limit order trade never hit but you will notice the dates that confirm my one trade per day with this system.

Sunday night trade. Due to sunday being a short daily bar I went for a 20 pip take profit with 300,000. I set a buy limit at 1.6260 and hit take profit at 1.6280.

121166047November 22 03:33:25 2010 EST Take ProfitGBP/CAD1.62804300,000 1.62805001121152320 -0.6039585.9259585.3220 112,270.36
Once I learn how to put up a chart I will do so. As for now I will just show proof of order.

It looks now that there could be a possibility of a down trend. If so I might incorporate my bar break strategy.

+ 585.00

Ok first loss.

1122099997November 23 03:16:21 2010 EST Trailing StopGBP/CAD1.62744500,000 4731122053337 -0.0088-2,384.4497-2,384.4585 112,375.60

I decided to set a trailing stop. Which was absolutely the worst thing i could have done with this currency pair. I would have been happier if i lost 100 pips no trailing stop instead of 60 pips with one. The reason is this currency pair bounces back and forth from support to resistance until it decides to break. My trailing stop was set above resistance and since the pair had dropped into the money (Limit Sell) the trailing stop lowered itself below resistance and i got stopped out. The pair bounced of resistance perfectly after i was stopped out and ended up surpassing my take profit on the downside. The funny thing is i was only 1 pip away from the bid that would of hit my take profit before it shot up over 80 pips.

I broke my basic rules to hedge my losses. I played defense. Defense got me killed. This is an offensive game you have to be confident in your system and your rules.

With this system the only place you set a stoploss is when it is outside the previous daily range.

No more trailing stops for me unless my trade is in the money.

- 2,384.00

Fortunately had two other trades that hit my take profit with this same system and covered most of this lost. The beauty of diversification.

The unfortunate thing was the whole previous daily bar was covered and still ended up with this loss
due to the human brain fart. I will right down my rules on my notebook and every time a make a trade I will read them first.

As of this month I finally opened my live account. I traded demo for about 9 months off and on. My bar covering method has worked the same and suspect that won't change. I also trade my bar break strategy with my oanda account.

My risk has changed and where i place my orders has changed as well.
I used to place my orders around the daily entry bar (where the price is when the new daily bar starts. Now i place my limit orders At the support and resistance of the cosolidation patch. 1 lesson I learned to not keep more then 1 limit order per currency just in case of a spike (abnormal bar)

Now with the change of my order entry I am now able to enter a much better risk reward my risk 1% my reward 2 %.

Patience has allowed the trades to come to me and has allowed this risk reward ratio.

My bar break strategy has an equal risk reward ratio as the currencies i trade this with are trending currencies.

This strategy is based on resistance and support breaks with the trend on the daily bars. Orders are place at 9:00 pm MST time 10 pips below or above the previous daily bar (limit orders).

I do not like tight stops so for instance with the eurusd trades i usually go 50 pip trailing stop 50 pip take profit. I figuere if a trade goes 50 pips against me it's probably a new short term trend.

I started my live account july -11th- 11

most trades 1% risk

So far i am up 13% as of july 28th 1 more day left in my 3rd week.

My trade ratio isn't spectaculor

6 stopped even

27 winning trades
22 losing trades

I had a much higher percentage of winning trades with a lopsided risk reward ratio but the losses were outside my comfort range.

With my risk reward ratio even if i broke even on my trades i would still be in the money.

The key is to not over trade and wait for the right moment to enter the trades( if i am not there my limit order is).

I broke my rules a few times and has cost me about 11 %

rules broken

panicked 2 times both trades would have made my take profit. 4 percent swing

Entered two many trades with the same currency. 4 percent

left limit orders open with the same currency and the currency spiked. cost me 3 percent in 5 minutes.

Rules are the most important thing. I hate to interfere with a trade unless my 24 hour time expiration comes.

It is only 1% at risk so why not let my initial thought when I opened my trade have the benefit of the doubt.

Oh yeah any high impact news report i stay away from. Trade is either closed before the report or just not entered.

I don't feel like a lucky person so i would like to take luck completely out of the equation within relativity to probability.

My goal is to have a 66.6 percent winning ratio with a mixture of 1:1 and 2:1 risk reward.

I mentioned before in a post this is an offensive game . We all want to make money so we have to shoot to be succesfull.

Now when i trade though i only think about defense. Possible drawdowns, exposure in same currencies, news reports, MY RULES. etc.

learning to defend is more important then to offend.

I will post my results monthly maybe weekly.

Excellent results.

It is good to see somebody stick at something and make it work.

90% of people seem to jump from one method to the next and so on.............

Thanks Ian!
Highly appreciated!

Just some thoughts, maybe a little bit off topic, but the thread is about trading the daily.
At least, when it comes to the "MT4 world", there could in therory 24 traders around the globe sitting at their screen and all of them are looking at a different daily candle because of their broker's different timezones.
So what's the daily candle?
Is it starting at 00:00 GMT or after NY close or when does it start?
If I trade the daily, does that mean I have to have my broker within a certain timezone to make it work?
If not, I could trade the system on H1 also
If it does matter, is there a way to find the "best time" when a daily should start to make a trading strategy most profitable?
Anyone knows of an indicator/EA that can produce synthetic daily candles with a given start time (something like offline charts/renko)?

Hi iwjw

Good question. My daily charts start 9:00 pm pacific time (which would be 12:00 pm New York time.) That is the time frame I observe and look for patterns on the daily charts.

I have observed gmt time frame and does not give me the results on my bar break strategy. Bar cover strategy works fine though on gmt time frame.

The action seems to start durring my night time. So setting up my trades at 9:00 pm works better for me.

I really try to keep things simple i start looking for setups at about 8:30
and set 6 or so trades up with limit orders. I set the limit orders with a reasonable take profit based on the pattern of the previous daily bars.

I like the fact that not everybody is looking at the same daily bars as me.
I feel it is an edge. If 90 % of retail traders lose money in this game it's because they are making the same mistakes looking at the same indicators.

I like to catch the market offgaurd. The way i trade cannot be manipulated. And if it is manipulated there will be a new pattern to adapt to.

My system to me is a nobrainer, I anticipate my trades.

One simple technique I use is green bars verse red bars. If you look at the gbpcad daily chart you will see that if you get 2 or 3 strong green bars (usually up to resistance) you set a limit sell order at the top of the range. Back test this simple visual and you will see that strong selloffs happen on the next daily bar. I try to make a reasonable 75 pips with this currency and have a very strong ratio of success. You have to anticipate (trust) that this pattern will continue until it doesn't. Then adapt to a new pattern some where else.

The beauty of this system is when you set your limit orders near resistance you can get a fantastic risk reward ratio (2:1 for me) with a high probable rate of hitting your take profit.

If my math doesn't leave me here, 12:00pm NY is about mid of asian session