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GBPJPY Daily Trend Method

  • #801
  • Jan 12, 2011 9:08am Jan 12, 2011 9:08am
GBPJPY DAILY TREND METHOD: BUY

I'm long from 130.654
  • #802
  • Jan 13, 2011 9:01am Jan 13, 2011 9:01am
GBPJPY DAILY TREND METHOD: BUY

This is an add-on trade. I'm now long from 130.654 and 131.394
  • #803
  • Jan 13, 2011 10:32am Jan 13, 2011 10:32am
Hi Michael,

I understand the rule about the time at which ADX is above 25. Is this condition critical for the overall profitability of the strategy, or is it an enhancement? Would it be totally wrong to simply use the ADX value at the time all other parameters are satisfied?
  • #804
  • Jan 13, 2011 12:15pm Jan 13, 2011 12:15pm
Quoting SandyW
Hi Michael,

I understand the rule about the time at which ADX is above 25. Is this condition critical for the overall profitability of the strategy, or is it an enhancement? Would it be totally wrong to simply use the ADX value at the time all other parameters are satisfied?
Good question
  • #805
  • Jan 13, 2011 12:31pm Jan 13, 2011 12:31pm
Quoting SandyW
Hi Michael,

I understand the rule about the time at which ADX is above 25. Is this condition critical for the overall profitability of the strategy, or is it an enhancement? Would it be totally wrong to simply use the ADX value at the time all other parameters are satisfied?
Sandy,

Sorry about the delayed response. I just got the email notification of a new post. The ADX is used to keep us out of range bound markets. When GBPJPY is consolidating the ADX tends to be below the 25 level. Of course with any system, there will be times of chop that are unavoidable. So it's not perfect.

I am not in any way opposed to using the ADX as you suggested previously. In fact, Bob and I had a lengthy conversation this morning about how to improve the method. He had an idea regarding the London Gold Fix and I am looking into the higher time frames for trading possibilities there. So, in short, feel free to tweek the method or change parts of it outright. The only thing I ask is that you report back here if you have any positive developments so all of the members can see the progress.

Thanks,
Michael
  • #806
  • Jan 13, 2011 12:54pm Jan 13, 2011 12:54pm
Thanks Michael, it's good to have your thoughts.
  • #807
  • Jan 13, 2011 2:11pm Jan 13, 2011 2:11pm
Quoting SandyW
Thanks Michael, it's good to have your thoughts.
  • #808
  • Jan 14, 2011 9:06am Jan 14, 2011 9:06am
Hey everyone,

We are waiting until 10:30 EST here..... The 5 ema was below the red forex offtrend line......
  • #809
  • Jan 14, 2011 10:12am Jan 14, 2011 10:12am
Sorry for the delay everyone.....No GBPJPY DAILY TREND METHOD TRADE TODAY.....
  • #810
  • Jan 16, 2011 10:29am Jan 16, 2011 10:29am
Michael thanks for this interesting system will study it and see if a mechanical backtest will give good results.

Do you think this system would have worked two years ago or is it an adaption for the current market?
  • #811
  • Jan 16, 2011 12:11pm Jan 16, 2011 12:11pm
Quoting Saidar
Michael thanks for this interesting system will study it and see if a mechanical backtest will give good results.

Do you think this system would have worked two years ago or is it an adaption for the current market?
Hey Saidar,

Thanks for joining up with us and your interest in the method here. I'm sure that the approach had different results two years ago when compared to 2010. The later half of 2010 was fairly rough for gbpjpy as a currency pair. Volatility decreased significantly and it was caught in a small range for weeks, if not months. I'm currently researching a few different things including higher time frames and the implementation of a more dynamic target (take profit). Any ideas or testing that you can bring to the table would be much appreciated!

Michael
  • #812
  • Jan 17, 2011 12:53am Jan 17, 2011 12:53am
Quoting MichaelLee_8
Hey Saidar,

Thanks for joining up with us and your interest in the method here. I'm sure that the approach had different results two years ago when compared to 2010. The later half of 2010 was fairly rough for gbpjpy as a currency pair. Volatility decreased significantly and it was caught in a small range for weeks, if not months. I'm currently researching a few different things including higher time frames and the implementation of a more dynamic target (take profit). Any ideas or testing that you can bring to the table would be much appreciated!

Michael...
Yes that is usually the problem with any mechanical system, once the market changes the rules change.

Your idea to only trade 3 30min bars a day is excellent, backtests over 10 years always prefers one hour a day where propabilities are very high compared to the rest of the day.

For a more dynamic take profit I would suggest you look into donchian channels.

What you can do is use the top or bottom area of the channel, or use the channel for a fibo retracement and use one of the levels for a TP, or all of the levels to close a part of the order.

Bollinger bands may also work but I prefer donchian channels as they are real SR areas
  • #813
  • Jan 17, 2011 8:56am Jan 17, 2011 8:56am
GBPJPY DAILY TREND METHOD: NO TRADE TODAY.....ADX is below 25
  • #814
  • Edited 11:31am Jan 17, 2011 9:29am | Edited 11:31am
Hey guys, I've just found this system and I consider it a great idea (the time really fits me). Ok, now questions xD
First question for Michael - in third post you wrote 9.30, 10, 10.30 EST. If i recall correctly EST is GMT -5, so 9.30 EST is 14.30 GMT, right? You use forex.com broker, I thought it uses GMT time, but your first bar stars at 13.30...I believe you get, what I mean
And second question - In winter New York open hour is 8:00 EST, but in summer (daylight saving) it is 8:00 EDT (EST +1 I believe). This system is basing on New York opening hours (if I've got it right) so times of our 3 bars should change... Well, maybe I misunderstood everything, but better to ask the way than go astray ;D
So keep on, guys!!! You do great job and you can count on me...
  • #815
  • Jan 17, 2011 7:55pm Jan 17, 2011 7:55pm
Quoting rafstraszek
Hey guys, I've just found this system and I consider it a great idea (the time really fits me). Ok, now questions xD
Thanks for taking the time to look into the method. The time has always been an issue so don't feel bad for asking. It's tough to figure out at first. The three bars that we are concerned with are:

The bar that opens at 9:30am and closes at 10:00am
The bar that opens at 10:00am and closes at 10:30am
The bar that opens at 10:30am and closes at 11:00am

The times that are listed are according to the time in New York City. Daylight savings time only affects things in terms of GMT because, to my knowledge, GMT never changes.

Let me know if you have any other questions.
Michael

P.S. I used to be with forex.com but I moved over to FXCM.
  • #816
  • Jan 18, 2011 8:50am Jan 18, 2011 8:50am
GBPJPY DAILY TREND METHOD: NO TRADE TODAY... ADX is below 25
  • #817
  • Jan 19, 2011 9:43am Jan 19, 2011 9:43am
GBPJPY DAILY TREND METHOD: Sell

Here's the link to a video on the newer dynamic take profit settings that I'm working with..... http://www.screencast.com/t/GJ7CC3D0yuVg
  • #818
  • Jan 19, 2011 11:35am Jan 19, 2011 11:35am
Quoting MichaelLee_8
GBPJPY DAILY TREND METHOD: Sell

Here's the link to a video on the newer dynamic take profit settings that I'm working with..... http://www.screencast.com/t/GJ7CC3D0yuVg
Hey Michael, the ATR is good, but try to use support/resistance areas for a stop loss (few pips above), and modify the take profit so that the risk to reward ratio stays the same.

I've been very busy this week, will develop an EA for this system soon so that we can do some mechanical backtesting.
  • #819
  • Jan 19, 2011 12:27pm Jan 19, 2011 12:27pm
Quoting Saidar
Hey Michael, the ATR is good, but try to use support/resistance areas for a stop loss (few pips above), and modify the take profit so that the risk to reward ratio stays the same.

I've been very busy this week, will develop an EA for this system soon so that we can do some mechanical backtesting.
Using s/r for stop loss levels turns it into a discretionary system.........unless there is an automatic way to define s/r......
  • #820
  • Jan 19, 2011 12:38pm Jan 19, 2011 12:38pm
yes you are completely right and we do not want it to be a discretionary system.
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