GBP/USD - one trade a day

Not that would be of help to anyone but me. I can't possibly tell what your spread would be at the time of trades, nor would I know your account balance or other parameters specific to your situation.

I'd suggest going through the thread again. There are several posts that fully explain the money management aspects. I can't make it any more clear/easier than the first post spells it out.

ronnie - read the last two paragraphs of this post: http://www.forexfactory.com/showpost...0&postcount=80

It breaks the MM down to the simplest possible terms.

Start of the week in long at 1.59564, lets see what happens, going back to bed.
Geoff

Dear cgrey
I appreciate you for starting this thread. I joined you today. I put the order at:
Entry: 1.5957 (Buy)
SL: 1.5935 (20+2 spread)
TP: 1.6039
All the best.

And closed with 15 pip win, as the system wants.

Open was 1.5957 at my demo account.

Dear cgrey
Here is my today’s trade:
Entry: 1.5957 (Buy)
SL: 1.5935 (20+2 spread)
TP: 1.6039
Close @ 09:00 GMT: 1.5972
Profit: 15 pips
All the best.

If Cgrey gives me the authorization, i would answer you about the gambling matter.
Someone said this system could work now but not next year, because market conditions could change, well here is the fundamental error, when someone says because, he thinks he knows something. The fact is: this system will work no matter what, since he is placing a stop to his loss and lettin go his profit to run, he will make money!. The problem is that people thinks about trading in a short time frames, people thinks about a system on a yearly basis, it doesn't work like that, let's think that we could trade this system for 1000 years it would make a profit 990 years, but 10 years (from 2000 to 2010) it would show a loss, well we would say this system doesn't work right? while the system would show a 99% possibility to show profits in a year!!
To make an example in the real world:
Let's say we are professional poTKer player, (poTKer card game is a poker game that i just invented, lol) PoTKer is very similar to hold em poker the only differences are: we don't have big blind so we can pass all the hands that we want without losing money, and people can't raise, so we can place our bet (our 2.5%) and we can wait until the last deck card is showed. Well we will play just when the cards shows us a ace's pair, so we could often have a ace's three of a kind. We are pretty sure we would make money in the long run, but think to play for a 1000 year how many times would you lose? and what would you do if you start playing during a losing period? if you follow me i would go further: other players doesn't always wait for a ace's pair, someone waits for ace and two, to have straight, someone for spades couple to have color and so on... all this people are BETTING they have no power on the cards, some trader prefers day trading, someone trend following...


When you compare trading to other business you are making another mistake.
Because: you can make a statistical research, if you open your shop in the north pole or in NY city it makes a lot of difference. You can merchandise on tv or newspaper your activity; and so on... there are thousand examples i can make. In the "real" world you have some power to change things, in poKTer you have no control over cards, in trading you have no power on the prices...

Those are my thought and could be absolutely wrong, so feel free to criticize!!

:-)

Took 13 pips today (+1.40%)

For tomorrow's trade:

% Target: 7.54%
r:r = 1:3
TP Target: 60 pips

Nobody needs "authorization" to post here - feel free to share your thoughts.

I don't necessarily agree, but you're certainly welcome to post your opinion.

I think the general CONCEPT of this strategy - low risk, high reward - will always work, in terms of money management. Many succesful traders operate on this principle. However, blindly trading this specific system, exactly this way (at exactly 08:00GMT, entering based on the price in relation to 00:00GMT) will almost certainly change at some point. It remains to be seen. I stopped looking backwards beyond 2007, since I was comfortable enough with 4 profitable years. That was when I made the switch to forward testing as we're doing here. It's easy to look back and see how something WOULD HAVE worked after the fact. Now we need to see if it really WILL work in the present.

I really enjoy learning from a professional trader, thank you cgrey for your ongoing comments.

I have a question about how the entry was developed. It seems that so far your comments, and other people's comments have centered around the risk reward and that "you will always make money" because you are cutting losers short and letting winners run.

Then why don't we pick 0500GMT to 1300GMT with the same scenario (that way I could trade it when I'm awake instead of this system that I have to trade in my sleep ). Keep the same risk/reward and go!

In other words, I'm thinking your timeframe has been tested for 3 years and that's why you feel a certain level of comfort trading it. But we could no doubt do the same thing for other timeframes too, right?

It is all a matter of perspective, after all. I definitely understand your view on this.

Yes, and not to belabor the point, but if we take your example as "gambling" then all of life is a "gamble." I "gambled" that if I learned to fly there would be a job for me after all the money spent. Doctors gamble that after 16 years of medical school expenses a hospital will hire them. Truck drivers gamble that after going to truck driving school and purchasing the big rig there will be driving jobs available. Just thinking out loud.

Again, not wanting to beat a dead horse nor take up your time, I just have an aversion to gambling and would rather call your system trading .

Not that it is an original but the description I like is Risk Management

cheers

This will probably key you in to how immersed I am in my business (if you haven't thought about it already).

I spend a lot of time looking at past charts. A LOT of time. I do this as part of what I call my "real" trading... A few weeks ago, I was looking through hourly G/U charts - I generally don't trade G/U, so this was sort of studying for me... And I just sort of noticed that it always seems like there's a pretty big candle each day at around the same time (I have period separators on, to help break up the days for me). So I started looking at that candle, and lo and behold, most days, that big candle was 08:00GMT. I also noticed that G/U seems to have a fairly common pattern of reversing itself (sometimes even more than once a day). And, guess what - this 08:00 candle is usually somewhere around that point, too.

Now, of course, all of this makes perfect sense since 08:00GMT is London open and the GBP is half of this pair, so we could expect some sort of movement.

So, I now know I get a pretty big candle here fairly often, and there is also a movement "the other way" somewhere around this candle fairly often. Hmm... I wonder what would happen if I "bet" on this candle (sorry, couldn't resist ) to move back toward the open of the current D1 candle (which is the same as the open of the 00:00GMT). And so on, and so on.... After a few hours, I came up with the money management, because playing this straight just wasn't working out, but I was still convinced there was a way to exploit it. I started trying to work 1:4 in to it, since that is always a target for me in manual trading. After some more time, running through this candle by candle, I found the point that I could say, if I apply another principle of money management (capital preservation) to this, and quit after a certain weekly (eventually settled on monthly) target was hit, I may be on to something. About 5-6 hours in total after seeing those big candles looking through charts, I was manually back testing what ended up in the first post, and found it profitable back to 2007. The kicker was when I started going fowrard from January 2011, and found that I was out with my +10% within 3-days.

I don't think it would work at other times, because of those two specific factors. But I haven't tried it. I did wonder if other pairs, possibly even around the opening times of other markets, might work out. I still wonder that - but none of them jumped out at me just by looking at charts the way this did.

I really appreciate how you approach your trading truly as business, do your research, see if there are probabilities, develop appropriate risk/reward and good money-management techniques. You're thorough and professional. Nice job!

(Better than rolling the dice, huh? Couldn't resist....)

Someone before said risk management. That's a good way to put it. Risk management is pretty much money management since it's our money we are risking. Since there is some debate about the definition of gambling, notice how the word risk and gamble are intertwined [BTW, I like the analogy of risk and life Dreamliner].

Anyway, I think the one thing we've all realized in our time trading is that the balance of risk/money management and seeking favorable probabilities is the key to succeeding. It's simple yet not so simple. I think where beginners begin to become better traders is when they learn to not only balance these two but also spot opportunites at the same time (and learn to have patience). Patience comes from accepting losses and understanding that you will very likely get margin called if you have too high of a return expectation. I'd like to associate forex trading like balancing a basket of eggs on your head. Move too fast and eratically (inconsistent) and you will get egg on your face. Move steady and consistently and you will do okay.

A little late, but long for today:
from 1.5962

and hit my SL...

Unfortunately, as it was expected from the short time trend, it was hit the SL.
Open @ 00:00 GMT: 1.5980
Long @ 08:00 GMT: 1.5957
SL (20 +2): 1.5935
TP: 1.6022
Close: 1.5935 (22 pips loss)

Loss of 20 today (-2.1%)

For tomorrow:

Target: 9.69%
r:r - 1:3.876
TP target: 78 pips