Hi rtrs111 et al,
Just for interest, my take on some of this. These conclusions are based on my backtests of various variations on Tony's two methods outlined in this thread. It is not science but is my overall view of results that I have obtained from my limited tests. I do not consider a test valid unless it is over more than six years if data and preferably ten.
The London/NY open method makes use of the volatility and extreme R/R ratio. How much better is the entry than a coin toss exercised at the same time? I do not know, but I would guess very little, if at all. Increasing the stop won't do much at all for this method as it is does not rely on being "right". However this is not a negative criticism it is leveraging some powerful circumstances to good effect. The input that an experienced trader can add is difficult to quantify but let me give an example. Imagine that it is Monday the 13th Sep 2010 and you are looking at your weekly chart. As often is the case we get 3 or 4 weeks of congestion after a good sized move. The market opens almost bang on support as can seen in the attached image. That would be a good risk to take an entry on the open method, don't you think? Well of course I cherry picked that from the chart, but I did so as an example of judgement. Such examples can turn what might look like a dog on a computer backtest into a stellar trading system.
The 8ish pip extreme bar is a completely different animal. This is a pattern trade and may benefit if the stop is increased as it has a tendency to be right that is greater than random. One has to quantify precisely what "follow through" etc means. I tried a period of seconds after the 8 seconds and defined what had to occur within that
Both of these methods can and should use tight breakeven stops, and simple trading rules to improve their potential. As an example of a rule. I want to be out over the weekend, so if I get to a certain time on Friday and I do not have my target pips than I will take 40% of the target and I am done.
It is not my intention to pass judgement on Tony's work but rather to give some insight into what may happen if you start tinkering with it.
note: The chart is from ProRealTime and may not coincide with London open at 08:00 BST.
Just for interest, my take on some of this. These conclusions are based on my backtests of various variations on Tony's two methods outlined in this thread. It is not science but is my overall view of results that I have obtained from my limited tests. I do not consider a test valid unless it is over more than six years if data and preferably ten.
The London/NY open method makes use of the volatility and extreme R/R ratio. How much better is the entry than a coin toss exercised at the same time? I do not know, but I would guess very little, if at all. Increasing the stop won't do much at all for this method as it is does not rely on being "right". However this is not a negative criticism it is leveraging some powerful circumstances to good effect. The input that an experienced trader can add is difficult to quantify but let me give an example. Imagine that it is Monday the 13th Sep 2010 and you are looking at your weekly chart. As often is the case we get 3 or 4 weeks of congestion after a good sized move. The market opens almost bang on support as can seen in the attached image. That would be a good risk to take an entry on the open method, don't you think? Well of course I cherry picked that from the chart, but I did so as an example of judgement. Such examples can turn what might look like a dog on a computer backtest into a stellar trading system.
The 8ish pip extreme bar is a completely different animal. This is a pattern trade and may benefit if the stop is increased as it has a tendency to be right that is greater than random. One has to quantify precisely what "follow through" etc means. I tried a period of seconds after the 8 seconds and defined what had to occur within that
Both of these methods can and should use tight breakeven stops, and simple trading rules to improve their potential. As an example of a rule. I want to be out over the weekend, so if I get to a certain time on Friday and I do not have my target pips than I will take 40% of the target and I am done.
It is not my intention to pass judgement on Tony's work but rather to give some insight into what may happen if you start tinkering with it.
note: The chart is from ProRealTime and may not coincide with London open at 08:00 BST.
Attached Image