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GBP/USD - one trade a day

  • #641
  • Edited Apr 1, 2011 9:22am Mar 31, 2011 5:33pm | Edited Apr 1, 2011 9:22am
Quoting Rasi
Thanks cgrey and erwal. As I said before I have been trading this strategy live since late February on a manual basis. I was initially interested in this strategy due to the time of trade. I live in UK[font=Arial] and this allows me to place the trade before I go to work (regrettably I am still part of the corporate world and trading is a part time activity for additional income). Like everyone else, I was following the rules as set out by Cgrey to begin with. For trading/research/analysis I was using 1 hr,...
Thank you Joel for your suggestions and for sharing your experiences. I will give my opinion and my thoughts on your suggestions. I'm not inclined to change the risk or target, however this is a personal choice. In my opinion, if I were stopping at a target, I think 10% a month is reasonable and backtesting illustrates that it is achievable more often than not. If backtesting shows it's very possible then why stop short? Now that is my opinion if I were to stop at target. However, as I've stated before, I would not stop trading for the month at target. My target would simply be my recalculation point. I would not wait until start of month to recalculate and resume trading. This is also a personal preference. As for what target is best to recalculate? Who knows? I would probably stick with 10% again because it's a nice round number.

As for the 7 pip rule as opposed to 9 pip rule. I think this is splitting hairs. I'm starting to believe that this filter is negligible and everchanging. Therefore unreliable. Personally, I wouldn't use it. I do think the 30 pip max difference rule may have some merit (to not trade instead of in choosing direction). This is something that should be investigated on through backtest to see if it is a worthy filter. Markets do go through cycles of building 'energy', breaking out and then settling back into a 'flat' stage of building momentum again. So again, it could have merit based on this market tendency.

Lastly, if the start time of 8 tends to have wild swings in both directions then maybe it's best to delay entry a few minutes. However, I'm not convinced this is better. I would hate to enter at 8:05 and lose out on 'X' pips because it went in my favor right from the 8 start. I suppose this is also a prefernce though; although it could have merit too if there is whipsawing at 8 which could take your stop out often. I suppose we can study this going forward.

Good luck in April all!
  • #642
  • Edited 2:06am Apr 1, 2011 1:26am | Edited 2:06am
Looking at post 1 March was a nearly a 20% loser - so stopping at -12% for me was a good idea.

Basically what i do is have a stop limit of 12% max. But keep trading for the whole month until I either hit -12% or come to the end of the month - then I reset and start again.

Time will tell I am sure.

This is just a coin tossing method mind you - its the MM thats the important bit

GL
  • #643
  • Apr 1, 2011 2:06am Apr 1, 2011 2:06am
That was a quick 20 pip loss

Great start.
  • #644
  • Apr 1, 2011 2:49am Apr 1, 2011 2:49am
Morning Puntalara
Not too sure how you get loss already as its not 8am gmt yet.
Geoff
  • #645
  • Apr 1, 2011 3:34am Apr 1, 2011 3:34am
short triggered and in 33 pips profit now
  • #646
  • Apr 1, 2011 3:36am Apr 1, 2011 3:36am
Quoting GEOFFREY62
Morning Puntalara
Not too sure how you get loss already as its not 8am gmt yet.
Geoff

Hang on - London opens at 8.00am in the UK we are now in BST so you guys are trading a hour after London opens then. Now that makes no sense, as before you were trading ON London opening
  • #647
  • Apr 1, 2011 3:39am Apr 1, 2011 3:39am
Quoting puntalara
Yes it is I am in the UK
doesnt matter where you are, GMT is GMT through out the world.

pl read the original post again, we dont apply any day light savings to the system. its always 0GMT, 8GMT
  • #648
  • Apr 1, 2011 4:08am Apr 1, 2011 4:08am
I thought this method was on London opening. So it is not then. Also we have UK news at 9.30am on a lot of days. So in the UK winter you miss all this news BUT in the summer you hit it.

I must of totally misread the first post then - sorry.
  • #649
  • Apr 1, 2011 4:33am Apr 1, 2011 4:33am
Quoting 2+2=4ex
Thank you Joel for your suggestions and for sharing your experiences. I will give my opinion
Good luck in April all!

Hi 2+2=4ex, thank you for your comments. As I said from the outset, I changed the rules and added some to suit my own requirements. Capital preservation is paramount to me and hence my reasons for looking for ways to reduce the risks which also meant lowering my returns. My preference is to make +5% and +5% in two months than to make -20% and +30%. The capital employed by me in this system was earning 2% per annum in the bank so my monthly target is more than adequate for me.

As for the minimum pip rule, I know there are arguments for both options. The extensive back testing revealed that it is worth having but the recent history suggests otherwise. Instead of losing it altogether, I have decided to lower it which again reflects my cautious nature. The worst thing that can happen to me is that I will prevent myself from taking a profitable trade by having this rule, which is fine with me. However, I will continue to monitor the market and amend the rule accordingly if I see the evidence to change it.

As for the start time, my changed entry time has produced better results in March. I am not sure whether it will continue. Your comments reflect your gut feel but my training is analytical and so I tend to take decisions based on empirical evidence.

I really want to stress to everyone that what I did with the rules are to suit my own needs. It produced better results than the standard rules (+8% v – 19%) last month but please do not take this as better going forward. What happened in March was history and there is no guarantee that it will happen again (one cannot drive a car looking at the rear view mirror alone!). I only wanted to share my thoughts because there was much despondency in this thread after a string of losses. I simply wanted to bring some optimism and give us a chance to learn together.
  • #650
  • Apr 1, 2011 9:03am Apr 1, 2011 9:03am
Thanks for taking the time to explain your modifications to this method, Joel. I will take some time to study them over the weekend and do a little visual backtesting of my own.

Just to clarify, though - I gather you DO change your trading candle to accommodate British Summer Time (although keep the indicator candles at GMT)? There seems to be some confusion emerging now as to whether we should be trading 8am GMT or 8am GMT+1.

I am one of those who traded at GMT+1, and lost 2.5% this morning. Those who stuck to GMT had a win.

I can see the advantage of hitting the UK 'news' candle; it is generally large, but it's a complete lottery as to which way it will take off.

  • #651
  • Apr 1, 2011 9:27am Apr 1, 2011 9:27am
To clarify, as the first post says - GMT.

All of the backtesting I've done has always used GMT, never changed for daylight time anywhere.

Again, feel free to experiment, but I've been clear (or so I thought) that I've always compared 08:00 to 00:00 GMT.
  • #652
  • Apr 1, 2011 10:18am Apr 1, 2011 10:18am
Quoting cgrey
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...
Cgrey, I think some of the confusion regarding the time is created by your post #134 above. If you now say that the trade should open 1 hr after the London open during daylight saving times, it calls into question your back testing. The same goes for others who have done the back testing. I understand GMT is the same but London market does not change its opening times and operates according to local time.

Both time frames are very important to the London market. 8:00 a.m. is the London open and 9.:30 a.m. is the important news release time. All through winter, we have been looking at the London open times and now we are looking at the second 1 hr candle after the market open (local times). The reversals you observed happen around the London open.

I would appreciate if you could look into your back testing data and confirm what you did please. I hope you have not been comparing apples and oranges.

Have a good week end.
  • #653
  • Edited 10:42am Apr 1, 2011 10:32am | Edited 10:42am
Quoting Rasi
Cgrey, I think some of the confusion regarding the time is created by your...
I will repeat this for the last time here. EVERY trade I opened in every back test (4 years worth) was opened at 08:00GMT, and compared against 00:00GMT. I have never said otherwise. In fact, I've said, in several different posts, that I do not adjust for daylight savings time, and always use(d) GMT.
  • #654
  • Apr 1, 2011 1:30pm Apr 1, 2011 1:30pm
Quoting cgrey
I will repeat this for the last time here. EVERY trade I opened in every back test (4 years worth) was opened at 08:00GMT, and compared against 00:00GMT. I have never said otherwise. In fact, I've said, in several different posts, that I do not adjust for daylight savings time, and always use(d) GMT.
Okay now that that's been settled... let's make a million dollars!

haha

Have a great weekend everyone.
  • #655
  • Apr 1, 2011 2:22pm Apr 1, 2011 2:22pm
So Cgrey
Are you sure its 8am gmt?

Sorry, couldnt resist.
Have a good weekend, month got off to a flying start today.
Geoff
  • #656
  • Apr 1, 2011 7:15pm Apr 1, 2011 7:15pm
Quoting cgrey
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.
Geoff, the above was part of a reply by cgrey in post #134 in this thread. Please go and take a look at it. He clearly mentioned London open and reversal patterns (which is known for some considerable time by the market participants).

Personally there is no harm done (lost 4.2 pips today) but I need to halt trading until I do the backtesting myself to verify. In the meantime, I'll stay on the sidelines and see how this works out for others. Also, the new times (9 - 10 a.m. local time) are not suitable for me due to my work. Ho.. hum..

Kind regards.
  • #657
  • Apr 1, 2011 9:15pm Apr 1, 2011 9:15pm
Quoting Rasi
Geoff, the above was part of a reply by cgrey in post #134 in this thread. Please go and take a look at it. He clearly mentioned London open and reversal patterns (which is known for some considerable time by the market participants).

Personally there is no harm done (lost 4.2 pips today) but I need to halt trading until I do the backtesting myself to verify. In the meantime, I'll stay on the sidelines and see how this works out for others. Also, the new times (9 - 10 a.m. local time) are not suitable for me due to my work. Ho.. hum..

Kind...
Joel -

One thing I've been saying all along, is that this concept is something people should take and work with to make something that works for them. There was a discussion very early on in this thread about adjusting for DST. Some folks said they thought it would make sense to try it. Maybe it will work out better that way.

All I've said, is that I didn't test it like that. When I stumbled upon this, I wasn't looking at what happens around "London open" and how we can exploit it. I was looking at a pattern I found on my charts, which happened to very often occur at 08:00GMT, regardless of whether it was standard or daylight time. So, that was how I presented it. When the discussion first started, London open did occur at 08:00GMT - hence the comment at that time that it made sense we were seeing this, because it was around the London open.

In the end, I believe more than anything else, it is the money management approach that makes this work. Someone mentioned earlier this is a "coin flip" strategy... It's a little less random than that because we are picking a time that a move tends to come, and trying to capitalize on it, but the "when" in this case is much less important than the "how" when it comes to making this successful.

Either way - sorry if it wasn't clear enough, and yes, I think you should certainly explore the possibility of adjusting by an hour now that the time has changed if you believe it will be more profitable for you in the end.
  • #658
  • Apr 4, 2011 5:21am Apr 4, 2011 5:21am
Traded GMT today, and hit SL

-5% for April (one loss due to trading GMT+1).
  • #659
  • Apr 4, 2011 7:38am Apr 4, 2011 7:38am
Quoting erwal
Traded GMT today, and hit SL

-5% for April (one loss due to trading GMT+1).
Which broker? Both of my demos (IBFX and MB Trading) and my live account all had small wins today.
  • #660
  • Apr 4, 2011 7:52am Apr 4, 2011 7:52am
Quoting cgrey
Which broker? Both of my demos (IBFX and MB Trading) and my live account all had small wins today.
same here. 1 pip gain. never in big dd today
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