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Strength for one week, No Charts Attached ;)

  • #1
  • First Post: Edited Aug 9, 2011 8:16am Aug 8, 2011 1:44pm | Edited Aug 9, 2011 8:16am
Hi Guys,

I had a very simple idea two weeks ago.

What would happen if I just follow strength of the 8 majors for one week?

Let me explain the idea a bit further:

Monday morning 8.00 am (Central European Time)
I look at the currency strength calculator on this site: Currency strength calculator
I don't exactly know how they calculate the relative strength of each currency but at the moment I don't care.

For the time period used to calculate strength I choose a period of the last 10 weeks.

Then I open trades for every possible combination of the 8 currencies in the direction of strength, i.e. If CHF is rated stronger then GBP I open a Sell GBP/CHF trade.

During the London and US session the open trades will develop into losers and (hopefully) winners.

At 20.00 pm (Central European Time) when the markets have settled a bit I look at my list of trades and close half the size of the losers. (If total amount on the negative side is € 800,- I close the largest trades until the negative side is lower then € 400,-).

I repeat the last procedure at 20.00 pm of every following day until friday when I will close all open positions.

Last week went very well and ended with a nice profit (Demo offcourse).

I thought I would share this idea with you to see what you think of this simple approach.

Best Wishes and Happy Trading,

FBForex
  • #2
  • Aug 8, 2011 2:16pm Aug 8, 2011 2:16pm
Attached is a screenshot of the current positions that I opened at London open.

Beauty is, no charts are needed to trade .

Will see how things develop during the week!
Attached Image (click to enlarge)
Click to Enlarge Name: Mt4.jpg Size: 220 KB
  • #3
  • Aug 8, 2011 2:37pm Aug 8, 2011 2:37pm
This looks very interesting, thank you for sharing!
  • #4
  • Aug 8, 2011 3:10pm Aug 8, 2011 3:10pm
Now that is i call some great idea.
May be big boys trading like this ? and keeping it a secret.
Thank you for sharing such a nice thought.
  • #5
  • Aug 8, 2011 6:30pm Aug 8, 2011 6:30pm
Sounds like you may have a good start to something however the key to any good strategy is money management. You explained how you would weed out your negative trades. Now, how do you plan on managing your positive trades?
  • #6
  • Aug 9, 2011 12:44am Aug 9, 2011 12:44am
Quote
Sounds like you may have a good start to something however the key to any good strategy is money management. You explained how you would weed out your negative trades. Now, how do you plan on managing your positive trades?

Managing profits is quite simple, you just keep them open till the end of the week. On Friday before the markets close you close all open positions.

The next monday repeat the proces.

I'm currently demo testing this idea with 0.1 lotsize but I sugest to keep lotsizes small (0.01 lots per 10.000) to avoid account wipe out when the market is moving against you.

Because this is a multi currencie strategy It's virtually impossible to backtest over a long period. So no idea how it will turn out.
  • #7
  • Aug 9, 2011 12:51am Aug 9, 2011 12:51am
you could also close all trades more than a set number pips in negative, for example close all 100 pips i negative, and take profit on all 200 pips in plus.

the simplest money managment on this strategy, lock in som profit and avoid big losses.
  • #8
  • Aug 9, 2011 2:08am Aug 9, 2011 2:08am
Quoting tutsola
you could also close all trades more than a set number pips in negative, for example close all 100 pips i negative, and take profit on all 200 pips in plus.

the simplest money managment on this strategy, lock in som profit and avoid big losses.
Hi Tutsola, thank you for your input.

You could use a fixed stop loss and take profit but I think this will limit the profitability of the system.

If you look at the weekly candles on a chart you will notice that the bodies of the candle are quit large in comparrison tot the wigs. This means that during the week price is likely to follow the same general direction.

In fact, profits are likely to come from a few open positions with ongoing trend while the other positions are going to be losses or turn out to go nowhere.

A fixed stop could mean that during a volatile week (with huge trending opportunities) your positions could be stopped out before they start to follow their initial trend direction again.

I try to follow the old wisdom: "Cut your losses and let your profits run"
  • #9
  • Aug 9, 2011 2:09am Aug 9, 2011 2:09am
I like this idea... no charts = less stress, especially on the eyes!

Thanks for sharing
  • #10
  • Aug 9, 2011 2:26am Aug 9, 2011 2:26am
Attached an overview of the trades from last week.

As you can see each day I closed around 2-3 trades to reduce the open negative trades for at least half the negative position.

The last day 5-8-11 I closed all remaining positions at around 16:45 (Central European time) because I had an appointment later that evening.

Last week was tricky because of the Swiss bank intervention and Japanese bank intervention.

Total profit was still quite good and as you can see the profit came from just a few pairs that had trended very well (esspecially AUD/CHF).
Attached Image (click to enlarge)
Click to Enlarge Name: Results last week.jpg Size: 296 KB
  • #11
  • Aug 9, 2011 2:52am Aug 9, 2011 2:52am
Hello,

Interesting idea. A little be scared of opening so many orders at one time
Subscribing and looking forward for results.

edit: Why did you choose 10 weeks period? So for this week the period had to be [May 30 - August 8]?

Donatas
  • #12
  • Aug 9, 2011 3:07am Aug 9, 2011 3:07am
Attached the current status of the open trades of this week.

Look at the current open profit! Would you be able to resist closing this much profit? Currently the open profit is more then the profit of last week.

I think the hardest part of this system to follow is being able to leave those positions open till the end of the week and risk all your profits to evaporate .

But you have to keep in mind that a huge gain can make up for lots of losses!

So my advice: At the end of the day, only look at your losing positions and close the negatives up to half of the negative amount. Let the winners run!

Edit: Forgot attachement
Attached Image (click to enlarge)
Click to Enlarge Name: Mt4.jpg Size: 287 KB
  • #13
  • Aug 9, 2011 3:12am Aug 9, 2011 3:12am
Quoting FBForex
Attached the current status of the open trades of this week.

Look at the current open profit! Would you be able to resist closing this much profit? Currently the open profit is more then the profit of last week.

I think the hardest part of this system to follow is being able to leave those positions open till the end of the week and risk all your profits to evaporate .

But you have to keep in mind that a huge gain can make up for lots of losses!

So my advice: At the end of the day, only look at your losing positions and close the negatives...

Closing negative positions, (i.e. on monday, it's the beginning of the week) they could be turning into profitable positions in the middle or end of the week, and versus with the winning positions at the start of the week.
So, theorically it's possible to close all possitions in negative.

Donatas
  • #14
  • Aug 9, 2011 3:24am Aug 9, 2011 3:24am
Quoting BaliuxXx

edit: Why did you choose 10 weeks period? So for this week the period had to be [May 30 - August 8]?

Donatas
Hi BaliuxXx,

I chose 10 weeks because I wanted the trades to be in line with the main strength of a period of at least 10 times the period the trades would be open.

In my opinion 10 weeks is long enough to determine long term strength but still short enough to be responsive to overall market changes.

Quote
Closing negative positions, (i.e. on monday, it's the beginning of the week) they could be turning into profitable positions in the middle or end of the week, and versus with the winning positions at the start of the week.
So, theorically it's possible to close all possitions in negative.

Yes you're absolutely right! That's why it's so important to be able to let winners ride the trend when they do. A large gain one week might compensate for a loss another week. The idea is that because we're trading in strength, the gains made by following trend will be enough to compensate losing positions (or losing weeks) and give a nice profit.
  • #15
  • Aug 9, 2011 3:55am Aug 9, 2011 3:55am
Quoting FBForex
Hi BaliuxXx,

I chose 10 weeks because I wanted the trades to be in line with the main strength of a period of at least 10 times the period the trades would be open.

In my opinion 10 weeks is long enough to determine long term strength but still short enough to be responsive to overall market changes.



Yes you're absolutely right! That's why it's so important to be able to let winners ride the trend when they do. A large gain one week might compensate for a loss another week. The idea is that because we're trading in strength, the gains made...
Hi FBForex,

I like your idea. I love Forex but I hate charts.......so thanks for sharing. I have just opened a new demo account for forwardtesting your system.

Thank you

EDIT: wow, +1.050.-$ in 10 minutes, letīs see the DD........
  • #16
  • Aug 9, 2011 4:14am Aug 9, 2011 4:14am
Quoting Caillou
Hi FBForex,

I like your idea. I love Forex but I hate charts.......so thanks for sharing. I have just opened a new demo account for forwardtesting your system.

Thank you

EDIT: wow, +1.050.-$ in 10 minutes, letīs see the DD........
Yes current market is amazing! But these aren't normal times! If you look at the charts for a moment (yes I know, who needs charts ) you'll see that current conditions are going to look like 2008 all over again...

But this system trades with the trend so should excell during this type of market...

Will be interesting to see how it holds up during less volatile times.
  • #17
  • Aug 9, 2011 4:21am Aug 9, 2011 4:21am
thank you for sharing

really intrested
and forward on demo
  • #18
  • Aug 9, 2011 5:30am Aug 9, 2011 5:30am
It may pay off to find out what is being measured with this calculator and how it treats abrupt market changes in it's final calculations.
  • #19
  • Aug 9, 2011 5:51am Aug 9, 2011 5:51am
knowing what and how this calculator calculates, it could be easy to develop a software to backtest this.

It's possible to parse numbers from html, but you cannot automatically send start and end dates to calculator here. The only one opportunity is to create a robot, which enters dates itself and gets the % numbers.

Don't have much free time for this Maybe later

Donatas
  • #20
  • Aug 9, 2011 5:54am Aug 9, 2011 5:54am
When you say close half of your loosing positions do you mean -say you have 20 open postions and say at the end of the day you have 10 winners and 10 losers, you close 5 of the losers? and how do you chose the loseres, the biggest 5 of those?
thanks
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