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  • #5,561
  • Dec 1, 2011 5:27pm Dec 1, 2011 5:27pm
Quoting SmartGXL
I agree, this system is primarily a test of psychological discipline. One must have that in order for this to work.

That is why, it might be good to develop a second, side system, that works on the same principal, with a SL of no more than 2, but with a TP of something like 20 pips...it might not make as much money as this version, but the fact that you get more consistent wins, helps the trader stay in the game and not lose hope and confidence in the strategy. I mean, I am going to trade the original version (0SL Classic), and I started this...
SmartGXL, that's a good idea. How about this: Enter with 2 or 3 positions. At 20 pips close 1st trade and trail other 2 at 10 pips. At +50 close second trade and move 3rd trade to trail SL at 10-20 pips. Close third trade at 75 pips or let it ride to 140 or SL. Use whatever levels you think best. I think you'll get more pips total like this than +140 or bust.

I don't agree that Tony's method is psychologically any harder than any other forex method. Sure, you have a string of losers between wins, but you don't spend much time on trading altogether. You take 5-10 minutes to set up the trade and be ready at the open, and if it's a loser you usually know within 5-10 minutes. Total time spent is under a half hour. (Ok, you have to get up in the middle of the night to watch it fail over and over, that part is a drag, I must agree!) But I stare at my screen every day for several hours waiting for setups, and this would actually be less total screen time.

This method is actually very mechanical, and it also gives me some confidence in statistical numbers rather than my own extremely fallible discretion. I think that would reduce the psychological pressure inherent in all forex trading.
Luck occurs when preparation meets with opportunity.
  • #5,562
  • Dec 1, 2011 5:27pm Dec 1, 2011 5:27pm
Just want to share a few more thoughts after a lot of good comments in recent posts.

I don't think Tony's method of replacing pips from other sources is bad, either. Cash is cash, wherever you get it (or spend it!). He is investing a little at a time which now and then pays a big return. If he let his account draw down he would not have as much leverage, and his $$ profit would be smaller. He also said he takes out profits and lives on that money. And still, in the end, he wins more pips than he loses. It sure beats a bank savings account!

I also don't see why the fuss over drawdowns with this strat. If you look at the stats I posted a few weeks ago you will see that over the last year the SL of 2 pips got hit 66 times, for -132 pips total. That's 27% of total + pips for TP target of 125 or bust, or RR of 4:1. It's 7% of total +pips for TP target of 20 pips, or RR of 15:1! I don't see a problem here guys!

FYI, I decided to record a failed trade like this: if price went at least 2 pips favorable before reversing, I recorded 0SL, because I figured I would have the chance to move to SL given a typical EU spread of 1.8 or so. If price went in the direction of the trade less than +2, then reversed and hit 2SL, I recorded a loss of the 2 pips SL. So you see, you don't plan to lose 2 pips every single time you don't get the epic win.

Hope this helps.
Mega pips to all!
Luck occurs when preparation meets with opportunity.
  • #5,563
  • Dec 1, 2011 5:31pm Dec 1, 2011 5:31pm
Quoting AlienFrog
As Tony says, we are not wasting our time, we are investing our time. Most of the time spent trading any system is waiting anyway. This is just a different way of waiting and being patient.

My only problem is still that I can't get up at 2:45am to be ready for the London open! If I can get my statistical analysis done that will give me the motivation I need!
Hey Alien - just curious, what analysis are you working on? As last year, a poster named RAC performed an analysis and posted the results in the thread (somewhere around page 367 or so). He crunched the numbers for Jan thru Nov of 2010 and found the following stats:

Total trades: 484
Epic Wins: 14
Break Evens: 256
SL (-2 pips) Losses: 213

If these stats hold up over the long term, then it means that there is an average of 1.27 Epic Wins per month (it wont distribute evenly like that, but it is fun to see the numbers). If you start on the first day of the month, and lose every day that month, until the last day, when you finally hit a winner, you would have lost approximately 40 pips until that last day of the month, when the 140-pip winner is hit, and you would then be up 100 pips for the month. You can then compound, increase your trade sizes, and keep going. But until that winner showed up, you have had a max draw down of approximately 9.5%.

The longest losing streak last year, was 2.5 months. If you had gone that length of time with no Epic Winner, however, your max drawdown, before finally hitting the Epic Winner (and there were 3 that month), was somewhere around 20%. But the first Epic Win, would have paid this off, and then some, and your net profit for the month is around 20%.

Tony has advocated "refunding" losses every week (essentially, transferring funds from your savings account to your trading account), to keep your available margin level high enough, so that you are not having to shrink your trade sizes every day. I probably wont do that myself, but the option is out there.

I am running a separate analysis for the 20-pip system, and might open a separate thread to cover that, as to not clutter up this thread.
  • #5,564
  • Dec 1, 2011 5:35pm Dec 1, 2011 5:35pm
Quoting AlienFrog
Just want to share a few more thoughts after a lot of good comments in recent posts.

I don't think Tony's method of replacing pips from other sources is bad, either. Cash is cash, wherever you get it (or spend it!). He is investing a little at a time which now and then pays a big return. If he let his account draw down he would not have as much leverage, and his $$ profit would be smaller. He also said he takes out profits and lives on that money. And still, in the end, he wins more pips than he loses. It sure beats a bank savings account!

I also...
Sorry Alien, I didnt see your two recent posts here before I hit the Send button for my post. Great comments - one thing that surprised me is how few times the -2 actually happened! That is a good sign, producing much better results than what happened last year.
  • #5,565
  • Dec 1, 2011 7:15pm Dec 1, 2011 7:15pm
Quoting SmartGXL
Hey Alien - just curious, what analysis are you working on? As last year, a poster named RAC performed an analysis and posted the results in the thread (somewhere around page 367 or so). He crunched the numbers for Jan thru Nov of 2010 and found the following stats:

Total trades: 484
Epic Wins: 14
Break Evens: 256
SL (-2 pips) Losses: 213

If these stats hold up over the long term, then it means that there is an average of 1.27 Epic Wins per month (it wont distribute evenly like that, but it is fun to see the numbers). If you start on the first...
I've seen references to RAC's post but I haven't searched it out yet. I'll definitely do that when I get a chance, thanks for pointing it out for me.

I posted a spreadsheet 3 or 4 weeks ago with analysis of the previous 12 months. So I may have picked up right where RAC left off. Here's the link to the post: http://www.forexfactory.com/showthre...65#post5134265 That is what I was referring to.

From the number of trade RAC has (484) maybe he is counting both London and NY opens? I only counted London. The ratios of wins and losses between his and mine are close. Again, I haven't examined his data yet, but on the surface that's really good confirmation!

That is why I want to do an accurate analysis with good tick data on the 5 or 10-second TF. I will be very interested to see your 20-pip analysis and how you go about it. I'm going to try to get this done before end of December. It will be interesting to compare notes.

Thanks!
AF
Luck occurs when preparation meets with opportunity.
  • #5,566
  • Dec 1, 2011 7:35pm Dec 1, 2011 7:35pm
MAN ALIEN, THIS IS FREAKIN AWESOME!! I wish I knew how to give you a voucher, I will give you one for this soon!!

I will post my analysis soon.
  • #5,567
  • Dec 1, 2011 7:38pm Dec 1, 2011 7:38pm
Hi jajano- I can only answer you what I understand from reading the thread. Once NY/London opens, we wait for price to move 1 pip in any direction from the open price, then immediately trade in that direction. Price may take more than 5 seconds to move, it may take less.

We do not trade if the spread is > 1.0 pips. Many non-ECN brokers have a larger spread. Our SL is set to -2 pips (the loss due to spread is part of this). Many non-ECN brokers do not allow such a small SL.

As for TPs, some are using 20 pips. Tony originally recommend 140, but sometimes he uses 300! So it may take minutes or hours for your TP to trigger, depending on what your target is. But it may take weeks for you to get 1 win, so be prepared for plenty of losses.

I highly recommend to you reading the thread- first page 1, and then pages 180-current. All you questions should be answered there

~Josh

Quoting jajano
hi all.. im newbie here..
and want to ask some question...

so... when NY or London open... we wait 5 seconds after the market open... and open position with the same direction as the 5 sec price did... is this right??

how long it will take profits??? within seconds?? or minutes??
Those who can kneel before God, can stand before anyone.
  • #5,568
  • Dec 1, 2011 8:22pm Dec 1, 2011 8:22pm
Quoting jrodatus
That's fair enough. We're grateful that Mr. Big Capital did the testing for us
I did notice that price occasionally bounces off the 0SL, not touching it, before returning for an epic win, and so the slightest "lemme get just +1 pip!" approach would ultimately reduce winnings, which we can't afford

~J
just wanted mention the opposite strategy, in case some thinkers would dare: http://www.forexfactory.com/showthread.php?t=78006 and seems to fail, in our case it's a sure winner .
r u ready?
  • #5,569
  • Dec 1, 2011 9:06pm Dec 1, 2011 9:06pm
Quoting rtrs111
just wanted mention the opposite strategy, in case some thinkers would dare: http://www.forexfactory.com/showthread.php?t=78006 and seems to fail, in our case it's a sure winner .
Hey RTS, thanks for posting, that, yes that strategy would fail, because even though you makes lots of pips here and there, one loss wipes all them out, and then some, and then you struggle to rebuild from that...you never catch up.
  • #5,570
  • Dec 1, 2011 9:20pm Dec 1, 2011 9:20pm
Quoting Tony112
There are a few times in our lives when we can definitely say Epic Win
Weird... your epic hit -2 SL on my ECN demo. Guess you're staying with Oanda now for sure.

But the fact that a crucial win can so easily be wiped out by a small discrepancy in broker price quotes... makes me uneasy.

Planning on "Doing the Dukascopy" with Alien and friends. We'll see how much downloads overnight...

~Josh

P.S. EA updated with bug fixes and more helpful/verbose output. Ignore the 'create_sleepsig_file' setting... I'm using it to automatically put my laptop back to sleep after setting up a trade.
Attached File(s)
File Type: mq4 Tony112.mq4   10 KB | 338 downloads
Those who can kneel before God, can stand before anyone.
  • #5,571
  • Dec 2, 2011 12:00pm Dec 2, 2011 12:00pm
Hi guys,

I have made some tests with this strategy and you should have in mind that 2 PIP SL is a very small SL. More reliable tests should be made at REAL TICK LEVEL. I have following this method in a demo account during aprox. 10 months and some of the epic winners that some people claims here actually have been missed, just because of a tiny movement of the price, that make you hit the 2 SL or when you try to adjust the SL to BE as per Tony's instrucctions.

You have to have in mind other factors : slippage, Broker SL hunting, bad execution sometimes, price differences, ECN broker commisions, high spreads with OANDA, etc. You will find this kind of problems only when you trade this strategy with a live account.

So be careful...!

This strategy may be good in long term but it requires you wake up at 3 am every day and get many loses in a raw and that's frustrating. That's why many people give up after some time. The psicological factor here is very important...I have seen that happening in this forum.

I believe it's necessary to make more improvements in order to trade this strategy with more confidence.

Van

Quoting SmartGXL
Hey Alien - just curious, what analysis are you working on? As last year, a poster named RAC performed an analysis and posted the results in the thread (somewhere around page 367 or so). He crunched the numbers for Jan thru Nov of 2010 and found the following stats:

Total trades: 484
Epic Wins: 14
Break Evens: 256
SL (-2 pips) Losses: 213

If these stats hold up over the long term, then it means that there is an average of 1.27 Epic Wins per month (it wont distribute evenly like that, but it is fun to see the numbers). If you start on the first...
  • #5,572
  • Dec 2, 2011 3:25pm Dec 2, 2011 3:25pm
Quoting vanhelsing
Hi guys,

I have made some tests with this strategy and you should have in mind that 2 PIP SL is a very small SL. More reliable tests should be made at REAL TICK LEVEL. I have following this method in a demo account during aprox. 10 months and some of the epic winners that some people claims here actually have been missed, just because of a tiny movement of the price, that make you hit the 2 SL or when you try to adjust the SL to BE as per Tony's instrucctions.

You have to have in mind other factors : slippage, Broker SL hunting, bad...
Hi Van Helsing - Yes, you are correct about all of those factors, many of those will prevent the system from being executed precisely by all traders at the same time.

One thing, however - demo accounts are also notorious for being inaccurate, and showing pip movements that did not happen in real life, and/or are missing pip movements that DID occur.

I made the decision last night, to officially move forward with a 20-pip Take Profit. AlienFrog's analysis corresponded with mine, that showed that you actually make more money long term with the 20pip TP, as opposed to the 140TP (sorry Tony!!). Although, I do have to admit, the idea of risking only 2 pips, and hitting a large 140 pip winner ($1400 for me) is VERY enticing!
  • #5,573
  • Dec 4, 2011 11:56am Dec 4, 2011 11:56am
still this method working in London NY open time only ?
-----------------
  • #5,574
  • Dec 4, 2011 2:34pm Dec 4, 2011 2:34pm
Quoting ibpo
still this method working in London NY open time only ?
Hi ibpo - yes, officially, these are the only times that this system seems to work.
  • #5,575
  • Dec 4, 2011 5:59pm Dec 4, 2011 5:59pm
Fixed a fatal typo in the EA! There was an OP_SELL that should've been an OP_BUY. It's a miracle I noticed this.

Nearly finished coding a strategy tester in C++ that will use all Dukascopy tick data since 2007. Will post results...
Attached File(s)
File Type: mq4 Tony112.mq4   10 KB | 759 downloads
Those who can kneel before God, can stand before anyone.
  • #5,576
  • Dec 4, 2011 6:15pm Dec 4, 2011 6:15pm
Quoting jrodatus
Fixed a fatal typo in the EA! There was an OP_SELL that should've been an OP_BUY. It's a miracle I noticed this.

Nearly finished coding a strategy tester in C++ that will use all Dukascopy tick data since 2007. Will post results...
Awesome, thanks Jro! Would you be able to test it on both 140 pip as well as 20 pip TP's?
  • #5,577
  • Edited 6:52pm Dec 4, 2011 6:18pm | Edited 6:52pm
Quoting jrodatus
Fixed a fatal typo in the EA! There was an OP_SELL that should've been an OP_BUY. It's a miracle I noticed this.

Nearly finished coding a strategy tester in C++ that will use all Dukascopy tick data since 2007. Will post results...
good work. now, i need to learn how to program to do my own testing. Hey, this can only work with dukascopy? which one of the five platforms?

UPDATE: got a dukascopy demo just now...will see how it goes.. hey what platform are you using, to know what platform to demo it in.
  • #5,578
  • Dec 4, 2011 6:36pm Dec 4, 2011 6:36pm
Quoting jrodatus
Fixed a fatal typo in the EA! There was an OP_SELL that should've been an OP_BUY. It's a miracle I noticed this.

Nearly finished coding a strategy tester in C++ that will use all Dukascopy tick data since 2007. Will post results...
Josh, this sounds absolutely fantastic! I've opened a Dukascopy demo account but I'm totally stuck. This may be the answer to my problems. I'll elaborate in another post. Thanks!
Luck occurs when preparation meets with opportunity.
  • #5,579
  • Dec 4, 2011 7:40pm Dec 4, 2011 7:40pm
I'm interested in this idea and have done some rough backtesting of my own. Here's what I did: I looked at FO, LO, and NO on hourly charts. On a an up candle, I would look for candles with lower wicks of two pips or less. Similarly, on a bear candle, I would look only for upper wicks of 2 pips or less. From there, it was simply a matter of seeing whether they ran to take profit of 140 before moving back to BE.

Please note that there are severe limitations to this method. First, the data is not precise enough. For whatever reason, MBTradings historical data rounds to 4 places, and I don't know how it does the rounding. Suppose you had bull candle open at 1.000 and the lower wick was .9998. With the rounding, that means that the move could be from 1.00004 to 99976 (2.8 pips). It could also be a move from .99996 to 99984 (.8 pips). This problem means two things: 1) some trades that took off might actually have started as entries in the wrong direction. You might be able to correct this problem by waiting for a 3 pip move to enter. This would only end up losing you one pip per winning trade. 2) Trading the system on this data would require using a 2.8 stop loss instead of Tony's recommended two pips. Ignoring these flaws means that this data only shows a possible best case scenario for that time period, and actual results could be worse, and perhaps much worse.

Here's the raw numbers for the three years I looked at:

2000 - Four 140 pip winners. Two at FO, two at LO
2001 - Seven 140 pip winners. 3 at FO, 4 at LO.

Those results are really discouraging. Based on a trading year of 260 days, and assuming that half of the non-winners got moved to break even, this would lose over 500 pips in the first year, and about 120 in the second.

2008 - 28 140 pip winners. 9 at FO, 11 at LO, and 8 at NO. There were also two trades that hit break even and turned around to become winners. This is more like it. Here, with a 2.8 pip stop loss, and 50% break even, you would make just under 2800 pips for the year.

I'm not sure what to make of these results. Even with three years data, the sample size is pretty small. For me it raises a few questions.

Is there anything to the entry at market opens? I haven't tried to do this, buy I wonder how the results would differ if one entered the market at the start of every hour. Here it's mostly a question of whether short wick candles happen more frequently at the market open.

These results do seem to suggest that Frankfurt Open is at least as viable as New York. That one doesn't surprise me at all. In fact, my observation while looking through this data is that the New York open winners seemed to mostly be continuations of moves that started earlier that day.

I started by noting how far away the biggest move was from these candles. But I stopped being so diligent after the discouraging results from 2000-01. In 2000, the best results occurred with a 50 TP. In 2001, the sweet spot was at 100 and 120. I didn't do the same for 2008.

I'd be very interested in hearing if others draw any conclusions from these results, or if people have any basic criticisms of my methods. It seems to me that this method can probably be insanely profitable in the right conditions. But it also seems pretty clear that any long term flatness in the markets will spell the death of this system.
  • #5,580
  • Dec 4, 2011 8:06pm Dec 4, 2011 8:06pm
Quoting duffypratt
You might be able to correct this problem by waiting for a 3 pip move to enter. This would only end up losing you one pip per winning trade. 2) Trading the system on this data would require using a 2.8 stop loss instead of Tony's recommended two pips. Ignoring these flaws means that this data only shows a possible best case scenario for that time period, and actual results could be worse, and perhaps much worse.

i did a little post about 3 pips here......

http://www.forexfactory.com/showthre...55#post5193455

Quoting duffypratt

Here's the raw numbers for the three years I looked at:

2000 - Four 140 pip winners. Two at FO, two at LO
2001 - Seven 140 pip winners. 3 at FO, 4 at LO.

Those results are really discouraging. Based on a trading year of 260 days, and assuming that half of the non-winners got moved to break even, this would lose over 500 pips in the first year, and about 120 in the second
.

How about NO open?

Quoting duffypratt
2008 - 28 140 pip winners. 9 at FO, 11 at LO, and 8 at NO. There were also two trades that hit break even and turned around to become winners. This is more like it. Here, with a 2.8 pip stop loss, and 50% break even, you would make just under 2800 pips for the year.
.

2008 was an anomaly in the forex market. there has never been a year like that before....not sure that is not a deviation.

Quoting duffypratt
I'm not sure what to make of these results. Even with three years data, the sample size is pretty small. For me it raises a few questions.

Is there anything to the entry at market opens? I haven't tried to do this, buy I wonder how the results would differ if one entered the market at the start of every hour. Here it's mostly a question of whether short wick candles happen more frequently at the market open.
i cant bring myself to just enter willy-nilly at the market open....i need some kind of technical setup. a breakout, a retest, something. That is why i modify the technique.

Quoting duffypratt
These results do seem to suggest that Frankfurt Open is at least as viable as New York. That one doesn't surprise me at all. In fact, my observation while looking through this data is that the New York open winners seemed to mostly be continuations of moves that started earlier that day
.

For just 2008 only? My observations are that NY OPEN are a reversal of FRANkfurst/london open. Either way, it doesnt matter. why? If you are right that NY OPEN is a continuation of FO....then, we know by looking at FO/LO where the market will go during NO = this gives directional bias. If i am right that NO is a reversal of FO, then, we also know from that info where the market is headed at NO. Whatever your thesis, looking at FO/LO, either way, they gives an idea in what direction to start looking for entry at NO. Long or short.

Quoting duffypratt
I started by noting how far away the biggest move was from these candles. But I stopped being so diligent after the discouraging results from 2000-01. In 2000, the best results occurred with a 50 TP. In 2001, the sweet spot was at 100 and 120. I didn't do the same for 2008.
TP of 50 makes sense, i wrote about it here, that is, if entering from NY open..However, if entering from FO/LO....90% of ADR as TP target makes sense. Having avoided any TL and S/R levels. TP of +20, not sure you really need to worry too much about TL or S/R levels, etc. It is only +20.

Quoting duffypratt
I'd be very interested in hearing if others draw any conclusions from these results, or if people have any basic criticisms of my methods. It seems to me that this method can probably be insanely profitable in the right conditions. But it also seems pretty clear that any long term flatness in the markets will spell the death of this system.
I concur. that is why i think directional bias is important. both on the lower time frame and higher time frame(trade with the trend.)
watch out for TL and S/R levels.
There has to be a way of entering the market with as little as -5pips or -2pips while still using some kind of technical setups at FO, LO or NO. rather than just entering because the clock chimes 8am EST or 2am EST.

I see potential in the method...just needs to worked out the rough patches. Thanks for your contribution, duffypratt.
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