forex money making system/strategy #1

This is a simple strategy all the rules of it are written clearly. please follow the rules on your demo account and IF they make you money, only then follow them on your live account. NEVER forget good money management rules

I did NOT create these rules - some super smart individuals did, and they made really good $$ with these strategies, i am only sharing them here for the ones who don't know about it.
Please bookmark the thread, i have lost a lot of amazing threads just because i forgot to bookmark them.

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Rules You Won’t Follow Don’t Matter
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Most successful traders use a mechanical trading system. This is no
coincidence.
A good mechanical trading system automates the entire process of trading.
The system provides answers for each of the decisions a trader must make while
trading. The system makes it easier for a trader to trade consistently because there is a
set of rules which specifically define exactly what should be done. The mechanics of
trading are not left up to the judgment of the trader.
If you know that your system makes money over the long run, it is easier to take the
signals and trade according to the system during periods of losses. If you are relying on
your own judgment during trading, you may find that you are fearful just when you
should be bold, and courageous when you should be cautious.
If you have a mechanical trading system that works, and you follow it consistently,
your trading will be consistent despite the inner emotional struggles that might come
from a long series of losses, or a large profit. The confidence, consistency, and
discipline afforded by a thoroughly tested mechanical system are the key to many of
the most profitable traders’ success.
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The Components of a Complete System

A Complete Trading System covers each of the decisions required for successful trading:
Markets - What to buy or sell
Position Sizing - How much to buy or sell
Entries - When to buy or sell
Stops - When to get out of a losing position
Exits - When to get out of a winning position
Tactics - How to buy or sell


Markets

The first decision is what to buy and sell, or essentially, what markets to trade. If you
trade too few markets you greatly reduce your chances of getting aboard a trend. At the
same time, you don’t want to trade markets that have too low a trading volume, or that
don’t trend well.

Position Sizing – How much to buy or sell
The decision about how much to buy or sell is absolutely fundamental, and yet is often
glossed over or handled improperly by most traders.
How much to buy or sell affects both diversification and money management.
Diversification is an attempt to spread risk across many instruments, and to increase
the opportunity for profit by increasing the opportunities for catching successful
trades. Proper diversification requires making similar, if not identical bets on many
different instruments. Money management is really about controlling risk by not
betting so much that you run out of money before the good trends come.
How much to buy or sell is the single most important aspect of trading. Most
beginning traders risk far too much on each trade, and greatly increase their chances of
going bust, even if they have an otherwise valid trading style.
Entries – When to buy or sell
The decision of when to buy or sell is often called the entry decision. Automated
systems generate entry signals which define the exact price and market conditions to
enter the market, whether by buying or selling.
Stops – When to get out of a losing position
Traders who do not cut their losses will not be successful in the long term. The most
important thing about cutting your losses is to predefine the point where you will get
out before you enter a position.
Exits – When to get out of a winning position
Many “trading systems” that are sold as complete trading systems do not specifically
address the exit of winning positions. Yet the question of when to get out of a winning
position is crucial to the profitability of the system. Any trading system that does not
address the exit of winning positions is not a Complete Trading System.
Tactics – How to buy or sell
Once a signal has been generated, tactical considerations regarding the mechanics of
execution become important. This is especially true for larger accounts, where the entry
and exit of positions can result in significant adverse price movement, or market
impact.

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Using a mechanical system is the best way to consistently make money trading. If you
know that your system makes money over the long run, it is easier to take the signals
and follow the system during periods of losses. If you rely on your own judgment,
during trading you may find that you are fearful just when you should be courageous,
or courageous when you should be fearful.
If you have a profitable mechanical trading system, and you follow it religiously, then
your trading will be profitable, and the system will help you survive the emotional
struggles that inevitably result from a long series of losses, or large profits.

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please do post in the thread telling us of the of your views or results about this system/strategy only - off topic posters or whiners will be banned from the thread. attached are some indicators/etc that will help you in testing/applying this strategy.

Position Sizing

Position sizing is one of the most important but least understood components
of any trading system.

because it normalizes the dollar volatility of a position by adjusting the position size
based on the dollar volatility of the market. This meant that a given position would
tend to move up or down in a given day about the same amount in dollar terms (when
compared to positions in other markets), irrespective of the underlying volatility of the
particular market.
This is true because positions in markets that moved up and down a large amount per
contract would have an offsetting smaller number of contracts than positions in
markets that had lower volatility.
This volatility normalization is very important because it means that different trades in
different markets tend to have the same chance for a particular dollar loss or a
particular dollar gain. This increased the effectiveness of the diversification of trading
across many markets.
Even if the volatility of a given market was lower, any significant trend would result in
a sizeable win because you would have held more contracts of that lower
volatility commodity.

what this means in layman terms is that you hold less of volatile contracts and more of stable/less volatile contracts

N is simply the 20-day exponential moving average of the True Range, which is now
more commonly known as the ATR. Conceptually, N represents the average range in
price movement that a particular market makes in a single day, accounting for opening
gaps. N was measured in the same points as the underlying contract.
To compute the daily true range:
True Range = ( Maximum(H-L, H-PDC , PDC-L)

where:
H – Current High
L – Current Low
PDC – Previous Day’s Close
To compute N use the following formula:

N=(19 X PDN + TR)
_____________
20

where:
PDN – Previous Day’s N
TR – Current Day’s True Range
Since this formula requires a previous day’s N value, you must start with a 20-day
simple average of the True Range for the initial calculation.

THIS IS DONE AUTOMATICALLY ON YOUR METATRADER NOW - USE THE ATR INDICATOR

Dollar Volatility Adjustment
The first step in determining the position size was to determine the dollar volatility
represented by the underlying market’s price volatility (defined by its N).
This sounds more complicated than it is. It is determined using the simple formula:
Dollar volatility = N x Dollars per point

Volatility Adjusted Position Units

make positions in pieces which we called Units. Units are to be sized so that

1 N represented 1% of the account equity.
Thus, a unit for a given market or commodity can be calculated using the following formula:

UNIT=

1%OF ACCOUNT
____________________
MARKET DOLLAR VOLATILITY

or

1% OF ACCOUNT
_______________
N X DOLLARS PER ACCOUNT

The Importance of Position Sizing
Diversification is an attempt to spread risk across many instruments and to increase the
opportunity for profit by increasing the opportunities for catching successful trades. To
properly diversify requires making similar if not identical bets on many different
instruments.
This System used market volatility to measure the risk involved in each market.
We then used this risk measurement to build positions in increments that represented a
constant amount of risk (or volatility). This enhanced the benefits of diversification,
and increased the likelihood that winning trades would offset losing trades.



Units as a measure of Risk

use the Unit as the base measure for position size, and since those
units are volatility risk adjusted, the Unit is a measure of both the risk of a position,
and of the entire portfolio of positions.
Follow risk management rules that limited the number of Units that
you should maintain at any given time, on four different levels. In essence, these rules
control the total risk that a trader should carry, and these limits minimize losses
during prolonged losing periods, as well as during extraordinary price movements.

Adjusting Trading Size

There will be times when the market does not trend for many months. During these
times, it is possible to lose a significant percentage of the equity of the account. After large winning trades close out, one might want to increase the size of the equity
used to compute position size.
You should decrease the size of the notional account by 20% each
time you go down 10% of the original account. So if you are trading a $1,000,000
account and it ever was down 10%, or $100,000, you should then begin trading as if you
have a $800,000 account until such time as you reach the starting equity. If you
lost another 10% (10% of $800,000 or $80,000 for a total loss of $180,000) you should
reduce the account size by another 20% for a notional account size of $640,000.

ENTRIES

There are two different systems of entry in this system/strategy ( you may wish to adjust the time according to your suitability.

System 1 – A shorter-term system based on a 20-day breakout
System 2 – A simpler long-term system based on a 55-day breakout.

A breakout is defined as the price exceeding the high or low of a particular number of
days. Thus a 20-day breakout would be defined as exceeding the high or low of the
preceding 20 days.
Turtles always traded at the breakout when it was exceeded during the day, and did not
wait until the daily close or the open of the following day. In the case of opening gaps,
the Turtles would enter positions on the open if a market opened through the price of
the breakout.

System 1 Entry

- enter positions when the price exceeded by a single tick the
high or low of the preceding 20 days. If the price exceeded the 20-day high, then you should buy one Unit to initiate a long position in the corresponding
unit. If the price dropped one tick below the low of the last 20-days, then you should sell one Unit to initiate a short position.

System 1 breakout entry signals would be ignored if the last breakout would have
resulted in a winning trade. NOTE: For the purposes of this test, the last breakout was
considered the last breakout in the particular commodity irrespective of whether or not
that particular breakout was actually taken, or was skipped because of this rule. This
breakout would be considered a losing breakout if the price subsequent to the date of
the breakout moved 2N against the position before a profitable 10-day exit occurred.
The direction of the last breakout was irrelevant to this rule. Thus, a losing long
breakout or a losing short breakout would enable the subsequent new breakout to be
taken as a valid entry, regardless of its direction (long or short).
However, in the event that a System 1 entry breakout was skipped because the
previous trade had been a winner, an entry would be made at the 55-day breakout to
avoid missing major moves. This 55-day breakout was considered the Failsafe
Breakout point.
At any given point, if you were out of the market, there would always be some price
which would trigger a short entry and another different and higher price which would
trigger a long entry. If the last breakout was a loser, then the entry signal would be
closer to the current price (i.e. the 20 day breakout), than if it had been a winner, in
which case the entry signal would likely be farther away, at the 55 day breakout.
System 2 Entry - Entered when the price exceeded by a single tick the high or low of
the preceding 55 days. If the price exceeded the 55 day high, then the Turtles would
buy one Unit to initiate a long position in the corresponding commodity. If the price
dropped one tick below the low of the last 55 days, the Turtles would sell one Unit to
initiate a short position.
All breakouts for System 2 would be taken whether the previous breakout had been a
winner or not.


Adding Units

enter single Unit long positions at the breakouts and add to those
positions at ½ N intervals following their initial entry. This ½ N interval was based on
the actual fill price of the previous order. So if an initial breakout order slipped by ½ N,
then the new order would be 1 full N past the breakout to account for the ½ N
slippage, plus the normal ½ N unit add interval.

This would continue right up to the maximum permitted number of units. If the
market moved quickly enough it was possible to add the maximum four Units in a
single day.



Example:
Gold
N = 2.50
55 day breakout = 310
First Unit added 310.00
Second Unit 310.00 + ½ 2.50 or 311.25
Third Unit 311.25 + ½ 2.50 or 312.50
Fourth Unit 312.50 + ½ 2.50 or 313.75

Consistency
you are to be very consistent in taking entry signals, because most of the
profits in a given year might come from only two or three large winning trades. If a
signal was skipped or missed, this could greatly affect the returns for the year.
the traders with the best trading records consistently applied the entry rules. The
Traders with the worst records fail to consistently enter positions when the rules indicated.

If you don't understand it , please read it again and again. soon enough you will start to understand the strategy. - make sure you bookmark the thread, i have lost great threads just because i forgot to bookmark them!

STOP

Stops
use N-based stops to avoid large losses in equity.

For most people, it is far easier to cling to the hope that a losing trade will turn around
than it is to simply get out of a losing position and admit that the trade did not work
out.
Let us make one thing very clear. Getting out of a losing position is absolutely critical.
Traders who do not cut their losses will not be successful in the long term. Almost all
of the examples of trading that got out of control and jeopardized the health of the
financial institution itself, such as Barings, Long-term Capital Management, and others,
involved trades that were allowed to develop into large losses because they were not
cut short when they were small losses.
The most important thing about cutting your losses is to have predefined the point
where you will get out, before you enter a position. If the market moves to your price,
you must get out, no exceptions, every single time. Wavering from this method will
eventually result in disaster.

stops are non-negotiable exits. If a particular trade is at the stop
price, then the position was exited; each time, every time, without fail.

Stop Placement
place your stops based on position risk. No trade should incur more than
2% risk.
Since 1 N of price movement represented 1% of Account Equity, the maximum stop
that would allow 2% risk would be 2 N of price movement. your stops should be set at 2
N below the entry for long positions, and 2 N above the entry for short positions.
In order to keep total position risk at a minimum, if additional units were added, the
stops for earlier units were raised by ½ N. This generally meant that all the stops for
the entire position would be placed at 2 N from the most recently added unit. ( you know this as trailing stop now)

However, in cases where later units were placed at larger spacing either because of fast
markets causing skid, or because of opening gaps, there would be differences in the
stops.
For example:


xyz pair
N = 1.20
55 day breakout = 28.30
................................Entry Price ................................Stop
First Unit ...................28.30 .......................................25.90

First Unit ....................28.30 ......................................26.50
Second Unit ................28.90 ......................................26.50

First Unit ....................28.30 .......................................27.10
Second Unit ................28.90 .......................................27.10
Third Unit ...................29.50 .......................................27.10

First Unit ....................28.30 .......................................27.70
Second Unit ................28.90 .......................................27.70
Third Unit ...................29.50........................................27.70
Fourth Unit .................30.10 .......................................27.70



Case where fourth unit was added at a higher price because the market opened gapping
up to 30.80:




First Unit ..................28.30.......................................... 27.70
Second Unit ..............28.90 ..........................................27.70
Third Unit.................. 29.50..........................................27.70
Fourth Unit ................30.80 .........................................28.40


There is an alternate exit strategy however, it is a bit more risky ( but gives a bit more profits as well)

Instead of taking a 2% risk on each trade, the stops are to be placed at ½ N for ½%
account risk. If a given Unit was stopped out, the Unit would be re-entered if the
market reached the original entry price.
The Whipsaw also has the added benefit of not requiring the movement of stops for
earlier Units as new Units are added, since the total risk would never exceed 2% at
the maximum four Units.


xyz pair
N = 1.20
55 day breakout = 28.30

First Unit.....................................28.30 .......................27.70

First Unit ....................................28.30 ........................27.70
Second Unit ................................28.90 ........................28.30

First Unit ...................................28.30 .........................27.70
Second Unit ...............................28.90 .........................28.30
Third Unit ..................................29.50 .........................28.90

First Unit................................... 28.30 .........................27.70
Second Unit ...............................28.90 .........................28.30
Third Unit ..................................29.50 .........................28.90
Fourth Unit ................................30.10 .........................29.50

Since the stops are based on N, they automatically adjust to the volatility of the markets.
More volatile markets would have wider stops, but they would also have fewer
contracts per Unit. This equalized the risk across all entries and resulted in better
diversification and a more robust risk management.

EXITS

Getting out of winning positions too early, i.e. “taking a profit” too early, is one of the most common mistakes when trading trend following systems.

Prices never go straight up; therefore it is necessary to let the prices go against you if
you are going to ride a trend. Early in a trend this can often mean watching decent
profits of 10% to 30% fade to a small loss. In the middle of a trend, it might mean
watching a profit of 80% to 100% drop by 30% to 40%. The temptation to lighten the
position to “lock in profits” can be very great.

The System 1 exit was a 10 day low for long positions and a 10 day high for short
positions. All the Units in the position would be exited if the price went against the
position for a 10 day breakout.
The System 2 exit was a 20 day low for long positions and a 20 day high for short
positions. All the Units in the position would be exited if the price went against the
position for a 20 day breakout.



These are Difficult Exits

For most traders, This exit System is probably the single most difficult part
of the System Rules. Waiting for a 10 or 20 day new low can often mean
watching 20%, 40% even 100% of significant profits evaporate.
There is a very strong tendency to want to exit earlier. It requires great discipline to
watch your profits evaporate in order to hold onto your positions for the really big
move. The ability to maintain discipline and stick to the rules during large winning
trades is the hallmark of the experienced successful trader.

Thanks to share forex money making system and tips. You shared a detailed info on each topic and it helped me much to understand forex trading.

TACTICS


Entering Orders
dont' use stops ( buy stop/sell stop) when placing orders. watch the market
and enter orders when the price hit our stop price. In general, it is better to place limit orders instead of market orders. This is because limit orders offer a chance for better fills and less slippage than do market orders.
Any market has at all times a bid and an ask. The bid is the price that buyers are willing
to buy at, and the ask is the price that sellers are willing to sell at. If at any time the bid
price becomes higher than the ask price, trading takes place. A market order will always
fill at the bid or ask when there is sufficient volume, and sometimes at a worse price for larger orders.
Typically, there is a certain amount of relatively random price movement that occurs, which is sometimes known as the bounce. The idea behind using limit orders is toplace your order at the lower end of the bounce, instead of simply placing a marketorder. A limit order will not move the market if it is a small order, and it will almostalways move it less if it is a larger order.

using this single tactic will cut your bad trades by almost 30%

It takes some skill to be able to determine the best price for a limit order, but with
practice, you should be able to get better fills using limit orders placed near the market
than with market orders.


Fast Markets
At times, the market moves very quickly through the order prices, and if you place a
limit order it simply won’t get filled. During fast market conditions, a market can move
thousands of dollars per contract in just a few minutes.
During these times, don't panic, and to wait for the market
to trade and stabilize before placing their orders.

Most beginning traders find this hard to do. They panic and place market orders.
Invariably they do this at the worst possible time, and frequently end up trading on the
high or low of the day, at the worst possible price.

In a fast market, liquidity temporarily dries up. In the case of a rising fast market, sellers
stop selling and hold out for a higher price, and they will not re-commence selling until
after the price stops moving up. In this scenario, the asks rise considerably, and the
spread between bid and ask widens.

Buyers are now forced to pay much higher prices as sellers continue raising their asks,
and the price eventually moves so far and so fast that new sellers come into the market,
causing the price to stabilize, and often to quickly reverse and collapse partway back.
Market orders placed into a fast market usually end up getting filled at the highest price
of the run-up, right at the point where the market begins to stabilize as new sellers
come in.
wait until some indication of at least a temporary price reversal before
placing your orders, and this often results in much better fills than would have been
achieved with a market order.

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But knowing these rules is not enough to make you rich. You have to be able to follow them.


What i can’t do is to give you the confidence to stick to those
rules even when things are going bad



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some common pitfalls.

An example: Failing to enter positions as quickly as the rules specify (1 unit every ½
N). While this may seem like a more conservative approach, the reality could be that,
for the type of entry system this strategy uses, adding to positions slowly might increase
the chance that a retracement would hit the exit stops—resulting in losses—whereas a
faster approach might allow the position to weather the retracement without the stops
being hit. This subtle change could have a major impact on the profitability of the
system during certain market conditions.
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It is much easier to weather an 8 month losing period if you know that there have been
many periods of equivalent length in the last 20 years. It will be much easier to add to
positions quickly if you know that adding quickly is a key part of the profitability of the
system.
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Trading Psychology
Trading psychology is the most important aspect of trading, and understanding
yourself and your own personality as it relates to your trading is critical. This journey is
much more about making a sincere and open-minded attempt to understand your own
personal psychology than it is about finding the magic psychology book with all the
answers.
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Money Management
Money Management is the most important aspect of a mechanical trading system.
Controlling risk in a manner that will allow you to continue trading through the
inevitable bad periods, and survive to realize the profit potential of good systems, is
absolutely fundamental. Yet, the interplay between entry signals, exits and money
management is often non-intuitive. Study and Research into the state-of-the-art in
money management will pay enormous dividends.
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Final Warning
There are a lot of individuals who try to sell themselves and their advice as “expert.”
Don’t blindly accept the advice of these self-proclaimed experts. The best advice
comes from those who aren’t selling it, and who make their money trading. There are
many books and biographies that give insights into the habits of those who have
been—or who are—successful traders.
Learning how to become a good trader—or even an excellent trader—is possible, but
it requires a lot of hard work and a healthy dose of skepticism. For those of us who
have chosen this path, the journey never ends. Those who continue to be successful
will never reach their destination, but will learn to find joy in the journey itself.



this concludes everything.



please do ask questions, i will try to answer it to the best of my abilities. ( or my fellow traders will.)
keep questions related to the strategy only please.

This is the Turtles strategy.
Many say backtests show that it stopped producing good results in the early 1990s, but I think it could still work in a properly diversified range of markets.
Competent123, I'd be interested to hear which markets you have been trading it in and how its been going.

Can this strategy really work now? Or it's better to upgrade it?

@lemma i deal in forex, and it's going very good so far! i did blow my account once i started, and that is because i was not following the first rule of forex - have a stoploss!!

@Dmitriy1987

this strategy is more or less based on a simple thinking that when new money comes in the system you buy and when existing system leaves the system you sell.

or

you see when people sell and you buy when people buy.

or

follow the trend, the system has merely shown you a practical way of knowing when the money is entering or when the money is leaving. ( in forex market, from which country the money is moving to or from.)

rest is just common sense and technicals.

Thanks alot for your reply! I appreciate it!

I have actually tried this methdo (it is the Turtle Methdo) using a trade simulator on the GU using the H4 time frame, and it is profitable. I also have found indicators that plot system 1 & system 2 breakout lines on and MT4 chart.

Do you think you can share the indicators here, for the benefit of all of us? Please?

Many thanks,

P.S. This systems looks good for an EA. Any coders willing to code?

searching it was much easier!

http://www.forexfactory.com/showthread.php?t=140805

http://www.forexfactory.com/showthre...57#post2457457

i believe this should be enough.

do let us know of your experiences if any!

Regards