Weekly Millipede Idea

Hello everyone,

I would like to get some feedback on one idea I got after reading Graeme's Building an Equity Millipede thread.

Some key things I remember from Graeme:
-the best time to catch the whole range of a candle is to enter at the open
-send scouts to catch the beginning of a new trend
-add multiple positions along the way
-risk very little for infinite profit
-participate in the market and follow the price
-buy when it's up, sell when it's down

Taking all these into account I developed the following system:
- every Monday, on the weekly chart, I place a buy and a sell order at the first .00 above and below the weekly open with a 100 pips stoploss
- 2 lots on each order, close 1 lot at +100 pips profit so I have a free trade from then on
- as you can see from the chart below more than half the weeks of 2011 were profitable according to the rules above (marked with an arrow) and would have kept you in the uptrend for the first half, in the downtrend for the second half and made a little profit in the range part of the year
- the KEY to this is leaving the successful trades open for growth and stacking several profitable weeks along the long-term trend and trading multiple pairs to smooth the equity curve
- you will catch the beginning of new trends this way and you will catch 500 pips weeks (see December 2010, January and September 2011)
- price action is also important to the overall view (Pin bars, Inside bars, Engulfing bars)
- exits are discretionary. Graeme calls it diversifying. This is done at a minimum of 500 pips profit by closing the smallest trades to replenish capital. In the example chart you can clearly see in May that a range is forming, so closing all longs except the first entry should be done without any hesitation.

I will post the trades I take and my thoughts along the way. Right now I placed orders in A/U, E/U, N/U, U/CH, G/U, A/CH, E/A, G/CH, G/N.

Indicators are not allowed in this thread. Please share your thoughts about this system/method after looking at some pairs on the weekly charts.

UPDATE: Please see post #42 for modifications to this system.

Disclaimer: Do not trade this system on a live account with real money! I assume no responsibility for any losses or profits incurred by trading this system.

Have you thought of any exit strategy? or where will you exit?

Oh yes Please see the updated first post regarding exits.

Interesting system. I like weekly charts very much. What time do you use for weekly candle open? EST or GMT? What time exactly you weekly candles opens? At what price levels did you placed your sell and buy pending orders in eur/usd today? Thank you

Hi Mordre,

Interesting concept.

However i don't understand the statement:
"I place a buy and a sell order at the first .00 above and below the weekly open with a 100 pips stoploss"

What do you meant by first .00 above and below...

Thank you for taking the time to read my thoughts.

@lite27
My broker is IBFX AU and the weekly open is at 00:00 GMT. I placed a Buystop at 1.35 and a Sellstop at 1.34 on Eur/Usd.

@hewtwok
To better explain, let's take today's Eur/Usd weekly open of 1.3467.
I will place a buystop at the first .00 above the open, that is 1.35 and a sellstop at the first .00 below the open, that is 1.34.

Gbp/Usd opened today at 1.5882. I have a buystop at 1.59 and a sellstop at 1.58.

This follows Graeme's rule of buy when it's up and sell when it's down.

Thank you Mordr. How long do you use this system? Whats are your results with this system?

Well I started trading by these rules this week, but backtested the method for several years and it seems to get the job done. Catching big trends early, that is. I will post the results every Friday.

So far, today has gone great. 2 trades have reached +100 pips, so they are free now and I hope several others will reach +100 pips tomorrow, if price continues to run.

Keep in mid this will only be slightly profitable if you close positions early. Let it run with the long term trend and stack positions along the way every week.

Range happens, so closing half at +100 settles some losses and gives breathing space.

Good job, Mordre. I have always appreciated Graeme's method of trading, though the drawbacks were self-evident. Entry methods were not clear, and don't get me started on exits .

So I will follow along with you.

Have you thought of any lot size per account size yet?

actually i have implemented the millipede strategy in my real trades.

the key here is to have multiple trading lots per trade signal.

For example, you have identified an entry point and you wish to go long in the market. You should break it out into a few trades. For example, if you would normally trade at 1 lot, you could split it into 4 trades of 0.25 lots each. You will then proceed to place the trade as normal but of these 4 trades, only 1 will end up in the millipede. The other 3 is for you to close as you wish.

This gives you the benefit of locking in short term profits and having 1 trade that will eventually bring back a huge bonus at the end of the day.

Your entry and exit rules still apply normally to all your trades. The change is for that 1 small trade you use a longer time frame with bigger stops.

edit: I want to mention that the whole point of the millipede strategy is to harness the power of trends. You will find that over time, these small lots tend to deliver very huge bonuses. This is not a entry and exit strategy. It is a strategy to harness the power of trends. So as long as you have a valid strategy that can beat the spread, the power of the trend will do its job for you.

I don't like locking system very much, it's wasting your time.
thanks for share anyway

---------
three line break trading

What exactly is a "locking system"? And please explain why it is "wasting your time".

Mordr, as for now gbp/usd loss -200 pips. euro/usd is a big drawdown. System does not work today

Surely you don't imagine that any system works each day, every day, do you?

@lite27:


How can be the loss -200, if the initial SL is 100 ?

@modre:

seems like a good idea, keep up the work, plz!

Hi mordre,

Wish you a good-luck on your new thread.

I have read Graeme's thread few times and I still reading it. I really like his method and the way he teaches. It is nice to see others trying to implement his method (completely or partially).

I will follow this thread as well and try to contribute whatever way i can.

Very interesting approach Mordre. I always liked the idea of stacking profitable trades. My question is regarding hedging. Since Us brokers do not allow it, I assume you only trade in the same direction as your initial entry because of this issue.

Thank you for all your replies,

Today, Wednesday that is, the overall floating P/L sits at +200 pips and account history shows a 4 TPs and 4 SLs hit.

@Dreamliner
My trade size for this week is 0.01 lots per trade, for testing reasons, but I will bump it up to 0.05 lots. My account is somewhere around $1k. You have to take into account the number of pairs you want to trade. I selected around 10 pairs with the highest weekly ATR. I could trade just 4 pairs and bump the size to 0.1 lots but I think it's better to spread you risk around.

@thews
Interesting idea, do you mean that you enter 4 simultaneous smaller trades at once, but manage them differently, or do you try to enter 4 trades at different prices in an area like the big volume players do ?

@errich_fx
I appreciate your concern about my time, but could you please explain the reason behind your statement ?

@lite27
You should check again your chart because I'm still long on Gbp/Usd at 1.59 with +22pips floating P/L. Yes, the SL got hit for the short trade at 1.58.

@The7
My broker is IBFX Australia which allows hedging. From what I know every major Forex broker has non-US divisions. May I ask what broker do you trade with?

I was used to daytrading and having a daily P/L that gave me instant gratification. This week has been pretty hard to just stare at the screen with around 8 trades open and do nothing.

Friday I will check which pairs began to trend or range and close the pending orders that didn't hit. I will post some charts too, so we can have an overview of how price moved during the week.

Please share any thoughts you have about this style of trading.

very interesting system, i ll test it... i ll trade as you said, but i ll use trade manager (with capital protector), because when market is consolidation, price action can easy go against us..

sorry for bad english

Mordr, the best way to use this system is a Monthly time frame. just my opinion. Can you or somebody simulate on history on monthly chart in order to be sure that 100 pips stop loss is good ? I know that system works on M, but can not determine the size of stop loss.