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Set it and Forget it, Dollar Cost Averaging

  • #41
  • Aug 17, 2012 9:05am Aug 17, 2012 9:05am
I'm looking for 1.2290 on the euro to close my shorts and finish off the week, if not I'll continue when the market opens on Sunday night.
  • #42
  • Aug 17, 2012 9:16am Aug 17, 2012 9:16am
Well I placed a sell on E/U last night to try this out (on demo of course) and it just hit my 50 pip profit. Dang! How am I suppose to check this out if I keep hitting my TP...
  • #43
  • Aug 17, 2012 9:42am Aug 17, 2012 9:42am
I have been testing this on an Oanda practice account for fun, and I hit the 50-tp the last 2 days in a row, LOL

I like this idea. I know it probably wont be profitable over the long term, like what the one poster showed with the test results, getting a margin call, but maybe it will only work with currencies that have a medium amount of volatility, such as E/U. Like someone else said, it wont work with JPY crosses, at least not with the amount of leverage being used, nor with the 50-tp. Maybe dial the leverage down really small, and look for smaller starting TP? (for example, looking for a 10-pip win instead of a 50-pip win)? Just a thought. I think this is a fun strategy, and I am testing it on an Oanda practice account.
  • #44
  • Aug 17, 2012 10:04am Aug 17, 2012 10:04am
Quoting spyderman
I understand you're quite a coder FerruFX. You could prob put something together pretty easy for testing or trading purposes
In my opinion, it won't worth the try ...
MT4/MT5 EAs/Indicators/Alerts coder
  • #45
  • Aug 17, 2012 10:52am Aug 17, 2012 10:52am
I hit my TP and had another great 5%+ week. See ya next week.
  • #46
  • Aug 17, 2012 11:23am Aug 17, 2012 11:23am
Quoting jaws810
I hit my TP and had another great 5%+ week. See ya next week.
This strategy works if the pairs one day down and next day up
Follow me to the Promised Land
  • #47
  • Aug 17, 2012 11:33am Aug 17, 2012 11:33am
I think this strategy could work if one is willing to close ALL trades at a loss, when you reach a 50% Drawdown.

The question is, how often does the 50% DD scenario happen? If it happens once per year, and you normally make "5% per week", then the math tells me that this system makes approx 170% ROI per year, because you would have 11 months (44 weeks) of profits (which leaves your account up 220%), followed by one full month where you build up the 20 trades and you dont have any winning weeks, which at the end of that month you get the 50% Drawdown, giving you a net growth in your account for the year of 170%. You wont be able to compound your account, because the 50% drawdown will be against your most recent "account basis" as opposed to using the account value baseline that you have when you start trading the account.

If there is a way to determine how often a 50% DD can happen per year, then this might be worth looking at.
  • #48
  • Aug 17, 2012 11:41am Aug 17, 2012 11:41am
Quoting SmartGXL
If there is a way to determine how often a 50% DD can happen per year ...
The market WILL determine ...
MT4/MT5 EAs/Indicators/Alerts coder
  • #49
  • Aug 17, 2012 12:00pm Aug 17, 2012 12:00pm
I have experimented with something similar in the past without ever getting around to making a trade-able system out of it. What I did was to start selling in the fashion you suggest when a stochastic was over bought and start buying when it was oversold. This is to increase the chance that it will revert in the desired direction so that you can collect your profits.

Other ideas I have had are:

* wait until a pair is trending strongly. If it is in a downtrend then wait until it is overbought (stochastic) then start selling, if it goes against you keep averaging in your price at a set number of pips until you have the required profit. For an uptrend wait until it is oversold. The idea here is that trends persist and that "v-shaped" bottoms are pretty rare and by entering into an obviously trending market and waiting for a pull back you are putting the odds in your favour.

* wait until a pair has filled it's ATR. If it's an up-day start shorting, a down-day start buying. The idea here again is that price is overextended and a reversion against the prevailing direction is likely at some stage as traders book profits etc.

* Price is constantly testing breakouts. As price makes a new high or low then sell or buy. If the breakout doesn't fail then it will come back to test the breakout. i.e it will revert in your desired direction......at some stage.

Not over-leveraging is very important obviously. Just some ideas, hope they made sense to someone.
  • #50
  • Aug 17, 2012 12:16pm Aug 17, 2012 12:16pm
Quoting SmartGXL
I think this strategy could work if one is willing to close ALL trades at a loss, when you reach a 50% Drawdown.

The question is, how often does the 50% DD scenario happen? If it happens once per year, and you normally make "5% per week", then the math tells me that this system makes approx 170% ROI per year, because you would have 11 months (44 weeks) of profits (which leaves your account up 220%), followed by one full month where you build up the 20 trades and you dont have any winning weeks, which at the end of that month you get the 50% Drawdown,...

I guess there is a lot of gamblers in this thread??
Does really anybody would consider using a strategy with a 100% probability that would hit a 100% dd and blow the account ? .. or let it go to a 50% dd to close?..
Wow...

If you have $10 000 and that 50% dd hit you in the first week... you now have $5000. You need to make 100% just to recover your money.

At 5% per week... those 5k would produce 250 per week ... that would be some 2 years just to breakeven...but wait.. what about if that happens again in a couple months??

I just proved you guys that the system did not go more the 3 months before hitting 100% dd

Double wow... is sane or logical thinking out of fashion??? amazing

J.
  • #51
  • Aug 17, 2012 12:25pm Aug 17, 2012 12:25pm
From post 1 - trading rules:

Quoting jaws810
...

3) Come back the next day before or after news releases(same as step 2) and if the trade is still there open another position and move the TP for all open positions to 50 pips from your average position, if it's gone it's gone go back to step 1.
...
Looking at the list of your trades, looks like you are trading twice a day.

Aug 16, 10:13 pm
Aug 16, 9:29 am
Aug 15, 11:52 pm
Aug 15, 7:06 am
Aug 14, 11:43 pm
Aug 14, 12:08 am
Aug 13, 9:32 am
Aug 13, 12:00 am
  • #52
  • Aug 17, 2012 12:42pm Aug 17, 2012 12:42pm
If you only placed 1 trade a day, you'd have to use 5% of your NAV per trade in order to generate a 5% return per week with a TP = 50.

If you place 2 trades a day, you'd use 2.5% of your NAV per trade for a 5% weekly return.

Please correct me if I am wrong. Thanks
  • #53
  • Aug 17, 2012 1:06pm Aug 17, 2012 1:06pm
Quoting jeuro
I guess there is a lot of gamblers in this thread??
Hey, jeuro.

I couldn't agree more.
However, I can't help but wonder... being aware of the problems of the averaging systems, you still say you're advocating them? That sounds somewhat contradictory to me. Care to elaborate? Maybe on PM, so we don't drift away the topic of the thread.

Best regards,
Barbossa
  • #54
  • Aug 17, 2012 1:17pm Aug 17, 2012 1:17pm
Quoting jeuro
I guess there is a lot of gamblers in this thread??
Does really anybody would consider using a strategy with a 100% probability that would hit a 100% dd and blow the account ? .. or let it go to a 50% dd to close?..
Wow...

If you have $10 000 and that 50% dd hit you in the first week... you now have $5000. You need to make 100% just to recover your money.

At 5% per week... those 5k would produce 250 per week ... that would be some 2 years just to breakeven...but wait.. what about if that happens again in a couple months??

I just proved...
Yes I understand all of this, I have been trading for 12 years now. But I like to throw ideas out there to get people thinking and get people brainstorming to see if we can take an (unworkable) idea and make it better, make it profitable.
  • #55
  • Aug 17, 2012 1:24pm Aug 17, 2012 1:24pm
wonderful idea!

set and forget

then come back, and find out the account is

wiped out!
  • #56
  • Aug 17, 2012 2:01pm Aug 17, 2012 2:01pm
Quoting charvo
wonderful idea!

set and forget

then come back, and find out the account is

wiped out!
  • #57
  • Aug 17, 2012 3:05pm Aug 17, 2012 3:05pm
Quoting SmartGXL
I think this strategy could work if one is willing to close ALL trades at a loss, when you reach a 50% Drawdown.

The question is, how often does the 50% DD scenario happen? If it happens once per year, and you normally make "5% per week", then the math tells me that this system makes approx 170% ROI per year, because you would have 11 months (44 weeks) of profits (which leaves your account up 220%), followed by one full month where you build up the 20 trades and you dont have any winning weeks, which at the end of that month you get the 50%...
I have no choice but to close my trades at 50% drawdown, that's my MC. But I'm not sure if all my positions would be closed or only enough to get me above the margin requirement. I could make the calculation and place a SL a few pips before the MC to insure that all positions would be closed at once.
  • #58
  • Aug 17, 2012 3:16pm Aug 17, 2012 3:16pm
Quoting dim13
If you only placed 1 trade a day, you'd have to use 5% of your NAV per trade in order to generate a 5% return per week with a TP = 50.

If you place 2 trades a day, you'd use 2.5% of your NAV per trade for a 5% weekly return.

Please correct me if I am wrong. Thanks
That sounds about right, but you'd still be using the same 5% NAV per day, so what would be the advantage of doing that.
  • #59
  • Aug 17, 2012 3:21pm Aug 17, 2012 3:21pm
99% of the time it will work, but that 1% will empty your account of all it's profits.

As the market keeps moving against you then your TP average for +50 gets further and further away.

Great for the current none directional chop, it won't hurt you until it gets a 2000pip trend move against you.
Nothing to it, but to do it!!! Stick to the plan FOOL!!!!
  • #60
  • Aug 17, 2012 3:36pm Aug 17, 2012 3:36pm
Quoting jeuro

If you have $10 000 and that 50% dd hit you in the first week... you now have $5000. You need to make 100% just to recover your money.

At 5% per week... those 5k would produce 250 per week ... that would be some 2 years just to breakeven...but wait.. what about if that happens again in a couple months??
J.
I think your math is just a bit off. 250 times 20 is 5000 so it would take 20 weeks not 2 years, and I don't think that your backtest was set to work like my system, similar but not the same as what I'm doing. You averaged every 100 pips, I average every 24 hrs no matter what happens to the price. NOT the same.
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