would this silly system work

Hello,

I was thinking about systems today (hmm), and thought, most systems dont even come in at 50%, the money is actually just made of larger winning ammounts then loosing amounts.

Well here is a system that returns 50% results, the question is can you capture the pips.

Basically open any pair and put a stopbuy and a stopsell out at 20 points from the current price (+spread for buy). You might want to do less for slow pairs (usd:thb) and more for fast pairs (gbp:usd). If one side catches put a 20 pip take profit limit on it and a 15+spread trail stop on it.


I have been testing this for 2 days now.

37 entries
21 reached the limit before stopping out.
193 pips ahead (420w/227L).

but im sure with more testing it would come out about 50:50

next i need to to try it with out a limit, just see how far the trail stop will go before it stops out. alot of them made the 20 mark and then returned, i would have had worse results i think if i let them run, but then again 1 good one could have taken off.

so far it has performed better then any cross system i have used, but then again all the pairs might be trending the same way with the dollar being weird lately (and i was sunday and monday)

I would check it over a sample of 100 trades minimum.

During that time, what if questions will arise, which you might need to write rules for.

Are you looking for just a random entry? (whatever the current price is?) or are you looking for a particular bar move of more than 20 pips?

I tried a system like this when I first started trading. My intention was to put together a butterfly hedge (used in options trading). The results were fairly disastrous. What you're looking at with a trade like this is a breakout of the range. Since the markets spend more time in range mode, than breakout mode, I ended up losing on both sides, as the price would go up, trigger my first order, go a little ways, then down and exit my first order, open my second order, then reverse again.

However, I would also point out that a few bad experiences doesn't make a system. I did not thoroughly backtest it.

With any system, I would suggest that you manually backtest as far back as you can go. I've constructed my own system and went back as far as my broker would allow me (about 1 year on a 15m chart). I moved forward bar by bar. On each bar, I would determine if my entry signals were met. If so, I logged it as a trade and then determine whether or not it was successful. I have over 460 sample trades of my system which returns a positive trade 85% of the time. I have screenshots of all of these trades, and can filter by market condition, announcements, etc. I would encourage anyone developing their own system to do something similar. This approach has been invaluable to my trading success.

Regards,

stockwet

Hi WitchHazel (funny login name...i use the stuff for medicinal purposes nearly every day!)

You might find of interest a test i did last year on the GBP during the London Open. If you wish, check out the images of my trades with notes at http://www.accrete.com/fx_gbp/ click the link on the page and you'll come to a directory with date-file-names for my trades that month. Going through the trades you will see that I was generaly doing what you prescribe. For that period of time (only about 50 trades? each day migh have a total of 3 to 4 as some were markets orders, others were entry orders.) I found that, for me anyway...it was a loosing proposition so I did not pursue it further.

Happy trading,
Thom

I tried it with 1 order on each of these pairs over night

AUDJPY
AUDUSD
CHFJPY
EURCHF
EURGBP
EURJPY
EURUSD
GBPUSD
NZDUSD
USDCAD
USDCHF
USDJPY
USDTHB

came out with +$15.34

I bet over time it would come out even, makes sense, 1/2 the time you will go up 20 pips before going down 20 pips. I have found the problem comes in when trying to capture more then 20 pips, if you put a trailing stop on of 20 pips you are actually hoping to get 40 pips before dropping 20 pips and those odds are not that good

any update ?