One hit wonder or am I on to something? | Forex Factory

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One hit wonder or am I on to something?

  • #1
  • First Post: Dec 22, 2012 11:54am Dec 22, 2012 11:54am
I admit it - I'm a system jumper looking for the 'ole holy grail .
I'm also addicted to the excitement of short timeframes - it's a classic case of getting that gambler's high.

Like most gamblers I've lost more than I won (the 95% vs. the 5%), just see my balance overview and trades statement attached.

I've never had any consecutive winners until yesterday.
Yes, they were small, but that's not the point.
The point is that for the first time I felt in control.
I even enjoyed the experience while suffering through drawdowns...

The charts I've attached basically show where I got in and out.
The strategy and chart layout are loosely based on "The 5 minute TF S&R trading system" thread.

I think I'll leave GJ AKA "The Beast" alone next time: very wild rides at a high spread cost (4p).
The majors are mostly at 2p at FXCM which is doable.

I'm currently still short on GU with my stop at BE.

I hope I've finally found a profitable way of trading.
If not, you guys will tell me, right?
Attached Image(s) (click to enlarge)
Click to Enlarge Name: AU.png Size: 33 KB
Click to Enlarge Name: EU.png Size: 36 KB
Click to Enlarge Name: GU.png Size: 33 KB
Click to Enlarge Name: GJ.png Size: 35 KB
Click to Enlarge Name: UC.png Size: 34 KB
Attached Image
Attached File(s)
File Type: pdf Combined Account Statement.pdf   1.7 MB | 581 downloads
Financial independence is what I live for
  • #2
  • Dec 22, 2012 2:05pm Dec 22, 2012 2:05pm
It is difficult to comment because you have not given any details of your criteria for entries and exits.
If you have been trading for one month using the same strategy and losing day after day, one winning day doesn't mean that your strategy is suddenly working, it just means that it worked on that one day.
Any strategy, no matter how bad, will have the occasional winning day.
It appears that you are trading some sort of break-out system and this is very difficult on M5 because there is so much noise. Even 50/50 trades will eat into your balance because the spread is such a high % of your prospective profits.
Please Do Not PM Me With Coding Enquiries
  • #3
  • Dec 22, 2012 3:36pm Dec 22, 2012 3:36pm
I was gonna say, seems to me you lost some money but if you entered the market that's really what can be expected.
I don't like trading the smaller time frames or copying someone else's trades. I would focus on higher time frames and find your own holy grail. You're not doing bad, if you feel you hit some ground under your feet keep that up. It took me 4 months to be profitable for more than 4 days a week. You'll get there, it looks good.
Argue for your limitations, and sure enough, they're yours. Richard Bach
  • #4
  • Dec 22, 2012 3:43pm Dec 22, 2012 3:43pm
Similar in ways as ma based to my method, it will work very well on days where the market is strong directionaly.

The issue is not trading that method when the market is slow and choppy.

Got 2 weeks off really to forget / test your method.



Serial system tweaker personally keep going till something sticks.
Nothing to it, but to do it!!! Stick to the plan FOOL!!!!
  • #5
  • Dec 22, 2012 3:47pm Dec 22, 2012 3:47pm
Quoting Gumrai
It is difficult to comment because you have not given any details of your criteria for entries and exits.
If you have been trading for one month using the same strategy and losing day after day, one winning day doesn't mean that your strategy is suddenly working, it just means that it worked on that one day.
Any strategy, no matter how bad, will have the occasional winning day.
It appears that you are trading some sort of break-out system and this is very difficult on M5 because there is so much noise. Even 50/50 trades will eat into your balance...
The criteria are sort of in a design stage:

 

  1. 5M line chart (close) with 200EMA and 10EMA (both on close). The line chart is really easy on the eyes compared to a candlestick chart.
  2. Where's 10EMA? If it's above 200EMA, then I'll only look for longs. If it's below 200EMA only shorts are considered.
  3. Look for consolidation. Go long when resistance is broken or short when support is broken.
  4. I use a 15 pip stop.
  5. I've read the mantra "Nobody ever went broke from taking a profit" many times here at FF, so I'm always looking to get my stop at BE real soon. From there I hope the trade turns into a runner.
  6. Avoid the news (check FF calendar).


So yes Gumrai, I figure that resembles a breakout strategy.

I agree that one day of lucky trading is no guarantee whatsoever.
Therefore I'll continue trading this way for a longer period .

I've attached my trading setup: a desktop to monitor the currency pairs on and a netbook from which I trade.

Attached Image (click to enlarge)
Click to Enlarge Name: foto.jpg Size: 177 KB
Financial independence is what I live for
  • #6
  • Dec 22, 2012 4:06pm Dec 22, 2012 4:06pm
Quoting Turveyd
Similar in ways as ma based to my method, it will work very well on days where the market is strong directionaly.

The issue is not trading that method when the market is slow and choppy.

Got 2 weeks off really to forget / test your method.



Serial system tweaker personally keep going till something sticks.
Alright! One of FF's top guns planning on doing some rigorous testing!
I've to work next week so I'm glad you're able to get some trades in.
Financial independence is what I live for
  • #7
  • Dec 22, 2012 4:47pm Dec 22, 2012 4:47pm
Before I say more, I think that it is only right that I point out that I am by no means an expert in trading the M5 timeframe. I find it very difficult and frustrating.
You say that you use a 15 pip SL, why? Doesn't it seem strange to you that you are using break of S/R levels to enter a trade, but you use an arbitrary number for your SL?
I guess that you are using the same 15 pips SL on all the currency pairs that you trade. 15 pips on USDJPY, as a % is the same as 30 pips on GBPUSD. This doesn't make sense at all.
Quote
I've read the mantra "Nobody ever went broke from taking a profit" many times here at FF
Yes, I've seen that repeated many times as well. Mind you, in direct contradiction, I've also seen many times "You have to give a trade room to breathe."
How many times have you set your SL to B/E at the earliest opportunity, only to see price retrace just enough to take out your stop before soaring off in the direction that you wanted?
Traders that set their stops to B/E too early do so either because of fear or because they do not have faith in their system.
My preferred method of trading is to see a break-out, then a re-test of the break-out level.
Using a short as an example. I see a break of support, then a retrace and test of the broken support as resistance. This, to my mind is a strong set-up.
You, on the other hand, have traded the initial break of support, seen your trade go into profit a little and then set your stop to B/E.
If the price retraces to the broken support, your stop is taken out at B/E just at the level that I am looking to enter.
Of course, if the price doesn't retrace and zooms off, you are in the trade and I am not. But I bet that you are stopped out of many good winners because you were too eager to get your stop at B/E.
Please Do Not PM Me With Coding Enquiries
  • #8
  • Dec 22, 2012 5:25pm Dec 22, 2012 5:25pm
Gumrai, your arguments make perfect sense, I'll give you that.
I agree that the stop size should be based on the pair being traded on, perhaps aided by e.g. the ATR indi.
Or maybe put my stop below / above the consolidation.
For the sake of simplicity I've opted to use a 15 pip stop for now.

That's why I've mentioned that the criteria aren't set in stone.
As for the method of entry and subsequent order management: I'll consider waiting for the retrace to S/R.
I'll do some chart eyeballing to make an informed decision.
Financial independence is what I live for
  • #9
  • Dec 22, 2012 6:54pm Dec 22, 2012 6:54pm
Quoting smatthew
Alright! One of FF's top guns planning on doing some rigorous testing!
I've to work next week so I'm glad you're able to get some trades in.

Not me, it'll just confuse me for my return, may try to trade Thursday and Friday we shall see, likely be BORED!!

I prefer a 220ema, then put in 2 x 220ema, 1 High and 1 Low give it some wibble room.
Nothing to it, but to do it!!! Stick to the plan FOOL!!!!
  • #10
  • Dec 22, 2012 7:04pm Dec 22, 2012 7:04pm
Quoting Gumrai
Before I say more, I think that it is only right that I point out that I am by no means an expert in trading the M5 timeframe. I find it very difficult and frustrating.
You say that you use a 15 pip SL, why? Doesn't it seem strange to you that you are using break of S/R levels to enter a trade, but you use an arbitrary number for your SL?
I guess that you are using the same 15 pips SL on all the currency pairs that you trade. 15 pips on USDJPY, as a % is the same as 30 pips on GBPUSD. This doesn't make sense at all.

Yes, I've seen that repeated...
I do 5 pip + spread, yes I get a lot of SL hits but keeps my emotions under control and I don't let any run away from me, so it's all good, most of the time SL hits and I get in cheaper than the SL so it's all good.

50-60% win rate, but my R:R is 3 - 5 : 1 so it's all good, but can be, down down down UPPPPP which gets me higher than the start so all good.

Before it was, up a tad, up a tad, repeat 15x's then CRASH down to new low.

More ways to skin a cat!!
Nothing to it, but to do it!!! Stick to the plan FOOL!!!!
  • #11
  • Dec 22, 2012 8:13pm Dec 22, 2012 8:13pm
This is a one hit wonder. Due to a high volume on that day.

You can confirm this by trading a low range day or the asian session, and your result won't be anything close.
I know this from experience which a lot of traders doesn't have within their system: how can you detect a low range and consolidating market condition.
If you can't detect this within your system, you are running on luck.

All the best to your trading
  • #12
  • Dec 22, 2012 8:20pm Dec 22, 2012 8:20pm
Quoting CrucialPoint
This is a one hit wonder. Due to a high volume on that day.

You can confirm this by trading a low range day or the asian session, and your result won't be anything close.
I know this from experience which a lot of traders doesn't have within their system: how can you detect a low range and consolidating market condition.
If you can't detect this within your system, you are running on luck.

All the best to your trading

Low volume I think you've find, low means only a few sellers needed to move the price a lot but more erratic.

You need a method for when there is strong 20 - 30pip moves and a method for when there is nothing but chop and range.

With a small enough SL, that if you trade chop and it starts trading no big deal only a small loss and vice versa, then it's about getting the 20 - 30pip or whatever moves when there on offer.


It's not about win rate ( just realised this myself this last week ), it's all about R:R!!
Nothing to it, but to do it!!! Stick to the plan FOOL!!!!
  • #13
  • Dec 23, 2012 10:29am Dec 23, 2012 10:29am
I've done a little backtesting by eyeballing the EURUSD 5m charts of December 3rd to present.
Furthermore I've only considered trades during the Frankfurt/London/NY sessions (roughly between 830 AM and 5 PM GMT+1).
I've avoided trade opportunities prior to news and round numbers.

Refer to the charts pdf for a day by day trades overview.
Refer to the spreadsheet pdf for entries, exits and pips gained or lost.

The results appear to indicate I'd survive trading this strategy.
Most likely I'm just fooling myself - hopefully just myself - but I'm sure you guys will let me know.
Attached Image
Attached File(s)
File Type: pdf Backtest EURUSD December - Spreadsheet.pdf   49 KB | 400 downloads
File Type: pdf Backtest EURUSD December - Charts.pdf   357 KB | 379 downloads
Financial independence is what I live for
  • #14
  • Dec 23, 2012 10:36am Dec 23, 2012 10:36am
Quoting smatthew
I've done a little backtesting by eyeballing the EURUSD 5m charts of December 3rd to present.
Furthermore I've only considered trades during the Frankfurt/London/NY sessions (roughly between 830 AM and 5 PM GMT+1).
I've avoided trade opportunities prior to news and round numbers.

Refer to the charts pdf for a day by day trades overview.
Refer to the spreadsheet pdf for entries, exits and pips gained or lost.

The results appear to indicate I'd survive trading this strategy.
Most likely I'm just fooling myself - hopefully just myself -...

Calling things which look to work in backtest LIVE is the tricky part especially when real $$'s are at stake, only way to find out is to test it in Demo first takes the Fear and Greed out then see if you can repeat for real $$$'s.
Nothing to it, but to do it!!! Stick to the plan FOOL!!!!
  • #15
  • Dec 23, 2012 10:46am Dec 23, 2012 10:46am
Quoting Turveyd
Calling things which look to work in backtest LIVE is the tricky part especially when real $$'s are at stake, only way to find out is to test it in Demo first takes the Fear and Greed out then see if you can repeat for real $$$'s.
I'll certainly do some forward testing. Perhaps I'll use Ninjatrader to utilize its testing capabilities on recorded market data.
Financial independence is what I live for
  • #16
  • Dec 23, 2012 11:01am Dec 23, 2012 11:01am
Quoting smatthew
I'll certainly do some forward testing. Perhaps I'll use Ninjatrader to utilize its testing capabilities on recorded market data.

I should likely spend the holidays doing just that myself, F12 with MT4 ( 1 bar at a time ), isn't the same as Tick Data.

Looking through your charts :-

1. are you allowing for Spread charge ??
2. Would you be able to take those setups and definately be around at the time to catch them ? Would leaving orders in place be better ?? If so could you be alerted to trade filling and be around to monitor and exit manually ?
3. There all Max Profit I guess, live it's a lot tougher you won't very often get max profit or close to.


It's never as easy as it seems, unless you've got unlimited patience and no life to get in the way.
Nothing to it, but to do it!!! Stick to the plan FOOL!!!!
  • #17
  • Dec 23, 2012 11:24am Dec 23, 2012 11:24am
Quoting Turveyd
I should likely spend the holidays doing just that myself, F12 with MT4 ( 1 bar at a time ), isn't the same as Tick Data.

Looking through your charts :-

1. are you allowing for Spread charge ??
2. Would you be able to take those setups and definately be around at the time to catch them ? Would leaving orders in place be better ?? If so could you be alerted to trade filling and be around to monitor and exit manually ?
3. There all Max Profit I guess, live it's a lot tougher you won't very often get max profit or close to.


It's never...

  1. Not in the charts. However in the spreadsheet I have deducted / added 2 pips to PnL.
  2. I'll only be able to take these trades when I'm off work. I happen to work Mondays to Thursdays, so I can use Friday for trading. Last Friday I've used price alerts to inform me of S/R getting near. At one point both alerts on GU (short) and UC (long) triggered. This strengthened my confidence in taking the trade. I'm considering using limit orders for trade entry. Perhaps I'll do some (demo) trading using my iPhone (LogmeIn app or FXCM app) while I'm at work.
  3. I've actually tried to be realistic by not entering the absolute maximum in the spreadsheet. I know myself too well to realize I'll chicken out alot of times.

Financial independence is what I live for
  • #18
  • Dec 23, 2012 1:46pm Dec 23, 2012 1:46pm
The problem with using the line chart is that you are limiting the information that the charts can give you.
On M5 charts, you are working with 12 snapshots of where price is in 1 hour.
I'm still not quite sure of your entry criteria. For a short is it candle close lower than the previous line chart low?
Looking at your chart for 6th December...
Your first trade is a short, by my reckoning, this trade only went about 4 pips into profit, but you log it as BE
The 3rd trade, that you log as a 40-70 pip win went about 10 pips into profit, retraced to entry level before the big drop.
This suggests that you are not being honest with yourself when backtesting. If you had closed the 1st trade at BE, then I think that you would have closed the 3rd trade at BE also.

As Turveyd says, when backtesting, you should use F12 and move forward 1 bar at a time so that you cannot see "the future"
Please Do Not PM Me With Coding Enquiries
  • #19
  • Edited 3:31pm Dec 23, 2012 3:05pm | Edited 3:31pm
Quoting Gumrai
The problem with using the line chart is that you are limiting the information that the charts can give you.
On M5 charts, you are working with 12 snapshots of where price is in 1 hour.
I'm still not quite sure of your entry criteria. For a short is it candle close lower than the previous line chart low?
Looking at your chart for 6th December...
Your first trade is a short, by my reckoning, this trade only went about 4 pips into profit, but you log it as BE
The 3rd trade, that you log as a 40-70 pip win went about 10 pips into profit, retraced...

  1. For me, the clarity of a line chart far outweighs the missing information of highs ands lows. I'm simply less nervous looking at lines instead of candles. In the coming period I'll continue trading using this layout instead of the traditional candlesticks.
  2. For a short entry, first 10EMA should be below 200EMA. Let's say it's 9 AM GMT+1: start of the London session. No news coming up? I'll look left at the line chart to find the nearest low. My entry would then be at the break of that low. If that break happens to be at the candle close, then all the better. If not, then I'll take the trade anyway.
  3. I could have registered the first trade on the 6th as a loss. As I said earlier, I'm always looking to move my stop to BE as early as possible. Five minute charts can be quite jumpy as you've remarked yourself, therefore I'd rather protect my capital than to give the trade some breathing space.
  4. As for the 3rd trade, after having added high/low lines, I see what you mean (see attached screenshot). If this were live, then I'd have moved my stop to BE.


Turveyd indeed mentioned the F12 functionality in MT4. I don't have MT4 - never used it.
Two years ago, I've purchased a lifetime Ninjatrader license not knowing about the existence of MT4 ().
However, Ninjatrader includes a Market Replay tool, which supports loading downloadable recorded tick data.
Turveyd actually implied that testing using tick data is preferable to "F12-ing" through charts.

Attached Image (click to enlarge)
Click to Enlarge Name: 12-06 EURUSD.png Size: 67 KB
Financial independence is what I live for
  • #20
  • Dec 23, 2012 3:19pm Dec 23, 2012 3:19pm
Quoting smatthew
[list][*]For me, the clarity of a line chart far outweighs the missing information of highs ands lows. I'm simply less nervous looking at lines instead of candles. In the coming period I'll continue trading using this layout instead of the traditional candlesticks.[*]For a short entry, first 10EMA should be below 200EMA. Let's say it's 9 AM GMT+1: start of the London session. No news coming up? I'll look left at the line chart to find the nearest low. My entry would then be at the break of that low. If that break happens to be at the candle close,...
I wasn't going to comment on the Line vs Candle debate, I prefer candle helps you see support resistance / SL hunting spikes it's info which is nice to see, I did try without thinking the same as you and well that experiment failed badly.

But if your history tick data testing then you'll see the price move to the highs and low's and better see if spikes woulda took out your SL or not, so all is fine.

Waiting for Candle closes and Candle stick patterns are all pretty much useless so you are best to avoid in ways.


Look forward to Tick Data replay testing, wish I had that function.
Nothing to it, but to do it!!! Stick to the plan FOOL!!!!
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