Planning Automatic Strategy Here - Help Appreciated!

Hi all,

This strategy is comes from my experience of straddling.

Opposite to other strategies, it doesn't need ANY analysis to do it. Everything is based on probability.

Here's the plan:

As we all know, currency pairs won't just stay as a flat line. At some point, they will decide which way they will go, at a higher or lower price level. Therefore, my guess is the following: if the pair has moved to one direction for at least (at least...) 60 pips, then it'll move towards this direction for another 2 pips.

There is no science behind that. It's just that after 60 pips (you can put more or less pips, the point is that it must be a lot of pips) the probability of this pair going in the same direction for the past 60 pips is gonna go for another 2 pips is statistically high.

I will start backtesting this technique on a demo account with the following conditions:

1, It'll be an Axitrader account with 500$US on it, with 200:1 leverage.
2, I will choose 5 pairs to put in each 10% of my fund in. After all, there are two orders (buy stop and sell stop) per each pair.
3, They will all entered by orders.
4, The take profit will be +2 pips, while the stop loss will be -20 pips. I honestly think that the probability of hitting stop loss among 10 orders is lower than 10%. Maybe I'll hit it once every 15-20 orders.

In fact, this strategy takes for granted that in most situations, these pairs should continue their already forming trend for at least another few pips. We are asking for one.

This system will be backtested for a month from now, and results will be posted on this same post in 1 month.

Again, this is an open source strategy. Any comment or constructive suggestion is more than welcomed.

Results (updated in real time)
Backtest account #1:
500$ at beginning on 06/12/2014
641$ as of 06/25/2014


Thanks!

Wllen1

LOL wllen..cmon now 10 pip stop loss and 1 pip take profit? it's not going to work. Theres no mathmatics behind your idea here just an assumption

It is not math, but statistics.

And I am currently backtesting it.

Is there any parameter you would like to change?

A couple of questions that come to mind right off the bat. Your 10 pip stop loss, does that include spread? If not, your looking at least 11 pips or more for your stop, and if you are counting in it, as soon as you open your trade your already 9 pips or less away from your stop. Next, why set your tp at 1 pip? If its gone 75 pips in one direction already, develop a method (or just take one of the several on this board), and catch a pullback, then go for a larger tp. The odds are still in your favor that way.

Anyways, just my thoughts... Go at it if you must, but seems like a lot work for such a small reward.

Hi Wllen1,

Just wondering what your rules of entry are.

And after taking a profit of 1 pip when can the next order be executed on the same pair?

Smiler

Hello there.
My entry rules are quite simple. The entry occurs after a rise or fall of 60 pips from the price level when order was made.
By the way, regarding exactly how many pips are going to be counted in order to get in a trade and what is the TP/SL, there has been a few changes. Please refer to the OP for the changes made.
The choice of 60 pips is arbitrary. There is no epic analysis behind. It simply cuts through enough noise and little spike, in my opinion, to have a clearer movement from the currency pair in question. The entry could also be done in 75 pips, or even 100 pips, whatever.
Of course, there is always this fear of getting whipsawed. After all, what if my entry was EXACTLY at a level for which 60 pips later, the price moves back 20 pips? The probability of such thing happening is statistically low. This is why we decide to put 2 pips as TP and 20 pips for SL. I believe that the probability of hitting SL is less than 10%. '
For your second question, yes I will put in another order once a trade is over. In fact, it doesn't have to be immediately after, since anytime is the right time for this strategy. Of course, this is also mainly because I don't know how to make EA for this. I have to process the orders manually, and I don't stay all the time in front of the computer.
Right now, orders have been put in AUDUSD, EURUSD, GBPUSD, NZDUSD and USDCAD. Let's play safe for now with majors.
I will update the the results once a few trades are triggered to see the results delivered.
Cheers!
Wllen1

Hi Wllen1,

How's the back testing going?

Can you update us on your results thus far?

Smiler

Hello Smiler!

Here is my update!

I wanted to wait after at least my first order filled to update you guys about my automatic, brainless system. The first order hit the take profit of 2 pips. It was on AUDUSD. At the same time, I am running a second backtesting account for 100 pips trending before filling orders. I want to see which one is safer and which one brings more balance between profit and safety.

I will put my progress in my account in the OP and will keep it upadted.

Please remember that you can also do it. Simply follow the steps on the OP while tweaking the parameters for your liking. For example, you can change the number of pips of when you enter the trade, as well as stop loss and take profit.

Thanks for your attention over my thread!

Cya around!

Wllen1

Update #2

Just saw that another trade was filled and also hit take profit.

The NZDUSD long order was hit, and another 2 pips.

Hi Wllen1,

With this strategy you will get a high win rate simply due to the probability of a 2 pip move in your favour compared to a 20 pip move against but you will need a win rate over 92% to be successful.

I put together an EA for you to try this, I haven't done a lot of testing on the ea but it should do the job for you.

From your description I can't see a starting point, just jump into the market somewhere with a 60 point straddle. Consider this hypothetical situation (only looking at the long side because short is just a mirror). The price is currently 95.0010 so you enter a buy stop at 95.0070 with tp at 95.0072. You're saying that if the price reaches 70 you expect it to go to 72 but don't have confidence that the price will go to 74. So the next person comes in a few minutes later with the starting price at 95.0012. They expect the price to reach 72 and continue to 74 but no farther, using exactly the same logic. And also think about someone who came in a few minutes earlier with the price at 95.0008, they are leaving the market just as your trade executes.

The logic behind waiting for a 60 point movement needs some kind of starting base to make more sense.

Still, best of luck with this strategy, I hope it goes well for you.

Hello SpikeDog,

Indeed, this is one of the flaws of my strategy. It grants a high win/loss rate nevertheless.

I am currently working on finding an entry point for the order. Simply bear in mind that the entry found could be quite arbitrary and subjective.

I will post my idea of finding an entry point on the post as soon as I find it.

Meanwhile, everyone and anyone is welcome to give suggestions.

Happy trading!

Wllen1

There are plenty of possibilities for an entry point. Since you seem to be looking for the market to build up momentum during the 60 pip move I have 3 suggestions, market opening, swing high/low or (my personal favourite) breakout from a consolidation range.

Happy trades.

Sure, I am exploring all possibilities. Will keep you posted as soon as I finish all the things on my plate.



Cya later!

Wllen1

Hey guys,

Just a little heads-up.

The 1st account is doing fine so far. It has reached so far 641$ from 500$.

I am thinking of putting orders at the beginning the month.

The number of pips is presently situated at 80 pips.

Thanks for your attention for my strategy.

Any comment, suggestion or help is welcomed!

Wllen1

Hey guys,

I was finalizing my strategy and is facing one last dilemma.

Is it true that more pips I straddle, the safer my strategy is?

I'll explain: What I mean is that if I wait for a move of 150 pips in one direction before the order is triggered, is it safer than waiting 60 pips before activating the order? In both case, the tp is 2 pips and the sl is 20 pips, as discussed in the original post.

Thank you!

Wllen1