The Coin-Flip Theory

I am using 1/2 ATR for my max stop.
My first trade yesterday was the EurJpy. 82 pips made with a 20 pip stop. Discounted stop due to previous low.
This pair takes higher than a 200:1 due to the 1/2 ATR being lower than 34



Also had the GbpAud. 72 pips with a 39 pip stop, so not quite double.

In the "universe" there is alway an exception rule to everything, because nothing is absolute.

Human can't fly, the "exception to that rule is ... you get on a plane" but human still can't fly.

So basically some day you have to "to see that that bullish candle is actually a bear candle" or even "reject that candle because the price action not going to in deep detail here. The only way you can "reject what you see on the chart" is only if you have enough experience in trading to project the future chart in your mind.

But you still have to enter the "same candle" everyday because it's the rule. But how you see "the candle is bullish or even just ignore it is up to you ..."

If you follow the "standard procedure without any exception" then the "MM % risk" would help you survive through random losing streak..... because it's Math.
But to get more streak and profit you will need good market future projection experience....

Even though you are suppose to enter "everyday". But it's advisable do not ever play this strategy on non farm payroll friday.... the stop loss will just be hunt uselessly.

@ spyderman
Thank you for posting, could I get the ATR indi. Thanks in advance.

@victor_ray
Non farm friday is just really random trade.

I see I forgot to mention my own trade today, I am sorry for that.

Sell Day 33(Today):
Open 1.33871
Close xxxxxxx

SL Yesterdays high 1.34040

Will post the results from March soon with ATR rule.

You make it sound so easy haha

@ scientist

Mathematical it is...

I was eating lunch today, bore as usual decide to sit and think about ATR..........

I thought about it before when spyderman brought up the 1st time, but I was too focus on "there need to be reasonable room for sl" . THe problem with ATR before is that during low volatility time, it give indication of false range. Where I use Average Daily Range for a 20 day period which is small safer. But it's too safe... that profit doesn't hit often ..mmm....


However, after I ate my food and sit and really think about it.... If you set sl small pip AND tp R:1 atr... the 2nd trade could get Reward 2 for letting it run . While you still maintaining your usual risk draw down. Ultimately I end up seeing this will result in very much random result which COULD be in your favor on lucky days...

Overall, I think using ATR is a good idea.
I'll do some back test and see how it go.

The Idea of the author can win... 1000% a day with ATR implement, is lol..(super super greedy ).

@ victor_ray
I am too backtesting and results are promising with my TP rule.

Plus 1000% a day is not greedy, I will explain after I am home from swimming.

I am think if you use "Keltner Channels" , it might be better the just Raw ATR data...

As reminder to everyone, when you use any indicator on your chart you must UNDERSTAND the math behind it before you can use it with confidence...

I can just put up an indicator say here is indicator, put on your chart it show the channel range with "whatever hidden math" you need to believe the hidden math...

With that said, here is info on Keltner Channels that I am sure that many newbies doesn't even know what the hell is Keltner Channel base on...

http://stockcharts.com/school/doku.p...ltner_channels


----

Seriously I don't like to mess around with complicate stuff.. but I really hope the "future of this thread is not a system that fill with 10 indicators and 15 entry exit rule...."

It happen on "99% of the forex factory system...thread" ...... But I hope this thread will not be one of the loser thread that just put indicator without a FULL understanding on the tool/indicator you are using...

While I am at it, I am also looking at "some Bollinger Band variation..." for comparison...

But I think Keltner Channel is the better choice ...

@victor_ray

I will definitely look at that. But first I will complete my backtest with the raw ATR data.
I totally agree on the second part of your post, you need to know everything behind your indicators you use.

I want to tell you something about greed in trading. I think greed is not taking every opertunity there is. For me greed is for example having in mind a SL of 10 pips, then the trade goes bad and you are already -15 pips but all your fancy indicators say that you are right and still not exit the trade. That is greed in my opinion.

As last a good tip, everyday I go swimming at the end of the day arround 22:00. It is a good exercise for my body plus it is not that strenuous. In that time I review all my trades of that day, this strategy and my main ofcourse. What went bad what went good what can be improved etc. This will increase you trading results by alot.

Today's trades...

EurJpy... lost 2.5 pips on a 16 pip stop.



GbpAud... lost 18 pips on a 39 pip stop (Actually I got out at BE because I was late to exit, but actual trade would have lost 18)

Ok I have done one back test adding ATR as a Risk MM on the month June 2014.
It's not good but I don't have time to back test other month.



I'll just give the excel and indicator so people can play around if they want to.. Although future result can be random at anytime....


May the Lady Luck is with you.

Screenshot of Keltner ATR Channel below:

Day 3: July 31, 2014
Result: -5.90%





Day 4: August 1, 2014
Bet Loaded

ATR only works if you use my TP rule.
Keltner ATR channel lags behind because it has EMA in it

I do use your tp rule the one where you have 1 order st tp at Reward 1 and let the 2nd one reward x amount close at "23 hr"

Obviously both 2 order all have same stoploss.

As for the month June 2014, if I use your current "no TP" rule it wouldn't matter because 97% trade hit SL first because of the ATR reducing the SL pip small because it average a bunch of "small 1hr candle".............

The Keltner ATR channel use EMA as the price so it's more smooth and SHOULD prevent random spike skewering RAW ATR result.

As for the lag, well indicator/all tool use historic price...to do compute average.
If you use ATR raw you deal with same lag too. You do know that you have to set the "period for any ATR indicator"

If you set ATR period (5) that mean it only "compute 5 previous candle of 1 hr" which make a sense of false range due to not enough PAST SAMPLE size...

You use ATR over x amount of days so that shouldn't spike.

I won't post alot today because I am very busy at the moment.

why not increase candles for calculating ATR??? why not even use ADR instead?

@ spyderman - what broker are you with? your spreads look nice for non-majors.

This is what happen when I increase ATR...to huge ammount:




I do use ADR since live day 1.
I picked EurUSd is because it's Average Daily Range is around 32-38 pip which is "match with the author sl 34 pip"....
And beside EurUsd Range too....so usually my sl doesn't get hit.. at 34 pip even though I risk at 34 pip SL...

seems it may be wiser to just use ADR then.

Hi

Interesting thread, have you thought about using the daily candle bull or bear for direction instead of a random hourly candle, surely the daily would give a more defined trend.

Cheers

Eamonn.