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The Compounding System

  • #81
  • Sep 8, 2014 1:20am Sep 8, 2014 1:20am
Quoting Paracelsus
{quote} Trading is only a "GAME TOOL" and the market is only its "PLAYGROUND".
  • #82
  • Sep 8, 2014 2:44am Sep 8, 2014 2:44am
@Paracelsus, i believe you have explain everything nicely, and that's it, probability game, just hopefully with less loss possible.
as for this monday, london session a winner on the first, let's look at NY now..
  • #83
  • Edited 8:48am Sep 8, 2014 3:22am | Edited 8:48am
Guys, I am glad that my small summary has resonated with your views. I hope that we can work together to make "serious monies" from this "casino", i.e. game strategy applied to Forex markets.

Today morning LO has provided an opportunity for almost instant TP with the "original" entry direction (as described in Post No.1).

I open each series in the direction of the last M5 before LO and NYO, so my initial trade was a "sell" which has reached SL, then with "Level_2" mode "buy" it has reached TP.

Concerning NYO, one may even choose even from 3 different entry times:
8 AM EST (official NY "Forex open")
9 AM EST (when most banks open) and
9:30 AM EST when NYSE opens. So there may be even 4 potential entry times in one day.

Also, as some preliminary results showed, Monday trades may last the longest, so it is a question whether Mondays are worth to trade or not.

Thorough backtests will tell which:
- initial entry direction
- "Open" times (i.e. LO and 3 other NYO) and
- days of the week are the best to run this "casino game".

Attached Image (click to enlarge)
Click to Enlarge Name: LO 0908.jpg Size: 498 KB


LO trade was still in play at NYO, so no "official" NYO trade today (for me).
  • #84
  • Sep 8, 2014 9:18am Sep 8, 2014 9:18am
Anyone using the basic technique but applying it at other times than LO and NYO ?
  • #85
  • Sep 8, 2014 9:45am Sep 8, 2014 9:45am
Quoting Paracelsus
Guys, I am glad that my small summary has resonated with your views. I hope that we can work together to make "serious monies" from this "casino", i.e. game strategy applied to Forex markets. Today morning LO has provided an opportunity for almost instant TP with the "original" entry direction (as described in Post No.1). I open each series in the direction of the last M5 before LO and NYO, so my initial trade was a "sell" which has reached SL, then with "Level_2" mode "buy" it has reached TP. Concerning NYO, one may even choose even...
I wonder if the high level of success is in part due to having a TP of 10. Have you tested using other TPs ? Also how about the cost of several opened and closed trades if it goes to a L4. Commissions and trading cost do add up.
  • #86
  • Sep 8, 2014 10:05am Sep 8, 2014 10:05am
Quoting freundr
{quote} I wonder if the high level of success is in part due to having a TP of 10. Have you tested using other TPs ? Also how about the cost of several opened and closed trades if it goes to a L4. Commissions and trading cost do add up.
It is not my thread, but I try to answer.

If you set TP and SL at 10 pips, you really get your +10 pips or -10 pips, as the spread is already accounted for when TP or SL values are triggered.

In other words: If your EURUSD spread is 2 pips (just as an example), the price has to move +12 pips to get your TP or -8 pips to get your SL. If you have a good ECN broker your spread is only about 0.3 pips (or even less), so to get your TP, price needs to move +10.3 pips or -9.7 pips to hit SL.

Of course there is some commission with ECN brokers (e.g. 0.5 pips), so one would set his TP at 10.5 pips and SL at -9.5 pips (to compensate for commissions). I have good ECN brokers so with manual forward tests I use the above TP and SL settings. So far, so good.
  • #87
  • Sep 8, 2014 10:11am Sep 8, 2014 10:11am
Quoting Paracelsus
{quote} It is not my thread, but I try to answer. If you set TP and SL at 10 pips, you really get your +10 pips or -10 pips, as the spread is already accounted for when TP or SL values are triggered. In other words: If your EURUSD spread is 2 pips (just as an example), the price has to move +12 pips to get your TP or -8 pips to get your SL. If you have a good ECN broker your spread is only about 0.3 pips (or even less), so to get your TP, price needs to move +10.3 pips or -9.7 pips to hit SL. Of course there is some commission with ECN brokers (e.g....
Understand that, but even when the costs are rolled into the spread it still is an ongoing expense. Have you tried this with a 15, 20 or higher TP ?
  • #88
  • Sep 8, 2014 10:46am Sep 8, 2014 10:46am
Quoting freundr
{quote} Understand that, but even when the costs are rolled into the spread it still is an ongoing expense. Have you tried this with a 15, 20 or higher TP ?
No, I have not experimented with different TP and SL, but for EURUSD the 10 pips looks good.

The real "expense" with 10 pips SL and TP is that the Risk:Reward ratio is not really 1:1, but about 1.1 : 0.9 with an ECN broker.
  • #89
  • Sep 8, 2014 10:50am Sep 8, 2014 10:50am
Quoting Paracelsus
{quote} No, I have not experimented with different TP and SL, but for EURUSD the 10 pips looks good. The real "expense" with 10 pips SL and TP is that the Risk:Reward ratio is not really 1:1, but about 1.1 : 0.9 with an ECN broker.
Thanks...
  • #90
  • Sep 8, 2014 11:32am Sep 8, 2014 11:32am
Quoting freundr
{quote} Understand that, but even when the costs are rolled into the spread it still is an ongoing expense. Have you tried this with a 15, 20 or higher TP ?
Reason to select 10 pips TP and pair EU is that if market is ranging, even then your TP will be achieved otherwise you are going to be victim of ranging market. EU ranging is 20 Pips on basis of history. Hope you undrestand.
Love for all; Hatred for none.
  • #91
  • Sep 8, 2014 12:05pm Sep 8, 2014 12:05pm
Quoting freundr
{quote} Understand that, but even when the costs are rolled into the spread it still is an ongoing expense. Have you tried this with a 15, 20 or higher TP ?
I had a little of back testing, what i understand is, if you target for 15, or 20, both on TP and SL you will get trades for some days, since the market as to move more than 20 pips a day, so you will have swap and you will not open another if it goes on to the next day, also on fridays it could leave it open on market close, and monday you could make 50 pips or loss 50 pips.

My backtesting indicate something for me, trade mostly on London open, not saying that you could not be in profit on NY, but somehow i belive more on London.

My results for today was win on first trade at London, loss on 4 trade at Ny, i'm testing with open a buy order on session start no matter what.

This is not trading, it's a probability game, if you have deep pockets you can stop at 8 ou 10 loses, and you could have more wins, but also more losses.
As for my backtest if you use only 2 trades, first 1 lot, second 2 lots, from january until today, EurUsd on london was positive. You do not win every day but it will be positive on the long run.
  • #92
  • Edited 2:16pm Sep 8, 2014 12:09pm | Edited 2:16pm
Today we have seen some interesting sideway movements between 1.2940 and 1.2950. Eventually both LO and NYO both were profitable latest by the 4th trades.

09/05/2014:

LO: +10 pips (with 1st entry according "original" entry direction rule)
NYO: +10 pips (with 4th entry)

Attached Image (click to enlarge)
Click to Enlarge Name: NYO 0905.jpg Size: 640 KB


Even if today had been a 15 units SL (1+2+4+8), considering the fact that there have been no SL over the past 5 weeks, it would be still tolerable.

Nevertheless, based on preliminary backtest results and today's events, probably it is better not to trade Monday NYO at all.
  • #93
  • Sep 8, 2014 12:53pm Sep 8, 2014 12:53pm
Quoting suicida
{quote} I had a little of back testing, what i understand is, if you target for 15, or 20, both on TP and SL you will get trades for some days, since the market as to move more than 20 pips a day, so you will have swap and you will not open another if it goes on to the next day, also on fridays it could leave it open on market close, and monday you could make 50 pips or loss 50 pips. My backtesting indicate something for me, trade mostly on London open, not saying that you could not be in profit on NY, but somehow i belive more on London. My results...
I wonder if using a TP of 5-8 would produce an even higher % of success and less times spent going to a LV 3 or L4 trade. More frequent but smaller positive trades.
  • #94
  • Edited 2:15pm Sep 8, 2014 12:55pm | Edited 2:15pm
Quoting freundr
{quote} I wonder if using a TP of 5-8 would produce an even higher % of success and less times spent going to a LV 3 or L4 trade. More frequent but smaller positive trades.
Yes, most definitely. The issue with a smaller TP is the longer recovery time after a SL.

Other options might be:

  1. reducing both SL and TP to 8 pips keeping the same R:R ratio or
  2. moving SL to +1 pip after a favorable 7 pips move.

  • #95
  • Sep 8, 2014 2:10pm Sep 8, 2014 2:10pm
Quoting freundr
{quote} I wonder if using a TP of 5-8 would produce an even higher % of success and less times spent going to a LV 3 or L4 trade. More frequent but smaller positive trades.
why don't you do some backtest to help other traders?
Love for all; Hatred for none.
  • #96
  • Edited 4:14pm Sep 8, 2014 2:11pm | Edited 4:14pm
As the enclosed screenshot shows: ECN broker EURUSD spreads can be really low:

Attached Image (click to enlarge)
Click to Enlarge Name: ECN spread.jpg Size: 160 KB


I am showing it in support for the above price chart. With larger spreads an additional SL would have been triggered, bringing in the +10 net profit only after the 6th entry.
  • #97
  • Sep 8, 2014 2:20pm Sep 8, 2014 2:20pm
Quoting aahmad29
{quote} why don't you do some backtest to help other traders?
I am unfamiliar with the software used for backtesting..any suggestions ?
  • #98
  • Sep 8, 2014 11:15pm Sep 8, 2014 11:15pm
Quoting Paracelsus
As the enclosed screenshot shows: ECN broker EURUSD spreads can be really low: {image} I am showing it in support for the above price chart. With larger spreads an additional SL would have been triggered, bringing in the +10 net profit only after the 6th entry.
Wow! Nice Spread!

Can you please PM me the Broker name?

Thanks!
  • #99
  • Sep 9, 2014 12:42am Sep 9, 2014 12:42am
Quoting freundr
{quote} I am unfamiliar with the software used for backtesting..any suggestions ?
very easy... google fxblue trade simulator and you find a very usefull tool
  • #100
  • Sep 9, 2014 2:23am Sep 9, 2014 2:23am
TP on London open within less than 15 minutes.

09/09/2014:

LO: +10 pips

Attached Image (click to enlarge)
Click to Enlarge Name: LO 0909.jpg Size: 674 KB
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