what can we do with 90% winrate?

Hi all and welcome!

First I like to state that this is more like an idea than a trading system so far.
we can say that it is under developement and anyone is welcome to help.
I also like to say that nothing is copy righted, everything is free for everyone.
it's time to let the retail traders get an edge, what we need is consistency and profitability.

I do not advise anyone to trade this system live yet, as stated, this system is under development,
and might still not be safe to trade live, if you chose to do so, you will do that on your own risk.

I started this thread to share this idea and trading method I discovered so that we together hopefully can improve it.
more minds is better than one and I am probably not the smartest guy, so here it goes.

at it's current state, this method have a 90% win rate. which means it wins 9 times out of 10 trials or 900 trades out of 1000, I have back tested it 1000 trials, and that is how I got this percentage. the system is profitable, but needs improvement, especially on the risk to reward point of view, as it is traded now with more risk than reward is something that possibly should be changed,

to tell you the truth I don't know how and I can't come up with anything that works, so far everything I can think of will affect the win ratio negatively. ideas are of course welcome,

I don't have an EA, I have been trading and testing this system manually in Forex tester. I have not yet been trading this live because I think it must be improved upon first.

IMPORTANT! I do not recommend anyone trading this system live just yet,
even though they could, just be prepared that you suddenly can get a big loss,
and remember I warned you, it should still be profitable in the long run so it's up to you to decide how much drawdown you can accept.

it is a very simple method, we will use the standard retracement tool found in Metatrader, however, we will modify it first.
so let's go ahead to open up our retracement tool, then delete every single level except zero and 100 and 1.168,
then add only the level 80, (0.8)
on the 80 line inside the retracement tool, mark that as Target,
on the 1.168 level, mark that as stop loss.
now we have our tool, and that is all we need to trade this thing.

it should be looking something like this

Now to the method

we will work on a Daily chart, which pair doesn't matter. other timeframes could possibly work but not tested, maybe 4 hour, but the pips will be smaller.
I do not recommend lower than Daily, the most pips would probably be on monthly , weekly could be great.
but please note that the time you are stopped out will be larger too.
I recommend not trade on abnormally long candles, as we might not get the retrace we need.

for a sell trade, the current days candle must be up
when the candle closes (completes)
then we will enter a sell order at market.

then you will take out your fib tool you edited before, and draw it from the (close) of the candle to the low as in the picture.
for a buy trade, the current days candle must be down and all red.

then we will do the same procedure but oposite, you will draw the tool from the close to the high.
left picture is buy, right picture is sell. and you can see where to place your stop loss.

and thats it, you just wait until your target is reached or you are stopped out.
the probability your target is hit before the stop loss is higher.

of course we must wait until the candle closes, usually midnight for a daily candle,
exactly when the current days candle closes and a new one opens, then you enter buy or sell at market
ideas and comments are welcome Thank you

Very unlikely to work long term....... with this fixed 0.3 :1 RR just a small string of losers can eat weeks end even months of profits.
You can try to trade with basket of uncorrelated markets.
You can also add some additional filter to trade with or against the big trends....but this may hurt the win rate.... I don't know.... you have to experiment.
But by default these 100% mechanical strategies almost never work in the long run.

Hi RoughTrader

This sounds interesting. I am trying to check against a currency and stuck with below doubt

What if the price doesn't reach TP or SL for the entire candle(Day)?
Do you let the current trade run to its fate and pick up a fresh trade for the next day?

Thanks
Chandan

as it is right now, because of the win ratio is 90 % the wins wil cover the losses long term, but sure, I would like to improve it, this is tested over 1000 trades. also note that all trades in pips are not equal, a long candle will give more pips, because the target from close to target will also be larger then, even though large candles are most risky, if the momentum is strong, sometimes there is no retrace on those, but if you have a look on any chart, you will see wicks on almost all candles, those wicks will be wins, you are more than welcome to explain your filters

That is a good question, to tell you the truth I dont know what would be better, maybe we should leve the trade to compleation or close it right away, as I have done in the backtesting, is to close them, if that is best? must be further tested. I must add that those times are very few indeed, but if I would let them run, I probably make sure that it is in the direction of the current momentum trend.

Similar, but again different: One can consider taking countertrend trades with smaller sl ~1h before the end of, for example, the London session.
k

with 90% winrate probably is better trade binary options.

that could be something to take a look on, thanks for the idea , unfortunatley it is very time consuming for me to test this as I don't have an EA so I would have to do it manually for tousands of trades, and I also trade daily, lets see if any kind soul could make one eventually, then we can test all sorts of things, I have no knowledge of programming EAs, thats a shame

Tack så mycket för att dela det!

Statistically speaking, the net expected profit factor for this system (assuming 90% win ratio and 0.33:1 Reward to Risk ratio) in long run would be (0.33*0.9)/(1.0*0.1) = 2.97 which seems to be a promising approach. I may create an EA to back test the idea.

Maybe use a daily candle of your own choosing. For example Frankfurt or London open.

Of course you have to keep in mind that since the pip count for profit/loss changes with each different daily range, to make your calculations work you would have to use dynamic position sizing based on the size of the range used to calculate the Target and Stop Loss so that the Target and Stop Loss would have a consistent $ value or consistent % of equity. Then your equation would work. Ideally any EA or Scripts developed would base their position size (risk) on a consistent % of the account equity.

KISS (Keep It Simple) is usually the best way to trade and if this already has a 90% win rate then the fewer filters the better. One filter, as the author mentioned, might be to NOT trade if the daily range is greater than a % of the ATR (200% for example), or if the retracement setup range (between the close and the low on up days or between the close and the high on down days) is too small (say 25% of the ATR for example).

I would be interested in also taking a look at back-testing it via an EA.

GREEN pips to one and all.

Thanks for raising the point that I implicitly assumed in the calculation of the profit factor. As you mentioned, I assume that we risk a fixed money per trade by adjusting the lot size according to stop loss distance.
Let's see how it works in a backtest.

You can prove that the formula holds true, asymptotically, for any MM.

How are the gaps handled?

I am going to try this system on demo,see how it works out :]

Subscribed. This sounds very interesting.

@roughtrader: many thanks for sharing your approach. Did you figure out if the method works better on certain pairs than on others? And on which kind of circumstances the losers mainly occurred?

one can try 1.309 as the stop level and and 0.809 as the target

1/2 the GR

interesting to note that if one are using 1.618 and .809 one is using 1/2 the GR for the target and the GR for the stop level.

good stuff.

i think no one focus on what have been said

you say your target is 20 and stop loss is 61.8 nearly 62

let's say the spread will be 2 pip

so you need to win 22 pip or lose 60 pip

and this make your risk:reward = 1 : 0.3666

and as we all know to make profit in forex you need to beat ( the zero sum game )

the zero sum game say that all your trades net profit will be zero if you take random trades

example : if you have a risk:reward 1 :1 and your win rate is 50% and you use constant lot size the sum will be zero

if you could make this 50% turn to 51% then you will make millions what ever the time it takes

let's get back to our method here

as i say above the risk reward is 1 :0.3666 so to make this system profitable we need a win rate more than 73.17 %

and as the owner of the thread say he have a 90 % win rate

and that could be proved by designing an expert

so we have a holly grail here