London Open Trading System Test

Journal to test my London Open Trading System

System Review - Week 1

Number of Trades: 4
Winning Trades: 2 (NZDUSD)
Losing Trades: 2 (AUDUSD)
Percent Win: 50%
Risk/Reward: 1:3 (12%, 36%) ($100, $300)
Account Gain: $400

explain your system

good explanation

​Hi tradability- system is extremely simple and pretty much 100% mechanical. I'm forward testing to see if it is profitable

1. Pairs traded EURUSD, GBPUSD, USDCAD, AUDUSD, NZDUSD
2. About 30 mins before London Open I look to see which pair has had the most percentage change since the Daily Open.
3. I take the Trade in the direction of chosen pair since Daily Open, unless it is against the trend. I look at all 5 pairs to determine strength or weakness of USD by using a SMA (34) on a 1 hour chart.
4. SL is 12% of Daily ATR (14), TP is 36% of Daily ATR (14) giving R:R of 1:3
5. I Adjust Lot size to give $100 loss or $300 profit
6. I then open the trade right on London Open - then let trade run to either SL or TP

I have some questions:
1) Why choose those currency pairs as opposed to others?
2) How do you define "most percentage change"?
3) How do you determine strength/weakness?

Hi Tradability, my system isn't performing that great the last couple of days, however I will stick with it to collect data and to train myself when to trade and when not to trade. But as to your questions:
1) I choose these currency pairs because they have better spreads and (to me) they move in a more logical way and therefore are (slightly) more predictable. The movement of USDJPY and USDCHF has always made less sense to me. With EURUSD, GBPUSD, USDCAD, AUDUSD and NZDUSD in front of me I can actually see most of the market anyway. I don't need to look at 20+ pairs, I can see what GBP or EUR or AUD are doing against each other just by how they are moving against the USD. Also if you are trading a pair like EURAUD, to me you now have a lot more complication as you have to get a grasp on USD, EUR and AUD to make a trading decision, rather than a pair like NZDUSD- is USD strong or weak? - is risk on or off? To me much easier to make a trading decision looking at one main thing.
2) Percentage change is a basic formula based on daily open price and current price-What is the difference as a percentage. I have a indicator that gives me the percent change. It is displayed on my chart. I simply look at which pair currently has the biggest percent change number (either positive or negative). This indicates to me that investors have been most interested in moving that pair in the current trading day.
3) I determine strength/weakness of the USD by looking at the moving average on my chart. If USD is really strong or weak then all the moving averages will be going in the same direction (opposite for USDCAD of course). If it is a mix of directions then USD is somewhere in the middle.

Have you looked at the way Ghostrider with his rules open trades? In which he trades the close of London market.
I think if you incorporate that style with yours you might improve your system greatly.
It then can be automated provided the rules are clear with precise execution of the strategy. The only issue will be the exit of open orders but that be looked at after.
Read his rules on his first page. Also I think it might improve your system if you assess renko charts to get a better guidance and clearer picture of price action to the entry points.

What do you think ? It's just a suggestion. (well my two cents worth)

I have had a brief look at the London close thread. Looks good, however living in New Zealand the time is no good for me (its the middle of the night!), so I have never tried out Ghostrider's trading method. I haven't tried renko charts either. Thanks for the suggestion. Something to look at in the future.

But for now I will continue with my method for at least a month or longer just to gather data. I like mechanical systems, they make it easy to crunch numbers and assess results and make changes. I believe I can make this system work just need time and data.

Thanks for your interest and input

System Review - Week 2

Number of Trades: 5
Winning Trades: 0
Losing Trades: 5 (NZDUSD 4, GBPUSD 1)
Percent Win: 0%
Risk/Reward: 1:3 (12%, 36%) ($100, $300)
Account Gain: -$500
Aggregate Account Gain: -$100