My New TradingSystem Need Help!

Quoting fullauto

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Hi Traders,

I was studying a daily chart for the Eur/Dol chart when I noticed a small pattern. I started trading it and it almost always wins pips. It is averaging over 90 pips a day or 6 lots (on 3 currency pairs). I would like some you folks that been trading longer then me to look over this simple system tell me if am crazy or just getting lucky and possible help me maximize its profits. Its extremely simple. I have back tested it and now currently live testing with a mini account and it has winning trades pretty much daily. The win to loss ratio is way out of balance and but I don't think the system works any other way. I losing day can take 5- 10 days worth of trade profits. There have been way more winners then losers so it balanced out in (+) pip favor.

System:

at the close of the day 5:00 pm Eastern pull up your daily chart. I draw a line one pip above the high and 1 pip below the low. Those are my long/short and stops.

I will use Eur/Dol for example:

(Sunday) 5pm Long (2 lots) 1.2784 Stp 1.2722 Limit (PT) Order 15 pips 1.2799

Short 2 Lots 1.2722 Stp 1.2784 Limit (PT) Order 1.2707

Long trade was opened and few minutes later 15 pip limit profit targeted hit.

30 PIP PROFIT

(Monday) 5pm Long 1.2821 Stp 1.2752 Limit (PT) 1.2836

Short 1. 2752 Stp 1.2821 Limit (PT) 1.2737

30 PIP PROFIT

I am currently trading 3 pairs each day. I take 2 lots but only 1 lot on a new pair. Most of the currency trades don't work with this method and a quick look at a daily chart will prove it.

Gerald - fullauto

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Quoting fullauto

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Hi Traders,

I was studying a daily chart for the Eur/Dol chart when I noticed a small pattern. I started trading it and it almost always wins pips. It is averaging over 90 pips a day or 6 lots (on 3 currency pairs). I would like some you folks that been trading longer then me to look over this simple system tell me if am crazy or just getting lucky and possible help me maximize its profits. Its extremely simple. I have back tested it and now currently live testing with a mini account and it has winning trades pretty much daily. The win to loss ratio is way out of balance and but I don't think the system works any other way. I losing day can take 5- 10 days worth of trade profits. There have been way more winners then losers so it balanced out in (+) pip favor.

System:

at the close of the day 5:00 pm Eastern pull up your daily chart. I draw a line one pip above the high and 1 pip below the low. Those are my long/short and stops.

I will use Eur/Dol for example:

(Sunday) 5pm Long (2 lots) 1.2784 Stp 1.2722 Limit (PT) Order 15 pips 1.2799

Short 2 Lots 1.2722 Stp 1.2784 Limit (PT) Order 1.2707

Long trade was opened and few minutes later 15 pip limit profit targeted hit.

30 PIP PROFIT

(Monday) 5pm Long 1.2821 Stp 1.2752 Limit (PT) 1.2836

Short 1. 2752 Stp 1.2821 Limit (PT) 1.2737

30 PIP PROFIT

I am currently trading 3 pairs each day. I take 2 lots but only 1 lot on a new pair. Most of the currency trades don't work with this method and a quick look at a daily chart will prove it.

Gerald - fullauto

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Quoting mrmikal

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Couple of things...

First of all, you're trading daily high/low break. I think for the most part, it wins more days than it loses if you're only targeting 15 pips. Like you said, depending on the range for the day, a loss can wipe out a few weeks worth of work. With your RR being 15:100+ your winning percentage had better be extremely high. It's natural to see that you are experiencing a "good run" which is inherent with such a small RR. That RR will eventually come back to bite you on a day where you may have 2 consecutive losses.

The other major thing that sounds very misleading is how many pips you're gaining a day. Technically, you're gaining only 15 pips...that's how far the price has to move. Whether it's 1 lot or 100 lots, it is recommended that you start looking at profit in terms of how many pips per lot you gain. Thus if you're gaining 15 pips on 2 lots, your gaining 15 pips. This will give you a more scalable system language. Let me put it this way...I could have easily said, I'm gaining 100 pips a day. People would look at me crazy and say "how"...well, if I told them I were trading 100 lots and waiting for a 1 pip move...that's not a very impressive system because it requires such a large position size. You have to realize that your current positive expectancy on 1 lot on this system is 15 pips while your negative expectancy is 100+ pips. At that ratio, I would say anything less than an 85% win ratio would be a lame duck system. You may be doing well now...but until you have 100 trades and can tell me that more than 85 of them were winners, we reserve the right to poke holes in this system.

Now, you can probably (over time), determine what a good stop loss is in order to minimize the risk during a down trend. Let's say during your wins, you've noticed that no win ever dips more than 40 pips. Well, if you set your stop loss at 40 pips (or let's say 50 pips) to be safe, you reduce the effect of a loss. So on days where the range is > 50 pips, you set a stop loss of 50 pips and take it if the price comes down to touch it. that way you don't lose the entire daily range (which, on most days averages more than 50 pips). Then your system becomes 15:50 RR which requires you to win 70% of the time...not a drastic improvement, but it's an improvement considering your previous expected win ratio was in the mid-80's.

Good luck.

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Quoting fullauto

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Just to update,

Using my breakout system I posted here, profit was 234 pips last week. Today closed out 10 pips up.

Currently trading 4 pairs using this simple system.

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Quoting fullauto

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Thanks for the great feed back, yes your right on the pips reporting. kenari05 you mentioned hans123 method, where could I read on this? Thanks again for the feed back guys.

it catches many wins but yes problem is doesn't take but few losses to wipe of a lot of wins. I have had as many as 20 + in row on the dollar. So I think the key is for me to do like you said and figure out a better stop loss position that would minimize loss and at same time not knock me out of potential good trades.

Any info on hans123 method and where I can read on it be great!

Fullauto

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Quoting johnedoe

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I use a similar strategy...

My parimiters are ....
TP = 3 pip
SL = 25 pip
position size is 90% of available bal.......

this gives me about 1% per day compounded return, and yes the SL has been hit a time or two and it takes some time to regain my losses, but regain them I do......

so for what its worth there it is.......

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Quoting fullauto

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Just to update,

Using my breakout system I posted here, profit was 234 pips last week. Today closed out 10 pips up.

Currently trading 4 pairs using this simple system.

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Quoting Turveyd

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JohneDoe, that could work out okay IF :-

You've got a full ECN broker, ie 1 pip spread + Fixed @$8 cost for $10 Lots.

With FXCM's Spread, need 8pips to get 3pips


What percentage of losers do you get 7 - 8% I'd guess, maybe less with better entry picking.

8wins required to make up for a loss, bet you do 20+ easy per day though.


I Likes

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Quoting philmcgrew

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Since your strategy is very simple (some of the great ones are) I coded it up in tradestation and tested it over the last 3 years. I used a 62 pip stop and a 15 pip target with a 2 pip spread. It buys at 5 PM EST at the high + 1 pip or sells at the low -1 pip. If that is not correct, let me know.

The trades are 80.37% accurate but as you can see that is not enough to overcome a rough risk:reward.

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Quoting johnedoe

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there is just one problem with back testing .......... it is wrong most of the time, I agree it will give you an idea, but there is nothing like forward testing to get the proof

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