Forex Trading - View Single Post

iGoR · #1 (**permalink**) 09-23-2007, 02:26 PM

Hi Everyone,

Were I normally believe that trading is very hard work and one can only get good at if spending all your time in it ( as everyone who is very good in his field--from doctor to tennis player) I would like to go over a system with you that is a "set and forget" principle.
It is a breakout system that I would doubt if it is not been looked at before because of the simplicity of the rules.

But I would like to look at it in combination with a few indicators.
I don't know if the indicators will be usefull or not. For all the same it is maybe better to just take the breakout rules with S/L and T/P.

I hate the aproach of so called making a daily amount of pips profit. Trading is surviving in bad periods and taking full advantage in the good periods. That makes an overall profit at the end of the year.
I believe if one is looking for a monthly profit he or she should pick up an normall job.

But lets give it a try.

The rules as I said are very simple and should work on every pair.
If one wants to make an EA for it please be my guest.

I went over the gbp/usd over the worst periods this year between march and june and it worked like a charm. Needles to say that between july and now it works flawless.
But there is 1 problem that today I can't seem to solve.

So the entry rule is going long when the high of yesterday is broken or going short when the low of yesterday is broken. Nothing more nothing less.
I looked on the gbpjpy and there my T/P was 10 pips. It could be that back tests would show us that a bit bigger T/P is also working.

When there is a day that you were not able to make 10 pips profit then the next day you go for 20 pips. If again you were not able to make your 20 pips that day you go the next for 30 pips profit.

Over this years period the highest profit I had to go for was 40 pips and succeeded doing that ( shown on the picture).
Don't ask me what the rule should be if after 10 days we still did not succeed. That is something we can look at to solve.

So basicly speaking I managed with "compounding" to get my so called daily 10 pip profit target. But of course placed on the 6 majors a day can give 60 pips profit.

BUT..and there is a BIG BUT. At this moment I don't see it or feel it how to incorporate the stoploss. Because there were severall days were we entered on a breakout but did not manage to get our 10 pips and price went back completely in the High and Low channel.

I sujest to close all orders and positions the latest at 22.00gmt

So some of you will already understand that this system will give us very high hitrate but the no stoploss rule can spoil the party.
It could be that the days that we don't have a stoploss will eat out the profit of all the other profitable days.

So we need to find a logic stoploss rule or with the help of an indicator.
If we manage to find that and you place this system on 6-8 pairs it COULD be a nice money machine.
On some pairs we will need to take the T/P a little bit smaller and on some other pairs like the gbpjpy bigger.

I know it hasn't a lot to do with real trading but it could be in the interest for people who don't have the time to look to their charts at all or who were smart enough to keep their normall job.

Every bit of feedback is welcome. If you have any remarks or ideas I sujest that you take your time and go over your charts and look over severall months if your idea still stands. Needles to give ideas that would be based on the last couple of days.
The best test period is between february and june this year because of the very low volatility and small daily ranges. Needles to see if this works on very nice trending days.

In the template I have placed the high and low indicator and also some zizag indicators that will show you new lows or highs that are made.

So all the succes of this simple aproach will depend on the rule that we can come up for the stoploss.
Again I succeeded to have EVERY day of this year the avg. 10 pip profit (if not 10 pips the other day 20 or next 30 etc). But that was without any stoploss taken in account. I'm looking forworth to the solutions that we can come up with.

succes and to be continued..

regards..iGoR