Forex trading strategy #18 (20 pips with GBPUSD after midnight)

Edward

You don't need an exact 1:1 risk/reward ratio or greater if you have a techninique that has a higher success rate and you need to evaluate this dependant upon many things but namely the technique and pair. You can have a larger SL than TP e.g. 20 SL 17 TP, e.g. if the technique wins 70% of the time. Out of ten times in my example you'd with a 70% win @ 17 pts = 119 pts versus 30% loss at 20pts = 60 pts. Net gain is 59 pts. If you have a 1:1 risk reward and you win 50% of the time you'd end up breaking even having paid the broker for the trouble.

Given the above, it's also worth pointing out, that the success of this technique/many techniques can vary on the spreads you get from your broker. If you've a broker with larger spreads you'll need to adjust your TP to account for them. Being less ambitious could improve the number of times the technique wins and although you take less from your winners than your losers you could find that you end up with with a considerably higher win/lose ratio. Check and adjust the application carefully and practice any technique on a demo first so that you're comfortable with it.

Happy Trading

McWallis - How about back testing it yourself, and posting it, rather than asking everyone else to do it for you. It's very easy to back test this manually or use a strategy tester available on software such as eSignal.

Also... this is a variant on a consolidation breakout technique that can be applied across many pairs at various timies of the day, also dependant on the time of month and which session the pair you're using, is most active in. A number of ratios for SL & TP can be applied and will vary even on the same pair during different times of the day, month and year i.e. different periods of volatility. The markets have seasonal cycles to. Constant analysis needs to be in play in order that you maintain the effectiveness of the principle of the technique rather than just blanketly following the stated use.

Best wishes in you your trading.

J

@ User: 5 point break = 5 pips price move beyond the breakout level.

@ McWalis: depends what pair you'll trade with. If EURUSD, then it's 20 pips stop. If GBPUSD, still could be 20 pips, but I'll probably also try it with 30 pips stop. But then the TP should also be 30 pips.

The main idea that Rich points out on is that you can't set a SL higher than your TP.
If you set a higher SL, you need to rise the TP level, but then your chances to reach it will be lower.

As I can see, it's about balancing pairs' breakout potentials at certain hours.

@ Wale: the leverage wouldn't make any impact on the performance. If you trade with 1-2 micro, mini or standard lots (depending how large is your starting balance), the leverage doesn't impact trading. P.S. assuming that you know what lots (micro, mini or standard) you should be trading with from the beginning.

Kind regards,
Edward

whats is a 5 point break

Hello , is this strategy working for anyone here? The original post was se tome ago now and was hoping someone may be able to update

dear ant
you have told 30 minutes strategy is working well on eur/usd, aud/usd. my question is what we have to take close of the first 15 minute bar after midnight GMT, or close of the first 30 minute bar after midnight GMT.

RAJ

Hi Guys,

Rich seem to have paused/stopped supporting this thread. So, let's develop it together.

Regards,
Edward

Hi Rich/any other member,

Nice site to reach and read always.

Can you please send me the performance report of the Strategy beginning from
29th April, 2010 to date to my e-mail address: walisthadd(at)yahoo.com.

Expecting. Thanks

McWalis

Hi Rich & other readers,

This is a great website to know and read regularly.

The strategy must be fantastic. But can I change my stop Loss from 20 to 50 pips, because I am afraid the market may just retrace immediately after your 20 pips stop loss and then move in your favour. It happens sometimes, i feel that the 20pips SL is too tight.

McWalis

Hi Rich,
What is your leverage ratio that you used in those trades? I want to know so that I can use it to assess your output as claimed. I am eager to try your strategy out.

Thanks.. Wale

Hi,
Iam Senthil from India i havejust started trading in Demo Account but never achieved profits.i want to join ur trading family pls reply wat strategy to use and pls mail me all tricks pls. sen_nat2010(at)hotmail.com.
or buzz me up @91-9677218307.

Thank U
Senthil

Please lets concentrate on Rich`s trading strategy and those related to it, and not get side tracked by irrelevant trivia. 99.9% of us are here to learn and trade. Chris

Jeff, are you for real

Yeah... hi Rich... I spoke to my neighbour about the whole mirror incident and she says not to worry. Apparently she broke a mirror once and walked under a ladder on the same day. She only broke three of her limbs in the following year and that was only because another neighbours child at a party, was blindfolded, mistook her for a pinata and she took a rather unfortunate beating. So I can probably start a bit sooner. I get paid this Friday and after all my outgoings: Rent, Child Support Agency payments, CCJs and other assorted debt collection agency payments I'll have £38.45. I'm interested in this midnight trade, it sounds ideal for me because have insomnia, I sometimes count the peas in my icebox to pass the time but would like to learn how to 'beat the market'. Is this the Holy Grail of trading systems? Thanks. Jeff

Rich... thanks for this... but what's a trade and how do you place one? I've got a computer and a savings account which I can take money out of sometimes. When I'm not overdrawn. Which is quite often... so I probably wont be able to start for awhile. I broke a mirror yesterday so I it's probably a good idea if I don't trade for at least seven years. If you're still about then I would appreciate any help you could offer. Many thanks. Jeff