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

It is done with OCO (one cancels other) order.

Good luck!

Hi Rich,
Thanks for posting this. Can you automatically cancel one trade when the other kicks in on IG Index? If so, how do you do this please?

Many thanks

Hi Ben,

I read that the platform is MT4, however the broker is not unknown to me.

Regards,
Edward

Hi Tony,

Your example is correct.
Regarding the 50 pips instead of 20 pips change: by rising the stop loss value, your reward:risk ratio becomes 1:1 instead of original 2:1

Regards,
Edward

Here is a pdf about: MT4 Backtesting.pdf
and Alpari data center link mentioned in the document: http://www.alpari-idc.com/en/dc/databank.php

Good luck

Tanne

Hi
i am interested to know, what platform did you use for this startegy?

Regards
Ben

Hi Rich,

This strategy certainly looks good based on your past year results. I am still relatively new to fx and not sure whether I have fully understood the stop loss and target profit points.

This is how far I've understood it and please correct me if I'm wrong so that I will be off trading this strategy according to what you've posted.

If at 00:15 GMT the closing price of Gbp/Usd is 1.5124, then I would sell at 1.5074 (50 pips below 1.5124) and target profit at 1.5054 (20 pips below) and stop loss at 1.5094 (20 pips above) and vice versa for buy. Is that right?

If so, is it a good idea to change the 20 pips stop loss and target profit above and below 1.5074 to 50 pips instead? Because I find the chance of going up 20 pips in a sell trade can be easily reached and my trade automatically stopped out at a loss esp. for a volatile pair like Gbp/Usd.

Please advise. Thank you.

Tony

Hi,please can anyone explain how to use the back testing indicator' thanks

Hi again Rich, just to add to my last comment.
Looking at 1 hour charts of the GBP/USD the converging support and resistance lines very often start quite early in the day, not just in the evening. Some good examples of converging S and R lines forming early on, but with break-outs late in the evening/midnight were on 28th April, 1st May and 5th May.
The great thing here is that you can use quite a tight stop of say 20 points (about 5 points wider than S and R lines gap at the time of the trade) and set your profit target to say 30-50 points, making the risk/reward ratio very favourable.
Hope this is of some use.
Regards
Chas

Rich could you test one more strategy with your metatrader program.

For the same pair buy the highest high + 5 pips or sell the lowest low - 5 pips of the time period 7am to 9am EST ie one hour before us open to one hour after us open.

I think this will be more profitable than the mid night breakout and may have a higher average number of pips per month.

Hi Chas,

I tried testing with a 5 point breakout of the high and the low of the 4 hours leading up to midnight but it was less favourable than the 50 point strategy or the breakout of the full days highs and lows.

I'll have a look into the support and resistance lines you mention and back test that also.

Rich

Hi Rich, I like your idea of the evening/midnight set up and walk away system. One thing I've noticed with the GBP/USD is that if you form a resistance line by joining the highs of the candles for the period 7pm - midnight and a support line by joining the lows of the same candles, then the resistance and support lines often converge towards midnight. Then if you place your buy and sell orders 5 points outside the support and resistance lines when the converging lines are anything from about 20-50 points apart then when a breakout occurs you should easily and quickly reach your profit target and your stop will be outside the converging trading range.
The important thing here is to make your entry level just above the resistance line and your stop just below the support line (for a buy order). Adjust yout profit target to be the same as or greater than your stop level.
Hope this doesn't sound too complicated. I've only backtested it so far but it gives high strike rate.

Regards
Chas

My metatrader doesn't go back further than Mar 08, otherwise I would have gone back a few years.

Rich

can anyone backtest the original strategy for the year 2007-2008 we need atleast 2 years performance before we trade live

Hi Rich,

I think you have a good strategy. However, you said that you only had one losing month but according to your excel spreadsheet, there are three months that lost. Having said that, I still think you have a winner especially since your losing months were fairly small and your winning months were larger. I like the ratio. I'll try it out on my demo. Thanks.

Dennis