Scalping system #2 (Morning breakouts)
Submitted by Edward Revy on April 22, 2007 - 10:03.
The closer time gets to 8:00 EST in the morning the less movements can be seen on the chart. It is a well known fact that once the Forex market “hears morning bell” at 8:00 am it is going to really move – stretching well doing morning exercises :).
What is needed from traders?
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The most predictable and significant move is still the morning one - somewhere till 11:00 EST I like to be in a trade. Other specific times - it depends solely on a currency. For example, GBP/JPY that you've mentioned, can also be watched starting from 14:00 EST. In the afternoon this currency pair quite often picks up a trending mood and trends well for several hours.
Happy trading!
Edward.
I have backtested this on a tick by tick basis for the past 12 months (EURUSD and GBPUSD). Performance is dismal for both pairs (ie: net result is a significant loss). I have tried various combinations of stop loss / take profit. Anyone actually backtested this and found that it returns a positive result over any period???
You've done a good job. In fact, it is one of the most unpredictable strategies here, although, I haven't heard of a significantly bad results yet.
I would be interested to see the testing results you've got. Does they actually show that even with +5 pips target and 5 pips stop loss you've got a big negative balance?
Just drop another line and so everyone could take look at system's backtesting performance.
Thank you,
Edward.
SL: 5
TP: 5
start date: 1-JAN-2007
end date: 17-SEP-2007
starting balance: $10,000
EURUSD:
Total net profit: -$4450
Total Trades: 173
Total Profitable Trades: 42
GBPUSD:
Total net profit: -$4000
Total Trades: 212
Total Profitable Trades: 66
This backtesting probably isn't 100% accurate but I believe it's fairly indicative of past performance.
Part of the problem is that the London market is known for stop hunting. Very often the Frankfurt open to London open range will be broken in one direction and then a retracement will occur to break out in the other direction. I have tried variations which wait for the first breakout and then place stop orders in the opposite direction. These have increased the strategy performance, but I am yet to see any variation which is actually profitable over any reasonable amount of time (6 months+).
It might be a useful strategy if a major news announcement is due within the upcoming New York market time. This might increase the chances of a true breakout.
Thank you for the update and useful notes. This should warn traders of being extra careful with this strategy and may be add some analysis to reinforce positive performance.
Great comment. Thank you!
Edward.
i have had fairly good luck with this system over some months of use.
i only trade the 8 am est breakout with the euro and go for 7 pips. i use the highest high and lowest low of the prior three half-hour candles, plus 3 pips for entry, with a tp after 7 more pips. the prior three 30-minute candles are the 7:30, 7:00, and 6:30 est candles.
i believe the win rate is about 75%.
great work on this site - maybe the best site on the internet.
thanks!
gibson
Hi All
These two buy/sell orders need to be OCO isn't it?
Regards
Yes, ideally they should be OCO 'One Cancels Other'. But if the distance between two orders is too wide it may require selecting a closer stop.
Regards,
Edward.
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