Advanced system #1 (Midnight setup)

Ok, this also reminded me about another method I wanted to share with you.
I call it "Trading breakouts of the breakouts".
The idea is to minimize false breakouts entries with our Midnight Strategy. In other words, we don't want to see the market moving against us shortly after we entered on the breakout of a daily candle, and never coming back...
Please follow me to the new page where I'm going to describe the setup and rules of Trading Breakouts of the Breakouts

Regards,
Edward

If you trade 1 hour and 30 min charts you should look back at 5 min charts, and after that even at 1 min, to pick your best entries. Otherwise you will often enter only to see that price immediately moves against you.

Now, when the market is testing support or resistance you have two options:
1st - when you've done a deep market analysis and also determined a major trend on daily charts (and would be also good to know a current trend on 4 hour charts), then you may sit back and relax knowing that you are on the right side. If you have less than 50 pips in profit, there is no need to move your stop or exit, unless you are very unsure about the market conditions.
For me, I exit without a second thought if for any reason I feel that it is better to exit now. It is quite remarkable how often simple feelings about market conditions (especially if you trade one pair and learned its behavior over the time) can be so right. But you have to have some experience to be able to do that.

2nd - when you have no solid analysis to rely on it would be wise to bring a stop to break even if applicable and watch how the market reacts to support/resistance.

Regards,
Edward

hi edward, when the market seems to be moving in a particular direction and l place a trade, the next thing l know it now moves against the trade,now l normally trade 30mins and 1hr charts,thats when l hv time to sit in front of my pc, im verrrry confused. plz my other question is wat should l do when a currency pair tests its resistance or support ,should l close the current position so as not to loose some pips in intra day trading.
tanx a lot dis site is one of the best, expecting a reply 4rm the house of traders. THANX

Does anybody tries to test automatically! I did on MT4 from the year 1999. This strategy looses money in EURUSD and GBPUSD in all mentioned modifications. You can faund some parameters in Y2007 to get some profits. (Original parameters gives 500 pips)
It seems that you guys are using something additional. Your feelings and knowledge about pivot points and when market is trading is much more important.
It would be interesting to hear more about them.

I have found some other very good ideas on this site, for example strategy #21 gives very good entry signals, that gives very good results if used also as exit signals and many positions are bought. True that such traiding require capital and also watching profits turn in losses is painfull. Alas optimizations spoil everything, at least I didn't faund any good ones. #21 definetly can be used as a bases for automatic system.

Anywhay I have found a lot here. Thanks a lot to everybody.
MM

Hi Terrence,

I've done no additional research so far.
The point is, I don't trade just one strategy, I use a mix of rules and also quite often test new ideas; so it is very difficult to make a report on either of the systems.

Anyway, thank you for asking and thanks for your holiday wishes. I took a long vacation this Christmas, came back few days ago :)... haven't traded for a month...

To Steve: yes, you can, absolutely. Among other systems try advanced #3 and #5.

Regards,
Edward.

Greetings Edward,

Please accept best wishes for a great trading year 2008. Please advise whether or not you still use this strategy and the accuracy rate. I believe that this strategy can produce phenomenal results if the right filters are applied to keep us out of bad trades. Unfortunately, these filters have proven to be quite elusive so far. Still searching. Have you had any success with new filters? All the best and happy trading.

Regards,

Terrence Muir

Dear Edward,

Thanks for you very valuable site!

Had 2 questions:

1)If I live on the pacific standard time do I use midnight eastern time or can I use pacific time?

2)Is this your favored system? Since you mention on some other posts that you like to trade off daily charts...What are your other favorite longer term strategies?

Many thank!

Steve

I been trying to use this setup from Nov 5 to Nov 9 its been doing good for about 3 days, justlately this friday got big losses on this setup with my live account. Guess this setup needs buffers or parameters that when tells us when to exit if one of the order is triggered at level are we necessary to BAIL OUT. Got around 70 pips loss last time it is triggered pair GU.

But guess this system would be ok just need additional indicators when to BAIL if its not running on the direction.

Thank you for your ideas, guys.

Both upper and lower wicks(shadows) should be included.

Regards,
Edward.

here is an idea. vegas, a hot trader on one of the forums, gave some very interesting advice, and said you should stop trading until you understand what he is saying, "trading is all about getting free trades."

what that means is that you move your stop to break-even or break-even plus 10 pips as soon as you are up 10 or 20 pips. then you let the trade run without worry.

i am thinking - though have not tested -that this might help manage the risk in this midnight trade.

you simply move your stop to break-even once your trade is triggered and in profit.

happy trading, gibson

The biggest disadvantage of this method is the risk/reward ratio!
When you're looking for 100 pips profit, and planning to take / manage +100 pips loss, then this is considered bad money management techniques...
If we assumed that any strategy will give us 50/50 success/fail ratio, then your profit will be very minor if your stop loss is just equal to your profit target!!!

I agree with lowering the stop loss by 50%, and maybe we'll have many bad trades, but they will be offset by the winning trades?

Once again thank you for valuable comment, your contribution is greatly appreciated!

You've got some good ideas that could be tested/added to the initial trading rules.

I've also got one for you. It refers to trailing stops using Fib retracement 50%. All you have to do in an uptrend is: find the latest Swing low (or use the latest fractal) and pull Fiboancci retracement from that swing low to the most recent daily candle. Adjust your stop to 50% Fib retracement. Re-draw Fibs every new day using the same low point, while adjusting the high to the most recent candle and trail your stop in such way.

Happy trading everyone!

P.S. Right below the text field find Input Format -> change it to Full HTML

Hi, everyone

Thank you for your support and feedback! It is highly appreciated!

Thank you, Thexder, for actively participating in strategy discussion and improvement.

All the best in your Forex trading and research!

Edward.

I haven't tried this out yet because I just found this site yesterday but I like this method and I've been staring at GPB/USD for 24hours looking for a way to help filter out the consolidation and reversal losses.
I thought I'd send a preliminary message to give a suggestion that I will be following myself to confirm it and since this environment sponsors sharing of information, I'd like to contribute anything I can as well.
What I'm considering as a possible way to help get a feel for when it's maybe time to stay out of the daily trade or whether it's time to get back in or stay out after a reversal, try going down to the 1 hour chart and using a standard MACD (12,26,9) to test the "current" state of the price action. Today for example a doji showed up with the small body down near the bottom, making it seem even more negative against the uptrend. So if you were in a long trade, it would be time to exit regardless, but to decide whether it's time to consider setting up a short trade, drop down to the 1 hour and notice that today since early morning EST, MACD was heading down along with negative histogram, suggesting it may be worth considering a reverse trade setup if the sell were to be hit on the next day's setup.
Along with that, I have implemented part of one of the methods I saw here using the "ribbon" of EMA bands. I used just the longer term EMA's (EMA 21 through EMA 36, each line spaced apart by 3). Watching the way those point and cross over helps give a feel as well on the 1 hour. The EMAs may not cross over in time to permit the change in direction early entry, but they will at least flatten out or slightly change direction to help confirm MACD and your own instincts looking at the daily Doji.

I don't know if this will work out long term since I'm only looking at the limited few days of data in front of me, but I'll be following it and tweaking it if needed.

Thexder

Edward
thank you for a excellent strategy, simple and highly effective.
Melvin
South Africa