Advanced system #14 (Simple trading with Daily range)

For the period of April 1 to today, the 3 best performing pairs were:
GBPJPY - winning ratio 85 %
EURJPY - 70 %
GBPUSD - 67 %
Winning ratio = (winning days - losing days)/days total
Attention Joe: the winning ratio of EURUSD has been only 55 %, which is, in fact, fifty-fifty. So, I hope that you build and test your EA on best performing pairs with the start at 7 GMT.
It seems possible that we have to concentrate on mentioned three pairs while using this system.
Indrek

After thinking further about Joe T's input I found an order placement system for another method and adapted it to suit this one, basically it involves placing 3 buy and 3 sell orders.

Buy/Long Orders:
i. #1 - Entry CLOSE+5pips, Take Profit=l5pips, S/L=30pips
ii. #2 - Entry CLOSE+5pips, Take Profit=30pips, S/L=30pips
iii. #3 - Entry CLOSE+5pips, Take Profit=50pips, S/L=30pips

Sell/Short Orders:
i. #1 - Entry CLOSE-5pips, Take Profit=l5pips, S/L=30pips
ii. #2 - Entry CLOSE-5pips, Take Profit=30pips, S/L=30pips
iii. #3 - Entry CLOSE-5pips, Take Profit=50pips, S/L=30pips

There can be 4 possible outcomes after either the long or short trades are triggered:
1.) All 3 profit targets are reached for a total of +95pips.
2.) The first 2 profit targets are reached (+45pips) and the remaining lot is stopped out (-30pips) leaving a total of + 15 pips.
3.) The first profit target is reached (+15pips) and the two remaining lots are stopped out for a total of -45pips.
4.) All 3 lots are stopped out for a total of -90pips.

Additional to this is the variable outcomes of when both the long and short trades are triggered. Also note that for those so inclined to monitor the trades, stop levels may be adjusted on remaining lot/s to protect already achieved profits. Don’t forget to put a time limit on the orders so that they expire before the close of the bar. Say 20 hours from placement.

I'll demo this and get back with the results.
Regards Batavier

Joe,
Have you tested the system starting at 7 a.m GMT?
By now, I am quite sure of two things:
1. London open is the best time to start. Midnight data (GMT) does not work because there are false breakouts very often during early morning hours.
2. Previous day average contains noise (after very active or passive days), so a longer period ADR is better.
And one more thing: EURUSD is surely not the best pair to make conclusions about the system. Try GBPJPY, EURJPY, GBPUSD.
Indrek

Hi Nick,
I think that the excel file that I posted yesterday (see page 31) is the best source for your encoding. It contains all the data about how I use the system.
What to do with positions that are still open by the end of your trading day - it is your decision. Stuart wrote some time ago that he usually lets them run.
Yesterday I traded 4 pairs and had loss on 3 of them. So, I decided to let the last one - EURJPY - to run. I now monitor its activity every hour and trail the stop. My hope is that maybe this position (as EURJPY is a volatile pair) will cover my yesterday's loss or at least part of it. Let us see.
About your other questions - please read previous posts, we have discussed very many things here already, no need to repeat.
Regards,
Indrek

Allen,
Your idea of 1:1,5 ratio may be very good, especially for the very volatile pairs like GBPJPY or EURJPY but it has to be analyzed/backtested.
I have also thought about the new approach of Stuart in one of his latest posts: what if we would not try to grab 25 % of ADR on different pairs but just 10-20 pips per day on one pair? Isn't it easier to buy, for example, 2 lots of EURJPY and grab 20 pips instead of trading many pairs during the day and having mixed results?
Maybe it would work this way: entry = +/- 25 %, TP = 20 pips, SL = 100 pips or whatever.
Indrek

Greetings to all.
Good money management allows us to fight on even with a disaster like yesterday.

Indrek thanks for the Average Daily Range Calculator. I worked out that the ADR is simply previous 1 + 5 + 10 + 20 days added and divided by 4. I googled this indicator but can find no reference on others ways to use it can anyone help?

Joe T. Thank you for your considered reply.
Regarding your boiled down strategy I read it carefully several times thru.

I'd like to try and trade it manually. I assume the idea is that recent prices have greater impact than the price several months ago. However didn't grasp the methodology of trading.
Do you simply use previous days range and place buy/sell order using close price +/- how many pips??? of previous days range? SL at entry +/- how many pips??? of daily range. TP at close of daily bar. So how do you work out the number of pips for entry and SL?
Could you please clarify this for me?

Thanks again for your time and effort.

Regards Batavier

Dear Indrek,
I have a lot of interest in this subject.
I decided to encode the system and I want to verify the results before sharing.
So, could you please post your trades list, with trade details (mainly entry and exit price) ?

I have yet 3 questions :
1. What is the rule if stop and target aren't filled ? Do we exit at end of day ?
2. You enter at price of 7 a.m GMT +/- 25 % of daily average (ATR).
Wich ATR do you use (10 days) ?
3. Does the ATR be calculated with data from 7 to 7 a.m GMT or from 22 to 22 GMT ?

Thanks a lot in advance
Nick

Indrek,

You are right on the money that the theory of probability was just waiting to give us a day like this. I'm just praying that the Eur/JPY pulls through so I don't realize my fear(0 wins). Also wanted to get your thoughts on trading with a ratio of 1.5/1. Basically looking to get a little more profit and in turn you could trade the 7 pairs and if 3 hit then you would make profit.

Ie.. If the pairs move of 25% is 40 pips then put your take profit at like 60 pips and stop loss at the normal 40 pips. So in turn if the 7 pairs average move of 25% is 43 pips then you put your Take profit at like 64 pips and keep the 43 pips as your stop loss.(If 3 hit the TP on average it would be 192 pips and the 4 that hit SL on average would be 172 pips- 20 pip gain winning only 43% of your trades) You would need to win less then half to make profit and if you win more than half it's icing on the cake.

Anyway it's just a thought and would love comments on peoples feelings about it. Thanks

Allen

Yes, Allen,
this has been the worst day for the system.
Yesterday evening when I posted the results sheet with extremely good numbers in it, I thought that the theory of probability should bring to us a very bad day soon. And it happened at once...
Today we were reminded that trading at forex markets cannot be one happy fairy tale all the time...
Indrek

WOW!!!!!
Did anyone else today just get hammered today(05/14)? This have been a very very rough day and given me a really check to always plan for the worst. I like this system alot but today through me for a loop given my results over the past couple of weeks. Thanks everyone

Allen

Hello Batavier and all others.
I use a simple Excel sheet for my calculations. I posted it earlier but now do it again - see below. In this file I just have to fill the blue squares to get everything that I need.
About Friday's - I have not analyzed it but I do not have any bad feelings about Friday's when using this system. It seems to me that all days with big news are suspicious, especially when you set your positions at London open and the news is coming from the States at only 12:30 GMT. Sometimes, before the news prices are going to one way but not enough to give profit and then after the news they change their direction.

Entry_TP_SL.xls

Regards,
Indrek

Why do we need to worry about daily trading range or HLC figures? Surely it is sufficient to note the price at the end of the 7.00am GMT price bar, note the ADR figure (using the indicator mentioned by Indrek) for that currency pair and apply your opening order, stop loss, take profit etc to this information. Job done!!

Hello Batavier,
I use an indicator that Stuart posted in this forum at page 8. It counts ADR for 1, 5, 10, 20 days and also just ADR. Unfortunately, I do not know exactly what is the period for the overall ADR.
I post the indicator again here.

Average_Daily_Range_1.mq4

Regards,
Indrek

Has anyone made use of Joe T's EA submitted on April 21 to use Stuarts strategy?
I'd like to amend it to use Indrek's latest revelation but have no idea how to adjust the program, this could save us all a lot of time and allow quick trade execution at 7am GMT each day, especially for those of us who have other time commitments. Any help would be appreciated.
Regards Batavier

Hi everyone,
I have "discovered" Stuart's system yesterday and have a great opinion about it. By using it, we are able to pull profit out of market in whole because we are diversified, using logical entry points and reasonable money management. Couple of observations:
- In order to avoid "noise", I think is better to use ADR /10/, instead of daily candle HLC
- I would cancel second order if first one hit TP. If not, price very often hits opposite TP
- Most convenient calculation of daily bar as per my broker, for me was at the day close, which is just before Tokyo open. Wrong!!!! HLC has to be calculated before London open in order to immediately get in strong move.
Thanks to everyone who unselfishly contributed to this great system and Good Luck to all of us. Frebek