Advanced system #14 (Simple trading with Daily range)

User

This seems a needed extention to select pairs with limited correlation. Please let us know what you find. Since there is some significant correlation at work here it might be hard to find 8-10 lowly correlated pairs. We'll see.

Thanks User.

Best, David

1st thing to note is the need for pairs not connected, by doing this one is basically setting up and including a nice hedging system ie 2 of my pairs have closed, both are ***/jpy, one has closed for 42 profit, the other 81 pt loss. i will try and select 8 pairs with no similarity.

5 pairs now triggered.

Just a brief explanation of how I am trading your system. I have devised a spreadsheet that uses 5 day rolling average daily range to see if this "smoothes" this process out, all other calculations are has your spreadsheet. I hope I can bring something to this board.

Hi folks,

A friend of mine stumbled across this thread and to say the very least it appears very interesting. Ref the initial spreadsheet I cannot see what relevance the pivot price plays because it is not used in any calculation for the entry, limit and stoploss prices, am I missing something.

I am using the 24hr period from 09.00 and with the exact time being 11.23 only 3 of my pairs have triggered, is this unusual?

Have any of you used IGIndex, they provide excellent charting. We shall be testing 8 pairs each and will be happy to add any input we can.

Hello everyone, my name is Hassan and I am from Norway. I think this method is very interesting and logical. I will try it on the different pairs and looking forward to the results.

Hello Stuart,

Thanks for the pictorial explanation.
i pray this week should be good. i will be sending my live report here.

is there any situation where one doesn't trade a pair at all?

Thanks
steve

You though up a pretty nice one Stuart. I'll be trading and posting my results also.

One question how do you do Sundays again, or do you ignore Sundays all together?

Great website Edward

Thank
Ben

Hi Stuart

Just wanted to pass this link on to you: I was thinking of brushing up my spreadsheet skills to build a spreadsheet to test out a few different strategies and came across this freeware - downloaded and had an initial look. I am sure when I get a moment it will be possible to use to test out a few different settings. You can download the Forex Strategy Builder from http://forexsb.com/download.html

Diana

Nice (Fri)day Stuart!

For those still deciding to work seriously with this system, or abandon. Here is something that might help. Take a look at your Expected Value (EV) of a day's trade.

Some possible parameters: 1)you expect to win on 70% of your trades (this seems about right with the limited data we have), 2)you expect to lose the max (assume 100 pips) on 10% of your trades, 3)winners will average 40 pips, 4) other losers will lose, say, 30.

So we have EV = .7(40) + .1(-100) + .2(-30) = 12 pips average win PER trade.

It seems small, and maybe my assumptions are slightly conservative, BUT this is your expectation for each pair. Stuart trades 9 or 10 daily. I'm down at about 5.

So, if you did trade, say, 8 pairs X an expected gain of 12 = 96. Most traders would be ecstatic to average nearly 100 pips per trading day.

I really like Stuart's trading upwards of 10 pairs since any positive expectation causes your total pip earnings to rise. IF the EV is positive, and I think it is, trading more pairs should smooth things out. Following his rules and taking your first entry: long or short, clearly helps.

Obviously, there will be challenging days, and you should insert your own assumptions on % winners and losers and how many pips are won and lost with different assumptions, but I think you will realistically find an EV of nearly 10 per trade to quite a bit more depending your experience. Of course, Stuart has had quite a number of BIG days. My EV assumptions for Friday (9 pair x 12 pips) was 96, but Stuart sailed in with 249 even with the one large loss. Still, it all evens out. That's where EV might help you.

Every success to Stuart and all traders of his solid system, David

Hello Sir,

I DON'T UNDERSTAND WHAT YOU MEANT BY:IS THAT IF A PAIRS MOVE IS UNDER 100 PIPS, CHANGE THE MOVE MANUALLY TO A MINIMUM OF 100 PIPS - OR DON'T TRADE THAT PAIR THAT DAY.

PLEASE EXPLAING MORE .
AM USING ALPARI AND FXOPEN , AM IN NIGERIA MY PLATFORM NEW CANDLE FOR THE NEW DAY START FROM 11GMT TO 11GMT AND 12GMT TO 12GMT ,AT THIS TIME I START INPUTTING MY HIGH LOW AND CLOSE, HOPE AM DOING THE RIGHT THING.

STEVE

Hello David,

Thanks for your assistance.

i want to ask if you use the spread sheet too?
or do i just place my buy stop order at the high and and sell stop at the low?
with 100 pips stoploss.
please suggest, i know you are making it , what is your best strategy with this system. i like the system, but i don't want to loose too much again with it.

thanks
Steve

Hello Sir,

talking about the timing, you said you will continue to trade all gbp pairs from 8.00gmt right?
that means i will calculate my high, low and close before 8gmt London opening opening session, am i right Sir. am not a pro. please could you explain more to this.
Thanks
GOD BLESS YOU
STEVE

HELLO STAURT,
Thanks for all you have contributed and others contribution too.
i want to ask about the timing of this system.
Am from Nigeria and uses Alpari and Fxopen platform.
i set up my pending orders from the beginning of the next days candle stick.
that is immediately its 12gmt midnight and another candle stick opens i start calculating my HIGH ,LOW AND CLOSE and enter my pending orders, please hope am doing the right thing.

About stoploss settings i will start inputting 100 pips for all the orders i place for the next week begins and will also try to use stoploss on the high and low for both orders too, to see which will favor.

Sir, please i dont understand what you mean the COG DIRECTION is an indicator or what how do i know more about this and get how to use it.
please any one can comment about what am about to do if am on the right track.

any way i still commend the system.

Hi all,

Matt - Thank you for a useful spreadsheet. I never used one of these approaches, but I think it is a good financial planner, for example for traders, that have firmly set plans for income each month and/or heavily rely on profits made from Forex trading... Or if they just simply like to have it all being arranged, like in your case. Thank you very much for this input. I'm sure It'll be of some help to others.

Diana - nice approach with Ichimoku and probabilities. Myself, I read about Ichimoku trading, but never tried to fully understand it to be able to apply it to Forex. It is a good topic to dig in. Thank you.

Diana's mentioning of ATR, reminded me about famous Chandelier exit method, where stop/exit levels are calculated based on Average True Range.
Here is an indicator: ChandelierExit.mq4, which can be used by trailing stop fans. Indicators' default settings will give a tighter trailing stop; to use a wider one set it to: (10, 0, 9, 4) and avoid the temptation to move your trailing stop closer.

traderjosh - gave a simple and excellent idea to choose only those pairs that
have a clearer trend direction. Actually, no matter if one uses COG or any other indicator/tools to identify trends - there are always few pairs that have clearer trend suggestions than others. That's also one aspect of probability trading as well.

Thinking about traderjosh comment on March 25, 2009 - 18:26 at page 12,
I would suggest looking at placing stops not at the open price, but rather behind the trading range, formed during the first 30 min of the new day. (In my case it'll be 00:00 EST to 00:30am EST). As practice shows, during first 30 min price settles down with its first support and resistance levels.

David - a system requires elimination of any kind of emotions or temptations - if you monitor your trades, you get involved, and then it is difficult to accept losses after you saw a trade being profitable sometime during the day. But, if you prefer to keep it all under control, try Chandelier indicator above, it might help to tighten stops a bit.

Andy - you've got a good point about returning to the original old strategy.
It often happens that after testing and tweaking it, the old rules still outperform new ones. The cause is simple: original rules have stood a longer test than any new ones. Every new day, as we see a new market turn we want to concur it, and so we try to modify the rules. Sometimes it works, but sometimes it leads us away from the original method. Its always exiting to do a research, to test new approaches, just remember to always return to the roots and compare old and new trading strategy over and over again. This bring structure to the strategy building routine and keeps a trader away from "suddenly breaking a well working system".

and finally,
Stuart - thank you for the tremendous and exciting work you're doing.
Regarding Average daily Range I totally support your concept: when we have a spike in the market, we turn to Average daily range to find out the best range for tomorrow's trading; during all other quiet or normal days, we use original method of Previous day high, low and close.

There has been a lot of ideas about improving the system, as to me, I would still stick to the original method I used a week ago (the one I've described on on March 20, 2009 - 10:36 on page 7)
So far "Pivot Point + 15 pips stop" haven't had much impact on the stop loss, so I don't consider it very crucial to the strategy at the moment, but I like to keep daily Pivot on my charts anyway.

Having said all this, I'm continuing my observation and will report to you as soon as I find anything interesting.

Best regards,
Edward

Steve this is a great system but you have to increase your reward:risk to 1:1 lower than that and you're eventual ruin is guaranteed. Secondly you have to adjust your position sizing so you do not lose more than 1% per trade and at any time ur worst case loss on all positions should not be more than 6%. Trust me on this, don't shoot for oversize returns or a high win rate. Concentrate on losing as less as possible.