My Trading Log

o990l6mh · October 7, 2009, 6:17pm

Ok, one more.

Once the trade gets into say 40-50 pips profit I’ll simply start switching up to higher time frames and track it for as long as it seems to want to run, basically switching to normal S/R, trendlines, etc. And gut feeling too of course - willingly or not…

phil838 · October 7, 2009, 6:21pm

Gotcha… Now go to bed.

SanMiguel · October 7, 2009, 6:26pm

o990l6mh:

I decided to remove the AUDUSD and EURUSD pending orders. I’m considering whether to make it a rule to only ever take trades that are in the direction of the daily trend and both these trades were attempts at picking the tops. GBPUSD order still standing, GBP looks weak still and I see no reason to remove that order.

On the backtest I’ve about come as far as possible on one of the two forks. The conclusion is that it sometimes is vastly superior to the standard method and on the right entry you can virtually double your account without using more than normal risk.

The drawback is that on the majority of trades, the standard method will do as well or better. Another drawback is also that once you initialize trading this way, you have to monitor the charts constantly, and I mean constantly.

I’ve been secretive enough, so I’ll try to explain the idea (If you can even call it that) that I’m investigating.

Imagine that we have a high quality pin bar on the 4H, location is at a swing high and it seems that the daily trend is about to resume with this pin bar. There’s at least a 1R profit possible, maybe more.
What would we normally do here?
Well, something like this: place a pending order a few pips beyond the high or low of the pin bar. Place a SL corresponding to our risk, for instance 2%, a couple of pips beyond the other side of the pin bar.

That’s logical right? No other sensible way to do it?
Ever since I began looking into trading I’ve been thinking about (like everyone else I guess) how to maximize profits without having to take too big risks with your account.

Logically, we would want a huge risk:reward ratio and a high win rate. But to manage to combine these… Oh if only life was so easy we’d all be putting in orders for that Ferrari.

Still, it’s clear that this is what we need to aim for.

The situation I mentioned with the high quality reversal is the best setup I’m aware of. It has a very high win rate and the trades can turn into long runners.

The technique I’ve been experimenting with and testing is simply to place a horizontal line at the same place we’d normally put our pending order. Then we open a 1min chart, or even better a 30s chart (available in Oanda) and wait for price to cross the line and close beyond it. When that happens we enter with something like a 3-4 pip (spread included so broker spread is of major importance) SL. That SL will correspond to something like 0.1-0.3 percent risk.

What happens next is that we keep taking these 0.1-0.3 percent losses every time price retraces to hit our SL, until… until the trade starts running. For easy math, let’s say 3 pip SL and 0.3% risk -> 0.1% per pip.
Simple math tells us that after 10 pips we’re in a 1% profit and if we’re able to hold for 200 pips, that results in a 20% account increase.

This is one of the two versions of this I’ve been studying. The trick is to manage to catch real runners that more than outweigh all the little losers.

One way to smooth the equity curve is to take partial profit at, say 4R, which dramatically reduces losses but also reduces the size of the big winners.

This means sitting in front of the screen for an undetermined amount of time and on many trades we will find that results would have been better with the classical approach.

There’s no question in my mind that this works when ONLY the best setups are chosen. When I get to a place someday where I can trade full time, I’m going to use this approach to try to get in on the trend with a huge position while still having kept a conservative risk.

Unfortunately I’m not in that place yet and it’s not even on the horizon yet, so for now this will have to be an extra spice to add when opportunity happens to knock, like during vacation and such.

Until that day comes I’ll dream of surfing the trend for 500 pips, I’ll leave it you to figure out how many percent account increase that would be…

Strange thing - I’ve never seen this being discussed anywhere else, which either means that I’m missing something and will feel like a complete idiot when I figure it out, or I’m really clever to have thought this up all myself. I think I’m clever!

Wow, this was a long post!

At what point would you put the trade to break even? There are going to be times where the trade moves many pips in your direction but still comes back to hit the SL.
Also, at what point would you call it quits? Presumably, if each entry is 0.3%, you still want to run a total risk of 2% so you have 6-7 strikes?

If no-one else is a programmer, I can have a look at this for you…

aamattsmith · October 7, 2009, 7:08pm

When did you first get into Fx?

phil838 · October 8, 2009, 1:07am

I’m a really bad programmer, but I’m giving it a shot right now. I’ll let you know if I get stuck.

phil838 · October 8, 2009, 1:43am

Ok, here is my trading plan for testing out this system. Let me know if your backtesting has already shown that anything I’m considering will not work. No need to reinvent the wheel…

For the entry points I’m going to use the same criteria that I’d use to place NickB scalp lines, but I’m only going to pick the strongest lines. I know that might be a meaningless description to a lot of people reading this, but to MacGyver, Matt, SanMiguel and a lot of others that sums up about a page of rules in one sentence.

I’m only going to take counter daily trend trades if it’s a really, [I]really [/I]good setup with a good potential for profit. I’m also going to give every trade a 5 pip buffer to help avoid fakeouts.

Because I’m trying to use an EA to help with the entries I’m going to be using IBFX, which has slightly higher spreads than Oanda. Since that’s the case I can’t do a 2-3 pip SL, so I’m going for 5 pips as my stoploss. I’m going to risk .25% per trade, with a max total of 8 trades per setup, making a total risk of 2% per setup.

I’m actually going to be testing this on my live account so I don’t have to switch back and forth between live and demo. That being said I’m going to ignore my MM rules and enter each trade with .01 mini lots (since it’s real money). I’ll limit my trades to 8 per setup and record which trade, if any, went into profit so I can figure up what my profit would have been had I been using the real MM rules.

As for breakevens and takeprofits, I’m going to use good ol’ fashioned chart analysis (S+R lines, trendlines, candlesticks, etc), just like I would on a conventional trade.

So that’s my plan… Is there anything I’m missing, or anything I misunderstood about “Project MacGyver?”

Right now the only setup on EUR/USD is a long trade at 1.4844. There is a short line at 1.4650, but I’m throwing it out because it’s counter-trend and has a minor S+R area and a major trendline blocking any good profit potential.

s050399b · October 8, 2009, 2:52am

What’s going on? What infraction?..

s050399b · October 8, 2009, 2:56am

OMG! Phil838!! so this is where you have been spamming now!! no wonder Sunday Breakout thread is so quiet nowadays!!

Please come back and spam the Sunday Breakout thread and the “My basic chart analysis”!

phil838 · October 8, 2009, 3:03am

You’re a little behind. It’s all been cleared up now.

But if you really want to know… He cussed at a spammer.

phil838 · October 8, 2009, 3:08am

Sunday Breakout is quiet because, with your help, we’ve pretty much got it down to a science. Not much left to say, except on Sundays…

“My basic chart analysis” died out… I guess it just wasn’t basic enough for most people. Plus the major trends that brought in the big money haven’t been around for a while. People tend to lose interest when the returns are “only” in the single digit range per month.

s050399b · October 8, 2009, 3:27am

just finished reading, but I couldn’t see any system being posted here to write the EA for?

phil838 · October 8, 2009, 3:32am

Post 409 is MacGyver’s orginal description of it, and post 425 has my trading plan for the forward testing I’m starting.

SanMiguel · October 8, 2009, 3:49am

Sure, no problem.
Obviously there are a few ways of doing it but one option could be to use a script to start the trade, which gives it a magic order number and then the EA can recognise which trades to work with. The EA will need to have a cut off point for when to stop creating new orders, any move to break even points, etc. …oh…also needs to be able to calculate risk according to account balance.

s050399b · October 8, 2009, 3:59am

I have re-read it, but didn’t really understand what’s going on…hmmmmm,

s050399b · October 8, 2009, 4:02am

o990l6mh:

The technique I’ve been experimenting with and testing is simply to place a horizontal line at the same place we’d normally put our pending order. [B]Then we open a 1min chart, or even better a 30s chart (available in Oanda) and wait for price to cross the line and close beyond it. When that happens we enter with something like a 3-4 pip (spread included so broker spread is of major importance) SL. That SL will correspond to something like 0.1-0.3 percent risk.[/B]

[B]What happens next is that we keep taking these 0.1-0.3 percent losses every time price retraces to hit our SL, until… until the trade starts running. [/B]For easy math, let’s say 3 pip SL and 0.3% risk -> 0.1% per pip.
Simple math tells us that after 10 pips we’re in a 1% profit and if we’re able to hold for 200 pips, that results in a 20% account increase.

This is one of the two versions of this I’ve been studying. The trick is to manage to catch real runners that more than outweigh all the little losers.

didn’t understand this part…

s050399b · October 8, 2009, 4:07am

wait a min!! breaking them down into steps…

identify a OSP_Buy, example, 1.50, SL = 1.50 - 3 pips
place order, OSP_Buy with a stop loss of 3 pips
check if order hit by stop loss
if order hit by stop loss, repeat step 2 until 10 tries is used up?

s050399b · October 8, 2009, 4:11am

Phil838, if what I interpreted is corrected, I could extend the functionalities of Position Sizer EA.zip here to do it?

http://forums.babypips.com/133505-post986.html

s050399b · October 8, 2009, 4:31am

o990l6mh:

The technique I’ve been experimenting with and testing is simply to place a horizontal line at the same place we’d normally put our pending order. Then we open a 1min chart, or even better a 30s chart (available in Oanda) and wait for price to cross the line and close beyond it. When that happens we enter with something like a 3-4 pip (spread included so broker spread is of major importance) SL. That SL will correspond to something like 0.1-0.3 percent risk.

What happens next is that we keep taking these 0.1-0.3 percent losses every time price retraces to hit our SL, until… until the trade starts running. For easy math, let’s say 3 pip SL and 0.3% risk -> 0.1% per pip.
Simple math tells us that after 10 pips we’re in a 1% profit and if we’re able to hold for 200 pips, that results in a 20% account increase.

[ Setup ]

user to set “number of times to try”, “% to risk”, “buffer”, “SL in pips” in EA
when EA is launched, there is a line for the user to move to his ideal pending buy/sell
user re-positions the line, and activiate the EA (by deleting the label?)
label changed to “EA Activated”

a) if current price is less than price of the line, Buy trigger, else Sell trigger
b) trigger price + buffer + spread (do we need to include spread for sell?)
c) check if the closing price of the previous 30 mins bar is more than the buy trigger price. If yes, do step e.
d) Check if the user wants want us to stop, if no, do step C
e) so closing price of 30 mins is more than our trigger + buffer + spread
f) send in order to buy at market with stop loss as specified
g) number of tries + 1
h) check if the order has been hit by stop loss, if it’s hit by stop loss and number of tries did not exceed user specify, do step C
i) change label to “EA deactivated”

http://forums.babypips.com/140108-post409.html
http://forums.babypips.com/140206-post425.html

o990l6mh · October 8, 2009, 7:02am

I see there are many posts, I’ll answer them tonight when I get home after work and gym.

phil838 · October 8, 2009, 12:24pm

I’m one step ahead of you. I’ve already modifed that exact EA into what I need.

I didn’t put too much work into it yet (everything is hard coded and the coding is sloppy), and I suggest you don’t either. We need to figure out what’s best rule-wise for this system, then work on a proper EA.

My crappy one will work for my testing purposes.