been trading demo for the last couple of months, my favourite is FXCM… I have read through countless systems and I found that I had been trying all of them with varying success, some better than others, until I found one that truly has worked. I’d like opinions on this one because I have yet to lose with it. It goes like this…
USD/JPY has consistently over the last month or more (I averaged roughly 9 out of 10 times) had a low somewhere between 48-594 pips from its midnite (est) open. what I do is open a short postion right at the open regardless of the rate and set a limit of 20 pips with no stop loss. By the time I get up around 8am (est) I am 20 pips richer. I have lost once in the last two weeks. If you check the daily open price and daily low for this pair, you will see what I mean.
just did this… went back 300 days… on a daily basis if you were to set a limit of 20 pips you would have won 250 times and lost 50 and if you held those 50 losing postions for and extra day or two you would have won aprox 275 days out of 300. if you set your limit at 10 pips you would have won 290 times out of 300 and again if you held those 10 losing postions for a day or two more, half would have came in as wins. I can post the chart if you don’t believe me.
Shouldn’t you try to at least use some form of stop loss to protect against that one catastrophy which may otherwise some day take you to the cleaners?
Other than that it’s an interesting theory. Go back manually a long time and make sure that there are always lower wicks, or upper if that’s your choice, on the candles.
I once had similar thoughts when I looked at charts and said to myself: it seems to not matter if I short or go long, cause during the course of a day my trade will hit it’s target since price bounces around.
However, since I felt I had to have a stop loss, it didn’t seem to work for me, but I never looked at USD/JPY, so that might be volatile enough.
If it works for you, then go for it. just make sure you’ve done the research properly first.
I’ll wait with interest for results from live trading or forward testing.
check my my last post, backtested 300 days… do the math, I fail to see the catastrophe… I do agree with the stop loss, I am currently thinking of a stop loss that would alow me to carry the trade long enough to hit my limit.
I’m just concerned that maybe 500 days back, maybe 1000… there would be one (one may be enough) instance where price immediately takes off in the wrong direction and just keeps going hundreds of pips.
Like I said, your theory is interesting. It’s just that… it sounds too simple.
KISS - Keep It Simple Stupid is a good thing though, so I absolutely hope that you’ll succed.
I have looked at similar ideas. From what I saw the problem is that your losses are much bigger than your wins so you get caught out. Example if you win 9 out of 10 with a tp of 10pips but your sl is 100pip you will lose long term. So for the losing trades how big were the losses?
Also when you backtest did you just look at the daily candles or smaller time frames as well to see the intraday data?
I never worked out how to make it work for me but good luck hope you succeed with your theory.
Have you tried going both ways (no pun intended LOL).
either daily candles or just a plain old table chart that just shows dates, open, daily high, daily low and close… with a 10 pip limit, out of the past 300 days, you would have had 10 losing days, if you closed those positions at the close you would have lost an average of 100 pips on each of those positions for a total of aprox. 1000 pip loss in 300 days and a gain of 2900 pips in those 300 days on the GBP/JPY pair… I averaged these numbers off from my backtesting could be a little more or a little less but fairly accurate, lol, its late here and I’m a little tired to give you the exact numbers, but yeah, thats the nuts and bolts of it… and if you look at other pairs, the numbers are similar ie., EUR/JPY GBP/CHF USD/JPY all have similar backtest results… to answer your other question, yes, I have thought about going the other way, but it would be nowhere near as profitable on the pairs I mentioned. I’m sure there are pairs that going long (buying) would be more profitable, but, the pairs I found to work short are working for me and in time I will back test every pair BOTH ways but it is very tedious to do all the calculations… hope this helps. All you really have to do is look at a table chart, go back as far as you have patience for, look at the open, high, low, and close on a daily table chart and make a decision.
BTW… DO NOT take this as advice of any kind, this is something that has been consistently working for me on a demo account, I am absolutely sure, that, in time, it will have to be adjusted or it WILL fail… do your own DD (backtesting) and decide for your self…