Hello again, Norm
A few random thoughts on the strategy you’re looking at, and on Tommor’s comments regarding its faults.
B[/B] I have never traded this strategy, so I can’t assert that it is (or ever was) overall profitable.
But, tKimble and others claimed years ago (when his thread and this thread were started) that the strategy was overall profitable – so let’s assume that those guys were honest, and that this strategy was, in fact, generating the consistent profits they claimed.
That was over 7 years ago. Things change. The “trendiness” of currency pairs generally – that is, the tendency of most pairs to respond to prevailing economic conditions by establishing strong and persistent trends – changes from year to year (just as it changes seasonally). And the typical daily and weekly pip ranges of any given pair vary over time, as well. This changing behavior of the pairs we trade affects the performance of strategies such as the one we are discussing. So, claims of profitability from years ago should be taken with a grain of salt. Or not taken at all.
If this strategy intrigues you, test it carefully on paper (demo trade it), and find out whether it lives up to the claims made for it 7 years ago.
B[/B] Tommor has raised a number of objections to this type of strategy. Not to put words into Tommor’s mouth, but I see his objections as falling into two categories:
(i) this strategy is crude, in that it ignores trends, it ignores more sensible ways of managing stop-losses, it ignores more logical ways of managing exits, etc., etc., and
(ii) because of all that, a sensible trader will be tempted to tweak this strategy to correct its flaws.
Those are valid objections. I can’t argue with Tommor’s logic. However, what if the claims made by tKimble years ago hold true today? What if this crude strategy really will grind out positive pips over the long term? In that case, I’m tempted to say, ‘Set it up, and let it run.’
Maybe this strategy should be given a name that reminds us just how crude it is, so that we will not be tempted to try to correct its flaws, to tweak it, to dress it up and make it look elegant and sophisticated.
Let’s call it THE JUNK-YARD DOG STRATEGY.
The Junk-Yard Dog.
He’s big, he’s mean, and he’s low-tech.
But, he gets the job done.
There’s no need to tweak this crude strategy with trend-analysis, indicators, fancy trade-management techniques, etc., although you might be curious to know whether those things could actually improve the performance of the strategy.
If this strategy – in its crude form – proves itself to you, and you decide to trade it live, then go ahead and trade it in its original form and let it make some money for you.
Then, in demo, make all the “improvements” you can think of (starting with Tommor’s suggestions), and test the results of your “improved” version against the results of the original.
You might find that THE JUNK-YARD DOG is more formidable than you thought.
Tommor asks, ‘Where is this strategy’s edge?’
Maybe the answer to that would be, ‘Who knows? But, it makes money. So, let it run.’
B[/B] You mentioned the nuisance of doing time-zone conversions. If you haven’t discovered THIS SITE, you should check it out. In my opinion, it’s the best site on the internet for time-zones and time conversions. I use it every 6 months to prepare the time-change reminders which I post here in the forum, prior to daylight-saving-time change-over dates.
Okay, that’s my stream-of-consciousness for now. Sorry, if it got tedious or repetitive.
Take care.