A Super Simple Trading System:

Following on from my previous post:

I just had a look at GBP/USD (daily) to see what you (Michael) could have done to avoid getting stopped out (whipsawed). By my calculations and using CCI(85): you would have entered long on 02/04/2009 at around 1.1482 and you would have stopped and reversed on 18/09/2009 at around 1.6233 resulting in a nett profit of 1 482 pips. You would have been whipsawed between then and 19/10/2009 for a nett loss of around 193 pips. That’s still a nett profit of around 1 289 pips. You’d still be long now.

That’s my analysis.

Now I know that there are many that will look at the results above and say that the profit made is not comensurate with the time taken to generate such profit. The above result assumes one single lot i.e. no pyramiding to increase the trade size (and therefore the potential profitability) and no (possible) locking in of profits by using a trailing stop of some sort. That being said: multiply the above nett profit by a good few instruments trading reasonably sized positions and what do you get???

Anyway: I FEAR that we are digressing somewhat from the topic of this thread (sorry for that i.e. it was not intentional).

Regards,

Dale.

Hey MattW2009,

Thanks for the kind words and compliment(s) (although I’m not sure that my clients would agree with you)!!! LOL!!! But I’ll ‘make good’ with them soon (or die trying)!!! LOL!!!

As I have said though: if there is ANYTHING that I’ve learned it’s that trading long term is the only way to trade (well: for me anyway). Unfortuanately: I’ve come ‘full circle’ I believe. There were times when I made thousands in a few days only to lose it soon after that (and THEN SOME). That type of trading is not sustainable in the long term and will only lead to misery!!!

One thing I CAN assure you of though: BEFORE I post anything nowadays I will make SURE that I MYSELF am sure about what I"m saying i.e. I’m tired of having to post disclaimers after a few months at the beginning of threads that I’ve started (NOT that anybody actually takes HEED of such disclaimers but still)!!! LOL!!!

Regards,

Dale.

I think I have found a good filter for this system.

I put up a 10/3/3 stochastic and if the trade was taken in the direction of the stochastic it would have given you the short in the eur/jpy and avoided the long in the gbp/usd.

My open position in the eur/jpy is now +175 pips.
My loss in gbp/usd would have been only -53 pips.

This seems to be a much better way of playing the Breakouts.
I couldn’t find a use for te CCI as a filter but I am still looking for other filters that could have avoided the gbp/usd trade altogether.

If anyone could find any filters that would have avoided the gbp/usd trade altogether, that would be very helpful.

Michael

GREAT NIGHT IN EUR/JPY +224 PIPS!!!

I will close the position Friday at 4pm EST

If anyone could find a good filter for this system, I think it will be a super system.

Eur/jpy is now +255 pips!!!
I can’t resist taking my profit now, so I will liquidate position at +255 pips instead of waiting for Fridays close to liquidate.

Perhaps there might be larger profits come Friday, but I just can’t resist banking the 255 pips.

Hi Finally

Do you still trade this at all?

Hows it been going for you?

Cheers

Jay

Hi,

I came through this method, and I have tested this system…its amazing…
its really super simple…and it someone handles it cleverly…get very very good results.
In fact , big moves in favour.

Thank you finally.

Sharad Patel
New Zealand

Hi Finally, or anyone else:

Where I live, I get up 4-5 hours after the New York open. If I were to place opposing trades (Pending Orders) as TKimble suggests, one of the opposing directions will likely be way beyond 50 pips of the previous week’s close. Any ideas how to best enter the trade? One possibility is this: Set a pending order 50 pips north of the CURRENT price, and another 50 pips south of it. Any comment on this? Other suggestions?

Thanks,
Norm

Hello, Norm

The New York open on Monday morning does not figure into this strategy.

In the original, [I]set-it-and-forget-it[/I] version, you only have to be at your computer two times per week: Sunday early afternoon (your time) to place pending orders, and Friday late morning (your time) to close your open position (if any) and remove un-triggered pending orders (if any).

Here is tkimble’s answer to your question in the FF forum:

Part Time Wealth Building Trading System - Weekly Scalping - Page 2 @ Forex Factory

Regarding the Sunday and Friday times:

The retail forex market opens at 8 am Tokyo time[B]*[/B] on Monday (1 pm Hawaii time on Sunday), and closes at 5 pm New York time on Friday (noon Hawaii time on Friday).

Based on your time zone (HST = GMT-10), you would place orders for the week sometime around 1 pm on Sunday, and you would close positions (and/or un-triggered orders) at 11:30 am on Friday (that would be 30 minutes prior to the weekly close).

Those times are current, but the Friday close will change in 2 weeks, when New York goes onto daylight saving time.

Beginning on Sunday, March 12, the time difference between Tokyo and Hawaii will remain the same, so you would still place orders around 1 pm (your time) on Sunday. But, the time difference between New York and Hawaii will go from 5 hours (currently) to 6 hours. So, beginning on that date, and continuing until late September, you would close open positions (and un-triggered open orders) at 10:30 am (your time) on Friday.

[B]* Note regarding the weekly market opening:[/B]

Technically, the market opens first in New Zealand, currently 4 hours ahead of Tokyo. Then, the Sydney market opens 2 hours after New Zealand. And Tokyo opens 2 hours after Sydney. So, why am I suggesting that you take the Tokyo opening as the weekly opening?

Trading is typically either very subdued, or very crazy, prior to the Tokyo opening on Monday morning, depending on whether significant geopolitical and/or economic events have occurred over the weekend. In either case — subdued or crazy — it’s a good time to sit on your hands, and let the dust (if any) settle. So, don’t worry that you’re missing important price moves prior to 8 am Monday (Tokyo time).

Some of us don’t like to fool around with the Asian market [I]even that early.[/I] For us, waiting an additional 2 hours (until 10 am Monday in Tokyo, 8 pm Sunday in New York, and 3 pm Sunday in Hawaii) is much more comfortable.

On the first Sunday in April, New Zealand and southeastern Australia (both currently on daylight saving time) will return to standard time. When that occurs, New Zealand will be 3 hours ahead of Tokyo, and Sydney will be 1 hour ahead of Tokyo. Ain’t daylight saving time fun?

.

Hi Norm -

I used to be very drawn to bracket trades like this that seem to rely only on volatility in order to make a profit. But I developed a serious scepticism after I started actually trading them. As soon as you do this, you start to optimise your set-up, and try to use TA to give you a more likely outcome, and to eliminate some of the losers.

From this tendency comes my main objection is - alright this system is suited for times when you cannot gauge which way the market is more likely to move: but why trade a market if you have no idea which way its going to go? Where is your edge? Why not trade something that is showing positive technical indications of its likely direction of travel?

I also have a prejudice against pip-based stop levels. As this amounts to a random decision in terms of TA, I have to extrapolate that losses and therefore overheads and therefore winnings will also be random. But this is a secondary question to the one above. Then again, why close a winning position just because its the end of the week???

So do I - very much so: there are [I]so many[/I] better, more sensible and more justifiable alternatives.

Thanks for sharing such information. Really helpful for those who are new in trading.

Hi Clint,

I thought I responded to your reply already, but I can’t find it. Perhaps I missed a stitch, so here goes again.

Thanks for the heads-up on the Tokyo open on Sundays. Seems so obvious now. Thanks, as well, for the reasons you gave for the Tokyo open as opposed to NZ or Sydney. You da man! I’ll take your advice and also copy your comments to file.

I’ve got time conversion clocks on my computer, tables relating Hawaii Standard Time to EST, EDT, UCT, GMT, LSMFT (“Lucky Strike Means Fine Tobacco” for the uninitiated), etc., have studied and memorized, but am still having a hard time wrapping my head around what’s relevant to me - but it’s coming. Yes, Daylight Savings is a barrel of monkeys!

Again, thanks for the heads up,
Norm

Hi Tommor,

Thanks for your reply. I take your objections seriously, and will be considering them.

The big picture is this: I’m obviously just a beginner, and am still rough tuning. Many claim to have had great results with the system, so my overall strategy is to test it pretty much as it is, and then refine it as I go.

In response to your well-taken question, “Where is your edge?” here’s what I perceive to be my edge, thus far:

I don’t just dive into any pair. I have a watch list of 17 pairs.

  • Yesterday, Saturday, I discovered that GBP/CHF showed the highest number of pips last week (using the MT4 crosshairs), and roughly the same number of pips several weeks in a row.
  • I saw that it’s in a range (which is OK, because I’ll only be trading one candle), and because it’s in a range, price action - I’m still learning how to read it - does not show me that it will likely be affected by nearby Support and Resistance.
  • I saw that the weekly and the monthly of the pair are well on the same side of the 60 MA.
  • I inspected the dailies and saw that a good number of the weeklies begin to reverse in mid-week, roughly on Wednesdays; so beginning on Tuesdays or Wednesdays I’ll check the dailies on this pair for opposing candle patterns and SR lines; and if a reversal begins, I’ll bail out.

As for the fixed 30 pip Stop Loss: I’m aware of many of methods of placing a non-fixed SL; but for now, I’ll go with TKimble’s comment, “More times than not, the 30 pip stop will not be hit if the trade survives through Tuesday of the 5 day period:” Part Time Wealth Building Trading System - Weekly Scalping - Page 2 @ Forex Factory. Should I begin trading late Tuesday or early Wednesday? Perhaps I should check the dailies again!

Well, that’s what I’ve got thus far. I’ll tweak whatever I have to based on continued study and experience, even to the point of it not looking like TKimble anymore.

I’m still in demo and, as I said, still rough-tuning; so if you or any eavesdropper sees a red flag, please wave it. If you have any further suggestions, bring them on!

Thanks, Tommor, and happy trading,
Norm

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.

Good stuff Clint.

I still dream of a methodology that lets me set and forget buy and sell orders so the money just rolls in quietly while I’m out hiking, so, yes, if it works, it works.

Thanks Clint and Tommor for your comments.

Junkyard Dog will have his day in court.

Clint, that Date and Time site looks like a keeper.

Hi Clint,

You wrote, “Some of us don’t like to fool around with the Asian market even that early. For us, waiting an additional 2 hours (until 10 am Monday in Tokyo, 8 pm Sunday in New York, and 3 pm Sunday in Hawaii) is much more comfortable.”

Would you recommend a similar wait on other trading days besides the first trading day of the week?

I think that depends on your trading style – scalper, daytrader, swing trader, etc.

Scalpers and most daytraders will generally find the early hours of the APAC (Asia-Pacific) session [I]boringly[/I] slow. So, they will typically look for action later in the morning (Tokyo time).

Swing traders and long-term traders often do their analysis, and place their pending orders, during the lull in the market after the New York close (5 pm New York time). So, while the scalpers and the daytraders are sitting on their hands, or watching TV, swing traders and long-term traders are getting positioned for the next trading day. If I’m not mistaken, that describes the style of trading you intend to do.

To get a feel for the dynamics of the APAC session, it helps to map out the opening times and typical trading volumes of the 8 countries that make up 99% of the forex trading volume generated in the APAC region.

Let’s key them to New York time (currently EST = GMT-5). You can then adjust all the times shown below to HST. And let’s use the (admittedly arbitrary) standard 8 am to 5 pm session time in each market.

2 pm - New Zealand opens at 8 am local time (NZDT = GMT+13)
New Zealand generates [B]$10 billion/day[/B] in forex trading volume.

4 pm - Sydney opens at 8 am local time (AEDT = GMT+11)
Australia generates [B]$135 billion/day in forex trading volume.[/B]

5 pm - New York closes. (EST = GMT-5)

6 pm - Tokyo and Seoul open at 8 am local time (JST, KST = GMT+9)
Japan generates [B]$399 billion/day,[/B] and Korea generates [B]$48 billion/day.[/B]

7 pm - Singapore, Hong Kong, Shenzhen and Taipei open at 8 am (SGT, HKT, CST = GMT+8)
Singapore generates [B]$517 billion/day,[/B] Hong Kong generates [B]$437 billion/day,[/B]
China generates [B]$73 billion/day,[/B] and Taiwan generates [B]$27 billion/day.[/B]

You can do the math, and even create a bar-graph of the hour-by-hour volume generated in this region. Clearly, the 600-pound gorilla, so to speak, in the APAC session is the overlap of the normal business days in the GMT+8 and GMT+9 time zones – that is, the overlap of the big 3: Singapore, Hong Kong and Tokyo (with the smaller players weighing in, as well). That overlap begins at 8 am in the GMT+8 (Singapore) time zone, which is (currently) 7 pm New York time.

So, traders looking for action in the Tokyo session usually have to wait until 7 pm New York time, or later, to get it on. By that time, many swing traders are finished for the day, having done their chart work and placed their pending orders for the next 24 hours.

Two points, and then I’m done:

The daily volume figures for the 8 major forex-trading countries in the APAC region are taken from:

Table 6, page 14, of the Triennial Central Bank Survey (2016), published
by the Bank for International Settlements (BIS) in Basel, Switzerland.

Between March 12 and April 2, daylight saving time changes in New Zealand, Australia, and the U.S. will change the times shown above. I will post all the details prior to March 12.

Take care,
Clint

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1 Like

Hi Clint,

I’ve yet to study your post carefully, but it looks very helpful.

By the way, your and Tommor’s comments on TKimble’s Weekly are having their effect. At this point, there seems to be better approaches to occupy my testing time with. As to my style, which you speculated on, I’m looking for a combo of weekly and short-term, so while the weekly is playing out I can trade short-term, keeping an eye on my margin. Also, in addition to trending strategies, I’ll be looking for a good range strategy for when that would be appropriate. Several good strategies for different market conditions and personal time constraints will be good.

Best to you,
Norm