500 to 5 million

Trading Systems Free Forex Trading Systems
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----EDIT-----

Looking back on this my thoughts were all over the place. To make a long story short, I put together a system, backtested it by hand and came up with some unbelievable numbers. I wanted to try it and share my results here as more of a journal than anything else. I’m open to people’s opinions on what I’m doing, and if it turns out to be a successful system, then I can feel like I’ve donated something useful to the community as well :slight_smile:

…in under 4 years. With about 5 minutes a day worth of work. Ridiculous, right? I agree. You shouldn’t be able to do that. I’ve never heard of anyone doing that. But I’ve stumbled across a simple set of entry, exit and position size rules that if would have been applied over the last 3 and a half years on the EUR/USD, would have done just that. Fair warning though: this will require an iron stomach. It will require you to sometimes make losing trades for 2 weeks straight and not question the rules. You will encounter strings of loses that can be hard to swallow. But you will also catch all the big, powerful moves that happen every so often that really make your account grow exponentially.

Unless someone wants to hear it at some point, I won’t bore you with the details of how I came up with this, so here it is: Put away all your indicators. Yes, all of them. No SMAs, no oscillators, no Bollinger Bands, and please no expert advisors. I see you trying to hide that ADX on the bottom there. Put it away. We don’t care about all that. I want to see a naked chart. Bars, lines, candles; it doesn’t matter. All you need to see are the high and low of the day before. There you go; good job. Now that you’re set to the daily time frame, off we go. Here’s your entry signal:

Put a buy order in for when today’s price breaks yesterday’s high with no T/P and a S/L on yesterday’s low. Only buy if yesterday was a positive day. Your exit signal is when the current price is lower than yesterday’s low. Every day adjust that S/L to yesterday’s low. Many times this only lasts one day. Every once in a while this lasts 6 or 7 days, or even more. That’s when our account is really going to grow. I tested this figuring on a $500 initial deposit in a mini account with 1:100 leverage and one “unit” being 0.1 lot, so each pip is worth $1. Lot size is your account balance divided by 1000 rounded down to the nearest 0.1 lot, with the smallest possible trade being 0.1 lot. E.g. if your account size is $4,873 then you’ll trade 0.4 lots. If at any point you encounter a loss, trade 0.1 lot until you make a profitable trade again. E.g., if your account size is $10,000 and you make a trade that loses $1500, rather than having your next trade be 0.8 lots ($8,500/1000), you make it 0.1 lot until you make a profitable trade again. This makes it so the strings of whipsawing you will encounter won’t decimate your account and eat up all your profits. Because yes, you are going to feel like you’re riding the teeter-totter most of the time. Take that whole thing and reverse it for going short.

I’m in GMT-8:00 so the beginning of a new trading day is at 4PM for me. I’m able to remote into my computer that’s running MT4 from either my computer at work or my phone if necessary but that may be different for you. I’m not sure how or if this would work if you set your own “beginning” of each trading day. I think the concept would be the same but I can’t think of an easy way to back test it. Also, I only ran this on EUR/USD. I had originally intended on testing it on other pairs to see which worked best, but I’m pretty happy with the outcome of this pair so I’m not going to bother testing others.

The broker I’ve settled on uses MT4 so I was able to download high, low, open and close prices from today all the way back to May of 2008. I created an Excel spreadsheet that lays this all out so you can see how my fake account grew from $500 to $5,737,529 in that time using these simple rules. I would be happy to upload it here or elsewhere if anyone is interested.

As I said, that kind of growth seems ridiculous. I feel like I must be missing something here. I’ve checked and double checked all my formulas and entries on that spreadsheet and it all checks out. So now I’m curious: can this really work? My maximum drawdown during this time was 1,323 pips over a two week period, so if I had started this right before that obviously $500 would have been blown out. But if I had stuck another $500 in 3 more times then I would have come out fine. I think a $2000 investment for that big of a return is pretty minimal, don’t you? And don’t even ask what the account size would have been if I started with $2K instead of $500. Really ridiculous. I would imagine at some point my broker will make me change account types or possibly not want to take such large positions but I’ve never had a $1,000,000 trading account so I’m not sure how that all works. But I’m going to find out :slight_smile:

So let’s take a ride. I’ve started a demo account with $500 and I’m going to come back each day and report what positions I’ve taken and how they’re doing. At a certain point in time (over the next few months) I will open a live account with this amount and I’ll keep a log of that as well. Without further ado, off we go.

I took my first long position today of 0.1 lot at 1.3533. Wish me luck!

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Well, the first trade was a loss: stopped out at Sunday’s low of 1.3504 for a loss of $28.30 bringing my balance to $471.70.

One thing to add, I said that my S/L was at the previous day’s high or low depending on the type of position I was taking, but I also cap that at 200 pips. There were several trades in my test run that ran over 300 pips in the red and that’s not often likely to turn around and make a profit in the near future.

A few other thoughts I’ve had as I’ve perused the forums:

  1. I have not taken into account spread, commissions and/or interest into account in my back testing. Yes, these will affect my P/L but not in such a way that my system will become unprofitable.

  2. Yes, I realize that keeping, much less growing, a $500 account for someone with relatively little experience is a near impossible task at best, and with my system, there is a good chance that I’ll get blown out, possibly more than once. But even during the worst stretch, a $1000 account would have held out just fine. My theory is if I’m willing to trade (or lose) around $2000 but there is a possibility that I can get away with starting out with only $500, I’m going to try it. If I get blown out, I’ll just deposit another $500.

Ok, onto tomorrow. Yesterday was a negative day so I’ve placed my sell order at the low which was 1.3429. Happy Tuesday :slight_smile:

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good luck bro!

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Good luck with it. Your stops are way to wide for my taste. One question are you trading a mini account or micro? You sated you pip value is $1. At that rate if you encounter some losses in the beginning EUR/USD can take you out in just a few days. If I could suggest something I would open a micro account and set your lot size to the size of your stop risking X percentage of your account. At least untill you can afford some of the wide stops you are going to see. I know you say you have a 200 pip cap on risk but with that said at $1 a pip you could wipe out your account by the end of the week.

And 1 last thing I know I have been in a few debates in the past about this and some dont agree with me. There is no Sunday in forex. The forex opens With the Aussie and Asian session and closes with NY lose. So if you made a trrade based on Sundays candle that is why you lost. Your chart is wrong.

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Thanks bobmaninc. My stops are pretty wide. That’s the problem with trading on a longer time frame: everything is bigger, gains AND losses. But I’ve never had much luck on shorter time frames no matter what I tried. Also, I don’t have the ability to sit in front of the computer for hours on end. I work full time and have many other demands on my time so the idea of spending a few minutes a day to set up my trade appeals to me.

To answer your question, I think I’m actually going to be going live with a standard account. I’m a little unclear on the difference to be honest. I wanted an ECN broker rather than a market maker, and the highest rated broker (on various forums) that didn’t want $5000 or more for an initial deposit was Forexoma. They say that you can open an account for $500 and trade as small as 0.1 lot, which in my understanding according to my demo account is worth $1 per pip, but then they only offer standard account, no minis. But then they offer mini accounts in their demo accounts…? My understanding was that if I wanted to trade 0.1 lot, then it didn’t really matter what type of account I had, but my understanding of how this works is limited. I do know though that I don’t trust market makers: RefcoFX stop-loss hunted most of my positions and then went bankrupt, I’ve had a negative experience with Oanda and just the idea that one entity essentially makes up the price they’re offering you doesn’t sit well with me.

As far as Sundays go, you make a good point. At a glance, I would agree that most Sunday’s are unprofitable. Mondays and Wednesdays too, according to my back test. But here’s the thing: when I re-ran the back test and pulled out Sundays, my end number went from $5,700,000 to around $860,000. I realize that an excel file filled with a bunch of formulas can’t take certain things into account like hitting yesterdays high, then going below yesterday’s low, then going back above yesterday’s high again. But I would imagine that sort of thing doesn’t happen too often, and because I’m not a coder, I can’t make a EA to officially backtest this. Although I would think that an EA with the same parameters would give me the same results unless MT4 is able to look into the way the market behaved on all those days rather than just using the HLOC info. And I realize that just because the market behaved the way it did for the last 3 years doesn’t mean that it will behave that way in the future, but I think 3 years worth of data gives us a general idea of what’s going on. Only running this live is going to really tell us if it works or not.

As far as the initial deposit, $500 isn’t some random number I pulled out of my head. This is the amount of money I’m putting into my savings account every month. I could save for 10 months and make a $5000 deposit, but why if I don’t have to? My back test showed that with a few exceptions (maybe 7 or 8 times in 3 and a half years) that initial deposit would have made it through and come out ahead. If I bottom out, then I’ll just deposit another $500. My take is that I’m willing to put as much money into this as it takes until I get it right, but I could also miss a really big move between now and 10 months from now. So in my mind, whether I deposit $500 a month or $5000 one time is no different. As a said before, I don’t think there will be too many occasions where a position goes 200 pips in the red to turn back around and make a profit. But I could be wrong :slight_smile:

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Looks good bro! Can you upload the excel sheet? BTW you should enter your system to that mechanical system they have here!! Thanks for sharing!

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I think you misunderstood bobmaninc. He’s not saying you shouldn’t trade on sundays, but that there should not be a sunday candle in your charts and if there is your broker does the charts wrong.

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Ever check out IBFX?

A mini account there with a $500 deposit, will let you trade everything from $1.00 pips or greater, to $0.01 pips.

And every possible combo in between. You can trade $0.17 cent pips, or $17.83 pips. Been there for well over a year now, and can count on 1 hand the times I’ve had trouble getting either filled, or closing a trade. Slippage hasn’t been an issue either. The spreads are a pip or two higher, but the strategy you are using won’t care about that.

Good luck!

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Thanks Fez. I tried to upload the excel sheet, but it keeps telling me upload failed. Maybe someone else knows why. YES, I made a BIG oops in my calculations. In one of the formulas I was calling the wrong column, and I noticed on some days it was making two trades in a day, which meant it wasn’t following the only enter in same direction as previous day, so once I fixed those things, my end number dropped from $5.7M to $276,752. That’s a little less ridiculous :slight_smile: But still pretty insane. And if I stop making my $500/month deposit into my savings account and deposit it into my trading account instead for the first year, then that number jumps back up to just over $1M. I think being that I’ve already committed to making this happen that I’m willing to lose a year’s worth of savings in order to see more growth in my trading account.

I think I’m a little late for this month’s entry for the best system of the month (if that’s what you were referring to), but that gives me a chance to write out my thought process on why this is an effective trading system, and to give it a real name (being that my $5M number is out the window :slight_smile: )

That’s interesting teb5108, I see your point but I’m unsure as to why my broker is issuing changing prices if there is no market activity. I can place a trade (and make or lose money) on Sundays, but it sounds like bobmaninc has been in debates over the subject, so I may have some research to do.

Master Tang, I took a look at IBFX. It received a lot of negative reviews over at Forex Peace Army, but a respected member of this community’s opinion may cause me to look at it in a different light, so I’ll give it some thought. I do think I still want to trade at the level where each pip is worth $1 either way. I’m going to be investing over $5K into this over the next year; it just won’t be all in one shot. I’m in this for the long haul, and I’ve got that money to spare (so to speak). Over the 3 and a half years of my back test, I think maybe there was one or two non-consecutive bad (loss rather than profit) months, so if I end up in the red for more than 2 or 3 months, I can stop and re-think my plan.

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Very very interesting.

I have only just started testing a similar strategy where I check for yesterdays candle and if the body is over 100 pips (eurusd) and the close is in the bottom half of the candle, then I place an entry order for the reverse direction at yesterdays close +50 with a TP of half the body size of yesterdays candle. Hope that makes sense.

I set an alert at close to TP and if I am logged in I will close only half my position and move the SL to +20 and let it ride, regularly moving the SL up as it climbs. SL is originally 100 pips but backtesting shows it rarely reaches it because the +50 entry means it is already moving in my direction.

I am also looking at a +50 entry order in the same direction as yesterdays candle in order to catch the multiday trends but have not played with it yet.

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It might be good for you to know that ForexPeaceArmy is a dirty player itself. My advice is to take their so called reviews with A LOT of caution.

Go with a big regulated broker. IBFX is a fine choice, Oanda is even better imho.

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Hi,

My apologies as this is off-topic but o990l6mh:

I’m just curious as to why you say that Forex Peace Army is a ‘dirty player’. The only involvement that I have with them is that I address issues that, now and then, appear over there from time to time (obviously insofar as issues concerning Deltastock). The only (constant) problem is trying to separate the REAL ‘gripes’ (trader reviews and ratings) from ‘virtual broker people’ (the competition) posting bad reviews and ratings and I do know that FPA does their best to check for this type of thing but in this day and age and with all the free proxy servers around etc. it’s an ALMOST impossible task but they do try though. That’s my experience with them.

One other thing: my very first broker is listed as a scam and FPA took on at least one ‘case’ (there may be more but I’ve not really checked those ‘cases’ lately so there could be more by now) and proved beyond a doubt that the broker was (and still is) a scam. I didn’t know that I was being scammed at the time but if I read the reviews that have been posted since those days (I’m talking four, maybe five, years ago) about that very same broker: just about every one of the reviews posted ‘mirror’ the ‘tricks’ that were ‘pulled’ on me (and it’s a broker that has a LOT of reviews posted). As a matter of fact: given the number of bad reviews and scam ratings given one can only assume that the ‘few and far between’ GOOD reviews and ratings afforded the said broker are again ‘virtual broker people’ that work for the said broker in a crass attempt to try to raise their rating.

All I’m saying is that based on my personal experience: I’d say that it’s not Forex Peace Army themselves that ‘play dirty’ but the brokers themselves.

If you don’t wish for this to be a public discussion then PM me and I’ll delete this post no problem. I really am just curious because in my opinion they’re ACTIVELY doing SOMETHING to ‘weed out’ the ‘lowest of the low bottom feeder brokers’ but as I noted: the broker reviews are (must be) VERY difficult to ‘police’. Me being on the ‘other side of the equation’: it’s difficult enough for ME to respond to APPARENTLY disgruntled traders because even I don’t know if it’s a legitimate ‘gripe’ or ‘issue’ that’s actually occurred or not or if I’m dealing with one of these ‘virtual broker people’. ONLY ONCE have I actually had somebody, who has posted a bad review and low rating, reply to me, and we addressed the issue. So one never knows.

And once again: my apologies for this being off-topic. Then again: maybe it’s not i.e. the thread starter was looking for names of reputable brokers based on broker reviews over at FPA (and as much as I hate to admit it: if it’s only FOREX that that the thread starter is interested in trading then, I believe, your first choice presented, is one of only a VERY VERY few reputable retail FOREX brokers on the planet. Your second choice presented I’ve no experience with at all).

Regards,

Dale.

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It should be well known to you of all people Dale that ForexPeaceArmy (FPA) is little or no better than the bad guys they pretend to investigate.

I don’t really care for a lengthy discussion, this link should be enough for you: Forex Peace Army Scam Alert | ForexPeaceArmy | Felix Homogratus | Rob Grespinet | Yuliya Kalinina
As always google is your friend and believe me, it doesn’t take many minutes to realize FPA is a scam itself.

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Well, I hope you further investigated with the case than just reading “fpa and scam” out of a small site which didn’t reveal anything about the case, lol. They just use bad speech, but don’t explain the details. Fpa is for sure no holy forum and all the popular big forums have their links with brokers, even BP, I guess. I read the whole story, from several different perspectives and fpa is imho not worse than bp or any other forum out there. Only “problem” (particular for some bucket shops) is that they try to reveal some bad tactics of brokers, either by themself or with the crowd which posts there. I agree with Dale that one must read between the lines to grasp what could be the truth. Albeit this activity to reveal the bad tricks of some brokers etc. for sure generates some broker guys who rain on the parade.

However, I just wanted to tell you, if you are going beyond a little google word picking and investigate a little further, nothing of the bad speech will survive the check of truth.

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(To Dale: I remember the last thread where we discussed FPA. You obviously like them a lot since you type never ending posts in their defense. I have done my homework thank you very much.)

The problems are: reviews are deleted if FPA doesn’t like them (aka they delete bad reviews for brokers that pay for ads on their website). Please don’t object, this is a known fact.

The reviews that make it into their website are… well… mostly written by idiots who blame the broker instead of their own ignorant ass.

FPA has had and probably still has IB agreements with some brokers. At least in the past those brokers, surprise surprise, had very good reviews.

The reviews are biased, deleted when they do not agree with FPAs plans, written by poorly informed people. The website sells ads to the very brokers they claim to review.

To me it is so obvious that FPA is worthless. This is my final post on this matter.

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That all might be true, but it doesn’t make them a scam. It’s like if I’d call Oanda a scam for a bad solution with their metatrader backend issues. Or I’d call bp a scam, because they delete posts if a sponsor complains about it. If somebody sponsors anything or anybody, he is in control. That is a known fact. At least to me. Albeit that doesn’t makes it a scam.

There is a difference between a scam and a little shady, but common practice. No broker, no forum is a charity organization. Not even bp. They have all people who pay their salary and human beings tend to judge different in that case.

However, that slander regarding fpa is coming from the opposite side: From bucket shops where those tricks and practices got revealed.

Anyways, here is another thread in another forum regarding that topic:

Felixbastard.com facts about Felix - Talkgold HYIP, Investment & Money Forum

You can also read a lot about it on the site of fpa itself where FH revealed why people/companies try to throw dirt.

My opinion regarding fpa is that this world is a little better with the site than without it. Sure as Dale mentioned you have to read between the lines. But if 100 people for instance complain detailed about bad broker execution that is hardly a fake. Some posts there reveal just that the poster is the issue, but even that is no issue, as one with a few brain cells equipped may find it out after a few words.

On a scale of 1 til 10 and the latter the best I’d judge fpa at least with 7.

You seem to be emotional involved with fpa.That you don’t want discuss anything if it goes a little deeper is your free choice, but it doesn’t increase your reputation. Forums are there for discussing matters, or not?

I am not emotional involved. Not with bp, not with fpa, not with anyting else. It’s just my opinion based on my thinking. :slight_smile:

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Not emotionally involved, just don’t have the time to waste on debates going nowhere :wink:

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Ha ha, okay. Albeit if you had some evidence for a real scam against fpa, you could try to convince me (plus others), right?

I have used fpa for broker research, know in detail about all the slander cases and if something new would pop up, I might change my mind. Just a link to a funny slander website and saying fpa is a worthless website isn’t enough to convince me, though. :wink:

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Hello.

I don’t remember us having a discussion about FPA before to be honest. But be that as it may: thanks for responding anyway. As I said: I was just curious as to why you made your comments is all (and was by no means questioning your judgement or opinion).

All I know is this: I’ve come to learn the hard way that this entire business is ‘filthy’ right from the ‘bottom feeder bucketshop retail brokers’ to the ‘top tiers of Wall Street’. And anybody that ACTIVELY does ANYTHING to do their part to ‘keep it a little cleaner’ has my vote of confidence. They APPEAR anyway to ‘walk the walk’ instead of just ‘talk the talk’.

But of course: everyone is entitled to their own opinion (and believe me when I say that my asking you your reasons for making your comments was NOT personal). All I know is this: one regret I still have is that I never knew about FPA and therefore never read the reviews and ratings afforded my first broker until I was ‘in deep’ and had lost a lot of money. I know that I would have lost that money in the beginning ANYWAY. No doubt about that. But based on the ratings and reviews afforded the said broker that I’m NOW aware of (well only became aware of after I’d just about ‘lost my FIRST shirt’): they most CERTAINLY gave me a LOT of ‘assistance’ in ‘accelerating the process’ (and I can also tell you that the said broker used to advertise on their site and, if I’m not mistaken, from time to time, still does, but don’t ‘call’ me on this i.e. I just seem to remember seeing some of their banner advertisements on FPA LONG after their first ‘less than stellar’ and bad reviews and ratings had started to appear and a ‘common thread’ had started to emerge).

Anyway and once again: thanks for responding. Much appreciated.

Regards,

Dale.

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If you can afford more than 500, then you should use it. No sense in saying I’ll just put another 500 in if I lose it.

I wanted to know if your backtest included any major credit crisis, your Market crashing ect.

You’re not done tweaking this method. : )
You can make this so much better with some adjustments.