I would be interested in hearing about your strategy for SL and TP.
I traded the strategy profitably between June and August. I followed the original entry rules on the 4 Hr chart. I am still experimenting on the exit strategy. I was trading small position size so I would not use a SL and could handle big moves against me. I would prepare to exit my position when the MA’s crossed in the opposite direction of my trade. I would not use a TP. I would start trailing a stop once I had a good move in my favor.
I’m having some silly trouble with the stochastic. Are you using the default MT4 stochastic? I use default and apply it to close/close, with K being 14, since it should be the slowest moving average, D 3 and slowing 1.
I’m not sure which parameters to use for the stochastic. In the first pages you suggested using a 14,3,1, so I guess that the slow moving average is the 14, the fast is 3 and the “slowing” parameter is 1?
You say this is the most profitable trading pattern we will encounter, yet I took a look at your fx book and according to that you are big into the negative…?
My entry rules are based on the original entry rules on page 1.
SL - None
TP - Trailing stop, instead of the fib level (FL) as suggested, I used 0.786, 1, 1.272, 1.618, 2, 2.272, 2.618, 3, 3.272 and etc. Set TP at 1.
When the price crosses 0.786 after the end of a 4hr candle, instead of shifting SL to breakeven, I change SL to (price at 0.786 + price at entry point)/2.
Example, if I open buy position at 1.2 and price move above 1.25 (FL - 0.786) after the end of 4hr candle, shift SL to (1.2+1.25)/2 = 1.225.
Shift TP to next level (FL - 1.272).
When the price crosses 1 FL after a 4hr candle, shift SL to 0.786 FL and TP to 1.618 FL.
When the price crosses 1.272 FL after a 4hr candle, shift SL to 1 FL and TP to 2 FL.
And so on.
Sometime trades do close at TP, especially there is a spike within the 4 hrs.
[U]2 Special scenarios to consider.[/U]
Difference in price at entry point and price at 0.786 is less than 40 pips (30 pips for EURGBP), set TP at 1.272 instead and price have to crosses over 1 FL instead.
Difference in price at entry point and price at 0.786 (or 1 if you start at the special scenario above) is more than 100 pips (75 pips for EURGBP), when the gain is 100 pips or more after a 4 hr candle, shift SL to above your rollover fee (so that you definitely will gain, I’m able to check the rollover fee accumulated for a particular position, so I’m not sure if your platform can do that, if you cannot, put at 1 pip over breakeven instead).
Once your SL is on the positive side, shift SL by 1 pip positively after every 4 hr candle if price cannot cross over FL. (I got lazy, so I shift 6 pips positive every day instead at a particular time). The idea for this is that if I already have a couple of winning positions, the additional pips gain from this method will be more than enough to cover the rollover fees of the all the positions.
I make this modification because I realised that the initial FL could be few hundreds of pips away, so it is very likely that the price could shift 200 pips in your favour but not crossing FL, and after that drop to 100 pips against you. This will ensure that you will still gain some pips out of it. Rarely you will hit anything that is above 3 FL, so having more FLs in between helps to gain more pips.
There are some TP rules which I follow as well, when I have more than 1 position of the same pair (I don’t have SL, so I open position when the entry is right). But I think it’s quite difficult to explain here.
[U][B]Changes to entry when I already have existing position.[/B][/U]
If I’m going to open a position which I already have in the [B][U]same[/U][/B] direction, I only open if the existing position is in a loss, otherwise discard this entry point. Change the FL of the existing positions to the current position (regardless if you open it).
If I’m going to open a position which I already have in the [B][U]opposite[/U][/B] direction, I only open if the existing position is in a loss but I close the existing position if it is gaining pips and discard this entry point.
There are also some money management rules to follow to ensure that your drawdown will never be above 40% at 99.99% of the time.
It’s an interesting strategy but I still finding ways to fine tune it, especially to ensure that I have maximum gain while not have too much free balance. It’s a delicate balance to try to juggle as, if you over expose too much, you won’t have enough free balance to protect your current positions if there is a wild swing against you. Not foolproof though, I lost 10% due to SL during the wild swing of AUD in August (I was watching movie at that time so I did not check my account!). So other than that, pretty straightforward gain over 8 months of experimenting.
Ok, I was able to figure out what I was doing wrong and finally get the 14,3,1 Stochastic. I had two good trades yesterday on my demo account.
One question: Why do you use these parameters for the stochastic instead of the “default” 5,3,3? Is it just because the 14,3,1 Stochastic works better with the 20 and 50 EMA?
It seems this strategy is not working anymore based on his myfxbook result. Its the same as Miami Bill’s strategy but he is using MTF-Stoch and it works very much.
I just sell EURCAD. I got to agree that there are not too many entry opportunities but I have been closing quite a few of my old deals.
If you are following a large number of pairs, then generally you will have more opportunities. I’m following 18 pairs now, with minimal amount of risk.
Let me know if you are interested in the money management of this strategy.
Keep in mind that trading is always the strategy/system + the trader. This strategy ( I call it strategy because system sounds to strict) works for me. He (Philip) just seems to be a bad trader.
Just to make sure everyone follows.
The losses on the account were not as a result of trading the system. If you follow the thread you would have read that I took a hit while trying the day-trading system. Not this system.
So mario 77’s argument that the system doesn’t work or that MTF-stoch works better is simply not true. An easy way to prove it is do the backtesting using the cbot I have created for the system. Not one pair turned negative result. I did share pictures of those backtests as well.
You should refer to the money management section. I’m trading $10,000 while putting only $2100 in the broker. So losses and winners on Myfxbook will seem magnified. so you need to divide all the percentages (whether winners or losers) by 4.5 in my case. So if you divide 43 by 4.5, I’m down 9.5%. That isn’t the worst.
The losses in the account were not a result of trading the system. Most of it was actually while I was testing the day-trading system.
(Mathematical) bad luck. I take only one trade at a time and this sometimes hinders the performance. For example do you remember when china devalued the Yuan? Days before that I had long signals for the Euro and Pound. 16 signals in total. I took EURJPY long.
When China devalued the yen, Euro and GBP went up a thousand pips against almost all currencies. The only exception was the Yen. So the system was correct 87.5% (it gave 14 great signals). I just happened to take the one trade that was in the 13%.
Now Kauto made a reference to this being “bad trader” but it really is about odds. When you take only one trade instead of baskets of trades, you increased the odds of you being wrong but the return is you magnify winners or losers. If you take all 16 trades you will always win, but small amounts.
With a system this accurate I’m happy to take five losing trades consecutively or go down 50%. Because three consecutive winners and I will be back in the green.
It is just a matter of sticking to the system. Once you do that you will start hitting a winning streak that makes you the profit. Bear in mind this account has been up on April 16 or something. So it hasn’t been a year even and people are already making judgments.
I will post from now on trades I entered based on the system [B]before entering.[/B]
So you guys know which trades are based on the system and which aren’t.
