GBP/USD easy breakout system

Trading Systems Free Forex Trading Systems
21

Well, this strategy worked this morning. Limited out for 20 pips on the 9:30am EST (14:30 GMT) candle.

Contrary to the rules of this strategy, I decided to straddle the 9am EST (14:00 GMT) candle with a SHORT entry order, as well as a LONG entry order, thinking that a move to the downside was more probable than a move to the upside.

But, now that the market has shown that guess to be wrong, I will remove my SELL entry order.

I’m still curious why this strategy was presented as a LONG-Only strategy. It seems to me that it should work in both directions,
or not at all.

Clint

22

Clint, I was wondering that also. Didn’t trade today, too busy at work, but I was thinking of covering both sides like that. Looked back at it some last night and there are times when it heads down instead of up.

here’s a little more on the volume. I did a pivot chart showing average volume per 15 minute time period, averaged over the past year. So the peaks and vallys are clear, while this is only tick volume, I would think it is representative of forex in general. Also considering these peaks coincide with higher volatility then I would guess that it is a fair representation of money volume also wouldn’t you think?

may be hard to see the times in that pic, but it’s Alpari data, I thnk they are GMT + 2

volume.jpg700×444 49.3 KB

23

I’m confused. I finally got time to take a look at the chart and don’t see that upside winner? looks to me like it went down. Am I looking at the wrong candle? It’s 9am candle EST but I’m using an Alpari demo and I think that’s the 14:00 candle on this chart.

can you show me a picture of your chart so I can make sure I’m looking at the right candle?

OOPS, never mind, I see it now, on Alpari it’s the 15:00 candle

24

Mike,

I enlarged your chart, but can’t make out the time scale along the bottom.

I’ve marked 7 points on your chart. When you get a chance, please tell me the OPEN time of each of these 7 bars. Thanks.

872×578

Regarding your question, I think there is a close correlation between tick volume and transaction (money) volume. Since tick volume is readily available, and transaction volume is generally not available, many traders use tick volume as implied transaction volume.

Clint

25

Hi Clint
This is from 15 minute data from Alpari. I have an Alpari demo using Metatrader at work. I use IBFX demo at home and Oanda for real, kind of schizo huh?
but anyway, this chart is with Alpari data and I believe that is GMT +2 hours,
what I did is download all available 15m data and got an average of the volume for each 15m candle, so all the midnight candles were averaged and all the 00:15 candles were averaged etc.

Edit:
had to come back and fix these times, had them wrong the first time.

The first bar on the left is 00:00 so your arrow #1 is at 2:0, #2 is 5:45, #3 is 9:00, #4 is12:15, #5 is 15:30, #6 is 20:15, #7 is 23:45

Maybe I could do a larger clearer picture if you want, let me know. It would be with my IBFX so the times would then be GMT.

when I download data from Metatrader I get date, time, open, high, low, close and volume for each candle. I am assuming the time is the open time for the candle.

The data for this graph is from sometime in February through November of this year. I don’t remember the exact dates but I think any sufficiently long time would give the same graph.

Are you any good with Excel? Do you have Metatrader? It’s interesting to look at the data in different ways, maybe find correlations of price and time or price and volume? I played around with it some today with interesting results but maybe will do it with a larger sample of data this weekend.

With my demo at home I can download about a quarter million 15m candles but Excel can only handle about 65,000 at a time.

Tell me why you find those particular bars of interest?
I pretty much have the same peaks arrow marked on my other picture, post 20, but I didn’t mark the valleys, even on just one day on a chart the pattern is obvious though a little more noisy than my pivot table graph.

26

Here are my thoughts on the peaks and valleys. #1 peak is the overlap of Sydney and Tokyo, valey #2 Sydney is close and Tokyo is still open so only one market hence the dip in volume. Peak #3 London starts up and Tokyo is still going. #4 valley Tokyo closed and you only have London open, #5 peak NY cranks up and London is still going. #6 I call it the shelf, London is closed, NY is the only one open and winding down. #7 the overnight lull between NY and Sydney

What do you think?

27

Hi, Mike

Thanks for returning my call.

[B]Alpari is GMT + 1 hour (central European time).[/B] So, if I understand this, the arrows I drew on your chart correspond to:

Alpari (CET=GMT+1): ------ 2am, 5:45am, 9am, 12:15pm, 3:30pm, 8:15pm and 11:45pm.

London (GMT): ------------ 1am, 4:45am, 8am, 11:15am, 2:30pm, 7:15pm and 10:45pm

New York (EST=GMT-5): — 8pm, 11:45pm, 3am, 6:15am, 9:30am, 2:15pm, and 5:45pm.

Do you agree?

Regarding Excel, I am illiterate.

Yes, I have Alpari MT4 and FXCM MT4. Alpari has a tutorial video in which they explain why they use the CET time zone in their platform: Alpari Academy - Video Tutorials - MetaTrader 4 Tips and Tricks - Alpari (UK)

Regarding those 7 bars, I want to compare your chart to some work I did a year ago, trying to graph (by hand, on graph paper) world forex trading volume, hour-by-hour over the 24-hour trading day. I’ll let you know how my graph compares to yours.
No doubt, yours is more accurate than mine, as mine was based on some country-by-country assumptions that I made about hourly transaction volume.

Let me know whether we agree now on the EST times for those 7 bars. Thanks.

Clint

28

Clint

I agree with your times. And I just did the same chart using IBFX volume data and got the same results. So over a long period of time volume averages the same for different brokers which is a pretty good indication that this is a representative sample of forex in general.

I’m trying to figure out how to do a similar graph of price data. But since price trends higher or lower from one day to another or week to week etc. It’s kind of hard to do. I’d like to graph relative price fluctuations for an average day. For example is average price higher or lower at noon EST than it is at 8am EST for example. Since I visually noticed the volume pattern on my charts, I also noticed a price pattern. There tends to be a dip in price in the morning and in the afternoon generally corresponding to the volume peaks, but I could be just seeing things that aren’t really there. If I could figure out how to graph it, I think it would be interesting to see the results.

30

Another winner today on the short side. And this is just right for my time zone also. I’m going to keep following this for a while and see how it works out.

you only need 20 pips a day…

31

Everybody starts out in CFD Trading wanting to make money but a whopping 95% of Traders lose, which leaves 5% winners. So what is it that the 5% of CFD Traders are doing to make them win in CFD Trading. What are the mistakes that the 95% of people are making, and how can you avoid them!

32

Well, one thing I suppose the 5% do is post on topic…
ummm… sorry just couldn’t resist that.

33

Why do you need to download i-ParamonWorkTime custom indicator if you are just using that one candle? What does i-ParamonWorkTime do?
Thanks
Frikkie

34

You can play shorts too with this method?

I thought fxhustler said he only plays longs with this method although logic dictates that one should be able to trade longs and shorts.

Thanks

35

I just hit GBP/USD for 20 pips this morning on the long side.

I am New York time and I just want to confirm that I am using the correct range.

Is the range to use: 7am(EST) - 9:15 (EST).

In other words you use the bar that STARTS at 7am and you use the bar the ENDS at 9:15am (EST) for your range.

Is this correct?

Thanks

36

Can this system be used on Sunday night when the market opens?

37

If you win or lose on a buy or sell, should you then also play the opposite side?

Intuitively it seems that you are better off only playing just one side.

Thanks

38

I just decided to take another look at this. It seems like a good trading idea for those of us in the eastern time zone. So I’ve had a couple wins from it so far this week. the Big Dog strat looks at the range from 7 to 9 am EST.

This particular thread only looks at the 9am high and low.

I see no reason to limit it to only buys. If you look back at history, Sells would have been profitable also.

39

As Far as I understand, it you have to wait for the 9:15 bar to close.

40

Hey, Mike

The current issue of Currency Trader magazine has an article on using tick-volume as a proxy for true hour-by-hour trading volume in the forex market. Reminded me of the conversation we had here on this thread, last November, on this same subject.

The Currency Trader article includes a graph which looks a lot like the graph you posted here on this thread — except, your histogram is way neater than their squiggly lines.

Here’s the Currency Trader graph, along with the first two paragraphs of their article:

“Exploiting currencies with time and volume” (Currency Trader, December 2009) discussed the commonality of currency markets — how the actual volume throughout a 24-hour trading day correlates significantly to average hourly ranges, and most importantly, how those patterns are very predictable, exhibiting a significant degree of “stationarity” (Figure 1).

Although identifying the optimal times of day to trade is extremely valuable, real-time analysis of a market is potentially invaluable. Unfortunately, because the forex market is so fragmented it is almost impossible to get an accurate real-time measure of all the volume occurring at any given moment. However, historical analysis shows there is a very high correlation between the number of price updates (“tick updates”) per unit of time and the volume traded per unit of time.

705×482

Note: the times listed on the horizontal axis are GMT (I hate it when that isn’t clearly specified!).

I’m still working on a way to analyze true volume from the bottom up: that is, applying a distribution algorithm to the total daily volume coming out of each time zone. So far, my (preliminary) results have produced a graph which is remarkably similar to your tick-volume chart; and in addition, it shows actual trading volume, hour-by-hour, in billions of USD. My results are still too rough to post here, but that might happen in the future.

For newbies and veterans, alike:

Currency Trader is a free e-magazine which offers useful and educational information every month. I recommend it. You can subscribe to Currency Trader here, and immediately download the August 2010 issue (and the July issue, if you so choose) — Currency Trader Magazine : Subscribe

41

maybe that magazine should hire me as their chartist? LOL looks like I was on to something there. Very similar peaks and valleys in what I found in the volume and what they are showing there. I’ll be interested to see what you come up with. Another thing I was thinking about along similar lines is coming up with something like that with price rather than volume. See if price behaves a certain way during the day. For example is price more likely to go up than down at certain times of day or vice versa. If you look back through the charts there are lots of times when price seems to drop at regular times of day… I noticed that about the same time I noticed the pattern in volume.