Hi Guys,
I have never posted on a forum before and I am also new to Forex so take me slowly:).
Here are a couple of thoughts which I am hoping you would discuss further in order to reach a final conclusion on whether they are profitable or not.
They both come from the same source : I hate stop losses:)…that’s right…they stop me out either too early or too late according to my setup. I have tried a lot of methods with looser stops or thighter stops but never seem to get it right (I am trading a mini account with 6 k equity).
I like a lot the idea of a triangle arbitrage (Eg. EURUSD USDCHF EURCHF) the only problem is that it does not make you any profit as the triangle is somehow close to perfection. Also taking opposites with pairs like AUDUSD NZDUSD does not work as it is the same thing as trading the AUDNZD pair.
After looking at the charts I found that there are two other pair couples which immitate eachother’s moves without being connected through a third pair as the triangles - GBPCHF and USDJPY or GBPJPY and USDCHF.
The idea is simple :
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In the beginning of the day buy GBPJPY and sell USDCHF and let them breathe for 30 pips. After that, if the sum of the two is positive close both and repeat process or, if negative, double the position which shows a profit . If the trend turns again add a second mini lot to the first (the one not doubled). Close When in profit. (My theory resides on arbitrage alone - if they copy eachother’s moves…there WILL be times when the plus is greater than the minus and viceversa). To protect your account from ugly times…close in a couple of hours and never allow the night.
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Make your directional bet on one of them in the beginning of the day (best through a scheduled entry order) and wait until it’s hit.AfterwardS close when the TP is reached (50-100 pips). If the trend turns out fake and the position reverses…instead of using the stop loss…take the other pair in the opposite direction - you bet GBPJPY will fall and it doesn’t…when -30 pips…buy USDCHF. Let them even out and close both. If the minus is greater than the plus and still going…double up the profitable position. To be closed when the overall minus is minimum, when zero or a bit in profit.
I am not sure whether any of these two works out for you but I am definitely curious about your opinions on the matter so let’s hear them !
Thanks,
Adrian