Ok I want to start off by saying that normally I trade smart. Meaning that I use good risk management, money management and a simple entry system on larger time frames. I am doing well and would suggest others to trade in a similar manor. I am always willing to learn more and do not consider myself a pro in any way. I just want to share an idea that I have been toying around with on a demo account and get feed back.
Ok this system is based solely on compounding. I love compounding because of the power it can give you on growing a small amount very quickly. Take a small amount of capital, say $100 and compound the heck out of it with say 5 - 6% per trade and after even 50 trades @ 5% you have multiplied your money by 10 times and now have 1000 to trade with.
The only problem with my system is how to have a system that can pull off 50 wins in a row or close to that with no loses. To solve this I thought it would be doable by using a 5 pip TP and a larger SL like 30 - 40. If I enter around London Open this strategy seems to work out nicely regardless of direction, but I do hit 1 loss every 20 or so trades. This is opening at random in a random direction. I feel that if there I had a system that was designed to catch 5 pips on even a small trend or in a spot of consolidation, this system could really grow a small account into a decent size account where a more stable system could be implemented for larger gains.
Any suggestions on a 5 pip system or a system where I can take 5 pips easily and frequently would be appreciated. I would also like to not see any negativity here because as I said this is not my main approach to trading, just a toy idea to play with in my free time, maby more As always do not go live with this before demo testing.
ps. when I say 5 pips I mean 5 pips+spread. So calculate your 5% on the 5 pips then add in the spread.
Here I go being a flatliner again. Try a two bar breakout. (yikes! did I just say that?!) make a tunnel like so, put a horizontal line at the top of the last two bars and another one at the bottom of the last two bars and trade price as it breaks one of those lines TP is 5 pips plus spread. if price is moving strongly hold on for more, if you see it slow down or start to stall then get out quick. Make your entry on something like a 15m chart and then look for the stall or reversal on a 5m. you can trade price going back into the tunnel from the outside also. Either go for 5 or put a SL at BE +1 or 2 asap and see where it goes. This is scalping and not my style.
I don’t trade the 2bar break but if I did I might look for something that puts momentum on my side, for example I may look for a situation where the last 2 bars were up bars and only take a trade if price breaks the high of those two bars. and vice versa for a sell. There’s no system that’s going guarantee 50 wins in a row though… Although I found something interesting… A system where a series of trades would end in an overall win more than 50 times in a row. I’ll have to think about that some and I’ll post it here if it turns out to be a good idea.
If you’re going for only 5pips plus spread you might look at a higher time frame like 30min or 1H. Five pips is so small it’s just a random fluctuation, should be easy to get that.
I totally agree there is no system that is likely to win 50 times in a row, but this is based on the assumption that you stated. Random fluctuation happens and 5 pips is what i find under my couch cushion most of the days I trade this. :57: Its those days where the market trends strong against us and never comes back. Thats what we are trying to find a way to deal with. The series idea is a point of interest, but the stoploss would need to be lowered or/and managed more to work with a series methodology. I even thought of incorporating some type of martingale with smaller stop losses, but that sounds hairy to trade. As long as you take out profits regularly, it might not be bad to tinker with. The starter account is small so we dont mind losing is as long as we cover it in our profits that we are taking out regularly.
Another idea I looked at is on the daily open, use price action or a predictive indicator like CoG to pick a direction and go small pips and small percentage increase. Most days price travels above AND below the daily open by more than 10 pips. This way you are still putting chances in your favor of winning, but still have random fluctuations to close you in profit for the day. Only problem is some days trend strong and dont come back in-case we are wrong. Maby a filter system to tell me when daily charts are ranging/volitile or a money management/martingale could be a solution. Any thoughts??
I would steer clear of a martingale. I tried my series idea yesterday and it is a highly modified martingale. it gave me a profit but it was nerve wrackin! I did an analysis once of price breaking the previous day high or low, theres something like about an 80% chance that it will go at least 20 pips in that direction.
As always do not go live with this before demo testing.