Thanks for the additional input MatW2009 (I’m pleased that somebody ELSE has also done some work on this).
Here is some additional information (not Larry Williams but I’ll wager that this is based on his work):
Ripe Trade: Day of week trading edge
Anyway: it’s NOT my intention to hijack this thread or to detract from that system that is currently being discussed. I just thought that the CONCEPT is the same so why not take a look.
Have fun.
Regards,
Dale.
Yes, personally I would go with 50. You will want to give trades a bit of room to retrace before continuing in your direction.
However to find the best stop really will require some back-testing as there will always be a trade-off, in any system, between win:loss ratio and stop/take-profit ratio.
I am going to use 50 pips as a SL and make a live trade tonight on the GBP/JPY (I like the volatility)…
I can handle a $10 loss and I simply don’t have the head to demo this thing for a few months.
Hopefully, it will be a strong directional week.
I’ll post my results.
Thanks for the input.
Hi Michael (finally),
Sorry for the delay: I had to ‘dig up’ the book!!!
It’s called ‘Long-Term Secrets To Short-Term Trading’.
Regarding equities vs forex trading using this type of methodolgy: I SURMISE that if you opened and closed a forex position (EUR/JPY for example) at exactly the same time as you WOULD have been opening and closing a position on the S&P 500 based on this methodology then you COULD be arlight (although you would have to test VERY thoroughly given that the correlations are not exact).
I must just mention this though: it’s just the CONCEPT that I thought I’d mention here i.e. Larry Williams’ methodology is SPECIFIC to trading the S&P 500. In other words (and forgetting about the S&P 500 for a minute here): what if you bought GBP/USD and always closed the position out four weeks later or if you sold EUR/JPY and always closed the postion out six weeks later or what if you bought AUD/USD if the close today was a certain percentage above the close five weeks ago. That type of thing. These patterns do exist for sure. It’s just a question of finding them. I guess the purpose of me intervening here was simply just to try to get everyone thinking ‘out of the box’ is all (seeing that they were ALREADY looking at a similar concept).
Regards,
Dale.
Thanks for the book title Dale.
I will read it and demo test it on Forex.
Hopefully there is a strong enough correlation between Forex and Equities to make it profitable in Forex.
Best of Luck,
Michael
Whoops!!!
I was editing my post (adding to it) and you replied in the interim and quoted my original post.
See the addition to my post (above).
Regards,
Dale.
The more that I think about it, the more I think that Williams ideas might be applicable to Forex.
There really might be profitable correlations using ideas like the ones that you mention above and I can go back years to test this simply by scrolling back on my daily and weekly charts.
This week I am going to come up with these type of ideas and I will back test them.
If any prove statistically significant, I will post them here.
I really like the SIMPLICITY of this type of trading and I love playing for big profits.
Hopefully I can find a profitable idea using these concepts.
I’ll keep you posted.
Michael
I find this style of trading appealing, not least because it allows people who dont trade full time like myself, to trade with minimum interruption of our day jobs.
Indeed i spent some time recently trying to come up with a similar method for the london session but despite playing around with entry levels, & various SL & profit targets, failed to find anything conclusive. Maybe the weekly approach will be more succesful.
My 15 min charts stretch back to May 08 giving 1.5 years of data to work on which will give us a better indication on the success rate of this thing so i will scroll through to see what type of results we are getting & post here later in the week
If you’ve got 5min charts going back a way you might want to play with this (quoted from another thread):
I was thinking, random entry at midnight at the start of the daily candle. However random gives 4 variables as previously noted. Always taking a long reduces it to two options - up or down (win or lose) however we could alter it slightly to give us an edge.
So I decided to arbitrarily take the last 5 minute candle of the day, and place OCO orders either side of it by 1 pip. So a break long by 1 pip sets us up for a long for the day, a break short by 1 pip gets us into a short.
We’re looking at quite short stops earlier in the thread and as it’s a 5min chart I figured put the stop at the opposite entry point. TP? Well, that’s open for discussion. At 1R TP I get a 60% win-rate, 2R TP yields a 53% win-rate.
But I only have 1 month’s worth of data…
This was on EUR/USD as it has the lowest spreads
Ive got only 5 months data on the 5 min charts, not sure if that is enought to get conclusive results but will try to look after i have tried this weekly method first
I placed my first trade using the method outlined in the opening post, except that I am using 53 pip stops instead of 30 pips.
I have 2 pending orders in EUR/JPY
Buy: 158.58 SL: 158.03
Sell: 157.56 SL: 159.09
I will post the profit/loss daily and I will close the position at 4 pm E.S.T. on Friday.
This method is NO Holy Grail.
The idea here is that if price moves 50 pips from the opening, hopefully it will not break that opening again for the week.
You need a nice big directional week to have a shot at making nice money.
This method may not work at all but I don’t mind risking $10 to find out.
I am just trading 1 micro lot.
NutTrader,
If you can look at that 5 minute data, that would be helpful just to get an idea.
Please post your results.
Since EUR/JPY has been in a range all night and has not triggered a trade,
I entered GBP/USD at 9:45 a.m. EST this morning.
I bought 1 micro lot GBP/USD at 163.56 (50 pips from the opening).
The SL is at 163.03.
I will be closing this trade Friday at 4pm EST.
I still have an open order to sell GBP/USD at 162.56, with a SL at 163.09.
I hope that we have a nice breakout.
I will post daily with profit/loss on open position.
The trade is off to a great start.
So far the trade is up 18 pips with GBP/USD trading at 163.74.
Hopefully the momentum continues.
Here’s a copy of that chart. I didn’t compile the data, I just stole it from a Forex Factory thread about 6 months ago. 
It shows the number of days in 2008 each pair had a weekly high/low on any particular day of the week. As you can see, weekly highs/lows happen on Monday and Friday about twice as often as on other days!
I think the key to a system like this is not to use a set number for the stoploss at all. The weekly range just varies too much. For example, in late 2008 weekly ranges on GBP/USD were over 800 pips on a regular basis, but now 450 is the norm, and in 2007 250 pips was common… What worked as a stoploss in 2008 or 2007 might not work as well now.
I suggest finding some value that changes with the market conditions to use as a stoploss. The weekly ATR and Sunday range that the Sunday Breakout uses are examples of what I mean. In volatile markets they get larger, and in slow moving markets they get smaller. 
I think this system has great potential! Hopefully someone has the time to backtest it and come up with the optimum values.
Thanks for the statistics Phil!
I think what this means is because of the weekend break, price has a higher chance of breaking out on Sunday/Monday because there is more of an order inbalance when it reopens on Sunday.
Perhaps Friday is more volatile because people want to adjust their positions before the weekend.
If you run across any other stats like this, please don’t hesitate to post!
I just got short eur/jpy at 137.56 with stop loss at 138.09.
I will post daily P&L.
If GBP/USD gets stopped out at 163.03 I will enter a 1 unit short at 163.03 instead of entering GBP/USD at 162.56.
I want to enter this trade as soon as price breaks opening price instead of waiting for a short at 162.56.
I like the idea of having open trades in both GBP/USD and EUR/JPY.
The reason for this is because these currencies are highly correlated and if one is stopped out there is a chance of a bigh move, in the other direction, in the other currency.
I will be trading just eur/jpy and gbp/usd.
I will update the P&L daily.
As of 10 pm EST Monday: eur/jpy= +66 pips(open position)
gbp/usd=–10 pips(open position)
gbp/usd= -53 pips (stopped out)
Hi Guys,
Very keen to test out this system, love the idea of it. Just one question, what orders are you using to enter the market?
Hi,
I see that this thread is gaining some momentum. Nice!!! I ALSO see that the traders HERE are more interested in LONG TERM trading (and ME PERSONALLY: I NOW believe it’s the ONLY way to trade)!!!
To this end: take a look at the CCI or ‘Commodity Channel Index’. Place it on your charts but don’t bother about the default period setting (which is usually 14-periods) i.e. use a LARGE or LONG TERM period setting e.g. 100-periods or greater. I DO believe that this could be a rather good filter for the system being developed and tested on this thread i.e. only long trades are initated when the CCI is above the zero line and moving upward and only short trades are initiated when the CCI is below the zero line and moving downward.
Now (and not meaning to detract from the system being developed and tested on this thread): one COULD simply go long when the CCI has just crossed the zero line from being below the zero line to being above the zero line (the CCI has just changed from a negative value to a positive value) and one COULD simply go short when the CCI has just crossed the zero line from being above the zero line to being below the zero line (the CCI has just changed from a positive value to a negative value). Take a look at EUR/USD (daily timeframe) using a period setting of 100-periods (or even 200-periods) as an example. THAT is LONG TERM but HIGHLY PROFITABLE trading so far as I can tell!!! Of course: you don’t go long or short at market but place stop orders ‘a couple of ticks above the high or a couple of ticks below the low’ of your signal bar for entry (and there are many ways of calculating your ‘couple of ticks’ value of course). Risk management is essential (this should go without saying). One could possibly use a trailing stop to lock in profits if required (although THIS ‘system’ is a ‘true reversal system’ meaning that you are ‘always in’ and should stop and reverse when given a signal to do so and the use of a trailing stop will interfere but hey: profit IS profit sometimes)!!! What’s more: one could look at pyramiding into your position i.e. adding units to the position to increase profitability at certain points during the trade (but always watch your risk management).
So there you have it: a good filter for the system being developed and tested on this thread or a trading system on its own.
Have fun.
(Oh and please note: I really only look at daily equities charts so the LARGE or LONG TERM period settings for the CCI to which I refer above could quite possibly be shortened given that the system being developed and tested on this thread uses the weekly timeframe).
Regards,
Dale.