A Super Simple Trading System:

finally · October 27, 2009, 1:20pm

GOOD NEWS SO FAR!!!

The short I took (live trading) on Sunday, on the eur/jpy at 137.56 (as I posted earlier on this thread) is now trading at 135.85.

So, the eur/jpy short is now up 171 pips!!!

Unfortunately, the gbp/usd got stopped out twice for a total loss of 106 pips.

But there is stll a net profit so far of 65 pips on the two trades and this trade will be closed out Friday at 4pm- Hopefully, the eur/jpy keeps tanking

I bet there was a way to only take the eur/jpy trade and filter out the gbp/usd trade.
I am going to work on a filter to screen out only the best pairs to play and I will post again later tonight.
If the gbp/usd was filtered out, so far I’d be up 171 pips for the week and it’s only Tuesday…
I’ll keep you all posted later.

finally · October 27, 2009, 1:35pm

dpaterso:

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.

Hey Dale,

Thanks for the input.
It’s funny you talk about using a long term CCI going thru the zero line to initiate a trade. I sometimes use it to corroborate trades.

I think that you are right and that a long term CCI can be used as a good filter for this system or be made into a system itself.
I really like the idea and will give it some thought and I will post my ideas later today.

I would love to combine a long term CCI with this system and think that it is definetly doable!

I’ll keep you posted.

How’s the weather in Johannesburg today?

Michael

finally · October 27, 2009, 1:43pm

I am using a buy stop to enter long and a sell stop to enter short.
Once the orders have been initiated, I then place liquidating stops on those orders.

dpaterso · October 27, 2009, 2:18pm

Hi Michael,

The weather is good now i.e. it’s our SUMMER here so I’ve got no complaints (I cannot stand the cold)!!! LOL!!!

CCI:

As I said previously: it’s quite odd because I’ve never really given it (the CCI) a second thought before but of late it seems to be mentioned more and more so I thought I put it on a few charts and ‘see what gives’. Quite impressive to say the least. What’s even MORE odd is the period setting of 89 that you used!!! LOL!!! I’ve been ‘fine tuning’ (for the S&P 500 on the daily timeframe) and I found my possible ‘sweet spot’ to be 85 or 86!!! How about that!!! LOL!!!

As you may or may not know: I’ve learned some VERY hard and some EXTREMELY expensive lessons in this business and I’ve reached the (my own) conclusion that this business of trying to catch even the SLIGHTEST HINT of a price move in one or the other direction is only for the professionals (which I’m not)!!! To be honest: I’ve been evaluating the Turtle Trading System for many months now and I guess it’s changed my entire perspective on trading simply because it demonstrates that given enough time and patience one CAN make REAL money in this business. So: I no longer have a problem waiting days, weeks, or even months for signals on an instrument. This is why I’d also have no problem in initiating a long term CCI trade and let it run for MONTHS on end even IF a fair portion of the profits are given back when it comes time to stop and reverse. It’s taken me a LONG time to realise that whipsaws inherent with short term trading methodologies (most times) cost you MORE than the profit that a long term trading methodology will give back eventually. This business of trying to catch every single price move: leave it to the Goldman Sachs’ of this world (with their ‘supa dupa’ ‘flash trading’ computer systems)!!! LOL!!!

But yes: I contributed my views on the CCI to this thread because I figured it could very well be a nice filter for the system being designed and tested on this thread and I hope it works well for all involved. As I said: it SHOULD (at very least) serve to give SOME confirmation of the direction in which to be trading.

I understand your possible dilemma regarding an exit strategy. I suppose there are as many possible exit strategies as there as possible period settings for the CCI (1 - 999)!!! LOL!!! One SUGGESTION: you entered on the weekly timeframe so why not switch now to the daily timeframe and TP if CCI(89) crosses the zero line??? As I said though: there are probably many possible exit strategies. Another one that I’ve been looking at would be to move your stop order after every ‘dip’ of the CCI i.e. a trailing stop. I’ve not tested any of this ‘for real’ yet though i.e. at the moment I’m just ‘observing’ is all.

Regards,

Dale.

dpaterso · October 27, 2009, 2:39pm

Following on from my previous post:

I just had a look at GBP/USD (daily) to see what you (Michael) could have done to avoid getting stopped out (whipsawed). By my calculations and using CCI(85): you would have entered long on 02/04/2009 at around 1.1482 and you would have stopped and reversed on 18/09/2009 at around 1.6233 resulting in a nett profit of 1 482 pips. You would have been whipsawed between then and 19/10/2009 for a nett loss of around 193 pips. That’s still a nett profit of around 1 289 pips. You’d still be long now.

That’s my analysis.

Now I know that there are many that will look at the results above and say that the profit made is not comensurate with the time taken to generate such profit. The above result assumes one single lot i.e. no pyramiding to increase the trade size (and therefore the potential profitability) and no (possible) locking in of profits by using a trailing stop of some sort. That being said: multiply the above nett profit by a good few instruments trading reasonably sized positions and what do you get???

Anyway: I FEAR that we are digressing somewhat from the topic of this thread (sorry for that i.e. it was not intentional).

Regards,

Dale.

dpaterso · October 27, 2009, 2:47pm

Hey MattW2009,

Thanks for the kind words and compliment(s) (although I’m not sure that my clients would agree with you)!!! LOL!!! But I’ll ‘make good’ with them soon (or die trying)!!! LOL!!!

As I have said though: if there is ANYTHING that I’ve learned it’s that trading long term is the only way to trade (well: for me anyway). Unfortuanately: I’ve come ‘full circle’ I believe. There were times when I made thousands in a few days only to lose it soon after that (and THEN SOME). That type of trading is not sustainable in the long term and will only lead to misery!!!

One thing I CAN assure you of though: BEFORE I post anything nowadays I will make SURE that I MYSELF am sure about what I"m saying i.e. I’m tired of having to post disclaimers after a few months at the beginning of threads that I’ve started (NOT that anybody actually takes HEED of such disclaimers but still)!!! LOL!!!

Regards,

Dale.

finally · October 27, 2009, 4:25pm

I think I have found a good filter for this system.

I put up a 10/3/3 stochastic and if the trade was taken in the direction of the stochastic it would have given you the short in the eur/jpy and avoided the long in the gbp/usd.

My open position in the eur/jpy is now +175 pips.
My loss in gbp/usd would have been only -53 pips.

This seems to be a much better way of playing the Breakouts.
I couldn’t find a use for te CCI as a filter but I am still looking for other filters that could have avoided the gbp/usd trade altogether.

If anyone could find any filters that would have avoided the gbp/usd trade altogether, that would be very helpful.

Michael

finally · October 27, 2009, 10:58pm

GREAT NIGHT IN EUR/JPY +224 PIPS!!!

I will close the position Friday at 4pm EST

If anyone could find a good filter for this system, I think it will be a super system.

finally · October 28, 2009, 4:25am

Eur/jpy is now +255 pips!!!
I can’t resist taking my profit now, so I will liquidate position at +255 pips instead of waiting for Fridays close to liquidate.

Perhaps there might be larger profits come Friday, but I just can’t resist banking the 255 pips.

Jay_D · August 25, 2010, 4:40pm

Hi Finally

Do you still trade this at all?

Hows it been going for you?

Cheers

Jay

sharad · March 22, 2011, 8:05pm

Hi,

I came through this method, and I have tested this system…its amazing…
its really super simple…and it someone handles it cleverly…get very very good results.
In fact , big moves in favour.

Thank you finally.

Sharad Patel
New Zealand

NormanA · February 25, 2017, 9:24pm

Hi Finally, or anyone else:

Where I live, I get up 4-5 hours after the New York open. If I were to place opposing trades (Pending Orders) as TKimble suggests, one of the opposing directions will likely be way beyond 50 pips of the previous week’s close. Any ideas how to best enter the trade? One possibility is this: Set a pending order 50 pips north of the CURRENT price, and another 50 pips south of it. Any comment on this? Other suggestions?

Thanks,
Norm

Clint · February 26, 2017, 6:34am

Hello, Norm

The New York open on Monday morning does not figure into this strategy.

In the original, [I]set-it-and-forget-it[/I] version, you only have to be at your computer two times per week: Sunday early afternoon (your time) to place pending orders, and Friday late morning (your time) to close your open position (if any) and remove un-triggered pending orders (if any).

Here is tkimble’s answer to your question in the FF forum:

Part Time Wealth Building Trading System - Weekly Scalping - Page 2 @ Forex Factory

Regarding the Sunday and Friday times:

The retail forex market opens at 8 am Tokyo time[B]*[/B] on Monday (1 pm Hawaii time on Sunday), and closes at 5 pm New York time on Friday (noon Hawaii time on Friday).

Based on your time zone (HST = GMT-10), you would place orders for the week sometime around 1 pm on Sunday, and you would close positions (and/or un-triggered orders) at 11:30 am on Friday (that would be 30 minutes prior to the weekly close).

Those times are current, but the Friday close will change in 2 weeks, when New York goes onto daylight saving time.

Beginning on Sunday, March 12, the time difference between Tokyo and Hawaii will remain the same, so you would still place orders around 1 pm (your time) on Sunday. But, the time difference between New York and Hawaii will go from 5 hours (currently) to 6 hours. So, beginning on that date, and continuing until late September, you would close open positions (and un-triggered open orders) at 10:30 am (your time) on Friday.

[B]* Note regarding the weekly market opening:[/B]

Technically, the market opens first in New Zealand, currently 4 hours ahead of Tokyo. Then, the Sydney market opens 2 hours after New Zealand. And Tokyo opens 2 hours after Sydney. So, why am I suggesting that you take the Tokyo opening as the weekly opening?

Trading is typically either very subdued, or very crazy, prior to the Tokyo opening on Monday morning, depending on whether significant geopolitical and/or economic events have occurred over the weekend. In either case — subdued or crazy — it’s a good time to sit on your hands, and let the dust (if any) settle. So, don’t worry that you’re missing important price moves prior to 8 am Monday (Tokyo time).

Some of us don’t like to fool around with the Asian market [I]even that early.[/I] For us, waiting an additional 2 hours (until 10 am Monday in Tokyo, 8 pm Sunday in New York, and 3 pm Sunday in Hawaii) is much more comfortable.

On the first Sunday in April, New Zealand and southeastern Australia (both currently on daylight saving time) will return to standard time. When that occurs, New Zealand will be 3 hours ahead of Tokyo, and Sydney will be 1 hour ahead of Tokyo. Ain’t daylight saving time fun?

.

tommor · February 26, 2017, 7:57am

Hi Norm -

I used to be very drawn to bracket trades like this that seem to rely only on volatility in order to make a profit. But I developed a serious scepticism after I started actually trading them. As soon as you do this, you start to optimise your set-up, and try to use TA to give you a more likely outcome, and to eliminate some of the losers.

From this tendency comes my main objection is - alright this system is suited for times when you cannot gauge which way the market is more likely to move: but why trade a market if you have no idea which way its going to go? Where is your edge? Why not trade something that is showing positive technical indications of its likely direction of travel?

I also have a prejudice against pip-based stop levels. As this amounts to a random decision in terms of TA, I have to extrapolate that losses and therefore overheads and therefore winnings will also be random. But this is a secondary question to the one above. Then again, why close a winning position just because its the end of the week???

lexys · February 26, 2017, 8:16am

So do I - very much so: there are [I]so many[/I] better, more sensible and more justifiable alternatives.

braydendrury · February 26, 2017, 9:26am

Thanks for sharing such information. Really helpful for those who are new in trading.

NormanA · February 26, 2017, 6:05pm

Hi Clint,

I thought I responded to your reply already, but I can’t find it. Perhaps I missed a stitch, so here goes again.

Thanks for the heads-up on the Tokyo open on Sundays. Seems so obvious now. Thanks, as well, for the reasons you gave for the Tokyo open as opposed to NZ or Sydney. You da man! I’ll take your advice and also copy your comments to file.

I’ve got time conversion clocks on my computer, tables relating Hawaii Standard Time to EST, EDT, UCT, GMT, LSMFT (“Lucky Strike Means Fine Tobacco” for the uninitiated), etc., have studied and memorized, but am still having a hard time wrapping my head around what’s relevant to me - but it’s coming. Yes, Daylight Savings is a barrel of monkeys!

Again, thanks for the heads up,
Norm

NormanA · February 26, 2017, 7:00pm

Hi Tommor,

Thanks for your reply. I take your objections seriously, and will be considering them.

The big picture is this: I’m obviously just a beginner, and am still rough tuning. Many claim to have had great results with the system, so my overall strategy is to test it pretty much as it is, and then refine it as I go.

In response to your well-taken question, “Where is your edge?” here’s what I perceive to be my edge, thus far:

I don’t just dive into any pair. I have a watch list of 17 pairs.

Yesterday, Saturday, I discovered that GBP/CHF showed the highest number of pips last week (using the MT4 crosshairs), and roughly the same number of pips several weeks in a row.
I saw that it’s in a range (which is OK, because I’ll only be trading one candle), and because it’s in a range, price action - I’m still learning how to read it - does not show me that it will likely be affected by nearby Support and Resistance.
I saw that the weekly and the monthly of the pair are well on the same side of the 60 MA.
I inspected the dailies and saw that a good number of the weeklies begin to reverse in mid-week, roughly on Wednesdays; so beginning on Tuesdays or Wednesdays I’ll check the dailies on this pair for opposing candle patterns and SR lines; and if a reversal begins, I’ll bail out.

As for the fixed 30 pip Stop Loss: I’m aware of many of methods of placing a non-fixed SL; but for now, I’ll go with TKimble’s comment, “More times than not, the 30 pip stop will not be hit if the trade survives through Tuesday of the 5 day period:” Part Time Wealth Building Trading System - Weekly Scalping - Page 2 @ Forex Factory. Should I begin trading late Tuesday or early Wednesday? Perhaps I should check the dailies again!

Well, that’s what I’ve got thus far. I’ll tweak whatever I have to based on continued study and experience, even to the point of it not looking like TKimble anymore.

I’m still in demo and, as I said, still rough-tuning; so if you or any eavesdropper sees a red flag, please wave it. If you have any further suggestions, bring them on!

Thanks, Tommor, and happy trading,
Norm

Clint · February 26, 2017, 11:17pm

Hello again, Norm

A few random thoughts on the strategy you’re looking at, and on Tommor’s comments regarding its faults.

B[/B] I have never traded this strategy, so I can’t assert that it is (or ever was) overall profitable.

But, tKimble and others claimed years ago (when his thread and this thread were started) that the strategy was overall profitable – so let’s assume that those guys were honest, and that this strategy was, in fact, generating the consistent profits they claimed.

That was over 7 years ago. Things change. The “trendiness” of currency pairs generally – that is, the tendency of most pairs to respond to prevailing economic conditions by establishing strong and persistent trends – changes from year to year (just as it changes seasonally). And the typical daily and weekly pip ranges of any given pair vary over time, as well. This changing behavior of the pairs we trade affects the performance of strategies such as the one we are discussing. So, claims of profitability from years ago should be taken with a grain of salt. Or not taken at all.

If this strategy intrigues you, test it carefully on paper (demo trade it), and find out whether it lives up to the claims made for it 7 years ago.

B[/B] Tommor has raised a number of objections to this type of strategy. Not to put words into Tommor’s mouth, but I see his objections as falling into two categories:

(i) this strategy is crude, in that it ignores trends, it ignores more sensible ways of managing stop-losses, it ignores more logical ways of managing exits, etc., etc., and

(ii) because of all that, a sensible trader will be tempted to tweak this strategy to correct its flaws.

Those are valid objections. I can’t argue with Tommor’s logic. However, what if the claims made by tKimble years ago hold true today? What if this crude strategy really will grind out positive pips over the long term? In that case, I’m tempted to say, ‘Set it up, and let it run.’

Maybe this strategy should be given a name that reminds us just how crude it is, so that we will not be tempted to try to correct its flaws, to tweak it, to dress it up and make it look elegant and sophisticated.

Let’s call it THE JUNK-YARD DOG STRATEGY.

The Junk-Yard Dog.
He’s big, he’s mean, and he’s low-tech.
But, he gets the job done.

There’s no need to tweak this crude strategy with trend-analysis, indicators, fancy trade-management techniques, etc., although you might be curious to know whether those things could actually improve the performance of the strategy.

If this strategy – in its crude form – proves itself to you, and you decide to trade it live, then go ahead and trade it in its original form and let it make some money for you.

Then, in demo, make all the “improvements” you can think of (starting with Tommor’s suggestions), and test the results of your “improved” version against the results of the original.

You might find that THE JUNK-YARD DOG is more formidable than you thought.

Tommor asks, ‘Where is this strategy’s edge?’

Maybe the answer to that would be, ‘Who knows? But, it makes money. So, let it run.’

B[/B] You mentioned the nuisance of doing time-zone conversions. If you haven’t discovered THIS SITE, you should check it out. In my opinion, it’s the best site on the internet for time-zones and time conversions. I use it every 6 months to prepare the time-change reminders which I post here in the forum, prior to daylight-saving-time change-over dates.

Okay, that’s my stream-of-consciousness for now. Sorry, if it got tedious or repetitive.

Take care.

tommor · February 27, 2017, 3:06am

Good stuff Clint.

I still dream of a methodology that lets me set and forget buy and sell orders so the money just rolls in quietly while I’m out hiking, so, yes, if it works, it works.