This is an even better idea:). Thanks for pointing it out to me. Why have all your profits depend on one single TP, when you can have three? However, the SL and TP can be improved from that of the poster’s.
Currency: EURUSD
Parameters: Standard Lots
Duration: Month of June
This is the chart for the month of June, using the poster’s SL and TPs:
This is the chart produced using Sl=10, and TP= 35, 40, 45 (the values which were most profitable with the lowest draw down from my tests):
And this is what the chart looks with just one TP (35, SL=10, PipFilter=2):
The 2nd chart, with optimized TPs (constant SL) shows a steady growth of profits, compared to the first, and greater gains than the 3rd chart.
I personally like SL and TP values giving a Reward to Risk ratio greater than one, as this allows for profits to be sustained after consecutive losses.
It looks good so far. I ran some more numbers and found the GBYJPY to have steadier gains (less consecutive losses) than the EURUSD, but I like the latter as it’s easier to calculate pip values and such. Either way, I’m happy with what I see. Looking forward to trying it this week.
I use the MT4 strategy tester, with SL, TP and PipFilter as optimization parameters.
Pipfilter is a pip offset from the previous daily high and low. This is used to avoid bounces rather than breaks from these levels. So the the previous day high was 1.5000, the BUY order would be placed at 1.5002 when PipFilter is 2., 1.4998 is this was the daily low and we were going to enter a SELL order.
My plan is to not monitor my trades for the purpose of shifting stops to BE and such. Although later on expert advisor could do that. Please see my previous post, yes indeed placing multiple orders with multiple TPs is a lot better, because profits are not dependent on just one TP.
There are a lot of options, and they all give steady profits, it just depends on your appetite for risk, and how aggressive you want your gains to be.
Thanks, Synergy. I am still not clear on when your “day” begins and ends. If I use the daily opening candle with different brokers, I will get different start and end times. My goal is to emulate as closely YOUR trading style because you have optimized Talon’s system. So…at what time when will your trade begin? And, how many trades per side? SL and TP, please.
Sorry to be persistent about this, but I won’t feel comfortable if I’m not following what you deem to be the best setup.
I’m using IBFX, which is on GMT time. So the new day (i.e. the new daily candle) begins at 00:00 GMT, or 8pm EST. The previous day high and low, then, is based on the previous 24 hours. So if you were on EST, it would be 8pm to 8pm.
If your doing the single order trading, you can use:
Well as long as your position sizes are adjusted, so you’re risk is not to high.
I will be trade the GBYJPY with this method, with the following parameters:
SL=10
TP=50
PipFilter=6
SELL was already activated a stopped out, but I’m not deterred. This is a daily TF trading system, so I need to just need to be patient and wait for the next day.
With Reward to Risk ration at 5 to 1, You don’t have to have a high winning % in order to be profitable. But I am wary of being stopped out on the “beast” with only 10 pips. Just the same a 10 pip loss or even several in a row is a lot easier to swallow than 50 to 100 pip losses!
BTW, did you cancel the opposite side pending order once your SL on the 1st EU trade hit the SL?
I set the orders and forget about it. That’s the way I need it to be, because I can’t monitor my trades now that I have a full time job. If the SELL gets stopped out, I keep the pending BUY open. I only close pending order at the end of the day, when I know there is no way for them to be activated, and it’s time to set new orders for the day. The GBPUSD last week was a winner for both the buy and sell orders, so it’s best to keep them open.
Yes, with a 5:1 R:R I can go 4 consecutive losses and still come out profitable. But anything is possible in forex! But again, I’m sticking it out, taking it one day at a time.
I marvel and at the same time lament at how my stupidity can mess up even a most profitable trading strategy as this. So here are some rules I’m posting for myself and others, continuing from my previous posts on trading the daily hi and lo:
[B]Enter your trades AFTER the daily candle has closed.[/B] I know this seems obvious. But with the candle having seemingly completed its daily range, and there being only 15 minutes left in the day, and the current price no where close to the daily high and low, you’d think entering the next day’s pending orders a little early would be fine. WRONG!!!
[B]Stick with the same parameters for every trade.[/B] There are many different sets of SL/TP/PipFilter values that are profitable, each with it’s unique profit curve. Stick to one, wait out its initial drawn down and enjoy it moving into profit. Don’t switch around when one loses, to another in hope that it would be better. It’s amazing how an entry price difference of only 4 pips can mean the difference between a profitable trade or not. Some win on a day while others lose. If you jump ship when one set loses to another pair that just won, you could be catching the latter in a losing trade the next day. I’m looking at the price action, and it’s a win for parameters I lost with yesterday and so I chose not to use today ! :eek:
Avoid trading, or entering a trade, when the price closes at or is very close to the daily high or low. Things are unpredictable there.
And remember, this is a daily strategy, so you really have to think it terms of days and weeks for profit, and it requires a lot of patience, and long term vision.
I realize that because of your job, you need this to be a “set and forget” strategy. BUT…given that I can spend some time monitoring my trades, do you have any recommendations for trade management during the trade that can enhance profitability?
I trade with Oanda, and I will be trading both the EU and GJ according to your specs. However, I will be experimenting with 4 entries per side with an initial TP=35 on EU, and TP=50 on GJ. This way I will have the flexibility to employ multiple strategies within your parameters (such as letting one of the entries run with a trailing stop and no specified TP).
I have not worked too much with multiple entries at the daily hi/lo so I can’t completely vouche for its profitability. My current plan is to stick with single entries, and ride that out for a while before I make my trades more sophisticated. And I would want to optimize the SL and the TP for the entries as well, before I trade them.
If you can monitor your trades, then I would suggest either a shift of your SL to break even or a trailing stop. But you have to be careful. Many times, especially on the EU, there are two false break outs before the final move in the direction of the day. Your trade will move in your favor, then against you and then back in your favor, which could hit your SL, with in now it shifted to break even or trailing behind the market price. This may stop you from gaining the winners that you would definitely need to make up for the losing trades, form being profitable overall. I personally find keeping myself out of the trade (i.e. with decisions) always works out better for me.
I learned a lot this week about this method, and hear are a few points.
Firstly, the EU was a loser this week using SL=10, TP=40, PipFilter=0. It turns out the best parameters for the week were completely different that what I have calculated for the month. And it may be that optimization must be done on a weekly basis. And these weekly numbers should be check with previous weeks for consistency.
I like the GBPJPY because the best parameters for the past few weeks have been in the same range, and there have been a range of values that are profitable. This week I will be trading the GBPJPY using SL=10, TP=50, PipFilter=10. I will also trade the EURUSD, but a very low position just to see it out.
[B]I have found that the profitability of this trading strategy is highly correlated to the ATR 100 or 200 moving average. [/B] When the line is increasing or flat (the latter still not completely verified), this system is profitable. When it is decreasing, this system loses. The transitioning from losing to winning began for the EU and the GJ at the end of April, and the profit curve and ATR 100 and 200 SMA align well. Logically, this strategy depends on the probability of price breaking the daily high and low, and this probability increases when the daily ATR is gradually increasing. We can see from plots of the daily ATR that this system is currently profitable, but the line is flat right now. Which way will in go? We’ll know day by day. Right now this method is profitable for the EU and GJ. The question is, how long will it last? These past two months could have been exceedingly profitable. And this week was great for the GJ. So we’ll see.
In the future, I will want to transition to a multiple entries method. I just don’t want too many things happening right now. Watching price action has helped give me a good feel as to why my SL and TP levels did or did not work. I would want to work on optimizing the levels of the mulitple entries. Right now I just want to keep things as simple as possible.
As for your first question on how to increase profitability, I would suggest using one for the higher R:R trade parameters, if you have the appetite for risk. The method in itself will give you steady profits, so another thing to do is just be patient and wait day by day.
The EURUSD lost every trade last week. Weekly optimization showed that SL=35, TP=90, PipFilter=0, would have done best. I will still trade the EURUSD, but on a smaller position. This week, I will mainly trade the GBPJPY using the following parameters:
BUY @ Previous Day High + Spread + PipFilter
SELL @ Previous Day Low - PipFilter
SL=10
TP=50
PipFilter=10
Profit Graph for the GBPJPY using these parameters from 2010/06/01 to 2010/07/09:
Last week as profitable. Three losses, and two wins. We’ll see how this week goes.
This would have been a winner last night:
Sell @ 133.29
SL=133.39
TP=132.79
And I say “would have” rather than “was” because, I moved my stop to BE, and got stopped out. Had I left it at 10 pips it would have hit the TP :mad:. So the price did reach the TP. Like I said, I’m the worse thing to happen to my trades. This really is a SET IT AND FORGET IT method, for me, and from now on I’m setting my orders and closing my MT4. Anything I do to it, just ruins the trade :(.
Yes the GBPJPY is a beast, but that can work in our favor. I’m confident in the parameters, and there are a range of them that work. On average 5-6 trade orders get activated every week. 3 of them are usually stopped out, and the other 2-3 hit the TP. With a good R:R ratio, you’ll come out on top. You need to just persevere to the next trade and not get worried and start changing parameters after each losing trade. That’s would I did last week. You need to think in terms of weeks when it come to profits. And it takes a lot of patience, because you have a wait a whole day to enter another trade after one gets stopped out. Pipsychology’s articles have been great, and I’m trying to follow his guidelines for managing trade psychology.
