Daily Hi Lo

Trading Systems Free Forex Trading Systems
599

Yes I have. Larger SL’s do work too, but you will have a larger draw down, and your profitability will be lower. But they will surely give your trades some room to breath. From the optimization, a SL of 10 was best for the GBPJPY. It is common when the daily levels are broken, that they are retested. But it is also common that when the levels are broken, the price zooms below/above it, and a 10 pip SL is fine. As long as you have a good R:R ratio it works out.

The parameters: SL=10, TP=50, PipFilter=10, have been profitable for both the month of May and June. So I’m staying vigil with the numbers for this month. At the end of each week I will run the optimization again for that week to see if the parameters are still good.

But for now, we technically have a winner on the GBPJPY to start off the week, I just happened to be there to ruin it for myself. :slight_smile: Let’s hope that we don’t have a string of losses now before the next winner!

[B]Rule: Don’t move SL’s to BE!!![/B]

Synergy

600

I, too, have been burned more times than I care to remember by moving the SL to BE. I think my trading psychology is closely akin to yours.

But…I am concerned that my setup was quite different from yours last night. I lost despite following the rules. But let’s compare notes. It may have been due to the difference on how/where we collect data from the Friday/Sunday night candle.

I use FXDD for my settings (if IBFX is used, the data collection point is different by 2 hours). So, using the same broker as where you compiled your results could have a huge effect on the outcome. Consrquently, I have Friday with a GJ high of 134.64 and a low of 133.22. Then my BUY pending order was 134.77 (spread=3; pipfilter=10). The SELL order was 133.12 (pipfilter=10).

Your settings were all +17 pips higher than mine. Please provide the source and time you are using for your data as I want to be trading on the same page with you.

601

The details for my Monday trade, based on the Sunday daily Candle was the following:

Previous Day High: 133.9
Previous Day Low: 133.39
Spread 6
SL 10
TP 50
PipFilter 10

------Sell-------Buy
Price 133.29 134.06
SL 133.39 133.96
TP 132.79 134.56

I use IBFX, which is on GMT time. Sunday candle opens at 6pm EST and closes 8pm EST.

603

Thanks Synergy. That explains the differences in settings. I should be on track with tonight’s trading.

604

Yes, multiple entries is far more superior than a single entry, and can make the profit more steady and stable. I’ve just done a lot of work on the single order entry and want to see it out atleast for a month before I decide to try anything fancy.

Secondly, I have been under a little draw down and would like to make some profits first, before I start more advanced methods.

Synergy

606

Here is an example of how price can break the previous day low, then drop (close to a 50 pip TP), then go back to retest the previous day low, and then finally hit the TP. It was on this first drop that I decided to move my stop to BE, which then was hit, before it finally went down. This is why it’s important to keep the SL at its place, and just wait it out. And this is why, for me, it’s important not to watch the price action, as it’s always tempting for me to adjust my SL!

607

I love running numbers. So here are some more, and the data looks encouraging. I counted the number of wins/losses for the past 11 weeks (from the last week of April) on the GBPJPY:

Week Wins Losses Total % Win
11 2 3 5 0.40 TRUE
10 3 1 4 0.75 TRUE
9 2 2 4 0.50 TRUE
8 2 1 3 0.67 TRUE
7 4 2 6 0.67 TRUE
6 5 0 5 1.00 TRUE
5 3 1 4 0.75 TRUE
4 3 2 5 0.60 TRUE
3 2 2 4 0.50 TRUE
2 3 3 6 0.50 TRUE
1 1 3 4 0.25 TRUE
Total 30 20 50

Min # Trades 3 per week
Max # Trades 6 per week
Avg # Trades 4.55 per week
% Win 0.60
& Lose 0.40

As one can see, the average trades activated on the GBPJPY (SL=10, TP=50, PipFilter=10) is over 4. Based on these SL and TP values I have chosen, every single week was a winner (Indicated by the TRUE - from excel), with a net positive pips gained. Only in one week (last week of April, with April being established as the last month before this method became profitable once again for various SL and TP values) was there only one win.

Basically, with a 10/50 SL/TP values, one can win 1 trade and lose 5, and break even. Anything less than 5 losses, and you’ll still end up on profitable by the end of the week, pipwise (pip-value-wise would depend, for GBPJPY as the pip value changes). Since the average number of trades per week is around 4.5, let’s say 5, and the average number of wins per week is around 2.73, let’s say 2, it looks like you are highly likely to come out of every week with some profit.

So it looks good, and hopefully this can give us a little hope to endure those daily losses, because in the longer term, we can still be profitable. And I haven’t even looked at the higher R:R SL and TP combinations, which might be just as good, and thus be used to rev up more profit (but let’s be conservative here :slight_smile: )

And let’s remember, this is forex, and anything is possible. This is all historical analysis, and can become outdated the very next day after the analysis, so we’ll just have to wait and see!

Synergy

608

That’s pretty remarkable that you could score so many wins with a SL as tight as ten pips. That certainly wasn’t my experience when using a 30-pip stop on GU some months back.

609

Recent phenomena. A 10 pip SL just became feasible around the beginning of May of this year. Prior to that it was a consistent loser. It’s been holding since then. Not sure how long it will last.

610

It would seem then the ‘magic’ is in knowing how you are using the MT4 strategy tester to determine your SL/TP/Pip Filter values. One would not be surprised to find you reticent to share this technique. :wink:

611

Below shows the ATR (100- and 200- moving average) of the Daily Chart for the GBPJPY:

One can see clearly that the moving average begins an uptrend suddenly, after its steady down trend, at the beginning of May, which corresponds well with the trading strategy becoming profitable for R:R>1, including tight stop losses such as 10 pips. Currently it’s seeing a plateau, or slight decrease. If profitability and the ATR are related, it might be that trading with R:R>1 might not work in the weeks to come, or may render less profits, or see weeks of loss. Time will tell.

Synergy

612

I wouldn’t be surprised if that’s covert reverse psychology to make me post my method, to prove you wrong. :cool:

[B]Method [/B]

It’s really simple Merchantprince: Just place a pending BUY and SELL order above and below the previous day’s high and low, offset by a certain amount of pips (what I refer to as PipFilter). And don’t forget to add the spread on the buy order.

I coded an EA to set new pending orders for the new day based on the new previous day high and low, after closing any orders from the previous day.

[B]Optimization[/B]

I use SL, TP, and PipFilter as my optimization parameters. I varied SL and TP between 10 and 100, in intervals of 10, and PipFilter from 0 to 10, in intervals of 2. Spread is fixed, rather than grabbing the current spread from MarketInfo, for example, 6 pips for GBPJPY.

I optimize either a week or months duration to find the best parameters.

Other selections in the Strategy Tester:

Daily Chart
Initial deposit is $3000
Trading only 1 mini lot.
Both Long and Short positions considered
Optimized parameter: Balance
Genetic Algorithm: Unchecked

Every tick - selected

[B]Selection[/B]

I chose the parameters that yields that highest profit that have

  1. A R:R > 1, i.e. TP greater than SL
  2. A draw down below 2% (arbitrary choice based on personal appetite for drawn down)
  3. If there are several that meet the above criteria, then the selections gets a little more relative, looking at which parameters give the most steady profits, least amount of consecutive losses, etc.

[B]Assumptions[/B]
Markets will make similar moves, so as to render the previous week/months optimized parameters applicable.

[B]Flaws[/B]

Based on historical data, the markets can change any time, rendering optimized parameters unprofitable, as I learned last week for the EURUSD. Profit is dependent on one single TP. Multiple entries with different SL and TP would be a lot better, but I’m taking my time with this, and I want to be able to learn along the way, so I don’t want too much happening at one time.

Let me know if you have any questions, or if anything needs to be more transparent.

Cheers,

Synergy

614

That’s some very cool information there. And, no, I wasn’t being disingenuous. I’ve noticed some traders are happy to share the general idea of their strategies but tend to get blurry on the details out of a desire to maintain a proprietary edge in the strategies they develop. I appreciate the details of what you are putting into the MT4 ST to arrive at your parameters.

I’ve been reading up on the MT4 Strategy Tester, as I’ve never used it. The tutorials I’ve read so far are daunting but I am going to fire it up today and see if I can’t install your variables and play around with it for a bit. I think it would be critical to understand how one must alter the parameters of the hi-lo trades monthly (weekly?) if one intends to trade this way.

615

I’m more than happy to help. Yes, the Strategy Tester is great and is, for this particular strategy, quite accurate over the last two weeks where I have been able to compare its results to what actually happened in the market.

TalonD made the excellent observation of the high probability of price breaking through the previous daily levels. I believe my small contribution is making the SL and TP vary each week/month, and using the ST to find the optimized numbers.

And as I have recently found, it’s better to optimize the SL, TP and PipFilter based on the [U]previous week[/U], rather than the previous month. If the previous weeks parameters are consistent with the previous months parameters, is the case with the the GBPJPY, that’s even better.

Cheers,

Synergy

618

Bobkat posted but I can’t see it in the thread. But yes, as he was happy to see, we had another winner on the GBPJPY!

That makes two wins and two losses for the week, net gain of 80 pips (30 pips for me, because I got stopped at BE on the first one because of my own mistake :mad: ). The numbers show we [I]could [/I]have maybe one or two more trades activated for the rest of the week, with [I]probability [/I]favoring another win, which would be nice. That would make [B][U]rent [/U][/B]for me, and I’d be happy with that :).

Synergy

619

Winner, winner…chicken dinner! :smiley:

Thanks, Synergy!

620

I’m blurry on detail because I don’t have any details LOL

621

Less details is sometimes better, less liability. Which is why I always emphasize in my posts that anything is possible in forex.

623

Synergy,

Please let us know your optimization parameters for this coming week’s trades. :cool:

Thanks,
BK

624

Will do. IBFX now has price quotes to the pipette, so I need to make some adjustments to my EA, but I will have the information up soon. I think I might have even incurred a loss today that wouldn’t have been had I know. You see my chart had only two decimals, it doesn’t refresh, I had to open a new chart to see the third digit :mad:. Anyways I will work those numbers and post.

Neglecting the change in the quote price, we have two wins and four losses this week on the GBPJPY, so we still ended up profitable.

Synergy