How much time to find a good system?

Vipron123 · December 31, 2019, 10:12am

Hello, Forex trader !

(Sorry for my english, i’m a French guy).

I’d like to know, how much time did you spend before finding a good and consistent trading system ?

I trade forex since 2017. At the beginning, i knew nothing about it, and I made a lot of mistakes.

But know, I finally know how to create a system with a statistical edge.

The problem is that I spend most of my time trying to create a system that I like and wich is also profitable, but I can’t find a system with an expectancy over 0.17.

I don’t like to talk in pips, I prefer saying that the distance between my entry and my Stop Loss is 1R.

So, an expectancy of 0.17 means that on average, every 1 € put in a trade will make me win 0.17 €.

What should I do ?

Trying to modify my best system by adding another indicator, backtest it again until hopefully on version is better than the other ?

My actual system use this:

-Parabolic Sar
-SMA75
-SMA150
-SMA300

I wait for the SMA to be in line, and then I take a trade on the new SAR in the direction of the trend

Ratio Risk/Reward of 1:2, I put my Stop Loss at breakeven when Profit is at 1R.

2% Risk on each trade

So I have 32% of Winning trade,
46% of losing trade
22% of trade at breakeven

On average

I trade this on the H4 timeframe, because I want to only trade 1h every day

On every currency (expect some with a too high spread)

Also, do you use only one strategy or you use multiple at the same time ?

Thank you

ProfesorPips · December 31, 2019, 10:20am

Hi, this question has no clear answer, the approach to trading is a very individual matter and many factors, including experience, influence the creation of a profitable strategy. For example, it takes 3-4 months for me to create and review my strategy. Regards Greg

tommor · December 31, 2019, 5:02pm

I try to stick to one strategy per market or sector. I get distractions, confusion and poor results when I try to mix strategies. So I am using one strategy for all the forex pairs. But I would use a different strategy for the Dow.

In order to bring in a third strategy I would need to either run it on e.g. all the forex markets, or as the sole strategy on e.g. EUR pairs or AUD pairs, or run it on the Nasdaq or the DAX or Gold etc…

I trade long-term only, trend-following only.

ProfesorPips · December 31, 2019, 5:14pm

do you trade on D1 chart?

tommor · December 31, 2019, 5:16pm

Yes, only on D1. I do use W1 for some trend confirmation. Many long-term traders use H4 to find best entry and exit levels.

ProfesorPips · December 31, 2019, 6:25pm

Maybe you should check Price Action in action

tradeforex077 · December 31, 2019, 8:06pm

Hi vipron,

I have a few questions.

Why would you pick the 75, 150 and 300 moving averages? I mean why them in particular.
You have some breakeven trades, have you tested them to see if you didnt take at breakeven and just left them? Does it affect your profitability?
How much do you want to make a year? The expectancy of 0.17 downplays what you make. If you trade 100k, 2% risk, 2:1 risk reward. 128k winners, 92k losers, 44k breakeven. So 18% for the year or 36k. Which is actually pretty good.
do you trade the same size every trade or are you compounding? As your returns will be be bigger if you do.
you trade the trend so maybe 2:1 is not enough, have you tested whether you should be going for higher TP and letting the trade run with the trend?

It took me 2 and a half years to find a profitable way to trade so you are doing exceptionally well. On top of that I trade multiple strategies and am a day trader which you’re doing all in one hour. So not sure why you want to add another indicator in. @tommor is also a longer timeframe trend follower so it would be helpful for you to pick his brains and read his past posts. You’ll pick up a lot of experience and knowledge.

Dextor_Mason · January 1, 2020, 5:59am

Trading with multiple strategies is more effective rather than rely on single methodology.
It should be vary from all different financial instruments as well as market status

Wara_arif · January 1, 2020, 9:16am

finding a good system is not a big deal ,
the main issue to to bring profit consistently from that. money management also important.

Vipron123 · January 1, 2020, 9:44am

Hi Tommor,

I do exactly the same, but have you notice that on some pairs the system work well and on some other it work… Not so well ?

Generally, the trades I take on EUR/USD are really better than the other !

Vipron123 · January 1, 2020, 9:55am

Hi Tradeforex077,

Because I like the idea of having a “long term” trend that is confirm. But I don’t have tested the system on other Moving average yet, so perhaps it work well with other Moving averages.
Yes, when backtesting, I try to see if on the exact same trade, letting the trade continue without break-even would make it more profitable, but no. Without the breakeven, the system is a bit less profitable, but not so much. I personnaly prefer that because psychologically it’s reassuring to know that you’r trade is secure once it has reach 1R
I’m pretty sure that the only limit is set by the mind, so I’d like to be millionnaire in less than 10 years !
Yes, I do compounding.
No, I havent tested it yet. I will

I’d like to add an indicator to upgrade the system by taking better quality trade, but I’m not sure if it will work

I’m new on this forum, I will read it

TomCooper · January 1, 2020, 10:07am

if you think ,
its much easy to bring good trading strategy ,
please suggest me some of these. i think its hard.

tradeforex077 · January 1, 2020, 5:11pm

If you cant have consistent profit then how can it be a good system in the first place?

Toskac · January 1, 2020, 8:14pm

Dont know how many trades did you place to get the winning and losing % you are getting but with your risk/reward ratio, you seem to have a winning strategy. The fact that you are not happy with it is a different story

I would not include additional indicators to be honest. Maybe find some other way how to reduce losing trades (using simple supply/resistance).