SithJawa, how much as percentage of account did you profit this week? I show if you risk 3% per trade, than you get 3-6.5% profit per good trade…and if you make 1000 pips, that is 75% profit minimum of account, maybe as much as doubling the account every week with enough 70 TP trades…is this estimation correct?
@pipcompounder: I don’t want to tell people they can double their account every week trading this, but I do :P… I actually trade with 5% risk on 4 accounts as well, 3% is for the drawdown potential 
if you look through rhe threads I’ve posted you’ll see A thread about turning 1,000 into 1,000,000 in a year, in fact with this system 10 million is more likely… Again I’m not saying everyone can do it in fact I doubt it, but it is obviously possible 
EDIT: one thing to note, not to toot my own horn but this is the most profitable system that I’m aware of, and i personally know bank traders and other wealthy private investors, maybe two things to note, I’ve said it before and I’ll say it again, most people don’t have what it take to keep a level head when trading real money, meaning they botch up even profitable systems because they can’t manage their emotions :3 it is EXTREMELY difficult to break past the mental barrier to being successful, but once you do it I can at the least guarantee you what I make, which right now is around 100% a week, sometimes more, sometimes less, the best way to keep your risk under control with an amount as large as 5% is to have multiple accounts and only calculate risk at the start of every week
@jawa i’m using pepperstone broker in australia
I’d like to PM you some suggestions for the EA but i don’t have access to (can you email me…)
I’m exciting to start again next week! But also looking forward to 8hours sleep tonight haha!!
Sorry back opposing signals, can you summarize it again? I not you posted across multiple posts on it but single write up would be nice.
How to handle
Opposing Indecision candles that are two or more candles
Opposing Inside bar / Indecision / Stars
@smacko: i emailed you I’m excited too! I always am 
although yes the sleep is most appreciated aha, i’ll try to summarize it in a simpler way: crap im busy right now but i will edit it in to this post within the hour :l
EDIT: basicly with indecision candles, when you have an open position and an opposing signal occurs on the very next candle, you zoom in to the 1 hour chart and look at the candles, the last candle in the signal you are trying to filter (the opposing signal) has to close lower then all the closes of the other 1 hour candles contained within both signals, the picture is on the first post
All of the candles immediately reverse your position if it is an opposing signal, the only exception is if it is an indecision candle taking place immediately after another indecision candle
The only tricky one for this is inside bars, normally i have an alert set so when the inside bar is about to trigger that would oppose a current trade i can be there to make the transition smooth by closing out my old signal and activating my sell stop (because we cant hedge in the US)
thanks jawa
opposing indecision signal directly after indecision signal apply filter: If fail ignore, if pass immediately close out and place new trade.
all other opposing signal immediately close out (inside bar needs to wait for order to fill) and place new trade.
SethJawa,
I have been following your thread here for awhile. I would like to submit an idea borrowed from "Simple and almost Naked thread on Babypips. What I have done is attempt to use the fibonacci Retracement as a tool to set entry and targets with your strategy. This methods comes from Simple and Almost Naked thread on babypips as I understand it.
This is a long trade on the eur/usd. I circled the 4 hour candle and then shifted to one hour. The direction is up. I drew a fibonacci from the high of the 4 hour candle wick to the low, 100% to 0%. I set my entry between 61.8 % and 76% and my target at 161.8%. It hit about a 60 pip gain. Now notice that for the entry to be triggered the price need to retrace to the 61.8 % and 76% window or range. This means that the trader will get better entries and miss some trades.
This is just meant as an idea and it might not work, but my early back tested show that it might have potential.
I don’t mean to change anything on your wonderful thread, just an idea.
Sincerely,
Greg Jones
@Greg Jones: It is honestly a great filter to improve the percentage of winning trades, however like any other further filter it will reduce profitability :\ I have mentioned before i have gone through every thread on this forum and picked apart others strategies to better my own and i still suggest others do it, well i wasnt kidding (btw this is not meant to sound negative or harsh i just get very passionate when my mind gets going and i can’t help being forward :))
The problem with waiting for fib retracements on single candles is that you will miss every break out move and continuation that has enough strength to immediately move price, which are the ones that are most likely to hit tp levels
Another issue with using 4th dimensional price points (and this might be a new concept to most traders [including most professional traders in fact as it is only my opinion]) such as fibs is that the only points of data you are actually extrapolating from are the start and the fib level you CHOOSE to take data from, meaning price moves from point A to point B (it should also be noted that it is you defining these variables based soley off of price extremes) and the only data you take is the data at point A and point B, how it gets there doesnt matter, which means you deny yourself all of the data between those points, what if in fact the two variables you chose weren’t points A and B, what if the two points you ended up choosing were A and J? This means every significant piece of data between A-J is not being used which means you have a majority of data that could be supporting something counter to what the combined A and J can predict
There are many other reasons but i think the simplest way to exemplify and define this is that Fibonacci is a recurring theme in nature, whether it is the order and amount of sunflower seeds or the curves in a shell, it is a 4th dimensional underlying mathematical principle that all matter in the universe adheres too, not on a molecular level but on a cellular and higher lever, meaning that collective groups of matter ORGANIZE themselves together as opposed to each individual piece of matter adhering to fib within itself, Nature is amazing but technology, psychology, emotion, are all features and products of human “nature” and do not run by the same rules as nature itself, to simplify further, do Fibonacci levels work in the forex because the laws of nature transcend through to human psychology? Or does it work because it is human psychology to draw meaning from the familiar and project in to all areas of our lives? Do fib levels hold or break because it is somehow accurately measuring the odds of most traders wanting to push price a certain way at certain prices, or does price push a certain way because there are people who use Fibonacci and deem these price levels significant? food for thought
Just like my old zone jumping method, fib levels work but not for the reasons people think, therefore there is a more accurate method of interpreting that data presented in fib line
That being said if you are drawdown averse you could use a filter like this (or S/R levels, pivot points, etc.), but it will definitely reduce your profits by as much as half, at least, though your losses would also be significantly reduced as well it still wouldn’t be worth adding the extra complication :\
believe me i have tried, without exaggeration, every single indicator on MT4 (and pivot point, fib levels, zigzag, freedom bars, and many other custom indicators [all on multiple settings]) both used as a filter and a main feature of this system and what my strategy is at now is the optimal setting i have found, there could be a better way but again i have not ever seen a method of trading like mine as far as profits, minimizing drawdown, ease of use, ability to work in ranging and trending markets, compounding profits, and being able to predict market psychology, it is the best out there that i am aware of, and you can feel confident in the concept behind it, it predicts market psychology dynamically through visual representation yet uses concrete price percentages to calculate entries, it finds the areas buyers and sellers power starts to struggle and we jump in the fight, simple and easy, cut and dry
This is a type of trading style where you will not have any reason to feel confident about your entry when starting at first, you cant quite quantify visually the strength of market psychology, and by definition this system just uses the data we have to predict who is winning in price then we throw our gamble in, however it’s pip gains cannot be compared too meaning once you start it, you will start having confidence in all the trades specifically because you know this system works
@everyone: Let me try to give you a basic visual of how my system works with predicting market psychology:
What every system needs is three things to predict and successfully trade the markets movements
- A method of determining entry prices
- Determining which way you will trade at that entry price
- Exit
There are a certain amount of quantifiable prices we can use to determine where we think price will go, ignoring ticks which humans cannot accurately trade do to our obvious limitations, we are left with the lowest form of data being 1M candles, I wont go in to quantifying a value over 4 hours since i have already found it to be the best chart mathematically and practically speaking
So basicly the available units of data we have to use are candles,
1M
5M
15M
30M
60M
240M
By common sense you would think the most accurate way of trading possible would be to use the most data and trade the 1M, because when we are using for instance the 4 hour candles we really are only using 4 units of data out of the possible 240, the open, the close, the high, and the low, meaning we are only able to use 1/60th of the data available to determine our entries, crazy right!?!?! Okay so that is a bit crazy so i want to use more data so that so our entries will be more accurate!
So how about we zoom in to the 1 hour chart and use the 4 candles that combined make up the 4 hour candle we are trading? okay! If we do that we use even more data! how much more? we have the high, low, open, and close of each candle! that means we have 16/240 of the total data available being used or simplified 1/15th! we have quadrupled our odds but still, trading with a 1/15th chance will get us no where :[ atleast… it would be if the only tool we had at our disposal was raw data, fortunately for us we have a concept called Human Psychology on our side
Although it isn’t quantifiable in individual pieces of data, when we look at sets of data as a whole and look at the relationships between the different sets of data and how price has changed between them, we get new pieces of information to add the puzzle, momentum and sentiment, meaning the amount of buyers as opposed to sellers, and the relative price driving force the buyers have as opposed to the sellers
So since they can’t be accurately quantified we have to use backtesting and tedious analysis to determine their average values, as we know price moves in waves, but even during a bearish retracement the overall market sentiment can be bullish, meaning we know that whoever has the market sentiment has an advantage, and if we go further and quantify how strong their advantage is we can also determine how long their strength will last, two more pieces of information to use!
Through back testing let’s say that that whoever has the sentiment has on average a 2:1 advantage on the opposing force, meaning in a bullish trend price moves up 2 ticks for every time it moves down 1 tick, sometimes it will be less, sometimes it will be more but this is a valid ball park estimate, so if we find a way to add market sentiment to our prediction we can drastically improve the numbers :[ but we forgot something didnt we… we know that whoever has the sentiment has a 2:1 advantage but we forgot to quantify their strength, or in other words, for how long they have that advantage!
Through backtesting we can determine that sentiment has the advantage 3 ticks for every 4 ticks of data
so (2 x 3) + 1 = Sentiment and 4 = Against sentiment for every 4 ticks of data, meaning that trading with the sentiment from the very beginning will give us a winning ratio of 1.75/1 W/L
Now if we add that to the fact that the way we set our stop losses and take profits for every loss we lose 1 and every win we win 1.75 (40 sl 70 tp), seem familiar? Meaning just by trading with the sentiment we have an automatic 3.0625 pips won for every 1 pip lose
So how do we determine sentiment? By trading close to close! We find the inner candle sentiment of each 4 hour signal and zoom in to the 1 hour signal to determine who was winning, in other words, who had sentiment
THAT is why this system is profitable, it takes advantage of the markets consitnacies
This is of course a VERY BASIC visualization and the numbers are ball parked, in the actual calculations we would also include our original data point usages along with our market psychology calculations, the probabilities of all possible sentiment scenarios, news probability along side sentiment, probability of where we are price wise within each individual move, along side the fact that we trade every signal which cuts short losses as well as compounds profit, that actual profit factor of this system is somewhere closer to 12.6 pips gained for every 1 pip lost, I would post my reasoning on those numbers but i’ve already spent an hour typing this out…
P.s. This is all just my perception of data and psychology, I know I am wrong to some degree due to the unquantifiable market but I also know I catch enough consistencies in my data to truth to be profitable
SethJawa,
Thank you for the comprehensive, thoughtful, and mathematically proven response. Wow! I never expected this outstanding response. I will work to improve my understanding of you strategy.
Greg Jones
It seems to me, to make this system really work, one must really trade every single signal, like you said, so that the probability works…for instance, if somebody traded only one pair and only did two trades a week, using only two signals on different days, the odds may not be very good for them…this really wouldn’t even be using this system!
I am in the “I don’t have much time because of work, etc…” boat with these other guys, so, while it only takes four glances every four hours, I may only have two of those opportunities a day, and, yes there might be inside candles on three pairs, like the other night, but I want to use the fullest potential of is system, so that it works the best, and in my opinion, an EA is the way to go…also, an EA on a VPS can help people overcome the emotions side of trading, which is our biggest obstacle (been there, done that, everything they say about live money vs. demo is true). An EA will also catch any opportunity that we may have missed even if we were looking at charts, because of definable rules that it won’t forget, and live money makes the brain regress and forget rules, opportunities, and just plain common sense!
Thank you sithjawa, or whatever your real name is, for teaching everybody your system and explaining it…not very many thread starters do that, certainly not as well and patiently as you have!
Also, quick question…if somebody has 1:300 leverage, doesn’t it work ok to risk 3% and have several trades going, whether they be multiple pairs, or to compound multiple signals, compared to 1:50 leverage?
@pipcompounder: Let me start off by saying I have been warned by many people including the programmer not to put the EA on this forum, so i wont be putting it up :3 however I will be sending it to those who have participated in this thread including you The only reason i commisioned an EA is so those of you who cant trade the 4 hour charts can profit from this system as well, but apparantly putting it on a forum risks quite a bit the integrity of the psychology of the system, more so then i thought originally :3 I have been trying to work on a new daily system but i have many different things on my plate and i don’t have the time to spend 100+ hours analyzing data and backtesting theories :\ daily candles are much more complex then 4 hour candles…
And as far as your query to whether it is still viable to only trades a couple candles a day, i can tell you that while it will probability speaking be around 1/4 as profitable percentage wise, HOWEVER, it will still be profitable, the signals are accurate enough to give you high probability and low risk trades, the greatest features of the system wont be utilized but the concept behind each entry is sound
Lets say you have 10 trades in a week on 1 chart, but because you can only trade 2 candles a day you only get to trade 3.33 signals a week, and since the W/L of this system is close to 80% (without including the opposing signals and all the other features of this system) that means you can expect to win 2ish trades a week, and lose 1ish, and because of the flat take profits and half take profits with percentage of which is most likely you can expect to win 35 pips a week nevermind maybe you’re right…
BUT AGAIN!! It helps no one to be a lazy trader and just trade off of EA’s :3 that isn’t what i want to accomplish at all, I want to help people get their own trading careers started if at all possible, so while i will send the EA out when its done if it is profitable I am at the same time hoping you guys can learn a lot from this thread and find a trading plan and stick to it, to be honest since there are so many daily plans out there all someone needs to do is find one they like and trade it, regardless of its level of profitability it will still make them money, and even 5% a week becomes enough to live on after a year, I would suggest all of you guys who cant trade the 4 hour charts either find a good daily system and master it, or even develop your own just start trading, thats the only way to eventually overcome the emotional aspect of trading, and once you do that the rest is easy
p.s. my name is Daniel
cheers for the your last few posts jawa, they are highly informative!
so its saturday afternoon and i’m tossing up whether I should go live or keep demoing next week… Right now I feel I have a pretty good understanding of the system (thanks to all my silly questions getting answered), however when I have a few lives trades going and more signals come in and immediate action is required, thats when i may forget the rules…
going to read over everything, then decide when i go to bed.
@jawa: once the market starts if fridays close produces a signal do you trade it? or do you want for the first candle of the new week to close?
Trading it less often doesn’t effect the probability at all. Like SJ said, if you trade fewer signals you will make less profit, but you will still make profit. If you randomly trade 100 signals in a year, the odds shouldn’t be any different than if you trade 100 signals in a week. I frequently miss candles and will miss weeks or months at a time in the future because of my job, but it doesn’t really matter, because in my experience this system is so effective that even if I am trading it over a much shorter time frame, the results are so good that I would still be doing better than if I were trading other systems full time.
For example, before I found this thread, my goal was 50 pips a week. Last week I missed 4 good trades and still made over 600 pips.
@smacko
I know what you mean about the stress of live trading, but the beauty of this system is how mechanical it is (and its simplicity). Like SJ has said before, just tell yourself the reason you are entering each trade, or use the checklist. If you’re concerned about how you would do live trading, then just start out with a small amount.
@smacko: obviously it’s up to you and you know you and your situation better, but because live trading = real money there is always something about it that makes even I make stupid decisions I would suggest demo trading it until you have a large enough amount of time trading it profitably to say you know for a fact you can do the same live, whether it’s a week of demo trading, or more or less, as long as you have mastered the system to the point you can trade it like a machine that hits every rule for entry and exit flawlessly as well as have confidence that it will work in the end (to keep you from dying on the inside on every loss), you’ll do fine live trading but if you do live trade I would suggest the lowest amount possible just for the first week, that way you get the emotional battle of live money to prove to yourself you can do it and still get to make some profit, but remember it has to be an amount you can close half of for the half take profits, for my broker that’s 20 cent lots, the key to trading is minimizing loss, not maximizing profit, so be on the safe side whatever you do
And funny enough If you look over the past few months nearly every trade that would’ve been made or held over the weeks end would’ve opened in profit on Monday, so really it’s up to you I myself like a stress free weekend and even though probability would be on my side I don’t like my money floating around :3 and I also don’t think brokers guarantee stop losses over the weekend, not sure though… I think from now on I am trading 12AM Monday to 12PM Friday
@philosophunculist: literally took the words right out of my mouth!! Well said
EDIT: remember the checklist! I start from the top and make my way down it every trade that way I know for sure why I’m entering
@everyone: p.s. this week I am live trading with ATR stops and take profits, the 40 sl 70 tp was tailored to the past months movements and either I’ll have to change the numbers or find a dynamic way of doing stops and take profits if you look back a couple months ago you’ll see regular price moves were nearly double what they are now, the market has been in kind of a lull but I think it has broken out of it, the average moved the past 3 weeks have been enormous
Also on a side note I’ve noticed the past three Mondays have had nearly all bad trades, still looking in to that, I don’t mean to change anything but I seriously can’t help trading something I think could be better :\ I’ve literally spent the past 8 hours at my computer analyzing data aha, woot vacation
EDIT: I’m not saying you guys should trade that way too or adjust your settings :l just letting you know what I’m working on
I want to try ATR TP and SL too. How far should I go in days? I was thinking about ATR from one week or even dayly ATR will have somethink to do with next day move. THX
@renda1234: I am using ATR (40) for stop losses and half take profits and ATR (40) x 2 for take profits this will adjust the price levels to the fundamental market sentiment and volatility nicely while still being applicable to inner trends and short term moves we’l see how it goes
@jawa: can you please advise the name the alert site you use? i hunted through the thread but couldn’t find it…
i’ve decided to go live with 1% risk (2k account, that is currently 5% up from another system i was trying), i’ll stick to the sl, tp1, tp2 from the front page until you state other wise
Hi Sithjawa, jus wanna say thanks for this system! and to jonah76 for the indicator! been testing it for the past wks but due to time contraints were not able to trade all signals, hence i’m getting mixed results on the trades. SithJawa, just wanna ask whats ur profitable:non-profitable trade ratios on an average wk?