I am seeking thoughts and ideas for a system that is simple, can withstand the changing market conditions (including summer conditions), and one which can gain consistently. I ask not only for myself but for many who are in a similar position in these forums.
I’m looking for something in which I can set pending orders, or place orders at a given time (due to working a full-time job). A breakout system comes to mind, but am interested in finding something during ranging markets as well. I would risk $1/pip per $1,000 (adjusting the lot size accordingly). Ideas for money management would be a big help too; I don’t like anything less than 1:1 risk/reward.
I’ve been studying what’s out there the past year; I’m very familiar with the basics and beyond. Yet, I cannot settle on any system I’m comfortable with. I am also a MQL4 programmer and can program a system if it works and someone here is willing to share it (for anyone interested).
Anyone have any idea for something that might be what I’m looking for? Please do not send affiliate links; I am looking for a system I can manually trade or one in which I can program on my own.
A simple Mini Breakout system for you. That I’m sure could be programmed.
EURUSD / GBPUSD
1 minute before UK news at 9am (check economic calendar).
Place two pending orders.
First one, a buy order 15 pips above current price.
Second one, a sell order 15 pips below current price.
When one order triggers, the other cancels.
Target Profit - 50 pips
Stop Loss - 25 pips
R/R 2:1
1 in 3 trades right is breakeven - 33% win rate, any greater is profit. (less brokerage if payable)
or
Target Profit - 75 pips
Stop Loss - 25 pips
R/R 3:1
1 in 4 trades right is breakeven - 25% win rate, any greater is profit. (less brokerage if payable)
People spend many hours looking for the holy grail and high win rates, where the important thing is positive expectancy. Trade both pairs takes 3 minutes a day.
I do a similar system and my win rate is 52% EURUSD / 48% GBPUSD for 50 TP / 25 TP.
As you say above start at 1 pip per $1000, and increase pip size as your account grows
If your in the US, you could wait to just before their news releases.
gaining profits consistently requires to include some auto adaptive algorithms to the system logic. In most cases this is already related to neural networks, so I doubt that it will be so simple as you want.
p.s. many people wanna create system with exactly the same “parameters”
It’s not the system per se that is making the money, it’s the probabilities working to make positive expectancy.
The system I posted the other day if you traded both pairs & started with $1000 and 2 pip size, compounding
GBPUSD
26th pip size 2.00 +50 profit $100
27th pip size 2.20 +50 profit $110
28th pip size 2.42 +50 profit $121
29th pip size 2.66 -25 loss $66
Total profit $265
EURUSD
26th pip size 2.00 -25 loss $50
27th pip size 1.90 -25 loss $47
28th pip size 1.81 -25 loss $45
29th pip size 1.71 -25 loss $43
Total loss $185
Overall Profit $80
Win Rate 37.5%
My system isn’t posted anywhere but it is developed around a breakout on the UK start of day trading. Like the system posted above I set a buy & sell and I don’t care which direction it goes as long as it goes one way.
See most may look at the figures above and go 4 losses in a row, what a bad system, but most traders will have losing streak of that many and many more.
Whilst I don’t have stats on the above system, it wouldn’t surprise me if it was profitable if you stuck with it. Plus it only takes 5 minutes a day. So if you had a starting account of $5000 and traded a $10 pip, this week you would have made $800 for 20 minutes work, no screen watching.
Another note once the trade is on I do not move the stop. Either 50 pip profit or 25 pip loss.
I don’t actually trade the system I said to the OP, but do one very similar. I just wanted to suggest a system as simple as this may be profitable. I did put the caveat that I don’t know if it will be but I thought I would run the stats for a little while since I posted it. I’ve been doing my system that I trade for four months. I’ve originally traded shares for 10 years.
The key I was trying to point out in my post is if you focus on getting the probabilities right and have a positive expectancy and understand you will have losers in a row and can accept them then you can make a profit. If you can understand why your system is making positive expectancy and are prepared to trade it through good and bad times then you will succeed. Most traders chop and change systems when they have three losers in a row and that is why they don’t succeed.
Our life learnings teach us to be right in all occasions but in my experience and people I learn trading from, most will not have much better than 50% win rate. If you can grasp that then what can you control, Profit & loss.So the system I posted above has a R/R of 2:1, therefore approx 33% will have you at breakeven. Any better your in profit, but you can still be in profit and loss more trades than you win.
Have you found any way of backtesting the system? Obiously historical data wont encompass widened spreads that youll encounter at news time - that could blow as massive hole in your % win rate. Slippage could put a real dent in your realised R:R as well.
The system may be perfectly valid - but without seeing the results on a few years worth of trading/data it seems hard to know…
Pipmagnit,
No I haven’t backtested the system, and unlike shares I find backtesting forex a bit harder.
I trade my system with IB and when I place my trade I have an entry plus 2 pip maximum slippage. If it misses the entry due to major news then I’m not in the trade so no real concern, always tomorrow. And the spreads don’t widen that I’ve seen with my broker as they charge brokerage.
“The system may be perfectly valid - but without seeing the results on a few years worth of trading/data it seems hard to know…” Agree that may be true, but once again many traders backtest systems find their results, start trading and get 5 losses in a row, then panic and look to change an indicator here and there to get it closer to the holy grail and never end up getting forward true stats for longer than two weeks because usually when backtesting they don’t understand what is making the profit.
IMHO I don’t believe in demo unless to learn platform as many will not trade the system rules as they have written because it is not real life/money.
I don’t know if the system will be > 33%, I’m just saying with R/R 2:1 you need roughly 33% to breakeven.
It’s interesting that traders focus on the entry with their indicators and believe it will be low risk trade, but really the only control you have on a trade when you enter is your exit, eg your stop loss and get out price. The indicators & setup just make the trader feel like they have control of the entry but many systems will be no better than randomly tossing a coin heads go long EURUSD, tails go short, it’s now how you control the trade.
smithy that sounds really simple and logical because you’re right it doesn’t matter how many indicators you have on screen, whether the price moves up or down is essentially 50/50.
also which news releases are you talking about because they are many everyday correct? sorry i’m a newbie and although I’ve learned a bit about technical analysis, I don’t have a clue about fundamental analysis.
If you look at the forex calendar under tools, you will see the news for EUR & GBP, so whatever time that is where you’re from, put your trade on. I don’t have any fundamental knowledge either, just learn to understand the maths and positive expectancy.
As I said in my last post, traders chop & change all the time. Have a look at all the trading journals that open up and then finish in a short time.
If you know the story of the Turtles, they were all giving the same system, yet some made major profits and some were kicked out, why when the system was profitable. The entry rules were known by all, so what was the difference. What you can control the trade management once your in…
thank you for the quick reply. I checked the calender ex. for monday nov. 8; there is a release for GBP at 19:01 so we would set pending order at 19:00? Is that correct.
also for EUR, there are many releases at 2:00, 4:30, 6:00 etc…in these cases we would set pending order at 1:59, 4:29, and 5:59?
Are news releases released at the exact minute listed on the calender always? say it it says 9:00…is that a definite or could be 8:58 or 9:05?
sorry for these dumb questions hope u dont mind :o