Thought I would leave you some feedback following your request earlier this week.
Many thanks for taking the time to teach your system - which I personally love, not least because I usually work office hours for most of the week. Got some nice pips on USD/CAD cross earlier this month.
As a newbie though I find your commentary on your thought process before you go into a trade, both in your e-book and in this thread particularly enlightening and helpful. I know its probably a hassle at times but where you do have the time to do these posts ( as you have done this week ) they are much appreciated!
Iām new to Forex but would like to contribute to this thread. Iām starting off by first backtesting this system, then going to demo, then live. However, Iāve ran into a hiccup with backtesting using the ForexTester software. I canāt seem to find a way to setup the SMA to apply to the āFirst Indicatorās Dataā like the e-book says to do in MT4. ForexTester only allows the following SMA:
1 - Close
2- Open
3 - High
4- Low
5- (High + Low )/2
6- (High + Low + Close)/3
7- (High + Low + Close + Close)/4
Because I canāt seem to emulate the MT4 SMA being applied to āFirst Indicatorās Dataā the 8 period SMA and the RSI never cross (never share the same value). This system depends on those indicators crossing.
It was too hard (technically) to get Oandaās charts look the way you are describing them in Metatrader so I decided to try MT. I also imported templates you prepared for 8&8 system. Here are my thoughts.
Earlier in this thread I had a couple of questions regard the hiding Sunday candle. Now, in MT, looking at USD/JPY and EUR/USD dailies I see that actually charts are hiding Saturday candle not Sunday one. In other words it seems that it hides days when there is no market activity. It maybe seems strange why Iām having so much trouble around this question, but I want to be 100% sure I understand every detail of how charts are formed to back test the system. Otherwise I donāt see how this system can be tested on different brokers.
Another question is about MT - If we look at one chart, why open price of a candle is 1pip different from close price of previous candle? Is the price somehow differently applied to candlesticks?
The āSunday candleā refers to the first few hours (1 or 2 or 3 depending on what each broker terms as the start of the new day) of Monday trading in Sydney. I wasnāt aware of any other Saturday candle. If there is it hasnāt affected me!
I trade with FXCM but use FXDD to make my trade decisions. Thatās it. Donāt use multiple broker charts as you may get a few different signals. Stick with one and in backtests FXDD worked best.
The gap between candles sometimes is normal as the price has moved 1-2 pips in the time it takes for a new candle to load on the charts. It wonāt affect the price much and anyway, if youāve got a borderline cross, itās best to leave the trade alone (in my experience).
wow, its been a while since i last posted on the fozzy method, but in that time iāve learnt a lot.my results have been somewhat mixed, largely because my R:R wasnāt good.
i even had to read the original thread at forexfactoryāall 175pages of it, the knowledge gained has been priceless,
i would like to thank you micheal for bringing this trading strategy my way and for answering my questions.
i have a question, the past couple of days have seen currencies ranging, and in the book, you talked about setting up a breakout trade. at the risk of asking a stupid question, how does one do this?
i posted some charts below to illustrate this point
Apologies for not posting for a while due to other time commitments, especially to butter and houmous (I take the trade when the market opens on Sunday by the way).
Just a quick notice to say Iāll be posting one or two YouTube videos this month on my trades.
Michael, be sure to post the link to your youtube videos here.
BTW, I read the first 105 pages of the original thread on that other forum. I also followed the other related threads like your journal and the others with BeachBum and the rest. Good stuff.
Iāve been doing some backtesting of my own flavor of this system with what I think are good results and Iāve been demoing with equally good results. My winning percentage is only about 60% in my backtesting as I seem to be way more liberal than others in the trades I take. But I figure the wins more than compensate for the losses and Iām happy with the results of the backtest and demo. Iām going to start rolling with this system on a live account no later than Monday of next week, maybe even today.
Just a question on timing. If you need to check for signals in the previous day and then wait to see where the pair opens, assuming you only check once per day, then youād have to check right near a major market open, right?
So Iām in EST (and I work full time), so it seems as though Iād trade on the Tokyo market in the evening. I can check the prior dayās signals and then place a trade when it opens at 7pm local time assuming the signal holds up after open.
Does that make sense? I canāt trade USA because itās only open while Iām at work and if I trade Europe in the morning, the market has already opened.
Sorry, Iām a noob. Trying to understand the logistics trading a daily system with a full-time job.
dhannum, you are supposed to place your trades at 5pm EST. Having said that you may run into occasions where placing your trade an hour or 2 after 5pm works to your advantage. The reason I say that is because in my observation most pairs actually retrace from the direction of your trade until at least the Tokyo open. This would give you a better entry point than if you entered at 5pm. I havenāt tested this to see whether it is a theory I would want to implement but you may want to observe a couple pairs to see how they behave and go from there. Personally, Iām sticking with placing trades at 5pm for now. Iām just throwing out alternatives for your situation. Either way, do some good amount of testing and demo before using your own money.
Really? Arenāt I supposed to wait for an open to see if the signal is still valid? If I place a trade at 5pm (say Thursday, for example), then either Iām doing it just after I saw a signal on Wednesday but before the next open (bad), OR I saw a signal on Tuesday, market opened Wednesday with the signal still valid, but I waited until Wednesdayās close to put in the trade (not bad, but inefficient).
Did that make sense? If you have to wait for an open to confirm, 5pm seems like the wrong time to trade.
Or perhaps you mean that you should place the trade as soon as the previous dayās candle closes and the next one opens? (which is probably 5pm for some brokers, but Iām told varies)
^^^^This is your answer. Yes, when the previous candle closes. As the e-book states, this system works best with a broker whose candle closes at 4:59 PM EST and a new one opens at 5:00 PM EST. So for example, it is approx 2:45 PM EST on Janaury 15th right now and AUDJPY crossed earlier this morning signaling to go short. If you wish to take this trade you are supposed to wait until a new candle opens at 5:00 PM EST later today. However, Iām not suggesting you take this trade because it is close to what may be regarded as a resistance point. Iām trying to figure out whether it is good to take these trades close to resistance or further away from resistance. Another factor to consider is that the candle that created this cross to go short is a long one. Iām not sure how these work out in the end.
I backtested this system using three months of data and had a 60% winning percentage, but some handsome profits. I stopped backtesting because I was unsure of the validity of my crosses as well as the historical data I used. I then demoed it and had some very good trades. Then I got hit by a brick when I went live with it last week. My first 4 trades were losing trades. My confidence was shattered. This lead me to start looking at ways to filter out the bad ones. Iām aiming for a 70% win rate, possibly 70%. I think this system, depending on how you implement it, can be profitable with a 50% win rate. That was my win rate last week and I made a 1% profit. I also noticed in my backtesting that I made better than 1% profit during times I was at 50% or slightly under. The problem with a 50% win rate is that it is nerve wracking and can wreak havoc on your confidence. Iām still looking at ways to filter out the crappy trades.
[QUOTE=theYardie;35750
I backtested this system using three months of data and had a 60% winning percentage, but some handsome profits. I stopped backtesting because I was unsure of the validity of my crosses as well as the historical data I used. I then demoed it and had some very good trades. Then I got hit by a brick when I went live with it last week. [B]My first 4 trades were losing trades. My confidence was shattered. [/B]This lead me to start looking at ways to filter out the bad ones. Iām aiming for a 70% win rate, possibly 70%. I think this system, depending on how you implement it, can be profitable with a 50% win rate. That was my win rate last week and I made a 1% profit. I also noticed in my backtesting that I made better than 1% profit during times I was at 50% or slightly under. [B]The problem with a 50% win rate is that it is nerve wracking and can wreak havoc on your confidence.[/B] Iām still looking at ways to filter out the crappy trades.
Good luck.[/QUOTE]
You went live much too quickly with insufficient preparation. You have to have enough backtest and forward test data to be sure of the performance of your system over time. Without that you cannot have sensible risk management since you do not know what the biggest drawdown of the system is which is critical information. For instance how common is a 4 trade losing streak? What is the longest losing streak in the system? Are the results of your trades consistent with this system in this kind of market (heavily trending on many pairs) etc etc
With regards to the second highlighted comment this goes to understanding your own psychology. A friend of mine trades equities and makes a fortune with only a 30% hit rate (I couldnt do this in a million years). Again you need to have understood yourself and how you will react in certain situations long before you put real money into this thing
Avoid getting burned and turned away from trading as so many do. When you have found an approach that suits you then demo trade it or trade it live with tiny amounts of money (or both) until you can do it in your sleep and know its performance inside out. For me it takes about 6 months with an approach in real time before I begin to have some faith in it but of course we are all different. Dont forget it is the newly beginning traders that are giving their money away to the big boys and the more experienced retail traders. This is inevitable but minimise the losses in this formative stage
Sorry if it sounds like I am on my soapbox (but I am!) - good luck
Tony, no problem I know youāre trying to help. Everything you typed is correct. Iāve read a few of your posts and youāre always helpful. At the same time, I donāt regret for one minute going live with this when I did. That one week taught me infinitely more than I did when I backtested or demo traded. Not to devalue backtesting and demo trading. I still do them. I decided to try live for one week and assess from there. In doing so I made a concerted effort to limit the amount I was willing to lose by way of not risking more than 1% capital, mainly risking less than 1% on my trades. What I found was that no matter how much you read about the psychology of trading, you really donāt know until you put some real money down. After that I realized what I needed to do in my demo trading and the general approach I needed to take in trading. I found I was just treating it the way I should from a psychological, discipline and regimented standpoint. I also discovered what I found to be acceptable win rate regardless of the amount of money I was winning.
Iām afraid that had I continued to just backtest for 6 months one of several things would likely have occured: 1) I would go on and accept the win rate I was getting as long as I was making decent fake money. I would then get upset at myself once I went live and realized my demo results werenāt satisfactory and felt like I essentially wasted 6 months. 2) I would have demoed the system, not feel satisfied with it, move on to another system, rinse and repeat indefinitely. I decided to give it a shot with limited risk while planning to get out if things didnāt go well. Thatās what I did even though I made 1% profit. The experience has actually helped me look further into other aspects of trading. Iāve actually researched and now demoing ways to filter the bad trades, something I had no interest in doing when I was demoing and backtesting. Yes, I realize this might be a personality flaw of mine but thatās another thing my short live experience brought to light. It taught me a lot about myself.
Once again, I donāt take offense to your comments and wouldnāt necessarily recommend my approach to others. I just found that I needed to test the waters before moving further. I actually feel better about trading in general now that Iāve done that than the uncertainty I felt before.
Thanks again. Your comments and candor are always appreciated. A noob like myself definitely wants to learn from a veteran like you.
Fair enough. Thats a well argued rebuttal. You seem to know yourself well and are being appropriately cautious. These are vital traits. I also learn best by losing money and interestingly it doesnt matter how much. Although not for everyone I move to tiny lots for trading fairly quickly for similar reasons to yours
I donāt know where to post this question but I noticed journals are talked about in this thread a bit soā¦
Does anyone have a good spreadsheet layout to keep track of their trades? In fact if anyone is interested in helping me lay out a design Iāll program a website backed by a database to track our journals (each person with their own login). But first just a spreadsheet.
