One Percent Per Day System

Trading Systems Free Forex Trading Systems
1

Hi All,

New year, new system.
Thought I would start this thread as I am trying to create a scalping strategy that works for me and I can consistently work with. I have been learning over the past year all I can about Forex and have been demo trading various strategies. Quickly a bit about me, I work from 7am to 5pm every day, but my job allows me to look at charts relatively often, but the strategy should have a number of trading opportunities so I should be able to catch some of them.

Also I know there are similar systems to this, I am using this as 1, a trading diary, and 2, a way of refining my system. So any advice or suggestions are welcome.

I am starting a trading account with ÂŁ10,000.00, and the system I am starting with is as follows:

Time Frame:
1hr & 15min

Setup:
EMA (5)
EMA (10)
RSI(10) applied to the close.

Essentially it is a scalping strategy, with a top down analysis, and a set pip target.

Rules for a long trade:
On the 15 min chart, wait for the EMA (5) to cross the EMA (10) upwards. This is the entry trigger, however, before entering, check 2 things.
Firstly is the RSI angled upwards and over 50?
Secondly, check the 1hr chart, is the general trend in the same direction as the crossover?

If the answer to both of these is yes, the trade is on.

Enter, with your TP at 30 pips, and SL at 20pips (inclusive of spread). Risk to reward is therefore 1:1.3 and I will be risking 1% of my account on each trade.

Other stuff:

  • I have some other ideas about my TP and SL levels but to start with I am going to try this set up and go from there. Our main goal here is for consistency.
  • I am planning on only entering one trade at any given time as I know I often get too excited and enter loads of stupid trades.
  • I am using IG Trading Platform

Any input, feel free to speak freely.

3 Likes
2

It sounds a fairly orthodox system. Which is not to say it will be sufficiently profitable. A couple of questions - these may be illuminated during your initial trial period -

  1. Do you need the RSI?
  2. 5 and 10 period EMA’s are close together - would not greater divergence between the two give better signals?
  3. Similarly, the 15M and H1 time-frames are close together - I like that your min. t/f is 15M, I would think any lower is either for experienced experts or kamikaze traders - but again I wonder if greater divergence would be a help?

Anyway, good luck and we shall see.

3

Hi Tommor,

I am not certain about RSI, I have seen it used effectively as a confirmation before, but it may not be the best indicator to use. I would like some sort of confirmation other than the overall trend though. Anything you think would work better?
The divergence on both EMA’s and timeframes is something I need to look at, I think for now the 15M and H1 I am going to stick with but I might play with the EMA (10) and see if having a 15 or 20 period will suit me better.

As you say it is orthodox, but I have the feeling that incredibly complex systems will limit too many trades. Who knows though, this might head that way after some trials.

Thanks

1 Like
4

First trade completed and accidentally made profit.
Trade was GBP/EUR and the signal was at 8:50am.

Profit was accidental as I didnt set my SL (oops), and I would have gotten stopped out. I am having a look back now and for this system to work I might need to increase my SL, 20 pips will get hit very often when you take the spread into account.

Thoughts on stop loss figures??

I also may have overestimated the 1% on 20 pips, as my account size did not allow it, for this one I made my 30 pips, which worked out at ÂŁ72.

5

SL distances in fixed pips are very difficult to guestimate so they tend to fail. Apart from anything else, the volatility of every forex pair changes continuously, so what was a conservative SL distance last week might be hit by moderate “noise” today.

Try comparing your SL distance with ATR on the same time-frame, e.g. ATR20. Trial and error but you might find e.g. a SL distance of less than 1 x ATR20 is hit 80% of the time, suggesting its too tight. ATR14 is the default setting I think for most software so maybe use that as your yardstick. ATR changes with every bar.

Alternatively, though harder to objectively test, use TA to give you the SL level, again, in reference to ATR.

6

Just had a look, this would have worked (on this tiny sample size), but then I would have to move my TP as well, or have a terrible R:R. Woudl you try and keep your R:R the same and base your risk off of ATR?

7

Starting with the SL, I would want this where it will not often be hit by a moderate increase in recent volatility. I must admit win rate is more important to me personally than r:r so what I like in a trade in which I am right about timing and direction is a SL that rarely gets hit and a TP that always gets hit.

8

I am going to try and move my SL to what is indicated by ATR, and keep my TP to 30pips for the moment, see how it goes.

9

GBP/EUR, USD/JPY & USD/CAD are all looking like shorting opportunities will be coming up soon. Im keeping an eye on them.

10

Ended up shorting all three of the above pairs, completely going against my one trade at a time rule. I just hit my PT on GBP/EUR, making myself a tidy 30 pips and ÂŁ30. My EUR/CHF trade is going well also, currently about 20 pips up. Just entered the USD/JPY, so we will see how that plays out.

11

Good and bad news, my EUR/CHF trade hit my TP, making me another 30pips, and ÂŁ45, however the USD/JPY trade stopped out, lith a loss of 55 pips and losing ÂŁ71.50 :frowning:. This has made it very obvious that one big loss can mess up your account, I am wondering if making my target 1xATR as well as my SL is a good idea, so I would keep a 1:1 risk to reward.
I will have a look back and see if this would usually come off.

12

Another winning trade on USA/CAD just complete, in at 12986.2 and out at 12979, 72 pips! I was using the ATR as both my risk and reward for this one. Once I was up by half the ATR, I moved my SL to BE so that I wasn’t risking any more money, wondering if there is possibility of using a trailing stop loss?

Going to stay with the 1:1 ratio for the moment and see how it goes.

13

Its a far from usual sort of trading session today - Friday, in a holiday period, at the start of the year, the morning after the Baghdad Airport attack…

14

True, but it is a system based off of price action, it needs to be tested in all environments. So I dont see this as a problem.

15

@Samtrades07 - thanks for posting updates. I am looking forward to how this goes for you as it sounds promising. Will be interesting to see how it fairs next week when markets should pick up. Please keep us posted. Thanks

16

Hi There, appreciate the interest, I plan on thouroughly testing this system so we should see it through a number of market conditions.

I also just made another trade on USD/JPY. I moved my SL after I was 1/2 ATR in profit, unfortunately, it then came back and hit the SL making only 1 pip and ÂŁ1.30. Oh well :frowning:
I also then did something I have never done before an reentered the same market, lets see how it goes.

17

Hi sam,

Sorry I’ve only just seen this thread. I was up analysing trades from this week and reading posts and this popped up. It’s a very interesting system and looks nice and simple. However…

I couldve told you straight away your fixed SL and TP wont work. I’m glad @tommor picked it up and his advice on using ATR is something that should be implemented. I’ve found a few discrepancies in your setup which need to be ironed out before you continue.

  1. how did you take a trade at 8.50 when you’re looking at the 15 min chart? Do you not wait for candle to close and confirmation of ema crossover?
  2. 1% of 10000 is 100 so why are some of your trades making and losing a lot less than that? Gbpeur 30 pips made you ÂŁ30, thats nowhere near 1%.
  3. your TP should be atleast 1:1 with your SL
  4. ATR is better to guage stop loss position
  5. I see you’ve already done this. As you are testing the system you should be moving to breakeven as soon as you can. You are looking for a quick move, if it doesnt happen get out at breakeven. No harm done.
  6. at the end of the week go through all your trades and see if moving to breakeven is holding back profits.
  7. the 2nd part of the entry is checking the 1hr for general direction of crossover. I’m not sure how you could trade usdcad as the 1hr is in a range. The emas briefly crossed at 7am but this reversed by 10am so no usdcad trade shouldve been taken.
  8. your rule is one trade at a time, so you shouldnt be entering 3 together
  9. dont re-enter if you’ve already closed or been stopped out of a position unless your system resets

I’ll stop here lol. Sometimes in trading less is more. You want to look for very good setups and trade those. Then do it day in day out consistently. Stick to your rules that you set then at the end of 30 trades analyse them and see how you’re doing. Try not to chop and change so much while you’re trading. It’ll lead to too much curve fitting and the results will be unreliable. Best of luck :+1:

2 Likes
18

Out of the trade I mentioned in the previous post, I was doing the same thing (i.e. moving the SL and extending the TP as the trade went on). I left my computer for 2 minuets trying to find someone and it price hit my TP for 81 pips which was ÂŁ101.40. Happy about the result but I think I could have gotten more out of the trade.

I’m done for the day, initial views are looking good, feel like there is some TP and SL refining to be done, however I am going into the weekend happy.

Statistics are:
7 trades made
Win % = 86%
Profit/Loss = +ÂŁ286.2
Days Traded = 1

19

Hi there,

You are completely correct about the curve fitting issues, I am trying to be as flexible as possible at the moment and iron it down to the perfect system (for me).

First change that us already implemented and will stay as such is that r:r will now be 1:1 equal to ATR, that seemed to be working well and we all know about what risk to reward should be etc.

In answer to some of your questions:

  1. I took the 8.40 trade because of the sharpness of the crossover, I think I did take it before the candle was confirmed, something I have already made a note not to do anymore, as it could be a whip saw.
  2. The trades that made less were before my r:r was 1:1, from now on, each trade should be initially set at 1:1 with both if those being 1%
    3 and 4. Answered previously
    5 and 6. Completely agree, started doing this towards the end of yesterday, only issue with it is when to move to BE, I was thinking at .5ATR but nit sure this is perfect, I am also then thinking lengthen the TP as soon as I am not risking any capital, this way I could possibly catch the trend early and ride it. What are your thoughts on this? Better to secure the profit, ir chance the run?
  3. Looking back at it I agree, it didnt fit my criteria, the reason I went for it is I was looking longer term trend. However taking your point on board, was possibly thinking about implementing a 100 and 200 ema, if they point in the same direction of the trade fo for it, if they are flat or angled in opposite ways then there is no trend, so dont trade. But you are right, the trade wasnt really on.
  4. I know this, I got excited and felt like I was gambling the whole time the trade was open. I shan’t be doing it again.

I’m going to have to do a couple more tests to say anything regarding the system, I’m hoping for 3 or 4 good set ups per day, and ideally, I end the day with +1 net winning trade. Hoping the more experienced ones of you out there can give me a hand in this journey!

20

Great setup, let us know about your progress. I’m not a big fan of trading purely by signals produced from technical indicators because they are too rigid, don’t take into account market context. Add some fundamental analysis in your trading to determine market sentiments and use indicators as a support instead of primary tool.