it has been really tough going for the last three weeks, perhaps that’s why there haven’t been so many posts. All my previous gains have nearly dissapeared, it seems almost every day that it just about breaks one 8.00 high or low then immediately turns around and goes the other way.
on a couple of occasions when it has gone right, I have been waiting for 9.30 news items and ended up missing the trade. grrrrrrrrrrrrrr!
Does anyone have any views on what is causing it to whipsaw so much?
Agreed. It has been rough. On back testing before I started playing with the LBS, there didn’t seem to be this many whipsaws or losing days. Seems like there has been a long rough patch for several weeks as you said. Not really sure what is causing it. This morning I put on a buy 10 pips above the 8AM candle and it was triggered, and then it went on a rampage in the other direction. SL hit and scratching my head. I’ll continue to stick with it as I am sure there are rough patches. There better be a lot of winners coming soon though
One more thing when using the double bollijger bands, u might wanna use ADX too, if the line is sloping upwards and more than 20, it is a trend, this is useful especially when the bands are converging.
When trading 4h, i use 1h and macd to determine entry
two remarks: one: breakout systems like this are hard to trade psychologically cause you can have a string of losers the mentally kill you. two: it’s summer, so not the most liquid period in the financial markets, that might have something to do with this system not working so well for the moment. It would be interesting if someone did a backtest of just the months of july and august over several years … I don’t have the tools for that myself …
Good point CVDS. I’d be lying if I said I wasn’t getting a little frustrated. I hit my SL again this morning. What I may do is go back to waiting for the 9AM candle to close on the breakout instead of putting in an order the moment it passes the top or bottom of the 8AM range.
OK, this time I was patient. I waited for the 9AM candle to close in order to “confirm” the breakout…only to be SL’ed again during the 9AM candle. London Breakout System, you are trying my patience!
I have been spending some serious time backtesting a slight variation of this system. Using forex tester I was getting pretty consistent results of around 13% a month. I started in july o7. Then when I got to march o8 it hit the fan. The account was chugging along amd then I lost all of my gains since july. Ouch. Was march o8 a crazy month for something?
So I was being disciplined until the huge downer month. I was trying to just let the system work and not modify any rules. After my huge disappointment, I decided to try the market more recently. I have only gotten halfway thru june and the system is chugging along quite nicely again.
Here are my rules for the lazy version of the breakout:
Entries:
using the o6oo candle…
Breaks at 5 pips above or below that candle. Stop loss 5 pips below the other end of the o6oo candle. Take profit at twice the distance of entry to stop.
Put on trades every day no matter how long the candle or what the economic calendar, and leave orders until the next day. Often times a trade will hit one stop but then hit the tp on the other side.
Then next day repeat but close any open trades before putting on new orders.
Position size: multiply your account by .oooo4 and this is the lot size.
Let me know if your a back tester and you get good results.
I still feel this slight mod has some great potential.
Hey knothead, i want you to take a look at the AU and NU using the double bollinger bands. Look at the h4 charts and isolate them into a weekly segment.
Tell me if you notice a certain possible profitable pattern there.
Well, yes. These are epic events going on at the moment. With the US on the brink of a default and the European debt crisis getting ever worse. What do you expect? Everybody seems to be extremely uncertain. These were definitely some very choppy months. I decided to stay out a bit. Not trying to force things. I think the system is great, just the time for it is not. This is comparable to the post Lehman events in terms of volatility. I wouldn’t be surprised if nothing works consistently now…
Having a clear set of rules to trade by is good. But you can’t neglect the events happening at the moment. They may ruin any trading plan. I’m not a pro, this is just my opinion.
Just my opinion: I totally understand you discussing this Bollinger system (which I find intersting too) but should we not open a new thread for this? It is frustrating that most threads always get off topic so fast. If you’re discussing the Bollinger Band backtesting in a lot of detail now, this thread is lost. Nobody will follow the LBO. Just my 2 cents.
I am still trying to follow or modify this system, however the last few months data is pretty crazy. How long do the analysts predict this crazyness to last?
I was using the 7gmt candle for last month and showed a 3oo+ pip loss. Using the 6gmt candle cut it almost in half to 157 pip loss.
I want to feel confident in a system before I put up my money, but the edge seems lost in today’s turbulence.
Great points. And yes, Jungle it has been a jungle out there recently. I’ve been using the 8AM candle as the standard and then watching for the break out on the 9 or 10AMs. My issue has been whether or not to jump on as soon as the 9AM breaks (without waiting for the close to confirm) or not. I got burned a few times jumping in before the9AM candle closed and my SL was hit. Then again, I waited for the 9AM candle to close,only to miss the “break out.” Lately it has been a mixed bag…and I am still on the fence as to whether to wait or not. The other issue I have with the LBS is that it requires that I get up VERY early (early for me anyway) and that has been a challenge ~ and also has dictated whether I wait up until a closed 9AM candle or not.
As for the Double Bollinger. That is my fault for hijacking the thread. I should have opened up a new thread. It is an interesting possibility and I have been testing a lot. Jayjb, I’ll shoot you an email and we can talk about that 4h deal…and then maybe we can start up a new discussion thread on the double bollinger.
Don’t take this as a critique, sorry just thought the LBO deserves its clean thread…I would love to hear more about the double Bollinger band too.
As for the FX trading. I don’t go near it at the moment, no LBO this is whipsaw. Couple of test trades only and the only thing for me that works is the CHF and that is completely insane!
No critique taken! LBO talk should be the only discussion on the LBO thread. I’ve been watching the AUD/USD, NZD/USD and the CHF on a few other pairings too. I was getting whipsawed all over the place on the LBO. I started trying a few other things in my demo account but I am in a holding pattern on LBO for a few days.
was just looking at this and i may give this a try. i using a practice account on fxtrade at the min so may use that to prototype. Is their any way for me to look back over stats for 30 days against a currency and see what it did 7Am til say 9am on each day?
Well I have been reading and lurking on this one and applied the strategy in a demo account since May. In addition I backtested it from the beginning of the year and have achieved the following results. I will post the results for August at the end of the month (if I remember to). I think thus far I have stuck to the strategy absolutely except for the odd day here and there (maybe half a dozen days and the odd weekend when I didnt get to close orders before market closed for the weekend). I’m trading manually as I have the benefit of working from home.
forward test
May + 16.16%
June + 25.08%
July + 2.25%
backtest
Jan +3.9%
Feb +11.98%
Mar +14.8%
Apr + 7.05%
so thus far YTD I would have been + 79% or so (mind you with all the volatility in August it’s not going to be a great month) with no losing months. I’m definately going to go live with this strategy in the next few weeks probably when things calm down a little. Theres little need to tweak the system in my mind, if you cant stomach the losing days then you shouldn’t be trading at all and with only 1% (often less to be honest) risk per day it’s very acceptable.
One thing I will be looking into is whether or not a secondary daily trade with a R/R of 1:1 would have reduced the losses or increased the return over the period. However, I am not one to be greedy, my long term target has always been to achieve a monthly return of 4% anything above is a bonus to me.
Interesting, one question though, which variant did you exactly test as things seem to be getting a bit confusing there. Good results though, but most likely it’ts not going to be for me, I prefer something with a bit more action (and hopefully a bit better results to much). But you made me think that I might trade this on the side. Just some thoughts: good work and good results, although the last part is not quite such a suprise to me considering that we had a very volatile year with lots of intraday trends due to the financial crisis. Nog sure if I would allow my bread and butter on this …
Thank you very much for the work you put in this and sharing it. This looks indeed very good! Have been trading this myself occasionally with some success. Have stopped recently due to the increased vol but hopefully will pick it up again soon.
