$* Statistical London Breakout Strategy *$

[mostwantedpips]

today, the NFP gave us another 30 pips, so this week has netted 120 pips, with yesterday having the only loser, but then a winner to make it BE.

mostwantedpip- that’s an idea to try…you can do a variation now of that by having TP1 say, 29 pips, and TP2 something like 40-60 pips, and have your lockinpips at +29…is this what your talking about?..if you want it to jump again another 30 pips at 60 pips positive, you would have to have that programed…IMO, price retraces at least 40% back on a move, so I don’t know if that would produce results or not…this week has been the first really trending week in a long time…wish price moved like this year-round…

Hi not quiet.
EA opens 2 orders and split risk to70% and 30% for example sake say you are willing to risk 10 lots, based on our risk model we split our 10 lots in to 70 and 30 % respectively.
We got in to trading with all same settings, but we introduce a second order as well which sole purpose is to capture average daily range which is round about 100 pips on average. So here is what we do
Order
1)Order 1 has tp of 30 pips and lot size of 7, if it moves 30 pips we bag our 30 pips and be happy with it.
2)But now we are introducing second order which is smaller in lots size this is our bonus sort of speak.
It goes in to market exactly same as order 1, but lot size for it is 3 lots. and we utilize a jumping stop loss no trailing.
Jumping stop loss can be set at any value you wish 30 pips 20 pips ect This is something that can be experimented with.
Finally we can have an option for 3rd order to try and capture ADR of 100 pips so Targer profit for order 2 can be set @100 pips. So with jumping stop loss if we are ranging there is less likely hood we will get stopped out.
So consider this :
Ref Buy stop is @ 1.2900 price goes past it to 1.2930 order 1 just got its profit and be banked 7 lots with our examples, but here is the kicker:
Order 2 is now @BE makret contues to go higher and gets to 1.2960 our Jumping stop loss just locked in 30 pips of profit @3 lots, market continues to 1.2990 our Stop loss jumps again to 1.2960 locking in 60 pips of PROFIT, market
is like nah i am not done for the day it continues to fulfil its ADR to 1.3000 since our TP is 100pips for second order our second order just exited with 100 pips profit. Essentially Doubling our takings for the day.
So if market only moves 30 pips we are paid! thanks to order 1 second order just goes to BE. NO biggy
But if makret moves 100 pips then we get paid and make a bonus:13:
NICE
I hope this makes sense, if not shout me out:).

Safe trading

[pipcompounder]

today is very slow, hopefully the price drifts up, was within 5 pips of buy 30 p TP.

mostwantedpip- your idea makes sense to me.

personally, I want to stick to my single trade idea, and need two things to make this work correctly…

1. when the tp is hit, the other pending order needs to be cancelled, last friday is a good example of this, where after hitting TP, the price opened the other trade, which never went anywhere, which leads me to my 2nd "thing…
2. At 1 min before the market closes for the week on friday, the EA needs to close all open trades…I was forced to leave the buy trade over the weekend, and it gapped way down…of course, the first part of this would have kept this from happening, but this is still necessary, as it may have been the only trade of the day, and gapping down like this (-60 pips) is very expensive.

Now, I visually backtested from Nov. 1 up to now…the results are as follows:

27 trading days
25 winning trades using 30 pip TP
11 losers, assuming EA would cancel opposite trades, once active trade hit TP
14 net wins with this.

14 losers, all together, if allowed to trade after win on same day.
5 times a loss was followed by a win on the same day, so BE day
3 days had double losses, both trades lost.
1 day had two wins, but this wouldn’t be if we had opposite trades cancelled after hitting TP

the first 10 days ended with net BE…because of election.
24 out of 27 days had winners, extremely good win rate.
no consecutive losing days
1 consecutive BE days, where loser was followed by winner, two days in a row.
$42 net profit using 0.01 lot size…if this was on $100 account, that’s 47% up, 1.74% average per day.

in pips…
750 gross pips
-330 loser pips
420 net pips

I would like it if the markets would increase volatilty so 40 pip TP could be viable, much more profitable, but we must adj to the current market conditions, so here we are.

[pipcompounder]

Yesterday’s buy finally hit TP, and today also has 30 pips in the bag…good start for the week.

edit: so I don’t have so many posts together, today, dec 12, also has…ding, ding, ding, …another 30 pips in the bag…three in a row this week…

[mostwantedpips]

today is very slow, hopefully the price drifts up, was within 5 pips of buy 30 p TP.

mostwantedpip- your idea makes sense to me.

personally, I want to stick to my single trade idea, and need two things to make this work correctly…

1. when the tp is hit, the other pending order needs to be cancelled, last friday is a good example of this, where after hitting TP, the price opened the other trade, which never went anywhere, which leads me to my 2nd "thing…
2. At 1 min before the market closes for the week on friday, the EA needs to close all open trades…I was forced to leave the buy trade over the weekend, and it gapped way down…of course, the first part of this would have kept this from happening, but this is still necessary, as it may have been the only trade of the day, and gapping down like this (-60 pips) is very expensive.

Now, I visually backtested from Nov. 1 up to now…the results are as follows:

27 trading days
25 winning trades using 30 pip TP
11 losers, assuming EA would cancel opposite trades, once active trade hit TP
14 net wins with this.

14 losers, all together, if allowed to trade after win on same day.
5 times a loss was followed by a win on the same day, so BE day
3 days had double losses, both trades lost.
1 day had two wins, but this wouldn’t be if we had opposite trades cancelled after hitting TP

the first 10 days ended with net BE…because of election.
24 out of 27 days had winners, extremely good win rate.
no consecutive losing days
1 consecutive BE days, where loser was followed by winner, two days in a row.
$42 net profit using 0.01 lot size…if this was on $100 account, that’s 47% up, 1.74% average per day.

in pips…
750 gross pips
-330 loser pips
420 net pips

I would like it if the markets would increase volatilty so 40 pip TP could be viable, much more profitable, but we must adj to the current market conditions, so here we are.

Congrats Pip-compounder
So the current 30pip TP both ways works quiet well. Simple is better! I guess next year when volatility returns you maybe be able to elect 40pip tp once again?

I am not sure if CRISCROSS will read this?, but if you are, do you think you could implement my idea as an option in the ea? Please read my previous post.

Many thanks

[sandybeach]

Interesting strategy, always have liked daily breakouts

congrats everyone on the work you have done so far on it, looks like its coming down to a nice refined strategy.

---

I have a few questions:

1. Does anyone trade just one trade per openning (as per the new rules) are are you opening 3 trades each time as per the old rules?

2. Has anyone traded on any other pairs other than EURUSD ?

3. Has anyone traded this strategy on breakouts from the New York or Asian opennings ?

So far i have had 3 sets of 3 trades open (6 in total), all closing in profit for a profit of 46.8 pips, so a good start so far.

[pipcompounder]

Interesting strategy, always have liked daily breakouts

congrats everyone on the work you have done so far on it, looks like its coming down to a nice refined strategy.

---

I have a few questions:

1. Does anyone trade just one trade per openning (as per the new rules) are are you opening 3 trades each time as per the old rules?

2. Has anyone traded on any other pairs other than EURUSD ?

3. Has anyone traded this strategy on breakouts from the New York or Asian opennings ?

So far i have had 3 sets of 3 trades open (6 in total), all closing in profit for a profit of 46.8 pips, so a good start so far.

Thanks for your interest…here’s my answers:

1. Yes, I now only trade one trade per opening with a 30 pip TP, and have the lot size on the other two trades at 0.

2. I have backtested other pairs, but was disappointed, so haven’t actually traded them.

3. I backtested these, and found they lose too much…better to have 30 pips every day, with a BE day here and there.

The market seems to have sprung to life since after the election, so the results have been pouring in…I really like the backtest curve for the month of November.

[charlesmoss]

Hi hey this is working partially for me. I got three orders placed and none of the trades today closed after the 30 pip profit. Can you please post the latest version. Or is it V1-3-1? Thanks

[sandybeach]

Thanks for your interest…here’s my answers:

1. Yes, I now only trade one trade per opening with a 30 pip TP, and have the lot size on the other two trades at 0.

2. I have backtested other pairs, but was disappointed, so haven’t actually traded them.

3. I backtested these, and found they lose too much…better to have 30 pips every day, with a BE day here and there.

The market seems to have sprung to life since after the election, so the results have been pouring in…I really like the backtest curve for the month of November.

Thanks dumb question are you using the EA out of interest? I pulled off the latest version going back a few pages, are you using the default settings in the EA ?

[Sempai]

Last night was the first night In some time when i didn’t get up at midnight to trade the london open and news. I left the EA that I have been running for some time on, and for some reason it set the stop loss at ~600 pips (don’t have the exact number) did anyone else get this?

i’m running 1-3-3.

[sandybeach]

Last night was the first night In some time when i didn’t get up at midnight to trade the london open and news. I left the EA that I have been running for some time on, and for some reason it set the stop loss at ~600 pips (don’t have the exact number) did anyone else get this?

i’m running 1-3-3.

No i had the EA running also, but only loss was EURUSD hit the SL at -28 pips, otherwise nothing that bad that i could see.

[erinsunc]

Hi All,
I stumbled across this thread about 24hours ago and I have given is some serious time since (approx 9 hours). Anyway, after reading and digesting the info contained within, I have come to the conclusion that the beginning was an excellent discussion on the discovery of how significant the 1st hour London trading candle can be for offering the ability to make pips on it’s highs and lows. Unfortunately after this, the thread very quickly became more about the development of an EA rather than expanding the understanding of how and why this candle seems to be important. I was kind of hoping to see some kind of reference to FIB levels and Pivots (forward indicators) in a hope that we could see if there are some other significant ‘quirks candles’ out there which would be of use to us all. Anyway, I’ll quickly change/swing my direction of discussion now as I am probably getting some people’s backs up and that really isn’t my intent.

Arise Sir pipcompounder, You stumbled across a candle which will have made a lot of people quite a few pips. Are you able to tell us how you managed this? Was it buy chance or possibly was it the fruits of some seriously hard chart study? I only ask because whatever thought process or approach you to took to find this discovery is the way forward in this game and it is this I would really like to learn as I know that applying that logic will be the winner in finding the next ‘Magic Candle’.

Don’t get me wrong, I am really not meaning to p**s on anyone parade here. I know that there has been a lot of effort in developing the EA by many contributing folks but I really feel that it has been a missed opportunity to use the collective thinking power.

I have done some back testing on the system myself. Not with any EA’s or spreadsheets that presume that an hours candles high must have happened before its low and therefore my TP would have been hit before my SL because that’s what I wanted it to. Nope, I have poured over the charts and even down to 1M timeframes to check when highs were hit and SL’s taken out. The reason I have done this is to make my last 9 hours worth while i suppose anyways I have found the following.

I used the reference candle in all days and I have gone back 39 days to the Monday 22nd October. Set 2 pending orders at either end of the candle(High & Low) with 1 pip buffer (btw, excellent thought about it’s need). Each pending order had a SL set at the opposite end of the candle (high/low). The intention is to leave both trades open for 24 hours by setting up the expiry time right up until 10mins or so before the opening of the second candle the following day. To be honest, leaving the trade open this long helped curb losses from what the charts showed me and only helped the results. The results I have are as follows:

Total Trade days (including Friday) = 39
Days were TP was hit = 24
Days where both trades hit SL = 3
Break Even days (one pending order loss the other win) = 10

Now these stats look good, out of 39days only 3 losses… hmmm but now talk pips

24 days x 30pips =720
The 3 days where the SL was hit means 6 lots of SL hits and on these days the difference between the High and Low were 50+42+48 = 142
So Net Pips = 720 – 142 = 578 over 39 days which averages at 15 pips a day as of today.

What is interesting though is that the 3 bad days where at the back end of Oct and beginning of Nov, Obama time? In fact from 22/10to 26/10, the Reference Candle was a really naughty boy. However, it seems to have been good of late and has not been naughty since the 12th Nov. Well all was good until today. It would have been a really bad day, 90 pips lost!! I don’t think I have seen such a small day candle.

Anyway. From what I have learnt today is that Sir pipcompounder is indeed correct, don’t go higher than 30pips TP at the moment. This seems to be the correct level. As for the EA, personally I won’t be trying it until there seems to be a lot more volatility on the market. I would suggest hold on this system completely untill next year and then try it out for a few weeks first.

Thanks for reading and happy trading :57:

[pipcompounder]

Erinsunc…thanks for your interest…your are correct about the significance of the reference candle. My decision on how to exploit it was a combination of researching different aspects of general trading knowledge, which I outline here:

1. when a trend is started with the london open, it usually continues that direction for the rest of the day, sometimes there is a mid-session reversal. The London session has all the market movers involved, and they all end up moving the market in one main trend, the majority of the time from the point the session opens.
2. Stop orders from reakouts are the most tradeable types of entries. These are fairly good from consolodation periods, but I decided to use them from a certain time, instead of consolidations.
3. All traders need to do to profit is open a trade that the market turns out to move in a positive direction for the needed distance.

There may be small other aspects of the theory, but these are the main supporting facts, that exist enough of the possible times to be profitable. I admit I was fixated on the possibility to almost completely eliminate losses, but that is not really possible as long as there is a spread involved. So, now, it does indeed seem that finding the highest average distance the price moves from the reference candle, while balancing that against potential losses, seems to be the goal. We need the TP to be hit as often as possible, while allowing the SL, when hit, to have a loss equal or less than one profit hit.
Now, a quick note to everybody…as you should have noticed, the market is mostly flat now because all the market movers are on vacation for the next 2-3 weeks for holidays. The market just won’t move enough for us to profit, so I suggest you all take a break from testing for the next 2-3 weeks, and then when the market “returns” we can all get back to it…I will be going live with my 30 pip idea next year…

[lbcox]

Newbie here (first post actually): Found this thread from the “3 highest scoring systems” post. After reading thru this thread and trying to make sense of the changes - To confirm today’s play, would I have bought at 1.32039 + 3 PIPS; SL @ 1.32030; TP1 @ 1.32369 & Sold @ 1.32030; SL @ 1.32069; TP1 @ 1.31730??
AND, would this have been a profitable play?

• BTW, I find FX totally fascinating and this site very informative.

[pipcompounder]

Newbie here (first post actually): Found this thread from the “3 highest scoring systems” post. After reading thru this thread and trying to make sense of the changes - To confirm today’s play, would I have bought at 1.32039 + 3 PIPS; SL @ 1.32030; TP1 @ 1.32369 & Sold @ 1.32030; SL @ 1.32069; TP1 @ 1.31730??
AND, would this have been a profitable play?

• BTW, I find FX totally fascinating and this site very informative.

Thanks for your interest…I am not trading this week because of holidays…no trades would have profited this week so far, and probably won’t…I will not start trading again until january 2, 2013…at the earliest. I recommend you do the same. If you want to use the time to learn, try visually backtesting this idea on previous days, by pretending you would have the pending orders in place when the reference candle ends, and see how many you win\lose.

[sandybeach]

Happy trading, Merry Christmas and Happy New Year Guys and Gals!

[lbcox]

I structured my trade yesterday perfectly; or so I thought. I got stopped out on the way down from the buy side. (they called it “an offset”). I found out today that my broker doesn’t allow hedging :58: , so in order to execute this strategy I would need to open a second account to play the opposite direction. Is this a typical policy?

[lbcox]

Hi All,
I stumbled across this thread about 24hours ago and I have given is some serious time since (approx 9 hours). Anyway, after reading and digesting the info contained within, I have come to the conclusion that the beginning was an excellent discussion on the discovery of how significant the 1st hour London trading candle can be for offering the ability to make pips on it’s highs and lows. Unfortunately after this, the thread very quickly became more about the development of an EA rather than expanding the understanding of how and why this candle seems to be important. I was kind of hoping to see some kind of reference to FIB levels and Pivots (forward indicators) in a hope that we could see if there are some other significant ‘quirks candles’ out there which would be of use to us all. Anyway, I’ll quickly change/swing my direction of discussion now as I am probably getting some people’s backs up and that really isn’t my intent.

Arise Sir pipcompounder, You stumbled across a candle which will have made a lot of people quite a few pips. Are you able to tell us how you managed this? Was it buy chance or possibly was it the fruits of some seriously hard chart study? I only ask because whatever thought process or approach you to took to find this discovery is the way forward in this game and it is this I would really like to learn as I know that applying that logic will be the winner in finding the next ‘Magic Candle’.

Don’t get me wrong, I am really not meaning to p**s on anyone parade here. I know that there has been a lot of effort in developing the EA by many contributing folks but I really feel that it has been a missed opportunity to use the collective thinking power.

I have done some back testing on the system myself. Not with any EA’s or spreadsheets that presume that an hours candles high must have happened before its low and therefore my TP would have been hit before my SL because that’s what I wanted it to. Nope, I have poured over the charts and even down to 1M timeframes to check when highs were hit and SL’s taken out. The reason I have done this is to make my last 9 hours worth while i suppose anyways I have found the following.

I used the reference candle in all days and I have gone back 39 days to the Monday 22nd October. Set 2 pending orders at either end of the candle(High & Low) with 1 pip buffer (btw, excellent thought about it’s need). Each pending order had a SL set at the opposite end of the candle (high/low). The intention is to leave both trades open for 24 hours by setting up the expiry time right up until 10mins or so before the opening of the second candle the following day. To be honest, leaving the trade open this long helped curb losses from what the charts showed me and only helped the results. The results I have are as follows:

Total Trade days (including Friday) = 39
Days were TP was hit = 24
Days where both trades hit SL = 3
Break Even days (one pending order loss the other win) = 10

Now these stats look good, out of 39days only 3 losses… hmmm but now talk pips

24 days x 30pips =720
The 3 days where the SL was hit means 6 lots of SL hits and on these days the difference between the High and Low were 50+42+48 = 142
So Net Pips = 720 – 142 = 578 over 39 days which averages at 15 pips a day as of today.

What is interesting though is that the 3 bad days where at the back end of Oct and beginning of Nov, Obama time? In fact from 22/10to 26/10, the Reference Candle was a really naughty boy. However, it seems to have been good of late and has not been naughty since the 12th Nov. Well all was good until today. It would have been a really bad day, 90 pips lost!! I don’t think I have seen such a small day candle.

Anyway. From what I have learnt today is that Sir pipcompounder is indeed correct, don’t go higher than 30pips TP at the moment. This seems to be the correct level. As for the EA, personally I won’t be trying it until there seems to be a lot more volatility on the market. I would suggest hold on this system completely untill next year and then try it out for a few weeks first.

Thanks for reading and happy trading :57:

Very thought provoking reply erinsunc: In your back testing, did you find/notice any reference candles that were not good trades (i.e. too small or too large (if so, what would those values be); the highs/lows = open/close…no tails). I noticed you made 1 reference to one of the days you “didn’t” trade and you would have lost 90pips; implying it was because the day candle was so small.

[pipcompounder]

I structured my trade yesterday perfectly; or so I thought. I got stopped out on the way down from the buy side. (they called it “an offset”). I found out today that my broker doesn’t allow hedging :58: , so in order to execute this strategy I would need to open a second account to play the opposite direction. Is this a typical policy?

You may not fully understand this strategy. There is no hedging involved, if the trade goes against you to the point of opening the opposite trade, the first trade is to be closed by a stop loss order, which you should have entered as part of your pending orders, so when the opposite trade is opened, you have suffered a loss, and your best outcome will be BE for the day, like yesterday would have been. Today, would have been a good TP hit.

[erinsunc]

Very thought provoking reply erinsunc: In your back testing, did you find/notice any reference candles that were not good trades (i.e. too small or too large (if so, what would those values be); the highs/lows = open/close…no tails). I noticed you made 1 reference to one of the days you “didn’t” trade and you would have lost 90pips; implying it was because the day candle was so small.

If only … The reference Candle doesn’t tell you when or when not to trade. If it did we’d all be millionaires… The only thing that can tell you this would be an assessment of the bigger picture and where that particular days trading session fits in to the overall price action of the week/month/year and even then nothing is guaranteed.

There are certain candles I would avoid though. Spinning Top’s, Doji’s, Hammers etc. But you should know this through general knowledge of candlesticks anyway.

I would think that a Bullish Engulfing or Bearish Engulfing set up would be favourable but as I understand it, this system is more mechanical than analytical.

[claqlink]

Shr1k can i take a look at this EA

I will look at it I am trading a very similar method that has been working well the last few months on forward testing and back data. I am only using one order and moving the stop to BE at about 8 pips. I am using an EA to enter trades and it will reenter the trade if price retraces into the breakout range after a trade closes at BE. I am using a trailing stop to close trades.