Thank you Phil for introducing a new profitable and less comlex strategy.
I went through the steps and I think I understood the steps. I do use IBFX Demo so I should be having Sunday 20.00 GMT 4 HR candle. I have never seen the ATR indicator but I will try spot that today on metatrader. I just want to clarify the following time match since I am always confused with GMT and local timings.
Instruction says looks for Sunday GMT 20.00 Candle. It means I have to wait for the close of this 4 HR candle which will happen at 24.00 GMT. Is this correct ?
Since I live in a PST(USA - Pacific) time zone, my time would be 1 PM and I will wait until 4 PM to close the 4 HR candle. I can only enter into a trade, probably, at 4.02 PM PST or 00.02 (GMT) since at least 2 mts are required to place the orders.
(Assumption : I will place 2 orders one for short and one for long. Both the orders would be 10 pips from the high and lows of the 20.00 to 24.00 GMT candle. On hitting one order, I can cancel the other order)
You almost got it! Your thought process about the time is correct but your time zone calculations are off by 1 hour. Iām in Arkansas and my IBFX Sunday candle closes at 7pm, so you should be two hours behind me and have it close at 5pm.
Correct, except you donāt automatically cancel the other order. Sometime one trade will be hit and end up reversing and getting stopped out, and then the other trade will trigger and end up being a winner. But then again, sometimes both trades will end up getting stopped out.
I only cancel the second trade if the first one goes up a significant amount. People keep asking what that amount is, and I really need to figure out an exact number for it, but to tell the true I just judge it on a case-by-case basis. Hereās how I explained it to Mumpips earlier this weekā¦
Imagine the current ATR is 500 pips, which would make our profit target for the week 250. If the short trade gets triggered, moves down 225 pips, and then reverses and ends up losing would you enter the long trade??
Of course not! Because if the average range of the pair is 500 pips per week, and weāve already āused upā 225 of that on the downside then thereās only around 275 āfreeā for the long trade to go. Since our profit target is 250 thatās cutting it way to close (it is an average, after all), so weād skip the long trade for the week.
Iām going to be on vacation next week so I wonāt be around after Saturday night. If anyone has any questions that would keep you from trading on Sunday make sure you ask them in the next two days!
Iāll still be trading the breakout on Sunday from my hotel room, and Iāll still post the trade numbers right after midnight GMT, but after that Iām shutting the computer off and letting the pending orders handle everything. Hopefully I wonāt lose anything from not being around to move the stoploss to break even.
When I place 2 limit orders on long and short entry. Long failed.
When I changed limit to stop order for long entry & limit order for short entry, both are successful. Have I done correctly on the 2nd method???
This attached explains how you should set pending orders depending on the price action.
If you have the Sunday candle and you are placing orders they should both be stop orders since you are expecting price to breakout from the candleās highs and lows.
Stop Buy @ price.
Stop sell @ price.
Each of these orders then has a separate OCO order on it for stop loss and take profit. The stop loss is a stop, the take profit is a limit.
Iām going to defer to SanMiguelās expertise on that one. My broker doesnāt use that terminology so I never bothered to memorize which is which.
I do remember reading an article about it on a Forex4noobās blog once. Hereās a link and an excerptā¦
With a ļæ½Stopļæ½ order, this can be a Buy Stop or a Sell Stop, you are looking for price to travel in one direction, activate your order, and keep going in the same direction; Continuing the trend. Think of it this way, you are driving your car down a road, you come to a ļæ½Stopļæ½ sign, and then you keep driving in the same direction.
With a ļæ½Limitļæ½ order, (Buy or Sell), you are looking for price to travel in one direction, activate your order, and then reverse in the opposite direction; Reversing the trend. Again, you are driving your car down a road and you suddenly come to a dead end, the roadļæ½s ļæ½Limit,ļæ½ you are forced to turn around and go back the way you came.
Hi SanMiguel, thanks for the reply. I am rather slow on this, need more time to understand. The confused part is when everyone is talking abt limit order for this system, I need to put stop order for the pending orders.
Okā¦my brain is not working properlyā¦give me more time to understand this. :o
A lot of people use the terms āpending orderā or ālimit orderā for any type of order thatās set to trigger in the future, even though it may not technically be a limit order.
Itās the same logic as using the word ācarā for any type of vehicle. Just because someone says āThere was a 3 car pileup on the highwayā doesnāt really mean they were carsā¦ It could have been a truck, van, etcā¦
Thank you for the correction. I just looked at the weekly ATR now and it is showing as 0.0510. It means I should be considering 255 as Profit target.
I understand that Weekly ATR on Sunday will be differrent than what I see now.
A very interesting strategy however the win/loss ratio is scary for me. As you know Iām down to virtually nil on my account and a string of losses would end it all so Iām thinking about a change to the ārulesā of the system that would produce more wins, although ultimately reduce profitability - thus making it a more conservative and āsafeā system.
How about exiting the trade at 2R?
Do you think this would produce more (smaller) wins? Would it have produced some winning trades in the Feb-March losing streak?
Are you able to back-test this a bit? Like some others my 4hour charts only go back 3 months.
Simple solution. Just download an Alpari demo and through history center get the data you need. Voila - you can do the backtesting yourself.
Another piece of advice - donāt let previous losses have an adverse effect on how you trade. Itās better to either stop for a while, or to do a complete mental restart, wipe the slate clean.
Who are you using for a broker? If you have a good broker account size shouldnāt matter. If your account is small go with a broker that lets you trade fractional lot sizes, like Oanda or IBFX. Either one of those would still allow you to trade with good MM even if you only had $20 or so in your account!
I donāt have data to back it up, but based on my experience I donāt think taking profit at 2R would end up being profitable. Youād probably end up losing money in the long run. This method is based on pure statistics and probability, not any type of real technical analysis, so you need the big wins to make it profitable.
Iād hold off trading it if your broker/account size wonāt let you trade it safely.
Iāll do some backtests on it next week, but Iām leaving for vacation in a few hours and donāt have time right now.
Be careful if youāre wanting to make short-term money with this method. I can [I]almost [/I]guarantee good results over 6 months or more, but itās very possible you could lose some money if youāre only trading this for 2 months.
Iāve scrolled back through my 3 months of data and had a positive result.
Every BE and winner on Philās rules would produce a winner, every loser would likewise be a loser. At 1:2 Risk to Reward I would imagine it would prove profitable over a longer time period
