I’m not exactly sure what you mean here but im assuming your talking about applying the 25-bar ATR to find your t/p and s/l??? If that is what your asking then you can decide one of the following:
1.) Apply it to the candles opening which is where the system directs you to open the position.
2.) You can apply it to the exact price of where you opened your position. Say the price is ten pips higher than it was at the open but your just now able to place an order, you can apply the ATR to the price of your position opening.
I will tell you what I do. I trade on the 1 hr TF. At the turn of the hour (when one candle closes on the 1 hr TF and another opens) I immediately plug in the values for the just completed candle. I then find the pair I want to trade. Then I switch to the 4hr TF and get the ATR(25) from the candle that was just completed. I then open a position. I add and subtract the ATR value to/from the price at which I placed my position. Then I multiply the ATR value times .65 (the system recommends .6, but its a personal choice), this now becomes my trailing stop.
I realize all this takes time and by the time you opend your position, price may have moved for a good 6-7 minutes, but unless your trading a highly volatile pair like AUD/NZD that moves like crazy, Ive found that it doesnt really affect the w/l percentage. I suppose you COULD move to a lower TF to find a really good opening but I dont like doing that.
Advantage
This system makes sense in terms of trading in line with trend, and as you’ve mention buying strong currency and selling weak currency. So automatically since ur not betting against the trend, ur trade is “rational”, thus shd generate > 50% win lose rate.
Agreed. With proper money management and good decisions, its very easy for this system to be profitable.
Disadavantage
It is does not help in avoiding u entering at the tip or bottom.
This is why I tend to only trade the pairs that have one at an extreme and the other near the 40 or 60 mark. Plus visual inspection of the chart can tell you whether or not the pair has been on a sudden trend or not. If the price has suddenly jumped up 100 pips or something, obviously you can expect a retracement. I know this may be something that is intuitive versus mechanical though so you bring up a good point. We should find a way to help us in avoiding entering at a peak (when going long) or valley (when going short). If anyone has any suggestions they are more than welcome.
It’s also more suitable for long term trading or high TP/SL trading, i.e. susceptible to retractions. So a TP/SL of less than 50pips is definitely not suitable. In fact anything below 100pips is quite dangerous.
Im not sure how you came to this conclusion? I have been in a several trades where the ATR has been .0040 or so and if I remember correctly they were winners. Your right though, you have to watch those retracements. Thats exactly why one doesnt take every trade that presents itself.
I know for a fact that the good majority of the trades are under 100 pips. Its pretty rare that I have seen a good trade where the ATR(25) is at .0100 (or 1.00 if your dealing with JPY) in fact. I understand why you say this but i must disagree with you.
So far I have done pretty well with trading the 1 hr TF. I do not know what you consider to be long term, but there hasnt been a trade of mine go longer (or anywhere near) a day. I usually have several trades a day actually.
This is more of a fundamental system (something like the “Sunday Breakout Strategy” in another thread), and definitely not technical system. Nothing wrong though.
Well I agree that its not exactly the ordinary technical trading system that you run into everyday. Thats exactly why I wanted to share it. But I do not know if I would say its a fundamental system. One uses the Alligator indicator and a set of equations to compare the relative strengths of the currencies. you do this with every new candle. Some of its power it’s ability to follow price action amongst the majority of the traded market. Maybe if you use this system in tandem with fundamental analysis then it may gain strength but from the way I view technical vs. fundamental, this is a technical system. Everything about the pairs’ future movements are based off of what we see from the CHARTS not what we learn from a financial report or news story. However, you said that was your opinion and your allowed to have what ever opinion you want but i respectfully disagree.
FXSTER: just realised i’ve only got 23 pairs out of the 28 pairs.
So this system won’t cut out for me?
I have this same problem. I actually only get 22 pairs out of the 28 BUMMER! But what I have done is open up a demo account on mt4 with FXSolutions (I think at least, ill double check if youd like) and they have all 28 pairs. So I use that to get my values for the excel sheet. Then hopefully, whichever pair I find is good to trade my broker offers. If not then its not a big deal, I just wait for the next available trade.
From what I read in the actual document though, it says use whichever pairs are avalaible for your use. So you COULD just calculate the relative strengths from the 23 pairs you have and leave the other 5 blank or delete them altogether. I have often wondered how much, if at all, this affects things. If you do decide to try it out please let me know how things go.
Thanks again for showing interest and asking questions. This is a learning experience for all of us including me so it is to everyones advantage. Please keep us informed as to your progress!!
If you’re looking for a broker who offers you the 28 pairs, I advise you "ActivTrades.
In addition to the broker only has 4 digits which simplifies life for the calculations of pips.
Regards, Didier:)
Thanks [B]Didilut[/B] for providing the chart and an explanation, Ill just add to it for anyone who isnt familiar with the ATR indicator. With all pairs that do not contain JPY (i.e. EUR/GPY, USD/CHF, AUD/USD…etc.) the ATR(25) indicates the expected amount of movements in pips by the last few decimal places. For instance if the ATR(25) reads .0060, then youre T/p and S/l should be 60 pips from your opening. If the ATR reads .0113 then its 113 pips from the opening for the t/p and s/l
When dealing with a pair containing JPY you read the ATR a little differently. You pay attention to the first 2 decimal places mainly. For example if the ATR is 0.5674 then you would place your t/p and s/l 56 pips away from the opening. If the ATR reads 1.0342 then you would place the t/p and s/l 103 pips away. Hope that clarifies some things!!
Please keep us informed of how things go. Im also eastern time but im a night owl so I trade towards the end of the asian session and most of the London session. Ill be posting some of my trades shortly, Ive found time to trade just not time to gather up all of them to report on :o Anyways thanks for posting!
The first and only trade I took with this system I took, I took in the wrong direction by accident anyway it was a win for 55 pips. Keeping a lookout for today and seeing if there are any probable trades.
U took a wrong direction and u made 55pips??
I made 2 trades so far, both losses.
First trade maybe due to wrong TPSL calculation as i didn’t know how to read ATR for JPY pairs.
Second trade maybe due to trading about just half hour after news.
Haha, yea I’m a little embarrassed to admit it but it took me some researching before I finally made sense of when to go short and when to go long when one currency is at a given extreme . Haha, but after some refreshment on how and why the pairs are paired as they do, it all came together.
For anyone who hasnt pegged down whether to go long or short, I’ll run through a quick explanation, the easiest way to do that is just by giving an example. If a currency is at 100% and is the [B]FIRST[/B] currency in the pair, for instance GBP is at 100% and JPY is at 35%, you would go [B]LONG[/B] [U]GBP[/U]/JPY. If a currency is at 100% and is the [B]SECOND[/B] currency in the pair, GBP=100% EUR=38%, you would [B]SHORT[/B] the pair EUR/[U]GBP[/U].
Hopefully that helps anyone who was curious. You can look up the explanation of why this is by learning more about what is actually happening when you buy or sell a PAIR (buying one currency and selling another and vice versa).
I’ve made 3 losses so far and another one still in trade is going against me.
If these continues mayb i shd just reverse the aristotelian alligator system, i.e. buy 0%, sell 100% and so on.
My limitation is i cannot put in any trailing stop, which would save 2 of my trade to BE, as i dun on my pc 24hours. Save the environment!!!
So far I have 5 wins and 1 loss. I might have one more loss today but we will see happens.
If I assume that the current trade I’m in CHF/JPY will lose (I wouldn’t be surprised because I bent the rules to get in the trade) then that brings me to 5 wins and 2 losses with a net pip count of 91 pips. If I win the current trade I’m in it’ll be 201 net pip profit so whether I win or lose I’ll be in the green for this week.
I’m still trying to get a handle of the system and today I’m going to manually backtest this system for the past month (this will be a huge pain in the ass with all the pairs) and I’ll report my results.
Why can’t you put in a trailing stop? What broker are you using? I’m also going to try and figure out a good 2 tier system.
I’ll slowly be putting results up.
EDIT: I forgot to add that you have to make sure you’re taking the trade in the right direction and using the right pairings, that is where the discretion comes in from the system. I actually like this aspect because it makes you look at the charts and not blindly follow the system which so many people do and fail.
How long is most of your trades before it reach TP/SL? I have 5 losses outof 5 trades so far, and all the trades are around 10hrs before it closes.
What do u mean discretion is choosing the pairs? I either choose those with 100% with 30%-40% or 0% with 60%-70%. I thot that’s wat the system says. What other discretion u look at?
For my trailing stop to work, i cannot turn off my platform, hence my internetr and pc need to be on the whole time. I’m using ALpariUK. I thot all brokers will b the same? U using MT4 rite?
but i respectfully disagree.
anyway it was a win for 55 pips. Keeping a lookout for today and seeing if there are any probable trades.
. Haha, but after some refreshment on how and why the pairs are paired as they do, it all came together.