Yep I’m I’m the Gbp/jpy aswell up around the same level so far
I have created an EA for this method. It is based on the broker that I use, IBFX, so you will need to modify the code for your particular broker. Current features:
*Ability to trade all defined pairs from one chart
*Determines trend direction based on SMA and distance traveled up or down
*Definable Stoploss and TakeProfit for each pair
*Monitors forming inside bars and displays them on the chart. Green for uptrending, red for downtrending and gray for flat. This is updated every 5 minutes.
*Calculates lot size based on a defined percentage of account balance.
*Merges Sunday bar with Friday bar to determine inside bar.
*Places Buy Stop or Sell Stop orders immediately after bar close.
*Displays countdown until bar close in upper left of chart.
*Accounts for brokers that use pipettes.
*Likely more that I have forgotten.
I am still learning MQL. Coming from a background in PHP I found MQL to be missing many functions. As such I have coded things the best that I could with the limited knowledge that I have. There are likely many ways to write the code better. So while suggestions are very welcome, criticism is not.
I am unable to be near charts when the daily bar closes so I wrote this for my own use and am sharing it as a way of saying thank you for this method.
Do with this what you will. Just remember the following:
[ul]
[li]I am not interested in providing support. If you don’t know how to change something try to learn… Google is your friend.
[/li][li]Trading is risky. Do not use this on a live account!
[/li][li]This is free. If it doesn’t work for you don’t use it or modify it so that it does.
[/li]
InsideBarEA.zip (20.8 KB)
[/ul]
I did a rough back test for January of the pairs listed by Toby123 for inside bars. Not using the 2 to 1 ratio, but using the idea that there was a positive move I got the following results. 10 winners, 4 loosers, 10 no entries. For those who actually traded this method for January did you come out ahead for January? I would be interested in any thoughts traders have as to the long term success of this method. I don’t find the 2 to 1 risk reward to be realistic. I see too many stops being hit with such a short stop. I’m I wrong? I still like the method, but with two targets, one at 1 to 1 and one 2 to 1 after a move to BE.
Interesting discussion Greg. I’m also curious about the different TP and SL strategies availabe. I think the one you mentioned could be one of the best. Right now I just eye off resistance and if I see a winning trade starting to waft around i’ll move my stop loss up say to 25 pips or so just so that i take some bread home.
Greg, alos, sorry could you explain what you mean by this: "Not using the 2 to 1 ratio, but using the idea that there was a positive move"
so what was your take profit?? what do you mean a positive move?? just a move into positive by 0.1 pip was a winner?
and also, what did you count as a “loser”
thanks greg, good experiment that one.
Jonah, well done. Not an EA expert myself, but good to know I now have a tool in the shed, so i’ll give this one a try some time. For me the candle close comes at a conveniant time so it’s not such a big deal.
So is the 2 to 1 really the best target and stop. It seemed to me the the targets were a little farther out than seemed reasonable. There are other formulas such as the length of the set up bar. I especially think that a typical 50 pip stop is rather short for daily bar action. I could be completely wrong.
One money mangement method would be to have two contracts. If 100 pips is the target then a 50 pip target could be for the second contract. If the 50 pip target is hit, then move the remaining contract to break even.
In setting the target and stop Average True Range etc. In addition just lookin to see recent lows helps determine stops. I also like the donchian channels to help determine stops and targets.
That being said, I’m very intereseted in hearing what experience people have with this method. I would not turn this over to a EA. I think it takes personal management of the trade. In the past I have traded daily bars that are engulfing. I do think the inside bars are much better. For those traders who are having difficulty with determining the Friday through Sunday Monday daily bars I highly recommend using a demo account or micros until they are very comfortable reading charts.
I have to say a massive thank you to Toby for this it has added a valuable and profitable strategy to my trading and a thank you to everyone else who has tried to help and refine this strategy to make it even more profitable, it really helps newbies such as me I have only been trading for a couple years and so am still learning so this is a real help
Thanks
Mahesh
I’ve backtested the EURUSD and USDJPY using reward-to-risk of 2-to-1, trading with the trend. However, my method is a little different than toby’s. While toby uses a pre-defined SL and TP, my SL is located at the bottom of the inside bar. TP is 2 x SL. Resistance and support were ignored for the backtest.
For the EURUSD, I tested from the start of 2001 to mid-2009. Average return on risk was 23.08%.
For the USDJPY, I tested start of 2001 to end of 2008. Average return on risk was 13.9%.
Trading 3-to-1 and 4-to-1 yielded better results, 28.21% and 37.8% for the EURUSD respectively. It’s a similar story with the USDJPY, 19.79% and 22.99% respectively.
I don’t have much experience backtesting support and resistance. It looks like a tedious manual process lol. But I think you should achieve better results than mechanically trading 2-to-1.
Thanks, that really helps. If you could KK what would a typical trade look like. Do you ever move your stop to break even?
What kind of drawdown would you expect? Do you have an idea of average pips earned per trade? Once again nice work!
No worries. I don’t have a concrete figure on drawdown, but according to my spreadsheet, my longest streak of losses was nine trades. So if your position size was 2% of your account, you would’ve lost around 18% of your account before hitting a win. I’ll have to fiddle with my spreadsheet to come up with something more definite, but I’ll have to leave that to tomorrow as it’s 5 minutes to midnight and I need to sleep. 
The average SL was 74.8 pips, so that would give an average TP of 149.6 pips. As the average return on risk was 23.08%, your average trade would yield 17.3 pips (0.2308 * 74.8 = 17.3).
Here’s a snapshot of my typical setup.
For the backtest, I didn’t move my SL to breakeven. I let each trade play out.
Great work KK,
Just an observation, please comment if you care too. Your two posts on this thread regarding ROI really drive home an idea that is repeated often about the value of risk/rewrd ratios. Also, you setting the SL off the set up candle size vs. a set amount of pips is more inline with what many price action gurus encourage. No offense to the OP er’s system, because I much appreciate his work too.
bisognor
my USDCAD hit stop loss. -50 pips. not pretty to watch after going 25 pips up or so.
Also GBPJPY now down -8 pips after being +50 up…
Perhaps this is where moving stop losses may need to be explored…
Anyone else lose out on the USDCAD. Toby?
I think the issue with the usdcad was that it was rather oversold and due for a reversal. There is still hope for the gbpjpy in that it seems to be forming support. I would not bet on it but it has a chance to hold here. We will see if 122.600 will hold.
Gbp/jpy moving up now, it held the support and it should be a nice winner.
gbpjpy, I took 95 pips and out. I may have bailed too early, but I’m new to the daily inside bar action. Record so far, 50 pip loss on audusd the other day and today’s win.
A thanks to Toby123 an all the contributers. I think this method has much to offer. In the past I have used the bullish daily engulfing as a trigger. The inside bar looks like it has better potential. I do enjoy this discussion group. I’m still itching to read Toby123 other strategy.
how are you guys getting on? very tough week!!! hope still able to manage to earn some pips!
What was your experience with trading engulfing bars? I did a backtest on the USDJPY from 2000-2009 with very nice results.
I traded the engulfing bars one a one to one risk reward basis. Best results with aud/usd and nzd/usd. Sometimes I would enter on pullback after engulfing bar. I intend to trade both engulfing and inside daily bars. While I really like the Toby strategy, I’m not convinced that the 2 to 1 ratio is best. I like the two contract, withone at one to one and the second as a runner after Break Even. About 64% winning trades on engulfing.
You guys got the link to this engulfing bars method? Is it one that has been posted up?
I guess I’m the daily engulfing bars guy. I got it from a friend who subscribes to specialisttrading.com. I think it is forex strategy number 5. Go to youtube. Steve Primo Forex Strategy #5 Service Trade Results - YouTube
If that link doesn’t work just search Steve Primo forex strategy number 5 youtube. His website is a pay for site. He posts trades as they come up. He claims a successful track record with engulfing daily candles. Essentially the daily candle must close above the 50 sma for a long. The entry is just a few pips above the engulfing candle. The stop is just belong the engulfing candle or the candle that was engulfed. The target is the length of the engulfing candle.
His site offers a number of strategies for stocks and forex and /es futures. Too me it is too expensive but I think the product is good. Youtube covers Primo pretty good.
I like both inside and engulfing daily candles, I trade them both. Finding Toby123 has given a whole additional strategy for me. I used to get chopped up in smaller time frame trading. The daily is much more consistent.
Thanks again to Toby123. I don’t mean to sound like a know it all, Forex trading is so difficult, it is a constant study. Very humbling for me.
Thanks Greg. I’ll look into this and certainly view the youtube later. Though I’d wonder how often these entry signals are triggered. An engulfing candle is rare enough, and then to also close about/below the 50 SMA is another thing. But I know nothing about this yet. Reasonably Happy with Toby’s so far but need a little more time with it. Its good to have more tools in the shed though so i will be looking into this.