so, with all the questions and only vague answers, been thinking about trading this method and how to go about it; let’s barnstorm up some ideas, who’s with me?
First, from Post 1650, Dennis suggested method:
TRADING THE TREND WITH STRONG WEAK ANALYSIS
- Wait for the daily candle to CLOSE
- Compute the Strong Weak rankings
- When the currencies ranked 1 and 8 give a new pair –
- Enter the trade immediately with a Market Order
- Set a TAKE PROFIT of 100 pips
- Set a STOP LOSS 200 pips
- Trade will EXIT when the TAKE PROFIT or STOP LOSS is hit
Now, is there any LOGIC in determining the Stop Loss and Take Profit? I doubt it, he doesn’t mention any back testing, nothing, just looks like round numbers for convenience to me, what you think?
Even the most novice of trader will read the advice that tells them to be successful, the Take Profit should be at least twice the Stop Loss, don’t even have that here, even worse, it’s in reverse!
So, given that this is an end of DAY method, using DAILY price, let’s look an Average Daily Range for the 28 pairs. Okay, so they vary from 53 pips all the way up to 201 pips, therefore, logically, there can be no one size stop loss fits all pairs for a start. A stop loss of 200 pips is 2.2 time the average of the ADR of the 28 pairs, so let’s look at using 3 times the ADR for each pair, it is a long term method after all.
Your comments, suggestions and criticisms welcome but keep it civil please.