Ah, finally! Someone that finds/highlights this “little problem”. As I said, problem with this system is that we have a completely inverted R/R. Loosing 3-4 100 pips trades in a row is devastating, since the recovery is so slow. In my backtesting, I find this quite recurrent (I certainly do not find the 85% success rate advocated before), unless you can exactly predict every ranging market. Unfortunately, ILZ is away (forever?? I hope not, but I have bad feeling).
Well, i am now sitting on three trades that have gone red on me to the tune of 100 pips with another two in the system that are not looking good. However … i have to say … i was hesitant before in entered into those trades. Thats a piece of knowledge i am taking away from this experience and perhaps also one weak point in this system which, no doubt, ILZ is aware of.
Yesterday we had some unexpectedly good news for the USD which was reflected in all USD pairs with 100+ pip moves. I entered trades, late yesterday, in the direction of the move caused by the news. Big mistake! Today markets bounced the other way … all my losing trades involve USD. My eurjpy and gbpjpy trades made modest profits. I have nobody but myself to blame!
Which brings me to the weakness of the system … not really of the system but the application of it. There’s too much correlation if you trade all the currencies ILZ suggested. That can lead to significant losses if a major currency like the USD (especially the USD) goes against you.
So i think in the future i will not enter trades on the day when unexpectedly good or bad news hits the market. I need to think a bit more about the correlation risk, my instinct is to only have one active dollar trade at a time but there may be better ways to do this.
@forexboy9: I recall ILZ stating he will usually exit positions before significant news events occur, or at least keep a close eye on them.
I have been following this thread and trying to acquire more knowledge on forex as a whole. I think this is a good simple system to start with and grow my knowledge of trading. Probably demo account for a few weeks, then just jump in (since there’s no substitute for risking real money).
Thanks for the system ILZ. And thanks to all the contributors of this thread (especially abrsive and irvinfitness).
Correct. However, i entered the previously mentioned trades long after the news were out, at least six hours later.
Glad you were able to gain from reading through the thread. In all honesty, there is little reason to demo unless you are just looking for practice becoming familiar with the platform (MT4, etc.). I was stubborn on this and feel as though I wasted the last 2 weeks in demo. The real insight that I gathered was from mechanically back testing the system on various pairs (both those that ILZ trades and others) to determine what pairs are doing well and which ones are not. It takes some time to go back and do, but it is well worth it.
Good luck!
At the moment I have one trade open, EUR/GBR long, entry 0.85778 yesterday 6pm (GMT+1)
Currently -31 pips.
From FXWW markets:
Month-end flows will drive markets today and tomorrow
Like I mentioned earlier today, most of the market is focussing on expected heavy end-of-month flows from the big institutional asset managers who will be rebalancing after big moves on stock and debt markets worldwide.
Most expect these flows to be USD-negative but the AUD is also expected to come in for some heavy selling. Quite a few hedge funds are already positioned short AUD/JPY to benefit from these flows so if they don’t materialise then we could see a sharp short-covering rally.
For now at least, this is what’s driving movements in the market.
Yesterday was a tough day for trend following systems… quite painful.
The 100 pip stop needs to be taken with a little less rigidity… ILZ has said that his average loss is between 30-60 pips. For me, my stop loss responds to established S/R levels and often reduces the 100 pip stop loss.
Having said all that, yesterday was going to be ugly no matter what.
Two trades today GMT 9.00am Oanda
Long GBP/USD @ 1.51682 SL under sup 1.57314
short USD/CHF @ 0.95911 SL above res 0.96144
Error on SL
Long GBP/USD @ 1.51682 SL under sup 1.51314
Price on GBP/USD is still under the 200 SMA, so according to the rules of the system, you shouldn’t go long yet 
The SMA 200 is a guide and if you read back ILZ does enter in these conditions :32:
Well, the first question of his “When to enter” checklist, is whether price is above or below the 200 SMA
I wouldn’t enter that trade, but I hope it goes your way!
There’s a couple of big figures out for the US dollar at 1:30pm (GMT +1); prelim GDP and unemployment claims.
I guess with this system you just have to ride it out?
I’m tempted to enter a pending short on my long EUR/USD position (which I shouldn’t have taken in the first place as it didn’t clear the resistance at 1.2977 by 30 pips).
I got taken out of GBP/USD at 1.51743 secured +61 pips
Also out of USD/CHF @ 0.95775 secured +142 I used a trailing 30 pip stop on both
I’m sorry, I don’t understand…? You said that you entered at 1.5168, and got out at 1.5174? That’s not at all 61 pips, that’s 6 pips!
The same for your USD/CHF trade… Not 142 pips, but 14 pips…
I’m not trying to be rude or anything, but it’s quite a big difference! :54:
Your right Esser but my broker goes to 5 decimal points Oanda
Open Time Type Size Item Price S / L T / P Close Time Price Commission Taxes Swap Profit
2013.05.30 04:13 buy 1.00 gbpusd 1.51682 1.51746 1.53002 2013.05.30 06:05 1.51743 0.00 0.00 0.00 61.00
2013.05.30 04:13 sell 1.00 usdchf 0.95911 0.95774 0.94825 2013.05.30 05:57 0.95775 0.00 0.00 0.00 142.00
I am on a demo and above is the statement.
I’m on a 5 digit broker as well, but that still doesn’t make the fifth decimal a pip The fifth decimal is called a pipette. You have to divide your “pips” with 10, when you want to compare your trading results with others
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Ok, amend the results to +14 & +6 sorry for the school boy error :8: