zupcon
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Hi Mark - Well done for setting up this system - Forex is not my field but I am interested in your entry/exit rules. I have a simple system for the FTSE and Dow, currently 70% and 65% reliable respectively. However, my exit signals are simplistic 2% from entry for both stop and profit target, so the winning and losing trades make or lose the same amount each. How do you ensure your winning trades will make more than the losers lose?
PS - I find that if I reduce the % stop and target limits from entry to 1%, the win rate really suffers.
Hi Mark - I am taking price reversal over 1 hour charts: I do hope to add other criteria such as MA as a trend indicator or anything else that works but nothing so far seems to increase these win ratios. Hence my interest in maximising the winners. All I can do at present is close half position at 2% profit and run the remaining half another 1%, usually works. Stops are set initially at 2% net loss then trailed at -2% from best price achieved once price has gone into the black by 1%. I do see that I am leaving some profit on the table - I can live with that, but if I can build in an objective trade management rule set that takes up some of this money I would like to. Once you're well ahead on the trade, what are your rules to maximise gain?
Mark - you're asbsolutely right, I must go back over the system's results and see how running profits beyond 2% would work, I can see my backtesting and trading has not yet been fully developed.
However, I suspect that holding for much beyond a 2% gain would take the holding period outside FTSE100 and NY market hours before the target is reached, and this strategy has so far been able to avoid overnight positions - using SB for this I find that their quotes outside the exchange hours will often spike up or down to my stop. So I suspect I might squeeze another % or so but that's probably it. Nevertheless, what you say has motivated me to this research. Best wishes.
Mark - you're asbsolutely right, I must go back over the system's results and see how running profits beyond 2% would work, I can see my backtesting and trading has not yet been fully developed.
However, I suspect that holding for much beyond a 2% gain would take the holding period outside FTSE100 and NY market hours before the target is reached, and this strategy has so far been able to avoid overnight positions - using SB for this I find that their quotes outside the exchange hours will often spike up or down to my stop. So I suspect I might squeeze another % or so but that's probably it. Nevertheless, what you say has motivated me to this research. Best wishes.
I like this statement you mentioned. "So I suspect I might squeeze another % or so but that's probably it". Lets not forget that going from 2 to 3 % is a 50% increase and if this system is still 65-70% accurate that sounds pretty dam good to me. Wins will then be 1.5 times your losses so you only need to have an accuracy of above 40% to be profitable.
regards Mark
Today i decided to put pen to paper and write out what i would like to achieve and how i would go about doing this as Van K. Tharp suggests in his book "Trade your way to financial freedom".
I ended up writing for about 3 hours and unintensionally wrote out a complete system based on my beliefs. I ended up designing an oscilator trading strategy that i would like to use in forex.
This is the first system i have attempted and have done a quick test on 3 currency pairs (by hand) on 5 days of 5 min data. They came back looking pretty good. with about 60% winning trades and twice the size wins as loses. Im trying to be very carefull at this stage (of dare i say) "Optimization" as i just guessed 25 pips as a good stop level.
I obviously need to test this system against alot more back history on forex if anyone can suggest where i can get 5 min data for a couple of years on the popular currency pairs for as little as possible and what anyone thinks about trailing stops to lock in profits as i think this could help my trading system alot ( will need to add to my test).
Regards Mark
I would not divulge your system too quickly. If you have a winning edge it is best kept to yourself.
Split
I have been wondering lately about divulging winning systems (if had one). Its unlikely so many traders would find out about and trade the system so as to make it unviable for me to carry on, through it becoming a target for counter-trades. But my main thought was, what if the system is based on SB chart TA / quotes etc. and my SB firm starts to take painful losses and they track this to the system I had freely broadcast? I suspect they would close my account for all time: I think they reserve the right to do so with impunity. I also suspect there will be some implied duty arising from our contract that I act in good faith and not seek to damage the interests of the counter-party, in which case, they might seek damages.
Who's been in this boat, and what happened?
The way i look at it is for example; Tiger woods could write a detailed book telling you how he plays golf and wins, does this mean that everyone who reads this book will beable to play like Tiger? (I think not).
What system is right for one person will certainly not work for most other people, you need to have the psychology and understanding to trade that system rigidly. A winning system is only a very small part of an overall successful trader. ( I believe)
regards Mark
get a ruler/straight line
try " WITHOUT ANY " indicators - (they all lag - by the time its signal is generated, the price has whipsawed) -
draw trend lines - (support/resistance/horizontal AND DIAGONAL)
PRICE ACTION
TREND
If the trend is - UP - You are only looking for " buying opportunities " on a test of SUPPORT - !! (DEMAND)
If the trend is - DOWN - You are only looking for " selling opportunities" on a test of RESISTANCE..!! (SUPPLY)
" BUYING or SELLING CLOSE TO A TREND LINE" is where your risk is " L O W E S T "..... !!
(because the distance between your stop and your entry is " C L O S E S T " .... !! The risk is small, so you have an " excellent " risk/reward ratio - !!
(and you can " still " maintain profitability if your loosing trades are more than your winning trades)..
Really small time frames are hard - its been mathematically proven that no trends exist there..!! - ALL short term volatility is " random " - trading there and running the risk of getting stopped out on random " noise " is crazy. I try and wait for the next level/break-(CROWD TO SORT THEMSELVES OUT) on a wider chart - one thats trending.. !!