Sniper Forex System

[GumRai]

Well for a start, say you always use 100 pips as your SL. What if the actual risk need only be 30 pips (based on whatever method or system you are using). Your just p1ssing away 70 pips for nothing when you could have closed out the trade already.

Your SL also affects how much your posistion size is worth. So I'd always establish my risk in the trade before entering, and not just using 100 pips or whatever.

So, using Sniper, can you tell me how you manage to establish the risk before entering?

 

[AcuteAngle]

First check the level of the Sniper stop, or previous high/low as (as per the manual). Lets assume its 60 pips.

When you've got your SL point, you need to calculate your size. Lets say you risk 2% of a £10000. That means you're risking £200 max. Lets also assume we're trading mini lots on G/U.

With a max risk of £200, divided by a SL of 60 pips, and then divided by a pip value of £0.61, you can risk 5.5 mini lots, or round it down to 5 if you like.

5 x £0.61 x 60 = £183 risk total.

If the SL was only 40, you could be trading 8 lots for around the same risk.

You can see how you adjust the size of your position based on the pip risk and why its important to establish this first.

 

[ougoah]

So, using Sniper, can you tell me how you manage to establish the risk before entering?

Personally, I risk no more than 2% on my open trades. This isn't a Sniper rule per se, but something people generally agree upon as sound money management, regardless of the system used. If, rather than keeping the % risk constant, you decide to keep the $/pip constant, then in a highly volatile market, you account might be wiped out very quickly. The larger the stop loss is in this case, the larger the risk, since risk = stoploss x $/pip.

One thing you lose by setting a constant risk % is a definite relationship between pips gained and $ gained, as said in Salvador's post, so that at the end of each month, you might see yourself making pips, but not money (which, by the way, is a clear demonstration that pips are not units of currency).

However, in the long run, I would guess, without proof, that a gain in pips probably corresponds to a profit in dollars. I say this because Sniper seems to work for stoplosses of any size (within a reasonable range), which means that for any $/pip value, the system seems to be profitable.

I think it's interesting to look for potential market conditions in which a system doesn't work. If a system works only when the market is highly volatile, then the losses encountered in low-volatility periods (high $/pip) may outweigh the profits from high-volatility periods. However, that's just a hypothetical situation. Just like if GBPUSD stopped trending, then Sniper would no longer be profitable. Whether these scenarios seem plausible or not is for each of us to judge based on our own intuitions.

But it does amaze me that amidst all the randomness of the market, there seems to be sufficient regularity in it that makes it possible to make a profit using a system of rules like Sniper.

H

 

[salvadorveiga]

salvador,

Hey, don't apologise for your English, seems like it's better than mine and I am a native speaker.:cheesy:

Very interesting, possible to be negative in pips, but still positive in cash. And vice versa.
I would hope that when people refer to pips profit/loss that they are using a constant investment per pip otherwise it would be very confusing.
Likewise, when using the stoploss to dictate the variable investment per pip, it should be reported in cash gains/losses or as a percentage of the bank.

Using a system like this, I prefer to use the same value per pip for each trade, whereas you will set the level according to the stoploss - who's right or wrong? Well it's just possible that we may both be right.

To be honest with you, it just never occurred to me that people posting their results in this thread were maybe using different values per pip for each trade. I took it for granted that if people were dealing at 1 Pound per pip, it would be the same for every trade. Ie a 100 pip gain equates to 100 Pounds and a 50 pip loss is 50 Quid down the gurgler. (Obviously if dealing in lots, the same lot value)

Greenfield, Kent and Trendie, which system do you use? Do you use the same lot value for every trade or adjust it to the stoploss?

Well I don't know for others but that's why I never say how many pips I gained... actually I don't keep track of the pips I gained since I find it's not importante because of the things I mentioned...

When analysing my bottom line, I look for %'s and R-multiples (R is amount risked per trade, so if a trade gains 5R I gained 5x what I risked).

Mathematically speaking a fixed lot size approach will always lose to an adjusted sizing position on a constant risk level... i guess a fixed contract could be viewed not totally as martingale but as semi-martingale.

Antimartingale (fixed fraction etc) they increase positions the more you win, and decrease when you lose. Martingale is the opposite. A fixed lot approach could be viewed as semi approach i guess. when you lose, while not increasing the position, yet, the % risk at stake increases everytime you lose because you have less capital therefore you need more leverage to maintain that same contract. the same thing goes when you start winning, you don't increase positions as anti martingale...

Note: really amazed how this thread flows... didn't expect from last night to today to have almost 3 pages to read... it's nice to exchange views perspectives and opinions

 

[salvadorveiga]

All the stats and numbers are very interesting indeed. As I'm based in UK spread betting forex is preferred choice as it is tax free.

I would like to understand why a fixed stop loss is a bad idea?

Lets take the following example:

My capital is £10,000
I'm prepared to risk 1% of capital on each trade = £100
£1 pound per point (per pip)
So naturally stop loss is set at 100 points (100 pips)

Is there any reason why stop loss can't be set at 100 point for each trade? Why fixed stop loss is bad?

because markets change, volatility is always changing... so what looks to be a good stop loss now in more volatile environments you'll be stopped out over and over... and in more calm environments probably that stop loss would be too large and you wouldn't fullfill all potential of the system to collect profits...

So with a fixed stop loss since markets change due to volatility (we can talk of any timeframe, volatility in 1H timeframe is always changing as well just pull up an ATR or something) you may be in the right side of the trend but you'll be out over and over due to bad stop placement... money management here won't save you, being stopped out a over and over with money management would only make you lose money slower than without money management.

of course you could say to go then with a very large stop loss, but then it would be counter productive to the system since you could deploy bigger positions risking the same % capital.

I for instance use some multiple of ATR on my systems. I rarely get stopped out, i only get stopped out when a trend changes or someting... i rarely get stopped out on those consolidations of the trend or in more volatile periods during a trend due to stops being to close... usually it happens we having a stop close and getting stopped out in the middle of the trend just for it to continue without us... i would say with this approach i rarely rarely get stopped out due to those reasons...

btw a friend of mine was the other day telling me this story, this regarding position sizing and stops... this guy is a professional... he's probably in my opinion the best trader i have been able to talk with and i put him side by side with the great names such as Seykota and Bill Dunn, his mechanical systems are a delight to be seen..anyways he was telling me a friend of his approached him with his system and in 1 year he transformed 20k or 30k i don't remember to 120k more or less...

This friend of mine told him "I won't congratulate you... by using fixed lots you lost an incredible opportunity and instead of having 120k on your account by following a fixed fraction approach you'd have 7 times more capital..."

Have a great weekend

Best,

Sal

 

[salvadorveiga]

Well for a start, say you always use 100 pips as your SL. What if the actual risk need only be 30 pips (based on whatever method or system you are using). Your just p1ssing away 70 pips for nothing when you could have closed out the trade already.

Your SL also affects how much your posistion size is worth. So I'd always establish my risk in the trade before entering, and not just using 100 pips or whatever.

exactly... why use a 100 pip stop loss when probably the market doesn't need so much room? perhaps at times only needs s/losses of 40 pips...other times will need stopp losses of 200 pips it all depends on volatility... and this will take an effect as well on your W/L ratio, at least in the R ratio... My aim is to get at least a trade of 2R (2 times what i risked so if i risk 50 pips i want at least 100 pips...) so if you risk 100 pips everytime and the market is quiet, a move of 200 pips may be a lot hence harming your R ratio as well

 

[salvadorveiga]

First check the level of the Sniper stop, or previous high/low as (as per the manual). Lets assume its 60 pips.

When you've got your SL point, you need to calculate your size. Lets say you risk 2% of a £10000. That means you're risking £200 max. Lets also assume we're trading mini lots on G/U.

With a max risk of £200, divided by a SL of 60 pips, and then divided by a pip value of £0.61, you can risk 5.5 mini lots, or round it down to 5 if you like.

5 x £0.61 x 60 = £183 risk total.

If the SL was only 40, you could be trading 8 lots for around the same risk.

You can see how you adjust the size of your position based on the pip risk and why its important to establish this first.

dont forget GBPUSD pays in USD so you have to adjust your trading capital to USD.

My account is euros. So let's say I have 10000 €. Sniper issues a trade.

If the quote currency is USD then transform it into dollars. 10 000 * 1.42 = 14,200 USD

1% is 142 USD. I'll use an easier calculation for the size which is pretty much straight away than claculating pip per value etc etc... we know 1 pip is 1/1000th of 1 monetary unit. So the math here is just :

Amount at risk/ pips in monetary unit form. 1 pip is 0,0001 units.

So the math is 142 / 0.0050 (stop loss of 50 pips) = 28,400 USD

so this is 28 micro lots i think, round up is 2.8 mini lots and 0.28 standard lots. (im not used to the whole lot thing...fortunately my broker lets me buy whatever amount i want... i can buy 28400 worth of USD or 28443... this enables me to have an exact % risk position instead of rounding up... I do have an account in another broker that uses lots... but even if i have 10 or 20k in it i always chose micro accounts so i can have positions the closest possible to the risk %'s i get instead of rounding up in bigger chunks)

 

[salvadorveiga]

Personally, I risk no more than 2% on my open trades. This isn't a Sniper rule per se, but something people generally agree upon as sound money management, regardless of the system used. If, rather than keeping the % risk constant, you decide to keep the $/pip constant, then in a highly volatile market, you account might be wiped out very quickly. The larger the stop loss is in this case, the larger the risk, since risk = stoploss x $/pip.

One thing you lose by setting a constant risk % is a definite relationship between pips gained and $ gained, as said in Salvador's post, so that at the end of each month, you might see yourself making pips, but not money (which, by the way, is a clear demonstration that pips are not units of currency).

However, in the long run, I would guess, without proof, that a gain in pips probably corresponds to a profit in dollars. I say this because Sniper seems to work for stoplosses of any size (within a reasonable range), which means that for any $/pip value, the system seems to be profitable.

I think it's interesting to look for potential market conditions in which a system doesn't work. If a system works only when the market is highly volatile, then the losses encountered in low-volatility periods (high $/pip) may outweigh the profits from high-volatility periods. However, that's just a hypothetical situation. Just like if GBPUSD stopped trending, then Sniper would no longer be profitable. Whether these scenarios seem plausible or not is for each of us to judge based on our own intuitions.

But it does amaze me that amidst all the randomness of the market, there seems to be sufficient regularity in it that makes it possible to make a profit using a system of rules like Sniper.

H

Agree. in my opinion trending systems will always work, they can have bad periods for some extended times but if there are no trends how can markets move? especially in lower time frames like the 1H and such there will be always trends, even if in the daily the market is sideways...

Here's Daily crude oil for example

http://1.bp.blogspot.com/_l3Np4NrEM.../qU5J2UDX6ks/s1600-h/miNY+Light+Crude+Oil.png

 

[AcuteAngle]

dont forget GBPUSD pays in USD so you have to adjust your trading capital to USD.

Hmm, I don't calculate like that. For G/U, a mini-lot pip is $1 USD and that means (currently) £0.61 GBP, or €0.70 EUR. I take my risk to be on the native account currency, not based on the currency the profits (or loss) occur in. The profits get converted back to native currency anyway.

I agree with your points though. I setup a spreadsheet which gives me the values, which, although not exact, get me in close enough.

Which broker do you use that allows you precise entries like that?

 

[AcuteAngle]

Agree. in my opinion trending systems will always work, they can have bad periods for some extended times but if there are no trends how can markets move? especially in lower time frames like the 1H and such there will be always trends, even if in the daily the market is sideways...

Here's Daily crude oil for example

miNY+Light+Crude+Oil.png (image)

I agree with this also. The key is identifying when the markets are trending, and when they aren't. Trading during a trend is actually pretty easy, its when your trend system gets caught in the chop you start to feel pain.

Right now, I'm not able to evaluate Sniper like that. I just take the entries regardless, but its something I'm interested in longer term so that I can add my own filters.

 

[salvadorveiga]

Hmm, I don't calculate like that. For G/U, a mini-lot pip is $1 USD and that means (currently) £0.61 GBP, or €0.70 EUR. I take my risk to be on the native account currency, not based on the currency the profits (or loss) occur in. The profits get converted back to native currency anyway.

I agree with your points though. I setup a spreadsheet which gives me the values, which, although not exact, get me in close enough.

Which broker do you use that allows you precise entries like that?

it's the same... you just use the math in reverse... i take my account and transform it to usd... you take the pip value and transform it to your native currency... same thing

by the way here's some good articles on money management:

Article Library -- Adaptrade Software

 

[salvadorveiga]

I agree with this also. The key is identifying when the markets are trending, and when they aren't. Trading during a trend is actually pretty easy, its when your trend system gets caught in the chop you start to feel pain.

Right now, I'm not able to evaluate Sniper like that. I just take the entries regardless, but its something I'm interested in longer term so that I can add my own filters.

Well the protection against the chop is either a sound money management plan, so you can endure that phase... diversify into more assets so that when one asset is on sideways, one other asset may be in a trending phase... so diversification in the assets you trade, or some kind of rules that can identify being in a sideways market and use some kind of oscillators... a breakout system in this case would be a good idea...

The broker I use is from my country Orey Valores... spreads are competitive and so are comissions and im able to trade positions down to the penny pretty much

 

[forexkunta]

I agree with this also. The key is identifying when the markets are trending, and when they aren't. Trading during a trend is actually pretty easy, its when your trend system gets caught in the chop you start to feel pain.

Right now, I'm not able to evaluate Sniper like that. I just take the entries regardless, but its something I'm interested in longer term so that I can add my own filters.

I also agree, but the markets are always in a trend of some kind, even when you think they aren't. Looking at the big picture thru Elliott Wave filters in your mind, and looking at the 4H and Daily charts on a regular basis will show that. Whether in a solid long move up or down and then the correction that always follows, it is in some kind of move. At the 1h and below charts, it just looks like chop because of the shorter time frames. I have found that Stochastics on the lower charts help to identify "chop" alittle better.
What do you think, Sal.
Kent

 

[AcuteAngle]

Well the protection against the chop is either a sound money management plan, so you can endure that phase... diversify into more assets so that when one asset is on sideways, one other asset may be in a trending phase... so diversification in the assets you trade, or some kind of rules that can identify being in a sideways market and use some kind of oscillators... a breakout system in this case would be a good idea...

The broker I use is from my country Orey Valores... spreads are competitive and so are comissions and im able to trade positions down to the penny pretty much

Good stuff thanks Salvador.

 

[AcuteAngle]

I also agree, but the markets are always in a trend of some kind, even when you think they aren't. Looking at the big picture thru Elliott Wave filters in your mind, and looking at the 4H and Daily charts on a regular basis will show that. Whether in a solid long move up or down and then the correction that always follows, it is in some kind of move. At the 1h and below charts, it just looks like chop because of the shorter time frames. I have found that Stochastics on the lower charts help to identify "chop" alittle better.
What do you think, Sal.
Kent

Yes true, and I will be checking higher timeframes to get an idea of trend, but I want to avoid adding more indicators to Sniper if I can. I know a few ideas have been mentioned, but there seems to be no clear advantage to adding anything else (unless I'm missing something).

Of course, I don't actually know how Sniper works anyway, so really don't want to be second guessing it just yet.

 

[salvadorveiga]

Yes true, and I will be checking higher timeframes to get an idea of trend, but I want to avoid adding more indicators to Sniper if I can. I know a few ideas have been mentioned, but there seems to be no clear advantage to adding anything else (unless I'm missing something).

Of course, I don't actually know how Sniper works anyway, so really don't want to be second guessing it just yet.

agree you don't need much more indicators... in hindsight it looks easy... but truth you can never be sure if we're entering or not a sideways phase... if indeed we're in a prolonged sideways phase yes stochastics can help you trade... for example staying with a position and lightening at overbought (in case we're talking longs) and to add on oversold conditions and repeat as long as the sideways phase seems in action. if you see it broke out of the range or something then you can stop doing this...

Of course with this method you will endure a few losses at the beginning of a sideways phase and less profits at the end of a sideways phase because on the start of the phase you still don't know we're in a sideways market so you're still getting whipsawed a bit until you identify the sideways range... once we finish the sideways phase before a possible breakout you won't have as big as position since you had lightened before the breakout or when the oscillator told you to sell, so youll take less profits... but long term it should be beneficial and enable you to have a smoother equity curve... that's my opinion of course

 

[2be]

Yes true, and I will be checking higher timeframes to get an idea of trend, but I want to avoid adding more indicators to Sniper if I can. I know a few ideas have been mentioned, but there seems to be no clear advantage to adding anything else (unless I'm missing something).

Of course, I don't actually know how Sniper works anyway, so really don't want to be second guessing it just yet.

There have already been some very good pointers on this thread as to how this system works. PLease do some more homework, otherwise you will be taking trades with much less understanding and possibly minimise your profit/s or even incure some losses. Adding one more indicator to what you do not understand shall not make a lot of difference, unless ofcourse you understand how the added indocator/s work. If that is the case, stay with what you understand, and try hard to understand the former.
Please do not feel that I am trying to discarrage you and criticise you just for the sake of it. Your account is at stake if you follow what you do not understand, and the pain of blowing a large account might be considerably bigger then spending several hours by studying this system in depths. Pls feel free to PM as on this public forum I do not want to discuss in depths what this system migh or might not be based on.
Regards,
2be

 

[karl6666]

There have already been some very good pointers on this thread as to how this system works. PLease do some more homework, otherwise you will be taking trades with much less understanding and possibly minimise your profit/s or even incure some losses. Adding one more indicator to what you do not understand shall not make a lot of difference, unless ofcourse you understand how the added indocator/s work. If that is the case, stay with what you understand, and try hard to understand the former.
Please do not feel that I am trying to discarrage you and criticise you just for the sake of it. Your account is at stake if you follow what you do not understand, and the pain of blowing a large account might be considerably bigger then spending several hours by studying this system in depths. Pls feel free to PM as on this public forum I do not want to discuss in depths what this system migh or might not be based on.
Regards,
2be

here here.

i downloaded the demo, to compare with my own thoughts. Im worried when i read of novices, getting to serious in the early stages. I think its £100 - yippee buy it, give a month...

If you could simply buy and sell when it told you so, we would all be trillionaires

K

K

 

[2be]

here here.

i downloaded the demo, to compare with my own thoughts. Im worried when i read of novices, getting to serious in the early stages. I think its £100 - yippee buy it, give a month...

If you could simply buy and sell when it told you so, we would all be trillionaires

K

K

This is a good trend following system. To get profit/s one has to follow trend on a given TF. Good hours for this pair is 7am to 7pm or there about.
One of the simplest and workable explanation of thrend has been written by DiNapoli, and his setup comes with MT4 anyway. Anything below or above the white MA he considers to be trending. His book is easly available, read the first 150+pages.

 

[salvadorveiga]

here here.

i downloaded the demo, to compare with my own thoughts. Im worried when i read of novices, getting to serious in the early stages. I think its £100 - yippee buy it, give a month...

If you could simply buy and sell when it told you so, we would all be trillionaires

K

K

i disagree... there are also very profitable systems FREELY available out there... why are we not all millionaires? not many people have discipline and don't know to be consistent...

They are all seeking instant gratification... I think trading is pretty much as dieting and exercising... you need to commit and show up everyday and exercise consistently along with dieting...

You see a lot of people join gym's to achieve their dream body, achieving six pack abs etc... they join the gym etc all excited and how easy its going to be... 30 days later they're nowehere to be seen... either lost interest, or didn't see results so gave up right away, or not dieting correctly (we can say this is the money management ) etc...

again it's a matter of consistency consistency consistency... the fact is not many people are able to be consistent over a larger period of time... either they are hopping from system to system or hopping form time frame to time frame etc etc...