The Alba System Journal- EUR/USD intraday system

[Chocolate]

I've only just come across this thread and I haven't examined it thoroughly, but as I understand it Alba means breakout from European session range (does this mean European morning, or the whole European session till 5pm?). Are the auxiliary tools just common sense support, resistance and basically your feel for the market? If the system was working well except in the last couple of weeks, maybe that's something to do with the current situation - Euro attempting to break out of its previously narrow range. So why might that adversely affect the system?? Any ideas?

If EUR is trending, I can see that the US would be wary of pushing EUR/USD countertrend beyond European extremes lest they receive a backlash the following morning, but I don't see any reason against them getting a headstart on an existing trend and pushing it along. But then what I've said doesn't apply just to EUR/USD, and whether there's any truth in the idea I would welcome comments, analysis or backtesting if anyone's done anything like this. The problem comes down to the definition of "trending" but I'm sure you can come up with something...

If you were more open about your system, I think we might lure some others to come post on this thread and share their thoughts.

It's been a very tough 2 weeks and we're actually negative for the month at this moment. Since the Alba inception, I've never had a losing month so it will be interesting to see what will happen next week. This is one of those times when you can really see the power of good money management

4/10/06 - 4/12/06
Monday: No trades
Tuesday: No trades
Wednesday: -105

4/18/06 - 4/21/06
Tuesday: -33
Wednesday: -138
Thursday: +24
Friday: No trades

Total: -252 pips

Overall track record

 

[Big Pippin]

I've only just come across this thread and I haven't examined it thoroughly, but as I understand it Alba means breakout from European session range (does this mean European morning, or the whole European session till 5pm?). Are the auxiliary tools just common sense support, resistance and basically your feel for the market? If the system was working well except in the last couple of weeks, maybe that's something to do with the current situation - Euro attempting to break out of its previously narrow range. So why might that adversely affect the system?? Any ideas?

If EUR is trending, I can see that the US would be wary of pushing EUR/USD countertrend beyond European extremes lest they receive a backlash the following morning, but I don't see any reason against them getting a headstart on an existing trend and pushing it along. But then what I've said doesn't apply just to EUR/USD, and whether there's any truth in the idea I would welcome comments, analysis or backtesting if anyone's done anything like this. The problem comes down to the definition of "trending" but I'm sure you can come up with something...

If you were more open about your system, I think we might lure some others to come post on this thread and share their thoughts.

Hi Chocolate,

By EU range I'm referring to the open of the EU session up until the open of the US session. There are several articles that have done research in which the findings show that when the Euro can break out of its range from this time frame, it is a good indication that the price will continue in that direction. This is the idea behind the Alba breakout.

As far as the past 2 weeks is concerned, here is what I have to say:

Alba is a purely technical system. The problem is that the past couple of weeks have been fundamentally "confusing" for the EUR/USD. There is a conflict of sentiment right now. Now this is completely my opinion but let me further break it down:

Yield differential- The market thinks that the dollar yield differential has peaked. Can you blame them? With 15 consecutive rate hikes, it's hard to think otherwise. To top it off, if the yield differential has peaked, how can the US attract billions of dollars to fund its deficit?

Rising commodities- More specifically- Crude and Gold prices are increasing. The rise in commodities directly correlates with the dollar index and coupled with the 15 consecutive rate hikes, it looks like US consumers are finally slowing down. Or are they?

It will be interesting to see upcoming news reports to see whether or not consumers are actually starting to slow down. Even with good US data, the dollar is still struggling to gain any momentum. Confusing? You bet it is!

In the massive losses we took, most of them were on dollar positive news reports. Once in the trade, price would continue in our favor for a short period but then would be followed by another strong sell off causing the Euro to rise. The one win we did take, we were fortunate to get in early enough because as soon as our target was hit, the price continued to move back in the favor of the Euro.

Now for the EURO side- Does the ECB really want the Euro to rise? I doubt it. If the Euro goes up, they will have a hard time selling exports which will hurt their economy. This adds to our current dilemma.

In short, times are very strange right now but nonetheless, I will continue to trade. I'd like to see how Alba can perform in these conditions.

Thanks for your comments. It will be interesting to see what unfolds in the next few weeks.

Happy trading!

-BP

 

[Big Pippin]

Forex Trade- 4/24/06- 1 Trade Lost

Unfortunately this week is not starting off good. There was an Alba breakout (albeit an ugly one) at 10:00 am EST and I entered 3 lots short at 2344 with a stop at 2363 and a target at 2335. I was stopped out at 10:50 on all 3 lots. The way things are going this could be the first negative month for the Alba system. We'll see how the rest of the week pans out. Cheers! ~Big Pippin

Results: -57 -9(spread)= -66 pips

 

[Chocolate]

It seems a really nice system and thanks for the really helpful explanation. But you avoid trading the breakout on news - is this usually a good idea?

Here's an idea I have - tell me what you think: trade any breakout after 8 EST (or 7, whichever you use) stop just behind your dotted line, and one hour after entering any trade, move stop to breakeven. If it hasn't got going within an hour, then it's looking messy. If you had done this in the past would that have messed up loads of really profitable trades?

Also, how big do you set your stop behind the dotted line. The thing I really like about your system is that in its simplest form it requires no management - you just set stops and limits and can go home!

 

[Big Pippin]

It seems a really nice system and thanks for the really helpful explanation. But you avoid trading the breakout on news - is this usually a good idea?

Here's an idea I have - tell me what you think: trade any breakout after 8 EST (or 7, whichever you use) stop just behind your dotted line, and one hour after entering any trade, move stop to breakeven. If it hasn't got going within an hour, then it's looking messy. If you had done this in the past would that have messed up loads of really profitable trades?

Also, how big do you set your stop behind the dotted line. The thing I really like about your system is that in its simplest form it requires no management - you just set stops and limits and can go home!

I only avoid trading important news events. During those times, the market goes crazy and sometimes it's hard to determine where the price will go. That's why I wait at least 20 minutes after a news event before looking for a trade.

Regarding your 2nd paragraph. This type of trading works better with the GBP/USD as it tends to have more range. I am actually posting signals on Moneytec's "Intraday Recommendation" forum as I am still testing it out. So far I am having very good results seeing how I just added a few tweaks which is really making a difference.

Regarding your 3rd paragraph. The system is not really a "set and forget" system. Although it is partly a breakout system, there is a little more detail to it. You do have to watch the market. If you are looking for this type of trading then I suggest you look at my signals on Moneytec:

http://www.moneytec.com/forums/showthread.php?t=18745

Happy trading!

-BP

 

[Big Pippin]

Forex Trade- 4/25/06- Breakeven

Well it wasn't a good or bad day today. At 8:10 am there was an Alba breakout and I entered 3 lots long at 2428 with a stop at 2396 and a target at 2446. I knew that the Consumer Confidence report and Existing Home Sales were coming out at 10am so I had intentions to close out my trade before the reports came out. At around 9:50 the price started to go against me and I ended up closing my trade out at breakeven. So no luck today but at the same time, maybe I was lucky as the Euro dropped after the better than expected news reports. Just another reason why the times are crazy right now. We have a weak dollar sentiment but strong dollar fundamentals! What will the EUR/USD do next? Find out next time on (insert show name here) Cheers! ~Big Pippin

Results: +0

 

[Big Pippin]

Forex Trade- 4/26/06- 1 Small Trade Won

Ok so we made a tiny dent at getting back some of our pips from the losses we've taken this month. At 9:10 there was an Alba breakout and I entered 3 lots long at 2437 with a stop at 2421 and a target at 2445. My target was hit on the next candle and I closed 2 lots and moved my last lot's stop to breakeven where I was stopped out a couple minutes later. So it was a very small trade, but I'll take any kind of win at this moment Cheers! ~Big Pippin

Results: +16 +3 -9(spread)= +10 pips

 

[Big Pippin]

Forex Trade- 4/27/06- 2 Trades Won

Finally, we were able to regain some ground after our string of losses we've had the past few weeks. Today we had 2 winning Alba trades. The first came with an Alba signal at 9:00 am EST and I entered 3 lots long at 2430 with a stop at 2427 and a target at 2438. My target was hit at 9:20 and I closed 2 lots and moved my last lot's stop to breakeven. I was promptly stopped out on my last lot at breakeven. After Triple B spoke at 10:00 am there was a nice Alba signal/breakout at 10:10 and I entered 3 lots long at 2492 with a stop at 2429 and a target at 2524. My target was hit at 10:30 am and I closed 2 lots and moved my last lot's stop to breakeven. I trailed my last lot's stop to the low of the candle marked on the chart which is where I was eventually stopped out at 2513. Overall it was a great day and I'm glad we were able to get back some of our losses. Hope you all did well! ~Big Pippin

Results:
1st trade: +16 +3 -9(spread)= +10 pips
2nd trade: +64 +21 -9(spread)= +76 pips
Total: +86 pips

 

[spartz]

Hi BP,

I'm a newbie to forex and want to thank you for sharing your trading with the forum. I have a fair bit of share trading experience but forex seems to be a little different. Following your thread is helping me get a feel for forex before I actually take the plunge.

I agree with you completely that good money (risk) management is the key to successful trading. I would rank it number one, followed by exits, with entry being the least important aspect. Which brings me to my question: If it is not a secret part of your system, how are you determining stops and targets?

My concern is that from your entry point your stops are often wider than your targets, therefore giving you a potential loss greater than your potential gain. In my share trading I refuse to trade anything that does not give me at least a 3:1 gain/loss ratio. Would a risk management "gate" like this work for your system? Or perhaps you have already trialed that without success?

Interested in your thoughts behind this aspect of the Alba system

Spartz.

 

[Big Pippin]

Hi BP,

I'm a newbie to forex and want to thank you for sharing your trading with the forum. I have a fair bit of share trading experience but forex seems to be a little different. Following your thread is helping me get a feel for forex before I actually take the plunge.

I agree with you completely that good money (risk) management is the key to successful trading. I would rank it number one, followed by exits, with entry being the least important aspect. Which brings me to my question: If it is not a secret part of your system, how are you determining stops and targets?

My concern is that from your entry point your stops are often wider than your targets, therefore giving you a potential loss greater than your potential gain. In my share trading I refuse to trade anything that does not give me at least a 3:1 gain/loss ratio. Would a risk management "gate" like this work for your system? Or perhaps you have already trialed that without success?

Interested in your thoughts behind this aspect of the Alba system

Spartz.

Hi Spartz,

You are definitely starting off on the right foot by placing money management as your top priority. Remember you are in this for the long haul and not just for that big "jackpot" trade.

Stops- I can't blatantly tell you where I place my stops but look closely at each chart and look where I enter. Then look at my stop. Although each trade has a different stop (risk), they are placed at the exact same spot every time.

Targets- Unfortunately I cannot give this out but look at the amount of risk I take once you figure out where I place my stops-- then look at my target. The ratio is about the same for each trade so that might help you determine how many pips to go for on each trade.

Regarding the risk/reward ratio-- Yes, Alba is notorious for having a horrible risk/reward ratio. Whenever you have a system with a less than stellar risk/reward ratio, you have to make sure that the system has a high win ratio. With Alba, the win percentage is about 74% at the moment so although the risk/reward is bad, the system still comes up profitable.

When your reward to risk is 3:1 like you mentioned, this allows you a greater margin for error. In your case, you can just win 40-50% of the time and still be profitable because you win much more than you lose.

Either scenario will work. Just remember- the better the reward to risk, the less times you have to win to still be profitable and vice versa. The worse the reward to risk, the more times you have to win to still be profitable.

I hope that helps and I wish you the best in your trading.

Cheers,

-BP

 

[spartz]

Ah yes, I see what you mean about the stops. Too tired to try and work out your targets - way past my bedtime.

I was curious enough though to follow up on my thoughts about the extra risk/reward gate. To date, since 8 March you have a total of 26 trades for 133 pips with 58% of trades profitable. If you only took trades that have a reward/risk ratio more than 1, then you would have only traded 4 times (10, 16, 21 March, 27 April) for a total of 90 pips and a 100% strike rate. Hardly enough data to base any solid conclusions on, especially as you say Alba normally has a 74% win ratio. However, it might be worth checking over your old records to see if there is some merit in the idea of this gate.

Of course, it would be very boring only trading 4 times in two months. I guess that's where you would have other systems working concurrently. And besides, if you want excitement you're better off on the sports field - following your system with discipline should be reasonably boring!

Spartz.

Okay, bedtime for me. Enjoy your day over in the USA. We've finally got some spring weather in Germany. Hurray!

 

[Big Pippin]

Forex Trade- 4/28/06- 1 Trade Won

Today was a good way to end the trading week as we closed out with another win. At 10:50 am we had an Alba signal and I entered long at 2595 with a stop at 2573 and a target at 2606. My target was hit on the next candle and I closed 2 lots and moved my last lot's stop to breakeven. On the next candle I moved my stop to the current low when it made a move up and was later stopped out when the price reversed. I was stopped out at 2612. This is the last trading day for this month and it looked like we were going to have our first negative month, but this week pulled us out of the trenches and put us into the positive zone-----barely! I'll take it over a loss though. Have a great weekend everyone! ~Big Pippin

Results: +22 +17 -9(spread)= +30 pips

 

[Big Pippin]

Ah yes, I see what you mean about the stops. Too tired to try and work out your targets - way past my bedtime.

I was curious enough though to follow up on my thoughts about the extra risk/reward gate. To date, since 8 March you have a total of 26 trades for 133 pips with 58% of trades profitable. If you only took trades that have a reward/risk ratio more than 1, then you would have only traded 4 times (10, 16, 21 March, 27 April) for a total of 90 pips and a 100% strike rate. Hardly enough data to base any solid conclusions on, especially as you say Alba normally has a 74% win ratio. However, it might be worth checking over your old records to see if there is some merit in the idea of this gate.

Of course, it would be very boring only trading 4 times in two months. I guess that's where you would have other systems working concurrently. And besides, if you want excitement you're better off on the sports field - following your system with discipline should be reasonably boring!

Spartz.

Okay, bedtime for me. Enjoy your day over in the USA. We've finally got some spring weather in Germany. Hurray!

Yea that 58% win ratio is actually what brought the system down to being only a 74% win percentage. The system at one point was at over 80% win ratio but the past few months have been brutal

 

[Big Pippin]

Alba results for 4.24.06 - 4.28.06

This week was a good week minus the loss we took on Monday. Fortunately we were able to pull in enough pips to stay positive for the month.

Monday: -66
Tuesday: No Trades
Wednesday: +10
Thursday: +86
Friday: +30

Total: +60 pips

Total for March: +39 pips

 

[hornblower]

when the system kicks in you get a good trade , in the middle of the run up
your getting in too late and getting out too early
I try to get in 8 candles, after your black candle (just when its breaking out)
and out on the first or second second red candle

I pick up 15 /20 points every now and again , as well,and that makes the day

If you are going to sit in front of a computer all day
you must maximise your trades, and get the most out of each trade

 

[Big Pippin]

Forex Trade- 5.01.06- 2 Trades Won

It was quite an interesting Monday as we saw more movement than normal on these days. With the economic reports providing the EUR/USD some juice, we had 2 great trades. The first trade was an Alba breakout which happened at 8:50 am EST. I entered 3 lots long at 2668 with a stop at 2639 and a target at 2686. My target was hit at 9:10 and I closed 2 lots and moved my last lot's stop to the low of that candle. I was stopped out the next candle at 2673. The 2nd trade came after the release of the better than expected numbers for Factory Orders and the ISM report. At 10:40 there was a great Alba signal and I entered 3 lots short at 2623 with a stop at 2669 and a target at 2600. My target was hit at 11:40 and I closed 2 lots and moved my last lot's stop to the high of that candle. I was stopped out at noon at 2612. As far as the long term trend goes, I'm still unsure where this pair will go in the next few weeks but the intra-day movements are still giving us some decent moves. Hopefully the rest of the week will be just as good as today, but of course that usually isn't the case Cheers! ~Big Pippin

Results:
1st trade: +36 +5 -9(spread)= +32 pips
2nd trade: +46 +11 -9(spread)= +48 pips
Total: +80 pips

 

[Big Pippin]

Forex Trade- 5.02.06- No Trades

Well with the big move that the Euro made during the EU session along with the absence of economic reports today it was no surprise that the market was quiet during our session. There's really not much to say because the chart speaks for itself. There was very little movement and the only money I made today was through an online poker tournament I won due to sheer boredom Hopefully the rest of the week will be more exciting. Cheers! ~Big Pippin

Results: +0 pips

 

[Big Pippin]

Forex Trade- 5.03.06- 1 Trade Lost

Unfortunately today was not a good day for Miss Alba. At 10:00 am EST there was an Alba breakout but since it was a news candle (Factory orders, ISM non-manufacturing) I did not enter. Those of you who follow my posts know that I don't like trading news candles. I waited a while and there was another Alba breakout at 10:30 so I entered short at 2597 with a stop at 2615 and a target at 2587. I was eventually stopped out on all 3 lots at 11:00 am EST. Hopefully tomorrow and Friday will be better so we can finish the week strong and start the month off to a good note. Cheers! ~Big Pippin

Results: -54 -9(spread)= -63 pips

 

[Big Pippin]

Forex Trade- 5.04.06- 1 Trade Won

Well it was a good day for Alba as we had a pretty easy win. At 9:40 am EST we had an Alba signal/breakout which is usually a very good indication of a winning trade. I entered at the close of the 9:40 candle at 2643 with a stop at 2623 and a target at 2653. My target was hit at 10:00 am EST and I closed 2 lots and moved my last lot's stop to breakeven. I trailed my stop to the low of the candle marked on the chart where I was eventually stopped out at 2674. It was a quick and painless trade and hopefully tomorrow's NFP report will give us more juice to have another winning trade. Cheers! ~Big Pippin

Results: +20 +31 -9(spread)= +42 pips

 

[Big Pippin]

Forex Trade- 5.05.06- No Trades

Although there was some good movement from the NFP report, I couldn't find a suitable entry. Many of you know that I don't like trading news candles and that is the reason why I didn't enter at the 8:30 candle. After the big move, the price pretty much stalled the rest of the day and I couldn't find a viable signal or breakout entry. As a result, there were no trades today. The good news is that we were able to finish the week positive. Hope you all have a great weekend. Cheers! ~Big Pippin

Result: +0 pips