Memoirs of a Weird System - GBP/USD Only

Hello,
I am going to test a new system from tomorrow on and thought I might as well post it on here in case it actually interests anyone else other than me
The system is quite unorthodox and I am quite aware of the shortcomings of the strategy I am about to engage in. However, if I did not believe it had potential, I would have tested it on a demo account first hand, which is not the case here. The only thing I like more than making money is managing not to lose it, so I would not play around with my capital if I did not think I have a shot at making it grow.

Ok, so it all started when I replied to a thread yesterday about someone asking whether 20 ticks daily target on the Eurostoxx futures was enough. Obviously, what is missing here is size. Id personally be fine with 20 ticks if I trade 50 contracts.
Hence the new system. I will attempt to focus on what I consider high probability trades and aim at relatively small profits, only to progressively size as we go. I will take a break from trying to pick tops and bottoms or looking for usually elusive hundreds of ticks per trade cause Ive established after the years that it's not my strength.

What? Cable
When? 7am - 5pm
Where? IG Markets
Starting capital is £500. This is a mini account therefore mini contracts with a $1/pip value per lot. 2 lots will be traded.
Profit target will be 30 pips on ALL trades. Exceptionally, I may let one trade run if I see serious momentum, for instance if I am on the right side of a rumor or a BoE member's comment.
Stop/Loss will be 15 pips on ALL trades and will be raised to BE when I am within 5 pips of profit target.
Now the peculiar aspect of the system is that I will have a daily profit target of 30 pips. That does mean that if my first trade is a winner, I am done for the day. On the other hand, I wanted to set a fixed limit on the downside (45 pips), but I will just keep that as a yardstick for now and I'll see after a few days if I will implement it rigidly. Note IGMarkets have an average 3 pip spread on cable therefore stop and take profit orders will be triggered after absolute price moves of 12 and 33 pips respectively.

So that's it, let's get it started. I do not use any price derivatives and indicators for my decisions. Just observation of price action and news flow. Therefore charts will not be needed most of the time, unless there is a compelling candlesticks formation for instance. And based on the size of R:R, trade should never last longer than 45-60mins so I'll try to post as quickly as possible to keep the last bit of credibility I have left. I will give it a full week and assess next Friday. Hopefully the account will have some left.

Hello,
Little delay posting first trade.
Short 6408, SL 6420, Target 6475 at 07:58.
Cleanly wiped out by the current rally.
-15 on the day.

Hello,
We have a second one.
Long 6468, Target 6500, S/L 6456.

Stopped out. We've been in a 55pips range for the past 2hrs. We'll see how the day develops, but it seems quite slow today so I may let it go until monday.
-30 for the day.

Anne Onymous,

I haven't seen you around before and I've been on these boards for a good while now. Just wanted to comment on your posts and don't mean any disrespect by what I say at all just trying to be constructive.

I really think that these random "systems" are just another one of the reasons people don't get anywhere in this game. I know there are an infinite number of ways to trade but I've sat with a few pros and know just as many more and no one trades in the way you are outlining above and would laugh at the notion.

Why have a profit target of 30 pips? This just seems completely nonsensical.

You should let the price action define your target

Why would you want to limit a winner? That practice should be confined to your losses only.

Conversely, why would you want to shoot for 30 pips if the price action shows you it's only going to give you 20?

Again, why a 15 pip stop? The market should define where your stop goes, not you!

You seem to be imposing what you want out of the market rather than listening to what the market wants to give you.

A stop should be placed where the idea for the trade is WRONG.

A target should be placed where the idea for the trade has been PROVEN to be CORRECT and you feel this is the limit of what you can expect out of it.

Conversely it seems like you are basically saying "f*ck what the market does, I want to get 30 pips a day to make a good living and I'm only prepared to risk 15 per trade to do it".

Unfortunately things don't work like this and this is why no one that makes a lot of money in this business does that.

As an example of one of my own trades this morning (because it was also in GBP/USD) I took this setup that occured at 6 AM GMT. I took the candlestick marked which came at a high probability turning point. I was only WRONG if it took out the lows which meant, in my opinion, regardless of what I WANTED to risk in number of pips, the stop had to go 48 pips away. So I adjusted my risk on the trade to only be a percentage of my account and set my TARGET which was defined by the market (the next resistance). The target which was 92 pips away was hit and gave me an R:R of 1.91:1 which is not at all bad for a day trade and near enough what you were aiming for anyway.

If you trade with common sense you can up your size quickly without needing to say "I'm only risking 15 pips so I can trade more lots etc"

Which brings me to my final point: Although there may be some, I personally don't know anyone that tries to day trade FX without chart based reasoning (unless they are a bank or market maker etc). You say you are looking at price but what exactly are you looking at? The ticker? At the same time, trading news flow is the quickest way to the poorhouse...

Anyway, best of luck with your venture and I sincerely wasn't trying to have a go - just to be helpful.

Tom

Hello trader_dante,

I understand your reservations. As I said at the beginning, this is an experiment. That is, this is a parentheses in my trading activities. I am long cable since yesterday afternoon in fact, and using fixed risk and reward targets is not my usual way of trading. However, I believe I can constantly better myself, and this experiment, even if it is a total disaster (as it is on its way to) may teach me even just 1 thing that will allow me to make an extra tick later on. This is why I am doing this. I believe in evolving trading habits, and Im sure all your pro friends, and mine, who have made money have had to adjust their strategies along the way and will have to keep doing so.
Perhaps this system seems ridiculous to you and to them, I fully understand that, but so did heliocentrism at some point. Now Im not using comparable scales obviously but my point is Im just trying to move forward, and I hope this is just a step towards something I had never thought of before maybe.
And yes Im looking at charts, candlestick chart to be precise, 5-30mins.

tenbobtrader said:

good observations TD as per your usual posts

will delete post to keep thread clean later

Q: why do you consider it high probability turn spot

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Look at daily chart. (chart 1) Tight sideways range forming. Clear battle between buying and selling pressure. Lots of long supporting tails at the bottom of the range. I figure that there are two possibilities here:

Either a) We take out the overhead supply and shoot up to the next MAJOR level around 1.72.
or b) We are going to really tank.

Obvious, right?

However, if its b thats going to happen, the easiest way for the market to hurt the most people would be to take out the topside resistance first and pull the headfake and then collapse.

Notice how both scenarios result in a push upwards first. lol

Switch to hourly (chart 2) Nice reverse H&s has formed. Good s/r pivot and we get a pin into it at 6am. If it was going to happen, it was going to happen here (to me anyway).

Ok sorry to derail the thread - Anne you can get a mod to delete this after Tenbobs seen it if you like. Anyway, you seem cool, back to you!

-Tom

tenbobtrader said:

good observations TD as per your usual posts

will delete post to keep thread clean later

Q: why do you consider it high probability turn spot

Click to expand...

Hello,
Please do not delete trader_dante's post as it's useful for people who may think that trading is as simple as what I have outlined in the system.
And as for high probability, Id say that Im looking at existing short term trends within larger contexts and psychology, as in candlestick formations and conflict zones like that we are in the middle of now. Im big on Dow Theory.

Anne Onymous said:

I am long cable since yesterday afternoon in fact...

Click to expand...

Anne,

Careful now!!

Long Cable since yesterday afternoon (without telling anyone) and then making a short call on a public thread with so many people watching??

Any more of that and you'll get your reputation ruined like mine when people ask you why you are doing one thing and saying another

No one seems to understand the concept of being long on one TF and short on another or vice versa. lol

Right, I swear I won't derail this thread anymore. A mod can delete my posts if you wish.

All the best with your experiment

Hehe

Im not trying to make calls or anything. Im not a market prophet unfortunately, and Im more often wrong than right? That cable trade must have been an exception, albeit on small size unfortunately Will exit it anyways now, it ran its course. And let's refocus on this system. This is just a position keeping journal, Im obviously not trying to give some trading ideas to anyone, especially with a system that unlikely to succeed. But you never know. And if my reputation becomes that poster with wacky systems then so be it, I will stop posting

Ok so...
There has been another loser around 12:15, short 6478, S/L 6490, T 6445.
-45 for the day at that point.
Then at 13:15, long 6498, S/L 6486, T 6531. Target was hit but I let it run but it turn pretty switfly and is now on way to breakeven. So looking like -45 for the day.

Anne Onymous said:

Ok so...
There has been another loser around 12:15, short 6478, S/L 6490, T 6445.
-45 for the day at that point.
Then at 13:15, long 6498, S/L 6486, T 6531. Target was hit but I let it run but it turn pretty switfly and is now on way to breakeven. So looking like -45 for the day.

Click to expand...

lol target was hit but you let it run?!

Not only have you got a dodgy system but you're not even sticking to it!!!!

Anne!!!!

trader_dante said:

lol target was hit but you let it run?!

Not only have you got a dodgy system but you're not even sticking to it!!!!

Anne!!!!

Click to expand...

Hehe, like I said in the description "Exceptionally, I may let one trade run if I see serious momentum, for instance if I am on the right side of a rumor or a BoE member's comment." On that occasion I thought we could ride US Personal Income data a bit more, which was wrong.

I have read some of your previous stuff so I know you know what you are talking about. I'm curious now and will follow along.
If it turns out to be coin flip or dice I'll be very amused.
I'm subscribed ...
Good luck, Nicola

Hello,
Ok back after a magnificent first day String of losses leads to the first rethink and from now on I will stop trading when I am down 30 on the day. So two initial losses or another set of consecutive losses. I usually enter when a short move is already half-established and this is not compatible with the type of narrow range we had on Friday for most of the day. Therefore -30 should mean we are looking at a similar situation and there is no need to pursue.
In any case, could not update earlier as I was quite busy but there was a short taken at 7:05am at 6465, SL 6477 out at 6435 10mins ago. So curtain for today.

Anne Onymous said:

Exceptionally, I may let one trade run if I see serious momentum, for instance if I am on the right side of a rumor or a BoE member's comment.

Click to expand...

you make it sound like rocket science.
why not simply raise your Stop Loss to +30 whenever your trade moves to +31 ?

then wait to see which way the wind blows you ?

Anne Onymous said:

Just observation of ..... news flow.

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doomed Captain Mainwaring, she's doomed

Hello,
Long 6455, T 6485 at 7am on back of very good housing data. Exited after 2mins at 6492 and it was quite intense so did not have time to post it. Day is over again then.
As for the suggestion to lift the S/L to +30 when I hit +31 profit that is what I mentally do but you are right, I will execute it so it will prevent silly conclusions like Friday.

Sensing a bit of flirting from Trader_dante here

Interesting thread

HaloTrader said:

Sensing a bit of flirting from Trader_dante here

Click to expand...

I hope Mr anne onymous is enjoying it ...