Big Ben on the FTSE100

[Mata Nui]

Not Happy (but my own fault).
I run a demo and live spreadsheet to calculate the entries. My demo correctly calculated 2x for EUR/USD but my live only did 1X.
So win EUR/USD but only 36 points
FTSE just closed at a loss (looked like it was about to go further the wrong way)
EUR/JPY just closed at a loss (ditto)

Leaves me about +3 for the day (which i why i closed early. No way was i going to let today turn into another loss day). At least its a +3. Lets see what tomorrow brings.

 

[tomorton]

Minor change to my expiry times - movng forex expiries from 2400 to US close, same as FTSE100.

 

[tomorton]

Today - 1 win, 1 expired positive, 1 expired negative.

 

[tomorton]

Interesting how a system, which on the face of it seems like a pretty average entry can work so well.

Average is absolutely the right word. This system ignores trend, indicators, news and 95% of the trader's learned skills. Maybe it needs to be severely refined by TA before it can be a principal bread-winner, which is why I had to start the thread. Glad to hear of any enhancements that prove themselves.

 

[tomorton]

Jcols77 - thanks for your message: hope you don't mind me responding here as I have lost messages still in draft.
Small profits, large losses, limiting losses

To establish any profit level, you have to work out where your position will probably run to, in your chosen time frame, based on the grounds for your entry. There is no point looking for a 200pt gain on the FTSE100 today just because yesterday's candlestick was a particular shape.

Limiting large losses - Set a stop at the earliest point that price will reach which proves your estimation of what the market will do was wrong. Suppose you think the FTSE will rise from a certain level and it doesn't but falls by 20pts: at that level, 20pts below your starting point, would you think it would rise at all? If probably not, there is no need to wait for a 30pt or 40pt or 50pt fall, you were wrong, accept it, get out. Ensure that your position size means that a loss at this evel only destroys a very small percentage of your account: the aim of the game is to keep playing, and the only way to lose is to get knocked out.

Entries are important but every entry is a flop if it does not also flag up two exit levels - target and stop. These must be in line with what the market usually does. They must balance each other, either individually in points per trade, or collectively in a predominance of wins over time.

Stick to targets and stops. Entries are easy, like shopping for a shirt: exits are hard, like throwing away a perfectly good shirt or your favourite shirt. But we're not collecting, we're traders.

 

[Mata Nui]

Looks like today is going to be nasty.

 

[Mata Nui]

Yep, Today was nasty.
Only entered FTSE, EUR/USD, GBP/USD all stopped out for total -150 ish

 

[tomorton]

Nasty. My GBP is still running but well down, other two stopped out here too.

 

[tomorton]

Still, have to take the long view. Of 10 full weeks trading BB on the FTSE, only 3 have had more trades stopped out than hitting targets: longest run of stopped out trades is 3.

 

[Mata Nui]

A few days ago, somebody (I think it was you) commented that a number of FX pairs were highly correlated and shouldn't be traded together.

EUR/JPY and EUR/USD were listed as highly correlated, and only one should be traded on a given day.

As you are trading both today, does that mean you are not paying any attention to these correlations?

Cheers

Hi,
I think it was Tomorton who listed the pairs. I have since cut down on the pairs i trade but i did comment that yes, in general some pairs would be regarded as correlated. That doesnt mean though that with this system you will see correlated results. I dropped EUR/JPY but wished i didnt. Today EUR/USD lost but EUR/JPY won.

I think the reason you can get away with (and it may even be a good idea) using correlated pairs with this system is that although they move the same direction over a day or week, because they move within different ranges and at different rates, one may trigger a false break and the other wont move as fast meaning you just get in at the right direction. Thats what happened today. EUR/USD went up triggering the order before dropping out the bottom of the range. EUR/JPY hovered at the top of the range then moved down. Same direction/different range/different movement rate/different result.

 

[tomorton]

I suspect Mata Nui is right, that correlating pairs do not produce the same result simultaneously. And vice versa: today, non-coinciding markets FTSE100, EUR/USD and GBP/USD all had identical charts, and I lost on them all. And all started well, triggering entries very quickly after 10am. Grrrr!

 

[Nigel_T]

I suspect Mata Nui is right, that correlating pairs do not produce the same result simultaneously. And vice versa: today, non-coinciding markets FTSE100, EUR/USD and GBP/USD all had identical charts, and I lost on them all. And all started well, triggering entries very quickly after 10am. Grrrr!

Big red numbers on my account too.

I've followed this thread since it started, and I'd like to tell you how interesting its been. Also I'd like to thank tomorton for his frankness above as he's shared the pain and not found some 'guru' solution to get out in profit. Sincere thanks.:clap:

 

[tomorton]

Cheers Nigel_T.

Two targets hit today, one trade still running and in the money. Goes some way to restoring yesterday's damage.

 

[Shakone]

Ok just some outside views. I haven't traded this system, so I don't know if my comments will help or hinder the system. Also I don't know all the markets traded, but I see mention of FTSE, GBPUSD and EURUSD.

Today FTSE broke out of the 8+9am hourly bar range and pretty much to the pip hit the 1:1 R:R target. GBPUSD went a lot further but hit the target anyway. EURUSD seems to have hit the target as well. Good day.

Yesterday it seems there were losses. FTSE broke out, but the 10am bar closed back in the 8+9am range. Not a disaster, but at least a slight warning signal. 11am bar closed in the money, but the 12am bar closed back in the range. If you weren't thinking of getting out after the first warning signal, you definitely should be now. Price then moved up and let you out for breakeven or a tiny profit. Are you really going to let that hit your stop below the 8am bar after what price is telling you?

Same day, GBPUSD breaks out nicely. Goes a good 40 pips into profit, but doesn't hit the target. Comes back, bounces off the range on the 12am bar (minor warning sign). Now it closes back in the range (major warning sign). Then offered you a chance to get out again for break even or 10 pip profit.

EURUSD moves outside the range. Close isn't strong above the range, but anyway...comes back and closes inside the range. You should be on alert here. Comes up to the top of the range, and allows you out at breakeven, then bounces off the top of the range (the wrong way). Again, if you weren't already out at this point, you would want to be. Even luckier here, in that EURUSD allowed another chance to get out at breakeven. You'd be mad to stay in that and let your stop be hit.

 

[steve79]

Cheers Nigel_T.

Two targets hit today, one trade still running and in the money. Goes some way to restoring yesterday's damage.

What did you trade today tomorton?

My results so far,

FTSE -18
GBP/USD +51
USD/CHF -39
EUR/USD +61
Net +55

Still going,

EUR/JPY - hovering around -8 currently

 

[tomorton]

Ok just some outside views. I haven't traded this system, so I don't know if my comments will help or hinder the system. Also I don't know all the markets traded, but I see mention of FTSE, GBPUSD and EURUSD.

Today FTSE broke out of the 8+9am hourly bar range and pretty much to the pip hit the 1:1 R:R target. GBPUSD went a lot further but hit the target anyway. EURUSD seems to have hit the target as well. Good day.

Yesterday it seems there were losses. FTSE broke out, but the 10am bar closed back in the 8+9am range. Not a disaster, but at least a slight warning signal. 11am bar closed in the money, but the 12am bar closed back in the range. If you weren't thinking of getting out after the first warning signal, you definitely should be now. Price then moved up and let you out for breakeven or a tiny profit. Are you really going to let that hit your stop below the 8am bar after what price is telling you?

Same day, GBPUSD breaks out nicely. Goes a good 40 pips into profit, but doesn't hit the target. Comes back, bounces off the range on the 12am bar (minor warning sign). Now it closes back in the range (major warning sign). Then offered you a chance to get out again for break even or 10 pip profit.

EURUSD moves outside the range. Close isn't strong above the range, but anyway...comes back and closes inside the range. You should be on alert here. Comes up to the top of the range, and allows you out at breakeven, then bounces off the top of the range (the wrong way). Again, if you weren't already out at this point, you would want to be. Even luckier here, in that EURUSD allowed another chance to get out at breakeven. You'd be mad to stay in that and let your stop be hit.

I don't dispute your TA of these trades once they are running. Thing is, being at work and sometimes travelling for meetings, I don't usually have time to do any meaningful TA after 10. The system was set up to allow a set and forget operation and to forgive such a crude (might say stupid) basis for entries. But yes of coutrse, if you see TA going badly against a position, why not get out.

 

[tomorton]

3 out of 3 today, FTSE100, EUR/USD and GBP/USD.

 

[Mata Nui]

No trade for me today. Its half term so had other things to do. I guessed that probability would mean given the not good start to the week today would be a better day. Cant trade tomorrow either, wont be around at 10.

Makes it a -ve week for me.

 

[Mata Nui]

Ok just some outside views. I haven't traded this system, so I don't know if my comments will help or hinder the system. Also I don't know all the markets traded, but I see mention of FTSE, GBPUSD and EURUSD.

Today FTSE broke out of the 8+9am hourly bar range and pretty much to the pip hit the 1:1 R:R target. GBPUSD went a lot further but hit the target anyway. EURUSD seems to have hit the target as well. Good day.

Yesterday it seems there were losses. FTSE broke out, but the 10am bar closed back in the 8+9am range. Not a disaster, but at least a slight warning signal. 11am bar closed in the money, but the 12am bar closed back in the range. If you weren't thinking of getting out after the first warning signal, you definitely should be now. Price then moved up and let you out for breakeven or a tiny profit. Are you really going to let that hit your stop below the 8am bar after what price is telling you?

Same day, GBPUSD breaks out nicely. Goes a good 40 pips into profit, but doesn't hit the target. Comes back, bounces off the range on the 12am bar (minor warning sign). Now it closes back in the range (major warning sign). Then offered you a chance to get out again for break even or 10 pip profit.

EURUSD moves outside the range. Close isn't strong above the range, but anyway...comes back and closes inside the range. You should be on alert here. Comes up to the top of the range, and allows you out at breakeven, then bounces off the top of the range (the wrong way). Again, if you weren't already out at this point, you would want to be. Even luckier here, in that EURUSD allowed another chance to get out at breakeven. You'd be mad to stay in that and let your stop be hit.

Now this really is an interesting discussion to have about this system. Played as is it seems to be quite profitable with about a 60% hit rate (probably more with some of the fx pairs) at a 1:1 rr. If you accept that with a better than 60% hit rate with wins and taking the full loss (if you have to) the system is profitable, then to my mind interfeering too much may be counter productive. As i have said you can afford to take the losses the system gives (they are already factored in) but with only a 1:1 rr can you really afford to miss wins by cutting at BE as soon as you dont like the look of things.

Almost every day the trades reverse (sometimes to within a few points of the SL) and often they reverse again giving a +ve or even a TP win. I am not saying there isnt a lot of merit in what you are saying. I work from home so providing i am not on a clients site or in a meeting i can peek at the charts. What i want to avoid doing is closing a position just because it is going the wrong way (because a lot of the time it does come back).

What i think i will do though is if i see some really good TA that would make me really want to enter in the other direction then i will move my stop to BE or take profit at that point. I will though always be looking to reinstate the order once the price has cleared enough. Over the past few weeks we have seen some good looking pin bars on the 11 or 12 bar signalling that we really could be in the wrong way and i have resisted the urge to pull out. I will say though that these havent all gone to hit the SL.

 

[Shakone]

Yes that's a good point mata nui. If it is working fine for you, then leave it alone and don't mess with it. The simplicity of it interests me though.

One thing worth considering is why the strategy gives a positive return. It isn't the exit, a fixed Risk:Reward of 1:1. So if I consider the entry, entering on the break of a bar or bars is in my view trying to go with the short term trend, and attempting to jump onto some momentum (you may see the reason it works differently).

If I enter, and price comes back below my entry, and then bounces the wrong way off my entry level (or gives me a couple of warning signs), then one of the main reasons for entering (and why I think it works) doesn't really hold any more, because the momentum isn't there at that time. Given that, it may still work, and the trend may be with the trade still, but I would feel my chances of success dropped somewhat. I'd at least want to take off half of the position at breakeven or better to lower my risk.