Memoirs of a Weird System - GBP/USD Only

[Anne Onymous]

Hello,
I ventured into a very risky long @ 6419, S/L 6407, T 6452, and we'll see how far we can pull back here. If it is quickly dismissed a short could follow quickly.

 

[HaloTrader]

I hope Mr anne onymous is enjoying it ...

So do i.

 

[Anne Onymous]

Hello,
Short 6423 this morning. Wed have to break 64s which I think will happen at some point but with my 15pip stop being agonizingly close, with this thin market, I'd be very happy to take it.
Yesterday I was indeed stopped out for 1 pip, so if something similar happens today, at least thats some worthy observation to start taking in.



Edit: 6393 target just hit. I really did not want to lose this one and chase before the potentially deadly NFP/ECB combo so happy to close everything out for the day. I think I will do a little weekly report tomorrow since Friday should be fairly quiet and I may stay away from cable as a result.

Edit: Wait, today is Thursday. Wow.

 

[Anne Onymous]

Hello,
So I sold 6404 around 8:15am, target at 6371 we'll see if we reverse that far for now. Stocks futures should lead us there though hopefully it will be before I get stopped out.
I'll comment on the first week once Im done today. Sincerely hope I will be up on this first one.

 

[Anne Onymous]

Weekly Summary

Hello,

A little report to wrap up the first week and also sharpen up the whole project.
First of all I have made some trades using this account inadvertently plus I wanted some cash to buy a few things therefore I have cleaned it up and I am back to £500. From now on I will try to make sure only trades using this system are undertaken and that capital is not removed so that I can at least entertain the illusion that I will increase size as it grows.

Last Friday was by far the worst day, with a cumulative loss of 45 pips. There were 5 trades, 3 losers and 2 evens. Im fully aware that I overtraded on that day as I wanted the first day to be a good one, and that was silly. It led to the 30pips daily downside cap rule, which I will keep for the time being. Once I have a more reliable sample of trades under my belt, I'll have a look at some probabilities calculations and assess if something like the theory of runs can suggest a more scientific figure.
Then I managed to trade a winner on the first trade of the day, usually between 7am and 8am, on Monday, Thursday and Friday. I did not trade using this system on Tuesday, and ended up at -15 on Wednesday as I traded a loser then did not find an opportunity to confidently trade again.
So overall, +30 on the week, with 3 winners, 4 losers, and 2 evens. I am confident I can keep a greater than 33% success ratio so let's go for another week to test it out.
As for the suggestions, to let profits run beyond 30pips is obviously a given which I advise myself in a general approach but the point of this system is specifically to test the relevance of a fixed profit target. So far, although I may have made more money, letting profits run costs me a winning trade. Also, there is a psychological advantage I appreciate a lot which is that I am able to completely shut down my computer once I reach the 30pips, removing myself from the market, instead of facing the quandary of position exit. No worries about the next target, stop or trailing S/L, pyramiding, scaling out... Of course I still do it otherwise, but this system I guess is an attempt to seek whether one can generate money with a bit more peace of mind perhaps. I never get more than 30 ticks on a winner, but on the other hand I dont get greedy or worried of losing it if I made 70 either, therefore there is embedded discipline for the next trade. Ive always been discretionary, but if there is something I would like to systematize to improve my overall game it is my emotions. Perhaps this system will help me do that.

 

[meanreversion]

What criteria have you selected which will determine when/if your experiment is a success/failure?

 

[Anne Onymous]

What criteria have you selected which will determine when/if your experiment is a success/failure?

Hello meanreversion,
Good question. As far as I am concerned, this experiment cannot be a failure. No matter how wrongly things go, as in I lose everything within the next few days because my stops are too tight or because my target is too close and keeps me away from large gains, I will have lessons to take away. In fact, I would not even mind as it would only serve to reinforce the accepted belief of letting profits run and keeping stops at a reasonable distance. You can fail your CFA but you cant fail your practice CFA. Therefore what matters to me is to run this out, then once I decide to incorporate or not some of the ideas mentioned into a "serious" money-making-driven system, I will be able to look at my P&L and assess whether this was all worth it or not.
As for the when, I do not think I will work on this for more than 6 weeks. Based on the very short time frames I am using for my decision making, 6 weeks should be statistically significant enough for me to move forward, albeit a bit short. However, as you know markets evolve quickly, and I will want to make sure I apply the lessons learned in a similar environment. I did not pick cable out of a hat, nor were 15 and 30 chosen at random. They were deemed to be suitable based on my trade entry strategy and I would want to use them while the market operates according to the same geometric characteristics as it is now.
Also, I will stop with the trades updates because it is of little use. I will just do weekly recaps since it is not a live calls thread.

 

[meanreversion]

In my opinion, people spend far too long agonising over entry and far too little time on exit. Most people have a stop in mind, but what about when the position starts to go in your favour.. are you looking for a certain return, or maybe install a trailing stop etc. You could also get out of the trade if the original signal "fails" (although I suspect you will have been stopped out by then anyway). I don't scalp trade, but I suspect that "feel" for the market is crucial as you are only looking for small moves...... or you could spend 10 years and $100mio developing a trading algorithm like Goldman Sachs have, your choice..

 

[Anne Onymous]

Indeed feel for the market is important to me.
As for focusing on the exit and trying to figure out whether I should implement a trailing stop or else, this is exactly the opposite motive to what this experiment is all about.
I appreciate all the suggestions, but I am not trying to test various things in order to find out what the best way to trade and make money is. Maybe trailing stops are the answer, maybe not... I am testing this fixed target/stop-loss system precisely to determine that.
This is why I created a thread. This system is unorthodox and seems foolish since it ' includes principles usually seen as typical beginners mistakes. I just want to make sure it cannot be worked out under specific circumstances by someone who is not a beginner. And if it does not and sort of proves the need for trailing stop losses then great.

 

[Anne Onymous]

Hello,
Ok another week gone by, which means I will have to wait 72hrs before I can trade again when I shut everything down in a couple minutes
This week was fine, I think I have learned a couple things about how to better deal with the shortcomings of my strategy and improve my entries picking. With such a small stop/loss amount I need to put extra care into identifying when the market is ranging, or at least undecided about short-term direction. This is obviously why I avoid night time for example and also rely on news flow because I need insight about what market participants think. Of course I do believe that looking at price action can allow one to decipher market psychology; a hammer in a downtrend will warn you to protect your shorts. But with 15 pips S/L on cable I basically need to know that a hammer is coming before it actually appears, and knowing that UK PPI is around the corner, or that a DJ company is going to announce EPS is important in that respect (I think )
Anyways, breakdown is as follows: Monday -15 (I had a a chance to turn it around but I took a nap around noon and had unfortunately disconnected my speakers to print out something so I couldnt hear the alarm when entry was hit (and that will NEVER happen again ahah)); Tuesday +30; Wednesday +30; Thursday -30 (on the first trade price went 3 pips over my stops before surging the other way.. it's not the first time this happens but I will keep monitoring before amending the S/L. I should have known better and not traded before BoE announcement anyways); Friday +15 (loser then winner but only an hour before UoMichigan figure so I decided to stay away from the vol subsequently generated and keep my winnings safe). So +30 on the week again, let's try to better that next week!