Hello,

I've been working on a strategy based on the 5min 7 am UK candle for the GBP/USD pair.

Let's call it the sugi pulla system.

Entry Rules:

You are going to need 2 accounts for this otherwise you will have issues with the entry orders - they will be like stop orders if they are for the same amount.

Place buy order 5 pips above the 5 minute 7am UK time candle and a sell order (on the second account) 5 pips bellow the 5 minute 7am UK time candle.

Place stops at the other end of the candle in both cases (do not include the 5 pips when placing stops).

Place take profit orders for both at 100 pips.

Close your trades if they havent reached either stop loss or take profit before 23:59 EST.

Comments:

I've backtested this strategy using 5 minute charts on FXCM,thus these results would reflect real world conditions and does not have the same problems that backtesting via other means has.

You can certainly backtest this successfully with 5 minute data.

You will often get whipsawed,either on both legs of the trade (long and short) or just on one leg.

Sometimes when you get only 1 leg profitable,it will not reach your take profit but will be profitable when you close it out at 23:59 EST.

I have backtested this with 2 sets of take profit targets,one with a 50 pip take profit and the other with 100 pips take profit.

The second backtest included instances where one leg of the trade was profitable but did not reach take profit while the other was a loss.

The estimates for these trades are not precise but id say it's -+10 pips at most.

Assumptions:

I assumed the 7 am 5 min candle was 20 pips + 5 pips entry = 25 pips.

So I automatically assumed each 1 legged whipsaw was 25 pips and each double whipsaw was 50 pips.

Most of those candles however where less than 20 pips so there's some extra profit margin to be squeezed out of there but I was just being conservative.

Keep in mind this is just 2 weeks of backtested data and the market may have just been favorable to this system over this period.

But also take into consideration the foundations of the system,it can be logically deduced that this system will work in the long run simply because its safe to assume that every now and then the pair in question will travel from its open 100 pips in one direction or whipsaw once and then travel in that direction.

The issue is the number of whipsaws and this can certainly change but I still think its going to be profitable.

If you can do more long term backtesting reliably,be my guest maybe I am just an optimist because this is my pet theory.

Results:

Take profit: 50 pips

8/7/2009: 25 pip profit

9/7/2009: 25 pip profit

10/7/2009: 50 pip whipsaw

13/7/2009: 50 pip profit

14/7/2009: 50 pip profit

15/7/2009: 50 pip whipsaw

16/7/2009: 50 pip profit

17/7/2009: 50 pip whipsaw

20/7/2009: 50 pip profit

21/7/2009: 50 pip profit

22/7/2009: 25 pip profit

23/7/2009: 50 pip whipsaw

24/7/2009: 50 pip whipsaw

Total P/L: 325-250= 75 pips profit

Take profit = 100 pips

8/7/2009: 75 pip profit

9/7/2009: 100 pip profit

10/7/2009: 50 pip loss

13/7/2009: 75 pip profit

14/7/2009: 60 something pips profit

15/7/2009: 25 pip loss

19/7/2009: 35 pip profit

20/7/2009: 100 pip profit

21/7/2009: 50 pip loss

22/7/2009: 100 pip profit

23/7/2009: 50 pip loss

Total P/L: 545-175= 370 pips profit

Warning,unlike my daily breakout strategy (http://www.trade2win.com/boards/for...0-20-pips-every-day-95-profitable-trades.html)

This strategy has a much lower success ratio (the number of times it goes your way) witch statistically implies there's a higher likelyhood of hiting a prolonged period of bad trades that can mess up your account really bad.

So I urge you not to leverage to the hilt with this strategy.

Try and keep those maximum loss potential per trade of 50 pips to 2-3% of your account equity.

PS: I haven't traded this live yet but I am planning to do so this week - this doesn't change the real backtested results in any way.

Good luck.