Settled Trade:
We have backtested this yesterday and ready to put it to real in 2009. This system bascailly utilize 5 min/15 min chart, detail of the system will be published if it works out well in the coming 3 months, thoughts and analysis will be discussed from time to time
1/12/2009: 3 trades,8 Pips.
1/13/2009: 9 trades,14 pips.
1/14/2009: 15 trades,14 pips.
1/15/2009: 14 trades, -6 pips.
1/16/2009: 0 trade
1/19/2009: 0 trades
1/20/2009: 42 trades, 6 pips
1/21/2009: 15 trades, 18 pips
1/22/2009: 32 trades, 31 pips
1/23/2009: 39 trades, 18 pips
1/26/2009: 10 trades, 35 pips
1/27/2009: 1 trade, -12 pips
1/28/2009: 1 trade, 5 pips
1/29/2009: 35 trades, 44 pips
1/30/2009: 43 trades: 8 pips
January: 283 trades, 346 pips
All trading can be found in:
http://spreadsheets.google.com/pub?key=p529a7zpbiaHSyJcazklXXw
Monday, January 12, 2009
Thursday, May 8, 2008
5 pips breakout trading journal - 1. USD/JPY
5/7/2008, USD/JPY was trading in the range of 104.05-104.80, 104.05 provide a good support. Using the 5 pips breakout system.
The setup -
Pair: USD/JPY
Entry point: support and round figure 104.00 breakout point 103.95,
The trade: Sell USD/JPY at 103.95, Limit profit 103.90, Stop Loss 104.15.
Result: the moment USD/JPY broke 103.95, it went all the way to 103.85 in second.
Thoughts: as I pointout in the 5 pips breakout system, large stop of USD/JPY is put around 103.95 - 104.00. That's why price drop 20 pips in seconds.
The setup -
Pair: USD/JPY
Entry point: support and round figure 104.00 breakout point 103.95,
The trade: Sell USD/JPY at 103.95, Limit profit 103.90, Stop Loss 104.15.
Result: the moment USD/JPY broke 103.95, it went all the way to 103.85 in second.
Thoughts: as I pointout in the 5 pips breakout system, large stop of USD/JPY is put around 103.95 - 104.00. That's why price drop 20 pips in seconds.
Thursday, May 1, 2008
5 pip breakout - Peanut and butter for hedge fund
There are a lot of players in the Forex market, they use different strategies to make money. In this example, I will explain one of the popular trading ideas hedge fund use. The 5 pip breakout system.
The Idea - We all know there are supports, resistants and psychology levels in currency trading and those are the places traders usually put their STOPs, especially retail traders. If you pay attention to the price movement, there are high probabilities the price will breakout the supports/resistants or it doesn't touch the supports/resistants at all. Case 1, a clear breakout, price break the level with little or no retracement. Case 2, a fake breakout, it price the level about 10-20 pips then move back. It's the second case that most of retail trader get pushout before they see the price move back to their favorate direction because most of them put the STOPs 5-10 pips around the supports/resistants. We often see when price breakout, its momentum last at least 15-20 pips and the movement usually very quick, in a fews seconds. Why? It's very obvious, trader's STOP get trigger, which push the price move further.
The trading setup - Buy/Sell after the pair pass the N pips of the support/resistant/psychology level. Take 5 pips profit. Set the stop loss for 20 pips.
* N: depends on the pair, different pair have different breakout pips, usually EUR/USD is 3 pips.
The Statistic -
Reward: 5 Pips
Risk: 20 Pips
Ratio: 1/4
Probability of winning trade: 85%-90%
Summary: The ratio 1/4 looks odd. It needs 4 winning trade for every loss trade to break even. But through our research in a lot of pairs, the probability of winning in this settup is higher than 80%, which make it profitable in the long run.
Example -
1. EUR/USD: resistant/psychology level 1.50, Buy EUR/USD if it pass 1.5003, take profit at 1.5008, set STOP at 1.4983
2. AUD/USD: support/psychology level 0.94, Sell AUD/USD if it drops below 0.9396, take profit at 0.9391, set STOP at 0.9416.
Thoughts - Determine the resistant/support/psychology level and findout the magic breakout point N for different pairs are two important factors of this system. And pairs, major or cross tend to breakout together, making multiple trades will lower the risk.
The Idea - We all know there are supports, resistants and psychology levels in currency trading and those are the places traders usually put their STOPs, especially retail traders. If you pay attention to the price movement, there are high probabilities the price will breakout the supports/resistants or it doesn't touch the supports/resistants at all. Case 1, a clear breakout, price break the level with little or no retracement. Case 2, a fake breakout, it price the level about 10-20 pips then move back. It's the second case that most of retail trader get pushout before they see the price move back to their favorate direction because most of them put the STOPs 5-10 pips around the supports/resistants. We often see when price breakout, its momentum last at least 15-20 pips and the movement usually very quick, in a fews seconds. Why? It's very obvious, trader's STOP get trigger, which push the price move further.
The trading setup - Buy/Sell after the pair pass the N pips of the support/resistant/psychology level. Take 5 pips profit. Set the stop loss for 20 pips.
* N: depends on the pair, different pair have different breakout pips, usually EUR/USD is 3 pips.
The Statistic -
Reward: 5 Pips
Risk: 20 Pips
Ratio: 1/4
Probability of winning trade: 85%-90%
Summary: The ratio 1/4 looks odd. It needs 4 winning trade for every loss trade to break even. But through our research in a lot of pairs, the probability of winning in this settup is higher than 80%, which make it profitable in the long run.
Example -
1. EUR/USD: resistant/psychology level 1.50, Buy EUR/USD if it pass 1.5003, take profit at 1.5008, set STOP at 1.4983
2. AUD/USD: support/psychology level 0.94, Sell AUD/USD if it drops below 0.9396, take profit at 0.9391, set STOP at 0.9416.
Thoughts - Determine the resistant/support/psychology level and findout the magic breakout point N for different pairs are two important factors of this system. And pairs, major or cross tend to breakout together, making multiple trades will lower the risk.
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