MoneyTec Traders Community Forum - View Single Post - Absolute simplest KISS method. Also, how should we measure risk/reward?

permanentjaun · 06-11-2006, 17:09

Sorry I don't see your attachment. I will discuss your post though.

I have evolved the idea to try different avenues. I mentioned earlier that a good key to the success of this system was finding a way to put yourself on the winning side of the trades more than 50% of the time. Right now that key is in the form of a filter. Apparently I came back to the idea of the thread I referenced in my first post. If we wait for 50 pips, on GBP/USD, then it gives us a very good indication of how to place our trade.

Just last night I placed a trade in this matter and banked the 5 pips I wanted. I lowered my TP to 5 since I'm looking at a daily chart. It opened at 1.9020. I straddled that price 50 pips away with my entry orders. A buy at 1.9070 and a sell at 1.8970. They were parent and contingent orders so I could place my exit orders too.

Price moved south to hit 1.8970, and continued in that direction to bank my 5 pips. I could have left the buy order open but decided to cancel it as I had to leave the computer for several hours.

This filter needs some tuning for GBP/USD as well as other currencies it is applied to. We need to calculate the average shadow/wick length of a candle in its opposite direction. For example, what is the length of the bottom shadow when the candle is up? What is the average length of the upper shadow when the candle is down?

We want to find the window that most shadows do not go into yet the bodies do. This way we enter trades in the direction of the real body and not the counter trend shadow. I'm sure I could make it much easier to see in a video presentation.

I'm having trouble convincing myself to move the filter from 50 pips away. I think when we start to increase it to say 70 pips, then we place ourselves in a situation where the TP may not be hit even if we're on the right side of the trade. This happens quite a bit in a ranging market. Also, many times the entry order may not be hit.

Another problem that still needs to be addressed is the stop loss. We can institute a stop loss much easier in this system. Still don't know how much room we should give it though. Would a 50 pip SL save us from one bad trade wiping out the many small profits? Is it too far? Is it too close and we get stopped out even on winning trades? Anyone have any suggestions? Matt

06-11-2006, 17:09	#6
permanentjaun level 1 Join Date: Sep 2006 Posts: 45 Downloads: 0 Uploads: 0 Rep Power: 2	Re: Absolute simplest KISS method. Also, how should we measure risk/reward? Sorry I don't see your attachment. I will discuss your post though. I have evolved the idea to try different avenues. I mentioned earlier that a good key to the success of this system was finding a way to put yourself on the winning side of the trades more than 50% of the time. Right now that key is in the form of a filter. Apparently I came back to the idea of the thread I referenced in my first post. If we wait for 50 pips, on GBP/USD, then it gives us a very good indication of how to place our trade. Just last night I placed a trade in this matter and banked the 5 pips I wanted. I lowered my TP to 5 since I'm looking at a daily chart. It opened at 1.9020. I straddled that price 50 pips away with my entry orders. A buy at 1.9070 and a sell at 1.8970. They were parent and contingent orders so I could place my exit orders too. Price moved south to hit 1.8970, and continued in that direction to bank my 5 pips. I could have left the buy order open but decided to cancel it as I had to leave the computer for several hours. This filter needs some tuning for GBP/USD as well as other currencies it is applied to. We need to calculate the average shadow/wick length of a candle in its opposite direction. For example, what is the length of the bottom shadow when the candle is up? What is the average length of the upper shadow when the candle is down? We want to find the window that most shadows do not go into yet the bodies do. This way we enter trades in the direction of the real body and not the counter trend shadow. I'm sure I could make it much easier to see in a video presentation. I'm having trouble convincing myself to move the filter from 50 pips away. I think when we start to increase it to say 70 pips, then we place ourselves in a situation where the TP may not be hit even if we're on the right side of the trade. This happens quite a bit in a ranging market. Also, many times the entry order may not be hit. Another problem that still needs to be addressed is the stop loss. We can institute a stop loss much easier in this system. Still don't know how much room we should give it though. Would a 50 pip SL save us from one bad trade wiping out the many small profits? Is it too far? Is it too close and we get stopped out even on winning trades? Anyone have any suggestions? Matt