Absolute simplest KISS method. Also, how should we measure risk/reward?

[Trevman]

those candles were just the oens that stood out im sure theres more that failed just as they did, i just cba to check.

in reply to your above post - 49, 50, 51pips what difference does it make. down there, up here its just as likely to be a point of no return as any other point. entering a trade after 20 pips, 50 pips or any other amount is the same being in the body of a candle does not mean its more likely to complete a trade. the movement can just as easily continue or turn.

[permanentjaun]

Trevman,

That is true. What waiting for 50 pips does, however, is eliminate a lot of the scenerios where you're trading in the shadow where it will reverse. Most of the candles on a daily chart don't have 50 pip shadows. If they do then there is a good chance you'll get to 60 pips and be able to exit with a profit. In the instances where the shadow doesn't reach 50 pips then the body usually does considering the average pip range of GBP/USD. Thats the point, the filter eliminates the possibility of being in a shadow and increases your chances of being in the body where you are more likely to get to 60 pips from open and get the 5 pip profit.

We can't use a straddle of 20 pips because there are plenty of instances where a shadow is only 20 pips and then reverses. Or it hits 20 pips and doesn't move the last 9 to give us the 5 pip profit if we have a 4 pip spread. I'm going to manually research tonight, but what if we use a 100 pip straddle? We'll get less signals, but will they be more reliable?

[Trevman]

how about this, (see attachment - yes it is there this time ) 1pip limit on the key points 1.9000, 1.8900 etc 100pip stop on below key point. basic idea is the key points will provide enough whipsaw to get you your 1pip but wont be enough to stop you out. ofcourse youll have to manually backtest but it should be little effort to see how the price moves around the keypoints.

also if it rarely goes 50pips from candle open could you place a stop at 50 and place your 1pip profit order near the open

[cliffedwards]

Hi fellas..

Been skimming through your thread.. travelling.. very interesting. Need to reread to fully understand but meanwhile maybe attached pdf written by Scott Owens in 04 might be of help..

atachment...

[permanentjaun]

cliffedwards,

Thanks for the pdf. That was recently posted on another forum as well and I have read it over. I'll simply say I don't think those numbers are very reliable. Here is my reply on the other forum:

I'm not so sure I can believe the percentages on the pdf file posted in the thread. Just quickly looking at a GBP/USD daily chart I've found several instances where the price moved 10 pips in one direction and did not give even 5 pips more. Check out 10/18, 10/11, 10/8. Those are three quick examples just in the last month. I don't have the time to bother checking further, but I expect similar trading can be found all through out the chart. If moving 10 pips was really 95% accurate at predicting the next 10 pips then it can only have 2 more instances on the chart. I found those in just 30 candles. So I have to say the numbers in the pdf aren't true. Anyone disagree?


The pdf is almost what the principle of the strategy is though. I'm not sure if it really is measuring the correct thing however. Besides the examples I provided above of retrace after 10 pips, what are the chances of a retrace at 10 pips compared to the chances of a retrace after moving 50 pips? Meaning I think the chances of the price moving against the direction after 50 pips are much less likely.

The last two nights I easily banked my 5 pips with gbp/usd. The positions were closed within seconds of being opened. After some thought I've moved my pip straddle to 60 pips. I think this filters out that many more bad trades where we'd be placed in the shadow. I think it also is short of being caught in a situation where after so many pips the run is stalled and we don't get our pips. If you wait for 110 pips then how much more room does it have to move? It could be exhausted. Thats why I'm not using 70.

I believe there are certain windows a currency moves within. I'm trying to find them. Matt

[permanentjaun]

No doubt price is attracted to numbers such as 1.8800. I'm not sure how I'd play it though. Look at 10/27 on that chart. It crossed a key price level but failed to really continue the move. It took several more candles before finally breaking through. If you use a system that waits for a close to cross the candle then you introduce lag and set yourself up to trade into a countertrend.

You'll have to give some examples of how to trade it. I had a long long day and am burnt out. Look forward to discussing this tomorrow though. Thanks. Matt

Originally Posted by Trevman

how about this, (see attachment - yes it is there this time ) 1pip limit on the key points 1.9000, 1.8900 etc 100pip stop on below key point. basic idea is the key points will provide enough whipsaw to get you your 1pip but wont be enough to stop you out. ofcourse youll have to manually backtest but it should be little effort to see how the price moves around the keypoints.

also if it rarely goes 50pips from candle open could you place a stop at 50 and place your 1pip profit order near the open

[astro]

Originally Posted by permanentjaun

No doubt price is attracted to numbers such as 1.8800. I'm not sure how I'd play it though. Look at 10/27 on that chart. It crossed a key price level but failed to really continue the move. It took several more candles before finally breaking through. If you use a system that waits for a close to cross the candle then you introduce lag and set yourself up to trade into a countertrend.

You'll have to give some examples of how to trade it. I had a long long day and am burnt out. Look forward to discussing this tomorrow though. Thanks. Matt

There was a thread not long ago about playing the round numbers. There were some strategies that can be traded. Search for it and it'll give you some ideas.

BTW, as to the idea of the move up 10 pips after the day open: keep in mind that forex is a 24 hr market, so there's no really a "day open", so basically it's like entering long any other time during the day and hoping to take 10 pips.

Astro

[Trevman]

my idea was taken from this http://www.investopedia.com/articles...topHunting.asp for all the move didnt continue much past it (1.9002 according to the data) a buy at 1.8999 for 1.9000 would have got you your 1pip. i think the idea i'm starting to look towards is when the price is around the 50 price place your orders 1pip from the key level as such.

price: 1.8950
buy order: 1.8999 tp 1.9000 sl 1.8900
sell order: 1.8901 tp 1.8900 sl 1.9000