Forex

I was thinking this morning about my method and an idea occurred to me that has the potential to reduce the losses on losing trades dramatically.

Basically, I’ve noticed that when we have a maximum loss of 35 pips, the trade pretty much always seems to stall at entry point or thereabouts and then retrace to hit the stop. Often, it’s ok if the trade goes 15-20 pips into profit first because we can move our stop to break even, but the losing trades rarely go to 35 pips and then back forwards again into profit. It does happen sometimes but I could probably count on the fingers of one hand the amount of times that has happened.

Conversely, it seems that most of the winning trades seem to go into profit right away, like this afternoons, and just keep going.

So I was just wondering if it might be a good idea to set the initial stop loss a lot closer to the entry point… at say 10 pips? I know this seems very close but my thinking is that it seems for the vast majority of qualifying trades we are moving the stop to break even usually within seconds, or at most a minute or two of the trade going live anyway. Those trades that don’t go far enough for us to move to break even tend to be maximum losers so why not make that maximum loss just 10 pips instead of 35?

Of course I know this means that there will be trades that retrace 15-20 pips before going on to make a good profit and on these trades we would lose instead of win… but I wonder how often that happens with my method. It’s not something I’ve actually monitored but it just occurred to me this morning that most winning trades seem to be straight forward winners without retracing first.

If this is true then reducing the losses on losing trades to 10 pips will significantly increase the profitability of an already very profitable method.

Of course, this is just an idea at present but I would appreciate it if those of you using my method could keep an eye on what happens during the initial stages of the qualifying trades and let me know if I’m right.

Thanks

Filed under Forex,Spread Betting by Graham

Wednesday 7th January

Two more break even trades this morning on the GBPUSD and EURUSD:

Then a 60 pip profit on the EURUSD this afternoon:

Filed under Forex,Spread Betting by Graham

Tuesday 6th January

Looking at the charts Tuesday morning there was a break even trade around 7.30am followed by another one at around 8.30 on the GBPUSD:

(Edit: Sorry I copied the wrong time frames above… it was on the 10, 15 minute charts)

Interestingly on the EURUSD there was nearly a great trade that could have netted close to 100 pips profit but for the fact that the entry points were 18 pips apart and I settled on a 15 pip maximum difference in entry points last year:

There have been a few good trades missed recently because of being a few pips out between the entry points so it may be worth looking at increasing the buffer to 20 pips. I’ll keep an eye on it.

Filed under Forex,Spread Betting by Graham

Monday 5th January

Ok I’m back from a two week break from Tufxp and I notice there have been no daily updates from the tufxp team either so it seems they have had a holiday too. I’d be interested to hear from anyone that traded over this period using my method to see how it faired.

There was a software update when I loaded up TESS this morning and I noticed that it doesn’t download the data or whatever it was doing before that took ages to load, so it now loads very quickly which is good.

There was a qualifying trade on the GBPUSD this morning. Too early for me unfortunately but it looks like a nice 50 pips profit for those that got it:

I did get in on a trade later in the morning but got stopped out at breakeven:

Filed under Forex,Spread Betting by Graham

Apologies for no post yesterday. I woke up with Man Flu and am obviously incapable of doing much at all (except picking superb lay bets). I’ve decided to take two weeks off for Christmas and New Year, partly just to have a break, partly because I’m going away and I’m not confident enough in my Three internet dongle thing to keep me connected during a trade, and partly because the trading will probably be a bit dodgy over the holidays. So I will be resuming trading on Monday 5th January.

For those that want to trade over the holidays using my method and would like to know if they got it right, one of my readers has kindly agreed to e-mail me his trades and profit/loss figures and I’ll post them here. Thanks for that Tom.

Monday 22nd December (Toms trades)

Have had a very hectic trading session this morning! I was fully expecting very little to happen at all.
Had one max loss (within seconds), then a breakeven, and finally ended the morning with a nice 120 pip profit
Hope you managed to get on that one as well.

There was also a very nice trade on the EURUSD at 10:10 and went again for another 100 at least but the entries were 22pips apart. Shame.

Good start to the week anyway

Tuesday 23rd December (Toms trades)

I was only trading for the morning today however here are the results below for the GBPUSD and EURUSD of Dec 23rd

Only 1 Qualifying Trade on the EURUSD at 2:20 on the 10 and 15min chart
Went 50-55 pips into profit, which returning for about a 30pip profit.

No other qualifying trades at all.
 

Filed under Forex,Spread Betting by Graham

Friday 19th December

A nice straightforward trade on the EURUSD in the morning netting around 90 pips profit. Unfortunately for me I was back to school run duties so I missed it:

There wasn’t anything else in the afternoon.

Filed under Forex,Spread Betting by Graham

Thursday 18th December

I had one of my quickest trades this morning on the GBPUSD. I’m still setting my Order to Open 4 pips above the Buy opening point and 1 pip below the Sell to allow for the spread in IG Index. The trade opened just after 11am and very quickly moved 20 pips into profit (in seconds). I moved my stop to break even and the trade reversed just as quickly and stopped me out. The whole thing couldn’t have taken more than 30 seconds:

I’ve also noticed double bars happening on the 10 minute GBPUSD chart, as in the screenshot above. It doesn’t seem to affect the way it works but it’s certainly odd. It disappears if you refresh the charts though but refreshing is a bit of a pain because I’ve also noticed with the new feed it seems to take ages for the ‘Retrieving Tick Data’ to complete… minutes instead of seconds. Hopefully these are just teething troubles.

I also had about five e-mails today from users asking me to detail exactly how I manage my trades.

Basically I enter 4 pips above the TESS BUY signal and 1 pip below the SELL signal using the Order to Open. As soon as I hear the bong and the trade goes live I double click on the Stop and alter the stop level in the ticket to the entry level. I then keep my finger pretty much hovering over the button waiting for the  trade to go around 20 pips into profit at which point I hit the button and lock in a break even trade. Then I allow the trade to go out to 40 pips and move my stop to 10 pips profit and follow the market keeping roughly 30 pips behind the market, moving my stop in steps of 10 pips at a time.

Filed under Forex,Spread Betting by Graham

Wednesday 17th December

Apparantly there was a great trade just after 3pm yesterday netting 70 pips profit, but I finish at 3pm. Can’t win them all.

10 pips profit on the EURUSD this morning:

And a sweet 130 pips on the GBPUSD too:

Now, I normally wouldn’t trade anymore after such a big win but just before noon another trade lined up. I set an order to open at 15409 and went back to answering e-mails. As I was just about to check if the trade had run out I heard a bong and in fact the trade went live, but the 5 minute PTP had just disappeared making it an unqualified trade with my method. I grimaced as the trade went into minus figures but it soon moved into profit just enough for me to take it to break even. I thought I might as well let it run at this point and boy am I glad I did… another 100 pips profit on the day, brilliant:

I’m quitting for the day now as I’ve made up for a poor two weeks in one day.

Filed under Forex,Spread Betting by Graham

Tuesday 16th December

I finally managed to get in on a trade today around noon. However, as the market had been jumping up and down all morning giving plenty of false signals (none of which qualified under my method thankfully), and seeing as a few minutes before I was lined up for a sell trade that didn’t qualify, I decided to move my stop to break even pretty much immediately. The trade progressed to about 15 pips profit at which point I moved my stop, and then it plummeted back down stopping me out of the trade in two minutes flat. I definitely made the right decision as the trade would have been a maximum loss:

 
I’ve just read my e-mails and so thanks to those of you that told me about the update in the members area. I can’t bear to watch Kieths daily videos… very bad of me I know, but I feel like I’ve had a frontal lobotomy by the time I get to the end (hope he doesn’t read this!). Anyway, apparanty Kieth has advised not trading GBPUSD currently as all the focus appears to be on the EURUSD. Also, there’s a new data feed replacing Tullet which is apparantly faster. I watched the video and it does indeed seem to be vastly superior, practically matching the price in IG Index in less than a second, and updating itself every second too. This is great news as it’ll mean from now on we shouldn’t have the problem of a trade getting opened in IG without it qualifying in Tess.

I think with this new feed it is now worthwhile abandoning using both the Barclays and the Tullet feeds. From tomorrow I will be trading GBPUSD still because I want to see how it performs over a whole year, but using the new FXCM feed, and seeing as I’m not using Barclays now, I’ll also run a set of charts for EURUSD as that is apparantly where the action is.

Filed under Forex,Spread Betting by Graham