Absolute Simplest KISS Method. Also, how do we measure risk reward?
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Thread: Absolute Simplest KISS Method. Also, how do we measure risk reward?

  1. #1
    Howdy all,

    I am sorry but I like open talks around theories of trading. I am not going to provide you a system saying when X currency is over this MA here buy 3 lots, blah blah blah. Here is.

    How KISS can a trading system get? How about if I told you everything you needed to do was place on order at the open of a new candle with no consideration of any past price movement? Imagine if I told you the system was at the very least 80% right? You'd say get out of town right? It can be, although its not that easy!

    It hit me d3vil submitted a thread about a egy that he was considering. You may read about it


    My idea is nearly exactly the same except one thing. The system of d3vil demands that a currency transfer 50 pips to activate a trade in that way. My notion is wait to the 50 pips? I say, at the open of a new candle on a daily or weekly chart open a trade in almost any way using a take profit of just 10 pips or so. No thought required, simply enter a trade.

    Look at a daily and weekly chart. There's a lot of motion in those candles. This system doesn't care about that motion however. This system cares only about several pips, 10 perhaps. What do you find in each individual candle about those charts? Rarely, very rarely would you find a candle go and open without any kind of shadow in the opposite direction in 1 direction. Meaning, if a candle is a long white candle, there is still usually a shadow of a couple pips below the open.

    That's what got me thinking. Imagine if when a new candle on a weekly or daily chart is shaped you input a long or short trade for just 10 pips profit. Do I mind taking 10 pips? Well examine the chart. How often did a new candle shape not and where you would have entered a position made the 10 pips? (I must note I am looking at GBP/USD, EUR/USD, and USD/JPY) I would say the win/loss ratio is 80/20. That.

    Also note the Issue with this 80/20 number. Out of the trades that would have gone wrong, how many of those would you've been on the bad side of? When the trades were chosen randomly we can presume you would have been in those shedding 50 percent of the time and 50 percent of the time to situations on the wrong side on the ideal side. So the win loss ratio would likely be 90/10. Not sure how much better actual judgement could help, but then consider if you were able to utilize some chart reading expertise to place yourself in the winning position of the potential losing trades better then 50 percent of this time. Becomes up of 95/5.

    I just got back from a trip to the SEMA conference in Las Vegas so that I have not looked at the charts to affirm those win/loss numbers. I would say on a weekly chart those numbers will stand up well.

    This is another thought that came from this. What is risk/reward? Why do most of us measure our benefit in pips instead of by how risky the play really is? I see the egy really safe considering the pip goals and higher frequency of being right. It's up for discussion, but I would feel really safe putting more than two% of my account towards a trade. Once you're making $100 a pip consistently would you mind taking 10 pips per week? $52K a year is a lot more than many make here trading. The idea is to keep reinvesting and incorporating more money to gradually build the value of your pips. When we attempt to take pips, in almost any egy, our odds of success starts to fall dramatically.

    At this time I'm having difficulty determining an exit egy to get a stop loss system however. With such long time frames we allow plenty of motion and don't need to wipe out our 10 pip profits with a single long candle of 100 pips. There are plenty of occasions when a currency will retrace 60 pips to provide us our profits as well though. This makes me wonder just how many of those good trades that are 80% did this and would be eliminated by means of a stop loss to decrease our likelihood of succeeding to just 80.

    The take profits and shedding depart egy nevertheless need to get worked out. I have been thinking about taking just 5 pips out of a daily candle to ordinary 25 pips . The success rate would be increased on a daily candle whilst still giving us more pips than taking just 10 on a weekly chart. The machine might also be applied to different currencies at once to provide a potential 100 pips per week if just 4 currencies are used. The further volitile with reduced spreads the better. Is not that cool? A system that works with volatility. EUR/USD would work nicely also. We are in need of currencies .

    This thread was also to get folks thinking about different forms of trading. Systems attempt to be successful based on how many occasions the thought process is accurate. This system is based off of how many occasions in a time frame currencies really do something. Do you understand what I am saying, although I am having trouble putting it into words? It's like, as soon as a candle opens to a long time frame chart it's 100% certain that it will move from the direction or another. What certainties do we base a system off of? I will have a look at a egy, but with entrances near the very end of a candle to find out whether the candles later it often float the preceding closure by some pips. Can we increase the probability of succeeding with that?

    I'll finish by saying the previous benefit of this system. It's so easy even an EA could do it! (Thinking of the geico caveman commercials, haha) Truthfully. No indiors. No thought procedure. Trades for long/short might be arbitrary and be in situations where it wouldn't matter which place you take and be upwards of 80% right. Simple egies could be entered. For instance, when the preceding candle was red then put in a short on the open to the next candle. When it had been green go into a long trade. This would add some decision and might help remove those losing trades better than 50% like the win loss is off the bat.

    What do you think? The beginning would be gradual, but once you start making $50 or more a pip, the profits will probably add up fast. Matt

  2. #2
    I Thought This Was A System...

    it's an imcomplete system

  3. #3
    Ha. Sorry Hanz -

    Yea that was another one of my threads I started to discuss concept of trading. I'm doing too much of this recently. Sorry to waste your own time?

  4. #4
    Hi permanentjaun,

    I have run across a very similar procedure to yours on a different forum. . I am attaching some indiors that might be of help to you. The very first one is that the HedgeTest, which basically requires the price of the day and pulls two lines at the next day. . One 14 pips over the close of earlier day and a single 14 pips below (10pips profit plus 4 disperse ). The indior is some thing I discovered in choosing the right side of the transaction that may help. What I had been thinking about was to only set the trade in one direction at the close of earlier day after having figured out that direction will the market probably go. I.e. if in downtrend, you merely go short and vice versa. That way, you can take the bigger portion of your commerce out for 10 pips profit and leave the remaining part to acquire some more. Now, the only two problems that I see is how do you discover what the bias for the day will be (bullish or bearish) as you already mentioned that the SL. Let me know what you think about it. Thanks

  5. #5
    Quote Originally Posted by ;
    Why not somebody please place a system using an entirely random entry that is profitable? Everybody in this thread claims it could be achieved isn't anybody?
    I am working on a system which employs the doctrine I explained earlier. Even though it's not a entrance system. It is hard to be constant in randomness. So in order to be consistent my system will use a few indiors that is common to give signals. I have made an EA to perform backtesting, and I am very happy with the results. However, a couple of components of my trading beliefs are left out, because I am still new to programing I found it hard to program some things in. For instance, I believe that time is just one of the main part in my trading system, if a commerce have not gone my way I'd like to shut it out at every price before it touches my stoploss. But I have not figured out how to program a few different items, in addition to that in. So my system has not yet been finished. I will not post an unfinished system. In all honesty, I am not sure I'll disclose my system if I finished it. I am very selfish in natue therefore that I won't do that until it's made money for me:--RRB-. What I do not mind to talk about is my view that resulted in the system. And the EA. I believe that the only system that works for you are the ones you've deleloped yourself. So maybe it's much better that people share thoughts which could result in successful systems instead of systems that works for the programmer himself. Just a thought.

  6. #6
    Hey everyone. I read through this thread with some interest... I am not certain whether or how it could be made profitable, but I spent some time calculating a couple of things for consideration:

    For the calendar year 2006 the following happened:

    My feed (Alpari) reveals a total of 222 candles for EUR/USD (1 Jan to 22 Dec 06).

    The number of candles which broke only one of the previous candles high or low: 165

    The number of candles which did not split either way: 29

    The number of candles which ranged (broke out) of both the high and low of the previous candle: 28

    The characters seem good! There are some issues that I can foresee. I did not count the amount of pip gain for the 165 good breakouts. Let's say 50% of them provide us 14 pips (3 1 10pip profit). That is a favorable dount of 165/2 x 10 = 825 pip gain!

    How many of them will trigger our buy stop and retrace before giving profit?

    Then there is the 28 candle's which ranged, breaking out both ways. I believe a stop is important to control our losses providing the facts. Even with a conservative 10 pip stop that is 280pip loss. In all honesty, I believe that the stop should be placed at the candle's low or high which in a lot of instances will add up to be a lot more than a 10 pip stoploss. Among the less-than-average candles I just looked at had a range of 71 pips. There were tons of candles. The issue is if we make it smaller, we bite to our profits by quitting out in a particular percentage of our potential wins.

    This is all just food for thought, but I am wondering whether it's a feasible method of trading. If there was a way to limit risk/reward without restricting your profit possible also drastically, this could do the job. I cannot for the life of me think of how to do this.

    Just some food for thought! All ideas/comments are welcome.

    Merry Christmas everyone!

  7. #7
    Hi Permanentjaun,

    I read that any idea believed by one individual, can and will be thought by another individual as well. I thought after a discussion with another fx friend to this about a egy similar. Did some guide ahead testing and inputting data into excel on each daily candle of gbp/usd. I came up with the following principles:

    1. Set restrict entry 7pips spread above and below the candle of previous day.
    2. TP has been 10 pips, including disperse (so if your spread is 4 pips on gbp/usd afterward tp was just 6 pips)
    3. No sl.

    The results were pretty good really for the time frame that I did the testing. On the other hand, the drawbacks of the system were the following from my testing:
    1. You need to wager big to make it worthwhile.
    2. You want enough $$ to maintain negative floating dd while the pair swings up and down together with the preceding day's candle
    3. Your data feed will affect your high and low of candle, thus giving you different entry points
    4. You want a certain type of plogical profile to weather the negative dd (which I didn't have)

    The testing got too far for me personally, as it had been taking a lot of time from really understanding different systems which seemed to perform better etc..

    There must be somebody around who can make a easy EA based on the above rules and perform a backtest.

    I think the best way to implement this would be to take a portion of your account and alloe it to the egy. I have found that taking your forex trading capital and alloing different amts to different egies works better in the long run, rather than alloing your entire capital to one system/egy, esp a one such as this.

    Hopefully someone out there can optimize this.


  8. #8
    Quote Originally Posted by ;
    I Thought This Was a Method...

    it's an imcomplete system
    This is a system... Big Ball System... LoL-RRB-


  9. #9
    Quote Originally Posted by ;
    You guys will get the thread closed. Please stop. Take it to PM at least.
    You are right. We were only trying to help.

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