Simple Profitable Method

[bearmountain]

Quote from bmwhendrix:

Anyone care to share their programing of this system? I believe a couple of folks have backtested it with poor results. I am just starting to use AmiBroker and any help modeling would be appreciated.

This system doesn't backtest well, it is not suitable for 100% mechanical trading.

imo I believe trader28 due to his good psychology and experience is able to make this system work. If you notice
the rules are somewhat ambiguous, I don't believe the author is trying to mislead anyone, but there is a subtle
play or judgment call between the different components of this system.

1) how one weighs in the longer term timeframe(10min). 2) the number of contracts traded per signal and
how many contracts to hold for big trends 3) role of 9 or 3 period MA in entry/exits etc

A lot of people say that entry doesn't matter, its how you manage the trade and most importantly exits that count. I believe this is how trade28 is able to make this system work.

The discretionary component for those with weak psychology is deadly.

 

[Bearbelly]

Exactly. A rule driven system that worked off the rules alone would be worth a lot of money and probably would not be shared.

In spite of my occasional ragging I kind of like this little system and am still following it on paper.

 

[jack411]

Quote from DonKee:

Just had an entry at 750.10 and exited at 752.1.

I'm not sure there is enough movement in the YM and ES to make much money.

The ER moved $200.00 while the ES moved about $100.

This is a very "quick hit" way to trade, so you probably need to adjust profit targets on the YM or ES to lower levels to compensate for the lower range of the bars. [/QUOTE

Ive demo traded this on the YM, NQ, and ES this week and last. Ive done very well. A few small losses today early on the YM and ES, but volume was a little lower and I should have waited for the market to work itself out first. I jumped into a couple trades too early I think.

For the YM and ES you have to adjust the R/R. You're not going to get 2 points on the ES from this system using a 2 min chart. Now using the 10 min chart, you can make larger profits per trade, obviously. But yes, targets should be adjusted.

If anyone is having trouble with this, read over the first few pages of the thread again. You're most likely making things difficult. Follow the simple rules, and it will work fine. I believe the author stated that he's traded this strategy with the ER2 for two years. I seriously doubt that suddenly after starting a thread on it, it's stopped working. So just take another quick glance at the guidelines and compare that to with what you're doing.

Only thing I can think of that could be throwing others off and not me is -

1. Im havent traded the ER2 yet. Im not sure if my targets would be the same, etc. Im in the mindset of Id rather have four good 7 tick trades than two 10 tick trades. So I sometimes get out a little earlier than others might. But that doesnt seem to be the problem people are stating anyway.

2. They are making things more complicated than they need to be. Only indicators needed include MACD standard setting, and a 9 SMA.

Good luck...

 

[potemkinvillage]

Quote from jack411:
1. Im havent traded the ER2 yet. Im not sure if my targets would be the same, etc. Im in the mindset of Id rather have four good 7 tick trades than two 10 tick trades. So I sometimes get out a little earlier than others might.

fwiw, one profitable trader i know trades only ER2 (albeit not this system) in a scalp-like fashion. high probability setup patterns combined with small targets and tight stop loss multiplied many times a day adds up to a tidy sum.

Quote from Bearbelly:
An entry in the 11:30 area seems reasonable to me in this situation but not before.

earlier in this thread mokwit (i believe) suggested the use of ADX as a simple indicator of trendiness. applying that would've kept you out till after 11.30.

 

[carlito]

A real trade i did today.
To make things more simple i have drawn a 60/130/45 macd histogram (in green ont he chart). It forces me to go with the trend.
When this 60/130/45 macd histogram is above 0 i look for long trades : up cross of macd 12/26/9.
This morning on gbp entry at 2h25 (usa hour) at 1.8576 and exit at the round number 1.8600 for a quick scalp : 20 pips net (because of this 4 pips ugly spread).
The 9 sma moving average give me often the opportunity to enter before the macd cross is completely done.
Hope this will help.
I trade it on the 5 minute 15 minute and i will add the 30 minutes soon, i exit either on round numbers or pivot points.
SToploss is set between 20 and 35 pips .

 

[darmasdt]

Quote from carlito:

...
This morning on gbp entry at 2h25 (usa hour) at 1.8576 and exit at the round number 1.8600 for a quick scalp : 20 pips net (because of this 4 pips ugly spread).
...

You trade this strategy on SPOT FX, don't you ? I've found that the cost of spot FX is too expensive. Comparing the cost (spread and comission if available) with the daily ATR or several hours' ATR is too big.
I think the ER2 or the FDAX seem more suitable for intraday strategy ?
correct me if im wrong. TIA

 

[trader28]

Quote from bearmountain:

This system doesn't backtest well, it is not suitable for 100% mechanical trading.

imo I believe trader28 due to his good psychology and experience is able to make this system work. If you notice
the rules are somewhat ambiguous, I don't believe the author is trying to mislead anyone, but there is a subtle
play or judgment call between the different components of this system.

1) how one weighs in the longer term timeframe(10min). 2) the number of contracts traded per signal and
how many contracts to hold for big trends 3) role of 9 or 3 period MA in entry/exits etc

A lot of people say that entry doesn't matter, its how you manage the trade and most importantly exits that count. I believe this is how trade28 is able to make this system work.

The discretionary component for those with weak psychology is deadly.

More than anything else it's just common sense, I mean you dont go for $200 on FOMC days when it just isn't going to move until the announcement, also lunchtimes are typically dead as a doornail, most days you can guage the range from the opening hour and you adjust accordingly, just common sense trading

 

[carlito]

I agree that he futures market is better because of lower spreads. I test this strategy on forex and i plan to do it on both futures and forex.
Forex : 5/15/30 minutes time frame.
futures : 2/5 minutes time frame

 

[darmasdt]

Quote from carlito:

I agree that he futures market is better because of lower spreads. I test this strategy on forex and i plan to do it on both futures and forex.
Forex : 5/15/30 minutes time frame.
futures : 2/5 minutes time frame

Yes, I've been trading FX for more than 3 years, and i've just realize that recently.. So all those bs about how fx is better then futures, they are all misleading. correct me if im wrong..

 

[paulbechard]

I have a question about all these graphs I have been looking at throughout this thread. If the bar size is 2 min and 10 min for most of them. How is it posslbe to get those smooth curves in the MACD and SMA graphs? Iv been trying to recreate this strat using my paper account at IB in TWS. It only gives me the option for 2 and 15 min bars. and when I place a MACD with first based avg = SMA, period of first avg = 9, second base avg = SMA, period of second avg = 9, period of signal avg = 9. it draws a very jagged line. which makes hit harder to see where the exit points are.