No Signals Today
October 13, 2006 by Trader Rich
I just wanted to give a quick recap of the week… I did not have any GBP/USD trading signals today. From the experience I've had with my system, it certainly seems like the GBP/USD is at a critical juncture where a decision will be made very soon on whether the short-term trend downward will continue or whether the pair will reverse or correct.
Overall, it was a losing week for the system with a total of 4 trades, 2 winners and 2 losers. I lost a total of 63 pips this week. I changed my exit strategy this week to a static stop loss of 30 pips. This was changed after my 108 pip loss (3 lots at 36 pips each) on Wednesday. In addition, I think I've optimized it more and hopefully the results will reflect this going forward.
- Changed the stop loss to 30 pips. I will no longer use a 34 EMA as a stop loss. I noticed that if the price went against me by over 30 pips, usually it would continue to go against me.
- From backtesting results, it would be safe for me to move my stops on all 3 positions to breakeven after I'm up 20 pips. This will certainly cut down on some losses from what I've seen. This is a new addition.
I've been poking around the FX Trader Plus capabilities that FXEngines offers and have asked many questions of them over the last day. I've come to the conclusion that this system can be fully automated. Each evening, I would still manually put my orders in at certain levels but after that, I'd let the automation take over. I will make sure to demo test the automation next week before allowing it to take over.
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Rich, I’m surprised and disappointed to see that you’re going the tighter stop route. I have yet to find a trader that can beat the risk/reward ratio. It’s impossible.
The more you try & optimize with back data…especially when it’s not even data from the broker you’re using (they’re all contrived markets, after all), the worse your performance will be.
It’s a bad idea to go changing things after every losing week. That’s what the — quote, unquote — “loser” would do. The winners stick to their systems. In fact, the main thing that separates the winners from the losers is the ability to stick to their systems. Period.
I mean, you can back test & optimize to the point that you have 100% winning trades for the last “x” timeframe, but would in all likelihood lose your butt once you go with it in real time.
Mark my words, if you change your stop to 30 pips fixed, in two weeks you’ll say, “You know what? A 20-pip stop would be even better.” Before you know it, your system becomes a shell of its former self, and you’re back to the drawing board, frustrated & confused.
Hopefully you reconsider your actions.
Mike
Mike, you may be right and if the stop levels I was previously using (34 EMA’s high or low) weren’t so arbitrary, I may have to agree. The thing is, these levels were initially used just to keep my system simple without having to go back and consult candles which might just contribute me to overanalyzing. I really didn’t change it because of a losing week, just because the system is new and tweaking it was part of my plan. You may very well turn out to be right…. After backtesting this system over 5 years of tick data this system, I may already be “back to to the drawing board, frustrated & confused.”