H Trading System
This is where I will put all information pertaining to my production trading system called the h-system. I won’t give the specific details of this trading system NOT because I don’t want to share but mostly because I don’t feel like giving it out will be of any help to anyone for the following reasons:
- It is important for everyone to create a system that fits their personality and trading style. I’m not a successful trader yet but I’ve heard that doing so can lead one closer to success.
- I don’t want to feel responsible for someone using this system and then losing money because of it.
- I am using real money to trade this system and I’ve spent a lot of time backtesting and forward testing. Since I just started trading it for real, I still don’t feel confident that this system will be a success (see #2)
What I will say is that this system has very simple rules. It uses technical analysis but nothing that anyone hasn’t heard of. Here are the rules I will state:
- Trade the GBP/USD only
- Trade using the 30min chart
- Trade during the hours of 2am EST and 11am EST only
- Always enter with 3 lots at the same entry price (unless slippage occurs)
- Always exit 2 lots after 30 pip profit each (60 pip total)
- Once the 3rd lot reaches 30 pip profit, trail the stop using the last candle high (if in a short position) or the last candle low (if in a long position)
- Place stop loss at the 34 low EMA for all 3 long positions on entry and place stop loss at the 34 high EMA for all 3 short positions on entry. Adjust the stop loss every 30 minutes if the 34 EMA high or low has changed.
- If trade was opened right before a hot zone (economic announcement), get rid of the stop loss and use a mental stop. If 1 minute after the economic announcement the price is below the stop loss in a long trade or above the stop loss in a short trade, exit. This rule is to allow the emotion to clear before exiting a position that may reverse.
- DO NOT TRADE DURING MAJOR ECONOMIC RELEASES. (RED RELEASES FROM Forex Factory)
The entry is just on price with only 1 confirming indicator. I’m looking into using an additional indicator for confirmation but as of yet, it hasn’t proved to be useful.
| Month | Pip P/L | Gross P/L | Total # of Trades | Total Winning Trades | Total Losing Trades | Total Even Trades | Avg. Winning pips | Avg. Losing pips |
| 4 | 294 | $2940 | 12 | 7 | 5 | 0 | 99 | -80 |
| 5 | 279 | $2799 | 12 | 8 | 4 | 0 | 83 | -95 |
| 6 | -28 | $-420 | 7 | 4 | 3 | 0 | 39 | -61 |
| 7 | 61 | $610 | 7 | 5 | 2 | 0 | 60 | -120 |
| 8 | 467 | $4670 | 12 | 10 | 2 | 0 | 56 | -47 |
| 9 | -697 | $-6817.4 | 34 | 14 | 20 | 0 | 57 | -75 |
| 10 | 0 | $240 | 4 | 2 | 2 | 0 | 30 | -30 |
| Total | 376 | $4021.6 | 88 | 50 | 38 | 0 |
Popularity: 2% [?]
Do One Thing Right
Piptopia, Rob Booker's site has a short post that says to do one thing right instead of getting tangled up with multiple financial instruments, indicators, time frames, and trading systems. I've said this in the past and that's why I was concentrating on 1 currency pair and 1-2 trading systems associated with this currency pair. But what happens when this system doesn't work anymore in the current market conditions? This is probably where patience comes into play.
I'm in the situation right now where my trading system isn't working out like it once was but I am sticking with it and trying to remain patient. At the same time, I'm trying to explore other ways of trading and to be absolutely honest, don't know where to begin. This has happened in the past to me, a period of confusion that sets in and takes me over. I'm not trading recklessly but I feel frozen, unsure of anything. My patience is being tested as I start to move away from my primary currency pairs to other currency pairs and multiple time frames. I'm searching for something, anything but maybe I just need some time away to regroup. Should I trade short-term or long-term, should I trade just the GBP/USD or start incorporating new currency pairs, should I try discretionary trading again or stick with system trading, should I…. What to do. I wish I knew at this point what to do but one thing I do know is that I shouldn't jump in and start trading with this uncertainty hanging over me. I'll continue to put trades in based on my systems but I'm not about to do something rash that would threaten my account balance.
When this confusion has happened in the past, some people have recommended that I just start trading in my demo account but I always felt that I couldn't take my demo account serious enough for it to be much help. If I start using my demo account this time around, I'm not sure if anything will be any different. Maybe I should consider trading smaller lots but this is just throwing away money at the expense of trying new things. Therefore I'm going to try something new to see what type of involvement I can get from others to make trading more competitive and perhaps, more meaningful. I've set up a FXContest on Oanda in which anyone can be a part of. Quite simply, as long as you have a demo (FXGame) account with Oanda, you can join the contest. FAQ's regarding the contest can be found at https://fx2.oanda.com/mod_perl/fxcontest/fxcontest.pl?rm=help#q6. If you already have an FXGame account, it's as easy as going to the "Forex Project Contest 1" and joining. You can do this at https://fx2.oanda.com/mod_perl/fxcontest/fxcontest.pl?rm=contestDetails&contestId=130. If you currently don't have an FXGame account, they will instruct you on creating one and then you can join the contest. The contest is slated to begin next Sunday, March 25th and will end 2 weeks later. Performance is based on portfolio return. They talk about this more in the FAQ's link above.
I don't know if this is of interest to anyone but if it is, feel free to join. I thought about offering some sort of prize that goes to the winner but I'd rather wait to see what type of involvement the contest gets first.
Lastly, I just want to give credit to Booker's post that's mentioned in the first paragraph; you can find it here: http://www.robbooker.com/blog/2007/03/20/do_one_thing_right.php
Popularity: 3% [?]
March Begins On The Upside
Since I had such a terrible forex trading month in February, I've had to do some thinking over the last week to re-evaluate my trading. What kind of things have I been thinking about? Let me give you a quick brain dump right now.
- My comfort level with the GBP/USD is getting increasingly better and better. Obviously no one can predict what direction a currency is bound to head but I feel like I've been able to determine the correct movement of the GBP/USD to a certain extent. Now I just need to find out how to profit more from this. Maybe I need to be more instinctual in my trading and go with the feeling.
- On the other hand, I am totally uncomfortable with my stop loss levels. I received one comment about my poor choice of a 1:1 reward/risk when I trade the GBP/USD. His answer was simply to use a 15 pip stop and 30 pip target which would give me a 2:1 reward/risk. Unfortunately I think this is much easier said than done. I've had enough experience over the past 18 months to know that a 15 pip stop with the GBP/USD is suicide. You need to pick a less volatile currency pair if you want to use a 15 pip stop, like the AUD/USD. My problem is that I have a full-time job and I don't have the luxury of trading the European session. Therefore I cannot incorporate a more complex stop loss strategy. I don't know what the answer to all of this is. I'm fully aware that in order for my h-system to be profitable in the long run, it needs to win more than lose.
- Due to visitor comments on this site, I'm more intrigued with the possibility of opening an account with FXDD. Doing this would allow me to use expert advisors with Metatrader. I previously turned the h-system into an expert advisor so the only additional work that would have to take place would be if I incorporated a different stop strategy.
- Part of the reason my performance from last month looks so bad is because I hastily used the h-system on the GBP/CHF and GBP/JPY. I lost my focus.
- March has started off better, I'm currently up 114 pips.
- I'm not going to pressure myself as much to add another system using other currency pairs. I'll continue to search for a new system because I enjoy the challenge but my focus should remain on the GBP/USD. As I state in #1, if I can continue to increase my comfort level with the GBP/USD as much as possible, this may be the answer to success.
In the meantime, I'm trying to recover from my full-time job's hectic schedule last week. Due to the increased volatility in all the markets worldwide, especially in Asia, the corporation I work for was affected and there was a rush to extend certain IT infrastructure levels. This need will continue into the upcoming week so I'm hoping that I can still stay focused on Forex trading also.
Popularity: 2% [?]
February Trading Over. I Lost DI Pips.
Yes, you read it correctly. I lost DI Pips. In roman numerals, D=500, and I=1. Like I've been saying all week, it was a pretty bad month for me mainly because the h-system performed terribly, losing 697 pips. What more can I do other than stick with what I have, which I will do in March.
See my results:
At least I ended the month on a positive note. I had a profitable h-system trade and a profitable reversal trade this morning for a total of 125 pips.
Once again, the Lien Schlossberg service didn't show much this month, getting me a total of 22 pips. I didn't take some of their trades though but I still consider these realistic results. When using a forex trading service that sends out 24-hour real-time trade alerts, you cannot expect to be able to enter every single trade. I get alerts sometimes when I'm sleeping, driving, in a meeting, or otherwise unable to access my trading system. Due to this, I don't expect to continue using this service past the 3 months that I paid for it. I'm sorry to say but overall I'm not impressed at all with their trades.
Popularity: 3% [?]
February Bloody February
February is beating me down hard and I'm looking forward to March. I lost on two h-system trades today and one yesterday. The British pound has been very indecisive over the last two weeks but I'm staying on my toes because I'm expecting a big fat breakout sometime soon.
I have to admit that I'm putting off the updating of my trade history because I know that my trading efforts from September 2006 until last month will be essentially wiped. To put it another way, my profits over the last five months probably won't survive the beating I'm taking this month. Was this all for nothing? I'd have to say definitely not. I've obviously still got a long ways to go and this month can be a great learning experience.
Stay tuned later for a post where I'm going to give you reasons why I've always been concerned with the h-system money management rules.
I actually had the best Lien Schlossberg trade last night when I shorted the CAD/JPY. I profited 77 pips on a 1 lot trade. Unfortunately, we were also short the USD/JPY but they recommended an exit with a 10 pip profit last night. Since then, the USD/JPY plunged a unusual 200 pips.
I still enjoy the challenge the Forex markets have given me so I'll accept my losses and move on. I'm not this challenged at my full-time job so I welcome it with open arms.
Popularity: 5% [?]
I Am Down 430 Pips
Like I said yesterday, this month has not been a good one for many reasons. I'm currently at -430 pips for February. The good news is that I finally caught up on recording 2 weeks of Forex trading history which can always be viewed at http://www.forexproject.com/My_Trade_History.
The results could be worse… Before I completed the history update, I had feared I was down over 600 pips so seeing -430 was a little encouraging. I actually feel like I may be able to recover with 4 trading days left in this shortened month of February. I've lost on 3 straight h-system trades which is really indicative of how this system has performed overall for the month, lousy. http://www.forexproject.com/H_Trading_System
My savior was an EUR/USD trade I took last night where I was able to capture a total of 129 pips(3 lots). I might have been even more severely in the red if it weren't for this.
I have not been able to follow some of the Lien Schlossberg trade calls but from what I can see, they may turn a slight profit this month. On the 11 trades I've personally taken due to their calls, I've only profited 2 pips. But as I said, I've missed a couple of their calls that were profitable.
I'm starting to get back into the swing of things now. I also feel good about the fact that this website is still alive and running. I almost had to shut it down or risk having 1/2 of it taken from me due to the divorce. It's kind of funny that this site was even mentioned in a settlement proposal because I don't make a damn thing compared to the work I put in to it. Nevertheless, this site is all mine and will continue to move forward.
Popularity: 2% [?]
Expanding My Horizons
After performing backtesting and limited forward testing, I've decided to expand the currency pairs that I trade the H-SYSTEM with. I've been searching for months now to find additional currency pairs where this strategy might work. I will always take the GBP/USD H-SYSTEM signals because this has proven to be profitable. In addition, I'll also look at taking signals on the GBP/JPY and GBP/CHF. From my studies, the GBP/JPY may have more conducive moves for this strategy than the GBP/USD. I've also found that in backtesting, if I lose on a GBP/USD trade, the GBP/JPY would often give me a win. This would not totally cancel out the loss since a pip is worth less with the GBP/JPY than the GBP/USD. I have thought about the lack of diversification considering trading any of these three pairs are all betting on the British Pound to strengthen or weaken. I've determined that this doesn't matter to me at this point. If it works, it works. Another drawdown of using these additional currency pairs are their increased spreads, typically 7 pips at Oanda.
I've wasted no time in incorporating this into my trading plan, maybe a bit hastily. I had three short signals this morning on all three pairs, GBP/USD, GBP/JPY, and GBP/CHF. Two of the three positions were profitable for a total of 180 pips. The GBP/CHF lost. So if I had only traded the GBP/USD, the results would have basically been the same, +90 pips.
I'll have to see how this goes in the upcoming weeks. The point of this isn't to stretch myself thin but to give myself more options when trading this strategy. My ultimate goal is to have multiple strategies but my time has been consumed with just the H-SYSTEM for 6 months now. Some of you had great comments in the Carry Trade post and developing or reusing some Carry Trade strategy may be a future goal.
Popularity: 2% [?]
Five Consecutive Profitable Months
I was able to rebound today with a +90 pip h-system trade and a +21 pip Lien Schlossberg trade. This brought my January 2007 total to +80 pips. It isn't much but nevertheless, it is my fifth straight month trading forex profitably.
I want to talk about the trading signal service that Kathy Lien and Boris Schlossberg offer. I lost 97 pips using their service this month. In their defense, I missed two of their most profitable trades because I just didn't have the ability to trade at the time. Even if I would have caught these trades, I still would have been negative for the month. If I had to estimate it, I might have been down about 30 pips if I could have taken these trades. Their member area shows that with today's profitable trade, they were profitable by about 30 pips in the month of January. This performance is under ideal conditions; where I was able to trade at their exact entry and exit points. This was usually not the case since emails or text messages lagged or the price just slipped. I didn't follow 3 of their signals, 2 because I wasn't available to trade at that time and another because by the time I received their email to enter the trade, their target was already hit. Most of their signals require entering at market price so you don't have any prep time whatsoever. In addition, their signals occur at random times throughout the day and night. Strangely, they have no qualms opening a trade in the afternoon (US EST) which I would never do myself. Realistically, although they show a profit on paper, it would have been very difficult for someone using their service this month to show a profit. I would be surprised if I was wrong. They rarely had that surefire trade that allowed one to get in, grab profits, and get out. Their trades tended to take some time to develop, sometimes for better and sometimes for worse. Although their initial call showed a 2:1 reward/risk ratio, it rarely showed this ratio in the end. For instance, today's trade call went out with profit target of 55 pips and a stop loss of 30 pips, almost a 2:1 ratio. Similar to many past trade calls, they sent out a message to close the trade immediately at market before the target was hit. This particular trade was closed with a profit of 32 pips (under ideal conditions) for a reward/risk of 1:1. Their risk/reward more times than not worked out to no better than 1:1.
The point of all of this is not to bad mouth the service, just to make everyone aware of the caveats with forex signal services. Kathy Lien and Boris Schlossberg are undoubtedly very informed about the Forex market and carry an almost implied trust. This is a good thing but what I realize more and more is that just because they're well informed doesn't mean they can make money trading. One month doesn't tell the whole story either but I don't think one should imply that well-known traders who command a certain level of forex celebrity make money trading forex. I'm not saying that Boris and Kathy don't make money trading forex. They really didn't this month but they very well might next month. One thing for sure is that they aren't making a killing from trading forex. They probably are making a killing selling their signals though.
I promised I would use the service through the end of February, so I will follow through on this.
Popularity: 5% [?]
Revealing the Forex H-system
I've contemplated introducing everyone to my trading system because it's just so easy but I never do because I don't want to be responsible for losing trader's money. It's also a system that has definitely been used by others in either its current incarnation or some modified version of it. As I close out the month of January with another H-system win; the system produced 10 wins and only 2 loses this month; I wonder if my success with this system has my thinking skewed. Is it really as easy as this? Since I've started tracking this system's individual performance, I've had the following success:
- September 2006 +294 pips
- October 2006 +279 pips
- November 2006 -28 pips
- December 2006 +61 pips
- January 2006 +467 pips
These results are produced with a trading system that produces a 1:1 reward/risk most of the time. Most people would reject this system on this fact alone. Believe me, I've tried to get more reward out of it but most of the time this trades during the European session (I'm asleep) and I can't squeeze more out of it because I'm not there to do it.
I think that having a very simple system where I follow a simple set a rules is the way to go. I do truly believe this but I should also note that I haven't been able to find another simple system in addition to the h-system. So is it really that simple? The system is simple but finding out if it was viable was not. It took a lot of time and effort. Everyday, I learn a little more about it that may assist in making the system more successful. I do think that profiting from trading can be this easy as long as you keep certain things in check like fear and greed. Emotional or impulsive trading can really knock you off track and can ruin your entire plan in an instant. I really don't know what more there is to trading than this. I have a simple strategy, I follow the strategy taking my gains and losses sometimes consecutively, I try not to let fear or greed enter my mind, and in the end I'm profitable. Is it wrong for me to think that people over complicate trading? I haven't been doing this long enough to come to this conclusion just yet. I could have 3 consecutive losing months with this system and my entire way of thinking could change.
Popularity: 3% [?]
Back To Profitability
I apologize for the limited posts and also for posts that aren't as beneficial to you. I've mainly been talking about me, me, me. I'm in a bind for time this week so I'm just giving short updates until I can get back into the swing of things.
I've quickly recovered from my losses and I'm actually now up 22 pips for the month of January. This was all thanks to an h-system trade last night that got me 90 quick pips and another 30 pip discretionary GBP/USD trade.
I have to also give some recognition to Lien Schlossberg, who have assisted in capturing 63 pips this week. They also hit on a trade this morning for over 40 pips but I couldn't take it because I couldn't trade the US session. They are unfortunately -47 pips for the month. I will have to add to their trade performance page the fact that the performance I show is taking into account slippage, delayed alerts from their servers, and the inability to take certain trades either due to slippage or because I just wasn't in front of a computer. Today was the first trade I could not take though so I consider these results realistic. http://www.forexproject.com/Kathy_Lien_Boris_Schlossberg_Trades/
I have to be happy with what has transpired this week going from -191 pips on Sunday night to +22 pips today. I said yesterday that the true test was to see if I could pull myself out of the funk before falling further into negativity. It seems like I've been able to do this. If I can continue with smart and unemotional trades, recovering from my losses this month will be my greatest accomplishment so far as a forex trader.
Popularity: 5% [?]
