Simple Forex System Trading

Thanks everyone for your kind comments.  I am so glad to hear from you.  I had a spam filter put on the site to filter out spammers’ comments.  Your comments were waiting for me to verify but I somehow overlooked.  I apologized for the delay in responding.

I don’t normally trade British Pound in my daily trading; however, I do have demo accounts set up for a few Pound / Dollar breakout systems.  Over time, what I found was that the pivot breakout systems produce better results than simple breakout systems.  Now, I am using Oanda demo to test, so I do not use trailing stops.  The results are based on very simple set-up with protective stop loss and preset take-profit target.  Stop loss also plays a very important piece in the trading system.  I found that somewhere between 25 and 35 pips of stop loss produced better results in conjunction with the take-profit targets.  The ratio is about 1 to 1.  For example, stop loss 25 pips v.s. take-profit 30 pips, or stop loss 30 pips v.s. take-profit 30 pips.  Not that I meant to change the authors’ original systems, but I was just curious as to what combinations of profit/loss ratio would change the end results.

Again, I invite you to check out these two breakout systems if you are a British Pound / Dollar fan, because I think the creators are brilliant.

I think this strategy looks very intriguing, and it is true that many times the price moves back before reaching the take-profit target after a fake breakout.  The author did not post the testing or trading results on the website.  I didn’t find them or I could have missed.  The strategy was described in details on how and when to place orders.  The win-loss ratio is 1:4, which means it needs 4 winning trade for every loss trade to break even.  However, the author explained why the strategy still looked promising.

The theory from author’s website: 

The Idea- We all know there are supports, resistants and psychology levels in currency trading and those are the places traders usually put their STOPs, especially retail traders. If you pay attention to the price movement, there are high probabilities the price will breakout the supports/resistants or it doesn’t touch the supports/resistants at all. Case 1, a clear breakout, price break the level with little or no retracement. Case 2, a fake breakout, it price the level about 10-20 pips then move back.

From forexmogul.blogspot.com

I have been using CCI to trade the euro pound pair for quite some time.  Because this pair is not very volatile and tends to retrace reasonably after decent rise or drop, the commodity channel indicator works well with this pair.  I also found that it is even more accurate during the post-US and pre-European sessions.  Here is the strategy:

Hours:  20:00 GMT to 6 GMT

Time Frame:  1 hour chart is used

Buy Condition:  Place limit buy a few pips (0 to 5) higher than the recent low after CCI breaks above -100. 

For example, at the 21:00 GMT hourly bar, low was 0,7900, CCI was -125.  At 22:00 GMT hourly bar, low was 0,7904, CCI was -103.  At 23:00 GMT hourly bar, low was 0.7910, CCI was -87.  So, we place a limit buy anywhere between 0.7900 and .7905 at your choice at the open of 00:00 GMT.  Remember.  This order is only valid for an hour.  If not filled during the hour, cancel it.

Sell Condition:  Place limit sell a few pips (0 to 5) lower than the recent high after CCI breaks below 100. 

For example, at the 1:00 GMT hourly bar, high was .7950, CCI was 132.  At 2:00 GMT hourly bar, high was 0.7944, CCI was 96.  So we place a limit sell at the open of 3:00 GMT.  Set the limit sell price somewhere between 0.7950 and 0.7945 at your choice.  The order is only valid for an hours.  If not filled within the hour, cancel it.

Take Profit:  10 pips

Stop Loss:  15 pips

Trailing Stop:  If you like to put a trailing stop to protect your profit, feel free to do so.  I tend to do it when I gain 6 or 7 pips or so, and I move the stop to the break-even level.

No-No rule:  Do not open new buy or sell after 6:00 GMT.

What to do if buy or sell order still open after 6:00 GMT? 

You can close it or you can just leave it to hit the pre-set take profit or stop loss.

Yesterday was a good day as I raked in 10 pips.

In the image below, the CCI broke above -100 at the 23:00 GMT bar (1), so I placed a limit buy at 0.7937 at the open of the 00:00 GMT bar (2).  In Oanda, I could also set to have the order expired in an hour.  Therefore, it would automatically expire at 01:00 GMT if not filled.  With the same ticket, I set the take profit at 0.7947 and stop loss at 0.7922.

The buy order was filled at 0:55 GMT and closed with a profit at 2:00 GMT.

Stumbled upon this website, pipholic.com, while looking for other breakout trading systems to read about.  The author of this daily forex signal primarily trades British pound.  The strategy is a combination of the pivot, breakout, and support and resistance levels.  This trading system is similar to another pivot breakout system on Daily20Pip.com.  Check out both strategies.

From the author’s website: 

In general, the system is based on many basic trading concept: Pivot Lines, The London Breakout concept and support and resistance. The big ben strategy explains very well how The London Breakout concept could be very useful for trading the GBP/USD. Of course I have additionally put my own approach.

For a simple start, I believe that many of you - especially who have been following my free forex signals since the beginning- have recognized these simple formula:

1. Define the daily pivot
2. Place buy order at 20 or 40 pips above the pivot, or
3. Place sell order at 20 or 40 pips above the pivot
4. start to place the order at about 05.00 GMT

I halted the euro yen 30 / 30 system in April because this pair’s performance was not consistent.  After testing it out in demo and doing some statistical research on its historical performance record using this method, I am bring it back with some minor changes.  Primarily, the changes are the definition of the previous day high and low.  The details are documented on the set and forget trading system page.

So far so good this month in April.  + 55 pips.  In terms of percentage gain this month, it is currently at +7.38%.  Besides the EUR/JPY & EUR/GBP pairs I normally trade, I added EUR/CHF AND AUD/USD this month.  Except for the EUR/GBP pair, I continued to use the 1:1 profit to loss ratio, normally set at 30 pips.  EUR/GBP is still 7 / 17.

EUR/JPY and EUR/GBP are still my favorite pairs.  EUR/CHF tends to have “moody” swings which hit my protective stops every time.  What I did was when the trade was in plus 15 to 20 pips, I would move the stop loss to the break even point.  Somehow, this pair would have some kind of knee jerk reaction frequently.  It hit the stops and then resumed its course.  This is probably my least favorite pair.

I currently do not trade this method as the pattern of this pair has changed.  I am writing scripts to test it out in demo.

The method was posted here.

The method was originally posted here. 

I’d like to make some updates to this method.  Currently, the settings are:

Time Zone Used:  GMT

Reference Price:  Open Price at 23:00 GMT

Buy Limit:  Reference Price - 7 pips

Buy Take Profit:  7 pips

Buy Stop Loss:  17 pips

Sell Limit:  Reference Price + 7 pips

Sell Take Profit:  7 pips

Sell Stop Loss:  17 pips

I found that the Buy Limit and Sell Limit can be modified depending on your brokers’ spread and your trading style or preferences.

So, with that said, you can adjust your buy limit or sell limit as follows:

Buy Limit:  Reference Price - (7 to 10) pips

Sell Limit:  Reference Price + (7 to 10) pips

The rest of the settings remain the same.

You can find the method here.