European Breakout Grid Trap Strategy

[forextrader-radioman]

... and here the GBPUSD breakout trap from today, 30th of November, 08:00 GMT , the London opening.

Calculation:

Long1 = (2 x 45) = 90 Pips
Long2 = (2 x 30) = 60 Pips
Long3 = (2 x 15) = 30 Pips

Short1 = (3 x -75) = -225 Pips

Spread = (9 x 3) = -27 Pips

Result: 72 Pips loss

[forextrader-radioman]

and finally the overview for the November 2011 ...

all the best to you,
Dietmar (forextrader-radioman)

[forextrader-radioman]

I'm scratching my head trying to figure out how you could calculate the risk for this. I.e. how much of your account do you risk at each buy/sell? There are so many orders, and you can keep adding them on, that I'm not quite sure what the maximum risk is. Dietmar says there could be "20 orders" open but as far as I can tell, with his definition there is no limit.

Dragos, I really want to see your EA. Then I want to change it. I want to see if some changes to the rules could contain the risk a bit more and maybe even improve the results.

Hy George,

yes, there could be "unlimited open trades" ... if the price is going endless in zig-zag ... but not very realistic for a SL of 105 Pips

The difference between 2 lines up to one hedges the other (long1 to short1, long2 to short2 and long3 to short3) and the spread ... that are the most important factors ... but it is not possible to make a proper money management lot size calculation (in classic, conserative definition) because you never know, how many trades are finally open when price reaches TP or SL ...

That´s why I recommend to use the smallest lot size offered by the broker ... and trade pairs with smallest spread ...

and the time (when to set the trap) is very important ... when (time and day of week) (and how large) are the major movements in one direction at the pairs?

CU,
Dietmar

[DragosDanescu]

Dietmar,

As the Ea is in testing phase, please give me some details.
If a trap is still open, from the previous day, you open another one, or wait for it to close?
Anyway, the EA has the user selectable option to set this to true or false.
I think it will be ready tonight, just testing the logic.

Cheers!

[forextrader-radioman]

Dietmar,

As the Ea is in testing phase, please give me some details.
If a trap is still open, from the previous day, you open another one, or wait for it to close?
Anyway, the EA has the user selectable option to set this to true or false.
I think it will be ready tonight, just testing the logic.

Cheers!

Hy Dragos! ...

that happened only one time, last friday, the day after thanksgiving with so low volatility ... and with that huge monday morning gap ... all other days in november, all trades are finished before the new trap time (7:00 GMT for EU and 8:00 GMT for GU).

on the way to bed,
Dietmar

[DragosDanescu]

Ok, guys,
the new toy is here http://www.stevehopwoodforex.com/phpBB3 ... 1349#p1349. Have fun and please report any problem. Also, new ideas are most welcome. Already implemented several options that can be used.

Cheers, Dragos

[garyfritz]

2509 pips in November, only 2 losing days -- that's VERY impressive Dietmar!!

I wonder how well it works on other pairs? Dragos' EA should tell us that. I'd like to see if it has to run at Euro opens, too, or if it would work in my daylight hours.

I'm buried with too many projects so I haven't thought through this well, but the part of having multiple hedging orders at each level bothers me. Especially since we in the US can't hold hedges like that.

I've learned through hard experience that my guesses of how a system will work are very often wrong. So I have some ideas I'd like to test sometime to see if they can improve your already-excellent system.

I am thinking something like: Enter 1 long at long1, set long1 SL at short1. That has the same effect as having the hedging short position at short1.

Now if you hit long2, I think I'd put the long2 SL at middle, and the long3 SL at long1. So each position has a 2-band (30 pip) SL.

I'm not sure how I'd handle shorts after you've gone long. I'm tempted to say you should reverse to short at each of the SL levels. But that might be too tight -- Dietmar's wider entries for levels 2 and 3 may be necessary. Or maybe have long1 SL at short1, then reverse to short at short2? So there's a 2-band SL, and a 3-band reversal. Or 2-band SL for long1, 3-band for long2, 4-band for long3? That still tightens it up over Dietmar's 2, 4, 6.

That way if the market bangs back and forth in a wider-than-30pip range, you're going to get hurt. But if it ever heads in one direction, you'll enter quickly from wherever you are, and pick up the 3 positions profit from there. Each position has only a 2-band risk instead of the 4-band risk for long2 and the 6-band risk for long3. I think we should also have an upper bound on our risk so we could determine a safe position size.

Does that make sense?

If Euro opens are the right time to run this, I'd have to use an EA or get up at midnight-1am every night. For results like this I definitely would! (use an EA that is

Gary

[gaheitman]

The strategy seems very dependent on start time. I know, I know the start time is a critical part of the rules, but it seems to really, really matter!

For example, looking at May 31 - June 1. If we start trading at 7 GMT, we get 84 and 21 pips respectively on EURUSD.

pic_06 2011-11-30 20.47.gif

If we start an hour later, we have the original trades open through the 31st into the 1st, and exit down 1176 pips. Yep, that's three weeks worth of the 84 pip days.

pic_07 2011-11-30 20.48.gif

I'm not saying it won't work, just saying you better start at the right time!

George

[garyfritz]

Yeah, that's one of the things that worries me about the unlimited position sizes and the wide reversals. The "right time" may very well be dependent on the day's action. The almost-unlimited risk is very nervous-making.

I *think* a mod like I'm proposing would limit the losses without losing any profit potential. In fact another slight mod might work even better: place a TP at, say, 2 bands from any entry.

Not sure without testing. This looks like a great strategy but I'd want to tweak it to put a cap on the position sizes and the max loss.

[forextrader-radioman]

Hello traders,

here the GBPUSD breakout trap from today, 1st of December, 08:00 GMT , the London opening.

Calculation:

Long1 = 45 Pips
Long2 = 30 Pips
Long3 = 15 Pips

Spread = (3 x 3) = -9 Pips

Result: 81 Pips