stevehopwoodforex.com • Wealth Building System

Author:

a4v4c4 [ Fri Dec 09, 2011 2:47 pm ]

Post subject:

Wealth Building System - Set and forget

his method is for those who do not have enough time in hand to stare at charts for hours or babysit their trades. Those who are too busy with their day job which they cannot (should not) quit or busy with family affairs ... if you are among this category of people, then this system can suit you very well.. The system is very easy and straight forward.

Firstly, open a weekly chart then place a pending order ABOVE and BELOW the CLOSE of the previous week's CLOSE. You should use a fixed stoploss of 30pips and no profit target. Now, after these pending orders are set, there are only these possible outcomes:

1. Buy position get triggered and keep going in favor (100s of pips)
2. Buy position get triggered but later retraces and hit stoploss (-30 pips)
3. Sell position get triggered and keep going in favor (100s of pips)
4. Sell position get triggered but later retraces and hit stoploss (-30 pips)
5. Whipsaw in the market causes both position to get triggered and hit their stoplosses causing a maximum loss of -60 pips (-60 pips)
6. Buy get triggered, then hit SL, then Sell get triggered and run in profit (guaranteed to cover the -30 pips lost earlier)
7. Sell get triggered, then hit SL, then Buyget triggered and run in profit (guaranteed to cover the -30 pips lost earlier)

These are the only outcomes that can happen, however, most of the time, you will see the weekly trend re-establishes itself and get control of the direction the pair is heading. This is why we do not use any profit target (takeprofit/tp) and we keep the trades running till the END OF THE WEEK... we will close the trades only 30 minutes before the brokers shut down their platform on Friday night. In this way, if the weekly trend is bullish, and the buy gets triggered, the profit potential can be huge, compared to the maximum loss (-60 pips) that our account can suffer. Therefore, if we compare the risk/reward ratio of this method, we can safely conclude that this system can be a potential wealth builder.

You need to use this system on volatile pairs which are the GBPUSD, USDCHF, GBPJPY, EURUSD etc...

The most important part to make this system successful enough is to use a good money management technique alongside so that, you control your risk in a way that is healthy to your account... no matter how many lots you are using per trade, just make sure that you account is prepared to handle -60 pip loss for a few weeks consecutively and adjust your lots according to this scenario. Of course, such a scenario is very unlike to happen and most of the time, you will close your trades in profit.

The best part in this system is that it does not need any complex technical analysis or tons of charting time. It is a 'set and forget' type system and just need less than 10 minutes of your time each Monday of the week to set the trades, and each Friday to close the trades. As the label says on the tin... you set it and forget about it. You can close your platforms, shutdown your computer and turn all back on just on friday to close the trades. This system should really be stress free as you would not be exposed to the ups and downs of the market rolling in front of your eyes every hour and thinking 'my SL is going to get hit.. my SL going to get hit..' .. NO, you do not need to think about these... just set it and forget about it.

One thing which this system with definitely prevent you from doing is over-trading.. YEAH! Over Trading the market is a real kill, both for your health and for your balance as well. Keep it simple and keep it coming. As with any system, make sure you practice this on a demo account for a while. This is a 100% mechanical system and does not need any analysis etc, so it will not be a problem practicing on a few pairs as well. After some time, then you can decide whether this system is good for you to trade on a live account or not.
just i need ea for this guys
Would like to hear back comments and suggestions... Good Luck.

Author:	garyfritz [ Fri Dec 09, 2011 4:12 pm ]
Post subject:	Re: Wealth Building System - Set and forget
C'mon. If it was that easy we'd all be rich. I knocked out a quick Tradestation strategy to test this. You didn't say how far from the weekly close you'd set your entry breakout stops, so I looked at entries from 10 to 500 pips away from the weekly close. For stoploss size I also looked from 10 to 500 pips. I tested it on EURUSD. It actually worked much better than I expected when I looked at the last year of trading. To make sure it was stable I tuned on 2010 data (in-sample) and looked at 2011 results (out-of-sample). The best values for "entry breakout width" in 2010 were around 55 pips, and the best SL size was around 30 pips. It only hit 21% wins but it averaged almost 25 pips per trade! Then I moved to the OOS period in 2011. The % wins dropped to 11%. It spent most of the year underwater and ended the year down 340 pips. I experimented with TPs and that didn't help. Trailing stops did help some. Really tight trails, like 5 pips, produced very pretty equity curves (without any trading costs) but only averaged about 2 pips per trade -- not practical when you figure in a spread. Bigger TSs worked well IS (2010) but not OOS (2011). It doesn't run for "100s of pips" very often. With 55pip breakout and 30pip SL in 2011, there was one win in the 400pip range, one 300ish, 4 200ish. Meanwhile there were about 75 trades that lost 30 pips each. It's a classic case of "death by a thousand cuts," also known as "getting pecked to death by ducks." So while it's possible to choose parameters that work really well, those parameters don't seem to be very stable. It would be very hard to pick parameters that would work going forward in realtime. It may be possible to come up with a workable implementation of this idea, but the basic idea as you've presented it doesn't seem to work.

Author:	a4v4c4 [ Fri Dec 09, 2011 10:19 pm ]
Post subject:	Re: sorry
I am currently putting pending order 30pips from the close with a 60pips SL and why u try this on one pair try 5 or try another pair :!: but that seem hard so i asked for ea for saving time and that will work well with volatility pairs i just see it Interesting if it not working so what?

Author:	garyfritz [ Fri Dec 09, 2011 10:50 pm ]
Post subject:	Re: Wealth Building System - Set and forget
OK, 30 pips from the close and 60 pip SL is different than what you said before, but no matter... I did try other pairs. None of them did all that great. Here are the results for the last 12 months on a number of pairs, using 30pip breakout and 60pip SL: EURUSD: USDJPY: EURGBP: EURCHF: AUDUSD: USDCAD: If you'd started trading these pairs 12 months ago, by June you would have been down about 3500 pips. Nearly all the pairs lost money during this period. Would you have kept trading it? If you did, you would have been rewarded with good runs in EURCHF and AUDUSD. By the end of the 12 months you'd have been up about 2200 pips. This strategy seems to trend well, meaning that it does well for a while, then it does poorly for a while. It might work to track all the pairs you want to trade, but only trade the ones that have been winning recently. If I get a chance, I'll take a look at that.

Author:	gaheitman [ Fri Dec 09, 2011 11:20 pm ]
Post subject:	Re: Wealth Building System - Set and forget
garyfritz wrote:OK, 30 pips from the close and 60 pip SL is different than what you said before, but no matter... I did try other pairs. None of them did all that great. Here are the results for the last 12 months on a number of pairs, using 30pip breakout and 60pip SL: If you'd started trading these pairs 12 months ago, by June you would have been down about 3500 pips. Nearly all the pairs lost money during this period. Would you have kept trading it? If you did, you would have been rewarded with good runs in EURCHF and AUDUSD. By the end of the 12 months you'd have been up about 2200 pips. This strategy seems to trend well, meaning that it does well for a while, then it does poorly for a while. It might work to track all the pairs you want to trade, but only trade the ones that have been winning recently. If I get a chance, I'll take a look at that. Thanks for looking into this. I clearly need to get TradeStation! Luckily, Tradestation Forex just bought my broker, and while no changes are planned (ha!) we'll see what the future holds. George

Author:	garyfritz [ Sat Dec 10, 2011 5:06 am ]
Post subject:	Re: Wealth Building System - Set and forget
I've heard good things about MultiCharts, and it supports EasyLanguage which is a plus for me. TS is not perfect, and EasyLanguage has some limitations that drive me crazy (though I haven't had a chance to learn all the new [significant] language enhancements they've added in the last few years), but it really is "easy" to do straightforward things. This system, for example, was less than 30 lines of code total and took about 15 minutes to write and test. Makes it easy to knock out a quick test and see how it would have worked in the past -- no sitting around waiting for a realtime test. TS also has the advantage that it is totally free for forex, and they provide the data & brokerage. I've had good experiences with their FX brokerage since they dumped GAIN Capital and started self-clearing.

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Author:	garyfritz [ Sat Dec 10, 2011 5:07 am ]
Post subject:	Re: Wealth Building System - Set and forget
Now, back to Mr. a4v4c4's weekly system... One thing TS is NOT good at is basket testing. Trading the equity curve is tough too. So I dumped the equity curves and loaded them into a spreadsheet to try out my idea of "only trade it when it's working." I dumped the weekly equity and calculated an EMA of each pair's weekly equity curve. If this week's equity for one pair was above its EMA, then I'll take next week's trade in that pair. If not, I sit out for that week. A 9-week EMA worked best. But what worked better than that was a 10-week EMA of of entire basket: The blue line is the result of taking all trades in all the pairs I showed above, and adding together those equity curves. The red line "filters out" one pair's trades in any weeks when that particular pair's equity curve is below its EMA. The green line takes the EMA of the entire basket, and doesn't take any trades in any pair when the basket equity is below the basket EMA. I'm actually fairly surprised how well this worked. Trading the equity curve like this means you take all the trades that drive you down below the EMA, then you miss all the trades that pull you back up over the EMA, and that often negates the advantage of sitting out through the down periods. But in this example at least, trading the basket equity curve had you sit out through the big drawdown -- during which you could be using your money for something else useful if you wanted -- and got you back in when the overall basket turned up again. The drawdown was almost nil, and the end result made 1.75x more profit. That ain't too bad. In a case where the down periods and up periods weren't so clear and long-lasting, this wouldn't work as well. But it does show there might be some promise here.

Author:	a4v4c4 [ Sat Dec 10, 2011 8:58 am ]
Post subject:	Re: o k
thanks very much mr. garyfritz for that great job and for Amazing work on the system i wait for your modification on the system thanks again

Author:	garyfritz [ Sat Dec 10, 2011 2:23 pm ]
Post subject:	Re: Wealth Building System - Set and forget
Well, don't get too excited about that chart I posted. Like I said, trading the equity curve like that can work well, sometimes, if you have long continuous periods of losses and long continuous periods of wins. In this example, the basket did that, so it worked great. But if your equity curve goes sideways -- or even if it goes up slowly -- trading the equity curve can turn a breakeven or winning system into a big loser. If you wanted to do this, it might be safer to trade the equity curve on the individual pairs. This system has LOTS of losses, so it often has long continuous losing streaks. That's perfect for trading the equity curve -- though as the red line in the chart showed, it doesn't work THAT much better than just taking every trade. But at least with individual pairs you're likely to see those long continuous losing streaks. If you add together all your pairs and trade the equity curve of the basket, it might "smooth out" the patterns of the individual pairs -- and you might end up with a pattern that the trade-the-equity-curve approach turns into a loser. As for other improvements to the system, at the moment I don't have any. I tried a few obvious things (TP, trailing stop, adjusting entry and SL, equity curve) and none of them helped much. I'm afraid this is just a marginal system, and I don't know of any magic fixes that will make it better.

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