Forgotten Strategies... GBPUSD Weekly 100pips
It looks that although this can be a winner, it is similar to a grid style system. If you have a large account, then you can ride through the drawdown, but take a look at the weekly chart for 1st jan 2008 to 31st December 2008. I know this is a very extreme case, and a lot of the losses would become winners over the next year or so, but,having done a rough manual backtest, I think that if you had opened an account on 01/01/2008, starting at lot size 0.01, by the end of the year, you would have won approx $17000 ,but, staring you in the face would be a drawdown of over $35000!!!!
I think there should be a winning way of using this system,and still keeping it simple.....but I haven't found it yet. Using a stop loss,of 500, seems to work for some years but not others, but maybe a one in one out for the trades may work.
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This is one of the old and forgotten method I recently found on some dead thread on some dead forum... However, the idea seems to be very interesting and when I did a quick eyeball of the charts, I found it to be a potential money making strategy. Just need people with enough motivation to pursue it. This system works on the Weekly chart and we just place 2 trades per week... Yeah I know, you are saying this is not enough... You want to be present in the market all the time... You want to overtrade... because this is what most are doing and making them into losers... When we trade on the weekly, we are trying to catch the main trend and if you give a little look at the weekly charts, you will see the profit potential that is hiding within the main trend. So this method is not about scalping the markets and stressing out yourself to death but it is like the other methods I wrote about a few week ago, it is a 'Wealth Builder' method. However the tweak in this method is that we are going to use some method in order not to get caught in ranging market and not to take too much trades as well. We will be using a BUY and HOLD type method.
Find the Weekly Open
We are going to work with the GBPUSD pair as this pair has high volatility, that is, it moves a lot and it has always got strong trends. First of all, we need to wait for the OPEN of the Weekly Bar at the start of the week... And that happen on sunday night with most brokers.
Place 2 pending orders
After we have identified the OPEN of the current week bar, we just place 2 pending orders... A pending LONG order 100 pips above the OPEN and a pending SELL 100 pips below the OPEN. This is it, we do not place any stoploss or takeprofit value at all. After we have set these orders, we close the platform and we live our life for the whole week. We do not mess, touch these trades at all during the whole week!
Friday night... the weeks ending
So we have placed 2 pending orders at the start of the week and have closed the platform after that. We have also left these trades alone and not mess around with them and now we are on Friday Night and the Week is ending... So what are we gonna do about these trades?
You open your platform to see what has been going on with the trades. If your pending order has been triggered.. and you see the PROFIT to be GREATER than 100 pips, then you CLOSE THIS trade. The Rule for closing a trade is to close it only when the profit is greater than 100 pips.
What if both trades have been triggered??
If both the BUY and the SELL pending orders has been triggered, then obviously one of them will be in profit and the other will be in loss. So what you are going to do is, if the one in profit is greater than 100 pips, you are going to close ONLY the trade in profit. The one which is losing, you leave it open and you wait for the NEW WEEK to cover it with other orders.
How to cover
So, we are on second week now and we have 1 losing trade which remained open. We are not going to do anything with the losing trade. We just place 2 pending orders again as we did in the first week... However, this time, we INCREMENT the LOT of the previous winning order. If the last trade we closed in profit was a buy of 1 lot, then when place the pending buy order the second week, we increment the lot value by 1. So we will place a pending buy order of 2 lots and a pending sell order of 1 lot. After we are done, we close the platform and we live our life. We come again at the end of the week to check on the trade, if the profit is great than 100 pips, then we close it. If there are losing trades, then we leave them open and will cover these losing trades the next week with additional lot in the direction of the earlier winning trade.
For example, if you have 3 losing sell positions at the start of the week, then you will place a pending sell order of 1 lot but a pending sell order of 4 lots. This is how this trading idea is. We always need to cover the losing orders BUT NOT close them. We close only orders which is greater than 100 pips in profit. This is the main rule.
The 'wisdom' behind
So, you might be asking yourself what is the wisdom behind leaving orders with loss floating around and not close them. Well, the idea is, When we accumulate the sell orders in an uptrend we are looking for a REVERSAL after we CLOSED all the buy orders, so for instance we have 5 sell orders active, next week we set a buy stop for 5 lots 100 pips up as the earlier winning order was the BUY.And If we are at the top of the trend the buys will not be activated so we have 5 sells WORKING for us instead of just using a FIXED SL of 200 pips.
Secondly,we are using a 200 pips straddle off the WEEKLY OPEN, which is, the BUY order is placed 100 pips away from the open and the SELL also is placed 100 pips away from the open... SO, in total, we are using a straddle of 200 pips. And by using this straddle as well as the 100 pips minimum profit to CLOSE an order, we are infact avoiding the RANGING and the WHIPSAWS of the market, therefore we will not be accumulating too many buy and sell orders, and we will be taking more profit than with a fixed stoploss as we will always have a position riding the trend.
This is it... what you gonna do now?
I am done here... I try to write it as detail as possible to convey the proper understanding of the method. Now what are you going to do after you have read this trading IDEA? As you have read, this is a long term method, and does not need much time at all to set the orders... So why don't you just use a demo account and start testing this out for yourself. Maybe you can also come up with some good suggestions on improving the method. Be sure to demo it for a while though... Best of luck with the trades...