Trading Strategies

How to lose no more than 15₀ points a week

28 July 2014, 10:37
Stanislav Korotky
Stanislav Korotky
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This article is another one in the series of publications about trading strategy based on MarketMeter indicator and accompanying CCFs+. This time it's very important story, because the trading brought some losses. Indeed, MarketMeter is not a grail, this is a real world system, and it must fail sometimes.

I think it's fair to demonstrate every aspect of trading, including potential problems (that may be hidden, intentionally or accidentally, by authors of other trading strategies). This will help us to understand the alrogithm better and to handle similar situations in future.

Just as a brief reminder, I repeat that the strategy is used here for trading Forex majors, though the indicators may process any tickers. The best signal is to buy the currency at the top and sell the currency at the bottom. And here is the signals discovered during the last week from 21-th to 25-th of July (all times are CET).

 

 


  • 21 July 14:00-22 July 2:00 buy EURJPY +15o
  • 22 July 2:00-15:00 buy NZDJPY 0
  • 22 July 15:00-23 July 21:00 sell AUDCHF -45o (shown on the screenshot)
  • 23 July 21:00-24 July 00:00 buy EURAUD +25o
  • 24 July 00:00-5:00 (add)-25 July 22:00 sell AUDNZD -10o
Total: -15o

Why did this happen? First, as it was already said above, this is not a grail, so we have to have some losses.

Second, we collected signals from the single timeframe H1. Of course, this is not as relialble as trading by signals from several timeframes. You may find a good analogy with Elder's "triple screen" approach. And this is why MarketMeter shows 3 columns of signals by default: every column for appropriate timeframe - H1, H4, D1. Using signals that are confirmed at all timeframes we can expect better profit factor.

Finally, one could note that exiting the market by the strict condition when a currency left its uppermost or lowermost position is a bit hasty. If we introduce a threshold of signal level as the difference between two currencies values, and close position only when the signal goes below the threshold, this could improve performance. For example, if we kept the short AUDCHF position, that brought the main loss, until the signal strength falls below 50, we could close it at breakeven. I plan to publish an expert adviser, which will accept the thresholds and handle them automatically.

#indicator, marketmeter
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