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Trading system research laboratory

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Chinedu Onuoha
4193
Chinedu Onuoha  

lets turn this thread into a strategy research laboratory. Only constructive criticisms are allowed.

I have this idea that I want to share for more input and tweaking.

I am of the opinion that risking only 0.5% or 1% of my trading account per trade if I have a trading system that is at least 55% accurate will always keep me in business.


That said I thought about divergence trading (Regular and hidden) as an intraday trading tool on the 15 minutes timeframe using 20pips stoploss, 20pips takeprofit and close by opposite signal.

I assume that the trading time starts from 8am (GMT) and ends 5pm (GMT)


The only challenge with this approach is that it is time consuming (you need to stay put behind your computer all day)

So lets get started ( your contributions and constructive criticisms are very welcome)

You can use any oscillator of your choice.

Assuming that you want to use stochastic, make sure that you wait for a momentum cross to happen (when you spot divergence) before you take a trade)

Contributions please.

VikArggo
5
VikArggo  

"I am of the opinion that risking only 0.5% or 1% of my trading account per trade if I have a trading system that is at least 55% accurate will always keep me in business."

About this, I fully agree with you, because if you look global market research, then by all major companies, such risks and leave. 

Alain Verleyen
Moderator
29865
Alain Verleyen  
VikArggo:
Please don't reply inside the quote.
Simon Gniadkowski
Moderator
18058
Simon Gniadkowski  
profedu2001:

lets turn this thread into a strategy research laboratory. Only constructive criticisms are allowed.

I have this idea that I want to share for more input and tweaking.

I am of the opinion that risking only 0.5% or 1% of my trading account per trade if I have a trading system that is at least 55% accurate will always keep me in business.

If you risk a %age of your account on each trade you will always have an account balance greater than zero . . .  even if you have 100% losers,  is that what you consider to be "in business" ?  most traders want to make a profit,  just specifying the risk per trade and the Win Rate is not enough to determine if a Strategy is profitable.  OK,  so you say SL 20 TP 20 . . .  what about the spread ?  factoring in the spread moves the required WR to be profitable,  so depending on the spread even 55% may not be enough.
Chinedu Onuoha
4193
Chinedu Onuoha  
RaptorUK:
If you risk a %age of your account on each trade you will always have an account balance greater than zero . . .  even if you have 100% losers,  is that what you consider to be "in business" ?  most traders want to make a profit,  just specifying the risk per trade and the Win Rate is not enough to determine if a Strategy is profitable.  OK,  so you say SL 20 TP 20 . . .  what about the spread ?  factoring in the spread moves the required WR to be profitable,  so depending on the spread even 55% may not be enough.

I will not argue this.


Now moving on to the research, Hidden divergence has a high win ratio, so what if we consider trading only Hidden divergence signals.

In another forum some one suggested on the H1 timeframe for intraday trading.

Dua Yong Rew
5554
Dua Yong Rew  
profedu2001:

I will not argue this.


Now moving on to the research, Hidden divergence has a high win ratio, so what if we consider trading only Hidden divergence signals.

In another forum some one suggested on the H1 timeframe for intraday trading.

How do you code a divergence? Then we will get started.
Chinedu Onuoha
4193
Chinedu Onuoha  
doshur:
How do you code a divergence? Then we will get started.
I think you can find out from the codebase. I spot divergence with my eyes.
Chinedu Onuoha
4193
Chinedu Onuoha  

I have been busy researching and I just came up with another theory.

I will start with the intraday approach and then move on to the swing approach.

Rules:
1.Trading hours (for intraday trading) 8am (GMT) to 5pm
2. Take profit = 60pips, stoploss = 20pips
3. Enter only when a momentum cross happens after spotting divergence ( hidden or regular)
4. Exit by opposite momentum cross (only after divergence is spotted before price hits either takeprofit or stoploss).
5.Risk less than 2 % of your equity per trade.


Now lets get started with Examples:

Chinedu Onuoha
4193
Chinedu Onuoha  
2nd Jan 2014, GBPUSD M15
  See attached picture

This is a typical Buy entry scenario but this trade hit the stoploss. This is very normal so dont feel bad when your stoploss is hit. You cannot be right 100% of the time.

-20pips.




Chinedu Onuoha
4193
Chinedu Onuoha  
This is the 3rd of January 2014, GBPUSD M15 ( See attached image)


This is a good day with the TP reached.
It will not always be like this so enjoy your good days as they come and dont feel too bad when you make losses.

The Risk:Reward ratio is 1:3 that gives you a very big edge.

+60pips


Sergey Golubev
Moderator
101648
Sergey Golubev  
profedu2001:
... ( See attached image) ...



Use this button for images please :


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