DislikedThanks Haystack for your advise... However, I'd like to mention that I'm working on applying this system to a swing trader method. In testing GBPUSD I observed that over the last 8 years (2063 daily charts) that there is almost a 50/50 split between ranging days and trending days. For clarity, a ranging day is when today's price direction is opposite of yesterday's price direction; however, a trending day is when today's price direction is the same as yesterday's price direction. Actually the results are: trending - 52% of the time; ranging - 48% of the time. Using the FXTradepro semi-martingale would be excellent for swing trading in this dymanic. The only challenge is the SL and TP. Currently I setting my SL @ 50 or 75 and TP @ 100 or 150, depending on the currency pair. For GBBUSD, I'm inclinced to use SL-75 & TP - 150.
This is the potential problem: With a 2:1 r/r ratio I can extend about 5 progressions comfortably before my money management becomes problematic. However, if I wait for two consecutive trend days before I enter a position, then that increases the likelihood of obtaining my TP within 5 progressions. Furthermore, I set my long entry at a support point materially below the day's open if my trend entry order is buy; and I set my short entry at a resistance point materially above the day's open if my trend entry order is sell. At the end of the day, even if I did not obtain my TP, but have gained from a trending position, then I will close my position. Thereafter, at the start of the new day I will open with a trend position with a cushion (support or resistance) entry order.
The missing link is this: I need to determine how many times over the last 8 years did any pair have more than 7 or more consecutive ranging days. If I can get assistance with that then I think applying this system to swing trading would be exceptionally successful. I think this form of swing trading with the FXTradepro system can yeild more than 400 pips per month.
Your thoughts....
WaltIgnored
Interesting Walt - I like this concept also.
(The track you are following is almost opposite to my fast in/ fast out approach.)
So lets consider the numbers.
Firstly I suspect that if you do your analysis over a longer period than 8 years that you will find the trending to ranging (by your definition) moves even closer to 50/50. So is there may be little advantage gained in looking for an edge in the expectation of either one of these states being present more often than the other.
You mentioned that you prefer the use of an SL = 75 and a TP = 150 using GBP/USD (assuming a 4 pip spread), and going out to 5 progressions.
Firstly your odds are very similar no matter what pair you are using a 4 pip spread will give you random entry odds of 1: 6.6 and a 10 pip spread will give you odds of 1: 5.5.
These are very low odds so I think you must have a very good edge to trade this type of progression and/or restructure your sequence to include more progresion levels.
But I think that there is some merit in looking at using the EA for longer time periods IF we can establish a decent edge in the market to achieve this.
Tim