Fascinating twist on TRO's midpoint entry

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casinoman
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Fascinating twist on TRO's midpoint entry

Postby casinoman » Mon Sep 03, 2007 12:18 am

This mades a steady, consistant profit and is a no brainer requiring no knowledge, expertise or skills. It also clearly illustrates points I have been making in various other forum posts here.

First let's define the criteria used which are all absolutes:

1. Use forex daily open, close, low and high
2. Midpoint equal (high + low) / 2 for previous day
3. Enter long if current day open less than midpoint at midpoint
4. Enter short if current day open greater than midpoint at midpoint


Short Long
#Win #Lose #Tie %Win #Win #Lose #Tie %Win
AUD 136 154 1 46.9 150 125 6 51.7
CAD 219 199 3 52.0 189 212 4 44.9
EUR 226 201 3 52.6 229 216 4 53.5
GBP 211 209 8 49.5 244 205 4 57.3
JPY 235 271 1 46.4 226 198 1 44.7


Grand total net expectation per $1 risked:

No Stop Loss just EOD Arbitrary 20 pip stop loss or EOD
AUD .0347 / 572 = .00006 .3883 / 573 = .00680
CAD .1185 / 827 = .00014 1.0410 / 827 = .00126
EUR .2725 / 879 = .00031 1.4711 / 879 = .00167
GBP .4158 / 881 = .00047 2.1575 / 881 = .00245
JPY 25.52 / 932 = .027 124.24 / 932 = .133

Median vs average from midpoint to current day close (EOD):
(Valuable in setting profit taking or stop losses relative to risk)
SHORT
WIN LOSE
MED AVG MED AVG
AUD .0020 .0029 .0021 .0027
CAD .0034 .0044 .0029 .0040
EUR .0034 .0042 .0034 .0046
GBP .0042 .0060 .0046 .0061
JPY .29 .41 .26 .36

LONG
AUD .0021 .0026 .0023 .0029
CAD .0027 .0038 .0029 .0038
EUR .0040 .0051 .0030 .0044
EBP .0049 .0063 .0045 .0058
JPY .36 .45 .25 .37
"Technicians never die - they just chart away"
Trade like a Lemming but don't jump off the cliff like the others

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Postby TheRumpledOne » Mon Sep 03, 2007 1:30 pm

"No Stop Loss just EOD Arbitrary 20 pip stop loss or EOD "

I don't understand.
IT'S NOT WHAT YOU TRADE, IT'S HOW YOU TRADE IT!

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casinoman
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Answer to TRO's Question

Postby casinoman » Mon Sep 03, 2007 9:35 pm

Just when I typed out in original posting, the spacing I used had been reduced to a single spacing regardless. Should read using * for additional spacer (EOD means end of day close price):

****** No Stop Loss just EOD ******* Arbitrary 20 pip stop loss or EOD
AUD ** .0347 / 572 = .00006 ********* .3883 / 573 = .00068
CAD ** .1185 / 827 = .00014 ********** 1.0410 / 827 = .00126
EUR *** .2725 / 879 = .00031 ********* 1.4711 / 879 = .00167
GBP *** .4158 / 881 = .00047 ********* 2.1575 / 881 = .00245
JPY **** 25.52 / 932 = .027 *********** 124.24 / 932 = .133

As you can see with the very limited, defined, measurable parameters with no stop loss, each of the 5 currency pairs are positive. Arbibrarily using a 20 pip stop loss each has a nice positive expectation. However, using the median spread for the individual currency pair would be appear to be more logical.
"Technicians never die - they just chart away"

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Postby TheRumpledOne » Tue Sep 04, 2007 4:36 am

"However, using the median spread for the individual currency pair would be appear to be more logical."

What is "median spread"?

I am not understanding but I think you are onto something.
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Re: Fascinating twist on TRO's midpoint entry

Postby michaelangela » Mon Sep 24, 2007 10:28 pm

casinoman wrote:1. Use forex daily open, close, low and high
2. Midpoint equal (high + low) / 2 for previous day
3. Enter long if current day open less than midpoint at midpoint
4. Enter short if current day open greater than midpoint at midpoint


Hi there casinoman

Just wanted to ask for clarification, when you say "open less than midpoint at mindpoint", what does the second midpoint refer to?

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Re: Answer to TRO's Question

Postby michaelangela » Mon Sep 24, 2007 11:18 pm

Ditto on the "median spread". Do you mean the high-low range for the precious day?

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Z response

Postby casinoman » Tue Sep 25, 2007 3:11 am

The median spread is the median number (as many numbers above as below) from the midpoint to the current day close that I found in running my trials.

MEDIAN number of pips in favor of or against direction taken from midpoint:
AUD 20 pips
CAD 30 pips
EUR 30 pips
GBP 40 pips
JPY 30 pips

The entry point is:

(1) If the open is higher than the midpoint and the price moves to the midpoint (directional bias) enter short at the midpoint, or

(2) If the open is lower than the midpoint and the price moves to the midpoint (directional bias) enter long at the midpoint.
"Technicians never die - they just chart away"

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Postby michaelangela » Tue Sep 25, 2007 4:15 am

Ah thank you for the reply. That does clear it up. According to these rules then on the days where the open is higher than the midpoint and continues up or if the open is lower than the midpoint and moves down, those days you are out?

Also, do you mean "...from the midpoint to the previous day close"?

Thanks again! Always learning...

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michaelangela

Postby casinoman » Tue Sep 25, 2007 10:53 pm

Yes, it rules those days out.

The median number was computed on previous day middle to the current day closing. You have to remember that the computation was made on historical information - the current day's close was known, therefore measureable.

This median number is then applicable to the current day's entry position, potential profit taking and/or being stopped out. As an example, suppose that the previous day middle for JPY was 115.50. On the daily chart JPY opened at 115.30. Once the price moved up to 115.50 you would be entering in a long position. The median number (same amount of numbers above as below) that JPY would move up to would be 30 pips, meaning the target exit point would be 115.80 (115.50 + .30).

There is never any certainty that the price will continue to move in the choosen direction, it could just as well retrace. Say you used a stop loss of 6 pips, you could be stopped out 5 times for a total loss of 30 pips (6 * 5) and win 30 pips 1 time - a breakeven senerio. Win 16.7% and lose 83.3% of time.

Now consider this:
Out of 100 trys (using the exact same price, entry, stop loss and target exit price) you win 19 times and lose 81 times (19% win - 81% lose). Your expectation is a return of 114% for every dollar risked. So if you were risking $500 (representing 6 pip equivalent movement on gross cost of JPY lots), you would mathematically be earning $70 per trade for a total of $7,000. Obviously, if you won a greater percentage of the time or won more pips each time, your expectation is greater - of course the inverse is also true.

In my opinion the most important aspect of trading is the exit, managing your potential losses. Way too much empahsis, time and energy is spent on entry points and set-ups. The fact is once you've made a decision and entered - you're in - none of your logic, charting or insights will change the direction the price takes. You get the heck out fast if you were wrong and ride the winners.
"Technicians never die - they just chart away"

Trade like a Lemming but don't jump off the cliff like the others

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Postby TheRumpledOne » Wed Sep 26, 2007 1:03 am

"In my opinion the most important aspect of trading is the exit, managing your potential losses."

Too funny, Casinoman... we think alike and we think opposite.

To me, the entry is more important because the entry determines whether or not you have a chance to capture profit. That's what I want, a chance to make money. It's up to me to take it but it has to be there for me to take.

Otherwise, you can just enter the market at anytime, any price, and set your exits.
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