Statistical Gambling System (High Winrat)

Hello everyone, using my statistical knowledge I have built the best gambling trading system available for Forex. But first a little disclaimer:

By using this system, you agree not to hold me responsible for any losses, financial or other, that may occur as a result of your use of this system, nor for any other information or files present in this thread. This is a gambling system, so in the long run it will cost you money , but in the short term you can make a profit . It is a very, very high risk system and it can wipe out your entire account, so make sure you understand its risks and don't risk more than you can afford.

1) Basic stats of my build system (I know it's boring, but it's useful to read):

Using all my statistical knowledge, I'll show you how to maximize your gambling opportunities with this system. Most of you know that I don't like using indicators of any kind, but in this thread we'll make an exception. Bollinger Bands and Simple Moving Averages will guide us. Most of you don't know how to use BBs properly, so I'm going to show you how to use them properly.

First of all, Bollinger Bands is not a range bounce indicator or any such indicator, using it as a range oscillator, buying on the low bands and selling on the high bands, is the biggest mistake one can make. Bollinger Bands are a statistical tool that measures the standard deviation of a candlestick distribution.

For those of you who know nothing about statistics, you can quickly learn the basics here:
http://en.wikipedia.org/wiki/Standard_deviation
http://en.wikipedia.org/wiki/Probability_distribution

The system will use the "3 sigma rule" but we will use 7 sigma to ensure that our chances of failure are very small. If prices are normally distributed, then our winning rate will be 99.999999999744%. But the tune I showed that the price follows a Cauchy distribution to some extent which has a fat tail, so if we use 7 sigma distance as stop loss, our win rate will be lower than this value because the price has a greater chance of deviating from the median for a certain period, we use 5 days, but the win rate is still high.

http://www.forexfactory.com/showthre...58#post6646358



Here's a little spreadsheet that calculates it:

But the difference is that the Cauchy distribution has an infinite range, while the FX market cannot have an infinite range due to liquidity, so prices have to reverse at some point anyway (less chance when central banks inject liquidity during QE). But there are still fat tails, so we have to use a very high bias to deal with that.

Therefore, it is difficult to accurately calculate the win rate, but it is still higher than the 95% presented in my system. I will rely on my backtest data to estimate win rates.

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2) System principle

In the long run, the system will lose money, and 1 loss can wipe out a large part of the account ( or it can be wiped out completely ), but the win rate of the system is so high that the likelihood of a loss is small to almost impossible. Therefore, the longer you use it, the more likely it is that you will suffer a loss (of course, the results of each trade are statistically independent, but the longer you try, eventually at some point you will suffer a loss).

Therefore, since our probability of success is very high, we must take advantage of it and increase the LOT size accordingly.

So you can't use this system indefinitely, you have to stop at some point or risk losing everything, but hopefully we can make a lot of money before the losses wipe everything out. It's also good to make regular cash withdrawals after all transactions have closed, but don't end the transaction prematurely.

We can use a lot formula that increases the lot size accordingly to risk a certain percentage of the account balance. But why bother? Instead, to maximize the efficiency of our winrate advantage, we will always increase the LOT size, but make sure the SL is very wide so as not to stop increasing it. You don't want to receive margin calls, so you can also use smaller leverage.

So the risks are very high, but so are the odds of winning and potential rewards, so make sure you can afford the risk. 1 loss can wipe out the entire account, but this is still very unlikely.
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3) System

All you need are Bollinger Bands and Simple Moving Averages, the system can be automated but can also be used manually.

Since our system profits from the candlestick distribution, and since the probability of the price distribution occurring at the tail of its distribution chart is small, we will use a very high period BB.

Pairing: Minimum spread pair, the smaller the spread, the greater the opportunity, so EUR/USD
Timeframe: H1 (1 hour chart)
Bollinger Bands: Use this on H1 (1 hour chart) and set it to period 120 = 24*5 so it will look at the distribution for the last 120 hours (i.e. the last 5 days of trading). Since price sentiment usually changes on a weekly basis, BB will understand the distribution of the bars throughout the week. Set the bias to 7.
Moving averages : time frame H1, period 120, closing price and simple moving average

In case you were wondering, the midline of the BB is exactly the SMA, but if you set the MA to a different color it will give you a better visualization

Buy Entry : If the price closes or just moves above the SMA, and the price was previously below or equal to the SMA, you can buy
Sell ​​Entry : If the price closes or just falls below the SMA, you can go short if the price was previously above or equal to the SMA

You don't have to wait for the price to close because H1's closing time is 1 hour and you may miss the 4 pip trading opportunity, the sooner you enter after the price breaks above/below the SMA, the better the opportunity.

Profit: Stop loss + 1 or 2 pipettes, the smaller the TP the greater the chance, so the smallest TP is your stop loss, my broker gave me a 40 pipette. The stop loss is on E/U + 1 or 2 pipettes, depending on the volatility, on 5 brokers it is 42 pipettes, on 4 brokers it is 4.2 pips ~ 4 pips. If your stop loss on E/U is bigger or smaller, you have to calculate it.

Buy Stop : Just below the Bollinger Band, so the chance of loss is small at 7 sigma
Sell ​​Stop : Just above the Bollinger Band, so the chance of loss is 7 sigma

You may think that RR is too small, but mathematically it turns out that the chance of hitting the stop loss is very small, and since we use 7 sigma deviation, it is very, very small. In addition, it is better than no stop loss system and fixed stop loss system. Your stop loss is set dynamically based on the distribution of candlesticks on the chart.

Lot size : Since our stop loss is small, it doesn't make sense to adjust the lot size to a percentage of capital risk, so we want to make as much cash as possible until a loss occurs and wipes out our account. Therefore, the system uses 1% of the account balance (just to not receive margin calls, but you can use more if you have more capital and less leverage).

The formula to convert it to lot size is: Lot Size = ACCOUNTBALANCEINCASH * RISKPERCENT/10000
So, for $100, lot = 100* 1/10000 = 0.01 (MT4 lot unit) or 1000 lot unit (1 micro lot)
And adjust the lot size as your account grows.

Also make sure: STOPLOSSSIZE * TICKSIZE * LOTUNITS < FREEMARGIN to avoid margin calls and use smaller lot sizes if necessary!
Available Margin = (Account Balance - Margin Requirement)

Notice : Make sure your leverage does not exceed 1:50 or 1:25, preferably no more than 1:50 or 1:25, so that you do not receive a margin call when your SL is very wide, and if you do not have enough cash in your account, use a balance less than 10%. Try not to enter based on the news and make sure your slippage and spreads are also small. Also, never move your SL or TP or you will break the system, so your trades may be open for days, so if you may have overnight swap bonuses or pay swaps based on the currency, but with EUR/USD you will lose a little money on negative swaps, but not much.

Factors that can increase your probability of success :

1. The smaller the take-profit, the better, but a stop-loss + a few pipette-sized take-profits is also good.
2. The smaller the spreads and slippages, the better
3. The less volatile a currency pair is, the better
4. Higher liquidity is better (assuming lower volatility)
5. The higher the deviation the better (7 sigma deviation is enough)
6. The faster you place a buy/sell order after the price is below/above the Simple Moving Average, the greater your chance of winning. Don't let the price deviate too far from the SMA because with every point it deviates from the SMA, the probability of failure increases.
7. The longer the period of BB the better, we use 5 days price distribution (24*5 hours = 120 periods), this is enough because sentiment changes every week, so BB will contain the price distribution of the whole week, so the deviation of price from the weekly median by more than 7 sigma is very small, so placing the stop loss outside of it is perfect.
8. Stay away from all news and high volatility events, but do not manually close a trade once it occurs, and never move TP or SL

The latest version 1.5 can be seen here (after #330):
http://www.forexfactory.com/showthre...48#post7248548

Expert advisors for v1.5 (after #352):
http://www.forexfactory.com/showthre...53#post7256253