GBP/USD - one trade a day (GBP/USD - one trade a day) - MT4/MT5 resources

A lot of chart time for this pair reveals an interesting possibility. Starting tomorrow I will officially test this theory in a demo account.

This "system" couldn't be simpler. Money management requires more thought, so I'll explain it first.

We conduct one transaction per day on G/U (described later). We will always set a stop loss of 20 pips, and this 20 pips will always represent 2.5% of our balance. It's important to remember this.

Our goal for this month is to achieve a 10% return on the opening balance. This is how we determine the price target for each trade. We will always set a target price so that if the target price is reached, our end-of-month gain will be 10%. The first day of the month is simple, we risk 2.5% and want to gain 10%, so our risk:reward is 1:4. 20 points risk * 4 = 80 points reward. Therefore, the target price for the first trade of the month is 80 points.

If we have 3% winners on day one, we have 7% winners left this month. The next day, we risk 2.5% hoping to gain 7%. Risk: The return on this transaction is 1:2.8. We always risk 20 points, so our target price is set to 20*2.8, which is 56 points.

The next day, we lost 2.5%. There is now 9.5% left for the month. The next day, we risk 2.5% to gain 9.5%. 1:3.8 Risk:Reward. 20 points risk * 3.8 reward means a TP of 76.

Hopefully the math is clear. I've simplified it a bit - the example above doesn't take into account daily compounding or spreads. I have a spreadsheet that does the math for me and takes these factors into account when calculating. However, the concept may be challenging enough for some, so I want to make it as simple as possible without losing anyone. I'll post the results daily, which should help you understand the math after you've seen it a few times.

Enter the actual system. Like I said, it couldn't be simpler and this is what I discovered while spending hours studying G/U charts...

At the opening of the 08:00GMT hourly candle, review the 00:00GMT hourly opening price. If the opening price at 08:00GMT is lower than the opening price at 00:00GMT, we go long. If the opening price at 08:00GMT is higher than the opening price at 00:00GMT, we will go short.

Stop loss is always 20 pips.
TP is calculated as described above.

If neither the target price nor the stop loss is reached, the position is closed at the opening of the candle at 09:00GMT. Regardless of profit or loss, close the trade.

That's it. Each day, calculate your target price based on your distance from your monthly target, wait for the 08:00GMT candle, enter according to the rules above, and set your calculated 20 pip stop loss and target price. If the transaction is still open at 09:00GMT, the transaction is closed.

Once you reach your 10% target for the month, no more trades are made that month. Set a goal, stick to it, and don't overtrade.

Just to be clear...I don't want this system to work without money management. If you are doing backtesting on your own, simply counting points by looking at the 08:00GMT candles each day may not produce any exciting results. The key to whether this system is valuable is high risk:high reward. This is not a "how many points can I earn" system. This is a system with a predefined monthly goal, along with a money management strategy designed to help give you the best chance of achieving that goal.

I will not provide on this thread how to determine which candle is "support" for the 08:00GMT candle. If your broker is in GMT, then you have nothing to figure out. If your broker is not on GMT time, do a search to determine how GMT is calculated based on your broker's time.





Not much has changed in the six weeks or so this thread has been open. Several concepts have been discussed - summarized below. Remember, these are not "rules" per se. These are things people have observed that you can choose to incorporate (or not) into your trading with this system:

1. The “9 o’clock” rule. Some people have discovered during testing that if the distance between the 00:00 and 08:00 candles is less than 9 pips, the number of losing trades will be significantly greater than the number of winning trades. My testing has proven this as well, so starting March 1st I will be incorporating this rule into my trading. I will not place a trade where the difference between the 00:00 and 08:00 opening prices is less than 9 pips.
2. Use 01:00 GMT candles instead of 00:00 GMT. One member did extensive testing, replacing the 08:00 candles with 1:00 candles, and reported that his results were better.
3. Modify the risk:reward proportionally to suit your taste. There will be losers in this system. In a few months, there will be plenty. At a risk of 2.5% per trade, this number can add up. If you want to control risk, reduce it (and reap proportional rewards). Consider risking only 1% on each trade and aiming for 4% per month instead of 10%. Or risk 0.5% per trade and target 2% per month. Keep the ratio of 1:4.
4. Don't stop at 10%. Some members say continuing past 10% gains in winning months is better in the long run. Or, when you hit 10% for the month, don't stop, just "reset" to 0, adjust your position size, and start working toward 10% again.
5. What to do with your "last" trade of the month when you're close to your 10% target... If you're only a few pips away from your monthly target, it probably doesn't make much sense to risk 20 pips. Some options - (a) Set a target of 20 for the day so that the trade has a risk:reward of 1:1. (b) Don't trade and close your month at just under 10% - if you're closer to 10%, it's still a great month. (c) Don’t set any TP, just take what you can get. If you're up more than 10% this month, that's great!
6. Holidays - Some advise against trading during the UK holidays due to lower expected trading volumes.

As I re-read the topic I'll add anything I may have missed here. I think that covers most of the discussion.

At least one EA has been created and published in a separate thread. You will find links to them in this thread. Please do not post, ask for support or request any EA in this thread. If you want to create and share your own EA, please create a new thread for it. I will remove anyone's ability to post further in this thread if they post an EA, request the creation of an EA, or ask for help with an EA posted elsewhere. The only reason for doing this is to prevent the thread from being flooded with "EA Help" or "Can you add/change this" posts. I have nothing against EAs (I trade with them myself) and absolutely nothing against anyone creating an EA and posting it in a separate thread .

MT4 demo is a mess...

Ultimately, I hope you can embrace this concept and create a plan that works for you. This is a system that leaves no room for interpretation. You don't have to confirm if a line crosses, if 6 indicators across 4 time frames all match, or if something repaints or turns a shade of green you've never seen before and makes you wonder if you should enter at all. Entrance and exit are very clear. "Rules" are nothing more than guidelines. If you're wondering how to make it work better for you, be sure to give it a try and see. Take this and make it your own. Below are my results using the following rules: risk 2.5% per trade (20 pips stop loss), 10% monthly target, no trades when the difference between 00:00 and 08:00 is less than 9 pips, target 20 pips TP (no trades below 1:1 risk:reward) when the difference between 00:00 and 08:00 is less than 9 pips, target 20 pips TP (no trades below 1:1 risk:reward), do not skip holidays).

The results below are from forward testing in a demonstration started in January 2011. I will try to keep this section up to date.

January 2011: +10% plus additional +6% *

April 2011: +0.83%

*In January, before this topic was opened, the 10% goal was reached. We started at 0 on January 12 and were up 6% by the end of the month.