FOREX strategies :
Most of FOREX dealers are using different FOREX strategies in currency deals. We have written a bunch of different articles which explains the different strategies of FOREX trading, which you can make sure that’s correct, develop it and recreate the best commercial strategy for your own needs. Also this section includes an explanation of the profitable and losing business, how to protect the working capital and money management, experts and exchange programs.
If you didn’t find what you were looking for, try to check the whole list of “explaining FOREX” courses.
Breakthrough strategy TURTLE-STYLE:
Some of the traders prefer using the breakthrough points to indicate the direction points, while others prefer to use pointers that appears a strong directional movement. who’s right? and who gives a better result?
Turtle traders :
In the early 80’s of last century , the famous trader “RICHARD DENNIS” bet his partner that he can transforme a new traders into a winners by teaching them a simple trading system, brifly , he could actually appoint some new traders , give them a system and a capital , and watching them making a huge profits in few years. The long-way term ,there was a lot of expectations about what’s this highly profitable trading strategy.
Few years later , some of the original turtles posted the “rules of strategy” gived to them.
Generally believed that this type of breakthrough systems is not working well anymore , specially in FOREX market when FOREX breakthroughs frequently become “fake breakthroughs”. But, I was surprised by knowing through my own research that the turtle exchange system can work very well in the FOREX market , compared to the other acces systems that includes pointers , time of day ….etc
Trading turtle-style in FOREX
And because turtles trades in a wide range from markets, you might think that the main part of the successful application of their methods in FOREX market will be the trading with all currecy pairs equally . in fact, reaserch shows that the American dollar is the main driver in FOREX market, and the pairs of currency that includes the American dollar tends to move towards it . that may change in the future if the American dollar lost his role as a major global currency , but till now it’s true ; after the American dollar EURO is the strongest currency in terms of direction. So it’s good to apply this trading strategy on the American dollar pairs only.
Turtles used the 55 days breakthroughs and in some cases the 20 days breakthroughs . this periodes are considered very short comparing to the contemporary FOREX market , since 2008 ,the periode of 70 days versus 3 months become a great direction indicator , and it succeded very well before that near parts of contemporary FOREX era .
There is an oher final thingcould be added to bost the performance .the acces prices of all currency pairs can be improved at the daily close everyday and based on thst the income request can be determined . also the stop loss point can be calculated as a function for the real domain rate. But if the price is below, or it went down below the loss stop price before the entry price goes off ,trading should not be done . this mechanism prevent the access with tradings when there is a chance that the price finds its self stressful in a sooner period after the breakthrough .
Rules of strategy :
1.enter in a buying trading when the price goes on the higher price registered in the past 70 days or a selling trading when there is a breakthrough in the last 70 days, on condition that the stop point price will not be hacked before the entry.
2.the stop loss point can be determined based on 0.5, 1 or 2 unit from real mean range .
3.a fixed volume of trading cash must be used , and it has to be perfectly small , when it’s no more than 0.25% of the capital for each twice from the real mean range ;
4.trading with the American dollar main pairs only and the currencies related to the goods priced in the American dollar . a basic analysis filter may be used to improve the choice of trading.
5.a range of methods can be used to define the exit range for trading.
Results of the retrospective test:
A reverse test is done from April 2001 until the end of June 2015, which considered a long period of time, the average expectations for each trade shown for each currency pair and generally is listed in the table below, by using stop loss volumes at 0.5, 1 and 2 units from the real mean range for 20 days and the multiple profit goals are based on the rate of return for risk. spreads, commissions, glides and funding fees until the the next morning are not included in the results.
It’s obvious that this is a powerful and profitable strategy by time, especially at a higher rate of return for risk. for sure, there was a weakness in the trads which started with 1 and 2 real mean range compared to how much it was with the 0.5 real mean range, but it’s very interesting, notice how there are a few differencies in the positive mean expectations for trading between the loss stop levels. a good solution could be by using a real mean ranges higher when the lowest real mean ranges doesn’t start out.
Last warning : as is the case with all the mecanic strategies, there are sometimes a sharp backing down , with about 3000 trads for strategies 1 or 2 real mean range over 14 years , and about the half of that with the 0.5 real mean range strategy ;
Let’s give an example , the maximum back down from top to bottom with an exit points at rate of return for risks with 2 unit was as follows:
0.5 real mean range :34 units
1 real mean range :98 units
2 real mean range :130 units
This is what you should put it in considerations when you plan to a business management strategy, if you realized this kind of direction trading methods.
The financial value curves of the retroactivity:
All at the profit target of rate of return for risks of 2 unit.
Loss stop point 0.5 real mean range: