Forex trading strategies - bunny cross, woodies cci, 10 pips a day

Do the brokers with the narrowest spreads try to make up for it in other ways? I have been paying a 5 pip spread to trade GBPUSD and I’m tempted to switch to a broker with a spread of 3 pips.

The reason why they make the spreads narrower is because they hope to attract more suckers to lose their money with them instead of with their competitors.

It sounds like a way to save trading costs.

If one thinks clearly through the process how the brokers operate – their only source of “risk free” revenue is the margin accounts of the clients. (They also have risk based revenue from the offsetting of positions at their clearing houses. You must however understand that they can not realistically offset each small trade, so they constantly monitor the net position they have per currency pair and hedge that position. As a net result they may incur profits or losses from that process).

As long as their clients (all together) are net losers they are net winners. So the story of narrow spreads is just part of the marketing wizardry / half truths they use in their marketing to lure ****** money that will inevitably be lost via losing trades to them.

Think about it for a moment

1. They don’t ask commission. No free money taken out of clients’ accounts there.

2. They ask rollover fees. There they make free money. (But not nearly enough to make a business out of it.)

3. They can use tactics built into the software like, “price shifts”. With this they effectively just take a pip or two out of clients accounts. Price-shifts is a sure fire way to do it, but I think it is not used that much anymore because (1) they MAKE ALL THEIR LOOT FROM THE STOP LOSSES THE CLIENTS PLACE THE WHOLE TIME (2) they rather convince them to place say 30 point stops and make 30 X 1 pip than ripping 1 pip out of 30 accounts?! Or rather 30 X 30 pips rather than 30 X 1 pip ?!

4. Consider this. All of them do everything possible to convince you to over leverage and place close stops. WHY? Because the only way they make money is if you really are a net ***** – “at the end of the day”.

5. Its really immaterial to them if they have a 3,4 or 5 point spread. On all clients via introducing brokers they have to pay over usually 1/2 to 1 pip in any case. If they have to offset at a clearinghouse the spread they trade on is usually 2 or 3 pips. They therefore don’t necessarily make money from the spread. They make money from your losses.

6. And i say it again. They subtly convince you to follow trading strategies that cause you (inevitably) to do many losing trades. And in other respects they turn the concepts of “risk management” against you to convince you you better not leave that screen before you have placed a stop much closer to the entry point than a limit to the entry point, or your profit target.

Why do they do it? Because they know, from high up, your trade, how cool you might think it is, how right, how perfect a signal, it is just one more random entry like a million others in the global FX market done by thousands and thousands of “gamblers with randomness” and a stop 3 times closer to it than a limit, has a three times better chance to be hit. And they then take the winnings.

But Smooth operator, yes, move. Especially if you have a realistic history of profits. That means you may bargain on taking on average in the future x number of pips net per trade and if you can add 2 pips to that, its more effective. If you don’t have such a history, you shouldn’t even bother to move, but rather spend your time getting to the point where you can realistically know that on average you will net x number of pips if you push the buy / sell button to open a trade.

May I add here that any beginner should have this as part of his goals: Get a long run of real money trades behind your back and know why you did them. Then you calculate the net profit you make per trade. If it is a long enough series you should have confidence that you will be able in future to repeat it. (How much is long enough? Tough to say, probably about a 8 months to one year, where you have had a few ranging periods and up and down trending in the currency / currencies you are trading. Obviously if the result is a net loss, you should preferably stop doing it and leave the FX or get someone to teach you to make a series of net winning trades.

The moment you reach that point your broker is in trouble … cause they are going to become a net ***** with respect to you.

Oanda forum

I think the best way to understand it is to do it yourself. This is how I learned.

Let me try to put it simple on a single pair EURUSD with 20 pips grid spacing:

1. In one account, put limit buy orders every 20 pips at …, 1.2200, 1.2220, 1.2240, 1.2260, 1.2280, 1.2300, 1.2320, 1.2340, 1.2360, 1.2380, ....

Each order has a TP of 20pips (maybe 17pips if you don’t want to have a trade while the immediate lower one doesn’t TP), and NO STOPs.

Whenever a buy order is gone (either because it TP or limit order expires), re-enter that limit order (at the same price and same TP, no stop)

2. In another account, do the same thing except do sell instead of buy.

I personally trade in one account only and have adapative spacing, and use market orders instead of limit orders. But if you try this for 2 or 3 days, you will get the idea.

More about Grid tradding

Here is what I have been doing the last 3 weeks with my very small account (because after 4 or 5 years, I still suck at this). But it has been fun.

Imagine a chart of the AUD/USD. Above and below the current price, place small limit buy orders at 15 pip increments (05, 20, 35, 50, 65, 80, 95). The take-profit is set for 15 pips on each limit buy order. Reset each order that takes profit.

Flipside. Imagine the chart of the EUR/USD. Above and below the current price, place small limit sell orders at 15 pip increments (05, 20, 35, 50, 65, 80, 95). The take-profit is set for 15 pips on each limit sell order. Reset each order that takes profit.

Now imagine for the moment, just the AUD/USD chart with all those little buy limit orders. If price climb steadily up, you are buying and cashing in every 15 pips. If price is choppy, you are collecting on dips and selling on peaks. However, if price steadily declines, you are accumulating positions and drawing down margin.

The EUR/USD sells are a kind of hedge, taking profits on the reverse moves. I do these two pairs because of the small spread and they often move together. I happen to do the AUD/USD long, since it gains interest. Keep the limit orders small. Occasionally liquidate position and reset orders above and below market.

Tripled the account in 3 weeks. I know that the alarm bells are going off in folks heads, because big gains could indicate disaster down the road. But we’re just talking dinner money. I want to find out just how it will succeed or fail spectacularly.

1:50 leverage. Say, with a $20 account, the orders are 100 units. Once it gets to $40, 200 units per limit order. Maybe less would work better.

Happy trading, everybody. Thanks for the great posts over the years.

More discussion here

Most successful traders use a mechanical trading system. This is no coincidence. A good mechanical trading system automates the entire process of trading.

The system provides answers for each of the decisions a trader must make while trading. The system makes it easier for a trader to trade consistently because there are a set of rules which specifically define what should be done. The mechanics of trading is not left up to the judgment of the trader.

If you know that your system makes money over the long run it is easier to take the signals and trade according to the system during periods of losses. If you are relying on your own judgment during trading you may find that you are fearful just when you should be bold and courageous when you should be cautious.

If you have a mechanical trading system that works, and you follow it rigorously your trading will be consistent despite the inner emotional struggles that might come from a long series of losses, or a large profit.

The confidence, consistency, and discipline that a thoroughly tested mechanical system affords is the key to many of the most profitable traders’ success.

Tom Basso designed a simple, random-entry trading system … We determined the volatility of the market by a 10-day exponential moving average of the average true range. Our initial stop was three times that volatility reading. Once entry occurred by a coin flip, the same three-times-volatility stop was trailed from the close. However, the stop could only move in our favor. Thus, the stop moved closer whenever the markets moved in our favor or whenever volatility shrank. We also used a 1% risk model for our position-sizing system. ...

We ran it on 10 markets. And it was always, in each market, either long or short depending upon a coin flip. ... It made money 100% of the time when a simple 1% risk money management system was added. ... The system had a (trade success) reliability of 38%, which is about average for a trend-following system.

Source: Van K. Tharp , Trade Your Way to Financial Freedom

my goal is 20 pips a day and i have made well over that. as i get better i am sure my pip goal will increase. I currently work a day job too, but find the best trading time on my current favorite currency (aud/usd) to be between 9pm and 8 am.
So you have plenty of opportunity to earn an easy 10 pips per day by using the longer time charts instead of the 1 minute. try the 30 minute. Lots of stuff there.
Of course, if you tend to watch your trades you won’t get much sleep. I have my stops and take profits set automatically when i make a trade

by Colombino

The next thing – very logical, but many traders don’t realize it, is that 5&20 MA on the 30min is the same as 30&120 MA on the 5 min. Both shows the same, just in the second case are the MAs more accurate and more correspondig to the market.
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Bunnygirl

I’m just catching up with the thread, sorry for the delay.

The filters I have been trying out lately are:
Eur/usd 22 pips
Usd/chf 25pips
Gbp/usd 32pips
Eur/jpy 30pips

I chose these 4 pairs out of the 10 that I tested as they gave the most reliable results and made an average of a minimum 30 pips per day per pair. I havn’t backtested the pairs I rejected since I did the initial tests, so maybe circumstances have changed.

A bounce is really a failed cross when the wma’s touch or come within a pip of each other. I use the filter in exactly the same way to enter either long or short as the market could go either way from here. With hindsight you will see the wmas just touch and bounce off each other.

‘A day’ – I count this as european time, 6am onwards, as asian time is often flat and has many whipsaws without hitting entry. (although I’ve seen some very nice crosses in asia lately).

I have 3 options at big news time. If I already have a decent profit then I’ll lock in most of it and sit tight. If I’m around breakeven then I get out and wait. If I’m in a loss then I bring my stop up tight and chance that it will turn in my favour.
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Hi Leeanne

If I miss the cross entry at the time then it is possible to re-enter later when we get a ‘bounce’ – which will be when the price consolidates and then moves off again. If the price doesn’t cross the wma20 then take the price bouncing off it and making a higher high/low of the previous bar. I try to stick to the rule of only entering in the same direction as the cross (so if the cross was up I’ll only take longs) until we have a cross in the opposite direction.

The filter thing is what the whole strategy is based on. The idea is to keep out of ranging days, but to catch the intraday trends.
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Your first 3 paragraphs about entering using the filter is correct. My exits are a bit of a grey area. I do look at bollinger bands and wma100 on both 5 mins & 30 mins for exits, along with trailing stops. I don’t use the wma5/20 cross on 5 mins for exits.
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Yes I do use a live account and trade with real money. My winning percentage is around 90%. With that percentage and cutting losses at the cross it is very successful. Maybe my rate is higher because I don’t take every trade, I should backtest to see how I would have done if I had. My longest streak of 46 wins ended 2 weeks ago.
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The gimmee bar set up is exactly as described in the link in Blaiserboy’s post and is a great tool for scalping.

Mr Sheen is just a nickname I gave to entering a trade after the dust has settled. (Mr Sheen is a brand name of polish ). I use it after big news events and also any other time I see the price retracing by 30 – 40 pips after a strong move on a 30 min chart. I move down to a 5 min chart and look for the price bouncing off wma20 or wma100 and closing in the opposite direction. I then take the breakout of that bar with the initial target being the previous high/low made (around 30 – 40 pips). Stops can be fairly tight at around 10 – 20 pips depending on which pair is being traded as anymore than this would be more than a normal pullback – it would be a reversal.

Mr Sheen is also a great tool for re-entering the cross trade if stopped out anywhere along the way or if the cross was missed due to being in the wrong timezone. I take partial profit at the initial target & let the rest run for the normal +50, +100 if seen with stops moved to breakeven.
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by tigerman

A bounce has to be confirmed by the same filter as a cross.

Personally, when the 5WMA bounces off the 20WMA I sometimes buy/sell WITHOUT waiting for a filter but also with a tighter than normal stop. That way if I’m right, I make a better profit and if I’m wrong I lose less. Checking other time frames, indicators and candle formations agree with the trade direction can further put the odds in your favor.
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by dentist007

A bounce has to be confirmed by the same filter as a cross.

Personally, when the 5WMA bounces off the 20WMA I sometimes buy/sell WITHOUT waiting for a filter but also with a tighter than normal stop. That way if I’m right, I make a better profit and if I’m wrong I lose less. Checking other time frames, indicators and candle formations agree with the trade direction can further put the odds in your favor.
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If I’m waiting to enter a trade I’ll set an alert to tell me when the price is approx 10 pips past the wma20 to save watching the screen all day. When the price has reached this level I check first to see how close the wma5 is to crossing, then I watch until either the wmas cross or bounce.

If the wmas are flat at the end of the day and I have no trade then for the Asia market I set 2 orders, 1 long & 1 short with accompanying ‘if done’ OCOs to take profit at 30 pips or loss at 30 pips because this type of OCO can’t be split into smaller stakes.

If I’m already in the market and in profit and want to hold overnight then I’ll simply set 3 OCOs and 1 stop loss. The first to take +30 or b/e, the second to take +50 or b/e, the 3rd to take +100 or b/e and the 4th just a plain stop at b/e.

It’s a bit complicated but saves a lot of wasted time.
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by dentist007

bg.enjoy the holidays.is it club 18-30.2 weeks in faliraki?again.
i am not old enough for that???
some thoughts for youre holiday.i did some testing on the nasdaq yesterday with the underound trader methods.
the 3 lane highway.ieon 3 different time frames.say 5/15/30 mins.if all the ma and stoch are moving in the same direction on all three,then why bother with a filter??
exit strategy,according to them the exit is determined around the price in reltion to 5 ma.maybe the price crossing the shorter ma by a certain amount or number of candles will determine whether the price is consolidating or retracing
the displaced 3 ema looks good.available on gftforex.they also have trailing stops.can give you the reentry.i have looked at this,they claim you have 6 mins on nas 3 min charts before the world knows there is a break.ie 2 candles
a good book to take on hols.20 quid from amazon.secrets of the underground trader.the principles can be applied to forex.
lcan someone please let me know if i am going in the wrong direction.i can take the criticism
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by tigerman

Guys the Bunny Cross works and is profitable IF you know when to trade it and when to ignore it. When to take profits and when to let them ride. This comes from experience and knowledge.
Bunny has both and if you don’t you may find it hard to make money with this or any method.
There are many great books available on technical analysis and they will help you to use the Bunny Cross at your own discretion as Bunny herself does.
If you flat out trade the Bunny Cross without discretion you will lose money or at best break even, but you’ll have fun either way
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by dailydow

To filter out bad trades only trade when the market is going to turn hmmm yes phil and how do we do that
Well the last three days on gbp look at an hourly chart on a daily basis there is allways one big move a day look at any day there is allways a move a reversal it is this move that you have to capture.
now check the times of the big moves for the last three days they have all been around 1 pm uk time which i understand is usa forex traders at there desks time
Now scroll back over a number of days and see what times of the days there are turns 10 am bar jumps out as being really significant.
So what im saying is do some bactesting to see which bars the market turned on reguarly 10 am i think will be the winner and only trade the cross on these bars lie in the sun for the rest of the day.
This whole topic of time of day to trade has been dicussed at legngth on trade to win under spot on trading system jonny t
hope its ok to say that
time of day is what its all about
Remeber there is allways a biggish reversal everyday
it
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by rivertrader

ahhhhhhhhhhhh the strategy of bunny cross, i will put my two cents in, i have found it to be genius. the filters are a miracle…80% of the time they keep me safe. and i am profitable, big time. ( this is a new thing for me.) and, i must admit, i can use my many years of gathered knowledge to make the bunny cross work better for me… (yes, any strategy we use, we can`t help but have all our past experience blend into the trades) trading is an accumulatinon a zillions hours of study and highs and lows…
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Yes I’m still using exactly the same rules, except the filter has been reduced on gbp/usd & usd/chf to 25 pips for shorts and 30 pips (25pips + spread) for longs.
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by Beachie41

Instead of looking for hard & fast rules for the filter, start to think of the concept behind it & apply a pip filter based on your own observation.
The filter is based on past price action, so eyeball the charts for recent months & see where, on average, a cross fails. Then use that as the filter.
The market isn’t static, therefore volatility will change and so will the filter.
If you do this exercise, rather then asking someone else for the answers, you will benefit far more from the observations you will make and thus have a better understanding of market dynamics.
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I use multilots using a different strategy for each lot so hopefully at least 1 lot will make it to the end of the trend.

1st lot 10 – 30 pips depending on the speed of the move & moving the reamainder to breakeven

2nd lot 30 – 50 pips locking +10 for the remainder

3rd lot 50 – 100+ pips,

4th lot trails using the extreme of the previous bar or the halfway point if it’s a longer than average bar.

Sorry to be a bit vague, but that’s what’s supposed to happen in theory. Quite often i’ll take half out at 10 – 30 pips and then trail with 3rd & 4th lot.
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“I`m normally here in the chatroom 7 am GMT until 5 pm GMT trading.

Best time to trade generally is 6:00 to 9:00 am GMT and 12:30 to 15:00 pm GMT. Be wary of entries between 10:00 and 12:30 GMT and after 16:00 GMT. Europe and US opening are most reliable. Be aware trends can change when a new market opens.”
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by Blaiserboy

Trading can be simple and very gratifying….. you need to define your approach, keep it relatively simple and practise until you master it…....

The system, bunny cross, works very very well without alteration, although sometimes people want to ‘improve’ it… and complicate it to all extremes…...

Practise makes perfect…!!!!!!!

Good luck trading
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3) From the sounds of it you only moved to EMA because your current platform does not do WMA. Would you use WMA if you had the choice to? From the little looking I have done, it seems that WMA gives crosses sooner then EMA, and thus could weild more pips.

3) It’s swings and roundabouts between the wma & ema. Yes the wma will have an earlier entry when there is a sharp swing in the price, but you will also see some very nice bounces off the ema too, and sometimes using the ema will keep you out of a bad trade. The last few days I’ve been putting both on Netdania and with some interesting results.

4) If the cross was in a range where the 100 EMA (WMA) prevented a trade, do you get in after say 20 pips above/below 100 MA or just wait for another cross?

4) First of all I wait to see if the price closes beyond the ema100. If it does, but by quite a long way (more than 10 pips) I’ll wait to see if the next bar pulls back to the ema100 and then uses it as s/r. If it makes a clean bounce off it I’ll enter using a 5 min chart. If it goes back over the ema100 then I wait to see if the bar closes the other side and repeat as above, but in the oposite direction. If this isn’t clear, just holler and I’ll find a chart to post.
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Sticking to the rules is the hardest part.
It’s a vicious circle –
If I break the rules I make bad trades, If I make bad trades I doubt the system, If I doubt the system I change the rules, If I change the rules I make bad trades.

Then I start pedalling backwards –

When I feel I’m on a downward spiral this is what I do:

I look back over the last month’s trades. At the point where I started to doubt the system, I take a look at the daily and weekly chart to see what was happening in the bigger picture. There’s usually somthing going on there, either a crossover, or a bounce that I’d missed.
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4) If the price is far away from the entry level I wait for it to pullback to at least the ema5, & preferably the ema20, this can take a while, but worth the wait, I’ve pointed out some pullbacks on the charts on page 90.

5) If I’m stopped out I wait to see if the emas are bouncing or crossing back. If they are crossing back over then normal entry rules apply to try to avoid getting caught in another whipsaw. If I get stopped out and the emas bounce off each other (sometimes news can have this effect) I try to re-enter when the price closes back below the ema20.

1. I use trendlines instead of MA. If the prize touch the trendline and go through it with 3-5 pips – in ~70% will break the trend.

2. Candle pattern – if it is classic ~85%. If not- ~50-70%

3. I use pivot points instead of fibonachi- S1,S2,PP,R1,R2 and the lines in between them. These are the places where “my finger is on the trigger”. If pattern or trendline breakout happens here- +10% probability

4. When the prize progreses and makes double top on the 5 min, and the second top is higher but in RSI is lower. RSI divergence ~70% probability

These are the best IMO. The most powerfull. I use them in combination.

r/r Target based on stop loss. good if not around the PC for few hours

Trailing stop.- the worst method in my opinion

And almost forgot economic news. If bad- exit.

I use 2 lots. With the first I lock profit early and then reenter if needed. The second- exit only when there are sure sings.

What time scale do you normally use?

Regards

I use multiple frames. I’ll identify a trade on the hourly then enter on either the 15 or 5 min. I stay on the entry frame until it reaches a certain point, then I move up to the hourly and use that for my exit.

So, if I enter on the 5 minute and the first three (or three out of four, three out of five) 5 min bars go against me, then I get out because it tells me that either my analysis or timing was wrong. Once I move up to the hourly, I’m well into B/E territory, or a small profit, so I just set a stop and limit and stop worrying about it.

I use the three bar rule. If my trade goes against me for three periods, I’m out. I take smaller losses this way and it suits me psychologically.

For example, I trade Fibs. I put my stop at a predefined spot. Once I enter, if the trade goes against me for 3 periods, it’s time to get out.

For me the most important part of this is regaining my objectivity. I find it very hard to be so while in a losing trade. Also, it prevents me from seeing better opportunities. There are lots of opportunities to put in trades so why get stuck in a losing position for hours or days on end when it’s clear that you’re losing?

I love the POP (Phantom of the pits) stuff. I have that on my wall, along with Rule 2-Press your winners correctly without exception.

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