New Weapons Against Nefarious Price Action

New Weapons Against Nefarious Price Action

Aug. 7, 2023

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July’s Forex trading action made me very angry.

The Bank of England and the Bank of Japan couldn’t keep their mouths shut and couldn’t stop making sudden announcements.

Considering my favorite pair to trade (and the best tested pair to trade) is the BRITISH POUND/YEN, that banking combo was not good for trend following robots using GBPJPY.

It was maddening.

Price would break out Long…and immediately reverse to a stopout.

Then price would break out Short…and immediately reverse to a stopout.

And then it would go back to Long (with a stopout) before going back to a Short (with a stopout).

It was almost as if a Central Bank was manipulating the price to artificially keep it in a range.

Hmm.

But was the losing streak in July unique? Not really. There have been several streaks like this over the past 20 years.

The truth is: this sort of thing is just part of the game.

The game, though, made me furious this time.

And I want some weapons against this type of ridiculous price action.

What’s one?

Use a system that’s in the market for a much shorter period of time.

And the Hornet is an example of that. The Hornet is one of my oldest robots (developed back in 2013) and goes for small profit targets on pull-backs. It only trades a certain part of the day and tries to go in the direction of the short-term trend.

If I used the Hornet in July 2023 using the settings I just shared with my Elite Members, here’s what I would’ve hypothetically gotten (trading 1 lot each time on the EURJPY, NZDJPY, USDJPY, CADJPY, CHFJPY, GBPJPY, EURUSD, and AUDCAD):

Granted, it’s not much if we traded it on a sample $10k account.

But it’s not a losing month, either. And all my bank-manipulated July angst would have ceased to exist.

Here’s that same portfolio for all of 2023:

Those results on a hypothetical $10k account would be much better.

And, again, it takes the idea of a manipulated market (real or imagined) out of play.

S0, problem solved?

Not exactly.

A broker can always widen the spreads for no reason and make a robot with small profit targets much less profitable.

Do we have any weapons for that?

We’ll talk about that in the next newsletter.

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Disclaimer:
It should not be assumed that the methods, techniques, or indicators presented in these products will be profitable or that they will not result in losses. Past results are not necessarily indicative of future results. Examples presented on these sites are for educational purposes only. These set-ups are not solicitations of any order to buy or sell. The authors, the publisher, and all affiliates assume no responsibility for your trading results. There is a high degree of risk in trading.

HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN INHERENT LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT ACTUALLY BEEN EXECUTED, THE RESULTS MAY HAVE UNDER- OR OVER-COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN.