HLHB Weekly Update – November 11, 2011

HLHB Trend-Catcher

EUR/USD 1-Hour Chart

As you can see in the chart I posted above, the system experienced a boatload of whipsaws. This resulted in a lot of small losing trades, which consequently caused a big hole in my forward-testing demo account. The winning trade didn’t matter as it wasn’t enough to cover the losses.

After months of forward-testing, I must say that the HLHB Trend-Catcher System is NOT fulfilling my expectations. It does not filter out the whipsaws and it experienced huge drawdowns. This means that I must make some changes or pick out a completely new system.

That being said, I’ve decided to come up with a new system for the 2012. I’m thinking of picking out one of the more popular systems in the Free Forex Trading Systems forum, asking my awesome readers (you guys!) for systems, or coming up with a new one myself. Of course, my new system should be purely mechanical.

Please let me know what your thoughts are!

GBP/USD

GBP/USD 1-Hour Chart

My GBP/USD trade also didn’t play out as well as I hoped it would. After I bought the pair at 1.5930, it just consolidated around the 1.5900 handle. I thought that it would start an upward rally when a bullish candlestick formed, but it didn’t take long for price to slip below support at the major psychological handle again and stop me out. Boo!

Buy GBP/USD at 1.5930: Stopped out at 1.5870, -60 pips/-1.00%

I was right about the BOE not increasing its asset purchase target during its interest rate decision yesterday. But as it turns out, that wasn’t enough to get the pound bulls rallying.

I guess investors are still pretty jittery about the situation in Europe. As Forex Gump has pointed out, with Italian bond yields soaring to 7% (and beyond), the possibility of Italy defaulting has become a real risk. But it seems like the situation is already getting better with Italy having a relatively successful bond auction yesterday.

Gosh, I hope I my trading will also get better in the coming week. I feel like I haven’t won a trade in forever! I will need to relax this weekend and get rid of all the negative vibes. But how? Let me know how you guys cope with a bad week in the markets.

XOXO,

Huck

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  • Gazi Nibras

    just my newbie thoughts… what if- once you are gaining pips, set your trailing stop tight enough to avoid being whipsawed?

    • huck

      Well, I’d like to tweak/find a system which prevents me to get into whipsaws in the first place as much as possible.

  • Andrew

    I noticed there was a cowabunga sell signal at 1.5924 as your cable trade was heading down to its stop out of 1.5870. I’m thinking of exiting cable trades if there is a cowabunga signal opposing my trade. This would have cut your losses yesterday.

    • Andrew

      suppose i’m saying be a robot if you wanna cheer up! not the best suggestion …. :)

      • huck

        It’s okay Andrew!

  • Andrew

    Is it common for traders to have a hybrid system, combining discretionary and mechanical? Or is it more usual to have separate discretionary and mechanical systems? I’m a newbie, do you experienced traders use such hybrid systems?

    • Marshall Clarke

      I would say many if not most professional traders use some variation of both… Using discretionary analysis to determine good times to enter while using mechanical analysis to pinpoint entries.

  • giancarlo

    My humble opinion is that, while no system is perfect, the EMA – RSI – ADX combination is the optimal one when it comes to finding trends.And there might be 3 simple solutions to your problem:1. use the 5 EMA and 10 EMA applied to the close, instead of 10 and 20;2. for entry points, watch the chart and wait for all indicators to give (EMA crossover) and confirm (RSI >/< 50) a trend signal;3. for exit points, do not set a specific target profit, rather keep watching the chart and close the position when, for example, “indicators happen to reverse at a certain level” (as the experts at Babypips say).Just my thoughts.

  • René Merki

    I guess it works better on the 4h chart…

  • giancarlo

    So, in Andrew’s words, i think a discretionary system would be a better option than a mechanical one.

  • Schnitzel

    i tried this system too and the main problem, i think, is that it only works in a trending market and with big trends, but of course it reacts to signals from both markets and so you get a lot of faketrends which are only like 50-100 pips long and stop you out before even going near your profittarget which is pretty big.. or as giancarlo said, you could just reduce your targets and add some support-/resistance levels and stuff to figure out where the market might go

  • nunezdiddy

    well huck..same goes with me..but fear not..as we still have lots of opportunity in the future..:)