Mathematical Trading System

By the time you finish reading here, you will be saying "O thank God, I got the Holy Grail". From my point of view this system is as close to the Holy Grail as the nose is close to the mouth. I therefore request your comments and contributions to make this system better for us all. Thanks, and here we go.....

Do you know that when a Currency pair begins to move, it will not continue moving in one direction? It will move move 20, 35, 78, or even 100 pips but somewhere somehow it has to retrace in the opposite direction.

Let's say, I wake up 00:00hrs GMT(use any time here) and look at the GBP/USD. What I do, without asking, I short the pair expecting 25 pips as profit. I risk 25 pips for the trade, meaning SL at 25 pips away(assuming zero spread). I also put a pending order, double the size of the first one, at the point of the SL. This pending order is also a Sell, expecting a 25 pip profit and having 25 pip SL as above.

Let us see the outcome:
1) The pair may go down immediately and give me profit of 25 pips. 25 pips? I am rich! So, close all the other trades, pending, whatever. Assuming a Micro account, with a starting balance of 1000 USD, 1:200 leverage, I had used a 5% margin. This was 10 Microlots. This gave a profit of 10*25/10= 25 USD. That is a cool 2.5% for the day. I am rich!!!!!!!!!!
2) Sorry my profit-hungry friend. By the time you finished bathing, you find the Pound has moved against you. You watch, and the stop loss is hit. Pooooo........ Well, you have just lost 2.5% of your account. Remaining balance: 975 USD. However at the point the stoploss was hit, a new trade of 10% margin was triggered. It has TP at 25 pips and SL at 25 pips. You watch, and the pair continues to go against you. When it is about to hit the new stop loss, you mutter something like "Jesus". The pair then reverses, moves through its origin and goes down and makes you rich 5% of your account( ie 20*25/10= 50 USD). You are twice richer your initial loss. In other words, your -2.5% has been rendered 2.5% for the day. A miracle, not so?
3) Another guy, who was on the EUR/JPY, using the same principles, gets the second SL hit. He therefore loses a further 5% bringing his balance to 925 USD. He therefore decides to go in with 20%(of 1000 at 1:200 leverage) margin which is 40 Microlots. This trade is a sell. It gives him 25 pips, and he makes 10% profit with a net of 2.5% Profit for the day.

This assumes the pair will retrace at a certain point. Please read and review. Let me give you one of my reviews:
1) I could not put a sell at the beginning of an up-trend as shown by, for instance, moving average cross-over(faster ma moves above slower). At this point I would go in with successive buys.

Hi Busingy, I don't think I have a come across a system like this before (though I am fairly new to this).

So basically what you are doing is constantly adding to a losing position until it retraces 25 pips in your direction?

How far would you be willing to go before you cut your losses? For instance, to start with you would be risking $1 per pip, but by the time it has gone 150 pips in the wrong direction you will then be risking $64 per pip. And 25 pips @ $64/pip is $1600. Your unrealised P/L will already be at -$1575 just to get to 150 pips. So if price goes that extra 25 pips to reach 175 pips in the wrong direction, you will be at -$3175 and will now be risking $128/pip.

I think this is a surefire way to get an account wiped out. But good luck.

Tom

I also agree, markets trend all the time. I'm not liking this fixed idea of 25 pips, how have you come up with this fictitious number? Doubling bets each time is know as gambling. You would be better off doing this idea on roulette. Each time you loose, repeat your bet on the same colour without changing. Eventually the colour will change to the one you are backing. This is a really dumb idea of trading if you want to blow your account when a bad run occurs. You cant afford to go wrong more than 4 times before the leverage starts rocketing.

Thanks for your comments.

I have been using this system today. I used 2.5% of account as Trade 1. The 2nd Trade was of course 5%. and so on.... My 1st trade was entered whenever a candle closes out of the Bollinger on the 5 min chart; a Buy if on Lower Bollinger; and Vice-versa. My TP was 12.5 pips; SL 12.5 pips. This means 0.625% on a successful round.

This way I have to make sure I win before Trade 6. In otherwords, Trade 5 has to win or else..................

When I backtested, it worked well for many months. Of course use the Eur/USD which has low spreads.

Thanks again.