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Hilary - The Loonie Strategy !

I thought for a while that it rewarded failure.

If you have an initial winning trade you would bank 45 pip/lots.

If you were in a trade that produced a loss of at least 120 pips and then reversed 45 pips you would gain 231 pip/lots.

However, I did calculate it with a loss of at least 300 pips before the 45 pip gain and there I got a loss of 432 pip/lots.

If you had started trading with 1 mini lot by the time you were 300 pips down you would have a total of more than 18 standard lots on the table.

Mind, it is late and I may have calculated it incorrectly.

Interesting startegy but it would appear exceedingly dangerous if the Black Swan (Loon) appears or you find yourself up against central bank intervention.

power cut or similar at the wrong time could be costly

qwento,

Is the Loonie Strategy a name that you have made up because the guy is Canadian, or is it something that's well known?

In the 3 days that's he's been running it, he's down a total of 116 pips over 44 trades, but up a profit of $123. That's starting the sequence with an initial 0.1 lot (they're actually mini $10k's).

PF is a healthy 1.77.
His average loss 2.6 pips/trade and average trade duration is 15 hours 47 minutes.
He's currently got an open loss of $9.53 or 86 pips over 4 trades using about $6 of margin.

There's clearly nothing there that's earth shattering and, as this only represents a very small percentage of his total account, it could conceivably actually be quite safe.

At its worst to date, he had 7 open trades and his largest trade was only 1.98 lots. He clearly had quite a way further to go from there before he was ever going to feel the squeeze.

It was the Canadian connection.

As I said, and I think I'm right, it will make money as long as he gets his 45 pip profit within 5 or 6 lot increases. After that it could spiral out of control.

Unless he has a limit set on the number of times he increments the lot size he is in danger of encountering that one event that blows the entire account.

I'm sure you're right with your calculations about it being loss making after 5 or 6 lot increases. I suggested yesterday that I thought there would be a need to increase the lot sizes exponentially to maintain profitability with a long loss run. My maths aren't up to it (actually they are up to it, but my it's my head that isn't right now - too much Chilean Sauv B last night).

As you say, the Black Swan would be the killer. It would therefore be safest to consider the worst case number of open loss positions from extensive backtesting over many years and to use that to draw a line in the sand somewhere.

The other consideration is running it through news events.

I would have thought that you are unlikely to get filled at the correct levels which may also influence profitability.

It would be interesting to find out the biggest move on the majors without a 45 pip reversal.

I wonder why he picked 30/45 pips - does he know something we don't ??

Well Timmy Taxes might mince around, but Volcker gets straight to the point.

Volcker, showing he’s no economic diplomat, says “China didn’t have to buy all those dollars” and that they contributed to the problem. That said, he understands why the dollar-centric global monetary system is restive.

Did anyone read the weekend story about Spanish and ex-pat people shopping like mad in Morrisons in Gibralter to milk Chunnel?

Well my local Lidl was full of Slovaks today.

:o)

Never realised you had fallen under the Lidl spell of perceived value

Oh I've never been in there. I just use their car park when I shop in Aldi.

:o)

I had you down as a Netto woman Hiltops.

;-)

No. That must be some sort of northern thing, Flossie.

:o)

She's a closet Waitrose Essentials shopper, Rob. Trust me.

Whoaaaaa Tiger. Don't put me alongside the geri's.

:o)

lidl do a really nice choc icecream! Morrisons in gib was always good for picking up gammon etc, certain things difficult to get in spain or very expensive.

Usd/jpy having another go at 98

USD/JPY: end of financial year sales start tomorrow

March 26, 2009 at 05:26 GMT

Chatter in the market is that there will be some very large sell orders in USD/JPY hitting the market tomorrow as the Japanese financial year draws to a close.

Generally the Japanese and London Fixes are particularly busy on these days but I would expect large two-way business.

Hiltops, got a little query for you which I'll mail you over the weekend - just watch that junk mail box :-)

No problem, Flossie. I've still not restored my old address book, so I don't have your email address just now.

Oh Flossie, to save you some time, you won't need to change the cable start hour as the major Asian markets aren't subject to DST because of their Equatorial proximity.

Loonie may be affected differently though - I'll have to check.

:o)