What is the New York Box Strategy?
This Forex strategy is pretty simple. I have back tested it with some impressive results. I will now start trading live and post my results here for all to see, evaluate and comment.
The Strategy
When to play? Every Monday
Currency Pair: Eur/Usd
Time: Analyse 7-9p.m. Enter after 9 p.m. once signal triggered. [GMT +800]
Step 1:
From 7 p.m. to 9 p.m. (GMT + 800) Draw a horizontal line at the highest point and the lowest point of the price range. See the graph below.
The two lines create a box indicating the price range before the New York Market opens every Monday.
In the above example, the highest point between 7-9 p.m. is 1.3695 and the lowest point is 1.3552
The difference: 1.3695 - 1.3552 is 143 pips. This will be my take profit target as well as my Stop loss target.
Step 2:
Look at the graph again. From 1-2 a.m. (GMT +800) the price hits my bottom line. This is an indication for me to go short.
I sell Eur/Usd at this point. I enter at $0.25 per pip. Then I wait.
My stop loss in this case would be 1.3695 (The opposite line)
My take profit target will be around 1.3409 (143 pips below my signal line at 1.3552...see graph)
Step 3:
Between 2-3 a.m I see that the price has retraced back up. I am losing at this point. What do I do?
I wait till price hits around 1.3600. Then I open a new sell position for Eur/Usd pair at $0.25 per pip.
.
.
.
.
Lets have a break now. Let me explain. My intention is to play the Eur/Usd pair at $0.50 per pip. But if I do that, if the trade goes against my favour, I will lose, in this case, $0.50 x 143 pips = $71.50
BUT, I opened 2 positions. One at the first signal: 1.3552 between 1-2 a.m. When price hit 1.3600 between 2-3 a.m., I am losing 48 pips x $0.25 = $12
Then I open my second position at 1.3600.
If price continues moving against my favour and hits my stop line at 1.3695, I would have lost a further 95 pips x 0.50 = $47.50
Altogether I would have lost $47.50 + $12 = $59.50
So in summary, for the same pip loss, if I enter straight away at $0.50 per pip, I will loose $71.50 but if I enter in 2 positions of $0.25 per pip each, I lose only $59.50. Thus, I reduce the risk for myself.
Sometimes, price does not retrace. As in, price continues in your favour all the way untill it reaches your profit target. In such cases, no choice, I play $0.25 per pip.
Price does not have to retrace exactly halfway before I open a new position. As long as I feel it has retraced enough, I open a new position.
Try to digest my rationale before moving on to Step 4.
.
.
.
.
Step 4:
After 2 a.m, I have both my positions open. I switch off my computer. I am mentally prepared for a $59.50 loss. The next day, I check my charts again at around 8 p.m.
As you can see, price went further up against my favour before plumetting all the way down to my take profit target between 1800-1900 at 1.409 the next day.
Again, my 2 positions of $0.25 per pip works better for me then if I had opened 1 position of $0.50 per pip.
What do I mean?
Scenario 1: I open 1 position only at 1.3552 between 1-2 a.m. at $0.50 per pip. I would have made: [143 pips - 5 pips (spread)] x $0.50 = $69
Scenario 2 (My method): I open 1 postion at 1.3552 at $0.25 per pip. And a second position at around 1.3600 at $0.25 per pip. Once price starts falling from 1.3600 to my signal line at 1.3552, I have made 48 pips x $0.25 = $12
When price continues falling to my profit target at 1.3409, I am making [143 pips - 5 pips (spread)] x $0.50 = $69
Altogether I have made $69 + $12 = $81 instead of $69 if I had only one position open.
Thus I increase my reward, and reduce my risk.
Why I like this method?
Reason 1:
I analyse the graph for perhaps an hour or two. Once I have my 2 positions open (and the Stop Loss values set), I can call it a day. Easy-forex is an online platform so the comp does not have to be on. Thus you save on electricity as well.
Reason 2:
Money Management: As explained above, Increase your reward and reduce your risk.
Why only Monday?
Honestly, I do not know. But it seems to work for me since I started ion October 2008. Most of my Monday trades have been successful.
I can speculate that perhaps, every monday the market is just waking up and thus the probability of getting a false signal is lower. But honestly, if anyone out there can offer a fundemental explanation to the success of my method, it would be greatly appreciated.
Why only Eur/Usd?
Simple. I am familiar with the price movement of this pair. This pair is my 'thing' as I have been following it ever since I took an interest in Forex. Feel free to try on other pairs.
I only like to concentrate on 1 pair as it helps me to be focused.
What if I lose?
I wait to fight another day. (The following Monday) Check my main blog for my weekly updates.
The Strategy
When to play? Every Monday
Currency Pair: Eur/Usd
Time: Analyse 7-9p.m. Enter after 9 p.m. once signal triggered. [GMT +800]
Step 1:
From 7 p.m. to 9 p.m. (GMT + 800) Draw a horizontal line at the highest point and the lowest point of the price range. See the graph below.
The two lines create a box indicating the price range before the New York Market opens every Monday.
In the above example, the highest point between 7-9 p.m. is 1.3695 and the lowest point is 1.3552
The difference: 1.3695 - 1.3552 is 143 pips. This will be my take profit target as well as my Stop loss target.
Step 2:
Look at the graph again. From 1-2 a.m. (GMT +800) the price hits my bottom line. This is an indication for me to go short.
I sell Eur/Usd at this point. I enter at $0.25 per pip. Then I wait.My stop loss in this case would be 1.3695 (The opposite line)
My take profit target will be around 1.3409 (143 pips below my signal line at 1.3552...see graph)
Step 3:
Between 2-3 a.m I see that the price has retraced back up. I am losing at this point. What do I do?
I wait till price hits around 1.3600. Then I open a new sell position for Eur/Usd pair at $0.25 per pip.
.
.
.
.
Lets have a break now. Let me explain. My intention is to play the Eur/Usd pair at $0.50 per pip. But if I do that, if the trade goes against my favour, I will lose, in this case, $0.50 x 143 pips = $71.50
BUT, I opened 2 positions. One at the first signal: 1.3552 between 1-2 a.m. When price hit 1.3600 between 2-3 a.m., I am losing 48 pips x $0.25 = $12
Then I open my second position at 1.3600.
If price continues moving against my favour and hits my stop line at 1.3695, I would have lost a further 95 pips x 0.50 = $47.50
Altogether I would have lost $47.50 + $12 = $59.50
So in summary, for the same pip loss, if I enter straight away at $0.50 per pip, I will loose $71.50 but if I enter in 2 positions of $0.25 per pip each, I lose only $59.50. Thus, I reduce the risk for myself.
Sometimes, price does not retrace. As in, price continues in your favour all the way untill it reaches your profit target. In such cases, no choice, I play $0.25 per pip.
Price does not have to retrace exactly halfway before I open a new position. As long as I feel it has retraced enough, I open a new position.
Try to digest my rationale before moving on to Step 4.
.
.
.
.
Step 4:
After 2 a.m, I have both my positions open. I switch off my computer. I am mentally prepared for a $59.50 loss. The next day, I check my charts again at around 8 p.m.
As you can see, price went further up against my favour before plumetting all the way down to my take profit target between 1800-1900 at 1.409 the next day.Again, my 2 positions of $0.25 per pip works better for me then if I had opened 1 position of $0.50 per pip.
What do I mean?
Scenario 1: I open 1 position only at 1.3552 between 1-2 a.m. at $0.50 per pip. I would have made: [143 pips - 5 pips (spread)] x $0.50 = $69
Scenario 2 (My method): I open 1 postion at 1.3552 at $0.25 per pip. And a second position at around 1.3600 at $0.25 per pip. Once price starts falling from 1.3600 to my signal line at 1.3552, I have made 48 pips x $0.25 = $12
When price continues falling to my profit target at 1.3409, I am making [143 pips - 5 pips (spread)] x $0.50 = $69
Altogether I have made $69 + $12 = $81 instead of $69 if I had only one position open.
Thus I increase my reward, and reduce my risk.
Why I like this method?
Reason 1:
I analyse the graph for perhaps an hour or two. Once I have my 2 positions open (and the Stop Loss values set), I can call it a day. Easy-forex is an online platform so the comp does not have to be on. Thus you save on electricity as well.
Reason 2:
Money Management: As explained above, Increase your reward and reduce your risk.
Why only Monday?
Honestly, I do not know. But it seems to work for me since I started ion October 2008. Most of my Monday trades have been successful.
I can speculate that perhaps, every monday the market is just waking up and thus the probability of getting a false signal is lower. But honestly, if anyone out there can offer a fundemental explanation to the success of my method, it would be greatly appreciated.
Why only Eur/Usd?
Simple. I am familiar with the price movement of this pair. This pair is my 'thing' as I have been following it ever since I took an interest in Forex. Feel free to try on other pairs.
I only like to concentrate on 1 pair as it helps me to be focused.
What if I lose?
I wait to fight another day. (The following Monday) Check my main blog for my weekly updates.
I only started using this new money management rules this week (Week 2, 2009). I hope after reading the post, things are clearer. Any questions can be posted in the comments area. Posts from now on will be based on this new money management rules.
My Old Money Management Strategy: Results from 2008 to Week 1 2009.
Update: I have stopped using this strategy as the amounts I have to risk after entering a Martingale is crazy. Please refer to my posts from Week 2, 2009 onwards where I practice my new money management rules as stated above.
If you are interested in my Martingale strategy, please leave me a comment.
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