The Yogi Berra System
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Thread: The Yogi Berra System

  1. #1

    The Yogi Berra System

    It's tough to make predictions, especially about the future.

    - Yogi Berra


    INTRO


    Wow... it's almost a year since I have been around FF. Time for an update on my trading reflections. I have been honing my method for more than two decades now, so I think it's time to take it from Dr Zeus Does Demo and take things dwell. Actually I went July 2010, but I haven't bothered to create a new trading diary. I updated it last March to comprise using two subaccounts, and produced further adjustments in the past couple of months with a new go live in May.

    I call this Yogi Berra System due to the quote attributed to him in trading Foreign Exchange, the future is tough to predict. Will price go up or down today? What will it do in the next hour? Sure there are oscillator indiors, but how often have you been trading an oversold pair simply to see it fall further and further? And I have yet to see an oscillator that offers an indiion of the size of change from an OS/OB condition.

    From a fundamental perspective things are not much better. How will the market react to upcoming news? Is Yen over priced? Does EURUSD price accurately reflect the risk of a Euro breakup or cost of another bailout?

    Time and time I have seen technical and fundamental analysts neglect. The more effective analysts commonly provide multiple target prices and coyly call for the market to go up whether that or go down if that they often appear to be correct in hindsight.

    The question is, can we be always profitable in a market where we always fail in our prognostiion? I believe we could, and I have for the past two decades.

    Admittedly, it has been a journey with its share of reductions, drawdown, and courses learn. I have found that some analysts are partially correct, at least with all the price levels where movement will happen (even if they're incorrect about the direction or size).



    BASIC PREMISE


    I create one assumption about the Foreign Exchange market: whatever the price is now, it will change in the future.

    That is the heart of how I trade. I don't attempt to forecast if it will proceed, which way it will proceed, or really how much it will proceed. I assume that it will go somewhere. Turns out I am right.

    I really do NEED it to proceed, and I want it to pick a direction and proceed that way for quite a bit so I could take some profit.


    CHART SETUP


    There is no chart installment. I usually enter my orders in late night in the very first part of the week (after NY close, before TOKYO open). This is not a hard and fast rule, it's just a convenient time for me personally.

    I exchange three pairs: EURUSD, USDJPY, and EURJPY. I do this so I will sell EU, sell UJ, and buy EJ and end up getting a hedge. Hedges themselves will not make you some money except in the rare case of a swap overpayment, but my goal is not to get hedged but take advantage of whatever movement happens in the future.

    I take advantage of future moves by putting orders above the current price for BUY , and beneath the current price for SHORT . I place orders which are each equivalent to the account size, and distance them 3 to 5 pips apart.


    So I'll have a series of 10 market orders for EURUSD below its current price, the same for USDJPY, and then 10 buy orders for EURJPY above it's current price. In my other account, I do the specific opposite and buy EU and UJ and market EJ. This way, if the dollars bulls take off within another few days, I'll have big EU short and UJ long positions. If BOJ is able to move Yen, I'll have big UJ and EJ long positions. In a risk-on situation, my EU and EJ longs are big.

    I normally end up with huge losing positions also which makes my history look wierd. I may have 10 EU long positions deep in the cash, but 4 EU shorts deep in the pit. Net-net, I am in great shape though!

    Generally I like to shut everything at the Exact Same time. I'll read some fundamental and technical analysts to get their remarks, and when I feel good about my profit and in which the market is, I shut it all and accept my own profit, redistributing so that both accounts have the same balance.


    ADVANCED CONCEPTS


    It's not unusual for me to possess huge winning and huge losing rankings, and sometimes all of the orders on both sides will be taken. In that case, I can not shut everything and get a profit! When this happens, I try to guess which side has attained the extent of its movement and shut it out.

    At this point, you must always ALWAYS ALWAYS enter re-enter orders just beyond where you shut out the place in the event you are incorrect!! I have been wrong a lot of times to take that risk. If you are correct, then the market will continue to proceed in your favor and the rest of the trades can be shut out later. If you are incorrect, the orders you put will be removed and the most you will lose is a couple of pips.


    PERFORMANCE TO DATE


    I have made a few major changes. The first version just traded one account, which with 25 pips spacing. I included the next account once I missed a huge up movement on EU. In theory I should have caught it with the EJ-UJ artificial, but as Yogi says, In theory there's no difference between theory and practice, but in practice there is.

    So my next version included a second subaccount trading the contrary direction, still at 25 pip spacing. The current iteration tightens the spacing to 3-5 pips. The wider spacing took a long time to ch a movement, along with the drawdown would become very very significant. My DD has not exceeded 10 percent with the current edition, and I am ready to get everything shut in a shorter period of time.

    With that said, my average performance for the 8 months of only account trading was 9.8% each month. For the 9 months Using the double account system, it was just 4.9% per month. This however includes two months of extraordinary personal difficulty and bad decision making; eliminate those 2 months and functionality is 12.54% per month.

    The tighter spacing has not yet been proved, but so much the results significantly exceed previous variations. I want a couple of months of operation to draw any conclusions, but I am excited so far!


    WHY AM I PUTTING THIS UP HERE


    There are several reasons. I have benefited from discussion atcliqforexand other Foreign Exchange websites, so I think I need to contribute something. So much of what I read is quite bad information, and the majority of the writing is by unprofitable amateurs, therefore I think that having the ability to trade live profitably for a few years gives me a helpful view.

    Unlike some egies, my performance will not degrade if other men and women jump on the bandwagon. I really don't feel a necessity to protect my intellectual property as with other successful traders.

    Actually, I am certain that by sharing what I do, I'll hear some helpful opinions on more adjustments to make. Maybe other pairs operate better, or another spacing or entry size will be profitable. Maybe somebody can write an EA, although I really don't know of an MT4 customer that would allow an EA handle two accounts at precisely the same time.

    Also, there's a bit of a brag here. :--RRB- After a lot of years of paper trading, researching, and demoing with little live accounts, I am proud to have made something which works for me and that I haven't seen anyplace else. I am still humble however - seeing 30% reductions in your account will do this for you! Plus I understand other men and women do much better than me.


    CLOSING REMARKS


    I'll try to post now and then and answer to some comments. Screenshots will be in their way if I get round to it. If anyone else tries this out, please let me know and post your changes and performance.

  2. #2
    Pretty dull so far. We're down a couple percent but that is well within relaxation level. We looked really good this morning until Mr. Bernanke took a break from the printing press and the market got scared.

    I don't believe any of those 3 pairs has reached an exhaustion point for bulls or bears, so I'm leaving everything as is. The most I'll do is move receptive orders closer to the current price in a few places.

    OK, have a good day! I was hoping for fireworks and a big positive day, but this is more like what usually happens. Mr Market needs to take some strong strides up or down so we'll find out what London does on Friday!

  3. #3
    Okey Dokey, I have finally entered trades for this particular week. It's really kind of late night and so I have missed the huge upswing, but I have had a lot happening. You can not ch all of them!

    So you can see that my orders will ch any movement. Hopefully something cool will happen before Friday close and I can show that here.





  4. #4
    Super fast update... wife and I'm taking the kiddos to the waterpark this day!

    I closed my EJ and EU shorts at the pre-market at 20 pip spreads (ugh). Spanish bailout news sounded bullish, but I had been too tired to make a decision at the moment. Thought about it again this morning and figured things would go up.

    So far I'm in great shape, here's hoping the market doesn't turn me while I'm at the pool :--RRB- I've got offsetting brief orders along the way down when I'm wrong, but they're well below the gap, therefore I hope that they do not get hit. Heck, I will be taking quite a equity hit whenever they're. With luck this early trading presages a big up week for EJ and EU.

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