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Is it possible to trade JPY pairs safely?

INDEX trades GBPJPY with R/R close to 1:3 and large gainers are seen regularly with intermediate small losing phases.  On an average large gainers (>250 pips) are seen about 5 times per year. Since March 2018, INDEX has has 4 large gains (+228, +243, +439, +615). The last trade went on to hit the TP of 600 pips with some positive slippage.  SL losses are always maintained at -100 pips and most trades are closed for smaller losses when trade direction is no longer in line with the the entry conditions.

The historical data is provided below

(We have also shown in the INDEX technical report that Live trading match backtests trades very well)

We acknowledge the role of luck in trading, however any trading or strategies cannot survive on luck. We believe that any trader or developer can only put odds in their favor by a small percentage and use proper risk + trade management to make reasonable gains.   The positive R/R enables INDEX (along with trading uncorrelated pairs/timeframes/strategies) enables it to recover from losing phases much faster than any of our other strategies.

3rd Jan 2019 Asian Market Crash :  How the INDEX trade gained 600 pips?

INDEX GBPJPY trade was open with floating gain of +200 pips prior to the current crash. The trade had been open since 31st Dec. Flash crashes are generally seen in the same direction of the trend (may not always be the case (system failures can happen in any direction). Phibase started trading Yen pairs only after INDEX strategy was developed - this is largely because the strategy has a lot more market information to factor into the trade. In most cases the overall trend direction is maintained. INDEX trades are likely to benefit from flash crashes. Among all strategies we have researched and developed, INDEX is relatively safest for trading Yen pairs - the risks associated are well compensated by the rewards offered by trading this pair.

Please refer to the Phibase technical trade recommendation published on 2nd Jan 2019 :

As per this trade setup, a drop to 134 level was very much expected as it was the completion leg of the Crab Harmonic pattern. We are of the opinion that many large positions had stops placed below 133.8 level and once they got triggered, the slip to 131 was imminent.

In case INDEX was holding a LONG prior to the current crash, the SL of 100 pips would have been triggered about 15 minutes prior to the 600 pip drop.

In the rare event that the Phibase portfolio has a trade in wrong direction, the loss would be as per the risk level used and well within max drawdown expected.

Assuming a worst case 500 pip drop with stoploss not being honored would lose about 10% of the equity (at default risk 2%). The equity loss would be 15% at risk 3%.  This is a risk that should be factored into trading.

Many EAs/traders set risk based on most recent good performance without considering the max drawdown the system has seen in past when trading with such risk, accounts are usually blown out. Grids/Martingales almost always blow out accounts during such events.

We always recommend risk keeping in mind the worst-case DD. This makes our gains look smaller and lagging other EAs on performance leader boards.  Our goal is to perform consistently over long term and give the strategies a chance to prove their potential.

If you are new to Forex trading, you can find more information on Forex trading, brokers and strategy analysis methods at Forex InfoBookForexGermany and BabyPips.


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