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Aussie Dollar Experiment

June 13, 2007 on 3:16 pm | In Australian Dollar, Aussie Dollar Experiment | Aussie Dollar Experiment

I present to you the Aussie Dollar Experiment! This is a Forex Trading experiment using the simplest of all trading systems. Professional traders always advise on trading with a system, and I would like to test if flipping a coin can be used in a successful forex system. I will be flipping a coin at around 9am Sydney time (+10GMT) every day. Heads would mean a long trading position, Tails would be a short trading position on the Aussie Dollar. This would be theoretical - no real money involved, but I will be tracking the number of pips that we would theoretically be making (or losing) with this super simple trading system. I will also be putting an arbitrary stop at 30 pips against any current position. The system will also automatically take profits at double the stop loss at 60 pips and each position will be closed 12 hours after it had been opened. I’ll be recording this daily in a spreadsheet, then reporting the progress of the system weekly.
The Aussie Dollar Experiment forex trading system summary:

  • Flip a coin: Heads = Long; Tails = Short
  • Initiate trade around 9am Sydney time (+10GMT)
  • Conditions to close a trade:
    • Stop Loss at 30 pips; or
    • Take profits at 60 pips; or
    • Close Trade 12 hours later at 9pm.

This is a totally blind forex trading system; it doesn’t take into consideration any technicals like support and resistance or any fundamentals such as important economic announcements like employment or GDP growth. My hypothesis for this Aussie Dollar Experiment is that a blind trading system can make money. I’m predicting a small amount of pips would be gained from this… I will be running this experiment for at least a quarter or three months, depending on the system’s success. Wish the system luck!

Related Posts

Aussie Dollar Experiment (Update #2)No Yield Yet: Aussie Dollar Experiment (Update #1)

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  1. […] There isn’t any yield yet from our experimental trading plan. So the Australian Dollar experiment got off to a bad start… is the coin just unlucky? The first two days was 100% unlucky. On Thursday, our trade opened LONG 83.94 cents at 8.50am Sydney time and closed at 83.75 cents: the trade ended with a 19 pip loss - remember, our trading plan is to exit if it hits 30 pips against our position or 60 pips if it goes towards our position. Last Friday, the coin was tails so we went short at 9am opening the position at 83.58 cents. 12 hours later we closed the trade at 83.62 cents - 4 pips loss. Unlucky? Well we’ll keep track with this progress for a while… […]

    Pingback by Forex Trading Log » No Yield Yet: Aussie Dollar Experiment (Update #1) — June 17, 2007 #

  2. […] Our Experiment using this forex trading plan for trading the Aussie dollar has not yielded anything for two weeks. It actually yielded a loss of 87 pips. I’m actually stopping the experiment there after two and a bit weeks in operation. So what conclusions can we draw from this forex experiment? Well, I for one can say that a dumb and blind system like this one is not effective. The system relied solely on the 50/50 odds of a coin as well timing the markets. But hang on, what if I went the opposite side of each trade in the experiment - you could have actually made 87 pips trading forex - which is a modest income by anyone’s standards for two weeks worth of trading. Hey - at least your doing something consistent right? But on the other hand - the system lost 87 pips - which can be a substantial amount of anyone’s trading capital. when I’m feeling up for it, I’ll try out a more intelligent trading system (but simple) a little later on. It’s interesting to see that this system didn’t make much money - and didn’t take advantage of the volatile movements of the Aussie dollar over the past two weeks: hitting 85 cents then retracing back to 84 cents and below then coming back to test 85 cents yesterday night. Economic data releases in Australia this week: […]

    Pingback by Forex Trading Log » Aussie Dollar Experiment (Update #2) — June 29, 2007 #

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