LeBEAU
VIDEO

7 / 11 Yen Trading System
by Charles LeBeau, Dave Lucas and David Elden

$3,300 AVG. WINNING TRADE - 65% WINNERS - LONG AND SHORT

Trade By Trade Report

Background: Like many currency traders, we are concerned about the possibility that the pending implementation of a common European currency will greatly reduce the trading opportunities in the D Mark and Swiss Franc. For this reason we have selected the Yen as the trading vehicle for our newest currency system. The Yen has shown excellent historical trending characteristics and is a very popular and extremely liquid market for futures traders.

Strengths of the system: The excellent trending characteristics of this market allowed us to develop a system that would trade both long and short with 65% overall accuracy. (Our test results gave us 73% winners on the short side and 57% on the long side.) Thanks to the unusually strong directional movement, the average trade (win and loss) was slightly over $1500 with the average winning trade being well over $3,000. The average losing trade is slightly less than $1,900 which makes the average winning trade 1.80 times as large as the average losing trade. As many of you know we have long been strong advocates of using the Average Directional Index (ADX) to measure trendiness and identify markets entering periods of high probability trading opportunities. The "7 - 11" Yen System uses one of our favorite ADX strategies for entries. The system is embarrassingly simple. There are only two extremely logical and very timely entry conditions. We believe the elegant simplicity of this highly adaptive ADX entry strategy should make the "7 - 11" System extremely robust over future data. Once a high probability entry point has been identified the "7 - 11" System employs two very creative exit strategies that we have not seen anywhere else. These clever and logical exit strategies do an excellent job of controlling losses and maximizing profits. As you can see from the smoothness of the hypothetical equity chart, (Coming Soon) these exits have performed their roles very well over many years of data and a wide variety of market conditions.

Weaknesses of the system: Like most highly profitable trend following systems the "7 - 11" System doesn't trade as often as we might like. However it does manage to produce nearly seven trades per year over our test period which isn't bad for an intermediate term trend following system. The parameters we selected have a very wide margin for error. In fact there are many possible parameters that were much more profitable over the historical data than the ones we selected. There is plenty of room left for further optimization if you might prefer to increase the profitability at the expense of reducing the unusually high winning percentage. Personally we have always found that high winning percentages make a system much easier for us to follow in real time.

Summary: This is a solid and well tested trend following system that is very similar to the ADX strategy we have used in actual trading for many years. The strategy has been applied to the Yen which has proven to be a good trending market with a long history of unusually profitable price swings in both directions. Based on the simple entry logic and the creative exit strategies that are an integral part of the system, we expect that the "7 - 11" System should work very well on a real time basis.

System Historical Results (TradeStation format):

Includes $100.00 per trade deducted for slippage and Commissions

Includes $100.00 per trade deducted for slippage and Commissions

Includes $100.00 per trade deducted for slippage and Commissions