Simple, pure mechanical H4-System, EA needed
I want to introduce a really simple system without any need of interpretation or discretion.
You just need a H4 chart and the DeMark-indicator (attached). Don't change the parameters. Just use it as it is.
The entries (I only describe the long-entry):
If you see a red circle on the top of a bar, this is your entry-level.
You place a long order at the high of that bar + 4 pips + spread.
The stoploss is placed 3 pips under the last blue circle.
You only use the current red circle. If the last was not exceeded, ignore it.
The red circle shows a bar which has two bars with a lower high on the left side and two bars with a lower high on the right side. Therefore the circle appears eariest three bars back (because the indicator waits for two lower high-bars on the right side + the current bar).
Two possible exits:
1. Stoploss, which is a trailing stop
2. An exit after the next bar with a red circle appears (see the description below)
I think the best way to describe it is to look at the chart.
You see the the yellow check where the first bar with a red circle occurs. This bars' high is your entry-level. The circle appears on the bar with the yellow arrow which is also your entry-bar this time because it breaks the high of the red-circle-setup-bar. PLEASE REMEMBER THAT YOU ONLY SEE THE CIRCLES AFTER 2 FINISHED BARS!
Ok, now we are long. The initial stop is placed 3 pips below the last blue circle. The next bar is again a red circle bar (long setup bar) but we don't know it yet! The circle appears three bars later with the open of that bar. Now the exit rule: We wait for that bar to close and the trade is closed immediately with the open of the next bar. In this case it means that the trade is closed with the yellow-cross-bar. One bar before you see that the the very long bar has a red circle (it is marked with a light blue check) and then the trade is closed at the next bars' open.
This time it looks stupid because we close the old trade and go long again. The light blue checked bar is a long setup bar and 4 pips (+spread) above it a long trade is triggered. This trade is pretty good as you can see the next red circle is at the very high and we don't need to get out before. We move the stop to each new blue circle as soon as they appear. In this case you see the light blue cross on the bar where we are stopped out. Exactly the open of this bar made the blue circle three bars before visible and our stop was moved to this position. Now we are flat.
But this time we have a short setup. The white check shows you the first short-setup. 4 pips below the low of that white checked bar a short trade is placed. So we get stopped out (3 pips below the short setup bar) and reverse the position here (4 pips below). Now we are short and the red circles are only used for the stops. So our initial stop is above the very high.
Unfortunately there is a new blue circle directly at the low of our entry-bar. But we can see that three bars later. The exit rule says that I have to wait for the close of the current bar and close that trade with the next bars' open (white cross). That was a small loss.
I hope I could explain the idea how it is stucked in my crazy brain... ;-)
I would be really thankful if anyone could make an Expert Advisor for that because it is 100% mechanical. Further I would like to test some other parameters. Maybe the system works better if DeMark's parameter LevDP is set to 3,4,5,6... instead of 2. But remember that if you use e.g. 5 for the LevDP then you can see the circles not after three bars but after 6 bars! The LevDP defines how many bars must have a lower high to the left AND TO THE RIGHT SIDE! If you can code an EA, please consider that!
It can also be possible that it is better to use 6 pips as the buffer to place a trade instead of 4 pips what I described here.
That's it! Comments, ideas and help are appreciated!!
Great detailed information about the DeMark-indicator from hanover can be found in this thread: http://www.forexfactory.com/showthread.php?t=37073
thanks for sharing your system
"4400 pips in GBPJPY in 6 months"
Is your statement above from your own backtest, demo or live trading results? I don't think we need to improve this method if it rakes in over 700 pips a month..
The results are from a visual backtest which took many hours... This is the reason why I would like to have an EA. Then we can test different parameters.
I am sure that it is possible to improve that system. At the moment I try to implement Bollinger Bands to filter the trades. Therefore I am happy about any comments! Months like April or May have to be improved (somehow)...
are you 100% sure that the circles never repaint. Once they are there, they never disappear...?
Reading your first post I was wondering, why this is a demark indicator.
Your description reminded me of the fractals indi, which is a standard indicator in MT4. Did a quick check - it is the same. Only wanted to let you know.
Greetings - and thanks for sharing
Yes, I am 100% sure... because they just show a bar which is surrounded by two bars with lower highs (red circle) or two bars with higher lows (blue circle). The circles can't repaint because the highs and lows of the bars are also not repainted. They never disappear because they just appear when the last bar has closed and therefore nothing can change anymore.
You are right! Fractals seem to show the same points! I never had a look at them. But you can change the LevDP in the DeMark indicator and that's something i wanted to try. Fractals seem to be static and not variable.
Wouldn't you go long on the blue circles and short on the red? I'm not sure I'm getting your explanation. Any help??
Long above the red circles and short under the blue ones...
The idea of the system is to play breakouts and not rebounds. Therefore red=long and blue=short.
Thank you very much! Your system seems very easy to follow. I am, tho, having a problem as the Yellow and Blue check marks don't appear when I load the indicator. Thanks again.
No, the checks, crosses and arrows are only for demonstration! I painted them just to make it better visible. The system only works with the circles.
Thanks for the system... can't wait to implement and demo.
You mention that the arrows were painted in by you and that you only use the circles to trade on... yet when I load the indicator, I get either a red or blue arrow on some of the pairs I am watching. They only seem to show at the front of the chart (recent) and not historically.
Can you explain these please?
Sorry, I don't know what these arrows and crosses (they also appear sometimes) are about. But I just ignore them. I only use the circles as a trade setup because the arrows and crosses disapear sometimes. The circles stay and don't repaint.
You might run into a situation where "improvements" in April and May take away pips in the other months. From these numbers, you may have a robust system. Good find.
How to attach an indicator.
I am new to forex and also to MT4 ..i am currently doing demo trades. and only downloded the MT4 today.
Can anyone be kind enough to explain how to load or attach an indicator to a chart.
i have H4 chart for GBPJPY in MT4 but dont know how how to attach the indicator.
What is the Max peak/valley drawdown for this system over this time period? What is the frequency of drawdowns > 200 pips?
@bill: don't know. I haven't test it yet.
@eagle: Everything is written in the rules, so what's your question?
This is a lot like a ABC or 123 break-out pattern. Those do work fairly well. This indicator makes those points stand out pretty nicely and works across about any pair.
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