Here is a PM exchange I have just had with Simon, and my reply. Have a read guys, and see what you think about how I propose carrying it forward.
"Steve,
I have a suggestion - for this and the EA I understand you are working on with NanningBob for his 4HR system. The idea is a fairly generic one designed to deal with the issue of long runs for counter trend systems.
I've been using NanningBob's 4HR counter trend system and while I like its ability to predict where a trend retrace is likely to occur, I am frightened by the 2 4 2 three level drawdown system, which can be caught out by sustained trends. (Just as the fib retrace robot can be). NB has successfully used it live, but it is subject to bad drawdowns during major trends and news driven crises, for example the Euro news runs during May of this year (NB was - 3383 pips for that month).
What I'm proposing is a simple stop and reverse modification to place the user in a trade in the direction of the trend (assuming initial conditions are met) until such time as the EAs for the NB 4HR system, or the Fib Retrace Robot would enter for the counter trend trade. At this point a stop and reverse order (which unfortunately needs to be coded on MT4) would be placed, closing the existing trade (which was with trend) and beginning a new trade in the opposite direction (i.e. counter trend, or retrace). This has the advantage of putting the trader in a very profitable trade if the trend continues (i.e. past T4 with the Fib Retrace Robot, or for example a run up the BB bands under NB's system). It also converts the big losers of both systems to big winners. Exact implementation needs a bit of thought for either system, but I think would be an especially useful variant for NB's approach, because the point at which the EA begins to look for counter trend entry is clearly defined (so a with trend enter can be made there) and also because it turns NB system major disadvantage into a major advantage.
regards
Simon"
My reply:
"This sounds like an idea well worth trying.
Thinking about FTLR, trades triggered at T1/T2 still open when the market passes the 200 could be losed and a sar trade opened in the opposite direction; TP at T4 perhaps. The sar trades could have a stop loss at T2 or T1, eliminating the danger of a long and sustained move against the original trade.
I am going to throw this open in the thread, to see what others think.
Thanks. Cheers."
"Steve,
I have a suggestion - for this and the EA I understand you are working on with NanningBob for his 4HR system. The idea is a fairly generic one designed to deal with the issue of long runs for counter trend systems.
I've been using NanningBob's 4HR counter trend system and while I like its ability to predict where a trend retrace is likely to occur, I am frightened by the 2 4 2 three level drawdown system, which can be caught out by sustained trends. (Just as the fib retrace robot can be). NB has successfully used it live, but it is subject to bad drawdowns during major trends and news driven crises, for example the Euro news runs during May of this year (NB was - 3383 pips for that month).
What I'm proposing is a simple stop and reverse modification to place the user in a trade in the direction of the trend (assuming initial conditions are met) until such time as the EAs for the NB 4HR system, or the Fib Retrace Robot would enter for the counter trend trade. At this point a stop and reverse order (which unfortunately needs to be coded on MT4) would be placed, closing the existing trade (which was with trend) and beginning a new trade in the opposite direction (i.e. counter trend, or retrace). This has the advantage of putting the trader in a very profitable trade if the trend continues (i.e. past T4 with the Fib Retrace Robot, or for example a run up the BB bands under NB's system). It also converts the big losers of both systems to big winners. Exact implementation needs a bit of thought for either system, but I think would be an especially useful variant for NB's approach, because the point at which the EA begins to look for counter trend entry is clearly defined (so a with trend enter can be made there) and also because it turns NB system major disadvantage into a major advantage.
regards
Simon"
My reply:
"This sounds like an idea well worth trying.
Thinking about FTLR, trades triggered at T1/T2 still open when the market passes the 200 could be losed and a sar trade opened in the opposite direction; TP at T4 perhaps. The sar trades could have a stop loss at T2 or T1, eliminating the danger of a long and sustained move against the original trade.
I am going to throw this open in the thread, to see what others think.
Thanks. Cheers."