Jollyroger: an inside bar auto-trader by SteveHopwood

SERIOUS WARNING

1. Most Forex traders lose all their money.
2. Using the robot posted here in trading Forex does not guarantee success.
3. Trading this robot could lead to serious financial loss.
4. Trading this robot without understanding its underlying trading strategy guarantees traders will lose their money.

Here are the guts of the email I received from Jollyroger:
"I am not a coder but have been trading various methods with varying success for the past several years.
After considerable study and sometimes painful experience I have come across a method that follows both the primary axiom of Forex trading and the 4 pillars upon which successful trading is built. That system is the Inside Bar trading system or DIBBS as it is often called.
The system follows the primary axiom of “Only BUY a market that is up for the day and only SELL a market if it is down for the day as determined by the previous day’s close.. It incorporates the four pillars of successful trading., Manage Risk, Stay with the Trend, Let your Profits Run and Maintain Patient Discipline. There is only one problem…It involves trading specific hours in the London market and I happen to live in the US.. The good news is that the parameters of the system would appear to ideally set up to code into an EA. (You knew that was coming didn’t you?)
The rules are as follows:
1H Timeframe. Begin trading at 06:00 GMT and stop trading at 16:00 GMT..
• On an H1 chart look for an inside bar to form.
• If the price is> than the previous day’s close it is a buy trade and if < than the previous day’s close it is a sell.
BUYING (SELLING IS THE EXACT OPPOSITE)
• Place 2 buy orders when the PA penetrates the high of the inside bar.
• Place a stop loss on both orders at the low of the inside bar.
• Place a take profit on one of the orders at the same distance from the open as the stop loss but in the opposite direction of course.
• Do NOT place a TP on the other order.
One of two things will eventually happen:
1. Both orders will close at the stop loss for a small loss or
2. The order with the TP will close at a profit
Since your closed order was profitable for the exact same amount as the stop loss on the unclosed order that order is in effect “FREE” and heading in the direction of the expected trend. Even if it reverses and closes at it’s SL the trades are a break even..
After giving the FREE order room to breath (depending on the volatility of the currency pair) I place a trailing stop LWMA(21) on the bar open and let the order ride as long as it can until the trailing stop takes it out at what is often beaucoup pips.

Steve, if you think these ideas have merit and peak your interest you can learn more from the thread “The DIBBS Method, No Free Lunch continued”.. The first page is informative and concise as are the posts by Peter Crowns."

The attached does as described above, or at least I think it does; it appears to in a few backtests but there could easily be thingy's to discover.

The inputs are straightforward - all the usual suspects. Leave CriminalHasSundayCandle set to true if this is the case, otherwise change it to false.

Watch the CriminalIsEcn input; get this wrong and the bot will sit there until the Second Coming without sending trades. Remember that IBFX are ECN, even though they try to hide this for reasons known only to their deepest, darkest collective inner psyches.

The bot will draw yellow candle high and low lines when an inside bar has formed. If a subsequent ib forms, it should move the lines accordingly. The turquoise dashed line is yesterday's close price; this will explain why some apparent triggers do not actually result in a trade.

I have not visited the DIBBS thread, so will try to do so over the weekend to see what insights ther are to glean.

Others have and are already starting to contribute. Make sure you follow the links in MurpyhMan's post at http://www.forexfactory.com/showpost...68&postcount=7 for some fantastic information.

Have a play guys, and see what you think.

Edit 5th Sept 2011: MurphyMan just pm'd me to ask me to add NB V10 two moving average trend detection to this bot, and to allow for trades to be taken only in the direction of the trend. I have done this in the latest update.







Note for the newbies: an 'inside bar' is a two-candle formation; the first candle has a high that is higher than the second, and low that lower than the second. The second candle lived 'inside' the range of the first.

Nice bot ...

I just realised that I coded the bot to open a trade if the price is the correct side of the hi-lo at the opening of a new candle, not merely a penetration of the price.

I will code this as an option - TradePenetration, TradeBreak kind of thing. I will wait for Roger to come onstream first, to see what he says.

Thank you Steve,

Will try it.....

I had a trade execute right now on the system, at 7am EST for an inside bar. the problem is that we didn't have an IB. If you are using this, could you please let me know if I need to make some changes on my side and I'll figure it out from there.

Thanks guys,

Simple

Steve, I started drafting a note to you about DIBS a couple months ago, but never got around to finishing it. I think DIBS is ideally suited to a bot and you are just the man to get 'er done

I'm really looking forward to this one!

In the meantime, TOB keeps chugging away, giving me another 1% each day.

Thanks!

Murph

Steve, here are two important DIBS posts. First, from Peter Crown: http://www.forexfactory.com/showthre...67#post2616367

And then here: http://www.forexfactory.com/showthread.php?t=86766

No, it isn't you. It is me being my usual thick-as-a-brick self. I forgot to add the don't-trade-if-there-are-no-lines check.

Fix in post 1, or add
to the start of void LookForTradingOpportunities() and recompile.

Nice one, Simple. Cheers.

Hi, whats TOB?

Cheers Murph. I have put a link to your post in post one to make sure everyone sees it.

I only coded the ea this morning because it the basic code was already in place for one I coded for Ibuks a few weeks ago. I did not realise the method represented such a big thread.

At the mo, the ea looks at the close of yesterday's candle rather than the opening of today's. I don't suppose it matters a huge amount but I will amend this.

Thanks for this, Murph.

I don't see a problem of coding it as an option but I believe that the percentage of small stopped losses would increase if the penetration option is used versus the new bar opening. This is a good place to find out since we are all here to learn and improve.

Two things.....Steve thanks for the bot. You never cease to amaze me with the speed of your talent, ideas and accomplishments.

Secondly I encourage everyone to read Peter Cousins posts at the links so kindly provided by Murphyman in Post #7 on this thread. Not only will it give you a greater insight into inside bar trading but I don't remember ever reading anything on any Forex forum that contained more valid information on learning to trade profitably than these posts.

Since I haven't loaded the bot and it's Friday I haven't any other comments or suggestions at this time. I will run it next week and see what happens.
Roger

For initial de-bugging of the bot, you may as well set the demo to run 24 hrs, and watch what happens.

Steve, it looks like the buy is being taken at the first TP, point instead of the breakout of the inside bar.

Here is what the guide says

Where to put the buy and where to put the sell:
First rule: We buy on a break of an IB if price is above the daily open and sell if it’s below.
Where to put the buy and sell has no where been discussed in great detail. Put the buy/sell 1 pip outside the IB range and remember to add the spread.
Example: IB range is high @ 1.5500 and low @ 1.5400. Buystop: 1.5501 + spread, SL 1.5399, BE 1.5603 + spread. Sellstop: 1.5399, SL 1.5501 + spread, BE 1.5297.

Then take another look at the diagram, about half way down the post: http://www.forexfactory.com/showthread.php?t=86766

Murph: I am running on 4 pairs and have yet to see a valid buy. There appears to be a couple of instances when the IB formed but the breakout was in the wrong direction so no trade was taken. I am letting the ea run overnite and will try to critique in the AM (PST)
Roger

My bot is not taking trades. I have reloaded from Post one in case I don't have the most recent update and have changed the trading time to 24 hours. There are more IB's overnight than Carter has pills and the bot has only recognized one that occured yesterday. At this point I'm so screwed up I have nothing to contribute. I took one trade on an IB on USD/CHF this AM manually which is now in free trade.

Murph...since you understand the system and are testing it I would appreciate your comments to Steve regarding your results, suggestions etc. If I ever get my head on straight I'll chime in but right now I would just be cluttering up the thread.
Roger

Finally got the bot to take trades. Noticed several problems:

Trades are being taken at the candle reversal inside the IB and not at the breakout of the IB.
Only a single trade is being taken rather than the two called for by the system.

also prev day definition needs clarity. if entry is after 6 AM GMT, prev day ends at 0 GMT ? we need day start hr, trading start hr, trading end hr inputs so that everyone can give his values based on the broker offset

Is Steve done with his bath?

I think Steve was out of town for a couple days. I do not understand how he possibly finds the time to accomplish all he does.

i spent sometime testing the EA, here are my observations so far

1. first of all excellent work by steve (we know that anyway) to develop this EA which has great potential to succeed (with proper money mgmt which is the main objective of EA)

2. as per PC, the start time is ALWAYS 6 AM GMT. this start time is also used to derive 'prev day close'. both are same. the candle open price of 6 AM GMT is the prev day close. so we should not be considered as D1 shift 0. i am assuming all the times mentioned as inputs in steves EA are user local times. not the broker times. my local computer time may be 11 AM, but the broker time could be 09 AM and both may not be same as 6 AM GMT. So we need to make sure the inputs are given as your local computer time equivalent to 6 AM GMT (start) and 16 GMT (end)

3. in the EA theres a bug, the takeprofit is not applied to 'sell', its applied to 'buy'.

4. if we have a pending trade since yesterday and what shall we do today ? should we ignore all new trades until the existing trade is closed (due to trailing stops) ? i dont know what DIBS thread says. but in my view we should add new trades in the same direction if we get. if we have a pending long trade, today if we get a long trade we should take this also. each is treated by itslef, that means their sl, tp, trails are different

5. as per PC, if theres a inside bar inside a inside bar, he takes outer inside bar. some people take inner inside bar. but i guess we should leave it in a way thats easy to code. hardly matters

6. may be we can add a buffer of 2-3 pips on breakout of IB

7. if we have prev day close price between ib high, low then we can trade both ways. lets say first we get long breakout, we take long trade. if it reverses and goes down below ib low then we initiate short trade after hitting sl for long

8. it will be nice if we show vertical line at start time (which is same as prev day close)

in my view the key is the 2nd leg. how far we trail ? sometimes we get very big moves. but most times in ranging markets we hit sl for 2nd leg, for some its frustrating to book losses after seeing profits. using this EA we can optimize