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Attachments: Follow the prior Heiken Ashi candle for profits
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Follow the prior Heiken Ashi candle for profits

  • Post #1
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  • First Post: Mar 25, 2015 2:29pm Mar 25, 2015 2:29pm
Hello friends,

My purpose in this thread:
1) Test out a simple system using Heiken Ashi candles
2) Post my trades and results when I have the time
3) Hopefully help others in their trading

Disclaimers:
1) I'm NOT an expert trader. Any systems or advice offered here are for educational purposes only. Trade at your own risk.
2) I have no idea how profitable this system will be, as I've only just started testing it.
3) This system is based upon other systems here at FF.
4) I have NO commercial interests, but commercial members are welcome as long as they play by the rules.

Rules:
1) Please be respectful of others.
2) Please be constructive with your comments.
3) Please do not be overly negative or critical just for the sake of it.

Suggestions:
1) Post pictures when you can.
2) Keep cool and relaxed. We are all here to learn to improve our trading.
3) Try to make the system simpler, not more complex (e.g., avoid adding extra indicators).

------------------------------------------------------------------------------------------------------------------------
Heiken Ashi System:
1) BUY = the previous heiken ashi bar was bullish
2) SELL = the previous heiken ashi bar was bearish

Time frame:
1) Higher time frames (daily or weekly charts preferred)

Exit rules for manual trading:
1) Exit when the heiken ashi bar changes colors
2) Set SL to just below prior resistance

Exit rules for automated trading:
1) Exit when a fixed TP or SL has been hit

------------------------------------------------------------------------------------------------------------------------
My thoughts:
1) I prefer the weekly charts
2) I prefer to make my trading more automated
3) In my opinion, this leaves two primary setups.

Setup A - Follow the trend:
1) Follow the prior weekly heiken ashi candle
2) Set a fixed SL and TP using a 1:1 ratio (e.g., 30 pips TP and 30 pips SL)

You may be thinking: "Why such a low TP and SL?"
The reason is simple: volume.
We can take many trades each week using this criteria, and my estimation is we will have around 75% winners (this is my ESTIMATE).

Example:
30 trades
21 = win
9 = loss

Pips gained:
(21 * 30 pips) = 630 pips
(9 * 30 pips) = 270 pips
Weekly gain = +360 pips

**In most cases, we will just follow the prior weekly trend!**

Here's an example trade I took this week on the GBP/JPY with a 30 pip TP (the trade won).

Attached Image (click to enlarge)
Click to Enlarge Name: Setup A example.JPG Size: 76 KB


Setup B - Catch the new trend early:
1) If the weekly heiken ashi bar changed colors, trade the new color for a possible trend reversal.
2) Set SL below prior weekly candle, and exit trade once heiken ashi bar changes colors.

Example: The last 5 weekly heiken ashi candles were bearish. This week it closed bullish. Place a BUY order.

**The idea with this system is to be getting in early on a possible trend reversal!**

Here's an example trade I took this week on the EUR/USD with no TP and a SL below the prior weekly candle (which I've now moved to break-even level).

Attached Image (click to enlarge)
Click to Enlarge Name: Setup B example.JPG Size: 102 KB


This is the system I'll be exploring in this thread! Feel free to join along if you'd like.
I am NOT an expert. I post to learn from others.
I did a quick and dirty test for profitability and overall accuracy. This is just an estimate and is not conclusive.

I tallied the number of times the trend continued in the direction of the previous Heiken Ashi bar on the weekly charts for pair GBPJPY.

A few caveats:
1) Granted, we cannot know for sure whether our TP or SL would have been hit first, even though the overall trend continued eventually. So, again, just an estimate!
2) Some weeks would have been winners even though the candle changed (i.e., it moved beyond 30 pips in the previous direction before changing directions).

Even with these caveats, I think the results are impressive overall! Especially when you consider the minimal amount of work you have to do each week. Not to mention the stress-free nature of this kind of trading!

Attached Image (click to enlarge)
Click to Enlarge Name: profitability.JPG Size: 80 KB
I am NOT an expert. I post to learn from others.
Good Luck Phantom. This is an interesting method. Update us with the results.
i'm curious to try a quick n dirty if you use a bigger timeframe exit and smaller timeframe entry, what the best setting would be?


if you use 4 hour as entry use weekly as exit. what results you get? would it improve?

if you use 1 hour as entry use either 4 hour or daily as exit?

wonder if it helps
Quoting Bardy
Good Luck Phantom. This is an interesting method. Update us with the results.
Thanks friend. Will do.
I am NOT an expert. I post to learn from others.
Quoting dagoods
i'm curious to try a quick n dirty if you use a bigger timeframe exit and smaller timeframe entry, what the best setting would be? if you use 4 hour as entry use weekly as exit. what results you get? would it improve? if you use 1 hour as entry use either 4 hour or daily as exit? wonder if it helps
Hi there,

It is possible it could help. Try it!

My only issue is that it adds complexity to the system. In general, I like to keep things simple.

For instance, imagine the difference between:
1) Just placing all your trades at the start of the week, setting your TP and SL levels, and then walking away

vs.

2) Watching the 4 hour charts for the right time to enter the weekly trade, across 30+ pairs!

This is personal preference. It could increase the win rate even higher, but it might not be worth it, ya know?

Anyways this is all experimental. So if you like the idea, go for it!
I am NOT an expert. I post to learn from others.
HA isn't ideal when it is used solidly without combine with other inductors. I personally have been having it with my system for years now, but it was never used as triggering signal.

If you would like to try it that's perfectly fine. And if you may, it's my friendly suggestion that you post your weekly or monthly performance just using the HA as your only signal.

Cheers and i will check back with you later.
Underspeak, overdeliver.
Quoting FXSayWhat
HA isn't ideal when it is used solidly without combine with other inductors. I personally have been having it with my system for years now, but it was never used as triggering signal. If you would like to try it that's perfectly fine. And if you may, it's my friendly suggestion that you post your weekly or monthly performance just using the HA as your only signal. Cheers and i will check back with you later.
Thanks. I will try it out and see what happens. This week (starting on Sunday) I placed 5 orders following prior weekly HA and all 5 orders won.

Pairs:
USDJPY
AUDCHF
GBPJPY
GBPUSD
AUDJPY

Most I used a TP of 30 pips. But on GBPJPY I used a trailing stop (I forget the number I trailed by, though).

Pips gained:
30.7
30.9
52.6
29.6
30.3

Anyways we will see what happens next week!
I am NOT an expert. I post to learn from others.
Quoting Phantom-X
{quote} Thanks. I will try it out and see what happens. This week (starting on Sunday) I placed 5 orders following prior weekly HA and all 5 orders won. Pairs: USDJPY AUDCHF GBPJPY GBPUSD AUDJPY Most I used a TP of 30 pips. But on GBPJPY I used a trailing stop (I forget the number I trailed by, though). Pips gained: 30.7 30.9 52.6 29.6 30.3 Anyways we will see what happens next week!
Can I ask you why you chose these 5 pairs? Thanks.
Quoting mozhixing
{quote} Can I ask you why you chose these 5 pairs? Thanks.
Hi mozhixing,

There was no particular reason. I am testing out several different systems, and I just randomly assigned those 5 pairs to this particular system for this week.

In the coming week, I will probably randomly pick another 5 or 10 pairs to test the strategy. I will not trade all possible pairs yet just in case the system goes terribly wrong! If the system seems profitable, I will continue to add more pairs each week.
I am NOT an expert. I post to learn from others.
Quoting Phantom-X
{quote} Thanks. I will try it out and see what happens. This week (starting on Sunday) I placed 5 orders following prior weekly HA and all 5 orders won. Pairs: USDJPY AUDCHF GBPJPY GBPUSD AUDJPY Most I used a TP of 30 pips. But on GBPJPY I used a trailing stop (I forget the number I trailed by, though). Pips gained: 30.7 30.9 52.6 29.6 30.3 Anyways we will see what happens next week!
Phantom,

HA has its reputation for a quite some time now. There is absolutely no question it has its value and validation as an indicators. In other works, there is no need to test HA just to see if HA is "working or not"

The plan you had above is just the set up for making entry and exist. Where is your risk management? where is your target daily, weekly and monthly? And how much are you committed to follow your system? You must have all these elements calculated to make yourself as a whole and progress further. I notice you are clearly lacking some knowledge in making trade plans, that's okay, your will pick them up along the way as you progress further.

And as you are running things on the weekly charts, I would like to ask you to question yourself what exactly moves the market? There are many answers to my question, but one thing is clear, HA isn't the main drive that moves the market. Does it worth for you to invest time into such thing? Do you see where am i going with this?

Of course, i toss you these questions, and I'd expect you to find out answers for yourself.
Underspeak, overdeliver.
Hi Phantom,
Interesting concept. I have two questions; why are you using HA and what exactly are the entry rules?
Thanks
Sounds interesting. But 30 pips could stop you out quite soon I believe. Even if the whole market is bullish, it could still go 100 pips down, before going up again. So I would want to make sure to pick the right entries.
Quoting FXSayWhat
{quote} Phantom, HA has its reputation for a quite some time now. There is absolutely no question it has its value and validation as an indicators. In other works, there is no need to test HA just to see if HA is "working or not" The plan you had above is just the set up for making entry and exist. Where is your risk management? where is your target daily, weekly and monthly? And how much are you committed to follow your system? You must have all these elements calculated to make yourself as a whole and progress further. I notice you are...
Hi friend,General rule is 1-2% of your account per trade, or if you have a series of trades open make all of them total to 1-2%. I may be more aggressive and go up to 3-5% each week. I will do the calculation such that if I had 10 losing trades @ .1 lots that would be $3 which would be 3% of my account. I doubt all will be losers but I guess that's a good place to start.This system is purely technical I will pay no attention to news. I know people move the markets based on their beliefs but I will pay that no mind right now. Maybe just to check on Sunday to make sure no big big news come out but prolly not even that.I am a scientist. I am committed to the system. That's why I create thread so I can hold myself responsible. I test many systems and record my results. All in the quest to learn and become a better trader!Thank you for your input I really appreciate it and your guidance.
I am NOT an expert. I post to learn from others.
Quoting Phantom-X
{quote} I will probably randomly pick another 5 or 10 pairs to test the strategy. I will not trade all possible pairs yet just in case the system goes terribly wrong! If the system seems profitable, I will continue to add more pairs each week.
I'm practicing with a similar technique. Basically riding momentum from the recent close on a given time frame. It is amazing how often the results are positive. I think that if there was a non-discretionary filter then bad entries could be (almost?) eliminated.

In this picture its obvious we're at or near a high so why buy here? This entry fits the post-1 parameters but fails to follow through.

The beauty of a simple system like this one is that the decision is automatic and free of emotion. I'd very much like to hear any opinion as to whether or not we can add an indicator or two to filter out bad trades.

Good luck with your thread. I'm looking forward to it!

Attached Image (click to enlarge)
Click to Enlarge Name: Screenshot2.png Size: 30 KB
I can't quite reconcile myself to a 30 pip SL & TP on the Weekly but your preliminary results look very good. I'm thinking of a hard stop of 30 pips and a trailing stop of 30 pips, trying to catch the runners such as you did with the Geppy in an above post - 52 pips, I think. I will be watching with interest as I trade the Weekly with PA but find it is not advisable to enter after Tue. opening. Good thread and good explanation, thanks.
Quoting piprac
I can't quite reconcile myself to a 30 pip SL & TP on the Weekly but your preliminary results look very good. I'm thinking of a hard stop of 30 pips and a trailing stop of 30 pips, trying to catch the runners such as you did with the Geppy in an above post - 52 pips, I think. I will be watching with interest as I trade the Weekly with PA but find it is not advisable to enter after Tue. opening. Good thread and good explanation, thanks.
Hi friend,

Yes, you have a good plan. Trailing stop can help you sometimes, I think. Try it out!

I did catch some extra pips on GBPJPY with it.
I am NOT an expert. I post to learn from others.
Quoting Rippin
{quote} I'm practicing with a similar technique. Basically riding momentum from the recent close on a given time frame. It is amazing how often the results are positive. I think that if there was a non-discretionary filter then bad entries could be (almost?) eliminated. In this picture its obvious we're at or near a high so why buy here? This entry fits the post-1 parameters but fails to follow through. The beauty of a simple system like this one is that the decision is automatic and free of emotion. I'd very much like to hear any opinion as to...
Hi Rippin,

You can try to add some other indicators if you wish. Go ahead. I like to keep things simple though. If my system fails then maybe we can try to modify it.

All the best.
I am NOT an expert. I post to learn from others.
Quoting Phantom-X
{quote} Hi Rippin, You can try to add some other indicators if you wish. Go ahead. I like to keep things simple though. If my system fails then maybe we can try to modify it. All the best.
someone's making me an ea for this. It will have the option to trade 28 pairs and simply turn off those to avoid. I'll share that once I get it.

It would be great if we could use this forum to discuss what trades to enter. the great thing about W1 is that there is plenty of time to watch setups develop, discuss and make decisions.

reason I want a filter is to incorporate it into the EA. Even if we can filter out a few trades it would make this all the more awesome.

Wishful thinking?
Quoting Rippin
{quote} someone's making me an ea for this. It will have the option to trade 28 pairs and simply turn off those to avoid. I'll share that once I get it. It would be great if we could use this forum to discuss what trades to enter. the great thing about W1 is that there is plenty of time to watch setups develop, discuss and make decisions. reason I want a filter is to incorporate it into the EA. Even if we can filter out a few trades it would make this all the more awesome. Wishful thinking?
I am usually a little leery of EAs, but this kind seems OK because it's only placing trades for us (and not analyzing market per se).

Can I ask why you would want to filter trades, or how you plan to filter them?
I am NOT an expert. I post to learn from others.
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