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The Daily Fozzy Method

  • #141
  • Sep 22, 2006 2:02pm Sep 22, 2006 2:02pm
Scott.............I'm not challenging your test or results; however there is a phenomonon that I have seen with this trading strategy that might change your results. I have seen a cross of the RSI and MA at the end of a day that will "uncross" so-to-speak" as the next candle builds in the opposite direction, causing a potential trade to move in the "wrong" direction. When "looking-back" on the Daily chart this will not show up as a loosing trade because the cross that triggered the trade is "gone", it no longers appears on the chart as a false signal. I have had this happen to me on numerous occasions as I forward test this method with 15 currency pairs. Does this explanation make sense? The only time I can be very certain about this kind of test is when there is a cross and then several Daily candles move in the direction of the originally triggered trade. But when there is a cross, and then just one Daily candle that moves in the right direction, I don't think you can be sure that this situation results in a positve trade and vice-versa. Having said that: my forward testing shows this to be a profitable system, at least for the last two weeks. Just some thoughts to ponder.........



Quoting smjones
I spent this morning doing an actual manual forward test starting from 1/1/2006 on EURUSD, paging thru each day using F12. Here are the results. I used a 50 pip Trailing Stop for the TP and also as the BE Stop
I used the previous day High or Low as the initial stop loss.

Total trades 28
Wins 18
Pips won 2347
Avg Win 130
Losses 4
Pips Lost -358
Avg Loss -89
BreakEvens 6


Totals
Net Pips 1989
(percentages are based on number of trades, not on pips earned)
Winning % 64%
Losing % 14%
BreakEvens % 22%

Consecutive wins 8
Consecutive Losses 2
Consecutive BE 1
  • #142
  • Sep 22, 2006 2:06pm Sep 22, 2006 2:06pm
Yes I thought of this problem myself, so I chose to only start a trade on the open of the bar past the actual cross. So, the cross was already in history and locked in place. This is the way have I traded this also, for the last week or so... I have not used the cross, until it was locked in history one day back.



Quoting BeachBum
Scott.............I'm not challenging your test or results; however there is a phenomonon that I have seen with this trading strategy that might change your results. I have seen a cross of the RSI and MA at the end of a day that will "uncross" so-to-speak" as the next candle builds in the opposite direction, causing a potential trade to move in the "wrong" direction. When "looking-back" on the Daily chart this will not show up as a loosing trade because the cross that triggered the trade is "gone", it no longers appears on the chart as a false signal. I have had this happen to me on numerous occasions as I forward test this method with 15 currency pairs. Does this explanation make sense? The only time I can be very certain about this kind of test is when there is a cross and then several Daily candles move in the direction of the originally triggered trade. But when there is a cross, and then just one Daily candle that moves in the right direction, I don't think you can be sure that this situation results in a positve trade and vice-versa. Having said that: my forward testing shows this to be a profitable system, at least for the last two weeks. Just some thoughts to ponder.........
  • #143
  • Sep 22, 2006 2:09pm Sep 22, 2006 2:09pm
Quoting BeachBum
Scott.............I'm not challenging your test or results; however there is a phenomonon that I have seen with this trading strategy that might change your results. I have seen a cross of the RSI and MA at the end of a day that will "uncross" so-to-speak" as the next candle builds in the opposite direction, causing a potential trade to move in the "wrong" direction. When "looking-back" on the Daily chart this will not show up as a loosing trade because the cross that triggered the trade is "gone", it no longers appears on the chart as a false signal. I have had this happen to me on numerous occasions as I forward test this method with 15 currency pairs. Does this explanation make sense? The only time I can be very certain about this kind of test is when there is a cross and then several Daily candles move in the direction of the originally triggered trade. But when there is a cross, and then just one Daily candle that moves in the right direction, I don't think you can be sure that this situation results in a positve trade and vice-versa. Having said that: my forward testing shows this to be a profitable system, at least for the last two weeks. Just some thoughts to ponder.........
Part of the original method, and something I believe in using with any cross system, is confirmation via the next bar.

Yes, the bar can cross back down, but it can NOT uncross its self on the next daily bar. Sure, it could move back down again due to price movements, but then you'll have a sort of inverted V shape showing the price moving up and back down again. Fozzy always waits for the next daily bar to enter a position to avoid just this very issue.

As far as I can tell, given that you are waiting for the cross to be confirmed, any back testing would be valid as any whipsaw action would be irrelevant at that point.

Jason
  • #144
  • Sep 22, 2006 2:11pm Sep 22, 2006 2:11pm
OK............something about this still troubles me. I will need to take a look this weekend at my trading records to see if I can find what it might be. Thanks!



Quoting smjones
Yes I thought of this problem myself, so I chose to only start a trade on the open of the bar past the actual cross. So, the cross was already in history and locked in place. This is the way have I traded this also, for the last week or so... I have not used the cross, until it was locked in history one day back.
  • #145
  • Sep 22, 2006 2:13pm Sep 22, 2006 2:13pm
Well said..............thanks!



Quoting jlowder
Part of the original method, and something I believe in using with any cross system, is confirmation via the next bar.

Yes, the bar can cross back down, but it can NOT uncross its self on the next daily bar. Sure, it could move back down again due to price movements, but then you'll have a sort of inverted V shape showing the price moving up and back down again. Fozzy always waits for the next daily bar to enter a position to avoid just this very issue.

As far as I can tell, given that you are waiting for the cross to be confirmed, any back testing would be valid as any whipsaw action would be irrelevant at that point.

Jason
  • #146
  • Edited 2:26pm Sep 22, 2006 2:15pm | Edited 2:26pm
Do you think you could post a screen shot of your combined indicator... I am wondering what your ma is tied to... I probably could tell by the appearance.

Well maybe I can... thanks scott


Quoting BeachBum
OK............something about this still troubles me. I will need to take a look this weekend at my trading records to see if I can find what it might be. Thanks!
  • #147
  • Sep 22, 2006 2:56pm Sep 22, 2006 2:56pm
I'm not at the computer that has all my charts set up for trading, but I'll be glad to do this later.



Quoting smjones
Do you think you could post a screen shot of your combined indicator... I am wondering what your ma is tied to... I probably could tell by the appearance.

Well maybe I can... thanks scott
  • #148
  • Sep 22, 2006 3:07pm Sep 22, 2006 3:07pm
It was probably inevitable that someone would ask for this...........

I would like a very simple MT4 EA that has the fozzy daily system basics written into it for testing purposes. All I want is an advisor that sees the RSI cross the MA during a single Daily candle development and then signal a trade at the opening of the next Daily candle if the cross remains. No need for Bollinger Bands or anything else. T/P and S/L targets would be entered manually. I would use this basic EA to test with numerous currency pairs. That's not asking for too much, is it?

I do not know how to write such an advisor in MT4, but if someone can provide this for me, I'll do a lot of testing (back and forward) and post the results for everyone to see and use. Those of you who know me from VP testing (a strategy I still use everyday!) know I like to test and will always post and share pertinent info. Thanks!
  • #149
  • Sep 22, 2006 4:26pm Sep 22, 2006 4:26pm
well so far i really like this method. running live right now on 4 pairs and getting good results with:

2 lots. 1st lot 50 pip TP. 2nd lot trailing 50 pips.

soooo..... it 1st lot hits profit.. 2nd lot is automatically set to BE point.

was up 120 pips on eurusd and usdjpy but retraced a bit today. now at 70 or so..

still not too bad
  • #150
  • Sep 22, 2006 8:14pm Sep 22, 2006 8:14pm
Quoting jlowder
...you'll have a sort of inverted V shape showing the price moving up and back down again. Fozzy always waits for the next daily bar to enter a position to avoid just this very issue...Jason
Sort of a repeate to an earlier post, but thought with todays live example it was in context... Early on in my mentorship classes one of my mentors had us place the dots on our RSI indicator and look for the tell tale "V" patters as i've mentioned in some of my posts and Jason mentions in the above quote. The dots to me really make these types of indicators easy to read. One look and you can see there is something taking a closer look at on the price chart.

I do trade with other indicators on my price chart, mainly the Vtunnels. In the case above where you have the near perfect "Evening Star" I was ready, and entered into a sell at the open of the next candle and rode it down and took my daily profits before it retraced to far as it was Friday and i didn't want any open orders after noon-ish. :

http://accrete.com/fx-atm/RSIexample2.gif

Indicator used above can be found by following this link.

Cheers,
Thom
  • #151
  • Sep 23, 2006 12:15am Sep 23, 2006 12:15am
Quoting accrete
Sort of a repeate to an earlier post, but thought with todays live example it was in context... Early on in my mentorship classes one of my mentors had us place the dots on our RSI indicator and look for the tell tale "V" patters as i've mentioned in some of my posts and Jason mentions in the above quote. The dots to me really make these types of indicators easy to read. One look and you can see there is something taking a closer look at on the price chart.

I do trade with other indicators on my price chart, mainly the Vtunnels. In the case above where you have the near perfect "Evening Star" I was ready, and entered into a sell at the open of the next candle and rode it down and took my daily profits before it retraced to far as it was Friday and i didn't want any open orders after noon-ish. :

http://accrete.com/fx-atm/RSIexample2.gif

Indicator used above can be found by following this link.

Cheers,
Thom
Thom,

Perhaps you could explain the importance of the V pattern and how it relates to this method?

Thanks,

Jason
  • #152
  • Sep 23, 2006 1:10am Sep 23, 2006 1:10am
Greetings Jason. My2pips on the "V" pattern. I don't know how relevant it is to "this" method, but what i was taught is to watch the momentum of the candle close-price (see the dot on the forming line, this represents the current price/candle). When this "Dot" has finaly surpased the level of the prior candle -1, then the reversal is verified. So you have, in the case of the posted image, a bull candle, then a doji-bull, then at some point in the formation of the bear after the doji-bull, the "Dot", or current close price of the forming daily candle (Thursday's) did two things:

1) the dot went below the level of the prior candle (Wednesday's) -1 (Tuesday's), you now have an inverted "V" indicating a reversal, and

2) The price/"Dot" also broke the signal line (8ma on RSI - Yellow) with momentum.

In my more aggresive discrestionary mode, i actually entered a sell once the forming daily candle broke the signal line on the RSI, (This might be similar to how Vegas describes intraday entries when price bounces off an area of S/R?) I then entered again on the candle open Friday in the more traditional entry after a Evening Star formation (in this case Thursday afternoon at NY market close, I will often times average into a trade as entries are rarely "perfect")

Of course one must take in mind, that as cool an indicator as our RSI might be, it is still a simple reflection of what price is all to willing to tell us if we would just listen to a naked chart...but i like to dress it up in costumes with nice pretty colors and such. When will i learn that naked is beautiful. grin.

Hope that clears some of the fog?
Cheers,
Thom
  • #153
  • Edited 7:24am Sep 23, 2006 4:23am | Edited 7:24am
thx for links to indicators, how can I load templates, I can download it only like txt file or mht or html , but no like tpl? can you help me please
thx bj
BJ
  • #154
  • Sep 23, 2006 8:22am Sep 23, 2006 8:22am
I'm actually working on one right now. I'm having a slight issue with it, but, should be able to work it out. I won't be able to see if it works until next week when markets open again.

stockwet

Quoting BeachBum
It was probably inevitable that someone would ask for this...........

I would like a very simple MT4 EA that has the fozzy daily system basics written into it for testing purposes. All I want is an advisor that sees the RSI cross the MA during a single Daily candle development and then signal a trade at the opening of the next Daily candle if the cross remains. No need for Bollinger Bands or anything else. T/P and S/L targets would be entered manually. I would use this basic EA to test with numerous currency pairs. That's not asking for too much, is it?

I do not know how to write such an advisor in MT4, but if someone can provide this for me, I'll do a lot of testing (back and forward) and post the results for everyone to see and use. Those of you who know me from VP testing (a strategy I still use everyday!) know I like to test and will always post and share pertinent info. Thanks!
  • #155
  • Sep 23, 2006 9:31am Sep 23, 2006 9:31am
Excellent..............I'm sure there are many of us who are anticipating this development. Thank you!



Quoting stockwet
I'm actually working on one right now. I'm having a slight issue with it, but, should be able to work it out. I won't be able to see if it works until next week when markets open again.

stockwet
  • #156
  • Sep 23, 2006 9:52am Sep 23, 2006 9:52am
I guess your browser displays the TPL-file as text. The best way to get it is to download it as TPL file: right-click on the downloadlink to the tpl-file and select "Save target as" or sth. like that. If you can't get that to work, save it as txt and rename it to an TPL file, so if you have template.txt rename it to template.tpl. Since the encoding is the same, I think, it should work also.

Quoting brainjt
thx for links to indicators, how can I load templates, I can download it only like txt file or mht or html , but no like tpl? can you help me please
thx bj
  • #157
  • Sep 23, 2006 10:10am Sep 23, 2006 10:10am
brainjt right..using sniper's for comfirmation...
if RSI and EMA had crossed but the sniper's isnt cross yet then there are
a chance for chipsaw...
"Analysis Is Hard But Trade Is Easy"
  • #158
  • Sep 23, 2006 10:12am Sep 23, 2006 10:12am
Hello Scott............screen shot attached as requested.

One more question: In your backtest, at what time did the new Daily candle form? I ask because I have been using an MT4 platform from FXDD (GMT + 3) which gives me a new Daily candle open at 5 PM EST, a very convenient time for me to trade this method. Before I was using IBFX (GMT) and getting the new candle at 8 PM EST, no so convenient. Also not the same time as the NY market close. I like the FXDD timing.


Quoting smjones
Do you think you could post a screen shot of your combined indicator... I am wondering what your ma is tied to... I probably could tell by the appearance.

Well maybe I can... thanks scott
Attached Image
  • #159
  • Sep 23, 2006 10:20am Sep 23, 2006 10:20am
Hi BB, First off, your indicator is Accrete's so I cannot address what the MA is a moving average of... Perhaps Accrete will answer that. To the second question, My new bar forms at 18:00 ET I am with SBFX for this test.

BTW, My test was not using this indicator. It was using an exact copy and and laid down in the exact same order and from the same broker as Fozzy.
In fact in one of Fozzy's posts he states that the last short trade he placed on USDJPY was from the open at 117.68. That is the exact same open as my chart...

Of course there will be subtle differences between feeds and end of day time zones... These should average out over long term tests.

Thanks Scott


Quoting BeachBum
Hello Scott............screen shot attached as requested.

One more question: In your backtest, at what time did the new Daily candle form? I ask because I have been using an MT4 platform from FXDD (GMT + 3) which gives me a new Daily candle open at 5 PM EST, a very convenient time for me to trade this method. Before I was using IBFX (GMT) and getting the new candle at 8 PM EST, no so convenient. Also not the same time as the NY market close. I like the FXDD timing.
  • #160
  • Sep 23, 2006 10:36am Sep 23, 2006 10:36am
Scott..............I have two indicator windows, so the screenshot shows the MA for the upper window (not Accrete's). This is from the fozzy template in post #25 of this thread (posted by 'minute'). Does that answer the MA question?



Quoting smjones
Hi BB, First off, your indicator is Accrete's so I cannot address what the MA is a moving average of... Perhaps Accrete will answer that. To the second question, My new bar forms at 18:00 ET I am with SBFX for this test.

BTW, My test was not using this indicator. It was using an exact copy and and laid down in the exact same order and from the same broker as Fozzy.
In fact in one of Fozzy's posts he states that the last short trade he placed on USDJPY was from the open at 117.68. That is the exact same open as my chart...

Of course there will be subtle differences between feeds and end of day time zones... These should average out over long term tests.

Thanks Scott
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