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Win in Trend and Win in Range

  • #141
  • May 25, 2018 6:11am May 25, 2018 6:11am
This is sketch of Engine 1.
It will keep collecting pips whatever is the market direction. (similar to Engine 1 of GoWithFlow but here, lot size of profit trades will keep increasing as well along with martingale trades). This is successful because 80% time, market is ranging. For rest 20% volatility time, Engine 2 will kick in to close trapped trades at break even. I will try to explain in next post.
Attached Image
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  • #142
  • May 25, 2018 6:13am May 25, 2018 6:13am
I have an idea as well.
I will post tomorrow that I'm at home.
  • #143
  • May 25, 2018 6:24am May 25, 2018 6:24am
Quoting Merka
I have an idea as well. I will post tomorrow that I'm at home.
If we can create defense for this danger zone then we don't need to afraid of martingale. EA can keep running in all market conditions. Will wait for your idea
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  • #144
  • May 25, 2018 10:57am May 25, 2018 10:57am
Quoting Merka
{quote} Depend by your starting capital. Let say initial balance = 1000000$ If after 1 year a doubled that account I will be more than happy. Yes, it's a big profit
well yes
  • #145
  • May 26, 2018 4:44am May 26, 2018 4:44am
>> Merka: How the EA can distinguish when we are in ranging or trending market to use the proper engine?

>> KashifNawaz: No need to identify trend. Engine 1 will keep working in ranging. Once your set level hit, (...) then engine 2 will active.

Here is a thought: There seems to be an unstated assumption for this discussion thread that the market is EITHER ranging OR trending. What if we would assume instead that the market is ranging AND trending, all of the time?

To explain: if we take the general definition of a trend, like "trend up = higher highs and higher lows", we implicitely say that there is also some oscillation (a wave) in the price movement, between the highs and the lows. We can in fact describe any price movement (time series of price bars) as an ADDITION of a cyclical component ("wave") and a linear component ("trend"). This is nothing new, for example John Ehlers has used this concept in his work on Cycle Analytics and Digital Signal Processing for trading, over 10 years ago (link: https://www.amazon.com/John-F.-Ehlers/e/B001IO9TCC).

This would support KashifNawaz' idea to have a "range engine" running all the time, taking care of the wave component, and a "trend engine" kicking in as soon as the trend component gets above a certain level.
  • #146
  • May 26, 2018 5:44am May 26, 2018 5:44am
Here is a visualization of this concept, showing the market as "trend plus cycle" (extracted from a slide by John Ehlers).

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  • #147
  • May 26, 2018 10:17am May 26, 2018 10:17am
Quoting KashifNawaz
This is sketch of Engine 1. It will keep collecting pips whatever is the market direction. (similar to Engine 1 of GoWithFlow but here, lot size of profit trades will keep increasing as well along with martingale trades). This is successful because 80% time, market is ranging. For rest 20% volatility time, Engine 2 will kick in to close trapped trades at break even. I will try to explain in next post. {image}
Do the buy orders have any SL or not?
If there is no SL on buys side, from level 8 till which level price needs to retrace back to close all buys at break-even?
How does engine work to close sell 1.28 at BE?

What about if price continui to go down from level 8?

Cheers
  • #148
  • May 26, 2018 1:09pm May 26, 2018 1:09pm
Quoting Heptapod
Here is a visualization of this concept, showing the market as "trend plus cycle" (extracted from a slide by John Ehlers). {image}
How many bars back you take in consideration and at what TF
  • #149
  • May 27, 2018 5:05am May 27, 2018 5:05am
Quoting Heptapod
>> Merka: How the EA can distinguish when we are in ranging or trending market to use the proper engine? >> KashifNawaz: No need to identify trend. Engine 1 will keep working in ranging. Once your set level hit, (...) then engine 2 will active. Here is a thought: There seems to be an unstated assumption for this discussion thread that the market is EITHER ranging OR trending. What if we would assume instead that the market is ranging AND trending, all of the time? To explain: if we take the general definition of a trend, like "trend up = higher...
Thanks Heptapod for giving us motivation that this may be possible. I had never read any book about trading or forex, but I believe, its possible. We all need to find a solution here, how to defend trapped trades once EA caught in volatility and engine 1 is seized.

Quoting Merka
{quote} Do the buy orders have any SL or not?
No SL. Its pure martingale. In reality, the multiplier will be very low, like 1.2 or 1.3 but here for easy calculations, we are using 2.

Quoting Merka
{quote} If there is no SL on buys side, from level 8 till which level price needs to retrace back to close all buys at break-even?
In martingale cycles, price needs to retract only 2 to 2.5 levels to close all trades but it depends upon multiplier. Higher the multiplier, higher the risk and lower retracement required for closure.

Quoting Merka
{quote} How does engine work to close sell 1.28 at BE?
Still working on it, its not an easy task. In reality, this will be .32 or .64 lot size but here, lets say max trade allowed is 1.28.

The rough idea is, as soon as trendy martingale will hit 20 pips SL, engine 2 will wake up to defend this. Engine 2 will be mixture of all strategies which don't use Stop Loss.

Engine 2a, Martingale (with low multiplier) This loves Range
Engine 2b, Recovery Zone (with low multiplier) This loves Trend
Engine 2c, maybe any other stoploss-less strategy?

Lets say, only 2a & 2b available for now, both will work together to close this on BE. The purpose is, either market stuck at this stage in range or trend, these both with mutual support, should kill the trapped trade. And this should be done without opening so many new trades (to avoid new spread cost)

At first they need to open a hedge buy trade with multiplier, lets say 1.2.
(1.28 x 1.2 = 1.53 lot)

So half trade will be placed by 2a and half lot by 2b. For further scenarios, how to deal with up or down or range price movement, still on it.

Quoting Merka
{quote}What about if price continui to go down from level 8? Cheers
No issue, with low multiplier and increasing lots on both sides, every trade which will hit TP will increase enough equity to open next trade and to survive spread cost. Lets say there is movement of 700 pips, with proper setting, (low multiplier, proper grid size, fixed distance or candle trades) it can be survived.
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  • #150
  • May 27, 2018 7:16am May 27, 2018 7:16am
My idea is to enter the market with a bias direction and not randomly.
For example H4+H1 are downtrend so we enter on M5 on short side Sell(1)=0.1L.
Let say we entered at the wrong moment and price is going against us for example 20pips.
We enter Sell(2)=0.1L + Buy(1)=0.1L.
Price goes against us other 20 pips. We open Sell(3)=0.1L+Buy(2)=0.1L but we take profit from Buy(1)=0.1L
every 20 pips of the grid we open B+S (same lots size) and TP the previous B.
etc...

at some point price will reverse to continui on high TF trends (in this case downtrend).
Sell orders will be averaged.
In the example attached price needs to retrace to 5th grid level to have average sells orders between (1) to (9)=0.
At the same 5th grid level we close also Sell(10) and Buy(9). Sell(10)+Buy(9)=0 because they have same lot and they were opened at the same 10th grid level.

If you use higher grid multiplier obviously the sequence will be closed early but you'll face higher draw-down.
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  • #151
  • May 27, 2018 9:46am May 27, 2018 9:46am
Quick reply to mntiwana:

>> How many bars back you take in consideration and at what TF

In John Ehlers' logic, you would try to find what he calls the "dominant cycle period", and then use a full cycle period (sometimes also half cycle period) for the number of bars, as length parameter in indicators. In principle this is valid for any timeframe.

For example, if in a 5min chart the full dominant cycle period is found to be 32 (bars), the recommendation would be to use CCI (32), if you use the CCI momentum oscillator as an indicator. As the cycle period turns out to be dynamic (changing over time), Ehlers developed a number of indicators to use a variable cycle period as input, so that these indicators would become "adaptive" to changing cyclical behavior.
  • #152
  • May 27, 2018 12:09pm May 27, 2018 12:09pm
Quoting Heptapod
Quick reply to mntiwana: >> How many bars back you take in consideration and at what TF In John Ehlers' logic, you would try to find what he calls the "dominant cycle period", and then use a full cycle period (sometimes also half cycle period) for the number of bars, as length parameter in indicators. In principle this is valid for any timeframe. For example, if in a 5min chart the full dominant cycle period is found to be 32 (bars), the recommendation would be to use CCI (32), if you use the CCI momentum oscillator as an indicator. As the cycle...
Thanks for the detailed reply -
Actually am asking and trying to know/understand ,as an user/trader side,there should be some specific and or more precise criteria for deciding cycle,as you all knows well,in any TF there are always cycles and of every size,price always move,run in cycles either side (up/down) some times short when some times bigger ones and usually a mix of every size,so what length/number of bars should be suitable - no user can alter his/her formula,logic and or strategy in every single next trade,when once decide
regards
  • #153
  • May 28, 2018 1:49am May 28, 2018 1:49am
Quoting Merka
My idea is to enter the market with a bias direction and not randomly. For example H4+H1 are downtrend so we enter on M5 on short side Sell(1)=0.1L.
Yes, agree. Adding some kind of entry rules will let you face less draw-down but also less trades and less profit (which is okay compare to loss)

Quoting Merka
Let say we entered at the wrong moment and price is going against us for example 20pips. We enter Sell(2)=0.1L + Buy(1)=0.1L. Price goes against us other 20 pips. We open Sell(3)=0.1L+Buy(2)=0.1L but we take profit from Buy(1)=0.1L every 20 pips of the grid we open B+S (same lots size) and TP the previous B. etc... at some point price will reverse to continui on high TF trends (in this case downtrend).
Have you tried GoWithFlow? If you place multiplier 1, you will get exactly the same results (only it doesn't have entry rules)

Quoting Heptapod
Quick reply to mntiwana: >> How many bars back you take in consideration and at what TF In John Ehlers' logic, you would try to find what he calls the "dominant cycle period", and then use a full cycle period (sometimes also half cycle period) for the number of bars, as length parameter in indicators. In principle this is valid for any timeframe. For example, if in a 5min chart the full dominant cycle period is found to be 32 (bars), the recommendation would be to use CCI (32), if you use the CCI momentum oscillator as an indicator. As the cycle...
Hello Friend,
I believe, you have read many books about this topic. Can you please guide us, how to practically apply this concept in any EA? Thanks in advance

Quoting mntiwana
{quote} Thanks for the detailed reply - Actually am asking and trying to know/understand ,as an user/trader side,there should be some specific and or more precise criteria for deciding cycle,as you all knows well,in any TF there are always cycles and of every size,price always move,run in cycles either side (up/down) some times short when some times bigger ones and usually a mix of every size,so what length/number of bars should be suitable - no user can alter his/her formula,logic and or strategy in every single next trade,when once decide...
Hello Mate,

Can you please share with us, how you want to apply this concept? Using manual trade or by EA? Do you think it can be done manually?
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  • #154
  • May 28, 2018 9:44am May 28, 2018 9:44am
Entering with a bias is definitely a good idea.
Kashif, perhaps you could explore expanding upon GoWithFlow with a biased direction.
  • #155
  • May 28, 2018 9:58am May 28, 2018 9:58am
Quoting carddard
Entering with a bias is definitely a good idea. Kashif, perhaps you could explore expanding upon GoWithFlow with a biased direction.
Hello Carddard,
Yes we can add entry rules but it will not make EA blast-free. Whatever entry rules we will chose, after placement of trades, market is not in our hands. EA will must face trades of death sequence. I have tried few martingale EA with specific entry rules (BB, CCI and even famous TMS) they all face draw down. Specific entry rules will decrease the number of trades and will reduce profit but will never eliminate threat.

I believe, we need to discuss about defense. I have shared idea of engine 2. Do you think is this possible?
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  • #156
  • May 28, 2018 10:02am May 28, 2018 10:02am
In response to KashifNawaz:

>> Can you please guide us, how to practically apply this concept in any EA? Thanks in advance

I didn't want to send you down the road of programming John Ehlers' indicators into your EA. This would lead to discussions that have nothing to do with the initial topic of this thread (win in trend and win in range). I mentioned Ehlers only to say that it is ok to trade based on the assumption that the market is cycling AND trending at the same time. So you could indeed decide for your EA to run one engine for cycles and another engine for trends, at the same time, no need to decide whether you are in a trend or in a cycle.

You may only want to measure some relevant parameters for both the trend ("up or down, how strong is it?") and the cycle components ("what is the amplitude, period...?"), if this increases the % of profitable trades of your EA. For example, if you find that the cycle component is currently smaller than the trend component, you could filter out entries against the direction of the trend (only trade in direction of trend), and/or use cycle preaks and valleys to pick the best entry in direction of the trend.
  • #157
  • May 28, 2018 10:21am May 28, 2018 10:21am
Quoting KashifNawaz
{quote} Hello Carddard, Yes we can add entry rules but it will not make EA blast-free. Whatever entry rules we will chose, after placement of trades, market is not in our hands. EA will must face trades of death sequence. I have tried few martingale EA with specific entry rules (BB, CCI and even famous TMS) they all face draw down. Specific entry rules will decrease the number of trades and will reduce profit but will never eliminate threat. I believe, we need to discuss about defense. I have shared idea of engine 2. Do you think is this possible?...
That's because you haven't found the right entry method.
Every good algorithm functions like an all-rounded sports team, with good entries and exits.
Having a good entry criteria reduces risk. You could even say that in itself is an additional defense mechanism.
What you have mentioned assumes that a good entry criteria = reduced trades = reduced profitability (with an equal chance of a black swan event).
I actually disagree and think that a good entry criteria = reduced, higher quality trades = enhanced profitability.

Think about it - if a black swan event is going to occur anyway, this is probably your best bet:

  1. Enter with high accuracy
  2. Manage low-risk periods with clearly defined algorithmic rules
  3. Manage black swan events with clearly defined algorithmic rules

Your approach is controversial, and trust me, it will bring you naysayers but that's just because they haven't been successful with it.
Stick to it, I think you are onto something!

  • #158
  • May 28, 2018 5:51pm May 28, 2018 5:51pm
Why just not trade manually? EA will never be as good as manual trading
  • #159
  • May 28, 2018 6:07pm May 28, 2018 6:07pm
Quoting Zakattack
Why just not trade manually? EA will never be as good as manual trading
No problem with manual trading as I'm doing it right now but here we are also sharing ideas.
What's your idea?
Regards
  • #160
  • May 29, 2018 1:42am May 29, 2018 1:42am
Quoting VEEFX
A fabulous thread title but painful to see it go nowhere ! My final post on this thread.... May I suggest you guys find the common denominator between Trending and Ranging Markets? There is one in the Thread title itself i.e. "Win" which is tricking you all into going in circles! Ask yourself the right questions and solutions will surface in just a matter of time! What do we have to do with win in both trending and ranging market? What is the common denominator? You will NOT find the answer in entries! If you can figure this out, you will OWN the...
I think exits are equally as important as entry. A system with good exit without good entry will really struggle to make money. A system with good entry and not good exit will also struggle. You need both.

To answer the thread's question, the only way to perform in both environments is to underperform in both environments. i.e underperform trending systems in trendy environments and underperform ranging systems in range environment. There is no free launch.
When you see it, BET big.
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