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Learning From Unsuccessful Mouteki Trades - The Search for Filters...

  • #141
  • Oct 7, 2006 11:16am Oct 7, 2006 11:16am
This is just an observation from someone who has read most of what has been posted about the Mouteki and Bagavino trading methods and for two weeks has been using the Fozzy trading strategy which is based on daily chart useage. Would it be reasonable to use the Fozzy method to watch for a trade signal on a daily chart, then drop down to the 4 hour chart and wait for a trade signal using the Mouteki method (still during the same trading day) and finally look at a one hour chart for a Bagavino signal? Would this filter out potentially bad trades? Would this process serve as strong confirmation to enter a trade? S/L values could be established using the smaller time frame while T/P could come from the larger chart. Several years ago I learned to trade using a similar method. It was productive although not as well refined as I would have liked. But that same method still works today. This is just something I have been thinking about forward testing in the near future on only one currency pair. Perhaps it has some relevancy here in this discussion.



Quoting donb01
I also very much agree
now here is a thought, I remember someone posting in the original thread about seeing a 4hr breakout and then going to a 1hr with a different system for an entry.
everyone else on the thread were almost condemning him/her for that however, ONCE mouteki posted again he condoned that trading.

So is that a possible key?
to use the smaller timeframe to filter possible false breakouts

just a thought
  • #142
  • Oct 7, 2006 11:43am Oct 7, 2006 11:43am
I think this thread should be moved. By altering Mouteki, it is no longer pure Mouteki.

Also, the only thing these filters will filter out is more good trades than bad trades. The only suitable filter is your own discretion and gut feeling. Maybe filtering out news is the only other suitable filter.
  • #143
  • Oct 7, 2006 2:32pm Oct 7, 2006 2:32pm
Quoting ra300z
I think this thread should be moved. By altering Mouteki, it is no longer pure Mouteki.

Also, the only thing these filters will filter out is more good trades than bad trades. The only suitable filter is your own discretion and gut feeling. Maybe filtering out news is the only other suitable filter.
Let the moderators or Mouteki decide that.
  • #144
  • Oct 7, 2006 3:04pm Oct 7, 2006 3:04pm
I have been following, testing and live trading Mouteki for quite a while now. The method that I have found is that I enter a trade signalled by Mouteki's trade and if there are 2 conflicting trend breaks from the Support Line and the Resistance Line, I zoom out and see which one is the more apparent trend from a larger scale and I go with that one.

I sometimes avoid trades that have a conflicting signal as that is a bit of a gamble as then you don't know which direction it may go purely on the Mouteki trade.

I have been reading how some forum readers have been applying the DeMark filter on the Mouteki Trade. I have searched Hi and Lo for a defined description of what the DeMark filter is but I cannot seem to find it. If someone can please post the exact "DeMark Filter on the Mouteki Trade" or post a link that directs me to the exact posting of the DeMark Filter.

As this would help me greatly as I would like to back-test and forward-test applying the DeMark Filter and comparing the results with just purely the Mouteki Trade.

Thanks in Advance.
_______________ Say Good-bye to Buy-and-Hold
  • #145
  • Oct 7, 2006 3:46pm Oct 7, 2006 3:46pm
Quoting ra300z
I think this thread should be moved. By altering Mouteki, it is no longer pure Mouteki.

Also, the only thing these filters will filter out is more good trades than bad trades. The only suitable filter is your own discretion and gut feeling. Maybe filtering out news is the only other suitable filter.
Get the TD book there is no such thing as "Pure Mouteki".

You may be right about the filters though. Instead of not getting into a trade because of the filters (They were written for the Stock Market) I'm thinking about just waiting for price to prove the a valid signal before entering.

I think the entire Mouteki thread should be removed since it's plagerism.
We should restart the discussion under the Demark name. After all he did trademark it.
  • #146
  • Oct 7, 2006 3:54pm Oct 7, 2006 3:54pm
Well I wouldn't take it that far... Mouteki is not 100% copy.. I mean all cars role on 4wheels dont' they... Look how many people coudn't draw a trend line and now they can. Yes you can agure it simialr but the stoch and CCI look the same to me to but I don't think mouteki as broken any laws. Now if Demark and company contact the factory well I guess they could just take it from there.

turbo

ps not to mention I think Demark books sales have gone up since the start of the Mouteki thread

Quoting nutmg12
Get the TD book there is no such thing as "Pure Mouteki".

You may be right about the filters though. Instead of not getting into a trade because of the filters (They were written for the Stock Market) I'm thinking about just waiting for price to prove the a valid signal before entering.

I think the entire Mouteki thread should be removed since it's plagerism.
We should restart the discussion under the Demark name. After all he did trademark it.
  • #147
  • Oct 7, 2006 3:55pm Oct 7, 2006 3:55pm
Quoting nutmg12
I think the entire Mouteki thread should be removed since it's plagerism.
We should restart the discussion under the Demark name. After all he did trademark it.
Ha ha ha nutmg12, good one!

I would love to second you as I like the way you said it, but unfortunately I can't since I have not read Demark's book myself.
I am JuMPeR.
  • #148
  • Oct 7, 2006 4:03pm Oct 7, 2006 4:03pm
Quoting turbokaos
Well I wouldn't take it that far... Mouteki is not 100% copy.. I mean all cars role on 4wheels dont' they... Look how many people coudn't draw a trend line and now they can.
Good point turbokaos!!
The trend isyour friend untilis about to end...
  • #149
  • Oct 7, 2006 5:13pm Oct 7, 2006 5:13pm
Quoting hans_gregor
Good point turbokaos!!
Have you read the book?
Try hard, think fast, die young
  • #150
  • Oct 7, 2006 5:53pm Oct 7, 2006 5:53pm
Quoting ra300z
I think this thread should be moved. By altering Mouteki, it is no longer pure Mouteki.

Also, the only thing these filters will filter out is more good trades than bad trades. The only suitable filter is your own discretion and gut feeling. Maybe filtering out news is the only other suitable filter.

We don't know what pure Mouteki is, we only know the basics of it. For his own reasons, which may well be good ones, he has chosen not to expand further. How do you know this isn't just what he wanted was a discussion like this about his system. You don't, so thou shall not read this thread.
  • #151
  • Edited 7:45pm Oct 7, 2006 7:25pm | Edited 7:45pm
Well, I went to the library and read the trendline chapter from the book, and I was surprised that not only is the idea almost straight from the book, but even parts of Mouteki's first introductory page are almost straight from the book. So there is no question in my mind that it is plagiarism.

The only differences in the base idea are:
1) DeMark says to take the breakout of the trendline, and not wait for a bar to Open over the trendline
2) Likewise, DeMark measures the profit target from the trendline, not from the Open over the trendline

Keep in mind that DeMark developed his ideas based on daily bars that sometimes have gap openings, and mostly developed for commodities and to some extent stocks. Mouteki's entry probably makes more sense when trading 4-hour bars, and when trading Forex.

DELTAWORLD, a discussion of the DeMark filters can be found here:
http://www.forexfactory.com/forexfor...0&page=1&pp=15

and they are also discussed in the Sept/06 issue of Currency magazine, available free, here: http://www.currencytradermag.com/mxaw2o.htm

FYI, DeMark's filters have changed a little bit between his first book and his book on trading options. Also, DeMark doesn't say to pass up a trade that doesn't meet these filters, he actually just says that the success of the trade might be "suspect" if it doesn't meet these qualifiers. And since they were developed for daily bars, with gap openings, some of the filters concerning where a bar opens may not really apply to 4-hour bars.

Having said all this, I'm thankfull that Mouteki brought it to our attention, and has done some of the homework for us, but it would have been appropriate for him to acknowledge DeMark, rather than denying it.
  • #152
  • Oct 7, 2006 8:54pm Oct 7, 2006 8:54pm
From what I have heard of about TD book from other traders, the only chapter which is relevant is how to draw his trendlines otherwise everything else is for your reading pleasure. I guess with technical analysis, most are just concern with how to do it, just I know they consider his TL to be conservative. I always believe there is no way to filter false breakouts except to hedge your position.
  • #153
  • Oct 7, 2006 8:59pm Oct 7, 2006 8:59pm
Well drawing trends lines I can asure you was around way before DeMark's book so I don't think that can be consider plagiarsim. and there you have it Demark says to take the break Mouteki says to take the candle open. That what makes a Ford a Ford and a Honda a Honda.

thanx for the currency trader link.

turbo





Quoting trader416
Well, I went to the library and read the trendline chapter from the book, and I was surprised that not only is the idea almost straight from the book, but even parts of Mouteki's first introductory page are almost straight from the book. So there is no question in my mind that it is plagiarism.

The only differences in the base idea are:
1) DeMark says to take the breakout of the trendline, and not wait for a bar to Open over the trendline
2) Likewise, DeMark measures the profit target from the trendline, not from the Open over the trendline

Keep in mind that DeMark developed his ideas based on daily bars that sometimes have gap openings, and mostly developed for commodities and to some extent stocks. Mouteki's entry probably makes more sense when trading 4-hour bars, and when trading Forex.

DELTAWORLD, a discussion of the DeMark filters can be found here:
http://www.forexfactory.com/forexfor...0&page=1&pp=15

and they are also discussed in the Sept/06 issue of Currency magazine, available free, here: http://www.currencytradermag.com/mxaw2o.htm

FYI, DeMark's filters have changed a little bit between his first book and his book on trading options. Also, DeMark doesn't say to pass up a trade that doesn't meet these filters, he actually just says that the success of the trade might be "suspect" if it doesn't meet these qualifiers. And since they were developed for daily bars, with gap openings, some of the filters concerning where a bar opens may not really apply to 4-hour bars.

Having said all this, I'm thankfull that Mouteki brought it to our attention, and has done some of the homework for us, but it would have been appropriate for him to acknowledge DeMark, rather than denying it.
  • #154
  • Oct 7, 2006 11:10pm Oct 7, 2006 11:10pm
I'll just try and ingore all the hogwash posts concerning this particular thread and continue on with the purpose of the thread.

Horace,

I have backtested August, September and October to date on the gbp/usd only. I did this three separate times to make sure I had all points drawn correctly. The 2nd time around, I had missed some points. The 3rd time around, I got the same results as the first two, so I am confident I have all possible points and trendlines.

I used purely Mouteki method that he posted, taking every trade, including extra trades if I was already in a trade. In other words, any possible trade, I took. Here are my results:

August -24 pips
September +1029
October to date +92
TOTAL = +1097

Adding a filter of only entering a trade once the candle opened higher/lower than the tl break candle and buying/selling at this point (not at the open, but one pip higher/lower than previous candle), and putting at least a 60 pip s/l if the s/l calculation was less than 60. Here are the results:

August -122 pips
September +1386
October +107
TOTAL = +1371

Difference +274 pips using the criteria I set above...

It appears August is just a bad month for any system. There were very few filtered trades taken in August, but the 60 pip s/l hurt the results. There were a lot of Mouteki trades taken, but ended up being +10 trades and then a lot of losses, so the net results were almost even.

I only did the 60 pip s/l because most of the trades in September ended up occuring, but were stopped out using Mouteki s/l system when there was a 30 or 35 pip s/l. A lot of these trades would've been positive if there was a 60 pip s/l minimum. Also, I have noticed in other pairs sometimes a min. 60 s/l trades would've resulted in profit. This is still up for debate though.

The only other thing that was nice about using the filter is there were very few failed trades in those months, while using purely Mouteki produced a lot of failed trades. However, the net result was still profit.

So, my conclusion is that Mouteki system that he posted is still profitable on its own without filters. In both cases, you have to take every possible trade that signals, even if you were asleep, otherwise the results would be different. It seems August should never be traded.

I will also backtest June and July later and keep October forward updated.
  • #155
  • Oct 8, 2006 1:48am Oct 8, 2006 1:48am
Quoting llambert3
It seems August should never be traded.
A lot of guys don't trade during the summer period.

Matter of fact, August typically is a bad month to trade overall because all of Europe is off on vacation because of the crazy heat. Literally -- people quit working during that month...

I am convinced that most systems crap out in August. Next year I'll be taking that month off.
Mr. Trend
  • #156
  • Oct 8, 2006 3:22am Oct 8, 2006 3:22am
Quoting trader416
......... Likewise, DeMark measures the profit target from the trendline, not from the Open over the trendline......
I've seen many sources before who would suggest measuring target from the trendline and not from the opening. Worth a thought? Could also open two positions and have 2 targets. Worth a thought? Could also keep a position open until a reversal signal instead (eg a reverse "Mouteki" signal). Worth a thought?

We think too much.....
"The market will rally from this or lower levels"
  • #157
  • Oct 8, 2006 3:34am Oct 8, 2006 3:34am
Quoting LightKeeper
I've seen many sources before who would suggest measuring target from the trendline and not from the opening. Worth a thought? Could also open two positions and have 2 targets. Worth a thought? Could also keep a position open until a reversal signal instead (eg a reverse "Mouteki" signal). Worth a thought?

We think too much.....
Worth 3 thoughts.
I am JuMPeR.
  • #158
  • Oct 8, 2006 3:55am Oct 8, 2006 3:55am
One hugely important and hugely overlooked "filter" (for want of a better word) is.......if you're trading 4H, check your 1D charts when drawing your trendlines or deciding whether you take a trade or not. If the 1D chart is choppy and currently in a range (you could probably see that from 4H too!), you might get a trendline rejection (false signal). If 1D has started a strong trend and your Mouteki signal in 4H is against that 1D trend, you should be careful, you're entering into a potential retracement in 1D and this might fall short of your projected target. If your 1D is trending and has retraced and then you get a signal in 4H in the direction of a trend, you have a potentially very good trade. If 1D is approaching a mouteki line in its own chart, enter and then rethink the situation when it hits that line. There might be a retracement from that line. Or it might breach it. Then you'll consider adding to your position on 1D as well.

Often false signals in 4H happen when after a period of trending, price reverses and breaches our Mouteki TD only to go back again to do a double top or double bottom and then reverse once again. That's why the safest Mouteki trades are where we already have a double top or double bottom and the Mouteki signal identifies a breach of it

Disproportionately long candles....often caused by news releases or unexpected news (eg, a particularly unpopular president of an unnamed country gets assassinated). This very long candle could breach our trendline and give a signal. We enter. Only to see that this was a very temporary reaction to the news. That's just another thing to be careful with. I myself try to stay clear of extremely long candles. Leave them to news-traders, fundamentalists and scalpers.
"The market will rally from this or lower levels"
  • #159
  • Oct 8, 2006 7:14am Oct 8, 2006 7:14am
Lightkeeper

Thanks for reminding all to drill from the top down, I know that sometimes it gets overlooked when a system is so popular to those who uses the Mouteki system. Since 4 hours is such a long time, we always want to be on the right side of the trend.
  • #160
  • Oct 8, 2006 9:08am Oct 8, 2006 9:08am
Quoting Mr Trend
A lot of guys don't trade during the summer period.

Matter of fact, August typically is a bad month to trade overall because all of Europe is off on vacation because of the crazy heat. Literally -- people quit working during that month...
That's a new thing. That is funny also. Maybe I'm wrong, but it's funny. As I know july/june is hotter than august. People have A/C in europe, you know.
From what I know, august is the traditional month for big guys to take vacantion (big guys from europe, us, asia...). It's allmost like a convetion, majority of big traders go in vacation. They take their wifes/secretaries and go... That's why the market has no power in august to move in one direction or another... there is nobody to move it (demo accounts don't count).
Here is a link with the average temperature in london on monthly bases.
http://www.bbc.co.uk/weather/world/c...ml?tt=TT003790
And here it is from frankfurt
http://www.bbc.co.uk/weather/world/c...ml?tt=TT003710
24C is 75F. I didn't new that 75F is crazy heat
Try hard, think fast, die young
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