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

  • #161
  • Quote
  • Oct 8, 2006 11:35am Oct 8, 2006 11:35am
Here is the June data:

Taking every trade:

Mouteki +192
Filter +166

A ton of false signals appear to occur in a sideways market. I am beginning to wonder if those saying the daily or longer term trend should not be the true filter. There were also a lot of false filter trades this month, just not near as much as pure Mouteki. Then there were some Mouteki trades that worked out, but were not taken using the filter. Almost like it is a pure guess.. LOL

The one thing I have noticed though is IF the trend is TRULY broken, the pip projection is always hit and a smaller s/l doesn't matter because it doesn't go back anyway before hitting the target.

At least both methods were positive in the end, but with so many negative trades, I can see how one would get discouraged at the point they are in the negative...
  • #162
  • Quote
  • Oct 8, 2006 12:29pm Oct 8, 2006 12:29pm
Same here

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...

I am convinced that most systems crap out in August. Next year I'll be taking that month off.
  • #163
  • Quote
  • Edited Oct 9, 2006 4:35pm Oct 8, 2006 5:37pm | Edited Oct 9, 2006 4:35pm
Ok, July results are in:

EDIT:::: ***10/9/06 - July was using 1hr candles by mistake, read later post.****
Mouteki -186
Filter -141

Now, I compared my results and charts to the powerpoint presentation Mouteki posted. You can see in his slides he is redrawing lines as time goes on. The problem is, I got a reversal on the first trade, where he ignored it. That trade ended up being a reversal for him, but later on after a +40 hit.

Looking back at Mouteki's posts some of the filters we discussed in this thread were clearly not used by him, however sometimes they looked like they were.

In his post of showing charts, he always mentioned it to be a perfect setup. He also said we should be patient and he would reveal more of his method as time goes on. He also posted once to not assume and do the thing we are doing on this post.. Hee hee.

He did guarantee that his method worked, and that he would love to trade against the big guys to see who'd win.

So, maybe Mouteki will still post some more information on his method. As far as following the method he posted to a T, it is almost just taking a chance you are in a trend, or an actual reversal occurs as I get more failed trades than positve ones.. Of course for June and September they were more positive. Over the 4 months, the net was positive, so that is a postive..

Oh well, the idea of trendlines and a break or going with them, as well as price action, is still a good one. If nothing else, Mouteki helped me understand and become closer to charts......WOW

I can't explain why he didn't take trades in his charts that should be taken, or reverse trades that are clearly reversals.

So, June was positve, July and August were negative, September was big time positve (for gbp/usd)...

Later.
  • #164
  • Quote
  • Oct 8, 2006 6:49pm Oct 8, 2006 6:49pm
Quoting llambert3
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:
Thank you very much for backtesting llambert3. This really has given me an insight on the pure Mouteki Trade and Mouteki Trade with filters. Im sure all of us here at FF appreciate all your hard work that you had put into backtesting these methods.

I have one query about the filter that you had placed. You mentioned that you did not place the trade on the next open candle after it had broken the trend line but at one pip higher/lower than previous candle. Could you clarify on that method please. Do you mean one pip higher/lower than the previous candle's close. And if it was the resistance trend line that has been broken [A BUY] would that mean placing a BUY trade one pip higher than the breaking trendline candle's close?
_______________ Say Good-bye to Buy-and-Hold
  • #165
  • Quote
  • Oct 8, 2006 8:26pm Oct 8, 2006 8:26pm
Quoting deltaworld
Thank you very much for backtesting llambert3. This really has given me an insight on the pure Mouteki Trade and Mouteki Trade with filters. Im sure all of us here at FF appreciate all your hard work that you had put into backtesting these methods.

I have one query about the filter that you had placed. You mentioned that you did not place the trade on the next open candle after it had broken the trend line but at one pip higher/lower than previous candle. Could you clarify on that method please. Do you mean one pip higher/lower than the previous candle's close. And if it was the resistance trend line that has been broken [A BUY] would that mean placing a BUY trade one pip higher than the breaking trendline candle's close?
No problem Deltaworld. I almost didn't post my research because of everyone downing us for doing this thread in the first place, but I figured there was still a few who would appreciate it, so you are welcome.

Also, one thing I can't help to comment on. I know for sure I read the entire Mouteki thread (the original when it was just one) in the beginning, but I do not remember Mouteki posting some of those messages. Maybe because I was just starting to research and ignored them??? After re-reading his posts, I now feel and hope he may add to his method, and maybe after all we really didn't need to search for filters. Maybe in Mouteki's mind, the time isn't right yet to show us the rest. My only concern now (and this is pure speculation and not meant to throw off on him), is that he may have gently led us to this point to gain something bigger in the end, but forexfactory cut that idea. I hope that wasn't the case, but if it is, at least we got a little bit of a good strategy, which he is to be credited with, even if it is part of someone else's strategy.

As far as your question, the candle that breaks the trendline (or ends up being the 2nd to the right of point A) has a high (or low). The next candle that opens is where we normally open our position (either buying or selling), however the filter I used was to wait until that candle went one pip higher (or lower) than the prior candle (the 2nd one to the right or final candle of a trend). Does this make sense now? If not, let me know and I'll post a picture. I wish I could draw on Metatrader charts.

But as I said earlier, there were some Mouteki trades that gained 100 pips, but were not taken using this filter alone. The other thing I was thinking is this. Maybe once a trade is placed, and appears to look like a good setup, Mouteki ignores reversals unless it "looks" good as well because we may be in a sideways trend, which leads to false moves.

I don't know anymore. I'll have to look at all the postive trades to see if there were any similarites. I'm glad I put all of this in a spreadsheet.
  • #166
  • Quote
  • Edited 10:54pm Oct 8, 2006 10:50pm | Edited 10:54pm
Once again not Mouteki but the results and method may be of some help to people considering using Mouteki.

I backyested the following pairs for Aug and Sept: aud/jpy,aud/usd,chf/jpy,eur/aud,eur/jpy,eur/gbp,eur/usd,gbp/chf,gbp/jpy,gbp/usd,nzd/usd,usd/cad,usd/jpy,usd/chf.

My filters were:

1. Waited until the candle opening above/below the TL went 5 pips higher or lower than the candle that broke the TL - even if it was along candle.

2. The 5 WMA had to have crossed the 8 WMA within the prior four candles (and no more) in the direction of the proposed trade.

3. Initial SL was ATR based and was usually 60-90 pips on entering the trade.

4. Take profit was not used, rather the trade was exited thru hitting a trailing ATR stop.

5. Trades were only taken between 8am and 11pm Australian EST.

The results.
AUG 62 trades, 32 wins, 30 losses. Average win 71 pips, Av loss 35. Total +1232 pips

SEPT 80 trades, 41 wins, 39 losses. Av win 75 pips, Av loss 28 pips. Total +1993 pips.

Comparison with previous post: GBP/USD Aug +5 pips, Sept +699 pips.

mungo
  • #167
  • Quote
  • Oct 8, 2006 10:55pm Oct 8, 2006 10:55pm
llambert3,
I thought I would go through July as well, to see what I got:
1) I don't see the reversal on the very first trade that you do
2) His slide #8 in Part 2 is wrong. He says the Sell is opened at 1.8467 and that the price action within the bar allowed him to move his stop to +10 profit. That means the low of the bar had to be lower than 1.8427, which it came nowhere near to.
3) He missed recording a trade that resulted in a loss of about 82 pips right after that one (if you go back to slide 6, and draw a line from the start of his Demand line up to the bottom of the last bar in slide 6 and then project it, you will see this trade)
4) Slide 17 is booked as 172 pips, even though the slide before calculated the target as 127 pips.
5) Slide 17 shows 5 bars after the 2nd pivot before an Open over the trendline. My charts showed one more bar in this space, and that bar caused my trendline to be different, causing an entry about 20 pips higher than him, which in turn caused a loss of 58 pips, rather than a profit of 127 pips. After some analyzing, it looks like his bars stop at 12:00 GMT on a Friday, even though my 5 minute charts show trading going on as late as 13:00 GMT. When I set my charts to stop at 12:00 GMT, then I get the profitable trade rather than the loss.

This same thing also made a difference in the trade in Slide 16 of Part 1, as to whether I would have entered on the same bar as him, or one bar later, and give up the initial 100+ pips on that bar.

In summary, from my viewpoint, because of the errors he made, his total for the month should really have been 789 pips instead of 968. However, considering the problems I mentioned in item #5 above, people like you and I might expect closer to (maybe) 500 pips (still pretty good).

I don't know how you came up with a loss for the month, and would be willing to compare my results with yours, if you like.
  • #168
  • Quote
  • Oct 8, 2006 11:04pm Oct 8, 2006 11:04pm
Mungo, great work ! What length of ATR did you use ?
  • #169
  • Quote
  • Oct 8, 2006 11:27pm Oct 8, 2006 11:27pm
Quoting trader416
llambert3,
I thought I would go through July as well, to see what I got:
1) I don't see the reversal on the very first trade that you do
2) His slide #8 in Part 2 is wrong. He says the Sell is opened at 1.8467 and that the price action within the bar allowed him to move his stop to +10 profit. That means the low of the bar had to be lower than 1.8427, which it came nowhere near to.
3) He missed recording a trade that resulted in a loss of about 82 pips right after that one (if you go back to slide 6, and draw a line from the start of his Demand line up to the bottom of the last bar in slide 6 and then project it, you will see this trade)
4) Slide 17 is booked as 172 pips, even though the slide before calculated the target as 127 pips.
5) Slide 17 shows 5 bars after the 2nd pivot before an Open over the trendline. My charts showed one more bar in this space, and that bar caused my trendline to be different, causing an entry about 20 pips higher than him, which in turn caused a loss of 58 pips, rather than a profit of 127 pips. After some analyzing, it looks like his bars stop at 12:00 GMT on a Friday, even though my 5 minute charts show trading going on as late as 13:00 GMT. When I set my charts to stop at 12:00 GMT, then I get the profitable trade rather than the loss.

This same thing also made a difference in the trade in Slide 16 of Part 1, as to whether I would have entered on the same bar as him, or one bar later, and give up the initial 100+ pips on that bar.

In summary, from my viewpoint, because of the errors he made, his total for the month should really have been 789 pips instead of 968. However, considering the problems I mentioned in item #5 above, people like you and I might expect closer to (maybe) 500 pips (still pretty good).

I don't know how you came up with a loss for the month, and would be willing to compare my results with yours, if you like.
Ok by me. The only difference may be my chart compared to yours and his.

WOW - I can't find the first trade that I did and even verified 3 times for July on the chart anymore. Even when I compared mine to his powerpoint slide, I didn't have the same entry he did. Now all of a sudden the first two trades in July doesn't match my spreadsheet. I even wrote down the candle times in my spreadsheet, and there is no way the candles now could be the candles to use. I can't explain it. I would say that maybe I wasn't looking at gbp/usd, but the numbers are gbp/usd. This is really strange. I was going to post the chart to show you, but now there is no reversal until Mouteki's and this was a profit. How can this be???? Really wierd. I checked and trades 3 and 4 are the same as the current chart, so what could I have done differently? Metatrade doesn't change the charts when it opens up does it?

I triple checked the charts because I didn't want to post wrong numbers, and now I have posted wrong numbers. Maybe I was tired from doing this backtesting. Sorry guys about that. I'll do it again when I have some more free time to get an accurate July count, but I am sure it still can't be too positive.
  • #170
  • Quote
  • Oct 8, 2006 11:54pm Oct 8, 2006 11:54pm
Don't get too troubled over it, llambert3. That happens to me all the time. I took a live trade last week that was a loser, and when I went back to analyse my entry, I coudn't even figure out why I made the trade ! I made the entry at 6am my time, so maybe like you, I was just tired and made a mistake. (I know, I should be keeping notes....)
  • #171
  • Quote
  • Oct 9, 2006 12:49am Oct 9, 2006 12:49am
Quoting trader416
Don't get too troubled over it, llambert3. That happens to me all the time. I took a live trade last week that was a loser, and when I went back to analyse my entry, I coudn't even figure out why I made the trade ! I made the entry at 6am my time, so maybe like you, I was just tired and made a mistake. (I know, I should be keeping notes....)
Are you using an indicator to draw your TD Lines or aid you in picking your points? The same thing happened to me a couple times until I figured out my indicator was marking TD points before they were valid.
  • #172
  • Quote
  • Oct 9, 2006 7:01am Oct 9, 2006 7:01am
Quoting mungo
I backyested the following pairs for Aug and Sept: aud/jpy,aud/usd,chf/jpy,eur/aud,eur/jpy,eur/gbp,eur/usd,gbp/chf,gbp/jpy,gbp/usd,nzd/usd,usd/cad,usd/jpy,usd/chf.


The results.
AUG 62 trades, 32 wins, 30 losses. Average win 71 pips, Av loss 35. Total +1232 pips

SEPT 80 trades, 41 wins, 39 losses. Av win 75 pips, Av loss 28 pips. Total +1993 pips.

Comparison with previous post: GBP/USD Aug +5 pips, Sept +699 pips.

mungo
Hey mungo,

I think your filters make sense.

Did you get those results combining all tested pairs or only GBP/USD?
Thanks
  • #173
  • Quote
  • Oct 9, 2006 8:53am Oct 9, 2006 8:53am
Hi everyone

I am still very much in process of evaluating methods including Mouteki, Sidus, Bago and admittedly don't have extensive backtesting results for any.

My current preference would be to find that Mouteki does work and adopt it as my main method, but now I have been taken aback by Mungo's test results! - only about 50% wins with Mouteki???
if that's the case why do people get so excited by it? (Sidus seems to generate well over 50% winners)
if the positive pips are only based on winners exceeding losers, then any system including even gambling can deliver with the right money management (e.g. positive RR ratio)!
Any thoughts? again, my preference is to be convinced that Mouteki does work...

On the issue of filters and further to another post, I had also thought of trying to combine different timeframe methods such as Fozzy (1D), Mouteki (4h), Sidus/Bago (1h) plus BB (15m) to find the best point of entry.

Cheers
Consistency and patience is everything
  • #174
  • Quote
  • Oct 9, 2006 8:54am Oct 9, 2006 8:54am
Quoting nutmg12
Are you using an indicator to draw your TD Lines or aid you in picking your points? The same thing happened to me a couple times until I figured out my indicator was marking TD points before they were valid.
No, I probably entered late, in the middle of a bar, and then once a bar finishes printing, the setup doesn't look the same anymore. I'm saving a screen image now of each trade I take, at the time I take it, and just filing them in a folder for future reference
  • #175
  • Quote
  • Oct 9, 2006 11:17am Oct 9, 2006 11:17am
Trader416

Initial stop was close of signal bar + or - ATR(10) x 2.5. . Stop was ATR(10) Ratchet (Le Beau) on each bar.

Happy Camper.

Results are from all pairs as specified in first paragraph. The GBP/USD was in included in that lot.

Geldmeister. (and others) - I suggest reading Van Tharp

To quote somebody:

In the 24 years I've been in this business I have never seen any trader come close to being able to produce a track record of 80% winning trades. In fact, this is like a professional baseball player having a batting average of .800 ,the best hitter in baseball history Ted Williams batted a .407 in 1953 (which means the best hitter in the world struck out 60% of the time at the plate). The bottom line is that it is pure insanity to think that you are going to be right 8 out 10 times. Even if you do have a system that wins 80% of the time that still does not tell you if the system makes money want proof... here we go:

Let's look at two different trading systems and see how they compare:

System #1
Percent Accurate: 65%
Average Win: $850
Average Loss: $1,100

System #2
Percent Accurate: 37%
Average Win: $3,400
Average Loss: $900

On the surface system one looks substantially better than system two. It is 65% accurate after all. Most traders can stomach being right 6 times in 10. System two with its 37% accurate would be hard to sit through - or so it seems.

When you look at expectation per trade you begin to see the big differences between the two systems. The expectation per trade measures the expected amount you will make on a given trade. This statistic uses a sample of the trades from a given track record.

System One expectation per trade: $167.50
System Two expectation per trade: $691.00

System one has a low expectation per trade. A little bit of slippage or transaction costs can eat of the majority of its expected profit. System two has a more robust expectation. Slippage and transaction costs will not decrease its expected profit as much as system one.

Looking at the breakeven percent shows an even bigger difference in the two systems:

System one breakeven percent: 56.4%
System two breakeven percent: 20.9%

System one must be right more than half of the time just to generate profits while system two can be right less than 25% of the time. With this information, which system would you rather trade?

Assume you begin trading each system, each takes 10 trades. Both systems loose the first 8 trades and the last two trades are profitable.

System One After 8 losers: (8 x $1,100) = ($8,800)
System Two After 8 losers: (8 x $900) = ($7,200)

System One Next 2 trades are winners: (2 x $850) = +$1,700
System Two Next 2 trades are winners: (2 x $3,400) = +$6,800

System One Net results of 10 trades: ($7,100)
System Two Net results of 10 trades: ($400.00)

What happens if you begin trading either system and you hit a string of 8 losers? System one is down $8,800 and system two is down $7,200. What happens if the next two trades are winners? System one will be sitting at loss of $7,100 and system two will be at a loss of $400.00. The recovery time of system two is much better than the recovery time of system one.

Manage your breakeven percent and making money is easier. Do not be fooled into trading a particular trading system just because of a so-called high percent accuracy.

mungo
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  • #176
  • Quote
  • Oct 9, 2006 11:44am Oct 9, 2006 11:44am
Quoting llambert3
Ok by me. The only difference may be my chart compared to yours and his.

WOW - I can't find the first trade that I did and even verified 3 times for July on the chart anymore. Even when I compared mine to his powerpoint slide, I didn't have the same entry he did. Now all of a sudden the first two trades in July doesn't match my spreadsheet. I even wrote down the candle times in my spreadsheet, and there is no way the candles now could be the candles to use. I can't explain it. I would say that maybe I wasn't looking at gbp/usd, but the numbers are gbp/usd. This is really strange. I was going to post the chart to show you, but now there is no reversal until Mouteki's and this was a profit. How can this be???? Really wierd. I checked and trades 3 and 4 are the same as the current chart, so what could I have done differently? Metatrade doesn't change the charts when it opens up does it?

I triple checked the charts because I didn't want to post wrong numbers, and now I have posted wrong numbers. Maybe I was tired from doing this backtesting. Sorry guys about that. I'll do it again when I have some more free time to get an accurate July count, but I am sure it still can't be too positive.
UGHHHH! I was testing the 1 hour chart for July (maybe June too) since I was doing June/July at the same time. All that wasted time. Well, at least now we know the results on an hourly basis..

How embarrassing
  • #177
  • Quote
  • Edited 12:53pm Oct 9, 2006 12:08pm | Edited 12:53pm
Ok, tl just broke on this one. Could this be a good sell? Using the 4 filters posted, this is what we know.

1. Candle prior to breakout candle is green.
2. Candle prior to breakout candle is not touching tl.
3. selling pressure is above the line (hadn't tested this in the past yet to know if there is anything to it)

Items not favorable:
1. Open candle has not gone below the tl low as of this post.
2. Breakout candle has a higher high than the previous candle.

The filter of open 1 pip lower than prior candle we have determined is not for forex.

oops:
Anyway, we'll see how this plays out, as it is only 55 pip projection with a 28 pip s/l....

EDITED:::: I had posted the chart showing wrong target, so when I fixed it, it had already broken #1 of not favorable above. In case this is confusing to anyone as to why I posted it hadn't occurred yet. Sorry about that.

CORRECT CHART
http://picnac.com/images/5168eurjpy%20100906%2000.gif
  • #178
  • Quote
  • Oct 9, 2006 12:13pm Oct 9, 2006 12:13pm
Quoting llambert3
Ok, tl just broke on this one. Could this be a good sell? Using the 4 filters posted, this is what we know.

1. Candle prior to breakout candle is green.
2. Candle prior to breakout candle is not touching tl.
3. selling pressure is above the line (hadn't tested this in the past yet to know if there is anything to it)

Items not favorable:
1. Open candle has not gone below the tl low as of this post.
2. Breakout candle has a higher high than the previous candle.

The filter of open 1 pip lower than prior candle we have determined is not for forex.

oops:
Anyway, we'll see how this plays out, as it is only 55 pip projection with a 28 pip s/l....
Ok, it broke #1 of not favorable, so I took the sell in my account.
  • #179
  • Quote
  • Oct 9, 2006 12:31pm Oct 9, 2006 12:31pm
Quoting Geldmeister
Hi everyone


My current preference would be to find that Mouteki does work and adopt it as my main method, but now I have been taken aback by Mungo's test results! - only about 50% wins with Mouteki???
if that's the case why do people get so excited by it? (Sidus seems to generate well over 50% winners)
if the positive pips are only based on winners exceeding losers, then any system including even gambling can deliver with the right money management (e.g. positive RR ratio)!
Any thoughts? again, my preference is to be convinced that Mouteki does work...


Cheers
You answered your own question. Money management is one the most important if not the most important part of any trading system. % of wins to losers isn't as important as your TP to SL ratio when your making money.
And yes, you can make money gambling. Successfull blackjack players make money because they manage their money and the cards being played. When blackjack players get 86'ed out of a casino it is most likely that they are not cheating, but are so good at beating the house.
  • #180
  • Quote
  • Oct 9, 2006 12:34pm Oct 9, 2006 12:34pm
Here is another one I took. These are scary buying yen in these times, but oh well.

The only 2 filters not working on this one:

1.) Candle prior to breakout candle is not green.
2.) Selling pressure is below the trendline.

http://picnac.com/images/8292gbpjpy 100906 00.gif
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