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  • #3,681
  • Jun 25, 2019 9:39am Jun 25, 2019 9:39am
Some potential entries to consider / think about

Look at the images below. All marks arrow, rectangles and triangles are potential entries

Attached Image (click to enlarge)
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- Arrows: Valid entries based on my preferred rules (Close below or above outer band and reverse)
- Triangle: Exceptions: Gap below or above and reverse (They look to be valid but for me gaps represent sudden uncertainty and value changes or manipulations). Therefore i prefer to avoid. But the image above show they could be valid opportunities
- Rectangle: Exception: Price just touched outer band and reversed. Looks like a valid trade. It's a price rejection.

Should we take those trades i consider as exceptions?
  • #3,682
  • Jun 25, 2019 9:42am Jun 25, 2019 9:42am
Quoting bishopdotun
Spikehunter Review Each new release gets better and better. Great job R4M. I overlay spikehunter on NIH98 TMA with the settings displayed {image} {image} If you agree with me, then you see that they are pretty much the same. But I do not entirely agree with the exits printed. The entries are almost the same but could be better. Consider the proposal below. If it's an overload, you may minimise the post. Entries & Exits {image} I marked my entries above. Works similar on M5 and M15 Long Entry - Wait for price to go below the blue outer band - Wait...
One additional trade management proposal -

A. Long entry

1. After long entry and high exceeds 2nd blue band, stop loss adjusted to last swing low

B. Short entry

1. After short entry and low exceeds 2nd pink band, stop loss adjusted to last swing low

My proposal,

Long Exit
- Wait for the candle to close above the dashed pink dotted lines
- After the candle close, price may continue in our favour or may want to reverse.
- If price reverse back to the pink dotted line after the candle close, close the trade activate stop loss to breakeven

Short Exit
- Wait for the candle to close below the dashed blue dotted lines
- After the candle close, price may continue in our favour or may want to reverse.
- If price reverse back to the blue dotted line after the candle close, close the trade activate stop loss to breakeven
  • #3,683
  • Jun 25, 2019 9:59am Jun 25, 2019 9:59am
Hey Steve,

First of all thanks for another update, it's inspiring to see someone who dedicates so much time to coding and learning how to trade. I feel like we are on the same page regarding the discipline that's needed to be able to succeed in Forex, we at least share the same passion and both put in a crazy amount of hours to make this all work.

One thing I don't really agree on for the moment is the route we are going with the repainting bands. I very much understand that when we execute trades at this exact moment that we will get profitable entries and or exits but we are only able to forward test this strategy because of the repainting issue that is going to take a lot of time. I'm a big fan of backtesting theories and strategies, it is something I do multiple hours a day.

You probably know I've always been a big fan of one of the first indicators that you created which is the MMdetective indicator. Back in the days when George opened our eyes, we learned that the market is manipulated, by a single entity using most likely an algorithm, I believe you very much agree on this. Keeping this in mind and adding the MMdetective indicator to the charts it became very obvious to me that an algorithm is controlling the market. On every timeframe, you can see tops and bottoms getting taken out by this algorithm and very often this happens by the EXACT pip. This is what really fascinates me as after these targets get taken out the price very often reverses giving us the edge and the option to ride on the back of the MM and that is what this thread is all about right, reversal trading.

I have not seen you experimenting or giving much attention to this amazing indicator that you created which shows the market manipulation and I really would like to encourage you to give it a second chance.

As much as you like examples by charts just like I do I will provide you with a couple of examples of targets that are taken out by the exact pip. I very much believe we can trade off these targets because we are trading with a huge R:R ratio explained in the charts below. And for me, trading is all about risk-reward ratio.

The last 2 screenshots are trades I took today, target taken out by the pip, almost zero DD and HUGE R:R. Yes I very much realise that there are a lot targets that get taken out where price doesn't reverse that's why I tend to trade only the extremes of the day and even if price doesn't reverse I don't really care that much because we are applying a VERY tight stop loss of 2-3 pips as we only are after the targets that the MM wants to take out by the pip giving us a huge RR on the trade. Manually trading this would be pretty intensive and probably not recommendable for you as you don't like staring at a screen all day but as you are talking more and more about an EA I'm very sure that this strategy could be transferred into code and be very very profitable.

I hope you don't mind me spitting my thoughts out and wanting to keep your attention on the indicators that you previously coded, I believe they contain a lot of value!

Thanks,
Wim
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  • #3,684
  • Jun 25, 2019 10:09am Jun 25, 2019 10:09am
Quoting bishopdotun
Some potential entries to consider / think about Look at the images below. All marks arrow, rectangles and triangles are potential entries {image} {image} - Arrows: Valid entries based on my preferred rules (Close below or above outer band and reverse) - Triangle: Exceptions: Gap below or above and reverse (They look to be valid but for me gaps represent sudden uncertainty and value changes or manipulations). Therefore i prefer to avoid. But the image above show they could be valid opportunities - Rectangle: Exception: Price just touched outer band...
Triangle - too dangerous without manual trade management. If this set up is accepted then have to apply tight trade management and be prepared to be stopped out.

Rectangle -
1. Long trade - touch candle must be bullish candle with lowest low to show strong rejection
2. Short trade - touch candle must be bearish with highest high to show strong rejection
  • #3,685
  • Edited 10:42am Jun 25, 2019 10:23am | Edited 10:42am
Quoting LongBTC
Hey Steve, First of all thanks for another update, it's inspiring to see someone who dedicates so much time to coding and learning how to trade. I feel like we are on the same page regarding the discipline that's needed to be able to succeed in Forex, we at least share the same passion and both put in a crazy amount of hours to make this all work. One thing I don't really agree on for the moment is the route we are going with the repainting bands. I very much understand that when we execute trades at this exact moment that we will get profitable...
The problem with target to the pip is how to quantify these targets ?

Is it possible you write down the quantifiable rules that can be translated into code ? In other words describe how you chose those targets among the many lines plotted by the indicator in a consistent way that it is mechanical in nature without subjective discretionary input ?

***This to the pip phenomena is an after event. We don't know whether price will stop exactly at those lines to the pip in real time live market. In r4m words, that will be the holy grail. The EA can be coded to execute trades when the selected lines are touched, what happens after that we won't know.
  • #3,686
  • Jun 25, 2019 10:40am Jun 25, 2019 10:40am
Quoting skyway
{quote} The problem with target to the pip is how to quantify these targets ? Is it possible you write down the quantifiable rules that can be translated into code ? In other words describe how you chose those targets among the many lines plotted by the indicator in a consistent way that it is mechanical in nature without subjective discretionary input ?
Yes, I'm aware that there are a lot of "targets" that can potentially be taken out, especially if you drop down to lower timeframes then the 30m. Therefore we need to build in filters as Steve has mentioned before and what the whole purpose is of this thread to get to the point where he is able to build a profitable EA.

The filters I currently automatically apply in my head is that the ADR has to be between 0.75-1 , as it is less likely that price will push through a target the higher the ADR and more chance for a reversal to happen. While I don't really believe in trends, I tend to also look what price has done the last couple of days when trading of the H1, that's another little filter I would like to apply. For instance when the price has strongly been trending down without any real appropriate reversal then I'm more eager to place a buy limit at a target as again in my mind the chances have increased for a reversal.
  • #3,687
  • Jun 25, 2019 10:44am Jun 25, 2019 10:44am
Quoting skyway
{quote} ***This to the pip phenomena is an after event. We don't know whether price will stop exactly at those lines to the pip in real time live market. In r4m words, that will be the holy grail.
It is not an after event. The price has touched that price area and if you would go look at your charts, add the MMdetective indi then you would see this happens VERY often. Offcours price often won't stop at this exact target, but it sure does happen more often than not to build a profitable strategy around this.
  • #3,688
  • Jun 25, 2019 10:50am Jun 25, 2019 10:50am
Quoting LongBTC
{quote} It is not an after event. The price has touched that price area and if you would go look at your charts, add the MMdetective indi then you would see this happens VERY often. Offcours price often won't stop at this exact target, but it sure does happen more often than not to build a profitable strategy around this.
Issues to consider -
1. Selection of lines,
2. Execute open trade when chosen line is touched,
3. Trade management in respect of stop loss or open opposite hedge trade,
4. How and when to unlock hedged trade,
5. Whether to implement grid level cost averaging trades,
6. Exit management
7. Whatever ???

All this starts with how to select chosen lines in a quantifiable manner to be translated into code.
  • #3,689
  • Jun 25, 2019 10:59am Jun 25, 2019 10:59am
Quoting robots4me
{quote} @parisboy -- okay. Then let's put your money where your mouth is. I'll bet you one EURO that the NEXT version of SpikeHunter will place a blue or purple dot very close to where you would have opened a trade using your Envelopes + Underlying Trends + whatever else you wish to employ. Seriously, I wouldn't go so far as to say an underlying trend doesn't have an effect, but it's not a deal breaker. A reversal strategy may perform differently under different market conditions (i.e. different data patterns), but that would be expected,...
When I answer somebody on a thread, I very often loose money because I am not where the action is.

Helping rookies, newbies and Dummies on the subject of Envelopes, Cycles and Waves has a financial cost. Let's say it's my charity !

Helping rookies, newbies and Envelopes dummies I very often miss the reversal to the pip. Only George and fellows can do that as Top Notch coders.
The good thing is that when I look at my screen THE REVERSAL IS CONFIRMED.

When to Enter is easy : NOW
At which level to Enter is easy too : at the convenience of the market !

Gliding Stop Losses 1, 2, 3 were positioned at the previous low before the entry, then at the successive reversals lows to reach first Break Even then to protect profits

When to Exit : Centered Moving Averages and Envelopes Limits playing both the role of Targets and of Resistance, as Price Action was Downtrending (Envelope 256 (brown) and Envelope 128 (ocre) were downtrending) I classified the current reversal as a counter-trend reversal up to the proof of the opposite. It is why I suspected that the Centered Moving Average 256 (brown) would play a role of resistance and decided to sell my position.

Profit was + 54 points

Note that the distance between the Lower Limit of the Envelope 256 (brown) and the Centered Moving Moving Average 256 is 125 points.

The Amplitude of the Envelope is KEY when entering late but safely.

It is easier to grab 50 points on the DOW (26.000 points) than 5 on the SP 500 (3.000 points)
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  • #3,690
  • Jun 25, 2019 11:38am Jun 25, 2019 11:38am
Candidate signal

Below is a developing trade signal. Now we have a spike below the blue band. We wait patiently to confirm the reversal. This will be around the Asian session.

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  • #3,691
  • Jun 25, 2019 11:47am Jun 25, 2019 11:47am
Quoting bishopdotun
Candidate signal Below is a developing trade signal. Now we have a spike below the blue band. We wait patiently to confirm the reversal. This will be around the Asian session. {image}
Well the reversal happened almost immediately. Long now.
GbpNzd
  • #3,692
  • Jun 25, 2019 11:49am Jun 25, 2019 11:49am
GBPNZD 5 minutes

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  • #3,693
  • Jun 25, 2019 11:50am Jun 25, 2019 11:50am
Quoting bishopdotun
{quote} Well the reversal happened almost immediately. Long now. GbpNzd
Trend is DOWN

I would not play this counter-trend reversal.

Price Action can reinter the Envelope 256 (brown) then Downtrend has a high probability to go on.
Attached Image (click to enlarge)
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  • #3,694
  • Jun 25, 2019 12:19pm Jun 25, 2019 12:19pm
Quoting parisboy
{quote} Trend is DOWN I would not play this counter-trend reversal. Price Action can reinter the Envelope 256 (brown) then Downtrend has a high probability to go on. {image}
You and I are too conservative traders, not risk takers. No guts to trade against trend.
  • #3,695
  • Jun 25, 2019 12:21pm Jun 25, 2019 12:21pm
Quoting skyway
{quote} You and I are too conservative traders, not risk takers. No guts to trade against trend.
Please see message 3691 above
  • #3,696
  • Jun 25, 2019 12:28pm Jun 25, 2019 12:28pm
Quoting parisboy
{quote} Please see message 3691 above
Post #3691 is extra "delayed" counter-trend trade=trend trade by ultra-conservative trend trader.
  • #3,697
  • Jun 25, 2019 12:31pm Jun 25, 2019 12:31pm
Quoting parisboy
{quote} Trend is DOWN I would not play this counter-trend reversal. Price Action can reinter the Envelope 256 (brown) then Downtrend has a high probability to go on. {image}
@parisboy -- an indicator (or EA) is a sequence of algebraic expressions. Please explain to me, using algebra, what exactly are your rules here.

If you say you are discretionary trader -- I get it. But algebra is not discretionary. If you say that one can not use algebra to make trading decisions well, that's another matter. Now that's sounding more like @George.

Algebra will not replace the discretionary capability of @parisboy's brain. However, if you are willing to pay a price -- and what I mean by that is willing to accept poorer performance -- then automation (i.e. algebra) has a place. The advantage using algebra is that you can let the computer trade for you while you are out walking your chien ou chat.

Right now we are speaking different languages. I'm speaking in algebraic rules. You are speaking a the higher level language of an experienced trader. I don't want to trade like that. I don't want to think that hard. I want to drag a piece of algebra onto a chart and let it make some mediocre trade decisions. As long as it makes more than it loses then I'm good.
  • #3,698
  • Jun 25, 2019 12:38pm Jun 25, 2019 12:38pm
Quoting robots4me
{quote} @parisboy -- an indicator (or EA) is a sequence of algebraic expressions. Please explain to me, using algebra, what exactly are your rules here. If you say you are discretionary trader -- I get it. But algebra is not discretionary. If you say that one can not use algebra to make trading decisions well, that's another matter. Now that's sounding more like @George. Algebra will not replace the discretionary capability of @parisboy's brain. However, if you are willing to pay a price -- and what I mean by that is willing to accept poorer performance...
Tbf parisboy ultra-conservative counter-trend trade can be represented by a sequence of rules base algebra. You will be surprise he thinks in algebraic format. Allow him to describe step by step in detail in his non-coders version. You have to be patient to probe him for the exact details.
  • #3,699
  • Jun 25, 2019 1:29pm Jun 25, 2019 1:29pm
Quoting skyway
{quote} Tbf parisboy ultra-conservative counter-trend trade can be represented by a sequence of rules base algebra. You will be surprise he thinks in algebraic format. Allow him to describe step by step in detail in his non-coders version. You have to be patient to probe him for the exact details.
@skyway -- @parisboy is brilliant -- and I'm serious. Early on I didn't appreciate his posts so much, but now I do. It's not that I disagree, rather, I come from a different world. Yes -- I don't have his trading experience, but I have different experience and I'm curious whether it can be applied here. Actually, it's more than curious -- I know it can because I've done it before for trend following strategies.

The posts here are amazing! And though I can't do each one justice, I want to work through them all and respond the best I can.

It occurred to me while walking my dog this morning there is this schism between what I'm trying to do and the feedback from conservative, experienced traders. Don't take this the wrong way, but like @George and @moodybot and @bluesteele, you guys spend a heck of a lot of time analyzing each chart before making a trade. How many trades a day -- 1, 2, 10? Not me. I come from the world of trading portfolio EAs. There can be 100's of different strategies (similar to SpikeHunter) executing at the same time. Do I pay attention to each one? Of course not.

I've noticed the conservative, experienced traders never mention anything about statistics -- and now I realize why. Statistics requires a minimum sample size, but when you only make a handful a trades each day or week then the sample size is too small to apply meaningful statistics.

A very simple statistic used when trading portfolio EAs is called Profit Factor -- it's the ratio of the profit from a winning trade versus the loss of a losing trade. A profit factor of 2 would be quite excellent. Even 1.5 is good. If your EA had a profit factor of 2 it could lose 50% of the trades and still be considered the holy grail. So, for me, losing a trade means nothing. I may do a post mortem analysis on some losers to see if there is a bug in the strategy or some pattern I could improve on, but I'm not going to fret over every setup and trade the way some of you guys do. With automation I can have dozens of EAs trading different pairs, different time frames etc. As long as the PF (profit factor) and win rate meet some critical threshold, then I'm profitable. Do you know what I mean? I don't want to spend time analyzing each setup -- using EAs and statistics allows one to approach trading from a different perspective.
  • #3,700
  • Jun 25, 2019 1:57pm Jun 25, 2019 1:57pm
Quoting parisboy
{quote} @Robots4mE, I can do whatever you ask, on whatever TimeFrame with whatever financial support you require , by the way using the same Envelopes settings 256 / 128 / 32 only the Amplitude (Scaling) varies Let's use Skyway AUDJPY in 60 minutes in Red you have Tops noted T2 - because they have touched or broken on the upside 2 Envelopes limits (Envelope 32 (blue) and Envelope 128 (ocre) Then these Tops are of the same degree , nature, order WITHIN THE TIMEFRAME Moreover you can link 2 successive Tops with a straight line, building what Jim Hurst...
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I see 4 winning SELL trades and 5 winning BUY trades that a reversal indicator like SpikeHunter would have picked-out using simple algorithms to generate candidate signals followed by a momentum filter.
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