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The Daily Fozzy Method

  • #501
  • Oct 20, 2006 8:58am Oct 20, 2006 8:58am
Quoting stockwet
I think it's becoming evident that FF is a growing community whlie other, ahem - unnamed - communities are shrinking, probably for the reasons you cite.

I also have to add that Merlin et al are sometimes viewed as a little "nazi-like" when it comes to spam and censoring. However, I greatly appreciate this approach. I was recently on a board I used to frequent and not only could I not believe how much promotion was going on, there were a LOT of posters who were clearly there with hidden agendas. So, well done, Merlin, on helping to create a professional community of participating traders and not a cesspool of spammers.

Sorry all, for digressing.
I agree with everything this man says. My only regret is that I didn't find this site sooner.
So far so good.
  • #502
  • Oct 20, 2006 9:05am Oct 20, 2006 9:05am
Quoting BeachBum
4rex...........

My 2 pips:

Like stockwet, I ignore the news. Experience has taught me that. If you are going to be a technical trader, then trade with technicals and not fundamentals and I think the "fozzy" method is a highly technical method.
Good point. It seems to me that if the technicals are there, then the market has probably already taken the news into account, based on trader speculation or something.

Quote
I'm also guilty of managing trades (although not as much as I used to). However, with this method the only indicator I have been using successfully is the "Vegas Daily". This has really helped me to get out when a trade is in fact stalling or be extra careful when entering a trade at a point where there is historical technical resistance. Looking at the Vegas indicators along with the "fozzy" signals is working very well for me.

I do this too. At work, everytime I'd be in my office I'd check the charts. I'd check my positions, and even adjust stop losses (never loosen them!). I manage more than Fozzy suggested back on page 1. However, it works for me. I also don't take just any position. I apply a bit of market knowledge and look for resistance/support, to get an idea that the trade might work or not. So far it's helped me avoid at least 3 bad trades.

Quote
And finally, I just set up the latest EA prepared by stockwet and tradeigel on a demo account. I'm going to work with this for a while and when I get familiar and comfortable with it, put it on some real $$$.

I've had great luck with this method, while others i've tried i failed at misserably. It's not that Fozzy's method is so great, it's that it fits with me. Simple technical indicator, simple entry rules, and a nice daily chart. With good money management, such as scaling entries and exits, this system seems to be perfect for me. I've traded this profitably for am onth in a "micro" demo account, and in another month or so I will move to a micro live account to test in the real world. It should be fun.

Quote
I'm having a good time with the "fozzy" system (and making a little extra cash too............. ). I'll post this week's results on the weekend. It's been a good week!
So far so good.
  • #503
  • Oct 20, 2006 9:31am Oct 20, 2006 9:31am
Quoting paul2
I do this too. At work, everytime I'd be in my office I'd check the charts. I'd check my positions, and even adjust stop losses (never loosen them!). I manage more than Fozzy suggested back on page 1.
I'm a full-time trader, so can you imagine the "temptation" to be watching charts all-the-time? I did that until I learned that it was counterproductive to my trading. Daily charts and the "fozzy" method are perfect for avoiding a nervous breakdown........lol!


Quoting paul2
I've had great luck with this method, while others i've tried i failed at misserably. It's not that Fozzy's method is so great, it's that it fits with me. Simple technical indicator, simple entry rules, and a nice daily chart. With good money management, such as scaling entries and exits, this system seems to be perfect for me. I've traded this profitably for am onth in a "micro" demo account, and in another month or so I will move to a micro live account to test in the real world. It should be fun.
Just an idea paul.....................why not trade this "live" on a micro account where a pip can be valued at just $0.01 or even $0.001. You could loose 1000 pips a week and it would be less $$$ than most people spend at Starbucks. And it will give you the "feel" of trading real money with the fozzy EA. It's better than standing in front of a slot machine....lol!
  • #504
  • Oct 20, 2006 9:43am Oct 20, 2006 9:43am
Quoting BeachBum
I'm a full-time trader, so can you imagine the "temptation" to be watching charts all-the-time? I did that until I learned that it was counterproductive to my trading. Daily charts and the "fozzy" method are perfect for avoiding a nervous breakdown........lol!
Yup, I love the daily charts MUCH more than the 1h and even the 4h i was trading on before. Talk about pulling hair....


Quote
Just an idea paul.....................why not trade this "live" on a micro account where a pip can be valued at just $0.01 or even $0.001. You could loose 1000 pips a week and it would be less $$$ than most people spend at Starbucks. And it will give you the "feel" of trading real money with the fozzy EA. It's better than standing in front of a slot machine....lol!

Another month (if i can hold off that long) so I make sure that I have a good "feel" for the system. I've never used MT4 before, but I absolutely love it now that I have. However, I still make the occasional screw up (hit 'sell' instead of 'close'..!) I will be using a micro account when I go live. I don't plan on risking any money I couldn't loose. I watched a friend of mine go broke trading penny stocks... Sure he did good for a while, but he was all in on a few too many and now he's back to nothing. That's not a road anyone should go down.

What benefit would the EA give me over manually looking at the charts before the new bar?
So far so good.
  • #505
  • Oct 20, 2006 10:14am Oct 20, 2006 10:14am
In an earlier post, stockwet expressed the opinion that the EA will not take trades on false signals, but only trade legitimate "fozzy" signals. After that comment I decided to set-up the EA on my charts and then keep a record comparing the EA trades with my "eye-ball" trades. Interestingly enough yesterday at 5 PM EST when I received new daily candles on my MT4 platform, the EA triggered two trades (I'm using 19 pairs in my forward test) but my "eye-ball" saw six trades (and that's using the fozzy indicator from stockwet and tradeigel). Hmmmmmm??????? All trades are doing well as of this AM. This is a phenomenon I need to take a very close look at.

Quoting paul2
What benefit would the EA give me over manually looking at the charts before the new bar?
  • #506
  • Oct 20, 2006 10:31am Oct 20, 2006 10:31am
BB,

I noticed the same thing. I have some diagnostic code in the EA where I am comparing the EA calculated RSI MA values and they don't match up with what the indicator says. Tradeigel is looking into it as well. I didn't see 6 setups at 00 GMT, but, I did see 2. The EA values, however, did not indicate a cross had occurred. We'll see if we can work this out.

stockwet

Quoting BeachBum
In an earlier post, stockwet expressed the opinion that the EA will not take trades on false signals, but only trade legitimate "fozzy" signals. After that comment I decided to set-up the EA on my charts and then keep a record comparing the EA trades with my "eye-ball" trades. Interestingly enough yesterday at 5 PM EST when I received new daily candles on my MT4 platform, the EA triggered two trades (I'm using 19 pairs in my forward test) but my "eye-ball" saw six trades (and that's using the fozzy indicator from stockwet and tradeigel). Hmmmmmm??????? All trades are doing well as of this AM. This is a phenomenon I need to take a very close look at.
  • #507
  • Oct 20, 2006 11:02am Oct 20, 2006 11:02am
Quoting BeachBum
In an earlier post, stockwet expressed the opinion that the EA will not take trades on false signals, but only trade legitimate "fozzy" signals. After that comment I decided to set-up the EA on my charts and then keep a record comparing the EA trades with my "eye-ball" trades. Interestingly enough yesterday at 5 PM EST when I received new daily candles on my MT4 platform, the EA triggered two trades (I'm using 19 pairs in my forward test) but my "eye-ball" saw six trades (and that's using the fozzy indicator from stockwet and tradeigel). Hmmmmmm??????? All trades are doing well as of this AM. This is a phenomenon I need to take a very close look at.
Very interesting. I'll have to give this a try next week. I tried his EA a while back, made a few mods to it and played around with it a bit, but again I don't know much about MT4 so i stopped. I'll have to give it a go with just the basic EA.
Thanks
So far so good.
  • #508
  • Oct 20, 2006 3:52pm Oct 20, 2006 3:52pm
Greetings all here at the Daily Fozzy thread.

Let me first say this thread is wonderful and i've gleened so much out of the insights and commradery here. Thank you all, great to be here.

I've just caught up on my reading here (spending lots of time on the EA testing at present). After reading more than a handful of "Bolligner Band" related Q's I think it in context and appropriate to share some insights directly out of John Bollinger's "Bollinger On Bollinger Bands" book where i took his "Normalized RSI" idea which was where Fozzy got the seed for his daily model (see his Sept 9th 2006 #1 post, 1st paragraph, and my response in post #6 showing the indicator in use in my January 2006 post here at FF).

There was some confusion when i posted a later image using the FXSniper Dynamic RSI (a post somewhere near 100 i think??). I am now back to the original RSI shown in my post #6, that is identical to the standard RSI indicator and includes candle-close-dots. See this image and compare:

http://www.accrete.com/fx-posts/tgle...normalized.gif

OK, now that we've got that confusion out of the way, let me explain myself as i should have waaaaaay back in my original post in January of just why i'm using the above (and actually i use them on hourly charts for the most part, but this thread has allowed me to take a fresh look at the dailies, and to that i'm greatful).

I am going to quote some text directly out of John's book i mentioned above. These quotes are out of chapter 21 "Normalizing Indicators":
Quote
Bollinger Bands server the same function they serve with price; they define high or low on a relative basis. This can often add great insight that the traditional rigid levels and rules cant' deliver
From this i first got the idea that John was leading into using the upper/lower bands instead of the 70/30 rigid horizontal lines in the RSI i was used to trading (with my dots added at candle close per my mentor at the time).

Then John, in the next paragraph did mention just what i thought he was leading to:
Quote
Take the Relative Strength Index, RSI, as an example. The traditional rules call for an overbought interpretation when the indicator rises above 70 and an oversold interpretation when the indicator falls below 30. Perhaps the most commonly employed technique using this indicator is to buy a positive crossing of the 30 and sell a negative crossing of 70. This, however can be problematic. Sometimes 70 and 30 work, sometimes they don't, and sometimes they fail spectacularly.
OK, he got my attention as i'd seen the above "failures" happen over and over when using the rigid 70/30 hrizontal lines on the RSI. I was now quite interested in reading more...
Quote
For a more robust approach to RSI...(we can plot) Bollinger Bands on the indicator using the bands to set the overbought and oversold levels.
So now we have the "Why", then John explains that we need to tweak the band settings a bit according to his studies (and since He's Da Man...) he states that:
Quote
In general, the appropriate averages tend to run longer...(then he shows a chart for suggested settings when using various RSI settings of) 9-period RSI Band Length=40, and Band Width=2.0
So basically what we have is an optimal setting of 40 for the Bands with our RSI 8. And actually my mentor used RSI 9 without bands (for trading commodities, futures, and forex) I just happen to like Fibos so i put it at 8 in my January post (several months into my normalizing forward testing. Yes the bands in that image are set to 21...hehe. Still love fibos, but regularly use 40 also Per John's work).

Now the biggie that you want to watch for is this, continuting out of John's book:
Quote
A sharp eye will soon hone in on the appropriate Bollinger Band parameters for any indicator application. Start with the same averalge-length-picking approach (see above quote). What you want to see is a slow transition in which the average (the middle moving average of the bands) lives in the upper range during uptrends and in the lower range during downtrends. However, the average should stay in the middle portion of the chart. . . for RSI roughly between 30 and 70. If the average gets into the upper quarter or lower quarter of the range, you have an average that is too short. If the average barely budges from the midpoint, you have an average that is too long. Then set the number of standard deviations for the bands, starting with 2, so that between 85 and 90 percent of all observations fall within the bands.
OK that's all the quoting from John's great book on the bands.

Now one might ask why the heck did i place a matching simple moving average of the RSI on the RSI?? Again, my mentor at the time was using an RSI with a "signal line" of sorts...an SMA of the RSI just as a heads up. He was looking in particular for "V" patterns followed by a cross of the RSI over it's own sma-signal line. I continued to use the sma as i figured all the math in the Bollinger Bands was set to simple math (sma) by John's studies, so i didn't want to rock the boat.

> > > So how do i use the "Normalized RSI" indicator in my daily routine?

I look for "V" patterns that originate outside, or very close to the outer bands with a cross of the signal line as a heads up. Not neccesarily a "Get In" signal, it just whacks me on the head and says; "Yo dude, check out this chart!"

Well i hope that helps out with the various posts i've seen asking about the Bollinger Bands and their use.

Happy Weekend to all.

Cheers,
Thom
  • #509
  • Oct 20, 2006 5:05pm Oct 20, 2006 5:05pm
Greetings,

Well I have completed my first week live trading the Alternate Fozzy method and have some statistics to post (I also posted these over at the Alternate Fozzy thread.

I have noticed that this week would have been much better using standard Fozzy entries (not limit orders at high/low of bar, but market orders at bar open). I don't know if it will be that way every week, as I am sure the alternate Fozzy entries keep us out of bad trades, but this week the difference in pips would have been 282 pips better using traditional Fozzy entries. Also, had I not traded GBP/JPY pairs I would have been 152 pips better off. Again, I don't know if it will be that way every week, but looking back several weeks now this currency pair has been very choppy. Also, I still have many open trades from this past week, which I am not reporting the results of until they close.

Overall, I am very happy with this method of trading, especially taking regular Fozzy entries as this method has very good win/loss ratio and risk/reward ratio, and good (low) drawdown stats. Next week I plan to increase number of units being traded.

Here are the stats (these are for traditional Fozzy entries, live trading):

TOTAL 176 PIPS<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" /><o></o>

Fozzy Traditional +282<o></o>

Total: 458<o></o>

Would be +152 without GBP/JPY trades<o></o>



=============================================================================================

PERFORMANCE STATISTICS

=============================================================================================

<o> </o>

TRADING PARAMETERS...........................................................................

Initial Account Equity: $10,000.00

Trading Vehicle: Futures

Initial Margin: $1,000.00

Round-turn slippage per contract: $0.00

Round-turn commissions and fees per contract: $0.00

Position Sizing Method: None

No. Contracts: From input data

<o> </o>

PROFIT SUMMARY...............................................................................

Total Net Profit: $475.00

Gross Profit: $850.00

Gross Loss: -$375.00

Profit Factor: 2.2667

Highest Closed Trade Equity: $10,484.00

Lowest Closed Trade Equity: $9,930.00

Final Account Equity: $10,475.00

Return on Starting Equity: 4.75%

<o> </o>

TRADE RESULTS................................................................................

Number of Trades: 29

Number of Winning Trades: 16

Number of Losing Trades: 13

Percent Profitable: 55.17%

Max Number of Contracts: 1

Minimum Number of Contracts: 1

Average Number of Contracts: 1

Largest Winning Trade ($): $158.00 (1.59%)

Largest Winnning Trade (%): 1.59% ($158.00)

Average Winning Trade ($): $53.13

Average Winning Trade (%): 0.52%

Max Number Consecutive Wins: 4

Largest Losing Trade ($): -$75.00 (-0.72%)

Largest Losing Trade (%): -0.72% (-$75.00)

Average Losing Trade ($): -$28.85

Average Losing Trade (%): -0.28%

Max Number Consecutive Losses: 4

Average Trade ($): $16.38

Average Trade (%): 0.16%

Trade Standard Deviation ($): $49.82

Trade Standard Deviation (%): 0.49%

Win/Loss Ratio ($/$): 1.8417

Win/Loss Ratio (%/%): 1.8551

Return/Drawdown Ratio: 4.0799

Modified Sharpe Ratio: 0.3293

<o> </o>

DRAWDOWNS....................................................................................

Number of Closed Trade Drawdowns: 6

Average Drawdown ($): -$58.50

Average Drawdown (%): 0.57%

Average Number of Trades in Drawdowns: 3

Worst Case Drawdown ($): -$121.00 (1.16%)

Trade Number at Trough: 17

Number of Trades in Drawdown: 7

Worst Case Drawdown (%): 1.16% (-$121.00)

Trade Number at Trough: 17

Number of Trades in Drawdown: 7
  • #510
  • Oct 20, 2006 6:45pm Oct 20, 2006 6:45pm
Hello,

What a great thread! Ok, in my last post I mentioned that I use the last weekly candle(h/l/c) to come up with a pivot line with 3 resistance and 3 support lines. I used them to help figure out my tp's, sl's and trail stops for the coming week. Do you guys think that I should use something else or is it a matter of personal preference?

Thanks
All 4 1 and 1 4 All
  • #511
  • Oct 20, 2006 7:51pm Oct 20, 2006 7:51pm
Thanks Accrete for putting together that explanation and Bollinger background info. I doubt if it makes a LOT of difference, but for consistency purposes with forward or backtesting, people should be aware that Fozzy elected to use RSI(8) and its ema while Accrete's original uses the RSI(8) and its sma.
Thanks to all.
  • #512
  • Oct 21, 2006 4:30am Oct 21, 2006 4:30am
Hi guys,

I have a cross at the EUR/JPY pair friday at close. I take it, but my only concern, is its close to the 150 level... Any thoughts?

Have a nice weekend,

FT
  • #513
  • Oct 21, 2006 4:53am Oct 21, 2006 4:53am
Quoting fingotrader
Hi guys,

I have a cross at the EUR/JPY pair friday at close. I take it, but my only concern, is its close to the 150 level... Any thoughts?

Have a nice weekend,

FT
Hi fingo

I had my cross on Thursday close at 149.23
RSI 8 - EMA 8

howard
Regards
  • #514
  • Oct 21, 2006 5:32am Oct 21, 2006 5:32am
Strange... I use North Finance and Im in mainland Europe.... but I guess there will always be different timezones and server issues.

Anyway, enjoy the good trade .

FT

Quoting howard
Hi fingo

I had my cross on Thursday close at 149.23
RSI 8 - EMA 8

howard
  • #515
  • Oct 21, 2006 10:43am Oct 21, 2006 10:43am
Quoting fozzy
Sorry,
FF doesn't accept template files as uploads. You can create the template yourself (in MT4) by following the directions provided by Sam1.

Cheers

Fozzy
People upload templates in zip files all the time
  • #516
  • Oct 21, 2006 10:47am Oct 21, 2006 10:47am
Quoting fingotrader
Hi guys,

I have a cross at the EUR/JPY pair friday at close. I take it, but my only concern, is its close to the 150 level... Any thoughts?

Have a nice weekend,

FT
Newbie here so apologies for being naive, but from wha I can see the cross is RSI dipping below MA, BUT this is occuring above the middle Bollinger band. I thought that in this case we would need RSI to cross below MA BELOW the middle Bollinger band for a short?? That's what I've undertstood from the Fozzy method - am I looking at it wrong?

Thanks and best of luck as ever!

Londoner
  • #517
  • Oct 21, 2006 12:37pm Oct 21, 2006 12:37pm
Quoting londoner
Newbie here so apologies for being naive, but from wha I can see the cross is RSI dipping below MA, BUT this is occuring above the middle Bollinger band. I thought that in this case we would need RSI to cross below MA BELOW the middle Bollinger band for a short?? That's what I've undertstood from the Fozzy method - am I looking at it wrong?

Thanks and best of luck as ever!

Londoner
I show a cross occurring on 10/19. It would be a long trade according to my chart.
Hi, my name is Barry and you can keep your doctor...
  • #518
  • Oct 21, 2006 2:49pm Oct 21, 2006 2:49pm
Here is my chart, just to show my setup and cross time ........

FT



Quoting cisco
I show a cross occurring on 10/19. It would be a long trade according to my chart.
Attached Image
  • #519
  • Oct 21, 2006 4:25pm Oct 21, 2006 4:25pm
That's a beautiful "fozzy" setup...........I would just suggest watching the fib levels carefully. Enjoy your trade!



Quoting fingotrader
Here is my chart, just to show my setup and cross time ........

FT
  • #520
  • Oct 21, 2006 6:14pm Oct 21, 2006 6:14pm
Quoting fingotrader
Hi guys,

I have a cross at the EUR/JPY pair friday at close. I take it, but my only concern, is its close to the 150 level... Any thoughts?

Have a nice weekend,

FT
Therefore the entry would have been on Friday at the opening at around 149.23, if it retraces to that level, would the Fozzy say buy at that level or let it go altogether?
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