Quad Candle System

Not sure if you'll escape that stop, it is rather close ... hmmm.

CADJPY entry on the 1K account got stopped out.

EURNZD still active but in DD.

Masterrmind..............

First leg at 0.01 lots has been stopped out. 2nd leg at 0.02 lots still active.

Currently out of the 10K trades and sitting on the sidelines due to increased volatility and uncertain market swings.

Masterrmind.............

Mastermind, would like to know if you would undertake an excursion study. Average, and median values over X number of days. Perhaps SD as well...

EU trying to pullback closer to the 1.13 handle.

Lets see.

Masterrmind..............

To normalize, values must be calculated, and rendered in terms of ATR, say 180 day.

What values are you referring too ?

Can you provide a simple example but be very specific.

Feel free to post to the thread in your own good time as I have to rest now but I'll look at it over the weekend if its been posted.

Masterrmind............

This is what I mean.

I thought your account got the Coronavirus

You do way too much analysis, and frankly, those numbers are not going to tell you the turning points

Look at how simple this trade is, caught the swing back up

Easy pips, no indicators, price only

Completely different approach you are showing and not related to the QCS methodology at all.

After the fact is no way to show trading except as an example of what might have happened.

QCS is all about getting into longer term entries on the D1 TF and using the Master Octive Trading Frame (MOTF) to take shorts at the OB zone or longs from the OS zone after a Quad Pattern completes.

The Quad Pattern suggests a possible (very likely) rolling over of price and a change of trend !

Professional traders analyze everything !

As for the Quad Candle System - Master 1K account lets take a look.

Current Balance = $1344.89
Current Equity = $1337.95
Floating PnL = -$6.94

Account has been well and truly inside the 'Profit Zone' for almost all of its history.

Drawdown has remained within assigned risk limits.

Trading volume has remained within assigned limits.

Trade management has been applied well.

My analysis of the trading analytics points to an account that is tracking very well over time and that risk control is being applied in a very well managed way such that large dips in the Equity Curve are minimized as much as possible.

Trading will always involve episodes of drawdown but how a trader manages to recover that drawdown in a timely manner sets him/her apart from the herd.

Although the account is currently in an episode of drawdown it is far from being terminal, not even remotely close.

Analysis of key trading metrics shall continue and if it is determined that little tweaks are required then they shall be applied after a full analysis has verified that such tweaks are warranted.

As far as this account is concerned it is my desire to trade it purely as per the Quad Candle System outlined in Post 1.

Trader Transparency is key here which is what I provide, others show a few flashy screenshots of 'what-if' trades and lack conviction.

Good trading,

Masterrmind..............

Yes ok but what is it that you want to achieve ?

You've broken pip distance down into multiples of the ATR(180) ... what would you want to do with this information ?

What is your plan for using ATR ?
Take profit zones or something else.

Masterrmind.............

Peak to Trough Drawdown (Quad Candle System - Master 1K)

A common way to measure drawdown is to measure the largest peak-to-trough decline in the value of a trading account (prior to a new peak).

Since the current account is fairly new its easy to determine these values off an appropriate chart (Equity or Return by Trade etc).

Max Allowable Drawdown:

Peak = $1483.58
Max Allowable DD = 30%

$1483.58 - (30/100*1483.58)
= $1038.51.

Now lets determine current drawdown:

Peak = $1483.58
Trough = $1337.95

Current Drawdown (%) = [($1483.58 - $1337.95)/$1483.58]*100 = 9.82%.

Current Drawdown ($) = $1483.58 - $1337.95 = $145.63.

Current Floating PnL = -$6.94.

Drawdown Recovery

This includes the amount to be recovered as trading profits and the time it takes to exceed the current Peak.

Be careful though since %Drop in Equity is NOT the same value as %Gain in Equity however the monetary loss will be the same.

If I lose $145.63, I only need to make exactly $145.63 to make a full recovery.

Think about dropping from $1483.58 down to $1337.95; What is the % decrease ?

Now consider increasing from $1337.95 up to $ 1483.58; What is the % increase ?

The values are different !

As the losses mount up and the distance between the two increases this has a profound effect on the recovery phase.

This is why risk control is vitally important.

Frequent analysis of the trading account is absolutely a must when DD is seen to be expanding with no real recovery in sight.

Traders who fail to address this in a timely manner ultimately blow their accounts !

Drawdown that ranges between 5% to 25% is acceptable with 30% the maximum allowed.

Traders have to risk something in order to realize a profit but they need to be smart about it.

Good trading,

Masterrmind.............

To establish what is a long excursion, very long excursion, etc. This, to get some sense of when trend exhaustion is imminent. Median values, and Standard Deviation values would be best measures. If you are busy, or don't see much value in this, please don't bother yourself. You have done much already.

AVERAGE TRUE RANGE (ATR)

Establishing whether the current direction will be a short, medium or long excursion using the ATR(180 or similar value) is an interesting exercise.

Each of the excursions would need to be defined.

1. What constitutes a short excursion;
2. What constitutes a medium excursion;
3. What constitutes a long excursion; and
4. What constitutes a very long excursion.

The ATR is defined as follows:

ATR(P) = Max[(Current High - Current Low) : (|Current High - Previous Close|) : (|Current Low - Previous Close|]

where P is the Period (14, 28, 64, 180 etc) of the chosen time frame (H1, H4, D1, W1 etc).

So an ATR can be calculated using any preferred TF and Period.

ATR Setup (typical)
SL_multiplier = 1;
TP_multiplier = 3;

USDCHF [D1 :: ATR(180)]

Stop Loss: SL_multiplier*ATR(180) = 1*71 pips = 71 pips

Entry: At market or after an extended period of low volatility (hoping for increased volatility to arrive).

Target: TP_multiplier*ATR(180) = 3*71 pips = 213 pips.

This might be alright for chasing 213 pips but the move was about 800+ pips so the traders' missed about 600 pips of that up move.

Ofcourse, given a move traders only take a section of that move with anything greater than 50% being outstanding.

How can more of that move be collected ?

USDCHF [H4 :: ATR(180)]

Using the H4 TF clearly the ranges are smaller and so too the ADR values.

ADR(180) = 32 pips

Stop Loss: SL_multiplier*ATR(180) = 1*32 pips = 32 pips

Entry: At market or after an extended period of low volatility (hoping for increased volatility to arrive).

Target: TP_multiplier*ATR(180) = 3*32 pips = 96 pips.

Lower TF might suggest smaller target and certainly no where near catching the majority of that up move.

Using ATR to gauge risk

ATR(D1 :: 180) = 0.00719
USDCHF price = 0.93737

ATR(D1 :: 180) / price = 0.00719 / 0.93737 = 0.00767.

ATR(H4 :: 180) = 0.00319
USDCHF price = 0.93737

ATR(H4 :: 180) / price = 0.00319 / 0.93737 = 0.00340.

Now determine ATR ratios for all other preferred trading symbols, then a comparison can be made in terms of assumed volatility.
Useful for traders who have a specific volatility range that wish to trade.

Getting to your questions.

Long story short I do not see how the ATR could be used to predict the excursion distance of any particular swing.

Looking at the 800 pip move on the chart above notice how the ATR(180) plot moves up and then rolls over and heads down between the area of interest (between the 2 red vertical lines) but how the move on the chart is almost all bullish except for the first half which could be described as a whipsaw price action although it still forms HH and HL as in an uptrend but the latter half is much smoother and its this type of swing that would be ideal to catch.

The area to identify is actually when the ATR(180) plot is very close to that of a horizontal line (~constant ATR values as time increases) and then as the plot starts to move away from these values either up or down a change in trend is likely.

The ATR calculations clearly point to a plot that cannot predict direction due to the absolutes used and that's ok because we only seek a major change in trend direction or close to when this change in trend direction will occur.

A problem with this approach is the use of subjectivity in deciding at what 'departed' values from the 'constants' (ATR) might be the trigger for trend change.

For example,

If we look at the ATR(180) values in the flat section of the plot


The problem is when we try to set some criteria for entering the market as the ATR values start drifting away from the horizontal.

If you look at green colored rectangle and how the ATR value drops lower just to the right this could be used as a trigger, but as I say it highly subjective, just look at other sections of the ATR plot and many could have been deemed to be 'flat'.

I do not think the ATR plot can be used effectively in isolation, in other words it needs to be used in combination with other tools with PA being the main one.

Perhaps the ATR could be used as confluence in trading.

It is simple enough to calculate the means and SD's of the ADR(180) plot and then set an alert such as 2*SD's (trigger value) away from the mean and use this as a possible trigger to prepare for a change in trend but that would need to be studied to verify its validity.

Increasing the size of the window and the plot looks as follows:

Plenty more could be said about market cycles, ranging zones, trending zones but I'll wait for your comments.

I may not have covered exactly what you wanted here but I have made an introduction however, I understand that you were after gauging the move of a swing and I don't think ATR(180) has any chance of being able to achieve the result you want.

Its difficult to know how far a swing will progress in terms of pips.

I often use PA on HTF's to get some idea or I use the MOTF and work within its boundaries.

There are advanced techniques that I use in my private trading some of which I have touched on in this forum but many I keep to myself.

These include my own interpretation of Gann, Astro cycles, SQ9, Gann Grid, Geometry (technical) and a fundamental analysis to form strong confluence.

Picking before the fact, the exact highs and lows of the big moves and the exact times they will occur on a given symbol is NOT POSSIBLE.
No trader alive can make such accurate forecasts otherwise they would have depleted the market and the market is filled with money so we have our proof.

Stocks are a little easier to predict in general than currencies but still not easy.

I'll leave it at that for now and just say that its probably better to stick to what has been shown to work although in the background by all means (pardon the pun) test out means and SD's on the ATR, its good for the mind because it keeps it active.

ps. I only suggest using the ATR as a form of trailing stop and for general data knowledge and not much more than that.

Masterrmind..............

Potential Setups for Monday using Quad or Octive Signals on the D1 TF are:

AUDCHF [D1 :: P64]
AUDNZD [D1 :: P64]
EURAUD [D1 :: P64]
GBPAUD [D1 :: P64]
GBPCHF [D1 :: P64]
EURCAD [D1 :: P64]
EURNZD [D1 :: P64]
GBPNZD [D1 :: P64]
GBPJPY [D1 :: P64]
USDJPY [D1 :: P64]

Traders should check these charts and decide which ones are worthy of additional analysis.

Good trading,

Masterrmind..............

Thanks for giving this consideration to my idea.

Certainly happy to revisit the ATR discussion whenever you like.

As a simple exercise I suggest you do a Quad Candle Flow through the chart I used to test the ATR.

Quad Long is the first pattern near the start of that up move.

Quad Flow means to take trades based on Quad Long or Quad Short pattern in sequence such as enter long then exit at opposite Quad then go short then close at a Quad Long and then enter long and close at a Quad Short then go short and continue.

Use a 2 OG SL (try OG at 61 pips and 122 pips) for USDCHF so your stops will be 122 pips and then 244 pips using the 2 OctiveGaps.

I can go back in my charts and tell you exactly what the OG was at that time and if the MOTF reset during that swing.

Stop the sequence at the first Quad after the high or just keep going.

Once you've covered that swing compare the Quad Pip Count to the 860 odd pips.

The pip count might surprise you.

Masterrmind.......

Your system seems easy to follow, going to give it a go.

The basic process is simple.

But as trades are added or cycles of trades across multiple symbols are added subject to equity levels and it all needs to be managed subject to the assigned risk then it can become far more complex.

If you have questions regarding setups or what to look for simply post here and I will assist.

Welcome to the thread.

Masterrmind.......

HI,

I am sorry I am new here, really need advice of usdchf, I am suing EA, that already open 15 level position of usdchf and now all agains the trend. I already shut down the EA, please tell me what should i do to minimize the loss, since it's I using credit card for deposit, i don't have the money if i loss it. Thank you very mcuh