The "You can't be serious" system

Now, where do we go from here?

Learning from politicians, big companies and institutions, after apologising for any misunderstanding and inconvenience this may have caused, I could go on as usual.

After my deep insight, however, I think I should speed up things for this thread. I can’t treat this as a course. This means less explaining, which leads to more bickering from nay-sayers, which means to cut some out, which means more bickering and misunderstandings, but this is the nature of forums, right? If anything else, at least I will have an experience in thread management.

I am tempted to propose a proper course or other educational material on this stuff, but this may push me into the commercial side, where the company is usually.... not really nice. Treading on dangerous waters here! I will stop.

Another thing that crossed my mind was to create a spin-off thread where we talk about mechanical and semi mechanical strategies, perhaps starting from this one. It is a fantastic topic, and I love it very much, but I saw there was not much interest in the past and I am not sure I will have the time to do it. I just put it here as a thought.

I am still concerned, however, about expectations. So, let me be as clear as I can:

1) What we have here is yet another version of a trend following strategy. It is quite easy to predict when it works and when it doesn’t: it usually works in a (ahem…) trend? And it does not when there is no (ahem…) trend?

2) The strategy will still be a canvass where to build the next step. Spoiler alert: next step is mainly based on good old, well known and mostly basic Price Action principles most of you are already well familiar with. There is not going to be any fantastic “crocodile fangs” or “revolting monkey” or “triple trifle” new indicator.

3) As much of the PA is really hard to code effectively (perhaps someone here is a programming guru and he can perform some magic, who knows?) the system will become more and more discretional. Every time there is a discretionary element, the stats on which a mechanical strategy are based go out of the window and results will be different for each user, as each user has his/her own idiosyncratic features. I know from experience that with the same principles, same strategy, same parameters, same risk management rules, and a little opening for discretion (individual interpretation) some people are successful and some are not.

Quite depressing, I know, that’s why I would like to make it clear now. The fact that some have been successful with this strategy is no guarantee that many other will be, and this is just how it is.

Please keep going as you like.

People are so stupid. Maybe even me
CORRECTION not all are stupid, only 38 %

https://www.nytimes.com/2020/04/03/b...rona-beer.html

Just ignore stupid people. Without reactions there is no reactions.

Enough about clarification and disclaimers. Let’s look at some charts.

Here is the basic, always in strategy, as we defined it so far, at work.
These are the money shots, the charts I would be using if I wanted to sell the strategy for $$$$$.
DAX

Oil CFD

This is more typical, still usable for marketing, to show that you do not always win, but you are always on top! EU

Attached Image (click to enlarge)

If trends were so easily identifiable by a simple code, there would not be any need for filters and “cerebral masturbation” (from now on “CM”) and we will all be at that crowded bar in the Bahamas.

The problem is that you also have charts like this (or worse, believe me!)

Could we do something about it? Perhaps. In comes the “cavalry”, in the form of Price Action (PA)

Now, if it were for my preference, I would have a long explanation on my take of it. But we are in a “trading systems” forum, so google it and learn something….or do not bother, I don’t agree with most of that stuff.

For our purposes and using a huge simplification, I call PA in this context “identifying the points where there may be signs of tension between buyers and sellers”.

Cutting off 560 pages of my famous non-book, here is what we will use for now:
1) Pivot point, S1. S2. S3, R1, R2, R3. They are really simplistic Psychological levels that have the tendency of mysteriously working in identifying those points
2) Other so called “psychological levels”, typically Round Numbers (or Big Round Numbers – BRN) : 1.2100, or 35,000, or 0.7500
3) Other levels that you can “easily” identify from your chart (the emphasis is on “easily”.) This deserves more explanation, I am afraid, and it will come in the next post.
So, on your charts, plot Pivot points (there are loads of indicators on MT4 for this) and Big Round Numbers for now, and get familiarised.

hallo capm,
what time frame are you using?
thanks

Here are some examples of Pivot points and other psychological levels.
UC


GY

EA

Impressive, right? I know, I know, pleasepleaseplease, I know this is ridiculously oversimplified and I have read the literature on these things. Just say, or better, think “rubbish” and walk on, or walk away.

It does not matter. I am deliberately omitting time frames, because it applies on everything. There are differences in approach if your are using daily or weekly charts, of course (Daily pivots will be a silly thought), or you may be away from any PP or BRN for ages in 1m charts, so they would be useless.
Again, this is just a tiny part of the puzzle. If you do not see them in your chart with your time frame, there will be other tools.

ok...
I am waiting for next lesson.

thanks and regards,

For daily what you can use monthly pivots and its it takes 2-3 weeks to move between S1-PP-R1

Exactly. Always check if they are relevant, though. I am not using any specific tool because a guru told me to. I read, understand and above check if it actually the case. Monthly Pivot may not be as effective as daily. Make your own observations.

I will follow up on point 3 above: Other levels that you can “easily” identify from your chart (the emphasis is on “easily”.)

This is where we start introducing discretion, and where all the problems linked with it start.

1) Pivots and BRN are quite easy to plot and rather non discretional (hint, hint: they are easy to code into the strategy)

2) There are other easily identifiable points: Daily open, Yesterday Close, etc. I will omit them for now for simplicity, but if you like them, you can use them.

3) Some people may want to push it further and claim that they can “identify the points where there are signs of tensions between buyers and sellers” via Fibonacci levels, or Eliot wave or whatever. If you love them and you want to use them, do it. However, it is much more subjective to decide when to measure a Fib or a wave sequence from than it is to tell where the market opened today. The level of discretion is high. So, I would not use them, but you do what you want.

4) The same goes for the more classical Technical analysis (TA) tools. Where you draw your trendlines from is relatively subjective. Having said that, TL could be quite effective, as are channels and so on. Too much to discuss. Let's omit them for now.

So, why on earth should we use “Other levels that you can “easily” identify from your chart”? Because I think they make a great job at telling you were support and resistance have been in the past.

In this example, we are far away from Pivots or BRN, but it should be pretty clear that there are no seller below that green line and that buyers are defending their positions very strongly there. Not only, when sellers finally break that level, buyers counter-attack and push sellers up, but seller are defending that same level now: “support becomes resistance”
Or, adding to the GY chart we used before, "today’s" S1 held a bit but then was broken, only to find support at "yesterday’s" support level (the green level at the bottom of the chart)

Finding these levels is a bit of an art in itself and one can use many different techniques to identify them with more accuracy (volume could be a very powerful tool in this sense). Let's keep it easy here and focus on what our eyes could detect. It needs practice and training. That is up you!

How does all this help? Potentially in many ways, let’s focus on one, for now.

Let’s go back to the “not so good” chart that I showed in post 63 (what???63?? already??? Time flies when you have fun!!)


Let’s focus on the long side. You enter on the signal, markets goes up a bit, and then down, and you lose 7.3 points.
NOTE1: we will be back on this chart much later on to see if there was anything you could have done to avoid this loss, but let’s keep it simple.

After the first high, you can draw the green area you see in the chart. After your short, you have a long signal. Market goes up and tests the level you have drawn and does not seem to progress from there.
NOTE2: we will be back on this chart much later on to see how you could have taken profit there, rather than enduring the reversal, but doing so will change your original always in strategy, with huge consequences!

Then you have a short signal, and you lose 10.6 points
Note 3: we will be back….ok you get the idea: there is a lot to talk about here!

Now we get to the important point I want to make for the moment. You have a long signal. By now you should bloody well know that you are entering into an area of resistance. This trade has very low probability of success. So you can avoid it by “filtering” the signal. This would save you 14.2 points and you would still be in the black, rather than in the red.

OK, there is a lot of stuff and a lot to digest and I am sure many will be pretty confused.
I have done all this today because, as I said, I guess many would like to see a “system” as soon as possible rather than a long course on how to get there.
Also, I needed to move faster because I will be away from everything (PCs, lap tops etc.) this week-end, so I won’t have time to dedicate to this.

Practice, practice, practice, ask as many questions you want, I will do my best to answer. I will be back here this evening after trading to see how it is going.
Have fun!

Cool.
As i saw from your previous pictures you didnt took every signal, thats why even before you mentioned it i was already usin PA or market structure or whatever people want to call it. Its all clear for now.
I think if you are not a complete beginner you should be able to grasp around these principles as they are all well known and simple.

Trade away from zones, BRNs and pivot points.

As you say, well known principles.
And already developed on ff by many traders. Our friend took a long time to give birth and finally he "broke down an 'dicretionary' open door" (as they say in France)
Merci et à votre bonne santé
jf

First transaction +18

Lets wait and see. Its not over until its over. He might bring something new even to you to the table...we all need strict rules at trading

I made this specifically for the Dax 1m but it appears to transfer successfully to all other TF's as does the MAbufferhisto.
Thanks - appreciate the thread and hope this helps.
George

Right, true !

I am a fan of this thread, but it makes no sense to take trades with this early-bird-approach of a system.


I will code further more in the upcoming days. Please understand, that I can only code for FF in my spare time and I do not have much. So I can not always be up to date.

Hi capm,

Do these trades satisfy the criteria that you have established in post 71?
Thank you for your response.

lmao read again. you did nearly everything wrong