The "You can't be serious" system

Oh..don't get me wrong..I`m not dissatisfied.
I love easy systems (and I suppose this one will not be that easy as one might think)!
From my experience people love clear and undisputable rules:
enter when this happens, close when that happens and so on.
What shall I say.. ah...we could make it a bit more international.
We have French, English, German, US ...we should invite Italians, Spanish and a
lot from Asia. They all have good ideas.
By the way..I think we are on a good trip...

I agree: everyone is invited! As long as they speak English.
I also agree that many want to have undisputable rules. My experience is that most of the time almost all end up changing the undisputable rules because ....ahem ...they become disputable for them. Not knowing any better, many people usually jump on to on the next set of undisputable rules prepared by someone else.

But now allow me a last blurb for the day.

I have been poo-pooing my little 2 MA slope simplistic stupid strategy quite a lot recently, and I feel bad. It does what it is built to do: identify and catch trends. No trend = poo-poo. It may not be the most efficient way, but in the right market condition it is rather good.
So, to make amend, I will show what would have been the results of this simple strategy (even in its super simple “always in” mode) from London open (black vertical line) to now on 2 charts: Gold and EURUSD 5 minute. No BRNs, no pivots, no support-resistance rectangles.
Guess which one moves more (has a wider range?) Guess which one had a better trend today?





I am sure there are a lot of negative examples, but I guess you’ve had enough of me today. I leave to others to show. Au revoir!

Hey Sir
I just created an FF account to thank u for this System
im Now fan of YCBS
I Love How it react after YH/YL
(BlueBox is Asian Range)

Hi Capm,

Very well done for this worthy contribution. I'm sure you are building it up gradually and there's still more to come.

May I please ask what's the timeframe for this system?

Thanks.

Whichever suits you.
Test it, test it, test it...and then you will know what to expect.
I prefer 5min but others 30min or 1h...

Many thanks JM

HA! Ycbs, imitation is the sincerest form of flattery! And I am flattered indeed! Mind you, you may have to change your name when this thread will be trashed and crushed.

Thanks jmaster for stepping in.

OK, some balance now. Nobody took upon him/herself the task to show terrible examples of the simple mechanical strategy, so I will do it myself.
Yeup! No holy grail, here!

This is 5 min Gold today. Painful and pathetic. As we expect: no trend, dead end for such strategy. This is where filtering becomes very important. In this particular case, BRN and Pivots would have been useless. Sometimes one just has to endure the bad weather.

Sometimes, however, even if there is no discernible trend, if the swings are wide enough, there are good results. Let’s then look at oil. 2 charts: a 1H and a 15 min chart.
Simple mechanical strategy, 1H:


..and with a bit of PA analysis. No "magic" indicators, just basic Supp/Res and BRN (the vertical orange line at the top.) You could do much more with TA and whatever, but let's keep it simple.


Simple mechanical strategy, 15M:

..and with a bit of PA analysis. No "magic" indicators, just basic Supp/Res, BRN (the vertical orange lines at the top and the bottom) and Pivot points, You could do much more with TA and whatever, but let's keep it simple.


Just a little earworm: ...there is a little catch when we depart from the mechanical/automatic version.
I won't comment any further. Do some work yourself, if you like, ask yourself what would you have done and ask me as many questions you want.

YH/YL works well as Take Profit

Thanks Capm for this thread.
I am still trying to understand the easy and mechanical part . Can you please answer my question as I marked on below image?

Regards
Peter

Haha i choose that Username To not look at any other Strategy for at least 5-6 months, cuz i tired of doing this Doom cycle.
i wish to change but i dont know how

For now lets look at this

last 17 Days with EurUSd
No S/R , pivot ,... Just filtered Asian Range Signals( Active Time 7AM-14PM UTC), 1H tf



1: loss trade -15
2:Win +15
3:Not triggered
4:Win +45
5:Loss -40
6:Loss -38
7:Loss -48
8:Not triggered
9:Win +133
10: Win +80
------------------
+132

Sry For my bad english

hi capm

What do you think about this trade on EURCAD h4 ?
My analysis :
2 mA are blue (only long). There's a pivot point on support (S38). If I had been paying attention I would have taken on the pullback and the rebound on the support. Prices are quite far from the next BRN. The stop loss I put it under the S38 pivot point for a price target between 1.48 and 1.4835.

Pki87
I do not understand your longs and shorts there. They do not look at all like following this strategy. Perhaps you can explain?
This is what I would have done. I suppose it’s a 15m chart UC

Hi Peter2 and thanks for your question.
Well done spotting it. As I said, the rule is that we place the (in this case) short entry “x” points below the low of the bar that generated the signal. “x” depends on a number of factors (volatility of the instruments, time frame, personal preference, etc.) This creates a “buffer” between the low and the entry point.

In the first case it was not triggered (the entry was below the low minus the buffer. Besides, if you want to use a bit of PA, you were trying to place a short into a former support (the reversal pattern formed at the previous low.)

In the second case it was. The histograms where red and you should be looking for short only. You had a better entry on the second case.
I hope this explains.
There would be more to be said about that second entry. This may open a huge further debate on how potentially difficult it is to follow the strategy manually. I am expecting it will come up soon, but for the moment I stop here.

Good stuff, YCBS.
I am sorry, I do not have the time to check all your trades there, and some appear a bit confusing to me.

Some observations, anyway.

I am glad someone started showing his/her adaptation to the rules. Remember, by removing the Asian session you have changed the strategy. Nothing wrong with that, you are adapting it to your needs. But :

a) you have to build your own statistics. These results look good overall, but a few days mean nothing in statistical terms. That’s why it is important that you keep note of all your signals and entries and exits until you feel confident you have a (flimsy, I know!) statistical edge.

b) whatever the results, notice that at some point you had a 3 losses in a row for a combined loss of 126. You have to ask yourself if you feel comfortable with that. Try to imagine if it was real money and you started from trade Nr. 5. Would you still trust your system? There is no right or wrong answer, I am just pointing at questions you may ask yourself.

c) there are many things that change when you do not use an always in strategy. Your risk management changes and this is a huge building block you have to look into.

d) You may want to close you positions for the Asian session…or not. Notice that some signals were ignored because they happened during the Asian session. Sometimes you were better off, sometimes you paid for that. Find out what gives better results and if you feel comfortable with it. As you do not have an always in strategy, make sure you have a stop for all your positions during the Asian session (well, all the time, really!)

I hope it helps. Keep posting!

Hi Ex3m6, thanks for posting.

Let’s see. First of all we have the usual bloody Forex issue that your broker starts counting the 4 hour from a different place than the one I use for these examples, so our charts are a bit different. Still, let’s see:



1) Histos turn blue=buy signal. Notice that you may have been Long from the previous change of colour and the short would not have been triggered. So, if you are using the simple mechanical strategy, you are in, correct.
2) Now, let’s pretend we know what we are doing. Where would we expect the buyers to find some resistance? That green area I traced is a rather good candidate. It is a BRN (and notice how this pair seems to like BRNs!) In addition, it has been an important point in the past: it was Resistance back at the beginning of April, it became support at the end of April, it acted as resistance again on 7-8 May. Enough to think that buyers are looking to reach it, sellers are waiting for them there. So, your target at 1.4835 seems a bit beyond that barrier.

It looks as if you like fib pivots. I do not use them and I do not know if they are “any good”, but if you like them and they proved to be fine in the past, by all means use them.
So, when are you going to decide you are “wrong” and place your stop? Below the last low? Below the last BRN? You decided it's below the S38 fib and you make your own calculations. If your first target is 1.4800 and you entered at 1.4750 and you stop loss is at 1.4640 (below last low) you would risk 110 to get 50, less than ½ to 1 Risk Reward. Horror!!!! Millions of readers here will tell you that you are crazy and nothing below 3:1 would be permissible!! They may have a point, in some circumstances, but, you know, I tend to take what gurus and pundits say with a sarcastic smile and then make my own decisions, usually based on observations and statistics. If you are happy with your analysis and you risk reward based on a stop based on fib pivots, fine. You need to collect enough evidence they work, though!

Personally, I would be happy with a "scalp" (but that is just me!) for this trade. The barrier at 1.4800 is particularly strong to act both as a magnet for buyers (they are likely to get there) and a line in the sand for sellers (they will fight it there.) This is what happened, so far, actually.
If you do not like "scalps", you may want to pass this trade and focus on one with apparent better probabilities.

If you are looking for a longer term long, well, you may be on a good horse, too. I traced two trend-lines (in purple) that show a flattening of the downtrend (a sign of exhaustion). Slope of MA are up. You can now trace an ascending channel and you may notice an inverted Head and shoulder formation, with the head being a rather typical reversing bar on a BRN. But what do I know?

I hope this is not too confusing. Please let me know.

Lets not pre-occupy capm with all stuff asking if you are doing it right -->most likely he will point out a chart if theres anything to "teach". Hi is not you paid mentor.

Theres no right or wrong. You can take whichever timeframe you feel comfortable with.
As he already pointed out, do the hardwork---> and that is to TEST it by yourself. How will you trust in entry if you dont know what to expect? Just because someone said it it works, youll put your money in? OK.

Common sense says that dont trade into support or resistance or any other important level. It can be like crashing without a helmet into a wall-->you just dont want to do that.

- You want to trade market that moves(indices or gold are usually more volatile)
- for start you can specialize in one market only(get familiar with it like its your girlfriend)
- you can play with settings(what is more natural: lets say 1h compared to 4h or 17min to 31min?hmm)
- its trend indicator, so you can make more than 1 entry per "same color" trend, or you can add to the first position when you have pink-pink/pink-blue/pink-pink
- you can add another much slower MA and trade into directions when price is above( lets say 1000EMA )and you have blue-blue indicator
- you can trade signals back into asian session range, or you can trade breaks of yesterdays Hi/Lo or pullbacks after fake breakout
.
.
.
After many hours spent analyzing, you wont need indicator to tell you where is "trend" going

I agree with you 100%. However, I am not trying to understand his method but rather to understand his philosophy.

For that you have several ways to do it. Mine is to be like a child (I put aside everything I know about technical analysis) to have a fresh and candid view on what Capm says.
Moreover, by the examples submitted, it allows us to gradually introduce new tools to allow us to better understand a trade. (In the example I submitted he introduces the concept of flattening trend line. This means a potential future range before either a bearish continuation or a reversal if I am not mistaken).
Moreover, by explaining to me what he considers, according to his vision, "good" and "bad" (I use quotation marks because I know that it is a very relative notion to each one), it allows me to have a different vision of the markets. Currently my view is not efficient and I am looking to improve it. (like the vast majority of people who intervene on this forum). The statistics of brokers on the losses of their customers are blatantly true).
Anyway capm has enough tact and reparti to " refocus " me if I slip.

Thank you again, jmaster. I have the feeling I should consider hiring you!
I totally agree with you: hard work, test it yourself and, if I may add, know what kind of trader you are. I think we share the same approach.

I can’t help adding my comment on your comments.
The first is that you simply can’t start a forum thread with just this stuff: hard work, test and common sense: who is going to read about it? You have to show some apparent “magic”, get people interested and hope that some will get the message. Ooops , I may just have revealed my secret plan!
Of course I am trivialising here, but, if you like metaphors, you throw an old car wreck in the sea (yes, yes, after removing the polluting parts of course! Jeez, you have to be so careful what you write these days!) and gradually an ecosystem grows around it. You need an anchor, a famous psychological bias and effective teaching method.

Secondly, although I suppose I am also a “paid mentor”, for a living (hint, hint!) I am happy to spend some time being a free mentor in this thread. So, while it lasts, I do not mind people asking questions and trying to improve their understanding. I actually encourage them and I like to have a discussion if it is constructive, decent and informative (or at least funny!)
I am just showing the tip of the iceberg of this black hole (there: a totally unscientific clash of metaphors!) that is trading. I hope to show that a lot of serious application and commitment is necessary to get anywhere in this field. A serious (paid) mentor or a decent course will help a lot (hint! Hint!). Or, one may prefer to spend time reading @wallstreetbet or do… whatever based on what Elon Musk says, which seems to be the best strategy in town by a mile!

Some other comments:

“You want to trade market that moves(indices or gold are usually more volatile)”
Yes, I encourage to trade more volatile markets. But you can trade markets that do not move much, too. It depends on what is your objective, time frames and so on. USDYEN does not move a lot, but you would have had some nice trades recently on daily or 4H charts. Gold moves more, but the strategy presented here was trashed the other day.

“you can add another much slower MA and trade into directions when price is above( lets say 1000EMA )and you have blue-blue indicator”
Adding filtering MAs. Funny. I had precisely that in mind in a later chapter of this thread, if we will ever go there. Yes, it is once again one of the old tricks, but are you reading my mind? Glad you mentioned it and it shows we share a common approach.

“for start you can specialize in one market only(get familiar with it like its your girlfriend)”
Ok, I have 2 things to say there, actually 3, no actually….ok. The first is that it is true that for beginners, focusing on one instrument and perhaps one time frame is usually beneficial. The more discretionary is your strategy the more focused you have to be, so specialisation may be necessary. But if you use a (more) mechanical strategy you have big advantages in diversification (I will stop here on this fascinating topic.) Finally, I like your analogy with girlfriends. You seem to imply that if you focus on one “instrument”, or market, as you put it, you get familiar and understand it. It may work with financial markets, but …girlfriends? I hope this is your experience. My experience is that no matter how well you think you know your “instrument”, it will always throw unbelievable challenges at you. After youthful years where I was happily practicing diversification, I settled for getting to really know one “instrument” and I married her. After many years I still have no idea how she thinks!