The Bat...a strategy by Team Aphid

Quoting sm31

Disliked

Here are my observations so far...

I did some extensive backtesting with something similar in mind except that I used 3 moving averages to define up-trend, down-trend, and range bound conditions. I took every trade the BAT indicator said to take then assigned a specific condition to each completed trade according to my indicators. It was a lot of work... Unfortunately, the results were not what I hoped for. No matter how I tried to define market conditions, by far my most profitable scenerio was to take each entry the BAT indicator said to.

Call me captain obvious here, but I think it's good to remind everyone that this is FAR from a "mechanical" system. It basically has only one mechanical component... Entry. The one element that has *substantially* impacted my profitability is the good ole' swing line, and placement of it is entirely discretionary. After a lot of practice with it profitability has dramatically improved. So, like many other systems practice is the key.

Ignored

Quoting TeamAphid

Disliked

Thanks for sharing your observations with us. ATR indicator gives more than enough room to trades and trends to develop, and due to its lagging nature as most of the indicators have, we use price action for entry and exits. Therefore, adding another lagging indicator will worsen the results, we believe.

We don't agree with you regarding your idea about how mechanical our system is. Mechanical means to apply the well-defined rules 100%, like a robot, and not using any discretions during application. Changing the parameters does not change the mechanical nature of any system. If you can apply the rules mechanically with different parameters, the system is still mechanical as long as you apply all entry, exit, SL, TP rules. We initially set the rules and trade this system according to those rules, we are not bending them and we are not using any judgement before entering or exiting. If you enter or exit trades with modified rules at each entry and exit, then you cannot talk about mechanical system.

Ignored

Quote

Disliked

We now place the fib lines on the chart. We draw the fib line from the trade entry
point at 9589 to a recent or significant low. In this example I will draw the fib lines to
the low of the bar 26/12 19.00 at 1.9511.

Quoting TeamAphid

Disliked

If you can apply the rules mechanically with different parameters, the system is still mechanical as long as you apply all entry, exit, SL, TP rules. We initially set the rules and trade this system according to those rules, we are not bending them and we are not using any judgement before entering or exiting.

Ignored

Quoting mason

Disliked

sm31,

Can you give more explanations about 3 MAs and how you filter BAT trades, also did you try another setting of BAT indicator ? How about combining with multiple timeframes ?

Your backtest will become an asset for us, if you go into details.

Ignored

Quoting billbss

Disliked

There is only one non objective part of your system-

On most trades, there are two or three "recent or significant low"s (or highs) to choose from.

This choice makes a great deal of difference in the outcome.

It can make the difference of being stopped out or going on to profit.

If money management is being applied, of risking a certain percentage of the bank on each trade, the choice of pivot also determines how much profit will be made on successful trades.

A robot could not choose the pivot using these instructions "a recent or significant low".

Ignored

Quoting sm31

Disliked

Billbss stated it perfectly in the previous post. The reason I think of this system as more discretionary in nature is that the one "discretionary" element of the system seems to have by far the greatest impact on profitability. Only 20%, 80% comes from trend following component.

In looking at your backtest results, I couldn't define a strict set rules for your placement of the swing high/low. It looked like a discretionary decision on your part. If not, can you share your rules for placement of the line? I may have missed it in a previous post. Significant anf farthest.

In my first shot at applying a strict rule to the swing line like the "most recent swing high/low" I found that many times the line was just too far out. Yes it should be far enough not to be stopped out frequently. This is how you make 400, 800 pips. Risk/reward was terrible as a result. Since the "big money" on BAT is in trend following, the tighter we can reliably place the swing line, the better then you will have more chance to be stopped out. For trend following systems, you should give enough room to trade. In order to improve risk-reward, we integrated range trading component. (obvious again...). But I'm having difficulty in working up a set of hard rules to do so.

Ignored

Quote

Disliked

Although it seems subjective, we use farthest significant low to give time to atr indicator to respond. Therefore, on most trades, it is obvious to us to choose pivot point. According to our observations and backtests, there are only a few trades being stopped out at pivot +10/-10 pips and as we explained in previous posts, you can always reenter in the original trade direction if price reverses again after being stopped out.

Quoting TeamAphid

Disliked

And if you look at backtest results and if you trade 5 lots version as we do, you will see that fibo/pivot related trades are only 20% of total result (for GBPJPY, in 2006, 1627 pips out of 8119 pips).

Ignored

Quoting billbss

Disliked

Do your backtests reflect this type of reentry?

Ignored

Quoting sm31

Disliked

What about the real value of those pips?

I realized I may have caused confusion with my comment about "big money". To clarify... When my money management rules are applied, pips attain a specific value unique to each trade. I first calculate the maximum risk in pips for a trade should the "full monty" stop out. Then I assign a $ value per pip based on the % of my account I am willing to risk per trade (5% currently). So the value is really in the amount of pips earned vs risked rather than a straight pip count.

Does TA employ a similar money management technique for BAT?

Ignored

Quoting billbss

Disliked

A robot could not choose the pivot using these instructions "a recent or significant low".

Ignored

Quoting sm31

Disliked

In looking at your backtest results, I couldn't define a strict set rules for your placement of the swing high/low. It looked like a discretionary decision on your part. If not, can you share your rules for placement of the line? I may have missed it in a previous post.

Ignored

Quoting brainjt

Disliked

Im new with this system, now I draw fibo lines and pending order, can you help please, is order oh key??? Thx bj

Ignored

Quoting brainjt

Disliked

yes I did, but on friday before news I think its risk, could you please give me answer on questions-
do you close all trades and pending orders before weekend??, did you test only for inst. London open? or USA open? or togother?, or only Asia?
thx for your answer,

Ignored