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Double deep throat the real pullback

  • #21
  • Edited 11:20am Apr 5, 2024 11:03am | Edited 11:20am
I've used a similar method for over a decade now - and they tell you, you can't make money with Indicators!

The trick is the narrow range bar pullback on the SMA along with the 2RSI <25%

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75% win rate + some very decent R multiple moves = a very successful system/method

The Indicator catches price cycle moves - some will be good, some bad - Walter Bressert published works on this in the 1990's where he used a 3RSI smoothed by a 3 period SMA

You can use a stoch setting 533 and it will do a pretty decent job too
  • #22
  • Apr 6, 2024 1:25am Apr 6, 2024 1:25am
Quoting Thtpro
I've used a similar method for over a decade now - and they tell you, you can't make money with Indicators! The trick is the narrow range bar pullback on the SMA along with the 2RSI <25% {image} {image} {image} {image} 75% win rate + some very decent R multiple moves = a very successful system/method The Indicator catches price cycle moves - some will be good, some bad - Walter Bressert published works on this in the 1990's where he used a 3RSI smoothed by a 3 period SMA You can use a stoch setting 533 and it will do a pretty decent job too
Your 75% win rate soung great.
Them when do you enter and exit ,what are your trading rules ?
  • #23
  • Apr 6, 2024 4:24am Apr 6, 2024 4:24am
Quoting Puntacana
{quote} Your 75% win rate soung great. Them when do you enter and exit ,what are your trading rules ?
If you look at the charts above - this works on ANY time-frame - I generally trade UK stocks on hourly time-frames - you are looking for the SMA's to be in perfect order which is 10 above 20, 20 above 30 and 30 above 50 etc - but doesn't have to be, if you are confident that the TREND is UP, then the SMA's can intertwine etc

Then you want the 2 period RSI less than 25% ideally, although sometimes you get reversals between 30-25% on the RSI, so you need to work out what you watch - anyway, once you have those conditions in place you need a nice smaller than normal (ideally) ranged bar - you can see some of those in the charts above

You then go long on the break of the HIGH of the narrow ranged bar, then you need to work out if you trail the price lows or set a target - I mostly trail stops up and let the market take me out, but I always get stop to breakeven as fast as possible

The INITIAL STOP goes 1 pip UNDER the trigger/Entry bar - or you can build in some "wiggle room" up to you, as sometimes you do get a wash and rinse of the low of the entry price bar

If this method is going to work, price just rockets, it does not faff about

This works brilliantly when the higher time-frame momentum is oversold too

The chart below shows the set-up on forex - I missed both those trades purely because they happened out of my trading hours or when i was asleep - the bars weren't narrow either - when the bars are normal range, it still works, you just don't get more bang for your buck - so I just specifically hunt for narrow ranged bars during the month and lay in wait, as I've rather have 5R+ than 2R etc

It definitely works, unless I've been living in some sort of alternative life for the past couple of decades

PS the 14RSI is there purely so I can read the trend of the market based on what the RSI has been doing


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  • #24
  • Edited 5:01am Apr 6, 2024 4:40am | Edited 5:01am
Forgot to say - Go test it on a beautifully trending market like the US markets - I can't tell you how much money I've stripped out of the SP500 using this method over the years but its a huge amount

Don't chase gap opens and if its a wide range bar, the chances of making money is very small, hence the narrow range bars as ideal

You can devise rules for shorts to - works on all liquid markets and any time-frame

The only way to balls it up is to over-trade, lack of patience and try to out smart the simplicity of it - which as we know 95% of traders automatically do, but I can tell you it works

Because it's trend following, cycle following and timing turns

Look at this one - CIRCLED trade = It was not a perfect set-up, some of the rules were bent for this one - but it turned out to be a nice RETRACEMENT trade, the key was the 2RSI and the retracement, the initial target was the swing high, so you can see why trailing a stop pays off rather than a straight target level
This is EXACTLY what you expect if you've got the retracement and Indicator right - price just moves vertically NO faffing

The retracement trade was taken because of the RISING prior swing lows + the 2RSI position <25% + retracement to key 50% level (not shown)

So you can use the same theory of the Indicator to trade retracement levels and or Elliott wave/pivots

The rectangle trade was valid, but it just did not work - hence why you want to get the stop to breakeven asap - this is a perfect example of everything being in place but price fails to comply, once you see price faffing like this, get the stop to breakeven as soon as possible before the low of the entry bar is taken out

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  • #25
  • Apr 6, 2024 9:05am Apr 6, 2024 9:05am
Quoting Thtpro
{quote} If you look at the charts above - this works on ANY time-frame - I generally trade UK stocks on hourly time-frames - you are looking for the SMA's to be in perfect order which is 10 above 20, 20 above 30 and 30 above 50 etc - but doesn't have to be, if you are confident that the TREND is UP, then the SMA's can intertwine etc Then you want the 2 period RSI less than 25% ideally, although sometimes you get reversals between 30-25% on the RSI, so you need to work out what you watch - anyway, once you have those conditions in place you need...
Thanks ,I think that if you take out the 200 sma you will get more false signals
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  • #26
  • Apr 6, 2024 9:06am Apr 6, 2024 9:06am
Quoting Thtpro
Forgot to say - Go test it on a beautifully trending market like the US markets - I can't tell you how much money I've stripped out of the SP500 using this method over the years but its a huge amount Don't chase gap opens and if its a wide range bar, the chances of making money is very small, hence the narrow range bars as ideal You can devise rules for shorts to - works on all liquid markets and any time-frame The only way to balls it up is to over-trade, lack of patience and try to out smart the simplicity of it - which as we know 95% of traders...
THANKS
  • #27
  • Apr 6, 2024 9:21am Apr 6, 2024 9:21am
RSI2/
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  • #28
  • Apr 7, 2024 7:37am Apr 7, 2024 7:37am
Fresh buy set up
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  • #29
  • Apr 9, 2024 5:15am Apr 9, 2024 5:15am
You don't take every signal - you simply watch and wait for picture perfect prospects, ignore the rest, let other traders take those trades

This came along the other day - you'd commit a full risk to a trade like this

You are buying into a pullback in a possible up trending section and it worked perfectly

You only need a few of these 3R+ trades a month to make a decent living at this game (depending on account size)

Again this set up works on any time-frame, but it doesn't happen everyday - I'm quite happy to wait half a month for it to show up (I trade 15 min upwards and scan for it every hour) because I know 4 of these per month pay my salary, anymore is a big bonus and the win rate is better than 70%

The ENTRY and STOP for this trade was 1 penny above the NR bar HIGH and 1 penny below the NR bars LOW

This is precision trading at its finest (you could allow "wiggle room" for the stop, but if its going to work, its going to do as its done in the chart)

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If you use the 2RSI along with any other momentum Indicator in a DOWNTREND, you'll find it tough going - I researched all this 14 years ago
  • #30
  • Apr 9, 2024 8:25am Apr 9, 2024 8:25am
this just happened on forex pairing

Ignore the Gann box and bright blue circle - was showing someone else, something else about the markets

The BLUE circle hits it right - multiple R profit trade - BECAUSE EVERYTHING was in perfect place and order, so the market HAD to move

There was a prev set up that worked off the 10 SMA a couple of 2RSI <25% back

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  • #31
  • Apr 9, 2024 10:22am Apr 9, 2024 10:22am
Quoting Thtpro
You don't take every signal - you simply watch and wait for picture perfect prospects, ignore the rest, let other traders take those trades This came along the other day - you'd commit a full risk to a trade like this You are buying into a pullback in a possible up trending section and it worked perfectly You only need a few of these 3R+ trades a month to make a decent living at this game (depending on account size) Again this set up works on any time-frame, but it doesn't happen everyday - I'm quite happy to wait half a month for it to show up...
--------------------
If you use the 2RSI along with any other momentum Indicator I see more winner trades but less signal wich is good.

RSI 2 +STOCH+CCI all hit OB and them they pullback to OS level before up trend continua .
reenter long for a nice move up
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  • #32
  • Apr 9, 2024 10:32am Apr 9, 2024 10:32am
Quoting Puntacana
Fresh buy set up {image}
price did not reach the buy point yet
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  • #33
  • Apr 10, 2024 4:25am Apr 10, 2024 4:25am
Quoting Thtpro
I've used a similar method for over a decade now - and they tell you, you can't make money with Indicators! The trick is the narrow range bar pullback on the SMA along with the 2RSI <25% {image} {image} {image} {image} 75% win rate + some very decent R multiple moves = a very successful system/method The Indicator catches price cycle moves - some will be good, some bad - Walter Bressert published works on this in the 1990's where he used a 3RSI smoothed by a 3 period SMA You can use a stoch setting 533 and it will do a pretty decent job too
Thanks for your strategy! 75% win rate is really good.
I'm trying to backtest it, could you please see if I get something wrong? The pictures below are some screenshots of loss trade, the bar in blue rectangle is the entry bar, MA red(10) yellow(20) blue(30) green(50).
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  • #34
  • Apr 10, 2024 8:40am Apr 10, 2024 8:40am
Quoting welsonclum
{quote} Thanks for your strategy! 75% win rate is really good. I'm trying to backtest it, could you please see if I get something wrong? The pictures below are some screenshots of loss trade, the bar in blue rectangle is the entry bar, MA red(10) yellow(20) blue(30) green(50). {image} {image}
Hi

I would not have taken trade 1 shown - I don't trade it like that on the short side, I'd trade the break of the swing low before the pullback

Trade 2 would never have been taken as it was out of hours and little liquidity, so you can't include those into your backtest

Trade 3 (bottom chart)again it looks out of hours and you would not have traded it, but I would have traded the break of the swing low if it was within normal trading day hours

Trade 4 (bottom chart) which you've not marked (green bar hitting the down blue MA) I would have traded the break of the low of that green bar and trailed a stop down or you could have taken a break of the swing low just around the trade 3 you show

Be careful backtesting - most people rely way too much on a computer to do the calcs, I've never done that, I've always got 10 years of price data and manually back tested methods, unless you'll get a load of false signals that mess up the back testing calcs

Also I don't have a stringent set of rules for trailing, if I think a market will move, I give the trailing stop a little room/space, if I'm worried about a position, I'll tighten the trailing stop - which is impossible to back test with via a computer

The same goes for some entries - If the market is not picture perfect, then I'll add wiggle room into play, which again you can't back test for in a clinical way that a computer does so

Lots of methods need a bit of form reading art to be employed, which just cannot be picked up by a computer

I'd be Interested to see what a computer pulls out, as I bet its worse than in real world - This is why its always best to create your own method, rules and whatnot

This was a trade from the other week

I got in at the pink circle and out on the pink line

I sold a % of the position off a few hours after entry and let the rest trail up, Initially this was trailing at the 20 SMA, then as price began to motor, I trailed a stop a few bars back at the low of the bar, which was stopped out around where the line is and the 10 SMA was

If there had been more discernable swing pivots on the zig zag line, I might have used them for stop placement - but that's only known as the market progresses and again you can't back test it - a bit of logical thinking needs to be applied, as the market develops

Anyway, you can see it was more than a few R profit

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It took me a long time back in the early 2010's to niche out the method, as I always had Larry Connors 2RSI system in the back of my mind and that didn't do that well on a computerised back test of a slightly differing method

Don't focus on every NR bar either, you just get much more bang for your risk when perfection happens and it does not happen all the time, which is most likely why the result of the back test might not be desirable - remember this method is more of an "art" than a mechanical process

You could use a STOCH setting 5 3 3 to get the turns too - but again, you'll not get good back testing results with a pure mechanical use

I would research Walter Bressert as he did rather well off a 3 SMA of a 3RSI in the 1990's
  • #35
  • Edited 11:40am Apr 10, 2024 11:11am | Edited 11:40am
I don't want to hijack the thread

I just want to reiterate you just WAIT and don't trade everything that might be

You will find trades like this that come along - THIS is what we are WAITING for

In the first (RED) circle (losing trade) - you might have taken this trade, you might have given the stop wiggle room - lots of mights! - lets say it was a loss

Then the 2nd (Blue) circle - was a great trade

If you ran a exact scan, you'd of missed it because the 10 SMA was =< than the 20SMA - but "reading" the chart, you'd of taken the trade of which you can see it turned into a multiple R profit trade even if you applied "wiggle room" to the stop placement

By running "back testing" you miss these real world winners

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Just going through my end of day routine and here is another from the other week that if you had back tested via a comp or run a scan end of day - you would of MISSED

Can't emphasise enough how important "eyeballing" is

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All you have to do is make a NET profit of 3R per week @ £250 (1% of a £25k account) and you make £750 per week, based on a 40 week trading year = £30,000

Just by waiting patiently for picture perfect trades to show up and as you can see some of those examples have been much much more than 3R!

Yes we have losing trades - its just part of the job
  • #36
  • Edited 9:43pm Apr 10, 2024 7:31pm | Edited 9:43pm
All ideas are ok
Open to changes
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  • #37
  • Apr 11, 2024 6:32am Apr 11, 2024 6:32am
Buy above signal bar
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  • #38
  • Apr 11, 2024 6:53am Apr 11, 2024 6:53am
GBPJPY
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  • #39
  • Apr 11, 2024 7:29am Apr 11, 2024 7:29am
Quoting Puntacana
GBPJPY {image}
out no good trade
market reverse up
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  • #40
  • Apr 11, 2024 9:03am Apr 11, 2024 9:03am
Quoting Puntacana
{quote} out no good trade market reverse up {image}
i would wait for a new close below 9 ema to reenter short
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