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Three Bar Scalp Method w Probability

  • #41
  • Sep 14, 2007 10:52am Sep 14, 2007 10:52am
Quoting NipthePips
Lol glad we can vibe off each other...thats what these boards are all about.


I actually trade boomerang with conservative risk with only 10-15% of my equity live....only because it can have some bad streaks...but adding the 2 bar up/down filter might work.
Or just try RSI...
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  • #42
  • Sep 14, 2007 1:07pm Sep 14, 2007 1:07pm
Quoting bullrock
GBPUSD -> would be fine for short but RSI > 50
USDJPY -> would be fine for long but RSI < 50

Edited (correction):

EURJPY long @ 159.56
SL would be @ 159.39 (25% of ATR + spread) we put it @ 159.17 below an S/R level on 5 min chart
USDCAD short @ 1.03502
SL would be @ 1.03632 (25% of ATR + spread) we put it 1.03700 above an S/R level on 5 min chart.
Close USDCAD @ 1.028202 +68 pips

I will wrap up the week during the weekend but not too bad so far.
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  • #43
  • Sep 14, 2007 8:23pm Sep 14, 2007 8:23pm
bullrock, I use something similar to you, but with 4 candles. I never thought of using the RSI as a filter. Good stuff!
  • #44
  • Sep 15, 2007 1:14am Sep 15, 2007 1:14am
Quoting comppro
bullrock, I use something similar to you, but with 4 candles. I never thought of using the RSI as a filter. Good stuff!
You're mostly welcome
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  • #45
  • Sep 17, 2007 4:55pm Sep 17, 2007 4:55pm
Bullrock,

Could you give an example or clarify the following statement in your method: "provided that the open is at the same level as the close." A chart example would be great, but any clarification would help.

Thanks in advance,
Marcy
  • #46
  • Sep 17, 2007 5:53pm Sep 17, 2007 5:53pm
Quoting Marcy
Bullrock,

Could you give an example or clarify the following statement in your method: "provided that the open is at the same level as the close." A chart example would be great, but any clarification would help.

Thanks in advance,
Marcy
Interesting thread guys, I love these simple methods that take literally milliseconds to decide whether to take a trade or not. You might want to take a look at the 'SIMPLE Daily System' which can be found in the Trading Systems section of this forum. It basically follows the 'Three White soldier/three black crows' formations that was mentioned earlier but has been expanded with a couple of filters. This method has been backtested significantly and discussed in depth with the consensus that this is a solid dependable strategy (with varying degrees of success depending on which pairs it is applied to). The relevance of this is that these two systems can be used side by side to haul pips hand over fist!

Marcy, my take on this is that the close of the previous bar is equal (give or take a couple of pips) to the open of the present bar. This occurs most of the time anyway except when there are breaks in trading ie. weekends, where a gap may appear between the close of the Friday bar and the Sunday/Monday bar. Take a quick look at your charts and you'll see this the case most of the time.
  • #47
  • Sep 17, 2007 6:13pm Sep 17, 2007 6:13pm
Quoting birdt
Interesting thread guys, I love these simple methods that take literally milliseconds to decide whether to take a trade or not. You might want to take a look at the 'SIMPLE Daily System' which can be found in the Trading Systems section of this forum. It basically follows the 'Three White soldier/three black crows' formations that was mentioned earlier but has been expanded with a couple of filters. This method has been backtested significantly and discussed in depth with the consensus that this is a solid dependable strategy (with varying degrees of success depending on which pairs it is applied to). The relevance of this is that these two systems can be used side by side to haul pips hand over fist!

Marcy, my take on this is that the close of the previous bar is equal (give or take a couple of pips) to the open of the present bar. This occurs most of the time anyway except when there are breaks in trading ie. weekends, where a gap may appear between the close of the Friday bar and the Sunday/Monday bar. Take a quick look at your charts and you'll see this the case most of the time.
Thank you for your compliments.

I have three systems like that.. One is like the simple system, MA based, the other is this one, oscillator based and the third one is breakout based. All three emply the same MM and I have calculated the prbabilities under certain conditions the range of the motion from the entry. I can safely tell that in this case RSI+2bar close higher the GBP will reach 50 pips 60% of the time.. Now, I haven't said anythong what will it do between then, but probably a 60 pip sl would work. Anyone with discipline can emply this simple stuff.. You do not need large brains and skills polished over long years to figure out when to eneter.. All you need is to manage the trade. be consistent and discplined.

Regards
bullrock
Sometimes the "close is higher today then yesterday" is not equal to the "today the close is higher than the open, and yesterday the close is higher than the open" because even thogh it is a bullish bar the close can be lower than of the previous bar. We do have a filter here, the RSI. And I have certain numbers like in case of the GBP it is 60% probable that it will reach 50 pips from the open.
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  • #48
  • Sep 17, 2007 6:25pm Sep 17, 2007 6:25pm
Quoting Marcy
Bullrock,

Could you give an example or clarify the following statement in your method: "provided that the open is at the same level as the close." A chart example would be great, but any clarification would help.

Thanks in advance,
Marcy
Hi Marcy

Here is an example.

On 6th of December 2001 (the first large blue bar after the red bar) closed higher than the previous bar, though it is a bear bar. The next bar to the bar opened at the same level as the previous close or higher. The RSI jumped above 50. It is safe to enter right at the open... If you need more clarification please do not hesitate to post here. Also if you would have employed a 50 pips SL you would just have missed the SL and you would have made a pips gain...

Regards
bullrock
Attached Image (click to enlarge)
Click to Enlarge Name: 2bar_rsi.gif Size: 28 KB
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  • #49
  • Sep 17, 2007 6:47pm Sep 17, 2007 6:47pm
Quoting bullrock
Hi Marcy

Here is an example.

On 6th of December 2001 (the first large blue bar after the red bar) closed higher than the previous bar, though it is a bear bar. The next bar to the bar opened at the same level as the previous close or higher. The RSI jumped above 50. It is safe to enter right at the open... If you need more clarification please do not hesitate to post here. Also if you would have employed a 50 pips SL you would just have missed the SL and you would have made a pips gain...

Regards
bullrock

Nice chart for clarity! I think I get it: Meaning that Bar 3 (the trade bar) opens somewhere within the high/low of Bar 2 (Bar 3 did not "gap up" or "gap down" in relation to Bar 2?)

Thanks in advance,
Marcy
  • #50
  • Sep 17, 2007 6:57pm Sep 17, 2007 6:57pm
Quoting birdt
Interesting thread guys, I love these simple methods that take literally milliseconds to decide whether to take a trade or not. You might want to take a look at the 'SIMPLE Daily System' which can be found in the Trading Systems section of this forum. It basically follows the 'Three White soldier/three black crows' formations that was mentioned earlier but has been expanded with a couple of filters. This method has been backtested significantly and discussed in depth with the consensus that this is a solid dependable strategy (with varying degrees of success depending on which pairs it is applied to). The relevance of this is that these two systems can be used side by side to haul pips hand over fist!

Marcy, my take on this is that the close of the previous bar is equal (give or take a couple of pips) to the open of the present bar. This occurs most of the time anyway except when there are breaks in trading ie. weekends, where a gap may appear between the close of the Friday bar and the Sunday/Monday bar. Take a quick look at your charts and you'll see this the case most of the time.

Thanks Birdt, I'm getting the picture. The bars are in formations, like soldiers marching or crows flying!
  • #51
  • Sep 17, 2007 6:58pm Sep 17, 2007 6:58pm
Quoting Marcy
Nice chart for clarity! I think I get it: Meaning that Bar 3 (the trade bar) opens somewhere within the high/low of Bar 2 (Bar 3 did not "gap up" or "gap down" in relation to Bar 2?)

Thanks in advance,
Marcy
I have a new filter. Whether it is gapping or not the only requirement that the open of the "trade bar" in case of longs should equal or higher than the close of the signal bar... In case of short the open of the trade bar should be lower or equal to than the close of the signal bar (the second bar)

Regards
bullrock
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  • #52
  • Sep 17, 2007 7:01pm Sep 17, 2007 7:01pm
Quoting birdt
Interesting thread guys, I love these simple methods that take literally milliseconds to decide whether to take a trade or not. You might want to take a look at the 'SIMPLE Daily System' which can be found in the Trading Systems section of this forum. It basically follows the 'Three White soldier/three black crows' formations that was mentioned earlier but has been expanded with a couple of filters. This method has been backtested significantly and discussed in depth with the consensus that this is a solid dependable strategy (with varying degrees of success depending on which pairs it is applied to). The relevance of this is that these two systems can be used side by side to haul pips hand over fist!

Marcy, my take on this is that the close of the previous bar is equal (give or take a couple of pips) to the open of the present bar. This occurs most of the time anyway except when there are breaks in trading ie. weekends, where a gap may appear between the close of the Friday bar and the Sunday/Monday bar. Take a quick look at your charts and you'll see this the case most of the time.
I know that system. I am using a variation of that. Only one MA and instead of three bars I am using 2 bars.
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  • #53
  • Sep 17, 2007 7:57pm Sep 17, 2007 7:57pm
Quoting bullrock
I have a new filter. Whether it is gapping or not the only requirement that the open of the "trade bar" in case of longs should equal or higher than the close of the signal bar... In case of short the open of the trade bar should be lower or equal to than the close of the signal bar (the second bar)

Regards
bullrock


No more RSI? I like this Bull rock
  • #54
  • Sep 17, 2007 8:40pm Sep 17, 2007 8:40pm
I took a SHORT trade on the GBPJPY based on this system in conjunction with some price action observations I've been looking at and just closed one lot with a 100 pip gain (a very small position). I've got another one going with a longer TP (midpoint between S1 & S2 on ActionForex.com daily pivot points) and the SL in profit. Beautiful!
  • #55
  • Sep 17, 2007 9:14pm Sep 17, 2007 9:14pm
Quoting bullrock
Hi Marcy

Here is an example.

On 6th of December 2001 (the first large blue bar after the red bar) closed higher than the previous bar, though it is a bear bar. The next bar to the bar opened at the same level as the previous close or higher. The RSI jumped above 50. It is safe to enter right at the open... If you need more clarification please do not hesitate to post here. Also if you would have employed a 50 pips SL you would just have missed the SL and you would have made a pips gain...

Regards
bullrock
Are you still looking for it to close higher (for long) than the previous candle's close, or are you now looking for it to close higher than the previous candle's high? THanks!

Chris
  • #56
  • Sep 18, 2007 12:40am Sep 18, 2007 12:40am
Quoting Cmartin371
Are you still looking for it to close higher (for long) than the previous candle's close, or are you now looking for it to close higher than the previous candle's high? THanks!

Chris
Hi Cmartin371,

Close higher than the previous close.

Regards
bullrock
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  • #57
  • Sep 18, 2007 12:54am Sep 18, 2007 12:54am
Quoting Cmartin371
No more RSI? I like this Bull rock
I need to figure out this better. It does not always work in case of shorts. That is the probability that the next bar will close lower is less than 50%.. I will find something. Later today
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  • #58
  • Sep 18, 2007 1:05am Sep 18, 2007 1:05am
i like this sytem thanks Bull rock for it.
reason
1) it tell you when to enter
2) it tell you when to exit and take profit
3) it tell you to put SL
4) it follow the trend... thus increase probalility on winining.
5) don't take up much time as it does only once a day.
6) most important it simple and easy for any more to follow.

GREAT SYSTEM!
  • #59
  • Sep 18, 2007 2:33am Sep 18, 2007 2:33am
Quoting SynWind
i like this sytem thanks Bull rock for it.
reason
1) it tell you when to enter
2) it tell you when to exit and take profit
3) it tell you to put SL
4) it follow the trend... thus increase probalility on winining.
5) don't take up much time as it does only once a day.
6) most important it simple and easy for any more to follow.

GREAT SYSTEM!
.
  • #60
  • Sep 18, 2007 2:37am Sep 18, 2007 2:37am
Quoting bullrock
I've cooked up quickly a system. I've got the ideas from various places on the forum and then performed some calculations and certainly looks promising.

So the setup.

RSI(8)
ATR(14)

Go long: enter on the open when the previous close is higher than the close of the bar before of the previous bar and provided that the open is at the same level as the close. The RSI(8) is above 50.
Exit short: End of the day.
SL: 25% of the ATR(14)

Go short: enter on the open when the previous close is lower than the close of the bar before of the previous bar and provided that the open is at the same level as the close. The RSI(8) is below 50.
Exit short: End of the day.
SL: 25% of the ATR(14)

I have include some calculations in Excel but it does not take into account the whipsaws.

Rationale.
The probability that the 3rd bar (trade day) will close higher is 62.77% for the Gu and that the 3rd bar will close lower is 60.53% viewing the last 7 years.

Any comments?

ps: Probably this thread will die out fairly quickly I am just curious regarding your opinions.
ps: English is not my native language so sorry for the mistakes

Edit: The zip file contains an excel sheet with the calculations.

Edit: Clarification: We enter long on the 3rd bar open when bar 2 close is higher than bar 1 and RSI(8) is above 50. Short is reverse.

Edit:
We might also try to play with a stop and reverse strategy. With the same parameters. Say SL 40 pips. First TP @ 40-50 next TP @ 80-100 and leave third till the end of day. If first TP hit move SL to BE. If TP or BE or SL are not hit either leave everything as is and start next day as per original rules. Maybe if SL is not moved to BE do not open new positions. If next day SL moved to BE start next day as per original rules. But this time be consistent, if you have shorts from previous day go short. Do not tinker. Be disciplined and WAIT until either TP, BE, or SL is hit.

Regards
bullrock
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