Killer 'B' System Q & A

Quoting Deadly Avenger

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Coming back to the topic in hand,
do you mean the highest and lowest daily range observed previously? This is what I think you mean.

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Quoting thehedge

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Hi Bemac,

Thank You.

I've been following your thread with much interest but am trying hard to understand your system at the same time. Here's the Killer B at work on VTTrader and hope you'll be able to clarify the rules of your system.

1. I assume the 2 lines straddling the 06:15 opening price is the entry price (20%MDR). What about the 2 darker lines beyond that? What are they for?
If you kept the original colour coding, the two Grey Lines are 20% Entry Lines. The two Drk Magenta Lines are Previous 24 Hr High & Low.

2. And are the 2 thinner lines even beyond the darker lines (which tend to follow price as it makes new highs and lows) the exit price (80%MDR)?
Correct. The two thinner dashed lines are the 80% Targets.

3. I believe the stop-and-reverse point is the exit sign followed by the red arrow. However, shouldn't that have taken place at the 12:00 mark when price actually broke below the lower bound?
The System is based on the Close of The Bar. Crossing & Retrating before the Bar Closes Negates the Signal.

4. Do you re-enter during the same day even if TP has been hit (characterised by the second red arrow towards the EOD or is that signal to be ignored)?
I Do Re-Enter. Notice, however, that the exit for that Short Entry @ ~ 4:30 AM on Aug 29 was Exited @ ~ 5:00 AM as this was within 1Hr of the Start Hour of a New Session ie, 6:?? AM.
This is one area I have already identified as requiring some additional thought as exampled by the Current Short on the 5Min GBPUSD.
If a New Signal is generated AFTER that End of Session Timed Exit, It will hold the Position Open into the Start of the New Session. This Particular Trade was a nice Entry but it is not actually a true part of the System.
Notice that this Trade appears to have a Premature Exit. This is due to the Trailing Stop {Yellow Line} Calculating 50% of the distance between Entry & Short Target of Previous Session.

5. How do you make use of the stochs and volume indicator to filter your entries? You mentioned that you will only enter if both stochs are within 10 of each other. In this case, since both are not, do you not take the trade?
The Code Requires that ABS(OStoh-StdStoh) <=10.
This means the System should not have generated a Signal.
Can you point me to which Signal you are referring to?

I use the Volume Indicator merely as a visual

Hope to understand your system better!

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Quoting Bemac

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Does any of that help?

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Quoting Deadly Avenger

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Would it be better to plot a normal distribution of the daily range and use the top and bottom 15% of the distribution as the high and low to remove even the effect of outliers from the MDR calculation?

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Quoting thehedge

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It sure has, thanks! Hope you won't mind me making further clarifications?

1. The dark magenta lines seem to be only visual guides since they are previous highs and lows. Any other uses for them?
Visual Guides. Correct!

2. Before running your system on VTTrader, I thought the 80% targets were fixed stops. But it now shows that they move as price moves. Is this always the case?
Yes. The Lowest low Target will be affected by the Highest High achieved. The premis being that the distance between HHV & LLV will be close to MDR.

3. Thanks for your clarifications on the signal at the close of the bar and your rules for re-entry. Unfortunately, I do not see the trailing stop (yellow line) on the chart. Would you mind pointing it out and explaining how it works?
Will attempt posted image.

4. The signal I was referring to is the first blue arrow circled in red. The corresponding stoch levels (also circled in red) are blue line ~ 50 and red line ~ 30 (difference > 10). Am I reading it correctly? Do you happen to know whether MT4 has a function to overlay stochs of different TFs on one another?
Can't confirm <10 therefore no comment AT THIS TIME.

5. How do you use volume as a visual aid? E.g. when volume is very thin you do not enter a trade?
Exactly.

Thanks alot for your help.

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Quoting thehedge

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Hi Bemac,

Thanks for your replies. I'm beginning to understand your system much better. Just a few more questions (I seem to be the only one asking though)...
But yet, I think {hope}, not the only one reading the replies. No worries. This is what it takes to UNDERSTAND & TRADE A SYSTEM.

All good questions btw.

Trailing Stop:

1. When do you exit the trade at the TP (80%MDR) and when do you allow TS to kick in? The attached image "Trailing Stop" shows the exit (circled in red) stopped out by the TS. Why wasn't the trade allowed to exit at TP?
2. You mentioned that TS kicks in when price is "50% of the distance between Entry & Short Target of Previous Session". What is the rationale of calculating it based on the previous session instread of current session?
3. How many pips is the TS?
4. LongEntrySetup := LongTradeAlert = 0
   AND CloseWeek = 1
   AND MyClock < 24
   AND Ref(Low,-1) < HighEnt
   AND Close > HighEnt
   AND StDK - AvgStDK >= -10
   AND AvgStDK > LHoriz;
   
   LongExitSetup := LongTradeAlert = 1
   AND Cross(High,HighTgt)
   OR LongTradeAlert = 1
   AND Cross(LowEnt,Close)
   OR LongTradeAlert = 1
   AND MaxTradeProfit > Trailer *TrailerMultiple
   AND Ref(Close,-3) - Close >= MaxTradeProfit*(MaxTrdPftFactor/100)
   OR LongTradeAlert = 1
   AND Cross(MyStop, Close)
   OR LongTradeAlert = 1
   AND Cross(Hour()=OpenHour-1,0.5)
   OR LongTradeAlert = 1
   AND DayOfWeek()= 5 And Cross(Hour()=13,0.5) ;
5. Hopefully this responds to all of the above & your "Others" Q. It may not be all the answers but...
   

Stop and Reverse:

1. I understand that if price hits the buy stop, the trade is initiated. However, if price reverses and hits the sell stop before hitting the long TP, the trade is stopped and reversed. What happens then if price reverses a second time to the long side of the trade without hitting the short TP? Do you SAR again or do you employ a fixed stop after going short?
2. Only seen it happen a few times where I Have two whips but never three, so far.

Stochs:

1. May I know the rationale for stochs to be <10 in order to enter a trade?
2. It abbreiviates the Code & therefore time required to Run the Code rather than a lengthy definition of Both Stohs Crested AND heading South for Short Entry
3. Would you have taken the trade on 28 Aug 07:20? Looks like stochs were ~ 20.
4. Don't Know.
5. How about the long signal on 30 Aug 08:55 when stochs were miles apart from each other?
6. Sorry for my earlier incorrect definition of the {Stohs} Setup. Read the Blue Line Above in Long Entry.

Others:

1. In images "1" and "2", an exit signal appears (circled in red) without any apparent reason. Price did not hit TP, nor was there a TS, nor was it an hour before session close. What could have been the reason to exit the trade?
2. See Above for Exit Criteria.

Hope I'm not of too much trouble to you, sir.

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Quoting Bemac

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I think I may have confused you even more with the response above.
Let me first target the TS.

WHen an Entry is Triggered I know a number of things.
1) Entry Price.
2) Exit Price
3) Price at half that distance. {(Entry +/- Price Target) / 2}

Until the Price crosses 3) {50% of Target Achieved}The TS is not active.

When 3) IS ACHIEVED, the TS is Activated at a level of Max Trade Profit {so far} minus {-} 20% of Max Trade Profit so far.

So...
If my Target Pip Profit is 100p, the TS will be activated whe the position is positive 50p and will be set 20% below Max Position Profit So Far.
ie 50p - (50p*0.2)
= 50 - 10 for a lock of 40p Profit
This means if the Trade goes positve 50p, I will lock in a profit of 40p and be stopped out if it pulls back 10p from the Max Profit Price.

If the Trade continues to go my way from the 50p Profit mark, the TS will continue to move with it.
ie. The Trade goes 80p in profit, TS @ 80p-(80p*0.2)
=80 - 16 for a lock of 64p Profit.
And so on until I am either Stpped or Exited on TP.

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Quoting thehedge

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Hi Bemac,

Thanks again for your thorough explanation of your system. Everything seems to be falling into place now! But I must agree with Thom that it took me a couple of hours to understand how the TS and Stochs work.

1. So just to make things clear for the Stochs, StDK - AvgStDK >= -10 is the code for both stochs having crested and turning up or down depending on whether it is a long or short entry respectively? Stohs can turn on a dime, especially on short Timeframes. If the HTFS {Higher TimeFrame Stohs =AvgStDK} are headed Down, then we want to give emphasis to Short Trades. BUT, I also want to Time my Entry. So... I want to post my Entry when the CTFS {Chart TimeFrame Stohs} are close to the Higher TF Stohs. In other words, the CTFS Stohs have sufficient room below them to suggest this could be a nice Short Entry Level. eg. IF HTFS Stohs have crested but CTFS are Close to the Bottom, It is not an optimum setup for Entry as the CTFS are telling me the Price could rise. Therefore, since it is not a Setup for this system, I Filter it out by using the Difference between the Stoh Values. Right or Wrong, right now, it's how the system works.
2. What if one of the stochs is turning down and the other is turning up, would you still enter the trade? Especially since I noticed that the 2hr Stoch tends to give pretty high probability trades even if the 5min Stoch is disregarded. See Above
   
3. I am currently trading on an MT4 platform (which does not have 2hr charts). Will substituting the 2hr Stochs with 1hr or 4hr Stochs make a significant impact on the entry signal? Hmm, Probably may require adusting the "Within -10" value
4. With regard to whipsaws, "I mostly weather them." what do you do if you have been stopped and reversed once but instead of having price reaching the TP, it reverses a second time? Do you stop and reverse the trade again? If so, at what point?

That's all for now!

P.S. Have you modified/tweaked your system since you first started trading it a year ago or has it withstood the test of time?

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Quoting thehedge

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Good day Bemac,

Thanks for your replies. Think I'm getting the drift concerning your use of Stochs. One last bit which still vexes me, however, is that if HTFS Stochs have bottomed out but CTFS are cresting at the top, wouldn't StDK - AvgStDK >= -10 (it would be very positive in fact)? Then although price could rise, it isn't an optimum entry, but the trade would still be entered. How do you overcome this limitation?

Thank you.

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Quoting Bemac

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StDK - AvgStDK >= -10 The equation reads ABS(StDK-AvgStDK)<=10 {Less than or = to}If CTFS are Cresting, It is 'Supposed' that the price will Fall and Therefore, A Better "Timed' Entry is Yet to Come.
In other words; they have to be "Close" to being in Complience.
Sorry it took so long to reply.

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