Pivot Point Squeeze, high probability system

Quoting JohnnyFOREX

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Hey GCT,

Got to agree with an earlier post (as I'm a little confused here) ... you mention using the MACD to choose your direction of trade, yet I do not see it on your charts. Can you please confirm the application of MACD in your system, thanks.

P.S. As MACDoug has commented, I'm hoping soon to code up your system also into PRT, hopefully with several tweaks of my own that I've incorporated into other systems I've been working on. I'm talking 20 pages of code though, so I need to sift through this carefully to utilise some ideas and discard others - but we should end up with a very nice backtest and a psuedo 'black box' indicator (similar to your entry indicator if you like) which will take much of the work out. Your use of MACD though for entry and exit though I am not entirely sure of.

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Quoting GCTrader1

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Hi Johnny,

The Macd is one type of entry or exit strategy that can be used. In the code or indeed just visually looking at the chart the direction can be easily picked by which way the breakout is headed from the constriction. In the code, it is easily added to pick the direction of the trade.

Same thing for the exit, it is used to evaluate if the move is over or it has just stalled. That is why I have the MACD Threshold. It compares the current value of the MACD signal to the previous bar and if that value goes over the threshold, it exits the position.

As I said, it is one form of exit. Another VERY effective exit strategy is to stage out at pivot points.

I hope this clarifies it and I cant wait to have a look at your code. Im a code geek, what can I say!

Here is a pic of my layout, although it cuts off one of my screens! The screen capture mustnt be able to see all 4. lol

GCTrader

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Quoting GCTrader1

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FXhermit,

As always, your contribution here and to everyone that is following this system is much appreciated. Especially since there are alot of MT4 users out there and with your understanding of the concept.

Finally I have come up with the indicator which im sure can still be worked on but it is definitely progressing. Here is the code for the new indicator. This will work for people that are with IGMarkets


--------------------------------------------------------------------------

b=18

L=(lowest[period](BollingerBandWidth[18](close)))+C

trigger = undefined

rem This is the buy setup which detects when the bollinger bandwidth has made a new low followed by an increase in bandwidth below the trigger line and the MACD is trending up.


if (round((BollingerBandWidth[b](close))*10000)-((BollingerBandWidth[b](close[1]))*10000))>=1 and BollingerBandWidth[b](close[1])<L and round((MACDline[5,13,1](close)))>round((MACDline[5,13,1](close[1]))) then

trigger =1

endif

rem This is the exit setup which detects a turnaround in the MACD histogram. The turnaround threshold is determined by A

if abs((round(MACDline[5,13,1](close[1])))) - abs((round(MACDline[5,13,1](close))))>=A then

trigger = 0

endif

rem This is the short sell setup which detects when the bollinger bandwidth has made a new low followed by an increase in bandwidth below the trigger line and the MACD is trending down.


if (round((BollingerBandWidth[b](close))*10000)-((BollingerBandWidth[b](close[1]))*10000))>=1 and BollingerBandWidth[b](close[1])<L and round((MACDline[5,13,1](close)))<round((MACDline[5,13,1](close[1]))) then

trigger =-1

endif

rem This is the exit setup which detects a turnaround in the MACD histogram. The turnaround threshold is determined by A

if abs((round(MACDline[5,13,1](close[1])))) - abs((round(MACDline[5,13,1](close)))) >= A then

trigger = 0

endif

return trigger


Variables

A
MACD Threshold
Range 2-10

C
Trigger Buffer
Range 0.0001 - 0.002

PERIOD
Sample period for Trigger
Range 24 - 250

----------------------------------------------------------------------------

Here is a pic of it at work with trigger line accentuated. *values still need to be adjusted*

http://img129.imageshack.us/img129/3...xaudusdqf1.png

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Quoting guess121

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Hi GCTrdaer,

Is this coding for the indicator or back tester, as I am having troubles putting this code in now?

thanks
guess

indicator

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Quoting GCTrader1

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Hmmm, can the beast be tamed...

GBP/JPY on 100tick chart

http://img208.imageshack.us/img208/9...xgbpjpyak9.png



http://img66.imageshack.us/img66/269...xgbpjpyrk4.png

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Quoting guess121

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Infact... can you please do a story book for us?

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Quoting jonaslt

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O, just some ideas GCT since you've been using this for longest,
Do you use weekly,monthly pivots with this at all or fibs looking for confluence for more sure moves?

Just to throw that out there for anyone interested to try so far I've tried weekly and some monthly, weekly seems to have a pretty decent effect on pa on eurjpy at least the range I tested.

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Quoting GCTrader1

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Weekly pivot points are another great pivot point to watch out for. When they are close to a daily pivot point, get ready for a big bounce when the price hits it! Monthly not so much, I dont know anyone that uses monthly. Fib IMO is snake oil, put that many lines on a graph and its bound to hit some eventually. : With pivot points, you can see day after day it hitting them and bouncing off or stagnating around them. With them there is no question that the market keeps an eye on them.

GCTrader

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Quoting fxhermit

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Hi FX97, I'll try to answer as best as I can:

Questions 1 & 2. From looking at your chart it seems that your broker prints a Sunday bar. Some brokers do and it looks like and extra day to the pivot indicator and how it calculates the pivot therefore the difference between your chart and mine. Some don't and they just incorporate it in the Monday data. It is not uncommon for data feeds to vary from broker to broker and price bars to print slightly differently from platform to platfotm. You will occassionally find the same sort of discussion amoungst Price Action traders (James16 thread) as to why the suppossedly same charts look different from broker to broker. The conclussion is usually that you should treat the charts you are looking at as your "window of truth". That is where you will be placing and managing your trades. Unfortunatley it does not always make it easy for us all to be exactly on the same page when posting and analysing charts.

Question 3. Good question - no reason why it couldn't be .15 I suppose. All of these levels on oscillators are some what arbitrary. They are usually ment to signal a change in mood of the indicator. For example a common indicator that most traders are familiar with is the Stochastic. It uses levels of 80 and 20 to delineate overbough/oversold conditions for price and when it moves through those levels it is usually considered that price action is changing in some way.

The same is true for the 0.2 and -0.2 levels of this indicator. It is actually the default setting used by the coder for the demarker part of the indicator. I would presume that the reason why they are the defaults is that these levels most appropriately define a change in mood of the indicator in the same manner as the aforemention levels do for the Stochastic. For us, that should translate as price movement out of the squeeze. Many other oscillator type indicators have their own default levels as well. They act as another "heads up" area for the trader. Since they are early signals there is usually a higher risk of false signals at these levels, yet when they are descisively broken often yield generous pips.

Question 4: Signs for exit are for the time being those that are recommended by GCTrader1 such as exiting at R or S pivots. If I remember correctly, earlier on in the thread GCT mentioned the use of MACD as an exit. You may want to review some of the earlier posts (as I suppose I should as well ) for recommended exits. I will try and flesh out take profit as well as stop loss strategies at some future point - they are such a subject unto themselves. P.S. GCTrader1 just confirmed MACD use in a post or two previous.

Question 5: Glad you asked, although this part is not really rocket science, it sure is all important - there is obviously no trade if you don't pull the trigger. A buy trigger is when the Lime coloured demarker oscillator moves UP through the Waterline (0.0) and the dots are Magenta. The reverse is true for a sell trigger.

Question 6. As is life, a work in progress. GCTrader1's methodology is theoretically tradeable with a price chart that ONLY has the Bollinger band on it. Squeezes of the Bollinger bands are quite visual and rather easy to recognize. Actually a pretty good way to train one's eye is to create just such a chart and have it open next to the one that you are trading. After a while you may be pleasantly surprised at the clarity of vision that this nearly naked chart provides. The Bollinger dance is a thing of beauty and goes on all week. Transposing a methodology from one platform to another is a translation at best. I have, because of my limited knowledge of coding relied on already existing MT4 indicators so have I totally captured GCT's system? No, probably not, but I hope to have come close. I'm sure that over time both approaches will reveal their unique strengths and weaknesses. Every trader has to prove to themselves that what ever methodology they adapt, that they can be profitable with it. Don't be to quick to leap, practice a bit first - opportunity will always abound and it is doubtful that there will ever be a scarcity.

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Quoting Fx97

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It seems like we got very good buy signal here is the chart from Fxhermit indicators I am long at 162.84

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Quoting hello

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Good Trade

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Quoting hello

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Good Trade

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