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Inside Bar Trading Technique

  • #121
  • Feb 15, 2008 1:29pm Feb 15, 2008 1:29pm
Great system DamonL. I have also been experimenting with a daily IB system and I wanted to share it with everyone here for comments.

Below I have posted the last 3 IB trades that were generated on the daily GBPUSD chart.

Note that I am using a Fib projection of 1.44 for entries, using the IB for the Fib level 1 to 100. The thumbs up is below the inside bar and the arrow (green or red) is just below or above the entry point to show where I would have entered.

Similarly, I would then use a Fib projection of 2.44 for a profit target.

These 3 sample trades (in just over 2 weeks) would have produced:
169 pips
121 pips
111 pips
_______

401 pips TOTAL....not bad, eh?

What I like about this particular twist to the system is that the Fib projection demands that the trade really break out in one direction or the other and it tends to reduce false entries. Sure you are giving up some pips between the 100 and the 144, but I would rather not get caught up in the whip saw. The thing that I like about using the Fib projection as a break out level is that it is to some extent based upon the volatility and range of the market (as demonstrated by the size of the inside bar). Of course, You can use any levels that you want for break out and profit targets. I just find that these seem to work fairly consistently.
Attached Image(s) (click to enlarge)
Click to Enlarge Name: gbpusd 1.24.08 breakout.gif Size: 24 KB
Click to Enlarge Name: gbpusd 2.1.08 breakout.gif Size: 24 KB
Click to Enlarge Name: gbpusd 2.12.08 breakout.gif Size: 24 KB
  • #122
  • Feb 17, 2008 12:18am Feb 17, 2008 12:18am
Hi Slade, thanks for posting the charts, makes it easier to ubderstand. could you help me to work out how to adjust the fibs to make the same settings as you. i am using odl charts and i cant seem to see the area to adjust the fibs from the standard settings. maybe there is an indi i can can place on the chart to make it easier. anythanks buddy. steve from oz
  • #123
  • Feb 17, 2008 5:09am Feb 17, 2008 5:09am
Quoting slade
What I like about this particular twist to the system is that the Fib projection demands that the trade really break out in one direction or the other and it tends to reduce false entries. Sure you are giving up some pips between the 100 and the 144, but I would rather not get caught up in the whip saw. The thing that I like about using the Fib projection as a break out level is that it is to some extent based upon the volatility and range of the market (as demonstrated by the size of the inside bar). Of course, You can use any levels that you want for break out and profit targets. I just find that these seem to work fairly consistently.
Interesting take slade. However I did some backtesting, and my results indicate that this doesn't avoid whiplash quite as much as I believed.

My criteria was fairly simple.... I looked to see if the 144 fib would keep you out of a bad trade. If it did, I marked this down as "help". For this test, if the IB breaks only one way, waiting for 144 doesn't help you, it only eats into your profits. Also, if you're whiplashed even when waiting for the 144 fib, it clearly "doesn't help".

For example, the three charts you posted would all be categorized as "doesn't help". Since they broke only one way there was no whiplash to reduce, and some pips of profit were lost.

On all Inside Bars with the EUR/USD from Jan 2007 - current, I found that 144 fib DOESN'T help by a ratio of 3:1.

On all Inside Bars with the GBP/USD from Jan 2007 - current, I found that 144 fib DOESN'T help by a ratio of more than 5:1.

This doesn't mean that playing the break resulted in good trades. This just indicats that the 144 fib saves you from whiplash about 1 in 3 times with the EUR/USD and about 1 in 5 times with the GBP/USD. The other times (6 out of 8 times across both pairs), either it's costing you pips, or you're being whiplashed all the same.

Finally, this was far from scientific, and I should mention that I'm in my first few months of demoing only. Just thought I'd throw this out there, maybe someone else thinks differently.

Edit: This was based on playing an inside bar within 5 days of its appearance, bit different from the original strategy.
  • #124
  • Feb 17, 2008 6:02am Feb 17, 2008 6:02am
Niner49 I agree with you, in that waiting for a cross of the 144 fib would miss you out on quite a few pips. And I had a quick eyeball of the charts and your right there is no way to confirm its a safe trade.. Mind you what is in Forex?? lol..

I had a look at slades example on my charts and with using the Stoch's I mentioned in an earlier post, the inside bar before Slades indicated trade (ie 23 Jan, then heading up), I would have bought on the open of the next candle, for max profit of approx 394 pips over 4 days. Then the inside bar that Slade indicates would have sold at open of candle after IB (Stochs had also crossed previous bar and headed south), for max profit of approx 496 pips over 5 days.. All up potential max profit of 890 pips over an 11 day period (remember waiting for the next signal to appear).

Ok I understand unless you have a precognitive disposition you would never have got that many pips, however it does show pretty effectively how the IB does indicate a move (especially in a ranging market), and in conjunction with some other indicator (be it Stochastics, MA crosses etc etc) you can make some nice easy trades, the beauty of the daily chart, set it and forget it.
  • #125
  • Feb 17, 2008 8:16am Feb 17, 2008 8:16am
Quoting Kiwi06
Gidday Totalpips

I'm glad you like being naked lol.
Most of the system was formed from basically staring at blank bar charts and noting down what happened after each of the bar patterns, then I read TA Explained from Pring 4th Edition (thanks Santa) and finally googled pretty much everything on Bar Pattens. There is a lot of crap out there.
I have several versions of the EA the version posted is the trimmed down version, I have a couple of others where you can input the minimum bar size to look for etc.
The Basic premise was that these patterns happen on all TF's and it does not matter what you are trading be it FX, Futures or stocks that same thing should happen.
For the coders and naked people out there if you have a good patten that works for you please feel free to add it to the EA and post it.
I have attached the initial design and a free gift enjoy

Damonl is the LL3 and the HH3 where you place your stops? if so it's a bit like the Three bar trailing stop it works the same but when counting back you don't count the inside bars.

Unfortunately i can't code very well at all so please don't ask.

I hope this explains a bit more about the system.
Thanks Kiwi, I have been MIA, but it was the weekend and I had a nice life this weekend with my family.

Keep in touch....
"Keep your eyes on the helpers" - Mr. Rogers
  • #126
  • Feb 17, 2008 8:23am Feb 17, 2008 8:23am
Quoting totalpips
Niner49 I agree with you, in that waiting for a cross of the 144 fib would miss you out on quite a few pips. And I had a quick eyeball of the charts and your right there is no way to confirm its a safe trade.. Mind you what is in Forex?? lol..

I had a look at slades example on my charts and with using the Stoch's I mentioned in an earlier post, the inside bar before Slades indicated trade (ie 23 Jan, then heading up), I would have bought on the open of the next candle, for max profit of approx 394 pips over 4 days. Then the inside bar that Slade indicates would have sold at open of candle after IB (Stochs had also crossed previous bar and headed south), for max profit of approx 496 pips over 5 days.. All up potential max profit of 890 pips over an 11 day period (remember waiting for the next signal to appear).

Ok I understand unless you have a precognitive disposition you would never have got that many pips, however it does show pretty effectively how the IB does indicate a move (especially in a ranging market), and in conjunction with some other indicator (be it Stochastics, MA crosses etc etc) you can make some nice easy trades, the beauty of the daily chart, set it and forget it.
I am in agreement with both you and niner49 regarding the FIB add ons. Also, your stoch add on does not impress me much on the daily charts, even though it looks good on the hourly. However, this was just at a quick glance. If I could trade the hourly I would certainly give it a try, but right now I can only trade the dailies.

I am however looking for a trending m,arket indicator where we would only take trades in the direction of the trend or in some cases on a ranging market pullback.

In going through the forum, I have found something that I really like. I will make updates on the first page. It will mean that we would have to modify the tradeing style a little bit, but I believe that it will get us entering and setting trades only in the right direction.

Keep in touch guys and I always like to hear your thoughts.

Cheers,

Damon
"Keep your eyes on the helpers" - Mr. Rogers
  • #127
  • Feb 17, 2008 8:26am Feb 17, 2008 8:26am
I have added a very simple indictor on the first page that will help us choose the direction in order to place our Inside Bar Trades. In fact, I believe I will will be using this indicator as a directional signal to enter most of the add on trades that I decide to take.

Hope that you all enjoy. I will go and make those changes to the first page now.
"Keep your eyes on the helpers" - Mr. Rogers
  • #128
  • Feb 17, 2008 8:52am Feb 17, 2008 8:52am
Hi Damonl,

Your method looks very simple even so powerful. I will try it.
Thanks a lot for it.
  • #129
  • Feb 17, 2008 8:53am Feb 17, 2008 8:53am
Fibonacci!

Now THERE'S science.
  • #130
  • Feb 17, 2008 8:58am Feb 17, 2008 8:58am
Quoting tdion
Fibonacci!

Now THERE'S science.
LOL tdion......hahahahahahhaaha
"Keep your eyes on the helpers" - Mr. Rogers
  • #131
  • Feb 17, 2008 9:00am Feb 17, 2008 9:00am
Quoting viatoris
Hi Damonl,

Your method looks very simple even so powerful. I will try it.
Thanks a lot for it.
Keep in touch
"Keep your eyes on the helpers" - Mr. Rogers
  • #132
  • Feb 17, 2008 10:11am Feb 17, 2008 10:11am
Quoting damonl
I have added a very simple indictor on the first page that will help us choose the direction in order to place our Inside Bar Trades. In fact, I believe I will will be using this indicator as a directional signal to enter most of the add on trades that I decide to take.

Hope that you all enjoy. I will go and make those changes to the first page now.
Damon, I checked out the indicator, and it doesn't seem to appear in conjunction with all of the IBs. Also it appears with some bars that aren't IBs.

I know you're still testing this..... in addition to only playing one side of the IB, are you proposing that this indicator filter the potential IB entries? Cheers

EDIT: I went through again and noticed a pattern of rotating long and short dots. So now I'm assuming that if you have a long dot at or immediately prior to the current IB bar, you'd enter long (and vice versa). Please correct me if I'm wrong.
  • #133
  • Feb 17, 2008 12:37pm Feb 17, 2008 12:37pm
Quoting niner49
Damon, I checked out the indicator, and it doesn't seem to appear in conjunction with all of the IBs. Also it appears with some bars that aren't IBs.

I know you're still testing this..... in addition to only playing one side of the IB, are you proposing that this indicator filter the potential IB entries? Cheers

EDIT: I went through again and noticed a pattern of rotating long and short dots. So now I'm assuming that if you have a long dot at or immediately prior to the current IB bar, you'd enter long (and vice versa). Please correct me if I'm wrong.
Right'o Cherrio......

This indicator is a filter only to determine long and short trading direction only. The IB might fall two bars after the dot appears and then you would only trade the bar in one direction.....

Short if the last dot was above a bar and long if the last dot was below a bar.

It appears that this is a fabulous filter that not only iliminates losses, but keeps us in the trade which is always a good thing.
"Keep your eyes on the helpers" - Mr. Rogers
  • #134
  • Feb 17, 2008 1:46pm Feb 17, 2008 1:46pm
Quoting damonl
Right'o Cherrio......

This indicator is a filter only to determine long and short trading direction only. The IB might fall two bars after the dot appears and then you would only trade the bar in one direction.....

Short if the last dot was above a bar and long if the last dot was below a bar.

It appears that this is a fabulous filter that not only iliminates losses, but keeps us in the trade which is always a good thing.
Good to hear it. I did some simple backtests on EURUSD and GBPUSD and it REALLY filtered out the bad trades well.

For this testing, I used a different TP strategy. It was a Gann 2 bar count, starting with the hard stop loss at the opposite end of the IB, and never bringing stop to B/E automatically when in profit (except when there was a reversal dot and bar was in profit).

Here are the results:

EURUSD Jan 2007 - present, Daily TF: 28 profitable trades (12 trades profit>100 pips, 16 trades profit<100pips or BE) and 7 negative trades, most less than 50 pips. So we had 4:1 winners, and pretty good Risk/Reward. The indicator filtered out 9 trades which would have turned out negative.

GBPUSD Jan 2007 - present, Daily TF: 22 profitable trades (12 trades profit>100 pips, 10 trades<100 pips or BE) and 6 negative trades. Nearly 4:1 winners, decent R:R. The indicator filtered out 5 trades that would have been negative. On the other hand, we missed out on 2 decent 100 pip gains, and a run of about 300 pips.

On the whole pretty solid results. By my calculations the filter seems to work well, only missed out on half of a big run on the GBP.

So this brings me to my next question: what is this SilverTrendSig indicator based on? I took a look at the file and was completely lost. I don't like using an indicator on blind faith alone.... but the proof appears to be in the pudding with this one Who knows how it works, but it's able to reversals with minimal whiplash pretty well. Could you possibly elaborate Damon?
  • #135
  • Feb 17, 2008 3:12pm Feb 17, 2008 3:12pm
Quoting niner49
Good to hear it. I did some simple backtests on EURUSD and GBPUSD and it REALLY filtered out the bad trades well.

For this testing, I used a different TP strategy. It was a Gann 2 bar count, starting with the hard stop loss at the opposite end of the IB, and never bringing stop to B/E automatically when in profit (except when there was a reversal dot and bar was in profit).

Here are the results:

EURUSD Jan 2007 - present, Daily TF: 28 profitable trades (12 trades profit>100 pips, 16 trades profit<100pips or BE) and 7 negative trades, most less than 50 pips. So we had 4:1 winners, and pretty good Risk/Reward. The indicator filtered out 9 trades which would have turned out negative.

GBPUSD Jan 2007 - present, Daily TF: 22 profitable trades (12 trades profit>100 pips, 10 trades<100 pips or BE) and 6 negative trades. Nearly 4:1 winners, decent R:R. The indicator filtered out 5 trades that would have been negative. On the other hand, we missed out on 2 decent 100 pip gains, and a run of about 300 pips.

On the whole pretty solid results. By my calculations the filter seems to work well, only missed out on half of a big run on the GBP.

So this brings me to my next question: what is this SilverTrendSig indicator based on? I took a look at the file and was completely lost. I don't like using an indicator on blind faith alone.... but the proof appears to be in the pudding with this one Who knows how it works, but it's able to reversals with minimal whiplash pretty well. Could you possibly elaborate Damon?
Wow....4:1 is great. I think that you are right. The T/P, S/L stratedgy has to be different now.

I don't know what the Gann 2 barr is, but I was thinking about doing a HH3, LL3 right from the start or a close above the set-up day, rather than just a hard stop at the other end of the Inside Bar.

As for the T/P, I was really looking at the reversal dot to excite the market.

I really am not sure what SilverTrend is based on. I have attached the .exe file in this post. I'm not sure if anyone can decipher it to let us know, but I have been wondering the answer to that very question as well.

Cheers....

Attached File(s)
File Type: ex4 SHI_SilverTrendSig.ex4   4 KB | 817 downloads
"Keep your eyes on the helpers" - Mr. Rogers
  • #136
  • Feb 17, 2008 6:15pm Feb 17, 2008 6:15pm
Quoting damonl
Wow....4:1 is great. I think that you are right. The T/P, S/L stratedgy has to be different now.

I don't know what the Gann 2 barr is, but I was thinking about doing a HH3, LL3 right from the start or a close above the set-up day, rather than just a hard stop at the other end of the Inside Bar.

As for the T/P, I was really looking at the reversal dot to excite the market.

I really am not sure what SilverTrend is based on. I have attached the .exe file in this post. I'm not sure if anyone can decipher it to let us know, but I have been wondering the answer to that very question as well.

Cheers....

Attachment
Well I call it a Gann 2 bar but really it's just like HH3/LL3 I believe.... for a long trade, just count two bars back (not including IBs) and move your stop to the lowest of the two lows. That way you stay with the trend that keeps making higher lows. Not perfect, but it could be promising....

Yea really wish I could understand the inner workings of the SilverTrend.... anyone have a clue? haha
  • #137
  • Feb 17, 2008 8:07pm Feb 17, 2008 8:07pm
Here is the the Gann 3 Day Low Stop.pdf

I use it to keep me in the trend and it works quite well. The one thing i will say about it is that you must be willing to give up some profits to use it.

This is a trend trailing exit method so you will need a trend for it to work properly.

Enjoy
Ademac
Attached File(s)
File Type: pdf Gann 3 Day Low Stop.pdf   22 KB | 1,331 downloads
  • #138
  • Feb 18, 2008 5:45am Feb 18, 2008 5:45am
hi damonl and others. the new indicator you put on the first page looks interesting. one day, someone will come up with a system where you sell when the blue dot appears and buy when the red dot appears. wouldnt that be worth some money to sell. anyway i am going pretty well doing this, havnt had any large break outs yet but plenty of 40-100 pip results. see ya later. steve
  • #139
  • Feb 18, 2008 6:07am Feb 18, 2008 6:07am
Quoting niner49
Well I call it a Gann 2 bar but really it's just like HH3/LL3 I believe.... for a long trade, just count two bars back (not including IBs) and move your stop to the lowest of the two lows. That way you stay with the trend that keeps making higher lows. Not perfect, but it could be promising....

Yea really wish I could understand the inner workings of the SilverTrend.... anyone have a clue? haha
Definietly on the right track. Anything to stay in the trend. With all the consolidation that is happening as we speak, I think many pairs will make moves soon.

BTW.....Silver Trend is almost spot today with market movement. Very impressive.

I think I am almost ready to realease an additional add on trading strategy now that the trend can be determined easily. It was either Silver Trend or PBSAR, so for now I will stick with Silver.

Cheers......
"Keep your eyes on the helpers" - Mr. Rogers
  • #140
  • Feb 18, 2008 6:08am Feb 18, 2008 6:08am
Quoting ademac
Here is the the Gann 3 Day Low Stop.pdf

I use it to keep me in the trend and it works quite well. The one thing i will say about it is that you must be willing to give up some profits to use it.

This is a trend trailing exit method so you will need a trend for it to work properly.

Enjoy
Ademac
Thanks ademac
"Keep your eyes on the helpers" - Mr. Rogers
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