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Inside Bar Trading Technique

  • #161
  • Feb 20, 2008 7:04pm Feb 20, 2008 7:04pm
I view inside bars as a compression zone. Often this occurs after a wide range bar and if given enough time might forum a triangle pattern. The compression zone is when volatility is compressing like a coil and then the spring pops and thus expansion in volatility occurs again. This flows like the water in cycles. Expansion followed by compression and over and over again. The longer the compression zone take place the more intense the move.
Check Mate GAME OVER
  • #162
  • Feb 21, 2008 6:28am Feb 21, 2008 6:28am
hey damon. i understand what your saying. spent all day learning about fibs and putting them on charts etc. my brain is bleeding. thats complicated for a learner but it would be nice to kind a know where price is going and set some part t/p on the way of a nice ride. anyway, drinking rum and coke now and watching charts. now thats my idea of fun.
  • #163
  • Feb 21, 2008 5:23pm Feb 21, 2008 5:23pm
Quoting joe77199
Hey Damonl,
I totally agree. Looking for more of the move as well.

Can you post a chart as per your post yesterday at 6:48pm titled "Finding the Trend". Post # 154.

Thanks.
Hey Joe....here is your chart. I hope to be able to do more for everyone soon. I am just getting my thoughts together

As you can see by this chart, this is the trade the niner49 asked about. You can see the Silver Trend dot stuck and the AO moved to red 4 bars later, signaling a downward trend. Then the inside bar formed, which at that time you would place an order on the short side of that IB.

As you can seem, the trade did not tirgger, but also the AO is still red and will close today in red which means that this trade is still a valid trade.

Hope this helps.

Attached Image (click to enlarge)
Click to Enlarge Name: gj.jpg Size: 152 KB
"Keep your eyes on the helpers" - Mr. Rogers
  • #164
  • Feb 21, 2008 5:27pm Feb 21, 2008 5:27pm
Quoting bunton
I view inside bars as a compression zone. Often this occurs after a wide range bar and if given enough time might forum a triangle pattern. The compression zone is when volatility is compressing like a coil and then the spring pops and thus expansion in volatility occurs again. This flows like the water in cycles. Expansion followed by compression and over and over again. The longer the compression zone take place the more intense the move.
Yes...that is the way that I see it as well. From an inside bar, the market has to go somewhere. Why not go with it

Cheers.....
"Keep your eyes on the helpers" - Mr. Rogers
  • #165
  • Feb 21, 2008 5:29pm Feb 21, 2008 5:29pm
Quoting brisvegus
hey damon. i understand what your saying. spent all day learning about fibs and putting them on charts etc. my brain is bleeding. thats complicated for a learner but it would be nice to kind a know where price is going and set some part t/p on the way of a nice ride. anyway, drinking rum and coke now and watching charts. now thats my idea of fun.
enjoy
"Keep your eyes on the helpers" - Mr. Rogers
  • #166
  • Feb 21, 2008 5:46pm Feb 21, 2008 5:46pm
Here is a chart of the AU. I am not sure how this trade will fare since we are already way into the trend, but it is another look as to what we are doing.

As you can see, the Silver Trend dot is red, but the AO is green. This means that our most recent confirmed trend signal is the valid one, in this case it would be long.

At the close of today you will see an inside bar which you would place a long order. Because the Silver Trend dot is opposite the AO, a possible reversal or correction is in the works. For this reason, I would keep all stop losses, even orders you have had open since the beginning of this run to close at the low of the bar about to close.

JMO, as I am still working out exit scenarios myself, but this is my thought.

Hope this is all understandable.

Attached Image (click to enlarge)
Click to Enlarge Name: au.jpg Size: 160 KB
"Keep your eyes on the helpers" - Mr. Rogers
  • #167
  • Feb 22, 2008 2:21am Feb 22, 2008 2:21am
Quoting damonl
As you can see, the Silver Trend dot is red, but the AO is green. This means that our most recent confirmed trend signal is the valid one, in this case it would be long.

At the close of today you will see an inside bar which you would place a long order. Because the Silver Trend dot is opposite the AO, a possible reversal or correction is in the works. For this reason, I would keep all stop losses, even orders you have had open since the beginning of this run to close at the low of the bar about to close.

Attachment
I'm not sure that I follow you.... 1) are you saying AO trumps SilverTrend on entries? Or 2) is this an signal to move our stops up on previous trades....

Though I'm not positive what you were getting at, I personally only agree with statement 2. Assigning relative value to these indicators is kind of deviating from our strategy, which defeats the original purpose of having two indicators for filtering, IMHO.
  • #168
  • Feb 22, 2008 6:17am Feb 22, 2008 6:17am
Quoting niner49
I'm not sure that I follow you.... 1) are you saying AO trumps SilverTrend on entries? Or 2) is this an signal to move our stops up on previous trades....

Though I'm not positive what you were getting at, I personally only agree with statement 2. Assigning relative value to these indicators is kind of deviating from our strategy, which defeats the original purpose of having two indicators for filtering, IMHO.
That is exactly right. Two indicators for filtering. Since the current two indicators do not or did not trigger, you would go back to the very last filter that should us which direction to go in. In this case it was back on Jan. 21st and we are still in an uptrend.

The problem I am having with this indicator is that it can repaint itself everyday until it is right. This is a psychological block for me. I think it starts because of the Sunday bar shich has relatively no movement and so it thinks reversal, and then it has to correct everyday because of that bar.

It is also causing me issues with S/L because of this repainting for the obvious reason that this signal could have only been generated because of the Sunday bar and therefore is entirely false and we shouldn't be moving our S/L up at all.

Anyway....I still like the position these indicators can get us in.
"Keep your eyes on the helpers" - Mr. Rogers
  • #169
  • Feb 22, 2008 8:42am Feb 22, 2008 8:42am
hey damonl... i guess you mastering this technique verywell... i need your any comment about my inside bar indicators that i'm filtered with simple neural network and i'm pretty sure it's far from good
Attached File(s)
File Type: ex4 iB_nn.ex4   4 KB | 831 downloads
  • #170
  • Feb 22, 2008 10:12am Feb 22, 2008 10:12am
Quoting mintul
hey damonl... i guess you mastering this technique verywell... i need your any comment about my inside bar indicators that i'm filtered with simple neural network and i'm pretty sure it's far from good
EXCELLENT Indicator...

Your contribution is really much appreciated.
Looking forward for the other Excellent job from you Mintul.

Do you have DBHLC or PinBar?

My Gratitude to Damonl The Thread Starter.

Pls ignore my bad english

Hadji
  • #171
  • Feb 22, 2008 11:16am Feb 22, 2008 11:16am
I don't know if this has been discussed so far in this thread about the SHI, and if so then I've missed it. But from what I understand, this is how the SHI indicator works (most of the time). In an uptrend, there will be a dot above the bar with the highest high (HH). So if the last closed bar had the HH then the dot will be above that one. When it makes a new HH, the dot will be above this bar, which is why it keeps repainting itself. When the uptrend is over there will be a dot above the bar with the HH. Thus it looks like a good signal, when all it's really saying is something that you can see with your own eyes just by looking at the chart.

So basically all it's saying is that the current trend is over and you can now enter in the opposite direction. But since it keeps repainting it's not really saying anything - it's not a predictor, it's a chartreader.

Now I might be wrong. But just look at the chart and see for yourself and you'll find this pattern. This is visually better if you look at the lower timeframes, like M15, where there's more swings. A new dot comes only after a bar is closed.

From what I see the only time you'll find a dot on your chart when looking at past times is at reversals (it could be minor retracements or trendchanges). And as mentioned already IB's are very powerful trading signals on its own. I understand that the reason for introducing the SHI was so that you didn't have to put a pending order above and below the current IB. But the way I see it the SHI indicator doesn't really provide much help with that.
  • #172
  • Feb 22, 2008 5:27pm Feb 22, 2008 5:27pm
Quoting mintul
hey damonl... i guess you mastering this technique verywell... i need your any comment about my inside bar indicators that i'm filtered with simple neural network and i'm pretty sure it's far from good
I have tried to load it on my charts, but I don't see any signals. Maybe it is because trading is closed. I will try again Sunday night.

Thanks for you contribution
"Keep your eyes on the helpers" - Mr. Rogers
  • #173
  • Feb 22, 2008 5:41pm Feb 22, 2008 5:41pm
Quoting NowAndLater
I don't know if this has been discussed so far in this thread about the SHI, and if so then I've missed it. But from what I understand, this is how the SHI indicator works (most of the time). In an uptrend, there will be a dot above the bar with the highest high (HH). So if the last closed bar had the HH then the dot will be above that one. When it makes a new HH, the dot will be above this bar, which is why it keeps repainting itself. When the uptrend is over there will be a dot above the bar with the HH. Thus it looks like a good signal, when all it's really saying is something that you can see with your own eyes just by looking at the chart.

So basically all it's saying is that the current trend is over and you can now enter in the opposite direction. But since it keeps repainting it's not really saying anything - it's not a predictor, it's a chartreader.

Now I might be wrong. But just look at the chart and see for yourself and you'll find this pattern. This is visually better if you look at the lower timeframes, like M15, where there's more swings. A new dot comes only after a bar is closed.

From what I see the only time you'll find a dot on your chart when looking at past times is at reversals (it could be minor retracements or trendchanges). And as mentioned already IB's are very powerful trading signals on its own. I understand that the reason for introducing the SHI was so that you didn't have to put a pending order above and below the current IB. But the way I see it the SHI indicator doesn't really provide much help with that.
There might be a lot of truth to what you are saying, I really don't know. Although I am not sure it is quite as you have suggested, but I think that you are not entirely wrong, however not entirely right either. If what you say was true you would see a dot below the bar on 2/21/08 for UJ for example.

On the contrary, I believe that it is very keen on predicting ranging markets, and then gets confused during a trend, though the Sunday bar doesn't help it any. The question is how to use it effectively.

I really like what I see when using it in conjuction with the AO for determining trend direction. When both the dot from Shi and the AO both are in the same direction that is a good sign of a reversal or at least a retracement.

The question is now how to accurate predict when to get out of the market using an indicator that repaints itself. I think I have found something that will work well.

Thanks for your input, and I am still looking for a very accurate trend indicator is you know of one, please send it our way.
"Keep your eyes on the helpers" - Mr. Rogers
  • #174
  • Feb 22, 2008 5:47pm Feb 22, 2008 5:47pm
Hi damonl,

Run a dumby EA (empty EA) on backtesting with the Visual Mode checked. When the chart comes up and starts ticking, attach the indicator (iB_nn.ex4) to the chart. Use the horizontal scroll bar next to where you checked Visual Mode to control the speed of the historical ticks. This will show how the indicator works over time. This is also very useful for developing indicators...

Regards,
lucidlamp
  • #175
  • Edited 6:13pm Feb 22, 2008 6:00pm | Edited 6:13pm
I have been trying to figure out a way to exit the market at the right time while using an indicator that repaints until it is sure the trend has been identified.

I have been a big fan of Bill Williams work for a long while now and try to incorporate his ideas in what I am trying to do. That is again what I decided to do when trying to narrow down an exit strategy.

The 1st thing that must be done is to determine that amount of risk we are willing to lose if the trade goes against us. For the Daily chart it is 100 minimum and possibly more for pairs like GJ, GCHF, EA, GU, etc.

Someone brought up ATR in a prevoius post as a trailing stop idea, and as i try to avoid trainling stops, I dismissed this idea. However, it might be a good idea to use that ATR for the initial hard S/L with a B/E when that same amount goes to positve.

For example if the S/L based on the ATR is 140 pips, then when we were up 140 pips in profit, we would go to B/E and stay there until a reversal. This would then be the philosphy for all the trades we entered as we moved with the trend. Or maybe go to B/E at 1.5 X ATR.

So, how to determine when to exit the market once in profit. Here are my thoughts:

Exit 1: You would always exit on a reversal signal that involved both the AO and Shi which determines a trend in the other direction is about to occur. You can either chose to do this once the signal is generated or use LL0/HH0 as your exit points in case of a false signal. LL0/HH0 is the high or low of the bar that just closed depending on trade direction.

Exit 2: You would close using HH0/LL0 if and only if a reversal Shi dot and the AC gave us a color change on the same bar. If the dot and the color change do not happen at the same time you would stay in the trade until S/L, B/E or reversal happened. The 2nd part of this strategy would be that if you have a trade in profit that would end up negative at the close using HH0/LL0, you could choose to close these orders at the signal rather then wait for the HH0/LL0 to trigger. However, many times you will find yourself out of a trade because the HH0/LL0 did not trigger. Trading involves risk. I think we need to look risk square in the face and not fear it to be successful in forex. This will mean taking losses.

During very volitile times with a lot of movement like occured a couple weeks ago, many times most of our profits would be eaten up and even put into losses, however on less volitle times and trending markets, we would be golden.

This strategey may get us out early at times in a trending market, we can always get back in, but it more importantly plays into my philosophy to B/E or take small losses when ranging and making a killing when the market is trending.

Those following, I'd love to hear your thoughts and any other ideas that you may have.

Cheers and have a nice relaxing weekend
"Keep your eyes on the helpers" - Mr. Rogers
  • #176
  • Feb 22, 2008 6:17pm Feb 22, 2008 6:17pm
Quoting lucidlamp
Hi damonl,

Run a dumby EA (empty EA) on backtesting with the Visual Mode checked. When the chart comes up and starts ticking, attach the indicator (iB_nn.ex4) to the chart. Use the horizontal scroll bar next to where you checked Visual Mode to control the speed of the historical ticks. This will show how the indicator works over time. This is also very useful for developing indicators...

Regards,
lucidlamp
Thanks lucid.....I will look into this.

Much appreciated
"Keep your eyes on the helpers" - Mr. Rogers
  • #177
  • Feb 23, 2008 11:45am Feb 23, 2008 11:45am
I've been looking at the Stochastic Oscillator (5, 3, 3) to determine the trend. If it's above the 80 level it's trending up and if it's below the 20 it's still trending down. If it's between the 20 and the 80 follow the %K and the %D lines. Which one is on top is the trend. Simple and seems to work fairly well.
  • #178
  • Feb 23, 2008 9:40pm Feb 23, 2008 9:40pm
Quoting tradetheforex
I've been looking at the Stochastic Oscillator (5, 3, 3) to determine the trend. If it's above the 80 level it's trending up and if it's below the 20 it's still trending down. If it's between the 20 and the 80 follow the %K and the %D lines. Which one is on top is the trend. Simple and seems to work fairly well.
Thanks trade....

I find that the SO works best in oscilating markets where high and low pivots are fairly equal. or...better known as ranging markets.

Using this would maybe give my a few more pips in ranging markets, but will really lesson my profits during the trend, and my trading system is all about the trend.

Thanks and keep in touch.
"Keep your eyes on the helpers" - Mr. Rogers
  • #179
  • Feb 24, 2008 9:46am Feb 24, 2008 9:46am
Quoting damonl
There might be a lot of truth to what you are saying, I really don't know. Although I am not sure it is quite as you have suggested, but I think that you are not entirely wrong, however not entirely right either. If what you say was true you would see a dot below the bar on 2/21/08 for UJ for example.

On the contrary, I believe that it is very keen on predicting ranging markets, and then gets confused during a trend, though the Sunday bar doesn't help it any. The question is how to use it effectively.

I really like what I see when using it in conjuction with the AO for determining trend direction. When both the dot from Shi and the AO both are in the same direction that is a good sign of a reversal or at least a retracement.

The question is now how to accurate predict when to get out of the market using an indicator that repaints itself. I think I have found something that will work well.

Thanks for your input, and I am still looking for a very accurate trend indicator is you know of one, please send it our way.
Funny that you mentioned 2/21/08 UJ because this is my chart, and there is a dot there. Anyway I understand what you are saying and just wanted to give you my observation.

About the trend indicator. I'm trying to only trade with the trend (have we heard that before lol!) and I trade IB's and OB's of the M15 with the help of stochs. I determine the trend with the 55SMA on the H1, bars above the SMA = uptrend and the opposite, and I think this works well for me.
Attached Image (click to enlarge)
Click to Enlarge Name: uj.gif Size: 18 KB
  • #180
  • Feb 24, 2008 10:12am Feb 24, 2008 10:12am
Quoting NowAndLater
Funny that you mentioned 2/21/08 UJ because this is my chart, and there is a dot there. Anyway I understand what you are saying and just wanted to give you my observation.

About the trend indicator. I'm trying to only trade with the trend (have we heard that before lol!) and I trade IB's and OB's of the M15 with the help of stochs. I determine the trend with the 55SMA on the H1, bars above the SMA = uptrend and the opposite, and I think this works well for me.
That is very interesting about the UJ pair and the dot. Thanks for that information and your trend determining factors.

Cheers....
"Keep your eyes on the helpers" - Mr. Rogers
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