Thexder's journey to(ward?) freedom

Great!

Cable Hourly Scalp
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Feb Week 1: +223
Feb Week 2: +141
Feb Week 3: computer problems
Feb Week 4: +15 +38 +13 = +66

A long break turned back a little and stopped at +13 only to go on about 100 in the break out direction but that's how it is. Still one more day left in the week. I've seen this before where not much happens until the last day of the week with this method, suddenly an almost null week becomes one of the best. And if this is an under par week, it balances with some above par weeks. At least the week is green, I've never seen a red pip week with the scalp. I expect from 100 to 150 a week, currently at 66 with 1 day to go.

In a day like today it seems obvious that if a stop were trailed behind each hourly candle it would have worked today to lock in that 100 instead of scalping 13, but in looking back at past scalps, it is seen that overall if the hourly candles were trailed, the scalp would have squeezed an extra 20 out of the trade here & there, so overall maybe it's better to let the few big misses go. Or maybe there's enough big ones that the hourly trail would be more profitable or equal to scalping every last pip. It would take more research. If it could be found that trailing an hourly stop performs comparable with scalping the exits, it would probably be less tedious to implement, just checking once an hour instead of sitting and watching and waiting. I am sticking with what I know for now rather than system hopping. If I am to change the method it will only be after enough confidence is gained in the new method.

Cable Hourly Scalp
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Feb Week 1: +223
Feb Week 2: +141
Feb Week 3: computer problems
Feb Week 4: +86

Two shorts were taken this time. First one failed, second one gave +40 minus spread, balanced out to +20 between the two after spreads.

A slow week for me but still ok. Looking back at the week I can see where things ended up under par. Most of the week was sideways but Tuesday had a 100+ move on a long that came JUST after my normal trading day ends (I don't take anything after 12pm EST). So I think if I captured that within normal hours it would be a typical week. Either way the first week of the month was well above par, and everything is up to standards on the weekly average. +86 is never a bad thing.

Cable Hourly Scalp
March week 1

Haven't seen any change in the ranging that started Friday with a little wave on Friday being engulfed by a larger Friday wave, and all of today so far also being stuck within that mess with long wicks all over the place.
London has produced nothing and NY is coming but I don't think I'll find a trade in the time left today. I'd want to see a break from the range noise first and THEN a setup, which doesn't seem too likely. So I'll be starting the week tomorrow instead of today. Most of last week was a range so it's not motivating to continue trading within an even narrower range so far today.

Edit: And now after the day is done I can see what would have happened. If I took every scalp of my setups I would have had a not so good short where I could have jumped out at break even after it went stale too long and was oscillating from +10 to -10 after half an hour, easy to choose a break even. Then a long that would have gone sideways also for too long, over an hour, and this time not even oscillating, it just went almost straight sideways very narrowly, and at a loss. Then more tight ranging into a funnel followed by finally a successful long break that would have balanced the bad long...and by then more than 100 pips daily move including one big thrust upward would probably keep me out at break even for the day. If the 4th setup of the day were taken despite the big move already being done, which would have been a short somewhere below the long up candle, it would have been break even after spread. So overall a break even day with 4 trades or a break even day with no trades due to anticipated ranging.

Right now price is right back down in the same range zone it broke out of. So I don't know what this will mean for tomorrow's judgement of things.

Last week was unproductive enough with cable and this week so far the first 2 days are even worse with the range narrowing more and leaving less room for even fast scalping. I see at least 3 layers of nested ranging and so I'm waiting until something breaks free. The risks are getting too great.

Any trades I look at end up going sideways for up to 3+ hours fluctuating around break even, allowing at least a narrow escape. Even trying to reach a simple swing 38.2 target could take a while and lots of in-trade ranging before it crawls there, barely clawing it before retreating back into the nastiness.

The scalp method normally doesn't discriminate against ranging times but when it's this obvious on the zoomed out perspective plus two days of very bad opportunities, it's time to employ discretion.

After walking away from it in the middle of the session and coming back, here's what it looks like since my last pending fib was placed. I'm glad I walked away from that mess.

Definitely sitting on the sidelines now even if it means a full week of no trades. Friday NFP will kick in motion if it's still messed up by then I assume.

Cable Hourly Scalp
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Mar Week 1: +29

After 2 days of ranging a short break comes and blasts down through the low of the last 2 days. I looked at M1 to observe what's happening and instead of seeing an immediate range on M1, I saw a series of supports being taken out as in a GOOD trade, so I got in on a support break of M1 and as soon as I could, I put my stop to break even just to be sure I don't get stuck.

Since I got in late compared to where I normally would have entered short if it weren't ranging, I was about 20 pips behind and I wanted to not only break even asap but I wanted to trail my stops extra tight. I looked for any hint of support and resistance on M1 even in the form of single spikes that go down and retreat up, then become broken. I normally wouldn't be that strict.

But it worked out. One of those mini resistance points got me stopped out for +29 and then a range began. 45 minutes of ranging after that, it continued down and following S/R I could have doubled my gains but after the way it's been going lately I'm still content to squeeze anything out of it this week.

Update after end of day: I saw that a successful long came that would have given possibly up to more than +100 even with following M1 s/r levels - I say possibly because some of the touch points on pull backs might have been 1 or 2 pips over the threshold and so the only way to know if it would have triggered a stop is to watch it live.
I point this potential trade out because on the short, over 100 pips movement already occurred and my tendency is to stay out after that but this time it would have worked out and actually given more than my weekly expected average between two trades in one day after a lot of going nowhere. So I'm documenting all possibilities for future study. Maybe I would alter the method to blindly take any setups even if the daily big move has come. Or maybe this one time +100 gain would be eaten up by another 2 weeks of -20 per trade by trying to over trade after a big move.

Today's performance so far is again back to ranging. I had an initial fib with its high at yesterday's high and it was the first break to come. That was an hour ago and it's still coiling around on M1. It bumped up to break even twice so I took the hint and it's like nothing ever happened except I made a new discretion guideline.

With all the ranging going on I can clearly identify something. When a good break happens amidst the ranging, it behaves like a good break in trending times. When a bad break occurs, it also performs similar to a bad break any other time, ranging or trending overall action. Here's the observation.

When looking at M1 after a break out, if a new high or low in the trend direction isn't made within 15 to 20 minutes, the trade is bad. Looking back at all the charts, 15 minutes is almost a constant threshold time for a new high or low to be made in a good trade. This time count begins at the point where an M1 pull back begins. So in a long break, as soon as M1 candles start going sideways or lower highs, if there isn't a new high 15 to 20 candles later, it's time to jump ship. Maybe the trade works out but if so it's coincidence at that point.

In today's failed long after around 20 candles it barely started trying to go back up and it made it to break even, fell down a bit, then tried again and went back to break even (exited trade) and now it's been 70 minutes as I write this and it's still stuck.

Cable Hourly Scalp
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Mar Week 1: +29 +7 = +36

Got stuck in another sideways trade and took a relatively small hit, then had a successful long that balanced out to a small overall gain. Very slow week but I can't forget the first trade gave me only half of what I could have gotten from it if I weren't keeping tighter than usual stops on it out of fear of whipsaw. And I've learned a few new things to use in the future when things get good again, maybe after this the good times will be even better. Still 1 day left. I've been in this position before and the last day gives something good afterall.

I'm working on a few new things this week and it's funny that every time I think I'm coming up with something new I find I've just re-invented the wheel. I think tonight I accidentally came up with a poor man's Bollinger band at least visually. If anything materializes I'll speak more of it, otherwise I may be scarce for a while as I develop some ideas.

All the recent ranging has accelerated my enthusiasm to find a non scalping method. I'm not ready to come up with or invest capital in a pure daily method with wider stops yet so I want to at least minimize some of the screen time for now both in the time waiting for a trade setup and in the monitoring and nurturing stages.

I've tried combining some common ideas everyone knows about (like simple S/R, price action etc) with some themes I've seen in various threads and a little of my own over complications thrown in to make it frustrating. I think it's almost ready. Just needs some testing. And it's not full of indicators, I have lines on the screen but they're only visual props. I could do it with a naked chart once I get used to spotting things of interest.

I've been long Cable since around 2.0110 on the new technique I'm experimenting with and it's been going for a while now and I'm up around +80, but the funny thing is I would have taken the same entry point on the scalp method AND still been in the trade from that anyway - the M1 s/r is holding a clean staircase pattern.

Go figure. I try to 1-up myself and nothing ends up changing. But that's just a coincidence, if I were using the new stuff before today I'd be in good trades that the scalp wouldn't have been in, and I'd have avoided losses the scalp did capture.

I still have to do back testing and I guess more forward testing as I am now before I document the insights formally. I thought I'd actually validate the idea this time before publicizing it.

Here's a preview.

By the way, I find it very annoying when someone posts their trades and says they have this great system they came up with...and then they leave us hanging.

Wait..what's my point...nevermind!

I'll discuss it more if it continues to look valid. You know how these things go, a few iterations of coincidence wins and you gain confidence and then the system falls apart and you start hopping again.

Just as fast as +100 pips came, another possible range (or a surprise short that's too wild for my taste) comes along. At least the entry was safe and profitable rather than an instant loser in a box.

Announcing the Three Strikes Method - Price Action with Training Wheels.

People always say don't look for a reason to trade, look for a reason not to trade. With this system all it takes is three strikes and the trade is forfeited.

PDF and chart templates are in the first post.

I've refined the rules to a certain extent and am continuing to evaluate it but it's far enough along to present now.

In forward testing three strikes here's what Friday looked like. I have also been working on the rules and have added a few, with fine details to be decided. Three of those new rules all showed their purpose Friday.

First note the blue s/r areas that include part of the day before. There has been a coil forming and my own experience says the initial break of a coil is often false so I'm always cautious. The first possible break out has strikes including one for the inward spiral, whipsawing price line with no clear long bias established, broadening tunnel walls, and another new rule I determined in some back testing about possible tops and bottoms - this trade is a potential long after a period of consolidation at a possible top after an up trend - and now the slope of the trend line MA has rounded over and is aiming down during this possible long. So I see 3.5 strikes overall and disqualify the trade.

The second trade is a short that is permitted. The tunnel walls are both aiming down prior to break out and the tunnel hasn't been engulfing the trend line, it had cleanly passed above it barely and is now crossing back down. It's borderline but it's valid on this chart. If someone had optimized the trend line period for another chart this could easily be a strike with the tunnel having engulfed the trend line for 3 bars as it slowly widened and began turning downward.

There is a strike for the price line in the tunnel not being fully short biased, still fluctuating. A possible half strike could be given for the recently broader tunnel compared to the width during the coiling. Otherwise the tunnel is still smooth and parallel walled more than jagged and irregular shaped. It's just changing width and looks a little awkward.

That short would be stopped at the passing of the bar high in the red circle as the stop is trailed behind new-low-creating bars. The loss would be very small but I have another pending rule, I haven't decided on the number but once a trade goes into profit by 40 or 50 pips, I have let it roll back on me once too often to give a small loss. I am willing to set it at break even from now on. If a trade is that far in profit on the hourly chart, if it rolls back to entry I consider the trade compromised. The more I test, the more I see that a good trade keeps making new high/low bars beyond break out, allowing a stop to trail behind and give good results.

So far an avoided long and a break even short have occurred. By this time the news was about to come out. There were two news times, 8:30 and 10am EST, plus it was Friday, maybe staying out the rest of the day is good but if the next long is evaluated, it has a proper up-aiming tunnel wall pair, otherwise not much going for it. Strikes for again being a long trade on a possible top with a down trend line, price line isn't showing a long bias in the tunnel, tunnel walls again broadening and showing slight irregularities ever since that short break getting jagged, and the other issues about news and time of week are enough cautions. If it were traded for some reason, the stop would be trailed up and triggered at the second red circle for a small loss. The price action moved somewhere in the 40-50 pip range after break out so maybe a break even stop could have been placed instead of taking the small loss.

That final short is just not a good idea. By now it's the end of Friday and although there is no tight ranging, we are seeing the widening megaphone type of range now, it is oscillating out of control more broad on each swing. I'm working on another range strike rule for this, something like if the tunnel passes a peak, then immediately reverses to pass the most recent peak the other way, then again reverses and passes the previous peak it just made, consider it a broadening range and give a strike. The broadening began when the first coil peak was broken on the first long of the day, then the other coil low peak was broken on the valid short trade setup, and the reversal again took out a high peak as its next move. The final short has a down sloping tunnel and is heading in the direction of the anticipated top formation with the trend line down slope, the price line is short biased, but strikes come for the broad ranging, trade time is outside normal hours, and possibly fully inhibited by being the end of day Friday, although there is no firm rule for that yet. If a full strike is awarded for being outside normal hours ON a Friday, we still only have 2.5 strikes unless more strength is given to the Friday rule. So if this trade continues cleanly short on Sunday, it makes sense, but if it ends up failing Sunday or Monday, we can't be surprised.

This short may pick up on the next day and continue to go down with the top formation but it's risky. Before the top reversal takes hold there could be more minor ranging etc. And there could be a gap up Sunday. It shouldn't be much effort to convince someone not to place a trade that late in the day at the end of the week.

I updated the three strikes PDF with a new preliminary revision. I've added rules and discretions that are optional but they help the success.

I don't know if I was being optimistic with some of the discretions I used in the testing since I was able to see the true results of the chart and I could have been psychologically tainted (I think I am anyway) but I'll be forward testing so it should get more accurate.

I so far have only gotten through the last half of February and in that time I count +299 pips for those 2 weeks on cable hourly. Even if some of my choices leading to good trades were tainted from the back testing pitfalls, I think the bad trades were more legitimately prevented...so let's say we only get half of this, +150 for those 2 weeks instead. If it can hold up, it's still very promising.

I also made the document more printer friendly with white background charts.

I saw a large short from end of January that would have been a big win but it would have been missed with this method with all the constraints to protect against ranging. That short came right from the nose of a coil and the price action was just all wrong so there's no way I could have caught the trade no matter how I look at it even knowing the outcome. But as long as the big bad ones are also avoided it doesn't matter to me.

I completed another two weeks of testing three strikes so now I have a full month from Feb 14 to Mar 14 2008 and the weekly average is holding up.

I see a result of +709 for that month. The first two weeks and the last two weeks of the month are about the same 300 pips, or 150 per week.

This is strangely close to my weekly 150 expectation on the original scalp, except much less screen time is required - just check in once per hour instead of sitting there up to 12 hours waiting for something to happen. It can't be too surprising because it's the same chart/time frame for both methods and they're both based on significant peak break outs.

Of course having updated the rules as I did the testing, and having a changing perspective throughout, the results could be skewed but even if we knock a few hundred off the estimate, it's more than adequate for a first stab at coming up with a set of rules for the method.

I did try to go back over the first 2 weeks with any of my new ideas but there's no way to know the most accurate pip count without doing the whole thing again, or better yet doing a month of forward testing as I will be now. In addition to the improved freedom from the screen time required with this method I think it is more robust against the ranges and can catch most of the big runs. It misses some major moves.

I might have just gotten lucky with the results of this particular one month span so I do need to look at more, maybe some random days in history, but there were at least two bad ranging periods this past month and the system survived those.

The new document rev is posted.

This is the only possible trade setup I would have even considered today but just by the volatility I disqualify it. Even though there were over 250 pips of down movement on the daily bar including one major surge down, most of the day was wildly ranging with parallel bars moving sideways whipsawing sometimes over 100 pips per bar. Initial stops would have to be too great and the short break out identified would be a run down that spans 130 pips from top to bottom peaks without a pull back in between - too risky of a snap back. If the trade were taken for some reason, the trailing hourly stop would give +11, demonstrating the poor risk:reward of such a volatile setup.

The setup isn't valid anyway. The trend line has been engulged for 3 bars, the lower tunnel wall is aiming counter trend, the price line is not biased short having been trending in a long bias and now only just turning short, the tunnel is irregular and possibly considered relatively wide lately although it's just started to converge tighter, and prior to this short break out there has been counter trend volatility with large bars having moved upward and now having reversed to attempt a move down - too risky. Up to 5.5 or 6 easy strikes.

This method looks for more calm setups. Today would have been a rewarding day for a longer term method.

That first possible peak at the left of the chart isn't a tradable peak by the definition of it being an irregular noise movement of the upper wall. During the time of that hump formation the tunnel walls are either diverging or converging as the upper wall rises to that high, so the tunnel is considered to be moving sideways or continuing downward from before rather than moving up to form a proper peak. The converging and diverging action creates enough indecision to invalidate the peak. Better setups from clean price action are desired even if a break out of that upper wall peak should prove successful. I aim to try to only take the most confident setups for now.

The low peak near the end of the session is outside normal trading hours and the tunnel is still too irregular, and seems to be trying to calm down, consolidate and come back under control. There is a great possibility that it will just move in small waves for a while through the off peak hours rather than going for yet another big down move so soon.

I'm still working on some of the rules and strike weight factors as I forward test so the document is still not set in stone. I want to refine a few things like when to consider a widening tunnel as important (if it's recently started narrowing but is still overall wide, what do I think?) and how to identify a true tradable peak, is a one or two bar tunnel pull back with not much visual separation considered a peak or should there be no doubt by looking and seeing clear separation between formed peaks? While uncertain, I may avoid some setups. If I wait for a clearly defined peak and a clean tunnel formation I don't see how I can go wrong, I just might pass up some other questionable trades until I work it all out.

Three Strikes
Forward Test Week 1
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Wins 1 : +161
Losses 0


This is a good first trade to kick off the first week of forward testing Three Strikes.

Took this long trade for +161. It moved straight to the top with higher lows so a manual trailing stop preserved things well above 100, then I made an educated guess and put a trailing stop so I could let it run on auto pilot. I did a little better that way as it started to collapse, getting possibly 30 more with the trailing stop than a manual stop.

Initial entry was 2.0054 including spread and initial stop was 1.9996 including spread, below the pre-break out bar.

When it went into +50 profit I moved the initial stop up to break even since I've lowered my tolerance for seeing profit turn to loss. I'd rather see profit turn to break even.

The tunnel formation finally calmed down after the last 2 days of broad ranging activity within the tunnel itself. It had formed a clean high peak and pulled back over several bars, leaving lots of space around the peak to identify it clearly. Prior to break out:

Strike 1: Bottom tunnel wall is facing counter trend
Strike 2: Price line is mostly short biased in the tunnel

The only other possible issue is with the divergence of the tunnel walls the tunnel technically got wider but it's only minor and if it is counted, it's still only 2.5 strikes. There's no other issues.

If that tunnel width issue was to be a go/no go factor I would probably allow the trade because the tunnel is so narrow that a little broadening is expected at some point without cause for alarm - the filter is meant to detect sudden out of control ranging of the bars and this doesn't appear to exhibit that. The tunnel is well behaved. Another explanation to justify the broadening is the trade is finally winding up to break out - it is very likely going to want to move a little counter trend and then blast off similar to the way the first break out of a coil range is often false as price winds up for the true break.

Thank you Thexder,
your three strike method pdf II was more printable,
I have printed it and I would read it today,
may pips with you!

Note to self, when a three strikes breakout is too volatile to trade and initial stops are too wide, revert to the original scalp and take the break out with maybe fixed target extensions.

Scalping in and moving to break even quickly could allow a back door into three strikes if the trend takes off without a struggle. If it fails, the scalp loss should be tolerable if there even is a loss.