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gbp/jpy Strength Indicator strategy Back Testing

  • #21
  • Edited 11:07pm Mar 24, 2008 8:52pm | Edited 11:07pm

Here is my 1h Chart with trade #4


http://www.fileden.com/files/2006/7/30/148326/1h422.jpg



4H QQE turn bullish @ 3.18 @8:00
4H candle formed above Gann @12:00
4h momentum is in sync with 4h trend
1H QQE cross 50 line @11:00
1st 1h confirmation entry @10:00 @ 195.65
2nd entry @ 15:00 @ 196.05
Both trades were in 300+ pips profit @ 199.05 so I changed my TSL to 50

100+ pips high @ 200.01 TSL=199.51 hit TSL @ 21:00

1st entry = +386 pips
2nd entry = +346 pips

Average =

+366



The first buy entry where the 1h QQE crossed the red 50 line the distance between the entry and the 1h 5sma is more than 20 pips so at the 1st entry I open the trade with ˝ position or 1 mini lot. The second entry is almost right on the 5sma line, but based on the price action I would not have gotten a perfect entry. I would have most likely set up a pending order buy limit @ 20 pips above where the current candle was above the 1h 5sma at the time and when the candle came down it would have filled me at approximately 196.05
  • #22
  • Edited 9:28am Mar 25, 2008 9:16am | Edited 9:28am

Here is my 1h Chart with trade #5




http://www.fileden.com/files/2006/7/30/148326/1h5.jpg


4H QQE turn bearish @3.20 @12:00
4H candle formed below Gann @3.19 @20:00
4h momentum is in sync with 4h trend
1H QQE crossed 50 line @3.20 @15:00
1h confirmation entry @3.20 @17:00 @ 196.76
100+ pips low @ 195.07 TSL=195.97 hit TSL @ 19:00


+79 pips


There is a possibility that I may not have taken this trade since the 4h momentum was in sync with the 4h QQE trend when the trend turned bearish, but by the time the 1h QQE crossed the red 50 line the 4H momentum had turned strong bullish. The 1h momentum, Stochastics, and CCI were all strong bearish where my entry would have been which would have encouraged me to look past the 4h momentum.

Well one conclusion that I have draw in the past couple of days testing this strategy is that it's tiring waiting on these trades to form just right to justify taking a trade based on this system, but so far it seems pretty safe. 4-8 trades a month with this strategy is a lot less than my 100-200 trades I used to take every month.

One reason I started this thread was to keep myself honest while back testing and forward testing this strategy and also to post some good quality charts for other forex noobs like myself to look at since I am big on visual learning. I encourage anyone that sees any possible flaws in the system or errors I may have made to point them out to me so I can correct them. I want this testing to be as accurate as possible.

I will refrane from analyzing the current P/J chart until the 4h QQE crosses back down into a bearish patern.

-Kevin
  • #23
  • Mar 25, 2008 9:41am Mar 25, 2008 9:41am
Sorry if I missed it, but what smoothing factor are you using on your QQE?
  • #24
  • Mar 25, 2008 11:17am Mar 25, 2008 11:17am
Quoting BenQ
Sorry if I missed it, but what smoothing factor are you using on your QQE?
5and below is a link to the indicator. I should update my first post with all my indicators, but if you find Auslancos GBP/JPY Stregth Indicator thread he has them all listed there as well.

You may also need to change the colors if you are using a black background like I am.
Attached Image
Attached File(s)
File Type: ex4 ###QQE_Alert_MTF_v5###.ex4   19 KB | 416 downloads
  • #25
  • Mar 25, 2008 11:31am Mar 25, 2008 11:31am
Hi Kevyluvu,

Thanks a lot for your strategy. Could you attach your template file ?
  • #26
  • Mar 25, 2008 11:37am Mar 25, 2008 11:37am
Quoting viatoris
Hi Kevyluvu,

Thanks a lot for your strategy. Could you attach your template file ?
Yes..here it is:

PS: I've never tried sending a template before and some of the indicators I have tweaked so you will need all my indicators as well. Give me a second and I will post them. Also this is really Auslanco's strategy so he deserves the props. I just made up my own rules for it.
Attached File(s)
File Type: tpl auslanco gbp-jpy strength indicator.tpl   7 KB | 433 downloads
  • #27
  • Mar 25, 2008 12:10pm Mar 25, 2008 12:10pm
FXDD is my MT4 broker for now. Here are my indicators:

Gann HiLow Activator input is 10
1h/4h

My moving averages are as follows:

21 ema (all apply to close) 15m/30m
50 ema 15m/30m/1h/4h
100 simple ma 15m/30m
200 ema 15m/30m/1h/4h

Momentum input is 10
1h/4h

CCI input is 31
15m/30m/1h

QQE smoothing is 5
1h/4h/1d

2nd Momentum input is 10
4h/1d

You should have the CCI, Stochastic Oscillator, Momentum, and Moving averages already. If you look at my chart on post #1 I have a lot of the things labeled. My second momentum indicator goes on top of the QQE so I can eliminate the extra window for my 1h and 4h charts since that is what I use most often with this strategy. The Chin breakout is a nice little alert I like to use to wake me up. I replaced my alert2.wav with a song I like since alert2.wav is too short and annoying. For the clock to work you will need to check the box "allow DLL imports".
Attached Images
Attached File(s)
File Type: mq4 Chin Breakout Alert mt4.mq4   17 KB | 372 downloads
File Type: ex4 Clock_v1_2.ex4   14 KB | 333 downloads
File Type: ex4 Gann_HiLo_Activator_v2.ex4   2 KB | 335 downloads
File Type: ex4 ###QQE_Alert_MTF_v5###.ex4   19 KB | 370 downloads
  • #28
  • Mar 25, 2008 1:13pm Mar 25, 2008 1:13pm
Any Trade?

According to Auslanco's 4hr Strategy,,, G/J is Bullish at the moment

Any Idea?
  • #29
  • Edited 6:54pm Mar 25, 2008 6:28pm | Edited 6:54pm
Quoting peghaam
Any Trade?

According to Auslanco's 4hr Strategy,,, G/J is Bullish at the moment

Any Idea?
PLEASE REFER TO POST 13,14, AND 16 FOR MORE ANALYSIS.

"I will refrane from analyzing the current P/J chart until the 4h QQE crosses back down into a bearish patern."

4h Chart
http://www.fileden.com/files/2006/7/30/148326/now.jpg


Hey peghaam,

The time to enter the buy trade would have been on Friday or possibly on Monday. In order for me to enter a trade I have a set of rules that all have to be in line for me to take a trade. When the 4h QQE crossed to form a bullish trend and the 4h candle was forming above the Gann line the next thing I look at before going to my 1h chart for confirmation is to make sure the 4h momentum is pointing in the same direction as the QQE trend. The momentum was strong bearish, so I did not enter this trade. In retrospect if I would have analyzed my 1h charts more I would have seen all my inticators confiming a bullish move, and also a break of a substantial trend line, but I played it safe. One big reason I did not get into this trade is because all my bigger time frames are strong bearish trends. The next trade that comes along on the P/J will be with the overall trend and should be a pretty substantial move down IMO.

This trading style is a very slow cautious style. I am only seeing about 4-8 possible trades per month with this type of trade so patience is key. I used to trade 100's of trades and overall I lost, so now I am trying some longer term trades that may last anywhere from 2 hours to 2 days. Also keep in mind I am only demo trading this system right now until I know for sure it works.

Hope this helps -Kevin

If you look back at the charts I posted you will see how the good setups look. The steepness of the angle of the 4h QQE lines and momentum are important too. Keep in mind this is just how I read my own charts...I will not always be right, and that is what the stop loss is for. If you see something else that may contradict what I see let me know. I am all for learning new things.
  • #30
  • Mar 25, 2008 7:09pm Mar 25, 2008 7:09pm
If anyone is interested here are my basic rules that guide my trading. Most of them do not apply to the style of trading that this thread uses. They are more for intraday trading the P/J for faster smaller trades.
Attached File(s)
File Type: doc forex rules.doc   22 KB | 587 downloads
  • #31
  • Mar 25, 2008 7:42pm Mar 25, 2008 7:42pm
Right now the U/J has crossed the 4h QQE indicating a new bearish trend. It has also crossed below the Gann Line. The 1h U/J QQE is bearish and below the red line and the 1h candle is below the Gann Line. The 4h momentum is in sync with the 4h QQE trend. I expect the P/J to follow the U/J most times so stay tuned if you are trying this strategy with me. Possible P/J short coming in the next couple hours.
  • #32
  • Edited Mar 26, 2008 4:25am Mar 25, 2008 8:08pm | Edited Mar 26, 2008 4:25am
I decided to try this U/J trade just for fun to see if it works like the P/J does. I know auslanco likes to stick to the P/J so we'll see what happens here. I entered some random stop loss and take profit as you can see because I'm not familiar with this pair except for the fact that it is less volatile than the P/J. I was able to enter right at the break and right @ the 5sma 1h, but it likes to retrace to this level on it's move down so if you want to try this demo the 1h 5sma is place to enter your short.



EDIT: If I ever see 50+ pips profit on this trade I will set a 40 pip trailing stop loss to protect my profits. Right now this trade is +22. My exit for this trade will be my stop loss or when the 1h QQE crosses the purple dotted line back up to signal a small trend reversal.

Attached Image (click to enlarge)
Click to Enlarge Name: new-uj-trade.gif Size: 27 KB
  • #33
  • Edited 9:30pm Mar 25, 2008 8:22pm | Edited 9:30pm
The 1H CCI is curently about to push through the zero line. The 1h momentum and stochastics are now angling bearish. We are still above the 1h 50 and 200ema's and above the 4h 50ema which is kinda scary. Since the P/J 4h has not crossed into a bearish pattern yet it may drop to the 4h 50ema and bounce up, but if it breaks down through the 1h 50 & 200 and through the 4h 50 I expect a good sized fall. Still waiting on the P/J to make it's move... The level I am looking to break is the 199.50 area. There is a good chance it will bounce off this same area @ 199.50 to the upside since this is where all the ema's mentioned above are hanging out.

Setting an alert and getting some rest....
  • #34
  • Edited Mar 26, 2008 4:14am Mar 25, 2008 11:50pm | Edited Mar 26, 2008 4:14am
If we break this trend line most likely the 1h QQE will cross and I will exit this trade. If it stays below this trendline I think we are in for a good drop.

I'm starting to see some strong bearish momentum on 4h P/J.. We may break down on QQE and Gann soon. The 1h QQE still has to break through the red 50 line. It doesn't look like anything is going to happen until London.
Attached Image (click to enlarge)
Click to Enlarge Name: trend-line.gif Size: 24 KB
  • #35
  • Edited 2:31am Mar 26, 2008 1:24am | Edited 2:31am
thank you for sharing your system, trades very smooth, and not much noise, keep inventing

wish ya many pips

http://www.abload.de/img/tyru5w.gif
  • #36
  • Edited 1:56am Mar 26, 2008 1:34am | Edited 1:56am
Thanks Flame,

I like the simple chart, it looks good. I will explain a little more later on why I have certain indicators on certain time frames and what I use these indicators for. Your CCI should be 31 if you are trying to duplicate my charts. Everything else looks great.

I just came back to look at my charts and bam the U/J shot up. My alarm never went off dang gummit. The 1h QQE crossed back up into a small bullish pattern and that is where I was going to exit but I missed it. If I did exit there it would have been a -8 pip loss. I am currently @ -22 pips on this trade right now. Since I missed my exit I will hold this a little longer and analyze the charts to see what may happen. I normally would not like holding onto this trade with the london open coming, but there is no major news for a couple hours still.

-Kevin

PS: You got a great entry on that trade. Right on the 5sma. I don't know how well this system works on different pairs. All I know is auslanco has had the best luck with it on the P/J and my rules have been setup to trade the P/J. If you use this system to trade the E/U I personally would cut all the stop losses in half since the E/U is a slug compared to the P/J. IE: 45 pip trailing stop loss when in 50 pips profit and 20 pip trailing stop once you see maybe 100 pips profit.

The U/J trade I am trying for fun is still looking long on 4H charts, but almost all my 1h indicators are pointing up. I am holding onto this trade for now.

No one will need to squint at your chart...lol

Mind sharing your screen capture and compression method? That chart is a nice size and great quality. Also I don't see the QQE on your chart yet.
  • #37
  • Edited 4:17am Mar 26, 2008 2:16am | Edited 4:17am
Your Euro entry was a little early according to the rules Flame:



You should have waited for the QQE to cross the purple dotted line and made sure a 4h candle closed below the Gann line above. You see how the Candle went down and touched the 5sma and now it jumped back up? Your 4h candles are still bullish. Your daily and weekly charts are still very bullish too. I personally would exit this trade and wait for the right setup. You have to make sure the 4h charts look bearish before entering a sell on the 1h charts. The main reason I am staying in my U/J trade is because the 4h/1d/1w charts are all very bearish in my favor.


PS: I figured out how you got such great quality...I have been using jpegs, but Gifs are much better bang for the bit. You open my eyes.


PSS: is there any way you can edit your post and shrink your image size down to 800 pixels wide max. I know people still use 15" monitors still with 800x600 resolution and your image will make them have to scroll way over to read all the posts.


Thanks Flame


-Kevin

Attached Image (click to enlarge)
Click to Enlarge Name: eruro4h.gif Size: 27 KB
  • #38
  • Mar 26, 2008 2:29am Mar 26, 2008 2:29am
yes , indeed i did exit after a 40 pips run, i use the 14 CCI for quick scalp exits, and i trade only in lower timeframes like 5min and 15min, cause of capital and risk management, i just wish to adabt the habit too for longer terme trades, thats why i found your system very comprehensive, and i can get slowly into it...

instead of the QQE, i use mostly price action as my major indicator ( 3SMA )

but i will try to understand how all function and why you have combine this setup

about the the image quality , i may suggest to boost up your graphic card


excuse my terrible english ;x

greets
  • #39
  • Mar 26, 2008 2:45am Mar 26, 2008 2:45am
Would you mind to share the template too? thanks. nice system

Quoting Kevyluvu

Auslanco’s Strength Indicator




Trading with 2 mini lots every trade with a 5k account balance. SL 100pips when in 100pips profit set 90pip TSL or manually close trade when 1h qqe trend changes. Whenever entry is further than 20pips from 1h 5sma enter ˝ position or 1 mini lot. Enter full position when right @ 5sma. I will enter a maximum of 2 positions for each 4h trend change. I will backtest this strategy for approx 1year from now and post my results here. 3.23.07 NEW RULE: If the angle of the 4h momentum is flat or trending oposite the 4h QQE I will not continue to look for entry on my 1h charts. 3.24.07 NEW RULE: If I ever see 250+ pips profit I will change my TSL from 90 to 50.
_________________________________________________________


3.14.07
4h cross bull qqe@16:00 Formed above Gann @17:00
1h cross@18:00 confirmation entry @18:00 @ 224.21
100+ pips high @ 225.59 TSL=224.69 hit TSL @ 19:00 = +48 pips

Manually I would have opened another position @ 224.59 with same TSL and new 100pip SL @223.59

100+ pips high @ 3.15 @ 2:00 @ 227.51 TSL =226.61

High= 227.51 and with TSL would have closed @ 226.61 = +202 pips except that I would have closed this trade early@ 3.15 @ 7:00 @ 226.69 where 1h qqe trend changes = +210 pips +48=

+258 pips.
_________________________________________________________

3.23.07
4h cross bear qqe@12:00 Formed below Gann @9:00
1h cross@11:00 confirmation entry @12:00 @ 231.59
100+ pips low @ 230.43 TSL=231.33 hit TSL @ 13:00 = +26 pips

Manually I would have opened another position @ 231.58 with same TSL and new 100pip SL @232.58.

100+ pips low @ 230.77 TSL=231.13 hit TSL @ 16:00 = +45 pips

TSL hit both times=

+71 pips.
_________________________________________________________

3.26.07
4h cross bull qqe@12:00 Formed above Gann @9:00
1h cross @9:00 confirmation entry @9:00 @ 231.42
100+ pips high @ 232.70 TSL=231.80 hit TSL @ 19:00 = +38 pips

I would have closed this position manually @17:00 @ 232.00 due to the 1h qqe trend change.

Manual close @ 1h qqe trend change=

+38 pips.
_________________________________________________________


3.27.07
4h cross bear qqe@12:00 Formed below Gann @13:00
1h cross@15:00 confirmation entry @15:00 @ 232.24
100+ pips low @ 228.74 TSL=229.64 hit [email protected] @19:00= +260pips

TSL hit @ same time 1h qqe trend changed=

+260 pips.
_________________________________________________________

3.29.07
4h cross bull qqe@4:00 Formed above Gann @12:00
1h cross @9:00 confirmation entry @9:00 @ 229.99
100+ pips high @ 231.88 TSL=230.98

I closed this position manually @3.30 @3:00 @231.47 due to the 1h qqe trend change.

Manual close @ 1h qqe trend change=

+148 pips.
_________________________________________________________
No Magic, Just basic fundamental chart analysis
  • #40
  • Mar 26, 2008 2:57am Mar 26, 2008 2:57am
I'll break it down for you real quick...

The very first thing I do is look at the 4h QQE. If it is above the purple dotted line the trend is bullish for long buy positions. If the 4h QQE is below the purple line the trend is bearish for short sell positions. The QQE does not need to cross the red dotted line on the 4h chart. I then look at my Gann line (the gold line). If the Gann line is above the 5sma (the off white) line then It is bearish down trend. If the Gann is below the 5sma then the trend is bullish up trend.

Now you have to put the two together to confirm the trend. Both the Gann line and the QQE have to be bullish to buy or both bearish to sell. If they contradict each other there is no trade until they are in sync.

The last thing you need to do to confirm your 4h trend according to my rules is make sure the momentum (the blue dotted line) is in sync with the QQE. If the QQE has crossed the purple line going down in a bearish move and the momentum is going up in a bullish move there is NO trade.

All 3 things have to line up for me to get into a trade. That is why there are only about 4-8 trades per month with this style, but they are low stress because most times when the setup happens you are in profit right away. The goal for me is to bank lots of pips and make less trades. This is crucial for the P/J because of it's high spread for MT4 users. The risk/reward ratio for these trades is huge.

OK so if 4h momentum is down at the cross down of the QQE and the most recent candle is forming below the Gann line then the trend is bearish and we go to the 1h chart to look for a possible sell trade.

On to the 1h chart. The first thing I look for is the green QQE line to break the red dotted line going down. This confirms our bearish trend. You want to enter your sell as close to where the QQE crosses the red 50 line as possible. As long as the 1h QQE is below the red line you are in a bearish trend. The purple dotted line on the 1h chart does not necessarily need to get crossed to confirm a bearish pattern, but it usually does.

Before you enter your sell you have to also confirm that the Gann line has crossed above the 5sma. Maybe a better way to say it when talking about a down trend is…Your 5sma needs to cross below the Gann line.

On your 1h chart if these two things are in sync then you can enter a sell position. I use 2 mini lots 2$ per 5k in each trade. You want to enter your sell as close to 5sam as possible. That is why is crucial to get into the sell or buy when it first sets up because that is usually when the big move happens. If you get in too late you’re asking for trouble most times.

One more thing…the steeper the lines are in one direction or the other the stronger the up or down trend will be. If the trend is extremely sharp down and you miss the entry by 20-30 pips I would personally get in because in most cases on the P/J that thing is going to take off big time. If your entry on a sell position is 20+ pips below the 5sma then I only enter ˝ my 2 lots and enter with 1 mini lot. I will then enter another mini lot if the candle retraces back up to the 5sma if the trend is still in effect.

The rest of the rules are on post #1

GOOD LUCK
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