Rainbow Squeeze

To Ronald:

I've seen you are active coder in this FF.

Just a query from me, so far any EA that you find consistent profit for long term?

I also can make a simple code, but so far I dont really find any system that really consistent in making profit.

I've seen somewhere regarding similar system using squeze BB but the guy dont use MetaTrader paltform.

It is simialr to this thread but I forgot the location.
If I found, I will post here, he has some code for determine the squeze.

Long-term profitable EA? They exist, but none coded my me.

alsup1955,

I believe Ronald Raygun may have answered your question, but another way to get the template into your MT4 platfrom would be to download the template I've posted to your desktop. Then open your MT4, click on your template icon drop down, select "Load Template...". An "Open" box will pop up, use the drop down in the "Look in:" select desktop, and then select the template, and you should be good to go.

Ronald Raygun,

I like your thinking. There are posts with great related programing on the thread I mention in post one. But also, the "how do I know if it is in a squeeze" type question is a great one. This is where the "bandwidth" factor comes in (see explaination in post one). The optimum distance between the band sets is key for finding a great entry, and as the band sets come closer together, so too do the individual bands come closer to eachother. I have been using the bandwidth to measure when a good squeeze is in play, which in most cases is 50 pips or less, but this is where I believe the template is brilliant - it is so very visually intuitive - with some practice you can see the squeeze comming on rather easily. There are times when the "squeeze" is so pronounced the bands combine and take on a whitish look. However, for programming purposes, I can't answer your question, but welcome your input!

I have thought an alarm for this system would be *fantastic* as the signal does not come around evey day, and I live in the EST, and see early morning signals that I've slept through all the time, so an alarm would be great. I might have take you up on your 50 bucks offer...

MrForex123,

Thank you for your comments, and you bring up a crutial point here.

Finding a long term profitable system definaetly takes time, work, and study. And just because a "profitable system" works for Joe does not mean it will work for Jim.

The key to finding a profitable system depends on finding a system that makes intuitive sense to you, and that naturally fits your trading needs (i.e. - that has signals when you can trade, that has signals at a frequency you can handle, that has draw-downs that you can psycologically handle, etc...)

The Rainbow System that I offer here is working for me as it fits all these criteria for me. Give it a shot, and if in a few months it is not working for you, it might be good to move to something better for your needs

Again I want to emphasise that this system is not merely an entry system - it *requires* that one use a 30 pip stop loss, not expose more than 2% of your equity, and never never never ever move a SL against you. If you do these things, it is not the Rainbow Squeeze, it is a new system you have created.

If some of these points work for you, take em and use em, and ignore what does not work for you, and in time, you could come up with a better system, and that would be great - thats what FF is all about, sharing ideas, and developing systems for everyone to be successful

okay, its saturday night, and I am going to try and go out and have a bit of a life but before I go, here is another example of what I look for. This signal had a 16 pip bandwidth! That is very unusual, and great! It is the very tight squeeze where the bands begin to blend they are so tight, on April 26.

http://picnac.com/images/1095ep_bw16... on screen.gif

on post 25, I meant to say the signal occurs on April 29th, not the 26th...
the point on the screen where upper set of bands comes closest to the lower set.

I understand yoru bandwidth concept, but consider this. What set of data points should I use to determine the "band-width"? And furthermore, how can I programatically determine whether or not this is a mere pinch, or a prolonged squeeze.

No need to take me up on the offer. I'm looking to develop a complete EA for free on this system.

I'll break this down into stages should other programmers want to contribute:

Stage 1
Develop an indicator or similar to paint two things:

1. Average distance between each bollinger band to adjacent bollinger bands. (Assuming the two sets--upper and lower--are equal)
2. Distance between the uppermost lower and the lowest upper band

Use the indicator to study what percentage of squeezes/pinches of a certain value (inter-bar distance or upper/lower distance) are successful x pip breakouts.


Stage 2
Create an EA which enters a straddle (BUYSTOP and SELLSTOP) at:

1. Specific bollinger band pairs
2. Specific price away from the current price
3. Specific ATR away from the current price

As I see it pipforia, this system may be best used as a scalping system as opposed to a trend-following one as most of the movement happens in the immediate burst following the pinch or squeeze.

Stage 3
Optimize as much as possible based on volatility.

In my limited experience trading currencies, the most effective and profitable systems had the following qualities:

1. Volatility-based model
2. Automatic position-sizing formula
3. Completely mechanical entry. (If a > b and B == C then BUY)
   1. Defined entry
   2. Defined exit

Here is Bollinger's definition of a squeeze:

Bandwidth = (Upper BB - Lower BB) / Middle BB

He considered a squeeze to be a 132 bar Bandwidth low.

Thanks Billbss,

Just curious, where did the 132 come from?

I extrapolated it from Bollinger's book.
He dealt strictly with daily charts.
He defined a squeeze as being a 6 month low in Bandwidth.
Six months is about 132 daily bars.

LOL All I can say is Good Luck and luck is all you need LOL

Ronald Raygun,

great ideas. can't help you out too much, as I am not a programer.
I having a busy work week, so hope to get back to you with some more detail this weekend. But in response to your idea of using this system to scalp - well, I guess you could. Like I said, take and use any ideas that work for you. I don't like scalping on it, but yes, agree that after a major news is often a time when the movement that this system tracks begins. I like to wait for the market to calm a bit, and get some overall direction - once that happens, if my signal looks good, I get in without hesitation for a 1-6 or so hour trade. If you planned on using this on a shorter scope of time, use your own judgement, but by all means, give it a try, and let me know how it goes

RR-

Here is the guy to talk to about these programming questions and ideas:
fxhermit

He is the programmer of the rainbow template I use here. If the two of you get together, who knows what might happen .

o yea, did anyone see this? It happened when I was snoring this morning at 3 am EST... But it had all of the qualities for a great signal, and would not have disappointed: you could have gotten in at the signal, setting SL at 20 pips, just above the central MA line, and gotten out on the candle that closed outside/out of contact with the BB lines 104 pips later...
a 5 to 1 Gain to Risk ratio = Not Bad

I'm still studying how to code an indicator for phase 1 of this project pipforia.

I just need an indicator with two histograms:

 

1. Plots the average distance between bands.
2. Plots the average distance between innermost upper and lower band.

It's safe to say that I may take awhile =D

Here is stage one.

Attached is an indicator which measures the range from the outermost bollingerband to the innermost bollingerband for both the top and bottom sides.

There is also an option which allows you to measure the distance from the upper and lower line of the innermost bollinger band.

extern int Periods=18; This is the bollinger band setting
extern int BaseDeviation = 2; This is the standard deviation of the innermost bollinger band
extern double DeviationStep = 0.2; There are 14 bands total in this indicator. This is the distance between bollinger band standard deviations
extern bool ShowTopDistanceBuffer = True; This shows/doesn't show the distance between the outermost and innermost upper bollinger band.
extern bool ShowSpaceBuffer = False; This shows the "Squeeze" value which is the difference between the upper and lower band in the innermost bollinger band.
extern bool ShowBottomDistanceBuffer = False; This shows the distance between the outermost and innermost lowest bollinger band



What I need from you piper is what value in my indicator would represent a good buy/sell signal.

RR-

Impressive, great job! Let's see, as for a optimal BB width number, its a bit tough, as I've been using bandwidth as opposed to distance in pips from bands top to bottom, however...

I went back a bunch of my saved screen shots, and did some examining on MT4. I looked at E/Y mostly (as most of my success has been from this pair) but I also looked at other pairs (Cable, E/P). Successful signals had a range of 12-40 for the distance in pips from outer most BB to innermost. The 'optimal' number is a bit elusive, as it is likely somewhat different for each currency pair, however, overall I found a 32-33 width to be promising. If we are trying to get a best 1 size fits all alarm for all our pairs, I'd say anything tighter than 40 pips would be worth checking out...

Please remember, this system also relies on daily Pivot Points and MACD, so we could have a situation where the width we are refering to here is 32, but it would not be wise to get in as the other compnents are not there...but for the sake of getting an alarm to tell us when something might be brewing, I'd say you are on the right track. I like your thinking.

I'm looking forward to what next...

-P

Set space buffer to true and the other two variables to false and that will give you the "Band Width" (Difference between innermost upper and lower bands)

Perhaps the biggest draw down with this signal/system is its infrequency...
I have not traded one in some time - but I have limited time to hunt for 'em.

That said, here is another signal. It occured this morning at 1 am EST (I think thats 5:00 GMT) on the Euro. All the pieces were there for a great entry. SL would have been set at central green MA. The trade would still be going - exit will be when an hour-bar closes without touching the upper bands.

http://picnac.com/images/9162euro_bw28_1am.gif

hello all. I haven't posted any signals lately, mostly because
I haven't seen any developing when I have time to check.
But today, at 8AM EST I saw a set up just before I went to
work and took it. My SL was 30 pips, just above the signaling candle, and
TP was 50. TP was hit when I was at work. I am working on getting
a sound signal for this...if I can get it to work, I will share.
The white ellipsis is where I got in for a short.http://picnac.com/images/4446euro_8a...051%20pips.gif