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V strategy

  • #1
  • First Post: May 26, 2008 10:33pm May 26, 2008 10:33pm
This is not full functional strategy, it is just my observations.
And any one of you can refine it and adopt it as a trading strategy.

By looking to past charts, i observed that England starts trading in just opposite direction of Asians. Most of the time, chart draws its self as V or ^ pattern. That's why i call it V strategy.

Following images will clear my thoughts!

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These are just examples of my thoughts. More or less you can easily grab at least 5-10 pips. Although England starts to boost its direction and mostly it moves 100 to 150 pips from that point.

There is need to refine this technique. Pending Orders will be useful for this purpose.

I am attaching SESSIONs indicator. (i took it from FF also)

Attached File(s)
File Type: ex4 i-Sessions pst.ex4   6 KB | 862 downloads

Attached File(s)
File Type: mq4 i-Sessions pst.mq4   6 KB | 1,012 downloads
  • #2
  • May 28, 2008 4:35am May 28, 2008 4:35am
My trades for previous 4 days including TODAY.

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  • #3
  • May 28, 2008 4:49am May 28, 2008 4:49am
Good Observation

you can call it a trading setup, better than a system

and set a rules for it, entry, exit, SL, etc

will back test it to add to my setups dictionary

excellent

Good luck
  • #4
  • May 28, 2008 7:29am May 28, 2008 7:29am
There was a long thread about this a couple of years ago on a different forum. The guy that brought it to everyones attention said that it occurred about 94% of the time.

It is very easy to see with hindsight but not as easy in realtime because you don't know if the vee has formed and the direction changed or if it is just going to be a little re-trace and carry on in the asian direction.

M
  • #5
  • Edited 8:15am May 28, 2008 8:02am | Edited 8:15am
mp777,

Instead of trying to determine tops and bottoms, I think this trade setup us geared more toward capturing the fat and nearly riskless middle part of a trend.
  • #6
  • Edited 8:15am May 28, 2008 8:04am | Edited 8:15am
Quoting mp777
There was a long thread about this a couple of years ago on a different forum. The guy that brought it to everyones attention said that it occurred about 94% of the time.

It is very easy to see with hindsight but not as easy in realtime because you don't know if the vee has formed and the direction changed or if it is just going to be a little re-trace and carry on in the asian direction.

M
Actually this IMO is the only good use of tick volume, to see increased action. I put the volume in a slightly different format and noticed some time go, at least for EU that when Volume jumps to 300 ticks per 15 min bar the "V" is usually begining. It is probably a little different number for other pairs, but should be easy to calibrate.

Ps, I was just playing with this, so I modified another indi instead of starting from scratch, so the code is not very clean.

Here is a copy of my modified volume test
Attached Image (click to enlarge)
Click to Enlarge Name: eurusdvoltest.gif Size: 12 KB
Attached File(s)
File Type: mq4 Volume Test.mq4   2 KB | 811 downloads
  • #7
  • May 28, 2008 8:28am May 28, 2008 8:28am
Thanks for that Scott, i'll take a look.

M
  • #8
  • May 28, 2008 12:30pm May 28, 2008 12:30pm
Quoting mp777
There was a long thread about this a couple of years ago on a different forum. The guy that brought it to everyones attention said that it occurred about 94% of the time.

It is very easy to see with hindsight but not as easy in realtime because you don't know if the vee has formed and the direction changed or if it is just going to be a little re-trace and carry on in the asian direction.

M
Yes these V is occurring almost 95% times.

You are right that it can be little re-trace but i think with pending orders just before England timings will be useful for this.

We need to set some SL and TP for this strategy. Because there is 95% winning trades.
  • #9
  • May 28, 2008 12:45pm May 28, 2008 12:45pm
The "V" fails whenever there's an early EU news event. Look at what happens when, for example, German numbers come out early. Beware selection bias.

Quote
and set a rules for it, entry, exit, SL, etc
Why not put a stop entry for the designated direction, exit at S1/R1 or S2/R2 pivots, throw in a quick break-even and a trailing stop and set your initial SL to the other side of the last half hour bar?
  • #10
  • May 28, 2008 2:00pm May 28, 2008 2:00pm
On Eurusd I think what I would do is a 40 pip stoploss and a 80 pip Take profit, because that is about 75% of the daily ATR. Then I would place the trade opposite of the Asian market when tick volume is at 275 ticks for a closed 15 min bar no later than about 11:00 GMT, because you want to catch the volatility when it is maximum. preferably between 05:00 and 09:00 GMT

Then if price continued on past the stoploss, with the Asian market, I would place a reverse order to go with the current trend and look for 80 pips TP. The reason being that the trend has already proved it's strength.
  • #11
  • May 28, 2008 4:42pm May 28, 2008 4:42pm
interesting. have just looked over past data and looks promising, but like mp777 said its knowing when it will happen.
Have just put up a 15m chart and used RSI to help see if it makes easier to spot. Generally it apears that when the rsi crosses over its a good signal, or if there is divergance. Also there are some good candle signals such as doji's and hammers.
  • #12
  • May 28, 2008 5:00pm May 28, 2008 5:00pm
looking at the past, it would be perfect to enter when volume (indy at MT4) goes at 220 or 250 aprox, i will start to enter with a 20 pips SL and 20 or 30 pips TP to see how it does, and not entering at news days
  • #13
  • May 28, 2008 9:59pm May 28, 2008 9:59pm
this might work well with some price action confirmation to nail the entries. im gonna take a look and if i find it does i will try to add to the discussion on this.

jim
  • #14
  • Edited 10:37pm May 28, 2008 10:20pm | Edited 10:37pm
I trade retracements and have found that the time period under discussion often provides the movement needed to enter trades with a more favorable Risk reward.

I have not quantified this but my observations have been that the size of the move seems to correlate with the distance that price has moved from the London close up till the end of Asia.

In other words the V is the end of the retracement and resumption of whatever the afternoon US session Asia has given it. There is often the type of Price Action that James16 is looking for.
  • #15
  • May 28, 2008 11:04pm May 28, 2008 11:04pm
Quote
this might work well with some price action confirmation to nail the entries. im gonna take a look and if i find it does i will try to add to the discussion on this.

Nod, there are pin bars and key bars that often form on the 15m, usually at a pretty predictable moving average or a pivot point. The only problem is you can't know how far those'll reverse (retrace or full reversal) so the bar pattern is less important than handling the loss (quick move to BE atleast) potential. I don't see a lot of H&S or double bottoms on these kind of reversals, altho I do see them during US-based reversals.

This is very similar to a basic open-range breakout strategy, basically a "market changeover reversal strategy" ... When a market opens there are a lot of "market on open" orders that go into the queue. Once these run their course the markets make a decision to either continue going or to reverse.

The less the market moves on open the more likely a new movement will turn into a trend day. This is especially true if the daily is breaking out of a range (like on an NR4 or inside bar). Those days won't have major "V" shapes and may even continue the same trend. At that point you get an opening bell breakout straddle strategy that tends to catch both, but with all breakout strategies it's how you handle the whips that make it profitable.
  • #16
  • May 29, 2008 6:47am May 29, 2008 6:47am
When i traded this in the past, i looked for a 1,2,3 reversal to confirm a bias change such as we have had today......

M

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  • #17
  • May 29, 2008 3:17pm May 29, 2008 3:17pm
Nod, higher lows or lower highs rock.

Here's a chart I want to discuss a little bit. It was today's. As you can see, there's no "V" pattern. I bring this up because it's easy to cherry-pick charts that fit our expectations, but the best lessons come from when we work to disprove our methods.

The highlighted area is today's london open, hourly charts. This was a trend day, as you can clearly see, there've been no major retracements. These kind of days are often very slow to start and can start on any open. The gold dashed lines correspond to an opening straddle position I took.


http://i32.tinypic.com/s120xl.gif
  • #18
  • Edited 5:05pm May 29, 2008 3:58pm | Edited 5:05pm
Well, as for today,

If you had entered a buy at the time the tick vol exceeded 275, which was 0600 GMT, because we assumed there would be a v pattern, with a 40 pip stop and a 80 pip tp on EU, we would have been stopped at 40 pips loss.

However, then reverse and enter a sell at the 40 pip stop level with again a 40 pip sl and a 80 pip tp. It paid very well . In the end on this rare occasion when the market continued the direction for the Asian market, we made a net of 40 pips, which was a 1:1 trade instead of the 2:1 trade we normally would have done with the V pattern. So all in all it worked just fine.

Edit: Rabid, I was just looking at your chart a little closer, I see the straddle. That looks like a great trade. I am always amazed at how there are so many ways to make money from the same price data.
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  • #19
  • May 30, 2008 3:00am May 30, 2008 3:00am
Quoting Rabid
Nod, higher lows or lower highs rock.

Here's a chart I want to discuss a little bit. It was today's. As you can see, there's no "V" pattern. I bring this up because it's easy to cherry-pick charts that fit our expectations, but the best lessons come from when we work to disprove our methods.

The highlighted area is today's london open, hourly charts. This was a trend day, as you can clearly see, there've been no major retracements. These kind of days are often very slow to start and can start on any open. The gold dashed lines correspond to an opening straddle position I took.


http://i32.tinypic.com/s120xl.gif

..and if you notice the closing price at London close is right where it was when they opened again. Hence, no need for a correction.
  • #20
  • May 30, 2008 6:46am May 30, 2008 6:46am
There's certainly been a 'Vee' on cable again.

Looking for a 1,2,3 on the 5 minute chart would have got you in the trade.

M

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