DislikedIf I may make a suggestion for the SL TP level. Decide a threshold you would like to keep for the SL (say 10 pip). Now your initial SL is set according to the recent low/high - SL_threshold (as outlined in the original strategy). Set your TP level to the 2nd pivot sup/res. Now set a static variable to keep track of the % of the way you have made it up to the first pivot level. As your % progression towards your first pivot level increases, you tighten your SL. This tightening should be proportional so that when you hit the first pivot level, your SL is your SL_threshold below/above your first pivot level. This pretty closely follow the ideas behind the original strategy, while leaving a level of mental comfort with EA users that they are limiting their losses.
Another much simpler solution if your EA does indeed get very good entry signals, is to set the TP level for the first pivot level, and only enter the trade if you have a 1:2 risk:reward ratio.
Long: tp-Ask>2*(Ask-sl)
Short: Bid-tp>2*(sl-Bid)
Or something of that sort. This should limit you from those pesky trades that are "mid trend" due to the nature of the SL (using the lowest low in a given time period) that TheWicker originally implemented.
Just a few thoughts, I am not sure whether you can code them or not, but they don't seem too difficult.Ignored
I remember that TheWicker once said that when a good signal is there on the 5mins TF he will go and check on bigger TFs to check if the signal agrees with the trend direction on bigger time frames , i tried that but again a signal on 5mins could agree with a couple of bigger TFs but not all , for example it could agree with the 30 mins and 1 hr ,but not the 4 hr ,so what does that mean ? i dont know 
I think the cChris has the right idea. It is a pretty fundamental theory that what goes up, must come down; trading is no different when your are talking about shorter time frame correlation with longer term trends. Let me give you a concrete example of where checking a longer term chart (the H1 in this instance) can be very useful to predict the strength of a move.
Lets say you are in a slight bull trend in your 5 minute chart. All the signals line up that tell you to open a long position following the strategy outlined. You look at your H1 chart and notice that you are in a strong bull trend on that chart also and no reversal signals catch your eye. This is a good sign that your 5 minute signal is legit, and should be taken. Now imagine if your 5M is in a slight bull trend, you get a signal to buy long BUT when you check your H1 chart you notice it is in a strong bear trend with no reversal signals in sight. This means that your shorter time frame is going against the long term trend, and has been for a little while (the M5 was already in a slight bull). Now your signal is telling you that there will be a jump in the bull direction which means the price will move even farther from the H1 trend....I don't know about you, but I would think twice before taking a short term position that went against the long term trend.
Why? Because if the long term trend is legit, then the short term trend must ALWAYS move within that long term trend. And if that short term trend has been moving away from the long term trend, my best 'guess' would be that it is going to move back toward the long term trend, rather than farther away. This is one of the big paradoxes of EAs, there is something to be said for all of the subconscious judgments that are made by traders who have been doing this for a while. I can almost guarantee any successful, experienced trader actually takes things into account without even thinking about them. Thats just how we humans are; when we have done something for a while, we are a lot 'smarter' at it then we realize (ironically,when we are new we seem to think we are smarter than we really are!)
Back to the point, think of it this way. Lets say you are trying to walk to the end of a street. The only problem is there is a rule. For some reason you have to take 1 step backwards for every 2 steps you take forward. The logical way most people would handle the problem is to take one step backwards, then two steps forward. But think if you took two steps backward first; now you can take four steps forward. What if you take four steps backward? Now you can take eight steps forward. Now if you were watching a person do this from a distance, the more steps they take backwards, the more likely they are going to step forward.
Short/long term relationships work the same way. The short term movements are like the "one step backward, two steps forward" rule, and the long term trend is getting to the end of the street. As you can image, the longer the short term goes against the long term trend (the more steps back you take) the more likely it is to break in the direction of the long term trend and the stronger the break will be (the farther forward you can walk before you have to step back again). To me it seems that this is what TheWicker would use the H1 charts for, to make sure the short term signal 'matched up' with what longer term trend was telling him. Just my two cents.
Inflation in things we need, Deflation in things we want.
- #1,937
- Edited 7:31am Jun 2, 2008 3:19am | Edited 7:31am
A asked TheWicker about this a while back.
See post 1178 on page 79.
Cheers!!
OK I understand, my english is not so good, so sometimes I have to think twice what you wanted to say.
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