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Is There Any Simplest Method To Success In Forex? 63 replies

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Attachments: Method BB
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Method BB

  • #61
  • Quote
  • Feb 3, 2007 6:17pm Feb 3, 2007 6:17pm
Quoting MikeC
Kharvell,

Nice system. I'm going to forward test it.

Taxgeek, I had trouble loading what you posted into MT4, but that might just be me.
Hey MikeC,

Glad you like the method! Be sure to post your results(only if they are good ) Also, I have included the "Rainbow bands" that user hapalkos made and posted for us. I looked at it briefly, and it has the correct colors with the correct deviations.

Quote
Thanks to Kevin for all the systems and the help along the way.

Does any have a BB indicator for this in MT4?

You may also download from the link below; it has the everything you need, you just have to put all 6 of them on your graph..

Quote
i did not caught that sorry if my post seems to be harsh that was not my intent...

I have tried to back test the BB method but i'm missing the exact explanation for the entry/exit point

In the pdf it's not very clear if you must enter when part of a candle has entered one of the BB and one is fully out, or a whole candle must be in etc...

It seems to be a good method but there is a small lack of explanation (more or less is still OK but to do a proper back test we need a clear explanation in order to make sure that what we do in the back test is in fact what will be done in a forward test )

For example, in a backtest, we are tempted to use what we see and not what we would have see in real time (specificaly candle being completely in the BB )

As they say in Australia, No worries about sounding harsh mate. I'm glad you have found my method somewhat useful. Allow me to clarify:

Enter when the price exits resistance lines and CLOSES in the main channel. Exit when the same thing happens on the other side. The bar can still be touching resistances, it just has to close in the main channel.

Now, we have come up with a couple of variations regarding lots. My favorite set-up that I came up with the help of others is looking at the center line(AKA Simple Moving Average) when an entry signal happens. If the SMA is sloping in your direction, open 2 lots and close one of them AT the SMA. Close the other lot when another entry signal occurs for a new position. If the SMA was not sloping in your direction when the entry signal occurs, enter with one lot, and just TP at the SMA, and call it a day.

I have thought of another signal to enter:

If you have just bought a 1 lot position(because SMA was not sloping in your direction. And the price bounces off of the SMA, you
1)Liquidate your existing lot and
2)Enter a position in the opposite of what you just liquidated.

This new position will be exited as usual with a normal entry signal

I have posted an example of these "bounce entries" and entering 1 lot vs 2.
It is rather detailed, so please study it closely..

And Yen, I agree with you. Let me know what you think of these "bounce entries".
Attached File(s)
File Type: zip Bands_rainbow.zip   6 KB | 713 downloads
File Type: pdf Bounce&Countertrend.pdf   114 KB | 1,036 downloads
  • #62
  • Quote
  • Feb 3, 2007 7:14pm Feb 3, 2007 7:14pm
Hi Kevin,

My problem is when i try to save it into metatrader it doesn't appear in mt where it should. I've done it before with different attachments, not sure why it's not working now.

Mike.
Taking Life One Pip At A Time I officially have my own opinion.
  • #63
  • Quote
  • Feb 3, 2007 7:35pm Feb 3, 2007 7:35pm
Kevin,

Thanks for all of your hard work. This system is very interesting. I have it up on my charts now, and I think that I will trade it live so as to forward test it correctly.

I have been working very hard on trading off the day charts, with some success in other systems, but this method of yours seems to fit my style.

Perhaps I will keep all informed about my trades. I must admit that I love the guppy, and maybe we can find some rules that will work well with that cross as well.

DC
"There is MORE Happiness in giving than receiving"
  • #64
  • Quote
  • Feb 3, 2007 7:42pm Feb 3, 2007 7:42pm
This is an experiment



Attached File(s)
File Type: doc Charts.doc   122 KB | 877 downloads
"There is MORE Happiness in giving than receiving"
  • #65
  • Quote
  • Feb 3, 2007 7:43pm Feb 3, 2007 7:43pm
Well you can see my gbp/usd chart but I would like to be able to just put the chart up in my post. Can anyone tell me how to do that?

I would appreciate the help.

DC
"There is MORE Happiness in giving than receiving"
  • #66
  • Quote
  • Feb 3, 2007 8:12pm Feb 3, 2007 8:12pm
Quoting drcole1
Well you can see my gbp/usd chart but I would like to be able to just put the chart up in my post. Can anyone tell me how to do that?

I would appreciate the help.

DC
Instead of pasting your image into word just save it as an image. If you upload one image with an appropriate suffix (jpg, png, gif, etc.) then it will automatically display. The image size is limited to 600x600 pixels.

I copied your image from your word document, resized it slightly to meet the 600x600 limit, and uploaded it as a png file.
Attached Image
  • #67
  • Quote
  • Feb 3, 2007 8:28pm Feb 3, 2007 8:28pm
Roughly equivalent chart using MetaTrader. Posted as a gif image.
Attached Image
  • #68
  • Quote
  • Feb 3, 2007 8:35pm Feb 3, 2007 8:35pm
http://www.forexfactory.com/attachme...1&d=1170552646

Here is my eur/usd chart

and thanks for the help

I hope to add some of my own thoughts and show my trades in this thread

DC

by the way, Kevin, does this or does this not look like a good short signal?
Attached Image
"There is MORE Happiness in giving than receiving"
  • #69
  • Quote
  • Feb 3, 2007 8:47pm Feb 3, 2007 8:47pm
Here is another chart with some analysis (not much) and some questions about a possible trade.

Note the questions on the chart. Or should I just enter Long at the opening on Sunday?

Just a question. Not a request for trade recommendations.

DC

http://www.forexfactory.com/attachme...1&d=1170553523
Attached Image
"There is MORE Happiness in giving than receiving"
  • #70
  • Quote
  • Feb 3, 2007 9:00pm Feb 3, 2007 9:00pm
Did you add an extra 1std BB band or something? Because in my MT4 charts, Both EURUSD and USDCHF were already triggered before the most recent candle.
  • #71
  • Quote
  • Feb 3, 2007 9:01pm Feb 3, 2007 9:01pm
Not sure why. It's the same one I use all the time. You can get it by looking for Akuma99's Not So Squeezy method here on the forum.
Quoting MikeC
Kharvell,

Nice system. I'm going to forward test it.

Taxgeek, I had trouble loading what you posted into MT4, but that might just be me.
  • #72
  • Quote
  • Feb 3, 2007 9:12pm Feb 3, 2007 9:12pm
Hello there Kharvell,
Great system. One problem I have is that on my charts using metatrader4, the price never reaches the outer 2 bollinger bands at any point. I notice the same thing with the chart image of £/$ that drcole1 posted. Does anyone else have this occur, or know the reason?
Hope someone can help as this looks to be a great system especially for those of us with day jobs.
happy day
kev
  • #73
  • Quote
  • Feb 3, 2007 9:20pm Feb 3, 2007 9:20pm
Looking for a bounce off a bollinger in the countertrend direction can be a tricky way to trade. I usually use an indicator like Accumulation Distribution or Momentum with a 10,1 bollinger applied to the indicator for an assist on those. Trade gets taken when the indicator breaks the bollinger in the right direction. I don't go counter much. My way to trade is to look for a momentum break of the 10,.8 bollinger on price in the direction of the moving averages and follow the trend. I find this discussion useful, because it shows when a trade is likely to run out of gas.
  • #74
  • Quote
  • Feb 3, 2007 10:02pm Feb 3, 2007 10:02pm
Thanks taxgeek and kharvell, figured it out.
Taking Life One Pip At A Time I officially have my own opinion.
  • #75
  • Quote
  • Feb 3, 2007 10:06pm Feb 3, 2007 10:06pm
Quoting drcole1
This is an experiment



Attachment
What is the experiment?
-chandra
  • #76
  • Quote
  • Feb 3, 2007 10:14pm Feb 3, 2007 10:14pm
Kharvell,

Just checking to see if I get this and also getting your thoughts on what you would have done in a specific example. Looking at the GBP/USD, would you have entered on Jan 25/07 the day after it closed in the channel. And would you still be in the trade or when would you have exited.

thanks

Mike.
Taking Life One Pip At A Time I officially have my own opinion.
  • #77
  • Quote
  • Feb 3, 2007 11:06pm Feb 3, 2007 11:06pm
Quoting kharvell
Hey MikeC,

Glad you like the method! Be sure to post your results(only if they are good ) Also, I have included the "Rainbow bands" that user hapalkos made and posted for us. I looked at it briefly, and it has the correct colors with the correct deviations.

You may also download from the link below; it has the everything you need, you just have to put all 6 of them on your graph..

As they say in Australia, No worries about sounding harsh mate. I'm glad you have found my method somewhat useful. Allow me to clarify:

Enter when the price exits resistance lines and CLOSES in the main channel. Exit when the same thing happens on the other side. The bar can still be touching resistances, it just has to close in the main channel.

Now, we have come up with a couple of variations regarding lots. My favorite set-up that I came up with the help of others is looking at the center line(AKA Simple Moving Average) when an entry signal happens. If the SMA is sloping in your direction, open 2 lots and close one of them AT the SMA. Close the other lot when another entry signal occurs for a new position. If the SMA was not sloping in your direction when the entry signal occurs, enter with one lot, and just TP at the SMA, and call it a day.

I have thought of another signal to enter:

If you have just bought a 1 lot position(because SMA was not sloping in your direction. And the price bounces off of the SMA, you
1)Liquidate your existing lot and
2)Enter a position in the opposite of what you just liquidated.

This new position will be exited as usual with a normal entry signal

I have posted an example of these "bounce entries" and entering 1 lot vs 2.
It is rather detailed, so please study it closely..

And Yen, I agree with you. Let me know what you think of these "bounce entries".
Kevin,
I have to write this. You started first with a very simple strategy (K-I-S-S), and produced a reliable system with profitable, repeatable test results. It was nice and dandy. Later, others carried away by the simplicity and effectiveness of the system and with all good intentions, eagerly contributed new ideas to improve the method. You seems to be carried by this improvement excitement and modified the system to come to 'The Bounce" approach. While it is very nice to see the system is being improved, what is the gaurantee it is better than the earlier, simpler and proven method you placed? You must have done some back testing using the "Bounce" apprach. If the the bottom line is better, then we have to see the feasibility or ease of implementing the systen and executing the orders. Many great systems were dumped when attempts were made taking a good system and trying to make it a perfect system. I just thought I should share my thoughts with you and all others at this juncture.

Please do not take this in any wrong way. My intentions are good and I have all the appreiciation for your great work. if you do not agree with my concern, just ignore it. That is all to it!http://www.forexfactory.com/images/icons/icon7.gif
Thanks.
-Chandra
  • #78
  • Quote
  • Edited 11:28pm Feb 3, 2007 11:09pm | Edited 11:28pm
Quoting kharvell

Chebyshev rules
If it is not known whether the distribution is normal, one can always use Chebyshev's inequality

I think Chebyshev's theorem relates more to my method than the other way because honestly, I'm not quite sure if we have a NORMAL data set or not, but given the unpredictability of forex, I'm going to assume it is not normal.
Great method - I love the effort you put into this. I like to think I'm a numbers-guy so whenever I see a method with a strong statistical framework I get really excited. I have been playing with these setups since the first day you posted this method, I cannot wait to begin forward testing this ASAP. Thank you for posting your trading rules.

I just wanted to add some insight into the normal/non-normal distribution dialogue above and back up your method a little more - I think that this type of trading can be extremely powerful. The core function of statistics is to use sample data (hopefully randomly selected of course) of a given population in order to make inferences and decisions about the population data. In essence, a small part can tell us a lot about the bigger picture.

The POPULATION does not have to be normally distributed (bell-shaped) for statistics to be valid. We are really concerned only about a random sample - in fact only the AVERAGES of the random samples need to be normally distributed for sound statistical methods to be employed against the population whether it is normal or not. This might not sound very significant, but it is a component of the reason that you, me, a four year old, or even a chimpanzee can pick out 25 to 30 randomly selected stocks from the Wall Street Journal and outperform most professional money managers that earn six and seven figure salaries. I would go into more detail here, but it would get really off-topic. It's an eye-opening way to look at trading and investing, but back to the method.....

Let's look at the tool we're using to analyze the data set (price and time): Bollinger Bands. Lucky for us, Bollinger Bands are based upon the MEAN of a sample of the population - a simple moving average of closing prices! In our case, the population is ALL the prices at all the time points. Our sample set is the prices at each day's end. As long as the mean of this sample set is normally distributed, making trading decisions about the rest of the population would be statistically sound (I know we're not here to earn our PhDs in stats so I'll wrap this up I promise). In short, we're good-to-go as long as the markets exhibit the behavior that they always have exhibited. I would expect that as long as human beings are doing the buying a selling this will be the way of the markets for a long time to come. I don't expect any radical, paradigm shift to come along and make every single market participant behave any differently than before.

Trading is really an odds game. As long as we can employ a statistically valid method to move money into position when we're most likely to profit and remove from play or keep our money out when we're not likely to profit, we'll be in good shape. To put it another way, we hope to trade when we're LEAST LIKELY TO LOSE. I worked as a futures broker for a year and a pretty successful commodities trader told me that at its heart, you're not trading bonds, dollars, euros, corn, stocks, options, etc. You're trading RISK. The individual instrument (i.e. bonds, GBP/USD, wheat) is just a vehicle we need to use to trade that risk. I think your Bollinger Band setups provide an enormous advantage to us by indicating when we have arrived at a point in time when we're more likely to profit and when we should sit on our hands - a forward test will be able to validate this. And the best part: there isn't a news straddle, moving average crossover, or Elliot Wave in sight! Hallelujah!

I hope that I can add a lot to this discussion and method. Thanks again!

-=DAVE=-
  • #79
  • Quote
  • Feb 4, 2007 12:15am Feb 4, 2007 12:15am
Kevin,

I agree with Chandra. Look at every single thread out there that begins with a simple trading approach on page one, and then look at the last page of the thread - the system is an entirely different animal and not one post says anything to the effect of: "After nine months of forward testing the original method and three varitions, we conclude the following..."

Within a dozen replies of any new system there's already an RSI filter, a CCI trigger, trade this way when going with the 89 MA, trade that way when going against the 144 fibo channel, take profit on 1/2 position at nearest S/R, trailing SAR at 14 day ATR, on and on! But this is based on hypothetical results!! Any changes are then necessarily based on hypothetical results as well. The original version is untested in a live environment and so are the tweaks - how does anybody reach any logical conclusion about anything in these instances? And some people wonder why 95% of traders lose money chasing returns of methods that are entirely unproven that just look pretty on a chart.

I have a different idea. What we need is a true forward test - not a back test! If there are any changes to an existing method, you need to test the original method as a control and the "updated" version along side of it. This needs to be done real-time without the lookback benefit of 20/20 hindsight backtests. I think backtesting is helpful and has its place, but nothing takes the place of live forward-testing.

Don't get me wrong, your backtest looks IMPRESSIVE. It's based on the fundamental mechanics of market behavior and is rooted in mathematics (statistics to be precise). But, already a few sharp minds have begun to ask why a certain action or another was or was not taken in the past. To your credit, Kevin, you updated your backtest. Kudos and bravo for being honest. But Chandra is right, after a few posts there's already new rules and a robust method is becoming diluted. I think we need to take a breath and not put the cart in front of the horse. I haven't even watched one live trade unfold yet, let alone the 100 or so I'll need in real-time before drawing any solid conclusions. Until then, as far as I'm concerned we're all just guessing.

The last time I checked, my bank will not accept deposits based on hypothetical 5,000+ pip yearly gains shown in a backtest. They want the real deal and I think we owe it to this approach to run a thorough forward-test. If anyone wants to test any updates or changes to original method, this needs to be run concurrently and in an unbiased manner to definitively judge if the update adds value. Too many systems get their legs cut out from under them by curve-fitting.

-=DAVE=-

Quoting Chandra
Kevin,
I have to write this. You started first with a very simple strategy (K-I-S-S), and produced a reliable system with profitable, repeatable test results. It was nice and dandy. Later, others carried away by the simplicity and effectiveness of the system and with all good intentions, eagerly contributed new ideas to improve the method. You seems to be carried by this improvement excitement and modified the system to come to 'The Bounce" approach. While it is very nice to see the system is being improved, what is the gaurantee it is better than the earlier, simpler and proven method you placed? You must have done some back testing using the "Bounce" apprach. If the the bottom line is better, then we have to see the feasibility or ease of implementing the systen and executing the orders. Many great systems were dumped when attempts were made taking a good system and trying to make it a perfect system. I just thought I should share my thoughts with you and all others at this juncture.

Please do not take this in any wrong way. My intentions are good and I have all the appreiciation for your great work. if you do not agree with my concern, just ignore it. That is all to it!http://www.forexfactory.com/images/icons/icon7.gif
Thanks.
-Chandra
  • #80
  • Quote
  • Feb 4, 2007 12:34am Feb 4, 2007 12:34am
Geeeez! Where do I begin? You guys are providing exceptional feedback! I love starting good threads

Quote
Here is my eur/usd chart

and thanks for the help

I hope to add some of my own thoughts and show my trades in this thread

DC

by the way, Kevin, does this or does this not look like a good short signal?

Looks good to me.

EVERYONE SHOULD KNOW THAT EVERYONE'S CHARTS ARE GOING TO LOOK DIFFERENT BECAUSE OF DIFFERENT BROKER DATA!!

With this being said, I have been short EUR/USD, and am attaching my graph for you to see when I entered(the orange down arrow)

Your quote regarding USD/CHF:
Quote
Note the questions on the chart. Or should I just enter Long at the opening on Sunday?

Should I use 1.2525 as a std deviation line?

Alright, I don't trade Sundays, but this is a personal choice. You do what you want regarding that. If Monday looks good, I will enter that USD/CHF trade long, too. Because I missed my chance on Friday, I'm definitely keeping an eye on this trade.

In regards to your 1.2525 std deviation line, I don't know where you got this number from. YOU may decide to use it, but I personally will not unless the reasoning is good enough! So explain yourself a little better, and in the future if you could please post your questions so I can copy and paste them that would be FANTASTIC!

Quote
Hello there Kharvell,
Great system. One problem I have is that on my charts using metatrader4, the price never reaches the outer 2 bollinger bands at any point. I notice the same thing with the chart image of £/$ that drcole1 posted. Does anyone else have this occur, or know the reason?
Hope someone can help as this looks to be a great system especially for those of us with day jobs.
happy day
kev

Hey there,
And thank you for your kind words! Statistically speaking, the outer BB line being hit is a rarity. To be approximate, there is a LESS THAN .5% chance that it will be hit. So worry not my friend, my only guess is that our brokers use different data, and your trades will be slightly different from mine.

Quote
Looking for a bounce off a bollinger in the countertrend direction can be a tricky way to trade. I usually use an indicator like Accumulation Distribution or Momentum with a 10,1 bollinger applied to the indicator for an assist on those. Trade gets taken when the indicator breaks the bollinger in the right direction. I don't go counter much. My way to trade is to look for a momentum break of the 10,.8 bollinger on price in the direction of the moving averages and follow the trend. I find this discussion useful, because it shows when a trade is likely to run out of gas.

Thanks for your comment taxgeek!
As I see it, trading counter is good if you TP at the center SMA. Otherwise, I do agree that there is inherent risks involved. Personally, I am not that good with momentum indicator and would appreciate a link or 2 to some info!

Thanks again,

Kevin

Quote
Kharvell,

Just checking to see if I get this and also getting your thoughts on what you would have done in a specific example. Looking at the GBP/USD, would you have entered on Jan 25/07 the day after it closed in the channel. And would you still be in the trade or when would you have exited.

thanks

Mike.

Yes, I would have taken that trade. However for me, it would have been since the 24th. No worries though, probably just broker differences. Personally, my SMA was showing a flat slope so I would have entered with 2 lots. At some point the price hits the SMA, I would have exited one lot, and I currently would have 1 lot. This is all hypothetical of course

Hope this helps,

Kevin

PS chandra and megadave, since your posts are so great, I will make a seperate post for you 2
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