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Spud's Predictive MTF Stochastics

  • #1,181
  • Edited 5:20am Dec 5, 2008 4:06am | Edited 5:20am
Thanks CindyXXXX - good points.

by the way: my bot wants to tell you: that your first 'punching him' is forgiven http://www.forexfactory.com/images/icons/icon12.gif



hi all,

don't know if anyone exits strictly by the mechanical Risk Rules.

Well I do not have millions of trades yet: since I started yesterday (but to give you an idea in one of my accounts I had 15 SHORT trades and 14 LONG trades in about 20 hours (tracking 8 Pairs)

overall I'm in negative. (Ok I also had some real bad entries and found some more bugs)


But what I had quite often is something like the FIRST PIC below:

SHORT Entry: at 1.2774

EXIT: at 1.27811

Well, I don't mind at the moment because I want just to observe exactly such things -- but it happened often.

I know Spud mentioned that the real challenge is a good exit - so right is he ;-)

So any idea to improve the mechanical Exit Rules.
* I know I could use the Trailing Stop Loss (not implemented yet) -
* or a fixed TakeProfit
* or more advanced 3 trades with different TakeProfit Settings
* or forget TF_group switching to the next higher Level

but maybe there are more sophisticated ideas.

thanks MJ


The FIRST PIC really shows my question - as it happened quite often with the present mechanical Exit Rules and TF_group switching. (or my bug ;-)

The SECOND PIC shows a nice dopple Short trade going on in GBP/USD: one about 100 + the other 70+ -- but where will it in the end exit ??

The THIRD PIC shows a nice dopple LONG trade : USD/CHF: 127+ and 135 + -- but where will it in the end exit ??

The FOURTH PIC shows the REAL BAD Entry (not to give a wrong impression all would be fine): USD/TRY - got stopped out. stoll have to check what has happened - if it should not had to be stopped before -- maybe a new bug ;-)
Attached Images
__Thanks__ MJ
  • #1,182
  • Dec 5, 2008 5:22am Dec 5, 2008 5:22am
M j:

When I did a quickie manual backtest, with a 10 pip TP, I had 20 wins, 4 losses over one week. Try running the EA with various TP's...10, 12, 15 and see what happens. What I haven't looked at yet is what is the total losses on those losing trades (SL at the peaks means average loss>average win). The shear volume of wins should make for a nice profit regardless.

FW
Isolate yourself from the herd
  • #1,183
  • Edited 8:03am Dec 5, 2008 7:08am | Edited 8:03am
well I watch my first SHORT EUR/USD Escalator on TF_group M30 (Level3)

and got just a EUR/USD LONG on TF-M5 (Level1)

very nice to watch -- especially the escalator how the Risk Level changed for each TF_group ( I calculate it every minute)


Current RISK Situation: (risk 1 is 20% risk 5 is 100%)

SHORT_RISK ! Pair: EUR/USD, TimeFrameLevel: TimeFrameLevel1, SHORT_RISK: 3
SHORT_RISK ! Pair: EUR/USD, TimeFrameLevel: TimeFrameLevel2, SHORT_RISK: 2
SHORT_RISK ! Pair: EUR/USD, TimeFrameLevel: TimeFrameLevel3, SHORT_RISK: 1
SHORT_RISK ! Pair: EUR/USD, TimeFrameLevel: TimeFrameLevel4, SHORT_RISK: 2

LONG_RISK ! Pair: EUR/USD, TimeFrameLevel: TimeFrameLevel1, LONG_RISK: 1
LONG_RISK ! Pair: EUR/USD, TimeFrameLevel: TimeFrameLevel2, LONG_RISK: 5
LONG_RISK ! Pair: EUR/USD, TimeFrameLevel: TimeFrameLevel3, LONG_RISK: 5
LONG_RISK ! Pair: EUR/USD, TimeFrameLevel: TimeFrameLevel4, LONG_RISK: 5

1.PIC: SHORT Escalator: TF_group M30 (Level3)
2.PIC: MEW Between LONG Entry: TF_group M5 (Level1)

Well just let it run and see what comes out of it in the end.



The 3. PIC is the ABSOLUTE Failure: 4 SHORT EUR/CAD Stopped out. (I post that only to see how it should not be ;-)
Attached Images
__Thanks__ MJ
  • #1,184
  • Edited 7:52am Dec 5, 2008 7:24am | Edited 7:52am
EUR/USD LONG Between Entry got Must Exit:

Risk Turned quickly from 40 % to 80 %

Fri, 05 Dec 2008 14:15:08 SHORT_RISK ! Pair: EUR/USD, TimeFrameLevel: TimeFrameLevel1, SHORT_RISK: 2
Fri, 05 Dec 2008 14:15:08 SHORT_RISK ! Pair: EUR/USD, TimeFrameLevel: TimeFrameLevel2, SHORT_RISK: 1
Fri, 05 Dec 2008 14:15:08 SHORT_RISK ! Pair: EUR/USD, TimeFrameLevel: TimeFrameLevel3, SHORT_RISK: 1
Fri, 05 Dec 2008 14:15:08 SHORT_RISK ! Pair: EUR/USD, TimeFrameLevel: TimeFrameLevel4, SHORT_RISK: 2

Fri, 05 Dec 2008 14:15:08 LONG_RISK ! Pair: EUR/USD, TimeFrameLevel: TimeFrameLevel1, LONG_RISK: 4
Fri, 05 Dec 2008 14:15:08 LONG_RISK ! Pair: EUR/USD, TimeFrameLevel: TimeFrameLevel2, LONG_RISK: 5
Fri, 05 Dec 2008 14:15:08 LONG_RISK ! Pair: EUR/USD, TimeFrameLevel: TimeFrameLevel3, LONG_RISK: 5
Fri, 05 Dec 2008 14:15:08 LONG_RISK ! Pair: EUR/USD, TimeFrameLevel: TimeFrameLevel4, LONG_RISK: 5

http://www.forexfactory.com/images/icons/icon13.gif

The SECOND PIC shows a next Long Entry - wich turn into profit and ended up in loss too ;-)
Attached Images
__Thanks__ MJ
  • #1,185
  • Edited 8:48am Dec 5, 2008 8:19am | Edited 8:48am
The SHORT EUR/USD moved already to the Last TF-group H1.

Note I use instead of H4 the H3.


Well and it Finished:

SHORT ENTRY: 09:44 Price: 1.27811

EXIT on TF_Group H1: 14:30 Price: 1.26949

PIPs: + 86 PIPs


* Had in the meantime 2 LONG Entries which failed both as above.

1. LONG: 12:40 Price: 1.26935
Close: 13:15 Price: 1.26653

PIPS: - 26

2. LONG: 13:27 Price: 1.26913
Close: 13:45 Price: 1.26649

PIPS: - 26

TOTAL: PIPS: 34


Wish everyone a happy weekend .

MJ
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__Thanks__ MJ
  • #1,186
  • Dec 5, 2008 1:24pm Dec 5, 2008 1:24pm
Quoting Jmc
Anyhow, lately I've been practicing what Spud has been preaching about the 20 a day with some better success. In and out like a pip sniper...feels good to see the account grow, albeit very slowly. JMC
You've caught the key word....practice. 20 pips a day on a $1 a pip account seems like a forever process but the bigger payoff is the investment in yourself and what you are learning while you do this. We spend 4 years in university to get a career...why not a year practicing trading discipline...seems like a good payoff to me when you can write your own cheque.
  • #1,187
  • Dec 5, 2008 2:03pm Dec 5, 2008 2:03pm
Quoting LuboLabo
I have done the change that you asked, in addition, I removed the signal line and set the initial values to 14-3-3.

Good Luck.

Lubo
thank you a lot for the indicator
  • #1,188
  • Edited 5:46pm Dec 5, 2008 5:34pm | Edited 5:46pm
I want to take a step back to answer the question, why we enter a trade when the Price Line is above 76.4 and the Origin line goes below 76.4...or when the PL is below 23.6 and the OL is above 23.6.

The chart below demonstrates this. Each red line represents a point where the OL crossed 23.6 or 76.4 with the PL in the proper place.

The mental (not fixed) stop loss is 10 pips off our peak. The profit is 10 pips.

Each solid thick red line represents an entry that never hit the mental stop.
The dashed red lines represent where we made 10 pips profit and exited, some trades share the same exit.
The blue lines represent where we hit our mental stop and had to make a decision (more details follow).

There are 11 trades in 24 hours here and there is no reason why all 11 trades would not have been traded successfully for 10 pips.

If you study each trade in detail you will see what combinations support each trade.

This is on the M5. Now, let us look at something a little more interesting in details.
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  • #1,189
  • Dec 5, 2008 5:46pm Dec 5, 2008 5:46pm
The chart below is details on a few of these trades. What you should notice is the relationship to the dashed red line representing where we made +10 pips and the peaking of the Origin Line..and/or the crossing of the Origin line relative to 23.6 or 76.4.

This is more of an "...isn't that interesting" correlation but it does show you how you could exit yourself out of a trade using the Origin Line and being relativel safe about it. You either take 10 pips or exit on the Origin Line crossing 23.6 or 76.4....or exit off the peak when the Origin Line changes direction.

This isn't a change from anything we have been talking about. What I'm showing you is the broad view of what is happening in our trade as the risk levels change. By flipping time frames we can extend our Origin Line and know whether to continue or not....you'll see the same correlations all the way through and the Origin Line spiking out or crossing a fib.
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  • #1,190
  • Dec 5, 2008 6:09pm Dec 5, 2008 6:09pm
Spud,

Thanks for posting these. I will read and reread again and again. Today was a really crazy trading day for me. I'm not sure if it was due to the fact that it was Friday or what. It seems to me that you are only entering a trade when BOTH the PL and the OL have crossed 76.4 or 23.6 and the OL is heading back across in the opposite direction.
  • #1,191
  • Dec 5, 2008 6:14pm Dec 5, 2008 6:14pm
Here is the detail where our entries hit a our mental stop. We crossed our mental stop by 2 pips on the candle close...is that enough to exit?

This is where M1 comes into play(see insert)...notice how it is breaking out 1 minute after our mental stop is hit. The exact same principles of our entry into the M5 trade exist on the M1. If you were just using the M1 filter you would see this rising and why would you exit? (If M1 is diving your out).

Now...if the M1 stayed in the oversold and we dipped again, I'd be a lot quicker on the trigger. However, this is where M15 comes into play....is M15 moving off a peak? If it is, I'd stay in even if we don't have a signal for an M15 long yet, but we have passed a peak. For the record, M15 is coming off a peak in the oversold area....so with M1 and M15 we don't have to exit on the mental stop.

There is no doubt this is a tricky area of a trade...whether to ride out the bounce and possibly get caught in an oversold market or take a loss. If you take the loss.....you'd still make 40-50 pips for the day....and our target is 20 pips...right? The M1 here is our saving grace and the fact we closed only 2 pips by our mental stop. Deciding your exit based on simple patterns like this go far into making you a more efficient trader.
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  • #1,192
  • Dec 5, 2008 6:17pm Dec 5, 2008 6:17pm
Quoting jdcompute
Spud,

Thanks for posting these. I will read and reread again and again. Today was a really crazy trading day for me. I'm not sure if it was due to the fact that it was Friday or what. It seems to me that you are only entering a trade when BOTH the PL and the OL have crossed 76.4 or 23.6 and the OL is heading back across in the opposite direction.

I'm just showing you can take the safest trades..be picky and still make good pips in a day. This is the safest way to trade stochastics when the PL is in the overmarket and the OL is leaving the over market.

Also, just trying to give a better overview of where we should be trading when we are entering a trade and where we are in the combination world on these trades. This is not the only way...it is the safest way.
  • #1,193
  • Dec 5, 2008 6:22pm Dec 5, 2008 6:22pm
Spud,

Look at the image that I've posted below. You will see that I've pointed out where the OL and PL were above 76.4 and the OL crossed back down but then turned back up. Was this just a failed entry?
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  • #1,194
  • Dec 5, 2008 6:24pm Dec 5, 2008 6:24pm
Oh, believe me, I am ONLY interested in the safest way. That's what will build my account. I'm just trying to make sure I have a handle on what you're saying. I want to practice and practice and get this method down.


Quoting Spudfyre
I'm just showing you can take the safest trades..be picky and still make good pips in a day. This is the safest way to trade stochastics when the PL is in the overmarket and the OL is leaving the over market.

Also, just trying to give a better overview of where we should be trading when we are entering a trade and where we are in the combination world on these trades. This is not the only way...it is the safest way.
  • #1,195
  • Dec 5, 2008 6:47pm Dec 5, 2008 6:47pm
Quoting jdcompute
Spud,

Look at the image that I've posted below. You will see that I've pointed out where the OL and PL were above 76.4 and the OL crossed back down but then turned back up. Was this just a failed entry?
Good catch. The straight mechanicals is yes, you hit the stop and there is nowhere to go here.

I think if you use the the time frames..M1 (or just filter) and M15 you'll get a pretty good idea we are a little early....does that prevent you from entering..maybe not...but probably as our M5 risk increases and M15 is not near a short yet...we might make a wise decision to bail out and get close to breakeven when the Origin Line takes a bounce on us.

You'll notice most succesful 10 pip trades the OL heads staright for the pips...which is another way to think of it too. It's really a matter of playing that OL bounce or not and taking a chance.
  • #1,196
  • Dec 5, 2008 6:50pm Dec 5, 2008 6:50pm
I'm following you so far. The only thing I need help with is understanding what you mean by checking M15, specifically. Using the M1 as a filter works really well but I'm really trying to work on timing my entries just right.


Quoting Spudfyre
Good catch. The straight mechanicals is yes, you hit the stop and there is nowhere to go here.

I think if you use the the time frames..M1 (or just filter) and M15 you'll get a pretty good idea we are a little early....does that prevent you from entering..maybe not...but probably as our M5 risk increases and M15 is not near a short yet...we might make a wise decision to bail out and get close to breakeven when the Origin Line takes a bounce on us.

You'll notice most succesful 10 pip trades the OL heads staright for the pips...which is another...
  • #1,197
  • Dec 5, 2008 6:57pm Dec 5, 2008 6:57pm
Quoting jdcompute
Oh, believe me, I am ONLY interested in the safest way. That's what will build my account. I'm just trying to make sure I have a handle on what you're saying. I want to practice and practice and get this method down.

You may notice we get a lot of "double" entry opportunity with one entry too early and the real entry following a little later with a slightly higher peak. Usually this doesn't hit the mental stop too often...unles we are way early. One way to use this is to be ultra cautious on the first entry (as it may be the only entry) and play a straight drop..any sign of reversal or increase in risk and start looking for a breakeven exit...or you may get a new entry before that which can solidify staying in.

Practice and watching M5, M1 and M15 you'll start to get the feel of how these are acting and if there is going to be some problems. Just watching how fast price reacts to M1 filter moves can give good insight into if we are a little early or not.

I suggest 76.3 and 23.6...but no reason you can't move those out to create more filter room say..20/80 or even 15/85...or even 90/10 and the M5 trigger. Still, with watching the stiochs move is by far the best advantage you have.
  • #1,198
  • Dec 5, 2008 7:02pm Dec 5, 2008 7:02pm
I'm reviewing my charts for today and I was just about to say the same thing about the double entries. I am trying to concentrate on knowing what entry is the real entry and I think that the M15 charts may assist me in knowing how close I am to the real move.

Also, just for clarification, we're still wanting M5 14,1,1 to dip below 10 for a valid long trigger, correct?

Quoting Spudfyre
You may notice we get a lot of "double" entry opportunity with one entry too early and the real entry following a little later with a slightly higher peak. Usually this doesn't hit the mental stop too often...unles we are way early. One way to use this is to be ultra cautious on the first entry (as it may be the only entry) and play a straight drop..any sign of reversal or increase in risk and start looking for a breakeven exit...or you may get a new entry before that which can solidify staying in.

Practice and watching M5, M1 and M15 you'll...
  • #1,199
  • Dec 5, 2008 9:27pm Dec 5, 2008 9:27pm
Here's a comparison of the early entry versus the good entry on JD's posting. The chart on the left is the early entry and the chart on the right, the good entry a little later.

Notice our M5's are almost identical.
The M15 crossover and filter look almost identical too. But look at the M15's Price and Origin lines. The M15 on the early entry is a marginal short given that if it goes short the price line hasn't risen above 76.4. The only way we can get M15 and M30 to carry over from M5 short entry and go escalator down is with an M15 climb (and M30 climb) first. Look at the M15 and M30 on the good entry...here we can keep our short entry going through the time frames and possible line up an escalator down. No possibility in the early entry, possibility in the good entry.
You can clearly see here which entry is safer and where patience pays off.

This is what I mean about being picky about your trades. If we wait for our trades to give us the most possibility for long term success (as an escalator down would be)...then it means our short term trades success is amplified a hundred times.

If you are mechanical about this and trade every trade on set conditions, it is an inefficient process but you do not have to watch it. If you watch what is happening and seek out the optimum targets then sniping 20 Pips isn't to hard.

I showed you previously how M5 lines up with a multitude of opportunity and how just using the single M5 with Price Line and Origin Line can be extremely successful. But it is not perfect! When you incorporate the multiple time frames, the combination rules and look for the rollover from M5 to M15 to M30 to H1 being a possible development, our trade entries get very succesful. In other words, if you can can get a M5 entry with an M15 entry forming or even happening at the same time, there's far more success than just using M5.

Put value into pips for the trades that line up better and take value out of the pips for weak trades. We won'yt always have the second entry set-up so put small lots sizes on the simple but weak entries. When things are lining up and much stronger...risk more lots into your pips. Statistically you will be much further ahead as the weaker trades will lose more than the stronger trades.

For example if we risk $1 a pip on every M5 entry, but say double or triple up when we have a corresponding M5 and M15 entry, and say triple up when we have a corresponding M5,M15 and M30 entry..then you take advantage of the strength of the trade.....play for 10 pips...get out. If you have a strong triple entry you might put 1 LOT to a trend (ride the escalator down) and 1 lot for 10 pips...challenge yourself to come out no worse than breakeven. You can play many different $$ entry combinations to get your pips for the day. Play for more $$ and less pips if you like, for example. Just be picky on your trades.
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  • #1,200
  • Dec 6, 2008 12:52am Dec 6, 2008 12:52am
Thanks for the analysis. I know that it takes a considerable amount of time to cut and paste those charts and then to write up your comments. I want you to know it's very much appreciated.


Quoting Spudfyre
Here's a comparison of the early entry versus the good entry on JD's posting. The chart on the left is the early entry and the chart on the right, the good entry a little later.

Notice our M5's are almost identical.
The M15 crossover and filter look almost identical too. But look at the M15's Price and Origin lines. The M15 on the early entry is a marginal short given that if it goes short the price line hasn't risen above 76.4. The only way we can get M15 and M30 to carry over from M5 short entry and go escalator down is with an M15 climb (and...
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