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Relative Strength Basket Trading System

  • #1,501
  • Dec 5, 2008 5:44pm Dec 5, 2008 5:44pm
Steve,

When you first said this the other night I doubted, then tested and made a £45.00 profit on 0.01 lots which equated to over 650 pips! Unreal....

Then there is that mother of all trades above (AKA my Fcuk up) where effectively I didn't listen to my own advice, entered when I shouldn't have, and was going to kill it off at -£30, but I went for Steve's Law 100%......


... as you know it got as far as -£92 (there was only £112.00 in the account) hence why I nearly got a margin call...

Faith held and it came back... all the way down... and I had doubts it would make it.... but it did.

Got as far as +£22, but closed for +£11 on the profit jumping stop.

So I think you may be right... start at either end of the scale and hold you breath....

Eddie


Quoting SteveHopwood
In my last post, I wrote this:

"At some point, those of us blindly following Steve's Law will find ourselves with a basket being rapidly left behind by a currency rapidly moving in the 'wrong' direction'.

Or does it?"

Every day this week, I have followed the xxxJPY range highlighted by KG's KG RS JPY Group indi, expecting the range to be broken as some stage. This has not happened. OK, no reason it should not happen, just that it hasn't yet.

I would have been happy to accept this were it not for the performance of the long-term demo account...
  • #1,502
  • Dec 5, 2008 5:54pm Dec 5, 2008 5:54pm
Quoting eddiemiller
Steve,

When you first said this the other night I doubted, then tested and made a £45.00 profit on 0.01 lots which equated to over 650 pips!...
Maybe we are feeling our way towards some rules here ie:

 

  1. Enter at either end and hold our breaths
  2. Enter late when the 'normal' rules apply so long as there is a difference of 10 between the RS_GROUP_JPY settings.

Hell, feeling our way sure makes a difference to guessing blindly in the dark doesn't it? Thanks KG.

  • #1,503
  • Dec 5, 2008 5:59pm Dec 5, 2008 5:59pm
Just had a thought. There is no reason why everyone should not have access to the long-term demo account, so here is how to access it. YOu will need an IBFX demo account to do this - visit http://www.ibfx.com/ to register for a free demo.

Password : n6tznly
Investor : sfg0ogg (read only password)

  • #1,504
  • Edited 7:17pm Dec 5, 2008 6:54pm | Edited 7:17pm
Quoting damonl
First of all, what got me looking at this is the theory that you take every trade when jpy stregth chart crosses the smoothing line I guess you could call it for lack of a better word. Trading in this manor is crazy IMHO. I took a look at that and I almost gave this system nay another look, and indeed left with no thoughts of returning when I happened to see something fuzzy. I look for fuz
I guess you are talking about RS_GROUP_XXX V1.1 indicators. Actually, i made those indicators (RS_GROUP_XXX V1.1) to help me visualy look at the strength individually. I define the strength (weak or strong) base on cross of the strength with the smoothing line.

Quote
So do that.....overlay the stregth chart for USD and the one for the JPY and get rid of the smoothing lines. Now you have an indicator with 2 lines. One, USD and the other JPY.

You can use KG_RS_GROUP only to see this. Just set false another currency on input and leave JPY and USD true.

Quote
Okay...now if the JPY strength chart is going up, that means the the JPY is getting weaker. If at the same time the USD strength chart is going up, that means that the USD is getting stronger. What this tells me is that the USD and the JPY are fighting for position, and you don't know who is going to win. So now you have USDJPY pair doesn't know which way it is going to go because both are in a battle for dominace. To me this is not the time to make a trade, because ultimately now you don't know which one will win and when it will win.

When the strength of JPY and USD are same (JPY weak & USD Weak or JPY strong & USD strong) who is dominace is the currency that has the bigger strength. This what i can see when i calculate the strength and observ it when i do a forward test.

Quote
So instead of making a trade here you continue to watch the USD and JPY strength indicators and all of sudden the most recent bar closes and the JPY strength chart is up and the USD strength chart is down. This tells you that USD is Weak and JPY is Weak....where is it likely that USDJPY will go.....my bet would be down. You just put the odds in your favor that you will make a winning trade. Or at least you will get some positive pips. Works the opposite way as well.Are you starting to see the correlation here and why it is important to look at...

Please, explain me this with chart.

Quote
P.S. I put both indicators on my gpyjpy chart and make my trades on that because it moves the most. If you were doing a basket I would open all basket trades when the entry for gbpjpy was triggered. But, once again, i would leave out chfjpy and cadjpy becaause the main pair is usdcad and usdchf, which would likely move with usdjpy. You would trade jpy crossings where the base pair has the USD as the denominator, unless you know something I don't......bottoms up...it's the weekend

We'll check & try this next week.

Thanks

KG
  • #1,505
  • Dec 6, 2008 12:40am Dec 6, 2008 12:40am
Quoting elchoco
I've just spent a week going through this thread. It's totally brilliant. On my first attempt I just made 22% in about an hour. 45 trades, 5 loses, 1 break even.

What was I thinking calculating all the relative strengths by hand????

I don't think I've had so much fun in weeks.

Total Kudos to all you shining lights !!!!!!!!!

Strategy: [list][*]Waited for strong separation on RS_GROUP_JPY_V1.0[*]Confirmation with all arrows on KG_TREND_MTF_MULTIPAIRS_JPY[*]Double confirmation from HIGHEST_LOWEST_INDEX_V1.0[*]Trigger Entry with...
this is interesting...esp.point no.1 and 3
care to show us some examples with charts ??
thank you
  • #1,506
  • Dec 6, 2008 12:49am Dec 6, 2008 12:49am
Quoting Kang_Gun
Thanks damonl,

Sorry for my english.
So, you will open the basket trade when:

USD [strong] & JPY [weak] or USD [weak] & JPY [strong] is it ?

Thanks

KG
I have been dabbling with this for a week now, if i could write mql i would have written an ea for it. but what i was thinking was on a 15 min chart from my observations to short a particular pair lets say gbpjpy
gbp[weak]<40 and jpy[strong]>60 exit when either one does not meat condition. it tends to be more of a scalp i guess but i think it allows for higher probability. now you could do this across all pairs available, with MM I think it increases trading performance overall.
  • #1,507
  • Dec 6, 2008 2:55am Dec 6, 2008 2:55am
Dear all,

I try this system in demo account for this week and so far it's work (with profit more than $ 1,500). But when I used Buy_long and Sell_long script in micro account, it didn't work (0 trade are open). Can anyone help me how to set this script? My broker is FXOPEN

Sorry for my english
  • #1,508
  • Edited 6:21pm Dec 6, 2008 4:22am | Edited 6:21pm
  •  bengong
  • | Joined Jun 2008 | Status: oalaaaahhhhhhhhh yo yoooooooo...... | 38 Posts
got some nice pips from this setup last night.... my rules is wait for red and line to cross in rs groups jpy ( jpy become weak ), then confirm that MOST of the the other currencies in kg rs groups is heading opposite direction (going strong ) or at least stronger than jpy currency ( because in this setup jpy is going weak. as u can see usd is also going weaker, but bit stronger than jpy )

http://i33.tinypic.com/2u5uhpx.gif

closed at about +1500 profit ( not pips, this is micro account so it's about 15usd ) and actually can gain about +20usd but already satisfied with the result and closed it considering it's about 2 hours before market closed....

Attached Image (click to enlarge)
Click to Enlarge Name: 2ep59qr.gif Size: 103 KB


will give it another try, any advise will be very appreciated...

PS. also used same horizontal support resistance based on candlestick for conderation on jpy pairs, in this case in this case I took a quick look on usd/jpy, eur/jpy and gbp/jpy
  • #1,509
  • Dec 6, 2008 5:22am Dec 6, 2008 5:22am
Quoting kenshandjaya
this is interesting...esp.point no.1 and 3
care to show us some examples with charts ??
thank you
Here's your chart, although there's nothing much new that hasn't been shown by others. Also, for exits, if a couple of the currencies are floating at a loss I look at KG_RS_GROUP to give me a heads up on whether to wait or to pull out early. Last night I was taking out the exits one by one.

I think due to my years of watching stochs that i instinctively (and probably erroneously) felt that separation of the RS_GROUP_JPY indicator implied an acceleration of the underlying price.

If the JPY is at the bottom of its range for this indictor, then the currency is weak and every JPY pair should be rising in price, ie a BUY on the pairs in the basket.

However it's then our choice as to whether we want to trade in the direction of the strength/weakness or play the reversal as mentioned by Steve Hopwood:

Quoting SteveHopwood
Surely it can't be as simple as buying xxxJPY at the top of the range and selling at the bottom?
Again, it not as if being at the bottom necessarily represents a state of "oversold" for the JPY. The currency is just weak and could carry on being weak for ages. Or maybe it is this simple. I need more screen time to see how it works.

About half an hour later the indicator crossed to the upside and would have been a text book entry for the reversal had it not been end of trading on a Friday. How early you want to enter against the trend is up to you.

I would like to clarify a number of point for my own sanity:

Why JPY? Have we just chosen one currency solely to focus our attention? (I think I read that somewhere) Or was it a choice informed by any other reason? (E.G. JPY pairs are really moving at the moment). At some point the JPY will go flat for a couple of weeks and the moves less easy to trade.

Exits: Without having the 7 charts open to see S/R, trend lines or a fib I feel a bit in the dark about when to close the basket. It's a bit like blindly driving a car based on someone saying "Let's go!!" I have no idea of my target destination or when and if I've arrived. Can't deny that last nights experience blew my usual win/loss ratio out of the window, however I was able to enter a full basket about 4-5 times with hardly any losses, so I presume I could have stayed in longer on the early entries rather than closing and re-entering and paying the 7 spreads over and over again.

Lot size: The scripts give equal lot sizes for all pairs. GBP-JPY and AUD-JPY for example are way out of balance in terms of risk etc. Does anyone care?

Strength? When I used to calculate relative strength manually (those were the days) I used the % appreciation of each currency against all the other majors with a weighted smoothing over the last 20 days. I then simply traded the highest appreciating currency verses the most depreciating currency. I'd be interested to hear more about the maths choices that drive the KG indicators.

Scripts: I've never got any of the "Weakest_is_XXX_Groups" scripts to work. The window pops up but nothing happens, live trading is enabled, but no trades entered. KG_JPY_BASKET_LONG/SHORT works fine. Any thoughts anyone?

Edit: I deleted my second pic because it made the screen too wide. Needn't have worried...

Cheers All

El Choco
Attached Image (click to enlarge)
Click to Enlarge Name: basket2 copia.jpg Size: 298 KB
  • #1,510
  • Dec 6, 2008 5:53am Dec 6, 2008 5:53am
can any one please tell me are the indicators in the first post are the updated last ones or i have to go through the thread to find them
  • #1,511
  • Dec 6, 2008 5:59am Dec 6, 2008 5:59am
Quoting deadsoul
can any one please tell me are the indicators in the first post are the updated last ones or i have to go through the thread to find them
you can find link to the updated indicators in first post, but reading through the thread will be a benefit
  • #1,512
  • Dec 6, 2008 7:11am Dec 6, 2008 7:11am
Quoting deadsoul
can any one please tell me are the indicators in the first post are the updated last ones or i have to go through the thread to find them
It seems that you are mentally challenged, but please ask the person helping you on the internet, to reduce the font size please. At least on this thread... Thank you!
  • #1,513
  • Dec 6, 2008 8:01am Dec 6, 2008 8:01am
Quoting deadsoul
can any one please tell me are the indicators in the first post are the updated last ones or i have to go through the thread to find them
deadsoul,
attached are the updated indicators.
Attached File(s)
File Type: ex4 KG RS GROUP.ex4   20 KB | 707 downloads
File Type: ex4 RS_GROUP_JPY V1.1.ex4   5 KB | 636 downloads
  • #1,514
  • Dec 6, 2008 8:04am Dec 6, 2008 8:04am
@bengong @elchoco
nice trade and well explanation both of you..thank you
  • #1,515
  • Dec 6, 2008 8:07am Dec 6, 2008 8:07am
Quoting dek_pendi
Dear all,

I try this system in demo account for this week and so far it's work (with profit more than $ 1,500). But when I used Buy_long and Sell_long script in micro account, it didn't work (0 trade are open). Can anyone help me how to set this script? My broker is FXOPEN

Sorry for my english
try this ..modify the script, put . (dot) at the end of each ccy..
  • #1,516
  • Dec 6, 2008 8:23am Dec 6, 2008 8:23am
  •  bengong
  • | Joined Jun 2008 | Status: oalaaaahhhhhhhhh yo yoooooooo...... | 38 Posts
Quoting dek_pendi
Dear all,

I try this system in demo account for this week and so far it's work (with profit more than $ 1,500). But when I used Buy_long and Sell_long script in micro account, it didn't work (0 trade are open). Can anyone help me how to set this script? My broker is FXOPEN

Sorry for my english
use this modified script.... fxopen use dot after pair symbol on their live account... example for usd/jpy pair they used USDJPY. <== (with dot) instead of USDJPY ( not using dot )

Attached File(s)
File Type: mq4 KG_JPY_Basket_Long_7pairs live fxopen.mq4   3 KB | 540 downloads


Attached File(s)
File Type: mq4 KG_JPY_Basket_Short_7pairs live fxopen.mq4   3 KB | 488 downloads


thx to bro ridwan for informing this

for mt4 from other broker that have same problem... maybe this can help...
if the problem is from pair symbol, usually u got error something like this

2008.12.06 21:22:07 KG_JPY_Basket_Long_7pairs GBPJPY.,M15: unknown symbol name USDJPY for OrderSend function

u can check this error report on your expert tab

hope this will help
  • #1,517
  • Dec 6, 2008 9:00am Dec 6, 2008 9:00am
My set up for next week is as follows

gj one hour chart which has the fiboline drawn connecting the high of last mondy and low of friday

KG RS group only showing the white line and it is superimposed with RS group JPY drawn with fibo high and low

I will be montoring the gj chart as well as the indi and will be staying out of the market during the ranging period

When the markt is ranging the white line moves from 25 to 90 or from 90 to 46 with out much pip gain

Yes I am going to look into eddie number 10 difference also
Attached Image (click to enlarge)
Click to Enlarge Name: eurus.gif Size: 34 KB
  • #1,518
  • Dec 6, 2008 1:18pm Dec 6, 2008 1:18pm
Hello, I just installed v 1.1 on my platform and for some reason all of the default colors for the plots for this indicator are black. Yet the individual currency symbols with the + and - show up with colors on the left hand side. When I tried to go into editor there is no .mq4 version so I can't change the defaults. Is this the way the indicator is supposed to be? If so can someone tell me what the colors are? Some are obvious but others are difficult to match up. Many thanks for the great thread!

Regards
Max
  • #1,519
  • Dec 6, 2008 2:48pm Dec 6, 2008 2:48pm
Quoting maxreturn
Hello, I just installed v 1.1 on my platform and for some reason all of the default colors for the plots for this indicator are black. Yet the individual currency symbols with the + and - show up with colors on the left hand side. When I tried to go into editor there is no .mq4 version so I can't change the defaults. Is this the way the indicator is supposed to be? If so can someone tell me what the colors are? Some are obvious but others are difficult to match up. Many thanks for the great thread!

Regards
Max
Hi maxreturn,
v1.1.ex4 is refered to RS GROUO JPY, and there only tow lines (red and white) are shown(at least this is what I know). Either give some more details or show a screen shot of your platform and some will help you. We all here to help each other.
Jeff
  • #1,520
  • Dec 6, 2008 3:35pm Dec 6, 2008 3:35pm
Analysing which currencies are appreciating/depreciating against a basket of the Majors is something I've been working on for a while and the tools provided on this thread are nothing short of incredible for making this analysis total child's play.

The question is: Once we know from our analysis which currency is appreciating the most and which is depreciating the most, do we then gain anything by actually trading the whole basket?

I'm thinking that trading strongest against weakest will have the highest probability of success.

While trading the whole basket I noticed that some pairs were in profit almost immediately whilst others lingered about, scraping in at breakeven or perhaps a loss. Looking at KG_RS_GROUP it's easy to see why. Some currencies were stuck in the middle or even tracking the curve of JPY to some extent.

So, why subject ourselves to the risks from taking these low probability trades when we have the choice to be more selective?

(Just trying to make this EVEN MORE profitable )
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