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Traffic Light System

  • #141
  • Jan 25, 2009 9:16am Jan 25, 2009 9:16am
Quoting syracuse4x
When you think about it, 40,000+ pips is really not that big of a deal when you're trading 20 currencies over 2 months time. That's an average of 1,000 pips per month, per currency. If you figure there are roughly 20 trading days in a month, that's only about 50 pips per day per currency pair.

For me, that's WAY too much work. I would much rather increase my lots and trade just a couple of pairs. So, instread of trading 1 lot on 20 different pairs, I would much rather trade 10 lots on 3 pairs. I primarily trade the GBP pairs as they make nice...
Nothing wrong with being lazy! In fact I'm a lazy forex junie wanna be myself.
  • #142
  • Jan 25, 2009 10:06am Jan 25, 2009 10:06am
I added the word "Daily" to this system so people wouldn't confuse it with other Traffic Light systems. This is not to say that this is exclusive a "Daily" system, it's just the way I trade it. I encourage all to test it at all levels and share their results.
  • #143
  • Jan 25, 2009 11:03am Jan 25, 2009 11:03am
Quoting mitchp
J,

Welcome and thanks for taking an interest in my little system. I wish you great success. I'd be interested in you review once you run this method on the simulator.

Mitch
Mitch,


I simulated your system today (took about 2 hours) and the results as per attached.

I will try to attach the chart as well so you have a better view of the trades.

Here are a few observations:

1. 7 Nov – trade closed as HMA changed to green on the open of the next bar…. It redrew to red later.

2. 12 Dec – Goldminer redrew 3 bar back.

3. 22 Dec – Goldminer redrew 2 bars back.

4. 26 Dec – HMA was green on open and no trade taken.

5. 5 Jan – HMA was red on open and no trade taken.

6. 6 Jan – Goldminer redrew 2 bars back

7. 16 Jan – HMA was red on open, no trade taken.

8. 19 Jan – HMA was green on open, no trade taken.

The RSI indicator works well and I only saw it redraw once – to yellow.

One observation that struck me was the close of a bar – when it closed below the HMA signaled
a change in direction for short, and when a bar closed above the HMA it signaled long.

As far as I could see, the goldminer is no use at all, but the RSI + CCI together with the
close of the bar above/below the HMA gave very good indications of a long or short trade.

When I have got time, I will try to simulate it with the close of the bar above/below the HMA.

As you will see, the system was profitable for the 3 months and I think it has good potential…
Thanks Mitch.

J

SymbolGBPUSDm (Great Britain Pound vs US Dollar)PeriodDaily (D1) 2008.11.02 00:00 - 2009.01.23 00:00 (2008.11.01 - 2009.01.25)ModelEvery tick (the most precise method based on all available least timeframes)ParametersBufferSpeed=2; Bars in test1073Ticks modelled1191439Modelling quality90.00%Mismatched charts errors5Initial deposit1000.00Total net profit1107.62Gross profit2039.72Gross loss-932.10Profit factor2.19Expected payoff92.30Absolute drawdown293.81Maximal drawdown943.25 (41.98%)Relative drawdown44.59% (825.43)Total trades12Short positions (won %)9 (44.44%)Long positions (won %)3 (100.00%)Profit trades (% of total)7 (58.33%)Loss trades (% of total)5 (41.67%)Largestprofit trade625.95loss trade-242.62Averageprofit trade291.39loss trade-186.42Maximumconsecutive wins (profit in money)4 (634.39)consecutive losses (loss in money)2 (-263.67)Maximalconsecutive profit (count of wins)634.39 (4)consecutive loss (count of losses)-263.67 (2)Averageconsecutive wins2consecutive losses1
Attached Image(s) (click to enlarge)
Click to Enlarge Name: gbpusd Daily.gif Size: 7 KB
Click to Enlarge Name: gbpusd daily chart.gif Size: 21 KB
  • #144
  • Jan 25, 2009 12:03pm Jan 25, 2009 12:03pm
Quoting Jnita
Mitch,


I simulated your system today (took about 2 hours) and the results as per attached.

I will try to attach the chart as well so you have a better view of the trades.

Here are a few observations:

1. 7 Nov – trade closed as HMA changed to green on the open of the next bar…. It redrew to red later.

2. 12 Dec – Goldminer redrew 3 bar back.

3. 22 Dec – Goldminer redrew 2 bars back.

4. 26 Dec – HMA was green on open and no trade taken.

5. 5 Jan – HMA was red on open and no trade taken.

6. 6 Jan – Goldminer redrew 2 bars back...
Thanks for the analysis, it sort of confirms what I've suspected about Goldmine (that it repaints more than I thought). But even though it repaints, I don't really think it has hurt me, maybe just kept me out of a trade longer. I think this is because I don't trade on the start of the new daily (that's 4pm for me), I usually get to the charts between 6-8pm CST. By that time the new bar has had time to settle into a direction. I think it's the same for HMA, I'm giving it time to establish itself before I take a trade. I have seen it change on me, but only at the very beginning of a trade, so my lose is usually very low.

The bottom line is we want to find the best combination of indicators, without overloading our charts. If goldminer is useless and CCI proves to be a better filter, than we just gave everyone a better tool to make pips with.

Lets keep up this kind of exchange - I love it!!!!
  • #145
  • Jan 25, 2009 12:37pm Jan 25, 2009 12:37pm
Jnita, part of your post said
"One observation that struck me was the close of a bar – when it closed below the HMA signaled
a change in direction for short, and when a bar closed above the HMA it signaled long."
I manually back checked the EUR/USD, and didn't find this to be the case. I found no pattern. If there was that sort of pattern, of even whe3re it was the case 60-80% of the time, that would be a great find as it would be a definite signal to change direction. Am I looking at the same thing?
  • #146
  • Jan 25, 2009 12:53pm Jan 25, 2009 12:53pm
I'm doing an experiment using only built-in indicators in MT4: RSI(8, open) and CCI(14, open). I'm using 'open' (instead of 'close' or other option) to make these indicators more "stable" and easier for me to decide. The only custom indicator that I'm using is the HMA indi (not the 'modified' version though). Any ideas of using built-in indicator to replace this HMA?
  • #147
  • Jan 25, 2009 1:05pm Jan 25, 2009 1:05pm
Freddy, I attached that KG Indicator to my chart. I suspect it repaints like the goldminer does. It looks like that 3 Level Semifor that some really like, but which I hate. I personally watched the Level 3 Semifor move a total of SEVENTEEN bars one day on a 15 minute chart. It only stopped moving to the next candle when the pair moved had finally had two up bars. In looking at it on a chart, it looked like the Holy Grail, though. But, I will keep my eye on this. If it only repaints one bar, might not be so bad to use on an hour chart.
Quoting Freddyfx
THANKS for posting this indicator. Can you PM me the settings for M5 as that is what I trade the most these days.

And for being clear on being positive to EVERY intent to make trading a bit easier, if you guys would like to take a look at these posted indicators. They are helping me a lot.
  • #148
  • Jan 25, 2009 1:08pm Jan 25, 2009 1:08pm
Quoting Freddyfx
THANKS for posting this indicator. Can you PM me the settings for M5 as that is what I trade the most these days.

And for being clear on being positive to EVERY intent to make trading a bit easier, if you guys would like to take a look at these posted indicators. They are helping me a lot.
Setting are the same for all time frames
My Email For Help: [email protected]
  • #149
  • Jan 25, 2009 1:19pm Jan 25, 2009 1:19pm
Good rule for trading daily is look at 1 hour for setup the same direction and enter and exit on 15 min. Also if your in the trade on a Daily look at 1 hour for retracements if you want to exit, keeping a eye on the 15 min. to.
These 3 Chart frames are like Radar for Daily Trading.
My Email For Help: [email protected]
  • #150
  • Jan 25, 2009 3:58pm Jan 25, 2009 3:58pm
Quoting tcmm
Good rule for trading daily is look at 1 hour for setup the same direction and enter and exit on 15 min. Also if your in the trade on a Daily look at 1 hour for retracements if you want to exit, keeping a eye on the 15 min. to.
These 3 Chart frames are like Radar for Daily Trading.
Well said, tcmm. This is the smart way to trade.

Rob
  • #151
  • Jan 25, 2009 4:20pm Jan 25, 2009 4:20pm
MitchP

Did I read something in earlier posts that you were going to post your trades for this week?
  • #152
  • Jan 25, 2009 4:28pm Jan 25, 2009 4:28pm
Quoting Stephan13
MitchP

Did I read something in earlier posts that you were going to post your trades for this week?
Stephan,

Yes, I'm going to put it all on the line and let everyone follow my erract style of trading. Since I usually don't start looking at the charts until after the start of the new week, look for my trades around 7 or 8pm CST tonight.

Mitch
  • #153
  • Jan 25, 2009 5:35pm Jan 25, 2009 5:35pm
MitchP

thanks
the day has already started for me, it's Monday morning 0930hrs and HOT.

Look forward to seeing your trades.

Stephan
  • #154
  • Jan 25, 2009 6:01pm Jan 25, 2009 6:01pm
Hi,

I wonder when you all place your trades? Is 15 minutes after 0 GMT too soon? Does the daily bar get time to settle in just 15 minutes or should I wait longer? Also, perhaps it can be good to wait longer on Sundays since the market is quite slow in the beginning?

Cheers,

Archie
  • #155
  • Jan 25, 2009 6:02pm Jan 25, 2009 6:02pm
Mitch,
I am interested in your strategy am going to demo trade it. I also have a job that keeps me from watching the market during the day here in the States.

You said that you started with $300 and have built it up. With not using a stop loss and only having $300 in your account, did you ever come close to losing your total account when the market went against you during the day when you couldn't watch it?

Thanks
  • #156
  • Jan 25, 2009 6:30pm Jan 25, 2009 6:30pm
That KG signal is a repainter, as I thought. You have to be there to watch it. What it does is to appear over or under the candle that just closed before, whether that be a 5 minute, one hour or whatever chart you're using. If that candle had just gone down 50 pips, the arrow appears over it, as if it gave the signal BEFORE the drop, whereas the signal was giving the candle later. Also, if that nexy dandle starts to go up, the arrow disappears, as if it never were there. I know this is all due to the pair movement, and all, but I'd say use it cautiously. What you see on the charts is after a lot of repainting and erasing.
Quoting Freddyfx
THANKS for posting this indicator. Can you PM me the settings for M5 as that is what I trade the most these days.

And for being clear on being positive to EVERY intent to make trading a bit easier, if you guys would like to take a look at these posted indicators. They are helping me a lot.
  • #157
  • Jan 25, 2009 6:35pm Jan 25, 2009 6:35pm
Quoting Archie
Hi,

I wonder when you all place your trades? Is 15 minutes after 0 GMT too soon? Does the daily bar get time to settle in just 15 minutes or should I wait longer? Also, perhaps it can be good to wait longer on Sundays since the market is quite slow in the beginning?

Cheers,

Archie
Archie,

I normally wait a couple hours on Sunday.

Mitch
  • #158
  • Jan 25, 2009 6:50pm Jan 25, 2009 6:50pm
Quoting 1522dad
Mitch,
I am interested in your strategy am going to demo trade it. I also have a job that keeps me from watching the market during the day here in the States.

You said that you started with $300 and have built it up. With not using a stop loss and only having $300 in your account, did you ever come close to losing your total account when the market went against you during the day when you couldn't watch it?

Thanks
1522Dad,

When I started out, I only had enough money to trade a couple pairs. As my equity/margin grew I was able to expand that upwards. Though I had losers, my win were higher and I was able to reinvest my equity into more pairs. I also must say I got really lucky to be in the correct position when the Feds lowered interest rate (that week my trades shoot up by $3000). Since then I have been averaging about $1000/week.

Again, I have been lucky that I have not experienced any great draw-down by not being able to watch my trades. Let me point out that I actually get to look at the trades in the morning and when I get home, till I go to bed (around 11pm-12am). So I do have the morning to readjust anything that has gone bad overnight (though overnight is where I make the most), and the night to correct for the day actions.

Hope that answers your question.
Mitch
  • #159
  • Jan 25, 2009 7:06pm Jan 25, 2009 7:06pm
Hi Mitch

I have been looking at the thread and as usual things develop and change over time. What are the current indicators that you are using?

Mister ED
  • #160
  • Jan 25, 2009 7:16pm Jan 25, 2009 7:16pm
Mitch,
Nice trading formula. I've been trading for a few years, but always looking for a new stratagy. I will watch (and maybe use this system this week) on a live mini account. My main question is ... now (Sunday 01:00 GMT) the pound and euro have had a few days of downward spikes and doji's... are you tempted to go long eventhough the traffic light system still shows downward pressure ??
Thanks, mike
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