I hope you complete the EA - I would like to use it to send/make alerts so that one does not have to watch all the charts all the time.
I have just finished reading the whole thread. I suggest the following rules to get started.
My understanding is that where the Stoch are relative to the 20 and 80 lines are where the discretionary part of the system comes in. I suggest therefore that you leave it out of the EA for now. I would also suggest to leave the rules around the 50 EMA out for now - they are (in my opinion) filters of the core system.
The core system as I understand it is:
Go long when:
On D1 chart %K>%D, and
On 4H chart %K>%D, and
On 30 min chart %K>%D
The opposite is used for shorts
If we have an EA - or maybe an indicator with alerts that notifies us when the above conditions are true then we may not miss it when it happens.
If you want to include the rules around the 20 and 80 lines I think they should be ignored on the D1 chart. From how I understand the position of the Stoch relative to the 20 and 80 lines are most important on the 4 hour chart.
Teb - please confirm that the rules above is correct
DislikedI need some clarification: The rules as I had them when I programmed the EA are not working; the system fails miserably under the following rules:
This is for using the Stoch(5,3,3) on Daily, 4-hour, and 30-min charts.
- Check the daily cycle: If the %K > %D and the %D has just crossed above 20, then we have a BULLISH daily signal. (Opposite for BEARISH).
- Check the 4-hour cycle: Same signal rules as the daily but applied to the 4-hour Stoch.
- If the Daily cycle is BULLISH and the 4-Hour cycle is BULLISH and...
If the %K > %D and the %D has just crossed above 20, for the 30-min Stoch, then we have a BUY signal; so GO LONG. (Opposite for short orders).This was tested on EUR/USD dating back to 1999. Why does it fail? Well look at the attached chart. There is clearly an up trend yet the system keeps trying to sell, to go short. This is because look at the Daily stoch on the chart, it is in the OVERBOUGHT region, so it is giving BEARISH signals. The problem is that the stochastics (as well as most oscillators) have a tendancy to "stick" to the top side (overbought region) during an up trend and vice versa for a down trend.
Now I don't doubt that this general strategy of multiple time frames with one indicator works, in fact I like it a lot. But there must be some rules you are applying that I have not considered...maybe you are applying these rules subconsiously, but let's try and uncover them. For example: Maybe if the stoch is overbought and gives a bearish signal, but then later turns back around and crosses back above 80, then that should restore the bullish signal...
Any thoughts?
Thanks,
mathematicianIgnored
