Charting and Trading Daily Reversal Points

I started thinking about trading like this because unless I am laid off, I still need a day job and spending countless hours planning trades at the end of the day was grouling. Spending a couple hours Intra Day trading was my goal as well as still being able to go for longer all day type trades. I tried lots of different methods of day trading, and even though I had good results, it all took too much time to accomplish. I started to look for points that a trade would possibly shoot in a predictable direction.

The question for me was this: How do I make longer term day trades when I cannot be at my computer and wait for these trades to happen? Any of you that have a day job, know that there is no easy answer to this. And is one I hope I will not have to struggle with any longer.

This journal has a few goals in mind:

1. Accurately Charting Possible Points on a Daily Chart where Trades Could potentially Reverse Direction.
2. Accurately Choose potential Profit Targets that Could be Reached if the Trade does Reverse Based not on a Pip movement, but an Actual Price Value Target.
3. Stretch to the Limit our Risk/Reward Ratio
4. Take these Reversal and Profit Target Points and Enter them Into an EA which would from there would manage our trades based on a precisely calculated management strategy while we did other more important things.

Okay....so the cat is out of the bag. Yes....we are going to be forward testing an EA with this system. I am sorry, but it is impossible to backtest this EA because the EA only works on values the we input for it and those values will change each and everyday. In fact, they will most likely differ slightly per person who uses the EA. Incidentally, the EA is not quite ready yet even for the testers.

I am sorry, but right now the EA is not available to the public. We will be choosing a handful of people who would like to test this EA with us on a demo account only and post their resuts and evaluations here on this thread. Whether and to what extent we make it available later, we don't know yet, but one thing is for sure that all testers who actively contribute with charts and evaluations will be given a version for only their live account whenever they want. Our reason for doing this is to keep testing in a controlled environment and we will not be able to do that if everyone had a copy. Please do not ask us to make an exception, because at the onset, there will be none granted.

So, as stated, this thread will be used by the testers and whoever else wants to contribute to chose the input values into the EA on a daily basis at the end of every day. I hope that all of you following along will also learn something about plotting charts. Regardless if you have a copy of the EA or not, there will be a tremendous amount information here that you will be able to learn from.

Testing Parameters: It is safe to say that all testers may have other criteria in which they make the decisions for their trading. Initally all my trading decisions will be made off the daily charts only.

Trendlines - I will be using high points and low points for drawing trendlines. A high point is described as a point that has at least on lower high on each side of it. A low point is a point that has at least 1 higher lows on each side of it. many times I will draw these lines at the open of the bars to get a reference a to where price may bounce from. Updated 03/07/09

Support and Resistence Lines - I will be using a version of Murrey Math lines to determine horizontal support and resistence points. I will be setting my TimeFrame to 10080

Updated 03/07/09

Pairs I will be Trading: - Here is a list of pairs I will be trading along with a current template for that pair and some of the more constant settings within the EA. I will get to the EA in a bit. I will put all the templates in a .zip file when I get this 1st page caught up.

Updated Templates 03/19/09 -

Attached File(s)

03_18_09.zip   13 KB | 474 downloads | Uploaded Mar 18, 2009 3:50am

EurUsd

1. Threshold = 75
2. EntryMargin = 1
3. ExitMargin = 10
4. Max S/L = 50

GbpUsd

1. Threshold = 100
2. EntryMargin = 1
3. ExitMargin = 13
4. Max S/L = 60

EurJpy

1. Threshold = 100
2. Entry Margin = 1
3. Exit Margin = 13
4. Max S/L = 60

GbpJpy

1. Threshold = 150
2. EntryMargin = 1
3. ExitMargin = 18
4. Max S/L = 70

UsdJpy

1. Threshold = 60
2. EntryMargin = 1
3. EsitMargin = 8
4. Max S/L = 40

GbpChf

1. Threshold = 125
2. EntryMargin = 1
3. ExitMargin = 15
4. Max S/L = 60

Okay.....Let's get to the workings of the EA:

The purpose of this EA is to help you (and me) become better traders. It will ask you for specific target points for entry and exit for the EA to work right. Random guesses may not work and many times exact pinpoints will not work either. It will probably take some time to master this EA, but in the end, I think it will free up your time considerably and make us all better traders.

I will now go into the settings in the properties area.

1. Upper Range Value (UR) - In this setting you will put in the price that you think the pair you are trading will turn around and start heading down. This does not mean that when this price is hit, the pair will open up a short trade, it only means that the EA will start looking for a short trade when this value is hit. If it does not find one, the EA will not open a trade.
2. Lower Range Value (LR) - In this setting you will put in the price that you think the pair you are trading will turn around and start heading up. This does not mean that when this price is hit, the pair will open up a long trade, it only means that the EA will start looking for a long trade when this value is hit. If it does not find one, the EA will not open a trade.
3. Threshold (TH) - This is a very important feature to the EA. Your threshold will vary based on the pairs volitility. The more volitile a pair, the larger the threshold will be. The less volitile a pair, the smaller the threshold will be. The threshold is the amount of pips beyond your UR or LR that the EA stops looking for reversal trades. Let's say that you are trading EurUsd and your threshold is 80 and your UR is 1.2500. If price gets to 1.2580 with no short trigger, the EA will no longer look for short trades as you have determined that past an 80 threshold, the pair will not reverse it's direction. Simple right?
4. BuyTakeProfit (BTP or LTP) - This is a price value that you would enter where you would want you trade to take profit. 100 pips will not work. You need to enter a price value for this editable field where you want the EA to take profit for you.
5. SellTakeProft (STP) - This is a price value that you would enter where you would want you trade to take profit. 100 pips will not work. You need to enter a price value for this editable field where you want the EA to take profit for you.
6. CloseOppositeTrade - Many times you will set both a UR value and a LR value. If one of your trades triggers, you can choose to have the other signal be removed by setting this to "True" when on signal is triggered. Leave the setting to "False" if you do not want any subsequent trade to be removed
7. Lots - If MoneyManagement is set to false, the EA will open up orders based upon any lot size that you input.
8. Risk - If MoneyManagement is set to true, the EA will open up orders based upon the difference between the open price and the stop loss price and the available margin in your account.
9. EntryMargin - This is the amount of pips below an entry bar or the amount of pips + spread above an entry bar that a pending order will be placed. Default is set to 1. I will leave it at the default setting unless it proves valuable to raise this amount to a higher number. You should never have it lower than 1 however.
10. ExitMargin - This is the amount of pips below an entry bar or the amount of pips + spread above an entry bar that a pending order will be placed. Default is set to 1. I will change this based upon the volitily of a pair as it is important to give your trade a little extra breathing you to move in your favor. If you check out my individual pair settings, you will see what I am placing each pairs amount at to start with. You should never have it lower than 1 however.
11. GMTOffset - If your broker is GMT 0, you can just leave this setting alone. If your broker is GMT -2, you will have to change this to -2. Another words, if your broker is not GMT 0 you will have to change this setting accordingly.
12. TimeToTrade1 - This is the time of day you want to be able to open up new trades for the next day. This is set in GMT time and default is GMT 0. You will want to set this based upon when your broker opens up a new bar for the day.
13. TimeToTrade2 - This is the time of day that you want all left over pending orders for that day cancelled. Remember that if you set it to 15:00 GMT, the EA will quit looking for trades at 15:59 GMT. This is where I am at the moment. Updated 03/19/09
14. Friday Close - This is the time in GMT that trades will be closed on Friday's as many times you will want the EA to quit looking for trades a little earlier on Friday's. Remember that if you set it to 15:00 GMT, the EA will quit looking for trades at 15:59 GMT. This is where I am at the moment. Updated 03/19/09
15. Max S/L - Sometimes the EA will because of the movement of the market determine a S/L that is too far out of reach. To avoid this from happening, we have added this Max S/L feature where you can set this and if the system determines that the S/L is greater then the Max S/L setting, then it will use the Max S/L setting by defualt. The Trailing stop system will work as normal.
16. For now, this is all the settings within the EA. For the most part, once you get them set, most of them you will never have to re-adjust.

Inner workings of the EA:

This is the behind the scences stuff that is not public knowledge.

1. Just because the EA hits your range targets, does not mean that the EA will open a trade. After the range is hit, certain other criteria kust be met for a trade to be executed. It is also advisable the no one places trades blindly at these ranges without the EA.
2. Just because you put in a Take Profit Target does not mean it will be hit. The EA has built in formulas to move your stop closer in a ranging market if it can and trail you trade in a trending market.
3. The EA will also determine your S/L level for you based on the current price action of the market. Sometimes it may be 25 pips and other times it may be 50 pips. And as stated above, it will adjust this price as the EA deems necessary.

That is all I can think of for tonight. I will be around so if you are interested in testing or have questions, please ask

I realize that tomorrow is NFP, and it is possible that we should even take this day off from this type of trade, but I am still testing the EA and also want to post my charts.

EurUsd



UR = 1.2616
LR = 1.2520
LTP = 1.2700
STP = 1.2450
TH = 80
ExitMargin = 10

Lr = 1.4082
Ur = 1.4300
Ltp = 1.4300
Stp = 1.4150
Th = 100
Exit Mrgin = 15

2nd Setting

UR = 1.4150
STP = 1.3920

Ur = 123.93
Lr = 121.92
Ltp = 123.42
Stp = 121.00
Th = 100
Exit Margin = 15

This might be a stupid question but what do the abbreviations mean. I'm guessing UR = Upper Range? and LR = Lower Range? Can you clarify if that's right and what the others mean. Sorry if that's a dumb question.

Thanks,
trublu

UR = 139
LR = 137.60
LTP = 139.00
STP = 136.50
TH = 135
ExitMargin = 20

2nd Settings

UR = 140.50
STP = 139.00

Hey Damon

Clocked in!

Gary

Hey trublu...it is not a dumb question yet . I will get to posting those in the 1st post, I just didn't have anytime at the moment.

Hey Gary...

You should be able to find some settings that you can start to test. A few of them I have inputed 2 seperate values. This would be ther reason for the 2nd set in the same EA, but it is okay opening 2 seperate charts .

BTW everyone....Gary is the programmer for this wonderful EA and deserves a great big and a round of applause .

Thanks Gary...let's see what happens

UR = 98.38
STP = 97.00
TH = 60
ExitMargin=10

Only interested in trading this pair one direction today.

Damon -

Using the EURUSD: some questions

UR = trend line from last 3 fractal highs on the daily?
LR = Center line of regression indie?
LTP = Ultimate Support price?
STP = Overshoot price"
TH = ???

what about margins?

Gary

Hey Gary...got you covered below

It will be interesting to hear what everyone is thinking as we get into this. It should be fun

UR = 1.2932
LR = 1.2860
LTP = 1.300
STP = 1.2865
TH = 65
ExitMargin = 10



Okay...back to the 1st page

hmmm, now it makes sense where/what Gary has been doing!!!! hee hee.

Wherever Senior goes so too will you find Junior not far behind. Apples don't fall very far from trees and... there's always a wolf in the shadows of the forest.

Good to see some friendly, familiar faces here!

Gary: It's time for you to get an avatar, man. I'm thinking maybe a photo of 8 hotdog buns in a wrapper, whatcha think?

Today we say some crazy markets to say the least. For testing purposes we went ahead and continued our bug testing for the EA. Normally we would have turned of all day trades for a day like today being that it was Non-Farm Payroll. We will also not trade this for the whole day when there is either a US or a UK Banking Holiday.

Issues with the EA:

1. There was a small bug with some of the MM settings that had a couple of trades opening up with lot sizes that were way to big. This should be an easy fix.
2. The threshold setting did not function properly, thus leaving trades run pased there alotted pip count. I am told this has already been taken care of.
3. There was an issue with the EA properly handle the trailing stop feature once we were in a trade. I think we know in what area lies the problem, now it is just about getting it fixed.

Other than that the EA functioned as it was suppose to function and we should be able to keep moving forward with changes and corrections.

Today was not the best day to trade as there were some extremely wild swings in the market. Not only was it Non-Farm payroll, but many pairs are sandwiched in between tight weekly support and resistence trendlines makeing the volitility even greater than what it might normally be today.

Because of this excess volitility our stop loss settings were in some cases double what they normally are and are trailing stop formula really was not given adequate time to function in it's normal manor.

None the less, I will go over the trades for today.

EurUsd - No trades triggered for this pair today.
GbpUsd -

1. Trade1 - (-58) pips of loss
2. Trade2 - + 48 pips. I must add though that the lot sizes for this trade were double what they were in the 1st trade so this made us a nice profit

GbpJpy -

1. Trade1 - This trade actually gave us +135 pips in profit but the trailing stop feature had a bug and we really would have only gotten +46 pips in profit. Once again this was due to the quick and wild moves of the market today.
2. Trade2 - +50 pips of profit

EurJpy - (-17) pips of loss

UsdJpy - This trade hit our Take Profit resulting in +105 pips of profit

UsdCad - (-28) pips of loss

That wraps up our trades for today. I am looking forward until Monday when we can make some more trades. I will be here then given my trade parameters for the day.

Remember, If you would like to be a tester of what we are doing here, please let us know. Have a great weekend

I'm willing to test but I would need the EA to do so

Hey Blackwolf...Gary and I were hoping that you would There are still a few bugs with the EA, but I will make sure that you are included.

Thanks for droping by.

Damon

hey guys, good to see ya'll
shout if you need another tester for the EA
(and shout big, I'm on the other end of the great water! )

Hey hsa013....yes we do. I will put you down on the list

Thanks for showing up