temporary s/r approach

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Please start at page 4 of this thread, Post #46

http://www.forexfactory.com/showthre...=157913&page=4

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hi

I would like to put this trading apporach to discussion:

backtested eurusd for dec08 24 winners, 19 losers, jan09 28 winners 20 losers, feb09 25 winners, 9 losers, march to date 12 winners, 11 losers

look at chart at 9:00 gmt, 1h after european market open and 16:00 gmt, 2h after us market open or 1h after major us newsrelease, 15 min tf

draw a vertical line at these times, mark the previous zigzag highs and lows with a horizontal line

consider the horizontal lines temporary support and resistance levels

place buy order at high, place sell order at low, sl 15, tp 20

let 9:00 gmt orders run until 13:00 gmt, so the spread and the volatility of us newsreleases doesn't bother. (as an option let the orders open until 16:00 gmt if only low impact news are scheduled)

let 16:00 gmt orders run until 9:00 gmt next day since the price is not driven by impac-news during this time

if at screen visit no obvious zigzags are given, or you suspect price to be either at a high or a low point, then wait max 1h for a signal. if it doesn't occur, then forget about it.

use two zigzag indicators, standard mt4 indicator

1st: depth 3, deviation 2, backstep 1
2nd: depth 4, deviation 3, backstep 2


questions, comments, contributions, backtestresults etc are welcome


best regards

ashes


edit: due to us daylight saving time the 9:00 gmt orders should be cancelled at 12:00 gmt and the second set of orders should be opened at 15:00 gmt

adding macd 5,13,8 as a filter would point out the direction to trade the zig zag signal. referring to the macd-sma 8 enter long orders if above 0 line, short orders if below 0 line.

dec08 13 winners 10 losers, jan09 15 winners 8 losers, feb09 11 winners 5 losers, march09 to date 4 winners 5 losers

tuning the tp could be done by atr20 using its value at screentime to determine tp. sl stays at 15. also trailingstops of 15 could tune the tp up

the last three months show backtest results in positive territory.
of course, we're counting little pips here, but we would hardly spend our time infront of the screen.

moneymanagement with increasing trading size at winners and decreasing tradingsize at losers could make a profitable monthly average.

here i'm referring to the free maxlot course to be found in the www

to start every month with let's say 1000$ using this silghtly modified formula

[1000(account size)/3000(magic number)]*10(pip value per lot)=0,33(lots to trade)

hi ashes

thanks for sharing

a pic would help .....thanks

regards lodol

hi lodol2

here's a pic

there are many ways to read the macd. I suggest testing

-8sma above or below 0 line

-8sma direction and angle

-8sma and 1sma (bar) cross

-level relations 0.00100/-0.00100 etc

for zigzag signal direction indication


there's for sure more to tweak


Regards

hi ashes

thanks i like the approach ...i will test

regards lodol

hi ashes

to clear something.. so you draw only the last two swinpoints as s/r line

not more far back?

and how you decide if price bounce or break trough the sr lines.. i dont understand?

in your picture above : at the first vertical line 10..price break through

at the second vertical line 16...price range and could not break through resistence

so what trades you take and why?

thanks

lodol

hi lodol,

yes, only the last swingpoints count, as indicated by the zigzag.

according to my first post on the thread I don't even put my mind to decision finding, I place long and short orders at swingpoints.

on the example chart, 10:00 long would have been a winner, while the rangemove around 16:00 would have created two losers.

my third post suggests using the macd as a directional indicator.

I'm actually backtesting a macd indication setup what looks promising especiall when using the moneymanagement formula.

soon I will post the results.


Regards

hi,

here are the backtest results of the following setup:

eurusd 15 min tf

at 9:00 gmt place orders. cancel them 1h before us market open.

at 15:00 gmt place orders and leave them until 9:00 gmt next day

all orders tp 20, sl 15

multi orders:

enter according to zigzag swing points

long if macd-sma8 slopes up
long if macd-sma8 is above 0
long if macd-sma1(bar) slopes up
long if macd-sma1(bar) is above 0

opposite for short

no trading if macd-sma8 is flat around 0
no trading if macd-sma1(bar) has been inbetween 0.00100 and - 0.00100 for the last 3h

that's four orders to place at 9:00 gmt and four orders to place at 15:00 gmt

moneymanagement formula would be:

((1000/3000)*10)/2=0,16 lots each order

backtested:

nov08 51w-30l,
dec08 48w-32l,
jan09 54w-42l,
feb09 58w-30l,
march09 to date 26w-16l


Regards

Hi,

Great system you've got here. I prefer less screentime, so this suits me. I have a couple of questions though.

Which one of the zigzags do you use for highs and lows? In the chart you posted, you used the high of the red and the low if the yellow, which one should I use?

Also, on that chart you drew the line at 10 GMT, right? Should it be 9 or 10? DST would mean that it would be 10, but it has not been switched in Europe yet, right?

Regards

Archie

hi Archie,

I use the zigzag high/low point closest to 9:00 gmt and 15:00 gmt, be it red or yellow.

since the alpari platform is gmt+1 the lines are at 10:00 and 16:00.


Regards

applying the mentioned moneymanagement formula to the zigzag macd multi order approach provides following result, starting each month with $1000 account balance. too good to be true.

nov08 51w-30l $1324 profit
dec08 48w-32l $1043 profit
jan09 54w-42l $1077 profit
feb09 58w-30l $2438 profit

I would apprechiate if someone interested in this approach could backtest these months for comparison purposes.

Regards

There is no way to backtest this.
The peaks and valleys you see, looking back on a chart, may not have been there in real time trading.

The zig zag indicators continually repaint.

hi billbiss,

thank you for pointing the repainting of zigzag out. One could still relate to previous highs and lows when forward testing, coudn't one?

my forward tests start today, to be posted on the thread.

Regards

ashes

Looking forward to your results. Good luck. I will try this system this week and post results here also.

Thank you for your contribution, Archie.

Yes, it can be forward tested, with the rules you describe.

ok, we're at 10:00 gmt candle

the highs and lows seem to be confirmed

high:1,2987
low: 1,2951

macd at 9:00 gmt candle close indicates

8sma above 0 = long
8sma sloping up = long
1sma above 0 = long
1sma sloping down=short

initial balance=$500

orders 2 pips above or below high:

3 orders long , each 0,08 lots - 1,2989 sl 1,2974 tp 1,3009
1 order short, 0,08 lots - 1,2949 sl 1,2964 tp 1,2929

I will close all open orders at 12:00 gmt

let's wait and see

short order closed

the 3 longs have been triggered to tp, account balance $549

next set at 15:00gmt

Hi ashes,
you can use also this indicator. He shows you the highs and lows.

Cherrs swakop

Hi swakop, nice to meet you again,

thanks for the indicator, I will check it out.

Regards


edit: thanks again swakop, looks like a useful indicator to this trading approach