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Did I just create my own very simple system?

  • #1
  • First Post: Apr 1, 2007 3:31am Apr 1, 2007 3:31am
Ok, maybe I'm being a bit silly with the subject line but I'm wondering if anyone has seen something like this and, if so (or if you just want to share your opinion) what do you think? Can anyone give me any advice just by eyeballing it? Can someone with some fancy software run a "real" backtest (or tell/show me how to do that)?

5 or 15 min chart
MACD standard setup (12, 26, 9)
RVI (100)

Long = on the cross of MACD to postive and RVI is above 0
OR
on the cross of RVI above 0 and MACD is postive

Short = on the cross of MACD to negative and RVI is below 0
OR
on the cross of RVI below 0 and MACD is negative

Literally, wait until there is a cross from postive to negative or vice-versa and then jump in.

TP is 20 pips, SL is 60 pips

I've spent the last 6 hours backtesting this on 5 and 15 min charts for several of the major pairs and the success rate seems too good to be true. And its so simple to use. However, I just put this one together, uh, 6 hours ago and the market is closed for the weekend, so no forward testing yet. I've spent the last few weeks reading everything I can here and, for the basics, babypips and then plugging in new indicators and timeframes and backtesting and forward testing until they blew up with unacceptable success rates but this is by far the best with over 90% success rate going back a week or two on U/J and G/Y and a few days on E/J, E/U and G/U. It also gets several trades a day per pair, which is a requirement for me since I can only trade after 6pm CST until my wife makes me come to bed (not always a bad thing).

I've spent most of my time with moving averages (which lag too much for my taste) and bollinger bands which seems to give too many fake-outs (I think I've got a bounce and it breaks out or I think I've got a breakout and it bounces! ARRGG!). This seems so simple and reliable. Maybe I'm missing something??? (Other than, of course, forward testing!)

Any advice/comments welcome!
  • #2
  • Apr 1, 2007 4:11am Apr 1, 2007 4:11am
TruckMusic6, you and I must be thinking the same. I use a "system", if you can call it that, somewhat the same as you've described.

The difference is, my RVI(10) chart is in yellow and white. I overlay a RSI(10) in red. Gives me an idea of just how much, if any, the price is actually moving.

RVI(10) may show a cross over but, the price may not actually be moving. Thus, the RSI will help me determine this.

Also, I place a 12SMA on the chart (purple). Helps to verify price movement. And, also include the Bollinger Bands on the chart (set at default levels). Many good moves can be seen from the BB's; especially at a break out of the bands.

I use these in conjunction with each one simply for confirmation of what's going on.

There is no such thing as "predicting" where price will go. However, using simple indicators will help in determining what, when, and where to place trades for possible profits.

By the way, by your "name" TruckMusic6, I take it you're a truck driver? Just curious; so am I.

Would love to discuss this "system" with you further.
  • #3
  • Apr 1, 2007 6:11pm Apr 1, 2007 6:11pm
mtcdavs - actually, its TrunkMusic6, not TruckMusic6. Sorry, never driven a big rig before. Do you trade your system exclusively? Mechanically? How has it done?

Market has been open an hour now and so I'm watching and waiting for trades using this "system." I was hoping for more responses but when it all comes down to it, I'm the only one responsible for what I do with my money, right? Right.

Still... any insight, recommendations, comments will be much appreciated!
  • #4
  • Apr 1, 2007 6:18pm Apr 1, 2007 6:18pm
Ok, market open and it starts:

Forward trade #1 - 5m chart - GBP/JPY - long 231.82 - GMT 23:14

TP 232.02, SL 231.14
  • #5
  • Apr 1, 2007 6:21pm Apr 1, 2007 6:21pm
Quoting TrunkMusic6
Ok, market open and it starts:

Forward trade #1 - 5m chart - GBP/JPY - long 231.82 - GMT 23:14

TP 232.02, SL 231.14
I hope that your system is very profitible. You may want to start your own journal on this system.

Wish you many pips!
  • #6
  • Apr 1, 2007 6:46pm Apr 1, 2007 6:46pm
Forward trade #2 - 5m chart - EUR/JPY - short 157.16 - GMT 23:40

TP 156.91, SL 157.76

(I'd like to test TP at 30 pips and SL at 60 pips or maybe 25 and 50... sometime with a 1:2 ratio. Not enough hours in the day!)
  • #7
  • Apr 1, 2007 6:56pm Apr 1, 2007 6:56pm
Forward trade #3 - 5m chart - GBP/JPY - long 231.62 - GMT 23:51

TP 231.74, SL 231.02

3rd trade and the last I'll post today (but still trading, all in my demo account though). This is an open order on G/J even though I've already got one still open. Anyone think this is a bad thing? Maybe it doesn't matter. The trades are independent of each other, its not like they influence one another.

I'll post again when the results are in. Right now trade #1 is looking pretty nasty, trade #2 is barely in the red and trade #3 is down by the spread.
  • #8
  • Apr 1, 2007 9:12pm Apr 1, 2007 9:12pm
TrunkMusic6,

Since you did the backtest and now forward testing this, you should give it a name because it is your system. Keep us posted on the result and good luck.

Rick
I'm a disciplined trader and that's the only way I trade.
  • #9
  • Apr 2, 2007 5:30am Apr 2, 2007 5:30am
Hey TrunKmusic6,

Sorry about the mis spelling. Just saw it too quickly and my mind saw "truck". Driving these things for way too long, that's for sure!!

The "system" is working great. I made a couple trades yesterday afternoon and ended up with 54 pips. Not bad for a Sunday. To be truthful, I rarely trade on Sundays. But, had to try this new "revelation" you shared with RVI instead of Stochastic. I like it!

As you've stated, I wait for the cross of the RVI, also look for confirmation with the 12SMA and strong movements with the BB's. If used all together and not relying on just one indicator, can be a great system.
  • #10
  • Apr 2, 2007 7:02pm Apr 2, 2007 7:02pm
Update on what I've named the RVI MACDaddy:

#1 - 5m chart - GBP/JPY - long 231.82 - 4-1-07 GMT 23:14

TP 232.02, SL 231.14 -- RESULT = TP $16.96

#2 - 5m chart - EUR/JPY - short 157.16 - 4-1-07 GMT 23:40

TP 156.91, SL 157.76 -- RESULT = OPEN

#3 - 5m chart - GBP/JPY - long 231.62 - 4-1-07 GMT 23:51

TP 231.74, SL 231.02 -- RESULT = TP $10.19

#4 - 5m chart - EUR/JPY - long 157.41 - 4-2-07 GMT 00:08

TP 157.63, SL 156.78 -- RESULT = TP $18.66

#5 - 5m chart - USD/JPY - long 118.04 - 4-2-07 GMT 00:16

TP 118.30, SL 117.42 -- RESULT = OPEN

#6 - 5m chart - USD/JPY - long 117.78 - 4-2-07 GMT 01:22

TP 117.98, SL 117.15 -- RESULT = OPEN

#7 - 5m chart - EUR/USD - short 1.3343 - 4-2-07 GMT 01:56

TP 133.25, SL 1.3403 -- RESULT = OPEN

#8 - 5m chart - GBP/USD - long 1.9785 - 4-2-07 GMT 23:35

TP 1.9795, SL 1.9722 -- RESULT = OPEN

#9 - 5m chart - USD/JPY - long 117.89 - 4-2-07 GMT 23:36

TP 117.99, SL 117.26 -- RESULT = OPEN

So far, no losing trades. Of course, 6 of 9 are still open! And trade #2 is looking pretty bad. Note to self: TP of 20 may be too high! Trades #8 & #9 I lowered TP to 10 pips but left the SL at 60. This really throws the ratio of gain/loss out of wack but I have a "feeling" that this method will pick of 10 pips more than 7:1 (break even point). A quick backtest this morning showed that some of these would have closed for a 10 pip gain over night.
Also, I have neglected to write in the exit times. My bad.

If there is any interest, I will move this to a journal and track the trades there.

I'm still posting this in the Beginner Q&A because I'm hoping for as much feedback as possible for a system developed by a beginner.

Any theories/insight on why trading the cross of RVI/MACD may not work in the long run? How do you feel about TP of 10 and SL of 60?
  • #11
  • Apr 2, 2007 8:24pm Apr 2, 2007 8:24pm
Quoting TrunkMusic6
Update on what I've named the RVI MACDaddy:
Hey MAC.D,
You have openened youself to public ridicule by pre posting your predictions. Please keep reading.
This fact alone convinces me that eventually {sooner or later} you will strip funds from this {combined} market.

Why would I make such an outrageous comment?
Simple.
95% of Traders have no Boss to ask them..
"Why did you place that Trade?"
and will invariably forget why & that they actually did place that Losing Trade.

In my opinion, and I have said this before, THE most important variable in any Trading System is....

Accountability....
...
"Sorry Honey...
Fuc@ I was sure it would have made us money.'

"No. Not Yet Honey.
I need another couple of weeks before I say yes to the new furniture..."

"Is this Trade ready for Commitment?"
"Farrgh.. I hate it when I miss the Market!
But not as much as when I miss read the Market!"
"I knew that trade would be a winner..."
"Fargghhh..I wish I made less wrong entries..."

Guess what,
If you have the {a} correct system, soon these questi0ons will fade to oblivion.
  • #12
  • Apr 3, 2007 6:47pm Apr 3, 2007 6:47pm
Update on RVI MACDaddy:

#1 - 5m chart - GBP/JPY - long 231.82 - 4-1-07 GMT 23:14

TP 232.02, SL 231.14 -- RESULT = TP $16.96

#2 - 5m chart - EUR/JPY - short 157.16 - 4-1-07 GMT 23:40

TP 156.91, SL 157.76 -- RESULT = LOSS -$50.85

#3 - 5m chart - GBP/JPY - long 231.62 - 4-1-07 GMT 23:51

TP 231.74, SL 231.02 -- RESULT = TP $10.19

#4 - 5m chart - EUR/JPY - long 157.41 - 4-2-07 GMT 00:08

TP 157.63, SL 156.78 -- RESULT = TP $18.66

#5 - 5m chart - USD/JPY - long 118.04 - 4-2-07 GMT 00:16

TP 118.30, SL 117.42 -- RESULT = TP $8.46

#6 - 5m chart - USD/JPY - long 117.78 - 4-2-07 GMT 01:22

TP 117.98, SL 117.15 -- RESULT = TP $8.48

#7 - 5m chart - EUR/USD - short 1.3343 - 4-2-07 GMT 01:56

TP 133.25, SL 1.3403 -- RESULT = TP $10.00

#8 - 5m chart - GBP/USD - long 1.9785 - 4-2-07 GMT 23:35

TP 1.9795, SL 1.9722 -- RESULT = TP $10.00

#9 - 5m chart - USD/JPY - long 117.89 - 4-2-07 GMT 23:36

TP 117.99, SL 117.26 -- RESULT = TP $8.48

#10 - 5m chart - GBP/JPY - long 233.14 - 4-3-07 GMT 02:09

TP 233.25, SL 232.46 -- RESULT = TP $9.33

#11 - 5m chart - USD/JPY - long 117.84 - 4-3-07 GMT 02:13

TP 117.94, SL 117.24 -- RESULT = TP $8.48

#12 - 5m chart - EUR/JPY - long 157.54 - 4-3-07 GMT 02:15

TP 157.64, SL 156.94 -- RESULT = TP $8.48

#13 - 5m chart - GBP/USD - short 1.9781 - 4-3-07 GMT 03:47

TP 1.9771, SL 1.9841 -- RESULT = TP $10.00

#14 - 5m chart - EUR/USD - short 1.3364 - 4-3-07 GMT 04:40

TP 1.3556, SL 1.3415 -- RESULT = TP $8.00

Overall, 13 out of 14 wins / $87.64 profit / 113 pips in 2 days.


I'm pretty happy with this (especially since its my first system). I learned quite a few things here:

1 - I'm amazed how little some of these pairs ranged. Trade #2 EUR/JPY took a day and a half to stop out. That means it only ranged 80 pips in 1.5 days.

2 - The longer it takes to exit out of a trade, the less the trend/momentum matters. After a day and a half, it might as well be luck (good or bad) to hit your exit (TP or SL).

3 - RVI MACDaddy produces a lot of trading opportunities. I missed lots of trades just by surfing the net, talking with my wife, playing with the cat, blinking, etc.

4 - Trade #2 would have quickly been a winner at a TP of 10 pips but because it was at 20 it was just missed and eventually stopped out.

5 - 60 pip losses hurt.

6 - Lots and lots of 10 - 20 pip wins feel good. NOTE: I started using 10 pip TP halfway through and did modify some existing orders. 20 pip gains take too long with too much risk for not enough gain.

7 - With RVI MACDaddy, there is no need to watch price action. I minimized that part of the screen and only watched the 2 indicators.

8 - Only using 2 indicators is a good thing.

9 - Forex and OCD is a dangerous combination...

Any comments, insight, suggestions are much appreciated!
  • #13
  • Apr 6, 2007 9:58am Apr 6, 2007 9:58am
Seems like a nice little system you have there. One thing that would make it easier for you would be if you get your hands on a custom indicator that sends alerts automatically whenever the right conditions for a trade reveals itself. That way you wont need to constantly watch the market. One step further would be to create an EA that could trade this automatically since you really do not need to watch price action.

Just some ideas. Best of luck to you and be sure to keep us updated on your progress.
Liberate me ex inferis
  • #14
  • Apr 14, 2007 6:24pm Apr 14, 2007 6:24pm
Hi Trunkmusic6,

What how what this week? What kind og results did you realize?
  • #15
  • Apr 14, 2007 10:53pm Apr 14, 2007 10:53pm
Great results! I noticed you stated at the outset that this could be used on 5 or 15m bars. Have you put together any results for the 15m TF? Thanks.


Quoting TrunkMusic6
Update on RVI MACDaddy:

#1 - 5m chart - GBP/JPY - long 231.82 - 4-1-07 GMT 23:14

TP 232.02, SL 231.14 -- RESULT = TP $16.96

#2 - 5m chart - EUR/JPY - short 157.16 - 4-1-07 GMT 23:40

TP 156.91, SL 157.76 -- RESULT = LOSS -$50.85

#3 - 5m chart - GBP/JPY - long 231.62 - 4-1-07 GMT 23:51

TP 231.74, SL 231.02 -- RESULT = TP $10.19

#4 - 5m chart - EUR/JPY - long 157.41 - 4-2-07 GMT 00:08

TP 157.63, SL 156.78 -- RESULT = TP $18.66

#5 - 5m chart - USD/JPY - long 118.04 - 4-2-07 GMT 00:16

TP 118.30, SL 117.42 -- RESULT = TP $8.46

#6 - 5m chart - USD/JPY - long 117.78 - 4-2-07 GMT 01:22

TP 117.98, SL 117.15 -- RESULT = TP $8.48

#7 - 5m chart - EUR/USD - short 1.3343 - 4-2-07 GMT 01:56

TP 133.25, SL 1.3403 -- RESULT = TP $10.00

#8 - 5m chart - GBP/USD - long 1.9785 - 4-2-07 GMT 23:35

TP 1.9795, SL 1.9722 -- RESULT = TP $10.00

#9 - 5m chart - USD/JPY - long 117.89 - 4-2-07 GMT 23:36

TP 117.99, SL 117.26 -- RESULT = TP $8.48

#10 - 5m chart - GBP/JPY - long 233.14 - 4-3-07 GMT 02:09

TP 233.25, SL 232.46 -- RESULT = TP $9.33

#11 - 5m chart - USD/JPY - long 117.84 - 4-3-07 GMT 02:13

TP 117.94, SL 117.24 -- RESULT = TP $8.48

#12 - 5m chart - EUR/JPY - long 157.54 - 4-3-07 GMT 02:15

TP 157.64, SL 156.94 -- RESULT = TP $8.48

#13 - 5m chart - GBP/USD - short 1.9781 - 4-3-07 GMT 03:47

TP 1.9771, SL 1.9841 -- RESULT = TP $10.00

#14 - 5m chart - EUR/USD - short 1.3364 - 4-3-07 GMT 04:40

TP 1.3556, SL 1.3415 -- RESULT = TP $8.00

Overall, 13 out of 14 wins / $87.64 profit / 113 pips in 2 days.


I'm pretty happy with this (especially since its my first system). I learned quite a few things here:

1 - I'm amazed how little some of these pairs ranged. Trade #2 EUR/JPY took a day and a half to stop out. That means it only ranged 80 pips in 1.5 days.

2 - The longer it takes to exit out of a trade, the less the trend/momentum matters. After a day and a half, it might as well be luck (good or bad) to hit your exit (TP or SL).

3 - RVI MACDaddy produces a lot of trading opportunities. I missed lots of trades just by surfing the net, talking with my wife, playing with the cat, blinking, etc.

4 - Trade #2 would have quickly been a winner at a TP of 10 pips but because it was at 20 it was just missed and eventually stopped out.

5 - 60 pip losses hurt.

6 - Lots and lots of 10 - 20 pip wins feel good. NOTE: I started using 10 pip TP halfway through and did modify some existing orders. 20 pip gains take too long with too much risk for not enough gain.

7 - With RVI MACDaddy, there is no need to watch price action. I minimized that part of the screen and only watched the 2 indicators.

8 - Only using 2 indicators is a good thing.

9 - Forex and OCD is a dangerous combination...

Any comments, insight, suggestions are much appreciated!
"Loss and failure are inevitable but misery is optional"
  • #16
  • Apr 23, 2007 4:43pm Apr 23, 2007 4:43pm
how close together in time must the two indicators cross? Seems if not close its a false signal...
Steve
  • #17
  • Apr 24, 2007 3:14am Apr 24, 2007 3:14am
Hi Trunkmusic6,
I am reasonably new to MACD and know nothing of the RVI. It would be great if you could post a chart or two showing your entries using these 2 indicators. By the way thanks for sharing.
BJ
  • #18
  • Apr 24, 2007 8:57am Apr 24, 2007 8:57am
Hey TrunkMusic,

10pip TP and 60pip SL is a first red flag which i see. If the win/loss ratio is very high, it could work. Make sure you use sound money management, risking 2% on each trade, would give you around 0.3% profit per trade.

One day, you are very likely yo have 3-4 losses. It will be painful if you overlevegare.

As a rule of thumb, i would not recommed trading this. However, if it works for you, it works. Stick to it, get a feel of it. Observe price and how it moves in tandem with your indicators. Keep a record of your trade. I like to take in progress screen shots of my charts.

I'm sure some of the nice people here will write a quick EA for your system, and a back test will follow. I very much doubt it will be profitable in the long run, but i wish you the best of luck.

Best regards,

Vlad Zapletin
  • #19
  • Apr 24, 2007 9:36pm Apr 24, 2007 9:36pm
The system really did seem to work well while I was forward testing but, in the end, I simply couldn't keep up. 5m and 15m charts are too hard to keep track of. I missed a lot of entries by getting distracted by other things. So maybe its true what all the forex veterans say: longer time frames are better.
  • #20
  • Edited 9:45pm Apr 29, 2007 9:39pm | Edited 9:45pm
  •  ZX14
  • | Joined Apr 2007 | Status: itty bittty pippy babby | 1 Post
Believe....and you will succede!!
IMPOSSIBLE IS NOTHING.
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