Mu$ic to my account - the Digeridoo

This is a trading system that works quite well, I am wondering if anyone may have ideas that may help improve it.

Indicators

i-Regr Indicator (a.k.a “Linear regression channel”)
Settings
Degree: 3
KSTD: 2.0
Bars: 250
Shift: 0

RSI (Relative Strength Index)
Settings
Period: 14
Line at 40

CCI (Commodity Channel Index)
Settings
Period: 14
Line at 0


Charts

4 hour chart for market direction
15min chart for entry signal



Buy Trades

1. Load the indicators onto the 4 hour chart. If price is below the center regression (purple) line, then we are going to look for long (buy) trades only.

2. There are two entry rules, both from the 15 minute chart:

Rule A: If price crosses and closes above the center regression (purple) line from below, then we buy two lots.

Rule B: If the CCI crosses above 0 from below AND the RSI crosses above 40 from below, then we buy two lots.

3. Stop loss is placed 30 pips below the entry price.


4. Exit the first lot after a gain of 30 pips. Move stop loss to breakeven after 30 pips have been gained and trail the stop on the second lot to maximize profit.

Similar rules for a sell trade.

1. Load the indicators onto the 4 hour chart. If price is above the center regression (purple) line, then we are going to look for short (sell) trades only.

2. There are two entry rules, both from the 15 minute chart:

Rule A: If price crosses below the center regression (purple) line from above, then we sell two lots.

Rule B: If the CCI crosses below 0 from above AND the RSI crosses below 40 from above, then we sell two lots.

3. Stop loss is placed 30 pips above the entry price.

4. Exit the first lot after a gain of 30 pips. Move stop loss to breakeven after 30 pips have been gained and trail the stop on the second lot to maximize profit.






USD/CHF 4 hour chart

Price is trading above the regression (purple) line, so we are looking to go short.

Ideally, we would see both the CCI above the 0 line and the RSI below the 40 line, but this is not necessary.






USD/CHF 15 minute chart

We enter if one of two things happens:


RULE A:

Price crosses below the regression (purple) line.

OR

RULE B:
Both the CCI crosses below the 0 line AND the RSI crosses above the 40 line.

In this case we enter a short trade because the conditions of Rule B are met.




Position Size:

We sell two lots.

Stop Loss:

Stop loss is placed 30 pips above the entry price.

Exits:

We exit 1 position at 30 pips profit and we move the stoploss to breakeven for the other position and let the trailing stop get stopped out. For every move 5 pips down I move the stoploss 5 pips down.

Choosing pairs:

I avoid the very volatile pairs, like the GBP/JPY and GBP/CHF, EUR/AUD, etc. You would certainly need to modify the stop placement if you were to trade these pairs.

Whats the linear regression channel :O ?

Here is a live signal:

4hr chart of the EUR/USD is below the purple regression line.

15min chart shows us that price has closed above the purple regression line (Rule A).

We have a buy signal.

Long at 1.3630
Stop at 1.3600

1st target 1.3660
2nd target Open

That ireg looks like a renamed cog. There are some cog threads here that may help you.

-30 pips on this one.

Wasn't ideal as the 15min was criss-crossing the regression line

USD/CHF had a trade about the same time. It got stopped out.

Nice EUR/USD signal, hit first target, now second lot is going to (hopefully) run......

Isn't the regression channel indirection redrawing ?

I'm just asking...

Yes. It's supposed to.
It walks forward one bar, with every new bar. This may change its shape.

That's the way it's supposed to work. It means you can't visually backtest this method.

You can visually backtest using the Trading simulator.

Someone else tipped me off to i-regr recently, I decided to write a version that only draws the value for the current bar (so does not repaint).

You can use this to do visual backtests...

Screenshot of both indicators on the same chart to show they give identical values (for the current bar).

I renamed the variables and added the ability to apply to any price (not just Close), otherwise it's identical.

Thanks Kore, that is great!

Hi, Thank you jack, you are very nice to share your system,

from my understanding, your system are predicting that once price cross the purple regression from below/above, it will continiue to go up/down, is that right?

i do have some questions need your confirmation: when price hit the purple line, do we wait until the 4hr bar close or just switch to the 15 mins?

another question is that do we trade based only on above/below purple line, (with indicators), regardless the direction of the trend? i.e. if price cross purple from above, and other criteria are met, do we go short even if purple is trending up?