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System for Trending and Ranging Markets

  • #21
  • Aug 30, 2009 4:04pm Aug 30, 2009 4:04pm
Quoting aicccia
Thank you.

I arrived at the ATR, Space, and Band Deviation default parameters from just trying out some combinations over a few days. ATR could possibly be tightened to 36 or 24 to make the channel more responsive to market whiplashing. (The lower the ATR period, the quicker the channel widens so that the whiplashes don't cross the bands.)

I use 216 as the EMA period because with "216" on the 5-minute chart, I'm getting the trend of a 72 EMA on the 15 minute chart with the resolution of a 5-minute chart, and 72 is a good period to determine...
Have you tried this out on longer term charts? I was thinking of trying to trade this on a 4 hour chart.
  • #22
  • Aug 30, 2009 4:10pm Aug 30, 2009 4:10pm
Quoting aicccia
Fine.

If the outside blue bands are the "B" Bands and the inner blue bands are the "A" bands, this is what you do:

BUY when a 3-EMA crosses above the lower B and A bands into the inner channel.

CLOSE the order when either:
- the 3-EMA falls back below the lower B band or
- rises above the upper B band, and then descends back below the upper A band.

Once it falls below the upper A band, then initiate a SELL and start the process over(close the order if it crosses back above the upper B band, or falls below the lower B band and then...
In a buy example, does the 3ema have to be below the 2 lower bands before it crosses above?

Suppose the 3ema was just below the upper lower band then crossed above the upper lower band, is this a valid buy?
  • #23
  • Edited 4:48pm Aug 30, 2009 4:41pm | Edited 4:48pm
I've attached an example of a set up. So you basically buy when 3EMA breaks into the channel from below (past both the outer b and innner a bands) and sell if 3EMA breaks into the channel from above(past only the outer b band). Is that correct?
Attached Image (click to enlarge)
Click to Enlarge Name: idea.jpg Size: 119 KB
  • #24
  • Aug 30, 2009 5:27pm Aug 30, 2009 5:27pm
Quoting bar
I've attached an example of a set up. So you basically buy when 3EMA breaks into the channel from below (past both the outer b and innner a bands) and sell if 3EMA breaks into the channel from above(past only the outer b band). Is that correct?
Just as good as buying there as buying at the top of that chart. Eventually you will, just a matter of time. Good luck.
  • #25
  • Aug 31, 2009 5:12am Aug 31, 2009 5:12am
Quoting aicccia
In 12 hours, I live in Japan and it's 2:30 am here. Goodnight.

Me too. Kanagawa Ken Aoba ku.

Glad to see another trader here in Japan.

This is a quick trade I took this afternoon for 30 or so pips.
Actually, with another system but looking back on this indicator this is how it panned out.

Is this basically a breakout indicator?

Not sure of the TF.
Attached Image (click to enlarge)
Click to Enlarge Name: Untitled-1.jpg Size: 101 KB
Starting to see instead of just looking.
  • #26
  • Aug 31, 2009 6:16am Aug 31, 2009 6:16am
Quoting RickW00716
Have you tried this out on longer term charts? I was thinking of trying to trade this on a 4 hour chart.
Well my goal in developing this system has been to create a very accurate model of the market. Once I have successfully done that, then this system should work on any timeframe, and any currency.

Let me explain:

In this system, once a trend is established, the order will not close till it crosses the Middle Base line, instead of the upper bands. This is because in a trend, the price will attracted to the upper bands as it continues upwards or the lower bands as it continues downwards, so we need move the line for closing back to a more neutral position, away from where the price is being attracted to. Since we're in a trend, we move this line to the base trend line.

If we are in a ranging market, the price will be attracted to the base trend line instead of the upper or lower bands. This means the price will spend a lot of time criss-crossing the base trend line and since we don't want to trade every time the market bounces a little bit, we move our lines for opening and closing to the upper and lower bands. Opening trades only at the upper or lower bands in a ranging market and opening trades only at the trendline in a trending market will mean we're only opening trades when the price has made a substantial move and not just a bounce. The more substantial the move, the more we can trust it and if we understand the underlying market dynamics that caused the move, then the question of "Where is the price going next?" becomes easier and easier to answer.

Market truths like these hold true regardless of timeframe or currency.
  • #27
  • Aug 31, 2009 6:19am Aug 31, 2009 6:19am
Quoting bar
I've attached an example of a set up. So you basically buy when 3EMA breaks into the channel from below (past both the outer b and innner a bands) and sell if 3EMA breaks into the channel from above(past only the outer b band). Is that correct?
Correct.

And when the price crossed above the upper lower band and then back down through it, the BUY order should have been closed and a SELL order initiated.

Since the price pierced the upper lower band and then came back down without heading above the upper upper band, the market is ranging.
  • #28
  • Aug 31, 2009 6:30am Aug 31, 2009 6:30am
Quoting Rastaman
Me too. Kanagawa Ken Aoba ku.

Glad to see another trader here in Japan.

This is a quick trade I took this afternoon for 30 or so pips.
Actually, with another system but looking back on this indicator this is how it panned out.

Is this basically a breakout indicator?

Not sure of the TF.
No it's not really a breakout indicator. If used correctly, you'll get in 50-60 pips before any break-out system. For example, according to the rules of the system, a SELL would have been initiated when the price went below the upper lower band in the top-left corner of your chart. The SELL would still be open as of now and you'd be in profit 110-120 pips. Baring a major move downwards, the trade would close when the 3-EMA moves above the lower-upper band.

Of course there is more noise on smaller timeframes, but it can be used on any timeframe. The settings will just need to be changed.
Attached Image (click to enlarge)
Click to Enlarge Name: pic1.jpg Size: 160 KB
  • #29
  • Aug 31, 2009 6:45am Aug 31, 2009 6:45am
A screenshot with several example of orders will be great for a best understanding.
  • #30
  • Aug 31, 2009 6:49am Aug 31, 2009 6:49am
Can you please describe the rules of your system in a numbered order? Such as:

1. Market reaches upper band, initiate market buy.
2. Stop loss is at...
3. Take Profit is at ...

etc.?
  • #31
  • Aug 31, 2009 6:50am Aug 31, 2009 6:50am
aicccia, according to your post #29 ,your system is a counter-trend, isn't it ?
  • #32
  • Aug 31, 2009 7:08am Aug 31, 2009 7:08am
Aiccia,
great system for id trends and range -
the question I have is do you take the breakouts above the upper hi band for long entry or below the lower low band for shortentry ?
thanks alot
traderdp
  • #33
  • Aug 31, 2009 11:41am Aug 31, 2009 11:41am
The indicator is only showing one set of bands on my screen. Anyone else having this problem?
  • #34
  • Aug 31, 2009 11:45am Aug 31, 2009 11:45am
Quoting Yibble
The indicator is only showing one set of bands on my screen. Anyone else having this problem?
try zooming out lol
  • #35
  • Aug 31, 2009 11:56am Aug 31, 2009 11:56am
lol v. funny. But seriously...any clues to what the prob might be?
  • #36
  • Aug 31, 2009 12:17pm Aug 31, 2009 12:17pm
I think it's got something to do with the spacing. Can someone pls let me know what the space value is in the inputs section. Thx.
  • #37
  • Sep 1, 2009 3:12am Sep 1, 2009 3:12am
Quoting aicccia
No it's not really a breakout indicator. If used correctly, you'll get in 50-60 pips before any break-out system. For example, according to the rules of the system, a SELL would have been initiated when the price went below the upper lower band in the top-left corner of your chart. The SELL would still be open as of now and you'd be in profit 110-120 pips. Baring a major move downwards, the trade would close when the 3-EMA moves above the lower-upper band.

Of course there is more noise on smaller timeframes, but it can be used on any timeframe....
hiii
would u mind telling the settings for 5m tf
  • #38
  • Sep 1, 2009 10:22am Sep 1, 2009 10:22am
I looked at the EURUSD all time frames (M5 to H4), but it doesn't look very impressive at all. A lot of false signals so not much confidence from the start to trade with this "system".
  • #39
  • Sep 1, 2009 9:32pm Sep 1, 2009 9:32pm
Quoting eTrader
I looked at the EURUSD all time frames (M5 to H4), but it doesn't look very impressive at all. A lot of false signals so not much confidence from the start to trade with this "system".
You'll find that it works better on other markets. Have a look at the other majors currencies.
  • #40
  • Sep 1, 2009 10:50pm Sep 1, 2009 10:50pm
looks interesting, will take some losses but any system will have some losses. Seems easy enough to code a simple ea for given the parameters. Once we have one then a simple strategy test will show whether its worth continuing to look at.

Good job,

Look forward to a excellent programmer to code this.
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