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trading reversal system

  • #1
  • First Post: Edited 5:27am Nov 19, 2005 5:17am | Edited 5:27am
Hi guys,
I was working on my system. I had this system long ago, but I make filters and improved it.

I will describe the system.
1. It is better to trade in direction of major trend
2. as more sized bullish/bearish candles as reliable.
3. Look at hourly and 4 hour charts two. Was this rapid move in such short term (in 30min, hour, 4 hour) or it rallied gradually. as short time-period as reliable.
4. slope of Stoch is more than 45 degrees, gap between slow and fast stoch widens. If slow stoch does not go to over-zone and reverses it is good indication. Also fast stoch must enter ove-zone
5. slope of RSI is more than 45 degrees
6. I trade this only on EURUSD. the reason is because this currency is most liquid one. So when this rallies happen it is not familiar for liquid currency because as liquidity is high the volatility must be down especially in short periods.


As you see from Chart I use Stochastic, RSI with chart patterns.

any questions and notes are welcome

thanks
777
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kiss the trend
  • #2
  • Nov 19, 2005 5:21am Nov 19, 2005 5:21am
another example. hmm it is happening very seldom. that's the lack of this system I think.
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kiss the trend
  • #3
  • Nov 19, 2005 5:30am Nov 19, 2005 5:30am
Without thinking too much about what you have done the comment that I would make is that the slope of the RSI is purely dependant on the amount of zoom you have on the chart. Try zooming out a long way and virtually all the time the RSI>45 and zoom in a long way and it will be never > 45 (almost).

Simon
  • #4
  • Nov 19, 2005 5:49am Nov 19, 2005 5:49am
Quoting DrRock
Without thinking too much about what you have done the comment that I would make is that the slope of the RSI is purely dependant on the amount of zoom you have on the chart. Try zooming out a long way and virtually all the time the RSI>45 and zoom in a long way and it will be never > 45 (almost).

Simon
Yes but using any zoom size the slope of RSI and Stoch in this areas are different from another areas. so no matter you will say 45 degrees or 30* the important is that this slope is bigger than usual. Just 45 degree is optimal for standard zoom size
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kiss the trend
  • #5
  • Nov 19, 2005 9:49am Nov 19, 2005 9:49am
I like where you're going with it, FX. I have always believed that the "angle of attack" of MA crossover's could determine the eventual profitability of the entry - and it seems to most of the time. However, it is much to complicated and involved to package into a system for general use. However, it does make for a great observational tool on a personal level.

You've apparently extended this onto the Stoch's and RSI which I think is a good idea.

Keep hammering it out! I think you've got yourself a nice system.

PS. Also keep in mind that while you may experience extremely good results, others may not. When developing systems, the developer oftens has attuned himself to the system and has unconscious aid that he is not aware of. This aid can only be learned by using and observing the system. But for most people trying someone else's system, they don't have the tolerance necessary to put forth the time to attune. If that made any sense at all....
Capital Preservation is key to long term wealth accumulation
  • #6
  • Nov 19, 2005 10:06am Nov 19, 2005 10:06am
Quoting fx-trader777
another example. hmm it is happening very seldom. that's the lack of this system I think.
Hmm, I notice on that chart here was a long downtrend, even before your entrance. Ever think of maybe messing with EMA's to help confirm your system? Maybe it can inprove gains and decrease risk.

Let me know what you do.
  • #7
  • Edited 11:15am Nov 19, 2005 10:37am | Edited 11:15am
Quoting MuddBuddha
I like where you're going with it, FX. I have always believed that the "angle of attack" of MA crossover's could determine the eventual profitability of the entry - and it seems to most of the time. However, it is much to complicated and involved to package into a system for general use. However, it does make for a great observational tool on a personal level.

You've apparently extended this onto the Stoch's and RSI which I think is a good idea.

Keep hammering it out! I think you've got yourself a nice system.

PS. Also keep in mind that while you may experience extremely good results, others may not. When developing systems, the developer oftens has attuned himself to the system and has unconscious aid that he is not aware of. This aid can only be learned by using and observing the system. But for most people trying someone else's system, they don't have the tolerance necessary to put forth the time to attune. If that made any sense at all....
Thanks for encouragement, I am not sure if I understood all aspects of your post because of my English skills but I think I understand basic concepts

I will continue to work and improve this system significantly and I will be glad if someone finds this system comfortable

as always all comments and questions are welcome

thanks
777
kiss the trend
  • #8
  • Nov 19, 2005 10:41am Nov 19, 2005 10:41am
Quoting xspowerx
Hmm, I notice on that chart here was a long downtrend, even before your entrance. Ever think of maybe messing with EMA's to help confirm your system? Maybe it can inprove gains and decrease risk.

Let me know what you do.
Yes I will work to involve EMAs in my system.
kiss the trend
  • #9
  • Nov 19, 2005 7:24pm Nov 19, 2005 7:24pm
777,

You may want to check out Mark McRae's "Sure-Fire Forex Trading" which touches somewhat on what you're doing here. While the system is quite extensive, it also incorporates the concept of looking for extreme RSI / WLR / MACD values in relation to a current trend (e.g. a high overbought RSI value as compared to RSI values in the recent past can signal a sell in a downtrending market). You might be able to incorporate some of his ideas into your system.
  • #10
  • Nov 20, 2005 7:36am Nov 20, 2005 7:36am
Quoting bluemeasure
777,

You may want to check out Mark McRae's "Sure-Fire Forex Trading" which touches somewhat on what you're doing here. While the system is quite extensive, it also incorporates the concept of looking for extreme RSI / WLR / MACD values in relation to a current trend (e.g. a high overbought RSI value as compared to RSI values in the recent past can signal a sell in a downtrending market). You might be able to incorporate some of his ideas into your system.
Can you tell me where I can get "sure-Fire Forex"?

thanks
kiss the trend
  • #11
  • Nov 20, 2005 6:48pm Nov 20, 2005 6:48pm
do a google on it or use something like emule.
  • #12
  • Nov 20, 2005 6:59pm Nov 20, 2005 6:59pm
Quoting fx-trader777
Can you tell me where I can get "sure-Fire Forex"?

thanks
http://www.surefire-trading.com/tsl/secret.htm

Jim
Indicators show the past. Price Action "Indicates" the future.
  • #13
  • Mar 10, 2006 11:32am Mar 10, 2006 11:32am
anybody remember my reversal system?

It generated a signal and I forgot

I discovered this signal today
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  • #14
  • Apr 11, 2006 3:26am Apr 11, 2006 3:26am
I think I made my system better,

I added weekly momentum as filter

Well first conditions is that you should trade this system in direction of weekly trend. Weekly trend is shown by momentum (5 SMA and 21 EMA as in Vegas docs).
So you can see how weekly momentum filter would have saved me from a loss if I traded this system on this rallies. (see attached files)
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kiss the trend
  • #15
  • Apr 11, 2006 3:27am Apr 11, 2006 3:27am
Here is daily
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kiss the trend
  • #16
  • Apr 11, 2006 5:53am Apr 11, 2006 5:53am
777,

I think you have got something quite nice. Your filter looks good.

The only suggestion I may make is to look for divergences in both RSI and STO, because these two indicators make divergences stand out and of course price usually follows. The only thing the divergence does not determine is how far price will move in the other direction...

Really nice stuff..

SMJ
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  • #17
  • Apr 11, 2006 6:02am Apr 11, 2006 6:02am
Quoting smjones
777,

I think you have got something quite nice. Your filter looks good.

The only suggestion I may make is to look for divergences in both RSI and STO, because these two indicators make divergences stand out and of course price usually follows. The only thing the divergence does not determine is how far price will move in the other direction...

Really nice stuff..

SMJ
This signal (you have quoted an image) was really false (according reversal system. Divergences are OK) but weekly momentum has filtered it and so you would have stayed out of the market.
This system is not high profitable but You can have some nice trades with others
kiss the trend
  • #18
  • Apr 11, 2006 6:34am Apr 11, 2006 6:34am
Oh yes, I see... It is the weekly momentum you are most interested in... Have you done testing on this filter? How is it doing? That looks like a great way of taking only the best trades... SMJ

Quoting fx-trader777
This signal (you have quoted an image) was really false (according reversal system. Divergences are OK) but weekly momentum has filtered it and so you would have stayed out of the market.
This system is not high profitable but You can have some nice trades with others
  • #19
  • Apr 11, 2006 6:39am Apr 11, 2006 6:39am
Quoting smjones
Oh yes, I see... It is the weekly momentum you are most interested in... Have you done testing on this filter? How is it doing? That looks like a great way of taking only the best trades... SMJ
I backtested 4-5 cases it works. I will do further research later.
kiss the trend
  • #20
  • Apr 11, 2006 6:54am Apr 11, 2006 6:54am
Quoting smjones
777,

I think you have got something quite nice. Your filter looks good.

The only suggestion I may make is to look for divergences in both RSI and STO, because these two indicators make divergences stand out and of course price usually follows. The only thing the divergence does not determine is how far price will move in the other direction...

Really nice stuff..

SMJ
look not trying to be the negative guy , but stoch , rsi, roc . wathever, you can have them all . There just to subjective and missleading spent 2 years following and reading books on that junk and Blew a lot of money trying to justifiy ther relevence .. Pure junk if you ask me Just my opinion . I am not knocking the system by all means if it works for you then great .
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