TSF Mavin

I've been working on a new system since late October. It needs a fair amount of work, so if you are looking for something that is a complete black box, holy grail... THIS IS NOT IT. I am posting here because I've learned tons from others here. Between the generosity of other posters here and other skills (price action and support and resistance as per James 16) I have managed to more than double my demo account since 27 October.

What I am about to present has been a huge contributor to that track record, but I would have lost money had I only been using it. Still, I think it has a lot of potential, because the winners way out number the losers. Again, that is NOT enough to make this profitable. My risk reward ratio is completely unacceptable by almost any standard. I've been using this in a demo account though, so I'm not worried. If you play with it in a demo account you too will not be worried... If you are so foolish as to run this on a live account YOU ARE A BLOODY FOOL.

All of that being said, what I've succeeded in doing is using this system to generally find safe entries into the market. Where the market occasionally turns and bites me (takes my stop loss) I now know I have a day where I'll need to go to work, but the market does oblige on these days. Whether it comes back for a re-entry, or runs off the other way, or gets stuck in a range, those are the days that I have to try something else to make back my pips.... but it seems that I'm becomming successful at that finally. It's just that I can't pay that kind of attention to the market every day. So, typically a couple days out of every 2 or 3 weeks, the market doesn't cooperate with this system. That kills it as a system as you will see. But I am hopeful that some of the fine minds here might help come up with some filters that can better limit trading on the losing days while keeping all or most of the winning days, and possibly turn this into a real winner.

So here we go.

I trade this on the GPBJPY 30 minute chart.
Use the TSF indicator provided. I attach one each for periods 19,20,21,22,23 -- you can set the colors to whatever you like, but be sure the 19 period is different from the rest.
I also attach a 20 period EMA of the close.

Do not trade any bar between midnight GMT and 1am GMT. However, you will begin analysis with the close of the 1am bar.

The TSF lines must all be above or below the 1am bar. If they are not you cannot trade until they do. This filter is valid only at the beginning of the trading day. Once it is cleared at a bar close, it is not applied forward from that.

The TSF 19 must be the highest TSF and above the 20 EMA, and the bar must have closed even or up, for a valid buy trade setup. Conversely, it must be the lowest TSF and below the 20 EMA, and the bar must have closed even or down, for a valid sell setup.

When the setup is confirmed, place a buy stop or a sell stop with the trend specified by the 19 TSF.

I place buy orders 1 pip above the close of the previous qualified bar, plus the spread (I figure 6 pips for my broker IBFX). Sell orders are placed at 1 pip below the low when that previous bar qualifies.

If the entry is not triggered, and there is a better entry bar that forms later, I will make the change ONCE. I won't chase it after that as there is a high probability you will eventually get executed for a loss.

My take profit is 20 pips. My stop loss is 51 pips. As a general rule I only look for the first qualifying trade for the day. If I lose, I know I have to work some other ways to get it back. So far I've not had a single losing day, considering my fallback actions, which I can't possibly attempt to explain. I am risking a total of 6% on a trade. I am testing. You may use whatever settings you want.

Perhaps some other TSF settings, or some other EMA settings might work better for you.... or some other filter... stop loss, take profit.... timeframe.... whatever.

I'm simply stating that this is easy pickings around 80% or better, each month. I have learned that there are more losses that seem to occur on GBP rate change statement days, and when the notes from the Bank of England are released. Rate statement is made on the Thursday of the first full week of each month, and the notes/minutes of the meeting are released on the Wednesday two weeks later. Trading on those days runs about 50% losses I think (so you can still win... but odds are not in your favor). Other losing days are harder to nail down. They look pretty normal a lot of the time. Narrow early trading does NOT corralate to less wins. It actually seems to be easier to win in that environment.

I want to post some pictures to make it clearer, but it might be a day or two before I get to that.

If anyone wants to try to make an EA that will watch and place an initial order I would really appreciate that. Also might be nice to build an indicator that could be attached and show where qualified trades occured and what the result was. That way, we could visually see what the effect of changing the settings for the current set of indicators are, and maybe get a better sense of what could be improved.

Let me know what you all think. As I said, I'll try to post some stuff a bit later.

I have looked at other pairs for this. It probably works with other TSF and EMA settings, but I've only been experimenting with these on GBPJPY. I am more familiar with this pair. You should feel free to experiment.

The key here is that we aren't trying to catch the very start of a trend, we just want to find a good safe place to enter. That is what these indicators help to do. Sometimes the signal comes VERY far into a move, and that is okay... isn't it.

I don't understand this quote.
If this has lost money, how was it a huge contributor?

Billbss, Good to see you droping in.

Okay, here is what I mean. Since 27 October, I think I've had 10 losing system trades. I believe I traded every other possible day with the exception of the last 6 tading days (because of the lower seasonal volume). On the winning days I just took the 20 pips and quit. On the losing days I took other non-system trades, with the objective of eliminating my losses and still achieving 20 pips profit on the day. My goals in the earlier days were less than 20 pips, so there are some lower earning days back then. My non-system trades kicked in only after I lost. A couple of times I actually did better than the 20 pips profit on the day, but that was my goal.

However, the majority of the pips made, and trades taken were with this "system". When it works I just take the easy profit and end for the day. Using my risk reward as stated, my 20 pips is about a 2.5% win each day. I compound that as I go, so I'm getting almost 64% return per month... at my current take profit.

My goal is 20 positive pips per day. If I lose I'll keep trying. BUT I am not saying I'm winning with this system every day. But it does win on its own almost 80% of the time. Some months are much better. Last January I don't think there was a single loss.

Hope that helps. Good to hear from you.

Picture is worth a thousand words, right? Okay, here is a sample from 14 December. In fact, every trade that week was a winner, and they illustrate the different ways that a winner can look, so I'll be posting those. And, for the record, tonight's move was a loser. I'll post that one too, eventually. But here is one to cut your teeth on...

Okay, I messed up... That was a 1 hour chart. Interesting how it worked out there too... Oh well... I'm just focused on the 30 minute chart for now, so here is the real 14 December 2009 30Minute chart.

thanks for sharing,i have 2 Q:
1. do you trade on 30M or 1H
2. is this strategy only for GJ or we can use it for other pairs like EU or GU

thanks!

Thanks for your interest. I have only been testing it on the 30 Minute GJ. I have looked quickly at some other pairs long ago, but the settings I'm working with don't seem well optimised for other pairs, and certainly not my take profit and stop losses. However, I suspect there are good settings for other pairs, and you are certainly free to look into it. In fact I highly encourage it. It also might be workable at other timeframes and certain times during the day. Obviously the options are almost infinite. My effort has been focused on GJ because I'm familiar with how it runs and am comfortable with how it unfolds. I found settings that work "pretty well" for it and started forward testing. I'm sure it can be improved. But I strongly believe some variations will work with other pairs too, and if you wanted to experiment I'd love to hear what you discover. I don't have time to study much beyond my current focus though. Thanks for the questions.

Getting late here in Hawaii. Time to go to bed. I'll be back in a few hours if anyone else has an interest.

sorry,i saw you 30M chart after posting,how about re-enter,look at my chart please!

I've seen MANY times that re-entering would have worked. But quite a few where it would not.

I have time of day issues for markets relative to my local time. London open is my bed time, roughly. So, it has been best for me to focus on just the first opportunity, which almost always comes, in GJ, before the London open. I have seen many times where a reentry at the original order point, after being stopped out, would have worked too.

There is much to investigate. That is one reason I introduce this. If I can get help from others in looking into more details we might all benefit.

Out till my morning... appx 6 hours from now...

Here is the winning chart from 15 December.

16 December 2009

Please note, my placement of the buy stop line shows where they bid price will be when I get filled. My actually entry price would be that bid price plus the spread (which is the ASK price). So for IBFX it is currently running 5 or 6 pips on my demo account. I guess that would be 50 or 60 on a live account with the extra decimal places.

17 December 2009.... Almost stopped out, but survived to go on to a win.

I see you lurkers out there... No problem. But soon I'll be leaving for work and won't be able to answer questions for a few hours. My time is very limited for trading, let alone posting to this thread... But I'll try.... The wife gets jealous of my puter...

18 December 2009 -- This is a very good one to show what can happen. The first fully qualified bar doesn't execute before an improved qualified bar (both of these were sells by the way) formed. I placed my original order. I moved it for the first better bar. But I won't chase it after that. In this case that updated order didn't fill either. I wait. Eventually everything turns the other way and I get filled on a buy order after the first qualifying bar going the opposite way. My stop loss again saved me from getting out too early... another close one. But I didn't spend a bunch of time with money in a trade as it whipsawed about. One whip after I entered, but it won anyway... all in less than 30 minutes once it got started.

Headed off to my day job now. I'll be checking at odd intervals through the day, but posting is tough for me. I'll be putting up more charts over the next day or so.

As for Monday's (Today's) loss... I'll be posting about that too. I had a strange bit of luck. I misread the chart and placed a buy stop just below the 1am bar. As it turned out, that was fortunate as the market went on and scored me a win. However, had I done things correctly I would have taken a loss off a valid sell entry set up from the 4:30am GMT bar. That triggered on the next bar, and the market retraced and would have stopped me out. IF that had happened then I would have begun my ACTIVE trading style, and I would have noted the bearish outside bar that formed at about 7:30 am, with another forming around 9:30 am. Between those two action points I would have been able to recoup my losses and move on to gain my goal of a 2.6% gain for the day.

The "system" needs improvement, but it catches alot. I can make it work for me as I can't be an ACTIVE trader everyday.... nor do I want to be. If I can catch an easy win 3 to 5 times in a week (relatively passively) and only have to work for it a couple of times every two weeks or so, that's workable for me. Of course, if I can improve the performance so that there are even less losers, or I can reliably judge which ones are going to run longer, etc, etc... this could really fatten my bank account... and hopefully yours too.

Interesting method. I have a question. According to your entry rules, you stated that you place your orders 1 pip + spread above/below the qualifying candle. But in your charts, you placed your entries above/below the high/low of the qualifying candles. Could you clarify your entries? Thanks.

You just trade this on GJ, have you tried other pair as well?

As originally stated... BUY orders are placed at 1 pip above the fully qualified bar PLUS Spread. This way the order should fill when the bid price (which is reflected on the MT4 platform by default) reaches one pip above the previous qualified bar high.

I have not tried it on other pairs. I believe it is likely that SOME settings will work with SOME pairs, but THESE settings are a reasonable start for GJ.

I have had a cursory look at some other pairs with these settings and was not impressed. I'm certain I didn't look at anything over a period of more than 2 weeks.

More optimal settings are possible, I'm sure. Other filters could be introduced to improve things too.