Another trend line system

I am using this as part of my overall trading strategy and have been demo trading it on and off for about six months. I have been trading it by setting pending orders with SL and TP. It works well but I think it will work better as part of a EA system that has a MM system that allows partial take profit. I don’t have that to test out what I’m looking at but here is what I do.
I took much of this directly out of the Demark and Pearl books. I hope you like it!

Good Luck and Happy Pips!
Demark Trend Lines
The goal of this system is to identify break outs according to a very rigid mechanical system. I use an indicator that will automatically plot the TD Lines to the first magnitude, I then monitor for TD Line breaks that meet these criteria. I will only trade this in the direction of the major trend for anything that is less than 1hr. Scenarios 1-3 are time tested by many who have used this system and I have found them very reliable in my testing. Scenario 4 is something that I’m playing with. Over the last six months of testing and doing this system I have found that I have been successful over 70% of the time with a better than a 1:1 risk to Reward.
Scenario 1:
X = current candle
X-1 = previous candle
X-2 = 2 candles before current candle
For a Long:
If the close of the previous candle (X-1) is lower than the close of the bar two previous of the current bar (X-2) the break out is valid.
If X-1 is lower than X-2 then it is a valid break out.
For a short:
If the close of X-1 is higher than X-2 then it is a valid break out

Scenario 2:
The market opens on the other side of the TL, it gaps in the direction of the breakout. After one tick in the direction of the breakout execute order.

Scenario 3:
For a short: calculate the difference between X-1 close and the greater of A) that bar’s high, or B) the previous bar’s close. Subtract that value from the close of X-1 and if that number is above the TL, you may short an intraday bar.

Scenario 4:
This one is not from the Demark or Pearl book. I have been playing with this to see how it works. On a break of the trend line that does not meet the previous three scenarios I enter the trade at half of what I normally enter a trade. I get out of the trade very quickly, still working on.
Pairs:
This can be used on any pair or market and is being used in them. This is what I trade.
Daily & 4hr: E/U, G/U, J/U, U/CHF, UCAD, A/U, E/J, G/J, E/CHF
1Hr: E/U, G/U, J/U
Money Management:
Currently I have just been setting a SL at 15 and a TP at 20. I am thinking of starting to use a trade management EA and start to test it out at different SL & TP.
EA:
This system currently does not have an EA. If someone can find one on the FF here or somewhere else I would love to see it. If anyone is a good coder and can code this it would be pretty awesome.
I have attached the indicator.

Posted is today's E/U daily chart. I look at it and say that a long break out is a valid break because X-1 (close) is lower than X-2. So I set a pending order.

Now I look at it and apply the rules of secnario 3 and see that it is a potential valid trade and enter in the pending order. I do the same thing for the 4hr and 1 hr, then I update as I need to.

Couple of questions:

Does the breakout bar have to close the other side of the trendline before you trade it or do you trade in mid bar when it crosses it?

15 pip SL seems very small for 4H and Daily charts.
It can burp and go against you 15 pips.
Is this really what you've been successfully using?

Hi Simple

Congrats on opening up your own thread, I will have a look at your system a little and comment on it if thats OK.

Cheers mate
Ezzy

I also trade similar trendline based system. In addition to Thomas DeMark's trend lines I also use classical trend lines,
built on price peaks. The principle is the same as yours, I try to recognize main move and wait for a trend line breakout
in the direction of main trend. By "trend line" here I consider ANY line drawn by significant price peaks. This can be
classical or Demark's trend lines. I like the sample you have provided on the chart, this is my favorite case! Especially
when the downward move is a retracement of upward long-term trend. The only difference from your system is that I only
monitor Daily charts. I could not find trend lines working well on smaller time frames, I think Daily charts are more
safe and they simplify technical analysis.

There is a large room for experiments here, and I'd say, it worth the effort.

I think some stock screener would be helpful here to fetch Pairs/Stocks that meet the criteria today.
For Demark's trendline break-outs, this one can be used:
http://www.technical-stock-screener....rk_trend_lines

Your E/U chart above is a good sample for mentioning about SL/TP levels. In similar situation I would set stop loss level below horizontal
red line on your picture, i.e. two support lines below of breakout point. And I usually set take profit a bit below next
significant resistance trendline somewhere above on the chart.

No you do not wait for a close, this is an intrabar breakout system.



Yes 15 SL is small I started off playing with 50 then 30.... What I found out is that most of the time that it passed the 15-20 it just went to the SL rarely did it do a big turn around. This is one of the reasons I hope someone could build an EA with the MM so I can do longer term tests. I do feel that I'm leaving a lot on the table sometimes. Right now I'm testing out a MM EA to see what I can get. I have been doing all my testing by hand.

Yes this is what I have been using.

Would be great to hear what you think Ezzy!

Here is what I have right now for the E/U. I have all the pending orders placed for the Daily, 4hr, and 1hr. the bottom one is the 1hr chart.

We had a break out on the hourly chart for the E/U. Just took 20 pips on it. When you see the chart you will notice the previous bar was lower than the bar before it. This tells me it is a valid trade to enter if the break occurs. I set the Pending and left it go.

Hey Simple

I made it over to your neck of the woods. Congrats on the new thread. I will be watching along with you. I will go over in detail soon. Looks interesting.

Rufus

Over the past two days here are my results only using this system. I started experimenting with an trade management EA. I have been taking 50% profit at +10 pips and then set the SL to BE. then I just left it with a 15 pip trailing stop. Need to work on the original SL some, still not working for me like I would like. I took 17 trades and ranged from -86 to a +108. 4 losers and 13 winners for a total pip count of 135.

Any thoughts? Right now I don't know what TF the trades came off of, going to start to work on that.

Any thoughts let me know:

Simple

1uchf9
2au-40
3eu23
4eu39
5eu5
6uchf19
7eu-20
8uj11
9gu9
10gu-18
11uj-86
12au10
13ej108
14ucad30
15gu10
16au10
17ej16
total pips135

Looks like your buying dinner.

imho, you should be more accurate in selecting pairs for this system. My observatin was that not all pairs work well with trend line signals.

Rules That Warren Buffett Lives By

by Stephanie Loiacono
Tuesday, February 23, 2010
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Warren Buffett is arguably the world's greatest stock investor. He's also a bit of a philosopher. He pares down his investment ideas into simple, memorable sound bites. Do you know what his homespun sayings really mean? Does his philosophy hold up in today's difficult environment? Find out below.
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You may think the recent financial meltdown changed things, but don't be fooled: those unfussy sayings from the Oracle of Omaha still RULE!

the real job has kept me from doing much on the 1 hr TF the past couple of days. As of today I'm a easy 34 pips. Just set the pending order every hour and let it run.

Hope all are doing well!

What are your current results?
What are the results for last month?
Did you test your system on historical data?