Monster Muncher Manual Trading Discussion: Compliments SH

This is a thread dedicated to the discussion of the Monster Muncher EA, which the illustrious Steve Hopwood has coded and I have designed. All kudos to Steve for a great job on this EA.

I personally don't like putting robots on my account, so I only trade this manually. I have done some studies of the backtests results, which were good, but in practice it may have some problems as an auto-trader. Truth be told, I haven't utilized it enough forward testing as a robot to be able to give any kind of comprehensive reporting.

My own interests have been in the manual trading aspects alone, and so that is what I hope to cover here: how to trade MM for the best manually.

I have forwarded tested it manually and have done very well on my live account after a little practice on demo.
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Important: This EA counts according to the GMT offset time of your broker. A broker with a GMT offset time of +2 will give different projections than a broker running on GMT.

I use IBFX which counts according to GMT. Any other GMT broker will give close projections to that.

I can't recommend using a non-GMT time broker for this system. I only have experience with IBFX. Brokers with a GMT offset time can seriously alter the results.

Best suggestion if you have a non-GMT time broker: Get a demo from a GMT time broker and take your signals off that.

Important #2: There is a bug in the EA which causes the charts to offshift every hour. You must refresh the template every hour-this will restore it to its original setting. Now that this info is up top and highlighted,

I will be ignoring any further questions about it on the thread. I have written this 5 or 6 times in the thread itself, even though it was already stated below in this first post. I can do no more.

One last time: You must refresh the template every hour.

Important #3: This is a strategy in development-I am urging people as they learn this strategy to either trade demo, or trade for a penny a point. This is common sense-use caution with your funds. Nothing in FX is certain

and all trades involve some element of risk. This is about creating a system which establishes favorable probabilities over time-not a holy grail. It takes time, study, and practice to become successful with any method.

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So here is the basic breakdown of the system:

First I'll explain the lines. The center Red line, or Average line is the heart of the system. Here is how it is calculated:

It calculates the average range of the first 6 bars of the week( point #1), then it calculates the average range of the second six bars of the week(point #2), then the average range of the 3rd six bars of the week(point #3).

Then it takes the average of #1 and #2 and produces a fourth point, #4. The it takes the average of #2 and #3 produces a fifth point #5.

The red line is a straight line starting from point #4 going through the center of point #5.

This gives you the average trajectory of the first 18 bars of the week. It updates automatically every week.

Therefore it take 4.5 hours after the start of the week to calculate the red line on the 15 min chart, 9 hours for the 30 min chart to calculate, and 18 hours for the 1hr chart to calculate.

The top of the weekly ATR (Blue line) is placed above the Red line. The bottom of the weekly ATR (Green line) is placed below the Red line.
The Yellow lines which are very close to the Red Line are not used for signals, just for helping with observation of price action around the red line. They are not essential, but I find them helpful.

So, this system can give you four kinds of trades.

Buy #1: Price closes above Red line RSI is oversold.
Buy #2: Price closes at or below Green line RSI oversold.
Sell #1: Price closes below Red line RSI is overbought.
Sell #2: Price closes at or above Blue line RSI is overbought.

The 1Hr chart is the most reliable chart to trade in my exp. 15 min gives you a few more trades but can cause drawdown. I like to watch 15 min, 30 min, and H1 to see if they are giving me aligned signals, but only take my acutal signal off the H1.

You don't have to watch all three TF's, up to you. You can trade just off the H1.
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Charts, EA, and template posted below.
EA goes in your broker>experts.
template goes in your broker>templates.

Template #1 is already set to disable live trading and alerts.

Template #2: also has lives trading and alerts disabled, but has user feedback turned off, and the ADR indicator removed. Its just the lines with the RSI, without any other kind of text. It looks cleaner.

Final Note: You have to refresh the template every hour if trading on the 1hr chart, every 1/2 hour if trading on the 30 min chart, every 15 min if trading on the 15 min chart. It will recaculate on each new bar it makes- just a bug-so to restore it to its original setting just refresh the template.

Also, obviously use common sense and practice on demo before any live trading. If downloading only the EA and not the template, make sure to uncheck allow live trading. Aside from that, enjoy!

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Types of set-ups to avoid coming in next post.

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More info concerning this system as a Robot and other Steve Hopwood Creations can be found here:

http://www.forexfactory.com/showthread.php?t=243432

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Updates:

8/7/10: Put up a corrected version of MM (mq4 file below titled 'breakoutv4), which has the yellow line settings correctly entered. The settings were entered rightly on the templates posted, but not on the bot itself.
"ATR Breakout Mulitplier" setting should read 0.162. This sets them at a distance from the red line where price action does significant things.

It also sets them at a distance where if you draw a trendline halfway between the lower yellow line and the green line, and one halfway between the upper yellow line and the blue line, you will get equal divisions
of 6 sections. Significant action can also occur around these 50% levels between the yellow and green, and yellow and blue lines. None of this changes the rules of the system, but its good for observation and
perhaps in the future something more will come of it.

This new version also has magic #'s set to 0, and trade comments set to 'none', to disguise them from brokers.

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8/21/10: Have refined the type 2 Retrace trading method using fibos. See post #120. Important improvements not to be missed.

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8/24/10: Have refined the type 1 Red line trades. Thanks to Ian for his help with this. See post #138.

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Types of set-ups to avoid:

I've had a very high percentage of winners trading this system. There is one kind of set-up though which I have been able to isolate which can fool the system. So you will want to avoid this type of scenario.

When you have a pair trading in a steep trend, either bullish or bearish, you can get this very steep angle created from the first 18 bars.

What can happen then is that a steep trending pair can move accross the chart and the Red line horizontally, so its basically already oversold or overbought at the moment it crosses the Red line.

The GU for example this week moved from left to right horizontally across the red line in an overbought state. Then it went bullish "under the red line" triggering a sell and just kept going bullish.

Anyway, a picture is worth a thousand words. I have two examples of this. You can spot it easily by the horizontal movement across the Red line and the steepness of the lines.

This is the exception rather than the rule, but you should know how to spot these kinds of false set-ups.

That includes the most important things I wanted to say about this system in my experience so far.

Emphasize-

1) take your signals off the H1 rather than the lower TF's.
2) avoid the bad set-ups.
3) practice demo and get green pip experience before any live trading.
4) don't ask me questions about its functionality as a live robot. I won't be able to answer you. This is a thread about manual trading of this EA.
5) do ask any questions you have about manually trading it.

Thanks!

Thank you very much for your efforts, Steve!

Some questions: Which pairs do you trade? And which SL/TP do you use? I hope I haven´t read something over.

Best regards!

Hi Meister-

I trade EU, GU, EJ, GJ, UJ, AU, UCHF. Pretty much any pair seems to be tradeable but those are the ones I keep my eye on the most. It cuts down on waiting time to have several up there.

But again, if a pair is in some kind of super-steep trending mode, like the EUR/CHF is right now, be on alert for the horizontal walk and the bad set-up situation.

My experience with SL is that it has been useful to have as much as a 50 point stop in certain cases. Most of the time though my SL is not that high.

If you take a sell under the red line, and price breaks up through it, give it some room-maybe half way or a little more between the red line and the yellow line above it. There's a good chance its going to come back down and then sell off big time. Thankfully, this doesn't happen too often (breaking up through it once its closed under in an overbought state).

Aside from that be mindful of the volatility of the pair and act accordingly. If your buying on a retrace below the green line on GJ, which is a very volatile pair, a 25 point drawdown is nothing unusual and nothing to be worried about.

I keep my positions small and usually scatter the entries on a drawdown(if I feel like it might draw down after my first entry), as opposed to entering all at once.

TP I'm working on improving as I tend to take the money and run, rather than maximizing my positions. You can catch some really big trades with this system-100, 150, 200 pip trades.

So I'm looking at using the RSI as an exit signal. Ex, perhaps if in a buy exit when RSI hits 63 or so on the H1. Or if in a sell exit when RSI is 35 or so. This is just an idea I had and is not really practiced yet.

Other than that its all situational, according to your style of trading, and etc.

Hope that helps!

PS-I should emphasize one point. You are waiting to see that a bar closes under the red line after hitting overbought, or closes over the red line after hitting oversold. Take your signal on the close of the bar not just its entering a state of OB or OS.

Hi Steve,
Thanks for sharing the system. It seems the red line is only drawn once a week. Do you see any advantage in redrawing it every 18 hours for the hourly etc.? Thanks.

Thank you SteveFX for sharing this manual strategy. I'll put it up on some charts on demo and give it a whirl.

Hi Yesbee,


Yes I do see advantage in doing something like that..not every 18 hours, but maybe twice a week. Sun/Wed. I am not a coder though.

As long as the price stays in the range of the lines you still have trades. After you take your first retrace trade on a pair your generally done with that pair for the week.

Each week a given pair generally has the ability to give two really good trades-one from the Red line, and one from the retrace area. But like- two really big trades-if it generates the signal. Watching a number of pairs you can find maybe 6 to 10 big trades a week. This comes to a lot of pips.

If there was a redraw feature you'd have fresh data til the end of the week-it might extend your trading time or increase the number of trades you can get. However as it is, there is already plenty of opportunity.

Thanks for your question-

Thanks for coming by octo- Best of luck!

I can confirm that it appears to be a failure; it made a brilliant start and then gave back all the profits and gradually drained the account.

I intended giving this a go as a manual trader but was sidetracked by Nanningbob's thread. These two trading methods should give us a formidable couple of strategies to take on the markets with.

Thanks for starting this, Steve. It has given me just the impetus I need to start practising this method again; I took a few successful demos whilst developing the robot.

Here is a thought for consideration. I am using mptm to send an Atr take profit to my NB 5 trades; it might be a help here also.

Excellent suggestion Steve-thanks! I will look more deeply into mptm (woefully ignorant of this most useful tool)-I know I'm giving up a lot of pips leaving TP to my own discretion thus far-though of course I might be able to work that out. Just chicken .

Also got to look more into NB's stuff-will be about that business soon.

-Cheers!

Here is a mptm set file to get you started:

 

1. manages all trades
2. sends a stop of Atr * 2
3. sends a tp of Atr * 3
4. moves stop to breakeven + 2 at +30
5. moves stop in jumps of 50 pips

It could turn out that the stops and tp's are better calculated using the distance between the average and the retrace lines, but that is for people to play with.

are u sure about Buy#1?

Hi, Mistersimple-

I'm not sure what you are asking. I am sure that the Buy #1 is triggered under the conditions I've described. Price closes over the average line (red line) when RSI is oversold. This triggers buy.

Cool Steve, thanks very much. I'm going to get it on there and start checking it out. Was just catching a few Zzz's.

I think around 80-130 points is your typical profit. This makes sense when you think about the RSI on the H1 moving from OB to OS-usually takes about the much to move from one to the other.

Taking trades from the red line typically yield around 75-110 points. Retrace more like 100 to 150.

Point is thats the range we're talking about, where as I'm bailing at like 45 points.

So yeah jumping from 50 to 75 to 100 to 125 to 150 would definitely work.

Anyway I'm going to play around with it and just get more familiar with the functionality.

I'm just going to cover the basic ranges of SL and TP that I have observed trading this system. Nothing is set in stone here.

If you are trading on a type 1 buy or sell, which is close to the red line, for the most part you can place tighter stops if the price crosses the red line in the wrong direction after your trade entry.

You might decide to use a 50% level between the red line and yellow line, for example. Most of the time that would work out to be about 30 points. Your min TP on these types of trades is around 50 points. Average realistic TP 75-110 or 120 points, in that ballpark. But then you know I have used stops as big as 50 points to my advantage even on a type 1 trade. So this is to a large extent a matter of personal preference and risk tolerance.

Retrace trades tend to pay off a little more-more like 90 to 150 points. So a 45 point stop in this kind of type 2 trade gives very favorable RR.

I don't mean to suggest that this type of drawdown is the typical story on most trades. In my experience it has not been-its been a lot smaller.

Again, the pair's volatility is a factor. GJ always backtested better with wider stops and tp's than most other pairs because its volatile.

Basically, getting all this right is just a matter of practice and observation.
I also have to work on holding out for bigger TP's than I've been taking. But thats the general idea.

Hi Steve,

Loaded everything and charts look like the ones you use. I have none of the red, green, or blue lines on any of them. Does it make a difference if my broker uses 4 or 5 digit charts?
Thanks.

pipsacker

Hi Stevefx,

Thanks to you and Steve Hopwood for putting together this system! I'm looking forward to giving it a go.

Question on RSI's OB/OS aspect of the system. I was curious as to how strict you were about OB/OS levels.
-- for going short, would RSI near 60 be too low? Or do you wait until RSI >= 70?
-- for going long, would RSI near 40 be ok? Or do you wait until RSI <= 30?

Thanks!
Leftcoaster

Hi,

I also have problems with loading the indicator on the chart...I even compiled it again and set ECN=false. But nothing happens on my chart...

BTW, I am with Alpari UK.

Regards,
Oliver

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EDIT: Failure found, it is an EA NOT and indicator!

Hi Leftcoaster,

I try to stick to the 30 70 settings, because it reduces drawdown. Having a system with lower drawdown lets you be a little more aggressive after you get comfortable with what you are doing, and I think is ultimately more profitable. 40 60 would be too loose. 32 68 would be about the loosest that I personally would dream of going.

That said, I'm not trying to say that everything I do is what everyone should do. There may even be other ways to use the lines to find different kinds of trades. This is just whats worked for me.

-thanks for your question