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The Small Hours Simplified!

  • #21
  • Feb 11, 2011 6:55am Feb 11, 2011 6:55am
As long as the condition does not exceed your ATR value x 1.5, YES it is possible for the next candle to be a potential setup candle. But until the current bars closes, the previous candle is still the setup candle. Remember these are 4H candles! You can interpret the rules any way you see fit

Quoting spaizkadett
If the pending orders are not hit and the next bar also is a valid setup, is it then allowed to close the pending orders and make two new? (E.g. the entire setup is shifted one to the right)

and shouldn't rule number two be:

2. The high of the current closed setup bar must be less than HH5
  • #22
  • Feb 11, 2011 7:04am Feb 11, 2011 7:04am
A good system is simple yet powerful. Do not read too much into the setup conditions.

If the current bar CLOSES and is inside the parameters of the trade, then THAT is the setup candle for the next 3 candles. If all conditions are met, place your limit and stop orders.

If price continues in a tight range sideways, then it is VERY possible that the next bar becomes your setup candle...when it closes!

You always begin by looking at the current candle and counting backwards 5 candles. But the trade is not valid until the current candle closes. So that being said if a new candle begins, then is it possible for the candle before it to be the setup candle?...Yes!

You can only apply the rules to 5 candles at a time. Use your judgement, current candle or previous candle? Apply the rules...you'll see, this system is safe and reliable, especially once a trade triggers!
  • #23
  • Feb 11, 2011 7:07am Feb 11, 2011 7:07am
Hi again,

I suppose you do not use the sunday candle?
Thank you for your answers!

Regards
  • #24
  • Feb 11, 2011 7:16am Feb 11, 2011 7:16am
The ATR value ensures that you are trading during quiet hours, low volatility. The rules ensure that your stops are tight and your account is protected. Generally, when the setup conditions are met, but price pushes the opposite way, your limit order doesn't trigger. I've had 10 trades trigger, 1 of the ten trades moved to within .5 pips of my TP 1 before reversing (due to a news release). I was able to move my stop, and only take a -22 pip hit. had I been in front of my computer for the news release, i would have closed both open orders for a profit.

My message is: 9 times out of 10 price is looking to BOUNCE out of that tight range. When it does your TP's will almost always be hit!
  • #25
  • Feb 11, 2011 7:18am Feb 11, 2011 7:18am
I have never used a Sunday Candle. But then again there has never been one in any of my signals.

Quoting again
Hi again,

I suppose you do not use the sunday candle?
Thank you for your answers!

Regards
  • #26
  • Feb 11, 2011 7:19am Feb 11, 2011 7:19am
Thank you.

It was merely for my own sake that I needed the clarification, not to bash your rules.

Also, good thing the pending orders on USDCAD didn't hit, because it has gone down south since.

You say the pending orders are valid for 3 candles. So the ATR is unimportant on the next three candles after we have had a valid setup (unless a new valid setup is hit)?
  • #27
  • Feb 11, 2011 7:32am Feb 11, 2011 7:32am
I know you weren't trying to bash the rules! There's no voice inflection in typing a post, apologies if I came across as gruff.

Now to your question...excellent question. If price pushes the other way (opposite your limit orders) first of all, it is possible that price broke out, so your 1st rule is no longer valid (too volatile!).

I actually prefer when price breaks opposite of your limit orders, and this is important to note: Your setup candle is good for 3 bars (12 hours). If price breaks the other way, then you wait for price to come back to you! There is no harm in waiting, and it costs you nothing to "see" if it will come back

Usually it hits one of the EMA's and bounces back the other way! If it comes back to you within the next 3 bars, be prepared to collect some guaranteed money! All that happened is price met with resistance of some sort and chances are it will come back! If not then...you look for the next setup!

Quoting spaizkadett
Thank you.

It was merely for my own sake that I needed the clarification, not to bash your rules.

Also, good thing the pending orders on USDCAD didn't hit, because it has gone down south since.

You say the pending orders are valid for 3 candles. So the ATR is unimportant on the next three candles after we have had a valid setup (unless a new valid setup is hit)?
  • #28
  • Feb 11, 2011 7:39am Feb 11, 2011 7:39am
Happy weekend to all and happy trading! Ended my trading week on a bad note, 2 of my trades stopped out on another method I use. Damn news releases, and DAMN US economy.
  • #29
  • Feb 11, 2011 7:53am Feb 11, 2011 7:53am
I forgot to mention: ATR is NEVER, EVER un-important! It is the MOST important. If conditions aren't met according to your ATR rule..then you better STAY AWAY ! ATR ensures that it is safe to enter ! Always remember that!

Quoting Colostarr
I know you weren't trying to bash the rules! There's no voice inflection in typing a post, apologies if I came across as gruff.

Now to your question...excellent question. If price pushes the other way (opposite your limit orders) first of all, it is possible that price broke out, so your 1st rule is no longer valid (too volatile!).

I actually prefer when price breaks opposite of your limit orders, and this is important to note: Your setup candle is good for 3 bars (12 hours). If price breaks the other way, then you wait for price to come back...
  • #30
  • Feb 11, 2011 8:09am Feb 11, 2011 8:09am
I'm a little confused on one point.

Counting the setup bar, is this a 5 or 6 candle pattern?

You speak of being at the setup bar and counting back 5 bars. This can be interpreted as a total of 6 bars or 5 bars.

Thanks.
  • #31
  • Feb 11, 2011 10:46am Feb 11, 2011 10:46am
Looks real good!

How long have you been trading this system and are you saying you only trade this when a particular market is not open so there are small ATRs?
  • #32
  • Feb 11, 2011 12:22pm Feb 11, 2011 12:22pm
looks good enough to try
also wanna try to make an EA based on the rules. already made some quick&dirty code (only confirming the rules, does not trade yet...) , will post back later when its more finished
have fun!

Attached File(s)
File Type: mq4 Small Hours.mq4   4 KB | 478 downloads


btw, how many trades do you average have in a week/month?
  • #33
  • Feb 11, 2011 5:59pm Feb 11, 2011 5:59pm
Quoting ido370
looks good enough to try
also wanna try to make an EA based on the rules. already made some quick&dirty code (only confirming the rules, does not trade yet...) , will post back later when its more finished
have fun!

Attachment

btw, how many trades do you average have in a week/month?

Hi Ido,

Thanks for the EA. For comparison, it is good for you to look back the examples of screeshot attached by Colostarr and do backtest whether the EA follows all the criterion.
  • #34
  • Feb 12, 2011 1:33am Feb 12, 2011 1:33am
Quoting mnoh
Hi Ido,

Thanks for the EA. For comparison, it is good for you to look back the examples of screeshot attached by Colostarr and do backtest whether the EA follows all the criterion.
once i have the order part ready, i will backtest in visual mode have to go to work now, so its gonna be this evening or tomorrow i think
  • #35
  • Feb 12, 2011 2:49am Feb 12, 2011 2:49am
To clarify this: I usually begin with the current bar and count back 5 candles (if the bar previous does not fit rule #1). But the rules can't be applied until the current bar closes. If you want to count the previously closed bar, you can. The rules must be met though. Sorry for the confusion!
Quoting billbss
I'm a little confused on one point.

Counting the setup bar, is this a 5 or 6 candle pattern?

You speak of being at the setup bar and counting back 5 bars. This can be interpreted as a total of 6 bars or 5 bars.

Thanks.
  • #36
  • Edited 3:43am Feb 12, 2011 2:52am | Edited 3:43am
As long as you can apply the indicators to your charts, the body of the candles don't matter. Whether you are using Alpari or IBFX the pattern of price action is consistant (it goes up with IBFX broker, it goes up with Alpari). Hope this helps! Just apply the rules and the light will come on for you. Rule #1 being the MOST important!

Try this: Print the rules and then leave this forum. Open your platform to any MAJOR pair 4H chart. Begin by using the current candle, apply the rules. You can also try using the candle previous to the current open candle. If you apply the indicators properly and follow the rules, it doesn't matter if your charts match mine or not. Price moves uniformly regardless of the platform or broker you use! Keep it simple, don't confuse yourself! There are only 3 rules to apply, they exist or they don't!

Quoting pp22
Im new to mt4 and forex factory

im trying to follow you but my charts and your charts candles do seem to match up. How can I get them to match.

Im using alpari server but on some candles the bodies are different then yours
  • #37
  • Feb 12, 2011 2:56am Feb 12, 2011 2:56am
No! The markets are open. You are only looking when the market conditions are mild (small hours) which happens more time than you think. The ATR (with a period of 20) helps determine the volatility! And helps keep you away from rangin markets. Hope this helps!
Quoting lewta
Looks real good!

How long have you been trading this system and are you saying you only trade this when a particular market is not open so there are small ATRs?
  • #38
  • Feb 12, 2011 3:07am Feb 12, 2011 3:07am
That would be awesome!

Quoting ido370
looks good enough to try
also wanna try to make an EA based on the rules. already made some quick&dirty code (only confirming the rules, does not trade yet...) , will post back later when its more finished
have fun!

Attachment

btw, how many trades do you average have in a week/month?
  • #39
  • Edited 3:23am Feb 12, 2011 3:11am | Edited 3:23am
The system works really well as it is. Would be interesting to see if an EA works well also. From what I've experienced if your limit or stop order is triggered it almost always hits your TP's.

Will an EA place stop or limit orders? Or just trigger a trade? I would hate for it to trigger automatically. The genius behind this system, is that price comes to you, not you triggering just because rules are met, price MUST come to you!

Quoting ido370
once i have the order part ready, i will backtest in visual mode have to go to work now, so its gonna be this evening or tomorrow i think
  • #40
  • Feb 12, 2011 3:48am Feb 12, 2011 3:48am
Quoting Colostarr
The system works really well as it is. Would be interesting to see if an EA works well also. From what I've experienced if your limit or stop order is triggered it almost always hits your TP's.

Will an EA place stop or limit orders? Or just trigger a trade? I would hate for it to trigger automatically. The genius behind this system, is that price comes to you, not you triggering just because rules are met, price MUST come to you!
the EA can place buy/sell stop/limit orders. if you look in the code, you will see i had already placed two sendorder commands for a buystop and a sellstop, but need to adjust tp, and sl first, so right now i commented it out). thats what you mean right?
You are using SMA20 and SM40 also right? Which one should be sufficient to place the stop orders? or does it always have to be above SMA40 and then place buy stop?
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