"The Logical Trader" - Thread to develop manual trading using insights from this book

I have myself been trying to focus on time rather than price for the last couple of weeks, difficult in reality, although it gets better with screen time I guess.

For me I'm exiting any trades that dont move within 2 candles of entry, including the loss. It's very interesting to see if you enter correctly then price does indeed move within a candle or so, more often that not it doesn't move, so in these cases im mis-reading what the flow of the market is telling me, raw price action.

Mark talks about stop loss at the opposite end of the opening range etc, I wonder how many times he actually let his stop get hit ? thats one bit I couldn't figure from the book, im guessing he's exiting trades way before even a 10 point stop if he sniffs no momentum (including the losses).

the research continues........


Edit - Theres just no way of dealing with the fakes, except for taking the hit and entering again. - pisses me off!

Thank you sir. I thought I was talking so much nonsense that everyone was ignoring me and the thread as a result(which would have been a shame since steve has put so much good work into this). With your indicators and contribution I am sure we will get a serious discussion regarding Mr Fisher`s method. I must read up on ALF and Laguerre since my knowledge of this indicator is very limited.

Mr Fisher is very charismatic and his book and videos are sheer joy to read and watch. IMHO Video 1 is a must for all traders and videos 2 and 3 is essential for anyone who wants to explore the concept more. Videos 4,5&6 gives an insight in to his trading style. Mind you we have to bear in mind that the book and vidoes are around 8 years old and some things are less relevant today. Steve questioned the relevance of the concept of time to forex and I tend to agree with him, however, having said that it seems to me that most profitable scalp trades seem to go in to profit within a candle or two of entry. This is just a casual observation and we need to have better research into this. It seems our friend morgb74 is testing this concept and we are very grateful for his work in this regard and his updates (keep up the good work mate)

Fisher emphasizes the point that his method in itself is not a trading system. As he puts it ACD and his method is used to gauge the PULSE of the market. In his most recent interviews he states that using just the ACD on its own would not be profitable and it should be used to compliment trader`s own trading style / system. Having said that, he does not think twice in quickly exciting a trade that is not going his way and getting back just as quickly if things change few candles down the line. Moreover, it seems the ACD method seem to work best with trending markets.

As you know Steve mentioned that we could use this to define trading direction for Brijon`s EA. I do not know how easy it is to convert the logical EA to an indicator, however, if it is feasable then we could use it in conjuction with that BOT. Anyhow I do hope you manage to finish your bathroom in good time in order to ensure peace and tranquility at home.

Kind Regards
P.s. Another important aspect that I had left out was the concept of tight SL. Being a disciple of BOB and trading NB 4H system with some degree of success for the last year or so you do not need to tell me the futility of SL with criminal forex brokers. However, Fisher emphasizes the importance of well defined exit points time and time again. Any suggestions in this field is most welcomed.

Interesting to see that people are visiting MF's time thingy.

My own contribution is this. Setting a tp of 30, when this is hit it is hit quickly. When it is not hit quickly I find myself spending large amounts of time Recovering and/or Hedging my way out of the trade.

Hmmmmmmmmmmmmm

well done Steve and the gang, wonderful thread. It's a step in the right direction as a combination of auto/manual is the most efficient IMHO.

The system has potential to win as it is based on the fat tales which exist in forex, however, as with most BO type systems, will have periods of DD when market is not trending. The hardest part is to adapt ideas created for a different market/TF into forex/intraday (as several have pointed out already).

A few points:

- Re exit, I suggest areas of SR, but if one is not prepared to put in the effort to identify SR, round numbers should do. Alternatively one could use the average daily range to set targets that have some statistical meaning.

- The system performance can be greatly improved by having awareness of the current market mood, major events driving the makret, and the usual news releases. For sure much better than blind entry exits according to mechanical rules and indicators only.

- Check out what happens if you go long only if price is above the Monday daily bar, short if below.

Thanks Steve and everybody else who posted.

follow up on my previous post to clarify points with some examples:

1. we know that the fed is printing USD, a lot of them, this was priced in up to Nov 2010 and USD declined, followed by around a month of profit taking on short USD positions, then USD declined more as jobs data showed QE2 didn't have the desired effect. So USD short positions had better odds post Dec 2010 - with the exception of short periods that other developments such as EU crisis etc gave USD some temporary support vs particular currencies.

2. After Japan disaster JPY strengthened (as expected, compare to 1995 USDJPY daily chart for example when there was the Kobe quake) so long JPY was favoured, then all major banks announced they will help yen weaken, that day JPY short positions where favoured.

3. You identify some exits based on SR or RN, but they are not hit, and there is imminent news release on your trade pair, it's safer to exit there.

4. Libya/arab countries related crisis since about 6 weeks now favoured price increase in oil so long oil bias was preferred (and to an extend long CAD).

The list is not exhaustive but gives you an idea about how we can use our brain to enchance a strategy (and for that matter, any strategy, not just the one discussed here).

I hope this helps.

To be honest, no, it does not. There are not many of us here who could not have posted this. Hindsight is a wonderful thingy.

Post along these lines now and be proven right this time next week/month, and you will have the undivided attention of many of us in the future. For now, it merely looks like the kind of stuff we poke fun at from time to time in my threads.

Actually, having written, "Post along these lines now and be proven right this time next week/month, and you will have the undivided attention of many of us in the future." I am not so sure that even this is true. Most of us here are scalping for a few pips here and there. What happens in the next hour is rather more significant than what happens in the next week.

I am not criticising your expertise. I do not think it has any relevance here.

will post my modified ACD strategy later ....it works no mater pair, earthquake, libia crisis....etc.....but we wont trade 1st friday before NFP....just ....

cheers

ps/
thanks Steve for another great tread and (hope) futures bot

We all know challenger to be a sensible experienced trader and his last two posts are basic common sense forex trading for M30 to D1 TFS. However, as you point out in m15 or m5 scalping mode it has little or no value. To be honest I do not know if he watched the videos or read the book. people are very busy and we do not expect them to read a whole book just to participate in the discussion here. Having said that watching the first 3 videos will give them pretty good idea what it is all about.

just to give you a rough idea the following strategy seems to work with ACD: Enter a long trade after an A up with BE of 8 and BE profit of 4 pips, jumping stop 4 pip increments, at some point the price moves back towards the OR (opening Range) and makes a C down now the reverse of the above is done. If the price goes through the Pivot range below the OR increase the lot size with the same settings, however, if Pivot range acts as support enter a long exppecting the price to go towards the OR.

In other words you may have 2 longs and 1 short trades all closing with small modest profit between 07:00 to 12:00, pure scalping at micro level.

Kind regards
P.S. WELCOME ARGON, this is what we need here, plenty of ideas and variations of the ACD to stimulate discussion and fine tuning.

At least I didn't ask how to set the timezone

Sorry if my post didn't seem relevant or useful. And BTW these are things I predicted as they happened, not in hindsight. But anyway, i prefer not to distract the thread any more on that one.

Astral: nice to see you again and thanks for the kind words I hadn't realised you intend to scalp this system, I've read the book a couple of years ago and my impression was that it was not a scalping system, but of course can be used as one.

All the best

I will put the latest update to mptm here whilst we check that it works.

There is a new inputs section, - Time limit trade closure settings- just before the global closure inputs. The new input is CloseLosingTradeAfterMinutes. When this is >0, mptm will close a losing trade after the number of minutes in the input have elapsed.

I am scalping off the H1 chart, so I will set mine to 120 minutes and see what difference this makes. For sure, I will spend less time fighting to recover/hedge the losers.

This was a bit of a dim-witted post fired off in between finishing off a bit of programming and going to bed.

For sure, I could not have written the stuff about the Fed's QE.

As for the final sentence in my post, what I meant was that your points have no relevance here, not your expertise. Your expertise is valued everywhere. I was wrong to say that your points have no relevance here also - they clearly do and only an idiot fights market movement caused by world events. They merely have less impact to us scalpers here than they do on long-term traders.

So, apologies to challenger for the hasty, ill-considered reply. he has positive proof of my respect for his ability.

Hi

You are welcome my friend, I say it as I see it.

You are correct, it is not a pure scalping system. However, it seems the micro ACD is best suited to scalp trading. At least that is the impression some of us have. We could be wrong and that is why we are discussing it here. I am very eager to know how different traders utilize ACD and your contributions / input is very much valued.

Kind regards

Hi argon,

any chance you could screen shot some trades and talk us through your mental check-list ?

for me a picture says a 1000 words. cheers

Just so I can piece together your take on it along with a chart.

Thanks argon. I need to clarify my thoughts. Here is my understanding of all this:


Taking buy trades as an example (reverse the directions etc for sells):

 

1. 3 opening ranges:
   1. Tokyo – I think 1.00 am gmt
   2. Frankfurt – I think 7.00 am gmt
   3. New York – I think 1.00 pm gmt
   4. Sorry about the 'I thinks': BST has thrown me.
      

2. Time frame a minimum of 30 minutes
3. A is 10% of ATR
4. C is 15% of ATR
5. B is C + 2 pips - spread
6. Break even + 5 if open price + extent of opening range
7. Price must close above A as well as trading above for 50% of the range tf
8. Exit trades before the start of the next session
9. Take profit at H4 BB
10. Take profit at 1 & 3 day, and weekly pivots
11. Stop and reverse after a good A stalls at the pivot (centre of Pivot Range)
12. If CCI and Stoch show opposite divergence, then consider going short:
13. don't understand the stop loss ("Even consider opposite trade with tight sl just above good A bar + 2 + spread")
    
14. Market is banging its nut on the Sixths top Magenta line – consider going short if Cci & Stoch show divergence
15. In the direction of the trend:
    1. Good A Tokyo, take trade
    2. Good A Frankfurt, double the position
    3. Good A NY, triple the position

16. If good Tokyo A and good Frankfurt A buy failure to penetrate NY range, close buy and take a sell

A couple of questions:

 

1. why both CCI & Stoch? Don't they basically show the same thing?
2. standard ATR settings?

Cheers

IIRC, Fischer claims that the statistical edge from the ACD strategy is based entirely on the fact that the high or low for the day occurs much more frequently during the first x minutes after the open, than would be predicted based on random chance.

Perhaps establishing if that was actually true for the forex markets would be a good starting point.

Hi Steve,

I wanted to give my contribution to your Mark Fisher thread.

I have been trading the Fisher style for a while now with good results. For me the trigger to look into his material was a thread from Crucialpoint (http://www.forexfactory.com/showthread.php?t=215432). I think he is trading almost the same way only adapted it to the Forex market.

My changes compared to the book are almost the same as Argon posted, namely:
- I trade the 5m and 1m depending on the pair
- I use a new range per session and also a new range per overlapping session. For example Frankfurt/London overlap with New York, so there are three session ranges (Frankfurt Open, New York open, London close). The rational behind is the as Fisher said. You have to adapt to the people in the market and in the Forex case these people change with the start and ending of every session.
- My opening range is the first 5 minutes of the session.
- The ATR's and pivot range are calculated from the same session of the prior day. This again has to do with calculating against the same market participants.
- Apart from the trading session ranges, I also use an hourly trading range.

I hope you find this useful and will help you with the development of a bot or trading strategy.

With kind regards,
Piet

Ok, in my short experience today, mtpm's time-limited trade closure acts just like any other stop loss - locks in the losses beautifully and thrills the crims.

I am away tomorrow. Come Thursday, I shall continue with the experiment that netted me a 25% account gain last week on my demo account:

 

1. H1 chart
2. Ranges - Frankie and NY opening.
3. scalping. 30 pip tp.
4. trade the breakout of the range alone.
5. ignore the Pivot Range and MF's rather gruesome description of the sword and the stomach - still makes me feel slightly sick. This is Forex. By the time a move has thrust through the entire Pivot Range, it is about to run out of steam and retrace.
6. when a trade fails:
   1. wait for the next trigger.
      1. when this is in the direction of the first trade, enter again and use iExposure to calculate the breakeven tp.
      2. when this is in the opposite direction to the original trade, then treat it as a one-off with the usual 30 pip tp.

7. not sure yet what I shall do with a trade that goes deeply into the hole. Losses on this will be offset by wins in the opposite direction, but that trade will continue to run and accrue losses. This is part of the strategy I am working out.

What I am working towards here is my own manual trading strategy. I already have TOB for the automated stuff, but I enjoy trading. I want a strategy that I own. I am not inviting people on my 'journey'. Tag along if you want but you are highly unlikely to benefit; you are not me. Luckily for you.

As I approach my 4th anniversary of surviving Forex, I have come to these firm conclusions:

 

1. You cannot trade a strategy unless you 'own' it. This means that you fully understand it. This may br your own invention or your own adaptation of someone else's. My success with TOB stems from the latter.
2. NEVER CLOSE A TRADE AT A LOSS unless you have made enough profit in the meantime to allow the trade closure without pain. Trades return to profit at some stage unless you have taken them at ludicrous extremes of the market. Stop losses were invented by the crims to separate the rest of us from our cash.
3. Trade lot sizes small enough to allow 2 without risking the account. Without even coming close to risking the account. Even in your worst nightmares or a couple of weeks ago.
4. Make lots of tiny profits accrue bigger profits. I will shoot for 1 pip = $1000 when I have a $100,000 standard account. In the meantime, shed-loads of tiny-value pips will do.

I'm trying out various different things with this as well, its great to have a thread alive and dedicated to this method. In the long run I think we all need a manual backup strat that we trust and can trade alongside TOB.

Build our accounts slowly whilst learning along the way, thats my plan anyway too.

I'm sure between us here we'll have a few ACD variations adapted for forex.

so yeah everyone ramble on! im certainly listening.

I know you are not around today, but I have THE BIG request for you...
will be just GREAT( for me and I think the others will like 2) if you can ( and want) to put my strategy of ACD in a Bot ?!? or to help me do it ...? adding
the recovery 1.1.2.4 (as optional) is good 2...but MPTM can be used 4 this always.... !?


I know you are so busy ...and that I am asking maybe to much....but this it is not so urgent request and situation....just when you have a little time...and maybe step, by step....

cheers Steve

a DSI (Daily Sentiment Index) indicator...or something similar ?

cheers