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PTT Method (Profitable Trend Trading) in Forex

  • #41
  • Aug 23, 2011 1:55pm Aug 23, 2011 1:55pm
Bobcat2: Since I live in west coast, it's 9PM for a new day for Oanda here. So, I can use Oanda for order as well as chart. In my opinion, price will be always (mostly) same for different platforms. However, signal may be little different for 4 hrs difference. Since those 4 hrs are pretty quiet time, it may not matter too much and some times, it will work in your favor or some times against. As per intial post, KelvinM does the same as you are doing.
Quoting Bobcat2
Hi FX_California,

I see you are using Oanda charting. Oanda's daily candle begins at midnight EST. KelvinM makes his trades at 8PM EST. So...your daily candles will look much different than his because of the 4 hour time differential.

Question: Is this trading strategy effective in both time frames? Hopefully, KM will address this for us.

I am using the IBFX platform as the new daily candle coincides with KelvinM's time for trades. But, I simply make my trades with Oanda.

Great trading!
BC2
  • #42
  • Aug 23, 2011 5:58pm Aug 23, 2011 5:58pm
Took this short, entry was late......the green line is my 55 ema. Sorry for the differences in the chart, in the future I`ll post with 50 ema and without indicators to not disturb the thread. However, I thought the opportunity itself might be worth sharing.

Good trading to all.


__________
michael
Attached Image (click to enlarge)
Click to Enlarge Name: 2011-08-24 00h50_41_chfjpydaily.jpg Size: 113 KB
Be like water.
  • #43
  • Aug 24, 2011 8:40am Aug 24, 2011 8:40am
Quoting wooli
Hi Kelvin,
How do you deal with areas where price is straddling your 50EMA?
Do you stop entering trades until price has moved away or just carry on regardless?
Regards,
Michael
Hi Michael,

Great question, and thank you for posting the chart.

Typically I like to see a bounce off of the EMA before trading it. Typically this system works good with that bounce because the bounce has usually happened by the time an Inside Bar forms.
  • #44
  • Aug 24, 2011 8:45am Aug 24, 2011 8:45am
Quoting winalot
Hi Kelvin, Thanks for the thread. I am very interested in this method.

Question, You stated that you enter your trades 8:00 PM eastern US time. I am located in eastern US terefore I consider the end of day to be end of NY session at 5:00 PM. My broker is FXDD whixh just happens to have a server time that closes the current daily candle at 5:00 and then begins the new daily candle.

How does the different broker times effect the method?
Greetings winalot, glad to see you participating.

If you examine your charts I think you will see the exact same thing as we teach in this method. By the exact same thing I mean, you will see the direction of the trend and then you will notice an Inside Bar at some point. This point may not be at the same place as someone else's Inside Bar, as timezones and brokers show different things. But the main points are all still there. Just trade your broker on your timezone and the results will equal over time.

Good trading to you, sir.
  • #45
  • Aug 24, 2011 8:50am Aug 24, 2011 8:50am
Quoting Elovv
Hi KelvinM

Nice thread and method. Which pairs are You looking on now?

Elovv
Hello Elovv, welcome to this method, and thank you for the good question.

Currently I have orders in for several CHF pairs. GBP/CHF, USD/CHF, and EUR/CHF. Of course if you wanted to limit your risk to CHF you would only go with the strongest pair and leave the others out.

Thank you again for your question and if you have any more, or any other thoughts feel free to share them.

Have a good trading day today Elovv.
  • #46
  • Aug 24, 2011 8:58am Aug 24, 2011 8:58am
Quoting Darryl
Hi Kelvin, greetings from Houston, TX. Your method has caught my attention, it really makes sense.

I have one question, just want to verify something. In your Method post you state: Let’s take an example: Say that we are in a downtrend (price is under the 50 EMA) and price then makes an Inside Bar. At the close of the day (shortly before 8:00 PM Eastern) I will place a sell stop order at the low of the present bar/candle. The low of the present bar/candle refers to that inside bar/candle, or are you referring to the candle after the inside bar/candle?...
Hello Darryl,

Glad to have a friend from Houston, Texas. I have family around that area, just a little bit north, so hope to make it through one of these days. I hope you get some rain, I've been hearing about the horrible droughts lately!

Your question is a good one, thank you for taking the time to ask and clarify. The answer is that we place the Buy Stop or Sell Stop orders at the price of the low (for short) or high (for long) of the actual Inside Bar itself. Of course the order will not be triggered until sometime later, up to a week, but the order itself is placed at the price of the low or high of the Inside Bar itself.

I am attaching a chart where I want to draw your attention to several things:

1. The red down arrow indicates the Inside Bar that we would trade.

2. The red horizontal line indicates the price of the low of that Inside Bar. This is the price where we would place a Sell Stop order.

I hope this clears things up. If you have any more thoughts or questions feel free to share them.
Attached Image (click to enlarge)
Click to Enlarge Name: Entry Bar.jpg Size: 132 KB
  • #47
  • Aug 24, 2011 9:04am Aug 24, 2011 9:04am
Quoting FX_California
After I read first page one more time, it appears that the limit order would be on the current bar not from the inside bar...
Hello FX_California,

The main thing we are concerned with is the price of the low or high of the Inside Bar, not as much the timing of when we place the order. For instance, we could look back up to a week on some currency pairs, spot an Inside Bar, and place a buy stop or sell stop order at the high or low (depending on which direction we are trading).

What I do personally is at 7:30 PM start my look for a trend, and then see if an individual pair has made an Inside Bar that day. If it has, then I place my buy stop/sell stop orders at the low or the high of that Inside Bar.

I hope that helps. If more clarification is needed please ask. I'm also going to post my 2-step methodology for entering trades as soon as I get a chance.

Thank you for your help in answering the questions, and have a very good day today.
  • #48
  • Aug 24, 2011 9:11am Aug 24, 2011 9:11am
Quoting Bobcat2
Hi FX_California,

I see you are using Oanda charting. Oanda's daily candle begins at midnight EST. KelvinM makes his trades at 8PM EST. So...your daily candles will look much different than his because of the 4 hour time differential.

Question: Is this trading strategy effective in both time frames? Hopefully, KM will address this for us.

I am using the IBFX platform as the new daily candle coincides with KelvinM's time for trades. But, I simply make my trades with Oanda.

Great trading!
BC2
Hello Bobcat2, good day to you.

I initially got interested in trading this method by observing price action on Oanda's charts, and began my backtesting with them as they are the broker I trade live with as well. All was well with the backtesting and many pips were gained.

However, due to my East Coast schedule I wasn't able to trade the later daily closing that Oanda uses so I also backtested using IBFX and had very similar results. I do not know what those results are because it has been a long time ago that I did the testing, but I do remember noticing very similar results using both brokers (IBFX and Oanda).

We are all looking at the same market, it is just that different brokers display daily closings at different times, which will give us a little different perspective on the method. Whereas IBFX may display an Inside Bar one day when Oanda does not, Oanda will display an Inside Bar one day when IBFX does not. Overall the results should be similar, though probably not identical.
  • #49
  • Edited 9:23am Aug 24, 2011 9:18am | Edited 9:23am
Quoting antonsatu
Hi Kelvin,
Thank you for sharing this logical trend trading.
I would like to discuss about stop Loss (SL).

When you say you RISK 1/2%, it means whatever your pips of SL (30 pips or 60 pips) ---> your risk is still 1/2%, not more. It just effect the LOT SIZE.
Example:
You risk 1/2% of your equity (i.e. your equity $100000) = 1/2% * $100000= $ 500.
Assume you trade standard account (1 pips = $ 10).
When your SL 30 pips, ---> your lot size = ($500/$10 * 1 pip) / 30 pips = 1.67 lot.
When your SL 100 pips, ---> your lot size = ($500/$10 * i pip)/ 100...
Hello Anton, thank you for your contribution. Your analysis is right on, and you have described well the typical method of placing a stop loss.

However if I may challenge you to consider something, it might affect the way you look at stop loss placement in the future, or at least when considering trading this method.

If you were to place a stop loss at the typical "last high" (for a short), and if that point on your chart were, say, 300 pips away, your lot size would be much smaller than if you were to place a stop 30 pips away. That means that your profit, upon successful completion of a trend run, would be much less (10 times less in this case) because of the small lot size.

Looking at it another way, with my 30-pip stop loss in I can actually be taken out of the market a total of 10 times to be "even" with a stop loss placed 300 pips away, and then when the market does trend my profits would be 10 times greater than if I placed my stop 300 pips away.

Of course the market would not meander around my order to take me out 10 times, but I'm just using that number as an example of why I place the stop losses in close.

One final way of understanding it is that I'm really just looking for one or two good runs, maybe three or four on a good day, that trend nicely and allow me to add-on during the run. Those nice runs make up for numerous 30-pip stop losses.

Thank you again for the question Anton and for contributing your input to this thread.
  • #50
  • Aug 24, 2011 9:20am Aug 24, 2011 9:20am
Quoting wooli
Hi All,

I think people put to much emphasis on time zone differences especially when you are looking at a DAILY time frame.

Your chosen currency is already trending, that is why you want to enter.
The (hopeful) target is perhaps 300, 600 or 1000 pips away.
Pip values between different feeds would usually be very minimal in comparison.

If I get an inside bar on my feed and you don't, then I'm sure there will be other times when it is vice-versa.

Whether I win on my inside bar and you lose on yours is irrelevant.
Next time, or the time after,...
Michael, this is really true, and gives the "big picture" view of the method. Thank you for your explanation here, and providing input.
  • #51
  • Aug 24, 2011 9:35am Aug 24, 2011 9:35am
Greetings all,

I wanted to take just a second and share my 2-step method for entering trades every day, in hopes that this might bring clarity to the method and stimulate further discussion if you would like.

In this post I am sharing a screenshot of how I examine the market initially. At around 7:30 PM I begin looking through the different pairs. Because this is trend trading I have no interest in the name of the pair (other than to notice if I happen to be doubling up on a particular currency by using too many pairs of that currency).

The way I examine the pair is to zoom as far out (using the magnifying glass with the - in it) as the MT-4 platform will allow. Once I get zoomed way out I do see the overall direction of the market.

Some people like to look at a higher timeframe or two and that is a good method as well. However, I find that if I just zoom way out I can see clearly, at a glance, the overall direction of the market. I only want to trade those markets that are trending, in a clear direction (of course noting the retracements that all trends have) and have been for most of the viewable chart that I am looking at.

As an example, in the screenshot of GBP/CHF where we have zoomed way out, we can clearly see that this pair has been in a downtrend for a long time (as have all pairs that have CHF at the end).

So this, then becomes a viable pair to consider entering a trade. I write this pair's name down on my list of pairs to trade. And I keep examining pairs like this until I get a master list of pairs that all qualify to trade that particular day.

In contrast to GBP/CHF, notice EUR/USD. While there are indeed some tradable trends, overall the market has been ranging for the full time available with this chart. Even more apparent does this become when viewing the pair over just the past few weeks to a month. It is clear that this is a ranging market, both in the longer timeframe and especially in the shorter. We want to avoid this market for now until a trend establishes itself clearly.

So attached you will find the bigger picture of how I view the markets and pick each currency pair to trade for the day. The first chart is GBP/CHF and the second is EUR/USD.

Thank you for reading and post any comments that you would like.
Attached Image(s) (click to enlarge)
Click to Enlarge Name: Big Picture.jpg Size: 138 KB
Click to Enlarge Name: EUR USD.jpg Size: 152 KB
  • #52
  • Aug 24, 2011 9:40am Aug 24, 2011 9:40am
Hi Kelvin, thank you for answering my question and clarifying with a chart which bar to use. I would just like to make sure of what an inside bar is: It's when the BODY of the candle is within the HIGH and LOW of the candle before it. Is that right? Is it that simple? I'm looking forward to trying this method out.

Its another hot day here in Houston, 104 for the high. Its the driest summer in the 11 years that I've been here. I'm looking forward to September.

Have a nice day, Darryl
  • #53
  • Aug 24, 2011 9:42am Aug 24, 2011 9:42am
Once I have my "Master List" of acceptable currency pairs to trade, I then begin looking for pairs that have recently bounced off the EMA and have formed an Inside Bar.

Again, GBP/CHF is an acceptable example for this, and I have posted a screenshot of where you could enter an order on this pair currently.

I say it is an "acceptable example" because the EMA is a bit too flat to make it a great example. But at least we can see the overall picture we are looking for, while our preference is to desire a pair that has bounced off an EMA that is sloping in the direction of our trade.

So the two-step method for finding a trade is to first consider pairs that are trending overall, then we look for pairs that have bounced off the EMA and are currently an Inside Bar. This produces both good entries and good trends.
Attached Image (click to enlarge)
Click to Enlarge Name: Zoomed In.jpg Size: 127 KB
  • #54
  • Aug 24, 2011 12:43pm Aug 24, 2011 12:43pm
Dear Kelvin,
Please let me know when do you remove your orders if they are not trigered?
BR
Sasa
  • #55
  • Aug 24, 2011 1:28pm Aug 24, 2011 1:28pm
Hi Kelvin, thanks for Your answers. I have some more questions.
Do You always reenter if Your stop gets hit ore just reenter the first order on a pair?
And how many times do You reenter? Guess it can be expensive if price is shopping between enter and stop?
Best wishes
Elovv
  • #56
  • Aug 24, 2011 2:09pm Aug 24, 2011 2:09pm
Inside Bar - A bar with a High that is lower than the previous bar’s High and a Low that is higher than the previous bar’s Low...not just the body. It's whole bar (including low/high) that had to be within the boumds of the previous bar.

Quoting Darryl
Hi Kelvin, thank you for answering my question and clarifying with a chart which bar to use. I would just like to make sure of what an inside bar is: It's when the BODY of the candle is within the HIGH and LOW of the candle before it. Is that right? Is it that simple? I'm looking forward to trying this method out.

Its another hot day here in Houston, 104 for the high. Its the driest summer in the 11 years that I've been here. I'm looking forward to September.

Have a nice day, Darryl
  • #57
  • Aug 24, 2011 3:35pm Aug 24, 2011 3:35pm
I just wanted to say thanks for the really well thought out thread! It really made me think!
I don't have any questions because you've covered everything pretty well. I think that the system is a nice balance of mechanical trading with just enough discretion to hopefully keep you out of trouble.
I will just comment that back testing is really time consuming due to the 30 Pip SL and reentrys so I will begin forward testing ASAP.
Attached is the AUDNZD form Feb. of this year to the present time, I just picked the pair at random and your system performed pretty well for very little work and very little draw down...
Attached Image (click to enlarge)
Click to Enlarge Name: aud nzd.gif Size: 55 KB
  • #58
  • Edited Aug 25, 2011 2:58am Aug 24, 2011 4:04pm | Edited Aug 25, 2011 2:58am
Here is an Indi to spot the IBs. First Step to create a dashboard for a quick look for IBs on a given day.

It includes a true/false to include or exclude Sundays
Draw a Histogram of IBs or Line ( I prefer the Histo)
and the 50 EMA colored to specify flat times. Choose the difference between the values of the two past days. Try 0.0005 for USDCHF daily chart as shown below.

Hope it helps

Cheers

Pat
Attached Image (click to enlarge)
Click to Enlarge Name: ib trend trading.jpg Size: 56 KB
Attached File(s)
File Type: ex4 IB.ex4   4 KB | 771 downloads
File Type: mq4 IB.mq4   3 KB | 941 downloads
  • #59
  • Aug 24, 2011 5:13pm Aug 24, 2011 5:13pm
Hi FX_California, thank you for the clarification on inside bars, now I know exactly what to look for. Have a good day, Darryl
  • #60
  • Aug 24, 2011 6:39pm Aug 24, 2011 6:39pm
Eamonn pm'd me asking if I thought KelvinM's strategy could be automated. I have done so; anyone interested visit http://www.forexfactory.com/showthre...59#post4899659

This thread is about trading this strategy manually, so please direct questions about the EA to my thread, to avoid cluttering up this one.

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