The Confession & The Secret

A Volatility Trigger can be anything you want it to be, as long as it contains:

a) High probability for swing
b) High probability for continued momentum (magnitude)

There is nothing else needed other than a line on a chart and some attentiveness to your Swaps. You could care less about Direction. Why take the risk? Why take the physical and psychological stress and strain?

If the market reverses back through my line, oh well. If that's the way the market wants to go - let it. I don't care. Sooner or later, as long as I have nailed down "A" and "B" above, then the market will have to move away from my line.

At some point, there will be the temptation to predict Direction during the Swap Sequence. Don't be sucked into that lure. Stick to the Swap Sequence and determine for yourself how many pips are necessary each day to make yourself a profitable trader. No one can answer that question for you.

Learn to Defend your Line. That's time well spent in this business. Stay away from cottage cheese market events with no Swing potential and no Magnitude potential.

A 12 year old can do this. I'm just so bewildered that it took me 10+ years to figure this out. LOL - I keep laughing at myself!
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To all Line Traders who came before me:

I applaud you for getting down to the simplicity of trading and for having the courage to keep your hand in the Box, when all else says pull out.

It is so simple, that I should be slapped upside my own head for not figuring this out years ago.

Kudos, to all Line Traders!

Signed,
Line In Sand

you have me curious, you mention ATR do you make this yourself or is it one off net, thanks

I'll post this again, because it is very instructional for the Line Trader.

* The Box = The Swap Sequence
* The Hand = Your 'next' Swap Trade
* The Pain = Your Temporary Losses (the Draw Down phase)
* The Reverend Mother = The temporarily Sideways Market
* The Voices in your head telling to to quit = The Voices in your Head that cost you capital when you do




Any questions?

Yea I see what you're saying now, a close above or below should do the trick.

This can be used to test a breakout vs fake breakout and get in where you fit in.

atr is a standard indicator available on almost any trading platform.

your right on it Line, the way i trade i get burned quite alot (but) its a temporary thing PMA as in positive mental attitude not pmt lol. i know for every loss i'll reap the benefits later on

really?? i dont actually use indies or maybe just a 50 ema and rsi if at all. so perhaps its there but as i dont look i,ll never know but i guess i will look around. thankyou

i just looked, there is a lot of stuff i can access but no mention of ATR i know the basics of formulating it so maybe i'll give it a try

What kind of tools do you use to initiate the swap? I am assuming you have a script that does this for you?

Also, you said you only swap as close to your original order as possible. The idea here is that you are only ever paying the spread, correct? Does that mean you swap on a touch of your original entry, or some sort of indication or close (1M candle maybe)?

I have something similar, but for this purpose, it is practically the same. You have to look at the history of ATR for the time-frame you are interested. Any Directional trader would do that much. However, unlike the Directional trader, you are not setting a blanket Stop Loss and then tossing out the white flag of surrender once your stop level has been hit. A Line Trader does not use mechanical stops.

A Line Trader simply uses a Swap Sequence, where you reverse your position with each passing of the high volatility line. There are three (3) methods of Swapping that you can use:

1) Swap on Close of current bar
2) Swap on RPO cycle (for contiguous bars)
3) Swap on Real-Time Ask/Bid cross of line

This is what I am testing this week in my ForexFactory trade journal. I'll be posting only the closed trades from a live test account next week. This week, I'll be using a demo account. You can search for my journal on this forum called: "A Different Kind of Journal (EURUSD)."

An RPO is simply a "Reversal of Previous Open." This is when the current bar opens and then reverses past the previous bar's Open level. In certain time-frames and under certain conditions, this is a prime internal pivot signal.

This week in my journal, I'll be working on number 3 above, as I have some additional ideas that I might want to attach to the way I Swap in real-time. My goal, is to keep the loss on each Swap Trade inside the spread. If I can do that, then I'm golden all the way home. If I fail to do that correctly, then my bonus check at the end of the day won't be so big.

Keep in mind here, I'm talking about bonus checks, not bottom line profits - those are virtually guaranteed, as long as I draw my line in an area with High probability for: Swing and Momentum/Magnitude. If I do that correctly, then it is really hard to lose capital.

I entered a trade today in my demo account (just for the heck of it) that was 24 pips away from my line! When I added up all of my other negative Swap totals to the initial -24 pip loss, I still ended the day with a 7.5 pip gain and I wasn't even really trying to make a profit. (see account statement in my journal)

I intentionally entered 24 pips away, hoping to lose money, so I could begin a recovery trade cycle. I have not had a recovery trade cycle in weeks using this method.

I'm trying to lose money with it but I can't seem to do it. That's what the demo trades will be all about this week - I've got four more day of them. I'm guessing by the end of the week, I'll have upwards of 40 trades or so, posted from the demo account where I will be trying to lose money using this method.

My goal this week in the demo is to lose money, so I can see how bad things can get and what it will take to recover. Right now, I'm +7.5 pips - so I came close, but no cigar today.

Keep an eye on the journal - when I am done with the demo, I'll be posting the live account results straight from the trading platform and there I will be attempting to make a profit each day. This week, it is all about losing money, if I can arrange that to happen.

Typically, the Average True Range (ATR) is based on 14 periods and can be calculated on an intraday, daily, weekly or monthly basis. For this example, the ATR will be based on daily data. Because there must be a beginning, the first TR value is simply the High minus the Low, and the first 14-day ATR is the average of the daily TR values for the last 14 days. After that, Wilder sought to smooth the data by incorporating the previous period's ATR value.
Current ATR = [(Prior ATR x 13) + Current TR] / 14 - Multiply the previous 14-day ATR by 13. - Add the most recent day's TR value. - Divide the total by 14
The idea is that the banks don't want or let the currencies to fluctuate more than an average per day. If they fluctuated too much economy would suffer as people always want piece of mind knowing that all is well.

If on average a currency moved x pips over the last 30 days and it moved only half that and it hit a pivitol area, here is where you can take advantage of some sort of grid setup or like the OP likes to call it a Line in the Sand lol

Every business model I know of has some kind of cost factor. Hard costs. Soft costs. Variable costs. etc. We all have to pay our fair share. There are no free lunches.

that RPO you just mentioned, i use that quite a lot and i didnt know it had a name lol AND i thought it was my idea lol, cheers

You don't have to use ATR, but you do have to know how much fuel on-board you have for the remainder of the trading session and what the probability for exhausting the tank is on that day. Else, you won't have a valid reason for entering the Swap Sequence.

The Swap Sequence consumes fuel on-board. So, there needs to be a fuel reserve beyond the Swap Sequence in order to justify the trip. Otherwise, you end up with a Wet Footprint and not enough fuel to make the trip safe, unless you want to engage in mid-air refueling operations, which means holding positions through the next session - not something I like to do, but it can and does happen sometimes when you get the fuel on-board wrong.

I'll discuss mid-air re-fueling if it happens in my journal. I don't look forward to doing it, but it may become necessary to salvage a Swap Cycle. Mid-air refueling is not good, because it requires a 24 hour mission, or close to 24 hours. Not unlike real mid-air re-fueling ops.

http://codebase.mql4.com/250

thanks for the link

Well when ATR is complete for the day or near completion you can take counter trend trade only mode, those may offer some very good risk:reward?

Tools? Nope. I am the Trader. I am the Swap Sequencer. I take full responsibility for the outcome, good, bad or indifferent.

Now, would I like to automate this someday? Sure. A virtual money machine, no doubt. However, the problem comes in the Swap Sequence algorithm. Not so much a problem, as it is a creative coding requirement. Using Swap Sequence methods "A" and "B" (above), the coding is easy. However, things get a bit more complicated when attempting to automate "C" in real-time. The reason is that with "C," I am making calculations that the human brain is more equipped to handle, rather than OOP and a dual processor. That's because I often times use "anticipation" of "continuance" above or below the line, which is based on "experience."

So, coding "experience" into a Bot is possible, but getting that Bot to "learn" from the experience, is a whole different kind of programing. Of course, I could use an AI platform and trade from there through an API to the trading platform or its server (depending on what the intermediary allows), but now you are talking about a fairly sophisticated model to build. However, I do plan to automate this at some point - just not yet.

The Swap Sequence is very important. If you read above, I gave the three basic ways that I Swap (A B and C). A cross, is by definition a "touch." However, to answer your question, yes. I do use smaller time-frames to help optimize the Swapping process. This is also something that I am still 'perfecting' on my own.

The absolute perfect Swap would be 0 net gain. A very difficult thing to do, not know which direction ultimately ends up being in play at the end of the sequence. So, there will be some losses along the way initially, but the goal is to minimize Swap Sequence losses to as narrow a range of loss as possible. The rest is up for the market to decide.

Aaaaah! Really? That's who I used to be before I became a Line Trader.

Think.

Line Trading is counter intuitive. Line Trading needs fuel in reserve. So, if the market has already "exhausted" its fuel on-board for the session, why is that the optimal place to draw the line? Aaaaah, now you get it. I see the wheels turning already.

Instead, you want to draw your line somewhere when there is plenty of fuel remaining on-board, not the other way around. A counter intuitive use of ATR. A non-directional use of ATR. Something the typical trader is definitely not thinking about.

So, this brings into play, obtaining your Volatility Trigger from data acquired in multiple time-frames beneath the Daily time-frame. While the Daily time-frame still has plenty of fuel in its tank, how much fuel remains in the H4, H1, M30, M15 and M5 fuel tanks respectively? Those tanks must exhaust before the Daily tank exhausts, by definition.

This is just one way to locate good Volatility Triggers.

When one stops thinking about Direction - one finds that there are good sources of Volatility Triggers all over the place.

That's it for me today. I'll be back to this thread tomorrow after I post the Line trade results in my journal http://www.forexfactory.com/showthread.php?t=321850.

Looking forward to another trading day!