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  • #201
  • Oct 31, 2011 10:28am Oct 31, 2011 10:28am
This pic shows the different Swap Modes. It also shows what I mean by a 127% expansion of a previous swing (note that I'm using the M15 chart). Note how the 127% expansion was pushed through, violating the Perimeter Swap Mode.

Either price will return back to the Lower limit of the horizontal range-bound price action, or it will reflect underneath the current 127% downward to continue the move away from the original V-Trigger Line.

http://www.freeimagehosting.net/t/ce8d5.jpg
Y = MX + B. The most important price level of all.
  • #202
  • Oct 31, 2011 10:59am Oct 31, 2011 10:59am
Closing position here for a net +41 pip gain on the day (including swap loss of -25 pips, plus some intra-swap recovery of +9 pips). The intra-swap recovery came by using the Perimeter Swap Mode (see above).

Note: I'm going go be testing nearly around the clock this week. So, I will be back at 0000 GMT -1, to test the new T-Trigger line.

Back at 0000 GMT-1 and I could go as long at 0800 GMT-1, but I hope it won't take that long to see some profit.

http://www.freeimagehosting.net/t/a0dfb.jpg
Y = MX + B. The most important price level of all.
  • #203
  • Oct 31, 2011 11:16am Oct 31, 2011 11:16am
To test one of the internal price dimensions that I wrote about last week on the Daily range (Low to Close dimension), I'm going to enter Long here at 3953, predicated on the fact that the Daily range is now 157% of normal to the downside.

The Daily Low to Close retracement dimension averages between 41 to 82 pips. So, today's low (at the time I entered the trade) was 3930. The 41 to 82 pips move is from the Daily Low, not where I entered the market.

Here's what it looks like: Note - this is NOT a line trade. I'm just testing the viability of the Daily retracement trade based on exhaustion of the Daily range and using the internal averages for Low to Close on the same Daily bar.

I'll be back at 0000 GMT-1 for the start of the Australia/Asia/European session.

Yes, I know - the original V-Trigger turned out to extend beyond where I exited - that's fine. I need to cram as much testing into this week as possible, so I may miss out on some of the better exists. I've got a lot on my plate this week as I want to get back to production trading next week. So, just count the number of pips extension on the original V-Trigger, if you care to.

http://www.freeimagehosting.net/t/d64fe.jpg
Y = MX + B. The most important price level of all.
  • #204
  • Oct 31, 2011 12:06pm Oct 31, 2011 12:06pm
If you are using what you call perimeter swaps then you are very nearly trading a market profile type trade because you are now trading a bell curve of volume. You should look to take trades 1 and 2 standard deviations from your line.
  • #205
  • Oct 31, 2011 3:25pm Oct 31, 2011 3:25pm
Directional entry into the Long Daily Low to Close, was crushed out the outset. Another real-time counter-verification for today's original V-Trigger, which ran for at least another 100+ pips in addition to the 41 picked up earlier. Its like seeing the opposition side of the original trade. (more reasons why I favor trading the Line over Directional).

Directional Long closed for a nice -114 loss. (taken)
Original Line trade sequence closed for +41 gain. (taken)
Actual Line trade sequence still running for a real-time +155 gain. (not taken)

On to the next Line trade at 0000 GMT -1 (5pm pacific time).
Y = MX + B. The most important price level of all.
  • #206
  • Oct 31, 2011 3:35pm Oct 31, 2011 3:35pm
Quoting Ranger911
If you are using what you call perimeter swaps then you are very nearly trading a market profile type trade because you are now trading a bell curve of volume. You should look to take trades 1 and 2 standard deviations from your line.
Which would have ended up in disaster, if I had got caught caught Long at one of those recoiling locations that did not recoil.

That's why I use 127%. 127% is the first real expansionary fib number that happens to be pretty reliable. It shows the internal expansion tendency of any market that is horizontal. When 127% starts getting pinged off an internal Swing (like you see in the chart above and below), that means that market is starting to pick-up some speed in "that" direction - whatever that direction may be. In this case, it was Short, as I outlined before the move occurred earlier today.

http://www.freeimagehosting.net/newuploads/ce8d5.jpg


Everything seen inside the Yellow vertical lines, represents the internal footprint of the M15 bars leading into the strike on the internal 127% level seen in the above pic. It tells me that 127% has a high probability of not being respected by the market. If that coincided with your MP, then they are similar. Everything between the Yellow vertical lines was red - indicated the necessary volume to take-out 127% and keep going.

In the same post showing the 127% level, I said that either the market will use 127% to reverse direction and start heading Up - or - it will remain underneath 127% and extend the downward push to expand the low of the daily bar. It was a great place to draw a Line in the Sand.

http://www.freeimagehosting.net/t/df96e.jpg
Y = MX + B. The most important price level of all.
  • #207
  • Oct 31, 2011 3:52pm Oct 31, 2011 3:52pm
Quoting Ranger911
If you are using what you call perimeter swaps then you are very nearly trading a market profile type trade because you are now trading a bell curve of volume. You should look to take trades 1 and 2 standard deviations from your line.
After re-reading, I think you might mean 1-2 Stdev from the Trigger for the Perimeter Mode, not the Standard or the Roll Mode Swaps. If that's the case, then that's interesting.

I was looking at internal Fibonacci levels of 61.8% for a horizontally contained market and 127% for the collapse of the horizontal. So, 61.8 for Perimeter and 127% to return to the Standard, entering in the direction that caused the 127% to break, is what I do.
Y = MX + B. The most important price level of all.
  • #208
  • Oct 31, 2011 5:26pm Oct 31, 2011 5:26pm
As I work with this technique, I'm becoming more able to wrap a target parameter around each trading cycle, so I know what my minimum daily net totals should be. I've had lots of back-testing before I put this on Forexfactory, and thus far, the performance here is matching what I found off-line.

I like to use what I call, Targeting Packages - because they include multiple indicators for locating optimal ranges for maximum profit and draw ranges. The difference here will be in the fact that there will be no singular draw against the trade cycle of swaps - rather - multiple trades that have draw before the cycle sees net positive pips. So, I'm going to have to come up with a hybrid draw component that totals all swap loss trades into a singular max draw range and then make sure I don't exceed that range for the day.

On the targeting side of the equation, I have a number of good custom tools that I've created over the years that I'll start building into a cohesive component for determining where to exit the profitable side of the cycle.

I find it rather amusing that the actual Targeting Package, will be far more complex than V-Trigger that sets the location of the Line. By first glance and having some experience with this, I'm hoping for somewhere between 50 to 75 pips per day as the minimum range for profitability after cycle completion. Anything else beyond that, will be gravy, if it is a level picked by the Targeting Package before the swap cycle begins. Some of these things are running in excess of 200 pips, but that is certainly not realistic on a consistent daily basis.

I have a requirement (currently) of 40 pips per day, at a rate of 93% accuracy to that target. So, 50-75 using the Line methodology, should provide for a welcome expansion in the capital growth curve.
Y = MX + B. The most important price level of all.
  • #209
  • Oct 31, 2011 5:29pm Oct 31, 2011 5:29pm
Quoting Line In Sand
Go ahead and start a thread on "what moves the markets" - it sounds like a good title. In here, I'll be dealing with Swap Methodology and Swing/Momentum potential. Good luck with your new thread.

BTW - Trailing Stops, are one of the highest ranked reasons that traders lose optimization on a constant basis - contrary to what the concept implies. Most trailing stops are set too close to normative market volatility and those that are set further away, tend to be the primary causality for non-optimized trades. Trailing Stops are good for Bucket...
I'm not talking about directional trading. If you agree that market moves with stops then you would place triggers where clusters of stops are, you don't care which way it goes.

You don't have to use trailing, was just a thought to avoid backlash trades with 50 pip profits evaporating into a loss.

Anyways just a thought, I'll probably create myself a little EA to place my trades and manage them.

Thanks,
Jag
  • #210
  • Oct 31, 2011 5:50pm Oct 31, 2011 5:50pm
I've also been thinking about another Swap Method. I'll call it the: Dynamic Swap Mode.

The fundamental requirement of keeping swap costs as low as possible, is no different in this form of trading than it would be in any business model. An airline, for example, wants to keep its fuel costs as low as possible, to increase its per seat revenues. Fuel costs are one of the absolute largest cost centers for any airline. Likewise, for the Line trader, Swap Costs, if allowed to get out of control, can spoil an otherwise perfectly good opportunity for a profitable cycle.

So, while trying to remain as creative as possible, I've come up with the idea of taking Break-Even after every Swap Loss and then continuing the trade in the direction of the previous Swap at the same Lot level. It sounds confusing, but its not.

Assume a EURUSD M15 V-Trigger at today's Line of 4001 at Close of 12:45 GMT-1 bar: (using Swap on Close Method)

1245 closed up: Entry Long at 4001
1300 closed down but above Line: Hold Long
1315 closed up: Hold Long
1330 closed down and below Line: Swap Short (Swap Loss = -10 pips)
1345 closed down: Hold Short
1400 closed up but below Line: Hold Short
1415 closed on the Line: Hold Short
1430 closed down: Hold Short

1445 initiates primary run to profit through current close at 2230.

If, I go back to 1400, initiate a Dynamic Swap during that bar's move down to 3978, I get 13 pips worth of clearance which is enough to recapture the 10 pips loss on the 1330 Standard Swap. From that point forward, the EURUSD never looked back on its way to a maximum (absolute) gain of +173 pips and a current close gain of +159 pips this trading session.

That would have included a Swap Loss of 0.0 pips, one (1) Standard Swap and one (1) Dynamic Swap to recover internal Swap Loss.

Ok, so - creatively it works, but I need to obviously study the effect using a Dynamic Swap a lot more. If history shows me that I can reduce my cost of doing business, then its worth further real-time analysis.
Y = MX + B. The most important price level of all.
  • #211
  • Oct 31, 2011 6:10pm Oct 31, 2011 6:10pm
Quoting sidhujag
I'm not talking about directional trading. If you agree that market moves with stops...
Well, what's a Stop other than the Entry of someone else in the market in real terms. Somebody has to be willing to take the other side of my Stop, as their entry or re-entry into the market. So, in net/net effect, Direction is a significant component to Stop locations.

Quoting sidhujag
...then you would place triggers where clusters of stops are, you don't care which way it goes.
Actually, that's conventional wisdom and though I've always been a counter-trend trader for the most part, conventional wisdom would place me in the heart of horizontal confusion - which is not where I want to be. Witness the time period from 0500 - 1415 GMT-1 today in the EURUSD.

Do you think the ratio of stops located in that region was higher than the ratio of stops located in the 0000 - 1415 GMT-1 region, and the 1415 - Current Close region? Today's price action was broken down into three (3) regions. The region in the middle (0500 - 1415) is where all the Stops were "clustered" together and drawing a line in the middle of all that horizontal confusion drives up the Swap Cost.

I need to keep my fuel costs down, in order to run an effective airline.

Quoting sidhujag
You don't have to use trailing, was just a thought to avoid backlash trades with 50 pip profits evaporating into a loss.
I had extra swaps in today's trade not because I had to, but because I used a mixture of Swapping Methods today. If you note the Swap on Close Method (above), then you can see the Trade Detail and that it only required one (1) Swap today for -10 pips. The remaining 150+ pips would have been all profit. I took 41 pips, including my additional swap loss.

But, I agree - getting the costs down as low as possible, is the name of the Swap game, no doubt.


Quoting sidhujag
Anyways just a thought, I'll probably create myself a little EA to place my trades and manage them.
If MT4 can handle the swap logic (I know C++ or VB can) then that does not sound like a bad idea. Make sure to note the five -vs- four digit broker issue, average spread range during the times you intend to have the EA running and of course, the Swap Method you decide to use will need to be calibrated to reflect how you intend to defend the line. Lot sizing and money management will also be something to experiment with as you hone the EA.

I wish you the best with it.
Y = MX + B. The most important price level of all.
  • #212
  • Oct 31, 2011 6:21pm Oct 31, 2011 6:21pm
Ok, I've effectively switched timezones here, and will be trading from 0000 to about 0800 GMT-1. I'm hoping to see some trade progress before then, so I can get some sleep before shifting back to 1200 hrs GMT-1. I'll be trading both timezones this week as an add-on to my study/testing. I've got about 40 minutes before the entry, so I'll take a quick break and be back later.
Y = MX + B. The most important price level of all.
  • #213
  • Oct 31, 2011 6:28pm Oct 31, 2011 6:28pm
Quoting Line In Sand
I've also been thinking about another Swap Method. I'll call it the: Dynamic Swap Mode.

The fundamental requirement of keeping swap costs as low as possible, is no different in this form of trading than it would be in any business model. An airline, for example, wants to keep its fuel costs as low as possible, to increase its per seat revenues. Fuel costs are one of the absolute largest cost centers for any airline. Likewise, for the Line trader, Swap Costs, if allowed to get out of control, can spoil an otherwise perfectly good opportunity...
The first type of entry I was thinking about using that popped in my head was this, closing price is always more important than crossing price in my mind. Reactions towards open/close/mid is usually good. So sometimes price crosses but doesnt close. Problem is that when price crosses and closes way over the other side you will be subject to a bigger swap penalty, especially if the trade retraces to close on the other side of the line again
  • #214
  • Oct 31, 2011 6:29pm Oct 31, 2011 6:29pm
Using an M15 chart, the strategy here will be rather simple:

- Trade the 0000 GMT-1 until profitable.

- If 50-75 pips are not seen by 0800 GMT-1, close current position.

- Re-enter the market at the start of the 1200 GMT-1 bar until 50-75 pips are realized.

Not a working schedule I could maintain for years, but certainly something I could do for 6-7 months out of the year, with 6-5 months off. So, much for not living in Europe, and being able to take advantage of those high volatility London trading hours.

Ok, back in 30 minutes...
Y = MX + B. The most important price level of all.
  • #215
  • Oct 31, 2011 7:02pm Oct 31, 2011 7:02pm
Quoting sidhujag
...Problem is that when price crosses and closes way over the other side you will be subject to a bigger swap penalty, especially if the trade retraces to close on the other side of the line again
Yep, which is why I like to enter when the Daily range has not expanded beyond 100% of normal. So, in reality, if I were in production trading, when I looked up at the Daily range this morning and found that it was well beyond 100% of normal, that would have been an *Indicator* that my very next move should be to put my golf clubs in the car and go to the golf course for the day.

I like Golf Indicators! And, Daily range above 100% is one the best.

Sure, I would have missed out on 41 or 156 pips *this time around*, but I know that history tells me that on average, I should go work on my 5-iron fade into postage stamp green with a flag tucked way in the back right corner. It is one of the sexiest shots in golf - if you can pull it off.
Y = MX + B. The most important price level of all.
  • #216
  • Oct 31, 2011 7:03pm Oct 31, 2011 7:03pm
0000 GMT-1 T-Trigger at 3858.

Initiating swap on sequence. Using Swap on Close method.

http://www.freeimagehosting.net/t/00b59.jpg
Y = MX + B. The most important price level of all.
  • #217
  • Oct 31, 2011 7:14pm Oct 31, 2011 7:14pm
Swap on Close method is being used this cycle, but I'm going to keep an eye on the M1 vs M15 charts to determine if there any advantages to swapping with one vs the other this cycle. Something I should have been paying more attention to in earlier cycles.
Y = MX + B. The most important price level of all.
  • #218
  • Oct 31, 2011 7:16pm Oct 31, 2011 7:16pm
Right out of the gate - Swap on Close using the M1 chart, would have saved about 26 pips in swap loss.
Y = MX + B. The most important price level of all.
  • #219
  • Oct 31, 2011 7:18pm Oct 31, 2011 7:18pm
Once again, as I was typing, I got caught in the middle of a swap. I'll post more later, and will focus on swaps for now.
Y = MX + B. The most important price level of all.
  • #220
  • Oct 31, 2011 7:58pm Oct 31, 2011 7:58pm
Initial Daily range for today comes in at between 157 - 161 absolute pips. Current range consumption is now about 28% at 43 pips, with the expansion being to the Short side of the T-Trigger.

Current condition is -26 pips on swap one. Should be -16 pips, but I was typing here, during the quick move off the open, so my swap was not on-time. However, with more than 70% fuel remaining on-board the Daily range, I have no doubt that recovery and a good profit run should result.

Still defending 3858.
Y = MX + B. The most important price level of all.
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