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  • #721
  • Apr 17, 2012 10:20am Apr 17, 2012 10:20am
jag1966 - The way I see things - the rules of system are very clearly laid out in the first post. If you think those rules by themselves give an edge then all you need to do is write an EA to trade the system, or pay someone 100 bucks to do it for you. It's not difficult at all. Then you can play golf while the EA makes all those millions for you.

In fact my guess is that if you let the EA trade you will soon see that it's not working. It will have good and bad periods and overall probably just slowly drain your account due to spread costs. Now you could say "of course it's losing because it took this or that trade that I wouldn't take because that pair wasn't trending enough for my taste". Sure, but how do we define "trending enough"? If you clearly define that concept, e.g. a certain angle of the 50MA, we can code that too. But guess what, once again you will find that the EA is not winning on the long term. When a good experienced trader follows the system he can turn it into a winner, just like 60minuteman is doing, but the edge in my opinion comes from his way of seeing the market, the way he draws his lines on the higher time frames, the way he interprets the price action as trending or not and probably many other small things that he's not even aware of. Ask him about the EURAUD signal for example - he didn't take it because he felt that the pair wasn't trending enough. I would have taken it because I anticipate a strong downmove by looking at the weekly charts. That's me, it's my interpretation, and he has his own. It is such interpretations that make some people win and others lose.

I'm not saying that there are no 100% mechanical systems that work. Maybe there are although I have never seen one. Whoever has such a system would definitely turn it into an EA and most definitely wouldn't share it on a forum. But then again ... if you see that all the big banks and hedge funds with incredible amounts of money and latest technology still rely on human discretionary decisions to trade it's hard to believe that they all missed something as simple as an engulfing candle above/below the 50SMA.
  • #722
  • Apr 17, 2012 10:22am Apr 17, 2012 10:22am
Quoting jag1966
crap to that, business is business, it is a valuable commodity, sell it.
Yes, if your business is to sell low-return or even useless systems. Not if your business is making money from trading. $5000 per day would be an easily achievable goal for some "gurus", according to their own claims, without even running into liquidity problems. Why would they work full-time teaching in order to make $500 more per day ? Why would they spend hours upon hours of advertising their "teaching" ? Do they enjoy BOTH teaching AND advertising ?

Well, the internet is so full of teachers and gurus that I don't think I need to expand any more.

BTW, I found 60minuteman's relevant post. Whether his system requires discretion or not, it is to his credit that he has shared ALL the details of it. Imagine if you had paid someone for "a fully automated system", then coded yourself ALL the rules, 100%, into an EA, only to find out that the system is not profitable out of the box and "discretion has to be applied".

Quoting 60minuteman
I'm finished posting in this thread now. I've shared all the information I have and I'm sure it will help your trading if like me you have had trouble with discipline and consistency.

Everything you need to trade this strategy, or variations of it is already here in the first few pages.

I have set up a skype group but it is strictly for trading the strategy as laid out in the first post.

If anyone wants to join then P.M me your skype contact and I will add you.

Good luck to everyone and make pips!

[b]Plan...
  • #723
  • Apr 17, 2012 10:28am Apr 17, 2012 10:28am
Quoting LazyPawn
jag1966 - The way I see things - the rules of system are very clearly laid out in the first post. If you think those rules by themselves give an edge then all you need to do is write an EA to trade the system, or pay someone 100 bucks to do it for you. It's not difficult at all. Then you can play golf while the EA makes all those millions for you.

In fact my guess is that if you let the EA trade you will soon see that it's not working. It will have good and bad periods and overall probably just slowly drain your account due to spread costs. Now...
There are many reasons why I disagree and if you stick at this long enough you may change your mind. Good luck.
  • #724
  • Apr 17, 2012 10:30am Apr 17, 2012 10:30am
Quoting micmic
Yes, if your business is to sell low-return or even useless systems. Not if your business is making money from trading. $5000 per day would be an easily achievable goal for some "gurus", according to their own claims, without even running into liquidity problems. Why would they work full-time teaching in order to make $500 more per day ? Why would they spend hours upon hours of advertising their "teaching" ? Do they enjoy BOTH teaching AND advertising ?

Well, the internet is so full of teachers and gurus that I don't think I need to expand...
That is your assumption and the argument doesn't hold water. All this talk about EA's is laughable also, it is the lazy persons option.
  • #725
  • Apr 17, 2012 10:38am Apr 17, 2012 10:38am
Quoting jag1966
That is your assumption and the argument doesn't hold water. All this talk about EA's is laughable also, it is the lazy persons option.
No, discrediting EAs is a scammer teacher's escape route. I can code ALL CLEAR RULES into en EA. If I make an error in coding, or if I can't code a specific rule, then it's my problem. But if I code everything perfectly but the system is not profitable, then it's the system's problem. If that system is given for free, then no harm has been done. But if it has been sold to me as "purely mechanical", then the seller is a scammer. Period.
  • #726
  • Apr 17, 2012 10:50am Apr 17, 2012 10:50am
Quoting micmic
No, discrediting EAs is a scammer teacher's escape route. I can code ALL CLEAR RULES into en EA. If I make an error in coding, or if I can't code a specific rule, then it's my problem. But if I code everything perfectly but the system is not profitable, then it's the system's problem. If that system is given for free, then no harm has been done. But if it has been sold to me as "purely mechanical", then the seller is a scammer. Period.

We will have to agree to disagree. But we hear all the calls of, "scammer" without any proof except what small minded people think.

Let them think it, the clever people will be making careful assessments and thinking for themselves and taking calculated business decisions to better their future.
  • #727
  • Apr 17, 2012 10:52am Apr 17, 2012 10:52am
Quoting LazyPawn
I'm not saying that there are no 100% mechanical systems that work. Maybe there are although I have never seen one. Whoever has such a system would definitely turn it into an EA and most definitely wouldn't share it on a forum. But then again ... if you see that all the big banks and hedge funds with incredible amounts of money and latest technology still rely on human discretionary decisions to trade it's hard to believe that they all missed something as simple as an engulfing candle above/below the 50SMA.
Exactly. Every simple and not-so-simple system is guaranteed to have been coded into an EA. And, you know what ? Some of these systems may have also been making money FOR YEARS. But not always. Sometime the market will change and you have to have the discretion (that word again!) to decide whether your system is having a bad streak or is not working anymore.

A profitable purely mechanical system would have to have such a complexity that would make it highly improbable for the vast majority of traders to discover it, including those geniuses that program for the banks. And of course, nobody would share it on the internet. If they did, it would soon stop working. If someone had made millions and millions out of such a system and decided he would like to help others, then he would most probably share it for free with a selected few instead of destroying it by making it common knowledge.

ETA: Case in point: the original and famous Turtles System is not working anymore...
  • #728
  • Apr 17, 2012 11:14am Apr 17, 2012 11:14am
Quoting LazyPawn
jag1966 - The way I see things - the rules of system are very clearly laid out in the first post. If you think those rules by themselves give an edge then all you need to do is write an EA to trade the system, or pay someone 100 bucks to do it for you. It's not difficult at all. Then you can play golf while the EA makes all those millions for you.

In fact my guess is that if you let the EA trade you will soon see that it's not working. It will have good and bad periods and overall probably just slowly drain your account due to spread costs. Now...
It's an interesting point Lazy....

and there are 2 or 3 studies on the internet based purely on the engulfing pattern...

and the results are pretty good... at least enough to build upon...

of course tests are always limited to time, more time tested or less time tested can vary results dramatically...

But lets assume it is 50% win rate going to 1/1 risk to reward... some simple s/r analysis and reading of trend could turn that into a simple consistent strategy.

In fact there is a trading group that trades it on the daily and publishes all its trades and results, and they do very well...

more importantly I believe in it, maybe that's an edge too...
tradewith60
  • #729
  • Apr 17, 2012 11:34am Apr 17, 2012 11:34am
Quoting 60minuteman
and there are 2 or 3 studies on the internet based purely on the engulfing pattern...
and the results are pretty good... at least enough to build upon...
Hey ... that's great news for me then (and for everyone else I suppose) - I am very happy to be proven wrong here. Too bad we both wasted years studying markets and charts, reading trading books and studying with mentors ... when in fact all we had to do was to compare the open and close price of 2 consecutive candles.

Now let's write that EA.
  • #730
  • Apr 17, 2012 11:53am Apr 17, 2012 11:53am
Quoting LazyPawn
Hey ... that's great news for me then (and for everyone else I suppose) - I am very happy to be proven wrong here. Too bad we both wasted years studying markets and charts, reading trading books and studying with mentors ... when in fact all we had to do was to compare the open and close price of 2 consecutive candles.

Now let's write that EA.
I did actually spend a lot of time on an EA for the engulfing strat with the group that studied with my mentor, but we all had better results when we traded it manually...

I will say this though, our results were probably better through trade management, specifically exits.... and we tried to find a way to program it, but never succeeded.. or should i say, decided it was easier for us to trade it

How do you program something to gauge that price is moving through all your targets with strong momentum and closing the other side of s/r levels, so clearly this is a trade to let run... guess it can be done, but makes my head hurt just thinking about it...
tradewith60
  • #731
  • Apr 17, 2012 11:55am Apr 17, 2012 11:55am
Quoting micmic

A profitable purely mechanical system would have to have such a complexity that would make it highly improbable for the vast majority of traders to discover it, including those geniuses that program for the banks.
This is so right on the money. Trading isn't simple, lets just throw that idea right out the window, which is why discretion or 'intuition' is necessary because the complexity an automated system would HAVE to have is beyond the skill, effort, or resources the typical trader is capable of or willing to put forth. Discretion describes a process that is too complex to translate into some neat little formula or list of rules...fortunately, the human brain is capable of this type of complex pattern recognition(The chess example given earlier was a good illustration), so we dont actually have to translate it all...discretion CAN work.

As far as the geniuses that work for banks, ahahah, thats a good one. I dont think there are any geniuses trading forex OR working at banks. True geniuses become scientists, or artists, or musicians. GREED is not one of the defining characteristics of a genius. There are some very clever people, even on this forum, but, alas, no geniuses
  • #732
  • Apr 17, 2012 12:00pm Apr 17, 2012 12:00pm
Quoting 60minuteman
How do you program something to gauge that price is moving through all your targets with strong momentum and closing the other side of s/r levels, so clearly this is a trade to let run... guess it can be done, but makes my head hurt just thinking about it...
Easily, if you care to define how exactly you plot your S/R levels: Do you take into account the higher timeframes ? How many candles back do you go searching for S/R ? How many pips/percentage of price/percentage of ATR does price have to close above an S/R level so that you consider it has broken it ? Do you use only open/close prices or also wicks ? How "thick" are your S/R levels ?

And momentum is just price movement per unit of time, so you can also analyze it all the way down to 1 minute candles. How much (%) should price move per M1/M15/H1/H4 etc for the momentum to be deemed "strong" ?

Unfortunately, no two persons would answer the same in ALL of these questions, so S/R plotting and momentum evaluation is also discretionary to a large degree.
  • #733
  • Apr 17, 2012 12:06pm Apr 17, 2012 12:06pm
Quoting Aldente
This is so right on the money. Trading isn't simple, lets just throw that idea right out the window, which is why discretion or 'intuition' is necessary because the complexity an automated system would HAVE to have is beyond the skill, effort, or resources the typical trader is capable of or willing to put forth. Discretion describes a process that is too complex to translate into some neat little formula or list of rules...fortunately, the human brain is capable of this type of complex pattern recognition(The chess example given earlier...
Of course discretion CAN and DOES work. But as good our brains may be in evaluating complex patterns much more effectively than a computer, they are also equally good in playing games with us. One very common game that traders find too distracting is that once their lot sizes go up, they often can't think as clearly as when they were trading lower amounts of money. This is why some traders say that trading with 10 or 100 lots is a totally different game than trading with 0.1 or 1 lot and requires complete restructuring of the trading mind and many many hours of trading - and this time, the education becomes REALLY expensive.
  • #734
  • Apr 17, 2012 12:08pm Apr 17, 2012 12:08pm
ok, some stats...

based on 20,000 instances of the engulfing pattern on daily TF

With no trend or s/r used...

is that an edge on its own? anything over 50% accuracy gets my interest???

Important Results for Bullish Engulfing

Theoretical performance: Bullish reversal
Tested performance: Bullish reversal 63% of the time
Frequency rank: 12
Overall performance rank: 84
Best percentage meeting price target: 67% (bear market, down breakout)
Best average move in 10 days: -6.31% (bear market, down breakout)
Best 10-day performance rank: 14 (bear market, down breakout)
All ranks are out of 103 candlestick patterns with the top performer ranking 1. "Best" means the highest rated of the four combinations of bull/bear market, up/down breakouts.


Important Results for Bearish Engulfing

Theoretical performance: Bearish reversal
Tested performance: Bearish reversal 79% of the time
Frequency rank: 11
Overall performance rank: 91
Best percentage meeting price target: 76% (bear market, down breakout)
Best average move in 10 days: -5.92% (bear market, down breakout)
Best 10-day performance rank: 21 (bear market, down breakout)
All ranks are out of 103 candlestick patterns with the top performer ranking 1. "Best" means the highest rated of the four combinations of bull/bear market, up/down breakouts.


and these are basically engulfing where the next candle trades higher or lower depending on bearish/bullish signal...


which is in effect what my strategy uses

Three Outside Down: Important Results

Theoretical performance: Bearish reversal
Tested performance: Bearish reversal 69% of the time
Frequency rank: 21
Overall performance rank: 39
Best percentage meeting price target: 55% (bull market, up breakout)
Best average move in 10 days: 6.30% (bear market, up breakout)
Best 10-day performance rank: 13 (bull market, up breakout)
All ranks are out of 103 candlestick patterns with the top performer ranking 1. "Best" means the highest rated of the four combinations of bull/bear market, up/down breakouts.


Three Outside Up: Important Results

Theoretical performance: Bullish reversal
Tested performance: Bullish reversal 75% of the time
Frequency rank: 24
Overall performance rank: 34
Best percentage meeting price target: 47% (bull market, up breakout)
Best average move in 10 days: -7.14% (bear market, down breakout)
Best 10-day performance rank: 7 (bear market, down breakout)
All ranks are out of 103 candlestick patterns with the top performer ranking 1. "Best" means the highest rated of the four combinations of bull/bear market, up/down breakouts.
tradewith60
  • #735
  • Apr 17, 2012 12:10pm Apr 17, 2012 12:10pm
Quoting micmic
Easily, if you care to define how exactly you plot your S/R levels: Do you take into account the higher timeframes ? How many candles back do you go searching for S/R ? How many pips/percentage of price/percentage of ATR does price have to close above an S/R level so that you consider it has broken it ? Do you use only open/close prices or also wicks ? How "thick" are your S/R levels ?

And momentum is just price movement per unit of time, so you can also analyze it all the way down to 1 minute candles. How much (%) should price move per M1/M15/H1/H4...
Yeah I can't disagree with you... its kinda a dark art, and really youre just laying down lines as markers that you will assess price action at when it gets there...
tradewith60
  • #736
  • Apr 17, 2012 12:14pm Apr 17, 2012 12:14pm
Quoting 60minuteman
Important Results for Bullish Engulfing

Theoretical performance: Bullish reversal
Tested performance: Bullish reversal 63% of the time
Frequency rank: 12
Overall performance rank: 84
Best percentage meeting price target: 67% (bear market, down breakout)
Best average move in 10 days: -6.31% (bear market, down breakout)
Best 10-day performance rank: 14 (bear market, down breakout)
All ranks are out of 103 candlestick patterns with the top performer ranking 1. "Best" means the highest rated of the four combinations of bull/bear...
That should be easily reproducible. Does the above mean that we are going long when we see a bullish engulfing candle in a downtrend ? Did they use stop loss and take profit, or does it only matter whether the next day is bullish or bearish ?
  • #737
  • Apr 17, 2012 12:35pm Apr 17, 2012 12:35pm
Quoting Aldente
As far as the geniuses that work for banks, ahahah, thats a good one. I dont think there are any geniuses trading forex OR working at banks. True geniuses become scientists, or artists, or musicians. GREED is not one of the defining characteristics of a genius. There are some very clever people, even on this forum, but, alas, no geniuses
Correct, I would also have a hard time believing that a trading genius would work for anybody other than himself, even with all the execution and arbitrage benefits than a bank would offer. But still, an aspiring EA programmer would have to compete with all the independent traders who are very capable in mathematics, statistics, programming, etc. And you can find many of those who have obviously not managed to code a consistently profitable EA yet. And this is because programming and mathematics skills are just a small part of what is needed in order to make such an EA; the most important thing is to have original and clever trading ideas.
  • #738
  • Apr 17, 2012 12:37pm Apr 17, 2012 12:37pm
Quoting micmic
That should be easily reproducible. Does the above mean that we are going long when we see a bullish engulfing candle in a downtrend ? Did they use stop loss and take profit, or does it only matter whether the next day is bullish or bearish ?
stops at the low for bullish... vice versa..

Target is equal to the size of the signal candle.. so 1/1

10 day average is highest price reached in 10 periods from signal

No accounting for trend was used.

where it says "Bear market" that is in reference to s&p 500
tradewith60
  • #739
  • Apr 17, 2012 12:41pm Apr 17, 2012 12:41pm
Quoting 60minuteman
stops at the low for bullish... vice versa..

Target is equal to the size of the signal candle.. so 1/1

10 day average is highest price reached in 10 periods from signal

No accounting for trend was used.
Ok, I'll make an EA to test this. Any pair will do ?
  • #740
  • Apr 17, 2012 12:44pm Apr 17, 2012 12:44pm
Quoting jag1966
That is your assumption and the argument doesn't hold water. All this talk about EA's is laughable also, it is the lazy persons option.
not really, it's just a really good by-product of backtesting systems.
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