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Buy sell line trading

  • #1,401
  • Jun 2, 2012 8:25am Jun 2, 2012 8:25am
Quoting Dezil
And do not try to trade it 100% mechanically. The edge is in taking only good setups (strong trend and RR>1) near SR levels.
I tested #2 entry rule from 2000 and it has 50% win rate with 1/1 RR ratio on EUDUSD D1
So the main rule is in your head. It's not for nub trader.
when we look at these results we should take great encouragement...

Over a 12 year period, through all of the market conditions the strategy gets the direction right as often as it gets it wrong...

Already at a good win rate in all conditions will mean that selecting the right conditions will only increase that figure...

Imagine applying some money management and selecting the trending periods only....
tradewith60
  • #1,402
  • Jun 2, 2012 8:34am Jun 2, 2012 8:34am
With 50% win rate exit rules became more impotant
  • #1,403
  • Jun 2, 2012 10:12am Jun 2, 2012 10:12am
Quoting 60minuteman
when we look at these results we should take great encouragement...

Over a 12 year period, through all of the market conditions the strategy gets the direction right as often as it gets it wrong...

Already at a good win rate in all conditions will mean that selecting the right conditions will only increase that figure...

Imagine applying some money management and selecting the trending periods only....
I have no doubt that this strategy performs very well when used as you described. However the entry for itself seems no better than random, according to the above figures. Not surprising IMO as PA alone doesn't mean much. So I guess it does not make much sense to take every signal in the backtest as there is no edge in the entry itself without location and trend.
  • #1,404
  • Jun 2, 2012 10:20am Jun 2, 2012 10:20am
Quoting pippiee
Please forgive my ignorance but I would think 50% with 1/1 RR is coin flipping.
Pippiee, this is correct, however if money management is used, for example by moving s/l to halfway to b/e when price is halfway to 1:1, an edge can be created that may skew the probabilities of success in the trader's favor. Another possible money mgt technique that could be used in a 1:1 situation would be moving s/l 1p closer to b/e each time price moves 1p toward t/p.

Once a trader finds a strategy he is successful with, the next step should be figuring out the most profitable money mgt treatment for that strategy. Of course that involves a certain amount of work in backtesting to see which combination of s/l and t/p and entry makes the most sense. Or one can forward test different combinations in different demo accts. Either way, I would say that most traders will not take this extra step. But it is what separates the men from the boys, in my opinion.

60mm has done a fabulous job of emphasizing money mgt in this thread, way more than elsewhere.
  • #1,405
  • Jun 2, 2012 10:38am Jun 2, 2012 10:38am
Quoting pippiee
I have no doubt that this strategy performs very well when used as you described. However the entry for itself seems no better than random, according to the above figures. Not surprising IMO as PA alone doesn't mean much. So I guess it does not make much sense to take every signal in the backtest as there is no edge in the entry itself without location and trend.
I kind of agree with you.... but believe me, a price action trigger that on its own gives 50% win rate is actually very powerful... but a complete strategy to make good profits requires more than just the entry signal... if that makes sense..

so what im really saying is this is a great starting point.
tradewith60
  • #1,406
  • Jun 2, 2012 10:52am Jun 2, 2012 10:52am
Quoting 60minuteman
I kind of agree with you.... but believe me, a price action trigger that on its own gives 50% win rate is actually very powerful... but a complete strategy to make good profits requires more than just the entry signal... if that makes sense..

so what im really saying is this is a great starting point.
Does the 50% accuracy include any trend filters such as the 50SMA or anything else? Because if adding the trend filters increases the edge even 2-3%, it will be more significant.
  • #1,407
  • Jun 2, 2012 10:56am Jun 2, 2012 10:56am
Quoting pipexplorer1
Does the 50% accuracy include any trend filters such as the 50SMA or anything else? Because if adding the trend filters increases the edge even 2-3%, it will be more significant.
I presume it was using just the 50sma...but as i have stressed, we need to do a little bit more work ourselves, judge the trend, wait for the retrace, then manage the trades...

but the real data that is missing is.... how far did the 50% go before they would of turned and hit the stops...

how many go to 2/1, 3/1 etc etc... I think California posted some data earlier in the thread... you need all parts of the equation.

Really people should pull up the charts at the end of every week and look at the data... I have been doing it on the thread for sometime now, theres excellent gains to be had if you can master a few simple techniques
tradewith60
  • #1,408
  • Edited 1:51pm Jun 2, 2012 11:31am | Edited 1:51pm
Here are a few things that can improve the probability of success using Entry 2:

1. Wide-range signal bars bear added risk. Use caution when taking these or do not take them at all.

2. The better opportunities occur earlier in a new trend, not in a trend that has been established for a lengthy amount of time. (The average trend contains three pullbacks, although some have one and others have eight or more.) If price has been extended above or below the 50SMA for a long period, use care with a new position.

3. The farther price is stretched above or below the 50SMA, the greater the risk that a retracement will end up being the start of a new trend in the opposite direction as price reverts back to the average.

4. Setups in which price moves persistently and deliberately during the retracement will be your best setups (important). Those with a bunch of overlapping bars represent more uncertainty on the part of the market and will not be as successful.

5. Stronger trends, as defined by the 50SMA slope, will increase the probability of price resuming its trend after the pullback.

Contributions from other users of entry 2 are welcome.
  • #1,409
  • Jun 2, 2012 3:48pm Jun 2, 2012 3:48pm
Quoting pipexplorer1
Does the 50% accuracy include any trend filters such as the 50SMA or anything else? Because if adding the trend filters increases the edge even 2-3%, it will be more significant.
Yes, i used 50 SMA in my tests. Win rate 50%.

Also i tested different variations of RR rations and different points of BE and closin half position. There are no profitable mechanical ways to trade this.
I do believe this system is profitable when traded manually using supply/demand zones by experienced and disciplined trader
  • #1,410
  • Jun 2, 2012 5:55pm Jun 2, 2012 5:55pm
Quoting Dezil
Yes, i used 50 SMA in my tests. Win rate 50%.

Also i tested different variations of RR rations and different points of BE and closin half position. There are no profitable mechanical ways to trade this.
I do believe this system is profitable when traded manually using supply/demand zones by experienced and disciplined trader
and was the 50sma slope correct?

RULE 1 TREND

IF PRICE IS ABOVE THE 50SMA WE WILL ONLY LONG.

IF PRICE IS BELOW THE 50 SMA WE WILL ONLY SHORT

IF THE 50SMA IS FLAT OR PRICE IS CHOPPING ABOVE AND BELOW THEN THE TRADE IS HIGH RISK AND YOUR WIN RATE WILL BE AFFECTED.

ideally we are looking for a nice slope on the 50sma showing a sustained trend in one direction...
tradewith60
  • #1,411
  • Jun 2, 2012 5:57pm Jun 2, 2012 5:57pm
please read the first pages of the thread carefully... this is not the starting point of an automated mechanical system, this is a structure which can very easily be made profitable
tradewith60
  • #1,412
  • Jun 3, 2012 12:53am Jun 3, 2012 12:53am
Quoting 60minuteman
please read the first pages of the thread carefully... this is not the starting point of an automated mechanical system, this is a structure which can very easily be made profitable
Hi 60minuteman,

I have went through all your post and as you mentioned based on daily support resitance I am taking the trade in H4 time frame and 60SMA as filter line.So far I am successful.Last week I am up about 800 pips.
My question is regarding price action.If price trading all time low.Then how you trade the pair and determine the support resistance.Because we are not able draw horizontal support resistance.
For example if you check EURAUD from end of december it was strong trending and price action trading at all time low.
Then in that case how you trading the pair and determining the support and resistance?

Regards,
Bedayan.
  • #1,413
  • Jun 3, 2012 4:11am Jun 3, 2012 4:11am
Quoting 60minuteman
and was the 50sma slope correct?

RULE 1 TREND

IF PRICE IS ABOVE THE 50SMA WE WILL ONLY LONG.

IF PRICE IS BELOW THE 50 SMA WE WILL ONLY SHORT

IF THE 50SMA IS FLAT OR PRICE IS CHOPPING ABOVE AND BELOW THEN THE TRADE IS HIGH RISK AND YOUR WIN RATE WILL BE AFFECTED.

ideally we are looking for a nice slope on the 50sma showing a sustained trend in one direction...
Yes i also tried to use flat/trend filter which i use in my trading.
I do not want to broke this thread with any EA stuff. All i want to say is that this style of trading is not for 100% blind mechanic approach. Trade it manually and after some experiance you will be profitable.
  • #1,414
  • Jun 3, 2012 5:24am Jun 3, 2012 5:24am
Quoting bedayan
Hi 60minuteman,

I have went through all your post and as you mentioned based on daily support resitance I am taking the trade in H4 time frame and 60SMA as filter line.So far I am successful.Last week I am up about 800 pips.
My question is regarding price action.If price trading all time low.Then how you trade the pair and determine the support resistance.Because we are not able draw horizontal support resistance.
For example if you check EURAUD from end of december it was strong trending and price action trading at all time low.
Then in that case...
Hi Bedayan, well done on the trading...

I've only ever seen one all time low or high, I think it was on ECHF.... really haven't got an answer for you though.

But right now theres some excellent trends on many pairs....
tradewith60
  • #1,415
  • Jun 3, 2012 9:43am Jun 3, 2012 9:43am
Hi at all i'm studing
i have found 2 thinks i hope there are interesting

1° the moving average is very similar at the macd colored (12,26,9)

red = short and green = long

2° in the engulfing candle is confirmed by the stocastich (8,3,3) (yellow vertical line) the probability of good trade is more , it's a confirmation i hope

many thanks at all for your criticism or advice

http://s10.postimage.org/4v5bdp9h1/S...n_03_16_36.jpg
  • #1,416
  • Jun 3, 2012 10:29am Jun 3, 2012 10:29am
Quoting bedayan
Hi 60minuteman,

For example if you check EURAUD from end of december it was strong trending and price action trading at all time low.
Then in that case how you trading the pair and determining the support and resistance?

Regards,
Bedayan.
Bedayan: The strategy, as initially explained by 60mm, does not use s/r or any indi's besides 50SMA. If it helps you to only take trades using s/r, then that is great. I trade D1 successfully without using anything except 50SMA and 10SMA. And besides fx, I use it on futures (tick charts and D1) and stocks (D1). So it is a true universal strategy for any timeframe.

Each trader should use what best fits his experience, risk tolerance, personality.
  • #1,417
  • Jun 3, 2012 12:58pm Jun 3, 2012 12:58pm
Quoting bedayan
Hi 60minuteman,

I have went through all your post and as you mentioned based on daily support resitance I am taking the trade in H4 time frame and 60SMA as filter line.So far I am successful.Last week I am up about 800 pips.
My question is regarding price action.If price trading all time low.Then how you trade the pair and determine the support resistance.Because we are not able draw horizontal support resistance.
For example if you check EURAUD from end of december it was strong trending and price action trading at all time low.
Then in that...
First I would like to say Hi to 60 and the rest of the members who are doing a tremendous job of helping many newbies in FX trading... I trade full time and I use almost the same trading style as 60 but with a twist... I do go to the various time frame to look for S/R and directional bias for the pair I intend to trade... hopefully this will answer your query where to find S/R when a pair is trending strongly in one direction... a slight pause or retrecement may be a signal enough for you to pull the trigger in the direction of the major trend.

By the way i have just completed reading the whole thread... I really enjoy reading it as it helps me to confirm my trading style.

Once again thank you 60 for sharing your trading plan
  • #1,418
  • Jun 3, 2012 1:34pm Jun 3, 2012 1:34pm
Hi California:

I am also from California. Becuase of our time zone and full time job, I always look for a daily trading system. How do you use 10SMA in this method? Does it help to filter out bad trades or you use it for helping to determine SL/TP? Appreciate, if you explain a little bit. Nice to see some one from the same area.

Thanks,

FX_California
Quoting California
Bedayan: The strategy, as initially explained by 60mm, does not use s/r or any indi's besides 50SMA. If it helps you to only take trades using s/r, then that is great. I trade D1 successfully without using anything except 50SMA and 10SMA. And besides fx, I use it on futures (tick charts and D1) and stocks (D1). So it is a true universal strategy for any timeframe.

Each trader should use what best fits his experience, risk tolerance, personality.
  • #1,419
  • Jun 3, 2012 1:44pm Jun 3, 2012 1:44pm
Hi Calafornia,

I too would like to hear from you regarding your daily system if you dont mind.

Cheers
  • #1,420
  • Jun 3, 2012 1:56pm Jun 3, 2012 1:56pm
Quoting FX_California
Hi California:

I am also from California. Becuase of our time zone and full time job, I always look for a daily trading system. How do you use 10SMA in this method? Does it help to filter out bad trades or you use it for helping to determine SL/TP? Appreciate, if you explain a little bit. Nice to see some one from the same area.

Thanks,

FX_California
Greetings FX_Cal

Yes, it is probably the worst timezone to trade fx, isn't it? Hopefully the weather makes up for it, right? I only use 10SMA as a trend descriptor, something that can provide me with more information on trend strength. When price < 10SMA < 50SMA, I call that "being in the power position" because trend is so strong that a retracement has a higher probability of follow-through in the direction of the trend. Of course, this should not be relied upon blindly, just as no strategy should be traded mechanically. Hope this helps.
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