SAR system based on QQE Adv and MACD Platinum

I have come up with a bit of a possible trading idea that may work. It is only early days and I have only completed a few basic manual backtests on the 4hr and daily charts, and it seems to have some potential. If it does prove to work, then it would certainly be a good candidate for an EA. It is a simple system that may require some tweaks, as at the moment I am only getting the idea out there to get others opinions.

I am looking at a system where you basically stay in a trade as long as the indicators tell you to do so. When the indicators change direction, you open a trade in that new direction and close the previous trade. Now depending how your previous trade went, would dictate position size on this new trade. Then when there was a new signal in the opposite direction generated by the indicators, you would then open a new trade in the new direction, and again depending what happened previously, would determine your position size. This will be a lot clearer with examples shortly. In a nutshell, you would always be in the market, just the position size varies depending on your profit/loss situation. These trades will also be in sequences that will either close in profit or at break even. If there is a losing sequence, then we have blown our account. I can’t stress enough how important money management would be.

I will be using both the QQE Adv and MACD Platinum indicators for the trade signals. You could really use any indicators that suits you, but these are what I know best. Watch the LACW 1 & 2 videos on my YouTube channel called TradersKey. Also the video called JAGfx will also help with how I read these indicators.
Basically need both to be in alignment for there to be a valid signal. Also wait until the current candle closes so the signal is actually confirmed and all new trades are taken on the open of the very next candle. Doesn’t matter which time frame you are using here. I do prefer the 4hr charts though as they tend to suit my lifestyle and have some nice decent trends without too much noise.

I was toying with the idea of using the martingale type system here for position size, but I am now leaning towards a Fibonacci sequence as it appears to be not as brutal as quickly. For those that don’t know the sequence, it is 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89 etc. Just the last two numbers added together to the get the next number in the sequence.

Here is my theory on how it should work. Say I start with a buy signal. Open 1x long trade on the open of the next candle to begin the sequence and just let this trade run until there is a new signal to go short. Either that long trade will end in profit, break even or a loss. If it is in profit, then that is the end of the sequence as you take your profit and run and that trade is no longer considered. Same applies if it is a break even result. Simple enough so far. If it is a loss, then the sequence continues with the new sell trade, which will also be for 1x unit as per the fibs. And the loss from the long is recorded where you will then have to do some maths. Just to be clear, we are not hedging here, so we only have one trade open in one direction at all times.

Now because we have more than one trade in the sequence, the best we are looking for is to close out the sequence at an overall break even result. So we would take the loss from the previous long trade and work out where the new short trade would have to reach to achieve this overall break even result. If it hits that price, then that trade is closed out and that sequence is now complete with an overall result of break even. At the same time, another short trade for 1x unit is opened for the start of a new sequence. Easy so far.

Now if in the above example, if price on the short trade did not reach the overall break even price required, but bounced back up, where a new buy signal was generated, then that sell trade would be closed immediately and a new buy order opened for 2x units as this is the third trade in the sequence (1, 1, 2). You would calculate your profit or loss from that previous short, and either add it or deduct it to or from the loss of the long trade before that. This will give you a new figure and a new target for your new long trade to hit. Be aware as this trade is for 2x units, you would need to do the maths to work out your target as the first two trade results were based on 1x unit each. If this long trade then hit the required target, then the entire sequence would close at an overall break even result. And we would open a brand new long trade for 1x unit at that same price to commence a new sequence of trades.

If that long trade did not achieve that target and there was then a new sell signal, the long would be closed either at a profit or a loss, and a new short trade for 3x units would be opened. Again do all the maths on the previous trades on the sequence and work out your new break even target.

There will be a lot of break even results, as the winners will only come when the sequence only lasts the one trade. This may be from when a new signal is first generated to when there is a reversal, or it may be from when a new trade is immediately opened after a break even target has been hit until it is reversed. I was considering not taking any new trades once the break even target was hit, but instead wait until the next new clean signal, however I did notice that the market tended to take off and leave me behind, so hence my thoughts behind starting a new sequence immediately. Again, this keeps us always in the trade.
Not sure if something like this would work on the smaller time frames, especially for doing the maths all of the time. An EA would certainly help there. The indicators I use are fairly accurate most of the time, and the longer time frames in forex tend to trend very nicely, where you will eventually get the big move that will recover your losses and some.

It is just an idea at the moment, which i have manually backtested over quite a few daily and 4hr charts on the majors only. There have been some very consistent results, especially on the 4hr charts. The daily charts tend to have long periods where it is just break even after break even result, which would test the patience of many traders. Everyone likes to be in the action!

If there is any interest, I will do up a YouTube video which should help clarify a few things as I appreciate it is difficult to read an explanation of a trading method and then visualize what I am talking about. This type of method could be used with any indicators of your choice, so it isn't limited to what I have nominated. I was actually thinking that you may be able to work this same method on multiple time frames of the same pairs using different indicators, which would give you a basket of trades all going at the same time, ultimately giving you some hedging protection when the market is undecided, but pick up the big winners when the market breaks. Just thinking aloud here.

As always, money management is critical if you were to trade a method like this, so be warned. Looking forward to any feedback. Cheers. Jim

Not sure why the thread was moved as I'm pretty sure what I described was a trading system. Not too worry, as may not get lost in the sea of other systems out there. I thought I'd upload the two custom MT4 indicators I use, so you can check them out for yourself. Both pretty simple really as the videos referred to in my original post show. The QQE Adv was actually taken from the Forex Rebellion system. Don't ask where I got MACD Platinum from as it is a bit of a sore point, but it works for me. I'll try and do up a proper video showing this method in the next 24hrs or so. Cheers.

Jim,

Making trading decisions (and even worse, sizing your positions) according to your P/L is one of the biggest reasons why the vast majority lose, IMHO.

To be profitable, a system needs to generate more raw pips than it loses. Your position sizes will magnify this result favorably only if you can somehow get the bigger positions to coincide with your winning trades; otherwise you're playing a lucky game of hit or miss, where one win can wipe out many losses, or one loss can wipe out many wins. Hence you need an 'edge' to begin with; MM by itself is not enough. If you can prove statistically that, following a winning (or losing) trade of yours, that the market behaves differently, in such a way that the probability of a win on your next trade is significantly greater, then you're justified in increasing your trade size. But ask yourself: why should the market behave differently merely because of the P/L of one (tiny) retail trader? Hence your position size should reflect the probability of imminent market behavior, not your recent P/L.

Success ultimately depends on 3 things: (1) whether your method (entries and exits) can generate more pips than it loses; (2) whether your MM is conservative enough to ride out any 'freak' losing sequences, thereby allowing your method to ultimately prevail; (3) whether you have enough confidence in your method to trade it with patience, courage and discipline. Fall short in any one of these 3 areas and you'll eventually fail. That's a big reason why forex is so damnably difficult.

If I was in your situation, my starting point would be to satisfy myself that your indicators (QQE Adv, MACD Platinum, .....) give entry signals that provide solid directional bias, and also work on a method of exits that complements them, preferably taking trades whose RR > 1. Then I would test the whole method over a high number of trades, and ideally many months' worth of changing markets, to gain the confidence needed to execute it flawlessly.

If just one losing sequence is enough to blow your account, then I'm afraid one thing is certain: one day you'll blow your account. The more often you trade, the greater the probability that it will happen sooner rather than later. If your method (entries/exits) is proven profitable, then taking undue risks with MM makes no sense.

My 2 cents,
David

well buff I will throw out some constructive criticism for you:

1. You state that it is an indicator system, get in and out when they say - but then later on say you will get out at a price point - that is not consistent and will add a random element to the results.

2. You are going to vary the trade size depending on the last result - this is a classic mistake and will screw your results. think about it, if your signals are any good then they should each be treated as equals, otherwise you risk having small sizes on your winners and large sizes on your losers - this will mess up the results and be random - Using MM and trading a fixed % to alter lot size is a different thing and fine to do.

3. All indicators and the ones you mention work best under certain conditions - if you are to use indicators for entry you should also use a filter system to ensure that at time of signal the market is in the ideal mode for those indicators.

So in essence if you don't control the trades in a repeatable manner with no randomness then you will never know if the system is working, even if it is making money at present.

I could add more but that should be enough for you to think about right now.

regards

Thanks for the feedback guys. It is appreciated. I think the quicker I get a video up, the better. It will help clear a few things up.

Hannover, I am looking at mainly trading this on the 4hr charts, and most likely the majors. I am a reluctant JPY trader as that always seems to be the currency that screws me most of the time, but the JPY pairs move nicely with this system. I already trade live using the indicators mentioned on about 18 pairs on the daily charts, where I manually check them once a day to modify stops or close half etc. The entry is all done whilst I am asleep with one of my EAs. It has been a consistently winning system as I treat it as a numbers game and look at the big picture. I must admit I have a 2nd EA that also picks up the same trends a little later that will add to my position. I don't really get too fussed if a few pairs are causing me grief, as long as the other pairs are doing the right thing by me. Basically just waiting on the big moves, which will happen.
I am looking to develop an EA here, and going down to the 4hr charts where there will be enough action to keep me interested, but probably too much for me to monitor at each candle close throughout the day. I enjoy my time away from the screen way too much. My trade size is all dependent on the previous trade results. The majority (notice I didn't say all) of my trade sizes will be 1x, 2x or 3x. And the majority of my results will be break even. If there is a loss, then the account is gone completely. If there are more than one trade in a sequence, and then once that sequence gets to break even, then it is closed out and the whole process starts from scratch.
I like how you nominate patience, courage and discipline with regards to trading as that is what I have written exactly on the top of my monitors. Spot on!
I also appreciate your comments re once losing streak will blow me out of the water. I fully understand that and I am prepared to take that risk. I have traded martingale and grid methods in the past, and it is stressful at times, but I do use some discipline when it comes to protecting my account once a certain target is reached where I try and get to the stage where I can retrieve my original account balance and then relax a tad as then only risking profits. I am not going to have some ridiculous scenario where I lose my mortgage repayments. But I hear you...

MaxDoom, I would have thought it was a system. Only two ways to exit, either at a profit or break even. If the break even is achieved on a 2nd or greater trade in a sequence, that sequence is closed and a new trade is immediately opened in the same direction at 1x so the sequence starts again. Pretty clear cut and I'm sure my video will show this.
Regarding point no.2, I would like nothing more than to be able to monitor each individual signal as a stand alone, but I don't have the time nor the resources, so I was looking for another way around this. The EA idea is probably not ideal as I will leave plenty of profit on the table, but there is nothing stopping me from manually interfering with the EA if I so desire. I'm here to make money, simple as that.
I'm also pretty happy with the combination of these two indicators and don't see any further requirement for a filter. But having said that, there is nothing stopping anyone adding their own set of rules or indicators and use a similar system as I have described.

I think I'll get onto that video pronto, which will make things clearer. Also if anyone is willing to nominate a period on a 4hr chart on any of the majors or 2nd tier pairs, I'd be more than willing to have a look at it and manually backtest it and produce a video of the results. That maybe enough for me to call it quits before I get too involved. Cheers. Jim

Jim,

I also do a lot of trading from the H4 charts.

It sounds like you already have a winning system, without the martingale sizing. Hence I don't see the need for taking the unnecessary gamble of blowing your entire account, with just a single loss. I had a similar debate with dredding82 in this thread. Anyway, the bottom line is that it's a personal decision: your money, your choice.

Basing trade size on prior trade results is a mistake IMO, for the reasons I gave in my prior post. MaxDoom explained it well in his second point, also.

Anyway, I've made the points I wanted to, and I'll move on now.

Good luck, I hope it works out for you.

David

No problems David. Thanks for the feedback.

Okay a pretty basic video has been done and uploaded to YouTube. It is on my channel and is called Forex Factory System. Keep in mind I am not a professional video maker so don't expect any Spielberg quality production. Sorry about the text not moving with the chart, and it is a pain in the butt having to use the crosshairs. Also when I say horizontal lines, I meant vertical lines, but I'm sure you will work that out. I suggest you change your video quality to HD for a much better picture. Sorry, I can't do anything about the voice....

Check out the video at

Cheers, Jim

Jim,

Nicely made video IMHO; you explained your entries/exits/sizing very clearly. (As soon as I heard the familiar Aussie 'accent', I realised that we're trans-Tasman neighbours. )

BTW, if you use MT4's menu option Insert -> Text (or click the little 'A' on the toolbar), then it anchors the text by Time and Price, hence the text moves as you scroll the chart. Whereas if you use Insert -> Text Label (or click the little 'T' on the toolbar), then it anchors the text by screen (x,y) co-ordinates, hence the text stays at the same position on the screen, when the chart is scrolled.

Cheers,
David

David, thanks for the comments and the tips re the video. You from the Gold Coast also?? Only kidding, as this place is full of Kiwis. I actually wonder sometimes, who is left in NZ. Must be the weather.

After receiving that hot tip on how to keep the text with the chart, I'll try and do another video and will attempt to look for a chart that isn't as pretty as that EUR/JPY example. I will be looking to give me a number of losses in a row and see if the system digs itself out of the poo.

Cheers. Jim

PS I notice I am back in Trading Systems. Getting dizzy!

Can you post a template please sir?

Martingale, never works, move on, like EVER EVER and Fib numbers are made up nonesense with no well anything behind them, so not the solution.

irampagemc, I tried to upload the template but couldn't do so because it exceeded the upload limit of that file type. Just load the 2x custom indicators on your MT4 chart and leave the MACD Platinum as default if you have a black background like my video. With the QQE Adv, inputs are left at default (1,8,3), but on the colors tab change #0 to dodgerblue width 2 and #1 to orange width 2. And on the levels tab, should have a level 50 and make it white if you have a black background so it stands out. Pretty simple and it should look like my video or very close to it.

Turveyd, I wouldn't say martingale never works. There are ways around it by using certain money management rules and other trading rules. I'd probably agree that pure martingale where you just double up all the time, will eventually blow your account. You obviously also have a very strong opinion on Fibs (which you are entitled to) but the only reason I use them in this manner as it just gives me a simple way of increasing my position sizes that is easy to follow as everyone understands the sequence, that's all. My use of them has nothing to do with Fib levels etc.

Cheers. Jim

While I'm here I might as well start a bit of a forward demo test on this system, where I can post all of the trade calls. I will use Oanda MT4 and stick with 4hr charts only on the EUR/USD, GBP/USD, USD/CHF, AUD/USD, EUR/JPY and EUR/AUD. So 6x pairs and a fair bit of correlation there. I won't get to hooked up on the spread, but I will make note of it if I think it would have affected any particular trade. This is only a demo and there will be trades called after the fact, but if you set up your own Oanda platform with the indicators (which don't repaint) I have supplied, you will see exactly where trades are taken. No fudging here!

To get the ball rolling, I'll just enter all trades now at market even though none of them are based on a new signal. They are all in a clear trend except the AUD/USD as it has mixed signals for now, so I'll stay out. Currently 1155hrs Brisbane, Australia time on 10th January.

EUR Sell 1x at 1.3042
GBP Sell 1x at 1.6004
CHF Buy 1x at 0.9269
E/JPY Buy 1x at 114.91
E/AUD Sell 1x at 1.2421

Okay, now we wait. No stops in place and just have to check at the close of the current candle. Cheers. Jim

Okay, the Oanda 4hr charts just ticked over at 3pm local. The AUD/USD now has a blue dot on the MACD Plat and as the QQE is already long, might as well jump into a long with this pair also. Keep in mind, the actual signal was given 21x candles ago, so I have missed the recent move today. Not to worry as this is all about just showing how the system works.

AUD Buy 1x at 1.0548

All other trades remain as is for now. Back in 4hrs if I am still at home. Cheers. Jim

Jim,

I'm a kiwi born and bred; have lived in Hamilton since my folks moved us here back in 1972. However, my mother's ancestors come from Adelaide; her grandfather William Henry Gray was one of the first settlers there.

I've knocked up a quick indicator for you. Assuming I understood your video correctly, the indy will plot arrows on your price chart when the combination of both QQE and MACD changes polarity, thereby giving you your buy and sell signals. Hopefully this will save you some time, especially if you want to do some visual backtesting. It doesn't take your MM into account, however.

The indicator will work if you simply copy the .ex4 file into your ..../experts/indicators folder. However, if you copy the .mq4 file there also, then you must also copy the two .mqh files here into your ..../experts/include folder, for the .mq4 to compile correctly.

Cheers,
David

Hey David,

Thanks for the indicator. I'll check it out over the next few hours. Much appreciated.

Thanks for the history lesson on Adelaide. Only ever been there once as it is sort of the forgotten city of Australia. When I use to live up in the NT, got a lot of people from SA up there. I think they got on the Stuart Hwy and forgot to turn off! Prime real estate your family owned also. Would be worth a few dollars nowadays. Cheers. Jim

David, that indicator worked a treat. It is spot on and makes life a lot easier. As I have a few live accounts with different brokers running on a VPS that always seems to be on the limit of my allocated memory, I can add your indicator and take the other two indicators off completely. Normally I like to see where the entry was, but the arrows will do fine.

Not sure if you are familiar with Forex Rebellion, but the QQE Adv is one of their main indicators that is used with a group of other indicators, where they all have to be in sync with each other before a trade is taken. They are way more conservative than me, as they only take long trades if the QQE cross takes place below the 50 level, and then the blue line has to actually cross through the 50 level to be a confirmed signal. The opposite for a short. So you can see by my trading, I am way more aggressive. On my live accounts, I have my own EA that takes the trades for me, and it will add to the trade when the 50 level is broken. There is also an option to add further if the blue line drops below/above the 50 level and then goes back to the other side etc. But I digress.

Hopefully I'll get another video up tonight (where I will use this new indi) which will give some better examples of when things go pear shaped. Cheers. Jim

PS Trade update from the top of the 4hr charts at 7pm local. Nothing has changed. Exciting isn't it???

Trade update as just ticked over 11pm local.

EUR now long 1x at 1.3111. There was a loss of -69 on the previous short that I got in late. Target for break even is 1.3180
GBP now long 1x at 1.6048. There was a loss of -44 on the previous short that I got in late. Target for break even is 1.6092
CHF now short 1x at 0.9222. There was a loss of -47 on the previous long that I got in late. Target for break even is 0.9175

The other three trades remain as is for now. Keep in mind if any of the above trades hit their target, then they are immediately closed and another trade at the same price for 1x lot is opened in the same direction. Seems pointless I know, but it just keeps things consistent if there were more than 1x lot open on these trades.

I won't be awake for the next two 4hr closes, but the charts will tell me exactly what would have happened anyway, so they will be reported after the fact.

Cheers. Jim

While I am siting here watching a movie, the EUR has hit the target at 1.3180, so that now closes out the sequence at break even. Now long 1x at 1.3180. Nil stop and nil target. GBP also came withing about 2 pips, but not to be as yet. Cheers. Jim

Trade update.

The GBP and CHF have also both hit their break even targets, so both sequences now closed at break even.

GBP now long 1x at 1.6092
CHF now short 1x at 0.9175

Neither trade has a stop or profit target in place. All other trades remain as is for now. Cheers. Jim