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  • #461
  • Feb 4, 2013 12:19pm Feb 4, 2013 12:19pm
Quoting Psychofant
SP,

2ii2c and I, Psychofant , wanted to vouch for you. We learned one must have four vouches for himself before one can vouch for another.
Sorry we can't give you the recognition you deserve.

Also, I noticed several new folks on the thread. That is another form of recognition.
Thank you for the thought.
  • #462
  • Feb 4, 2013 12:36pm Feb 4, 2013 12:36pm
Quoting square1
I have searched here and there and i have failed to get a way to correct this. Any help?
Some brokers will allow you to customize your timezone but if not you may just have to make the compensation yourself. If you want to key all your trading off London just set the times in your mind that you want to begin trading. Draw a vertical line on your chart if you need it for a reference. Just don't forget to adjust when London goes to British Summer Time in the spring.
  • #463
  • Feb 4, 2013 12:40pm Feb 4, 2013 12:40pm
To FFJeternal:

FFJ wrote:
To Psychofant, I would LOVE to see the results of your continued testing. My eyes bugged out at your last testing, and I hope you are willing to share the ATR-based results.

I appreciate your interest in the studies. I don't expect to test the ATR stop loss placement. SP was emphatic about the very discretionary nature of his trades. He also spoke correctly about the difficulty in identifying all discretionary elements and then coding them.

I think understanding the concept he is using is the most important thing. SP likes ATR as a reasonably accurate measure of near term volatility. He uses that as part of his stop loss placement decision. He will soon post about stop losses so that's enough out of me.

FFJ wrote:
I just wanted to make sure that my interest in seeing the results in no way takes away....

SP's great response in post 431 addresses all aspects of your comment. I particularly liked his comments about a clean chart with your own objective observations. I also believe understanding the market mechanics that cause a pattern to print is very important. It's like looking behind the curtain.
Remember, after SP made such observations and thought it through, he did the ultimate walk forward test....Trading real money in real time.

FFJ wrote:
Edit 2 (SOLVED): Discovered here: http://www.forexfactory.com/showthread.php?t=66047 --> Make sure you are pulling from

VERY COOL!!! That is the attitude that will get you much farther ahead. You had a question and YOU found the answer. IMO, first trying to find the answer yourself is that self-reliance that every trader needs. Of course, if that fails then go to your mentor.

********************************
I probably won't post any more tests and equity curves. I will pick one or two of the SP's significant levels and post the probability of hits. That is sufficient. With that knowledge you can decide if you want to create your own entry, exit, SL and TP to trade that level.

Hope I didn't talk too much SP. Best regards to everyone.
  • #464
  • Feb 4, 2013 12:53pm Feb 4, 2013 12:53pm
Quoting Psychofant
To FFJeternal:

FFJ wrote:
To Psychofant, I would LOVE to see the results of your continued testing. My eyes bugged out at your last testing, and I hope you are willing to share the ATR-based results.

I appreciate your interest in the studies. I don't expect to test the ATR stop loss placement. SP was emphatic about the very discretionary nature of his trades. He also spoke correctly about the difficulty in identifying all discretionary elements and then coding them.

I think understanding the concept he is...
My sincere thanks for your thorough response. I am listening.
  • #465
  • Feb 4, 2013 1:12pm Feb 4, 2013 1:12pm
Quoting Seneca pilot
In the case of today though the weekly open and the daily open are one in the same, whatever that time is for you.
Ok..that somehow confused me too. So...every "Monday's open price" should be the "Week's open price" level. Right?
  • #466
  • Feb 4, 2013 1:25pm Feb 4, 2013 1:25pm
Quoting square1
Ok..that somehow confused me too. So...every "Monday's open price" should be the "Week's open price" level. Right?
That is how I interpreted SP's response when he stated his weekly open is set at 0500 GMT.
  • #467
  • Feb 4, 2013 1:36pm Feb 4, 2013 1:36pm
Quoting FFJeternal
That is how I interpreted SP's response when he stated his weekly open is set at 0500 GMT.
i guess you were right.
  • #468
  • Feb 4, 2013 1:51pm Feb 4, 2013 1:51pm
There is a theory that moving averages should have a correlation to the trading activity you are averaging. In simpler words you should make your moving average a multiple of the time frame on which you are using the average. For example, fifteen minute chart four period MA = 1hr 48 period MA = 12hr, 96 period MA = 24hr, etc. The theory goes that you would want to average the last hour against the last twelve to determine the short term trend. Maybe you would want to average the last twelve hours against the last five days to determine the intermediate trend. Perhaps you would want to average the last week against the monthly average to determine the long term trend. As you know I don't use moving averages in my trading, however this struck me as logical. Why would I want to use a combination of moving averages like 9 and 21 on a fifteen minute chart. Doesn't it make more sense to use a combination like 4 and 16 which tell me the average of the last hour in relation to the last four hours.

I decided to take this concept and apply it to stops. Why would I want some arbitrary number like 20 pips for a stop. I thought there had to be a logical more reasoned approach to stop placement. I have data which is currently packed for our move so I won't post numbers, maybe someone can post up the exact percentages. As price moves farther away from a specific start point the odds of it continuing the move increase. At something over twenty percent of the daily range the odds of the price continuing to travel in the direction of the breakout from the open price increases substantially. Obviously the closer we get to the Average true range during the day the less the likelyhood of the price retracing back to that open. This is the reason I have selected to use twenty percent of the ATR on EURUSD. Some of the more volatile pairs may need a little more but I don't go over twenty five percent.

Obviously as we increase the stop distance we reduce the number of losing trades. Our winning trades however must grow proportionally in order to maintain a good risk to reward ratio. A stop of twenty percent of the ATR gives us plenty of room to get a decent RR without having to meet or exceed the ATR to reach the take profit. Also we don't want the stop to be so wide as to make it impossible to get a retracement to our trade level to reenter with the sentiment for the day. I wanted to go one step further though as one really large range day can throw off the ATR. I only want the last week's trading so I only use a five period ATR. I decided to smooth the ATR a little by averaging the values with a five period MA. This serves to smooth the daily variations in ATR a bit and gives a good middle ground number.

Ok great you say, but I am not a day trader. What do I do if I am trading off four hour charts and using the weekly highs and lows? Well here is what I use. I go to a four period ATR and apply it to a weekly chart. I then smooth it with a four period MA. Why not five? Four weeks in a month. If I were trading monthly highs and lows I would go to a twelve period ATR. Twelve months in a year.

Is this perfect? Probably not. Is there a better method? I'm sure. This is just the best stop I could come up with using the data available to me. This is the reasoning behind the stops that I post each day. This is why I have stops like seventeen pips, or fourteen pips, etc. The only way you will see me using a nice round number is when the stop before spread is eighteen.(I use two pips for the spread to account for wider spreads during certain times)

So there it is my simple complication of stops.
  • #469
  • Feb 4, 2013 1:57pm Feb 4, 2013 1:57pm
I am watching Top Gear on TV curently. Those of you who live on that side of the pond are lucky to have such good programs. Top Gear might be the best show on television. New essay soon. I hope the description of my stop placement is more clear now.

New essay soon.
  • #470
  • Feb 4, 2013 2:25pm Feb 4, 2013 2:25pm
Quoting Seneca pilot
I am watching Top Gear on TV curently. Those of you who live on that side of the pond are lucky to have such good programs. Top Gear might be the best show on television. New essay soon. I hope the description of my stop placement is more clear now.

New essay soon.
Absolutely, 100% agree on ATR-based stops (and targets). A gem I learned just over a year ago now that, as you clearly stated, allows someone to place stops and targets based on an ever-changing market.

Looking forward to the next essay.
  • #471
  • Feb 4, 2013 3:37pm Feb 4, 2013 3:37pm
SP, hope your boy is doing well. Funny you should mention Top Gear, I've found reruns on everyday for a week after getting in from work. Certainly brightens up a dull January afternoon.

I have a question about those latest lines - is there an indicator to place them on a chart automatically? Looks like it, as every line is titled. I would say placing them manually will give the trader a clearer idea of what's been going on but auto is so much quicker. On that bombshell.
  • #472
  • Feb 4, 2013 4:00pm Feb 4, 2013 4:00pm
A bit more on numbers and stats:

SP mentioned his observations that certain CTODs (Critical Time of Day) often correlate to certain price moves. I used the range made over the specified CTOD (a start time and an end time) to determine if certain times frequently yield certain results.

***I arbitrarily made up the CTOD windows and the desired ranges. The data are NY time.***

EurJpy most frequently makes an hourly range of 20 pips each clock hour between 2AM and Noon 85% of the time.
This info might be useful for a scalper whose goal is to snag 5 or 10 pips and then quit trading to do something else. He now knows he can join the market anytime within this 10 hour window and have many opportunities to make his goal.

If he is looking for a 40 pip opportunity within an hour the window and probabilities shrink a lot. He is asking the market to do something it rarely does. Here is the proof: Each hour between 8 and 11AM has a max prob of making a 40 pip range only 33% of the time. The other 21 hours drop into the 20s and most are 4% to 15%. He know his 40 pip goal within a hour is not realistic.

He now realizes to increase his chances to make more pips he will have to spend more time with the market. A 40 pip goal is important to him and learns that there is a 25% change he can snag 40 during each 3 hour window between 2AM and 2PM.
There are four 3 hr. windows between 2am & 2pm.

Now he remembers the additive rule for mutually exclusive probabilities. The odds of 20 pips per hour are 33% during each hour of a 10 hour window. If he can spend one additional hour his odds to snag 20 pips increase to 66%. He decides two hours with 66% odds to make 20 pips are better than three hours with a 25% to make 40 pips.

I'll soon finish this topic with my last study of the odds of hitting SP's Last Week's High or Low on any given day.
  • #473
  • Feb 4, 2013 5:39pm Feb 4, 2013 5:39pm
Last numbers & stats:

EurUsd, 10yrs of daily data, NY time:

On any given day there is a 33% chance the market will touch last week's high or last week's low.
There is the additive rule but filtering for periods of volatility or trending, versus sideways/consolidating greatly skews the stats.
That's where the pesky discretionary thing can really help.
  • #474
  • Feb 4, 2013 5:45pm Feb 4, 2013 5:45pm
Quoting stevexyg
SP, hope your boy is doing well. Funny you should mention Top Gear, I've found reruns on everyday for a week after getting in from work. Certainly brightens up a dull January afternoon.

I have a question about those latest lines - is there an indicator to place them on a chart automatically? Looks like it, as every line is titled. I would say placing them manually will give the trader a clearer idea of what's been going on but auto is so much quicker. On that bombshell.
I don't label mine although I do color code so that I know what they are at a glance. I think the labeled lines were a creation of Square 1. Not a problem to make them appear automatically if you know you want to trade them automatically. Also have to remember to change them when the time changes in thee spring and fall.
  • #475
  • Feb 4, 2013 6:31pm Feb 4, 2013 6:31pm
Quoting Psychofant
A bit more on numbers and stats:

SP mentioned his observations that certain CTODs (Critical Time of Day) often correlate to certain price moves. I used the range made over the specified CTOD (a start time and an end time) to determine if certain times frequently yield certain results.

***I arbitrarily made up the CTOD windows and the desired ranges. The data are NY time.***

EurJpy most frequently makes an hourly range of 20 pips each clock hour between 2AM and Noon 85% of the time.
This info might be useful for a scalper whose goal...
This is certainly important for someone to remember if they are a scalper. You really have to trade at the correct times. I don't trade for five or six pips at a time. If I did I would take the hourly ATR and devise a stop with that in mind. It generally takes about two to five hours for my trades to hit their TP. As my TP is usually around 35 to 50 pips that falls in line with your data.

Now I will not make the specifics public but if you look inside that data, break up those hours a little and look at which hours are most important in terms of news, options activity, and market opens and closes you can begin to work out some patterns in support and resistance that are extremely consistent. I am talking trading with 80+% accuracy. The patterns are there for the initiated to find.
  • #476
  • Feb 4, 2013 6:34pm Feb 4, 2013 6:34pm
Quoting stevexyg
SP, hope your boy is doing well. Funny you should mention Top Gear, I've found reruns on everyday for a week after getting in from work. Certainly brightens up a dull January afternoon.

I have a question about those latest lines - is there an indicator to place them on a chart automatically? Looks like it, as every line is titled. I would say placing them manually will give the trader a clearer idea of what's been going on but auto is so much quicker. On that bombshell.
Boys are both great. Declan has a stiff neck so we are seeing a physical therapist weekly. Colin has a new tooth. Life is good.

BBC America has a Top Gear marathon every Monday. I love that show.
  • #477
  • Feb 4, 2013 7:20pm Feb 4, 2013 7:20pm
Quoting Seneca pilot
This is certainly important for someone to remember if they are a scalper. You really have to trade at the correct times. I don't trade for five or six pips at a time. If I did I would take the hourly ATR and devise a stop with that in mind. It generally takes about two to five hours for my trades to hit their TP. As my TP is usually around 35 to 50 pips that falls in line with your data.

Now I will not make the specifics public but if you look inside that data, break up those hours a little and look at which hours are most important in terms...
SP and Psychofant, thank you both for your help and input.

EURJPY moves *fast*!
  • #478
  • Feb 5, 2013 2:53am Feb 5, 2013 2:53am
I am a utter moron with computers,so,I couldn't work out how to post your previous post about trading for a living /what's your job?
But thank you for your response, ie, "I tell others little,they don't need to know etc."

Keep up the good work-you/your thread is cool.
  • #479
  • Edited 11:55am Feb 5, 2013 10:51am | Edited 11:55am
SP. I have realised that your method of fading highs/lows and using the daily open works well. Its also good to watch when you use the 15 mn Chart for the first entry and higher time-frames for subsequent entries. Today ive made +100 pips.
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  • #480
  • Feb 5, 2013 11:00am Feb 5, 2013 11:00am
Quoting square1
SP. I have realised that your method of fading highs/lows and using the daily open works well. Its also good to watch when you use the 15 mn Chart for the first entry and higher time-frames for subsequent entries. Today ive made +100 pips.
Nice trading.
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