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Higher low, lower high system

  • #6,821
  • Nov 15, 2013 11:43pm Nov 15, 2013 11:43pm
OK that's looking better.
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  • #6,822
  • Nov 15, 2013 11:44pm Nov 15, 2013 11:44pm
Ooops the arrows are the 3 bar reversals as per post 1. They are placed to the right of the candle generating the signal.
  • #6,823
  • Nov 15, 2013 11:54pm Nov 15, 2013 11:54pm
And perhaps more manageable still.
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  • #6,824
  • Nov 15, 2013 11:57pm Nov 15, 2013 11:57pm
Making sense of our fave pair at the moment.
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  • #6,825
  • Nov 16, 2013 12:04am Nov 16, 2013 12:04am
First filter.
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Click to Enlarge Name: euraudh1.png Size: 36 KB
  • #6,826
  • Nov 16, 2013 12:09am Nov 16, 2013 12:09am
Same filters would give 2 winners, 2 losers on this day. If we applied our normal no Fri morning trades then 2 winners 1 loser.

Anyway we'll see where the experiment goes.
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Click to Enlarge Name: euraudh1.png Size: 34 KB
  • #6,827
  • Nov 16, 2013 12:41am Nov 16, 2013 12:41am
Now I hate to cherry pick but longer readers of the thread will be aware of the kind of D analysis we do.

EURAUD D chart. We have a proven support level in Oct in the area say 1.4140. 7 Oct a massive doji and then the positive close as highlighted on 8th that has the RSI cross and a close above the 8lwma. This was the 4th day we couldn't go lower at the support level which fits into the D turns take 3-7 days idea.

The first trades are the best trades so these 2 trades with filters all of a sudden show what the 3 bar reversal can do when applied at the right time i.e. once the D has shown its hand.
Attached Image(s) (click to enlarge)
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Click to Enlarge Name: euraudh1.png Size: 29 KB
  • #6,828
  • Nov 16, 2013 12:55am Nov 16, 2013 12:55am
Whilst Mrs V did get a sell near 1.4501 due to the resistance level and the D candle that couldn't follow through higher but that wouldn't be covered in terms of this system if automated.

OK as highlighted the solid D negative closed evening star pattern, 3 bar reversal, RSI crossed lower and close below the 8lwma. Standard analysis we do every day. The system if automated as envisaged would have taken the following 3 trades. It would have missed the trade marked x a winner and saved the trade with the tick from a loser. It would have captured 3 winners out of 3.

Again the first trades after the D has shown its hand are the best trades.
Attached Image(s) (click to enlarge)
Click to Enlarge Name: eurauddaily.png Size: 36 KB
Click to Enlarge Name: euraudh1.png Size: 31 KB
  • #6,829
  • Nov 16, 2013 1:11am Nov 16, 2013 1:11am
On 22nd Oct we have a 6 day pattern that ended with a 3 bar reversal, RSI crossed up and we are above the 8lwma. The big lower wick on 23rd should cause major problems, we'll see.
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Click to Enlarge Name: eurauddaily.png Size: 36 KB
  • #6,830
  • Nov 16, 2013 1:18am Nov 16, 2013 1:18am
Quoting Vantage
On 22nd Oct we have a 6 day pattern that ended with a 3 bar reversal, RSI crossed up and we are above the 8lwma. The big lower wick on 23rd should cause major problems, we'll see. {image}
There would have been a losing sell right there at the lows on 23rd but those kind of over sized blow out candles can easily be avoided by limited stop size. So far so good, we'll see how the last trade on 25th fares.
Attached Image (click to enlarge)
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  • #6,831
  • Nov 16, 2013 1:32am Nov 16, 2013 1:32am
Quoting Vantage
{quote} There would have been a losing sell right there at the lows on 23rd but those kind of over sized blow out candles can easily be avoided by limited stop size. So far so good, we'll see how the last trade on 25th fares. {image}
Depending on trade management used there would be 2 losing trades in this sequence. Potentially still trades running from 23rd and 24th and of course still a few trades in this sequence. You'd have to decide where to stop buying with an identified resistance level approaching at 1.4500.

Anyway there is great potential to build an EA around the 3 bar reversal with some basic filters and of course a little intervention when to switch the thing off when approaching key SR levels.

I will still do some research but so far looking good.
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  • #6,832
  • Nov 18, 2013 2:26am Nov 18, 2013 2:26am
'Morning, Mr & Mrs V,

Whilst I am totally for getting to as close to 100% methodical trading as possible, this is not the same as 100% mechanical, ie. an EA (in which I am no longer interested, having run thousands of hours of backtesting). Nevertheless, Mark Jurik once shared with me that he reckons for each additional strategy (EA in TradeStation parlance) input, you should add at least 100 trades to your backtest if you seek a robust parameter set.

In other words, if you are using all those chart indicators in the construction of your EA - I count 7 - then you need at least a 700 trade backtest.

Please ignore this post if not relevant to you

Health is wealth.

J.
  • #6,833
  • Nov 18, 2013 2:31am Nov 18, 2013 2:31am
... but having just posted the above, I should add that I am looking at an automated long-term approach for investment - not trading - purposes.

Here's a Weekly gold chart with a very simple ATR channel :
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  • #6,834
  • Nov 18, 2013 3:33am Nov 18, 2013 3:33am
Quoting jtrade
'Morning, Mr & Mrs V, Whilst I am totally for getting to as close to 100% methodical trading as possible, this is not the same as 100% mechanical, ie. an EA (in which I am no longer interested, having run thousands of hours of backtesting). Nevertheless, Mark Jurik once shared with me that he reckons for each additional strategy (EA in TradeStation parlance) input, you should add at least 100 trades to your backtest if you seek a robust parameter set. In other words, if you are using all those chart indicators in the construction of your EA - I...

Hi jtrade

I have done my normal check 20 days in uptrend, 20 days downtrend and 20 days sideways market and it looks promising indeed.
  • #6,835
  • Nov 18, 2013 6:00am Nov 18, 2013 6:00am
If anyone wants to take a crack at a massive coding job have a look here for the requirements
http://www.forexfactory.com/showthre...36#post7096536
  • #6,836
  • Edited 3:53am Nov 26, 2013 2:39am | Edited 3:53am
The uptrend on euraud is clear. Yesterday D closed a shooting star. No sign of a cross of D 8lwma lower (which would never have happened given the strength of the move last week, price moving strongly away from the lwma) or RSI cross lower. No 3-7 day reversal pattern. So whilst we could have fallen further today after the shooting star viewed this as a pause in uptrend. 1hr opened the day with a big lower wick and the lows held for 9 hours. 1hr 3 bar reversal positive close back into uptrend, bought 1.4749.

Target can be anywhere from area 1.4900 to the highs of the Aug upper wicks.

As usual will post charts if we progress higher.
  • #6,837
  • Nov 26, 2013 3:39am Nov 26, 2013 3:39am
Quoting Vantage
The uptrend on euraud is clear. Yesterday D closed a shooting star. No sign of a cross of D 8lwma lower (which would never have happened given the strength of the move last week, price moving strongly away from the lwma) or RSI cross lower. No 3-7 day reversal pattern. So whilst we could have fallen further viewed this as a pause in uptrend. 1hr opened the day with a big lower wick and the lows held for 9 hours. 1hr 3 bar reversal positive close back into uptrend, bought 1.4749. Target can be anywhere from area 1.4900 to the highs of the Aug upper...
We have moved up quite strongly, currently 1.4813. Yesterdays high is 1.4842, potentially a big hurdle to be crossed.
  • #6,838
  • Nov 26, 2013 5:29am Nov 26, 2013 5:29am
Quoting Vantage
{quote} We have moved up quite strongly, currently 1.4813. Yesterdays high is 1.4842, potentially a big hurdle to be crossed.
Bought euraud 1.4749, heading to Y's high currently 1.4842. Hopefully the plan will follow through and we move up convincingly!!
  • #6,839
  • Edited 6:55am Nov 26, 2013 6:43am | Edited 6:55am
Quoting Vantage
If anyone wants to take a crack at a massive coding job have a look here for the requirements http://www.forexfactory.com/showthre...36#post7096536
Now that a few pairs have returned to trend here's a few charts with trades highlighted in terms of the proposed rules.

Most importantly see the first trade (always the best trade) after the D has set up.
Attached Image(s) (click to enlarge)
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Click to Enlarge Name: eurjpyh1.png Size: 38 KB
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  • #6,840
  • Nov 26, 2013 6:54am Nov 26, 2013 6:54am
Quoting Vantage
{quote} Bought euraud 1.4749, heading to Y's high currently 1.4842. Hopefully the plan will follow through and we move up convincingly!!
Sitting at +110 1.4861 and moving stop.
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