Hi!
diallist and vegas have already pointed out that using the neutral line for entry yields more pips.
i've got some more ideas regarding exits and stops that might also help enhancing the strategy for more conservative trading.
the idea is that less (risky) trades and less losses make up a lot more pips than missed chances at more risky trade situations and missed profit.
(first bait: i got a result that was 100% more pips than the original mechanical trade result for january, will attach the trading log here)
another idea for a rule addition would be to take profit if price falls short of the second 233 fibo line by 10-30 pips and then begins to return back. at about 35% of this price difference (i.e. 35% of 88 pips = 30 pips roughly, i chose 35% as it's under the 38.2% for a 61.8% retracement flexibility to reach the outer fib after all...)...
this is of course discretionary and just an idea so far, still backtesting to see whether its more helpfull or detrimental...it's essentially the same as trailing a stop 30-40 pips away after having taken the first profit fib i guess...but i don't have trailing stops
the idea would be to prevent missing pips by waiting for a slope change to signal an exit without allowing us to take profit first(i see that happen quite a bit during the dangerous, low momentum weeks) >>> should boost
profit a bit perhaps?
another idea is moving up stops to breakeven and also after passing the first take profit level moving the stop to the first fibo line of the TIME OF OPENING THE TRADE. this locks in profit and avoids losses.
why at the time of the opening? because it seems even though price does touch the first fibo a lot of times on a retrace, it doesnt do so down to the TIME OF THE OPENING OF THE TRADE unless it is turning down all the way
in a change of momentum anyway, which would close the position for even more lost profit anyway.
at least that's what i saw, still checking whether there are too many exceptions to this or not.
these ideas are for a profit oriented conservative strategy which dreads loss. you COULD miss out on profits, maybe even a lot.
an ultra-conservative idea would be to eliminate the "free trade" and closing two thirds at the second fibo (with the lowest fibo price in the last 3 days rule) this again might boost profits....backtest and let me know, i am currently stepping through january 2006, a very undecided and difficult month, trying to check more months as time permits.
another conservative filter would be NOT to take ANY trades outside of the 233 fibo band, as the risk of it just exhausting and going against you are very high.
also we would filter out entries that are within 50 pips of the outermost fibo as they have nowhere to go and face the same exhaustion danger as the ones over the 233 band.
all of this reduces trades with a higher risk and total nr of trades taken, this should be a good thing. also do not forget vegas' idea of "Other: May not take off entire position at slight change in slope of 8 SMA on the 4 hour chart. Most likely scenario is to take partial profit, with stop based on technicals for remaining position."
this boils down to discretion in essence and if you can see the highs/lows made not exceed the current range of the last few candles, then one could place the stop at around a recent high/low with some tolerace accordingly(technicals, TDTL, fibs,s/r etc) and take partial profit on a mild slope change and not fully close like vegas suggests. it could just be a pause in the market during slow times before the actual trend resumes.
so to formulate the more mechanical rule additions and partially some a bit more discretionary:
Rule 1 : move up stop to breakeven after passing the first take profit level
OR
Rule 1(conservative ): move the stop to the first fibo line of the TIME OF OPENING THE TRADE (this could work against you!)
Rule 2(conservative, optional): if price is close to, but not at the second fibo (within ~ 30 pips) and then retreats back to the price of the (first fibo + 30 pips), then we close out either the second third or fully. (i would advise fully.)
Rule 3(conservative): never open a trade outside of the outermost (2nd / 233 distance)fibo!
Rule 4(conservative): make sure you have at LEAST 50 pips distance to the outermost fibo before even considering entering on a signal/slope change.
Additional note in that regard: if you are not far away from the first or second fibo (i.e. not between the 55SMA and first fibo with some distance) when you enter a trade, BE AWARE THAT THIS MIGHT HAVE INCREASED RISK! place stops accordingly, use technicals and don't waste too many pips
okay, i know this is a lot to read. i have attached a step by step trading log for january for a mechanical, no stops used just slope change vegas trade of january 2006 and then one for my conservative variation.
the differences are 407 pips profit roughly with 8 trades, 3 winners and 5 loser for the mechanical trading and 893 roughly with 5 trades, 4 winners and 1 loser for my conservative version.
please help me out if you have the time and try to step through january and see if i made some mistakes, i have already found and corrected one before. also try to check for other months, too, i will post any new logs i make to this thread, too.
i have assumed all of january to be an UPTREND by looking at the weekly 5SMA which turned up in december 2005 and continued going up till february.
I used metatrader 4 from metaquotes for the time and data so you can reproduce my results.
here is the attachment, have fun and cheers!
diallist and vegas have already pointed out that using the neutral line for entry yields more pips.
i've got some more ideas regarding exits and stops that might also help enhancing the strategy for more conservative trading.
the idea is that less (risky) trades and less losses make up a lot more pips than missed chances at more risky trade situations and missed profit.
(first bait: i got a result that was 100% more pips than the original mechanical trade result for january, will attach the trading log here)
another idea for a rule addition would be to take profit if price falls short of the second 233 fibo line by 10-30 pips and then begins to return back. at about 35% of this price difference (i.e. 35% of 88 pips = 30 pips roughly, i chose 35% as it's under the 38.2% for a 61.8% retracement flexibility to reach the outer fib after all...)...
this is of course discretionary and just an idea so far, still backtesting to see whether its more helpfull or detrimental...it's essentially the same as trailing a stop 30-40 pips away after having taken the first profit fib i guess...but i don't have trailing stops
the idea would be to prevent missing pips by waiting for a slope change to signal an exit without allowing us to take profit first(i see that happen quite a bit during the dangerous, low momentum weeks) >>> should boost
profit a bit perhaps?
another idea is moving up stops to breakeven and also after passing the first take profit level moving the stop to the first fibo line of the TIME OF OPENING THE TRADE. this locks in profit and avoids losses.
why at the time of the opening? because it seems even though price does touch the first fibo a lot of times on a retrace, it doesnt do so down to the TIME OF THE OPENING OF THE TRADE unless it is turning down all the way
in a change of momentum anyway, which would close the position for even more lost profit anyway.
at least that's what i saw, still checking whether there are too many exceptions to this or not.
these ideas are for a profit oriented conservative strategy which dreads loss. you COULD miss out on profits, maybe even a lot.
an ultra-conservative idea would be to eliminate the "free trade" and closing two thirds at the second fibo (with the lowest fibo price in the last 3 days rule) this again might boost profits....backtest and let me know, i am currently stepping through january 2006, a very undecided and difficult month, trying to check more months as time permits.
another conservative filter would be NOT to take ANY trades outside of the 233 fibo band, as the risk of it just exhausting and going against you are very high.
also we would filter out entries that are within 50 pips of the outermost fibo as they have nowhere to go and face the same exhaustion danger as the ones over the 233 band.
all of this reduces trades with a higher risk and total nr of trades taken, this should be a good thing. also do not forget vegas' idea of "Other: May not take off entire position at slight change in slope of 8 SMA on the 4 hour chart. Most likely scenario is to take partial profit, with stop based on technicals for remaining position."
this boils down to discretion in essence and if you can see the highs/lows made not exceed the current range of the last few candles, then one could place the stop at around a recent high/low with some tolerace accordingly(technicals, TDTL, fibs,s/r etc) and take partial profit on a mild slope change and not fully close like vegas suggests. it could just be a pause in the market during slow times before the actual trend resumes.
so to formulate the more mechanical rule additions and partially some a bit more discretionary:
Rule 1 : move up stop to breakeven after passing the first take profit level
OR
Rule 1(conservative ): move the stop to the first fibo line of the TIME OF OPENING THE TRADE (this could work against you!)
Rule 2(conservative, optional): if price is close to, but not at the second fibo (within ~ 30 pips) and then retreats back to the price of the (first fibo + 30 pips), then we close out either the second third or fully. (i would advise fully.)
Rule 3(conservative): never open a trade outside of the outermost (2nd / 233 distance)fibo!
Rule 4(conservative): make sure you have at LEAST 50 pips distance to the outermost fibo before even considering entering on a signal/slope change.
Additional note in that regard: if you are not far away from the first or second fibo (i.e. not between the 55SMA and first fibo with some distance) when you enter a trade, BE AWARE THAT THIS MIGHT HAVE INCREASED RISK! place stops accordingly, use technicals and don't waste too many pips
okay, i know this is a lot to read. i have attached a step by step trading log for january for a mechanical, no stops used just slope change vegas trade of january 2006 and then one for my conservative variation.
the differences are 407 pips profit roughly with 8 trades, 3 winners and 5 loser for the mechanical trading and 893 roughly with 5 trades, 4 winners and 1 loser for my conservative version.
please help me out if you have the time and try to step through january and see if i made some mistakes, i have already found and corrected one before. also try to check for other months, too, i will post any new logs i make to this thread, too.
i have assumed all of january to be an UPTREND by looking at the weekly 5SMA which turned up in december 2005 and continued going up till february.
I used metatrader 4 from metaquotes for the time and data so you can reproduce my results.
here is the attachment, have fun and cheers!
Trust price. Know yourself.
