Simple two bar system

Hi,

A very simpel system, is to go long when you have two green range bars ( R1 bars ), and go short when you have two red range bars. Take a profit when price has moved 1 tick, using 5 tick stop.

Combined with another system, setting limits on the SMA difference in the bollinger band, in such a way that if the band is too narrrow, you dont trade, and if the range is high + the band difference is expanding, this is a window to trade --> we have price action.

Take a profit when price has moved 1 tick, using 5 tick stop.

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Is this correct you have a 1 to 5 reward to risk ratio ? I presume if it is that the percent success rate must be in the high 90s


Paul

Trader333 said:

Is this correct you have a 1 to 5 reward to risk ratio ? I presume if it is that the percent success rate must be in the high 90s


Paul

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If used and set properly, the dif-bollingerband criteria gives a hitrate of 80-90%.

The 1 tick criteria is set to trigger a profit alert, if you traded manually or semi-auto, my experience is rather 2-3 ticks profit, since you use 1-2 secs to react. Its a profit taking - take your money and run.

If traded automated, I would set the criteria to 2-3 ticks, depending of the timeframe I trade.

There is usually quite a difference between theory and how it works in real life.

The tactics in this, is to find the moments where we have a high propability that price is moving in sufficient long "legs" to hit and run.

The two bars in a row is a good start on a "leg".

TickCOM said:

The tactics in this, is to find the moments where we have a high propability that price is moving in sufficient long "legs" to hit and run.

The two bars in a row is a good start on a "leg".

Click to expand...

Hi TickCOM

I have read your posts on this thread 2 times now, and i'm still none the wiser . Your instructions are very hard to understand and the chart you posted requires a magnifying glass.

JTrader said:

Hi TickCOM

I have read your posts on this thread 2 times now, and i'm still none the wiser . Your instructions are very hard to understand and the chart you posted requires a magnifying glass.

Click to expand...

Hi JTrader,

Here it is 1:1 , please let me know if there are questions.

Just want to add, that the bar-type in the chart is "Combined Bars" ,
an invention of mine. CB bars combines time and rangebars giving up to 50%
more descriptive bars - especially usefull for bollinger bands.

Does your system include buy/sell spread as well? Is the stoploss at 5 ticks with or without the spread?

Personally I think this system is a recipe for disaster.

Hoggums said:

Does your system include buy/sell spread as well? Is the stoploss at 5 ticks with or without the spread?

Personally I think this system is a recipe for disaster.

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Stop loss is calculated from your filled price compared with the bid or ask price ( the price you can get here and now ), spread is 1 tick. If larger than 1 tick we need to move up a higher timeframe. However, higher than a 1 tick spread on major futures is not acceptable.

The base of the above "hint" is to use the bollinger-dif to know when NOT to trade, and when there is a trend to trade. That will keep you clear of whipsaw trading. Isnt it nice to know if we are trading sideways or trending ;-)
Combining with the two bar principle is a powerfull combination.

You may not agree on stops and profit taking numbers, trading is not an exact science.
You may find your own "version" ( I hope, else we would all be trading the same systems ) or include the above in a trading strategy you allready use.

I think there are some issues which are important to address.

1) We can not expect developers to publish their systems/algorithms/strategies on the web. Would you publish a trading system which is profitable, which is the fundament of your living, and which you used months, or even years to develop ?

2) I dont believe in publishing finished systems ready to run, once all know about the system, it wont work any more. I believe one should be his own master, develop and use his own strategies/algorithms/systems - perhaps with 1-2 good trusted friends. Using forums to exchange idears, like trade2win - not public full ready to run strategies, since they dont excist ( or are rare ).

Suppose you do find a strategy, you are lucky its one which works in real live - today, and you are among the first ones to use it, and it works, and you buy a new house, a new car, trip to Hawai - and then one day, this profitable system seas beeing profitable since they all use it, actually its losing faster than a Grayhound can run. What do you do then - count on you can find another one .....

3) Apart from this, 99% of all systems are using one flat chart. To compete in the future we need at least two charts/timeframes, using the technical indicators across the multible timeframes.

If you are looking for a ready to run system anyway - check that its the latest generation using multible timeframes.

TickCOM said:

Hi,
Combined with another system, setting limits on the SMA difference in the bollinger band, in such a way that if the band is too narrrow, you dont trade, and if the range is high + the band difference is expanding, this is a window to trade --> we have price action.

Click to expand...

Sorry if this is a silly question, but I'm not familiar with Bollinger Knock out....

Am I correct if I conclude that the Bollinger knock-out at the chart is the volatility (width of bollingerbands) with a MA of this volatility?

What exactly is the criteria to make the line black or green? What is the ratio behind not trading when the line is black?

grtnx
Wilco

Silent.Trader said:

Sorry if this is a silly question, but I'm not familiar with Bollinger Knock out....

Am I correct if I conclude that the Bollinger knock-out at the chart is the volatility (width of bollingerbands) with a MA of this volatility?

What exactly is the criteria to make the line black or green? What is the ratio behind not trading when the line is black?

grtnx
Wilco

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Hi Silent,

Correct, the indicator is the difference between the upper and lower bollinger bands, measured in ticks. Formula (SMA1-SMA2)/ticksize.

Two more values have been added to the indicator, a upper and a lower limit, which could be 100 ticks and 30 ticks. When the indicator is below 30 ticks the indicator line is black meaning the volatility is too low to trade. When above the upper limit of 100 ticks we are overbaught/oversold, the indicator line is black. Above upper limit ( black ) and a negative slope could mean a correction. Below upper limit, above lower limit ( green ) and negative slope indicates sideways trading. Finally, green line and positive slope means we are in a uptrend with price action.

Upper and lower tick limits are set by the user.

TickCOM said:

Two more values have been added to the indicator, a upper and a lower limit, which could be 100 ticks and 30 ticks. When the indicator is below 30 ticks the indicator line is black meaning the volatility is too low to trade. When above the upper limit of 100 ticks we are overbaught/oversold, the indicator line is black. Above upper limit ( black ) and a negative slope could mean a correction. Below upper limit, above lower limit ( green ) and negative slope indicates sideways trading. Finally, green line and positive slope means we are in a uptrend with price action.

Upper and lower tick limits are set by the user.

Click to expand...

Thanks for the explanation! To me however the line color doesn't seem to change at the same level. Do I misunderstand the above or is it merely a glitch in the graph?

What is the motivation to choose 100 and 30 as cut off levels?

grtnx
Wilco

Silent.Trader said:

Thanks for the explanation! To me however the line color doesn't seem to change at the same level. Do I misunderstand the above or is it merely a glitch in the graph?

What is the motivation to choose 100 and 30 as cut off levels?

grtnx
Wilco

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Hi Wilco,

When you see that the lavels can differ one bar width, this is caused by the value was triggered between two bars. Cut off levels is up to you to set, 100 and 30 are default levels.

TickCOM said:

When you see that the lavels can differ one bar width, this is caused by the value was triggered between two bars. Cut off levels is up to you to set, 100 and 30 are default levels.

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I understood that the cut off levels can be choosen The way you explained it suggests to me they are choosen randomly. I find it hard to believe, I tend to say there should be a relationship between volatility and the cut off levels choosen. The 30 and 100 pips wouldn't fit an issue that moves on average only 10 pips a day or an issue that tends to move over 100 pips a day.

grtnx
Wilco

Silent.Trader said:

I understood that the cut off levels can be choosen The way you explained it suggests to me they are choosen randomly. I find it hard to believe, I tend to say there should be a relationship between volatility and the cut off levels choosen. The 30 and 100 pips wouldn't fit an issue that moves on average only 10 pips a day or an issue that tends to move over 100 pips a day.

grtnx
Wilco

Click to expand...

Cut off level depends on which timeframe you are in, on your trade strategy and what you are going to use the indicator for.

TickCOM said:

Hi JTrader,

Here it is 1:1 , please let me know if there are questions.

Just want to add, that the bar-type in the chart is "Combined Bars" ,
an invention of mine. CB bars combines time and rangebars giving up to 50%
more descriptive bars - especially usefull for bollinger bands.

Click to expand...

Hello Tick,

Is there any chance that you can explain in more detail how you define / calculate a "Combined Bar"

I use Bollinger Bands in one of my own strategies and hence my interest...

Many Thanks in advance,

Chorlton