My current strategy - request for your thoughts

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Old Apr 18, 2014, 12:29am   #1
Joined Jul 2010
My current strategy - request for your thoughts

I'd like some thoughts on my system please if you can humour a noobie

Using the 10 min and 5 min charts on the FTSE/DOW (DOW needs more testing and control over leverage)

Look out for a combination of:

Engulfing candle of min 5 points on FTSE and 10 points on DOW
MACD about to cross over
RSI around 60 or 20 region and turning in direction of trade
Stochastic around 70 or 30 and turning in direction of trade

Enter on break of engulfing candle (within 2 candles)
Stop 3 points above engulfing candle (5 on DOW)
Target - length of engulfing candle or if in direction of overall hourly trend or bouncing off a resistance/ support area let it run and move stop to b/e after bar length
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Old Apr 20, 2014, 2:07am   #2
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Have you considered trading price and time?

I can't make the MACD, RSI, or Stochastics backtrade with any consistency. Perhaps someone has advice for these indicators?
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Old Apr 20, 2014, 2:21am   #3
Joined Oct 2008
Quote:
Originally Posted by inzimam View Post
I'd like some thoughts on my system please if you can humour a noobie

Using the 10 min and 5 min charts on the FTSE/DOW (DOW needs more testing and control over leverage)

Look out for a combination of:

Engulfing candle of min 5 points on FTSE and 10 points on DOW
MACD about to cross over
RSI around 60 or 20 region and turning in direction of trade
Stochastic around 70 or 30 and turning in direction of trade

Enter on break of engulfing candle (within 2 candles)
Stop 3 points above engulfing candle (5 on DOW)
Target - length of engulfing candle or if in direction of overall hourly trend or bouncing off a resistance/ support area let it run and move stop to b/e after bar length
Didn't bother reading your system. - If you are asking, then answer is no. When you are ready and you have back tested your system then the answer is possibly yes.

Last edited by Jason101; Apr 20, 2014 at 2:25am.
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Old Apr 22, 2014, 12:05pm   #4
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inzimam started this thread
Quote:
Originally Posted by Jason101 View Post
Didn't bother reading your system. - If you are asking, then answer is no. When you are ready and you have back tested your system then the answer is possibly yes.
Thanks Jason for your constructive feedback.
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Old Apr 28, 2014, 3:13am   #5
 
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As Jason101 indicated, there is no way anyone can comment on how well a trading system may perform without backtesting it.

Even so, my inclination is to say that your system won't be profitable. I have tested hundreds (if not thousands) of systems, and developed a number of profitable ones, and using a simple combination of textbook indicators (RSI, stochastic K, etc.) in the traditional way, rarely (if ever) works on the US stock exchanges or the LSE anymore. The short-term timeframes that you mention pose additional challenges as well, as market data at them is quite noisy.
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Old May 2, 2014, 9:16am   #6
 
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Are you really are looking at 5M TF for an Engulfing ?
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Old Jul 22, 2014, 12:28am   #7
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inzimam started this thread Yes 5m for engulfing candle, happens very often but I only takes the trade if other factors are aligned.
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Old Jul 22, 2014, 12:34am   #8
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inzimam started this thread So far 66%success rate
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Old Jul 22, 2014, 3:17am   #9
 
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So far 66%success rate
How many trades total?
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Old Jul 22, 2014, 3:23am   #10
Joined Jul 2010
inzimam started this thread Average is 8 trades a day since my original post. Losses are bigger than wins tho which I'm working on cutting, but overall profits so far. It's a work in progress. I will post full stats later in the year
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Old Jul 24, 2014, 1:23am   #11
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Originally Posted by inzimam View Post
Yes 5m for engulfing candle, happens very often but I only takes the trade if other factors are aligned.
Hi, inzimam,

Thx for posting your ideas. As Jason and the others here have posted, ideas are only the starting "vibrations/energies" for a new trader to launch into his/her research.

Ideas stem from curiosity - couple it with some learning/studying/knowledge - and then mold it to your time frame(s).

Since you indicated M5 for engulfing pattern setups - then you must already have some internal "bias" for this criteria. So move forward and take action and create your own trading reality:

1. Define your ideal chart setup criteria on M5 - and start only with LONG trading setups. No need for SHORT setups until you find out if the LONG side is profitable or not.
2. Define Entry price point, Stop-Loss Proven Wrong point. You seem to already have a Target point selected.
3. Then consider a base "bet" like $1 or $100 for testing R&D purposes.

Since M5 is such a small time-frame approach - be sure to generate more test data points. Some ideas you will need to use to test M5 time-frames:

4. Test if morning setups (like first 90 mins) is different vs end-of-day setups (last 60 days).
5. Test if Mon vs Tues vs day of wk makes a difference (news events, earnings).
6. Test if LONG M5 setups have different outcomes vs Up and Down Trends in higher time-frames (like vs H1 or H4 or Daily time-frames).
7. Test if LONG M5 setups perform differently at Key price levels (like at mov avgs, at lower bands [Bollinger, Keltner], at Oversold levels [stochs, RSI, macd]), at Support levels off H1 or D1, or Fib Support levels, etc.

In other words - since you already have curiosity and bias towards using the M5 engulfing pattern - then have fun and be very creative. Really look to isolate as many different scenarios that bullish M5 engulfing patterns can "intersect" in random price action.

The more M5 engulfing LONG setup "environments" you can isolate - then the more robust your results will be in the R&D phase. Try to select out at least 15-30 trading setups PER long M5 engulfing setup vs its numerous scenarios.

I know this is "hard work" - but really - you must believe and have the self confidence that you deserve only the very best R&D results: robust, with enough data points per scenario, etc.

If you find early on that the results are not encouraging - then you will reach the critical point of pushing your creativity even further. It is human nature to "change" the trading rules/criteria if you find results unfavorable. TRY very hard not to do this - keep same rules, scenarios, criteria, for at least 10-15 trading setups.

Good luck - I know it is very hard to "start" to overcome inertia of R&D backtesting! But easier if you put all of your creativity and excitement into the effort - to know that you are on your way to create your own "profit machine".

Don't hesitate to ask here in T2W on the backtesting process - it needs to be done correctly like in all of the "CSI" tv shows out there! Experienced T2W traders can help give guidance to avoid R&D traps/errors/unseen critical biases. Track down books on systems development and backtesting (Tharp, Deel, Stendahl, Schwaeger, Simons).

Regards,

WklyOptions
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Old Jul 24, 2014, 6:36pm   #12
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inzimam started this thread Thank you very much for such a comprehensive list of advice. It is much appreciated.
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Old Jul 14, 2017, 7:33pm   #13
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Quote:
Originally Posted by inzimam View Post
I'd like some thoughts on my system please if you can humour a noobie

Using the 10 min and 5 min charts on the FTSE/DOW (DOW needs more testing and control over leverage)

Look out for a combination of:

Engulfing candle of min 5 points on FTSE and 10 points on DOW
MACD about to cross over
RSI around 60 or 20 region and turning in direction of trade
Stochastic around 70 or 30 and turning in direction of trade

Enter on break of engulfing candle (within 2 candles)
Stop 3 points above engulfing candle (5 on DOW)
Target - length of engulfing candle or if in direction of overall hourly trend or bouncing off a resistance/ support area let it run and move stop to b/e after bar length

THIS IS HOW I TRADE

http://www.trade2win.com/boards/educ...-hit-rate.html

http://www.trade2win.com/boards/indi...asdaq-s-p.html
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Old Jul 14, 2017, 7:59pm   #14
 
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inzimam didn't ask how you trade, did he? No-one really wants to know about your trades or, if they do, they can find your Ladybird threads on their own.
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Old Jul 14, 2017, 8:09pm   #15
Joined Apr 2017
Quote:
Originally Posted by inzimam View Post
I'd like some thoughts on my system please if you can humour a noobie

Using the 10 min and 5 min charts on the FTSE/DOW (DOW needs more testing and control over leverage)

Look out for a combination of:

Engulfing candle of min 5 points on FTSE and 10 points on DOW
MACD about to cross over
RSI around 60 or 20 region and turning in direction of trade
Stochastic around 70 or 30 and turning in direction of trade

Enter on break of engulfing candle (within 2 candles)
Stop 3 points above engulfing candle (5 on DOW)
Target - length of engulfing candle or if in direction of overall hourly trend or bouncing off a resistance/ support area let it run and move stop to b/e after bar length
Need further details of settings time frames before I can say anything.
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