The Three Keys

[Splitlink]

This idea of Elder's about the average of a price representing the true value of it begs some questions, although I thank you, Don, for expressing it.

A statistical population should not be less than 100, if I remember correctly, and the more the merrier, but you are using 5 bar averages. A price being overbought or oversold and staying at the high or low level for two or three bars would result in the average going to meet it, rather than the reverse, don't you think? Chartists are inclined to use short term averages beacause they have little choice, but that is not to say that they are all that reliable.

Nevertheless, your absence on the trading scene for such a long time, apart from your PC Plod activities, must mean that you have been doing some heavy work on your trading system and thought all that out.

Good trading and keep up the good work

Split

 

[Lightning McQueen]

Great thing to go live, but (hope you don't mind me asking), how much time have you spent testing or papertrading the three keys? I know you've been on the path of MA's since around 2006 I think it was, so you obviously put in some time and effort to study things. How much confidence do you have and have you set a threshold that identifies when you have to stop trading?

Another Q: have you applied the rules to a randomly picked time frame and instrument or are you sticking to the FTSE on hourly bars? (Not that there's anything from with that!)

Good luck!

The keys have not been tested, by that I mean I have not backtested to any large degree, yes I have looked at the historical data. this is going to be a forward test of the entry, trade management and exit still have to be worked on but as my theory and philosophy is based on the correct entry the rest will neatly fall in to place I don't foresee too many issues. other than the MA bands may need playing with to correctly identify the point beyond the pivot where MA explosion occurs and powerful market forces sweep the trade in our favour, to my mind they are a little wide at present.

Because I'm using the CS demo platform there is no need for a reason to call a halt to this, as I have said before I've always believed the general play has always been correct and as you know I had entry issues and have been a long time finding the correct methodology which I now believe I've worked through to successful conclusion.

A trend will appear on any timeframe it is not a method that is rigid, this is my edge this is my way of following the market at close quarters with an almost infinitely variable method due to timeframe MA and MA bandwidth.

The order of play is FTSE first then maybe Dax, if I can kick butt there then its on to your favorite and mine, the big daddy of them all ...DOW!!

Thanks for your continued interest in this and your continuing support, cheers mate

 

[Lightning McQueen]

This idea of Elder's about the average of a price representing the true value of it begs some questions, although I thank you, Don, for expressing it.

A statistical population should not be less than 100, if I remember correctly, and the more the merrier, but you are using 5 bar averages. A price being overbought or oversold and staying at the high or low level for two or three bars would result in the average going to meet it, rather than the reverse, don't you think? Chartists are inclined to use short term averages beacause they have little choice, but that is not to say that they are all that reliable.

Nevertheless, your absence on the trading scene for such a long time, apart from your PC Plod activities, must mean that you have been doing some heavy work on your trading system and thought all that out.

Good trading and keep up the good work

Split

Hey Split, glad you to see ya, how you have explained it it exactly whats going to happen although because of the longish timeframe and short MA it is the bars we are measuring and you are right if he price stays low the MA will move to meet it and thats ok, its what the price is doing thats the important thing, all we are interested in here is using the MA as a base line, a datum point if you like and what price is doing relative to it and not neccessarily because of it.

Clear as mud that, sorry

Yes some serious thought, long hours have been put in on this, its not the easiest thing to find simple solutions to complex problems, although I have to admit that the end result is not too dissimilar looking from the original strat, it still looks and feels the same to me there has been however a large shift of emphasis in how it works.


Being plod is going great and I feel a karma thing in looking after you lot in my spare time

I now have time for all this, a wonderful thing time management.

Thank for being there in the dark hours with your support and all the advise, much appreciated.

 

[Lightning McQueen]

ok I'm going to trade this live next week, FTSE the first victim, not sure of the format of presenting it yet, not sure either of the etiquette on this but I will have plenty of time to call a level which I will post up as soon as I have it entered the order into the CS demo platform. I think an end of day analysis will be too time consuming for me, an end of week shakedown of the weeks action will be preferable time wise for me.

For the purposes of this thread I will be operating on the hour timeframe but in the real world I could be on any one at any time. thats the good thing with this method it scales well up and down the timeframes depending on where the prevailing strong trends are evident.

If this all goes well over the coming weeks of testing and tweaking I go live proper on the finspreads platform, if I get that far that is :cheesy:

The quest continues

 

[Splitlink]

Clear as mud that, sorry

No, that's clear to me. Look forward to your coming posts.

Good trading

Split

 

[DorseyUK]

LM

Just wanted to say I think this is a fantastic thread. I have been eagerly reading it from the start and although at present I don't understand a single word you're talking about (newbie doesn't even come close!) i'm sure it will prove it's worth to me once the time's right.

Looking forward to seeing your results this week....

 

[TheBramble]

I think an end of day analysis will be too time consuming for me, an end of week shakedown of the weeks action will be preferable time wise for me.

Mr. McQueen, been following your thread with a sense of increasing tension. Get to that in a mo', but are you saying that you're doing this on a Daily chart? Given the attention span of most on these boards (myself included), you're going to lose momentum...on which note...

Sense of tension I have is around not only the selected TF, but the energy of the instrument. The last thing you really want, live, is a rangey, low volatility, small bar range example. Unless you've already outlined your trend v ranging decision making strategy, you could end up demonstrating the 'death by a thousand (small) cuts' system that tends to afflict simple MA strats.

Are you going to outline a method for identifying the best instrument to trade or are you saying this will suit any instrument?

 

[Lightning McQueen]

LM

Just wanted to say I think this is a fantastic thread. I have been eagerly reading it from the start and although at present I don't understand a single word you're talking about (newbie doesn't even come close!) i'm sure it will prove it's worth to me once the time's right.

Looking forward to seeing your results this week....

oh dear, it was not my intention to baffle, sorry about that, this was supposed to be a method that everyone could follow perhaps after a few trades the whole thing will become clear and be more accessible to all. thats my hope anyway.

 

[Lightning McQueen]

Mr. McQueen, been following your thread with a sense of increasing tension. Get to that in a mo', but are you saying that you're doing this on a Daily chart? Given the attention span of most on these boards (myself included), you're going to lose momentum...on which note...

Sense of tension I have is around not only the selected TF, but the energy of the instrument. The last thing you really want, live, is a rangey, low volatility, small bar range example. Unless you've already outlined your trend v ranging decision making strategy, you could end up demonstrating the 'death by a thousand (small) cuts' system that tends to afflict simple MA strats.

Are you going to outline a method for identifying the best instrument to trade or are you saying this will suit any instrument?

Thanks for your input Mr Bramble, most kind, this is going to happen on an hourly chart so we are day trading. Yes, the comment on EOD was refering to end of trading day analysis, my apologies on this confusion. The plan is to find and trade the main trends of the day whether this happens successfully is the rub here, we shall have to wait and see.

If the instrument being traded is in a range it will be obvious on the chart, small bar ranges are a characteristic of the price being in the value zone of my MA bands. when the price leaves these bands it does so with a lot of pent up energy so I am not in essence trading a moving average cross system at all anymore but it is still there as a price measurement tool of the price pivotal point and the bands the trigger for the expected price move.

This should work on any tradeable instrument but would have to be tested, as it is, all indices seem ok on it, I don't see any reason why forex would present it with any issues.

Now watch it all go wrong next week :-0 but I have high hopes

 

[timsk]

I have been eagerly reading it from the start and although at present I don't understand a single word you're talking about (newbie doesn't even come close!)

Hi DorseyUK,
Just so you don't think you're the only one, I'm not crystal clear how LM's strategy works either and I don't have the (very good) excuse of being a newbie and green about the gills like you do. But, like LM says, hopefully all will become clear as trades are entered, exited and/or stopped out. Looking forward to seeing how your system pans out LM - thanks for sharing it and good luck with it. Oh, and welcome to T2W DorseyUK!
Tim.

 

[brutusdog]

Thanks for your input Mr Bramble, most kind, this is going to happen on an hourly chart so we are day trading. Yes, the comment on EOD was refering to end of trading day analysis, my apologies on this confusion. The plan is to find and trade the main trends of the day whether this happens successfully is the rub here, we shall have to wait and see.

If the instrument being traded is in a range it will be obvious on the chart, small bar ranges are a characteristic of the price being in the value zone of my MA bands. when the price leaves these bands it does so with a lot of pent up energy so I am not in essence trading a moving average cross system at all anymore but it is still there as a price measurement tool of the price pivotal point and the bands the trigger for the expected price move.

This should work on any tradeable instrument but would have to be tested, as it is, all indices seem ok on it, I don't see any reason why forex would present it with any issues.

Now watch it all go wrong next week :-0 but I have high hopes

reading between the lines (no pun intended) i take from the second paragraph you are using the bands to quantify support / resistance breakouts?

 

[Lightning McQueen]

reading between the lines (no pun intended) i take from the second paragraph you are using the bands to quantify support / resistance breakouts?

Hi bd
Yes in effect this can be looked at as a breakout system of sorts, although i'm loath to call it that as the traditional textbook look of a breakout is the price has moved a conciderable distance already before a trade is entered, where im using a reletively narrow band so I would tend to call it a close reletive of breakout without the large move associated with them, also the price is outside the bands most of the time anyway, yes I like it

I don't really look at this from the point of view of support or resistance either although it may appear as such on a chart.

 

[Lightning McQueen]

Hi DorseyUK,
Just so you don't think you're the only one, I'm not crystal clear how LM's strategy works either and I don't have the (very good) excuse of being a newbie and green about the gills like you do. But, like LM says, hopefully all will become clear as trades are entered, exited and/or stopped out. Looking forward to seeing how your system pans out LM - thanks for sharing it and good luck with it. Oh, and welcome to T2W DorseyUK!
Tim.

I suppose this stems from not being a professional writer, or having the gift of the posting gab, its a very difficult task putting into writing the methodology at play here.

I do hope everyone has the patience to follow whats going on, I can only say sorry to those on the thread and those that have pm'ed for my inability to convey this in a simple manner

 

[Atilla]

i'm loath to call it that as the traditional textbook look of a breakout is the price has moved a conciderable distance already before a trade is entered, where im using a reletively narrow band so I would tend to call it a close reletive of breakout without the large move associated with them

Just quickly to add my interest to this thread and that I am patiently waiting for your system. Great thread.

I was a little confused with your entry above though

I thought this system was called The Three Keys. That sounds cool to me and with that logo vrom CV you are on to a winner.

I originaly thought of Don's MAV3Rich system but Three Keys has my vote. :clap:

 

[Phil Mibbutz]

Very interesting strat, Mr McQ, but I share TBramble's concern that many small losses will tend to make it unprofitable. Although the example given doesn't really prove much, hopefully the entry/exit rules will be clearer when you go live. I have my fingers and MAs crossed!

 

[Splitlink]

Large stop losses, I think, are the reverse of what many people believe, which is that the trade is given time to breathe. What I believe is that that they give the trader a false sense of security and, if they are taken out too many times, he is driven to a sense of despondency. I have been following one or two threads, recently, about larger TFs which mean that one has to use deeper stops. My previous trading experience will not allow me to rest in peace once the trade has deteriorated past my previous idea of what a stop loss should be.

Perhaps, I will have to retrain myself so as to overcome this fear because it is a very real one. I agree with Don on this point. Trades do not have to lose many points before the trader knows that it is not going the way he planned it. No point in staying, then.

Split

 

[Lightning McQueen]

Very interesting strat, Mr McQ, but I share TBramble's concern that many small losses will tend to make it unprofitable. Although the example given doesn't really prove much, hopefully the entry/exit rules will be clearer when you go live. I have my fingers and MAs crossed!

Hi phil

Don't be afraid of stopping out a trade if it is not running as expected. The winners are going to far out weigh any losses, this getting out and maybe jumping back on a trade if conditions look right concerns me only in the respect of the fact we are using SB and I could pop up on their radar as a scalper, resulting in my trading activites being restricted, this should not be a problem in the short term in all honesty.

The expectation I have for this after looking at this for a fair while now is that I will have far more positive trade entries than dodgy ones. Whether I can prove this over the coming weeks is the real issue at hand.

 

[Lightning McQueen]

Just quickly to add my interest to this thread and that I am patiently waiting for your system. Great thread.

I was a little confused with your entry above though

I thought this system was called The Three Keys. That sounds cool to me and with that logo vrom CV you are on to a winner.

I originaly thought of Don's MAV3Rich system but Three Keys has my vote. :clap:

Sorry Atilla missed your question, the rules of the method are in post two, a demo traded example is in post three. Thanks for adding your support, cheers

 

[Phil Mibbutz]

Hi phil

Don't be afraid of stopping out a trade if it is not running as expected. The winners are going to far out weigh any losses, this getting out and maybe jumping back on a trade if conditions look right concerns me only in the respect of the fact we are using SB and I could pop up on their radar as a scalper, resulting in my trading activites being restricted, this should not be a problem in the short term in all honesty.

The expectation I have for this after looking at this for a fair while now is that I will have far more positive trade entries than dodgy ones. Whether I can prove this over the coming weeks is the real issue at hand.

Exiting from losing trades ASAP is something I've been concentrating on recently, so I certainly like that idea! As you say, though, closing trades quickly will probably not make you popular with SB companies.
Another point I wondered about is whether this strategy will really work with different time frames and instruments. Surely all the indices, FX crosses, etc, tend to have particular 'resonant frequencies'?

 

[Splitlink]

As you say, though, closing trades quickly will probably not make you popular with SB companies.

I've closed trades within two minutes. Never had protests from SB companies although they probably know that I try not to make a habit of it.

Split