The Three Keys

[firewalker99]

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

If you don't feel comfortable using wide stops, than perhaps you should reduce your position size. If you still feel a certain trade needs a wide stop, but you aren't comfortable trading the setup, just skip the trade. Nobody said you needed to take every trade. If there's no entry possible that's safe enough to validate the stops you are using, than there's no trade. That might mean you'll have to wait that while longer before you get a trade with a decent entry and a close stop. All the more patience, and all the less fear.

 

[trendie]

were there amy triggers today?
how many trades per day does this 3-Keys generate?

I see a close above the 5-SMA channel, but the close was "too high" to take.

(as an aside, relating to other indices, I got some serious spiking on Dow and SPX at 7-am today on my CMC charts. from 1400, dipped to 1355 and recovered on SPX in space of couple of 5-min bars. anyone else?)

EDIT: please ignore the pivot-levels!!

 

[firewalker99]

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.

With the risk of sounding too critical, I think you'll find that "theory" can be different from market reality and "practice" can cause more unanticipated problems than you would have hoped for. Don't hope for the rest to "neatly fall in to place", prepare yourself for things not to fall into place and you're already be a step ahead and won't be so much surprised as disappointed by the firs setback you encounter.

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.

Sometimes a very little tweak can make the difference between a winning and a losing trade.

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.

By all means, don't call a halt to this. But at least forward test it for a decent time before putting real money on the line...

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.

We are currently in a phase where market volatility is more than it used to be, so have you thought about what you'll do when all those wide looking "explosions" cease to exist?

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!!

Hmm... I always considered the DOW to be the little brother.

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

I hope I'm not giving you too much negative energy. Just trying to be realistic amongst the potential euphoria :|

 

[Lightning McQueen]

Apologies thread followers, today has not been a good day for screen watching, busy work schedule last night, such is life of the night worker

I may have to change tack for thread purposes and concentrate on the DOW :-0

I shall be of course, reviewing the latest comments and answering them as best I can

cheers

Lightning

 

[Lightning McQueen]

were there amy triggers today?
how many trades per day does this 3-Keys generate?

I see a close above the 5-SMA channel, but the close was "too high" to take.

(as an aside, relating to other indices, I got some serious spiking on Dow and SPX at 7-am today on my CMC charts. from 1400, dipped to 1355 and recovered on SPX in space of couple of 5-min bars. anyone else?)

EDIT: please ignore the pivot-levels!!

Hi trendie, nice chart as per the setup

I would be looking for one maybe two good trades per session, this is what i'm aiming for anyway, today was not a good day for the setup, from what I saw early this morning at least.

Lets see how it pans out tomorrow, an early trade will no doubt give me the encouragement to stay up longer

 

[Atilla]

Hi trendie, nice chart as per the setup

I would be looking for one maybe two good trades per session, this is what i'm aiming for anyway, today was not a good day for the setup, from what I saw early this morning at least.

Lets see how it pans out tomorrow, an early trade will no doubt give me the encouragement to stay up longer

Hi Lightning McQueen,

Your Three Key system worked quite well on a number of instruments, making +33. That was based on half an hours trading late last night using 1 hour and 5 min charts.

GBPUSD - Win
EURUSD - Win
USDJPY - Loss
USDCHF - Win

This evening I've been playing around with it based on the DOW but holding off on entry at the mo.

I think the .05% vertical shift works great for the bigger time frames but less so for the short ones. I know you said one hour on your system but 4 hour and 1 day ones give less false signals.

It is also very time intensive. Requires frequent trading and watching the screens and your are ok.

I'll keep you posted on developements and big wins.

 

[DaxDestroyer]

Hi Lightning McQueen,

Your Three Key system worked quite well on a number of instruments, making +33. That was based on half an hours trading late last night using 1 hour and 5 min charts.

GBPUSD - Win
EURUSD - Win
USDJPY - Loss
USDCHF - Win

This evening I've been playing around with it based on the DOW but holding off on entry at the mo.

I think the .05% vertical shift works great for the bigger time frames but less so for the short ones. I know you said one hour on your system but 4 hour and 1 day ones give less false signals.

It is also very time intensive. Requires frequent trading and watching the screens and your are ok.

I'll keep you posted on developements and big wins.

No more Dax trading my friend?

 

[new_trader]

The stuff you read so frequently about lag makes me chuckle. Looking forward to this thread...

jj

Why does it make you chuckle?

 

[Splitlink]

Yesterday, I found that the signals came too late for a decent entry to be made. It needs more time, though.

Split

 

[Splitlink]

Because of my work schedule I have taken to trading SP500 during morning hours so that I get the possibility of locking in a profit when I leave, at 1330. I get home 30 minutes before the close which gives me time to close the trade, if I want.

0.5 % is seven points which means that I would not get a signal, this morning, until about 1415. That's what I mean by it coming in too late.

Split

 

[Mathemagician]

Why does it make you chuckle?

Because lots of people badmouth moving averages and indicators in general saying that they have lag or some other such thing. Yet, these very same people often cannot even properly define 'indicator' let alone 'lag'! Then they go off into a long search for a leading indicator (of course, not being able to define 'leading indicator' they wouldn't likely know one if they saw one) or start lecturing on the wonders of <insert oscillator/pattern/wave/coinflip/diceroll here>. So many of these discussions deteriorate so quickly into the standard internet "deaf guys shouting at each other" that it makes me chuckle when I see one starting up.

jj

 

[Lightning McQueen]

Its 0.05% Split, not very wide a band, but I see where your coming from, I'm thinking of widening as it happens, so maybe not for the S & P

I'm not having the success that Atilla has had, early days though, am watching mainly from the sidelines as i'm missing the price in the value bands and currently in the "greater fool" area below the bands

damn, I just missed another pop into the bands :whistling

 

[trendie]

Its 0.05% Split, not very wide a band, but I see where your coming from, I'm thinking of widening as it happens, so maybe not for the S & P

I'm not having the success that Atilla has had, early days though, am watching mainly from the sidelines as i'm missing the price in the value bands and currently in the "greater fool" area below the bands

damn, I just missed another pop into the bands :whistling

be careful, LM, about widening the bands arbitrarily.
you might end up deciding that Boll-bands, that dynamically widen/narrow, are the next step.
been there, done that.

 

[JTrader]

be careful, LM, about widening the bands arbitrarily.
you might end up deciding that Boll-bands, that dynamically widen/narrow, are the next step.
been there, done that.

...bought the T-shirt. First time i washed it, it shrunk and all the colours ran, staining my other garments in the process .

 

[new_trader]

Because lots of people badmouth moving averages and indicators in general saying that they have lag or some other such thing. Yet, these very same people often cannot even properly define 'indicator' let alone 'lag'! Then they go off into a long search for a leading indicator (of course, not being able to define 'leading indicator' they wouldn't likely know one if they saw one) or start lecturing on the wonders of <insert oscillator/pattern/wave/coinflip/diceroll here>. So many of these discussions deteriorate so quickly into the standard internet "deaf guys shouting at each other" that it makes me chuckle when I see one starting up.

jj

I suppose they mean MA indicators lag market price, which is true.

 

[firewalker99]

I suppose they mean MA indicators lag market price, which is true.

One has to look at how they are calculated. A simple MA of the last 5 days calculates the numeric average of the closing prices of the last 5 days (although MA's can also be calculated from the open, high or low price, most MA's are based on the close). This gives a number which can be used today. So by definition they lag, but that doesn't necessarily have to be a bad thing, it all depends what the trader wants out of it, right?

Shifting MA's is a whole different thing though. Especially if you shift them half of the original period.
I'll leave the rest up to the more experienced MA-followers.

 

[new_trader]

My 2 cents

One has to look at how they are calculated. A simple MA of the last 5 days calculates the numeric average of the closing prices of the last 5 days (although MA's can also be calculated from the open, high or low price, most MA's are based on the close). This gives a number which can be used today. So by definition they lag, but that doesn't necessarily have to be a bad thing, it all depends what the trader wants out of it, right?

Shifting MA's is a whole different thing though. Especially if you shift them half of the original period.
I'll leave the rest up to the more experienced MA-followers.

I would bet that anyone who claims to be a MA expert only uses the stock standard indicators that are included with even mediocre trading applications. Personally, I can't see how MA's can indicate anything more than a clock can indicate time. A clock doesn't indicate that you are late for work unless you set an alarm. A clock doesn’t indicate that it’s dinner time or lunchtime, time to do your shopping, time to do the ironing or bedtime. If you are hungry and look at the clock and see that there is still 1 hr until dinner time would you say that the clock is a lagging indicator of hunger? A clock does precisely what it is designed to do, indicate time and nothing else. Human beings ascribe different values and meaning to time, just like traders do with trading indicators.

 

[Mathemagician]

I would bet that anyone who claims to be a MA expert only uses the stock standard indicators that are included with even mediocre trading applications.

I consider myself to be fairly well versed in addition followed immediately by division, and I use a broad variety of canned and custom tools in my trading. How much do I win?

Personally, I can't see how MA's can indicate anything more than a clock can indicate time.

And, yet, we seem to find that clocks carry a good bit of information...

jj

 

[new_trader]

I consider myself to be fairly well versed in addition followed immediately by division, and I use a broad variety of canned and custom tools in my trading. How much do I win?

And, yet, we seem to find that clocks carry a good bit of information...

jj

No they don't. Just an indication of time. Just like a price tag indicates the price of something and not what its worth.

 

[Mathemagician]

No they don't. Just an indication of time. Just like a price tag indicates the price of something and not what its worth.

I'm not certain that analogy is valid. Regardless, this is getting too deep for my small brain. Happy trading!

jj