All you need to trade is a horizontal line - TheRumpledOne

[JTrader]

Hi JayJay,
Just read the opening post by craigaudio, thanks for link. I need to do some back testing.
I expect the parameters have to be reviewed over the long haul as market conditions change, yes?
Craigaudio makes a good point on 'emotional capital', using a mechanical system to remove the psychological factors.
Any recommendations from anyone on the best approach for back testing , I guess I could just use Excel / VB but would it be better to go the MT4 route or is there something more appropriate? I'm leaning towards MT4 at the moment.
Best Regards,
Neil

Several on that thread dismisses the value of backtesting due to the fact that TS8 (& also MT4) cannot look within a minute bar. Therefore they see backtesting in TS8/MT4 etc. a scalping strategy like this as pointless. But eudomonia says that visual backtesting produces remarkably similar results to his own - he is the guy whos traded it on ER2 for a year. Read the whole thread.

 

[BrainStorm]

Several on that thread dismisses the value of backtesting due to the fact that TS8 (& also MT4) cannot look within a minute bar. Therefore they see backtesting in TS8/MT4 etc. a scalping strategy like this as pointless. But eudomonia says that visual backtesting produces remarkably similar results to his own - he is the guy whos traded it on ER2 for a year. Read the whole thread.

Actually there is so much Dogma in trading. Sadly it seems that some are replacing the 'old Dogma' with 'new dogma'. Eudomonia, by steadfastly refusing to even entertain the idea that it was possible to do sub minute testing in TS (despite plain contrary evidence) dosen't help the cause. Of course whether back testing is valid is another issue. I guess he thinks so as he did so in Neoticker & 'visually'. However the overly zealous inflexible dismissal does call into question (in my mind at least) other assertions.

Having said that I do believe its quite possible to trade successfully from a random horizontal line. Actually a slanted line would do just as well. But really its exits that are important.

“Most of our so-called reasoning consists in finding arguments for going on believing as we already do.” John Harvey Robinson

 

[bansir]

no, i use ninja trader and never pay a spread like you do in currencies, of course there is a bid and a ask but there is no spread......I get right in at the live price level using limit orders most of the time, if i do use a market order its never more than 2 ticks but hardly ever use them. I use the ninja dom to do this, it is a brilliant tool and as good as x trader if you ask me.

I pay $4.60 per round turn per contract,

Bansir, why don't you do some testing say a week or two for the parametres of my trading system on the er2? instead of the currencies, see what you think. If you want the parameters they are here kreslik.com - Traders Community :: View topic - Craigaudio's ER2 Buyzone Strategy



jason

Hi Jason,
What brokerage / data feed are you using with ninja trader. I was wondering whether the open tick + ninja combination would be good to have a play with.

Cheers,
Neil

 

[jayjay121]

Hi Jason,
What brokerage / data feed are you using with ninja trader. I was wandering whether the open tick + ninja combination would be good to have a play with.

Cheers,
Neil

the zen fire data feed is the best and fastest available.....It never freezes and keeps up with the market tick by tick, and for the money i can't see why more people are not using it. The only thing i don't like about ninja is the charting, tradestation is better, but for value for money it is good. And the simulator is one of the most realistic too with realistic fills.


jason

 

[bansir]

the zen fire data feed is the best and fastest available.....It never freezes and keeps up with the market tick by tick, and for the money i can't see why more people are not using it. The only thing i don't like about ninja is the charting, tradestation is better, but for value for money it is good. And the simulator is one of the most realistic too with realistic fills.


jason

Thanks Jason,
Thanks for the tip on zen fire; I've been getting regular disconnections on Oanda. Not sure why; I run MT4 and Quotetracker with Stockwatch feed at the same time with no problems.
I've read the whole thread now, this system does seem to generate lively discussion at any rate!
All the Best,
Neil

 

[bansir]

Actually there is so much Dogma in trading. Sadly it seems that some are replacing the 'old Dogma' with 'new dogma'. Eudomonia, by steadfastly refusing to even entertain the idea that it was possible to do sub minute testing in TS (despite plain contrary evidence) dosen't help the cause. Of course whether back testing is valid is another issue. I guess he thinks so as he did so in Neoticker & 'visually'. However the overly zealous inflexible dismissal does call into question (in my mind at least) other assertions.

Having said that I do believe its quite possible to trade successfully from a random horizontal line. Actually a slanted line would do just as well. But really its exits that are important.

“Most of our so-called reasoning consists in finding arguments for going on believing as we already do.” John Harvey Robinson

Hi BrainStorm,
I think 33.3 degrees has been mentioned somewhere
I have to agree with you re exits; I think the way forward may be to place limit orders to get you out at a fixed profit as per the kreslik link. I gather from the same link that you really need a good broker / feed to ensure you get the entries and exits spot on since there's no room for wasted pips with this sort of scalping?


Best Regards,
Neil

 

[bansir]

horizontal line- thoughts

Thanks again to TRO for sharing his strategy.

I thought I would just throw a few ideas into the mix to try and reconcile the conflicting results reported by various traders.

The evidence so far is that it appears some traders are dong very well using the BZ but back testing by JTrader and some limited amount of forward testing by myself have proved less encouraging.
Why is there this discrepancy between test results and reports of traders happily taking good pips for months on end?

Here's one possibility:

IMHO The BZ has essentially two parts a MECHANICAL entry and a DISCRETIONARY exit.
The feature of the clear cut, simple entry strategy will be very attractive to many
traders.

As I see it , ignoring the 'stopped out' condition, the exit is essentially a mix of the following:

Exit when:
1) The price stalls,
2) You have 6 to 8 pips on the table,
3) Your trailing stop is hit,
4) You have made your target pips for the day ,
5) You just feel it's a good idea.

TRO has also mentioned using the average hourly price range to help set a target level for exit pips.

Maybe there are other exits I have neglected, just fill them in as required.

It is perhaps within this discretionary element where the traders own personality and psychology come into play. If this part sits well with the individual trader's character and approach then maybe BZ may well be worth adopting provided you can tailor your exits to suit. This may explain the good results reported by JayJay and others.
I would also venture that:- You can't back test this.
It is also I believe the psychological factors which bring into play recommendations such as 'If you've hit your target for the day, quit' and 'Don't over trade'.

Just to add the point made by TRO and JTrader and ohers in case anyone is new reading this; You need a good, quick data feed / broker and low / no spreads to stand a chance.

Anyway, FWIW thats just my take on it at the moment.

Very best regards to all,
neil

 

[bansir]

Just done a quick analysis of my 86 losing trades for Feb.

3 were due to slippage on entry
20 were where I had a chance of profits but failed to take them
4 were where I ran the stop too tight
59 were whipsaws

Cheers,
Neil

 

[trendie]

Just done a quick analysis of my 86 losing trades for Feb.

3 were due to slippage on entry
20 were where I had a chance of profits but failed to take them
4 were where I ran the stop too tight
59 were whipsaws

Cheers,
Neil

you should get some sort of medal for your commitment to this.
your approach (of sticking with it after many losses) certainly will be a factor in your success, once you find something that has a quantifiable edge.

of the analysis you posted, which are within your ability to control, and therefore do something to make-a-difference?

can you control slippage?
can you control the lost chances?
can you control tight-stops?
can you control the whipsaws?

 

[jayjay121]

you should get some sort of medal for your commitment to this.
your approach (of sticking with it after many losses) certainly will be a factor in your success, once you find something that has a quantifiable edge.

of the analysis you posted, which are within your ability to control, and therefore do something to make-a-difference?

can you control slippage?
can you control the lost chances?
can you control tight-stops?
can you control the whipsaws?

Bansir, i agree, you have been brilliant at showing us real life analysis of the buyzone and given an excellent honest account. And we are all learning from your analysis, so thankyou.

I honestly think that there is a viable system there though so do what trendie says and try to do what i've done and improve things to find that edge.

What about doing some testing on the er2 strategy now, see if that improves things........the main thing i beleive that is the hardest to change is of course the whip sawing, but what about the two losses rule as posted on craig audio thread, i know alot of you feel this is pointless but why don't you test it and see.


jason

 

[bansir]

Bansir, i agree, you have been brilliant at showing us real life analysis of the buyzone and given an excellent honest account. And we are all learning from your analysis, so thankyou.

I honestly think that there is a viable system there though so do what trendie says and try to do what i've done and improve things to find that edge.

What about doing some testing on the er2 strategy now, see if that improves things........the main thing i beleive that is the hardest to change is of course the whip sawing, but what about the two losses rule as posted on craig audio thread, i know alot of you feel this is pointless but why don't you test it and see.


jason

Hi JayJay / Trendie
Thanks for your responses.

Whip saws are a bit of an issue I guess.

Some initial ( possibly crazy )ideas to reduce them a little:

1) Widen the zone a bit, use say +/- 5 instead of +/-3 ( sorry TRO).

2) When you get 2 whipsaws in a row, stop trading until the price moves clear of that region, wait an hour or two and reset the zone.

3) Wait for whipsaw price action to appear so that you would have had 3 or so losses in a row had you traded then take the next BZ opportunity.

4) After a single whipsaw event - just take trades in one direction.

There must be some other ways of reducing them without having to complicate the entry method.

The whip saws tend to come in little groups of three or four, this is when most damage occurs.
You're doing ok then suddenly you get -6,-6,-5 and you're back in the hole.
Now the psychology kicks in and at the back of your mind you're thinking " I will let the next trade run to make up for the -17 hit I just took". (BAD - don't do this; every trade should be taken in isolation .)

The market then offers you a nice +8 pip reward and you turn it down in the hope that it will fly for +18.
You then watch as the market takes the pips back off the table a gives you another -6 or 0 pips for having clouded vision.

The "quit after 2 losses in a row" rule could help to combat this problem.

I think I've got my hands full with Eur-Usd testing at the moment so er2 is just on the back burner for now. Would certainly like to demo trade it though at some point.

Hope some of this waffle makes sense; I'm off for a cup of strong tea.

Best Regards,
Neil

 

[trendie]

http://www.trade2win.com/boards/397388-post142.html

"......
One other price point I look at the is previous 60 min candle's midpoint. To me, if price is above that, then buyers are in control and if below that, sellers are in control. Using that info helps to keep me from getting "whipsawed", since I am inclined to only trade in one direction. ...."

dunno if this helps in reducing whipsaw losses. from TROs other thread.
(can also be easily back-checked with your trades last week as to whether it would have made a difference)

good luck with this week, bansir.

 

[bansir]

http://www.trade2win.com/boards/397388-post142.html

"......
One other price point I look at the is previous 60 min candle's midpoint. To me, if price is above that, then buyers are in control and if below that, sellers are in control. Using that info helps to keep me from getting "whipsawed", since I am inclined to only trade in one direction. ...."

dunno if this helps in reducing whipsaw losses. from TROs other thread.
(can also be easily back-checked with your trades last week as to whether it would have made a difference)

good luck with this week, bansir.

Thanks Trendie,
Thanks for the suggestion.
I spotted that comment as well but had forgotten about it.
I will have a look through my charts tonight with this in mind.

My current thinking is to try the simplest approach and just stand aside for one or two hours if I get whipsawed.

Best Regards,
Neil

 

[JTrader]

The one thing that the BZ truly will test is the theory that -
"The entry is unimportant. It is managaing the trade and the exit, that determines win/loss."

Unless i could find a way of jacking up the R:R in a reliable way, that gave it an edge, i would not trade the BZ on forex. Because, whilever you are close to a 1:1 R:R, and 50:50 winniers/losers, you are going to struggle.

Remember, a 7psl = -8p net loss, and a 7ppt = +6p net win. Therefore with these parameters, the R:R is 0.75:1. With the narrowest spread possible - a 1 pip spread.

Maybe forex is not the best instrument to scalp also.

As for the average of 1.9 ticks per day on ER2, as discussed by eudomonia etc. on kreslik. 0.19 points profit per day, is truly woeful isn't it? Could anyone really be arsed to trade every day if this was your net average expectancy? Regardless of whether the average daily range is 10 points or not?

 

[JTrader]

Its interesting that BZ has proved not very popular on T2W, judging by the relatively few people who have even bothered to comment on this/these threads.
Perhaps those who have NOT bothered to comment on these threads, have not commented as they think BZ is BS...........

 

[bansir]

Its interesting that BZ has proved not very popular on T2W, judging by the relatively few people who have even bothered to comment on this/these threads.
Perhaps those who have NOT bothered to comment on these threads, have not commented as they think BZ is BS...........

Hi JT,

Todays results,
-5, +7, -5, -6, -4, -6, -6, 0

Thats -25 over 9 trades.

The second -5 was almost a winner, just stopped out before a nice move.
The first -6 was due to chasing the price.
The -4, -6, -6 were straight whipsaws.
I did manage to avoid a couple of whipsaws early on by not taking BZ breakouts immediately following a losing trade.
I think it still needs tweaking a bit

Best Regards,
Neil

 

[da-net]

Hi JT,

Todays results,
-5, +7, -5, -6, -4, -6, -6, 0

Thats -25 over 9 trades.

Hi Bansir,

Have been following your results very closely and something keeps bothering me about your trading TRO's system. Have you ever considered doing just the opposite? If the system indicates long, go short and vice versa. I suggest this course ONLY if you are demo trading his system. I question if the results would be improved or very similar.

Hope This Helps!

 

[jayjay121]

swing trading is supposed to be more profitable right?............so what about a weekly system or eod system?

Have you read tkimbles systems over at forex factory?, they are similar in a way to the concept of the buyzone. Read them as they will help in twinking your methods i think

I can't comment on the buyzone on forex cos i have never traded it, only the er2 system.


jason

 

[bansir]

Hi Bansir,

Have been following your results very closely and something keeps bothering me about your trading TRO's system. Have you ever considered doing just the opposite? If the system indicates long, go short and vice versa. I suggest this course ONLY if you are demo trading his system. I question if the results would be improved or very similar.

Hope This Helps!

Hi da-net,
Thanks for your thoughts. I think I see what you're getting at and it would be interesting to see what happens.
I have, I think stuck to the rules pretty well. Indeed, sticking to the rules has been my main objective so that I could give the system a fair trial.

My plan is to keep within the current entry rules through to the end of this week and then review the strategy and try making a few changes.
Whipsaws are one area where improvements need to be made. Also I think JTrader has made some good points regarding R/R ratio so I'm going to look at trailing stops and exit targets to try and improve this.


Best Regards,
Neil

 

[bansir]

swing trading is supposed to be more profitable right?............so what about a weekly system or eod system?

Have you read tkimbles systems over at forex factory?, they are similar in a way to the concept of the buyzone. Read them as they will help in twinking your methods i think

I can't comment on the buyzone on forex cos i have never traded it, only the er2 system.


jason

Hi Jason,
Thanks for your suggestions. Believe it or not I do actually seem to perform better in the intraday time frame! I have another 5min system running in the background which is looking promising.
Having said that, I'm also running a test on daily / hourly FX pin bars as per Trader_Dantes thread.

I will definately take a look at tkimbles systems though, thanks.

Best Regards,
Neil