Hello Nyad,
thank you for your comment but i dont uite understand what you meant with it.
Sincerely,
Essentially if you follow a set plan from someone else, you won’t know how to compensate for the odd cases or tweak it if it needs updating.
I don’t think anyone would dispute that its always better to learn forex and develop your own trading system, however TURBONero is responding to the large number of requests on here asking for systems and guidance on how to develop one.
Even as someone who has his own system, I can read the methodology and reasoning behind this system and maybe take some ideas that I can incorporate into my own.
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Hi Turbo,
you count back the last 5 daily candles. You identify the lowest point of the last 5 days and you identify the highest point of the last 5 days. Those 2 points serve as your entry into trades. On the highest point (price) you set up an automated entry order. You use the lowest point of the last 5 days as your STOP LOSS
So once you are long, the only thing that matters is the high and low of the last 5 days (including the actual day which is not finished yet) you count exactly 5 candles back, not 4, not 6
Do we mean the previous 5 days [I]prior[/I] to today’s current high and low or [I]including [/I] the current day as it develops?
Just to check my understanding, am I right in thinking I am now short on EURUSD?
5-day high (incl today so far) =6.2. = 1.07911 = Stoploss
5-day low (incl today so far) = 8.2. = 1.06404 = Entry during today?
In other words I would now go short as today’s low has broken 1.06404 - or do I wait until today’s close and only enter if still under the prev low?
In brief, is it the prev 4 complete days plus today’s range, or the previous 5 complete days and then enter today if either of these breakouts are crossed?
You did say the “5” is important so I just wanted to check I got it right! 
Hello Manxx,
it is including todays price action. so basicly today plus the 4 finished days before. the automatic order execution can be triggered at any time on every day and in the evening (or whenever you got the time) you see the actions of today and adjust the necesarry numbers.
so this means yes. you can go short immediately on this pair. its possible that the first trade might end not perfect but that is due to the fact that were comming a bit late with a short on it. the perfect short according to this system would have been an entree at 1.07102 with a stop loss at 1.07558. by that we would already be in plus of 91.5 - 100 of cents (0.91 euro-cents) and today we would have moved above the 1:1 risk ratio. the todays stop loss would be at 1.07056.
only one issue that i did not mention before is this:
it is possible that -due to the 5 days calculation- the opening price of the next day is already below the newest set stop loss. this doesnt happen often. but when it happens you close the trade manually and open a counterside trade. so basicly if today you change your stop loss number and the price of stop loss has already been violated by the opening of todays day then todays open acts as immediately stop loss (close immediately) and open counter side trade.
I do. It means someone doesn’t have much of a social life if he spends his time playing Starcraft2
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As we know, different brokers have varying levels for highs and lows on daily charts - could you confirm which dates you are looking at here as none of my daily levels match with these - and actually, I don’t have a low on EURUSD as far as 1.06102 to have given up to 100 pips so far?
I am not questioning the viability or anything, I’m just trying to make sure I’m understanding rules properly. This is an interesting first trade setup for me since it happens to coincide with my own (developing) longer term method…-
you are right. its not 91 pips. i made the mistake to calculate profit from the stop loss number (.07558) instead of entree number (.07102).
thats around 55 points. which is 10 points more than difference between entree and stop loss. so we exceeded the rr of 1:1 by today.
sorry my bad in doing math and subtracting from the wrong number.
OK thanks!
…and the stoplosss is now at yesterday’s high? - (on my charts) at 1.07096 i.e. pretty much at b/e from that entry level.
BUt in your earlier instructions you say:
So what is your job?
Today (every day) you count back the [B]last 5 daily candles[/B]. [B]You identify the lowest point of the last 5 days and you identify the highest point of the last 5 days[/B].Those 2 points serve as your entrée into trades.
So, since this is a critical parameter, could you categorically confirm are we to look at the previous completer 4 or 5 days in order to decide today’s entry/stop orders?
(Sorry if I am being a bit dumb here!)
Hi everyone,
Been working past 2 days on an indicator to calculate and display the high and low value of the past 5 or 40 days.
It also calculates the position size of the trading order.
Via the input tab you can change all needed parameters.
If you want to use the 5 day system or 40 day system. (when 40 day system selected then the mid value will be shown too)
You can change where to put the info on your screen (corner Top Right, Bottom Left, …), colour, font size, line colours and types, …)
For the calculation of the position size you can enter how much risk (%) you want to take per trade and if the calculation needs to be done based on your Account Balance or Equity.
Current spread is shown, High and Low value ( and also Mid value when you choose the 40 day system)
SL Size you will be using, how much risk per trade and the position size.
In screenshot above you will see that the position size is rounded up to 0.01. This is the minimum lot size of my broker.
In attachment a ZİP file with the MT4 source code and compiled .MT4 file.
WARNING:
I did test this indicator on my system only. All seems to be working fine but there might still be some bugs in it.
HighFive_v1.0.zip (20.5 KB)
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no in your trade which you explained earloer in earlier posts your stop loss is at last mondays high. which is 1.07887.
next monday your stop loss will be the high of last tuesday which is .07491.
next tuesday your stop will be the high of wednesday (.07139) since its the highest point of (then) 5 days -if untill then no mew highs have been made. if monday made a higher high than lets say .07139 then your stop loss will be at that new high. so while it creates this new high, our stop loss will get triggered and a new long position will be opened.
lets say on this example that monday made a high of .07300 which is less than the stop loss we have in place of .07491. so on tuesday our new stop loss will not be wednesdays high of 0.07139 but the high of monday (day before today if we supposed today is tuesday the 14th feb) because within our last 5 days range the new high is considered which happened yesterday because the lower high of last wednesday is lower than yesterdays. this is the new highest point of the last 5 days.
this is possible because on monday our stop loss was placed higher than mondays price action managed to accomplish but mondays high established a high that is higher than the other days before that and we do not count tuesdays high anymore since it fell out of the 5 days counting range and became day number 6. so that high doesnt count anymore but days 5, 4, abd 3 aswell dont count highs anymore because days 2 (yesterday) high is higher than the high of 5 4 and 3. if todays price then exceeds the high of yesterday we close the trade and a counter position is beeing initiated.
if todays price opens then aboce yesterdays high (which is then the highest high of last 5 days) we immediately close and trade long. this way a trend change is discovered early and leaves the system air to breath and to survive bumpy rides of up and down. in case yesterdays high was jist a short reaction fueled by false news or rumors or whatever and today continues down were still in the trade in the right direction.
you will discover that there are many situations this comes in handy. especially in trend changes and trend following
Hey,
no its not a dumb question. its actually a good question
Suppose that the last 4 days have been high and stop loss of 120 (random number not connected to eurusd) and the price of today (day 5) creates a new high and youre in a short. this exceeding of the stop loss when it exceeds the stop losss created -before- is the stop loss and triggers a new long position. in my calculation i chosed to adjust the stop losses every evening and not morning. so todays price action is calculated for a reason ill explain later- but not into the stop loss calculation of a ongoing trade. fore soneone trading in the mornings thos system your question is a good one since then the todays price action is still future.
so the high of last 5 days including todays is 120 there is stop loss in place already, if todays price goes above 120 the stop gets triggered and creates a new long position. then you count again 5 days and lowest point is stop loss. this always includes todays day simply because todays day aswell can be the lowest point in a completely new long position like shown in the example below:
in this case we were short and todays price action took us out of the short.
it aswell was the lowest point of last 5 days and therefore we must use it as stop loss.
the long trade has been triggered at around 75% of the upper range of todays candle.
such days happen (not often) and the system aswell covers such extreme moves to keep you in the right direction.
so in a trend we already have a stop loss in place if that stop loss gets violated today by todays price action it gets closed. todays price action creates no new high 5 of the last 5 days (in example a short) but violates tge high of the last 5 days action.
Sorry for my late answare. After i wrote the 2 posts before i gave it some thoughts and realized that the difference is that we 2 trade at different times. I trade in the evenings when the actual day is already nearly finished. You want to trade in the mornings. Theres a easy solution and you already mentioned it: just dont include todays action into the 5 days. So count back the 5 finished days and dont count todays “ongoing” day.
I created this based on my personal patterns of behaviour. i rarely open charts over day and never in the morning, only in late evening i give it half a hour a look and set up the things i need to change etc.
I must say im impressed. This is awesome work and shows exactly what is/was in my mind with this system. Thank You very much for this!
Now another question. Have you tried to program automated trading strategies before? where the computer initiates trades and sets stop losses and closes them? a fuly automated trading system which needs no human intervention?
Have you ever tried or did this in the past?
Fully automated I never did, but I always work with a trade manager/ea to manage my orders.
(Still need to make it for this system.)
I use the trade manager (by manually clicking on button) to create an order so that I don’t have to enter manually the values and make mistakes. With same system I can close or modify an active order.
Will make somewhere next week something for this system. Auto delete all pending orders and create new ones every day.
Not sure if it’s possible with this system to create a sort of robot. We need to be able to switch back to the 40 day system when we have 3 non performing trades in a row.
And to be honest. I don’t like robots. I prefer to have some control.
By clicking on a button I see what orders have been opened, if a stop loss has been moved, see what’s going on in market, get a feeling of the system, …, …
I completely understand why you dont like robots. I was asking because I wanted to convert this system into a robot to trade pairs which i usually never trade. I never trade currencies and having a robot doing that for me could be a great asset- especialy if i only need half a hour a day to check if everything is fine and the robot is doing his work the way he/it is supposed to.
would open me new markets without having to divert too much time from my life, business and the markets i am trading regurarly.
Ok, thanks Turbo,
Just to be a complete pain, I’d like to ask you another question that is confusing me. This is more of a principle regarding the method rather than the actual steps.
Regarding the issue of trend, you wrote:
We only trade in hot securities.
For a security to be hot it must be trending in at least 2 of the 3 long term charts.
If it trends in 1 year and 4 years chart but not in the 10 years chart. it is still a "HOT MARKET"
If it trends in the 1 year and 10 years chart it is again a "HOT MARKET"
If it trends in the 10 years and 4 years chart but does not trend in the 1 YEARS CHART it is “SEMI HOT”All 3 charts are important but the 1 year chart is the most important for us to chose a market.
If the 1 years chart along any other of the 3 charts, reveals a clear trend which is already on the go - you can enter immediately (in the direction of the trend only).If the 1 year chart is not showing any interesting trends it is a semi hot market and we enter it upon specific set-ups.
Now we look for our entrée. If the chart ( year chart) is already in a trend (this case now trending downwards - SHORTS) you simply enter immediately and put the highest high of the last 5 days as your stop loss and immediately set up a long trade on the stop loss of the short.
But we are setting our trades on the daily charts and every time we are stopped we simultaneously enter a trade in the opposite direction - again based on the daily chart.
But surely that means we are taking both long and short trades continually and consecutively regardless of the underlying trends on the 1 yr, 4/5 yr and 10 yr charts. I don’t really see the relevance of these really long term charts when we are trading in both directions on the daily (except when the price movement is defined as trendless and reverts tothe 40 day rule?)
PS I am writing this method and its rules into a pdf document for you to check and then post here which might help others as a reference doc if there is interest here.
The issue is that we must trade in markets that move. 'A flat market will never create any surpluses. This system -for example- would have banned you from trading euro-swiss frank (back then when swiss frank was pegged to the Euro) because it was a pair that was not moving at all. And history showed that it was good to not trade it.
The direction of trend does not concern us in this system, it only concerns us that the pair is moving and is not beeing flat. where the trend goes, start or ends? who cares? this is “thinking, guessing and opinionated analyzing”- those 3 things have been discarged out of this system and the system was created to participate in trend movements and in trends.
The trend analysing part is there only to confirm that the pair is trending, where its heading to or where its going to reverse or should perform xy at point xy does not concenr us.
Suppose we see a up trend in the 4 and 10 years chart and a zig zag (still trending) in the 1 years chart. Should we go long only because the 4 years and 10 years chart says its a uptrend? For a financial institutuon they would go long-yes. but we dont have the luxury to survive a 15% move in counter direction. The system is made to follow the closests trend. If its a upmove of 5% this week then you will be in, if its a down move of 5% you will be in - no matter if the pair made a upmove of 80% in the last 3 years and the market is clearly a bullish market.
Excellent series of posts. As quick as I am to jump on someone when they are wrong, I will certainly give credit where it is due.
Credit here should also go to the late Richard Donchian since the methodology is classic Donchian channels which are available as an indicator on many platforms. No need to code anything, it has already been done.
For example here on Babypips the free real-time chart function offers Donchian Channels just set the parameter to 5 on the daily chart.
Real-Time Currency Chart - BabyPips.com
The good news is that Donchian channels are a proven methodology for succeeding in the markets. Richard Donchian is considered one of the founders of trend trading. This “new” system was the basis of the very successful Turtle Trader experiments of Dennis & Eckhardt in 1983. Even though all the participants used the same system the results varied wildly so discipline is required. One of the participants was Ed Seykota who took that experience to become an extremely successful trader and is very well known. But all that information and history is available for free at your local library.
This is a system that is worth the time of new traders, to consider, learn, and test. The hardest part once the basic mechanics of the system is understood is to learn to stomach the large drawdowns that will occur upon occasion as you get whipsawed.
Speaking of whipsaws, it is best to let Mr. Seykota describe the essentials of the system is his own word. (CAUTION: Humor ahead)