Channel Trading: Viking1961 500 step system

Sguide0:

Understanding Stop Out Levels

If there are multiple active positions on a trader’s account, it is usual for the broker to close out the least profitable ones first and leave profitable ones open. If all positions are in debit, they will all be closed.

The different brokers have various takes on what constitutes their stop out level. It is important to understand what your broker’s stop out level is with respect to a margin call. Many traders rush through account opening and never bother to check, either out of ignorance or just plain carelessness. It is for such traders that the following explanation is made.

Scenario 1: Margin Call = Stop Out level

Some brokers may categorically state in their trading conditions that their margin call is 100% without any mention of a stop out level. This means that the stop out level is the point at which a margin call will be issued. No advance warnings are given. Once the equity dips to stop out level, all positions are closed.

Scenario 2: Margin call 20%; Stop out level 10%

This means that when your equity gets to 20% of margin (i.e. equity needed to sustain the position), the trader will get an advance notice from the broker to take steps to prevent stop out (see next paragraph). If nothing is done and equity drops to stop out level, all positions are closed. The percentages used are for educational purposes; look at the trading conditions in your account opening agreement to get the actual figures).

i know that my broker has the later model… with 50% margin calls, and 20% stop-out
so i will get warnings when i get under 50% of the margin needed, and if i then dont do anyting, my trades will be closed if i reach 20% of the margin needed…

All,

The version 2-3 posted some days back actually trades in all the correct ways that we have been discussing in the past few posts.
However upon backtests, the major reason for failure, as I see is the carrying back of more than 2 primers. Although the EA logic is to lockin pips on first primer when 3rd is opened, still I see in backtests that more than 2 are opened. This is one of the major reasons of failure.

As discussed margin is a big killer for this system, leverage of 1:100 in my opinion is not enough (when you start with a balance of 2k i.e). Another big killer is swaps (depending on the pair ofcourse), and high spreads.

Dennis- The reason a one sided move up and then a one sided move down will not be good for backtests is because: 1. All Primers will close at TP, 2. S/L’s will not be hit, 3. More opposite orders will not hit as there is no retrace. All the above reasons will actually lead to a good result for the system, which will not be correct.
We need a lot of retracements after primers have opened and a lot of primers to hit S/L’s. we also need opposite orders to hit when primers are opened. this will increase drawdowns. If the EA still maintains equity without failing then we have something on our hands worth trading.

What I am about to do next is add Trailing SL to the primers (user adjustable) and then publish it for all to test. When the test finishes, please look at the last trades (that have bee “Closed at stop”). See how many primers have been kept open. In no case should it be more than 2. If it is then, there either is some mistake with the code or else the backtest is not entirely trustworthy.

CC

I thought that version 2-3 was trading from free equity…

There was also some problems with the lot size, that did make me use 0,8% pr. trade when i started with $2000 just to trade 0,01 lot

I also think that there was some thing with the primers that didn’t quite fit. But I’m not sure about what it was.

I might be wrong, but that was my impression.

CC: just to be sure, you are implimenting this in the new version? :slight_smile:

The one sided test was only meant to prove imagined limitations in primers abilities to stop drawdown. That happened because I thought opposing trades should still be opened while primers are running. Getting that misunderstanding cleared up was well worth the time it took me to set up the trades manually.

The problem with grid systems in general is that they “only work in ranging markets” and you can’t survive extended trends. Now that I have a more correct understanding of primers, I see how this solution will survive trends as well. Counting on there always being retracements isn’t safe (just look at what happened to the cable in 2008).

Looking forward to your next rendition of “Who wants to be a millionaire” :wink:

Re
D

CC

I thought that version 2-3 was trading from free equity…

No, version 2-3 trades on balance. Only primers are stopped placing when new equity high is reached. I have explained this point in reply to Zepp’s query.

There was also some problems with the lot size, that did make me use 0,8% pr. trade when i started with $2000 just to trade 0,01 lot

I will check that issue out and let you know soon.

I also think that there was some thing with the primers that didn’t quite fit. But I’m not sure about what it was.

I might be wrong, but that was my impression.

I am testing and analysing results. Will let you all know tomorrow.

Originally Posted by crisscross1983
I understand you are asking for the EA to stop placing primers based on balance rather than equity. Shall we set the same logic of balance drop per pip% (user adjustable - lets say 0.03%).
CC: just to be sure, you are implimenting this in the new version?

Zepp:
Currently, EA v2-3 starts placing primers when balance drop per pip is less than 0.06%. When this drop is noted, the EA remembers the Equity high. For eg. Lets say you started with $2000. When drop of 0.06% happens, your balance is $3000, but equity is $1,500. A global variable is noting the highest equity reached. lets say this was $2200 before equity now fell to $1500.
Primers will be placed until equity surpasses $2200, at which stage primers will be called off and normal trade resumed.

Your advice requested.

Hi all. SeaCat here. Some of you might know me from Etoro where I used to run a channel. I know the system very well and strongly belive in it. I am very happy to find your thread and work here at babypip. I like to be a part of tve develpment here and Will read the history and try the EA you made and contribute the best I can. Looking forward to it!

Hey M8,
and wellcome to this little corner of the internet, we have already come along way (mostly due to webzones very precise info, now i know why viking choose him to write the documentation in the first place, and CC’s awesome coding skills)…
always good to have more people with “hands-on” knowledge of the channel on the project, the normal trading seems to work very well, but we still have some primer problems… as webzone knows the primers alot better than me, i let him do the talking on this one, and join Sguide0 and Frawan on the beta tester side :smiley:

but read the thread, and contact me on facebook if you have questions you need answered regarding this sweet project

I’m not sure I understand where this equity rule comes from. Kent was pretty clear yesterday that at 0.06% drawdown (calculated from balance), regular trades are suspended and primers kick in. As primers reach TP you can add regular trades to the new area opened below (or above in case of short primers). The opening rate of your last open primer in each direction will thus be your current “channel borders”. (You can use that as variables to cancel placement of regular trades and set it in the ModifyXXXXPrimers function). When the rate turns and you get below opening price for your lowest open long primer, or above your highest open short primer, that’s when primers end and regular trades are triggered again.

Where does the equity come from?

Re
D

TO CC

have you seen post #368 and #380 … it does not look like its the same thing you are saying that the EA does :slight_smile:

Dear All Primer Gurus!

I have been following this thread and all the Channel traders since last September. I did start my own channel too. :slight_smile:

I have created a special excel file for easily calculating the primers on etoro. It is only valid for etoro, but I think it could help and maybe move us forward in understanding primers better.

Please check and let me know what you think…

I think a similar calculator would be of great help for everybody. So please try to check it and tell me if the logic is good/bad?

Thanks
Andrew G.

Zepp: Am testing the EA now. Will revised new version tomorrow after prelim checks.

Welcome to Seacat and Primerhelp!! :60:

Thx. I hope this will help with understanding the logic of primers. However at the Excel sheet: Primer 7 would not be triggered due to lack of funds on the account.

And being so close to hitting SL seems dangerous. I mean the broker could intervene and close the whole channel.

This calculator is not valid. It is far from following the rules from the hourglass formation.
It will definitely kill the channel if it is used, as the balance gets far to low. and no balance is implemented in the calculating.

Please read some more on the system. Because that Excel sheet doesn’t do any thing good. I’m very sorry to say it in such a hard way. But we need to stick to the rules here, as we want to make it right the first time.

Zepp: You were right, EA 2-3 isnt performing as it should. Many errors. Have been scratching my brain for quite some time now , yet to arrive at a proper functioning EA. I will get it done soon. If not today then hopefully by this weekend.
Apologize for delay but will try to get it right this time.

Rgds
CC

I dont think that you ow anybody an apology, you are using [B]your[/B] time on coding, so i think that everybody here should be grateful that you are spending so much time on this project :slight_smile:
ofcourse we are all egar to get our hands on a “final version”, but that is just because we all love making money, right? :smiley:

I’ve gone through all of WebZone’s post and tried to distill the info into a specific list of programmable functionalities. Hopefully this is all stuff we can agree on (though I’m mostly asking Kent ;-). The only parts “invented” by me is Part 2, step 12 Primer cleanup, and Part 3 – Whistles and bells.

There may be more to the system that I don’t know yet, but the parts that I do know that I DON’T know follows below. (All referred to posts are by WebZone as exhalted keeper of the system knowledge and the dark arts of screwing with all other forex traders…). (Sorry, this project brings out the nerd in me :wink:

#98:
<snip>
4. When the rate has passed the opening point of with an (adjustable amount of pips, then a pending order on a normal trade against the trend is made. (This is to minimize the amount of red trades carried)
</snip>

and

#105:
<snip>
2 and 4.
That the trade is opened in trend direction means, that if we are at 1.5000, then a buy order should be made at 15050 but not a sell order. If the rate then goes to ie. 15075 (adjustable by pips) then a sell order is placed at 1.5050, so that in a trending market, then we wont carry too many red trades with us.
So no analysing trends. But pure mathematics.
</snip>

This seems to refer to added flexibility, basically extending the placement range in trending markets. Might be very difficult to program without turning to arrays with fixed orders. Is it optional? How do you make these decision while trading manually?

#98:
<snip>
Primers:

  1. If the drawdown each pips raises to 0.06% of total Equity. Then primers are started
  2. Primer size shall be more than total drawdown/3 , and less than total drawdown/2
    </snip>

Dividing the unit difference for the primer calculations is still not clearly specified. Maybe 2.5, is correct, maybe 2.8? 3 is too much…

#158+161:
<snip>
The calculations that I have made is all based on leverage x100 because the primers needs to be leverage x100 to work as planed.
</snip>

I don’t understand what effect leverage would have, but mabe we should say that the EA only works on x100 accounts (without it being a problem to me at least). It should be made clear to any users though.

#195:
<snip>
About the trade size.
I think that it might be a good idea to make the EA check if there is already an open trade. And then adjust the lot size so it fits the current lot size of the system, so that there is two smaller trades open with at lot size that added together is the same as the current lot size.
</snip>

This is part 1, step 9 in the list, which I’ve left open. I’ve included replacing undersized pending orders, but should all open orders (in some proximity) be increased as well when lot size in general increases? I haven’t seen any way to do that manually in MT4 (you can close parts of an order though), but maybe programming can add lots to an existing open order. Having multiple open orders at close to the same range would not work with the basic structure of the EA today (I think) as a 6+ pips difference will lead to new orders being placed in all directions and thereby doubling the trades.

#338:
<snip>
Personal I’m setting primers every 15 pips with a trailing stop of 2 pips and TP of 75 pips. It makes it more effective in trending markets and minimize the drawdown on retracements.
</snip>

Is this a personal aggressive choice, or should we change the default numbers for primers?

And lastly, the “official” Greenlander investment plan calls for a significantly more aggresive growth in lot sizes than what we have been using here so far. How was that calculated? (Or more accurately, should we change the lot calculations in the EA?)

Phuh! That was a long one, but hopefully it will quickly lead to a complete and correct documentation of the entire system so that we can get “the right stuff” programmed.

Re
D

The document looks good to me, but I am not the expert, so better wait for more comments before coding. Like the whistles and bells section :slight_smile:

Looking forward to test this :smiley:

The first part is already in the EA so no worry about that.

Part two:
The primers shall be total drawdown units divided by 3 and rounded up to nearest lot size.

Part tree:
The system is build to leverage x100
So I think the EA should work by that Leverage in the first place, and afterwards there can be added futures so it can be used in other leverage.

Part four:
I agree that it would be great to have the EA to check for the old trades to compensate for the new trade size.

Part five:
That is just my personal setting, when I can be at my computer at all time. (It takes up more capital, but is also more profitable.)If I’m away from computer, then I put them back to standard. Mostly I’m only using this strategy, in the direction, that I think the cable will go.

Part six:
The calculator is based on the fact, that its a human being making decisions and analysing the technicals an fundamentals So we should stick to the calculated risk factor. It can be adjusted as it is, to suit everybody’s risk willingness.