Channel Trading: Viking1961 500 step system

Trading Systems Free Forex Trading Systems
101

Hello all you wonderful people.

My name is Kent, and I have been a part of the Greenland/Hourglass system for quite a while now.
I have been helping Viking1961 with a lot of calculations during the time and we have made the system a bit more visual, so as many as possible would understand the basics.

Hello Kent, Thanks for stopping by. Hope you and Zepp can guide us into making a successful EA for this strategy.

[B]Normal trades:[/B]

  1. A normal trade shall count 0,5% - 1,5% of total capital (adjustable) Leverage x100

I will try to implement this feature in the EA once the basic logic is satisfactory to all.

  1. A new trade shall be opened in trend direction every 50 pips as standard (adjustable down to every 5 pips)

  2. TP on normal trades shall be 50 pips as standard. (Adjustable)

The above two functions are already in place I believe. What is your opinion after testing Rev0-5.

  1. 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)

Can you elaborate with the help of an example (using price).

  1. If a long or a short trade is open at a given rate (ex. 1.6000) then there will be no new trade on that rate, in that direction before the old trade is closed at TP

  2. There is no Stop loss.

These feature also exists in Rev0-4 & Rev 0-5.

[B]Primers:[/B]

  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

  3. Primer TP shall be 100 pips

  4. When the rate drops or raise more 60 pips in green direction then SL for all primers should be kept 50 pips away from the opening point of the latest primer, so that you can only carry 2 primers at any time.

Please elaborate on primer size with the help of an example. What do you mean by drawdown/3 and drawdown/2.

102

Hi Kent,

This is the nicest description I’ve seen so far. Simple and to the point.:35:
I have 2 questions:
1.(point 2.) How do you identify the trend. My guess is that we can use the same logic as in the FXTraderPro EA, which is: if a BUY is closed in green due to TP (or SL), then place a new BUY. Else, place a SELL.
2.(point 3.) Something I wanted to ask Michael for a long time: why not using TrailStop all the time? Every 50 pips we open a new trade according to the trade, but we keep the current profitable trade open with TrailStop (same logic as in the Primers, actually). In this way, the profit increases and in case of high volatility we are kept safe.

PS: I am CristianD from Openbook, and it is nice to see you here.:60:
PS2: I am also testing in demo account REV5, since yesterday, but it didn’t close any trade yet. Currency is oscillating less than 100pips, and I am trapped in the middle.
PS3: I have also modified v5 to work with TP=30pips and started from 3000usd initial equity (I have seen this sometime ago on Openbook, but I don’t remember who has made this sugestion). However, I have some trouble running multiple instances of MT4 on my laptop (demo account from Alpari and HotForex).

Have a great week, all!

103

Hi sgude0,

The information is not updated there. It looks like a “blank” (not-started) profile.

104

DOOOH, my bad :wink:

i will see if i can get REV 5 to work, but havent had much luck so far, even though i set primer size to 0,04 there is no 0,04 size trades opened outside the channel borders… so i might be missing something, but will fidle some more around with the settings…

105

Hello again.

I will try to answer the above questions as good as possible. Please let me know if I forget something.

Good to hear. That will make it possible to reinvest the gained capital and cover old primers as the channel gets older.

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.

Done

answered in 2.

  1. and 6.
    Should be good.

[B]Primers[/B]

Lets say that all trades that have been made till now was 1000 units or 0.01 lot and the trend is up
if we then have 1 buy trade and 11 sell trades running, then we have a drawdown of 10000 units or 0,1 lot
when full primer load is reach we will have minimum 3 and maximum 4 primers (only for 10 pips overlay) at the same time
so 10000 units divides by 3 =3333.33 units
and 10000 units divided by 2 = 5000 units
So the primer size should be more than 0.3 lots and less than 0.5 lots so that would make the primer be 0.4 lots each.
That way we will cover the drawdown with the primers and if the rate turns we will carry less lots with us the other way.

the 0.06% is allso calculated by the drawdown, so the 10000 units will make a drawdown of $1 each pip.

Fell free to ask more if You need to.

106

here is the rev 0.5 test with same settings as in the rev 0.4 test
https://dl.dropbox.com/u/5267610/greenland/Greenland%20strategy%20REV0-5.pdf

as you can see rev 0.5 is stoped out with alot less trades than rev 0.4

107

Oh i almost forget, that The borders of the channel is not locked.
They should be decided by the primers.
So no borders.
It means that the border is not visual, but is located at the 0,06% drawdown.

The borders in the original describtion of the system, was only to visualize the system to the many people trying to learn it.

108

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.

This point is very interesting. This feature does not exist in the current version of the EA’s, hence in a trending market the EA carries a lot of red trades with it. I will try to implement this soon.

[B]Primers[/B]

Lets say that all trades that have been made till now was 1000 units or 0.01 lot and the trend is up
if we then have 1 buy trade and 11 sell trades running, then we have a drawdown of 10000 units or 0,1 lot
when full primer load is reach we will have minimum 3 and maximum 4 primers (only for 10 pips overlay) at the same time
so 10000 units divides by 3 =3333.33 units
and 10000 units divided by 2 = 5000 units
So the primer size should be more than 0.3 lots and less than 0.5 lots so that would make the primer be 0.4 lots each.

0.04 lots - primer size according to your above example.

Question:
Lets say price is 1.5300 (GBPUSD for eg) and we have the need to place primers. we place primers every 30 pips (for eg) and keep TP as 100 pips. As price goes down how do we place the normal trades of 0.01 lots. Do we keep following the same principles of placing sell stops 50 pips below and a buy limit at same price after price goes a few pips down?
eg.
normal trade Sell & Buy - 0.01 lot @ 1.5300
Primer P1 - 0.04 lots - 1.5270
normal sell stop - 0.01 lots - 1.5250
P2 - 0.04 lots - 1.5240
Buylimit - 0.01lots - 1.5250
P3 - 0.04 lots - 1.5210
normal sell stop - 0.01lots 1.5200
P4 - 0.04 lots - 1.5180
buy limit - 0.01 lot - 1.5210
.
.
.
etc.

109

When we are using primers, there should be no normal trades. Only primers. and then we can make stop orders if the rate turns.
I’ll make an example. from your example.

1.5300 - normal trade Sell - 0.01 lot @ 1.5300
1.5275 - buystop normal trade - 0.01 lots at rate 1.5300, TP at 1.5350
1.5270 - Primer 01 - 0.04 lots - 1.5170
1.5250 - normal trade Sell TP - 0.01 lots - 1.5250
1.5240 - Primer 02 - 0.04 lots - TP at 1.5140

1.5210 - Primer 03 - 0.04 lots - TP at 1.5110
1.5210 - Primer 01 SL is set to 1.5260

1.5180 - Primer 04 - 0.04 lots - TP at 1.5080
1.5180 - primer 01 & 02 SL is set to 1.5230

1.5170 - Primer 01 - TP
1.5150 - buystop normal trade - 0.01 lots at rate 1.5250, TP at 1.5300
1.5150 - Primer 05 - 0.04 lots - TP 1.5050
1.5150 - Primer 02 & 03 SL is set to 1.5200

1.5140 - Primer 02 - TP
1.5120 - Primer 06 - 0.04 lots - TP 1.5020
1.5120 - Primer 03 & 04 SL is set to 1.5170

1.5110 - Primer 03 - TP
1.5100 - buystop normal trade - 0.01 lots at rate 1.5200, TP at 1.5250
1.5090 - Primer 07 - 0.04 lots - TP 1.4990
1.5090 - Primer 04 & 05 SL is set to 1.5140

1.5080 - Primer 04 - TP
1.5060 - Primer 08 - 0.04 lots - TP 1.4960
1.5060 - Primer 05 & 06 SL is set to 1.5110

1.5050 - Primer 05 - TP
1.5050 - buystop normal trade - 0.01 lots at rate 1.5150, TP at 1.5200
1.5030 - Primer 09 - 0.04 lots - TP 1.4930
1.5030 - Primer 06 & 07 SL is set to 1.5080

1.5020 - Primer 06 - TP
1.5000 - Primer 10 - 0.04 lots - TP 1.4900
1.5000 - Primer 07 & 08 SL is set to 1.5050

1.5000 - buystop normal trade - 0.01 lots at rate 1.5100, TP at 1.5150
1.4990 - Primer 07 - TP
1.4970 - Primer 11 - 0.04 lots - TP 1.4900
1.4970 - Primer 08 & 09 SL is set to 1.5020

1.4960 - Primer 08 - TP
1.4950 - buystop normal trade - 0.01 lots at rate 1.5050, TP at 1.5100
1.4940 - Primer 12 - 0.04 lots - TP 1.4900
1.4940 - Primer 09 & 10 SL is set to 1.4990

1.4930 - Primer 09 - TP
1.4910 - Primer 13 - 0.04 lots - TP 1.4900
1.4910 - Primer 10 & 11 SL is set to 1.4960

etc.

If the rate turns. Then we are not starting to trade normal trades except if there is a total drawback from the primers. Then we will carry 2 primers with us back in the opposite direction, and if the rate keeps rising. Then after a while the old primers is just small trades compared to the new trades on the new levels. so they won’t effect the overall picture.

In that way, the Primers are actually the channel borders, as they are calculated from the draw down. So the borders is moving around as the rate does, and that way we can adapt to all kind of markets.

110

Thanks Kent,

Your explanation makes a lot of sense. That is how it should be.

help explain in the above example of yours once how to place the SL’s for the primers.

I am working on the EA now and once that logic is clear to me I shall try to incorporate it into the EA.

Thanks again.

One more question:
When should the EA stop placing primers? Only based on drawdown or on price returning to assumed channels?

111

I have edited the post above to explain the SL to the primers too.

It shall stop placing primers if the rate returns back from the primer zone.

The primers set the channel border
If the rate turns up. And 4-5 normal opposite trade has been made (250 pips) and then turns back downwards. Then it shall depend on the 0.06% rule, because then the old primers will be covered out by the new normal trades before placing new primers.

But if it is only a small retracement and it closes the Pirmers with the green SL then The primers should continue with primer number 3

112

Very precise description Kent… fantastic!! :slight_smile:

113

Noted Kent. Tks for the explanation.
The EA will have to be mechanized. The only problem i see now is to define when the EA should stop placing primers and when it should start placing them back again. My previous method was to have user defined Channeltop & Channelbottom. These parameters can be changed by the user at will. This will help the EA understand when to place primers and when to stop placing them.
The 0.06% rule to start placing primers is defined.

I will try to implement all that you have said and come out with a revised version within the next two days and then we will try to improve further.

114

No, we’re just stuck in a tiny range so nothing has closed yet. I used AVAFX for the test initially, but they closed my demo account after 30 days so I set up a new one at XEMarkets, but then of course I had to restart with new trades an no history. I did try to merge the old results, but MT4Pips is really finiky about changing accounts so I had to go back to step 1.

Re
D

115

I’m really appreciate your hard work, and I’m looking forward to do some testing and twisting in the coming days.

I’m working night shift from Thursday and all weekend. So there should be plenty of time to test :slight_smile: but then I will only write comments in the night hours.

If it can be programmed that, if the rate redrawing further than the second primer then it only should start again if the rate drops below the second primer again. (This will should be the last open primer, that we are carrying with us, back up)

And if the rate goes back up by 250 pips (adjustable). Then it should go back to the 0.06% (adjustable)

Maybe that can help.

just let me know :slight_smile:

116

I read Webzone as saying that primers are turned on while each pip lowers drawdown by 0,06%. If “the damage” is less, no primers, just regular trades. If the trend turns, then the primers will close in SL and drawdown will automatically improve as regular trades above (or below depending on trend) are closed, hence primers are turned off again.

I’m looking forward to seeing how to calculate the 0,06% per pip test. I can’t figure that one out.

Also, the system has a “550 pips mid-range” where lot size increases on certain steps. I could never find out how to decide on that mid-range, but if lot size is calculated as percent of balance, then the EA could automatically increase lot size as soon as a defined % of balance equals a larger lot. (I assume 0.0012 won’t be a legal order, so it will run 0.001 until your % variable can afford 0.002 lots). That would greatly improve testability as well.

Re
D

117

Based on Webzone’s input I think the algoritm would look something like this:

Step 1: Open buy (at market) and sell (at buy – spread) of lot size closest to 0.5% (variable) of current balance. TP 50 (variable), SL 0 (variable)

Step 2: Measure trend direction (internal variable)

Step 3: If (((Total units against trend – Total units with trend) / 10.000) / Balance) * 100) >= 0.06
{
a) Replace normal trade going with the trend with primers, primer size = (Total units against trend / 4) / 10.000
b) Add trade against the trend as normal
}
Else
{
Repeat step 1 every 50 pips (variable), but don’t double up (not two longs in same range)
}

Step 4: Update SL on any active primers

What do you think? No worries about channel borders, automatic lot increases, primers are based on math alone. (Trend direction is included as the Excel sheet on primers uses that for the formula. Not sure if it is absolutly neccessary).

Re
D

PS! I found out MagicNumber is supposed to be used to identify the EA that placed the order so that it can ignore all trades placed manually, or by another EA (so you could run multiple EAs).

PPS! Webzone’s point of fewer trades against trend in trending markets (post #105) could probably be fixed by adding one more external variable for rate difference between long and short. Instead of using spread it can be set to 4 (while ranging) or 25 (while trending)

118

sgude0

the0,06% is tested very much in the the hourglass formation explanation. So that will work with the right settings.

The 550 pips zone can’t be administrated by an EA, as it can’t make decisions on its own. That’s why we have to make it to a % sats of total capital to keep reinvesting the profit.
Of cause it can’t work as fast as a person administrated channel. But if You only need to check the bottom line once in a while, I think it is worth it.
It is correct that it will jump from 0.01 lot to 0.02 lots. I think that is a matter of rounding up or down to decimals. So I can’t imagine that would be a big problem.

119

Since the discussion is focused on primers, here is my 2 cents on how the EA should look like.

  1. the main objective of the primers is to balance the channel, when it is in a dangerous situation (described very well, figures included, in previous posts). But… what if there will be situations (considering that the channel will take ~2 years to grow) when you can benefit of this “mechanism”. Shouldn’t you use it to grow? The point is: if you hard code it inside the EA you won’t have the ability to decide.
  2. Starting from this phrase: “Well, here I am to prove you that [B][I]if you react fast enough[/I][/B] and follow my instructions there is no way you could lose.”. As I read it, your own decision is needed to trigger the usage of the primers.

And the thread has actually started with this opinion, that this trading strategy should be semi-automatic. So, why shouldn’t we have an EA with a “rigid” implementation of the primers (at the borders of the channel - which can be external parameters) and a second EA, only with the primers strategy. So, when the moment comes (e.g. the Brits announce an amazing, unprecedented, measure of balancing the pound), you open another chart, add the primers EA and roll the dice. Sit back and expect it to rise or fall few hundreds of pips. Either way, profitable. And how should you know the direction? Well, you never do, but set the primers EA to start in any direction after reaching 30pips difference from start. Either way it goes, you lose these pips, but you will gain so much more later. And if, minutes after the news came, you don’t see any major action, you disable it from the chart.
I can see only 1 drawback, if the rate goes 30pips in 1 direction, triggers the primer, stops and changes the trend.

120

That’s a break-out strategy. There are tons of scalping EAs doing that already.

Re
D