Great stochastic System

[MrCannady]

From what I can tell your system is based on hard rule sets(when X crosses Y on indicator Z). That makes it easy to model since there are no objective components to it. Because it has a hard rule set, if this fails on a back test what would cause it to be successful using it live? I know stochastics doesn’t work because stochs and MA systems are usually the first systems that people test. If they worked then nobody would create the much more complex trading systems that exist. Generally markets are too complex to find predictable patterns using a basic stoch rule set. You can create more complex rule sets that involve more indicators that are successful, but they don’t trade often because they look for such specific criteria. I have written a couple such rule sets as EAs that have produce successful results in multi year back tests. I have threads dedicated to them in the EA forum.
I’m not saying rule based systems don’t work, but this type of system won’t.

Ok cool,I can respect that

[Lii]

Hi there…Mr Cannady…
In addition to Bob’s request… wanted to know which brokerage firm (or name of platform) you are currently using.
Been meaning too start trading forex and i think now would be the best time to do so.
Great performance summary you have there :-).
I hope your system wont fail you later into the future…All the very best.

Cheers.

Lii

[Lii]

MrC and Bob…
Just read the entire thread…
Looks like you are both doing very well…
If its not to much to ask…am really interested in seeing the updated live performance report of your trades.
I think this is indeed a nice system and would like to give it a try too…

Thanks guys for your contributions…
Cheers…
Lii

[aminio]

Dear Mr Cannady thankyou for discussing this, it is helpful to learn from these forums. In your response to Mr Zuzzulo you explained that you had many years of understanding individual nations fundamental economic data which contributed to your decisions in trading. Later in the thread you suggested “You have to use experience to determine which crossovers are legit”. What is the balance/ratio of crossover signals you accept based on this stochs methodology against the ones you reject based on fundamental experience and general trading knowledge gained over the years. Again thankyou for sharing your thoughts and knowledge.

[patmontes]

@MrCannady

It’s working well,a pretty slow week so far.And i have also decided to take trades that are in the same direction of a 55 period sma on an hourly chart.So in essence,i go long when the crossover is going up, and the price is above the sma, and vice versa for a short position.

Mr C this would def increase the accuracy of your system
Good luck and happy trading. Suggest you visit alertfx.com for automatic alerts when cross overs or ob/os levels are breached.

[nada]

Hi, Lii, I read you post and I can tell you that NSFX broker is veeery good, the platforms you can choose, fixed or floating spreads, no freezing platform during big news, no requotes, regulated Broker, bonus if you like, helpful and friendly team… I am very happy with them.

[MrCannady]

@Lii

Hi there…Mr Cannady…
In addition to Bob’s request… wanted to know which brokerage firm (or name of platform) you are currently using.
Been meaning too start trading forex and i think now would be the best time to do so.
Great performance summary you have there :-).
I hope your system wont fail you later into the future…All the very best.

Cheers.

Lii

Hi Lii,
I use tradeking forex trading, and they are an extension of GAIN capitol. I use the platform they provide, its pretty simple and has everything I require. Here are my latest trading results.

[MrCannady]

Dear Mr Cannady thankyou for discussing this, it is helpful to learn from these forums. In your response to Mr Zuzzulo you explained that you had many years of understanding individual nations fundamental economic data which contributed to your decisions in trading. Later in the thread you suggested “You have to use experience to determine which crossovers are legit”. What is the balance/ratio of crossover signals you accept based on this stochs methodology against the ones you reject based on fundamental experience and general trading knowledge gained over the years. Again thankyou for sharing your thoughts and knowledge.

Hey Aminio,
I usually take about 45 to 55% of the crossovers I see, and possibly 35% when im being really conservative.

[Jeffer]

I spent almost my whole yesterday to visually backtesting this Strategy… Well, Iam quiet impressed!!!
Of course, I would call this trading method a scalping system. In this case the SL is most of the time bigger than the TP.
I also checked the signals on a 15 Min Chart, wit also impressive results!

Attached you can see my first trade on my live account using this system on Gold on a M15 chart. I had set my SL at 20 Pips an my TP at 10… I closed the trade when it was in profit for 5.4 pips. Iam fine with that, but as we can see on the screenshot, price had easily hit the 10 Pips target and more…

I will check this Strategy more an more and keep you guys up to date with the results!!!

Big THX to MrCannady for sharing this Method!:57:

[MrCannady]

@patmontes

Mr C this would def increase the accuracy of your system
Good luck and happy trading. Suggest you visit alertfx.com for automatic alerts when cross overs or ob/os levels are breached.

Hey Patmontes,

haha What a coincidence that you mention that, because that’s what I use now, its horrible that they’re going to start charging now, but hey, that’s capitalism for you.

[MrCannady]

@Jeffer

I spent almost my whole yesterday to visually backtesting this Strategy… Well, Iam quiet impressed!!!
Of course, I would call this trading method a scalping system. In this case the SL is most of the time bigger than the TP.
I also checked the signals on a 15 Min Chart, wit also impressive results!

Attached you can see my first trade on my live account using this system on Gold on a M15 chart. I had set my SL at 20 Pips an my TP at 10… I closed the trade when it was in profit for 5.4 pips. Iam fine with that, but as we can see on the screenshot, price had easily hit the 10 Pips target and more…

I will check this Strategy more an more and keep you guys up to date with the results!!!

Big THX to MrCannady for sharing this Method!:57:

Great to hear Jeffer, but be careful with those 15 min charts, they can turn on you pretty quickly, and good luck with your future trading!

[Jeffer]

Yeah, I know!
I will only take trades if it is the right time and I see the right movement in the charts… A trader has to know his Instrument he is trading

By the way… Where do your big losers come from?

All the best and happy pippin

[MrCannady]

Yeah, I know!
I will only take trades if it is the right time and I see the right movement in the charts… A trader has to know his Instrument he is trading

By the way… Where do your big losers come from?

All the best and happy pippin

I started trading daily charts looking for the big bucks, but i got too greedy and used some tp and sl’s that were outrageous

[Jeffer]

One big thing Iam learning all the time is to Trade small lots and let my account slowly and consistently grow… Everytime I tried to catch the big fish and make the quick big $, I burned my account in minutes…

[aminio]

Well, had a botched attempt at trying this out, I set the stoch 14,3,3, assumed the setting should be as simple - not exponential. Followed the advice and tried AU on one hour it was midway, tried NU and it all seemed set up perfectly so placed a buy and added a stop. Then realised I had made an error and that the NU was in day chart mode. I switched down the TFs and the stoch was ok for the one minute chart. ( I know one minute chart is not the method but I had already placed the order ) So I was watching the one minute chart and about 5 minutes later it spiked down with a spikey pinbar taking out the stop. Then proceeded in an orderly fashion to go up. I probably had made an error placing the stop. Entry on NU 5th feb 2014 at 23:48 (47sec) 0.82140 SL 0.82083. I took a screen shot of the candle in 5min TF & then thought to check with two other brokers the same chart on 5 min TF. No such spike candle with the other two brokers. I took screen shots. Was a bit bemused at my first bungled, botched attempt at trying the method. I know this post does not assist the thread and its mehodology, but felt duty bound to report.

[MrCannady]

Well, had a botched attempt at trying this out, I set the stoch 14,3,3, assumed the setting should be as simple - not exponential. Followed the advice and tried AU on one hour it was midway, tried NU and it all seemed set up perfectly so placed a buy and added a stop. Then realised I had made an error and that the NU was in day chart mode. I switched down the TFs and the stoch was ok for the one minute chart. ( I know one minute chart is not the method but I had already placed the order ) So I was watching the one minute chart and about 5 minutes later it spiked down with a spikey pinbar taking out the stop. Then proceeded in an orderly fashion to go up. I probably had made an error placing the stop. Entry on NU 5th feb 2014 at 23:48 (47sec) 0.82140 SL 0.82083. I took a screen shot of the candle in 5min TF & then thought to check with two other brokers the same chart on 5 min TF. No such spike candle with the other two brokers. I took screen shots. Was a bit bemused at my first bungled, botched attempt at trying the method. I know this post does not assist the thread and its mehodology, but felt duty bound to report.

Ouch, who is your broker? And I was also reading a post about some people who don’t even set stops anymore because every time they do they encounter situations similar to yours.That’s crazy though, some brokers are really out to get you.

[aminio]

Well, the broker said it was possibly because they use a different liquidity provider. Strange though that three other brokers don’t have that candle and all the other candles are the same. I do have some software that hides the stops and take profit and lets you place them inside the broker no go zone for setting stops and take profits closer to the price ask bid line. I just haven’t been using that software. I did dump one broker for deliberately widening the spread to take out stops. This broker is good at processing withdrawals quickly and consistently. So I guess as long as I know they can spike out stops I will just have to work around it. Anyway I didn’t want to divert your interesting thread, can you confirm which setting on the stoch you use, is it simple, exponential, linear regression ? Doe the Risk reward not lead to long term problems in that occassional losses of 15 pips and more mean that you will need an 80% and over success rate ? thanks again for your interesting thread !

[nada]

Hi, if you ever decide to change your broker, please try NSFx you will never ever have such bed experience and you will see the spikes when it is at every broker and part of Market condition at that moment and you will get your withdrawals quickly and consistently and free of any charge.
All the best

[aminio]

Thankyou nada

[MrCannady]

Well, the broker said it was possibly because they use a different liquidity provider. Strange though that three other brokers don’t have that candle and all the other candles are the same. I do have some software that hides the stops and take profit and lets you place them inside the broker no go zone for setting stops and take profits closer to the price ask bid line. I just haven’t been using that software. I did dump one broker for deliberately widening the spread to take out stops. This broker is good at processing withdrawals quickly and consistently. So I guess as long as I know they can spike out stops I will just have to work around it. Anyway I didn’t want to divert your interesting thread, can you confirm which setting on the stoch you use, is it simple, exponential, linear regression ? Doe the Risk reward not lead to long term problems in that occassional losses of 15 pips and more mean that you will need an 80% and over success rate ? thanks again for your interesting thread !

I use the 14,3,3 stoch with a simple setting, or slow setting, either one is fine. And as others have said the risk to reward could be detrimental in the long run, so I would definitely recommend using sl and tp’s that are more suitable to your trading style. Just simply increasing the tp and decreasing the sl by a small margin could easily make you more protected if you were to experience a loss, thus lowering the percentage of trades that you need to be successful on. It is also important to take high quality trades, as this will also decrease your chance of experiencing a loss.