I guess I should say its not 100% indicatorless since it uses the 100, 150, & 200 SMA, but it doesn’t use these as a signal, only as a “guide” as to when the overall trend is.
Let me quickly start by saying that for the past six months I’ve been auto backtesting hundreds of different combinations of entry and exit signals, and all I can say is that the ones that I’ve found to be profitable with 2008-2009 data, would not work with 2006-2007 data. After reading many of the threads here in this forum for the past year or so, it seems that the goal is to be able to trade without indicators and just use price action & support/resistance.
In an effort to come up with such a system, I present the following simple entry/exit giude. My wish is to have the contributors to this forum send me some comments on it so that I can improve it. Due to the fact that I’m unable to program my backtesting software to include different time frames & pivot point calculations, I have only a guess as to the profitability of such a system.
Set-up:
Daily Chart:
Determine the trend. Should be apparent. If not, is the SMA(100)>SMA(150)>SMA(200)? If so, we will look to go long. If opposite, look to go short.
1 Hour Chart:
For Long: Did the previous 2 candles close above the Pivot Point (half-way between S1 & R1)? If so, enter LONG. Stop Loss=S1. Take Profit=R1
For Short: Did the previous 2 candles close below the Pivot Point (half-way between S1 & R1)? If so, enter Short. Stop Loss=R1. Take Profit=S1
I thank you all in advance for any comments and suggestions you can throw my way on this.
pictures please btw, i like this one. its kinda like what im trading 'cept i use momentum indicators to help show a reversal at a resistance/support level. also, my TP is two levels away and my SL is one level away, kinda like yours :p. only thing is i use different sup/res levels (i think)
btw do you use price action at all? or chart patterns or candlestick patterns? just curious
Ok, to clarify, when I say “two candles close above/below the Pivot line,” I mean two hourly candles in a row (or, consecutively) close either above the pivot line (if the Daily Chart shows an uptrend) or below the Pivot line (if the Daily chart indicates a downtrend).
Mr. HelloGoodbye4201:
Thanks for your response. As I’m putting this system together, I’ll post some charts as soon as I enter some live trades. As of now, I will not be relying on an indicators (nor chart patterns unless they are obvious), however, which momentum indicators do you use and what are you looking for in them?
i use a 8,3,3 stoch and a 12,26,9 MACD i just look for oversold/overbought conditions at a support or resistance level to help show a reversal. MACD histogram also shows strength in the current trend so if it starts to flatten or change direction that is a sign of changing momentum
Ok, I see where you’re at. Yes, I can see using the Oscillators to check a reversal at the S1/R1 levels. What’s different about what I’m trying here is to try to jump in on the move once it happens. It’s like this: Once the hourly chart shows enough price movement in the direction of the general trend (cue taken from the Daily Chart) to cross over (and stay over) the Pivot Line between the S1 & R1 levels, my theory is that this should be an indication/signal that price will move at least all the way to the S1/R1 level (whichever the case may be). I see that your system will give you a tighter SL and more price movement since there are obviously more pips b/w your entry and the S1/R1 level. Also, at best in my system I will only receive 1:1 risk/reward, possibly even lower.
However, I’ll do my best to continue to post the set-ups and results to see how this holds up.
Thanks for the comments/suggestions. Keep’em coming…
– Tony
you should try to always have atleast a 1:1 reward/risk ratio. and only one that low if you winning near 65-70% of the time. anything under 1:1 youd need to be winning nearly 85% of the time to cover for the few losses
Ok, good point. So, in order to keep it the risk/return better than 1:1 (even if only slightly better), we’ll move the “entry” line halfway back towards the S/R line. Sorry I don’t have a picture to illustrate (yet), so for now we’ll use hypothetical #'s.
For instance, Daily Chart says we’re in an UPTREND, so we’ll look to go LONG.
On the hourly chart, (we’ll keep the #'s round for simplicity), the Pivot Point is at .7000, the S1 line is at .6000 and the R1 line is at .8000. The original system would have us go LONG once the candle closed twice in a row over .7000 (the Pivot) and the SL=.6000 and the TP=.8000 giving us 1:1. (Not really though, because the entry would in effect be higher than .7000).
The Modified System: On the hourly chart, we’d enter LONG if two consecutive candles close above .6500 (the SL=.6000 and TP=.8000). In this way, we get a risk/reward closer to 1:1.5
Cool, hopefully there are some good opportunities to try this out next week. I wish I could program a way to back-test this, but I guess we’ll all see the results first hand here on this forum…
what is the most standard way for finding pivots/sup/res levels? by most standard i mean what do most of the people of a trading floor use?
for stagecrew
he has a point in the fact that you wil be entering late, thats one other area where our two systems differ. i place limits at support/resistance levels so i just right on w/o waiting
oh;
i had a 93 in AP english my sr. year in hs and got a 4 on the AP exam so now that im in college i can skip the first english class. and by what i said i was really looking for an answer to either show me how to use this technique or, show me what prices they use for this technique because ive noticed that alot of brokers have different prices some 50+ pips different at times. so if i used one that was 50 pips off why bother at the point? there would be too much error.
wow, cant believe i overlooked that ty for the hint and for embarassing me
edit
well still, what prices should i use? im currently using IBFX and i know their numbers can be different then other brokers so is there any specific source i should use?
I can’t comment on how well they work with other pairs, but Pivot points on GBP/USD can be really helpful!
IBFX uses GMT.
So 5:00pm new york time is 17:00 EST and 22:00 GMT.
I’d use 22:00 GMT to 22:00 for the full day.
Enter the HLC between 22:00 & 22:00 GMT
Sunday will mess you up because IBFX doesn’t come online until something like 23:00 GMT and Friday closes at 21:00 or 22:00.
On Sunday night I’d just use Fridy’s 00:00 GMT to Sunday’s 00:00 GMT. It’s not perfect but seems to get pretty close. Somewhere I think I have a pivot for MT4 that allows you to pick the open hour, I’ll look and see it I can find it and attach it for you.
btw, i like this one. its kinda like what im trading 'cept i use momentum indicators to help show a reversal at a resistance/support level. also, my TP is two levels away and my SL is one level away, kinda like yours :p. only thing is i use different sup/res levels (i think)
