Hello Bocajunior, hello everyone!!!
Bocajunior: thanks for the kind words and compliments (but do remember that I only STARTED the thread - the thread has continued to go on because of the input of some very good people who have contributed some excellent ideas - which I am going to try and ‘summarise’ below).
OK - well folks - I have spent a LOT of time looking at charts and stuff this weekend - and - this is what I have come up with (you probably won’t like it - and some of you have already ‘stated’ that using ‘pure’ Parabolic SAR is a recipe for disaster - so - to those of you who said it - sorry - but I HAD to find out for myself):
Basically - it boils down to this: do you want to make ‘SURE’ money - or do you want to use my ‘shotgun’ approach?
My ‘shotgun’ approach (I’m repeating here for the sake of clarity and to ‘sum up’) basically means that you take a Parabolic SAR entry signal on EVERY SINGLE PAIR AVAILABLE TO YOU when you get a Parabolic SAR entry signal and - as previously stated - you either EXCLUDE the ‘commdolls’ OR you make sure that the direction of Parabolic SAR on Gold and Oil is complementary to the direction of Parabolic SAR on the ‘commdoll’ pair. You use Parabolic SAR for your stops / stops and reverses. You only trade the daily charts. You make sure that you have LOADS of margin. You make sure that you don’t ‘bail out’ early. That’s it!
Now for the ‘SURE’ money:
I know this is a pain - I know it’s going to limit the number of trades - and I know that all it is is ‘throwing’ more indicators at the system BUT from where I sit - after checking each and every single daily chart - not only my 44 forex pairs at Delta - but also the Dow, Nasdaq, S&P 500, DAX, FTSE, Gold, Oil, Silver, even Soybeans and Natural Gas (need I go on) - this is what I have found:
Daily charts only.
When you receive a Parabolic entry signal to go short:
You ONLY take the position WHEN:
RSI is above 70 (or has recently been above 70 and has turned down i.e. has been above 70 within the preceding 1 to 3 bars and has turned down AND is still above 50)
Stochastics are above 80 (or have recently been above 80 and have turned down i.e. have been above 80 within the preceding 1 to 3 bars and haev turned down AND are still above 50)
MACD must have crossed down
Akram’s ‘Alligator’ lines are NOT intertwined (or at very least ‘look’ like they are changing direction i.e. at very least the ‘lips’ (or green line) must have crossed the ‘teeth’ (or red line) and the ‘jaw’ (or blue line))
ADX is equal to or above 20 (and if you have ADXR then it must also be above 20)
Assuming that your entry EVER meets ALL of the above criteria:
Once Parabolic SAR has ‘locked in’ your profits on the daily timeframe you switch to the next shorter time frame available to you and start tracking Parabolic SAR on this timeframe until stopped out. You DO NOT stop and reverse at this point. You have the option at this point to take another position on this timeframe IF Parabolic SAR reverses again on this timeframe with the proviso that Parabolic SAR on the daily timeframe still going in it’s original direction i.e. you have not (would not have) been stopped out on the daily timeframe yet. You NEVER stop and reverse i.e. you wait for all of the above criteria to be met before taking another position.
When you receive a Parabolic entry signal to go long:
You ONLY take the position WHEN:
RSI is below 30 (or has recently been below 30 and has turned up i.e. has been below 30 within the preceding 1 to 3 bars and has turned up AND is still below 50)
Stochastics are below 20 (or have recently been below 20 and have turned up i.e. have been below 30 within the preceding 1 to 3 bars and have turned up AND are still below 50)
MACD must have crossed up
Akram’s ‘Alligator’ lines are NOT intertwined (or at very least ‘look’ like they are changing direction i.e. at very least the ‘lips’ (or green line) must have crossed the ‘teeth’ (or red line) and the ‘jaw’ (or blue line))
ADX is equal to or above 20 (and if you have ADXR then it must also be above 20)
Once again - assuming that your entry EVER meets ALL of the above criteria:
Once Parabolic SAR has ‘locked in’ your profits on the daily timeframe you switch to the next shorter time frame available to you and start tracking Parabolic SAR on this timeframe until stopped out. You DO NOT stop and reverse at this point. You have the option at this point to take another position on this timeframe IF Parabolic SAR reverses again on this timeframe with the proviso that Parabolic SAR on the daily timeframe still going in it’s original direction i.e. you have not (would not have) been stopped out on the daily timeframe yet. You NEVER stop and reverse i.e. you wait for all of the above criteria to be met before taking another position.
By the way: the ‘rules’ for the ‘commdolls’ STILL apply here.
The only other way that I can think of (actually I did not think of it but Benjimang did): don’t base your ‘entry’ on RSI and Stochastics - but base your ‘non entry’ on RSI and Stochastics. In other words - If RSI and Stochastics are NOT at their limits then take the trade. In other words - if RSI is above 70 and Stochastics are above 80 and you have a Parabolic SAR entry signal to go long then that trade would be a disaster and of course the same would apply to a Parabolic SAR entry signal to go short when RSI is below 30 and Stochastics are below 20. I would say that as long as RSI is between 0 and 50 and Stochastics are between 0 and 50 - with both pointing up preferably - then take a Parabolic SAR entry signal to go long - and if RSI is between 100 and 50 and Stochastics are between 100 and 50 - with both pointing down preferably - then take a Parabolic SAR entry signal to go short. This would increase the number of ‘valid’ trades.
That’s it - that’s the BEST I can come up with.
Like I said - this will certainly limit the number of trades that you do - BUT - if all of the above criteria are met - you can be almost 100% sure that the position is a ‘winner’ - and I would go so far as to say that you could even break the ‘maximum margin’ rule for these trades i.e. increase your lot sizes or number of positions by a SUBSTANTIAL amount (basically to make up for the fact that you’re not going to be doing too many trades from now on). From what I can see - there is only profit to be made doing it this way - no losses - BUT - if you think the original ‘pure’ Parabolic SAR method require patience and self control - you’ve got another thing coming - following these rules requires you to look for ‘patience’ and ‘self control’ in places that you never even knew existed!!! That is the key!!!
You could (obviously) exclude as many or as few of the criteria mentioned above - it’s just a question of how much of a risk you are prepared to take. Put it this way - for every one of the criterion that you exclude - reduce your lot size or number of positions proportionately.
This ‘system’ has now gone from ‘low’ or ‘no maintenance’ to ‘quite a bit of maintenance’ but - like I said - there is no easy way or ‘shortcut’ to making money.
OK - well - that’s it! I just KNOW that I’m not going to be able to ‘discipline’ myself to this extent - BUT - I’ll sure give it a try!!!
The alternative: buy the book and we can start trading the actual trading systems detailed in the book - these are price based - not indicator based - and they will work in both trending and ranging markets. Sorry - like I said before - we cannot run a thread on these trading systems if nobody has the book as I cannot post the ‘inner details’ of the trading systems as this would be in infringement of copyright and very much unfair to the author.
On the other hand - my ‘shotgun’ approach still appeals to me. You know - we (I) keep forgetting that Parabolic SAR is very rarely wrong - and the only reason that I started having doubts was because of the losses that I took last week BUT in retrospect - like I said before - those losing positions were ALL bad ‘commdoll’ trades e.g. Gold was in an uptrend BUT I had a Parabolic SAR entry to buy GBP/NZD! That type of thing.
Another edit:
By the way - Gold and Oil are ‘teetering’ on the edge of a cliff in my opinion - and if they fall - I’m getting my money back and then some!!! Gold has cost me an absolute small fortune since I started trading for a living - so much so that I have not been near it for about four months now - but - it (Gold) ‘owes’ me BIG TIME - so - I’m here - waiting patiently - with ‘open pockets’!!!
And yet another edit:
Actually - to demonstrate the above - the ‘perfect’ entry - I have attached a chart of Gold. All that is needed now is an RSI failure swing above 30, Stochastics to remain above 80 for a day or two, a Parabolic SAR entry signal to go short (I don’t even think I’m waiting for MACD on this one i.e. an RSI failure swing above 30 is very rare and a very powerful signal). ADX is at 59.46 and ADXR is at 50.54. ‘Now THAT’S what I’m talking about’ (anybody watch ‘Mythbusters’)???
Regards,
Dale.
