Once we get a break out of the 40 day system and the trade is making some profit (0,5R) I switch to the 5 day system to move SL. I’m also not 100% sure how Nero does this, but I get good results by doing it this way.
Good question bro and one I would also like some input from Turbo. Please be patience in waiting for a response. Turbo is a busy individual and we must respect his time.
From my perspective I programmed the bot to immediately start trailing at the 5 day high/low. However after reading SteVeXX answer and re-reading the thread I fear I have misinterpreted the rules.
Hello Bob, Steve and Jazz,
i am happy that you ask this question.
I have already said something to this issue on page number 12.
When i finished the system i did not have a fitting solution to this very specific problem.
When a 1st 40-days trade is such a great sucess that it never falls back then theres a lack of guidance in the system which theoreticaly leaves you dry onto the options of what to do next.
Here is my answare of page 12:
Thou this methode of solving the issue is in my view not good enough.
simply because, in most cases, not in all, after such a brakeout it hapens very often that the price retests the brakeout zone co confirm if the newly established trend/brakeout is strong enough to continue. in such cases new options enter the market ad push further in the newly direction (or not).
Let me illustrate you an example:
In this example the USD/JPY made 2 retest of the lower “resistance” (remember, support becomes resistance after beeing braken) before it advanced further down.
The maingoal is to erase this “whipsaws” and stay in a profitable trade.
If we go now and add a barrier of 0,5 R/R-ratio as benchmark for the change into the 5-days methode (like steve is using), we will end up having a first trade that yiels a tiny mini profit and 2-3 trades which yield no profit or even losses.
Adding a 1.0 R/R-ratio will lead to a similar result.
After such breakuts we need to show patience and give the trade space to breathe. considering some statistical calulations ive made i came up with this solution:
After a 40-day brakeout trade we wait for a R/R-ratio of minimum 1,5 (id preffer even 2.0 over 1.5) before we change to the 5-day methode -OR-, if a 1,5(2) R/R-ratio never hapens: we wait 15 days (15 full candles) to change back to the 5-days trading methode.
the issue here is the uncertainty of the markets after it broke a 40-day (or more) trading range. The ulls still try to keep to their positions, the bears are not sure if the brakeout if a valid one. After the retest the bulls see a good opportunity to close losing positions as close as possible at their break even point and nt suffer bigger losses (this pushes the price down further) and the bears see a fitting opportunity to add to their winning position (this pushes price down further more) and the people who were not participating in the breakout see a great oportunity to enter the market and put their first short positions at a very secure point to open new positions (this pshes the price down even further).
Also i would like to add a advice for everyone. The stoploss in a 40-days breakout is leaving us with a profitable trade but one that is not as big in conctract size as it should be. So a winning trade which started as a 40-days breakout will yield less profits than a 5-days trade which was entered in the same conditions.
To solve this issue in a secure way i suggest you to sclae in to the 40-days trade after starting to se the 5-days methode.
Add to the trade every day 10% more position untill it gets closed by the 5-days methode.
This leaves you flexible and secure but adds to a winning trade of bigger magnitude and helps you to squeez out the maximum of prfits.
Hello Bob,
thank you so much for sharing your EA. awesome work.
For the issue you identified -of how to identify hot markets- in my opinion it it the best way to simply instruct the EA to enter first trades based only on the 40-days rule.
Breakouts happen sooner or later in every market and a EA keeps a good track of that. This way new markets/positions might be entered at a slow pace but in a secure way and it guarantees that new positions are entered only in moving markets.
Hello emeraldorc,
its nice to see you are still on BP sometimes.
Thank You for your contribution and nice words. and i completely agree with you. the closing is just as important as the opening. I have posted very detailed instructions of how and when trades are beeing closed right at the 2nd or 3rd post in this thread. These instructions are for profiting aswell as losing trades. The system is designed to take away any decition from the trader and make him act only according to the rules -rules which cover every possible situaton and scenario, opening trades aswell as closing trades-
you are more than welcome to post off and on topic posts here PMH!
awesome explanation. And i always watching a big news before starting trade.
Re The Breakout, with price continuing to move in our favour.
Thanks to Steve for your input and to Bob - especially for the EA. I haven’t used it yet, but intend to when I have a better understanding of the system and what’s going on (see below).
Turbo. Apologies for missing the original question re the breakout. Your in-depth explanation of how you re-evaluated your original answer to that question is a valuable insight into how you’re reading and assessing position(s), how what you’re seeing might be impacting on price movements and what the potential might be for maximizing any gain. Great stuff.
I’m learning a lot from this thread.
G’day folks. So I’ve tweaked the bot with a new variable called “Delta_n.” What it defines is the min risk:reward ratio the initial 40-day break trade must obtain before it will close via the 5-day rule. Ran a few backtests and I’ll let others discuss the results.
But, as usually, I’ll add my norms. Bots are great at backtesting and evaluating mechanical systems. They are not predictive of future performance. As there names suggests, they are a advisor, designed to assist the trader. You are the expert trader and it is up to you to understand when to turn it on and more importantly, when to turn the bloody thing off.
All the results below are from the EURUSD pair run from April 2003 to April 2017.
Original Bot High 5 v2.2.
40 day break is exited immediately on the 5-day rule.
High 5 v2.4.
40 day break is exited immediately on the 5-day rule once a return of 0.5 R:R has been obtained.
High 5 v2.4.
40 day break is exited immediately on the 5-day rule once a return of 1 R:R has been obtained.
High 5 v2.4.
40 day break is exited immediately on the 5-day rule once a return of 2 R:R has been obtained.
And please find v2.4 attached below
High Five v2.4.zip (2.26 KB)
Hey bobbillbrowne!
Thats really valuable, thank you for your contribution!
I will certainly use it from now on.
thank you very much for this Bob!
if i read the graphs correct the 0.5 rr gives the best returns and the 2.0 rr is the one with least whipsaws and most stable.
i am not very familiar with computerized backtesting so correct me if im wrong.
did you try 1.5 rr?
if this results are reliable i wpuld suggest to use the 0.5 rr methode like Steve is using. it looks the most promising.
edit: can you aswell backtest with scaling in into positions like i posted the last post? adding 10%/dail to position once it started trading according to the 5days rule? is that possible? and if- would you have the time to test this?
Yes my friend, you read the results right. Yet the results are open to interpretation. Firstly it does cost money to trade. Whereas commission chews away my profit on a daily basis, swap could do the same here. Also, in reality, would we consider this pair as a “hot” market the entire test period. Probably not. So we would be more selective in when we would have traded it.
As in your initial post, there are many markets we can apply this method in. My results are but for one. I would hope but, by providing a tool, that this is a catalyst for others to join in this thread. To discuss why they have chosen which particular markets to participate in and what influenced their decision making process during the trade.
Many won’t realize what a powerful little system you have provided here.
No, but I have now. The results are
This is a tuff call. After running a 1.5 R:R test I would almost suggest this. Again I think it comes down to market conditions. I love those two words together - market conditions - the greatest disclaimer out there.
If the market is hot I would suggest 1.5. Just keeps you in the market with minimum costs. However the 0.5 R:R seems to able to generate a better return in semi-hot or even cold markets.
All things are possible to a skilled programmer. This I am not. But this task is do-able, even for me. I’ll get back to you with some results soon.
Hi Bob,
What do you use to test your EA? I’m fairly new to forex programming and still struggling to find something to test my EA
Thanks
There’s only one piece of software out there for MT4. Thats Tick Data Suite from the good people over at https://eareview.net/. Otherwise MT4 is pretty much useless as a backtesting source. Haven’t tried any other methods (cTrader/forextester/Ninjatrade). I also programm with patches from these guys MT4GUI as it allows me to manually open and close trades in MT4 strategy tester.
Thanks, I will take a look at those sites
Well done mate!
Yes i agree, the EUR/USD is a choppy pair lately. my papertrading on t which i did for 1.5 and ilustrated the results on page 12 (i think) aswell made only minimal profits.
If you are looking for a hot market then please backtest XAU/USD on the 5 days-methode (dont test the 40 days methode) on it for the past cuple years. I am sure the backtest will show some very nice results.
In general, XAU/USD is the hottest mareket around these days to use the high-5 system.
Especially today i would recoment every trader (not only the people using high-5) to take a closer look at xau/usd (short till 1100) and try your luck on this specific market.
Market conditions, very true and very well said.
About the system: Yes yu are right, it is a very powerful system and indeed you realized correctly that most people will not realize it.
the reasons or this is because retailers are trained by brokers and entities with more “experience” that “daytrading” is the holy grail. Retailers are not interested in systems which require you to hold positions over days or weeks. Patience is a virtue rarely found in retail traders, and that is the reason why daytrading/retailers fail in such a overwhelming number.
To make money on tradint the only true virtue someone must have is patience. Just like in fishing or hunting. In our fast paced world, patience is something pretty much noone has anymore.
When you go out and study, do a professional finance study or a MBA in fincance, the first thing they teach you -and the thing they lay focus on for the entire 3 years- is to have/practice patience.
I knew that the participation for this system/thread will not be huge before i even posted it- the reasons for that is the lack of patience.
This system is for the people who learned their years of lessions, and after they found out how not to trade, they can find out how to trade.
Please when you have the time, Bob, backtest the 5-days methode with 50.000 starting account on xau-usd for a sample of 2-3 years (or as much as possible) and post the incredible results here.
I will go in bigger depth on how to chose a market within the next few weeks. How to chose a market is the main things that is beeing learned by learning “how to trade” it is the single most biggest fundamental that people must learn and that is something that needs a lot more explanation than the system i putted up here.
Bob - I installed your EA the other day on gbp/usd. It opened a buy order several pips below the high of the uk election announcement spike, (it placed a spot - entry mark? - at the top of the candle body) but without a stop loss? Every time I cancelled the order, it would place another one. Not sure if it had determined the high using 5 or 40 candles or what was happening. Presuming there’s something I’m not understanding here? I had set the 5 day risk at 1.5 and the 40 day risk at 0.5.
Turbo - Any reason why the 40 day candle count is a one off and not daily? I have some set ups where the 40 day count has a wide gap between the high and the low in deeply ranging currency pairs, from the end of February. Since then, the ranging has narrowed and widened but without breaking the high or low. If the 40 day count had been daily, there would have been breakouts from a narrowed range.
I do understand that the method is for trending markets, but you’ve suggested to Bob that his EA might use the 40 day rule because it can’t know if a market is trending or not, and I had already been trying this when I was unsure if a market was trending or how ‘hot’ it was.
Just thought I’d stop by to say that I have tracked three consecutive High-5 trades so far on USOil:
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Short Opened 2.3 / Closed 29.3: Profit 408 pips
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Long Opened 29.3 / Closed 18.4 : Profit 383 pips
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Short Opened 18.4 / still open : Current gain 295 pips
G’day bro, see if I can help. First, remember I’m not a pro trader/programmer/mentor. I’m a survivor, happy to share my personal journey. That aside, I’m flattered to hear from someone using my bots. Translating a system into a bot can be fairly simple (particularly if you are punter like me using MT4). Of course the more advance the bot, the better the skills of the programmer will be. There are many skilled programmers that lurk the forum and for-what-ever reason choose not to participate so it is left to the likes of me to offer something.
When using a bot it’s important to understand it’s logic. I program using true/false if/then/else statements. These statements pass on each and every tick received on the chart. The High 5 logic is pretty simply. So on each new tick the following process is applied;
[ul]
[li]Set variables. The bot obtains variables like ask price, bid price, account balance, time and market orders.[/li][li]Set flags. The bot uses true/false flags to determine if there is an active trade. The presumption is that on each new tick no order exist and therefor the bot is looking to enter the market on a 40 day channel break.[/li][li]Check for new bar. This is an important one. The bot calculates the highs/lows of the channels on start of each new bar (in our case once a day) and upon initializing. It will use these levels throughout the day to determine when to place, close and reverse or exit a position.[/li][li]Collect market order details. The bot checks current market orders to determine if there is an active trade.[/li][li]If an active trade is found it is managed by the 5 day rule. Meaning it will automatically close and reverse the trade on the 5 day channel break then exit the position after 3 consecutive returns less than 1 R:R. Because this is managed internally by the bot no stop loss or take profit is issued on the order ticket.[/li][li]Else if no active trade is found look to enter the market on the 40 day channel break.[/li][li]Operation complete, wait for new tick and repeat.[/li][/ul]
What I believed has happened as you have described is that you have initialized the bot on a day that a new 40 day high has formed. The bot would have locked in the value of the 40 day high the moment you loaded it on the chart. With such an aggressive move the price held above that level all day thus every time you manually closed out an order, it simply re-opened another. Because the price was greater than the 40 day high level it calculated upon initializing.
Although the logic inside the bot could be changed, it is to be remembered that the High 5 system is a semi-automatic system that uses limits orders to enter, reverse and close positions. Designed to be maintained once a day, set and forget. By fully automating it, you must put your faith in the bot and let it do its thing.
From my perspective, bots are about back testing. You get to evaluate a systems potential. Are able to watch how a system preforms under different market conditions and re-engineering a system. The fatal flaw in this bot is the switch between managing the 40 day break as a 40 day break to locking in profits by switching to the 5 day method. As the saying goes, letting the profits run. We have defined that switch with a rule that says if the trade is in profit by “[I]n[/I][B]R[/B]” and it breaks the 5 day channel then switch to the 5 day management plan by closing and reversing. In reality, we have the discretion as the expert trader to say no, I want to let this trade run. Or this was a fakey, I’ll close and reverse (cutting the loses) via the 5 day rule.
But what I’m more interested in is why you chose the GBPUSD pair for this trial. Looking at the daily chart it may well be a candidate for the High 5 system. The fact that a long break occurred on the day that UK elections were announced should be irrelevant. This is a mechanical system and a break is a break.
@TurboNero, got a 3 day weekend ahead of me, hope to put gold through it’s paces and report back in this time.
Hello Jazz,
i am not sure if i have understood your problem correct. The way i understand it is that the 40-days brakeout is too wide spread once the market narrows down a bit.
The 40-days is considering only the most recent 40-days. So if you lets say have had a 40 days high and low, and the market continues more days in this rage then every new day you count back again 40 days and the 41st day is not important anymore. That ways when a market narrows down to a trading range which is “calmer” the 40-days will adapt to this narrowed trading range automatically and trigger a trade once these 40-days high and lows have been broken.
Is that explaining or solving the issue you had or did i missunderstand something?