Here’s one thought that I just had:
What about the emergency top being 2 x the largest profit made by the system over the last x period??? That should give any still good trade time to run and stop out one of those very bad runaway trades like your EUR/CHF monstrosity. Using that other suggestion will not work as using a fixed percentage of capital means that the distance to the stop will depend entirely on your capital balance.
Regards,
Dale.
Yeh look. I really do have the utmost faith in this system as is. If you really think about it: it is not even indicator based. Because the RSI period is so short and RSI is calculated using only closing prices you are really in effect trading some type of price action if you think about it. It’s not like you’re using a lagging indicator. And I believe that its secret sauce is the scaling in over time and not so much the accuracy of RSI(2) (as I have noted previously).
Regards,
Dale.
That’s how I see it. There might be ways of tweaking it, for example with forex perhaps using 80/20 as the levels. But as you have said a few times, whenever you try to improve it things get worse!
Don’t think changing the levels would make a difference too much. I think the ideal test is in fact that EUR/CHF chart. And also GBP/JPY back in January. See what tweak would have resulted in ensuring an overall profit on EUR/CHF for that same period and then apply the tweak to the other pair. If the overall profit on the other has not been affected well then there’s the answer I guess.
Just one other thing though: although I cannot answer the question you may well find that there are just certain pairs to stay away from with this thing is all. Seems to me that EUR/CHF, for example, has had its fair share of flash crashes and manipulation over the years. Not sure. Just saying.
I used 20 and 80 on the same EURCHF chart and came out with 5 winners, 2 losers and an overall profit of 21 pips, which is better than an overall loss of 23 pips, even though it’s a minor difference. The main impact of that was on the big loser - from 72 pips loss to 27 pips loss. I used 20 and 80 on GBPJPY and came up with 215 pips profit. But that includes avoiding about 3 trades where 200 SMA was very close to price, which is a sign that price is consolidating / going sideways. Had I traded that blindly I might have lost quite a bit too.
Right. Now. Let me impart a little nugget (or two) here. I know I keep banging on that I trade the system as is but if I’m being honest I’m probably fooling myself. This being said: I’m not busy doing this right now (just getting back into the swing of things i.e. my last trades were in August last year and my broker has a new platform since then so also getting used to that at the moment) but I do it as the norm really.
Oh and before I go further: let me once again add that this works NOT on FOREX (not tested).
Take a nice look at the S&P500 or SPY (for example). You will notice that a LOT of times (assuming that we’re looking for long trades here by the way) RSI(2) closes below 25 but the very next day price rebounds. I trade this more often than not. Trade goes like this (again assuming that we’re looking for long trades for demonstration purposes): go long at market just before the close when RSI(2) has closed below 25. If price closes higher the next day take profit REGARDLESS of where RSI(2) closes on this day. You do not want to hold onto these trades or wait for RSI(2) to close above 70 as per the standard exit rule i.e. you just want to get out with a little bit of money. But let’s say that you’ve done this entry and the next day price closes lower again and RSI(2) closes again below 25. You now have a NORMAL entry as per the trading system so you just start scaling in (as if you did not have the other position open). So your lot size then ends up being 1 + 1 + 2 + 3 +4 (or whatever).
As far as an alternate TP method is concerned: I have on occasion reverse engineered the RSI(2) calculation once in a trade. In other words: once in a trade I’ve worked out what price would have to be reached in order for RSI(2) to hit 70 (or 30) and then set a TP. This really only done when I’m sure that there is no way I can be around to watch the close. So in other words: if RSI(2) reaches the price required for it to have hit 70 (or 30) then the TP will be executed. Unfortunately I’ve not written any code for this i.e. I just set up a spreadsheet to do this and it’s rather cumbersome. But given that it’s not something I ordinarily do I’ve not really bothered too much.
Yeh. I’m afraid that with this system moves like that are dangerous unfortunately. That and flash crashes!!! Then again and with flash crashes: your stops will not be honored or executed anyway in all probability so the end result would be the same with any trading system even one that uses stops.
@Spudfan (Alistair). You’re a JINX!!! LOL!!! Since you showed up with that EUR/CHF chart just look what’s happened now!!! LOL!!!
All jokes aside now…
Major moves down today as I’m sure everybody knows. Have been at just under 10% loss on one or two occasions today. But: it is what it is. And I cannot say it disturbs me or puts me on edge. That’s one beauty of this trading system (unless you’re trying to get clever of course): it’s relatively stress free. Is it nice to be sitting on losses??? Of course not. But most all of the time: patience pays off. I’m not saying that these things are going to turn on a dime tomorrow and shoot into profit. For all I know they could go down more and no matter what the case I’m going to take a loss. But thus far: historically those losses are far less than they would be today for example.
One other thing that I believe is very important to mention here and that is leverage. Today is a FINE example of the BENEFITS that are a direct result of the ESMA’s margin rules. There is no doubt in my mind (given my circumstances) that I would be trading WAY bigger positions if I still had WAY much more leverage, The floating loss detailed above could easily have ended up being 40% or 50%. And THAT is when people start to panic. Anyways. Just mentioning this i.e. maybe one or two of our “get rich quickers” will stumble across this and see why I bang on about leverage and why it should be respected. Yes i know: one could argue that it doesn’t matter i.e. if my tick values etc. were commensurate with my account balance then it should matter. But that’s just the point. Some people can and some people cannot. And I’m one of those people who needs that type of oversight. Happy to accept it because I know my shortcomings.
So yeh. Not the best of days. Worse still: the Dow appears as though it’s going to close below its 200-day SMA (then again I’ve said this before in just the last few days i.e. lately these things can recover on dime and usually in the afternoon and going into the close)… Anyway and point is: if this does happen to be the case then I cannot scale-in to the position which is a pity. The FTSE100: same thing (at this particular point in time anyway). As for the rest: no problems i.e. will scale-in further at the close.
One last thing: I’ve mentioned this before but again today a real world example. Because I never stayed up on Friday to TP on Australia that position has now gone against me and without hitting the TP that I set over the weekend. Sometimes that works. Sometimes it doesn’t. So just bear it in mind. Of course this does mean I’ll be adding to this position as well.
Have fun.
Chat later.
Regards,
Dale.
I checked out how TPS (using 80/20) would work on another currency pair - AUDUSD. Pretty reliable, but 165 pips over half a year doesn’t seem very attractive. It does suggest that if one could ride the trends this system would work much better.
Well in just looking at that chart: that idea of taking profit (to ride the trends) at the previous swing low (in this case) would only have worked twice so far as I can tell. And by not taking profit when you were supposed to: the trades got even worse. Nah.
As far as the number of pips goes: I count only eight trades over that period. I get way more than that on any given instrument. It is not designed for FOREX I tell ya. I really MUST post links to those videos I saw last night. They were eye openers.
Regards,
Dale.
Here’s a thought given that I don’t believe that the 200-day SMA has any real meaning on a FOREX pair (and you like testing): remove the 200-day SMA and just go long or short as dictated by the system’s entry method and also by my single bar entry signal tweak thing above.
Also remember something here (and this is a problem that I have and have had for years): lots should be increased and decreased or whatever as your balance changes. I don’t think you’e taking that into account after winning trades in your testing and i know for sure I just get stuck trading the same old lot sizes month after month with no scientific or mathematical formula being applied. I know this is a problem for sure. What I’m saying is that you’re counting pips and pips alone in your tests. It’s the (proper) $$$ value at the end of the day that counts let’s face it. But as stated: calculating position size accurately with this thing is a problem given that there are no stops. I’m still busy with those calculations (not gonna happen today though that’s for sure i.e. my flipping face is killing me again tonight). I must say though that I have a bad feeling that based on those calculations I shouldn’t be trading at all or at very least there would be certain indices that would not fit the bill because of their minimum tick value. Of course: this is the right way to do things.
Regards,
Dale.
Anyways.
Scaled in on Italy just before its close. Gonna take a break now (maybe smash my head against a wall!!! LOL!!!) (pliers starting to look good too right now).
I see traders are really trying to defend that 200-day SMA on the Dow. Interesting as always.
Chat later.
Regards,
Dale.
Here. Here are links to the two videos that auto played while I was watching YouTube last night.
I don’t know the dude, have never heard of him before, and for all I know his angle is to eventually flog you something. I don’t know. What I DO know (and probably what kept me watching as I don’t ever watch this type of stuff anymore) was the fact that he mentioned a guy by the name of Inner Circle Trader whom I know of and who used to try help new traders around here some many years back. I believe he wiped out (haven’t we all) at some stage since those days??? I also know that many didn’t like the dude. But he’d been around the block as they say.
Now the stuff may be real basic to most watching. But it is the best way I’ve seen somebody explain the who, what, and why of FOREX prices. MORE IMPORTANTLY (from MY point of view): quite often he refers to the difference between FOREX and stocks etc. Especially in the second video (link) re: the indicators. That’s my reason for posting these videos and the only reason. This being said: maybe it strikes a chord with others hell bent on FOREX trading??? Must say: a lot of what he says make a lot of sense to me (if I were that way inclined).
https://www.youtube.com/watch?v=Lvq0t0eQOG4
and
https://www.youtube.com/watch?v=3c6o4O8goAo
Regards,
Dale.
I know it was 2016.
Tried to p.m. him
Was inquiring about his specific reply.
Wasn’t sure if this was the same Anon that is currently onthe forum now.
It wasn’t my intent to upset you.
KC
Hello.
Huh???
Don’t understand the above. You’ve not upset me at all. Are you the person that sent me a PM YEARS ago asking if I was him??? LOL!!! Nope. Definitely not.
Regards,
Dale.
Dale, enjoying your thread! IPM the wrong guy sorry about that
KC
Kevin
No problem.
Hello Kevin.
Pleased to “meet” you.
Regards,
Dale.
By the way…
Thought I’d take a look at the Dow going back a way. Last time I did this I never actually noticed the huge drop in December last year (I wasn’t trading then) as the last time I looked at a historical chart for this thread it was compressed on my screen so just assumed RSI(2) did its magic. Well turns out: one would have gotten nailed in December last year too. Maybe not to the same extent as on those FOREX pairs i.e. there was at very least one reprieve (signal to get out of the short) when prices turned and the thing shot up again. But a loss for sure nevertheless. Just making sure there’s a balanced picture here is all and that I’m not just posting with rose tinted spectacles. There will be losses i.e. the system is not 100% winners.
Regards,
Dale.
Morning.
Nothing spectacular to report. Prices attempting to recover thus far. All good. Only thing I’m really watching for now is to see where the Dow closes tonight in relation to its 200-day SMA i.e. that could serve as resistance now for the Dow. If it closes above tonight: I can scale-in further on that trade. Same with the FTSE. Ideal scenario though: another down day (but nothing like yesterday) so that I can scale-in the last bits and pieces (I’m still not fully committed on any of these trades) and then up tomorrow (but by not enough for RSI(2) to close above 70) and then up the next day (and out).
Regards,
Dale.
Good morning.
Well: nice moves yesterday so I see. All things being equal: could see another rally today (China rallied overnight). If this be the case and the moves are of the same or similar magnitude as yesterday then these trades could be worth anywhere between 5% and 7.5% by my calculations maybe (assuming I get TP signals at the close tonight otherwise they could be worth more i.e. in my experience moves on Wednesdays tend to carry through to Thursdays and Thursdays usually have the most movement for reasons which I’ve never been able to fathom) (but watch these markets long enough and you’ll see what I mean).
Unfortunately: I have to be at the dentist in one hour (not been to a dentist for at least 25 years) (YES I am scared of dentists!!! LOL!!!). Should be an interesting experience. And, of course, spending my little bit of profits before I’ve even earned them. Nice huh. Oh well: such is life. See what happens Jack??? LOL!!!
Chat later.
Regards,
Dale.
