BlueHorseshoe

Hi Crude8, Based on the figures you provide, then it is fairly unequivocal that the strategy has had an edge over the period you have been trading it. This does not mean that it will continue to perform in this way. Even random entries/exits tend to produce suprisingly long strings of profitability and drawdown. I, and many others here, could test this for you over a longer period but . . . (a) you have to fully disclose the strategy, which you might consider your own intellectual property and not wish to share, and (b) backtested results do not always correspond to the results that can be realised in real trading due to the difficulty in attaining limit fills and/or the spread/slippage associated with other order types, all of which can have a dramatic impact on perfomance. If you're trading a single contract/lot and the risks associated with this are not an issue, and you have already realised a modest profit using this strategy, then my suggestion is that you look at position sizing approaches that will allow you to continue to trade with increasing size, but remove the possibility of giving back all your profit should the strategy begin to fail. Trading in and out of your own equity curve could be one way to do this. I hope that's helpful, and I'm sure you'll get plenty more advice in due course. Kind regards, BlueHorseshoe

It's because many traders are unsure whether the relevant fib level is 61.8 or 38.2, so they add them together and divide by two to get an average retracement level of 50 . . . :rofl: BlueHorseshoe

No you don't. BlueHorseshoe

There are three types of horizontal lines that one can draw on charts: 1) Lines based on price - eg traditional support and resistance levels or consolidation zones (try Auction Markets). 2) Lines based on mathematical derivations of price - eg fibonacci levels or "daily pivots" (try Red Team, Green Team). 3) Lines partially or wholly based on or derived from non price data - eg MP points of control or VWAPs (try Trading with Market Profile) All three are also well covered in various other threads around the site. Best wishes, BlueHorseshoe

Hi Larry, This has been linked from TL dozens of times, but the folllowing article will give you a good idea of "Death by a Thousand Cuts". And it's alternative. Hope it helps! gladwell dot com - blowing up BlueHorseshoe

Glad to be a help! Kind regards, BlueHorseshoe

Hi Db, How does the chart below (today) look in terms of entries and exits? Fine except that I would try the first short after the first break of the line (the hollow red circle), which would not have been triggered. After that, I wouldn't try another long until a new high was made (your 0935 arrow). There is of course no one way to do this. The point of the exercise is not to teach a system but to persuade beginners to become sensitive to price flow. The particular entry or exit is largely irrelevant as long as one has a well-thought-out rationale for it. Would you have used the red or the magenta line for the final exit (not that it made a masive amount of difference in this particular instance)? Neither (see my chart). Given the failure to make a new high at 0951 and the hour and the decline in activity, I most likely would have quit for the day. Am I correcting in thinking that the nearest potential short entry would have been after the retracement at 08:40? Yes. Thanks, BlueHorseshoe Thanks again. BH.

Hi, Apologies for the delayed response. Based on my understanding of displacement from your description above, I think that the following code should do what you want. Please take a look at it alongside the indicators on the chart, and see if the signals match with what you expect. Inputs: length(9), length2(12), length3(20), price(close); Vars: HMA(0), avg2(0), avg3(0); HMA=jthma(price,length); avg2=average(price,length2); avg3=average(price,length3); If (HMA[1]>HMA[2] and avg2>avg2[1]) or (HMA[1]>HMA[2] and avg3>avg3[1]) or (avg2>avg2[1] and avg3>avg3[1]) or (HMA[1]>HMA[2] and avg2>avg2[1] and avg3>avg3[1]) then Plotpb(H,L,O,C,"Buy",Blue); If (HMA[1]<HMA[2] and avg2<avg2[1]) or (HMA[1]<HMA[2] and avg3<avg3[1]) or (avg2<avg2[1] and avg3<avg3[1]) or (HMA[1]<HMA[2] and avg2<avg2[1] and avg3<avg3[1]) then Plotpb(H,L,O,C,"Sell",Red); Kind regards, BlueHorseshoe

Hi Db, The first post in the content thread doesn't really answer my question. The analysis in the first post states "So, Monday morning, price could take off from here or drop back into range", and the trades you show are both long and short. There is nothing wrong with this analysis as far as I am concerned - but I am asking whether it would ever be different (ie a definite directional bias from the daily chart), and whether that would mean that you would only take long/short positions on the 1 min chart? Many thanks, BlueHorseshoe No to both. Thanks Db. BH

Or, if we keep this sort of thing in the public forums, you could arrange to have this added to the smilies: BlueHorseshoe

Hi Db, I probably overcomplicated the question by giving an indicator-based example (just trying to give some context) . . . Asked more simply: would you keep in mind any kind of longer term bias (eg daily trend) when trading from a 1 min chart? See the first post in the content thread. And incidentally (ignoring indicators, timeframe etc), why do consider this so different from what your thread describes - i.e. trading retracements? Why do I consider what so different? Thanks for your thoughts, BlueHorseshoe

Hi DB, I was asking about small interval trading above. I have attached a chart which shows activity in the ES during the same period as your charts for NQ show, along with the type of entries that could have been triggered using a single indicator and a basic awareness of trend. Trading like this (with the indicator) works well for as long as the trend has been correctly identified; to what extent (if any) would you incorporate a longer term directional bias when making decisions from a one minute chart as per the thread? At all? Many thanks, BlueHorseshoe I can't answer that. I don't use indicators and the approach you present is different from that addressed in the content thread. Since the ES is generally mean-reverting, it's unlikely that the approach presented in the content thread would be of much benefit.

Hi DB, I have no questions about the entry and exit rationale, or none that I haven't asked you before, but I wonder what sort of a dent you would expect that typical retail commission would make in the profit from this process in this timeframe? And, did you trade this, and did you experience any execution difficulties beyond those you have indicated? Thanks, BlueHorseshoe If you're referring to the profit %, none. As I said in the introductory post, the profit % has to do with how many points traded resulted in profit. The degree of profit is not considered. If you're asking about the impact of commissions on trading a small interval such as the 1m vs a large interval such as the daily, total commissions would of course be higher with the former. However, profits, if any, will depend entirely on the skill of the trader. Scalping is no more a guarantee of monetary success than is trading a 15m bar or a weekly bar. Our current NQ long is 170pts in profit with only one commission, but a bad daily trade can easily be counterbalanced by a series of successful intraday trades, regardless of commissions.

Hi, I have now checked, and this verfies fine with the amendment I suggested above. At a glance, it certainly looks like it could form the basis of an interesting strategy . . . Kind regards, BlueHorseshoe

Hi Steve, Why do you keep stating "for the website owner Mark"? Is it because: You wish to reassure Mark that he owns the website? You wish to reassure yourself that Mark owns the website? You think there is authority and/or kudos to be derived from knowing the website is owned by Mark? Linguistically, it's just a curious thing to keep doing, that's all . . . Kind regards, The occasional website contributor BlueHorseshoe. ************************** ps. I was looking at an old ActiveTrader article by Thomas Stridsman (attached) the other day. Elements of his thinking seemed to resemble what I know of your own - might possibly be of interest or use to you? 20021217132118_at-prch oct 2000.pdf

Hi, Sorry - I'm writing this on a machine on which I don't have TS installed, so I can't check the code. Plus I haven't written a PB study in ages, so I'm doing it from memory . . . Try removing everything from within the quotation marks for both buy and seel signals, so that they just look like this: Plotpb(H,L,O,C,"",Red); Any good? BlueHorseshoe

Hi PitTrader, Firstly, the code you give above is not the code for the Hull Moving Average. It's just code to call that function. But that's not an issue here . . . Because of the way that the HMA is calculated you might want to try using a square number (9 or 16?) for the length setting - not quite hocus pocus in so much as there is a mathematical reason for doing so, but not necessarliy bound to make any improvement to your indicator. I'm confused by (high+low)/1 . . . There's no point dividing by one as this won't change the parenthisized value. If you're after the "midprice" of the bar, then you need to divide by two. In the code below, you can do this by replacing the "Close" for the Price input with (H+L)/2. I'm confused by the whole displacement issue as well. For now, let's ignore this and try and get some basic code for you to play with: Inputs: length(9), length2(12), length3(20), price(close); Vars: HMA(0), avg2(0), avg3(0); HMA=jthma(price,length); avg2=average(price,length2); avg3=average(price,length3); If (HMA>HMA[1] and avg2>avg2[1]) or (HMA>HMA[1] and avg3>avg3[1]) or (avg2>avg2[1] and avg3>avg3[1]) or (HMA>HMA[1] and avg2>avg2[1] and avg3>avg3[1]) then Plotpb(H,L,O,C,"Buy",Blue); If (HMA<HMA[1] and avg2<avg2[1]) or (HMA<HMA[1] and avg3<avg3[1]) or (avg2<avg2[1] and avg3<avg3[1]) or (HMA<HMA[1] and avg2<avg2[1] and avg3<avg3[1]) then Plotpb(H,L,O,C,"Sell",Red); Have a look at that and compare with what you see visually with your indicators alongside. Let me know if we're in the right ballpark and then we can try and tweak the displacement thing. Kind regards, BlueHorseshoe

Third from left? BlueHorseshoe

Hi Onesmith, If I consider anyone on here is worth my time, I tend to speak with them using PM. You know whether or not I speak to you through PM. You don't know whether I speak to Steve through PM. I will tell you whether I speak to Steve through PM in a PM to you, should you be one of those people with whom I speak via PM. If you're not one of those people then you'll never know whether I speak to Steve via PM, but you will know that I don't speak to you via PM, and therefore likely consider Steve's attack from last year to be accurate. BlueHorseshoe

That's not something I had considered. In theory, I suppose, arbing out randmoness would lead to . . . non-random behaviour? I should stop visiting threads like this before 9am "the perfectly random will still have some series of long runs more often that you can stay solvent" - which is why even Casinos limit some people and bet sizes For anyone who can be bothered with it, there's a detailed explanation of the maths involved in casino limits and long runs in Ed Thorp's 'Beat the Dealer'. BlueHorseshoe

I wouldn't agree. Lots of people grind down accounts with stop-losses - death by a thousand cuts - and call it "risk management". Once the money is gone, it's gone, so it really doesn't matter whether you blew it all on one trade, or you got stopped out a thousand times. Knowing the probabilities involved in each is the only thing of importance . . . Can anyone name an ETF that went to zero? Can anyone even show me a chart of an instrument (any one will do) that fell, let's say, more than 50% from it's highs without a pullback that would have provided a better than worst case exit? Doubling up on a position is only dangerous if your starting position is heavily invested or heavily leveraged. Otherwise, it's just buying more of something at a cheaper price. BlueHorseshoe

I have no thoughts on whether the concept is sound or not, but wouldn't you be better looking at a more automated and mechanical way of doing this, rather than 'staring at a screen'? It's perhaps not much good looking at volume of executed trades (as this may alert you too late), but why not just sum the depth of book and have some sort of average or threshold to reference against? Two other thoughts: 1. You could net off orders of a smaller size from the above (although this could be dangerous as you might miss icebergs etc). 2. This is purely a guess, but mightn't someone wishing to work a large order in a less liquid stock need to do so across multiple exchanges? If that's true, then you could include a requirement for that in your "in play" criteria. Hope that helps. BlueHorseshoe

The answer is 'yes'. And with equal probability there could be a million winning flips in succession. But why does this matter in terms of thinking about trading? I disagree with SIUYA's statement: I think that a market that was perfectly random would be incredibly easy to trade. The probability of long runs of similar behaviour would be incredibly small, and you could bet against the continuation of such events. Unfortunately price clearly isn't completely random, and nor is it completely non-random, hence trading is difficult . . . I am taking the needle off my own stuck record now BlueHorseshoe

Well . . . "inspired" is a strong word. I don't recall ever having been inspired by a post in Steve's thread . . . BlueHorseshoe