Walter`s Forex "Trend Trades"

[brownsfan019 17]

Hey,thanks for that brown. I entered short because of the 1min trend was down,the 5 sec is to time it.

 

I didn't even notice that was a 5 SECOND chart. :\

[PYenner 10]

With any luck there will be a copy of Bemacs Fantail VMA attached.

Had to rename it with a .txt extension.

DL fantail_vma_vtscr.txt, rename to fantail_vma.vtscr

Once it has been imported into VT, look for Fantail Var MA's in the indicator list.

Use the same time period chart as Walter or you will get different results.

fantail_vma_vtscr.txt

[SOF 10]

Ok... so lets start with the first definition here : Trend Definition

 

 

 

Now this new Rainbow indicator is based from a Variable Moving Average, as you should know VMA`s do adapt their input depending on the amount of volatilty... here is some definition http://www.fmlabs.com/reference/default.htm?url=VariableMA.htm in that definition you may notice that the Chande Momentum Oscillator (CMO) is normally used for volatilty calculation on this average, well Bemac aparently uses some form of ADX for his VMA and then creates the rainbow with emas from this VMA...

 

 

First should we talk about the normal problems trend indicators suffer.... next post... cheers Walter.

 

Walter, did u ever get to the bottom of how BMc uses the ADX in the calcualtions?

[walterw 10]

Ok... so far I had been talking about Trend Definition with the momentum definition included there... in this post I have to make one clear logic warning about a scenario wich will resemble as a very strong trend as all the above definitions BUT is inminent a change on the course of that trend...

 

Should we call that "inminent strong trend exhaustion"...

 

You will have the rainbow all spread out... you will have all the averages on the same beautifull side of the magenta, you will have an "old ladder" and watch out here ¡¡ when we did such a great big move... we MUST have caution on what may happen there, as probably market may be about to exhaust...

 

You can tell me we have all the trend and momentum definitions present YES... but we already did too much travelling and market may want to take a break at least...

 

 

 

Look on the image above how the trend and momentum definitions are present on the yellow arrow BUT we already did too much of a super move... some basic logic tells us that at this point our trend and momentum definitions would be suspicios at this time...

 

Here is where the chimp is tempted to start thinking in counter-trend setups, but at this point he will still dont bother with them... he will stick to the trend trades...

 

So this is some kind of prevention as to all the above definitions of trend and momentum, where they should be questioned after great big moves...

 

On the next posts I will start talking about pullbacks (dips and rallys) and Timing... cheers Walter.

[brownsfan019 17]

Walter,

What timeframe(s) are you using here and what market(s)?

 

I'm curious if you've applied this setup to stocks, futures, etc. as well? I usually hang back on many of your threads with a watchful eye, but a moving average system intrigues me as I like them!

[brownsfan019 17]

And for those w/o this VT platform, is this easily represented in other charting packages?

[walterw 10]

Walter,

What timeframe(s) are you using here and what market(s)?

 

I'm curious if you've applied this setup to stocks, futures, etc. as well? I usually hang back on many of your threads with a watchful eye, but a moving average system intrigues me as I like them!

 

Hi Brown... at this point this research is pointed to forex, obviously all this methods could be eventually applied on other markets and time frames as well...

 

The charts so far posted are AUD/USD 5 minutes... cheers Walter.

[PYenner 10]

And for those w/o this VT platform, is this easily represented in other charting packages?

 

It uses function calls to VT's inbuilt Wilders ADX, Chande and MA functions.

Any other platform would probably need to have similar inbuilt functions if it is to run fast. Need to be expert in two platforms and languages I fear :crap:

[walterw 10]

And here a short video on Exhaustion... cheers Walter.

Exhaustion.swf

[walterw 10]

It uses function calls to VT's inbuilt Wilders ADX, Chande and MA functions.

Any other platform would probably need to have similar inbuilt functions if it is to run fast. Need to be expert in two platforms and languages I fear :crap:

 

 

I am actually not using TS to full arround programing this, but this functions are not big deal on TS.. any basic programer on TS should be able to do it.. maybe Brown you can ask on the coding forum for some of our great programmers here at TL do it and add this nice code on TS... cheers Walter.

[walterw 10]

I am actually not using TS to full arround programing this, but this functions are not big deal on TS.. any basic programer on TS should be able to do it.. maybe Brown you can ask on the coding forum for some of our great programmers here at TL do it and add this nice code on TS... cheers Walter.

 

 

Should I add that I still did not present the other powerfull aplication of this indicator on the timing side... cheers Walter.

[Don4 10]

walter, well my friend is it finally time. I tell ya most people would not believe how hard you have worked and the systems you have been through. It is my great honor to have got to work with you. You are truly a remarkable person!!! :thumbs up:

[walterw 10]

walter, well my friend is it finally time. I tell ya most people would not believe how hard you have worked and the systems you have been through. It is my great honor to have got to work with you. You are truly a remarkable person!!! :thumbs up:

 

 

Thanks Don for this kind words... should you know you had made a great contribution into this system and it has been my pleasure to interact with you... and I know whats coming ahead its going to be absolutely awesome... the "Tokyo Gang" ¡¡¡ there we go ¡¡¡ cheers Walter.

[Nick1984 10]

My internet got capped so it took a while to go through all that but it was worth it. I love the simplicity of this Walter. You've taken a very simple novice idea and really expanded it to make it very useable.

 

When you first started posting about forex I thought that your small time frame might hurt you in the long term with some of the harsh spreads out there in spot FX but I think that the simplicity of your trend system along with the benefits of going on a longer time frame to help reduce the whipsaw effect will really pay off. I reckon you'll make your millions soon

 

That idea of buying an island somewhere in the pacific is still looking good. As the local chimp you can be the minister of finance of the little Bananna republic!

[walterw 10]

Ok,

 

Let me remind you the trend trade structure how it looks (as posted before) :

 

To open position :

 

_Trend Definition

 

_Pullback Definition (dips and rallys)

 

_Timing Entry Definition

 

To Close Position :

 

_Stop Definition

 

_Exit Definition

 

and also let me remind you that our target is "simplicity" and "optimization"...

 

 

now I will start with a new set of topics here as we already dealed with "trend definition", now we are ready to aboard the topic "Pullback (dips and rallys)" and "Timing Entry"...

 

This two are directly related... Timing comes right after the pullback, wich means that a pullback is the preamble of the timing entry in the trend trade structure...

 

 

Now here we have another BIG dilema (probably the bigest, the hardest) for the trend trader... and it is the "erratic morfology" of a pullback and its impact on "Timing"...

 

lets start with this question : what would be the ideal pullback for a trend trade ? the answer is : The ideal pullback would be a V shaped pullback...

 

 

now this ideal is so far from reality... actually this pullbacks have an "erratic morfology", what I mean with this is that they are not V shaped, thought some times they do contain V`s but from a morfologic stand point of view they are "erratic"...

 

 

Now, having an erratic morfology on the pullbacks wouldnt bother us if we didnt need to "Time" our entries on that mambo morfology... you see, we can say we are on a pullback very easy, BUT it gets hard when we have to do the next step of "Timing" our entry and getting in to a position in an effective way... here is where the trader starts to feel the frustration of knowing the trend and knowing a pullback is in place but NOT knowing when to enter and time his trade...

 

Now, lets analize and try to understand this "erratic" performance of a pullback... why erratic ? simple, market during a pullback is making a "pause" on his original direction (trend), and this pause will be a "chop" and not a perfect V... on this pause he has no rules, no time determination, no wave range, no intrascalp structure... no nothing... just "chop"

 

The old TA school tried to organize it in some beautifull patterns like flags, pennants, triangles and rectangles, well let me tell you if pullbacks had such nice clean morfologies we all would be multibillionaries some years ago already.. they do some times resemble this morfologies, but we have to accept the true fact that pullbacks are erratic in nature, because the market intrinsic structure gets erratic in that particular stage... its his nature, its natural... we cant get mad on him for being like that...

 

SO... having this reality and with the intention of playing the dips and rallys (trend trades ) we find that our "Timing" will be precisely situated exactly on the middle of a mambo of nobodies land : the "erratic pullback" :doh:

 

let me take some coffee... I continue on next post... cheers Walter.

[brownsfan019 17]

I'm curious to see if you have clearly defined entries and exits Walter, b/c as you just illustrated, the 'real world' is not always as pretty as our visions. Exactly how and where to enter will be a pivotal part of this trading development. How many times have we all been correct in our trade setup, yet get stopped out only to watch it do what we thought it would?

[walterw 10]

So in this "erratic pullback" scenario the trend trader is aiming to "Time" his trades.... you know what ? he normally fails... he normally gets stoped out and he gets very angry confused and frustrated.... :frustrated:

 

He starts blaiming the market, his broker, his costs, the fed... bla bla bla...

 

But the true fact is that the market will always be that way, and it will be independently to your emotions...

 

Now... let me tell you GOOD NEWS... thru optimization we can solve this dilema ¡¡

 

Here is where VMA rainbow will show us its second power ¡¡

 

Now, how can VMA rainbow help us out here...?

 

Well let me remind you the "horizontal effect" of VMA and how this can really help us here...

 

Do you remember this graph ?

 

 

well it tell us about the property of becoming horizontal during a "chop"... wow... that means that the "erratic" data could be normalized to one simple horizontal line during chop... and guess what... when the chop finishes, the VMA continues on the direction of the trend...

 

So let me show here on a graph the comparisson of an "erratic pullback" with a "horizontal effect" of vma...

 

 

This information will literally resolve our dilema just about a 100%...

 

Now let me shift here a little bit the topic and talk to you about "trend timeframe" and smaller "very specific timing time frames"...

 

So far I had presented "trend definition" on a 5 min time frame, and you know what, that IS our time frame, we are taking trades out of a 5 min chart...

 

NOW timing requires more dataseries so for that purpose we will be using a 1 min chart... I need more bars to get calculated, I need ironically more noise to normalize with VMA so I can read more clearly the "horizontal pullbacks" and its aftermath continuations that will happen to be my "Timing Entry"...

 

So for the sake of not confusing anyone let me make this clear, we will have at this point two charts, a 5 min chart and a 1 min chart :

 

_5 min chart with VMA rainbow...... for "Trend Definition" (described on above posts )

 

_1 min chart with VMA rainbow...... for "Pullback" and "Timing" definitions

 

Both charts will use VMA rainbow... BUT the uses will be diferent... on both charts the Vma rainbow parameters are the same... so actually we are looking into diferent VMA rainbows giving diferent informations... one for trend (5 min) the other for pullback/timing (1 min)...

 

on the next post I start showing the deployment of this arsenal to our service... cheers Walter.

[walterw 10]

We are Trend Traders here... so first things first.... First "Trend Definition"... that task is done on the 5 min chart as explained on previous posts...

 

Having a trend definition on line we are ready to find "pullbacks" and "timing"... this task will be done on the 1 min chart...

 

This would be a Typical presentation of our "Trend Trades" :

 

 

and typical real one...

 

 

Now without our powerfull tool let me show you lots of spots where you probably would had wondered where to enter your trade :

 

 

You can clearly see there where lots of smokes on the timing without VMA assistance ...

 

This timing tool on 1 minute chart gets as powerfull as it can get...

 

Let me get into the specifics of pullback and timing readings of the 1 min chart on the next post... cheers Walter.

[walterw 10]

Now lets get into the specifics of reading "Pullback" and "Timing" on the 1 minute chart...

 

You can notice that we dont have the VMA (Black line ) alone... all the contrary she is accompanied by the entire rainbow... now the rainbow literally is a series of "signals" of the VMA.... actually all emas all the way from 2 (first yellow ) too 100 (magenta line)...

 

Now you can notice on the way of this emas "signals" we come thru a thick darkgreen one, I asume she is a 22 ema of our VMA taking Bemac`s construction description... This green Line will have some important role on our specific reading of "Pullback" and "Timing"...

 

_Pullback Definition :

 

We will consider ourselfs in a "Pullback" condition only when we have a Down trend present (from the 5 min chart) and the black line crosses above the darkgreen line on the 1 min VMA Rainbow... thats pretty straight forward... thats our "Pullback Definition"

 

 

 

_Timing Entry Definition :

 

We will consider a Timing Entry on this example when we cross back down our darkgreen line... simple...

 

 

Where is the power, where is the edge in all this pullback and timing definitions ?... well as we started this thread showing the fact that horizontal lines just cannot make multiple crosses between them and in consecuence we cant have multiple whipsaws going on...

 

So here the POWER gets unleashed ¡¡ you are in the midst of the mambo with a tool that is performing in a CLEAN fashion giving a clear "Pullback Definition" as it also is giving a clear "Timing Entry Definition"...

 

So we have simplicity and optimization on "Pullback" and "Timing" thanks to this modern and simple tool...

 

We had been able to encapsulate the "erratic chop pullback noise" into one simple horizontal line... make her a series of simple signal lines that will not whipsaw and create a straight forward superb timing definition of unparalel performance...

 

This has been my Epiphany ¡¡¡ I am born again ¡¡

 

on next post I explain on videos... cheers Walter.

[walterw 10]

And now a video on Pullback and Timing...

 

The next step will be showing you a lot of diferent examples on this and after that we will aboard the closing positions issues on stops and exits...

 

Also further in I will present the most "shurefoots" trades as the Iconic vma rainbow setup and the super strenght trend vma rainbow setup... I asume we have a long way yet to get there....

 

Should I add this is all research at this point, so feel free to interact...

 

Hope so far things can be understanded, (sorry for my english) please feel free to make questions.. thanks Walter.

Trend-Pullback-Timing just Power.swf

[Don4 10]

Very nice walter, I can see why you are so exicited. Beautiful:cheers:

[PYenner 10]

Gee you have done a lot of work.

Looks very promising, good to see the 1min chart being used for verification.

Thanks Walter

[Armand 10]

Thank you Walter...this thread is very interesting. Are your screenshots from VTsystems? And are you using the default settings for this indicator? Thanks again for sharing this information! ...Armand

[Blu-Ray 10]

Excellent work Walter, great explanation on the posts and videos.

 

I'm currently trying to translate the code into Tradestation so others can follow along, it still needs refining as I don't think it's smooth enough yet, but here's a pic to show you. I'll post the code when I get it working properly(hopefully tomorrow).

 

 

Great thread, keep up the good work and thanks.

 

Blu-Ray

[walterw 10]

Very nice walter, I can see why you are so exicited. Beautiful:cheers:

 

Yes Don... this a new generation of TA...¡¡

 

Gee you have done a lot of work.

Looks very promising, good to see the 1min chart being used for verification.

Thanks Walter

 

Hi Pyenner, yes it has been happening on the most rare times of the day ¡¡ thats one of the advantages of forex jejeje... the 1 min is used in order to have more data series on the calculation of this Vma for timing purposes, but the spirit of the trade still is on 5 min... always remember that...

 

Thank you Walter...this thread is very interesting. Are your screenshots from VTsystems? And are you using the default settings for this indicator? Thanks again for sharing this information! ...Armand

 

Yes Armand at this time charts are from VT and indicator is on default settings on both timeframes... if we get to code this indi for MT4 it would be ideal as I consider MT4 more friendly in some other aspects...

Glad to be of help.. there is much more in front.... stay tunned, cheers Walter.