Buy Zone on Hour Bars?

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RicG
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Postby RicG » Sat Mar 08, 2008 1:12 pm

khalid wrote:Ric,

NO!

BuyZone needs no addition or alteration ? no drugs!!

However, before entering a trade one should:
? know oneself;
? be mindful of the market direction.

As TRO says, one must understand, and master, BuyZone to profit from it.

Khalid

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RicG
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Postby RicG » Sat Mar 08, 2008 1:21 pm

Khalid,

It sounds like to me that you are contradicting yourself when I asked about filtering trades using the BZ. You say "BuyZone needs no addtion or alteration." But then you go on to say "be mindful of market direction". Are you saying that you shouldn't go long if you think the market is short and that y ou shouldn't go short if you think the market is long?" That sound like a filter to me.

I'm not trying to start an argument, I'm simply attempting to learn how to use the buy zone profitably.

Peace and great trading to all,
Ric


Posted: Yesterday at 5:11 am Post subject: (No subject)

--------------------------------------------------------------------------------

Ric,

NO!

BuyZone needs no addition or alteration ? no drugs!!

However, before entering a trade one should:
? know oneself;
? be mindful of the market direction.

As TRO says, one must understand, and master, BuyZone to profit from it.

Khalid

khalid
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Postby khalid » Sun Mar 09, 2008 1:43 am

Ric,

I fully recognise this is not an argument; simply a discussion to understand and learn.

Please find attached a brief description on different types of chart analysis by Tom DeMark which describes my thoughts on the subject better than I could.

Coming back to the matter under discussion, I do not take BuyZone as fixed-rules system; it allows for sensible discretion and falls under DeMark?s second level of analysis.

Here is what (for FOREX) must NOT be violated:

?The long zone (blue lines) is the Open Price (white line) +
.0003 and +.0004.?
?The short zone (red lines) is the Open Price (white line) -
.0003 and -.0004.?
?Go long on green (bull) candle in the long zone and short on
red (bear) candle in short zone.?

Otherwise the mathematics of BuyZone shall be debased.

In my opinion, everything else is discretionary.

Remember:

?SL is 5 to 7 pips.?
?TP is whatever you can get before it goes against you.?

allow for discretion.

Neither is one to ALWAYS go long or short! Although one may, if one feels comfortable.

The reason I said ?NO? to your ?Are you saying that the Buy Zone should be filtered in some way when trading?? was an act of filtering requires removal of a part of something and in this sense BuyZone must not be filtered.

Or altered, because that will make BuyZone different in some specific.

Adaptation should be welcome because thus BuyZone can become suitable to one?s requirements, different market conditions, etc.

I have adapted BuyZone by only trading emini S&P, during regular hours, avoiding the daily open, waiting until I can see if it a higher highs day or a lower lows day, selecting the first on the half-hour hourly open and trade in the direction of either the higher highs or lower lows.

I trade emini S&P because of the enormous liquidity, during the day because the hourly range is higher than at night time, avoid the daily open because statistically trading at such time will give be no higher than 70% chance of winning, wait until I think I sense the main direction of the day because I must at least have 80% probability of winning, avoid on the hour hourly open because of nasty volatility at on the hour data release times.

However, my entries are still 4 ticks above or below an hourly open. Presently, my stop is 5 ticks and my profit target is 8 ticks. After commission and fees, my wins are 1.3 times my losses. If I win 80% of the time the multiple of the two would be 1.3X80=104.

If this multiple is below 100, one should really look for a better way to spend one?s time.

Khalid

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Postby khalid » Sun Mar 09, 2008 2:41 am

Ric,

Sorry about the attachement.

Khalid
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DeMark.pdf
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greaterreturn
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Postby greaterreturn » Mon Mar 10, 2008 6:23 pm

Well, I started the Buy Zone. My first trade on Sunday with USD/JPY was a winner. A little disappointment was that 10 pips only gave me $87 on the USD/JPY after $10 MB Trading commission. My goal was $100 a day like in TRO's $TRILLION plan. So I'm going to shoot for 12 pips from now on.

Any advice on that? Is that too aggressive?

Today, I tried the GBP/USD and lost money due to my error with the MBT Navigator. It turns out that if you double click on an existing order, it cancels it! So watch out where you click! It canceled my stop loss and I lost an extra 20 pips before I realized it and exited at the market.

Another thing I learned was that the margin is higher for trading GBP/USD than USD/JPY. MB Trading uses only $100 margin for all USD-based pairs. But for GBP and others based on foreign currency, they use 1% of the exchange rate * $100,000 so for GBP it is almost $200 or double that of USD/JPY.

Based on that info, I was only able to trade 5 lots on GBP. That means that 12 pips after commission would only make about $50.00. So I'm going to switch to pairs with lower margin.

Tomorrow morning, I'm going to try the USD/CHF.

I'll keep posting my results here if no one objects so you can offer any advice. Also, it's therapeutic to document results.

About the filtering, I have decided to take my first trade only in the direction of the hourly bars and the trend of highs and lows.

But if the first trade fails to produce a profit or reverses, I will not try again in that direction but only in the opposite one more time.

Wayne

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RicG
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Postby RicG » Mon Mar 10, 2008 10:23 pm

Hi Khalid,

Thanks for the detailed response and the DeMark info. What you say makes a lot of sense.

I'd love to hear TRO respond to the BZ filter/no filter question, if he has the inclination to do so.

Peace and great trading to all,
Ric

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Postby khalid » Tue Mar 11, 2008 4:23 am

Ric,

Thank you for you kind response.

You really do not need a special reply from TRO here; he has repeatedly said about BuyZone at its simplest and purest: This is ALL YOU NEED to make money.

For instance, download and read the Manual or go to kreslik.com - Traders Community Forum Index ? strategy trading forums ? Tradestation indicators ? TRO BUY ZONE - KEEP IT SIMPLE

Khalid

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Postby BlowFish » Tue Mar 11, 2008 4:27 pm

Hi Wayne, will be great to hear how you do there is a guy over the trade to win boards doing much the same.

One thing I would urge you to do is check out the risk of ruin. This is one thing you can control by appropriate position sizing. Reading your post it suggests you only require $200 margin per 'unit' and that you are maxing your size at 5. I'd urge you to check out http://www.traderscalm.com/ror0.html or simply google 'risk of ruin'. This is a very important concept and something you really need to work the numbers on. This is nothing to do with how good the buy zone is or how good a trader you are, even methods that produce a solid 80% winners will have fairly long streaks of losers. It's just basic probability and statistics if this happens early on it can destroy (or severly cripple an account).

I hope you don't mind me playing devils advocate, and forgive me if you have run the figures and are within your comfort zone. I do know personally the emotional pressure this can cause can very odften be far greater a problem than loosing a few bucks.

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daniil
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Postby daniil » Fri Mar 21, 2008 9:17 am

greaterreturn wrote:Well, I started the Buy Zone. My first trade on Sunday with USD/JPY was a winner. A little disappointment was that 10 pips only gave me $87 on the USD/JPY after $10 MB Trading commission. My goal was $100 a day like in TRO's $TRILLION plan. So I'm going to shoot for 12 pips from now on.

Any advice on that? Is that too aggressive?

Today, I tried the GBP/USD and lost money due to my error with the MBT Navigator. It turns out that if you double click on an existing order, it cancels it! So watch out where you click! It canceled my stop loss and I lost an extra 20 pips before I realized it and exited at the market.

Another thing I learned was that the margin is higher for trading GBP/USD than USD/JPY. MB Trading uses only $100 margin for all USD-based pairs. But for GBP and others based on foreign currency, they use 1% of the exchange rate * $100,000 so for GBP it is almost $200 or double that of USD/JPY.

Based on that info, I was only able to trade 5 lots on GBP. That means that 12 pips after commission would only make about $50.00. So I'm going to switch to pairs with lower margin.

Tomorrow morning, I'm going to try the USD/CHF.

I'll keep posting my results here if no one objects so you can offer any advice. Also, it's therapeutic to document results.

About the filtering, I have decided to take my first trade only in the direction of the hourly bars and the trend of highs and lows.

But if the first trade fails to produce a profit or reverses, I will not try again in that direction but only in the opposite one more time.

Wayne


better you use smaller lot. better you use even micro lot for at least half a year. better you focus only one pair and its LevelII behaviour.
12 pips? how much time you sit for 12 pips? sure if the market give you 12 pips "immidiately" - take it. but better you usually take 6-7 pips or move SL to breakeven immidiately price reached 5-6 pips in your favour to take sweet 10 pips.
why to trade USDJPY agains others? pls check Michal investigation of average spread for this pair. Also keep in mind that USDJPY is the cheapest pair to trade at MBT.

i usually trade USDJPY every hour. Only one time a day at London open i can afford to take some adrenaline and trade GBPUSD for 9-15 pips.

BRGDS, Dan

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Postby greaterreturn » Fri Mar 21, 2008 6:34 pm

Daniil first:

Thanks for the practical advice! Let me see whether I got it clearly. You advise just getting 5, 6, 11, 12--whatever you get right away. You you suggest to let the profits run as long as the market keeps moving. Once it stalls, take profits, before it turns.

What I like about that is some days the market immediately went to 20 or 30 pips of profit in the first few minutes of the hour but my TP was already out at 10 pips. On other days, the market rallied quickly to 10 or so pips and stalled.

I'd like to practice staying with the trade till it stalls either at 5 pips, 10 pips, 20 pips, etc.

Is that the idea?

Sincerely,
Wayne

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