DAILY WICK ZONE TRADING

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TheRumpledOne
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Postby TheRumpledOne » Sat May 24, 2014 8:20 pm

RicG:

Don't know if you watch my DAILY WICK ZONE videos or not. I assume not, since the methods were developed from statistical analysis.

YouTube: TRO DAILY WICK TRADE 002

" filtering for trending vs range-bound price action with optimized TP/SL (R/R) in order to start trading it. "

Sounds like a YALE STUDENT to me...LOL!
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Postby RicG » Sat May 24, 2014 8:34 pm

TheRumpledOne wrote:RicG:

Don't know if you watch my DAILY WICK ZONE videos or not. I assume not, since the methods were developed from statistical analysis.

YouTube: TRO DAILY WICK TRADE 002

" filtering for trending vs range-bound price action with optimized TP/SL (R/R) in order to start trading it. "

Sounds like a YALE STUDENT to me...LOL!
Hey TRO,

I haven't had the chance to watch the vids yet. I'll try to in the near future.

I was just wondering how johnsund was trading it, since he said he was doing so well with the method. I like understanding how traders are utilizing a particular methodology/strategy.

And yes, I am a statistical/rules based trader. If that makes me a Yale Student, so be it! LOL.

I personally didn't become a consistently profitable trader, until I became very disciplined with a statistical rules based approach (i.e. "filtering for trending vs range-bound price action with optimized TP/SL (R/R)....")

Best Regards,
Ric
(Disclaimer - This post is for educational purposes only. Always consult a licensed investment professional before taking any trade. Any trade you take is at your own risk.)

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Postby TheRumpledOne » Mon May 26, 2014 3:08 am

Ok Ric, please tell me more about how you filter for trending vs range-bound price action.

If I understand, I could write an indicator..
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Postby TheRumpledOne » Tue May 27, 2014 5:40 am

Image

Image

Image

Image

Image

Image

Not too shabby!!
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Postby MightyOne » Tue May 27, 2014 6:49 am

It seems like a good strategy, will have to explore further.

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Postby RicG » Tue May 27, 2014 12:42 pm

TheRumpledOne wrote:Ok Ric, please tell me more about how you filter for trending vs range-bound price action.

If I understand, I could write an indicator..



Hey TRO,

That's a difficult question to answer specifically, since I develop a trading strategy for a targeted single futures market, and haven't looked at the price action of the various forex pairs that you're trading. I would also add, that I don't know if a "one-size fits all" indicator will work, given the various "personalities" of multiple markets.

However, I'll give some general ideas of ways I've filtered in the past for trend vs range. And as mentioned in my earlier post, if I were doing the work on this filter, it would be conducted and used in connection with optimized TP/SL (R/R), so they are interrelated. That's another reason, why I don't know if generating an isolated, general trend vs range indicator for multiple markets would work. (As I write this, this type of approach sounds like Welles Wilder's ADX indicator, which I've never found to be of any value for my style of trading).

But back to trend vs. range as a standalone. I would look at backtesting results for an ATR threshold that gives an optimized expectancy. Obviously the variables that need to be considered are ATR period and trading timeframe.

Another method I've used is an HMA slope angle filter. When flat, or nearly flat - no trades. Look at optimization, utilizing a minimum slope angle threshold before a signal is valid. It's been my experience that HMA is significantly better for this, than any other MA.

For deciding whether to trade at all on a specific day, I look at the globex session range immediately prior to pit open. I've found a consistent threshold that alerts me when CL expectancy is that of a range bound day session. I don't know how this type of approach would translate to forex, since there is overlap of various world-wide markets "regular" trading hours that affect the ranges of corresponding currencies.

Hope you find something in this that seeds an idea for a great indicator.

Regards,
Ric
(Disclaimer - This post is for educational purposes only. Always consult a licensed investment professional before taking any trade. Any trade you take is at your own risk.)

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TheRumpledOne
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Postby TheRumpledOne » Tue May 27, 2014 6:18 pm

"I would look at backtesting results for an ATR threshold that gives an optimized expectancy."

Expectancy of what exactly?

Rather than optimizing, I prefer looking at frequency distributions.

" When flat, or nearly flat - no trades"

Can you define nearly flat? Didn't I code a slope indicator multimeter or something years ago??
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Postby RicG » Tue May 27, 2014 10:28 pm

TheRumpledOne wrote:"I would look at backtesting results for an ATR threshold that gives an optimized expectancy."

Expectancy of what exactly?

Rather than optimizing, I prefer looking at frequency distributions.

" When flat, or nearly flat - no trades"

Can you define nearly flat? Didn't I code a slope indicator multimeter or something years ago??


Answer to question 1) Expectancy of positive (and higher) win/loss%/risk/reward ratio as opposed to expectancy of negative win/loss%/risk/reward

Answer to question 2) Well, a "flat slope" (think thats an oxymoron...lol), would be a 0 degree angle. So running multiple frequency distributions starting at slightly above that, say at 3%, 5%, 7%, 9% and on up should show the optimal levels at which the win/loss%/risk/reward shows a positive expectancy. The results might find that from 0% to a low level, for discussion let's just say 15%, entries are much more likely to be losers, whereas a level from 16% to 70% might give a great winning expectancy. Then I would think at some point as the slope level gets too high, let's say, above 70%, you willl see the win/loss%/risk/reward expectancy turning negative due to price exhaustion.

And I have no idea if you coded a slope indicator multimeter years ago. Seems like you should know....lol. If you've already got one, I'd love to see a pic or two, and understand how you use it!
Last edited by RicG on Wed May 28, 2014 9:38 pm, edited 1 time in total.
(Disclaimer - This post is for educational purposes only. Always consult a licensed investment professional before taking any trade. Any trade you take is at your own risk.)

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Postby newscalper » Wed May 28, 2014 8:18 pm

TheRumpledOne wrote:RicG:

Don't know if you watch my DAILY WICK ZONE videos or not. I assume not, since the methods were developed from statistical analysis.

YouTube: TRO DAILY WICK TRADE 002

" filtering for trending vs range-bound price action with optimized TP/SL (R/R) in order to start trading it. "

Sounds like a YALE STUDENT to me...LOL!


TRO - I've just watched the video. One thing that's bothering me/a question I have is: when you talk about price leaving the zones and wick to body distribution - was the analysis run how you are describing and trading it? i.e. the zones being taken from previous daily bar data points and price moving out of the zone on the current daily bar?

So the statistical analysis and the stat that says a body is likely to be larger than a wick applies to the body of the current bar being larger than the PREVIOUS wick, not the current wick when the bar closes?

This leads to a further problem/question in that the current body will be from the current open: imagine the previous bar has a fair sized upper wick. Price today enters the upper zone and then breaks out of the high by 1 pip and then retraces again, closing half way down the zone. This gives a large bodied candle with a large body to wick ratio on THIS bar but the trade was entered w.r.t the previous bar high - i.e. price had to move a country mile before a trade order was triggered.......I know it all boils down to trade management after the entry anyway but the stats and how derived interest me.

I hope the question makes sense?

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Postby TheRumpledOne » Thu May 29, 2014 4:21 pm

Yes, newscalper, if you look at video 002, it shows the analysis of price entering and leaving the wick zone.

Yes, not the current wick, the previous day's wick is used.

True, if a previous day's wick is large, then price will have to travel a long way to exit. But most likely, price may also pass some other entry triggers along the way. That's why I always say, TRADE WHAT YOU SEE. But if only trade DAILY WICK ZONE trades, then you always have the option to NOT take a trade if it doesn't make sense to you.
IT'S NOT WHAT YOU TRADE, IT'S HOW YOU TRADE IT!



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