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TheRumpledOne
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Postby TheRumpledOne » Sun Dec 07, 2008 12:09 am

msforex wrote:
razorboy wrote:is the ea programmed to take the first reversal entry after a 3 hour trend or does it just take every reversal opportunity.

If you just take every reversal opportunity, then yes, it is at best a zero sum game. If you actually look at previous price trend, much different story.

I can't program EA but I have played both ways - taking every entry I see regardless of the previous 3 hour trend and then using the previous 3 hour trend to determine if I should take a trade. My entries were based off of TRO's dynamic Fib Lines and the buy and sell signals they generate.

There is a huge difference in the success ratio of you only enter a reversal trade at the end of a 3 hour (or more ) trend. There is almost always a profit opportunity.

I have taken enough statistics course to know what you are getting at and agree with you if you take every trade. If you swing at every pitch, you are going to strike out a lot - with a lot of home runs (and a lot of commissions). I've done the numbers myself on a spreadsheet for over 3000 minutes for various currency pairs and yes over all, you will fail

If you are more discriminating, you get a lot of singles and doubles. But unless you have programmed you EA to include TRO's logic - not just his entry and exit points based on price reversal, yes, you will lose - but you are only using half of his rules - its like driving a car that randomly, without any warnings, loses its brakes or its reverse gear - good luck with that.

But I would rather you think that this doesn't work....so keep with that thought


The EA only places a reversal trade after 3 same colored candles!

Basically I agree with you that after a long trend there will almost certainly be a reversal. However, the market doesn't swing in a H1 frequency (or multiples)! The up and down frequencies change almost all the times, and to make things worse, there is interference between multiple waves! So to find a 6PIP reverse on a H1 timeframe is like searching for a needling in a haystack. Or - according to Sampling Theorem - when trying to read an x second signal with a H1 frequency we will only get "noise".

To really be able to detect a reversal we would need to analyze on much lower timeframes and try to "detect" the main "frequency" of the current market move and try to predict the timing of its reversal swing.


Yes, but the EA does NOT use the BUY ZONE to trigger the entry.

Does the EA wait for the bar to close or is there intrabar order entry? I don't code EAs so I don't know.

You are trying to prove it DOES NOT work rather than focusing on how to make it work. You'll get what you want either way.
Last edited by TheRumpledOne on Sun Dec 07, 2008 12:54 am, edited 1 time in total.
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Postby razorboy » Sun Dec 07, 2008 12:45 am

the EA may not use the right entry - (I have both the BZ and Dynamic Fibs up - both will trigger the essentially the same trade) but she hit the nail on the head when she talked about needing to drop down to a shorter time frame............that should have been a blinding flash of the obvious.

I suspect you can do the buzzard thing after three hours of successive down candles (ie lower lows and lower highs) or 3 successive up candles regardless of ending candle color, but given the number of currency pairs your can play, the investment of time in figuring it out is probably not worth it

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Postby TheRumpledOne » Sun Dec 07, 2008 1:04 am

Most of my trades are BUZZARDS. It's just too simple.

If there is no BUZZARD trade, then I'll do a PSYCHOLOGICAL trade or a NO BRAINER.
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Postby razorboy » Sun Dec 07, 2008 1:24 am

You just sit and wait for it pop over or under the open price, aren't you. Do you ever hit the trigger twice on the same currency in the same hour?

Based on my mistakes and successes, I assume you have around a .850 to .900 batting average with this approach
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Postby razorboy » Sun Dec 07, 2008 2:31 am

If you are only concerned about price movement and knowing that different price feeds have different lags and will trace out slightly different patterns, the whole concept of waiting until a candle closes to enter a trade is irrelevant. You should enter when price hits the target. Price being where you think it should be when a candle opens is simply a matter of chance and illusionary correlation.

Correct?

TheRumpledOne wrote:
msforex wrote:
razorboy wrote:is the ea programmed to take the first reversal entry after a 3 hour trend or does it just take every reversal opportunity.

If you just take every reversal opportunity, then yes, it is at best a zero sum game. If you actually look at previous price trend, much different story.

I can't program EA but I have played both ways - taking every entry I see regardless of the previous 3 hour trend and then using the previous 3 hour trend to determine if I should take a trade. My entries were based off of TRO's dynamic Fib Lines and the buy and sell signals they generate.

There is a huge difference in the success ratio of you only enter a reversal trade at the end of a 3 hour (or more ) trend. There is almost always a profit opportunity.

I have taken enough statistics course to know what you are getting at and agree with you if you take every trade. If you swing at every pitch, you are going to strike out a lot - with a lot of home runs (and a lot of commissions). I've done the numbers myself on a spreadsheet for over 3000 minutes for various currency pairs and yes over all, you will fail

If you are more discriminating, you get a lot of singles and doubles. But unless you have programmed you EA to include TRO's logic - not just his entry and exit points based on price reversal, yes, you will lose - but you are only using half of his rules - its like driving a car that randomly, without any warnings, loses its brakes or its reverse gear - good luck with that.

But I would rather you think that this doesn't work....so keep with that thought


The EA only places a reversal trade after 3 same colored candles!

Basically I agree with you that after a long trend there will almost certainly be a reversal. However, the market doesn't swing in a H1 frequency (or multiples)! The up and down frequencies change almost all the times, and to make things worse, there is interference between multiple waves! So to find a 6PIP reverse on a H1 timeframe is like searching for a needling in a haystack. Or - according to Sampling Theorem - when trying to read an x second signal with a H1 frequency we will only get "noise".

To really be able to detect a reversal we would need to analyze on much lower timeframes and try to "detect" the main "frequency" of the current market move and try to predict the timing of its reversal swing.


Yes, but the EA does NOT use the BUY ZONE to trigger the entry.

Does the EA wait for the bar to close or is there intrabar order entry? I don't code EAs so I don't know.

You are trying to prove it DOES NOT work rather than focusing on how to make it work. You'll get what you want either way.

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Postby TheRumpledOne » Sun Dec 07, 2008 2:37 am

razorboy wrote:You just sit and wait for it pop over or under the open price, aren't you. Do you ever hit the trigger twice on the same currency in the same hour?

Based on my mistakes and successes, I assume you have around a .850 to .900 batting average with this approach


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Postby razorboy » Sun Dec 07, 2008 2:41 am

I thought sloppy seconds was a no no........just making sure
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Postby eudamonia » Sun Dec 07, 2008 7:34 am

razorboy wrote:I would cut ms forex some slack unless she is actually being intentionally malicious. If you just run the stats using a single time frame, without dropping down to a lower frame to trade, she is probably right.

When I was trading off of the fib lines on a 5 minute chart without really checking the h1 chart, there would be times I would be doing amazing - typically a trending market - up for half an hour, down for half and hour - back and forth - traces and retraces were spot on - then the market starts trending up and I would get killed when I went in for a reversal trade. Price would retrace to say the 38% level and then bounce the wrong way. I ran a number of spread sheets using only the 5 minute charts for Eurus and USJPN - sometimes there would win, sometimes lose - pretty much a zero sum game if you were lucky. I knew i was missing the obvious

Using the higher time frame to screen trades gets rid of the noise - yes, you miss a few, but you really do get focussed in on higher risk reward trades - the idea being that after 3 consecutive hours, price has moved too far in one direction and someone in the market will at least attempt to push it back


Sorry but the "automated idiocy" that sneaks into these threads really ticks me off sometimes. Some people act like they are the only ones who can code an EA or Strategy. As Michal told me - to do automated coding "you must know what you are doing". Never wiser words said. If you cannot code your own trading platform or a genetic algorithm from scratch then you aren't smart enough to accurately backtest squat. Doubt my word? Talk with Michal - he'll educate you.

I don't waste my time on automation anymore. I realize that isn't where my talents lie. What has and does continue to make money for me are reasonably good setups (i.e. ones that provide some statistical validity) and my ability to read the tape. I won't speak for Avery but I am reasonably confident (having watched him) that this is how he also makes money.

As an aside, yes watching a higher timeframe for a setup is a great filter. It is one of several ways to filter against trends when doing reversion to mean trading. There are several others - ADX, observation of the "stair step", bias in the T&S on the bid and ask, etc.

There are no shortcuts. I have literally spent thousands of hours training myself to trade. I am sure that for most other successful traders they have also put in this time. The lazy get no remorse from me. I just spent another 8 hours today replaying this weeks market and taking trades at 10X normal speed (thank you NinjaTrader). I typically spend 40-60 hours a week trading and reviewing trades (on top of everything else I do). I bet Avery spends much more than this (the man is a machine).

When Avery asks you to "see" the market action this is what he is talking about. So before you waste your time this week looking at a representation of the market (i.e. backtesting) I urge you to spend your time reading the tape. Watch what prices do at support and resistance. Observe the significant turning points in the market. Observe how prices move in waves. Now can you get on your surfboard and surf - or are you going to try to backtest it?

Edward
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Postby razorboy » Sun Dec 07, 2008 9:44 am

Edward

I know where you are coming from. While I am new to trading, I have spent a lot of time reviewing data and looking at what if scenarios based on TRO's approach.

I like the option of replaying the market. Much better than spread sheet testing as I can only work with closed data, which is less than perfect. Will have to look into this.

My father in law is an Elliot wave freak, and while i find it good for general prediction of trends, I have trouble getting actionable insight from it for day trading. I have jumped into this rather intensely in the last 3 months or so, but havent really done anything other that use TRO's approaches. Any money I have lost, which isnt much, has been good tuition and is much cheaper than any seminar. I suspect that my father in law is having issues with Elliot wave as well for day trading as he is looking at taking one of their 2500 dollar seminars on how to trade in a "fast bull market". I have spent way less than that on forex (ya, i love micro lots - all the same fun, with little to no cost) and have just sort of figured out why I was winning and losing - which after 2 to 3 months seems like a good milestone

The whole concept of automated trading is bizarre. It harkens back to Victor Lustig and his money making machines(he also sold the Eiffel Tower twice - you can read about him in the 33 laws of power). Every once in a while you read in the paper about someone who gets taken by it........the idea is that there is a physical machine that duplicates your money. You put in 10 bucks, put in some chemicals and out comes 20 bucks.......I kid you not.. This scam has been going on for hundreds of years. Sounds much like a Forex EA to me

http://en.wikipedia.org/wiki/Victor_Lustig

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Postby msforex » Sun Dec 07, 2008 11:01 am

razorboy wrote:I would cut ms forex some slack unless she is actually being intentionally malicious. If you just run the stats using a single time frame, without dropping down to a lower frame to trade, she is probably right.

When I was trading off of the fib lines on a 5 minute chart without really checking the h1 chart, there would be times I would be doing amazing - typically a trending market - up for half an hour, down for half and hour - back and forth - traces and retraces were spot on - then the market starts trending up and I would get killed when I went in for a reversal trade. Price would retrace to say the 38% level and then bounce the wrong way. I ran a number of spread sheets using only the 5 minute charts for Eurus and USJPN - sometimes there would win, sometimes lose - pretty much a zero sum game if you were lucky. I knew i was missing the obvious

Using the higher time frame to screen trades gets rid of the noise - yes, you miss a few, but you really do get focussed in on higher risk reward trades - the idea being that after 3 consecutive hours, price has moved too far in one direction and someone in the market will at least attempt to push it back


Razorboy, thats exactly my point: we need to look on the 5M or even 1M timeframes as well to have a real chance for long-time profits which such a small TP! H1 alone will not do the trick! I use the H1 and H4 for trend detection only - entering my trades on 5M when a "wave" is preparing to "swing" back. I find it useful to have at least one oscillator indicator on the 5Min chart as well to help me detect the "frequency" of the current market ups and downs.

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