I opted to pocket my gains @ 126.39.
Designing an Automated Trading Program
- Thread starter expiated
- Start date
I still believe it is true that the blue moving average I mentioned in a previous post deserved to be assigned greater significance than I had previously given it—but a reevaluation of my 60-minute setup prompted by the prolonged span of time it is taking my EURUSD and AUDUSD trades to find their way to where my forecast model indicates they are ultimately headed has caused me to conclude that I went a bit overboard.
What now appears to be a more correct interpretation of my setups sees the greatest amount of significance in a very subtle fluctuation of parameters that takes place quite regularly which, subtle or not, is monstrous in its implications.
If I am understanding it correctly, it should not only result in better explanations for a given exchange rate’s behavior and predictions of where it is most likely headed in both the short and long run, but should also enable me to do an improved job of picking precisely accurate entry points and take-profit targets.
In light of this enhanced understanding, I cannot realistically expect AUDUSD to climb any higher than 0.7062 in the immediate future, so this is where I am going to try to exit the position for now.
It also suggests that EURJPY will ultimately head higher as soon as the structure is set up for it, so this is a trade I will probably be looking to make in the next 48 hours of trading if the volume is not too light due to the holidays.
Last edited:
So if, at the end of this first week, I have not yet established the rules for automating my system, hopefully I at least have a good jumping off point...
POSSIBLE MODIFICATION: The stop loss should be set at the contrarian band of the x-period simple moving average envelope at x.xx% deviation, or as soon as a candlestick forms (opens and closes) on the contrarian side of the white x-period simple moving average, whichever occurs first.
POSSIBLE MODIFICATION: The stop loss should be set at the contrarian band of the x-period simple moving average envelope at x.xx% deviation, or as soon as a candlestick forms (opens and closes) on the contrarian side of the white x-period simple moving average, whichever occurs first.
Last edited:
Since the term “pivot point” is already in use and has an established meaning, I’m going to have to coin another expression for a situation which I’m going to call “termination reversal.”
This is when my calculations suggest that, statistically speaking, the forward progress of an exchange rate north or south has come to a halt or has ceased to such a degree that it appears to have come to a halt.
When this occurs, the corresponding asset must decide if it wishes to reverse course and head in the opposite direction or if it will resume its prior trajectory to embark on the same path it was traveling previously (similar to consolidation).
This is the situation in which I categorized AUDUSD on Friday. Unfortunately for me, the pair did not follow through with a “termination reversal.” However, I have not given up on the trade just yet. After all, the pair rejected falling beyond this general region near both the beginning and the end of October. But if it establishes a new low somewhere around 0.7016, I will simply have to eat the loss and accept that, this time, AUDUSD just might bust its way through support.
(My understanding is that with consolidation traders are looking at patterns, whereas with termination reversals my focus is on statistics/mathematical calculations.)
Last edited:
Yesterday I corrected a minor foible in an "instantaneous" moving average I have had for years and added it to my setup, which should fit right in with the rules I have from last week...
Fortunately for me, at this time it appears AUDUSD might ultimately follow through on executing a “terminating reversal,” which enabled me to avoid having to eat a loss due to having probably bought the pair too early. (I was indeed able to exit the position at 0.7062.)
The trade decisions I’ve made in my Tickmill account since December 20, 2018 have me on par for the kind of performance from this system that I’m shooting for. However, my Forex.com account (where I have been trading a bit more aggressively/recklessly) took a big hit from which I have not yet recovered due to misplaced confidence I put in the way I was using the system about a week ago—before I gained the two insights referenced in the above two quotes.
As for just how much difference these insights will make, I will probably have to wait a few days to find out. Now that I have exited the AUDUSD position with a little bit of profit, I am not likely to do much, if any, trading until after the new year.
This has been a fruitful exercise from my perspective. I now have 1-, 5-, 15-, 60-, and 240-minute setups to which I am no longer making additions. At most, I am comparing the slight variations and plotting the best of each on a single chart, letting any nonessential aspects fall by the wayside.
Whatever success I have had with a pseudo-swing style of trading, it has all led me back to where I started to conclude that, in the final analysis, I personally am best served by trading primarily off one-minute charts. The Numerical Price Prediction “automated trading” rules as they now stand seem to accurately reflect the actual behavior of exchange rates, as best as I can tell, so mission accomplished (I suppose).
With today’s trades, my Forex.com account has now recovered from the major blunder I made on December 20th, so hopefully I learned, or in the process of learning, from my mistake.
Based on a comment by a contributor to these forums, I looked very briefly into a chap by the name of Ray Dalio, and though it’s not what I think the contributor intended, I was emboldened to continue along this path I am taking by what Dalio had to say…
“I don’t think my principles are important. You could pick whatever principles that you want. What I learned when I was going along is that every time I would make decisions, they’re paid—particularly after making mistakes. It paid to write down what my principles were for dealing with that the next time I’m going around. And I think the important thing is individuals picking their principles for themselves.
“So one of the things that’s excited me about it is also people doing it for themselves. I don’t want them to follow my principles. I want them to think hard about what works, and then think about being clear on their own principles—to realize that the same things happened over and over again. So every time you have an experience, particularly if you have a bad experience, a painful experience, that there are lessons to be learned, and ways to change, and principles to develop, so that you can do it better next time.”
Whatever success I have had with a pseudo-swing style of trading, it has all led me back to where I started to conclude that, in the final analysis, I personally am best served by trading primarily off one-minute charts. The Numerical Price Prediction “automated trading” rules as they now stand seem to accurately reflect the actual behavior of exchange rates, as best as I can tell, so mission accomplished (I suppose).
With today’s trades, my Forex.com account has now recovered from the major blunder I made on December 20th, so hopefully I learned, or in the process of learning, from my mistake.
Based on a comment by a contributor to these forums, I looked very briefly into a chap by the name of Ray Dalio, and though it’s not what I think the contributor intended, I was emboldened to continue along this path I am taking by what Dalio had to say…
“I don’t think my principles are important. You could pick whatever principles that you want. What I learned when I was going along is that every time I would make decisions, they’re paid—particularly after making mistakes. It paid to write down what my principles were for dealing with that the next time I’m going around. And I think the important thing is individuals picking their principles for themselves.
“So one of the things that’s excited me about it is also people doing it for themselves. I don’t want them to follow my principles. I want them to think hard about what works, and then think about being clear on their own principles—to realize that the same things happened over and over again. So every time you have an experience, particularly if you have a bad experience, a painful experience, that there are lessons to be learned, and ways to change, and principles to develop, so that you can do it better next time.”
Last edited:
But this matters little unless I intend to continue trading using a pseudo-swing style approach, which is not likely once it is no longer necessary given that it entails too much waiting around for payoffs to pan out and it reduces my daily success rate probably by as much as anywhere between 5% to 15% at the least.
But who cares? Going forward simply check to see whether the exchange rate is above or below the red differential moving average.
However, seeking to execute trades only when the situation is ideal is not really necessary and might even be impractical. Feel free to enter positions whenever the candlesticks make contact with the goldenrod price range envelope band nearest the red differential moving average, though it is probably a good idea to continue the practice of doing so only after the candlesticks have bounced off this statistical level of support/resistance to begin forming on the side of that white instantaneous moving average allied with the short-term trend.
The stop loss should be set at the dotted olive-green band belonging to the envelope outside of the Goldenrod price range envelope—the band closest to the red differential moving average.
Set the take profit target at the goldenrod price range envelope band on the far side of the envelope with respect to the differential moving average—the side aligned with the direction of the short-term trend.
Reject this possible modification in that it has already proven to lead to the unnecessary exiting of positions that would otherwise be profitable.
Remember that this will not always be true. It is a bit of an oversimplification. For example, if an exchange rate reaches an outer limit of its typical intraday price range, especially if it is also near an outer boundary of the average day range, you will be looking to execute trades in which the rate will be moving back toward the red differential moving average, not away from it—even though you will technically be trading against the predominant trend.