Designing an Automated Trading Program

[expiated]

I have other things I need to work on, so that's all the trading I will be doing today. The average profit trade was more than three times the average loss trade, and any time that happens is a good day (seeing as how there was a time when such results seemed to be a total impossibility).

 

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I think this is the best I can do here. This is probably as close as I personally will ever come to a "Holy Grail." I've spent the last two days analyzing and evaluating the best of the best setups I have, and after all is said and done, probably the best course of action for me to take is to look to enter long positions when the black instantaneous moving average is above the red and blue-banded differential envelope, and short positions when below it:

Based on this forecast model, EURGBP appears to have reversed sentiment about one and a half hours ago from bullish to bearish @ 0.9008. USDJPY did the opposite about five hours ago when it climbed above 109.18, so I am currently long the pair.

 

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USDJPY did the opposite about five hours ago when it climbed above 109.18, so I am currently long the pair.

USDJPY never hit my take-profit target of 109.51 and has reversed bias once again, entering bearish territory, so I had to switch position.

 

[expiated]

I think this is the best I can do here.

Yeah, I think this is confirmed. Ain't no reason ta change nothin' now. All my future Forex trading will be based off this last setup and any chart in a different time frame will be adjusted accordingly. This leg of my journey is over. November 2015 is when it started, but this is as finely tuned as is gonna happen. I wouldn't have thought it would have taken over three years to get here (taking a winning system and making it the best it could be) but it did. Now I can sit back and relax, in a manner or speaking. Not sure what I'll do next, but I'll find something to fill the void.

 

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Questions to consider to help recognize the direction of the trend and aid the process of deciding what action(s) to take:

1. Is all the action relegated to the upper, lower, or middle region of the intraday price range envelope? If everything is taking place in the top half or the bottom half of the envelope, then the question of which direction price is probably headed has a clear answer.
2. Is the angle of the “yellow brick road” sloping upward or downward? Once again, if the answer to this question is clear, then the trajectory of price will be relatively clear as well.
3. Has a candlestick opened and closed above or below the green momentum channel? If so, consider entering a position and staying with it unless and until there is a reversal in the trusted twin moving averages.
4. After breaking out above or below the green momentum channel, has priced breached the triple banded envelope? If it has, fundamental factors might be sustaining momentum, so once again, plan to stay in the position unless and until there is reversal in the trusted twin moving averages.
5. Have one or more candlesticks ventured to the “wrong side” of the of the green channel? When such an event is followed by an immediate reversal in the short-term trend, it often constitutes a prime opportunity to easily realize several pips worth of profit as the exchange rate resumes a prolonged journey in the direction of the dominant trend. (Be alert for such opportunities!)

 

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More questions to consider to help recognize the direction of the trend and aid the process of deciding what action(s) to take:

1. Have you considered defining the upper, lower, and middle regions of the intraday price range envelope graphically?
2. What about evaluating the positional relationship between the center of the green momentum channel with respect to the yellow brick road?
3. Has a candlestick opened and closed above or below the green momentum channel, or does this even matter? Perhaps the more important question is: Are the trusted twin moving averages, the center of the green momentum channel, and the yellow brick road all fanning out in the proper sequence and alignment? If they are and there is a pull back in price, this just might be the best setup for entering positions with a high probability of ending with success. (See question #5 above.)

I ended up going to the hospital emergency room practically all day on Sunday and did not resume trading until late in the morning on Monday, making only the highest probability trades in light of the above questions/considerations. As a result, I only made three trades, but all of them ended in success.

 

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Have you considered defining the upper, lower, and middle regions of the intraday price range envelope graphically?

After attempting to define the upper, lower, and middle regions of the intraday price range envelope graphically, it appears it might be more accurate to say it’s possible that the exchange rate will continue to rise if candlesticks are forming within the upper 55% of the envelope or continue to fall if candlesticks are forming within the lower 55% of the envelope.

This renders the center 10% of the intraday price range a no-man’s land where price might go either way. To tip the scales in one direction or another, consult the positional relationship between the center of the envelope and the two longer-term trend lines— especially noting whether the dashed royal blue trendline is above or below the dashed deep pink trendline.

 

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My last trade was not a successful one (the purchase of USDCHF). My take-profit target was eventually hit, but not until after I was stopped out of the position, with both events occurring after I had retired for the night.

At this point, I am once again shooting for a near 100% daily success rate since I am not planning to make any more significant modifications to my system—only trade what I already have more proficiently. But after analyzing the situation, I can’t really point to anything I did wrong that led to the loss.

The main problem appears to be that a slight upturn in the yellow brick road and the fact that the center of the green momentum channel was above the yellow brick road led me to believe the exchange rate was probably headed higher. Eventually it did, but only after an unusually prolonged (by just a bit) trip south during which the center of the green momentum channel dropped back below the yellow brick road.

Though technically, there was nothing I did that was incorrect, it’s possible that in the future, such a situation might be avoided by comparing and contrasting what is going on with the yellow brick road and the green momentum channel against the positional relationship between the dashed royal blue and deep pink longer-term trendlines (which in this instance suggested that the pair was still bearish).

I am now short the pair, which climbed as high as 0.9834, with my take profit target at 0.9810.

 

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I am now short the pair, which climbed as high as 0.9834, with my take profit target at 0.9810.

USDCHF kept coming down to where it was just above my take-profit target only to repeatedly pull away, so I finally simply exited the position manually for about nine pips worth of profit.

 

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There will always be more to learn, but I think I might, at this time, have established the basic body of knowledge I'll need to trade this system more-or-less on “automatic pilot.”

I ought to soon reach the point where I can generate a minimum $50 return from a $1000 to $2000 account on a daily basis relatively consistently, though I will probably need to at least double that to meet my minimum living expenses (I live rather cheaply).

This week’s performance thus far would have been fantastic had I not been stopped out of that one position, which was an extremely substantial hit, but perhaps the modification I referenced above will enable me to avoid many of these types of situations in the future. Also, I’m more likely to easily make up for such losses in the future, once I return to trading full-time, since I will not be missing the numerous opportunities that develop in between the sporadic checking of the market I’m doing now.