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Duxon's Archive
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Good call, pretty much to the tick. Except...Why are you posting it 4 hours after it happened?
This suggests a rule to BUY when I get the confirmation signal above an upward sloping blue and purple trend line, and to SELL when I get the confirmation signal below a downward sloping blue and purple trend line.
However, I can tell you that this is not going to work, because there are too many times when those two trend lines are late to the party and FOLLOW the trend rather than define or lead it.
There is no getting around the fact that when it comes to the major U.S. indices, there are times when it is a coin toss...MAYBE! Recall that you just designed a chart configuration with a sort of "chop" or "congestion" zone for trading the Forex market. Will the same kind of thing work here?
UPDATE: No, that won't work either, but it looks like this just might: Use the beginning of the blue trend line (i.e., its reversal) as the entry signal, possibly with the subsequent crossing of the purple trend line as confirmation.
And hey, the chop/congestion zone does or can come into play here, because it appears that you shouldn't trust reversals that materialize with this region. Rather, only look to buy when the blue trend line reverses direction upward when located below the zone, and only look to sell when the blue trend line reverses direction downward from above the zone.
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Key Moving Averages (from my perspective) Forex Market Trading System
Short-term Trend
10-minute baseline (suggestive)
17-minute baseline (much greater significance)
23-minute baseline (confirms the above)
Intraday Trend
40-minute baseline (suggestive of intraday bias)
50-minute baseline (confirms intraday sentiment)
Overall Intraday Flow
The 1-hour measures are too slow for shorter-term trading and too susceptible to less significant price fluctuations for longer-term trading.
The 2-hour baseline is too lagging for shorter-term trading, but its corresponding price range envelope is useful in anticipating possible intraday reversal levels at 0.11% and 0.20% deviation.
The 4-hour is more suggestive of the ultimate direction in which price might be headed, with its corresponding price range envelope being useful in anticipating possible intraday reversal levels at 0.20% and 0.30% deviation.
But ultimately, it is the 8-hour measure that best conveys the gist of where rates are likely headed from day to day, with the extremes of price deviation (and therefore, possible intraday pivot points) most often found at the 0.60%, 0.70%, and 0.80% deviation levels.
Yet, the 16-hour baseline will also often prove useful as confirmation of the day to day sentiment/bias. (Any measure beyond this is too lagging or imprecise to be of practical value.)
Short-term Trend
10-minute baseline (suggestive)
17-minute baseline (much greater significance)
23-minute baseline (confirms the above)
Intraday Trend
40-minute baseline (suggestive of intraday bias)
50-minute baseline (confirms intraday sentiment)
Overall Intraday Flow
The 1-hour measures are too slow for shorter-term trading and too susceptible to less significant price fluctuations for longer-term trading.
The 2-hour baseline is too lagging for shorter-term trading, but its corresponding price range envelope is useful in anticipating possible intraday reversal levels at 0.11% and 0.20% deviation.
The 4-hour is more suggestive of the ultimate direction in which price might be headed, with its corresponding price range envelope being useful in anticipating possible intraday reversal levels at 0.20% and 0.30% deviation.
But ultimately, it is the 8-hour measure that best conveys the gist of where rates are likely headed from day to day, with the extremes of price deviation (and therefore, possible intraday pivot points) most often found at the 0.60%, 0.70%, and 0.80% deviation levels.
Yet, the 16-hour baseline will also often prove useful as confirmation of the day to day sentiment/bias. (Any measure beyond this is too lagging or imprecise to be of practical value.)
Something that helped me a LOT was backtesting one theory at a time using a robot. I thought you were already doing this, but you sound very unsure of the probabilities of your system. Do any of your baselines give a consistent edge with a backtest individually, as well as combined with multiple baselines?
Also, I mention it because my experience has been that before using robots to backtest, I had thought price would usually behave in a certain way at a certain setting on an indicator. But the backtest revealed that more consistent results were made if I used a larger setting on the same indicator. In other words, the backtests told me more than what I came up with when visually examining my charts and trying to count how often it worked or not to find the statistics showing how much of an edge it gave.
Of course, knowing you have statistics in your favor and actually be able to trade using them are two different things, and I've struggled big time with the actual trading part...because of the emotions involved.
No...everyone tells me that I should back test, but I've not taken this advice to heart and continue to do all my testing and experimenting in real time. On top of this, when I had someone write the code to automate a strategy with which I was making consistent/daily profits and then back tested the automated program, it consistently LOST money, which only increased my bias against looking to an automated past for proof of validity and reliability as opposed to real-time trials in the actual present—at least when it comes to using the MetaTrader4 program.
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Most definitely. I don't do back testing. I analyze using historical data and I test in real time. Here is an example of a baseline that looks to give a consistent edge when evaluated looking backwards, and which actually does give a consistent edge in real time:
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