KISS (Keep it simple stupid) ... but make sure you still have an edge

[expiated]

When Trade Setup A resulted in two losing trades, I set about designing a revised set of rules, which appear below.



In all probability, my Price Anomaly Channel is more than likely destined to be relegated to the annals of my trading history in that I am very much pleased with the accuracy and objectivity of my new bias/sentiment lower-panel indicator, which totally eliminates any subjectivity I might inject into the process of attempting to ascertain the true direction of price.

NEW TRADE SETUP A

1. Watch for the short-term trend to pull back to the “wrong” side of SMA 1 during periods when SMA 2, SMA 3, and the lower panel bias/sentiment indicator are all three aligned.
2. Enter a position when the short-term trend hooks back toward SMA 1.
3. Set the stop loss at the 1st level of support/resistance as represented by the inner band of Envelope A located opposite the trend. (This is a theoretical setting. Due to the inaccuracy of the platform, in practical terms, the stop loss will need to be a minimum of 10 pips.)
4. If trading ambitiously, set the take profit target at the 2nd level of support/resistance as represented by the outer band of Envelope A located on the side of the envelope matching the direction of the trend, or if trading conservatively, simply set the take profit target to match the size of the stop loss.

NOTE: For the following setups, a reversal is defined by the exchange rate pulling back at least as far as first level resistance, as represented by either of the inner bands of Envelope A.

NEW TRADE SETUP B

1. Enter positions when the short-term trend reverses direction to bring the lower panel indicator back into agreement with SMA 3 after a momentary divergence in the lower panel indicator, and/or when the short-term trend reverses direction to begin forming candlesticks on the “correct” side of SMA 3 after temporarily drawing them on the “wrong” side.
2. Set the stop loss at the local high or low, as appropriate.
3. Set the take-profit target to at least match the size of the stop loss.

NEW TRADE SETUP C

1. Enter positions when SMA 1 and SMA 2 reverse direction to come back into alignment with the lower panel bias/sentiment indicator and SMA 3 (after their temporary divergence from these two primary trend indicators).
2. Set the stop loss at the local high or low, as appropriate.
3. Set the take-profit target to at least match the size of the stop loss.

 

[expiated]

Executed during today's Tokyo session:

Though one of my rules (I think it’s a good one and deserving of being followed) is to use one-minute charts for pinpointing exactly where and when to enter positions, I was performing my recent “studies” using 15-minute charts. But after finally trading using one-minute charts once again (yesterday and today) I saw how I could greatly simplify the variety of setups I described in previous posts, though it probably makes more sense to write it out as a series of steps rather than rules…

1. The first thing you want to do is notice when the exchange rate deviates from the general overall day-to-day trend (from SMA 3).
2. If and when this happens, keep an eye on it to see if it manages to do so to such a degree that it enters into statistical support or resistance levels/zones/regions. If so, you have yourself a potential trade setup.
3. All you need to do now is execute a trade when and if the short-term trend turns around and assumes a new trajectory aligned with SMA 3...simple as pie!
4. However, if the lower panel sentiment indicator also deviated from the general overall day-to-day trend, do not executed a trade until and unless its oscillator crosses back over the central line to once again inhabit the half of the bias panel that corresponds with the slope of SMA 3.

 

[expiated]

Forget all that other mess I wrote before. Today I created an indicator that makes the rules I now use to trade the Forex market successfully as simple as simple can be. As illustrated above, if the TRUE Intraday Trend Line (the simple moving average) is sloping upwards, I enter a long position when price drops below the lower proprietary Trigger Line and set my stop loss 0.1% (?) lower, at the location of the dotted line. I take profit when price rises above the upper Trigger Line. If the simple moving average is sloping downwards, I simply do the opposite...easy as pie! The "edge" is that this works, like, 90% of the time.

 

[221bazookas]

@expiated Looks promising...once your TRUE sma enters the trigger band, depending on direction of entry, you open a position? Do you rely on atr of some sort to make your call? Proprietary=you coded it?

 

[expiated]

@expiated Looks promising...once your TRUE sma enters the trigger band, depending on direction of entry, you open a position? Do you rely on atr of some sort to make your call? Proprietary=you coded it?

@221bazookas

No, the only function served by the SMA is to determine whether I am looking to buy (when it is sloping upward) or looking of sell (when it is sloping downward).

If I am looking to buy, I enter a position when price (the exchange rate) drops below the lower band Trigger Line.

If I am looking of sell, I enter a position when the exchange rate climbs above the upper band Trigger Line.

I do not rely on ATR or anything else (i.e., MACD, CCI, RSI, Stochastic Oscillator, etc.) to make my call other than simple moving averages and simple moving average envelopes. I have come to regard all other indicators to be of little value—just my personal opinion…not a fact.

Anything else I use, such as the “Trigger Line Envelope” on which my trading will now depend (given that it works FANTASTIC and it would be stupid for me not to keep my charts exactly the way they are now!) I code myself, which I had to learn how to do in order to create the kind of indicators I wanted, since I regard stuff like ADX, Bollinger bands, etc., to be pretty useless (again, just my opinion).

The only kind of “average true range” I incorporate are typical price ranges as represented by simple moving average envelopes (which I kind of no longer need thanks to my new Trigger Line Envelope and probably should have deleted from the above chart) and dynamic envelopes that ADJUST TO REAL-TIME DATA ON AN ONGOING BASIS which, yes, I coded myself.

 

[TheSaint]

View attachment 183311
Forget all that other mess I wrote before. Today I created an indicator that makes the rules I now use to trade the Forex market successfully as simple as simple can be. As illustrated above, if the TRUE Intraday Trend Line (the simple moving average) is sloping upwards, I enter a long position when price drops below the lower proprietary Trigger Line and set my stop loss 0.1% (?) lower, at the location of the dotted line. I take profit when price rises above the upper Trigger Line. If the simple moving average is sloping downwards, I simply do the opposite...easy as pie! The "edge" is that this works, like, 90% of the time.

))
Are you sure? Because I see that you write some advice / trading strategy in one post and in the next post you cancel everything by saying “forget all the mess I wrote before “...???

 

[expiated]

Yes, I’m as sure as humanly possible.



The words, “forget all that mess” were essentially written “tongue-in-cheek.” I’ve been demo trading my basic approach successfully since November 2015 and have great confidence in it. Rather than cancel everything I wrote before, what I will be doing starting next week might be more accurately described as taking it all to a new level, partly because the new indicators I coded on Friday make the rules for implementing the system ridiculously simple, and partly because the level of precision they introduce into the system is remarkably high, with the probability of each trade ending in success approaching near perfection—God willing—and the chances of being stopped out of any given trade minimized to about as great an extent as possible.

 

[TheSaint]

I see! Hope you are right and hope you will make alot of money! Wish you luck! By “coding indicators” you mean that you’ve constructed a trading bot? Or a strategy?

 

[taco]

What time frames are you looking at expiated, i was thinking of writing a bot for the 15 minute charts

 

[expiated]

By “coding indicators” you mean that you’ve constructed a trading bot?

No, I mean that I wrote the MQL4 source code that draws the proprietary envelopes and moving averages on my MT4 charts. I do not know enough to be able to construct trading algorithms.