Price Action Strategy question. - page 2

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Hi WhooDoo22..

It's interesting that you are exploring opportunities to take advantage of sudden short term spikes.

Personally, I find them to be rather dangerous because they tend to often prematurely shut you out of a winning trade.

To counter this problem, I have rewritten my trade management EA to, once in reasonable profit, ignore SL breaches until they have been breached a set number of times.

I'm still experimenting with the number of times to ignore the breach, but so far this strategy has kept me happily in a number of profitable trades that would normally be closed by these damned spikes, and hasn't cost too much when the trade continues in the direction of the spike.

G-fer.

 
WhooDoo22:

Perhaps I'll swim deeper towards my objective and write that I am aware that there can be a lack of data being provided by some MT4 terminals. This lack of data that I am speaking of is sometimes referred to as "Level 2 data". Level 1 data

I remember in one conversation with an FXCM rep, they talked about this data being available somewhere! FXCM say they use several banks and lenders to run their system.

I was somewhat surprised that when I put on a friday night 30minutes before the close some pending orders the price seemed to move to get those orders filled - it was very weird!

 

@ G-fer: Years ago I played a first person shooter for xbox+xbox 360 called Halo 2 and Halo 3 on a network called xbox live against all players of all skill types in the world. At first, I suffered many losing battles with a few glorious victories. It angered me that I was not THE #1 BEST. Ha-ha. I asked myself why I would allow players of higher skill rank to take advantage of my "ignorance" in both games. I answered this question by dedicating my life to halo 2 & halo 3 until I would receive the highest rank available against the best players in the world. As the years of sacrificing 5-9 hours a day alone of practicing and reading proper strategy for about 2-3 years of my life, I finally achieved the pinnacle rank of level 50 (the highest rank achievable), BUT ;), I still did not feel like the #1 best. Why? Because I was still out-classed in map strategy and weapon use. This included being able to use any weapon at super-long ranges of distance. It didn't matter how far away my opponent was, I would challenge myself by using the hardest weapons to use at long range AND told myself that every shot would be a head shot. Nothing less than head shots would satisfy me. guy running Halfway across the map = head shot him, guy driving a warthog vehicle = head shot him while he is driving a moving vehicle, guy getting out of a banshee aircraft and falling from the sky = head shot him as he falls to the ground and finish him off before his legs hit the ground. Basically I challenged myself with any challenge and overcame them all! Eventually I became so good at head shots that I challenged myself even further! I began to hone all my power from my long range skills into using sniper rifle ;). Yeaaaaaaah. Ha-ha. You-know what I am talkin' bout now. Lol. Anyhow, I got so good at scoping in with the sniper scope and "popping head shots" that I challenged myself with even more challenging demands. I began "No-scoping". No scoping is when a sniper doesn't even spend time pressing a button to scope in when attempting a head shot long range OR close range. I first started off by trying to pull off "No-scopes" short range. Mastered that. Next I challenged myself even further by popping head shot "No-scopes" long range. It didn't matter if the player was almost at the opposite side of the map, I would challenge myself to put the super tiny circle cross hair on the player's head EVERY TIME. EVERY TIME. EVERY TIME. Lol... It didn't matter if I missed, because if the player hid to recharge his shields and his toe was in view of my scope, I would snipe it off ;). I then challenged myself even further. No-scoping head shots of players became a "sixth sense" for me. It just felt natural, like it was what I enjoy most in the entire world. Getting head shots. Mastering snipe was STILL NOT ENOUGH for me because I was not #1. (or at lease in the group of elite #1 players doing this stuff as good or even better than me) I decided to begin challenging myself (halo 2) with button combinations that allowed me to out-shoot my opponents using the same weapon (BR aka Battle Rifle) in half the time. Two head shots instead of four head shots to turn out his lights. ;) By now, head shots were 80-90% all I ever got. Body shots just took too long. At first I got frustrated getting shot down when failing the extreme button combinations to "out shoot" my opponent. as the days of practicing and reading EVERY SINGLE DAY 5-9 hours a day on how to master this new skill, I began popping these head shots so fast that my opponents began to not even stand a chance. I could literally start taking on multiple opponents at once. I would whoop out my BR and quad shot a head shot (2 shots instead of 4) at a player on tower and then start getting shot by plasma rifle and whoop around using sensitivity 10 on my controller and whoop out snipe and no-scope him in the head before he could finish me off! I began "back packing" whole teams in team death match. BUT ;), this was still not enough. I forgot about the players that didn't stand a chance against me, so when faced by a lesser opponent, I would just leave them to fight a player on my team with lesser skill and I would look for the "biggest fish" on their team to play with. The better the player was on their team, the better I was challenged. Eventually I made a couple of "buddies" and we teamed up to form an alliance that was just spectacular. Amazing things were done when three players of similar skill to myself teamed up. It was ridiculous. I challenged myself and my team even more! I began to use communication with my team to form a system of map control. My team-mates and myself would take position on all high positions on the map including tops of towers cliff tops, even tops of trees! I would literally control the map, power weapon spawns, vehicles, AND even predict player spawns on the opposing team after my team annihilated the team the last time around. I would simply alert my team to start throwing grenades at spawn points on the map after players on the opposing team were shot down or done for the last time around. The opposing team would simply "wake up" to grenades or rockets blowing up around them and if they were very lucky, could run and hide or pop a couple shots at a player on my team before they met their end. This system was repeated until the games were won (very quickly). The other team would simply be fish in a barrel. As my rank rose (halo 3) 45,47,49, http://www.bungie.net/Stats/Halo3/Default.aspx?player=girl5+luv+my+50&sg=1 my team was confronted by some pretty beastly teams. Mostly semi-pros and even pros. I LOVED IT! Now, I consider FOREX my new halo 2 and halo 3. A game of severe challenge and MQL4 is my new head shot challenge. MQL4 is a BIG challenge all by itself! This is why I enjoy learning how to write code in MQL4. It is a new skill to add to my "FOREX pip hunting arsenal". It is to be taken seriously and with dedication. Something that is like a second nature to me. Also, back to what you were saying regarding your strategy which you use for FOREX "spike" movements, if you could explain it in slightly more detail, I would greatly appreciate it! If you could explain what currency pairs you use it for, what made you decide to develop a strategy for this kind of market, etc. Also, thank you very much for your post G-fer! I wish to keep plowing forward onto more "challenges".


@ Ickyrus: Thank you very much for your post. The FOREX phenomenon seems to be years of history repeating itself AND making unique changes down to the tick similar to changes of life itself!


@ Both of you: OANDA broker seems to produce "order book" aka l2 data, but I am not exactly sure how useful it is. I will provide a link to keep you both updated. http://fxtrade.oanda.com/analysis/forex-order-book


Thanks to all for your posts.

 

Hi WhooDoo22,

I don't have a strategy to profit from spikes, my strategy is to avoid being creamed by spikes.

Spikes are just like the head shots that you mention .... they're sudden, they're fatal, and they come from nowhere. Unlike Halo, here you will always be the target, and never the assassin!!!

Fortunately, this problem can be managed if you happen to have some additional armor, such as a damned good trade management EA, because, if it's your EA, it's your game :)

I'm defining a spike as a short violent price movement that returns almost immediately (within a few ticks) to its original state. Spikes will appear in both directions.

It seems to me that, if you are in a long transaction, you can take advantage of a long spike by using a moving target price (the opposite of a trailing stop loss) set "spike high" above the current price, so you will be automatically closed out at a profit. You can always jump back in after the spike retraces and continue on your way. How high is "spike high"? Mmmmmm .... 10 pips? 20?

A spikes against you is a different kettle of fish. IMO the best way to deal with it is to ignore it because it's probably very short term. But how can you ignore it if you have a stop loss set that certainly won't pretend that it isn't happening? This is where you employ the additional armor ...

My method is to set a wide stop loss with the broker in case of emergency, (worst case risk) but manage the real situation within an EA. I employ a trailing stop loss with a counter attached. The counter is incremented each time the stop loss is breached, and when it reaches a predetermined number, the trade is closed. This avoids being closed out by a spike that only lasts a few ticks. If the spike isn't a spike, but a genuine reversal, you will be stopped out if the price remains below your stop loss for more than the number of ticks prescribed. How many ticks? I seem to have reasonable success with 10, but it requires more research.

Don't forget to reset the counter after the spike has occurred in order to be ready for the next spike.

Here's an example using a trailing stop loss with a long transaction ... 

   
g_triplimit = 7;  // number of breaches allowed before closing trade


if(g_bidprice < g_trailstoploss)                                                 // price has fallen below stop loss
   {
      g_reason = " trailing stoploss of "+g_trailstoploss+" breached";           // used by the CloseOrder() routine
      g_countout = g_countout + 1;
      Alert("Trailing stoploss breached "+g_countout+" times ... close imminent");      
      if(g_countout >= g_triplimit) CloseOrder();                                // number of allowed breaches exceeded ... close the order.
   }


regards ... G-fer

 

@ G-fer: Problem: "A spikes against you is a different kettle of fish. IMO the best way to deal with it is to ignore it because it's probably very short term. But how can you ignore it if you have a stop loss set that certainly won't pretend that it isn't happening? This is where you employ the additional armor ..."

Solution: If it was my EA (example: only for a solution to this problem) I would have written it so that if the spike moves against me, the current spike is simply an open high or low. So, with that understood, the price MAY have shot into my account equity, BUT ;), shot back up (hopefully) and my EA would not have closed the order unless the bar closed below a specified SL. I suppose this is only as important as the strategy's need to accommodate this feature. I understand that I am a small fish in a pool with really big fish. I suppose survival is to stay close to the big fish and swim when they swim ;)



"It seems to me that, if you are in a long transaction, you can take advantage of a long spike by using a moving target price (the opposite of a trailing stop loss) set "spike high" above the current price, so you will be automatically closed out at a profit. You can always jump back in after the spike retraces and continue on your way. How high is "spike high"? Mmmmmm .... 10 pips? 20"

(clapping hands) I like the sound of this. I have not created this feature for an EA. I am interested. I feel as if I have a sense of direction now.

Thank you!

 

Hi WhooDoo22,

.. .unless the bar closed below a specified SL ...

Unless you write an EA to specifically apply a bar's closing price to determine whether a stop loss has been breached, your stop loss condition will be tested every tick. In particular, the stop loss attached to your order will be tested every tick by the broker. It won't matter whether you are working on a one minute chart or a one hour chart. There may be a dozen spikes in a one hour chart, and a hundred in a one day chart. Your tick by tick EA will test your stop loss against each tick as it occurs, regardless of the time period that is displayed.

The trend is determined by the strongest, and the trend is your friend (Duck !!!). Jump on, limit your losses, know your risk, let your profits run but leave a little for the next guy. You don't want to be the last to leave the table.

A friend of mine says "Just work the guts of the trend. The guts are roughly that part between the previous support and resistance levels."

G-fer

 
G-fer:

Hi WhooDoo22,

.. .unless the bar closed below a specified SL ...

Unless you write an EA to specifically apply a bar's closing price to determine whether a stop loss has been breached, your stop loss condition will be tested every tick. In particular, the stop loss attached to your order will be tested every tick by the broker. It won't matter whether you are working on a one minute chart or a one hour chart. There may be a dozen spikes in a one hour chart, and a hundred in a one day chart. Your tick by tick EA will test your stop loss against each tick as it occurs, regardless of the time period that is displayed.

The trend is determined by the strongest, and the trend is your friend (Duck !!!). Jump on, limit your losses, know your risk, let your profits run but leave a little for the next guy. You don't want to be the last to leave the table.

A friend of mine says "Just work the guts of the trend. The guts are roughly that part between the previous support and resistance levels."

G-fer



I do not agree with the "trend being my friend" because the trend is what has happened and what has happened does not matter right now.

I have the BIGGEST smile on my face, because I believe I know EXACTLY what to do.

Thank you so much!

 

Hi WhooDoo22,

... "I suppose survival is to stay close to the big fish and swim when they swim ;)" ...

I think you are describing a trend here :)


Anyhow, the suspense is killing me. What ARE you going to do???

Regards ... G-fer.

 

"I think you are describing a trend here :)"

Yes, I am describing a trend as well as contradicting myself, but right now, none of that matters!

Right now, I am going to write a strategy that I was destined to write! :)

 

Good one :)

Go for it and good luck.


G-fer

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