Would someone kindly program the inside highly successful system? - page 3
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Hi,
As far as I can tell, your calcualtions are simply a 5 period simple moving average based on what is known in Metatrader as the TYPICAL PRICE: (h+l+c)/3
The attached indicator will draw Long Bar and Short Bar arrows for you.
Long Bar arrow = the prev. bar's average is higher than the bar before it.
Short Bar arrow = the prev. bar's average is lower than the bar before it.
Laters,
FX SniperPlease do one have to change the imput to 5 in this indicator to get exactly toxic jo specification or the indicator as it is already meets the specs?
The offset value varies the gap between the drawn arrow and the candle bar.
Ok, hang on a moment. Perhaps this will help you see things differently. I will attempt to write this in very laymen’s terms.
For a moment, forget about this so called system and look at the statistics of for example EURO/USD daily data.
I attach a spreadsheet demonstrating basic statistics that if created for other pairs also, could be used to set proper profit targets etc. The spreadsheet I just threw together in a few minutes, it is not complete and only shows 1 statistic for long trades only. This should serve to provide an example of how to look at probabilities in the most basic form.
Why all this now? So you know how to enter a trade for this system, next question, how far to set the take proffit levels, you can suck this from your thumbs or do it the right way using basic statistics. The next question would be, how far to place stops, well, use the example and the message it contains to think a bit further and create those levels for yourself, in this post I outline a example of finding the odds to exit for example 98.7% of the time with 10 pips, at what cost (drawdown) you can find out easily.
This post is not to confirm the validity of this so called system, in fact the information in the spreadsheet or similar information gathered on your own, can be applied to any system. I use statistics a lot to help me determine exits. I trade the 5 min Euro only and know that statistically speaking, when my trade is correct, price should not retrace back into the previous bar’s range by more than 3 pips from the high of that previous bar. This simple information has helped me to reduce my trade risk to only 3 pips excluding my 1.5 pip spread and 1 pip slippage ( 1 pip dived by 2 = 0.5 pips both ways ). This has helped me to take on trades when the market is extremely volatile without having to increase risk to adapt to the volatility etc etc… bottom line, using common sense and some simple tools, you can optimize profit targets and stops etc. to a fine degree. Why risk 10 point stop loss, if I know that 92.3% of the time, if the price goes against me more than 3 pips, the trade is wrong, you see my point.
With regards to the attached spreadsheet: It contains the daily Euro/USD data from 19 March 1996 (I was to lazy to get more, but I recon 10 years of data might be enough for now). You will notice a MFE column. MFE is the Maximum Favorable Excursion. It measures that if today’s’ price took out yesterday’s high, what is the maximum amount of pips it went above yesterday’s high. In other words, today’s high – yesterday’s high gve you the maximum amount of pips you could of made if you entered on the break. Of course we NEVER know how much it will run and where the exact high for today will be, but that is why we calculate the statistics.
You will see a column called BINS (CELL J2). One uses bins when creating a frequency table. A frequency tables tells one how many times a certain event happens. In our case I have set the bin sizes to 10 pip intervals… The HITS column (CELL K2) tells us how many times the maximum pips we could of made falls into the bin on it’s left.
For example we can see that 226 times the maximum amount that today’s high exceeded yesterday’s high falls between 20 and 30 points. Another example is that 86 times, the maximum amount today’s high exceeded yesterday’s high fell between 70 and 80 points and so on an so forth. This is the value of setting up a frequency table, it gives better clear information about how many times something happens in a certain way…
In total in this example, we had 1345 times where the high broke the previous days high… the %HITS column just converts the HITS column to a %... so as an example, we see that 16.8% of the trades gave an opportunity to take between 20 and 30 pips profit etc etc..
The ODDS column is the fun part. This shows us that for example, if we took trades as the broke the previous day’s high, and set a take profit for say 20 pips, we would of taken profit 85.7% of the time, if we set take profit at 10 pips, we would of taken profit 98.7% of the time.
Ok, so now you know a way to answer your questions using some simple statistics.
But before you think this is the holy grail of all grails with such high accuracy rates, remember, we have just investigated a small part of the picture…sure we can get 10 pips 98.7% of the time perhaps, but before it reaches that 10 pips, what happens in the mean time, how far does it go against us first before it gets there. This is called MAE of maximum adverse excursion. You will notice such a column in the spreadsheet also…but also bear in mind we are looking at the daily data, and from it we can not judge what came first, the 10 pip profit or the adverse excursion, so one needs to drop down to intraday data etc. to do some more checking and so on…all of this is not impossible, and if you want this badly enough, you will put in the effort to achieve the desired results.
Also bear in mind, that statistics in this case is only modeling historic data, we can only make assumptions based on the results and it does not guarantee future consistency.
With regards to this system, we can see by simply trading every breakout of every daily high, we can achieve 98.7% probability of receiving 10 pips profit, without using any of this system’s rules etc… If this system and it’s rules has a purpose, it should be to decrease the MAE, the odds of getting 10 pips is not the problem here, the MAE is !
Best wishes
FX Sniper
Fx Sniper, that was great research and confirmation that you do not need big sl if your entry is good, but I did not have statistics behind me, just personnal observation.
You are welcome
I have updated the info with regards to possible stop losses and take profits, I have started a new thread so not to divert from this one.
https://www.mql5.com/en/forum/175709
Take care,
FX Sniper
Thanks, Sniper.
indecator
Here is the indicator you wanted. White and red circles show breakouts.
#property link ""
#property indicator_chart_window
#property indicator_buffers 3
#property indicator_color1 Blue
#property indicator_color2 Red
#property indicator_color3 White
//---- input parameters
extern int nPeriod = 5;
//---- buffers
double ExtMapBuffer1[];
double ExtMapBuffer2[];
double ExtMapBuffer3[];
double MAtoday,MAyesterday;
//+------------------------------------------------------------------+
//| Custom indicator initialization function |
//+------------------------------------------------------------------+
int init()
{
//---- indicators
SetIndexStyle(0, DRAW_LINE);
SetIndexBuffer(0, ExtMapBuffer1);
SetIndexStyle(1, DRAW_ARROW);
SetIndexArrow(1, 162);
SetIndexBuffer(1, ExtMapBuffer2);
SetIndexEmptyValue(1, 0.0);
SetIndexStyle(2, DRAW_ARROW);
SetIndexArrow(2, 162);
SetIndexBuffer(2, ExtMapBuffer3);
SetIndexEmptyValue(2, 0.0);
return(0);
}
//+------------------------------------------------------------------+
//| Custom indicator iteration function |
//+------------------------------------------------------------------+
int start()
{
int counted_bars = IndicatorCounted();
int shift;
for(shift = Bars - 300; shift >= 0; shift--)
{
MAtoday = iMA(NULL,PERIOD_D1,nPeriod,0,MODE_SMA,PRICE_TYPICAL,shift+1);
MAyesterday =iMA(NULL,PERIOD_D1,nPeriod,0,MODE_SMA,PRICE_TYPICAL,shift+2);
ExtMapBuffer1[shift+1] = MAtoday;
if ( MAtoday>MAyesterday && High[shift]>High[shift+1] ) {ExtMapBuffer3[shift] = High[shift];}
if ( MAtoday<MAyesterday && Low[shift]<Low[shift+1] ) {ExtMapBuffer2[shift] = Low[shift];}
}
}If anyone wants to learn trading, go to FX_Sniper's thread, a lot of interesting ideas can be found.
More info please
Dear toxic_jo can you please ask your friend to describe his strategy in more detail. Does he consider any other info before making a trade? What kind of stocks does he trade on NASDAQ?
Just by itself this strategy will not be profitable (especially in Forex), one must consider fundamental and the time of day the breakout occurred.
Cheers.