There are still spike that will take you out too early, but I can't find any stops that would keep you in the trade on false spikes. Just the nature of the beast.
When you talk about Elder's stops, do you mean keeping them very tight? I haven't read his entire text, but only exerpts, and from what I gather he basically says that once a trade goes in the money by a "decent" amount, move your stop loss to breakeven and thereafter continuously with the trend.
The logic behind this, he explains, is that if the maket does not favor continued follow-through of price action, then something fundamentally is changing.
Haven't checked out chandelier. I'll take a look around.
The major benefit w/ the moving average is that it allows the market to take its normal course in a trend (small corrections throughout) without getting stopped out, and letting you ride it through completion. Other techniques have a harder time doing that. In trending markets, it pays off. In consolidation, not so much. I use a little of A and B in my own trading.
I read the excerpt on TD MA, and it said to exit whenever the TD MA disappears. So if the trend stalls, you would get out according to the TD MA. I also find that TD MA hugs the prices a little too close to what I like, it actually takes you out often in the beginning of long trends when there is a quick retrace.
I think TD MA really needs to be combined with the other TD stuff or else it probably doesn't work well because it really needs to find only the good trending entry signals. So maybe that is why my findings are skewed.
The elders stop, I think he has talked about is safezone. But it is probably not good if you use it with TD MA entry method.
First off I just want to say that I'm not a fan of anything that lags, and that includes (most) moving averages. I had the luxury of using the below described at my last job, but not anymore. I was surprised to see that I couldn't find it anywhere for metatrader, so I was hoping someone might take interest. I'm not a programmer, but the logic for this seems very simple, and the results have been outstanding when I have used it; I would be thrilled if someone would like to tackle this.
During nontrending markets, the moving average is not displayed, but when a breakout opportunity is prevalent, the moving average is installed on the chart, and it can be used quite easily as a guide for the trend, a filter for false breakouts, as well as a strong indication for when to exit. The rules are fairly simple, and are explained as follows:
If a low has been formed that is GREATER than all previous 12 lows, then a 5 bar moving average of the lows is calculated for a period of 4 bars. If subsequent lows are greater than and previous 12 bar lows as well, then the process of calculating a 5 bar moving average of the lows for four bars forward (incl. current) is continued. Once this process fails to occur (13 day higher low), the moving average is extinguished. Reverse this logic for a moving average of the highs.
How to trade it:
For entry signals:
If a bar closes above an ACTIVE moving average of the highs, buy.
Reverse for sells.
For exit signals:
This is where it works best and can be used as a great addition to any trading system. The moving average will "hug" your trend. If, at any point, a bar closes above or below an active moving average, or the moving average vanishes, exit the position.
If anyone needs any more info please ask. I have tons. Would love to see this coded.
Thank you for the *.pdf file winias...
I'll be reading up on the Elder stops; thanks for bringing it to my attention.
There's an exerpt from the book on trading naked:
with some mention of the SL technique.
And yes, you're right about the extinguishing of the TD Moving Average for an exit. You're in a range at that point. In terms of getting stopped out on a harsh retrace using it, would you want it then used on a higher timeframe? I think it becomes more of an issue of assumed risk.
As an alternative, you could trail a SL underneath the moving average, because, in many cases and especially in this market, it will close below the line and head right back up again.
As an example, take a look at point B on the attached. A trailing SL under the moving average manages false breakouts like this and provides protection in the case of nasty whipsaws, while letting you ride the trend and score muchos pipos. Just an idea. Now I'm going to hit the books and read some Elder. You really got me thinking though. I think I can come up with something more dynamic based on these different ideas. I'll let you know.
Cheers mate, enjoy your weekend.
I came across these which have been working for me pretty well over the past couple of days in terms of initial sl and exit. The 5 34 5 has been giving me some pretty good entries/exits before and on the change in trend/correction. FF seems to keep me in the trend for a safe amount of time looking only at the 5 min TF (sometimes 1min if I'm ready to get out/in). Divergence indicator has been helpful as its been pointing out a lot of things I miss on occassion. And of course, the Elder stops. Not sure if you have them already or not. Just thought you might be interested.
FYI I havent fully tested these out. Still on a trial run as with anything new to me (though I know these arent that new). If anyone has any experience with them please feel free to comment (regarding lag time, repainting, etc.). But they seem to be holding up decently.
FYI settings on FF arent the ones I've been using....just noticed after I posted. Been using 1, 5, 15, 30.
One very interesting stop method I have been using is my own idea, fractal stops. It works quite well even on minor turns when price continues up after that. Basically you raise/lower to the low/high of a bar fractal appears. Fractals appear a few bars late but that doesn't seem to be a problem.
I'm not too big fan of chandeliers, they kill your trade very fast on whipsaws and you have too many parameters so it seems that it works but in different conditions it doesn't after all.
I like to test a lot of methods and see what works best for each system, I'm originally a technical guy so all kind of optimization is kind of interesting for me.
I'm really interested to hear about more mechanical stop systems if anyone knows any really good ones. Trailing stop just is not good enough for me
DeMark wrote about it in his first two books, and its available on several other platforms. I would like to post a screenshot if I had one available but I unfortunately do not.
I'm not sure how this forum is about posting links, but if you Google "TD Moving Average", and look at the 3rd result down for Google books, click on it and scroll to page 248, you'll see a chart right from the book (its TD Moving Average 1). Do not click on the other links. They are to private vendors and the visual representation of the indicator on those sites are incorrect (they continuously display the moving average).
Did you ever get a coded version of this in the end?...I have been looking for it for a while as well? Thanks