Renko ADX Stoch system

To add comments, please log in or register
jlgardner263
56
jlgardner263  

Hello everyone,

I've been playing with Mr Nim's Renko Ashi system since he mentioned the idea and I've come up with several alternatives and one idea which I am seeking help with.

The first is a manual system using Renko (no Heiken Ashi to improve accuracy,) ADX, Slow Stochastic, and MACD directional filter. I personally use the Stealth Earlybird V1 alert to aide in entry (this alert is virtually worthless on time-based charts but works with relative accuracy on Renko charts.) It is a sort of discretionary system.

Set-up:

-Load one minute chart, scroll back one month, attach Lordfxts 10pippricebar

-Open (Instrument) M10 Offline Chart

-Attach ADX, with default settings (I change the average line color to "none" as I do not use it for decisions, only DI and -DI.)

-Attach Stochastic, K period 20

-Attach MACD (default)

Entry rules:

We are looking for an ADX cross in the direction of the MACD for an entrance point. Do not enter early, unassured ADX signals can be very deceiving (i.e. wait for next brick, probably don't have to say that.)

There must also have been a stochastic cross in the same direction within 3 bricks of the ADX signal.

Exit:

A) Fixed TP. This is what I'm going to move to as quickly as possible, I am working on an EA for this that will take 10 points on projected 20 point moves, leaving room for spreads and slippage. I recommend you adjust brick size for this. Example, you want to scalp 15 points per trade on the GBP/USD pair. Use 25 point bricks and enter on the first brick previous of an acceptable entry. I have not yet seen, via forward or back testing, any instance where an acceptable signal did not result in one brick in our favor, so we have a very strong indication that the next brick shall move 25 points in our favor. We only want to take 15, however, and this leaves room for price jumps prior to entry (for example if the brick is formed by a 7 point jump) as well as our spread.

B) If the MACD and ADX continues to show a strong trend, you may opt to stay in the trade. See the picture for confirmation. As you can see, at the line marked 4 I entered the trade based on my stochastic and ADX crossing in the direction of the MACD. Instead of bailing out at the first stochastic cross, I stayed in the trade until the stochastic fell out of oversold territory. The only reason that I did this was because of the strong MACD and ADX signals. At point 5 the Stochastic fell out of oversold and the histogram dropped below the MACD. Two bricks later the ADX recrossed, which would have been a late exit but still a profitable one.

I very rarely exit based upon ADX. On a note of the ADX I realize that this is not the most common usage of it, but it is working well.

Filters: See the picture where I marked a thumbs down? This is a bad trade. The ADX shows a fairly strong cross, but the upwards stochastic move was more than three bricks prior, so we will avoid this signal. Thankfully, if you had taken it, the stochastic what have bailed you out at break even or a small loss, but best to avoid these as possible.

If you are experienced with old school analysis, you will be able to make the most of the ADX and MACD behavior to create your own filters. If the DI Divergence within the ADX is small ("whipsaw,") we avoid the market.

Stop Loss: I am using a fixed stop loss of 2 times the brick value +3. So if I am working with 15 pip bricks, my stop loss is set to 33. This is because of the nature of Renko charts. Once a brick is assured (solidified, charted) it will not repaint. So if the previous brick were an up signal, and we have entered, the price can actually drop 30 pips before a down brick will appear. I have added the 3 just to count for human error. If you're a very precise trader than 2X the brick value will work.

I have yet to hit my stop loss. I have at all times received an opposing signal before that occurs, but I also pick and choose my trades carefully.

On a final note, it may be several hours before a new candle appears, so it's best to monitor several charts. I've found this to work well on most currencies. When a new candle appears, regardless of whether you have a signal, you should be able to predict whether the next candle might result in a signal, and if so, since we already know the size of the bricks, we can put in entry orders. Example, if the price rising to X.XX20 would result in an ADX cross, and you are confident that you can accurately predict the behavior of these indicators, we will put in an entry at perhaps X.XX25. I suggest you pick up the new candle alert (New_Candle_Alarm.)

Well, that was long winded, but I hope someone enjoys this.

Files:
jlgardner263
56
jlgardner263  

Opposing Signals

Further Filtration.

I forgot to mention. An opposing stochastic cross outside of oversold and overbought territory is a bailout signal. Once the stochastic is in oversold/overbought, we wait for it to cross back across 20/80 for our exits. If stochastic does not enter oversold or overbought then this is not the kind of trade we are looking for and we let it go for a small profit/loss/break even.

lordsfxt
165
lordsfxt  
jlgardner263:

Stop Loss: I am using a fixed stop loss of 2 times the brick value +3. So if I am working with 15 pip bricks, my stop loss is set to 33. This is because of the nature of Renko charts. Once a brick is assured (solidified, charted) it will not repaint. So if the previous brick were an up signal, and we have entered, the price can actually drop 30 pips before a down brick will appear. I have added the 3 just to count for human error. If you're a very precise trader than 2X the brick value will work.

I have yet to hit my stop loss. I have at all times received an opposing signal before that occurs, but I also pick and choose my trades carefully.

I am going to try your strategy at the end of the day, BTW, you can use the data window to get the precise open and close price of the renko bars.

Attaching the script and indicator.

Cryten
269
Cryten  

I decided I prefered my method on the 1 min after all but through my little renko journey I have this EA for renko charts which is the latest and also shows the "wicks"

Make sure to tick Allow DLL imports as well as confirm DLL function calls.

Files:
jlgardner263
56
jlgardner263  

Cryten,

Did you create the script to show the wicks? I have actually been looking for this concept myself, I am no coder...

Cryten
269
Cryten  
jlgardner263:
Cryten, Did you create the script to show the wicks? I have actually been looking for this concept myself, I am no coder...

The one I posted is an EA rather then a script but same set it up on 1 min chart to open an offline renko chart. Then choose to display wicks in the option settings of the EA but I think its hard coded to show by default anyway.

I did not code this but found it on another forum. ( I can't even program the coffee maker let alone C++ )

generousforex
371
generousforex  

Good setup

I really like this setup, its a really great base.

Add rsi 10 with 55/45 filter levels to your setup and its

even better.

How are you doing with this and what pairs

are you trading with it?

Any other updates anyone? This thread should be

more popular, I think more people just need to see it.

GF

jlgardner263:
Hello everyone,

I've been playing with Mr Nim's Renko Ashi system since he mentioned the idea and I've come up with several alternatives and one idea which I am seeking help with.

The first is a manual system using Renko (no Heiken Ashi to improve accuracy,) ADX, Slow Stochastic, and MACD directional filter. I personally use the Stealth Earlybird V1 alert to aide in entry (this alert is virtually worthless on time-based charts but works with relative accuracy on Renko charts.) It is a sort of discretionary system.

Set-up:

-Load one minute chart, scroll back one month, attach Lordfxts 10pippricebar

-Open (Instrument) M10 Offline Chart

-Attach ADX, with default settings (I change the average line color to "none" as I do not use it for decisions, only DI and -DI.)

-Attach Stochastic, K period 20

-Attach MACD (default)

Entry rules:

We are looking for an ADX cross in the direction of the MACD for an entrance point. Do not enter early, unassured ADX signals can be very deceiving (i.e. wait for next brick, probably don't have to say that.)

There must also have been a stochastic cross in the same direction within 3 bricks of the ADX signal.

Exit:

A) Fixed TP. This is what I'm going to move to as quickly as possible, I am working on an EA for this that will take 10 points on projected 20 point moves, leaving room for spreads and slippage. I recommend you adjust brick size for this. Example, you want to scalp 15 points per trade on the GBP/USD pair. Use 25 point bricks and enter on the first brick previous of an acceptable entry. I have not yet seen, via forward or back testing, any instance where an acceptable signal did not result in one brick in our favor, so we have a very strong indication that the next brick shall move 25 points in our favor. We only want to take 15, however, and this leaves room for price jumps prior to entry (for example if the brick is formed by a 7 point jump) as well as our spread.

B) If the MACD and ADX continues to show a strong trend, you may opt to stay in the trade. See the picture for confirmation. As you can see, at the line marked 4 I entered the trade based on my stochastic and ADX crossing in the direction of the MACD. Instead of bailing out at the first stochastic cross, I stayed in the trade until the stochastic fell out of oversold territory. The only reason that I did this was because of the strong MACD and ADX signals. At point 5 the Stochastic fell out of oversold and the histogram dropped below the MACD. Two bricks later the ADX recrossed, which would have been a late exit but still a profitable one.

I very rarely exit based upon ADX. On a note of the ADX I realize that this is not the most common usage of it, but it is working well.

Filters: See the picture where I marked a thumbs down? This is a bad trade. The ADX shows a fairly strong cross, but the upwards stochastic move was more than three bricks prior, so we will avoid this signal. Thankfully, if you had taken it, the stochastic what have bailed you out at break even or a small loss, but best to avoid these as possible.

If you are experienced with old school analysis, you will be able to make the most of the ADX and MACD behavior to create your own filters. If the DI Divergence within the ADX is small ("whipsaw,") we avoid the market.

Stop Loss: I am using a fixed stop loss of 2 times the brick value +3. So if I am working with 15 pip bricks, my stop loss is set to 33. This is because of the nature of Renko charts. Once a brick is assured (solidified, charted) it will not repaint. So if the previous brick were an up signal, and we have entered, the price can actually drop 30 pips before a down brick will appear. I have added the 3 just to count for human error. If you're a very precise trader than 2X the brick value will work.

I have yet to hit my stop loss. I have at all times received an opposing signal before that occurs, but I also pick and choose my trades carefully.

On a final note, it may be several hours before a new candle appears, so it's best to monitor several charts. I've found this to work well on most currencies. When a new candle appears, regardless of whether you have a signal, you should be able to predict whether the next candle might result in a signal, and if so, since we already know the size of the bricks, we can put in entry orders. Example, if the price rising to X.XX20 would result in an ADX cross, and you are confident that you can accurately predict the behavior of these indicators, we will put in an entry at perhaps X.XX25. I suggest you pick up the new candle alert (New_Candle_Alarm.)

Well, that was long winded, but I hope someone enjoys this.
bh4v1k
66
bh4v1k  

I agree

generousforex:
I really like this setup, its a really great base.

Add rsi 10 with 55/45 filter levels to your setup and its

even better.

How are you douing with this and what pairs

are you trading with it?

Any other updates anyone? This thread should be

more popular, I think more people just need to see it.

GF

I agree this should be a popular thread, i have just come across it and i was following the other thread. How's it goin jlgardner263? Even if you just took a box and you got a good 90% hit rate with a 2:1 stoploss should still make you money in the long run.

Will have to put it on my charts and have a go. Are you trading this live?

Thanks

bh4v1k

HAPPY PIPS!

bh4v1k
66
bh4v1k  

Trades

I also just noticed that from your trade setups in the picture on post one. Trade numbers 1 and 2 the MACD is on the oposite side? am i reading it right, becuase trade setup 3 the MACD is the correct side.

Whats your thoughts on this jlgardner263's? or is this were the discretion is when taking the trade.

Thanks in advance

bh4v1k

HAPPY PIPS!

generousforex
371
generousforex  

I trade that way

I trade that way, the important thing for me is

1. Macd color is correct, ie green for a long

2. Macd histogram is above the macd line

OR below the macd line if the other side of 0,

like in trade 1, the macd colored is red there

and the macd histogram is below the macd line.

I use the macd colored for this purpose and with

this setup and it works great.

GF

bh4v1k:
I also just noticed that from your trade setups in the picture on post one. Trade numbers 1 and 2 the MACD is on the oposite side? am i reading it right, becuase trade setup 3 the MACD is the correct side.

Whats your thoughts on this jlgardner263's? or is this were the discretion is when taking the trade.

Thanks in advance

bh4v1k

HAPPY PIPS!
Files:
bh4v1k
66
bh4v1k  
generousforex:
I trade that way, the important thing for me is

1. Macd color is correct, ie green for a long

2. Macd histogram is above the macd line

OR below the macd line if the other side of 0,

like in trade 1, the macd colored is red there

and the macd histogram is below the macd line.

I use the macd colored for this purpose and with

this setup and it works great.

GF

Thanks for that GF. So do you trade this system? how well has it done for you?

bh4v1k

HAPPY PIPS!

To add comments, please log in or register