Pt1 is your early entry. Between pt1 and pt2 during increasing volume that XO’s the rtl of the short channel is your entry. After pt3, one is looking for the short channel shift in dominance which is the same as above long but to the short side. Pt2 is always outside the previous rtl with peaking volume.
You and trader1974 are having strategy development discussions. As he now realize, you should be backtesting this stuff. In fact, I believe Japanese Candlestick Patterns is one of the easiest things to backtest via a program/code or manually (no program/code). By the way, I have not used the user name NihabaAshi since February 2010 when I asked the forum owner for permission to change my user name to wrbtrader after too many personal attacks and trolling by individuals that thought in error the user name implied I was Muslim. The personal attacks begin within days after 911 and then continue for almost nine years. His suggestion was that he would close the NihabaAshi username and then let me create a new username...he did such and I then created a new user name (wrbtrader) instead of having him to just change the old user name to wrbtrader. NihabaAshi is a Japanese Candlestick term merged with a martial arts term. With that said, you guys should start posting backtesting results of what you got so far and then let the results from the backtesting help you determine where to make changes to your strategy. You could also start a trade journal here at ET and post signal results you see going forward along with simulator results if you're trading this stuff. Also, I notice you used the phrases makes it a legitimate setup and higher probability... Does that imply you've done your backtesting ? If so, what were your results if you believe it will help further whatever your trying to do with your trade strategy ? wrbtrader
Thank you Mark, Mentioning your old forum name was only intended to be a reference and not to cause any trouble. Sorry from my side, if it was. I hope other newbies, as I regard myself, can use this reference as a paper trail while diving through the forum just as I did in the beginning. I found the following wrbtrader / NihabaAshi posts (and other experienced trader’s) insight- and helpfull from my perspective and related to the topic: Explaining, why candlestick patterns only work in market context (comes with chart examples) http://www.traderslaboratory.com/forums/topic/1450-constructing-a-candlestick-trading-plan/ How to trade hammers. I found it hard to read because some forum members regarded it as wrb should serve everything on a silver plate. But extremely helpful to give you the right mindset on what is necessary and where to put your effort to go in the right direction. May sound a bit ridiculous to some, but be aware, that it is super easy to get lost. Especially in the beginning. That’s the reason why I find/found it helpful. I myself found the identification of subgroups confusing, but in the end it’s all about getting confidence in an own developed strategy. Also the reason why I am posting here now, to boost confidence and raise my own commitment – and to learn . https://www.elitetrader.com/et/threads/trading-hammers-revisited.52880/ How to start a trading plan. No wrbtrader infos, but nodoji became a respected reference in that forum in terms of integritiy and ability to give knowledge to others. Nodoji left the forum – sad for newbies. But she left a legacy: https://www.elitetrader.com/et/threads/nodojis-trading-plan-development.237799/ On “Does that imply you’ve done your backtesting”: On your quality terms I have to say no. I made no backtesting. What I did, was adjusting a framework to match with former price action. What you say is, that is no trade plan, but a strategy development. Accepted. So I realise I am in the phase of a strategy development, where I need backtestings to progress. You suggest programming. I will do so in this week and come back with the results as a commitment. There is another reason why I didnt made any backtesting. In the past I realized that a backtesting almost always revealed no edge. Therefore I found it extremly hard to keep Motivation up and progress. Then losing myself in curve Fitting and overoptimization, because it felt like a personal failure and I wanted to avoid that Feeling. Writing all this down to get it from my subconscious Level to a conscious Level to be able to handle it. Feels pretty hard to write that down. What is the best way to a strategy development without getting lost in curve Fitting and overoptimization? On “start posting backtesting” and “trade journal”: Of course I prefer a trade journal, because it is less work than a complete backtesting. Also preferring of doing both, because it reduces the “hindsight” factor. Does it make sense to mash up a trade journal in this thread? I am forum newbie and open to experienced forum members opinions how to best handle this to keep the thread clear and comprehensible. fairvalue
https://www.investopedia.com/articles/trading/10/backtesting-walkforward-important-correlation.asp I'm a big fan on doing both backtesting and forward testing (simulator trade journal) to look for correlation between the two involving your trade strategy. Yet, if you're under time restraint and/or afraid to get suck down the rabbit hole of curve fitting...looks like forward testing is the solution. Personally, I put more merits on forward testing than backtesting even though I have the opinion that forward testing is much more time consuming than backtesting. Also, I don't view backtesting as a way to try to determine if there's an edge. Instead, I view backtesting as a way to determine the weakness of a trade strategy. Regardless, trade journal thread @ https://www.elitetrader.com/et/forums/journals.29/ Yet, I strongly recommend that when you start a trade journal (forward testing)...do such via a professional trade journal software because it will automatic do the hard work for you involving the quantitative statistical analysis of your trading. It will help you make adjustments in your trade strategy and in your trading plan yet my view of a trading plan involves more personal routine that impacts your trade performance whereas to people like NoDoji viewed a trading plan strictly from the point of view as an objective approach to managing a trade strategy. Thus, a trading plan gets more into the trader character and how the person's life outside of trading impacts the trading. For example, maybe you discover that most of your profits or best trades occur while you're at work (another job). You then need determine what adjustments you need to make in your trading routine (work schedule...personal life) to be able to trade your strategy when its at its best. Another example, you backtest many different trading products and the results determine Eurex Dax Futures are profitable with your strategy but the Emini Futures which you prefer to trade is not profitable via your trade strategy. You then need to determine how you can trade the Eurex DAX futures without messing up your daily routine. I bring this up because its very common to trade what's popular to you, what's popular at a discussion forum instead of trading a product you're best suited to trade. There's a old thread here at ET where some guy backtested his strategy on many assets (trading products)...energy futures, index futures, metal futures, agriculture futures and so on. He discover his strategy doesn't work on the Emini Futures but instead he's profitable on Metal futures. Simply, he had to make a decision to either make money via trading something that he doesn't like or keep hammering at something that he's losing money / prefer to trade. Another example, some here at this forum determine they're more suitable to trading Options in comparison to the products they initially begin their trading career. I saw the above again in a CME Group trading challenge. A buddy of mine enter the challenge and was breakeven in a few early trades while trading the Emini NQ futures...very similar like results as his real money trades. He then saw many on the leaderboard trading different trading products than his Emini NQ futures. It was only a simulator trading competition so he decided to change trading products to Palladium (PA) metal futures...he almost won the darn competition. Afterwards, he backtested his strategy on PA futures and others...discover he was a profitable trader. He's been doing well in his real money trading ever since. That's another example to show a change in the trading plan whereas the trade strategy remained exactly the same to show the difference between a trade strategy versus a trading plan. Thus, when your trading plan concentrates only on the strategy and one specific trading product...its really just the trade strategy. Yet, when you think outside the box of your trade strategy...you're now getting into the trading plan. wrbtrader
no matter how short my time - never can be too short to thank for a caring answer. I will reply in depth tomorrow
This is the NQ future analysed from 1999 to 2016. I was looking for an Inverted Hammer, that has to meet the following criteria: candle closes “green” (close > open) lower wick / shadow of the candle has to be a least twice as long as the body of the candle lower wick / shadow of the candle has to be a least twice as long as the upper wick / shadow of the candle Charts explained: Pls ignore the x-axis. Chart timeline direction is as usual from left (past) to right (present) “S” is the signal = Inverted Hammer selected by the above criteria the 5 candles following the signal is the future (yeah – back to the future the n and the number is just a sequence for me to identify which exact date it was. If it helps to bring things forward I can add the date. Sorry the sequence is turned around – number 5 for example is today minus 5 days and number 34 would be today minus 34 days. the chart below the “n” chart is the weekly chart to give me more market context, of what’s happening or has happened. That chart is bit rigged, as the last bar also shows the future. I am aware of that, please be so too. I’ll change that if it helps. What I write now is no backtesting, I know that. But I gave myself a week and want to get closer step by step. What I want to achieve now is different to what I wrote in a post before. Sorry for that. The reasons: it corresponds to the topic of this thread I always read that win rate probability is higher while trading in the direction of the trend Strategic Considerations: there is an uptrend (higher high / higher low) an Inverted Hammer indicates a change in supply & demand of a current retracement. Therefore a good chance that trend will resume. An ideal setup for me would be a big candle retracement followed by an Inverted Hammer the momentum of the Inverted Hammer takes price to reach the first open price of the retracement candle/s What works / what doesn’t: n 54 works perfectly fine n 78 aswell n 147 retracement seems to be not deep enough n 300 looks promising n 379 I expected a rise, instead of a hard fall n 531 no retracement, therefore invalid n 536 perfect signal n 570 I like the low of the signal to be far lower under the previous red candle (like 536). I can’t see that preferred constellation here, but am not sure if I am uneasy for the right reasons. n 691 a sideway “retracement”? n 760 I like that: wick of the signal well below the low of red retracement candle (7). Reaching my price target (open of candle 8) n 763 pls don’t be confused: Even though 760 comes after 763 I am counting reversed. That signal looks also extremely promising for me like 760, but failed. I know, data on the left is missing and probably the key to solve 763 + 760. The PDF file: I did a Analysis resulting in 112 Charts. Unfortunately the complete PDF is 20 MB so I reduced it to These 12. I am able to send anybody the complete list by request.
I now realize you're asking for someone to analyze your trade strategy. If that's the case...why not just use it on your broker simulator for the forward testing so that you can then compare it to your historical statistical analysis between for Emini NQ for 1999 to 2016. Why did you stop in 2016 ? You using another trade strategy since 2016 or trading something else that's not Emini NQ ? Have you done any forward testing (simulator trading or real money trading) of your trade strategy after 2016 ? wrbtrader
On "you're asking for someone to analyze your trade strategy" I have no intention for somebody else to do my job. I tried to perform, in order to show that I'm willing to go in that direction experienced traders are pointing and worth an answer of a person spending half an hour answering me instead of doing something better with his time instead . Therefore I programmed that mentioned signals in VBA and tried to show them here and later work out a backtesting. I got no broker simulator access so far. I thought Paper Trading without a broker would be sufficient. I have some historical daily data of some trading products (CL, ES, GX, GC and others) in a raw data format in Excel. I started to work myself into trading in 2016, so that is were I compiled that data. As I thought 17 years on daily charts were enough, I saw no need to update it and am working with that. On "big fan on doing both backtesting and forward testing" I never saw backtesting as a way of identifing the weaknesses of a strategy. Take that inspiration with me. Thank you for your thoughts on how I could handle backtesting and forward testing. I also took a look into the backtesting link and the in-sample, out-of-sample testing and forward testing. Appreciated, was new for me. As I understand from your post, you rely on the routine (and insights therof) and therefore stressing the importance of a trading journal. I always thought that there is no point in beginning to trade if I got no "edge" trading plan, while I was "backtesting" (on my terms, not yours) my trading ideas. On "trading plan whereas the trade strategy" I am honest: The difference between a trading plan and a trade strategy was for me synonymic. I take that point with me. Thanks for working out that detail. As I understood it, a trading plan is the framework of at what time (can) I trade, how much capital is allowed to be at risk, scalping or swing trading, etc. If you feel it can help to elaborate a bit in detail why a "trading plan involves more personal routine that impacts your trade performance" in contrast to NoDojis approach of a trading plan I would appreciate that. It became not so clear for me. The trading strategy itself is the composition of when to go Long/Short, put Stop Losses, Take Profits, contaigon plans, move stops, etc. Putting it all together Where to put in the strategy development? If I understood your explanations rights, the strategy development is a ongoing process. Starting with a trading plan (framework) and starting with a trading strategy. Backtesting (and stats thereof) is part of the strategy development altering the trading strategy - just as forward testing (or paper trading) does. A matured trading strategy finally needs backtesting / walkforward like in that investopia link or the trading results itself reveal an "edge". You recommeded an own Trade Journal Thread and a Trade Journal via a Software to get the stats automatically. You also mentioned backtesting manually is okay, but the mentioned stats have to be included.
Finally appreciating your insights shwoing different results of the same trade strategy in different markts / trade products. Didn't thought it can make that difference.