Callout To Coders - A TP/SL indicator for 10.2

[Jemook]

It would seem that a common issue for 10.2 traders is where to place SL and TP. If you are aiming for the next support or resistance then you know what to do. But if you are entering on a daily pivot cross and are aiming to get the most out of a daily move then I think I've found out a great method to work out SL/TP targets. This will help the individual pair traders as well as anyone trading baskets.

If we are all in agreement on this theory then we need one of the supercoder's to hook up this dashboard/indicator. Please hear me out.

With a basket strategy we are entering around the daily pivot and trying to capture as much of the move AWAY from the Daily Pivot in the direction of the trend as possible within 24 hours. Get in, get out, wait for another setup.

So if we are trying to capture the most out of a move AWAY from the Daily Pivot then it would make sense to work out what the 'Average Max Gain From DP' is over a period of x days. We can then target a value within that range.

So here's an example:

AUDUSD OVER 5 DAYS

DAY 1: moved 56 pips away from the pivot
DAY 2: moved 35 pips away from the pivot
DAY 3: moved 87 pips away from the pivot
DAY 4: moved 34 pips away from the pivot
DAY 5: moved 57 pips away from the pivot

The 'Average Max Gain From DP' is 54 pips. Great. So if you are trading the AUDUSD and you enter a 10.2a trade at the daily pivot you could target something within that range (say 40 pips). However what happens if we want to put this to work for our baskets?

It's quite simple really. We measure the 'Average Max Gain From DP' for every pair in our basket and then we average that by the numbers of pairs in the basket:

For example here are the 'Average Max Gain From DP' values for 5 pairs:

AUDUSD = 54 pips
GBPUSD = 111 pips
NZDCHF = 80 pips
GBPJPY = 73 pips
NZDUSD = 64 pips

Add them all up and divide by 5 pairs and we get 76 pips! So it might be good to target a value within that range for your AdaptiveTP (say 50 pips).

Let's take this one step further and work out where to place our stops. Let's get a reading of 'Average Max Loss From DP'. It's basically the exact same as above but it gets a measurement of how many pips price moved in the wrong direction away from the DP. We can then place our stop outside of this value so it has a better chance of not getting hit. If the 'Average Max Loss from DP' is 50 pips then we should place our stops at a value greater than this say 60-70 pips.

We aren't done yet!!

Sometimes we enter from the 5.1 which gives us even more room to move. It also means that maybe we can reduce our stops a little. So here's the magic formula for a single pair:

Average Max Gain - Current Distance from DP = VALUE for TP
Average Max Loss - Current Distance from DP = VALUE for SL

2012-07-05 05.59.25 pm.png

For a basket it works like this:

Combined Average Max Gain - Average of Current Distances from DP = VALUE for AdaptivePipsTP
Combined Average Max Loss - Average of Current Distances from DP = VALUE for AdaptivePipsSL

2012-07-05 04.58.27 pm.png

Also here is the Excel document which you can play around with to get a feel for what I'm taking about.

Pips from Pivots.xls

Now I'm not sure if I'm stark raving mad here or if I'm cracking another code but please let me know if this makes sense or if I've gotten anything wrong. If you also have any thoughts on things I may have overlooked on this idea please let me know too.

I've already thought about average daily range but I'd prefer to work with movements away from the pivots as that is what we are focusing on with 10.2.

Here's some quick thoughts on inputs for the indicator:

- CurrentPairOnly (calculates the ADMAFP of the current chart only)
- DaysToAverage (number of days to look back for averaging)
- LongPairs (input long pairs in watch basket)
- ShortPairs (input short pairs in watch basket)

The indicator will need to look for profit movements above the pivot for the long pairs and profit movements below the pivots for the short pairs.

The indicator will need to look for loss movements below the pivot for the long pairs and loss movements above the pivots for the short pairs.

OK, TALK.

[mobthehop]

Just my 2 pips

If we were to consider the pivot a zero pip "box" than Squalou's breakout box indicator for forexhard on FF should provide some of the functionality outlined.....

You also might want to consider take certain aspects of the pair definition used in the Pitbull System, eg:
buy pairs: AUDUSD,NZDUSD,EURGBP,EURUSD,GBPUSD
sell pairs: USDJPY,NZDJPY,EURJPY,GBPJPY,AUDJPY

or the T101 basket of 14 pairs

There are a ton of indicators available for either to determine when there is "good" movement / volatility in any of these pairs - combined with all we have learned from Bob's 10.2 system and the various indicator developed here, it should add a nice spin on things....

Mop

[Jemook]

The indicator could definitely draw a line on the chart to show where the Average Max Gain is and Average Max Stop is. I'm not sure about all the coding stuff though which is why I'm putting it out to you guys.

[will80]

Hey Jemook - I like the logic you are applying here.

Have you messaged Bob for his input on this, his work on the volatility of pairs over a 9 week period surely must be of value here. I know Bob isn't a coder as such but I think he may have the 'data' you are looking for with regards to the averages I think you are looking for.

Just an idea.

[Armen]

Hello Jem, I like your idea very much. It's all clearly put. Just one thing. We can further incorporate this indi (the code) into ShelleyNOW and BJS Pivot Basket Auto-Trader.
Great.

[kelisa]

After an ATP or ASL is determined, and if price continues to move further, I think we can still squeeze the juice out of it by triggering an EA to move SL to BE+ xpips(on every pair) and remove TP, then move SL further to ATP once price reached there.

What I currently do it, I manually watch the basket after 2-3hours, then decides to close pairs that has done its moves(both + and -), and place SL to those balance pairs that i think still have room to move..

Well, if this can be done, we may even call it AdvanceBasket.

[nanningbob]

Steve in his MPTM has a close all orders if the total pip count reaches X on all pairs. If you have a figure everyday that may work just enter the number and let the MPTM handle it. If you want it for different groupings you could set each group with a Magic number and the MPTM will handle each group separately. So if some guy can have a program that calculates the pairs you want to do and gives you a number, you then set Steve's MPTM to close all orders at that number or close the pairs of that goup. Dont know if that is what you want but it may get you in the right direction.

[xrismak]

Haaaaa ! naningbob,
Just found the Answer I have been looking for......

[Jemook]

Steve in his MPTM has a close all orders if the total pip count reaches X on all pairs. If you have a figure everyday that may work just enter the number and let the MPTM handle it. If you want it for different groupings you could set each group with a Magic number and the MPTM will handle each group separately. So if some guy can have a program that calculates the pairs you want to do and gives you a number, you then set Steve's MPTM to close all orders at that number or close the pairs of that goup. Dont know if that is what you want but it may get you in the right direction.

Hey Bob, this is what we are already doing.

This indicator that I'd like to see coded would basically be telling us the average of how far price moves away from the pivot in both directions for the past # days per pair. We can then get an average of all the pairs we are trading in the basket to use as our AdaptiveTP / AdaptiveSL.

It's so simple in my head, I wish I could code this!

[Traderchris]

Hello Jemook

This is my first posting, but I've read just about every word on this site... What a change in tone compared to most of the FF blogs!

I took the liberty of playing with your idea - attached is a rough draft. I use something similar, but plot the averages on the H4 chart, from which I trade.

Because everybody's setup looks different, I am trying to be as flexible as possible in the display of the values - which can bet set by the trader.

If it is the correct direction, please let me know. I will try and get this as close to what you want as possible.

Regards

Chris

Steve in his MPTM has a close all orders if the total pip count reaches X on all pairs. If you have a figure everyday that may work just enter the number and let the MPTM handle it. If you want it for different groupings you could set each group with a Magic number and the MPTM will handle each group separately. So if some guy can have a program that calculates the pairs you want to do and gives you a number, you then set Steve's MPTM to close all orders at that number or close the pairs of that goup. Dont know if that is what you want but it may get you in the right direction.

Hey Bob, this is what we are already doing.

This indicator that I'd like to see coded would basically be telling us the average of how far price moves away from the pivot in both directions for the past # days per pair. We can then get an average of all the pairs we are trading in the basket to use as our AdaptiveTP / AdaptiveSL.

It's so simple in my head, I wish I could code this!