919gilead » Sun Jan 10, 2016 5:44 am wrote:THE IDEA
The basic idea behind the Multi Currency MTF MA Dashboard is to identify strong currency groups and match them against weak groups for maximum profit. Every currency pair is made up of 2 currencies - the base and the quote currencies. And as we all know, there is no random movement of price as it moves either because:
(a) one of the 2 currencies is weak and the other strong or
(b) one of the 2 currencies is very, very weak or very, very strong.
Therefore to benefit from price movement, we don’t need much TA but to ascertain a way to put the odds in our favour, by matching and trading strong currencies against weak ones. Trading two strong currencies or two weak currencies against each other will not give us any mileage. We should always look for “that extra edge” where one is strong and the other weak.
My first step towards achieving this goal was the MADdash coded for me by Honestknave on FF. The objective of the dashboard was to arrange the 8 major currencies in groups with their related pairs, and have a bird's eye view of what each group is doing. It will then be very easy to see groups that have more red colors than green, and those with more green colors than red, and ultimately identify and match the strongest group against the weakest group for maximum pips.
THE CHALLENGE
The challenge I encountered with MADdash just like any other dashboards was the issue of late entry due to "seeming" late alerts, which made me to concentrate only on scalping with the indicator. This was not because we use lagging moving averages but because we have what I call “
stale and fresh signals” on the dashboard, and unable to distinguish between the two. Remember, in post 1, I defined
stale signals as those signals that remain on the dashboard because no new signals have been generated to override them even when price has reversed trend but yet to cross the reference MA.
On the issue of lagging indicator(s), we must remember that nothing moves in a straight line, and every trend must stop and rest by retracing, during which it
falls behind its reference moving average(s). It is at this point that
price itself now lags the referenced MA and this is where my interest is tickled, so that when the pullback ends and price resumes its original trend, I can ride with the trend as price goes back above/below the reference MA(s). See the enclosed Gold chart with the white arrows showing the pullbacks, and what I expect is the LTFs to get highlighted on price resumption in the direction of the original trend.
THE SOLUTION
I went back to the drawing board in my forex lab and started to brainstorm for possible solution(s) with no initial luck. I prayed for inspiration for several months, and still nothing until October 30th when my prayers were answered as I suddenly noticed price crossing the 35 LWMA on all EUR related pairs around the same time (within one hour of each other), and no similar crosses happened on most other groups, before price dropped that day like a stone. The only other pair that had similar moment was the JPY pairs with only 4 pairs around the same time. This was when something clicked in my head and the idea of “stale and fresh signals” was birthed. I immediately started looking for a coder to test the idea. Thanks to those who attempted to help but did not understand exactly what I wanted and a big thank you to Rene for coming to my rescue.
We ultimately coded a dashboard that will show the trend, eliminate “stale signals,” have only fresh ones left on the dashboard, and the “NOW” trend flashing like a Christmas light when price resumes its original trend. This was done by adding two features to the dashboard:
(a) LookBackMinutes to show current trend arrows for the last 4 hours or more (as user decides) and
(b) HighLighMinutes to highlight new signals within the last 30 minutes or more (as specified by the user).
I am telling you the background history, so you can understand how these features came about, and therefore put the dashboard to its best use.
We have gone one step further in the development of this dashboard with the introduction of 2 filter options as follows, and any of these filters or both can be turned off if you don't need them:
(a) filter by the next HTF MA, where M1 will not generate any signal unless it is in the direction of the M5 TF, and M5 will not generate any signal unless it is in the direction of the M15;
(b) filter by Baluda's CSSDiff indy. This indicator itself is a strength measuring indicator and it's use is to increase the quality of the signals by
(i) filtering by the next HTF strength and
(ii) filtering by cross of the 0.2/-0.2 level, meaning you will only get signals of strong vs weak currencies. If both currencies are strong, then there shouldn't be any signal and same if both are weak.
If you are observant, you will notice something from this dashboard, you will not get counter trend signals unless 2 TFs are in agreement.
How To Identify the Strongest and Weakest Currencies
Each currency group has 7 currency pairs, and for a group to fit my description of strong or weak, it needs to show strength or weakness against a minimum of 4 of the 7 associated currency pairs. The more, the stronger or weaker and this way I am able to identify the “strongest” and “weakest” groups for a good match.
How to use the Dashboard
This indicator is built on the principles of price retracement and trend continuation, where
we turn a lagging indicator into a leading indicator. The dashboard should reflect what is on your chart when you plug in your preferred moving average(s).
It is not a standalone dashboard but a MTF Currency MTF MA Analyzer, and trade entry management tool. It does not replace chart reviews and trade planning but will reduce over analysis and help with timing your entries.
How I Trade
1. I like to see a daily pullback from the prior day’s trend before getting involved in any trade unless there was a pullback before close of the last session;
2. I have all the groups setup in my profile and therefore review the profile of each group to ascertain where a minimum of 4 pairs are moving or retracing in the same direction around the same time or within a period of one hour or so;
3. Having identified the groups that are trending with a minimum of 4 pairs, I match those moving in opposite direction against each other;
4. I then turn to the dashboard for confirmation, where we likely will find the LTFs moving against the HTFs. I expect and wait for a turn in the direction of the original trend, when the LTF columns are then highlighted and if the alerts is turned to Popup alerts, you also get a sound and popup.
The first version of the dashboard with the filters is being released for testing and feedbacks, for the next few weeks, after which an additional alerting system will be incorporated, to alert us when a minimum of 4 pairs are moving in the same direction in any group. And when this happens, I may not be able to say, this is not a standalone dashboard because it will be very close to being a standalone tool
Live Trade Examples
With every sense of modesty and in my humble estimation, I think we have developed a far more superior currency strength tool that traders can adapt to their preferred moving average(s) and on their preferred time frame, and expect to generate a reasonable amount of pips daily. Remember however like someone said, “
trading requires the patience of a saint and the discipline of a soldier."
On Monday night (January 4), around 11.54 pm PST, which was 6 minutes before London opened I posted the screenshots of both the EU and EJ charts as follows:
1. From my charts you can see that I trade off the M5 chart but do trade the HTF trend;
2. The EUR group shows that the EUR was weak against at least 4 other pairs on both the M15 and M30 in the last 4 hours;
3. We get fresh crosses on the LTFs of M5 and M15 within the last 60 minutes, with M15 showing a minimum of 3 weak pairs;
4. The JPY group on the other hand shows that this group as very, very strong as we find 5 signal arrows on the H1 with 3 fresh highlights while the M5 shows 7 strong signal arrows with 6 fresh highlights.
Without too much hesitation, it was obvious that the EJ was the best pair to trade as the original trend was being resumed. And the result as it unfolds was also posted until I left to snooze.
A Final Word of Caution
I repeat the same word of caution as on the MADdash thread, “the main goal of trading the strongest vs the weakest groups is to have a small edge with momentum and price movement following. If however price is not moving within 10 - 15 minutes of entry, there is no edge in that instrument again, and should be closed as fast as possible. I will rather sit on the sidelines and wait for another opportunity than nursing a good trade gone bad and in the process, miss other good trades that will eventually come along.”
“We don’t have to take every trade, nor do we need to trade every day. Know the characteristics of a quality trade (called HPT) and take ONLY trades that agree with your trading rules. It will save you a lot of stress and risk capital.”
And please desist from asking for my MA settings or template as we're all in this together. If we all use my preferred MAs, then there will be no new feedbacks. We all need to use different MAs, turn on and off the filters and post our results, and we can improve this potential "ATM." :youknow:
The new dashboard will be added as soon as Rene finishes adding the bells and whistles :hi:
Good trading to all, and trade safe too.
Shalom, and God bless
George
,I'm really happy to know that you are going to quit your job.
:hi:
