OK. No takers on the request for the trendline indi so I went ahead and figured it out for myself. The good news is that it works perfectly as I had hoped... no, better than I had hoped for. I now have an EA coded to utilize the TL indi and it is working like a charm. No foxes and hounds with this strategy, just trading opposite trader's sentiments. Have you ever wondered why trades go against you when you enter basd on indicators? Because that is what the money making traders trade with, not with the indicators.... but against them because they know that the market is moved by buyers and sellers, and novice traders enter & exit on indicators. Why do indicators work (on the short TF)? Because of traders reaction to the indicators. It raises a question whether indicators causes the market to move in a particular direction or do buyer/sellers cause the market to move in a particular direction based on predicted move predicted by indicators? My theory is that both contribute. Look at most market reversals and you will notice that several different indicators predict reversal. Traders who follow a particular indicator react on their indicator of choice, but with 4 or 5 different indicators all lining up together it causes the market to reverse due to 4-5 different trader styles all following their indicators that all align in the same direction. When you compile this with 5M, 15M, 20M, 15M, 1H, 4H, 1D, 1W chart followers, when these different TFs all aign on 4-5 different indicators it creates volume that drives price into a reversal. Those that don't believe that indicators predict market changes are... well they just need to do more research to gain the knowledge needed to see clearly.
So... you may be saying that is all well & good, and something that can be debated until the end of time, but how does that help with trading! I am glad that you asked that question
Based on countless hours of researching historical data I have come to the conclussion that indicators play an important role in market movement. Not that they predict market movement, as much as they cause traders to enter based on prediction. In other words if enough different indicators predict that price will go down, the reaction of traders that follow those indicators will actually drive the market down thru supply and demand. If 10% of traders follow a particular indicator, and 5 different indicators all align the same direction, that equals 50% of the market moving in that direction. Out of the other 50% of traders for that pair/commodity there are 80% that are in the market & simply holding and doing nothing. That equates to 50% moving with indicators and 40% holding with no action, and 10% buying with market movement due to the attractive lower bids/spreads. It doesn't take a rocket scientist to figure that the 50% against the trend will win against the 10% with the trend.So... we trade with the indicators when several line-up in agreement? Nope. Just the opposite! Let the indicators changes market direction and when they split up in alignment then you trade when none agree... enter back in the direction of the original market trend. That is called a counter-trend or some trading higher TFs will call it consolidation. Call it whatever you want, just call me when it happens since that is the highest profit, lowest risk trade that you can ever enter. How do you do that, with indicators? Heck no! Let the indi followers create the market and use a strategy to enter at the point where the indicators cause market havic when the indicators all disagree. That is what my EA and TL indi attempts to do and has proven to do very well. It is very early stages with this new beast and there are some tweaks that I want to make, but in its current form it is producing profits on a daily basis regardless on market move with or against the main trend.
Something that I am working on and desperately want is to incorporate is the 3 step move (A,B,C / 1,2,3) and I am still working to figure out how to code that into my EA. The problem that I am having is just like with indicators, do you use the 1M, 5M, 15M, 30M, 1H, 4H, 1D, 1W, or 1M for the steps. An indicator is not smart enough (or rather I am not smart enough to figure how to code) to compensate for the different TFs in the 3 steps. I can visually look at a chart and determine the step, but I can't code an EA that can look at a chart and decide without my assistance. So what I currently have is a semi-automated system where I have to pick what step the market is in and enter into my EA to trade based on the step that I say that the market is in. So far it has been successful, but it would be nice to have the EA do all of the work for me
I will report back once I have found a way to code an EA that recognizes market steps, or I will report back that I have failed at my quest. Trust me, since getting into FX I am accustomed to failing! I seem to fail 100 times for every small win. But with each failure I learn something valuable. Even if it is what not to do, that is a lesson well learned! Any ideas on how to incorporate the 3 step strategy into an EA would be welcomed. Of course any suggestions will be be considered regardless of their strategic methodology. Good luck, good trading and wish me luck on tweaking my newest trading system!