Search This Blog

Thursday, December 27, 2012

TIS Squeeze Darvas Setup Indicator

On this New Post I will explain the Squeeze Darvas Setup and how to trade it with an Indicator for Ninjatrader

The Name of the Setup is Darvas_Squeeze and the indicators needed are :

  • Squeeze Indicator
  • Darvas Indicator
For the purpose of this explanation I will be using TIS_Squeeze and TIS_Darvas but any general Squeeze and Darvas indicators will work fine.

If you are not sure how a Squeeze indicator works, it is very easy to understand, in fact, if you don't have a squeeze indicator, with just a Keltner and a Bollinger is possible to know when there is a squeeze signal condition :

On the following picture we can see a blue envelope ( Keltner Channel) and a green band ( Bollinger Band ).

When the Keltner is bigger ( containing inside) the Bollinger then there is a Squeeze Signal ( red dot on the Squeeze Indicator at the bottom ).

The rectangles are the Darvas boxes, and these are used to define the breakout zone ;

The way to trade this setup is using bracket orders ;
Buy Stop above the box and Sell Stop below the box.
We can use an offset in ticks, where the orders must be placed from the box ; N ticks above for the Buy Stop and N ticks below for the Sell Stop.

So, the logic to trade this setup is as follows :
  1. Wait for a Squeeze Condition ( Red Dot )
  2. Place Buy Stop over Box + Offset
  3. Place Sell Stop below Box - Offset
  4. If one orders get filled, cancel the other
  5. If no more Squeeze condition ( no more red dots ) and orders are not filled, the trade is cancelled
About the settings to use, the Darvas don't need any input parameter, the only inputs needed are for the Squeeze ( Period, Bollinger Standard Deviation and Keltner Multiplier ).
The period is the same for Keltner and Bollinger.
Some good settings to start with are : a period of 20 , a Keltner Multiplier of 1.5 and a Bollinger Standard Deviation of 2.

Please post any comments, suggestions, and question here...
Also if you have a good combination of settings and want to share them, please post them here...

This setup can be traded using the Combo Indicator TIS_Combo_Darvas_Squeeze


Thursday, December 20, 2012

Best Indicator for NinjaTrader

Several people asked me about which is the best indicator to use...
In my humble opinion it is not related to a specific indicator but to a group of indicators, and the most important is to choose the correct ones and how to set them all together to find an edge.
In the following example I will show you how the Small Range Setup uses a different group of indicators to filter a setup from different scopes ;

The following is a GOLD ( GC 02-13 ) Chart of today ( Dec 20, 2012 ) 

On this setup I use a trendline ( blue exponential moving average )
an envelope ( gold envelope of 8 ticks size around a 17 moving average )
and Donchian Channel of 13 bars.
When the envelope is all below the trendline we are in sell mode...
A bar can trigger a signal, only if it is making equal or higher high for a short, so we check that the high of bar must be touching the Donchian Channel.
If all of these conditions align, then we place a sell stop 2 ticks below the signal bar...
If price continues against our entry we don't get a fill, just another bar with better entry, until the envelope touches the trendline again and the trade is discarded.
On this example, we keep moving our entry up for several bars until we get a fill at 1659.4
The stop must be placed 2 ticks above the high of the entry bar ; 1660.8 so we are risking 1.4 points = $140 per contract.
We usually should go for 1.5 to 2 times the range of the chart as first target ( 15 to 20 ticks ). On this example the move was enough to get 6 points ( $600 ) per contract.
I created a dedicated indicator to follow this setup that does all the calculations, paint the bars, show the indicators used and also places a diamond where you need to place the order... Really easy... More info Here
On instruments like gold or crude oil we should always take into account the option of using trailing stops, because these markets offer great potential.
There are several ways to manage a trailing stop, and that may be one of my next posts...


Pablo Maglio

Tuesday, December 18, 2012

Small Range Setup

New Setup : Small Range

This is an old setup focused to trade trending and/or impulsing markets in the direction of the trend.
The Entry Type uses Stop Orders as it is intended for fast volatile never returning markets like crude oil or gold.
This setup uses the following Tools :
  • A slow Moving Average to define the Trend (blue line)
  • An envelope around a fast moving average to define the trade / no-trade condition
  • A channel to verify that the entry bar is making an extreme of the move
  • A tool to calculate the range of the bar ( not used on range bars)
When the blue line is all outside the envelope, the setup has a trend. Otherwise it is in neutral state ; gray bars = do nothing.
If we have red bars and current bar is touching the upper channel, then we have a possible short entry.
When not using range bars we can add another condition ; signal bar must be of small range ;

The short entry is a Sell Stop some ticks below signal bar ( usually 2 to 3 ticks ).
If at next bar we have a better entry we move the order to new place, like on example above.
Once the entry is filled, the stop should be placed some ticks above the signal bar.
Using range chart is easy for this setup because the stop is a fixed value ; the range of bar + 2 times the offset. On a 9 range CL chart using 3 ticks as offset, the stop is 15 ( 9 + 2 x 3 )
I have a developed a special indicator for this setup on

Friday, December 14, 2012

The Indicator Store New Web Page

The Indicator Store estrena nuevo sitio
...ahora con muchos mas productos y facilidad de busqueda y compra.

The Indicator Store has new Web Page ! with a lot of products and an easy to use interface to browse and purchase.