Search This Blog

Thursday, February 25, 2016

Trade Setup Examples : High Time Frame Filters

High Time Frame Filtering

Filtering our signals taking into account the trend defined on a Higher Time Frame is one of the most important factors to take into account.

We can see on these Charts some Examples :

This is a High Time Frame Crude Oil Chart, very slow for Day Trading, where each bar has a Size of 18 Ticks, too big for the precision of an average day trading trade, where we use targets and stop near or lower those 18 Ticks.


But if we go back to our Trading Chart, much faster than this one, where we can have several Up and Down signals during one single bar of this slow Chart, which of these trades will have more Odds to Succeed ?

It is evident that we can get much better targets and less losers if we filter these signals using the higher timeframe trend.

Now, How we define the Trend ?

1) OpenClose
The example shown here ( 1st Chart ) is the easiest way ; while bars are closing up (green), the Trend is Up. When bars are closing down (red), the Trend is Down.

This is the faster and easier way to define the trend, and using some kind of fine tuning with Renko Bar we can avoid having noise or fast trend changes on sideways


  • We can see an example on Gold on this post


There are lot of other ways to define a trend ;

2) Moving Average Slope ( We can use SMA, EMA, HMA, etc )
Looking at the slope of a moving average is the 2nd fastest way to define a trend, and we can add a threshold to filter out noise.
On this example I'm using an EMA(34) and we can see that we get the same trend signals than on the OpenClose

Using the Markers Tool Slope we can measure this Trend and have it available on any other Chart, no matter what time frame or instrument.

Now, on our working chart we can specify a Markers filter for long and shorts this way ;

Markers will automate any detected signal only if the corresponding side filter is in agreement.


3) Relative Position of 2 Lines ( We can use SMA, EMA, HMA, etc )
We use 2 lines ; a fast moving average and a slow moving average.
When fast is above the slow the trend is up, when it is below, the trend is down.
The faster the periods and the closer the fast and slow periods, the fast the signal we get.
On this example, we have an EMA(36) [blue] and an EMA(34) [red]
We can see that the signals ( Arrows ) have some delay and filtering in relation to the OpenClose trend direction

To apply this method using Markers Tools, we need to copy both lines and then use the XO Indicator to calculate the distance between them ;

In total we use 3 indicators ; 2 Copy instances and one XO.
The variable defined on XO ; ema34vs36 is available on all charts and can be used to filter our signals as on previous method.
We can filter longs when ema34vs36 is greater than zero or a positive threshold.
...and shorts when it is smaller than zero or a negative threshold.


Having defined the Trend ( on current or higher time frame chart ) now we can focus on the signals of the work chart, usually the fastest time frame.

We will see some examples on the following posts.

Best Regards,
Pablo Maglio

photo
Skype Skype id : pmaglio
      

Defining a Trade Setup

Beginner's Guide to Define a Trade Setup

Hello Everyone !

On this Article I will explain the basics on defining and executing a Trade Setup.
It doesn't matters if we are analyzing Forex, Futures, Stocks or any other instrument, the rules are the same and they work anywhere.

An important step we must follow to document what are we doing is to write the rules in a way that anyone can understand and trade in the same way.

As a suggestion, try to avoid long and complex conditions and try to differentiate the setup into these 3 different items :

  1. Entry Trigger
    A group of conditions that when all in agreement trigger an Entry Signal
  2. Filter Conditions
    A group of conditions that must agree to accept an Entry Signal
    Usually we can put all these conditions together with #1
  3. Exit Trigger
    A group of conditions that when all in agreement trigger an Exit Signal.
    Any remaining position is closed when this happens.

Examples of #1) Entry Trigger

  • Fast Line crosses above Slow Line to Enter Long
  • Oscillator leaves oversold area to Enter Long
Examples of #2) Filter Conditions

  • System is already Long ( so we dont add more position )
  • System is Short ( so we wait this position to finish at target or stop )
  • Higher Time Frame Filter is not aligned
Examples of #3 Exit Trigger can be similar to #1


With Markers Plus, now we can Create, Visualize and Auto Trade any Logic that we define :



On the Following Post I will show several Trade Setup Examples and its implementation using Markers Plus Tools

Best Regards,
Pablo Maglio

photo
Skype Skype id : pmaglio
      

Thursday, November 12, 2015

Markers Plus 4 for Ninjatrader - Creating our own Trade Setup

Markers Plus 4 for Ninjatrader
Creating our own Trade Setup

Hello Traders

As we know, a trade setup consists on set of rules that define when to Enter the Market and in which Side, Long or Short. 
It can be just that, or can include also a rule set to define when to close a position.

As we saw on previous posts, Markers Plus 4 include tools to create Signals.
Those Signals can be used to either enter the Market or Exit the Market.

Lets review the most important included tools :


  1. Universal Slope Tool
  2. Universal Crossover Tool

Universal Crossover Tool

With this Tool we can identify the Cross between any pair of lines. Those lines can be drawn by any indicator installed on the platform.

Example :

These pair of Red and Blue Lines are an example of 2 things ;

  1. We can define the trend by the relative position
    When Red Line is above Blue Line, the trend is Up
    So, we only take Longs
  2. We can also paint a signal on the crosses ;
    When Red cross above the Blue, we have a Buy Signal
    ( or an Exit Short Signal )
Both items can be done with the Crossover Tool

Example applying the Crossover Indicator :

We get Up and Down Arrows painted in user defined Colors, so they can be used by Markers to initiate or exit a Position.
We also get a histogram with the difference between both lines, positive when red line is above the blue. Negative when below.
We can use this difference as a filter condition on Markers.
Example ; Taking only longs when histogram >0 ( or a threshold )
Take only shorts when histogram < 0 ( or a threshold )



This tool is really powerful to research and backtest new setups as we can see the results in real time on the historical data ( as seen on the chart )
We can change the settings of the indicator or the indicators itself that generate those lines and have the result at the instant.
Remember that those lines can be any plot of any indicator on your platform.
No need to Market Replay.
No need to create a Strategy.
Just create your logic, watch it on your chart, and put it to auto trade with Markers.

Some examples : 

  • Fast EMA vs Slow EMA ( this is a classic )
  • EMA crossing above an upper Donchian ( long signal )
    ...crossing below the Lower Donchian ( short signal )
  • SMA crossing above a Bollinger Upper Line ( long impulse signal )



Universal Slope Tool

With this Tool we can calculate the Slope of any line painted by any Indicator installed on our platform.
The slope is calculated by the difference of the indicator's line current value and N bars ago

This indicator draws a histogram with the slope and also paint signals when there is a slope directional change :





As we can see, with these 2 Tools, almost all possible Trade Setups can be recreated and Executed on Full Automatic, Semiautomatic or Manual Mode with Markers.





Feel free to ask for a demonstration if you want to see it working.



Best Regards,
Pablo Maglio


photo
Skype Skype id : pmaglio