Monday 31 October 2011

Rainbow Volume: Colour Based System from Technical Analysis of Stock & Commodites

In the magazine Technical Analysis of Stock & Commodities (TASC) (July, 2011 issue) there was an a article on short-term trading using a colour based system that looked very interesting, but there was only code for Metatrader 5 and not Metatrader 4. So, I whipped up a Metatrader 4 version, with a new option (...and hopefully down the road there will be some more additions to this indicator):
  • You can set a multi-coloured bar to determine how much of one colour is dominating the rest, or have the standard version with one colour (unforunately, the multi-coloured option only works as the price action currently changes)
Now, how it works is that the indicator takes the value of the current volume and the current price and compares it to the volume and price of n periods ago:
  • Green if current price is and volume is greater than the price and volume of n periods ago
  • Blue if the current price is greater than price n periods ago, but not the volume n periods ago
  • Orange if the current price and the volume is less than the price and volume n periods ago
  • Red if the current price is less than the price n periods ago, but not the volume n periods ago
The rules:
  • Buy when it is Green or Blue
  • Sell when it is Red of Orange
  • Exit with a trailing stop, or if you're really adventurous you exit at the opposite colour change

If you want to know how the full details of how it works, then be sure to check out the article. The website is in My Top Web Sites sidebar.You can download this indicator from the sidebar My Indicators, or by clicking the link below. Enjoy!

Rainbow Volume

Tuesday 25 October 2011

T3 / Triangular Moving Average with BB MACD: Who Will Be Named Champion?

I'm still playing with BB MACD. I think it is a great indicator. But like every other indicator out there, it has its flaws:
  • If you are trading the dots outside of the bollinger bands you would find that it can be a little late to the show
  • If you are trading the change in colour of the dots you would have a number of false movements, not a lot, but enough to make you nervous
So, I've been looking for something to filter this out. I've been browsing Forex-TSD's Elite/Advanced Elite sections for such an indicator, and I think a found a good one worth mentioning. It is a T3 with a Trianglar Moving Average compiled together in a unique setting that, when the two averages cross each other it provides very good entry signals (not sure on the exits just yet). Here's a picture of what it looks like (blue lines are the entry points):


Now, after I lined up all these lines with the T3/TMA and BB MACD entry points, I realize that I could just remove the BB MACD, and have the T3/TMA as a standalone indicator,  assuming that the exit points work ok. So, without the BB MACD entry signals tied in with the T3/TMA we get the below chart:


In this particular time frame (not the charts timeframe, but rather the span of the date) I calculated the how many pips were made in each chart:
  • T3/TMA with BB MACD:
    - 9820 pips total
    - 892 pip average
    - 457 minimum
    - 2508 maximum
  • T3/TMA without BB MACD:
    - 13368 pips total
    - 1215 pip average
    - 519 minimum
    - 3169 maximum
Hmmmm.... might have to give BB MACD the boot.

Well, for now anyway. More testing is need I would think. I believe I'm going to look for a bad situation for the T3/TMA on the charts (if I can find one), and see if BB MACD can correct it, or rather filter it.

Monday 24 October 2011

Review Forex-TSD: The Good, The Bad, The Overwelming

So I finally decided to subscribe to Forex-TSD, gaining access to their Elite and Advanced Elite sections. So far it has its good and bad points (remember: this is my personal opinion of the websites performance, and could be a more smoother experience for someone else):
The Good:
  • LOTS of indicators and Expert Advisers (EA), both inventive and useful (in fact, there are so many indicators/EA's on there website that it can be overwhelming; remember to stay calm and breathe)
  • Great ideas and theories posted on their forums
  • Very responsive to indicator/EA requests from other traders/payees
  • Indicators that are published on the wonderful magazine Technical Analysis of Stock & Commodities (TASC); see My Top Websites.
The Bad:
  • Would be very convenient if the indicators/EA's were displayed and available for download in a new indicator/EA section, rather than tracking down the source. They did have such a section, but I was disappointed when the indicators/EA's where not available to download; even upon searching such indicators/EA's on there website I still could not find them. I sent an email to the administrator asking about this, but I haven't received any reply yet.
  • Often these indicators are not entirely new, in that they are one already-known indicator distorted to fit a new idea, or an old idea, ex. RSI with NonLag MA, or Stochastic with CCI and RSI mixed with a Hull Average, etc...
  • I also didn't have access to My Profile on the website, and every time I click it I get the 'Sign up for Elite/Advanced Elite section to get access' page. Also included this in my email to the administrator.
I do believe the bad points can be fixed, either with me finding a way around such problems, or the admin fixing a couple things for me. I also believe that if you have MetaTrader for a trading platform, then you would benefit to signing up to this website. It's a monthly payment of $40 (US) for the Elite Section, or $90 (US) for the Advanced Elite Section, and if you are already doing well with your trading then this payment should be a problem. In fact you could just go crazy and download as much indicators and EA's as you can for the month, and get out with only paying the one month fee.

Wednesday 19 October 2011

New Indicators: BB MACD, SVE RSI Fisher, SEFC - Bull/Bear, and Kelly's Cycle Identifier


Firstly, we have the BB MACD indicator. This indicator is almost a stand-alone indicator if only it had good exit points (the exits are ok, but I believe an exit could be better handle with stop-loss, take-profits, or trailing stops).

Secondly, the... *inhale*.... SVE Inverse Fisher Transformation RSI ... *gasp*... This is also a wonderful indicator that displays early entries in a very clear way when compared to the standard RSI indicator.

Thirdly, the Kelly Cycle Identifier. This is a beefed-up version of ZigZag and the 3 Level ZZ Semafor indicators, and yes, it does repaint just like the ZigZag and 3 Level ZZ Semafor. But, despite this drawback, Kelly's Cycle Identifier is still very useful.

And Lastly, the SEFC Bull/Bear indicator. This will display the prevailing trend in a blue (bullish) or red (bearish) colour. Unfortuanly, this indicator also repaints. At times this can be very inconvient, but for the most part it helps out quite a bit in filtering out the false signals.

In addition to these indicators I also have a 5 and 8 EMA crossover with alerts to give me another early entry signal.

Now I got these indicators from a variety of forums from Forex-TSD and Forex Factory (See Top Websites side bar), and each one was used for another system. These systems seem to appear to work (I did not test them myself; just going on what other people have posted on the forums), but I was more interested in playing with the indicators to find a more optimum system for myself. I like playing with the 1 hour -1 week charts because it allows me to make mistakes and still walk away with a little bit of profit, or breakeven (I get into that on a later post). A lot of the forums never called for high timeframes, and was more gear towards scalping. I wasn't too keen on that (I don't have the patience to look at my screen minute by minute).

So, let me show ya a how I have it set up:



The plan is:
Entry (in order):
  •  Kelly's Cycle Identifier (the black spikes in the picture) will show a Major Top signal (red bar in a black spike) or a Major Bottom (blue bar in a black spike)
  • SEFC Bull/Bear indicator (the one with the blue and red vertical bars) will display the prevailing trend as blue for bull and red for bear
  • BB MACD ... OR ... EMA Cross Arrow will appear (choose which ever one comes first) 
Exit:
  • Stop-Loss (level of your personal preference), Take-Profit (your personal preference), and/or Trailing-Stop
  • Wait for the a black spike to appear to exit (wait for the close before exiting on the black speak; remember, it can repaint and change its mind)
  • Wait for the Major Top/Bottom of the Cycle Identifier (more risky, but it can payoff)
Now, I have not fully tested this system, so what you are getting here is just an idea... and hopefully a good one.  

Wednesday 5 October 2011

Crude News

I've never been much on the Fundamentals as a way to read the market. Most of the language these Fundamentalists spout out are well over my head (at least for the moment anyway). But don't get me wrong here, I do believe that the Fundamentals play a part in determining future price action. Just at the moment I'm more focused on the Technical Analysis of future price action.

There are a couple reports and news articles I'll look over, and use for my analysis. I found that a number of these reports and important news events are conveniently placed on the Bloomberg site. They call it the Economic Calendar, and this is where I get my Fundamental information (see My Top Websites on the right sidebar).

I found that out of all of news/reports given on the site the EIA Petroleum Report is the most significant in what will happen to the price action of Crude Oil. Often the price will fluxuate rapidly at 7:30am (10:30am EST) when the report is released. One can get in there when the report is released and go with the price action, but often I found that the price moved rapidly just before the report is released, meaning some people are getting this information earlier than the rest, or, and more likely, some traders are assuming where the price will go. Because of the latter point the price may go in the opposite direction of what the report says. This doesn't happen all the time, but it is something to consider when jumping in. So, be very careful when this report is released, and follow your indicators afterward on a smaller timeframe.

Tuesday 4 October 2011

WEVOMO + Adaptive Smoothing Moving Average in a Guppy Setup

I've gone through a number of Moving Averages (some of the Moving Averages I have in the previous post are not correct; I'll have that fixed today though). I visited the website Forex-TSD (see my Top Website List to right panel), and found a indicator that had all the Moving Averages together in a convenient package, so that was very helpful in my MA comparisons. I also found a another indicator that weighs volume, movement-adjustments, and a linear weighted moving average together to produce very accurate lines (the author, mladen, called it WEVOMO; this author is worth tracking if you have a Metatrader platform because he puts out really good indicators from time-to-time; as of late most of the really good indicators are being produced in the 'Elite' section / payment section of Forex-TSD). In addition, the author also produced a Adaptive Moving Average that has the amazing ability to resist the small news jumps that can cause us so much grief. This indicator is called Adaptive Smoothing, and it comes with a symbiotic indicator called the Adaptive Smoothing Alpha.
I decided to put the WEVOMO to a Guppy Multi-Moving Average setup with the Adaptive Smoothing MA as the early indicator, and it came out like this:
   
I gotta admit, if this setup doesn't work me then it can be at least the coolest looking setup I've ever made.
The idea with this setup is:
  • If the Adaptive Smoothing MA (large pink line) moves passed the last blue line then we buy/sell
  • If the Adaptive Smoothing Ma remains in the blue lines, then we do nothing
  • The 200 period WEVOMO (white lines) acts a buffer for some of the whipsaw moves (doesn't work 100% of the time, and it is almost unnecessary, but I still feel it necessary to include it)
  • Fast WEVOMO (red lines) acts as the error bars for the Adaptive Smoothing MA (the 'retail traders')
  • Slow WEVOMO (blue lines) acts the main buffer system (the 'big money')
 I still need time to work it out, but yeah, this is the skinny of it.

Monday 3 October 2011

Moving Average Derivatives Applied to GMMA Methods

So, I spent every moment of my spare time this weekend to finding a better Moving Average to be applied to the Guppy Multiple Moving Average idea, and here is what I got (includes standard 200 EMA white line):

Hull Moving Average:


NonLag Moving Average:


SSL (fast):


Step Moving Average:


Volume Weighted Moving Average (VWMA):


Kaufman Adaptive Moving Average (KAMA):

Exponential Moving Average with colour price cross (EMA):


This is what I got so far (still plenty more moving averages that I can play with: Fractal Moving Averages, Linear Weighted Moving Average (LWMA), Wilder Exponential Moving Average (WEMA), etc...). You may have noticed that some of these charts have the moving averages change colours, this is because the price crosses the line, and results in a colour change; a useful visual. 
So far, I think the Kaufman Adaptive Moving Average (KAMA) is the best alternative to the standard GMMA. I haven't tested this fully, but I think the KAMA could work as an earlier indicator than the GMMA; allowing for more trades to take place. The EMA with the colour price cross is also very useful in that the colour change can give you a better perspective as to when an entry point is merited.

As for the other GMMA hybrids, I think could tweak them a little more, but I don't think I'll get the same results as the KAMA.