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The Valley of the Rainbows


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The Valley of the Rainbows

  #1 (permalink)
Frankfurt
 
Experience: Intermediate
Platform: NinjaTrader
Trading: FGBL 6E B4
 
max-td's Avatar
 
Posts: 1,754 since Jun 2009
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The Valley of the Rainbows

Hi,
i was inspired from a astras post


and played around a bit cause of the lazy market today - here the first really colorful results from a 6B in a 4 Range-chart.
i dont know if / how this is tradable in c-futures (6E, 6B .....) in fact of spread + speed
also i never did forex-pairs -- but as a first step it looks OK.

Circle is an enrties with a winner
Box is an entrie with a loooser

Rule-ideas :
seems that its useful to let price dive deep into the rainbow
+ let Laguerre dive to the oposite side in extreme,
then Laguerre comes out of extrem
+ maybe wait for a BarClose above the last yello WMA --
+ enter there.

No ideas of targets/stop/Trails -- just a first observation today.

Pic one is yesterday, 09/22/2009 during US-cash session
Pic two is today, 09/23/2009 during EU-morning-session

all times are Berlin / Paris -time

Lets have some talks here !

max-td
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Last edited by max-td; September 23rd, 2009 at 08:39 AM.
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  #2 (permalink)
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suchen's Avatar
 
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looks good max, it seems very similar to the slingshot trading concept you were working with.


max-td View Post
Hi,
i was inspired from a astras post


and played around a bit cause of the lazy market today - here the first really colorful results from a 6B in a 4 Range-chart.
i dont know if / how this is tradable in c-futures (6E, 6B .....)
also i never did forex-pairs -- but as a first step it looks OK.

Circle is an enrties with a winner
Box is an entrie with a loooser

Rule-ideas :
seems that its useful to let price dive deep into the rainbow
+ let Laguerre dive to the oposite side in extreme,
then Laguerre comes out of extrem
+ maybe wait for a BarClose above the last yello WMA --
+ enter there.

No ideas of targets/stop/Trails -- just a first observation today.

Pic one is yesterday, 09/22/2009 during US-cash session
Pic two is today, 09/23/2009 during EU-morning-session

all times are Berlin / Paris -time

Lets have some talks here !


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  #3 (permalink)
Arcata, CA
 
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nice max... good approach... great results!

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  #4 (permalink)
Perdido Beach, AL
 
Experience: Intermediate
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websouth's Avatar
 
Posts: 1,150 since Jul 2009
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Cool Max
Rainbows and waves are very interesting to me. They of course paint the past but I do believe everything moves in cycles...weather, relationships, the tide, and others have mentioned astrology, etc. Sometimes the cycles are obvious sometimes they are not. I think next cycle prediction is difficult if not impossible....but let's swap some ideas.

One of the most common waves is the rainbow you have listed above. More than just moving average crossovers you can get a feel for trend strength as well.
Guppytraders.com - GMMA Guppy Multiple Moving Average

In the rainbow you mentioned the yellow bands.
Typical setup -
weighted moving averages spaced every 6 counting up to 160. Grouped like this
6-24 red (flame)
30-42 orange
48-60 yellow (pivot)
66-78 green
84-96 cyan
102-114 blue
120-156 purple
160 thick grey (spine)

So the things to look for are compression and rollover by watching the flame group, pivot group, and the spine slope. Generally don't trade against the slope of the spine. I personally think any other indicators are just repeating information already in front of you.

You will need slingshot and wmacolored both from the download section for this template which isolates the three groups...



+++++++++++
put chart template in
documents/Ninjatrader6.5/Templates/Chart

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Last edited by websouth; September 23rd, 2009 at 09:33 PM.
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  #5 (permalink)
Frankfurt
 
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max-td's Avatar
 
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thanks for a bit more background-info !
often heared about this stuff but never diped deeper into.

i also realized the Yellos as a possible early SL - if price doesnt stay above after ENTRY -- mostly its not running further, so maybe not bad to take it as the hard-SL-level.

it looks like you do the FX - ever done this with the c-futures ?
you really use the range 2 like your screenshot ?
i dont know how i gonna get fills in such fast action like range2 - especialy in 6B (pound$) wich is not as liquide as 6E (euro$)

max-td
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  #6 (permalink)
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Posts: 197 since Aug 2009

Took the "3fer" template for a test spin on the SIM... Worked out nice but generated a question or two (please see screen shot)

2009-09-23_1155

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  #7 (permalink)
Frankfurt
 
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hi Hjay,
which timeframe is this pic?

for me, your short was much too early.
the whole rainbow has to be clear short before an entry is valid.
this start around 11.39h in your picture.
for my view your entry was more while chop-conditions.

max-td
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  #8 (permalink)
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Posts: 197 since Aug 2009


max-td View Post
hi Hjay,
which timeframe is this pic?

for me, your short was much too early.
the whole rainbow has to be clear short before an entry is valid.
this start around 11.39h in your picture.
for my view your entry was more while chop-conditions.

Sorry, yeah I clipped that.. This is a 2 RangeNoGap (per websouth's input).. on the 6E.. Ahh... did not know about the entire rainbow being clear... agreed in retrospect it was chop at the time and a much clearer entry a little later... but who knew?.. There in lies the delema..

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  #9 (permalink)
Perdido Beach, AL
 
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Max you can use whatever time frame or scale works for you and your instrument. What's nice about waves is that they work on anytime frame.

I had a conversation with HJay - hope he doesn't mind here was my response...
This works for me...your mileage may vary. I like the granularity of looking at a small tick size so I can really see what is going on. I don't like looking at hour candles and such....but watching every tick or bar on a small time frame as it comes across the plate can whipsaw you. You need to be able to see the bigger picture also. So - If you look at everything as bands or waves that helps me. In the template price is there but you can really use the slingshot coloring band as a proxy for price. That is the "breathing room" for price.
I don't know what instrument you trade but my suggestion is to take the template I attached and put it on the smallest movement you can and still see a worthwhile movement -such as 1 or 2 range. You want to be able to see at least 30 pips/ticks or more across your screen though so you don't get tunnel vision. Attached image has 60 pips....So zoom it all the way out or maybe Zoom 1 click in.
Explanation is in the picture
http://www.screencast.com/users/websouth/folders/Default/media/5cd43a48-9b86-44e8-b4af-07e65bd7b96c

This image shows a narrow range of 20 pips or so. This is time to walk away. Market is stalled.
http://www.screencast.com/users/websouth/folders/Default/media/f54e8443-abe1-4310-b71f-ea51b8cac0bb

Hope this makes sense. You can't win them all.

HJay - you can't blindly follow the red green of the spine or a cross of the yellow. I wish it were that easy...but if it were that easy than that particular advantage would be exploited by bigger faster players than you and I until the advantage would just fade away.

In your chart 2009-09-23_1155
There was a double top before your entry you could have used as a stop. Then a trendline down from that. The Spine was pretty flat there. The whip saw would have made me nervous when it broke the downward trendline from the DT - if I had entered where you did I probably would have exited to try again later.

Price action is still king. Double tops, HH, HL trends and all that. The rainbow really shows 1-2-3 setups nicely.

pulled from my trading file some 123 stuff -
use these ideas with the wave concept.

LONG ENTRIES

Markets tend to move in waves. The main objective of the 1-2-3 breakout system is to identify firstly the overall direction of the market, then secondly to identify a high probability entry. For long entries, the point 3 must not be lower than the point 1

As the peaks and troughs are created, we set an entry, 1 point or cent (depending what market we are trading) above the last peak. We do not have to wait for a confirmation bar with this strategy, because we want to capture the movement as it is happening. For this strategy, we do not wait until the last 15mins of the trading session to enter the trade, as we do not require a confirmation candle, nor to be in front of the computer the whole day. For example, a conditional order may be placed with a broker to enter long if that entry price is reached.

With this system we are entering long just as the market has made an up trending directional movement, eg, there must be a low (point 1), a high (point 2), then a higher low (point 3), followed by a higher high (the entry) in order to make a 1-2-3 breakout.

123 long entry


LONG EXITS

We set the initial stop loss one point/cent below the last trough prior to our entry. As the market continues to form waves, we implement a trailing stop one point/cent below every trough, until we get knocked out. This way we maximise our profits and minimise our losses.


123 long exit


SHORT ENTRIES

Once we have identified that the market is shorting and the candlesticks are below the 21 EMA, we set an entry 1 point or cent (depending what market we are trading) below the last trough. We do not have to wait for a confirmation bar with this strategy, because we want to capture the movement as it is happening.

With this system we are entering short just as the market has made a down trending directional movement, eg, there must be a high (point 1), a low (point 2), then a lower high (point 3), followed by a lower low (the entry) in order to make a 1-2-3 breakout. For short entries, the point 3 must not be higher than the point 1


123 short entry


SHORT EXITS

We set the initial stop loss one point/cent above the last peak prior to our entry. As the market continues to form waves, we implement a trailing stop one point/cent above every peak, until we get knocked out. This way we maximise our profits and minimise our losses.


123 short exit



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  #10 (permalink)
USA
 
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Posts: 197 since Aug 2009


Thanks for the detailed break down... I appreciate that..

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