Looks good - congrats!
As the VWAP band can go to 3 instead of 3.1 the signals will not differ a lot.
Remarking that your Kumo colors are negated to mine - but this is only a thing
to be get used to.
Now is the moment to get on the testing route. My normal approach is to
playback some interesting periods to see where one would have taken the
Have a look especially for a SL setting which should be wide enough but
as near as possible to prevent a big loss.
@GFIs1 - Thanks for you response. About kumo colors you are telling it should be reversed i.e RED to GREEN and GREEN to RED? Also, in the previous chart I used VWAP band of 2 and 2.8 and signal arrows are for 2.8...If I put VWAP setting of 3 I can see entry and exit point only at the beginning of the session as you know morning session will be very volatile and VWAP bands just started from zero, this behavior is putting me in lot of confusion. My question to you is how you manage this signals at the beginning of the session?
Turning down means the VWAP band (with price) must be ABOVE red kumo to give a valid SHORT signal.
Here on this side only LONG signals might be right.
In other words: we are still on the downleg right now.
1. Low of price bar (3 mins) must go below lower VWAP band (SD = 3)
2. Cloud must be GREEN (note that RED and GREEN are reversed than default colors of Ichomoku cloud)
3. Cloud must be on top of middle VWAP line.
4. Cloud must be on top of price.
5. VWAP should NOT be in the GREEN kumo (i.e it should be out of kumo) - so not on the "right side"
(which means nearer / not farther) from price to kumo. - Check post # 71 (Thread # 8)
6. Validation for a signal needs a move of more than 1% change since last signal.
For SHORT entry
1. High of price bar (3 mins) must go above upper VWAP band (SD = 3)
2. Cloud must be RED (note that RED and GREEN are reversed than default colors)
3. Cloud must be below middle VWAP line.
4. Cloud must be on below of price.
4. Validation for a signal needs a move of more than 1% change since last signal.
Stop Loss (SL)
As long as the signals are accurate and valid - a stop loss is easily set in a very tight range.
We think of not going higher on the price "Hi" or not to go lower on a price "Lo". With these
extremes that should not been touched again a SL of 10 points as disaster stop in case of
a turning on a wrong signal seems adequate.
This is restraining the loss to a absolute minimum. If the signals are well the stops will never
be in use.
The following user says Thank You to bmtrading9 for this post:
Very well stated trading plan above.
Now coming back on our starts in the morning hours where signals normally often occur:
The signal is NOT valid when the Kumo is OUTSIDE of the VWAP band. This is normally
the case when a gap happened.
So wait for developing VWAP band and Kumo is getting INTO the band - so the signals
are well.. Of course all OTHER rules must be true as well to get a turning point.
I have found that price move around 1% the SL may be very tight. With every 1% added
the SL has to be widened (by the same amount as the first SL).
This prevents running into a SL right after the signal's turning point.
eg: 4% move needs much more space to "make that turn" than after a 1% move ;-)
Just a remark out of my experience on the DAX - I assume it is the same for all instruments!
The chart looks good - the signals too..
In fact I can not see if the signals are really valid - first you are working on a different instrument, second you
changed params a little bit and third I have never tested other instruments than the Dax future.
Looking at the last two days of end of the first quarter 2013 we need to be very distant too - as normally with
low volume some prices are pushed in a desired direction (here up to new highs).
I am looking forward into the first two weeks of april to get a better big picture.
Please go on with testing.