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Thread: When not to trade?

  1. #1

    I am in the process of placing a few egies together in one EA and have got stuck on a single important matter. My system is quite vulnerable to tight trading ranges, that is it produces a number of false signals in such conditions. Do not confuse this with a ranging market, it may range as long as it ranges in a slightly more interesting pattern than up, down, up, down, up, down...
    rather than tweaking the logic of the machine that's already quite complied, I thought I would think of an external protector that could monitor the price behavior and stop the system from trading if circumstances are unfavourable. Two approaches have tried up to now, not one of which seems to please. First off, I tried a very simple threshold - if it is fallen below by the high minus the lowest low within the last N phases no trading. This obviously doesn't work if the price goes up or down slowly but always - you will miss an adequate trend.
    The I moved on to trying because I called it a comparative trading range. This is the ratio of the trading ranges within the last N periods and M periods in which M gt; N.
    There's no trading if this ratio goes below - say - 0.2 (20%). This technique has one drawback - it's got a performance when a tight range gets tighter. In this case you might have a range of 10 pips which provides you 35% comparatively.
    As I am getting a feeling that I am attempting to reinvent the wheel, can you share your ideas on this? Note - I am not interested in any indis based on moving averages. I need something that quickly responds to unexpected events such as breaking from a range ( enjoy the approaches I have just explained). It doesn't need to work in general. About exploiting a number of its attributes, so I am thinking I am targeting GBPUSD on M5. Any ideas/suggestions more than welcome.

  2. #2
    Performance ratio. Look into elastic moving averages.

  3. #3
    Quote Originally Posted by ;
    Efficiency ratio.
    Thanks! I am already using AMAs for different things from the system but did not think they would be helpful here.

  4. #4
    What's a false signal? Are you trying not to have a losing trade?

  5. #5
    Quote Originally Posted by ;
    What is a false signal?
    It is a signal that activates a loser.

    Quote Originally Posted by ;
    Are you really trying not to have a losing trade?
    Yep, and I am quite near it. Seriously, the vast majority of all my losers comes from those tight ranges. When I exchange the system I understand when to refrain from taking a position. I'm looking for a way to quantify it.

  6. #6
    Quote Originally Posted by ;
    It is a sign that activates a loser.
    Giving a Winning Signal rather than Giving a False Signal are basically the same.

    Great that someone focused on NOT LOSING instead of simply winning.

    Cheers! And decent luck with your EA

  7. #7
    You might have it change to a breakout manner following the first false signal. So once it's a commerce, the code puts up a box depending on the last X number of candles and then just waits for a breakout of this box. That will keep the EA from trades until there's a substantial move.

  8. #8
    Quote Originally Posted by ;
    You might have it switch to a breakout manner after the first false signal...
    I think this is a brilliant idea. I have just given a quick inspection to it and it looks like signals are filtered out people I was concerned about. It is a shame I have never accepted breakouts seriously

  9. #9
    Quote Originally Posted by ;
    I think this is a brilliant idea. I've just given a visual review to it and it seems like most signals are filtered out people. It is a shame I've never accepted breakouts seriously
    Price is always breaking out of some level.

  10. #10
    Quote Originally Posted by ;
    It is a signal that triggers a loser.

    Yep, and I am quite near it. Seriously, the vast majority of my losers comes from these tight ranges. I understand when to refrain from taking a position while I exchange the machine manually . I'm trying to find a way to quantify it.
    What is your risk per trade? What is your TP and SL? What is your Risk/Reward?

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