10 Pips strategy with three line break

I developed a simple strategy to trade the Euro FX during moments of relative low volatility.

At the first signal you enter using as a stop loss the top of the box (or the bottom in the case of a long trade) your target is small 10 pips, because most of the time the euro come back stopping you due to low volatility. There isn't enough volatility for longer moves, so is better to close the trade at the first ten pips of profit.

Update:

Three Line Break

Three line break charts usually help traders more accurately determine the current direction of the trend and alert them sooner when the trend has changed than do other methods (stochastics, moving average crossovers, etc).

Three line break charts display a series of vertical boxes that are based on the closing prices. Every time there is a higher close a new white bar is created. When the price closes below the low of 3 green boxes the trend shifts to down and we start drawing black boxes. Every new closing low draws a new black box and so on. Three point break charts often can help a trader spot trend reversals quickly. There are many uses for 3 line break charts, you can use them for entries, exits, and make wonderful places to trail your stops to catch the majority of the move.

An example trade, my long with the Euro FX Cme Future

Entry point at 1.3692, first white box, i managed to close before FED meeting at 1.3756

This chart was made in Amibroker, using tick visualization, every 16 base ticks one bar is drawn or every 16 base pip, it is a way to compact the chart and eliminate small congestion areas.

GBP-USD and digital filtering PART 2

After 40 days i post an update to see what happened, the stlm gave 2 signals, one long and one short very profitable that is still valid.

GBP-USD and digital filtering

A nice example of digital filtering using STLA and STLM

STLA stands for Slow Adaptive Trend Line and STLM for Slow Trend Line Momentum show the tempo of change (fall or growth) of SATL.

Euro Fx, 5m chart, Today

Private Post

The 18.6 year cycle in the Dow Jones Index

I applied the famous coppock indicator for yearly chart instead of monthly chart. It gives outstanding results and put in evidence the long term 18.6 years cycle for stocks.

Here there are all the signals generated by the oscillator:

1. Short 175 - 1929
2. Cover and buy long at 125 - 1942
3. Cover and sell short at 966 - 1966
4. Cover and buy long at 1222 - 1983
5. Cover and sell short at 10095 - 2000
6. Still short - 2009

The coppock was originally intended for monthly trading, so using both monthly and yearly signals would have been generated much more profits.

Private Post for Hugo

USD/GBP Cme Future, 1d chart

A downward channel, today failed to go over the midpoint of the channel.

Still bearish

Sp500, 1h chart view

995?

Flat and easy

When the market is flat and oscillatory is easy to forecast it for quite some time, in this example we have daily chart of stm microelectronics listed at Milan stock exchange. With an average 13 bars cycle the auto regression algorytm that i use worked well. For one month it forecasted perfectly the behaviour of the stock, this is the best possible situation that can happen without a strong trend that hurts your forecast.

The forecast starts at the right of the vertical blue line, the arrows point the 13 days cycle. The envelope bands also worked great giving supportand resistance for each day.

Here another example with the future of USD/GBP (1h chart):

The importance of the stop loss

My attemp to follow the downtrend, unfortunately the market often bring surprises even to the most sophisticated forecast methods.

At 986.25 i stopped because i smell too much strong, it was right and once again i underline the importance of the stop loss.

E-Mini S&P500, 1h chart

Today i bought first at 1007.25 then at the lower band at 998.25 just 1 tick above today low.

I sold everything at the entry price of the first contract, 1007.25.

Non farm payrolls -247k

It is a decent data, and fell in my forecast range. I expect a positive trend for employment for the rest of the year.

Non farm payrolls forecast for tomorrow

I expect for tomorrow a non farm payrolls close to -300K, my range is from -230K to -370K. On the left a forecast for all 2009 starting from january, the worst month. By the end of the year, in the best scenario we could even see a positive non farm payrolls that could put an end in this big crisis.

Nasdaq Composite, yearly chart

Chart of Nasdaq Composite since its inception of 8 february 1971, with volumes.

1300 is a strong support that hardly will be broken this year, i remain bullish for 2009.

Bollinger Band and TILLSON’S T3 Filter, COMPARISON

Euro FX 5 minutes bar, today and yesterday

In Blue the bollinger band calculated with the average price (high + low / 2) at 89 periods.

The red bands represent my method to filter the data with a centered T3 Filter with 89 periods (it uses future data to erase the lag, so the last n-bar in blue are forecasted with autoregression algorithm and might change)

More Details about the filter i use:

T3 is a high order low pass denoiser made of six-pole nonlinear Kalman filter . The Kalman filter is an efficient recursive filter that estimates the state of a linear dynamic system from a series of noisy measurements (from wiki)

Inputs of the Filter:

Periods T3 = Periods for Tillson's T3 filter
Slope T3 = Slope for Tillson's T3 filter (0.7 to 0.83 for usual value) (Higher value mean more dynamic filter) i use 0.7 that is perfect and fit better the data.

Weakness ahead

A closing triangle, and i suspect the US markets will go down the first part of this week.
The n100 is going to break the 1466 level today.

Sold S&P500 unit at 957

An excellent example of trading using only price levels.

I bought at 930 at the support of the internal price envelope, sold today after the employment data at the resistance of the main price envelope.

I plan to be a buyer again near the midpoint at 947.