Multiple Timeframe (MTF) Fractal Breakout: Possible Short Trading

I recently applied the basic Fractal indicator that comes with MetaTrader 4, and noticed that a good breakout system could be made by observing the price break the lower-high fractal point, or the higher-low fractal point.

This idea is not new, since I remembered that the 1-2-3 Pattern system employs such a method. Regardless, I still decided to design an indicator to display such a pattern. Instead of using the Fractal indicator that came with MetaTrader 4, which uses two bars back and two bars forward to determine Support/Resistance areas, I made an indicator that did two bars back and only one bar forward. It resulted in more signals, and consequently more breakout points. This would not do.

To solve this problem I decided to apply Multiple Timeframes (MTF) to filter out most of my false breakout points. So now whenever price breaks the lower-high or higher-low on a Daily Timeframe I look to the 5-Minute chart to trail my stoploss with each coming support fractal point. Here's a picture of my "rough draft" indicator (longer lines are the Daily Timeframe Fractal points, and the small dots are the 5-Minute Fractal points):

This idea will not give you vast riches, but I think a person could make a small, consistent profit every month.

I have NOT tested this idea to its fullest. So unless you are willing to wait, then I would suggest testing this on your own.   

VWAP: Problem With Colour Change

I been trying to post my Volume Weighted Average Price (VWAP) indicator, but I'm having a problem with the change over of colour when price closes above/below the VWAP line. Here is a picture of said problem:

 You can see where the circles are that the red line should have disappeared as soon as the bar closed. But as it turns out the red line will stop moving in the direction of the price movement as soon as the price cross the line, and if the price remains above the line the red line will then cease to exist, and the blue line will take over.
So, the problem lies with the red line not moving with the price action even though the bar has yet to close.


This is my predicament. Hopefully I can come up with some sort of solution to the problem. But for now the posting of the VWAP indicator will be postponed.

Volume Weighted Average Price (VWAP): Colour Change

Just finished with another indicator I've been working on for MetaTrader 4: Volume Weighted Average Price (VWAP). I've seen this indicator around, so it is nothing new. The purpose for making a indicator that already exists is for practice with my coding skills. With this indicator I started from a formula posted on Wikipedia, and tried to code it, but ran into difficulties. I had to sum close and volume data AND split those summations into set periods. A little more difficult than my usual coding practices. But, none the less, I found a solution, and now I have a colour changing VWAP line on my charts:

I'm not posting the indicator on the Indicator portion of my site just yet. Still have some more bugs to work out.

Testing, Testing, Testing... RSI vs. MA Crossover on Hold

I was testing my theory on whether or not RSI could beat a Moving Average (MA) Crossover in terms of early entry and less false signals, when I got sidetracked by working out the most suitable MA Crossover settings for EUR/USD exchange. I made it so that for every signal I would enter a trade and close my previous trade (signal-to-signal). The results I came up with rather poor. My favorite MA combo's were 5/8 and 5/13, and both did not perform well on the 15 minute timeframe or the daily timeframe (I chose these two timefames because I would use them the most).

The both 5/8 MA and the 5/13 MA Crossover's did produce a profit on the daily timeframe, and this profit does include spread and swap price. The 15 minute timeframe, however, did not produce profit if the spread and swap price were include. So one could make a cautious assumption that a MA Crossover does not fair too well in intraday charts, but rather in daily, weekly, and monthly charts. 

Now, this does not mean that MA Crossover could not work for intraday charts. For my purposes I hoping to find a indicator that doesn't require any or very little filtration. Currently I'm reading the book Millioniare Traders by Kathy Lien and Boris Schlossberg, and they talk with a man who has made good use of the 5/13 MA Crossover on 30 minute charts. So unless the man was lying it would seem that it is possible to work with MA Crossover's in intraday charts. No doubt the man applied other methods than just a MA Crossover, but unfortunately it was not mentioned in any sort of detail.        

RSI vs. MA crossover

I was looking at an old post of mine that talks about the 5/8 Moving Average (MA) Crossover. It looked pretty good on my picture the position of each arrow the MA Crossover displayed, so I took another look at and compared it to some of the indicators I've been creating. I tried the Advanced RSI indicator, which displays arrows on the chart at given trigger level, and it seem the RSI out performed the 5/8 MA Crossover.

I do not have stats to back my conclusion, that's why I`m writing this in the general news section of my blog. But I did do a visual backtest for the comparison of the two indicators, and Advanced RSI won the day with fast entry/exit points and fewer false signals. At some point I`ll be posting the Advanced RSI indicator, but I need to make a few more adjustments before I`m satisfied with it.

So, for now if you are using MA Crossovers, you might want to compare it with RSI level triggers. You might get better results....

Mix in Volume, Bollinger Bands, and CCI

I've just recently figured out how to program an indicator into another indicator, like CCI with a Moving Average, or RSI with Momentum. In MQL4 they made pre-assigned arrays that can be attached to other indicators, which makes it really easy to mix and match a number of indicators together. I haven't figured out how to make my own array from some Custom indicator, but that will be for another day.

Right now I placed Bollinger Bands on Volume, mixed in the CCI formula, and came up with some pretty good results. Not great, but pretty good. It can estimate the potential tops and bottoms of a ranging currency, but it can give false signals in a trending currency.

Right now I'm just looking for a way to filter the signals some more. As soon as I figure that out I'll post a picture of say indicator.

Hedging EA: A Work In Progress

So, the part time job I had did not work out, unfortunately. The hours were terrible, and the pay did not even cover my rent. So I'm back to handing out resumes and such, while I try to make a better Day Trading System.

Right now I'm trying to create a Hedging EA from a Hedging method I came up with (or so I know). I just finished the worst part of this Hedging EA, which is creating new pending orders according to the multiple pending orders or open orders that are already present. This took quite awhile to pull off because I had to no way of testing my programming quickly. I had to do it the hard way by opening pending orders, and waiting until the live price hit them, which always takes forever. So if I got the programming wrong I would have to try and fix it, then wait all over again.

So, yeah, the worst part is over. Now comes the fun part of playing with the details of it, and prettying the code up a little.