SH's trading the 'greater fool' zone

B

blackberry

Well-Known Member
#21
#21
Nice initiative SIR, One thing I want to ask.Different time frame and different stock require different envelope %.How do we determine it.What is the criteria?
 
NTrader42

NTrader42

Well-Known Member
#22
#22
blackberry said:
Nice initiative SIR, One thing I want to ask.Different time frame and different stock require different envelope %.How do we determine it.What is the criteria?
Click to expand...
already given :)

Tradewithhunter said:
Different scrips and different timeframes require different width size of the envelope (defined as % points from the MA)

Cardinal rules to build an effective envelope

Irrespective of which scrip or timeframe you want to build the envelope, you need to ensure:

1. The envelope has around 95% candles falling within the envelope &
2. approximately 5% candles outside of the envelope.

Above two conditions would define the width of the effective envelope.

Cheers
SH
Click to expand...
 
NTrader42

NTrader42

Well-Known Member
#23
#23
Hello SH

Thanks for this new thread with a nice usable concept.

Most of the time contra trades based on these bands work out very well, but i have noticed an exception from the above rule.

When the touch / cross happens or just before that, if the outer band lines and the price are traveling in opposite direction, we should be more cautious.

Simply put, whenever there is a change of trend the first touch to the outer band usually fails to give a good contra trade.

On the charts this condition is easily noticeable as the price turns and the MA / Band keeps going in the direction of previous trend, the MA/Band will eventually also turn in the direction of the new trend in the process narrowing down the envelope.

The touch/cross that happens when both the envelope and price are traveling in the same direction gives a high probability contra trade.

Thanks for these valuable lessons.
 
L

lvgandhi

Well-Known Member
#24
#24
Is there any afl to find period of envelope and % MA
 
T

trade4joisar

Well-Known Member
#26
#26
Thanks SH. :thumb:

Its really nice way to work with S&R. I was in search for S&R for last few days, so it seems my search will end here.

It worked very well @ most of the places, only @ few places it was with the trend after touching to lower trend.

I am missing anything here?

 
NTrader42

NTrader42

Well-Known Member
#27
#27
trade4joisar said:
I am missing anything here?
Click to expand...
Hello t4j

Mark the actual trades and see what are the results, few of the contra trades / exits that you have marked will fail, but look at the overall results, check if your over all performance is improving by using this technique with the 315 system.

I feel every trader must do this exercise for themselves, this will give us practice for all the different scenarios based on the envelope.

Thanks
 
adityasaraf007

adityasaraf007

Well-Known Member
#30
#30
Have created this afl for Amibroker Users...... Try this out :)

Code: 
_SECTION_BEGIN( "MA Envelope" );
Type = ParamList( "Avg. Type", "SMA,EMA" );
P = ParamField( "Price field", -1 );
Periods = Param( "Avg. Periods", 20, 2, 300, 1, 10 );
F = Param( "Filter %", 5, 0.05, 100, 1 );

if ( Type == "SMA" )
    A = MA( P, Periods );

if ( Type == "EMA" )
    A = EMA( P, Periods );

EnvUp = A + A * F / 100;

EnvDn = A - A * F / 100;

Plot( A, _DEFAULT_NAME(),  IIf( Ref( A, 0 ) > Ref( A, -1 ), ParamColor( "ColorUp", colorWhite ), ParamColor( "ColorDown", colorOrange ) ), ParamStyle( "Style", styleThick ) );

Plot( EnvUp, "EnvUp", ParamColor( "EnvUp Color", colorRed ), styleThick + styleNoLabel );

Plot( EnvDn, "EnvDn", ParamColor( "EnvDn Color", colorGreen ), styleThick + styleNoLabel );

PlotOHLC( EnvUp, EnvDn, EnvUp, EnvDn, "", ParamColor( "Envelope Color", colorDarkOliveGreen ), styleCloud | 4096 );
_SECTION_END();
 
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