Profitable Scalping Strategy alert indicator required

[soundfx]

Hi Guys,

 

Here is a scalping strategy which works very well and I use it in live when I have plenty of time to be staring at the screen.

 

Does anyone fancy creating an indicator to give alerts when the entry criteria are met? I think this will be really handy.

 

Note that the strategy isn't one which easily translates into an EA, so complete automation isn't possible. A degree of understanding of where price is in relation to key pivot levels and the visual ability to see "choppiness" or horizontal movements in the MA cross, awareness of news etc. are all things which the manual trader can bring to the table.

 

The big problem is that even on the 1M chart you only get say 2-3 really good opportunities each day, so that means staring at the screen for hours waiting for good setups. A good setup has a high probability of being profitable and can run for 10-20 or more pips.

 

You can use the system on any pair, though I recommend those with the lowest spreads, EURUSD being a prime candidate. The system also provides good signals on other timeframes and the alert would be even more handy for 1H or 4H trading.

 

The 1M chart is set up as follows:

 

EMA 3 (applied to close)

Bolli Bands 18

MACD 12,26,9

RSI 14

 

Stops are the recent swing high for Shorts or the recent swing low for Longs.

 

Exits can be either on the cross back of EMA3 over the central band or can be manually handled at S/R levels etc.

 

Long Entry:

MACD >= -0.00005

RSI >= 50

EMA3 Crosses up over central bolli band and candle has closed.

 

Short Entry:

MACD <= 0.00005

RSI <= 50

EMA3 Crosses down over central bolli band and candle has closed.

 

Here's an example of a good Short trade signal from earlier today:

 

http://farm5.static.flickr.com/4040/4641586209_3e730be0cf_o.jpg

[loopyno]

MACD main or signal?

 

Loopyno

[loopyno]

i used MACD Signal ...

here u go:

 

http://www.megaupload.com/?d=5Z8LE82R

 

Loopyno

[soundfx]

Hi loopyno,

 

Blimey! That was quick lol.

 

It would have taken me days to work out how to code this.

 

Many thanks - I'll give it a whirl. Try it yourself too - it should be nicely profitable :)

[loopyno]

i agree there are many signals that look good .. it might need an indicator to avoid buy tops and selling bottoms

 

Loopyno

Edited May 26, 2010 by loopyno

[soundfx]

Hi Loopyno,

 

I thought that main and signal were about the same, though I normally use main.

 

The idea behind the -0.00005 and 0.00005 tolerance level is that we enter Short when MACD is <=0 and Long when it's >=0 but my definition of 0 is a small MACD bar either side of the actual 0 line.

 

I think it will be better to use main. Here's an example of a good trade that we've missed:

 

http://farm5.static.flickr.com/4059/4642500450_ae3b376323_o.jpg

 

I put the indi on the 1M chart on the 4 pairs you see and I've had signals going off all over the place.

 

For anyone wanting to trade this system - there will be lots of false signals particularly when the markets are relatively quiet like now. This is why the system needs manual input - you have to make the final call whether to trade the signal or not.

 

The best time to run the system for scalping is from around 8am GMT to 4pm GMT.

 

The art in trading the system is seeing these areas of consolidation and ignoring all the chopped out signals - not just entering trades blindly as soon as you see an arrow.

 

Sometimes signals are blindingly obvious - these are ones where price has been moving in one direction for a while and has made a clear turn - shown by a large degree of separation between the central bolli band and the EMA3.

 

Even when scalping on the 1M chart it's good to look at higher level charts as there may be pivot points or pinbars formed or whatever which give you an idea of the direction the next big move is going to be. If you see a pinbar pushing up on 15M for example after a reasonable move down, then price is wanting to retrace and will probably retrace a fair bit. If we then get an alert to go long we can enter the trade with a lot of confidence of success.

 

Another example: Price has been moving down on the 1H chart and has retraced about 50% and seems to have stalled. The 4H trend is down and we get an alert to go short on the 1M chart - this could well be a nice earner for a scalp trade.

[loopyno]

hi soundfx

 

this is the version of the indicator using MACD Main

http://www.megaupload.com/?d=WBSMH92R

 

Loopyno

[soundfx]

Great stuff!

 

Thanks again. I wish there was a way of easily ignoring the "choppy" false signals to reduce the alerts, though that's an inherent problem with any MA cross based system and I believe that it's the main reason why MA cross based EAs never work.

 

To get less alerts, we either need to trade higher timeframes (which I would like to do now) or if we're trading 1M charts then ensure that there's plenty of movement going on by only trading in the busiest hours of the day.

[loopyno]

or you can use something like Pivot Points or Any other working indicator that calculates future support and resistance and trade only after prices have reacted to those levels

 

Loopyno

[soundfx]

Hi Loopyno,

 

Yep, I agree. I always have the "AutoPivotIndicator_ver5" on my charts which has been working well in the current markets.

 

I also use "Barclock Modified" as it's crucial when scalping to know when a bar is about to close.

[loopyno]

yeah i agree :)

[soundfx]

Hi loopyno,

 

I don't know if you've used this alert or not, though I think I underestimated how many false signals there are

 

I've found my self rushing to check out alerts every few minutes which defeats the object of having the alert in the first place lol.

 

I've been searching around for a setup which will give occasional alerts but which still signals very high probability trades and I think I've found it here:

 

http://www.multiupload.com/D59YLYCAE6

 

That file includes a brief description of the system, where it came from and the main indicators used.

 

The originator is reporting green pips regularly from using the system as are others who are following it.

 

I think it should be possible to create alerts from the rules. There are two possible tricky bits - identifying the colour change on the bars and working out the MA angle. I think there are various MA_Angle indicators around the web which we could probably use.

 

I realise that this is much more complex than my original request, though if you have some spare time and are able to create an alert indicator for this system I think you'd be rewarded many times over with green pips without having to sit getting bored at the screen all day :)

Edited May 28, 2010 by soundfx
added code tags to link

[loopyno]

Man i can create an alert that will take many of those indicators into account but i think in the end u will end up saying the same thing about false signal.

One other problem will arise ... more indicators means more variables ... since an indicator will compare exact values you will have those false signals plus some signals that will not appear at all :)

 

Remember the talk about Main and Signal? :) It is the same principle ... only many more variables :)

 

Do not get me wrong ... i want to help ... just that i think that this indicator will add on more things to look at and maybe make u ignore some of the opportunities it misses

 

Loopyno

[soundfx]

Hi loopyno,

 

You've made a lot of valid points, however I don't think this one is quite as bad as it seems ;)

 

There are lots of indicators in this system though a good few of them are used to back up manual decision making only - not for the entry criteria, so I don't think we'll end up with that "too many links in the chain" dilemma here.

 

Yep, I remember the main and signal, though I think here it's slightly different as the primary entry criteria is a change in the colour of the "cloud" around the bars.

 

The key alert criteria are just the following:

 

Long:

Cloud changes from red to blue on 5M close

Price is above 50EMA

Price is above 14EMA

 

Short:

Cloud changes from blue to red on 5M close

Price is below 50EMA

Price is below 14EMA

 

Checking angle of the EMAs we can do manually.

 

Because we're using a 5M chart for this scalping system the alerts will be less than those on the 1M chart anyway. Plus from what I've seen in the main trading session there will be very few false signals.

 

Here's an example chart from today:

 

http://farm5.static.flickr.com/4020/4647355892_899fa7fb1e_o.jpg

[loopyno]

ok then

 

i will post the new signal indicator based on these rules:

Long:

Cloud changes from red to blue on 5M close

Price is above 50EMA

Price is above 14EMA

 

Short:

Cloud changes from blue to red on 5M close

Price is below 50EMA

Price is below 14EMA

 

:)

 

Loopyno

[loopyno]

hey man

 

here it goes

http://www.megaupload.com/?d=CO634165

 

sry for the late reply but i have a lot of things and not enough time :)

 

Loopyno

[soundfx]

Hi loopyno,

 

Late reply? lol. I'm happy to wait as long as it takes - you're too quick :)

 

A million thanks for your work on this one too! I'll try it out now.

 

I hope it will help us all get some more green pips from scalping :)

[soundfx]

The arrows look great!

 

I really like this system, I'll run with this all next week in live and let you know how it goes.

 

Take a look at GBPUSD for today which has been quite choppy:

 

 

http://farm5.static.flickr.com/4045/4647719950_ceae8de51f_o.jpg

 

From what I can see it looks as though we could have even traded every arrow here blindly with a 10 pip target and 10 pip stop.

 

The first trade would have been stopped out and we'd have 4 winners, giving us a net profit of 30 pips.

 

Now, the good thing with scalping is that our risk is kept very low because our stops are so small, so on a moderate sized account we could have traded 3 lots and made $900 on GBPUSD alone! Not too shabby for a day's "work".

 

I wouldn't recommend trading the signals blind normally, though the fact that you can do this at least some of the time is very promising.

 

It's best to look at the signal in terms of where price has been and where it looks as though it's heading now with the confirmations from the alert and scalping indicators. That way we can pick up on the larger moves and let trades run giving us a very good overall risk/reward.

[loopyno]

i agree that the signals look really good :)

 

Loopyno

[Lord_Sauron]

well done guys congrats thanks to you both

 

maybe the next step could be a simple ea that enters on arrow? maybe even with trailstop?

 

GAMBATE KUDASAI

[loopyno]

i can program it but i think the next step would be testing it ... preferably on a demo :)

today for example u could have traded all of these signals but there will be days when markets will go nuts ... and usually EAs have a hard time surviving these days :)

 

Loopyno

[dark_messiah_fall]

where is your download link i need cloud indi make a template pls

[loopyno]

http://www.multiupload.com/D59YLYCAE6

 

Loopyno

[soundfx]

Hi dark,

 

I posted the link earlier which contains indicators and template, you must have missed it as I forgot to put it in "

" tags...

[code]http://www.multiupload.com/D59YLYCAE6

[Stormin_Norman]

 

For anyone wanting to trade this system - there will be lots of false signals particularly when the markets are relatively quiet like now.

 

include a volatility indicator. CKspeed perhaps?