Channel trading, trend trading, and the importance of never trading based on one factor

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Trendline Trading Strategy

Trendline Trading Strategy in Detail

In this article, I am going to discuss the Trendline Trading Strategy in detail. Before proceeding to this article please read How to Day Trade with Trend article. As part of this article, I am going to discuss the following pointers in detail

  1. The importance of drawing lines over your charts.
  2. TRENDLINE
  3. Rules for DRAWING TREND LINES
  4. How to Determine the Significance of a Trendline Trading Strategy
  5. The trend channel
  6. Use of trendlines Trading Strategy
  7. How to entry based on trend line
Importance of drawing lines over your charts:

They tell a story. They showing the angle of advance or angle of decline within a price trend, alert when a market has reached an overbought or oversold point within a trend, showing trading ranges, indicate the point of equilibrium (apex), and help forecast where to expect support or resistance on corrections.

Never undertake to draw conclusive deductions from trend lines alone taking care to weigh all of the factors (three) involved in a complete diagnosis of market action

The three factors are Price Movement, Volume, and Price Movement-Volume Relationships determine when and where trend lines may logically be applied> and when it is inadvisable to attempt to apply them

What is the Trendline Trading Strategy?

The momentum of an upward movement is reflected in the angular upward climb of the vertical bars on our charts and the pace of a downward movement by their angular downward pitch. The eye may not always see the pitch of these angular swings clearly because of the confusing effect of minor irregularities of the price movement as recorded on charts. Therefore, it is frequently helpful to employ Trend Lines for this purpose. Thus, the examination of the accompanying charts will show how the angle of ascent or descent of prices may often be visualized more clearly by drawing straight lines through the successive tops or bottoms of the price path established during the minor, intermediate and major moves

A support or demand Line is that line which identifies the angle of the advance of a bull swing by passing through two successive points of support. Example:- Lines A-C, D-1 in above IMAGE 1

A resistance or Supply Line is that line which identifies the angle of the decline of a bear swing by passing through two successive points of resistance (top of rallies). Example:- Line I-K, and I-6 in above image 2.

An Oversold Position Line is that line that is drawn parallel to a supply or resistance line and passes through the first point of support (reaction low) which intervenes between two successive rally tops in a downtrend. Example:- Line J-L, Note that J is the first point of support intervening between the two successive tops, I and K. IN IMAGE 2

An Overbought Position Line is that line which is drawn parallel to a support line and passes through the first point of resistance (rally top) intervening between two successive points of support in on uptrend. Example: Lines B-E, in above image 1

Rules for drawing trend line

RULES

  1. DRAW a new trend line by connecting the stat of the trend with a valid swing point.
  2. Adjust the trend line as price action unfold
DRAW new trendline by connecting the stat of the trend with a valid swing point

This means that we cannot draw a new trendline without a valid swing. First of all, there must be evidence of a trend. This means that for an up trendline to be drawn there must be at least two reaction lows with the second low higher than the first

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ADJUSTING New trendlines

For instance, in the case of an advance, the angle of ascent may be leisurely for a time and then become pitched more sharply upward as the original force of demand is renewed by fresh buying from the sponsors of the move and the public, and perhaps by expanding enthusiasm of bullishly inclined traders and investors. Under these conditions, we have to relocate our trend lines to conform to the newly established stride

If a steep trend line is broken, a slower trend line might have to be drawn

Trendline analyze on a chart

It will be seen that after the reaction to (B), we are able to distinguish two well-defined rally tops, the first at (A) and the second at (C).

Accordingly, if we draw a straight line through the extreme tops of these two rallies we find that the extension of this supply line to the right, across the page, helps to define the approximate limits of subsequent rallies. If, however, it is able to rise through the supply line with some degree of strength by either with increasing volume, or by a material gain in price, or both. Finally price swing E-F successful break the supply line, as both candle and volume increases

The upswing from G enables us to establish the trend support line E-G which represents the angle, or rate of acceleration, of the first phase of the bull campaign in this stock. Extending this line to the right, we find that after the rise is temporarily accelerated by a sharp run-up from G, then price recedes toward this line of support in what we conclude is a normal corrective reaction. We reason that if it recedes further, we may expect the price to hold on or around this line of support (H). It does hold, for on the quick further rally from G POINT, marked by closing at the high, as the price almost touches our established trend line. Thus our trend line has given us a helpful hint, in advance, as to the point at which we might reasonably look for new demand (support) and the probable place where this particular reaction should end.

After the mark-up from H POINT, we must readjust our trend support line because of the increasing momentum of the rise. PONIT (1) brings a new phase of the advance. This new line, of course, runs from 1-2, price getting support from the support line.

How to Determine the Significance of a Trendline
  1. The number of times the trendline has been touched or approached. The larger the number, the greater the significance. A trendline that has been successfully tested five times is obviously a more significant trendline than one that has only been touched three times
  2. Time factor, a trendline that has been in effect for nine months is of more importance than one that has been in effect for nine weeks or nine days.
  3. Angel of ascent and descent, a very sharp trend is difficult to maintain and it’s liable to be broken, the steep trend is not more important as that of a more gradual one a large angle on a lower trendline in an uptrend means that the lows are rising significantly fast and that the momentum is high.
THE TREND CHANNEL

Occasionally, the momentum produced by the forces of demand and supply will become so plainly marked as to develop a well-defined zone of activity; that is, the alternating buying and selling waves form a price path or channel whose upper and lower limits are easily identified by a series of tops and bottoms confined within parallel, or nearly parallel, lines.

The drawing of the channel line is very simple. In an uptrend, first, draw the support or demand line along with the lows (A-C). Then draw a line from the first prominent peak (point B), which is parallel to the support or demand trend line. Both lines move up to the right, forming a channel If the next rally reaches and backs off from the channel line (at point D), then a channel may exist. If prices drop back to the original trendline (at point E), then a channel probably does exist. The same holds true for a downtrend, but of course in the opposite direction

In the uptrend supply line act as overbought, the price will be reverse from the supply line. Support line act as oversold

Use of Trendline in Trading:

Use of trend lines is frequently helpful in judging the points at which you may expect the price:-

  1. To be supported on reactions;
  2. To meet resistance on rallies; and
  3. Overbought and oversold condition sowing in channel
  4. To approach a critical position in its travel from one level to another. Trend line l also help you to foresee the possibilities of an impending change of trend before it actually takes place

The violation of a trend line often (but by no means always) may signify that the force of demand or supply which was formerly in effect is now becoming exhausted. This may either mean that the price movement is changing its rate of progress, or it may mean that the trend is definitely in danger of being reversed.

Trendline Trading Strategy

It is bad practice to take entry on a stock simply because it has penetrated an established. Trendline or broken out of an extended congestion area. The significant thing is HOW the line is broken; the conditions under which the change of stride occurs.

The quality of the buying or the selling at and around the point of penetration determines whether the violation of an established trendline may be regarded as evidence of a further price movement in the direction of the breakthrough, or whether it means the only temporary change of false breakout. For breakout, the price needs to close above or below the trendline

The 5 Best Trend Indicators That Work

Last Updated on March 16, 2020

One of the most common questions I get from traders is this…

“Hey Rayner, how do I identify the direction of the trend?”

However, it’s not as simple as it seems — even if you use trend indicators.

The Daily chart is in an uptrend.

But when you go down to the hourly chart, it’s a downtrend.

And if you go down to the 5-minute chart, it’s chopping all over the place.

So what should you do?

Well, you’ll know the answer after reading this post because you’ll learn:

Then let’s begin…

This is the most important thing before you can identify the direction of the trend (and it’s not an indicator)

The trend is an illusion.

You read me right. I said the trend is an illusion.

Because you can manipulate the trend and see what you want to believe in.

You might be wondering:

“How do you manipulate a trend?”

A trend is meaningless without knowing your timeframe.

Here’s the thing:

You can have two traders looking at the same market and one says it’s an uptrend, and the other, a downtrend — because they are looking at different timeframes.

Here’s what I mean:

Daily chart:

15minutes chart:

Before you attempt to identify the direction of the trend, you must know your timeframe.

You’re probably wondering:

“So Rayner, which timeframe should I use?”

This depends on your trading approach, whether you’re a day trader, swing trader, or position trader.

But as a general guideline:

  • Day traders are on the 30minutes timeframe and below
  • Swing traders are on the 1 – 4-hour timeframe
  • Position traders are on the 4-hour timeframe and above

Once you’ve defined your timeframe, focus on it 100% because the other timeframes are “noise” to your trading.

Next, let’s look at the 5 trend indicators that work…

Trend Indicators #1: How to use Price Action and identify the direction of the trend

Price action refers to reading market structure, momentum, and sentiment to identify trading opportunities.

It’s one of the most important things you can learn because it gives you a valuable insight of the market you’re trading (that may not be found on trading indicators).

  • Where will losing traders puke?
  • Where are traders placing their stops?
  • Where will new traders enter the market?

Now that you’ve understood the importance of price action, let’s learn how to read it and identify the direction of the trend.

Here are 3 things to remember:

  1. An uptrend consists of higher highs and lows
  2. A downtrend consists of lower highs and lows
  3. A range is contained between the highs and lows

Here’s what I mean…

Uptrend:

Downtrend:

Range:

Sometimes it’s difficult to identify the direction of the trend based especially when the candlesticks are “flying” all over the place.

So in the next section, you’ll learn how to identify the direction of the trend without using candlestick charts.

Trend indicators #2: How to tell the direction of the trend without using a candlestick chart

Here’s the thing:

Candlestick charts can get messy if the wicks are long which makes it difficult to identify the trend (especially for new traders).

And a simple solution to it is…

You’re probably wondering:

“What is a line chart?”

It shows the price on your chart by taking the price at the close and then connects the closing prices together via a line.

So, you’ll see a squiggly line on your chart which makes it easier to identify the trend.

Here’s what I mean…

Candlestick chart:

Line chart:

See the difference?

And here’s how you can interpret line charts:

  • If the line is pointing higher, it’s an uptrend
  • If the line is pointing lower, it’s a downtrend
  • If the line is flat, it’s a range

Simple stuff, right?

You must know that line chart only considers the closing price. This means you won’t know what the high/low of the candle is — and this will hamper your trading decisions.

In my opinion, a line chart is useful to identify the direction of the trend. But for precise entries, exits and trade management, it’s best to stick with candlestick or bar charts.

Trend indicators #3: How to use moving average to identify the direction of the trend and the strength of it

The moving average is an indicator that “summarizes” past prices and is plotted as a line on your chart.

Yes, it’s a lagging indicator but…

…it doesn’t mean it’s useless because the moving average indicator can help you identify the direction of the trend — and the strength of it.

How to use moving average to identify the direction of the trend

Here’s a simple technique that works:

  • If the price is above the 200MA, then it’s a long-term uptrend
  • If the price is below the 200MA, then it’s a long-term downtrend

How to use moving averages to identify the strength of the trend

Besides the 200MA, you can use the shorter-term moving average to identify the strength of a trend.

  • In a strong trend, the price tends to stay above the 20MA
  • In a healthy trend, the price tends to stay above the 50MA

Moving average works best in trending markets (whether it’s a strong, healthy, or weak trend).

But if the market is in a range, the moving average has little significance and it’s best to ignore it.

If you’re curious to discover my “secret” moving average trading strategy (that you can use), then check out this video…

Trend indicators #4: Trendlines

A Trendline is a tool you draw on your charts. It can help you identify the direction and the strength of a trend.

But before I get to it, you must learn how to draw trendlines the correct way.

How to draw trendlines like a pro

Here’s my 3-step technique:

  1. Look for at least 2 swing points (it could be a higher low or lower high)
  2. Connect the swing points using a trendline
  3. Get as many “touches” as possible on the trendline

How to identify a trend and the strength of it with trendlines

Here’s how to interpret the trend:

  • If the trendline is pointing higher, it’s an uptrend
  • If the trendline is pointing lower, it’s a downtrend

If you want to determine the strength of a trend, then pay attention to the angle of the trendline.

As a general rule:

  • The steeper the trendline, the stronger the trend
  • The flatter the trendline, the weaker the trend

Here’s what I mean:

Now you’ve gotten a glimpse of how to use trendlines to define a trend.

But if you want to discover my trendline trading strategy using proven techniques that work, then check out this video here…

Trend indicators #5: How to trade with Channels and find “sweet spot” for your entries & exits

In case you’re wondering:

“What’s a Channel?”

A Channel is a variation of the Trendline.

The way you draw and interpretation it is the same as Trendline.

The only difference is… Channel has an extra line that’s parallel to the Trendline.

Here’s an example:

Channel helps you identify where opposing pressure could come in. This means you can take profit ahead of time — before the price has a high probability of reversal.

Not sure what the trend is? This little-known technique will give you clarity

Here’s the thing:

If you look only at the water, you’ll miss the ocean.

If you look only at the trees, you’ll miss the forest.

If you look only at the current price, you’ll miss the long-term trend.

So what’s my point?

Stop being fixated on what the market is doing each and every moment.

Instead, zoom out your charts.

Zoom out your charts and see the big picture.

Here’s what I mean:

Zoom in view:

Zoom out view:

See how much of a difference it makes when you’re looking at the big picture?

A mistake made by many traders is they become so involved in trying to catch the minor market swings that they miss the major price moves. —Jack Schwager

My personal method: How to identify and trade with the trend

As I’ve shared with you earlier…

There are different ways to identify the trend and there’s no right or wrong or best approach.

But if you ask me, these are the 2 things I ask myself:

  1. What’s the long-term trend?
  2. What type of trend is this?

1. What’s the long-term trend?

I’ll use the 200-period MA to define the long-term trend.

If the price is above it, the market is likely to be in a long-term uptrend and I want to have a long bias.

If the price is below it, the market is possibly in a long-term downtrend and I want to have a short bias.

2. What type of trend is this?

Not all trends are created equal.

After many years of trading, I’ve realized most trends can be broken down into 1 of 3 categories…

  • Strong trend
  • Healthy trend
  • Weak trend

Strong trend

A strong trend is when the price has little to no pullback and remains above the 20MA.

In such a scenario, the pullback may never come as the price keeps breaking higher. Thus, in strong trending markets, the best entry is usually breakout trades.

Healthy trend

A healthy trend is when the market has a healthy pullback and remains above the 50MA.

In such market conditions, it’s possible to trade the pullback. Possibly towards the 50MA or, previous Resistance turned Support (in an uptrend).

Here’s what I mean:

Weak trend

A weak trend is when the market has steep pullbacks but remains above the 200MA.

In such a scenario, you can trade from the 200MA or an area of Support (in an uptrend).

If you want to learn more about trends, go read The Trend Trading Strategy Guide.

Frequently asked questions

#1: Which timeframe should I use to identify the trend?

The timeframe should be relevant to your trading:

  • If you’re a day trader, then you’ll identify the trend on the lower timeframe like the 1-hour or 30-minutes timeframe.
  • If you’re a swing or position trader, then you’ll identify the trend on the daily or the weekly timeframe.

#2: Do I have to adjust the moving average settings to suit different timeframes?

There are no best settings out there because it depends on the type of trend that the market is in.

If the market is in a:

  • Strong trend, it will tend to respect the 20 MA
  • Healthy trend, it will tend to respect the 50 MA
  • Weak trend, it will tend to respect the 200 MA

Personally, I’ll use whichever of these 3 moving averages that the market is respecting more, for the timeframe I’m trading on.

If you want to discover more on moving averages, then check this out:

Summary

Here’s what you’ve learned today:

  • Why a trend is meaningless without looking at the timeframe behind it
  • How to use price action and identify the direction of the trend
  • How to identify a trend without using candlestick charts
  • An easy way to tell the direction of the trend using Moving Average
  • How to draw Trendlines and identify the strength of a trend
  • How to use Channels to better time your entries & exits
  • My personal method to identify and trade with the trend

So, here’s a question for you…

How do you identify the direction of the trend?

Leave a comment below and let me know your thoughts…

v2v dynamic trading system

v2v dynamic trading system ─ for MT4 platform

The Montauk Edition: Project Looking Glass

This is not the usual trading system out there. It doesn’t have any arrows or trigger alerts that would provide or tell you to Buy or Sell. For such, it is up to the one who’s in between a keyboard and a chair. Yes, the one with the brain, is the best tool there is.

Basically, this system is a tool that may help you manage your trades or position your positions ; )─

The indicators/tools on this system are just another visual representation of time and historical price.

  1. Keep this in mind. that there’s always room for improvements to this system. Thus, expect constant updates from time-to-time.
  2. Ideas/suggestions are very much welcome but don’t expect to be added or considered.

※ Heiken Ashi ─ Average Price Bars ( HA-APB ) with PAC

The difference between the original HA-APB Price Action Channel ( PAC ) and this variation of PAC (using JMA, DSMA, and HMA), is that the latter is using three touchpoints instead of just the two-line PAC. This one added the Average Price to see if APB closed above or below it.

☛ HA-APB based Price Action Channel ( PAC ) and
☛ Average Price Line (HA-APB Low + HA-APB High)/2
☛ Fused with MTF mode.
☛ Using T3 MA and with.
☛ Jurik Smoothing/Filter and Deviation-Scaled Moving Average (DSMA)
. some extras added: Access buttons for features & functions, and a symbol or pair and timeframe switch panel

✜ Price Action Channel (PAC)
─ It provides an overall direction near the Price.
─ Reveals periods of consolidation.
─ Reveals periods of volatility.
─ It may Use as an Exit Target or
─ Use as a Trailing Stop Loss

※ Neural Network ─ HMA-DSMA

☛ Using a variation of HMA algorithm of low-lag to zero-lag, and then. fused with the following:

☛ Jurik Filters/Smoothing and custom MA types
☛ Combined with Deviation-Scaled Moving Average Algorithm, and
☛ Better & Best Formula (Better & APB calculation)

✦ The button text shows the average predicted open price
✦ As always this type of indicator eats a lot of CPU resources.

※ Volume Profile ─ Range ( VP-R )

☛ Based on VP – Range indicator by � FXcoder
☛ This is a modified version by v2v (streamlined features) ─ VWAP & PVP (Peak Volume Price) line only
☛ Default range type: ADR
☛ Work with Pivot Fibs plus
☛ Code optimized to adhere with v2v coding structure ( e.g. control center navigational features)
☛ Ideally suited for M30 & H1 time frame using M1 or M5 data source.

  1. For day sessions. the M5, M15 and M30 charts is the setup choice. Though the M5 timeframe is much more accurate, M30 is recommended for more clarity. Also, it is a standard volume profile calculation method.

※ Long & Short DSMA

DSMA was described in the “The Deviation-Scaled Moving Average.” article of July 2020 TASC Magazine
There John Ehlers describes not only the Deviation scaled moving average but a cross of two DSMAs. This indicator is the system of those two DSMAs ─ But with this indicator, it is a system multiple DSMA crossovers.

Similar to the GUPPY indicator in terms of Moving Average values and how it is being used ─But with the following fused algorithms.

☛ JMA (Jurik Moving Average): Smoothing/Filter
─ Long DSMA acts like the Slow JMA, and
─ Short DSMA acts like the Fast JMA
☛ Hull Moving Average non-lag variation

. this has been applied to all other indicators within this system

☛ This indicator is made and fused version by v2v
☛ Based on All Pivots indicator by Igor at TrendLabaratory
☛ Streamlined to Pivot Fibonacci ONLY ─ Yearly, Quarterly, Monthly, Weekly, Daily, and H4
☛ Added a feature to navigates using the v2v time frame button switch behavior, and among other things.
☛ Dynamic Open Session/State retention switch behavior
☛ Future Sessions and Previous Session Range
☛ Pivot Fibs pip distance from Pivot Base Price (e.g. Typical, Current Open. etc.)
☛ Weekly High & Low Levels
☛ PVP = Peak Volume Price Line (default Yellow color line). This is based on Volume Profile (without the volume bars)
☛ This indicator works with VP-R and VWAP indicator
☛ Best suited for M30 & H1 time frame.
☛ Forex Fixings ─ Frankfurt and CME-2 Fix ─ fx fixing guides
☛ The One Box Session ( daily H4, monthly >=W1 )
☛ Open Session (Sydney – Tokyo – London – New York). You may need to adjust accordingly with your broker server time (chart time) ─ for session time guides
☛ Daily Open Trading System (DOTS) method by Dean Malone ─ originally use Current Open base price, but this indicator is also plotted with other Pivot base price calculations (e.g. Typical, Previous Close, etc.). Note. it uses the Top & Bottom most level line only with extended DOTS level.
☛ Average Range (Daily-Weekly-Monthly) Dash info >>> n-Days(today range), Previous, Weekly and current Price distance to ADR, AWR & AMR High & Low

  1. ADR (Average Daily Range)
  2. AWR (Average Weekly Range)
  3. AMR (Average Monthly Range)
  4. With features midpoint range using Pivots (current) and PVP (current or previous)

Pivot Fib Levels: Now with the NEW Pivot VWAP & PVP

  1. R1/S1 = R38/S38
  2. R2/S2 = R61/S61
  3. R3/S3 = R100/S100

Pivot Base Price: Typical (default)

Pivot Base Price = (Previous High + Previous Low + Previous Close) / 3
Range = Previous High – Previous low
R38 = Range * 0.382 + Pivot Base Price

The Volume Weighted Average Price ( VWAP ) is simply the average of the volume distribution function.

What’s new with this VWAP indicator?

☛ Uses Average Range ( ADR/AWR/AMR ) and
☛ Average True Range ( ATR ) values for Shifted VWAP Deviation.
☛ Average Price line = (High + Low) /2
☛ Default range type: ATR
☛ It includes v2v’s update speed control feature.
☛ This indicator works with VP-R and Pivot Fibs plus indicator
☛ Option to attach multiple instances of this indicator by changing Instance ID ( Unique ID ) ─Ideally for using the anchored VWAP strategy
☛ Best suited for lower or equal to M30 & H1 time frame.

☑ Key Takeaways:
☛ A rising VWAP, and/or the price above the VWAP line, means the price may reflect uptrend move or likely in bullish sentiment.
☛ A rising VWAP, and/or the price below the VWAP line, means the price may reflect a downtrend move or likely in bearish sentiment.
☛ Rallies with a declining VWAP are treated as bounces which may likely fail.
☛ Be more aware of VWAP’s current direction. more than closing session price ─if it is above or below the VWAP-within a session or two (e.g. Asian, Euro or U.S. session).
☛ Like any Support & Resistance or Supply & Demand level, the more they are tested, the more likely that it may fail.
☛ Don’t rely on VWAP exclusively to determine a trend, since it is only showing a historical average, and not what is happening currently or in the future.
☛ Investors may use VWAP to assess the price they paid for a security/instrument throughout a particular session (e.g. Asian/Europe/NY, daily. etc.), if the price they bought at is higher than the VWAP, then they may have overpaid. If it is less than VWAP, then they purchased shares at a good price.
☛ The VWAP began as a tool for trading shares/stock on a daily setup only. However, in these times there were other investors or traders that started to use this more recently with financial instruments, such as Currency Futures or Forex pairs as some of the modern algorithms began to optimize this tool to integrate with their trading strategy or algorithms.
☛ Traders and analysts use the VWAP to eliminate the noise that occurs throughout a particular session so they can gauge what prices buyers and sellers are trading at.

The VWAP gives traders an insight into how a security/instrument trades for that day and determines, for some, a good price at which to buy or sell.

✦ If the price is below the VWAP. and the price is rallying back into the VWAP, then it may act as resistance.
✦ If the price is above the VWAP. and the price pullback into the VWAP, then it may act as support.
✦ Wait for the market to start to get a move and have it bounce once or twice off of the VWAP. Once that happens, you know that the market has addressed the VWAP (by checking on a 5-minute up to 30/or 60-minute chart).
✦ When the price tries to break above or below the VWAP line, there is usually a battle between buyers and sellers. If the price tries to break above or below the VWAP level multiple times throughout the day, traders and analysts can see that it is a good price to either buy or sell. However, some short-term traders, for instance, wanted to wait for one side to lose the battle and either go long on a break above the VWAP or short on a break below the VWAP.

☑ Limitations of Using Volume Weighted Average Price (VWAP)
While some institutions may prefer to buy when the price of a security is below the VWAP, or sell when it is above, VWAP is not the only factor to consider. In strong uptrends, the price may continue to move higher for many days, without dropping below the VWAP at all, or only occasionally. Therefore, waiting for the price to fall below VWAP could mean a missed opportunity if prices are rising quickly.

☑ Other VWAP trading methodologies
With the above limitations, you may use some other VWAP trading methodologies being used by other traders to minimized missed opportunities or even better. a high probability setup.

✦ MIDAS approach by Dr. Paul Levine ( RIP ) or use the Jperl strategy (If I’m not mistaken, his name is Jerry Perl), together with the Volume Profile indicator.

✦ The anchored VWAP approach is usually using two VWAP indicators wherein the (start from) is anchored based on the last significant move due to a big news event, as an example, NFP, CPI, etc., or based on session open ( e.g. NY session, London session, Asian session. etc ).

This indicator is a TDI variation. now known as, Traders Dynamic Zones ( TDZ )

✔ Fused functions & features below:
☛ Dynamic Zones by Leo ZamanskyPhd. and David Stendahl
☛ Jurik filter – phase, smoothing and
☛ RSI-Trend Strength Index (RSX) by Mark Jurik.
☛ Better & Best Formula (Better & APB calculation)
☛ Uses Hull MA (by Allan Hull) but this one is a variation from Low lag to zero-lag combined with.
☛ Ehler’s Deviation-Scaled Moving Average (DSMA)
☛ Powered by Smart MTF features
☛ Smart MTF Mode – update speed feature is not activated while on MTF mode
☛ Recommended TF: H4 & D1 TF
☛ Recommended RSI/HMA speed: 1.8 or 3.0 (aggressive)

✔ Dynamic Zones ─ The Dynamic Zone indicator is best explained by describing how it solves a common trading problem.
Extreme investing employs the use of oscillators to exploit tradable trends in the market. This style of investing follows a very simple form of logic: only enter the market when an oscillator has moved far above or below traditional trading levels. However, these indicator driven systems, lack the ability to evolve with the market because they use fixed buy and sell zones. Traders typically use one set of buy and sell zones for a bull market and substantially different zones for a bear market.

Herein lies the problem. Once traders begin introducing their market opinions into trading equations, by changing the zones, they negate the system’s mechanical nature. The objective is to have a system automatically define its own buy and sell zones and thereby profitably trade in any market — bull or bear. Dynamic Zones offer a solution to the problem of fixed buy and sell zones for any indicator driven systems.

※ Volumes on Main Chart

This indicator is a Fused version of the following indicators. initial version of volumes on the main chart by Mladen and Paul Hayes Scalper volatility indicator ported from cTrader platform. >>> more about Volumes on MainChart

Added Fused functions & features:
☛ volumes & volatility alerts with optional user-defined values.
☛ auto-adjusted zoom in/out for volume bars and location
☛ automated average volume bars based on daily, weekly and yearly with optional user-defined values
☛ auto-adjusted volume bars thickness
☛ with a hidden navigational switch to hide/unhide volume bars and
☛ added extra .wav alert sound files

Most of these indicators require the Volume on Main Chart indicator wherein it acts as the global control center

✔ T3 by Tim Tillson
Tim Tillson is a software project manager at Hewlett-Packard, with degrees in Mathematics and Computer Science. He has privately traded options and equities for 15 years.

“Digital filtering includes the process of smoothing, predicting, differentiating, integrating, separation of signals, and removal of noise from a signal. Thus many people who do such things are using digital filters without realizing that they are; being unacquainted with the theory, they neither understand what they have done nor the possibilities of what they might have done.”

This quote from R. W. Hamming applies to the vast majority of indicators in technical analysis. Moving averages, be they simple, weighted, or exponential, are lowpass filters; low-frequency components in the signal pass through with little attenuation, while high frequencies are severely reduced. “Oscillator” type indicators (such as MACD, Momentum, Relative Strength Index) are another type of digital filter called a differentiator. Tushar Chande has observed that many popular oscillators are highly correlated, which is sensible because they are trying to measure the rate of change of the underlying time series, i.e., are trying to be the first and second derivatives we all learned about in Calculus.

We use moving averages (lowpass filters) in technical analysis to remove the random noise from a time series, to discern the underlying trend or to determine prices at which we will take action. A perfect moving average would have two attributes:

It would be smooth, not sensitive to random noise in the underlying time series. Another way of saying this is that its derivative would not spuriously alternate between positive and negative values.

It would not lag behind the time series it is computed from. Lag, of course, produces late buy or sell signals that kill profits.
The only way one can compute a perfect moving average is to know the future, and if we had that, we would buy one lottery ticket a week rather than trade!

Theory:
There is always a need to measure if the market is “quiet” or it is volatile. One of the possible ways is to use standard deviations, but the issue is simple: we do not have some levels that could help us find out if the market is in a state of lower or higher volatility. This feature is attempting to do that:

  1. values above level 0 are indicating a state of increasing volatility
  2. values below level 0 are indicating a state of decreasing volatility

Usage:
This is not a directional feature. It should be used for volatility detection, not trend assessment – for that, you have to use some other indicator and then check this one if the market volatility conditions are those that you expect

✔ Variance
The standard deviation is a measure of how much a dataset differs from its mean; it tells us how dispersed the data are. A dataset that’s pretty much clumped around a single point would have a small standard deviation, while a dataset that’s all over the map would have a large standard deviation.
Given a sample, the standard deviation is defined as the square root of the variance

✔ Adaptive ATR
Average True Range (ATR) is a widely used indicator in many occasions. It is calculated as SMA (Simple Moving Average) of true range (which is calculated as the greatest of the following: current high less the current low, the absolute value of the current high less the previous close and the absolute value of the current low less the previous close). With an added “twist”: It is using Perry Kaufman’s Efficiency Ratio to calculate adaptive true range

✔ Tick Volume Indicator ( TVI ) by William Blau.
In his book “Momentum, Direction and Divergence” (1995). If you like to learn more, we advise you to read this book. His book focuses on three key aspects of trading: momentum, direction, and divergence. Blau, who was an electrical engineer before becoming a trader, thoroughly examines the relationship between price and momentum.

TVI is calculated according to this formula:
TVI = 100 x (DEMA(UpTicks) – DEMA(DownTicks))/(DEMA(UpTicks) + DEMA(DownTicks))

The TVI helps identify whether buyers or sellers are in control. If the TVI is trending up, it indicates that buyers are in control. If the TVI is trending down, it indicates that sellers are in control. If the TVI is above zero, it indicates that net buying has taken place over the time period displayed. If the TVI is below zero, it indicates that net selling has taken place over the time period displayed.
If a large number of trades are taking place at a specific price level (i.e., a flat spot forms on the tick chart) and the TVI is rising (falling), look for the price to break out on the upside (downside).

☝ If v2v system/indicators don’t seem to work on your end or found it useless, simply move on as there are thousands of other systems/indicators out there . . . and this may not be ready for you or is not for you!

✌ On how to use the system effectively will depend on your utmost keen observation (or greater experience), due diligence, understanding, and prerogative. Hence, this may not be recommended for noobs. especially when using the VWAP, VP─R & TDZ indicator, and even more with Pivot Fibs plus.

The core indicator of this system are the following ( in no particular order ) :

  1. Pivot Fibs plus
  2. Volumes on Main Chart
  3. Volume Profile – Range ( VP-R ) and VWAP
  4. Traders Dynamic Zones.

Most of these indicators included in this system (by default) are using the limited number of bars option to load much faster on your chart. I have to do this kind of set up since Volume/Market profile indicators are heavy to load and whenever the MTF mode is triggered with HA-APB bars. Not to mention the MT4 platform itself (if not that, your computer processing power limitation). Other benefits of such setup is a room for extra process functions & features that can be added to the system.

☛ The v2v dynamic system is best suited on H4 TF or higher using a Trend following strategy. However, if Session timings are the main or crucial part of a strategy, one must/should or may consider using the H1 timeframe and below ONLY. This is particularly logical or correct as the indicator builds pivots using the current chart prices (data). So there is no sense to use the session guides ( Weekly-Monthly-Q1-Yearly ) for time frames higher than H1. It means. that one needs to be careful when using a Weekly chart to build MN1, Q1, and YR1 because one can’t simply get the exact start date of these timeframes. Which means. don’t simply rely on Pivots build if your current chart timeframe is higher than H1. Thus, on the W1 chart, one should look “inside” of bars to find the correct prices for 1st January and 31st December of each year (almost always). Hence, do not use the Pivots on larger than D1 timeframes, in fact. it is highly suggested.

☛ With Volume Profile ─ Range indicator which is typically suited for the M30 timeframe is very useful together with Pivot Fibs plus an indicator that has the PVP (Peak Volume Price, also known as POC) without the horizontal volume bars.

☛ Swing Traders may use the TDZ’s dynamic floating levels or zones ( band high & low with midpoint ) that may look to show OB/S levels (careful, looks ONLY).

☛ The Pivot Fibs indicator is armed with calculated ranges wherein the Daily and Weekly range info is better or more reliable if the current timeframe is less than or equal to the H1 timeframe only. more importantly when gauging or sizing up the trading range.

☛ The Heiken Ashi – Average Price Bars (APB) with Price Action Channel (PAC) may act like the cherries on top or icing on the cake in terms of a Scalping strategy or if used as an Exit indicator. more so when in an MTF mode.

If you don’t consider all/or some of the above information. Simply use the Neural Network HMA-DSMA indicator which requires a little amount of thinking but one must be armed with trained intuition ; )─

The goal is to have a well-informed decision before entering into a trade. Thus, I’m using this system once I have my perceived fundamental bias or understanding and beyond (i.e. sentiment, qualitative & quantitative analysis).

Using this system may help to identify possible Price inflection/turning points, trend confluence, and/or chart structure for proper or well-defined (planned) entries and exit points.

✍ Note to Self : “While no methodology works in every instance . . . I have never seen anything so consistent ” ─ just like this system ; )─

☀ You may agree or disagree. ; )- but here are the collected reasons why traders fail to be successful in trading. #whytradersfail ─by Hanover

☛ No proven methodological edge
☛ Lack of knowledge and experience
☛ No trading plan
☛ Failure to accept losses ( causes recovery systems, irrecoverable open losses, revenge trading )
☛ Poor or non-existent risk management ( i.e. focusing on the return over everything else )
☛ Making decisions based on P/L rather than market probabilities/behavior ( focusing on the money, rather than the process )
☛ Undercapitalization ( causes greed, over-trading, over-leveraging ) — NOTE: according to many brokers, this is the most common cause of failure.
☛ Over-reliance on money management ( including ideas such as same-pair hedges, baskets, grids, averaging down recklessly, martingale variants )
☛ Complacency: a lack of respect for the market
☛ Laziness: trying to find a color-by-number shortcut to riches (i.e. make the most money in the shortest time with the least effort)
☛ Adherence to “$250 to $100,000 in 6 months” type notions
☛ Adherence to trading myths
☛ Lack of discipline
☛ Lack of patience
☛ Lack of resilience ( unable to bounce back after losses )
☛ Lack of composure/nerve ( afraid to “pull the trigger” )
☛ Lack of stamina (quit too quickly)
☛ Lack of dedication ( failure to put in the required number of hours of study )
☛ Failure to understand the importance of statistical validity, and the nature of statistical fluctuation
☛ Failure to keep a journal
☛ Over-reliance on automated systems ( EAs )
☛ Over-reliance on technical analysis ( using tools that “don’t work” )
☛ Exiting too early ( should take higher RR trades )
☛ Exiting too late ( should take lower RR trades )
☛ Hindsight bias
☛ Confirmation bias
☛ Apophenia
☛ Curve fitting
☛ Strategies that test profitably, but are not grounded in real market inefficiencies
☛ The randomness of price movement
☛ Letting outside noise affect your decision making
☛ Underestimating the effect of broker costs
☛ Underestimation of the amount of expertise that is required
☛ Being cheated by their broker
☛ Liquidity vacuums ( a.k.a. “flash crashes” ) and other “black swan” events.

☢ There are no guarantees that all these indicators shared here work perfectly or without errors. Hence, use at your own risk; I accept no liability for system damage, financial losses and even loss of life. ; )─

My post here at FF makes no guarantees as to the accuracy or completeness of the views expressed, including timeliness, suitability of any information – e.g. indicators, videos, images/charts, and documents posted or shared herein. All contents I posted here at FF are subject to modifications (bound by ForexFactory’s & Thread Owner’s rules and restrictions) and may have become unreliable for various reasons, including changes in the market conditions or economic circumstances.

Also, please be reminded that there is always the potential for loss. Your trading results may vary. Unique experiences and past performances do not guarantee future results. Hence, it is highly recommended to seek a duly licensed professional for investment advice whether any given investment idea, strategy, product or service described herein may be appropriate for your circumstances. All investments involve risk, including loss of principal.

Posting on this thread requires that you are a human and not a troll. and unfortunately a red ⚑ member status (only). Please don’t ask me to elaborate on why. This thread is not for me to get some subscribers, or gain fanatic followers. I am just here to contribute. And yes, I don’t have ADHD ; )─

If a troll with a red ⚑ can post through. then at least it is just a seasoned troll, a high impact troll, so to speak ; )──but it doesn’t mean it can escape from getting ignored or blocked on this thread.

If you don’t like any of my posts, simply use the ignore or unsubscribe option, and likewise, I’ll do the same. Otherwise, I can simply ignore anyone whenever I am damn well, please.

In case of issues due to previous versions. The v2v dynamic trading system (including News Event indicator ) uses global variables extensively. Below are the maintenance steps that you may follow:

MT4 global variable maintenance:

  1. Press “F3” on your keyboard to delete all or selectively the global variable(s)
  2. Or you may use the included Volume on Chart indicator
  1. Press “Ctrl” + “B” on your keyboard
  2. Delete all (. and “Ctrl”+”A”) or selectively (. put click on checkbox) the objects ─ more importantly, to reset the vertical line guides chart positions that are used for setting up VWAP and Volume Profile chart range.

For Session/Fx Fixing time configuration updates: click >>> here

  1. Open an M1 chart
  2. Press “F2” key to load History Center
  3. Navigate to the currency pair and the “1 Minute (M1)” history data for the chart you have open in your terminal (be sure to “double click” the “1 Minute (M1)” selection in history center so it becomes the active selection)
  4. Then left-click once on any of the data rows in the right-hand window of the History Center (it doesn’t matter which one)
  5. Click the “Add” button, this pops up another window titled “Bar” and the default selection is on the “year”
  6. Enter 1970
  7. Then select “OK“. and it creates a new bar with the timestamp and price info you just added.
  8. Now select “Close” in the History Center
  9. Attached a script located under “Scripts” folder (with v2v_dynamic_system.zip) >>> Attached this to your chart: ForceLoadHistoricalData.ex4
  10. Navigate to your M1 chart of interest and then from the terminal window (press Ctrl-T) select “Journal “-> go to main chart window and right-click mouse button and select “Refresh“. this will refresh the chart and attempts to fill any time gaps in the chart data (which now includes your year 1970 data point) with server data
    Step 10 continued. Now your chart will have pulled anywhere from 2048 to 65536 M1 bars from your broker’s server (not Metaquotes server) and is usually far more data than you can get the broker to cough up when you try and manually scroll your M1 chart back in time.

If everything went fine. then you’ve quickly downloaded all the broker’s M1 data on your currency pair that the broker is going to let you have, much faster than holding down the home or page-up key for minutes and minutes to download even fewer data. Now, you may continue with the rest of the time frames. But, don’t forget to delete the year 1970 dummy tick data after it downloads more history, then you may need to check & verify if after the deletion (1970 record) if still got maximum historical data has been downloaded otherwise add 1970 record once again.

Profile loading. an d greyed out MT4 toolbar ( unclickable elements ) prevention >>> please read this post and before this one

v2v dynamic trading system: powered by MomenTicks

  1. VP-Range: ATR/ADR bands calculation and period
  2. VWAP: ATR/ADR bands calculation & period
  3. TDZ: the dynamic zone top, mid and bottom bands only
  4. v2v Momenticks: period

Based on Homodyne Discriminator by John F. Ehlers, Rocket Science for Traders >>> here

This type of algorithm exhibits superior performance in a low signal-to-noise environment.

Homodyne means I use the signal multiplied by itself one bar ago to produce a zero-frequency beat note. This beat note carries the phase angle of the one-bar change. Still using the basic definition of a cycle, the one-bar rate of change of phase is exactly the cycle period.


v2v Momenticks fused by v2v and derived from the word Momentum + tick data (volume history)

Linear momentum is defined as the product of a system’s mass multiplied by its velocity. In symbols, linear momentum is expressed as p = mv . Momentum is directly proportional to the object’s mass and also its velocity . Thus the greater an object’s mass or the greater its velocity , the greater its momentum .

Read more about Linear Momentum >>> here
Read more about Phase Accumulation (of MACD) about Dominant Cycle Period >>> John F. Ehlers, Rocket Science for Traders >>> here

By the way, some of these indicators shared herein doesn’t simply work in stand-alone. Meaning. selectively using just one or so indicator out of the v2v system may not work properly.

Note: The zip file contains a template ( v2v_trading_system.tpl ) and all the libraries ( dynamicZone.dll and BPNN.dll ) required by the system/indicators.

Again, I just wanted to add or to reiterate (without sounding rude), that this v2v dynamic trading system is not for noobs, and I won’t say it that this system or indicators are for noobs as it would tend to sound not a good trading tool to have ; )─ I just meant that it requires greater experience to understand how the system works. Otherwise, look for another trading system that makes you think less and adhere to the mantra of the KISS approach.

This is not a trading system that shows you a buy or a sell signal. It is a trading system that makes you a responsible trader that uses more of your brainpower and not just simply waiting for a buy & sell signal or a pattern to form. This system will let you create your combination of confluences/setups and produced your own technical baseline bias before any type of price action shows up on your chart. However, at the end of the day, it is you and you alone who can figure out what works and what doesn’t. Good luck!

Meanwhile, you may need to watch the following videos below:

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