current incarnation of meantrades

This has been coming together for years. I feel the most confident trading this method than I have with any previous incarnation. In the truest sense of the word, this is the evolution of my trading methodology.

First we need to set up the template. We require a few MT4 indicators. We need to use MT4 since we are using a script. Apparently MT5 does not natively support scripts--which seems absurd, but anyways..

Use this demo if you do not have your own MT4 feed. Hands down the most comprehensive MT4 feed available. Commodities, Futures, World Indicies. I would not endorse actually trading with them, they are a little shady on fees.

Once you have your broker feed set up. Install these indicators in the correct folder. In my case this is: Program Files/Broco Trader/experts/indicators.

Now you have to set up the time for the ant-GUBreakout_V.0.4.2.mq4 file. This is somewhat subjective but the main purpose is to start it at the beginning of the Tokyo session and end it about an hour or so before London. This creates a nice opening range to trade off.

The main idea with meantrades is that we are seeking balance in the markets. We expect market prices to revert to their "mean" over time. Some people prefer to trade breakouts and that is fine, I prefer a value oriented approach.

It is counterintuitive but suits me fine. When prices are out of line I want to be looking for a reversal.

We are buying when prices are too cheap and we are selling when prices are too high. Simple enough. Now let's look at how we seek this out.

The main indicator to determine value in this case is fiboncacci extensions. When prices reach the outer range of the ORB or opening range breakout, we are looking for reversal trades.

We do not look at price alone, we also employ a very special script to determine when prices are ready to reverse. We use the constant range bars script which is available for download on this website. Please note it is not free. If you do not wish to invest in it at this time you can apply the template to a 5 minute chart with similar results. The main difference is the trend will reverse much faster and you will not be able to hang on for the ride quite as easily as you can with constant range bars. I am not a paid affiliate of the site but I can vouch for it's services. Enough said.

So what we are using in this template is:

Intoxicated oil trader fined £72,000 for trading ‘binge’

Steven Perkins, a formerly oil futures broker for PVM Oil Futures Ltd, went on an unauthorised trading shopping spree after a heavy weekend of drinking and purchased 7 million barrels of oil.

This not only stirred the market up to an ‘abnormal and artificial’ level of $73.50 per barrel, he also managed to rack up trades worth $520 million.

Perkins’s job was to trade Brent Crude Futures to qualify for the Intercontinental Exchange (ICE) on an execution only basis. But in the small hours on that fateful drunken day he traded without any client authorisation.

After his drunken splurge in the early hours of Tuesday 30th June 2009 he then called his office and tried to lie his way out of the mess.

Perkins has admitted to alcoholism and straight away went on a drying out course. The FSA have given him a trading ban of five years minimum but shied away from a lifetime ban as he may well recover and end up as no longer a irritating nuisance to the markets.

Good demo of a live chart on range bars

I miss trading the currencies

I have been away for a while running my offline trading business in Chinese goods. I love the challenge and I really don't think I make what the time requires of it. Nowadays I am trying to keep a balance on things and including trading again would be a great way to keep things fresh.

I have refined my method a bit since last year and will probably hand the system over to a programmer in the next few months. I still enjoy the manual trade though. The challenge of it is quite exhilarating.

ORB price extensions

I have been on an extended break from trading and am now in control of my schedule once again to analyze my chosen markets. Namely: GBP/JPY, GBP/USD, EUR/USD, USD/CAD and occasionally AUD/USD.

One of my favorite trade entries these days is a combination of the 1 hour ORB price level extensions coinciding with my CRB chart with VPOC levels. I know, an absurd amount of jargon. But really a very simple trade setup.

Here are the two annotated charts.

So the basic components are price extension fibs created from an opening range breakout (ORB), Market profile "Virgin Points of Control" or (VPOC) and the simulated price chart using Constant Range Bars with a setting of 20 pips (CRB).

Now, one question I am asking myself today is if a bias on the 1 hour chart creates more consistent returns using this setup or does it simply limit the amount of trades--which, in itself tends to reduce the sample set and improve returns over the short term.

The results of the trades for the past month on the EUR/USD with an hourly bias (created using a Volatility Pivot with an ATR setting of 7 periods; often referred to as the VP in my previous posts) are encouraging. But the question remains, does a bias improve my results? I will keep an eye on this over the coming weeks and report my findings.

Anatomy of an ORB bounce

Yesterday I bought at very nearly the low the of the day. I did this because of a price/ time relationship I have found to be extremely effective in entering the market. If you calculate the opening range and create a fibonacci extension over it, you will find prices tend to stop or even reverse once they hit these levels. Yesterday it was the 161 level. Often times this is the most probable level which price will bounce from as it is the first extension level from a breakout. 

What adds even more probability to the bounce is the hourly pivot. Yesterday the hourly pivot was below the 161 fibo extension level. If price stays above this level you can almost guarantee a very swfit and profitable bounce. Which we got with a clean 90 pips possible profit.

*Note there is a second way to play the Opening Range Breakout. One which is even more profitable and immediate in its rewards. You wait for a very small opening range, such as today in the Euro (only 24 pips) and enter on the first close outside the range. I am reasonably confident today's move will be swift and substantial.

Buy EU Buy GU

Healthy selloff on GU and EU seems very strong so far today. Taking the bounce.