Intraday Risk=on Risk=off idea for an intraday bot

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slowkey
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Intraday Risk=on Risk=off idea for an intraday bot

Post by slowkey »

This is just an idea for a possible bot based on the itsaquestion dash board that is found in the Indi section under 10.2. I am using the JimDandy version which I will upload below. A problem with any mechanical system for trading intraday is how to deal with news intraday. Using the Itsaquestion dashboard version by JimDandy and sorting the 4 hour power numbers by the absolute value of each currency can solve that problem. For example Friday AM we had strong risk=on trading.
chart 1.gif
How to read this is simple. Look at the 4 hour power numbers column POW(H4). If it is Positive green than the base of the currency is the prevailing 4 hour trend. If it is Negative red than the quote of the currency is the 4 hour trend. The highest values will be arranged top to bottom automatically. The half hour, hour and 4 hour constantly reset every half hour, hour and 4 hour time period. Looking at the chart above you can easily see risk on trading. The exception is that the AUD is being sold hard because of the rate cut also affecting the NZD. EUR GBP CAD and CHF are all doing well against JPY and USD. Now look at the afternoon below.

chart 2.gif
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Now above you see the USD and JPY dominating the trading. The exact opposite of the AM. The reasons purely mechanical systems break down intraday is that they do not take into account Risk=on and Risk=off trading and news very well. This indicator using absolute power sorting is an ingenious way of getting numbers that reflect daily fundamentals. Although the bot would not have to know this. The observation is just made to illustrate a point of how dynamic trading really is during an intraday time period. We start off a day risk=on and some leader in the EUR zone says something stupid and trading flips to Risk=off or a news event occurs and traders take it as a signal to go risk=on.

We could possibly enter a positive bullish trade based on a combination of an increasingly positive 30 minute, 60 minute power numbers and a rising 30 minute slope. We might be able to use the 4 hour number too but this would need some study. The slope numbers would not mater just direction and angle if that can be programmed. It could start to rise from deeply negative numbers and that really would not mater. It goes back to direction more than the numbers intraday. I have found the 30 minute slope to be most informative of intraday movement. The 15 minute is to reactive and the 60 minute has to big of a lag. An exit could be base on a change of the 30 minute and 60 minute power numbers in the opposite red negative direction. The numbers would have to turn red or negative and when they cross a certain threshold set by an extern value an exit would occur. We might want to incorporate slope into this exit strategy too if there is a way to evaluate neutral slope.

A new trade would be entered in the same direction or opposite direction based on slope again and power entry number combinations. However if the bias changed to bearish this time we would be entering when the red negative power number reached a new threshold in the opposite direction along with a change in slope direction from rising or neutral to falling. We would need to have a threshold that could be set by an extern for each time period power number value for both exit and entry. There will be some forward and backward movement within any 30 minute time period but generally the 4 hour will start to reflect over all movement. You have to remember that the hourly will be reflective of the two half hour time periods. I think it could be determined what value of movement in the opposite direction qualified for a exit and or entry and the best power number to use. I think higher volatility pairs would be the best to trade this approach but the sort could be traded top to bottom because generally the most active pairs will line up top to bottom because of absolute value sorting. However, a 4 hour power number of 100 EUR/USD is not going to equal a power number of 100 on lets say EUR/GBP in pip movement because of the difference in daily range but generally the sort works fairly well. It shows what pairs are moving the most and the base or quote that dominates.

I do not know if this dashboard can be adapted for a bot but I have found it very helpful for getting and immediate feedback for what is occurring during the day for intraday trading. I do not trade a purely mechanical method so I am not sure if adapting this idea will have legs but if the values can be extracted from the dashboard indicator than it might have legs. However if it cannot be used it is still food for thought. If this could be developed I could easily see that having the bot trade certain sessions might be a good idea. Trade the London and NY for entry and skipping the Asian for entry. You would want the most liquid sessions to trade this. I am not sure of any exact threshold numbers. I think that would just have to be worked out. Obviously doing this would be only possible if we can extract the values from the dashboard and I honestly do not know if this can be done. We might find the 4 hour a better trigger for entry than the half hour or hourly time periods alone. If the Dashboard can be use at all for a bot than there could be many different approaches to be tried out.

To duplicate the key elements of the dashboard the way I have it illustrated change the setting to the following.

SortByPower = true
SortBySlope = false
ResortEveryTick = false
UseAbsoluteValues = true
Choice = 240
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