I have a cautionary tale to tell.
Its about a trader who created a simple trading tool and tested it out. The tool was a vwap with a two channels +3 and -3 ATR above and below it...kinda like Keltner Channels. This was run on the 1-minute charts so the VWAP would be utilized to its fullness.
The idea of the trade was to do a "reversion to the mean" type of trade with the mean/center being the VWAP and edges of the +-3ATR being where the trades were initiated.
Well, he thought, why the hell not run it a few times in demo to see if it works. And so he did. And the results were amazing. While many other people were complaining about whipsaws and NFP release volatility; he was doing rather well.
He had run all different kinds of pairings. If the currency pair hit the outside of the channel, he would trade it towards the center vwap. He did this 10-15 times making about 10-20 pips each time.
It wasn't perfect. He had a few outliers but the system worked beautifully.
He thought, "wow this is good. I will try this again tomorrow". Except that the next day the system seemed to fail miserably.
How many times have you been here?
The reason, he figured, was the NFP. With everyone focussed on its release; the volatility created opportunity for trading back to the mean/vwap.
So now he sits, writing this very post and awaiting the next Non-Farm Payroll release which will be Feb 7th 2020 at 0830 EST.
I use tradingview and I have created a very simple indicator described above. I don't use metatrader 4/5 but I have used it in the past. Perhaps you guys can find something similar and join me in my quest to test this method.
Does anyone have any suggestions or are any of you doing something similar?
SE71
Its about a trader who created a simple trading tool and tested it out. The tool was a vwap with a two channels +3 and -3 ATR above and below it...kinda like Keltner Channels. This was run on the 1-minute charts so the VWAP would be utilized to its fullness.
The idea of the trade was to do a "reversion to the mean" type of trade with the mean/center being the VWAP and edges of the +-3ATR being where the trades were initiated.
Well, he thought, why the hell not run it a few times in demo to see if it works. And so he did. And the results were amazing. While many other people were complaining about whipsaws and NFP release volatility; he was doing rather well.
He had run all different kinds of pairings. If the currency pair hit the outside of the channel, he would trade it towards the center vwap. He did this 10-15 times making about 10-20 pips each time.
It wasn't perfect. He had a few outliers but the system worked beautifully.
He thought, "wow this is good. I will try this again tomorrow". Except that the next day the system seemed to fail miserably.
How many times have you been here?
The reason, he figured, was the NFP. With everyone focussed on its release; the volatility created opportunity for trading back to the mean/vwap.
So now he sits, writing this very post and awaiting the next Non-Farm Payroll release which will be Feb 7th 2020 at 0830 EST.
I use tradingview and I have created a very simple indicator described above. I don't use metatrader 4/5 but I have used it in the past. Perhaps you guys can find something similar and join me in my quest to test this method.
Does anyone have any suggestions or are any of you doing something similar?
SE71