Move the Markets

QuoteTracker Paintbars: Dummy Trade Entry

Posted on February 4th, 2007
Written by Richard
Posted in: N/A (old archives)

I’ve been putting just about everything that needs measurement or arithmetic into paintbars on QuoteTracker. I’m pretty excited about making use of them next week. Most of them won’t mean anything to you, but I did make one that tries to help me spot the “dummy”-style trade entry. I thought that might be worth sharing. I’m not the Dummy authority–it’s relatively rare when I make those plays–but I codified the kind of thing I look for, anyway. I reviewed my old trades, and the dummy-a-day category at uglychart to decide what I wanted to highlight.

As with any indicator I make, I want to catch as many winning signals as possible, without painting the whole chart with noise. It’s a balance you have to strike, between catching everything that could possibly be a signal, and missing a lot of good signals. People probably have different tastes in this regard. To me, painting every narrow bar is too many paintbars to deal with. But, if I make sure it’s near a moving average, and facing the right way, etc… well, then I have few enough alerts that I can browse them effectively.

So, here’s what I came up with:

For longs:

1. Inside NR3
2. Bar is at most 1% wide
3. Closes above 5MA
4. 5MA is at most 0.15% below the low of the bar
5. 5MA is rising for the last 3 bars

…and just invert the directional stuff for shorts:

1. Inside NR3
2. Bar is at most 1% wide
3. Closes below 5MA
4. 5MA is at most 0.15% above the high of the bar
5. 5MA is falling for the last 3 bars

Forcing it to be an inside bar drops a lot of meaningless signals, but also gets rid of a fair amount of example winners. So, that was hard to decide. I could possibly make the rule such that it has to be “mostly” inside, like it can peek out in the direction of the expected trade by 0.1% or something. But, for now, I’m sticking with a strict inside bar policy.

I made two separate paintbars for the ‘long’ and ’short’ cases, so that I could paint longs above the candle, and shorts below it. Here’s an example (if you aren’t familiar with how dummy trades work, you would enter the bar after the arrow, if the price goes outside the arrow-bar in the right direction):

Here’s the code for longs:

if (SMA(5) > SMA(5)[1]) AND (SMA(5)[1] > SMA(5)[2]) AND (SMA(5) >= (Bar Low – (Bar Low * 0.0015))) AND (SMA(5) < Bar Close) AND (Bar High-Bar Low) <= (Bar High[2]-Bar Low[2]) AND (Bar High-Bar Low) <= (Bar High[3]-Bar Low[3]) AND (Bar High<=Bar High[1]) AND (Bar Low>=Bar Low[1]) AND ((Bar High – Bar Low) <= (Bar High * 0.01)) set color to Blue

… and shorts:

if (SMA(5) < SMA(5)[1]) AND (SMA(5)[1] < SMA(5)[2]) AND (SMA(5) <= (Bar High + (Bar High * 0.0015))) AND (SMA(5) > Bar Close) AND (Bar High-Bar Low) <= (Bar High[2]-Bar Low[2]) AND (Bar High-Bar Low) <= (Bar High[3]-Bar Low[3]) AND (Bar High<=Bar High[1]) AND (Bar Low>=Bar Low[1]) AND ((Bar High – Bar Low) <= (Bar High * 0.01)) set color to Blue

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© 2010 Richard Todd. I am not a financial advisor, and nothing on the site should be considered investment advice or actionable recommendations. I'm just an individual, saying what I think, and sharing my experiences.