Avoid Range conditions for trend following setups only

[fifeivkbdedwcf]

Hey guys,

currently testing different approaches for a trend following system.

Do somebody has found a good approaches for a indicator to avoid sideways or choppy market conditions.

Just talking about a filtering system for entry conditions.

For trade mgnt and exit conditions currently testing different approaches as well, but just talking about entry.

Main idea is based on 2-3 EMAs.

above the 200 for long trend

and 20 and 10 for mid and short term trend.

For buy, price must be above 200 and the 20 and 10 must align as well below.

My second condition is MACD with 6, 12, 1 settings, trigger is the 0 line cross.

For Sell vise versa.

When market momentum increases the EMAs expend and fan out.
When sideways market crosses EMAs from below and above and EMA Line for 10 and 20 mostly move flat.

Have testet both the breakout through the 10 and 20 EMA and also the Pullback if market has broken the EMA before and then bounces/ retests back.
Havent found a setting in FX dreema to tell for EMAs Line angle 0 ° also dont find this approach good because Moving Average still is lagging indicator.

What i've tested is ATR and ADX indicator to use for momentum indication above certain level, but what i've found is that ATR still increases in sideways conditions, even above certain minimal level

and ADX tends to be legging even more.
Even though if is above 20 or 25 level, market often tends to range as well, if ADX shows that market seems to be trending.

For the MACD i've found that when market moves tight or ranging, that signal lines often moves parallel to the 0 level and doesnt give clear momentum shift.

Thanks to everybody helping out.

[Ipod]

You could use "ROC Rated of Change" indicator or a pair of envelopes

[fifeivkbdedwcf]

@Ipod

Hi thanks for your answer.

is Roc like classic momentum indicator? testet it a bit, but seems to have lots of divergences as well.

Seems like Roc isnt available in fx dreema.

Speaking envelopes, tried both with classic envelopes and also thins like Bollinger Bands.

Thing with Bollinger Bands is, that yes with more volatility, the bands expand, and with lower volatility band come togehter, like the classic BB squeeze setup.

From testing i've found that most of the times, first comes the consolidation or range and then breakout, with the BB squeeze, when market breaks out the bands start to expand.
Dont really know how to inplement this is fx dreema.

Have you good success with Roc indicator, do you trade Trend following as well?

[l'andorrà]

@Ipod Are you sure this indicator doesn't repaint? Because if it does, the bot is doomed.

[Ipod]

@l-andorrà Not sure to be honest, but I have been researching indiators a lot lately and ROC is mentioned by a lot of people especially for avoiding ranging markets but it's not something I have personally tried as its a custom indicator. I was just throwing ideas out

[fifeivkbdedwcf]

@l-andorrà

Ok, so you wouldn't remmonc Roc as well right?

Neither ADX?

[sktsec]

It is a big question. Whether the price has a trend is a random variable itself.

[roar]

The problem with tight range breakouts, those "sqeezed springs", is that usually the "tightness" is only because quiet trading on a holiday, or early Asian session, basically when most traders are sleeping. It is usually not anticipation of big jump. So you need some kind of indicator that takes the expected volatility into account as well.

[fifeivkbdedwcf]

I applies to regular market conditions, it is either in consolidation or expansion. I know what you talking about with Sessions, but i've found that yes some participants come and go, but Forex is traded 24/5 therefore even in Asia Session market sometimes expands and ranges in New york session and vise versa. Even overnight there are often trendig phases in EUR/USD or Gbp/USD. So to keep it simple, Up, down or sideways. I just need a filter to avoid when market is calm and when Momentum starts to come in.

Same thing with Volume for example. Often, first comes Momentum and then comes Volume.
For some times thought that ADX might help with that, but often even when is stays often certain level there is consolidation and vise versa.

[roar]

Forex can be traded 24/7, but there are undoubtedly quieter periods during the 24-hour day. Just put ATR to a chart and see how predictably the average volatility makes it cycles. Like a sine wave.

[fifeivkbdedwcf]

@roar

Hi, tried ATR only for Stop loss placement before, to give it more space to breath.

I've found that even ATR is high/ rising market can be very choppy sideways as well.

How did you came up with 34 period for M15?
Just used the regular 14 period before.

[fifeivkbdedwcf]

@roar

Currently testing with 200 SMA to give larger trend direction, but only need to have something to tell the EA that market is ranging or trending.

Sort of like Bollinger Bands, cause there are only 2 directional movements of the market,

• when Volatility increases, the bands curve, is expanding/line walking
  when market is calm or ranging they 're flat, market is contracting.

[roar]

@fifeivkbdedwcf ATR does not measure trend direction, it measures the average candle size. Candle size is a good proxy for volatility.

If you want to develop a range breakout strategy, you need more than ATR, maybe ATR and ADX combo.

[fifeivkbdedwcf]

@roar

Hi,

yes found that ATR works good for Stop Loss placement but not to give increase in momentum.

Found that ADX is super lagging, therefore acting not good to indicate breakout even when the line crosses above 20 level.

When backtesting there was a lot of "momentum" indications from ADX, when it was above 20 or 25 level, but then still maintain in a tight range.