Scalping system #4 (5 pips with GBP/USD)

Alex, (or Edward of course :)

had a question about this setup. I have both back tested (just visually, and I don't give such a backtest much credence because of the ease of curve fitting) and am now forward testing it on a demo account. So far, I am quite impressed. But I do have one question. Have you noticed that in real time, if you stay on a chart (don't switch away and then switch back) at times the SAR on the MACD will give one look... like say a long flat line on the bottom... but when you go away from the chart and then come back, the look has completely changed. Like, after coming back to the same chart, same time window, that previous long line of flat SAR's underneath has switched to above and below and above and below... I can send screenshots if what I am saying doesn't quite make sense.

Anyway, was curious if anyone else was having this happen, and what we should make of it. To me, it just confirms what I already thought: visual backtesting based on past chart looks is very suspect.

That said, forward testing on demo account (which has its own issues as well, you surely know) has been very, very promising.

Your thoughts?

Keith

Hi Keith,

Any trading idea starts with looking back at old charts. It is impossible to invent a new strategy, new rules without backtesting. Therefore, I see nothing wrong in that process. The other thing is that you don't have to rely on backtesting results as they will not guarantee future performance, that's why we need to forward test every strategy.

Surely, the situation you've mentioned is well known to me and to any trader who uses Parabolic SAR indicator for scalping. It does "changes its mind" and there is nothing we can do about it. If you see that indicator has changed its readings on the CLOSE of a price bar, exit. Never exit while the current bar is open, the indicator may "change its mind" again.

Regards,
Edward

Edward,

I really appreciate your effort to answer my question, but I feel I probably did not phrase it well enough to help you understand what I was asking, so that is my fault. My situation is not speaking of the one current dot of the SAR on the current candle, rather a series (at times, a very loooong series) of SAR dots specifically on the MACD. They would change looks when I would leave the chart open untouched for long periods of time, and when I would switch off the chart and back on to the chart. If it would help, I am happy to send screen shots to help you understand what I mean. Is there a way to do that?

If others are not experiencing this 'glitch' I am referring to, that will tell me there was a problem with me adding the indicator to my MT4 trading software. (as a note, I did copy and paste code, instead of unzipping a .mqt file, it is possible the glitch is related to this).

As far as the backtesting note, I completely agree with you. The one caveat I was highlighting is that a backtester better be very confident that if his visual tests include indicators, he better know for sure that the historical data is an accurate reflection of what the chart and indicator looked like in real time. My experience has shown me this is not always the case. But when you base your visual backtesting on breakout of candles (and others of course), I am fairly confident you are on safe ground. :)

Kudos to you, your site, your setups, and your gracious answering of questions Edward! :))

In your debt of gratitude,

Keith

Hi Keith,

No problem, simply send me an email with attachments to

and I will re-publish it here.

Another simple option to share an image is to upload it to Filekeeper.org and post a comment with a link here.

We'll look at those screenshots together.

Regards,
Edward

HI,

Thanks for the system :D ... already make it an EA :D ... want to try :D ... emel me at azam575(at)gmail.com .... hehehe...

I give you free EA... no Hanky Panky okes :D ......Free for the WORLD

azam575

Hey,

Has anybody tried the same set-up with other pairs or with GBP/USD at different times? If anybody did, what were the results?

Regards,
Pasi

As I see it, you should try the most actively traded currency pair that produces sufficient amount of pips in one move and the lowest spread for it. Those are GBP/USD, any/JPY, AUD/USD, USD/CAD and well, could be EUR/USD during London/NY sessions. Try several ones with lowest spreads (depends on a broker you use).
Trading it on other than 5M TF? Never tried..

Boris

Edward,

sent you an email with the screenshots, and here are the links posted to the website you recommended.

http://filekeeper.org/download/shared/screenshot_1_prior_to_switching_back.JPG
http://filekeeper.org/download/shared/screenshot_2_after_switching_away_then_back.JPG

The issue is the changing look when I let the indicator run and then switch away and then back. If this is not clear, please let me know, and I will try to make it more clear.

Thanks for your help on this matter!

Keith