Trading mtf in real time - page 4
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Error in logic
Hi DeForex,
I commend you on your desire to develop ideas and share them with others. It is that spirit that makes this website a favorite. However there is a huge hole in your theory. You assume that all the indicators are using simple linear equations and ratios. However, most indicators are using exponents, roots, linear regression, etc. and, when multiplied don't come close to having the same ratio.
Take for example the MACD which uses exponential moving averages. I have two screen shots of the same time. The first is a four hour chart using 12,26,9. The second is a 15 minute chart using 192,416,144. The end value of the first screen is about 0.358. The second is a value of about 0.331. Close you say? Not when measuring 4 or 5 decimal places in Forex. Look at the zero crossover in each screen. In the first (the true 4hr chart) the crossover was between 12:00 and 16:00 GMT or about 14:00 GMT on Jan. 4th. But the crossover in the 15 min chart with the multiplier is at 2:00 GMT on Jan 5th. That is 12 hours later! You would be looking 12 hours later for an alignment that is not in synchronization with the true 4 hour chart. And look at the signal lines. The end value of the true 4hr chart is twice as much as the value of the 15 minute chart with the multiplier!
I strongly urge you to post a large notice at the start of this thread warning people to do a comparison test of any indicators to which they apply a multiplier.
Kind regards,
gcgman
Check this.
Even simple moving averages don't equal when multiplied. Put a 20 simple moving average on the 4 hour chart. Check the value. Then put a 320 moving average on the 15 min. chart. I am checking the UDS/JPY and there is consistently 1/10th of a yen difference. If even simple moving averages don't work when multiplied one has to wonder if any indicators can be multiplied.
good luck,
gcgmanHELLO GCGMAN,
I read your post and I thank you for speaking out but you sand to be corrected.
Before I attend to this let me correct a notion you have. When I started tis thread I stated that I wanted to teach you some thing I was studying and I also stated that I noticed that it worked 90 to 95% of the time. I wanted you to share in my research, so thanks.
I think you are making a mistake here and I will show you with the following images.
Remember that the reason for this trade is how to get into trades without having to wait for a 4h bar to close while using mtf indicators. The second reason is to allow us to trade almost any indicator in Multitime frame without having an MTF version of the indicator.
You talked about two indicators MACD 12,26,9 and moving average 20.
So I decided to show you the correction with a chart having exponential moving average cross of 7 and 14 with default macd of 12,26,9. Am sorry for not using a parameter of 20 on the moving average but numbers don't matter.
Now how do I plan to prove the equivalence? We will observe the two ema cross and macd cross on 4H in relation to 15 mins crosses.
Please I hope the following pics prove enough that if u enter a trade on 4h time frame someone trading 15mins with tha equivalent will enter just about the same time but not after you, rather before you or same time with you. Notice on the chart that the two vertical lines remain in place but the crosses happens before them. Also note that those two vertical lines represent the entry points of someone trading 4h and the two crosses happens at least six bars before that persons entry.
Thanks
Deedee
Nigeria.
I ALSO WANT TO BRING TO EVERYONES NOTICE THAT AM NOT TRYING TO AND WILL NOT OFFER ANYTHING FOR SALE HERE.
I HAVE DONE THAT IN THE PAST AND GOT BANNED ON OTHER SITES AND I NOTICED THAT AM EVEN IN FOREX PEACE ARMY HALL OF SHAME BUT I GUESS THATS A STAIN I HAVE TO CARRY.
JUST HERE TO HELP OTHERS.
Check the pics again and tell me what you think. Or maybe I don't get where the hole is.
Beware! Pics don't lie!
Using a multiplier distorts most ratios and averages. In the first screen shot I show the crossing of the 7 & 14 ema with a white line and the zero crossing of the 12,26,9 MACD with an orange line in the 4 hour time frame.
The second screen shot is in 15 minute screen shot. Notice where the white and orange lines are. They are several hours before the crossings using a multiplier. So instead of trying to get a signal before the close of the 4 hour bar you are actually looking at a bogus cross more than 6 hours after the ema cross and more than 10 hours after the macd cross. I would need another screen to show the similarly ridiculous difference in the signal line crossing.
And finally Deedee, I have no notions. I am merely analyzing your presentation and warning others of the error in logic. As I stated previously I applaud your desire to share research with us and I wish you well.
kind regards,
gcgman
Reason fo this problem is the following:
If you take an indicator with a small value on a high TF like the 4h chart.
Lets say a value 5 then it is going to take in calculation the closing price of the last 5 bars. Lets now asume that on the 4hour TF price moved horizontal. Or that the closings of the last 5 bars was nearly all the same.
If you now place this same indicator with value 5 on a 5min TF you need to give it value 240.
But if during this period price had a strong horizontal volatlity (meaning it jumped up and down a lot in a horizontal way then you can not expect that the calculation over 240 5min closing points will be the same as the calculation over 5 4h closing points (aspecially if you use exponential MA's in your indicators. Don't forget that each indicator has an MA in its calculation).
Friendly regards...iGoR
Hi Deforex,
I have explained this principle already 2-3 years ago.
In my example I used the HMA (which I find the best MA around).
With the HMA the logic calculations of multiplying or deviding the value of the HMA on a certain TF with the amount of bars from an other TF will work more reliable then an MTF indicator.
But I also explained that one can not do this with all indicators. In fact this does not work for most indicators because their calculations are WAY OFF.
Let me give you an example: Place an ATR (5) on the daily chart ( so you could measure the volatility over a short period of time so you could addapt your T/P's and S/L's that you use with a ceratin system, accordingly).
If you place that ATR(5) on the eurusd (daily chart) you gonna see that the value is today 0.0154.
If you now want to place this on a 5min chart then you know there are 3600min in a day /5 for a 5min chart = 720. Or there are 720 5min bars in a day.
So we mulitply that ATR(5) x by 720 = 3600.
Now if you place an ATR(3600) on a 5min TF you will see that around 14.00gmt it reads 0.0006.
That is not a little bit different but that is WAAY OFF.
As said there are more indicators that you will face this problem with then indicators that will not give you this problem.
So before you start to use an indicator that way I suggest that you verify closely what the values are of the TF' s that you want to represent.
Friendly regards....iGoR
Here is the image of the ATR example where it clearly shows that this so called golden solution is WAY OFF.
Regards...iGoR
Reason fo this problem is the following:
If you take an indicator with a small value on a high TF like the 4h chart.
Lets say a value 5 then it is going to take in calculation the closing price of the last 5 bars. Lets now asume that on the 4hour TF price moved horizontal. Or that the closings of the last 5 bars was nearly all the same.
If you now place this same indicator with value 5 on a 5min TF you need to give it value 240.
But if during this period price had a strong horizontal volatlity (meaning it jumped up and down a lot in a horizontal way then you can not expect that the calculation over 240 5min closing points will be the same as the calculation over 5 4h closing points (aspecially if you use exponential MA's in your indicators. Don't forget that each indicator has an MA in its calculation).
Friendly regards...iGoRHello iGoR,
Where have you been all this while? I have been waiting for people like you to comment. I love the way you lay your facts down with reasons and to tell you, its only an ignorant person that won't listen to an experienced person like you. Thanks a lot for taking part in my research.
Well I never believed that it will work with all indicators but before I continue let me explain something to GCG's pictures. I notice that your vertical lines were on the exact cross of the ema and the macd. If you do it that way the you will get some thing like the 6 to 4 hours difference you showed me on your chart, that has been noted but let me remind you that what I am trying to deal with here is the issue of waiting for the first bar to close.
Personally I wait for the current bar to close on any signal I get due to my experiences with trading indicators. A SIGNAL IS NOT VALID TILL THE CURRENT BAR CLOSES, be it a cross or change of colour and thats why in my pictures I have actual cross and actual entry. If you trade the immediate signals then you are right this does not work at all but I trade after the signal bar close. So even if I use an mtf indicator and I get a signal in a small time frame I wait for the large time frame to close in the new colour in this case it will be 16 bars of 15mins to make up 4h time frame.
I agree but if I convert the parameters I noticed that most times I dont have to wait for the 16bars to close. Don't get me wrong. I respect ur opinion but the difference between your pictures and mine is that your horizontal lines in your pictures were placed on the immediate crosses and mine were placed the next bar after the actual cross which is where i would have entered my trade if I was trading the large time frame which in this case is 4h and when I flip back to 15mins and convert the parameters those horizontal lines are still on point. Please try taking the next bar with all due respect and see what I mean.
I have tested this conversion method using the next bar as my signal point with the following indicators.
CCI
RSI
MACD
STOCHASTIC
MOVING AVERAGE
and they all work. I believe they work because my style of trading is not based on a cross but till the bar closes that way.
Back to iGOR. I agree 100% with you that it wont work with every indicator especially those that use volatility as part of calculations etc..
Eg RVI. I have not tried it tho but u are right. People have better confirm its ability with indicators before using it.
Gcg I hope you get my point. we just have different because your signals are based on the actual cross but mine are on the next bar of the high time frame. Am really having fun here.
Gcg and iGor thanks for all your support. Igor I would also want to know how you dealt with this issue while carrying out your research. Or did you abandon it?
Thanks a lot
Deedee
Nigeria
Well I never believed that it will work with all indicators but before I continue let me explain something to GCG's pictures. I notice that your vertical lines were on the exact cross of the ema and the macd. If you do it that way the you will get some thing like the 6 to 4 hours difference you showed me on your chart, that has been noted but let me remind you that what I am trying to deal with here is the issue of waiting for the first bar to close.
Personally I wait for the current bar to close on any signal I get due to my experiences with trading indicators. A SIGNAL IS NOT VALID TILL THE CURRENT BAR CLOSES, be it a cross or change of colour and thats why in my pictures I have actual cross and actual entry. If you trade the immediate signals then you are right this does not work at all but I trade after the signal bar close. So even if I use an mtf indicator and I get a signal in a small time frame I wait for the large time frame to close in the new colour in this case it will be 16 bars of 15mins to make up 4h time frame.
I agree but if I convert the parameters I noticed that most times I dont have to wait for the 16bars to close. Don't get me wrong. I respect ur opinion but the difference between your pictures and mine is that your horizontal lines in your pictures were placed on the immediate crosses and mine were placed the next bar after the actual cross which is where i would have entered my trade if I was trading the large time frame which in this case is 4h and when I flip back to 15mins and convert the parameters those horizontal lines are still on point. Please try taking the next bar with all due respect and see what I mean.
Gcg I hope you get my point. we just have different because your signals are based on the actual cross but mine are on the next bar of the high time frame. Am really having fun here.
Thanks a lot
Deedee
NigeriaHi Deedee,
My lines are at the bar that caused the cross on both screens. When that bar closed there was a cross and confirmation was made. You are talking about waiting for the close of the next bar after the cross. Even if you shift over one bar on each screen you are still 2 1/2 hours late on the ema cross and 6 1/2 hours late on the MACD cross. The pics were to point out the huge difference in values. I am trying to warn others of these big discrepancies. The point that Igor & I are trying to make is that the values of a multiplier are way different than using the same indicator in a different TF. If this works for your trading style more power to you. I truly wish you well.
Kind regards,
gcgman
Hi Deedee,
My lines are at the bar that caused the cross on both screens. When that bar closed there was a cross and confirmation was made. You are talking about waiting for the close of the next bar after the cross. Even if you shift over one bar on each screen you are still 2 1/2 hours late on the ema cross and 6 1/2 hours late on the MACD cross. The pics were to point out the huge difference in values. I am trying to warn others of these big discrepancies. The point that Igor & I are trying to make is that the values of a multiplier are way different than using the same indicator in a different TF. If this works for your trading style more power to you. I truly wish you well.
Kind regards,
gcgmanThanks for everything and taking your time out to join me here and I have also added a large warning at the first post of this thread. Now tell me or give me a suggestion.
Hi Deedee,
My lines are at the bar that caused the cross on both screens. When that bar closed there was a cross and confirmation was made. You are talking about waiting for the close of the next bar after the cross. Even if you shift over one bar on each screen you are still 2 1/2 hours late on the ema cross and 6 1/2 hours late on the MACD cross. The pics were to point out the huge difference in values. I am trying to warn others of these big discrepancies. The point that Igor & I are trying to make is that the values of a multiplier are way different than using the same indicator in a different TF. If this works for your trading style more power to you. I truly wish you well.
Kind regards,
gcgmanThanks for everything and taking your time out to join me here and I have also added a large warning at the first post of this thread. Now tell me or give me a suggestion.
Thanks
Deedee
Nigeria