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Stormy Trading Methods

Hi all! and Seasons Greetings to all those that celebrate it!

Stormy, bless it's cotton socks, is coming along nicely, to the point now that the clouds are finalised, and instead I am working on the different ways to trade it. In trading of course there are several types of price action, some of these are:

  • Trending action, where there is a clear direction shown, with small retracements before moving again in the same direction.
  • Ranging action, where prices are bouncing between a rough range with no clear direction.
  • Snoozing action, where basically nothing is happening, as seen in some Asian sessions.
  • Compression action, the classic breakout time, where price suddenly quietens before exploding, the proverbial quiet before the storm.
You may remember I mention that Stormy was working well in trending markets, to me this was a waste, as most current indicators work well in trending markets, gee just looking at it with the naked eye works well in trending markets. The trick is to get it working in ranging markets, compression markets, and to filter out those quiet times.

The good news, I think I am close, the JPY is ranging at the moment, so here are today's charts with Stormy set to ranging, the arrows you see are built into the indicator, not drawn in by hand:

EUR/JPY

USD/JPY

These charts are only showing the arrows for ranging action (there are several modes), and things seem to be going ok. The way I see it, an indicator should be configerable so that you can specify if a market is ranging, trending or compressing, and the signals it gives adjust accordingly, for example I have Stormy set for trending on the GBP/USD and here is today's chart:

GBP/USD

The final setting is for compressing markets, the problem with compressed markets are the direction of the breakout is something that is very hard to predict through price action, as a lot of them are news driven, but if you look at any of the above charts, you see the clouds darken (stormy .. dark clouds ... get it :)) when signs of a breakout is approaching, so while no direction is given just yet, I am progressing on that front also. At this stage I suspect that the direction of dark clouds area may be best predicted by the computer in your head than anything else.

So that's it, that's where I am at, I have had several questions on when I will release Stormy, at this stage I suspect the New Year may be when it has been back tested sufficiently and refined enough for release. Oh before I go, I'm sure some of you have notice the different colouring of the candles in the above charts, that is a seperate complimentary indicator I am working on called "Rain drops", more information on that later.

Happy trading!

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Posted by Anonymous Anonymous:
Friday, December 23, 2005 2:30:00 PM

hi
I still don't get it how it's works. Can u please describe step by step

Thanks Boss

Farid    



Posted by Anonymous Anonymous:
Friday, December 23, 2005 3:40:00 PM

Do we need to set up trending,ranging,compression market manually or stormy decide by itself?    



Posted by Blogger Akuma99:
Tuesday, December 27, 2005 11:37:00 PM

Still to decide that one, but at the moment is manually, it might be quite a trick to have it detect things automatically but we will see.    



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