Topic: Question about 'Closing Logic' and exit strategies

Recently read an interesting post from one of the moderators about the importance of deciding on a good exit strategy so you have a clean getaway in case the market goes in the opposite direction.  So, I've been doing some experimenting and found a closing that uses several slots that seems to work well regardless of what I use for 'Opening Logic'.  I would like to have a general-purpose closing strategy that I can use with all my strategies that mostly protects me if the market goes in a different direction than the trade opened.  I always use SL, but that is usually painful and expensive and I'm hoping the closing strategy can detect a bad trade sooner and just get out (with minimal loss).

I've noticed that a number of indicators have a 'rising' and 'falling' parameter.  And sometimes I can add one of each in the closing logic and it has a positive effect on the back testing statistics.  So, my question concerns whether or not this makes any sense.  Suppose I open a long trade and want to get out if my strategy guessed wrong and the market drops.  I'm thinking the 'falling' indicator will detect that and exit the trade before having to wait for the SL.  On the other hand, if the market continues going up then the 'falling' indicator remains silent and does no harm.

The reason I need one of each is because I'm not sure FSBPro substitutes 'falling' with 'rising' (or vice-versa) when it automatically generates the corresponding short logic.

Does this make sense to anyone?  Can you think of any negative consequences?

Re: Question about 'Closing Logic' and exit strategies

Actually -- I think I can answer my own question.

What I am trying to do is fill several closing slots with indicators that can detect a change in direction from 'long' to 'short' -- and then reuse that closing strategy for all my strategies by locking those indicators when running the Generator.

Every strategy has an 'Overview' tab that describes in detail what happens when a position is long or short, and from that I can see whether or not it's doing what I expected.  And I can now see that FSBPro attempts to choose the corresponding opposite parameter for short positions -- which I sort of knew, but guess I forgot about.

Re: Question about 'Closing Logic' and exit strategies

I think you are close to the solution, I have experimented with similar.

I am working with Ross Hook today, trying what you are doing.

One day. within the next three lifetimes.......we will have solutions for all things...... lolol

My 'secret' goal is to push EA Studio until I can net 3000 pips per day....

4 (edited by sleytus 2017-10-29 21:36:37)

Re: Question about 'Closing Logic' and exit strategies

What?  Only three lifetimes?  You must be an optimist by nature...

Thanks for the pointer to Ross Hook -- I took your cue and also started experimenting with it and got some very interesting (and good) results.

And then, while poking around some more, I learned something very interesting.  As a long-time user of FSB you may already be familiar with this phenomenon, but it was a surprise to me.

So, I have this nice strategy and I replaced the 'Bar Closing' logic and indicators simply with 'Ross Hook', re-optimized, and the strategy looked great.  And then I started going through the list of 'Closing Points' and discovered that many others also worked as well as Ross Hook, some even better.  And then I got to the 'NoNo' indicator and substituted that for 'Ross Hook' and that also worked great.  Hmmmmmmm.  So, now I'm confused.  How can the NoNo indicator work as my Closing point?  I mean, how can this strategy ever close a trade?  I then read through the 'Overview' description and learned why -- because I'm using 'Reduce' or 'Close' in the next opposite direction signal, then my opening logic indicators are also being used for my closing logic indicators.  This is very, very, cool!!  I sort of knew this, but because this behavior is hidden from view then I wasn't thinking about it.  Instead I was thinking I needed to fill-in the slots for closing logic in order to complete a strategy.

I think there are a few implications (perhaps more).  For example:
1. Since my objective for the exit strategy is to detect when the market goes against my original guess, then from now on I will always use 'Reduce' or 'Close' because then my opening indicators serve a dual purpose -- they get me into a trade and also out of one.
2. By using 'Reduce' or 'Close' and then NoNo for the closing point, I can test the "robustness" of my opening logic.  That is, if my strategy yields good stats when using NoNo for the closing point, then that means my opening logic is good at detecting both buy and sell signals. 
3. Once I've confirmed my opening logic is good at detecting both buy and sell signals, then I can replace the NoNo closing point with something a little better -- e.g. Ross Hook.  I've noticed that now my closing point has little or no effect -- however, I do need to make sure I don't use a closing point that screws things up.
4. It seems I no longer need to use TP.  By using 'Reduce' or 'Close', if my opening logic is good then adding TP does not appear to improve the stats at all.

I haven't done any live trading with this yet -- but I will this week.  I'm using a new tool that allows me to create a single, portfolio EA by merging many FSB strategies, back test in MetaTrader, and then analyze the results in MT4 Tracker.  And it continues to look good.  As a side note, I plan to announce and release the new tool later this week, which will make it easier for you to also confirm or discount the above observations.

Neat stuff -- again, Blaiserboy, thank you for your encouraging advice and guiding hand...

Re: Question about 'Closing Logic' and exit strategies

One super thing about this software is that you can make small changes and run the generator for a few minutes and see what results...

I like to use the 'Long or Short' Indicator with this type of thing, just to see what might appear, sometimes there are significant differences.

My 'secret' goal is to push EA Studio until I can net 3000 pips per day....