TopStepTrader 50K Combine Success

Often system validation has no real third party but easily exaggerated self-attested performance is posted    The systems, indicators discussed in this blog and offered for subscriptions on futures.greeneleafe.com are distinguished in that these systems were used to pass the TopStepTrader 50K Combine and achieve a Funded trading account   More about TopStepTrader here: www.topsteptrader.com is a place where traders prove themselves to be eventually rewarded with "no-risk to the trader" funding (prop trading of a sort open to the public at large)

The recently concluded successful Combine trading record using these systems and indicators can be viewed here: www.topsteptrader.com/blog/there-is-no-such-thing-as-a-missed-opportunity-because-markets-are-not-going-away  and below screen-capture of the starting and ending balance (3K profit)   No single system was used but rather a combination of them executed in a discretionary way by selectively turning the systems on and off necessitated due to the rather stringent Combine rules.   Of course since trading is a long term game of consistent ability to bounce back from drawdowns the Combine "test" never really stops even though a Funded account has been achieved, one must continue to trade per the rules into the future is the continuing challenge and vindication of these systems discussed in this blog.  

  

S&P Big Picture: 2008 Crash Review

Everyone's aware of the financial markets crash of 2008 so how did it look under the Chaos four lines (hounds) analysis?     Reviewing that helps shed light on the current picture because in the markets everything repeats all the patterns over and over again in all time-frames sort of like waves on a beach they come on the sand and retreat over and over again.

So below chart, as early as 2007 the chaos white line crosses under the purple and constitutes a sell short signal  Again, to repeat, the need to be short signal delivered a year early AND the signal remained bearish, with white continued being below the purple all the way down, and crossed up over the purple pretty much on the dot in the bottom - in 2009.    The white line subsequently crosses below the purple again in 2010    So let's calculate the profits with this-

If traded per the Chaos four hounds signals, a S&P ES short held (and rolled over each contract period) would garner the following points:

Short 08/01/2007 ES 1340, Cover 03/12/2009 ES 570 =  770 PTS
Long 03/12/2009 ES 570, Sell 06/29/2010 ES 889 =  319 PTS

This is why it makes very good sense to pay close attention to the chaos lines cross overs in higher time-frames trading the rewards are huge, signals extremely early and precise, and while these chaos lines are computed algorithms, they are humanly easy to analyze representations of the market

So is this the holy grail for long term trading?   Not quite because though it would be profitable overall when carefully traded, it can be wrong too but in an instructive way   The problem is sometimes the cross-overs do not signal a true reversal but rather a major correction only.

The cross-over pattern suggests something like the famous Elliot Waves that everyone knows they are on to something important but leaves a bit to the imagination with voodoo wave 1, 2, 3 who knows what wave it is now?   Well perhaps the Elliot theorists are noticing these chaos lines white-purple crosses, consider the period prior to 2008 and looks like 2 fake crossovers - wave 1 and wave 2 in the Elliot Wave theory and then finally end Wave 3 is the real reversal?     Many patterns are evident in these charts not merely the white-purple lines cross over is the tip of the ice-berg really there are other lines drawn there too that reveal market structures along with the chaos levels on the main - top - portion of these images

The present picture as of 06-28-2015 looking like the end of "Wave 3" is imminent implying a S&P decline-

 











  

S&P Big Picture: Critical Time Period

Historical high areas here and the previous Big Picture post advocated trading the chaos four lines (affectionately aka 'chaos hounds'), in particular the white line - purple cross overs, very simply buy the cross-over, and reverse and sell-short the cross under.   There could be losses with the approach because each reversal can cost 20-30 points can start adding up if it "takes too many cross-overs"   But the beauty of it is that when it stops fluctuating, there would be hundreds of points moves

In the previous post the white line had crossed under around SP ES 2075, while now, at the end of the trading week it has crossed back up though not by much (see below the white - 161052 and purple - 160623) with the SP ES at 2097   One can either continue holding the Short a bit more because the white line barely over the purple or gain an early entry Long    A stop and reversal could be taken at something like 2110 the important thing is that the white remain crossed over the purple    Watch for the white crossing back down under the purple by end of Monday June 22, and if that happens there is no need to exit the current short

S&P Big Picture

At long last some significant movement in the four chaos lines indicator on the ES EMINI Daily chart - in particular the white and purple line crosses are very significant.  It crossed over (bullish) and now crossed back down (bearish) would be the latest signal (orange arrows pointing to it).  It would be excellent from here to mirror the cross-overs in trading, and so the current signal would be to go short here at 2073.   The overall picture of all indicators is bearish because the mid-line (1547) is exerting downward pressure, which gives one a great deal of confidence taking the bearish crossovers can be held comfortably   As things stand, the initial target for the short if the downward drift continues would be the 1836/7, one of the thin orange lines.  But again, if the white line crosses back over the purple the position to be reversed immediately (constitutes the stop and reversal signal)

   

Minute Charts CLFlame System burns up Oil!

Finally devoting some time exploring Chaos Algorithms on a range of minute charts and some striking systems have become apparent    One advantage of minute charts from a business "sales" perspective is that one can demonstrate longish performance histories tends to strenghten subscriber resolve in holding and trading the system through any drawdowns, because they have a longish backtest history to analyze and gain confidence from

In the past 1-18 minute charts while profitable were nowhere close to the tick charts performance and much of the research took place on tick charts that yielded striking performance in comparison.   Thus ESThunder, ESLightning, CLFlow, CLFire, in fact all of them are on tick charts

Recently started exploring a larger range of minute charts, especially the higher time-frame, 29 minute and up and was a revelation with numerous profitable systems it became a matter of cherry picking the best with literally thousands of permutations and combinations of profitablity.

These are NOT brute forced hyper optimized curve fitted systems but are rather "naturally" profitable upon application to the chart.   Then it becomes a matter of finding the best profit/stop loss value combinations   Back testing in such a situation is as simple as extending the chart time-frame backwards by a few more years and seeing the results

Out of this process arrives astonishing CLFlame trades on the 123 minute oil as close to a linear hypothetical performance curve as one can imagine charted on all available significant oil volume past history   (Beyond 8 years is too thinly traded with many gaps in the chart)

  

Introducing CLFLOW

CLFLOW trades the oil CL market in a conservative fashion and is built on two chaos indicators filtering each other in the most extraordinarily natural way with no pre-determined artificial stop-loss/profit-targets.  All exits these are determined dynamically in real-time    The system needed no optimization whatsoever and is at completely "as is" natural settings and shows the characteristic chaos systems step ladder like horizontal and vertical movement performance curve   It is not a very active system with only a handful of trades per month with lower drawdowns potential

CLFLOW : Built from the Chaos Levels and Chaos Wave indicators- notice that it trades the Chaos Wave exit and entry, Chaos Wave often provides incrediblely early entries an emerging trend

  

CLFLOW: Hypothetical Performance curve like a step ladder or inverted zig-zag shapes is typical of chaos systems, in this case completely natural not optimized in any way it just falls out that way is remarkable

Big Picture: Unchanged

Chaos indicators are universal working on all types of chart time-frames and when applied to the SP EMINI ES Futures daily chart provides big-picture insights of how the market is shaping up for the next few months   There are several indicators on the chart below but 2 discussed in this post are going to tbe mid-point fulcrum and the chaos "four hounds" indicator

The ESLIGHTNING system relies on price cross-overs of the Chaos mid-point fulcrum indicator- shown mapped on the Daily chart here the Yellow line in the middle of the chart hanging at 1543.50    Since the current price is over 2100 there is a 500 point difference between the mid-fulcrum the current price.   However the two attract each other and do not long tolerate such great distances and in fact often prices crosses over or under the fulcrum- and therefore from here the price must move down to meet the fulcrum and the fulcrum must move up as well to meet price is the only way to resolve it  

So the mid-point fulcrum relative position to current price is suggesting a drop of price to say at least 1900 is lurking in the background like a Democales sword over any upside move is going to have to fight this intrinsic downward pressure going forward.

Turning to the Chaos four hounds indicator, the positions have not significantly changed since previous big picture ES Emini post  The key is the yellow hound crossing/nearing the purple and though the yellow line is shaping in that upward direction has not yet intersected the purple.

To sum up then be very careful of any Long positions; look for Short entries with targets around 100-200 PT profit target and 30-50 PT stop-loss but be patient for some downward shaping confirmation from the Chaos Hounds indicator   Really aggressive folks can buy some SPY 200 Strike June/July PUTS right here and now are so cheap and the potenial reward ratio is quite good