/ES Futures Trading Strategy on ThinkorSwim

[tomsk]

@BenTen I dug up some additional commentary from Mobius to help the thought process. The key to me is the .6 level where it's in compression mode, e.g. Squeeze, ECI, consolidation, etc. He says ...

FE is a gauge of both mean reverting and linearity. Descending readings indicate a trend is on. A reading below .3 indicates exhaustion in trend or near exhaustion. A reading above .6 indicates moving sideways with rapid reversion and energy building for a move again.

Above .6 - Think price compression or squeeze
Below .3 - Think running out of gas

 

[blakecmathis]

My whole setup revolves around FE < .4 and it's been working pretty well.

 

[blakecmathis]

Doing some backtesting with fibs. Didn't realize this until now but the support this morning @ 3125.75 was dead on at the golden fib level

 

[tomsk]

Doing some backtesting with fibs. Didn't realize this until now but the support this morning @ 3125.75 was dead on at the golden fib level

Good on you man, there's gotta be a method to the madness

 

[horserider]

Sorry my error. When I wrote it I clearly got it reversed for some reason. Glad ya'll set it right. Thanks

 

[diazlaz]

Haven't used FE for a while, the days of Doc at Theotrade, had an interest in the RSI LE, but now this conversation and thread is making me reconsider if I should experiment more with FE and give it another try again.

Is it possible to use close price as a input to FE or optimize it for detection of compression, expansion (trend/sideways)?

any one have any thoughts? also would be interesting to see how it behaves in real markets condition against a ECI as an example.

I'm always looking for was to detect choppy / sideways price action/compression any other suggestions are welcome.

 

[mik707]

Chop update

@blakecmathis can you share this setup?

 

[Talochka]

Haven't used FE for a while, the days of Doc at Theotrade, had an interest in the RSI LE, but now this conversation and thread is making me reconsider if I should experiment more with FE and give it another try again.

Is it possible to use close price as a input to FE or optimize it for detection of compression, expansion (trend/sideways)?

any one have any thoughts? also would be interesting to see how it behaves in real markets condition against a ECI as an example.

I'm always looking for was to detect choppy / sideways price action/compression any other suggestions are welcome.

"against a ECI" what is ECI?

 

[tomsk]

@diazlaz To get a real appreciation of fractal energy, let's start with the very first code definition that Mobius published when he started this whole thread in the lounge way back in 2016. See additional commentary below

# Fractal Linear Energy
# Mobius
# May 2016

input length = 13;

declare lower;
plot FE = Log(Sum(Max(high, close[1]) - Min(low, close[1]), length) /
           (Highest(high, length) - Lowest(low, length))) /
            Log(length);
FE.AssignNormGradientColor(length, color.green, color.red);
plot random = if isNaN(close) then double.nan else .618;
random.SetDefaultColor(Color.Gray);
plot linear = if isNaN(close) then double.nan else .382;
linear.SetDefaultColor(Color.Gray);
plot mean = if isNaN(close) then double.nan else .5;
mean.SetDefaultColor(Color.White);
# End Code

I had been following the entire discussion from the time Mobius first presented the idea in the lounge. Here is a summary of the points I got out of that entire discussion.

FLE isn't an indicator on the usual way we think on that it does not have buy/sell signals. Instead it's a way of determining if price is trending or random. If you want something that measures strength of trend, use something like ADX. In simplest terms, FLE does NOT indicate overbought or oversold but whether price is linear or non-linear.

The closer to 1 the more non-linear (compressed or random) price is and the closer to 0 the more linear (trending) price is. If the FE is at extremes, it is leading you to a conclusion that something is about to change. If the FE is below .382, price has gone parabolic suggesting price cannot be maintained. But you may not want to sell because it may still go further in it's trend and it may not change direction right away. It's telling you though that it's not going to stay trending at the current rate of speed. If it's over .618 it telling you price is compressing and going sideways rebuilding energy getting ready for another run one way or the other.

That to me is the real value of FLE, or FE.

 

[tomsk]

"against a ECI" what is ECI?

Expansion Contraction Indicator. You can read about it at the following thread

https://usethinkscript.com/threads/eci-gaussian-indicator-for-thinkorswim.1160/

 

[blakecmathis]

@mik707 https://tos.mx/WgExA2B

 

[mik707]

@mik707 https://tos.mx/WgExA2B

@blakecmathis big Thanks!

 

[LouChez]

Paper account and still testing but liking the results. Was looking for a short since we were near the overnight high and yesterday high. FE showing exhaustion and WaveTrend gave the signal. Got short and closed around VWAP.

Anyone else take this trade? What were you exits and how did you determine?

 

[blakecmathis]

Was waiting for confirmation from 2000t for that play. Especially after the tri breakout. Was looking for a pb to 3141.75 so I didn't get filled @ 3141.50

 

[blakecmathis]

Two days in a row support @ golden fib

 

[Zulu_Trader]

Once again ... positive trade and my early exit helped me to avoid a false buy signal.

 

[blakecmathis]

The calm before the storm

 

[skynetgen]

Two days in a row support @ golden fib

What is the fib study you using?

 

[blakecmathis]

@skynetgen https://usethinkscript.com/threads/...indicator-for-thinkorswim.14/page-2#post-9719

 

[Zulu_Trader]

The calm before the storm

I'm right with you bro. Again, newbie question, but is this not a bullish pattern? So, you'll wait for the pattern to conclude to take a position, or are you already in at the bottom of the formation?