XTL Breakout Trades - Strategy Change?

[JackR]

I went through the 10 minute "XTL Breakout Trades with Advanced GET" on-line video lesson available in the Advanced GET Product Training portion of the web site and found that it is in conflict with the information contained in "Overview of XTL.pdf"(7/11/2003)file available in the File Sharing portion of the site.

Specifically -

The video lesson, is very clear in stating that for breakout trades all price bars must remain the same color as the breakout bar (red or blue) until the trade is initiated. No black bars are allowed. If a black bar occurs a new breakout signal (and appropriate buy/sell level and protective stop) must be established.

The pdf file, in the "How to use XTL" section, states "Buy (go long) when the market penetrates the BUY LEVEL provided the following holds true: a) XTL does not detect and display a bar with the opposite Trend color.....Neutral (Black) bars are okay and does not alter the strategy)....

So my question - Has Tom done further work on the practical aspects of his XTL study and revised the suggested approach? If so, I'd suggest revising the written material.

I'm a recent purchaser of Advanced GET EOD and have been overwhelmed by the material available. However, I plan to re-review the video tapes for XTL info this weekend and see what they say. However, if there has been a change I'd appreciate that info so that I can review the tapes with that in mind.

[MR]

Two ways of this XTL interpretation... the XTL Web-Ex presentation is directed primarily at beginning users unfamiliar with the XTL and it is really only a brief overview of the XTL. My XTL PDF file is directed primarily to more sophisticated, existing AGET feature users who have been looking for ways to enhance their use of AGET tools and studies.

You are not the first to ask this question. I apologize for the confusion. Below is a little summary answer...

If you want to be an absolute adherer to the rule, you allow no change to a black bar. When you are new to this tool you need to adhere more closely to the rules to reduce risks.

However, once you have the experience and confidence from using the XTL successfully, my experience still tells me you can allow for a deviation in the rule to allow for one to three bars of black bar change-- if the range is contained to the previous pattern-- and still have a valid XTL and/or Type 1 or 2 setting up. I have seen it happen many, many, many times.

Whether or not you are willing to deviate from this rule is also a function of ones risk/reward personality profile, and how much you may want to find reasons to enter a trade setup.

There are different ways to enter an XTL signal. One way is applying the 1.5 to -.5 calculation to the first blue or red breakout bar. They show this technique a lot in the AGET seminar video tapes.

If you are a beginner-- to be safe-- adhere to the absolute rule until you are more familiar with the Advanced GET methodologies, Type 1 and 2 setups. The more familiar you become, the more you will become willing to allow for some deviations in the rules, particularly when you are identifying a very solid Type 1 or 2 setup and the XTL is the one last confirmation you are seeking.

Not sure if this helps, but attached is a quick look update of the Nikkei with XTL comments added. It isn't the best XTL example, but I wanted to combine work this morning to see if it can illustrate visually a little more on this subject.

I will be working more on the XTL subject in the coming weeks to help better illuminate ways we can use this fantastic AGET feature. -marc

[MR]

Here is a sample XTL chart to illustrate a little...

[MR]

sample XTL #2....

[MR]

sample XTL # 3 ...

[MR]

Just a quick XTL from another thread idea.....

[epiphany]

I know this is redundant but intended with no less sincerity...Thanks Marc. Jack, I initially had the same observation regarding the different illustrated proposals for using XTL found online and in print but came to this conclusion that works well for me...use both.

I use the Fib retracement rule for pullback continuation type set ups and 1.5/-.5 rule for break out set ups.

Let's say I missed the original break out for one reason or another (getting coffee, kicking the dog, reviewing other trades or the occasional indecision)... no problem, If my trend bars remain the same and I get the fib retracement of .38 (give or take) I use a RTC entry with stops and money management based of a previous fractal (pivot) or the low of the retracement (depends, if I feel I am catching a W3 I like to use a fractal because if I'm wrong there will be other chances and this limits my loss vs. a missed type 1 or 2 trade in which event I apply those rules for stops).

On the other hand if I see a new color bar following the neutral black bar (white in my case because my back ground is black) I then take a bigger picture look as above (where am I in a wave count) and apply the 1.5/-.5 rule. The exception here may be if the break out bar itself is dramatic (big price move) I may use a break of the high or low for entry and stops (happens on the NQ sometimes where a 15M bar can have a range of +10 handles).


I than manage both trades with the 1-2-3 money management technique disucssed on a previous XTL disucussion, I vary it a little but the overview is like this . . .

Here is a management technique that allows you to go risk free once a 1 to 1 in Reward /Risk is reached:

1. Determine your Stop. The previous pivot low was used in this case. The difference between your entry and stop is the Risk. I bought 5 at 1016.75. My stop was at 1015.75. My Risk is 1.00.

2. Using the Fibonacci Extension Tool, first click on the Stop, then on the entry, stretch the lines to the right, and set the final click again at the entry price.

3. Click your right mouse button on one of the Fib. lines and edit the lines to show 1.0, 2.0, and 3.0. These levels now represent Reward levels in respect to the risk.

4. Take some contracts off at 1 to 1 and adjust the stop on the remainder to the entry price or to half of risk. I sold 3 at 1017.75, which is where my 1 to 1 was. I adjusted my stop on the remaining 2 to 1016.75. If you were to go half of risk, the stop would be placed at 1016.25. In either case, I am now "risk free" in this trade! This means, I do not worry about anything. I am stress free.

5. We now move to the next step: I took 1 contract off a 2 to 1 which was at a price of 1018.75. I canceled/confirmed my stop for 2 at 1016.75 and placed a stop on the remaining contract again at 1016.75.

6. When I reached 3 to 1 at 1019.75, I closed out the final contract and canceled/confirmed my stop.

7. That's it! Let's do the math here: $400 profit versus initial risk of $250, which is 1.6 to 1 in reward/risk. We can be profitable with 50% winners.

[MR]

Epiphany, thanks for sharing below... I was impressed to see it here. Wish more people would write like you did... this is very helpful information to read for us all!
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Forgive me for doing this kind of quick... but want to sneak in a little XTL tip or idea that comes to mind.

Here is London Weekly Nickel chart. If you don't trade the market, ignore the name, just look at the data bar pattern. Each stock, commodity or index has unique qualities to it. When you look at the XTL tool in action, review how it has worked in the past, then compare your expectations based on past behavior to the future ideas.

This Nickel market has nice XTL trades if you just add a couple tools to enhance your triggers and trailing stop management.

This would be an example of a market/time frame where I might be willing to bend the XTL traditional trade triggers and use a little more of my own interpretation of triggers because it seems to conform well to reasonable risk/reward considerations as well. Wish I could explain this better, but my English is a little poor right now as I grow tired and need to get some sleep. -marc

[MR]

nickel XTL example follow-up

Following up on the previous XTL Nickel chart post.