GKD-C Stochastic of RSX [Loxx]Giga Kaleidoscope GKD-C Stochastic of RSX is a Confirmation module included in Loxx's "Giga Kaleidoscope Modularized Trading System".
█ Giga Kaleidoscope Modularized Trading System
What is Loxx's "Giga Kaleidoscope Modularized Trading System"?
The Giga Kaleidoscope Modularized Trading System is a trading system built on the philosophy of the NNFX (No Nonsense Forex) algorithmic trading.
What is the NNFX algorithmic trading strategy?
The NNFX (No-Nonsense Forex) trading system is a comprehensive approach to Forex trading that is designed to simplify the process and remove the confusion and complexity that often surrounds trading. The system was developed by a Forex trader who goes by the pseudonym "VP" and has gained a significant following in the Forex community.
The NNFX trading system is based on a set of rules and guidelines that help traders make objective and informed decisions. These rules cover all aspects of trading, including market analysis, trade entry, stop loss placement, and trade management.
Here are the main components of the NNFX trading system:
1. Trading Philosophy: The NNFX trading system is based on the idea that successful trading requires a comprehensive understanding of the market, objective analysis, and strict risk management. The system aims to remove subjective elements from trading and focuses on objective rules and guidelines.
2. Technical Analysis: The NNFX trading system relies heavily on technical analysis and uses a range of indicators to identify high-probability trading opportunities. The system uses a combination of trend-following and mean-reverting strategies to identify trades.
3. Market Structure: The NNFX trading system emphasizes the importance of understanding the market structure, including price action, support and resistance levels, and market cycles. The system uses a range of tools to identify the market structure, including trend lines, channels, and moving averages.
4. Trade Entry: The NNFX trading system has strict rules for trade entry. The system uses a combination of technical indicators to identify high-probability trades, and traders must meet specific criteria to enter a trade.
5. Stop Loss Placement: The NNFX trading system places a significant emphasis on risk management and requires traders to place a stop loss order on every trade. The system uses a combination of technical analysis and market structure to determine the appropriate stop loss level.
6. Trade Management: The NNFX trading system has specific rules for managing open trades. The system aims to minimize risk and maximize profit by using a combination of trailing stops, take profit levels, and position sizing.
Overall, the NNFX trading system is designed to be a straightforward and easy-to-follow approach to Forex trading that can be applied by traders of all skill levels.
Core components of an NNFX algorithmic trading strategy
The NNFX algorithm is built on the principles of trend, momentum, and volatility. There are six core components in the NNFX trading algorithm:
1. Volatility - price volatility; e.g., Average True Range, True Range Double, Close-to-Close, etc.
2. Baseline - a moving average to identify price trend
3. Confirmation 1 - a technical indicator used to identify trends
4. Confirmation 2 - a technical indicator used to identify trends
5. Continuation - a technical indicator used to identify trends
6. Volatility/Volume - a technical indicator used to identify volatility/volume breakouts/breakdown
7. Exit - a technical indicator used to determine when a trend is exhausted
What is Volatility in the NNFX trading system?
In the NNFX (No Nonsense Forex) trading system, ATR (Average True Range) is typically used to measure the volatility of an asset. It is used as a part of the system to help determine the appropriate stop loss and take profit levels for a trade. ATR is calculated by taking the average of the true range values over a specified period.
True range is calculated as the maximum of the following values:
-Current high minus the current low
-Absolute value of the current high minus the previous close
-Absolute value of the current low minus the previous close
ATR is a dynamic indicator that changes with changes in volatility. As volatility increases, the value of ATR increases, and as volatility decreases, the value of ATR decreases. By using ATR in NNFX system, traders can adjust their stop loss and take profit levels according to the volatility of the asset being traded. This helps to ensure that the trade is given enough room to move, while also minimizing potential losses.
Other types of volatility include True Range Double (TRD), Close-to-Close, and Garman-Klass
What is a Baseline indicator?
The baseline is essentially a moving average, and is used to determine the overall direction of the market.
The baseline in the NNFX system is used to filter out trades that are not in line with the long-term trend of the market. The baseline is plotted on the chart along with other indicators, such as the Moving Average (MA), the Relative Strength Index (RSI), and the Average True Range (ATR).
Trades are only taken when the price is in the same direction as the baseline. For example, if the baseline is sloping upwards, only long trades are taken, and if the baseline is sloping downwards, only short trades are taken. This approach helps to ensure that trades are in line with the overall trend of the market, and reduces the risk of entering trades that are likely to fail.
By using a baseline in the NNFX system, traders can have a clear reference point for determining the overall trend of the market, and can make more informed trading decisions. The baseline helps to filter out noise and false signals, and ensures that trades are taken in the direction of the long-term trend.
What is a Confirmation indicator?
Confirmation indicators are technical indicators that are used to confirm the signals generated by primary indicators. Primary indicators are the core indicators used in the NNFX system, such as the Average True Range (ATR), the Moving Average (MA), and the Relative Strength Index (RSI).
The purpose of the confirmation indicators is to reduce false signals and improve the accuracy of the trading system. They are designed to confirm the signals generated by the primary indicators by providing additional information about the strength and direction of the trend.
Some examples of confirmation indicators that may be used in the NNFX system include the Bollinger Bands, the MACD (Moving Average Convergence Divergence), and the MACD Oscillator. These indicators can provide information about the volatility, momentum, and trend strength of the market, and can be used to confirm the signals generated by the primary indicators.
In the NNFX system, confirmation indicators are used in combination with primary indicators and other filters to create a trading system that is robust and reliable. By using multiple indicators to confirm trading signals, the system aims to reduce the risk of false signals and improve the overall profitability of the trades.
What is a Continuation indicator?
In the NNFX (No Nonsense Forex) trading system, a continuation indicator is a technical indicator that is used to confirm a current trend and predict that the trend is likely to continue in the same direction. A continuation indicator is typically used in conjunction with other indicators in the system, such as a baseline indicator, to provide a comprehensive trading strategy.
What is a Volatility/Volume indicator?
Volume indicators, such as the On Balance Volume (OBV), the Chaikin Money Flow (CMF), or the Volume Price Trend (VPT), are used to measure the amount of buying and selling activity in a market. They are based on the trading volume of the market, and can provide information about the strength of the trend. In the NNFX system, volume indicators are used to confirm trading signals generated by the Moving Average and the Relative Strength Index. Volatility indicators include Average Direction Index, Waddah Attar, and Volatility Ratio. In the NNFX trading system, volatility is a proxy for volume and vice versa.
By using volume indicators as confirmation tools, the NNFX trading system aims to reduce the risk of false signals and improve the overall profitability of trades. These indicators can provide additional information about the market that is not captured by the primary indicators, and can help traders to make more informed trading decisions. In addition, volume indicators can be used to identify potential changes in market trends and to confirm the strength of price movements.
What is an Exit indicator?
The exit indicator is used in conjunction with other indicators in the system, such as the Moving Average (MA), the Relative Strength Index (RSI), and the Average True Range (ATR), to provide a comprehensive trading strategy.
The exit indicator in the NNFX system can be any technical indicator that is deemed effective at identifying optimal exit points. Examples of exit indicators that are commonly used include the Parabolic SAR, the Average Directional Index (ADX), and the Chandelier Exit.
The purpose of the exit indicator is to identify when a trend is likely to reverse or when the market conditions have changed, signaling the need to exit a trade. By using an exit indicator, traders can manage their risk and prevent significant losses.
In the NNFX system, the exit indicator is used in conjunction with a stop loss and a take profit order to maximize profits and minimize losses. The stop loss order is used to limit the amount of loss that can be incurred if the trade goes against the trader, while the take profit order is used to lock in profits when the trade is moving in the trader's favor.
Overall, the use of an exit indicator in the NNFX trading system is an important component of a comprehensive trading strategy. It allows traders to manage their risk effectively and improve the profitability of their trades by exiting at the right time.
How does Loxx's GKD (Giga Kaleidoscope Modularized Trading System) implement the NNFX algorithm outlined above?
Loxx's GKD v1.0 system has five types of modules (indicators/strategies). These modules are:
1. GKD-BT - Backtesting module (Volatility, Number 1 in the NNFX algorithm)
2. GKD-B - Baseline module (Baseline and Volatility/Volume, Numbers 1 and 2 in the NNFX algorithm)
3. GKD-C - Confirmation 1/2 and Continuation module (Confirmation 1/2 and Continuation, Numbers 3, 4, and 5 in the NNFX algorithm)
4. GKD-V - Volatility/Volume module (Confirmation 1/2, Number 6 in the NNFX algorithm)
5. GKD-E - Exit module (Exit, Number 7 in the NNFX algorithm)
(additional module types will added in future releases)
Each module interacts with every module by passing data between modules. Data is passed between each module as described below:
GKD-B => GKD-V => GKD-C(1) => GKD-C(2) => GKD-C(Continuation) => GKD-E => GKD-BT
That is, the Baseline indicator passes its data to Volatility/Volume. The Volatility/Volume indicator passes its values to the Confirmation 1 indicator. The Confirmation 1 indicator passes its values to the Confirmation 2 indicator. The Confirmation 2 indicator passes its values to the Continuation indicator. The Continuation indicator passes its values to the Exit indicator, and finally, the Exit indicator passes its values to the Backtest strategy.
This chaining of indicators requires that each module conform to Loxx's GKD protocol, therefore allowing for the testing of every possible combination of technical indicators that make up the six components of the NNFX algorithm.
What does the application of the GKD trading system look like?
Example trading system:
Backtest: Strategy with 1-3 take profits, trailing stop loss, multiple types of PnL volatility, and 2 backtesting styles
Baseline: Hull Moving Average
Volatility/Volume: Hurst Exponent
Confirmation 1: Stochastic of RSX as shown on the chart above
Confirmation 2: Williams Percent Range
Continuation: Fisher Transform
Exit: Rex Oscillator
Each GKD indicator is denoted with a module identifier of either: GKD-BT, GKD-B, GKD-C, GKD-V, or GKD-E. This allows traders to understand to which module each indicator belongs and where each indicator fits into the GKD protocol chain.
Giga Kaleidoscope Modularized Trading System Signals (based on the NNFX algorithm)
Standard Entry
1. GKD-C Confirmation 1 Signal
2. GKD-B Baseline agrees
3. Price is within a range of 0.2x Volatility and 1.0x Volatility of the Goldie Locks Mean
4. GKD-C Confirmation 2 agrees
5. GKD-V Volatility/Volume agrees
Baseline Entry
1. GKD-B Baseline signal
2. GKD-C Confirmation 1 agrees
3. Price is within a range of 0.2x Volatility and 1.0x Volatility of the Goldie Locks Mean
4. GKD-C Confirmation 2 agrees
5. GKD-V Volatility/Volume agrees
6. GKD-C Confirmation 1 signal was less than 7 candles prior
Volatility/Volume Entry
1. GKD-V Volatility/Volume signal
2. GKD-C Confirmation 1 agrees
3. Price is within a range of 0.2x Volatility and 1.0x Volatility of the Goldie Locks Mean
4. GKD-C Confirmation 2 agrees
5. GKD-B Baseline agrees
6. GKD-C Confirmation 1 signal was less than 7 candles prior
Continuation Entry
1. Standard Entry, Baseline Entry, or Pullback; entry triggered previously
2. GKD-B Baseline hasn't crossed since entry signal trigger
3. GKD-C Confirmation Continuation Indicator signals
4. GKD-C Confirmation 1 agrees
5. GKD-B Baseline agrees
6. GKD-C Confirmation 2 agrees
1-Candle Rule Standard Entry
1. GKD-C Confirmation 1 signal
2. GKD-B Baseline agrees
3. Price is within a range of 0.2x Volatility and 1.0x Volatility of the Goldie Locks Mean
Next Candle:
1. Price retraced (Long: close < close or Short: close > close )
2. GKD-B Baseline agrees
3. GKD-C Confirmation 1 agrees
4. GKD-C Confirmation 2 agrees
5. GKD-V Volatility/Volume agrees
1-Candle Rule Baseline Entry
1. GKD-B Baseline signal
2. GKD-C Confirmation 1 agrees
3. Price is within a range of 0.2x Volatility and 1.0x Volatility of the Goldie Locks Mean
4. GKD-C Confirmation 1 signal was less than 7 candles prior
Next Candle:
1. Price retraced (Long: close < close or Short: close > close )
2. GKD-B Baseline agrees
3. GKD-C Confirmation 1 agrees
4. GKD-C Confirmation 2 agrees
5. GKD-V Volatility/Volume Agrees
1-Candle Rule Volatility/Volume Entry
1. GKD-V Volatility/Volume signal
2. GKD-C Confirmation 1 agrees
3. Price is within a range of 0.2x Volatility and 1.0x Volatility of the Goldie Locks Mean
4. GKD-C Confirmation 1 signal was less than 7 candles prior
Next Candle:
1. Price retraced (Long: close < close or Short: close > close)
2. GKD-B Volatility/Volume agrees
3. GKD-C Confirmation 1 agrees
4. GKD-C Confirmation 2 agrees
5. GKD-B Baseline agrees
PullBack Entry
1. GKD-B Baseline signal
2. GKD-C Confirmation 1 agrees
3. Price is beyond 1.0x Volatility of Baseline
Next Candle:
1. Price is within a range of 0.2x Volatility and 1.0x Volatility of the Goldie Locks Mean
2. GKD-C Confirmation 1 agrees
3. GKD-C Confirmation 2 agrees
4. GKD-V Volatility/Volume Agrees
]█ Setting up the GKD
The GKD system involves chaining indicators together. These are the steps to set this up.
Use a GKD-C indicator alone on a chart
1. Inside the GKD-C indicator, change the "Confirmation Type" setting to "Solo Confirmation Simple"
Use a GKD-V indicator alone on a chart
**nothing, it's already useable on the chart without any settings changes
Use a GKD-B indicator alone on a chart
**nothing, it's already useable on the chart without any settings changes
Baseline (Baseline, Backtest)
1. Import the GKD-B Baseline into the GKD-BT Backtest: "Input into Volatility/Volume or Backtest (Baseline testing)"
2. Inside the GKD-BT Backtest, change the setting "Backtest Special" to "Baseline"
Volatility/Volume (Volatility/Volume, Backte st)
1. Inside the GKD-V indicator, change the "Testing Type" setting to "Solo"
2. Inside the GKD-V indicator, change the "Signal Type" setting to "Crossing" (neither traditional nor both can be backtested)
3. Import the GKD-V indicator into the GKD-BT Backtest: "Input into C1 or Backtest"
4. Inside the GKD-BT Backtest, change the setting "Backtest Special" to "Volatility/Volume"
5. Inside the GKD-BT Backtest, a) change the setting "Backtest Type" to "Trading" if using a directional GKD-V indicator; or, b) change the setting "Backtest Type" to "Full" if using a directional or non-directional GKD-V indicator (non-directional GKD-V can only test Longs and Shorts separately)
6. If "Backtest Type" is set to "Full": Inside the GKD-BT Backtest, change the setting "Backtest Side" to "Long" or "Short
7. If "Backtest Type" is set to "Full": To allow the system to open multiple orders at one time so you test all Longs or Shorts, open the GKD-BT Backtest, click the tab "Properties" and then insert a value of something like 10 orders into the "Pyramiding" settings. This will allow 10 orders to be opened at one time which should be enough to catch all possible Longs or Shorts.
Solo Confirmation Simple (Confirmation, Backtest)
1. Inside the GKD-C indicator, change the "Confirmation Type" setting to "Solo Confirmation Simple"
1. Import the GKD-C indicator into the GKD-BT Backtest: "Input into Backtest"
2. Inside the GKD-BT Backtest, change the setting "Backtest Special" to "Solo Confirmation Simple"
Solo Confirmation Complex without Exits (Baseline, Volatility/Volume, Confirmation, Backtest)
1. Inside the GKD-V indicator, change the "Testing Type" setting to "Chained"
2. Import the GKD-B Baseline into the GKD-V indicator: "Input into Volatility/Volume or Backtest (Baseline testing)"
3. Inside the GKD-C indicator, change the "Confirmation Type" setting to "Solo Confirmation Complex"
4. Import the GKD-V indicator into the GKD-C indicator: "Input into C1 or Backtest"
5. Inside the GKD-BT Backtest, change the setting "Backtest Special" to "GKD Full wo/ Exits"
6. Import the GKD-C into the GKD-BT Backtest: "Input into Exit or Backtest"
Solo Confirmation Complex with Exits (Baseline, Volatility/Volume, Confirmation, Exit, Backtest)
1. Inside the GKD-V indicator, change the "Testing Type" setting to "Chained"
2. Import the GKD-B Baseline into the GKD-V indicator: "Input into Volatility/Volume or Backtest (Baseline testing)"
3. Inside the GKD-C indicator, change the "Confirmation Type" setting to "Solo Confirmation Complex"
4. Import the GKD-V indicator into the GKD-C indicator: "Input into C1 or Backtest"
5. Import the GKD-C indicator into the GKD-E indicator: "Input into Exit"
6. Inside the GKD-BT Backtest, change the setting "Backtest Special" to "GKD Full w/ Exits"
7. Import the GKD-E into the GKD-BT Backtest: "Input into Backtest"
Full GKD without Exits (Baseline, Volatility/Volume, Confirmation 1, Confirmation 2, Continuation, Backtest)
1. Inside the GKD-V indicator, change the "Testing Type" setting to "Chained"
2. Import the GKD-B Baseline into the GKD-V indicator: "Input into Volatility/Volume or Backtest (Baseline testing)"
3. Inside the GKD-C 1 indicator, change the "Confirmation Type" setting to "Confirmation 1"
4. Import the GKD-V indicator into the GKD-C 1 indicator: "Input into C1 or Backtest"
5. Inside the GKD-C 2 indicator, change the "Confirmation Type" setting to "Confirmation 2"
6. Import the GKD-C 1 indicator into the GKD-C 2 indicator: "Input into C2"
7. Inside the GKD-C Continuation indicator, change the "Confirmation Type" setting to "Continuation"
8. Inside the GKD-BT Backtest, change the setting "Backtest Special" to "GKD Full wo/ Exits"
9. Import the GKD-E into the GKD-BT Backtest: "Input into Exit or Backtest"
Full GKD with Exits (Baseline, Volatility/Volume, Confirmation 1, Confirmation 2, Continuation, Exit, Backtest)
1. Inside the GKD-V indicator, change the "Testing Type" setting to "Chained"
2. Import the GKD-B Baseline into the GKD-V indicator: "Input into Volatility/Volume or Backtest (Baseline testing)"
3. Inside the GKD-C 1 indicator, change the "Confirmation Type" setting to "Confirmation 1"
4. Import the GKD-V indicator into the GKD-C 1 indicator: "Input into C1 or Backtest"
5. Inside the GKD-C 2 indicator, change the "Confirmation Type" setting to "Confirmation 2"
6. Import the GKD-C 1 indicator into the GKD-C 2 indicator: "Input into C2"
7. Inside the GKD-C Continuation indicator, change the "Confirmation Type" setting to "Continuation"
8. Import the GKD-C Continuation indicator into the GKD-E indicator: "Input into Exit"
9. Inside the GKD-BT Backtest, change the setting "Backtest Special" to "GKD Full w/ Exits"
10. Import the GKD-E into the GKD-BT Backtest: "Input into Backtest"
Baseline + Volatility/Volume (Baseline, Volatility/Volume, Backtest)
1. Inside the GKD-V indicator, change the "Testing Type" setting to "Baseline + Volatility/Volume"
2. Inside the GKD-V indicator, make sure the "Signal Type" setting is set to "Traditional"
3. Import the GKD-B Baseline into the GKD-V indicator: "Input into Volatility/Volume or Backtest (Baseline testing)"
4. Inside the GKD-BT Backtest, change the setting "Backtest Special" to "Baseline + Volatility/Volume"
5. Import the GKD-V into the GKD-BT Backtest: "Input into C1 or Backtest"
6. Inside the GKD-BT Backtest, change the setting "Backtest Type" to "Full". For this backtest, you must test Longs and Shorts separately
7. To allow the system to open multiple orders at one time so you can test all Longs or Shorts, open the GKD-BT Backtest, click the tab "Properties" and then insert a value of something like 10 orders into the "Pyramiding" settings. This will allow 10 orders to be opened at one time which should be enough to catch all possible Longs or Shorts.
█ GKD-C Stochastic of RSX
What is the RSX?
The Jurik RSX is a technical indicator developed by Mark Jurik to measure the momentum and strength of price movements in financial markets, such as stocks, commodities, and currencies. It is an advanced version of the traditional Relative Strength Index (RSI), designed to offer smoother and less lagging signals compared to the standard RSI.
The main advantage of the Jurik RSX is that it provides more accurate and timely signals for traders and analysts, thanks to its improved calculation methods that reduce noise and lag in the indicator's output. This enables better decision-making when analyzing market trends and potential trading opportunities.
What is Stochastic RSI?
Stochastic RSI (StochRSI) is a technical analysis indicator that combines the concepts of the Stochastic Oscillator and the Relative Strength Index (RSI). It is used to identify potential overbought and oversold conditions in financial markets, as well as to generate buy and sell signals based on the momentum of price movements.
To understand Stochastic RSI, let's first define the two individual indicators it is based on:
Stochastic Oscillator: A momentum indicator that compares a particular closing price of a security to a range of its prices over a certain period. It is used to identify potential trend reversals and generate buy and sell signals.
Relative Strength Index (RSI): A momentum oscillator that measures the speed and change of price movements. It ranges between 0 and 100 and is used to identify overbought or oversold conditions in the market.
Now, let's dive into the Stochastic RSI:
The Stochastic RSI applies the Stochastic Oscillator formula to the RSI values, essentially creating an indicator of an indicator. It helps to identify when the RSI is in overbought or oversold territory with more sensitivity, providing more frequent signals than the standalone RSI.
The formula for StochRSI is as follows:
StochRSI = (RSI - Lowest Low RSI) / (Highest High RSI - Lowest Low RSI)
Where:
RSI is the current RSI value.
Lowest Low RSI is the lowest RSI value over a specified period (e.g., 14 days).
Highest High RSI is the highest RSI value over the same specified period.
StochRSI ranges from 0 to 1, but it is usually multiplied by 100 for easier interpretation, making the range 0 to 100. Like the RSI, values close to 0 indicate oversold conditions, while values close to 100 indicate overbought conditions. However, since the StochRSI is more sensitive, traders typically use 20 as the oversold threshold and 80 as the overbought threshold.
Traders use the StochRSI to generate buy and sell signals by looking for crossovers with a signal line (a moving average of the StochRSI), similar to the way the Stochastic Oscillator is used. When the StochRSI crosses above the signal line, it is considered a bullish signal, and when it crosses below the signal line, it is considered a bearish signal.
It is essential to use the Stochastic RSI in conjunction with other technical analysis tools and indicators, as well as to consider the overall market context, to improve the accuracy and reliability of trading signals.
What is the Stochastic of RSX?
Instead of using RSI for the Stochastic RSI calculation, this indicator uses RSX.
Requirements
Inputs
Confirmation 1: GKD-V Volatility / Volume indicator
Confirmation 2: GKD-C Confirmation indicator
Continuation: GKD-C Confirmation indicator
Solo Confirmation Simple: GKD-B Baseline
Solo Confirmation Complex: GKD-V Volatility / Volume indicator
Solo Confirmation Super Complex: GKD-V Volatility / Volume indicator
Stacked 1: None
Stacked 2+: GKD-C, GKD-V, or GKD-B Stacked 1
Outputs
Confirmation 1: GKD-C Confirmation 2 indicator
Confirmation 2: GKD-C Continuation indicator
Continuation: GKD-E Exit indicator
Solo Confirmation Simple: GKD-BT Backtest
Solo Confirmation Complex: GKD-BT Backtest or GKD-E Exit indicator
Solo Confirmation Super Complex: GKD-C Continuation indicator
Stacked 1: GKD-C, GKD-V, or GKD-B Stacked 2+
Stacked 2+: GKD-C, GKD-V, or GKD-B Stacked 2+ or GKD-BT Backtest
Additional features will be added in future releases.
