Sheriff’s Hilo
If you’d like to follow along with the e-book version of the blog, click on the play button in the audio player below (at the bottom of the page).
Continuing the Tradition
Last week we referenced an indicator’s name as something out of the old west. Continuing that line of fire (LOL), we’re going with an indicator whose name naturally follows suit. While it looks nothing like last week’s, it should prove to be an interesting one, especially since it’s very new to our trading world. Interested? Let’s go.
Fast on the Draw
Coincidently, when we were starting our indicator research for this week’s project, it was the first one we saw…which hardly ever happens. Usually, we spend a fair amount of time in the selection process before settling on one particular item of interest. Once we saw this, we agreed that we’d make short work of our search and stop there. Even we appreciate a break now and then.
We’re Still Asking
Don’t stop sending us your suggestions. We got a good one this week out of a few we received that will warrant a closer look. In fact, we may have already profiled a variation of it…but we’ll need to check to see. You do not need to include the indicator itself, but if you do, we appreciate the effort. Send those treasured crumbs to us at [email protected].
I Shot the Sheriff
Well, not really. But the deputy health may be in jeopardy. Any way, this week’s profiled indicator goes by the name Sheriff’s Hilo. It is a two lines cross chart overlay that uses colors to provide us with signals. There is an underlying intent to provide a trailing stop as well, but in this instance, we’ll ignore that feature as it doesn’t follow the NNFX protocol. We’ll address that later in the blog. What we did appreciate is its age, or lack thereof. We noticed that it was added to the MT4 population less than a month ago, in 2023.
Lets Math
Below, is the formula. It’s fairly straight forward for those who like to foray into the realm of manual calculations. We, on the other hand, prefer to let our micro processing friends do the heavy lifting.
SheriffHilo[i] = C[i] < SheriffHilo[i-1] ? Math.Min(HHV[i],
SheriffHilo[i-1]) : Math.Max(LLV[i], SheriffHilo[i-1]) ;
Vidrodrome
We’re currently in a different time zone than normal, so we’ll get a chance to record our data steam during a different session. We write the blogs before we record the video, so we’re always curious to see how they react real time, especially when it’s an indicator we haven’t used before. After the video ends, please be sure to continue reading to see how it did in our testing. Additionally, make sure you’re subscribed to the Stonehill Forex YouTube channel, so you don’t miss new material.
Bold and Beautiful
We left everything the same, except changed the colors to something a little more festive for easier viewing. Naturally, price has been left a clean snowy white as we just want you to focus on what’s important in the picture…sorry price, you take second string here.
You may have noticed that the red line seems to extend past the screen. The natural aspect ratio of the chart affects this phenomenon. But, MT4 (as most charts are able) permits you to “squish” or compress the screen to change the field of view. We did just that below to see what the whole signal looks like.
Remember we mentioned the bit about trailing stops? This is what we were referring to.
Now that we’ve addressed that, let’s move onto the settings.
Settings
There are just two settings which affect the calculation of the indicator, and we use both of them. The bottom two change the color of the lines (as do the settings in the “color” setting tab).
HHV: This is the High High Value used to calculate the long signal line. It has a range of 1-200 and the default settings sits right in the middle at 100.
LLV: This is the Low Low Value used to calculate the short signal line. It has a range of 1-200 and the default settings sits right in the middle at 100.
Advantages
* Very broad signals for long trend moves.
* Simple color based identification.
* Only two settings for quick(er) testing.
Pip On
While initially a little confusing, the blue line touching price fires off the short signal – which seems somewhat counterintuitive. Ultimately, price does reverse into profit, but in this instance, you would have not been in the trade long enough to realize any of that profit. That being the case, we’ll make a few changes to the settings to see if we can get a better example, other than what the default values present.
Better, no? Now we can see how the two signal lines work in concert with each other. One line touches price, indicting an opposite signal has been triggered.
How We Use It
Long signal: When the red signal line touches price, the blue line is created below price. Entry is on the open of the next period.
Short signal: When the blue signal line touches price, the red line is created above price. Entry is on the open of the next period
Test Firing
If you’re new to these studies, we recommend looking at some of the older blogs to understand how we conduct our testing.
The six pairs we recommend testing are…
EUR/USD
AUD/NZD
EUR/GBP
AUD/CAD
CHF/JPY
CAD/SGD
The markets we test our indicators are the:
EUR/USD (Euro/US Dollar)
BTC/USD (Bitcoin/US Dollar)
XAU/USD (Gold/US Dollar)
SPX500 (S&P500 Index)
Timeframes and Results
We’ll run the Sheriff’s Hilo indicator on the EUR/USD, BTC/USD, XAU/USD, and the SPX500 using the default and tweaked settings across the daily and 4-hour timeframes on the MT4 strategy tester.
We focus on three metrics;
Total trades
Win/Loss ratio
ROI (return on investment)
We Got This
Below are the results from our testing efforts.
Datum For Your Thoughts
The default settings for this indicator returned very interesting results. That’s where we start. Then we try tweaking the settings. Sometimes they’re spectacular, sometimes ordinary. The point is, we’re demonstrating that they can be better than other indicators. The results we post are not necessarily the best because that may not be helpful beyond the time this blog is broadcasted. Market change and you need to be flexible. Never stop the journey for better algorithms. Your bank account will (hopefully) be thankful for your efforts.
Money Management
Money management is based on the NNFX risk profile. That information can be learned in the Advanced Course.
Resources
We’ve made the Sheriff’s Hilo indicator available for download on our site from the indicator library. When you’re ready to get it, click HERE.
We’re Here For You
Sign up on our contacts page on the website for the latest digests. Subscribe to our YouTube channel and Facebook page. We also answer questions on Quora related to Forex. Visit Trustpilot to see what others are saying about us as well. Consider giving us a 5-star review if we’ve helped you. Your contribution helps others find us for a safe place to learn.
Our only goal is to make you a better trader.
BTW – Any information communicated by Stonehill Forex Limited is solely for educational purposes. The information contained within the courses and on the website neither constitutes investment advice nor a general recommendation on investments. It is not intended to be and should not be interpreted as investment advice or a general recommendation on investment. Any person who places trades, orders or makes other types of trades and investments etc. is responsible for their own investment decisions and does so at their own risk. It is recommended that any person taking investment decisions consults with an independent financial advisor. Stonehill Forex Limited training courses and blogs are for educational purposes only, not a financial advisory service, and does not give financial advice or make general recommendations on investment.