Some of my thoughts + Trading System - Page 12
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  1. #111
    elang's Avatar
    elang is offline Superior Master Contributor and Member
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    Quote Originally Posted by shandy View Post
    Hey Elang, just wanted to say thanks for what is probably the best thread on babypips - I posted this link in the online trading room I'm in and people were impressed!! Your system is a permanant fixture on my platform now and provides great confirmation to the another system I use as well as standing up on it's own. Your daily thoughts are invaluable - keep up the good work!!
    Good morning Shandy!

    Thank you for the kind words, they are much appreciated.

    Stick around i hope you will be able to learn more

    --------------------------------------------------------------
    Before i continue for those of you using my system. I have made a few updates to it, so if you use MetaTrader please feel free to download the attached .zip file.

    It is virus free and it contains 3 files:

    1. Lang.tpl (this is a template file)
    2. ZigZag.ex4 (put this in Experts/Indicators)
    3. ZigZag4 (put this in Experts/Indicators)

    What you will notice on the chart is:

    5 EMA - White
    10 EMA - Red

    25 EMA - Green
    50 EMA - Blue

    The 5 and 10 we use for the crossover.
    25 and 50 will indicate possible changes in the direction of the price and S and R zones.

    With the template loaded you should have the Zig Zag indicator on your chart.

    We will be trading only on H1 and H4 from now on, because as much as i love it i've decided that i earn money to live and not live to earn money.

    Hence i will be trading about an average of 10-15 trades per month, leaving me more time to do stuff

    Now my system pretty much remains the same as you will notice, but i've added a very interesting indicator that has been helping me out a lot recently - The ZigZag.

    Everyone knows what a zig zag is, it moves up then down and up then down again... what we want to do is..

    LONG - when the zig zag moves up and closes with a few candles, to solidify the rise

    SHORT - when the zig zag moves down with and closes with a few candles, to solidify the decline

    Meanwhile what you can do, is keep an eye on your RSI and your 5/10 crosses.

    I have been using RSI a lot in the past 7 months and i have understood that its not as simple of an indicator as it looks. With time you will realize too how powerfull RSI is in predicting price movement and hinting as to what is a major move and what is fluctuation of a major move... it's a wonderful indicator ... embrase it.

    GBP/USD

    Price action from the low of 9260 has taken us as far back up as 9661 (current)...we have broken through all major resistances and for now the horizon is clear with a head on collision imminent with 9750.

    As long as the price remains above 9531 our bias remains bullish.

    A break below 9531 will turn things consolidative first, which means we may enter a funky channel with hopes for a break out of it to resume the rally towards 9750 or it may break to the downside to decline to 9452, which needs to be broken for the bears to take power and attempt a retest of the lows respectfully 9315 > 9260

    A decisive break above 9750 will put us in the clear for 9850.

    For now on H4 i am holding my long position untill i see a bearish Zag with a few candles closed to confirm a turn around

    I will call the Bullish zigzag line breaks Zigs and the Bearish ones Zags.

    At the point we are at... a lot of people can get confused..

    A lot of traders know that if you sell when RSI is around 70 and Stochastics are in the overbought... that you would most likely profit hansomely... and even if you didn't look at the charts and just sold and bought on RSI on H4... you would make money...

    BUT what if... like on GBP/USD H4 right now.. RSI is over 70 and Stochastics is overbought... do you sell just because it is over 70 ?...

    You could... but what you should do to confirm a good exit point is logical R and S on the chart... it is obvious that untill at least 9750.. RSI will stay over 70 and so will stochastics.. and there is more of a chance that RSI and Stochastics will start declining at a logical R than at any other point...

    My point is... no matter what indicator you use... nothing can beat logical Ressitance and Support levels based on previous highs and lows of the market... These are the bigg mommas, these are where people sell, people buy... people place stop losses... If anything trend effective is going to happen its around these areas, so keep your heads up for them.

    I have also added a chart for you to see how the zig zag indicator can help you with entry points.

    The reason i have Entry and Exit Blue and Red circles overlapping each other is that you can short when you closed your long to get in on the reverse and vice versa.

    Regards,
    E. Lang
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  2. #112
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    Default ZigZag settings?

    Hi Elang:

    Great info. GPB/USD as been doing a fine job for me the over the last few trading days. I believe it'll at least hit or surpass the 1.9700+ mark as you suggested. I'm trying to set my chart up as you recommended. What are your setting for the ZigZag? My default is; Ext Depth = 12; Ext Deviation = 5; Ext Backstep = 3.

    Thanks in advance!

  3. #113
    elang's Avatar
    elang is offline Superior Master Contributor and Member
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    Quote Originally Posted by llh View Post
    Hi Elang:

    Great info. GPB/USD as been doing a fine job for me the over the last few trading days. I believe it'll at least hit or surpass the 1.9700+ mark as you suggested. I'm trying to set my chart up as you recommended. What are your setting for the ZigZag? My default is; Ext Depth = 12; Ext Deviation = 5; Ext Backstep = 3.

    Thanks in advance!
    Dear llh,

    The Zig-Zag settings are 1,1,10

    Currently on the H4 chart we can see a little Zag (Bearish) forming and i would like to take the opportunity to stress that you can become weary but not troubled.

    Untill a few candles close to solidify the Zag (Bearish) we will hold our position long.

    EMAs are still looking very fresh.

    RSI and Stochastics are in the overbought zones. I "think" ...

    /A\: they will hold there untill we test 9750

    OR

    /B\: they will take a breather now and correct slightly before running for 9750

    If RSI and Stochastics start coming down and we have at least 1 or 2 H4 candle closes on a Zag (Bearish) then we could consider terminating our longs as a correction may be starting.

    Either way i'm more biased towards an all out test of 9750 before any significant corrections take place from rise of 9315

    Regards,
    E. Lang

  4. #114
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    Default hi..just asking..

    hey guys...

    do u think cable will touch 2.0000 area ??

    many thks

  5. #115
    elang's Avatar
    elang is offline Superior Master Contributor and Member
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    If we break 750 then 850, it is the next logical target.

    We can only wait.

    Regards,
    E. Lang

  6. #116
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    Elang,

    For those of us that don't use MetaTrader, can you suggest how to simulate the zigzag indicator?

    Thanks

  7. #117
    elang's Avatar
    elang is offline Superior Master Contributor and Member
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    If it helps out in any way i've private messages you the script.

    Regards,
    E. Lang

  8. #118
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    Default Rsi

    Elang

    Our using Rsi 10 and Macd 10,26,9 for sittings with the zig zag.

    Thanks for all your great information.

  9. #119
    elang's Avatar
    elang is offline Superior Master Contributor and Member
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    ZAG (Short): 9641

    SL: 15 pips above last high: 9667+ 15 = 9682

    Exit: at next confirmed ZIg (Long)

    Closed: -25 (sniff)

    Regards,
    E. Lang
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    Last edited by elang; 01-16-2007 at 03:25 AM.

  10. #120
    elang's Avatar
    elang is offline Superior Master Contributor and Member
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    I did some studying and it seems the Zig Zag Indi. isn't as reliable for price predictions as i was hoping.

    I guess the results i had with it before were based merely on the fact that i was using my regular techniques aswell during decision making.

    Either way i don't want to be dissapointing so i've given you 3 goodies today to make up for my sillyness.

    1. GBP/USD Trade Report

    Daily Pivots: (S1) 1.9587; (P) 1.9627; (R1) 1.9685;
    Cable turned sideway after reaching 1.9667 but still, as long as cable stays above 1.9588 minor support, intraday bias remains on the upside and further rally is expected to follow towards 1.9750 resistance. Below 1.9588 will turn intraday outlook consolidative. But pullback should be contained above 1.9452 resistance turned support and bring rally resumption.

    In the bigger picture, break of 1.9564 cluster resistance (61.8% retracement of 1.9750 to 1.9261 at 1.9563) suggest correction from 1.9846 has completed after three waves down to 1.9261. Break of 1.9750 will encourage further rise towards 1.9846 high and then next upside target of 138.2% projection of 1.8090 to 1.9142 from 1.8517 at 1.9917.

    On the downside, it will take a break below 1.9452 support will argue that the whole rise from 1.9261 has completed but a break below 1.9315 is needed to confirm. Below 1.9315 support will bring a retest of 1.9261 low and then 1.9177 cluster support 50% retracement of 1.8517 to 1.9846 at 1.9182, 23.6% retracement of 1.7047 to 1.9846 at 1.9185). We'll still hold on to the preferred case that price actions from 1.9846 is merely correction to rise from 1.8834 only as long as 1.9177 remains intact. But sustained break of 1.9177 cluster support will turn medium term outlook neutral and argue that the whole rise from 1.7047 has possibly completed.


    2: Some Signals (Entry > SL > Target)

    eurusd buy 1.2948 1.2915 1.2998
    gbpusd buy 1.9663 1.9627 1.9710
    usdchf sell 1.2465 1.2505 1.2417
    usdjpy sell 120.32 120.65 119.80

    And

    3: A modified version of the Zig Zag indicator which automatically draws trend lines to give you the optimal breakout entry points for daily trading.

    Regardless of the fact that the Zig Zag isn't too good at predicting future price movements, i still accept it to be the best way to filter our price noise and provide the most accurate R and S levels, for those of you who don't have automated Pivot Points.

    Thats all for now.

    Regards,
    E. Lang
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    Last edited by elang; 01-16-2007 at 03:45 AM.

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