Some of my thoughts + Trading System

Good morning guys,

Hope you’re all doing well.

Yesterday i said this:

"We got through that R turned S 1.9578.
We may encoutner a little problem at 61.8%, but i doubt it will hold much water.

…it is smooth sailing from here down to our target LOW of 1.9433-ish.

…we are officially back in the consolidation range from price action High of 9846 started on 12.01.2006."

Right… Well it just so turned out that the little problem of 61.8% not only held water, but water purification plants worth of it.

The price bounced right of 61.8%, i was so certain it was going through that i underestimated 61.8%.

Our lesson learnt is, Never underestimate anything. As individual TAs we are too small to allow ourselves the luxury of saying “we are certain”.

Everything and anything can happen in the markets and as i said yesterday the best we can do as TAs is to:

  1. Analyze
  2. Summarize
  3. Determine Variations
  4. Execute the nearest logical possibility
  5. Set STOPS + Move Stops to your ENTRY as soon as you can.
  6. MONITOR the results of our execution and trace the course of probability untill we meet our target or establish that we were wrong.

Its that easy, you are either wrong or you are right.
When you’re wrong, you exit, you sit down, you go through an error optimization protocol and you wait for your next possible entry.

Note: Try to avoid reentering a trade when you were wrong.

Your TA and Period in Wait before executing the trade should remain as long as you can bare without missing the optimal entry point in order to provide a minimal stop value. With patient and maticulous analysis all you need is one trade per day to bag in enough pippos to kick ur feet up.

For the moment my GBP/USD Bias is a mixed and i feel we might try and go back up to test 9697 then 9748 and should God Almighty will it so eventually HIGH of 1.9846

On the other hand RSI on H4 is showing something i called a FLAT in one of my previous posts, which means the price might try and come back down, but Stochastics and MACD on H4 dont confirm it with their Bullish style.

H1 on the other hand shows signs of a possible test reattempt of 61.8 (9557-ish)

Based on these mixed factors at the moment we should be in Praying Ninja mode, waiting for an opportune moment.

Sit on your hands and wait for a while, the trade will develop soon, and we will be able to enter, SHORT OR LONG either way we will bag at least 50 pips today.

Regards,
E. Lang




Pippers and Pippets,

At ATTENTION! Bellies in, Chest out… Shooouullldeeerss BACK!

We are clearly breaking above the down trend line, even though we don’t have a correction and retrace to solidify the move yet, its Bullish, so our next targets are obvious.

R1: 9697

Then: 9748

Ah, just as i am writing this i notice the correction above the trend line is taking place now, it should wobble about over the trendline and bounce back up towards 9697 if this move is strong.

In any other case the price will get spat back down to test the bottom trend line support, sniff…
( THERE IS ALWAYS MORE THAN ONE SCENARIO !! )

I longed a little earlier today, so i am already in profit, dont forget to set your STOPS!

UPDATE: Bullish Scenario Confirmed : we have a clear break of the down trend line resistance.
Next tragets: 9697 > 9748 (12:00 GMT +2)


I hear ya buddy!!! :slight_smile:

PS: The EUR/CHF Short Scenario i metioned, seems to be devloping well a break of 6011 will trigger a good fall > this is a good short trade.
(SEE CHART)

Regards,
E. Lang


Please take a look at the chart attached, this is a classic theory which you should know.

Unfortunately it seems things arent going that way, thre was a massive struggle over the trendline and it seems the bears are more powerful thatn the bulls in this case.

Either way, take a look at the chart, this theory is applicable in both bearish and bullish trends.

Just take a look at all those dojis over the trend line, bulls taking over, then bears taking over then the price coming back to where it opened, its so chaotic, massive power struggle going on. It is best to avoid trading in such conditions unless you wanna loose all your money.

NOTE: All the BIG players with the big wallets know about this theory and they rely on it extremely often to pick out possible market reveersals, you can expect a serious move, should the reversal be confirmed with the factors detailed in the chart text.

Regards,
E. Lang


First, lemme tell ya, I love everything you write, and I think I will be using your system full time, it works perfectly for what I want to do. About that though, I do have a few questions…

  1. Preferable H1/H4 or D1? What does that mean and what is the preferable part. I am assuming that the H1/H4 are charts along with the D1? But please elaborate just in case. Second, Do you have a win loss percentage and also, what is a good drawdown number to use with your system? I have more questions but I think Ill let you answer these fisrt, if you wouldn’t mind that is?
    Thanks aaaaaaalot!!

Mac

Dear Mac,

Hello and Merry Christmas! :smiley:

[B]H1/H4 or D1?[/B] - I use 4 Hour (H4) and Daily (D1) charts to get a good birdseye scope of the market, to set main supports and to eye possible price targets for the day.

When im done with that i switch to H1 (1 Hour) and H4 Charts, to make an entry and get in on a trade at the right time.

[B]Do you have a win loss percentage and also, what is a good drawdown number to use with your system? - [/B]This is a very important trading. If your expense to income ratio is too even, you will loose your money.

You need to keep your expenses and income to at least 2:1, so that even if you loose one trade, on the next winning trade you will cover your loss + come out with profit.

Setting a resonable ratio there is one of the most important things you should consider about your account when trading.

A good drawdown with my system, would be 0% :), but unfortunately we’re not always that lucky.

Either way, its best to keep it to standards when it comes to this and use a 2% drawdown at a maximum.

If you trade very well you can afford to risk a little more on your trades with the perspective of a good return of course, but its better safe than sorry, if you’re just getting started out.

I don’t mind answering questions no.

As for everyone else who may have been following this thread, right now i have the biggest hangover ever recorded, so i will not be trading today, hopefully i’ll be feeling better tomorrow.

I have to go take care of my self now, so i will be posting tomorrow hopefully.

I wish you all a happy new year!

Regards,
E. Lang

Hello Guys,

I feel much better now, so i thought i’d at least write a short analysis for the GBP/USD Pair.

The bounce of .9748 took us all all the way down to as low as .9514 on the 26th. after which it bounced back up to .9632 on the 27th.

If you note the chart attached you will see i’ve traced the price movements constriction with a decending channel, which seems to be tightening the further the price develops.

All of this price action is consolidation from the rally started at .8835 on the 17.11.2006, which was halted at .9846 (Bullish Rally: Start: .8835 / End: .9846)

The swing lows and highs of this sideways movement are, LOW: .9433 / HIGH: .9748

It is important to take a birdseye view of things so you know where you are and what is going on.

Even if you trade on the small time frames i recommend keeping a “trade out of the box” trading attitude and know whats going on around you.

H4 BIAS:

Price: It just bounced of the decending trend line resistance

RSI: Hovering just over 50

Stochastics: Bullish

MACD: Bullish

OVERALL SENTIMENT: Bullish

H1 BIAS:

RSI: Bounced of 70, bounced of 50, heading for 70 again. (Lame attempts at tryinng to make bullish runs which in end will just solidify the probability of a top at .9633, which will in turn fuel a drop to .9513) - I am sort of bearish on this one, and i think RSI will pop back below 50 today.

Stochastics: Bearish

MACD: Bearish

OVERALL SENTIMENT: Bearish

COUPLED BIAS:

Boy this is a tough one.
We’re pretty much seing the same thing we had last week, very mixed signals on both main charts.

All we can do i guess is go into Pipjitsu praying mode and wait for an “opportune moment”.

On the downside: A break below .9570 may take things down to .9513.
On the updside: A break above .9533 may move things to .9683 > .9697 > .9748

I am extremely influenced by the fact that RSI has bounced of 30 on H4!

Langs Cross:

H1 is showing a nice EMA spread with the White 5 EMA leading on top signifying a healthy up-move.

H4 just got out of a spread and normaly we would expect an EMA bunch to follow but considering that we are around significant R levels i feel an eventual break of them may lead to volatility that will have the White EMA shoot right through the rest and surface above the remainders (10,20,50,100,200 < in that order for a bullish move)

Either way, 5 EMA has crossed the 10 on H4, so you should have closed the short position you may have entered at .9630 / .9640 (5/10 Cross) if you used my system for a 40-50 pip profit or +76 like me if you’ve learn to optimize your exits.

Thats all i can see for now.

Regards,
E. Lang


Hey guys,

From what we can see here, the price ran back to the highs and tried to break .9633, but with no luck. I assumed that was gonna happen as i mentioned before:

“Lame attempts at tryinng to make bullish runs which in end will just solidify the probability of a top at .9633, which will in turn fuel a drop to .9513) - I am sort of bearish on this one, and i think RSI will pop back below 50 today.”

The price bounced of 9633 which means we now have a double top there; a very significant price reversal pattern.

So, we’ve got the decending trend line resistance, RSI tested 70 twice and failed (H1) and double top and .9633 R.

I have this “3 to go” rule.
At least 3 factors are required to confirm a hypothesis.

Anyway thats pretty much it, right now all we can do is just sit and wait. You may be short already, but if your crossing with Lang you will be waiting for RSI to dip below 50 and for a good 5/10 cross, either way, you will bag at least 50 pips today - so that should keep you happy and all it takes is a little patience.

NOTE: Never marry your trade or your hypothesis. Notice how even when im sure about something, i still draw more than 1 Scenario - you don’t wanna be surprized, so be prepared. You need to remain cold blooded, the best way to achieve that is to have entry and exit protocols.

PS: If you are a more aggressive trader you may try entring the 5/10 short on the M30 or M15 chart, be warned however!

Regards,
E. Lang


Elang,

When all indicators indicates an “all system go” on the current bar, do you wait for a close (confirmation) of the current bar before making an entry?

Hey Ram,

I’ve only recently a few times implemented the “Wait for the candle to close” before entering rule, i personally don’t see much of a difference when i apply it in my trades.

The only time i wait for a particular candle close is if i am waiting for a candlestick pattern to form. Normaly once a pattern is confirmed i will wait for the candle after the pattern to close so it can confirm or solidify the pattern.

Thats pretty much it. I do assume however that it would be considered a play safe technique, i recommend it.

Another instance where i wait for the candle to close is, if the price is around a significant R or S level, i wait for the price to close above or below the level depending on whether the play is bullish or bearish, and then i act. It is a very reliable signal that shows you what the mass sentiment is.

Sometimes you will see a price break an R level for example and shoot out 40 pips above it, only for the candle to come back and close 1 pip below the same R level, it just goes to show the mass is rejecting intentions for an opposing move.

Thats the way i think of it anyway.

Regards,
Effiong Lang (Effi)

Hey Guys,

I need to leave the office real quick, so i wount be able to post a final update for today.

Just wait for a good 5/10 Cross on M30/H1 to open up and hold the position till you get a reverse 5/10 cross or you determine through other methods that you need to close your position.

Thats all.

I will update tomorrow on how this worked out.

Regards,
E. Lang

Long:
Stochastic must NOT be over 80 (Overbought Level) and MUST be HEADING UP.

Short:
Stochastic must NOT be less than 20 (Oversold Level) and must be HEADING DOWN.

Any other stoc behavior other than these which will help us regarding stoc analysis on this system?

hello elang

first many thanks for your great work on this thread , i have read all your comments ,now i think its time to send a lot of suggestions to your system, look at my screenshoot.... you can see the trend-channel ...its a indicator for MT4 named SHI-channel it`s very helpfully
second …you can see RSI (blue= RSI 5 , yellow=RSI 10) …i have only attached both to see the difference of it … i think the RSI 5 did quicker go conformable with the rest of indicators …what do you say about?

question:
have you advised to automat your system with MT4?

sorry for my bad english …

thanks for all your work and suggestions , i hope we can read you longer here

regards

guenther

Dear Guenther,

Thank you very much for your contribution.

I have seen the difference with a lower RSI. It is a little more aggressive, although a trader that felt more comfortable with that could easily implement and still get similar results.

That is good observation.

I did think about automating the system but i dont know how to script in MQL, so it is just an idea for now.

I did not understand what you were trying to accent with the SHI-channel ?

Thank you!

E. Lang

Elang,
In a good trend the stocs can be in the OS or OB zone. Do you just stay away and set on the sideline until the stoc broke away from these zones?

Right on Ram!

When they are in OS or OB i just cruise it and make sure the EMA Spread looks healthy, with no particular bunching.

In some cases if you are a more aggressive trader or you missed the entry, you can enter in the OB or OS zone but its good to make sure before you do so, that you have a good EMA Spread visible + RSIs’ condition and of course logical R and S on the chart.

But yeah, you got it!

Regards,
Effiong Lang

Elang

Do you set your EMA on the open, close, weighted or doesn’t it matter.
Thank you for sharing your system and knowledge it is very helpful.

Paul

Hi Elang:

You are an intelligent person! What is your educational background? I’d swear you were in your 40’s or more by the wisdom you’ve transfered from your brain to the keyboard. Very impressive, and you’ve mastered the English language as well.

pwegner, I believe all EMAs are applied to price close. Anyways, that how I have set mine.

Question:
After EMA5 & EMA10 crosses and RSI crosses 50, what do you guys see as spread or distance between the 2 EMAs when you make your grand entry? 2-3 pips?? I usually want to wait for visible gapping.

Thanks Ramrocket that is where I have them set but was wondering what others were doing. I have not use this system long enough to comment on the entry point.