Expanding The Daisy Chain

Trading Systems Free Forex Trading Systems
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Hi folks , I wanted to propose an idea . I present this to the people who have actually traded the Daisy Chain system and have an understanding of its basic premise.

So from what I have observed Skalpist has been banned from the forum. Reasons might abound but what I want to propose is that we expand a bit on the idea of trading a basket which generally moves in the same direction.

I don’t want to bash Skalpist , but there have been quite a few nuances in his overall presentation which makes me consider he is not as experienced as he makes out to be. In fact his free live session reminds of a sales seminar type deal … enough about that.

What I do think is that his Daisy Chain concept is quite powerful, I have included it in my toolkit and there are quite a few times I see i nice setup and choose to go with it. I have however , tweaked it a bit to fit my personality as I have never been one to follow to much. What I mean is , I like to take a concept and work through it and make it my own. I have no affiliation with him and would rather this thread focus on expanding his concept as opposed to talking about him.

Expand how ? Well for one , he completely fails to mention or chooses ignore Support and Resistence. Granted when a trend is moving strongly, it usually blows through S&R like its nothing. But there are many times when it comes into play even if for a few bars. What this would do is help us avoid a bad trade and give us perspective.

Also , do any of you traders who actually use this idea rather use the 5min chart to pinpoint an entry? There have quite a few times where I was able to gauge a safer entry on 5m. This is open for discussion.

Another idea is when a trend has exhausted itself and is "clearly"ish showing a reversal . Why not trade counter the trend ? There are obvious dangers to this , but to an astute trader , this presents opportunity. Being that the original system calls for about 30 pips profit per each of the 5 pairs, countertrend moves can be good for this amount and at times they even extend a bit further before continuing its original direction. Why not ? Pros and cons ? lets talk about it

There is more we can elaborate on and I may choose to fantasize, I would love for this thread to take on a sort of vibe as the Alternative Technical Templates threads… wishful thinking but that is a worthy goal. If this idea exhaust itselfs or if the forum chooses to bin this thread , so be it … I will keep trading it as I see fit.

I don’t use the scripts that came with the system, have NO INTEREST in an EA and would rather not go into lengthy discussions about indicators and such…

Basically ,Identify the general trend among the five pairs (EU, GU, AU, EY,GY )
and enter at a safe point during a retrace and ride it out. I posted a chart on the original thread which was completely ignored. On this thread it would be cool if we posted charts , discuss setups , successes and failures and those lovely bits of insight which come with working through a system.

If this thread idea sucks or the MODS prefer we don’t tread this water on the forum, just say the word and I’ll go on about my evolution on this system on my own. No worries, but I do suspect more than one of you were frustrated overall with the original thread but saw the potential of this system.

So hopefully no one will mind ( Danny included ) that this thread becomes.
:smiley:

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Hi Semaji,

I’m glad you re-opened the daisychain or basket style trading…I don’t believe the mods have anything against this method vs any other…it was just some of the players on the other thread weren’t playing nice together anymore over suspected ulterior motives…(same as the Never Lose Again thread which is still going strong)…lol.

Anyways, that thread did strike a chord with me…a good one…lol. Yes I believe you’re right about the lack of, or at a least lack of mention of, support or resistance areas in relation to opening all those trades. I found a website just lately that stated…

"[I][B] It’s clear that entry techniques alone can be pretty useless, but when combined with a well-chosen [U]‘area to trade’[/U], it seemed to blend and form a synergy.

When traders take entry techniques and just apply them whenever they appear… an example of using moving average crossovers… regardless of any context (support & resistance), sure, they may catch a few nice long trends doing that, but the rest of the time they’ll likely get chopped to whipsaw pieces and give back more than they’d ever make with the few trends that they’d catch. This is the opposite side of the coin where you have an “area to trade” without an “entry technique”.[/B][/I]."

For me, my areas of support and resistance are fib patterns, and when the correlated pairs are all showing a similar fib line support or resistance pattern, I open positions on all of them.

I do find the buy_all, sell_all, and close_all scripts really handy for executing the orders cause by the time I get to the 5th and 6th pair, I’ve lost a few pips timewise that using those scripts would have gotten…but that’s my preference.

Carry on…:slight_smile:

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What is the daisy chain system?

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Hi marsalis,
From what I understand, the original system uses 1hr charts to establish the overall trend and the 1min chart for entry. what makes this system a little more unique is that it is a basket system - you enter 5 pairs at generally the same time. The basket pairs are - EU, GU, AU, EJ, and GJ because they are quite correlated, meaning they move roughly in the same up and down movements.

The setup - use heiken ashi candles on 1hr charts to identify the trend. Wait for three consecutive long/short candles across the at least 4 of the 5 pairs - once you get that - move to the 1min chart and wait for the leading pair (usually a JPY pair) to pull back to support/resistance and then enter in the direction of the trend.

Target is 150 pips in total over all pairs, not each pair.

There are some indicators, scripts, ea that were developed to go with it if one chooses to use them.

:slight_smile:

1 Like
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I’m glad a new thread is around to discuss this, I’ve had good success and I’ve done some personal changes to the system myself.

I have recently have started using the 5 minute chart instead of the 1 minute chart and I’m still seeing how things are going with it, so far I don’t have much to report with this but I’ll continue to follow up with it.

I do also take into account support and resistance when I’m trading this system. There have been a few times where some of the pairs have hung around resistance or support and decided against the trade which in the long term was a good move because the trend started shift.

Personally I’ve had a pretty great win ratio with this, like I posted in the other thread I’ve had 21 trades now and only 6 losses with at least half of those wins being around 200 pips won instead of the 150 goal.

I think it’s a valid system to have people to look at and do some demo trading, right now I’ve been demo trading 3 pairs that move together and trading those 3 pairs and looking for a smaller pip gains as well as different time periods.

As for the EA’s, I don’t use them and I don’t use the entry/exit scripts because I prefer to enter and exit manually.

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Thanks for the info Sweetpip!

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I second that:cool: I saw the original daisy chain thread right before it was discontinued. Seems that it was all the rave ATM. I’m glad someone shed some light the actual strategy.
One has to wonder why it wasn’t outlined like this in the previous thread :confused: (correct me if I’m wrong)
Kudos Sweetpip

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First I’d like to say thanks to semaji for starting a thread on this. I’m a newbie trader and by no means an expert but I really did like the Basic Daisy Chain strategy. I found it really easy to learn and for the last 2 or 3 weeks that I’ve been using it fairly profitable.

I hope this thread becomes as popular as the last for the system and not the battle ground it became.

Charlene :slight_smile:

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Are you doing a demo or live trading ?

Suggestion: can we (couple of interested traders) together do a demo on some related pairs ? We can take either what Danny uses (EURUSD,GBPUSD,EURJPY,GBPJPY,AUDUSD) or can pick only 2 or 3 instead of 5…

If multiple do a demo simultaneously, we can analyze the variations and can make the method more viable & profitable… Any thoughts ?

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I have been using the m15 chart and s+r for my entries and exits. I will wait for 3 of 5 to move over s+r to enter. I babysit every trade. I have a mental stop of -80 and an oh crap stop of -30 set on each pair. I will move the individual stops or close a trade on a single pair if its going hard and fast against me, if I am not close to my mental stop.

I will close all short of 150 pips profit if I see the move slowing or reversing back over s+r. With 5 pairs things can happen fast and I would rather close at a profit. The same goes if a trade is stalled out at a small loss. I would rather close all and wait for a better setup than stare at the screen for ever and watch my profits slowly disappear.

I use FXCM and I saved a Trade Station layout just for basket trading I can close all with 2 clicks and open all 5 pairs with 11 clicks(5 double clicks) so I don't feel I need the scripts. I have found looking at 5 pairs can give a good conformation of a move once you see which is acting as a leader and wait for the followers to follow.

I just reread what I wrote and I am guess I am leaning towards a scalping strategy using 5 pairs. I am currently demo trading this as I have had some big losers if I have to leave the computer. If I get to stay at the screen and watch the trade I do much better. Most of my profit is +70 to +120 my losers are usually less than -50. If you wait for the jpy pairs to move in your direction when you are negative you can cut your losses quite well.

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Ok, I see there is interest in keeping the idea alive … awsome . I was beginning to wonder if the thread would be binned.

Even though I started thread , it is not “MY THREAD” , know what I mean ?
This is a collective thread, Thanks to Sweetpip for posting the sytem details.
Your post count is exemplery ( is that even a word?)

So yeah , I see Reaper mentioned starting to use the 5min to seek entries. This is also something I have been doing as well. To be honest the 1min drives me insane and the way I see it, since we are going for the overall trend a few pips later entry isn’t so bad no? Shr1k has been using the 15min for entry along with S&R … That seems even safer although, doesn’t it take much longer to sort out an entry ? Hmmm , I’ll look into it over the next couple of days . I have been switching to the 15 at times but that’s just to get a broder view on the near term S&R.

Maybe some charts of the setups on these timeframes ? let’s see what you see :slight_smile:

I’ll post one up in a few minutes of the action as of now , we just had unemplyment numbers out and the moevment is on. Are any of you in trades now ? Why ? Why not ?

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Ok , so I’m throwing these up to get some juices flowing … Im fooling around with my charts trying out a few things and seeing where they lead.

Right now the baskets seems to be moving up , however the JPY’s are the ones leading the way… something that was never mentioned before ( dunno why ) is that when the Yens seem to be doing their own thing , many time the USD/JPY pair has a clue … for example the USD/JPY right now has been flying upwards like it wants to kiss that 96 level. GY and EY are followingyet we don’t see the same the same enthusiasm from GU and EU … Aussie , well that lovely pair has a mind of it’s own…but its also going up. Isn’t Aussie correalated the price of gold ? Maybe someone could clear that up.

So is the basket poised for a reversal soon ? From a quick glance it seems to be pausing and retracing a bit. I wonder what the next few hrs bring. Europe is closing soon .

Don’t be shy people , lets see some charts

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digging a bit deeper about this daisychain, it was supposedly stolen from a system that was called THV (google it), and somebody is charging $1k for it.:slight_smile:
THV is free with EA and indi for it.
GoodLuck

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Well if you got that info from forexfactory, from what I read, someone (probably Danny Wall…lol) is charging $1k for a “mentoring” program to trade it…not the system itself.

I also found a pdf on the THV system by Cobraforex which has a release date of yesterday? from whatever developed thru his posts on forexfactory. It’s seems different except for using Heiken Ashi candles, but doesn’t mention trading mutiple pairs. THV uses the 1M & 5M charts, looks at divergences, and has quite the array of indicators that we’re not using.

I don’t know, it looks quite different to me :confused:, but even Cobraforex admits he got his system ideas from someone else…lol

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I basket trade almost as a rule; in fact, it’s rare that I throw on a single pair when I enter the market from a flat position. My established approach is different than the “Daisy Chain”, though, and there are other baskets that are just as effective. If this is more about discussing basket-style trading (pairs, position sizing, money management, what signals entries/exits), I’d be glad to contribute, but don’t want to interject if it’s only about this specific strain of a general basket (correlative) methodology.

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That’s interesting to know that you basket trade. Do you open all your pairs at the same time or do wait for each pair to signal which may result in a space in time before they’re eventually all open?

For me it’s not so much about the entry signal of the original thread, just this style of trading in general, although I can’t say for the others.

Thanks :slight_smile:

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This a one of my charts the blue lines are short term s+r I just paint the lines wherever I see price bounce or stall repeatedly. I wait for 3 out of 5 to cross or make a clear bounce off a line and enter. This chart is a good example of when I will hold back and wait for a trade. I expect to repaint the lines on eur/usd at its new price level in a short time. Then I will wait for a trade to develop.

I have a hard time consistently making a 30 pip trade off the m1 alone. 30 pips is the goal for each pair that’s why I use the m15. I do look at the h1 for trend but h1 to m1 for entry is quite a leap in the way the charts look. If I zoom the m1 out far enough that it relates to the h1 in trend I should be looking at a longer time frame any way. I tried shorter term trades with smaller targets off the m1 but price didn’t correlate tight enough and it was unwieldy to execute with my software. I don’t have any hard data to share just my impressions of trading a basket, and as I said before I am demo with this right now. I will go live soon with small lot trades. I haven’t decided if I should use my mental stop or my hard(OH CRAP!) stop in my money management lot size risk calculation.
I don’t know if I can link to a image?

chart2.jpg700×421 46.8 KB

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How does this work? I’ve read about the method, but doesn’t anyone have a difficult time with this? I understand the intent is track and exploit a basket of pairs as direction and volatility align, but not all pairs are created equal as regards their range. Just as an example, a 14 period ATR on the 15M shows a current read on GBP/JPY at ~160 pips, and GBP/USD at ~10. That’s atypical (GBP/USD has been a dog), but it seems like one portion of the basket will be left behind somehow: if GBP/USD tags 30 pips, you’ve likely left something on the table with GBP/JPY; but if you wait for GBP/JPY to move 30 pips, GBP/USD’s target probably isn’t reached. How long will you stay in your trade to hit that goal? The same might be said of EUR/USD vis-a-vis EUR/JPY. And where’s AUD/JPY in all of this, in light of the inclusion of AUD/USD?

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The range varies but the direction does seam to line up. I haven’t really tested this but I think if you have a strategy that works with one of the pairs you could look at all 5 and wait for 3 or more of them to move into your strategy of choice and enter a basket trade with some confidence.
I am not implying a higher level of risk. I am implying a greater level of confidence in your trade. Look up triangle arbitrage and you will see that within the confines of a single brokers price feed the pairs have to correlate or the broker will lose we all know that would never happen.

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hi andrew! i’ve also been trading the system using atr. if say a couple of the pairs in the basket is ranging, i would use atr on m1. if all of them are trending, then i use atr on m5. what i do is get the total atr for all pairs and set my tp to half of that total atr.

another difference in the way i trade is i have different pairs in my basket. i have eur/usd, gbp/usd, aud/usd, usd/jpy and usd/cad. basically i’m just trading the usd strengths and weaknesses. if the usd is going strong, the 1st 3 pairs will go down and the last 2 pairs will go up. in this case, i would go short on the 1st 3 pairs and long on the last 2 pairs, at the same time.

recently, me and a few others have also started watching the yen pairs in a similar fashion. the eur/jpy, gbp/jpy, usd/jpy, aud/jpy, chf/jpy and cad/jpy moves in a very very similar pattern most of the time. the only problem is the huge spread on some of those pairs.

yantz