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Edit 06-18-2009:
Please note: this is a CORPSE THREAD and SHOULD be called ‘Awesome Oscillator - that’s NOT all!!!’.
Please DO read the ENTIRE thread before posting here.
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OK - well - while I’m in the mood for sharing - let me post my ‘magic bullet’.
Bill Williams’ Awesome Oscillator!!!
Take a look at the chart - Dow Jones Industrial Average - Daily.
Rules: go short the moment a red AO bar appears - stop and reverse the moment a green AO bar appears - simple as that!
Following the above you would have, for example, gone short on 20/07/2007 at 14077 and even if you closed out on Friday afternoon you would have closed out at 13317. That my friends is 760 PIPs in 4 days - at $1 per tick (or PIP). So let’s say you had 10 lots open which would cost $500 to open (margin) - you have now made $7600 AND you should still be in this trade.
Now - you should stay short as long as there are red AO bars appearing - and you should stay long as long as there are green bars appearing. I use Mr Williams’ Accelerator/Decelerator Oscillator (or AC) for exits. In other words - I enter depending on the color of the AO and exit when AC changes color BECAUSE AC detects a change in momentum (or what I call ‘traders interest’ in the market) which normally signifies a pending price reversal coming long before (or at least 2 bars before) AO changes color but this is just me. True - it ends up that I sometimes exit too early because AO stays red or green but AC changes and then changes again - but at least I very seldom get whipsaws nowadays.
Although the AO indicator actually forms part of Bill Williams’ Profitunity (Chaos) Trading System (which would of course be a new thread) - it can be used on its own - as Bill says in his book ‘Trading Chaos - Second Edition’ - and just using the AO he reckons should be worth at least seven figures to you in the next few years. I now agree with him!
Once again - same as my ‘Parabolic SAR - that’s all!!!’ thread:
Only Daily / Weekly / Monthly charts (that is if you want to make REAL money otherwise it does work on any timeframe although anything less than 30 minutes does tend to give you more small losses but overall the profit is still there just not as much. Also - on Daily’s and longer - you’re pretty mich immune to those ‘pesky’ news releases)
Patience
Don’t mess with the settings of the indicator
Trust the indicator
Don’t give up on the indicator after your first loss - stick with it
For added peace of mind you could ensure that you are trading in the same direction as one timeframe up but again - then you are not doind a stop and reverse action - and your trades will be fewer and far between.
Now I do know that, again, because of the volatility this past week that this is an exceptional case BUT having said that - take a look at the preceding couple of days - when there was not so much volatility - and you will see that you would STILL be in the pound (dollar) seats!!!
By the way you’ll notice that the chart also has Parabolic SAR on it - that was just to back up my previous thread. It is plain to see though - that AO gets you into the trade a lot earlier than Parabolic SAR and gets you out - or at least makes you stop and reverse - a lot earlier - more profit. Like I said - the only reason I don’t (can’t) use this on my ‘main’ forex account is because the broker does not have any of Bill Williams’ Indicators built in and I have not gotten around to putting them in myself (yet).
As for stop loss (that is if you are not going to monitor this every minute of every day) - put your stop loss at the high of the previous three to five bars (you could trail this as well if you wish).
Again - screw the ‘analysts’ on TV (I don’t mean literally - although Louisa Bojesn on CNBC comes to mind at this point - sorry - in bad taste I know) - have patience - don’t mess with the trades until they have run their course - and don’t trade on anything less than a Daily timeframe.
I know that all of these indicators get you into trades relatively late and probably get you out too late as well BUT they at least turn profits almost all of the time. I’ve past the stage of trying to squeeze every last PIP out of a movement - it’s cost me dearly. I just want to make the money now, pay my bills, and enjoy life again!
If you really want to see some money - have a look at Silver - using this same indicator - on the Daily’s - at $10 a tick (PIP)!!!
Regards,
Dale.