Hi !
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I like the way that the indicator shows the trend for 4 timeframes all one one chart. However you haven't said much about the rules for when to take profit. In my following discussion, I'll use the strategy of working from the 1hr chart (but the ideas I am putting forward also seem to apply to trading off the 4hr chart):
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Taking profit can be a percent of ATR, while you open your position as 3/4/5 parts and close one by one to lock in profit. This decreases profit but ensures you lock in profit.
So I suggest that you add ATR. and I am preparing a long article regarding take profit levels with this method.
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On first glance, it would appear that the opening price (described by you as the close of the first candle when all 4 timeframes have matching trends) misses out on some of the move. Then if we simply close when the 1hr trend ceases to match up to the other timeframe's trends, we also close after much retracing has taken place.
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Please look at the following eurchf chart, yes a patient trader will wait until the first candle changing colors to match the other trends will miss some of the move. But he will still look in potentially a lot of pips (as the trade is considered more than short-term move, and not suitable for intra-day actions)
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Does this mean that the net gain can often be small and certainly not as impressive as the Heiken Ashi makes it look.
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I've tested this a lot, and so far I am impressed with the net gain. Because I feel good riding on the bigger trend D1/W1/Mn1. and even If I made a mistake, I could correct it. I will try to post as many examples as I could.. the net gain will vary, it can be small, and sometimes it can be huge, even times it can be fake at all. But the point is; proper money management, position management, and right stops/exits.
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Then considering the effect of any fake entry signals, such as a brief trade that lasts only for 2 candles or so before the 1hr trend quickly goes against us. If we exit as soon as the 1hr goes against us, we find that the pip deficits created by the entry and late exit candles can equate to a substantial loss, perhaps as big as the actual gains tha twe would make over some of the long running winning trades.
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I am still thinking whether 1hr is useful at all, so I need your support to decide this. I am still doing testing to see how 1HR affects the trend. Remember, 1hr represents intraday action way more and is too choppy. This explains you can enter on 4H and quickly H1 turns red. You exit! then it goes your way again in acceptance with bigger trend.
For now, avoid 1HR. and only use H4, D1,W1, Mn1, with stops.
The net gain in long run should be a lot larger, because you will be able to catch couple of 500-1000 pip moves in bigger trends. So for now, I advice that you just ignore any signal below 4HR as It's not a real trend. Even sometimes 4H may be fake trend, but I will respond to this. Believe me, I am contributing to write a small e-book that will cover all these problems regarding stop levels, and how to exit your trade, and how to use ATR in your position.
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However, having said that, this is just my first glance and I don't want to come across too sceptical. I suppose I am just looking for your views how to exit without suffering too much of a retrace. I guess one could use all the usual techniques, Fibonacchi, IB candles, trendlines, support and resistance levels etc... but I just wondered if you are using something more simple.
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Believe me, I do not use anything beside this indicator. Simply, I do not have much time to study charts that much and implement patterns, trendlines, etc. They are perfect, but I like things to be really simple. You are right cause when you exit, you do not exit from the top or the bottom of the move. By the time H4 reverses, you can miss a great retracement, but you can set this off, how?
*Always use like 4/5 parts in your position
*Look at the ATR in 4HR. and take profit on one part if price moved 70% of ATR in your way for example. After closing the first 4 parts, you should leave the last 5 to ride with the move, sometimes after this retracement, it is not an exit. The rally continues later. So you can simply let it ride free with the overall trend or move its stop to BE and forget about it.
I will tell you, pairs known for trending always do this. Retrace, gain momentum then rally again. So you will still have a chance the big move.
More agressive trader can just open the position as one part and let it ride for percent of ATR betting on success rate thats higher than failure rate. but I do not recommend this action.
Placing stoploss is the main challenge here, and I am preparing a small e-book that covers this as well. and this will be published soon enough. (Just have a flu this wekk..
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To what extent have you tested this trading strategy - I presume that you have found it to be pip-positive, or is this thread an early stage discussion of a possible strategy that is still being developed?
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It's pip positive, and I am using it for 2 months (still demo until I test about 4-6 months). I seriously think that I should not use anything more than this indicator plus ATR to figure currency movement, but it's your personal choice if you want to add indicators / trendlines, etc. I just want to keep it as simple as It can be. It is not 100% method, but the profits in long run with discipline and following every trend can yield much more.
Finally, I want to say that I am preparing an entry/exit strategy soon and how to entirely avoid losses.
But I ask people to be patient as I am hit with a tough flu this week and its causing my eye some infection and I can't properly use my eyes at this time.
**Suggestion: get rid of 4 MTF HAS BARS and depend on The HAS candles only, because the first proved to cause some crashes in some MT platforms. It's the same, but you will manually go through charts to find the actual trend. Means just more minutes from your precious time.
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