INGOT'S RAINBOW ... A Position Trading Strategy

Trading Systems Free Forex Trading Systems
278

blowfish, I can’t really see how that relates to Ignots rainbow technique, though hope it works for you.

here is what my chart looks like. I tend to trade off the 15min TF, and will buy or sell almost anytime the stochs rope together, the “roping” is significant, and it doesnt matter if what level it takes place at. Ideally its above 76.4 or below 23.6 but I will take it at the 50 level or anywhere in between.

On my chart I have the 50 EMA, 5SMA, Gann and daily pivots and thats it. I mostly just use the 50 EMA by itself or the stochs by themselves… I let PA tell me what to do.

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279

Now if you’ve read the whole thread by ignot, you can see I trade completely different. But it was this thread that inspired me to trade, though I just didnt have the patience to wait, it didnt suit my personality. So I altered it by trying this or that over the years.

Ignots system can work very very well, you just need the patience to wait for the right set-up which may only come along a few times a month. I prefer to trade one currency pair only instead of all of them, and I use a tight SL (40 pips). Part of the success of this technique is the large SL, which in turns mean you are trading a smaller position.

Read the thread, enjoy the stories… and practise practise…

cheers

280

Thanks for the differing views.
Its great to see different viewpoints… there is a lot of value in working through each method… allows people to pick up nuances…

Thanks for the sharing.

dave

281

Thanks to Ingot and everyone else who has contributed to this thread. This method has a lot of potential.

I am a forex noob, about 3 months into this venture, blew about $2000 trading randomly (with this or that system) before I realized I didnt have a set plan.

I am taking a step back and evaluating as the story goes with Bill and the friend.

I have decided to backtest this method for about 100 trades and then start a demo account to trade it for a few months before I go live again.

282

Hi all, thanks Ingot for your strategy, I really want to trade it the rest of my life. Iam just confused with this:

eurusd D1(Daily) is pointing up and the Weekly chart is pointing down. I want to trade with the Daily charts for entry: H4, D1, W1 and not D1,W1,MN. What should I do in this situation ? There are more pairs right now that are the same way .

Thank you very much.

283

I am a newbie at Forex and have no clue how to program MT4, (I haven’t used it since I will be trading with Oanda). However, I did manually enter the EMA parameters into the NetDania chart and attached is the resulting graph.

I love how it shows massive trends and clear trend reversals. So here is what I think I will try.

Entry: check monthly and weekly chart to determine the long term trend and medium term trend. If daily trend is the same, enter trade in that same direction.

Money management: 2% capital risk, stops placed at bottom or top of rainbow in opposite direction.

Exit strategy: When profit reaches 150% of stop loss, place trailing stop 10% behind current profit. When trade ends, start process over.

Example, USD/JPY, monthly trend, down, weekly, down, daily trend down.

Short USD/JPY, stop at 93.132, 449 pips above current price. Should profit reach 673 pips, place trailing stop at 613 pips below entry. When you finally exit trade, with 3% or so profit, (on account capital) if monthly and weekly trends are still down and daily is still down, short USD/JPY again.

While the 3% approximate gain/trade seems weak sauce, consider that by risking 2% capital, your leverage on each trade is small, about 1-1.5.

This means you could hold 20 or so positions simultaneously without risking a margin call.

Now lets do some math:

3% gain-2% loss= 1% net gain/trade, (assuming 50% win rate) 1% gain*15-20 positions=15-20% gain on capital/ about 4 month period.

15-20% gain every 4 months= 52-73% annualized gross returns.

Sounds promising indeed.

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284

Hi all,

Just a quick shout out to see who is still using this system and the success they have had w/ this system.

Stochs are great! Haven’t used the MA’s like this though.

Thanks,

Blue

285

Hey Guys,

Thanks a lot to Ingot, Spudfyre and anyone who contribute to this thread. Salute to all of you guys. What a brilliant and simple strategy.

Helps me a lot with decision making on entering a good setup.

Bless you all.

Cheers,
Stealth

286

Hey Guys,

I need to make some point about leverage. Correct me if I am wrong since it is learning experience for everyone. I think the easier way to explain this is using an example:

If Mr A and Mr B have $5000 each and Mr A have 10:1 and Mr B 100:1 leverage.
Both trading method and stop loss is the same. Stop loss is 3% from account value.

Supposedly an opportunity came and the S/L is 200 pips. So 3% of $5000 = $150 is the only amount that they can risk. If they want to trade 0.1 lot assuming that equivelant to $1 per pips(Standard Account) Mr A will have to have $1000 in his account before margin call but Mr B is well away before the margin call since he only need to have $100 in his account.

Since we all understand longer TF is the better one to trade there will be always a pullback along the trend. So this is where we add some more position to pyramid provided the other position is break even or in the money so the risk stays the same only 3% for the new position.

If all the pullback is good to trade then Mr A wont be able to take it since he will be running out of margin sooner or later but Mr B don’t have to think about it.

So Mr B is well ahead of the game from Mr A. I call it use other people money or OPM to achive higher return and financial freedom faster. But we must understand leverage is double edge sword. You can win big and also lose big. But and that is a big BUT if we stick to the money management then the risk stays the same but with higher leverage we can stay in trending trade longer before the margin call.

Cheers,

Stealth

288

Hi Stealth Trader, and the other contributors to the thread …

Thank you all for continuing the ideas started here … some good stuff in amongst all of it from you all.

I have been on the dark side for a little while as a part of my journey, and I can tell you it is good to be heading back to the Position Trading side … more determined than ever to simplify this kind of trading for the smaller trader. Scalping and Spot Trading might be one man’s bread … but … not this man’s! I am simply not good at those forms of trading.

It’s simple, folks, and no, not easy … but it can be e-a-s-i-e-r than we make it. And I’m referring to longer time-frame trading, or position trading, as you know.

My intention is to continue where we left off, if that is possible, and to try to get some of the earlier questions answered. I’d like to run through a couple of setups and show what to look for in a trade. And yes, we will hopefully run into problems in doing that, so as to learn what to do when similar things happen later on.

I doubt any two trades pan out the same, from similar setups - such is the nature of the market.

I like your reasoning, Stealth trader - you have nicely illustrated one of the benefits of trading with leverage. At the same time you have given recognition to the dangers of using too much leverage.

One of the reasons I went missing in action was because I am on permanent night shifts, and simply became too fatigued to continue. Then I became involved in learning to scalp and spot trade through a close friend of mine, and a bit of swing trading thrown in. But while I was managing to break-even … sometimes … the net result was a familiar spiral away from profitability.

To be involved in successful position trading requires patience and goal-setting, and I am sure we are all capable of those two things.

Success converts sceptics!

Best wishes

Ivan

289

Just a quick “heads up” folks.

I have added a poll to the beginning of the thread, to help sort out the amount of interest and understanding in the trading community, about Position Trading.

Many traders are chasing the latest indicator ( and I do like some of them) but this has not been terribly helpful to their bottom line.

Some are also addicted to finding the best robotic trading ea available, and that too is ok.

But it is my belief that few traders have understood and really attempted to trade longer term, from an educated point of view.

You can select more than one option from the poll.

Best wishes

Ivan

290

What we are doing here is trading pull-backs in downtrends, over the longer time frames of 4H and Daily23/3. Because of the larger-size Stops Loss orders we need to protect a position, entry is very important though perfect entries should not be the ultimate goal.

The goal should be “safe” entries that may leave a few pips behind, but reduce our risk of draw-down.

But it is more important to identify the trend correctly.

And, looking from an even bigger perspective, we are finding and trading pairs that are in long term trends.

This means that:
we ignore currency pairs that do not exhibit nice trends;
we correctly locate SUPPORT and RESISTANCE levels;
we correctly identify the higher probability turning points following those pullbacks;
we place our entry into the market to capture the resumption of the longer term trend.

Doing this correctly on the higher time frame, from 4H to DAILY, will result in a larger number of pips, generally speaking, unless you are a skilled and competent Swing Trader, or Spot Trader, trading those styles.

But claiming a “larger number of pips” is going to hold true, only in the perspective of time spent at the computer.

This form of trading is called Position Trading, because there are times when we can get into longer-term trends that can last for months. And it can allow us to live a life outside of the computer screen.

In the EURAUD chart attached (first chart) it is clear that the trend that commenced on Monday 23rd March 2009 and ended with a serious rally on Wednesday 19th May 2010 was a Position Trader’s dream. Yes, I concede there were instances in this time, where stop-out occurred … quite a few, but then, opportunities to rejoin the trend came just as frequently.

The top-to-bottom move was worth between 5,000 and 5,700 pips, as a straight buy-and-hold event. But by faithfully taking stops, and re-entering might have caused this yield to increase perhaps another 20%. I do not know - I didn’t trade it, and I haven’t gone back over it meticulously enough to calculate this … it is a generalisation over that 14 month period.

Don’t miss the point that there was a serious opportunity there, and that the SAME opportunities exist even now, in one of the worst choppy markets I have seen.

I have refined the appearance of my charts for simplicity. In the second attachment, I show how the removal of the Rainbow-look, replacing it with a monochrome-look, enable traders to highlight a specific MA, allowing more accurate trade management. For example, some like the 35 EMA as a strategic indication of Support and Resistance, and I have highlighted this EMA in red. Simply select and change the colour as desired.

The other streamlining is the change to te MTF Stochastic appearance … also now in Monochrome, with the 14.1.3 stochastic now red. I find this setup less distracting Of course you may customise to your own tastes.

The charts attached should be self-explanatory. I am trying a different way to annotate my charts, so hopefully these will appear clearly once posted.

EDIT: I apologise for the poor quality of the charts … I will experiment with a better format. The problem occurs through the difficulty I have of drawing lines on MT4 charts, and using screen-shots instead. If anyone knows how to draw lines/arrows on MT4 charts, I would appreciate the heads-up on that.

Best wishes

Ivan

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291

Just posting a chart to see if I can improve the quality of visuals.

The chart is SILVER - 4Hour - from August 2010, showing the great uptrend.

I have changed the 35EMA to red for illustration, and the image has been save straight from the chart as a .gif.

In the next day or so I hope to flip through my charts and come up with a live trade entry, if there is one.

I don’t want the thread to become all hot air and no balloon … :slight_smile: … so if there is an opportunity for a trade, let’s focus on one.

Best wishes

Ivan

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I offer my apologies for anyone following this thread - I am unable to continue due to personal circumstances.

Hopefully at some time in the future the idea can be resurrected … perhaps in a new thread.

But for now I have to leave the discussion to anyone who has an ability to manage position trading … if they wish to carry it forward.

Thanks to those who have participated and patiently waited for the end of the story. It may never be told … but hopefully I will be able to complete what has been started when/if circumstances allow.

I would urge anyone who has not been able to make short-term trading work for them, to consider moving up to longer term trading ie the 4H and Dailies … focusing on just one pair.

Patience is required … and a desire to succeed … few make it.

Best wishes

Ivan

295

Loved the thread over which I’ve spent the last several hours pouring, and that I plan to re-read. Ivan/Ingot is right about direction - he was prophetic about the direction of authority vs. humanity in his country, and the world - when he wrote back several years ago. Let’s pray that more and more people/sheeple wake up so that enough of us are awake and the ship can be turned around - back to entrepreneurship, unmodified food, clean air, and life.

I missed the explanation in some detail about why the rainbow effect is useful as well as beautiful. As others wrote, the use of stochastics is clear in this system.

296

I’m a big fan of the MAs rainbow, and to be honest, not so much of the stochastic threads. So I may have a good tip for MAs rainbow traders here…

[B]Moderators, kindly let me know if I’m not allowed to post links to other forums. They’re not commercial, so I don’t see any issues posting them here, as they will only help traders, and for free.[/B]

There’s a guy - 7bit - who developed this brilliant concept. The anti-grid. All the credit goes to him, for an outstanding work.

Please, PLEASE, READ at least 3 times the official page, so you can understand the concept before shooting questions that you could find the answers there.

It will take some time until you grasp the concept, so don’t be lazy, spend some time reading all you can about the concept on the other 2 links as well. I suggest taking at least a week to read/study the method, to fully understand how it works.

This way of trading fits the “rainbow trading” like a glove. All you need to do is to follow the wave direction, and tell the anti-grid to trade accordingly.

I’ve been using daily charts to trade the rainbow, with the anti-grid strategy configured to 50 pips and 1 take profit level, on several pairs. Also, there is a semi-automatic EA so you don’t need to be glued to your screen all the time. It’s a set and forget EA, until the next opportunity shows up. So read the concept page to understand how it works, as it’s not straight forward for the most of us.

IMO, the fastest way to learn how it operates after understanding the concept is running dozens of visual backtests.

I hope I’ve helped.

snowballs and the anti-grid (official page)
snowballs and the anti-grid (thread)
Trading the anti-grid with the snowball EA (journal)

PS.: In order to trade live, I’d suggest hiring a VPS service to make sure the EA will work 100% of the time. This will avoid computer/MT4 crashes, lack of power or internet down.

Regards,

Beto.

297

Hi

I’m new to trading daily charts and came across this thread. I have read the thread through with extreme interest and wondered if anyone is still trading this and what success they have had?

Thanks

298

I am trading the system as a Newbie. I am starting to look for places to pyramid, thinking that Murrey lines may be suited to that.

299

Whaddya mean “Newbiie” ? - You’ve been here since 2008 !

Thass longer than “Martin” has been trading !

300

Newbie to Ingot’s Rainbow…