Shane's posting of his "simple" chart shows a need for simplification of the concepts laid down by mp for this "information" to go forward and become at one with the trader.
A compilation of concepts is being prepared which should reduce mp's ideas down into a more compact form, with simplicity as its keynote.
On the use of the EMA 14, please understand that is a simple concept but came forth to prove that "any" system has to work. There are systems that will produce larger pip accumulations, but this one was just to get the readers into making profits.
There are many ma cross over "methods" and they all work believe it or not, with the only danger living in "how much of a move is there ?". And so enter Barrys s+r and the bollinger bands to help you out. By using those, plus understanding what the indicators are saying, you can see very quickly whether a ma crossover move is a simple retrace on a main trend, or if it is to become a major retrace. One clue to what is happening is to look at the speed of the move if it happens after noon, edst . . . . . . if the move is very slow to develop, it will invariably be a LONG move as it is being "stretched" out to fill the time available until the rollover at 5PM, EDST.
If the move starts and moves quickly, it is being fitted into the 1.5 hour or possibly the 45 minute move, and will invariably only be a 23% fib move.
If one is using the LRC, then one should be aware of not buying at the TOP of its move, semaphore signal or not, as that places you in the very real danger of watching the market move away from you in rapid order. If one likes to ride the edge of disaster, at least know where your higher timeframe trends are and if they are in agreement with the direction of your trade, you are offered much support, although you must remember that an H4 trade can often take a day or two to work through.
mp's thoughts on that are simple, but require experience . . . . . if you are wrong, but are "with" the higher timeframe trends, simply open a counter trend trade which will now be going in the "correct" direction. This will do two things . . . . . immediately it will "nullify" your margin increase on the "losing side" and nullify any loss of equity. As Dale pointed out to me, which i do automatically when trading, if the trade will take a day or more, simply "double" your counter trade vs the "loser" which now increases your available margin and provides a profit until the "loser" comes back to your tp point on the higher timeframes.
Essentially what this does is take a short term trade that was missed for whatever reason, and convert it into a swing trade, AS LONG AS THE HIGHER TIMEFRAME TREND IS MOVING IN THE SAME DIRECTION.
The concept is simple, and it is simply a form of defensive trading that is practiced by all money managers who can think it through, and not run to the government for money.
It works extremely well, but is also not for the faint of heart and definitely not for those without the experience and money management skills to work it well.
Far better is not to buy at the top of the LRC --- that should save a tremendous amount of stress for most.
As mp has so often stated, watch and learn for yourself and when confident it works, use it.
Last edited by Hillel; 03-10-2009 at 10:07 AM.
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