Price Action on Daily & 4H Charts- No More Indicators, News or Smaller Time Frames
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Thread: Price Action on Daily & 4H Charts- No More Indicators, News or Smaller Time Frames

  1. #1
    DRFXTRADING is offline Junior Member
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    Default Price Action on Daily & 4H Charts- No More Indicators, News or Smaller Time Frames

    The goal of this thread is to show traders a more consistent, reliable way of trading the Currency Market using Price Action on the Daily & 4 Hour Charts. You will see a more practical, realistic way of trading that is in sync with the major market movements, independent of;


    • Lagging Statistical Indicators;
    • Contradictory Economic News;
    • Volatile, Stressful Lower Time Frames;



    INDICATORS & ECONOMIC DATA

    Statistical Indicators are the most widely used tools in trading, but most are based on past price data. This makes them lagging in nature and inaccurate when providing entry signals. Short-term economic data are also used to support technical-based trading, but most are often quite volatile and lead to erratic, short-lived reactions. Since the major economic factors that actually lead to strong currency movements will be reflected on the Larger Time Frames, using these signals for market direction will always be the better decision for traders.


    HIGH FAILURE RATE OF TRADERS

    The reality of Forex Trading is the vast majority of persons lose money. Since most tend to be Day Traders, using the smaller time frames for their trading, the high failure rate is at least highly correlated with this way of trading, if not the cause of it.


    Most persons that were exposed to the market for the first time are likely to have headed straight for the smaller time frames in an attempt to capture small, but quick pips. This is what the Trading, Marketing and Brokerage Companies promote since the more frequently their clients trade, the more money there is for them, regardless of how profitable Day Trading actually is. If we were in charge of these companies, wouldn't we do the same?


    This isn't to say that there aren't successful Day traders, but there are several bad habits that are forced upon them by the volatile nature of the Smaller Time frames and daily currency movements that makes it highly unlikely:


    • Indecision about the size of stop losses and pip targets;
    • Constantly switching from currency to currency to decide on which to trade in the very short trading day;
    • Anxiously waiting on a target to be hit;
    • Indecision as to whether to monitor a trade or leave it until it is closed;
    • The pressure to meet daily or weekly pip targets/monetary goals;
    • Resisting or falling to the temptation of violating a trade plan in order to meet these targets;
    • Trying to stay objective while wanting to take ´revenge´ on the market for a loss ;
    • Getting more emotional, irritable and anxious than you normally are;
    • Feeling trapped like a mouse in a maze, with the cheese nowhere to be found;


    Another reason relates to the promoted approach to Currency Trading that comes from the prevalent culture in today’s society;


    • Everything must be done NOW OR ELSE! Am I right?


    Trading is just a click away and with the ability to see several pips of movement happening right in front of us everyday, it is very tempting to want to trade when we want to. But desire is one thing and reality is another.


    Feeding our emotions on a regular basis when it comes to money is a recipe for disaster; using Discipline, Patience and Self-control along with High Probability, Stable Trades are the pillars for financial success over the LONG-TERM.


    This is what the Swing Trading on the Larger Time Frames offers. You can identify a setup, trade it, then leave it until the target is hit a few days later. No need to micro manage your trade. I you were to just take a cursory glance at these time frames relative to the smaller charts you can see the greater stability and consistency in their movements.


    When this is combined with my Price Action strategy, which identifies high probability candlestick patterns without the use of lagging Statistical Indicators, trading becomes a lot simpler. There is also no need to follow the news since most of it is volatile and contradictory and are usually reflected in the signals given on the larger time frames.


    FROM DAY TRADING TO SWING TRADING

    I used to Day Trade and failed at miserably, no matter how often I tried different approaches. It was only after several years of losing money that I actually started to look at the higher time frames and started to be profitable. Unfortunately it took me a while to humble myself and ignore the lower time frames for good. Having finally done this, I spent several months developing a Trading Manual that narrows down the parameters needed to successfully trade the larger trends. This was done to both serve as clear and strong guide for myself as well as to share with others who are also tired of the futility of Day Trading.

    The advantages of this approach to trading generally and my method of trading specifically, include;


    • High Probability Trade Setups that Require Less Trading;
    • Predictable times for entry using the Daily and 4 Hour Charts;
    • Clear Candlestick Patterns that start and end Trends;
    • 100- 200 Pip Trades such as those executed during the Financial Crisis and European Debt Crisis and that have already beaten the BarclayHedge Top 10 Traders this year;
    • Practical, Unemotional ways to avoid checking trades;
    • Pre-determined exit rules based on each trade setup;
    • Weekly & Monthly Ranges not seen in any other strategy;
    • A Proven set of parameters built on 10 years of trading and analysis of market patterns;


    Let´s take these two examples that reflect the greater stress and indecision that a Day Trader goes through compared to that for a Swing Trader.


    In the first case, the Day Trader would be faced with the indecision about where to exit and how many pips to capture following an interest rate decision by the Reserve Bank of New Zealand earlier this year-


    NZD CAD - 30 MINUTE CHART

    Name:  NZD CAD 30 MIN NEWS.png
Views: 2474
Size:  211.1 KB


    For the Swing Trader on the other hand, he would simply have identified the setup and signal and waited on the Pre-determined target to be hit a few days later - independent of the rate decision.


    NZD CAD - DAILY CHART

    Name:  NZD FUND DAILY.png
Views: 2395
Size:  133.3 KB


    Even during the European Sovereign Debt Crisis when volatility and market indecision was at its peak, several opportunities were available without the need for complicated indicators and lower time frame analysis;


    EURO JPY - 1 HOUR CHART

    Name:  EURO JPY 1 HR FRONT.jpg
Views: 2377
Size:  34.9 KB


    EURO JPY - DAILY CHART

    Name:  EURO JPY DAILY FRON TEST.png
Views: 2414
Size:  183.8 KB


    Sometimes I got lucky, as in this case, the 200 Pip Target was hit the next day, well within my pre-determined holding period. This took place while I was watching an all day Marathon of my favourite TV series at the time, Bones, instead of constantly analyzing the trade.

    In a nutshell, it is a strategy that Rewards the Trader instead of the broker by avoiding the Stop-Hunting and unexpected reversals that take place on the Smaller Time Frames.

    If you follow my Swing Trades and my regular market analysis, you will see a consistent and stable way of trading for Long-Run Wealth Creation.

    When you are convinced, send me a private message for more information on my Methodology.

    Regards

    DRFXTrading

    ----------------------------------------------------------------
    Last edited by DRFXTRADING; 10-15-2014 at 05:15 PM.
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  2. #2
    keydcuk is offline Newbie
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    Thanks for the share! It's good inspiration as I am looking to trade on larger timeframes. I feel it is lower risk so long as you keep SL R/R and TP without compromise.

  3. #3
    kate25 is offline Master Contributor and Member
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    agree the longer time frames are less stressful - what is on your radar now

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    FxRipp is offline Newbie
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    I'm trying (on demo) to work on 4H and Daily timeframes, simply because I don't have much time to see charts during the day, so I study them at night and try to leave pending orders on what I consider to be a good trade.

    One problem (or concern) that I'm having is that Stop Losses become a bit bigger than I expected. And looking at your NZD/CAD daily chart I see that your entry signal is far from the support (I guess you put your stop loss below that support line), so the SL would be almost like your TP, if it's not bigger.

    Is that so?

  5. #5
    kate25 is offline Master Contributor and Member
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    That chart must be old - here is a UCad chart - looks like a wolf pattern especially when it went past the bottom trendline. In the boxes you see I wait for a lower high or higher low - if the retrace is 50 to 61 percent I usually take the trade and put ext fibs on looking for 1.61

    imgur: the simple image sharer
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  6. #6
    kate25 is offline Master Contributor and Member
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    Name:  ucad 5 point.jpg
Views: 2232
Size:  43.2 KBName:  ucad 5 point.jpg
Views: 2232
Size:  43.2 KB

    here is a larger pic - the 4th wave I am hoping falls around 1.0784 then should get 5th wave then up

  7. #7
    DRFXTRADING is offline Junior Member
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    Hey kedcuk

    Yes, larger time frames are definitely much better for trading. Difficult transition from lower- time frames though, but worth it in the end. Here is my Risk-Reward for my strategy as taken from my Trading Manual

    Name:  PARATM NO HOLDING PERIOD.png
Views: 2101
Size:  47.7 KB

    Stop Losses are larger than the lower time frames of course and the RR smaller, but the accuracy of trading on these time frames generally makes up for it. The 120 and 90 Pips come from what is the maximum needed to use when the entry signals and setups I use appear.

    What strategy & RR are you using?
    Last edited by DRFXTRADING; 06-27-2014 at 12:17 PM.

  8. #8
    DRFXTRADING is offline Junior Member
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    Hey Kate,

    That trade was actually the NZD CAD not the USD CAD.

    Im familiar with fibs but not wolf patterns..what direction are you expecting to trade and for how many pips?

    I actually missed this trade to go short- 1 of 2 missed recently since my focus was on finishing/promoting my Trade Manual. Here is a look at what I would have done.

    The Daily Chart actually gave a bearish signal to break the Pennant consolidation, telling us entry would should be short.

    DAILY CHART

    Name:  BABY PIPS USD CAD 2.png
Views: 2041
Size:  39.9 KB


    It was expected to go down to the outer trend line seen here

    DAILY CHART

    Name:  BABY PIPS USD CAD 1.png
Views: 2037
Size:  43.1 KB


    Entry would have taken place at the close of that Daily Chart, with the Stop Loss placed at the Resistance of the 4H Chart Range.


    4H CHART

    Name:  BABY PIPS USD CAD 3.png
Views: 2076
Size:  36.3 KB

    Target would be set for just above the Trend Line, expected to be hit any time now-early next week.

    What sort of targets you aim for and with what stop losses?

  9. #9
    DRFXTRADING is offline Junior Member
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    Hey Fx Ripp,

    Yeah Stop Losses are definitely bigger, thats one of the drawbacks of the higher charts. But my strategy aims to get at least a 1.1 ratio.

    In this case, the stop was 90 pips and the target 120 or 122 pips. The stop was actually placed at the Support of a Pennant on the 4H Chart.

    4H CHART

    Name:  BABY PIPS USD CAD 4.jpg
Views: 2047
Size:  27.4 KB

    What strategy you using to see those trades?

  10. #10
    keydcuk is offline Newbie
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    Quote Originally Posted by DRFXTRADING View Post
    Hey kedcuk

    Yes, larger time frames are definitely much better for trading. Difficult transition from lower- time frames though, but worth it in the end. Here is my Risk-Reward for my strategy as taken from my Trading Manual

    Name:  PARATM NO HOLDING PERIOD.png
Views: 2101
Size:  47.7 KB

    Stop Losses are larger than the lower time frames of course and the RR smaller, but the accuracy of trading on these time frames generally makes up for it. The 120 and 90 Pips come from what is the maximum needed to use when the entry signals and setups I use appear.

    What strategy & RR are you using?
    I'm kinda in between strategies at the moment. I have studied EW & Fibs, Gann Trading, Divergeance, Candlestick Strategies, Box Breakout, Triangle Breakouts & Lately I've been playing with Rubber Band.

    Really, I'm fed up of it all and I want to use something that requires minimal effort with best consistency. I only trade at about 62% accuracy but use to trade better when I was more into it. Long story short, I got a bit too deep and blew a reasonably large account. After staying out of it for a long time, I got back into it and started trading demo. I am no longer on demo and am trading a small 100 Euro account in micro lots.

    Have you got any advice that I could use or a strategy that works very well for you that you can share?

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