Price Action on Daily & 4H Charts- No More Indicators, News or Smaller Time Frames - Page 2
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  1. #11
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    Keyduck

    Ive used and experimented with a few indicators myself, especially MACDs, STOCHASTICS but like the rest of them, they only served to complicate things even more. It was even more disastrous when I traded several strategies on the smaller time frames which will always be a game of Russian Roulette...


    Basically my strategy involves identifying the Candlestick PAtterns that indicate that the market will move by at least 200- 300 Pips on the Daily Chart over the next few days. After they appear, I decide where to place the stop loss based on the patterns seen and then determine how much of that move I can get (minimum 100, maximum 200 Pips). I hold on to the trade for a set, pre-determined period and exit when that target is hit/period expired/ or stopped out.


    I NEVER check the trade after it is executed. I only look at the window of the platform that shows that the trade is still open at the end of each day, then close till the next day. I NEVER check the news to avoid hearing or seeing anything related to the currency I am trading. All of this was important to getting rid of the micro-managing and impatient bad habits of day trading and allowing the market to do what it naturally does.

    I think that most people know that the larger time frames/trends are better, but since it is hardly promoted and we are led to believe that trading is an everyday activity, we never take the time and develop the patience and strategy required to take a larger view of the market.

    Over the years I went back and forth between smaller time frames and larger time frames, getting my ass kicked with the short-term strategies then getting saved when traded the larger trends (more examples to follow). It is only in the last 7 months that I began to focus on the larger trends and develop a solid plan with checks and balances to ensure that this would be the long-term way of trading. (Available soon in the Advertising section). Confirmation has come from the results of these trades and when I compared them to the returns of the BarcalyHedge top 10 Currency Traders so far this year-no comparison.

    What I recommend is this


    • Practice opening an arbitrary trade on the Daily / 4H Chart and leave it open until target hit/stopped out
    • Close all time frames lower than the 4H Chart
    • Start Identifying Trend Lines and Consolidation Patterns on these Time Frames
    • Abandon Live Account for now and practice on demo account.
    • -Persons who get the Manual receive my Trade Setups for Entry 15 Minutes before I execute them which you could use on your live account (with my Disclaimer of course) BUT!!!! I recommend doing anything new first on demo account.
    • Start identifying the Candlestick Patterns and Signals that start, continue and end trends and consolidation breakouts that lead to 200- 300 Pip Moves;
    • Look at the patterns on the Daily and 4H Charts as the currency goes to these targets;
    • Try to identify any relationship you see between the signals on the Daily and 4H charts;
    Last edited by DRFXTRADING; 06-28-2014 at 06:10 PM.

  2. #12
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    Default Past trade examples using methodology- part 1

    Here are some examples of the trades executed on the larger time frames of the Daily and 4Hour Charts. Some are taken from earlier this year and others over the last 3 years.

    CAD CHF


    • February 2014;
    • Breakout From Daily Pennant;
    • Target Set for 200 Pips;
    • Exited for 77 Pips - Market didnt reach target within pre-determined holding period;




    Name:  PAST TRADES CAD CHF.jpg
Views: 2281
Size:  38.9 KB


    CAD JPY


    • March 2014;
    • Trading Within Daily Pennant;
    • 4H Signal Given;
    • Aiming for Support;
    • 100-Pip Target hit after 2 Days;




    Name:  PAST TRADES CAD JPY 4H RESULT.jpg
Views: 2294
Size:  49.7 KB


    CHF JPY


    • November 2013;
    • Breakout Daily Range;
    • Target of 220 Pips Set;
    • Target Hit after 4 Days;




    Name:  PAST TRADES CHF JPY RES.jpg
Views: 2151
Size:  46.4 KB



    EURO USD

    • January 2013;
    • Break of Daily Range;
    • Target of 100 Pips Set;
    • Target hit after 3 Days;



    Name:  PAST TRADES EURO USD DAILY RESULT.jpg
Views: 2072
Size:  30.7 KB


    GBP CHF

    • May - July 2011;
    • Trade 1- Trade Within Range;
    • Trade 2- Range Breakout;
    • Trade 3 - ABC Signal;





    Name:  FRONT GBP CHFF.png
Views: 2004
Size:  41.2 KB
    Last edited by DRFXTRADING; 07-06-2014 at 12:57 AM.

  3. #13
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    Default Past trade examples using methodology- part 2

    GBP JPY

    • Dec. 2011 - Jan. 2012;
    • Breakout Daily Pennant;
    • Target of 200 Pips;
    • Hit after 11 Days - A few days above current Holding Period Criterion;




    Name:  WR EURO 7.png
Views: 1966
Size:  56.7 KB


    CHF JPY

    • August 2011;
    • Breakout, Daily Range;
    • Target of 370 Pips Set (Above Current 200-Pip Maximum);
    • Target Hit after 3 Days;




    Name:  PAST TRADES CHF JPY 2011 RES.png
Views: 1969
Size:  70.1 KB


    USD CAD

    • September 2011;
    • Breakout Daily Range;
    • 200-Pip Target Set;
    • Target hit after 8 Days;




    Name:  FRONT USD CAD RESULTS.png
Views: 2017
Size:  153.0 KB


    The key aspects of these trades were


    • Patiently waiting on the right Daily/4H Signals;
    • Correctly identifying target based on the setup (Trade Manual);
    • Holding Trades for the Pre-Determined Period;
    • Exiting if Trade had exceeded Holding Period;

    Last edited by DRFXTRADING; 07-06-2014 at 01:06 AM.

  4. #14
    This is really good! I fully appreciate your input. There are several things that interest me in what you are saying but mainly you mention time stops. I have only recently read material on time stops but have not met or read anything yet that suggests how a time stop should be used. Do you have a method for this?

    Also about your start if mentions for indicators, I can only say that people need to know HOW to use their indicators. For example, everyone talks about MACD. MACD this and MACD that.. blah blah blah... but did you know that the MACD is designed to be used in a less volatile environment and best not used in high volatile intraday times? No wonder people fail if they don't know how to use the indicator.

    Another one I found interesting was ADX. This indicator is only to be used on Daily TF or higher. It is too much of a lagging indicator to be used in any smaller TFs.

    I have been trading for about 8 years now and in some times very successfully but I had not come across the thought of certain indicators are ONLY used in non-volatile or sideways markets and other are designed to be used in volatility. Lesson learned for me is that if you are going to use the indicator, study what the indicator does and when best to use it.

    I personally like all your recommendations as I have come to the conclusion that trading forex is simpler that people hype it to be. Candlestick patterns on high TF with trend lines, S/R, breakouts & time stops are a great way to go. I too have noticed I need to set SL, TP and just not look at the market too much. My trade win ratio is not bad at the moment but it is not worth anything to me if I close my trade to early and don't wait for a decent reward. I can't just TP at 10 pips if there was 50-150 to take.

    My latest study is to think about these S/Rs. There is so much out there. Fibs, Camerillas etc etc.. I think my favorite one at the moment is Murrey Math lines. I think it's because I was heavy in Gann theory at one point and would like to rework a strategy involving MMlines, Gann Theory with Candlestick Patterns.

    I wouldn't mind doing something with harmonic patterns but it seems to me they are not as successful as the hype makes it up to be.

    Thanks for all your postings!

  5. #15
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    Yeah, I have a method for holding period/time stops. Its based on the average time it takes for the trend to reach its targets once the setup and signals are in sync. (In the Trading Manual lol)

    I think you can experiment with millions of indicators and you might eventually find the right combination..I did so with candlestick patterns. But candlesticks reduce the trial and error in half and gets straight to the signals that matter without indicators.


    Its true, its really not worth it to be only getting 10 pips at a time when the market offer much more with less complication. But its hard to break away from these small targets when you have been used to it for most of your trading life. Its only when you get shock after shock of consecutive losses and drained accounts that one will get tired of it. For some its sooner, others when its too late.

    S/R can be useful especially in trying to use them for Stop Losses..but I could never determine which was going to hold and for how many pips. It was always hit and miss that couldnt be relied upon to be put in a strategy. Decided that since the candles are the most certain signal as to which one will be obeyed, then its better to just wait on them.

  6. #16
    Quote Originally Posted by DRFXTRADING View Post
    Yeah, I have a method for holding period/time stops. Its based on the average time it takes for the trend to reach its targets once the setup and signals are in sync. (In the Trading Manual lol)

    I think you can experiment with millions of indicators and you might eventually find the right combination..I did so with candlestick patterns. But candlesticks reduce the trial and error in half and gets straight to the signals that matter without indicators.


    Its true, its really not worth it to be only getting 10 pips at a time when the market offer much more with less complication. But its hard to break away from these small targets when you have been used to it for most of your trading life. Its only when you get shock after shock of consecutive losses and drained accounts that one will get tired of it. For some its sooner, others when its too late.

    S/R can be useful especially in trying to use them for Stop Losses..but I could never determine which was going to hold and for how many pips. It was always hit and miss that couldnt be relied upon to be put in a strategy. Decided that since the candles are the most certain signal as to which one will be obeyed, then its better to just wait on them.
    What is this manual you keep mentioning?

    Just a bit of observational advice with candlestick patterns. If you stick a volume indicator with your charts, you might notice that candlestick patterns with high volume have extra validation than the ones with low or average volume.

    Something to chew on if you wish...

  7. #17
    Join Date
    Sep 2012
    Posts
    36
    I love the back and forth on this forum - read through everything

    Thanks for the input - encouraging to see that there are many who have gone the same direction as me - also blew an account, also sick of lower time frame fails and the continual advertisement of 12299991122% gains on scalping.

    I've been focusing on trading daily charts lately, candlestick, patterns, price action, etc as well.

    I'm curious, is there a good resource or price action guide that would help me determine what moves WILL be 100-200 pips, vs those that are too small? Been demo trading, and I often hit my stops before my targets so trying to identify some patterns, help would be nice

    I'm also curious as to how far back is historical price action truly relevant? I saw a setup for USD/CAD which use the trend originally started in 2012, even with the triple top in recent history, they comment on possibly making a higher move upwards. So much data, how do you filter through the noise? (even without indicators, I hate those now lol)

  8. #18
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    Yeah, volume indicators coinciding with strong candle may also be useful. However I tend not to trust indicators in general since they can give false signals at time. Price Action using Candlestick signals are more accurate but since they can also give false signals, the fewer false signals one uses, the better. lol

    My blog at drfxtrading.blogspot.com describes the manual in detail, but essentially I have put together all the rules and parameters needed to trade the Daily & 4 Hour Charts after using 10 years of data and the last 3 years of actual trading results. This followed years of trading both the smaller and larger time frames at the same time but after losing money with the latest day trading method, finally took decision to stick to larger charts. It was only when I used the larger times frames that I actually made money, but was too impatient to stick to it given the temptation of the shorter time frames and so did not devote enough time to establishing the rules. Now that I have done so, no turning back.

    I have rules in place to determine market direction, entry and stop losses as well as the type of targets to aim for depending on the setup. I have narrowed down the best Candlestick signals that give the highest probability of success and have also detailed how/why the market does what it does- from trending to consolidation and back.

    100 - 200 Pips tends to be the average range of movement you can get when the best Candlestick signals are given. Aiming for less tends to narrow your Risk-Reward Cushion which is already tight given the stops needed on the higher charts. I also found that if a signal offers less than this, it will be very volatile. 200 is the maximum because it sits comfortably within the movements of the trend which tends to be 250- 300 Pips when it gets going.

    Smaller time frame trading is an unbelievably difficult thing to master. Im not really going talk about conspiracy theory as to why persons are led to that time frame more than any other. Nor will I ever say that no one can be profitable long term trading this way. All I will say is that the suffering, stress, losses and headaches are a lot less and the time to get a profitable rhythm going is a lot shorter when all that effort is devoted to the Daily & 4H Charts.

    Starting with this trade result on the AUD USD, I will continue to show how simpler it is to trade with my approach. Unfortunately this first one that I have traded since taking a break to complete the manual was a loss..lol..but for losses and gains, one will see a better thought process that allows a trader to be in sync with the market and accurately exploit it for personal gain-finally.

  9. #19
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    Trade Type - Breakout, Medium Consolidation
    Signal Needed/Given - Daily Chart
    Target - Breakout Equivalent
    Result - 100 Pip Loss


    __________________________________________________ ______________________


    The intention here was to continue to go long in favour of the Aussie in response to the breakout signal provided above the Daily Chart's Pennant. The pair had actually formed a smaller Pennant above a larger Pennant before providing the Bull Candle Signal for entry. Instead of breaking higher, however, the currency pair reversed unexpectedly despite having a strong setup and signal. So what could have been the reason for this loss?

    Let's first take a look at what the overall picture was on the Daily Chart. As we see in the chart below, the smaller Pennant was essentially testing the broken Resistance before giving the breakout signal.


    DAILY CHART

    Name:  TRADE RESULT AUD USD DAILY 1.png
Views: 1863
Size:  44.0 KB

    Source: FXCM Marketscope


    This was also taking place in an uptrend that added support for the currency pair to continue moving higher. Following the close of this candle, entry took place immediately with the Stop Loss set at the appropriate point on the 4 Hour Chart and the target of the Breakout Equivalent put in place. Within a few days, the market reversed sharply to take out the trade, resulting in the loss of 100 Pips.


    DAILY CHART

    Name:  TRADE RESULT AUD USD DAILY 2.png
Views: 1867
Size:  39.8 KB

    Source: FXCM Marketscope


    The issue at hand now following this loss and trading losses in general, is to ascertain the possible cause especially given the apparent clarity and strength of this setup. Two separate, but related reasons could provide the answer.


    SCENARIO 1

    It is quite possible that these two Pennants are actually about to give way to the formation of a larger Range Setup. This is something that happens from time to time in the currency market. If this is the case, then we could see a pattern that looks like this.


    DAILY CHART

    Name:  TRADE RESULT AUD USD DAILY 3.png
Views: 1874
Size:  32.8 KB

    Source: FXCM Marketscope



    If this is what will be formed, then we could either see another bullish signal to continue the uptrend or a bearish breakout that starts a downtrend.


    SCENARIO 2

    The alternate scenario involves taking a wider view of this currency pair's previous patterns. The unexpected reversal that took place could actually be the start of a bearish wave within a much larger Consolidation setup that is being formed.


    DAILY CHART

    Name:  TRADE RESULT AUD USD DAILY 4.png
Views: 1911
Size:  48.4 KB

    Source: FXCM Marketscope


    Confirmation of this will come in the upcoming days or weeks in the form any of these Candlestick Formations below the Uptrend Line;


    ABC Reversal Signal;
    Formation & Break of Small Consolidation;
    Counter Trend Line Setup & Break;



    Provided they are strong, any of these signals could lead to a steady downtrend over the next few months until Support is hit, over 500 Pips away.

    With any successful Methodology that is applied to the currency market, losses are always expected along the way in between profitable trades. One of the distinguishing advantages of trading with the higher time frames, however, is that it allows the trader a lot more time to calmly analyze the reasons for these losses and make adjustments where necessary. This helps to take the emotions out of trading and avoid the common habit of trying to exact immediate revenge on the market - a habit that inhibits long-run profitability in Day Trading.

    Let's patiently waiting on the next opportunity that this market will provide on this or any other currency pair as we start a new month.

    __________________________________________________ _________________
    Last edited by DRFXTRADING; 07-06-2014 at 01:07 AM.

  10. #20
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    DAY TRADING VS WEEKLY RANGE/SWING TRADING

    Day Trading is perhaps the most promoted way of earning income through the currency market and the stock market by trading companies globally. Relative to the larger time frames and longer holding periods, daily trading appears to fill that need for quick returns in this culture of immediate gratification, despite the greater risks that are inherent in this approach.

    A proven, tested and reliable short-term method could provide some gains for the resilient day trader, but perhaps more could be made on the larger trends with less effort, stress and inconvenience. Let´s compare the two strategies in terms of some of their respective advantages and disadvantages.


    DAY TRADING - 1 HOUR & LOWER TIME FRAMES


    ADVANTAGES

    - Short, quick gains same day or overnight;
    - Risk is smaller per trade;
    - More trades are possible;
    - Multiple lots and positions possible;
    - Predictable end of trading range-market sessions;
    - Trading possible 24 hours.


    DISADVANTAGES

    - Daily Range of each pair limits gains per trade;
    - Entry signals are at unpredictable times;
    - Time Zone issues for persons in the West;
    - Constant monitoring of market needed;
    - More trading, more stress to meet daily goals;
    - Shorter time to recover after losses.


    WEEKLY RANGE TRADING - DAILY & 4H CHARTS

    ADVANTAGES

    - Larger Ranges;
    - Stronger, Stable Signals, Patterns;
    - Predictable Times for Signals & Entry;
    - Less monitoring of Market Needed;
    - Less trading stress;
    - More time to recover after each loss.


    DISADVANTAGES

    - Fewer Trading Opportunities;
    - Larger Stop Losses;
    - Longer wait for Trade Completion.


    Day Trading can be fun, exciting and profitable, but perhaps less excitement and more stability could translate into larger profits, consistent gains and less stress. With the need to constantly monitor the market, analyze short-term movements and side-step increased volatility from fundamental news releases, day trading can become an emotional roller-coaster and take its toll on most persons.

    On the other hand, if one had more time to analyze the market in between trades and calmly assess each pair while avoiding short-term noise, would that be a better option?

    __________________________________________________ _____________
    Last edited by DRFXTRADING; 07-09-2014 at 02:20 AM.

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