@bmvlad: Thanks! Yup, I totally agree, it’s best when supplemented with good ole technical analysis.
@Halba: Glad this signal turned out profitable. If you havent hit your profit target yet, you may want to consider closing your position already as Stoch is now <20. Of course, you can also keep the trade open and try going for a homerun.
I dont use a trailing stop, but I adjust my stop manually.
Updated chart of EURUSD 1H:
im only demo trader, but will go live very soon. macd was very leading indicator in this example. i’m sure there will be other examples as other currency follow EURUSD very close.
in this particular case, i would not close position yet, keep waiting for further falls.
Just a few thoughts. I am posting two charts of EURUSD 1hr showing the same approach I was explaining earlier, but giving two different results. I will try to express myself the best I can since my native language is not English.
In the first chart, we obviously see divergence. According to jenesaisquoi’s rules, we should entry at point 2 after Stoch crossed down yhe 80 level, but we would have been stopped out since price kept going up after a brief retracement. There was another Stoch cross down at point 3, but again, price kept running up a bit. Then at point 4, price finally agreed to fall down for a significant profit. If you look at the whole picture, I would say that the trade is counter trend, still over the trend line goiong up. But I am not saying it’s not tradable. But I would rather wait till price crosses down the trend line and also the support level given by point 1 wich corresponds to the big depression of MACD (vertical dotted line).
Then on the second picture, same chart, but different analysis. We get a smaller divergence signal and then jenesaisquoi’s rule is giving a direct win at point 2, a Stoch cross down after the divergence signal. However, I would have entered at point 3, after the break of the support line. But that’s me.
I am not saying that jenesaisquoi’s technique is bad, on the contrary I think it’s great. I personally prefer to wait for breaks of trend and support/resistance lines. I don’t know if I am allowed to, but here is a video explaining the technique I am talking about. They use Stochastic for divergence finding, but I prefer MACD wich I find more stable.
How to Identify High Probability Trades Using Divergence - YouTube
That short EUR/USD was money in the bank. nice setup
m8 it is still goin. i wish i trade live on macdaddy. this thing could give 500 pips. a once in a coupla month short. euro is literally getting shredded to pieces, its got some serious problems. breaking down on all indicators.
it was well picked. by waiting for trend lines/support breaks is a good idea, but you are missing out on about 30-40 pips doing it. Simply waiting for overbought to cross back is a babypips strategy also(see divergence lesson) and is solid enough.
since this is an even sum game, probably waiting for additional confirmation is good, but long run it probably won’t make much difference as you gain additional without waiting, but probably get stopped out some other times because you went in too early.
anyone know the difference between MACD divergence and the stoch divergence shown on babypips front page(the one on USD CAD)?
i spot hidden macd divergence on EURUSD chart. bullish indicator, stoch currently oversold.
close out short i suppose. wait for a long entry?
Not using RS lines for confirmation is riskier than using them. I suppose this is where individual personality and money mgmt comes into place. Overall, extra RS breakout is pretty good allbeit for shorter gains.
Personally, I find Stochs very lagging, that means using the past to predict the future; not very good from my personal experience. I prefer to use Stochs as a backup div tool and not a leading ind. Because the stochs can cross 80% downward and in a few minutes turn back up without even reaching the 50% mark…it’s too flacky for me.
I was tempted to take the first Stoch cross down over 80% on Tue, and would have been stopped out early Wed as I use presiding HH and LL for my SL. But I entered 1.44551 on the downward breakout of diagonal Support. As I like scaling at every 50s 100s 150s, I’m in a very decent profit.
I’ve backtested the SR breakout filter and it seems to work very well overall. Thanks to Macdaddy, I’ll continue to demo it for the next 3months.Cheerios man
Hi Halba, exactly, one could be waiting to go Long as soon as Stochs breaks 20% line upwards; however, you never know, stochs can just hug that 20% line or cross it down again…
But if you want to be Long baised, then why not use SR filter, wait for the breakout of the downward slope Support line and go Long.
But personally, I still remain short biased on this one to be honest, I think there is another 50pips to suck out of this one, but I’ve taken 150pips out of it and I have the remaining puppies at BE+50 anyways…just my 2 cents
Has anyone tried MacDaddy on other pairs? what’s the performance like? (sorry, I’m a sole EURUSD demo trader)
it was a good call - spotting the hidden divergence. up about 40 pips since
hello, in the chart - which downward Support line breakout (for the long side now) are you referring to- thanks. the only downward sloping line i see is the lower highs, and thats a resistance line.
i agree breakouts make it better and then scale it in as its higher probability. take less pips initial but scale in as it break out
shorted eur/usd again, target 1.4270
Thanks for dropping by, guys!
@chamane: Congrats on the big catch! I totally agree with you. It’s really a matter of preference. Waiting for the breakouts is the safer choice, but at the same time, you’re forced to take on a less attractive reward-risk ratio.
I personally prefer to trade the divergences only when price is at a critical support/resistance level, as was the case at 1.4500. Like any system, MACDaddy is best when supplemented with technical analysis.
@Halba: What settings are you using for MACD? My indicators don’t seem to be showing the same divergence on those two points. Weird.
@Allta: I’ve tried it on other pairs (like GBPUSD, AUDUSD), and it seems to work just as well on those. But lately, i’ve been limiting it this system to EURUSD as I’ve been focusing on discretionary trading.
Nice one, 200pips from Macdaddy this week, so…cool! Hopefully it’ll stand the test of time.
Hi Halba, I’m now long on EURUSD @1.43867 based on MacDaddy, but being careful now because of the debt issue in the states.
Yeah. I also went long based on MacDaddy. had sell order with profit at 1.4000 but I saw that the buyers have become powerful so closed it though I got 150 pips on it.
i confirm there is a divergence based on the 1H chart - and it has broken out above 1.4260
however sometimes divergence can result in only small pip reversals so be careful
Is this the divergence you guys were speaking of?
If so, congrats! Looks like you got yourself a winner.
Personally, I didn’t take the trade because trading US GDP was too risky for me. How’d your trade turn out?
Yup, I’m up about 31 pips now, got filled at 1.43811, those who don’t use the Trendline filter might have got filled earlier. Seriously, the risk is just too much over the next too days with US debt uncertainty, so when I get to 50, I’ll move SL to BE and take 50% of the puppies off.
UPDATE
50pips reached, so took off 50% of my puppies and moved the other half of my positions to BE. This is looking really good, that’s 50pips already from Macdaddy this week.
what a good macdaddy trade. i suggest you exit your position.
any ideas what confirmation you used for entry - was it the trend line breakout?
Yep, I used TL for entry. I’m looking at the possibility of another setup soon, but I’ve taken off 90% of my positions. No arm in leaving the 10% for BE I think. I’ll confirm if I find another Macdaddy setup…btw…I use 21,55,8 for my MACD
UPDATE
Went short again based on MacDaddy+TL @ 1.43456 - I’ll keep a close eye on this one.
+60pips…took off 50% of my position, moved the others at recent swing high…here we go…
Perhaps ISM news helped to quicken the fall as well, almost close to 100pips where I will take 25% off and wait till the 150pips mark.
Wow, 150pips and still counting…Today has been good for MacDaddy!
