New to the forum, although been a member for a while using the schooling section. I have a live account which is doing well but I want my win:loss ratio to be much more stable and I wanted to ask a bit of a general question to gauge how in depth some people go.
Currently I’m trading on 5min - 1hr candles and really I look for trend lines and candlestick patterns to guide me, nothing more really.
I’d like to do trading on 30min, 1hr and 4hr candles.
I’ve learnt about stacho, divergence, fib, support & resistance.
My question is:
If i was to start my day by drawing out my support & resistence on say the 30min or 1hr chart.
Then look for hidden divergences where momentum and price action clash.
Then look for candlestick pattern to follow that divergence, ie an engulfing bullish candle or hammer candle at the bottom of a drop…
and seeing all this on a support line, ideally in the oversold zone…
Would this merit a good entry providing the next candle opens above the engulfing candle, providing it is not too far from the support?
I would love to know how some of you more experienced traders use the information or what methods you prefer.
If you want to move from trading the H1 (and lower) time frames to trading the H4 (and lower) time frames, then you are basically choosing a new style of trading, extending the duration of your trades from intraday to (potentially) multi-day. This change in style will require that you [I]pay even more attention to trend-following techniques.[/I]
Would you be interested in trading the 4-hour, 1-hour, and 5-minute charts – using the 4-hour chart to guide your trend determination? If so, you should check out [B]The 3 Ducks Trading System.[/B]
In The 3 Ducks System, the 4-hour chart provides two binary choices:
is there a TRADE-ABLE TREND / or NOT ?
if there is a trade-able trend, is it UP / or DOWN ?
The 4-hour chart directs you to
look further into pairs showing clear, trade-able trends, and to ignore all other pairs, and
consider trading those pairs which show trade-able trends [I]only in the direction of those trends.[/I]
The 3 Ducks System uses the 60-period SMA on all three charts. It uses no other indicators, and I would suggest that you try it [I]for a month[/I] without your usual menu of indicators. If, after a month, you find that The 3 Ducks has merit, you can experiment (cautiously) with adding indicators or other enhancements to the System.
Here’s a LINK to the venerable 3 Ducks thread, here on the forum.
And HERE is the specific post where Andy Perry (Captain Currency), the author of the thread, gives instructions for requesting his free e-book on The 3 Ducks Trading System.
I think 4H will be a bit too much, I would ideally like to open/close my trades on the same day or maybe 1-2 days later if needed. I’d be looking to trade more on the 30min and 1hr charts ideally.
How about the technique I mentioned, do you think it’s overkill for trying to find a highly probably good trade or any way I could tweak that method? That’s pretty much all the skills I’ve learnt so far…
Now, I’m confused. Do you want to include the 4-hour timeframe in your analysis, or not?
S/R levels [I](based on recent swing highs and swing lows that you can see with your own eyes)[/I] are powerful tools on any timeframe you choose to trade. You could make a successful career just trading [B]trends[/B] (higher highs and higher lows, or lower highs and lower lows), along with [B]support and resistance levels[/B] – and forgetting about all the other stuff.
Trendlines are good, as long as they don’t become a crutch.
Moving averages (which you have not mentioned) can focus your attention on trends.
Fibonacci retracements can be helpful, [I]if used only for confirmation[/I] of what your trend analysis and your S/R analysis are telling you.
Candle types and candle formations are details that [I]may confirm or validate[/I] the bigger picture.
Don’t base trading decisions [I]primarily[/I] on fibonacci levels or candle formations.
Ditch the stochastics, ignore the divergences, and clear all that over-bought/over-sold stuff out of your head. Let all the other indicators and oscillators fall by the wayside. You really don’t need them.
Just my opinion. Do with it what you will.
Indicators are fabulous tools for showing you the trades
[I][B]you should have taken[/B][/I] an hour ago, or yesterday, or last Thursday.
Thank you Clint.
Yes, I decided the 4h candle will be a bit too long for me, I would prefer where possible to close trades same day or the very next day.
And you are SO right - the indicators are perfect when I’m analysing historical charts, but on live data it proved pretty useless to me today because by the time all the pieces of the puzzle fit… I was away from any safe entry point and heading towards resistance.
I will try as you suggested, clear my head of all the ott indicators and see how I get on. Thanks for the detailed response + advice
