Considering the Higher Frame Candle - with Statistics

Trading Discussion
1

Aloha Traders,

What I’m about to share may be “ABC” for many, but perhaps not for many others.

I recently bombed out on two demo trades, one on the weekly and one on the daily, that had all the signs of high probability trades - on the time frames that I traded. After deciding that it would probably not help my forex career to open an artery, I looked at the next higher time frame for each. In each case, the direction of the current candle on higher frame opposed the direction of the trend on the lower, which I traded; so I performed a little test.

For each of the twelve pairs on my MT4 tabs, I noted the overall directional bias of the last four completed daily candles, and compared them with the direction of their corresponding weekly candles. (The Monday through Thursday candles had fully formed.)

RESULTS

  1. As one might expect, in every case the direction of the 4-candle daily bias was consistent with the direction of the weekly.
  2. For 10 of the 12 pairs, the direction of 3 of the 4 dailies was consistent with the direction of the weeklies.
  3. For 2 of the 12 pairs, the direction of 4 of the 4 dailies was consistent with the direction of the weeklies.
    (Note: Never less than 3 of the 4 candles were consistent with the direction of the weeklies.)
  4. Based on the last 2 items, for the 12 pairs, the direction of an average of 3.17 of 4 candles was consistent with the direction of the weeklies.
  5. As one would expect, on the whole, the size of the daily candles whose direction was consistent with that of their corresponding weekly candle was much bigger than the size of the dailies that opposed.

THE MORAL OF THE STORY
An inspection of twelve pairs will certainly not qualify as a scientific sample, but my 12 out of 12 unanimous results are quite impressive - to me, anyway! If you check Manxx’s post immediately following, he’ll point out some important exceptions and qualifications. Please check it out and perhaps others that may follow.

All thing considered, the very least that can be said is that the higher frame candle is a SUMMARY of the movements of the lower candles during the higher frame period - and there is always value in a concise summary. Therefore, the more lower frame candles that have transpired during the higher frame period, the better the higher frame candle represents its period’s recent trend movement on the lower frame.

All things considered, I’ll point out a couple of principles that I arrived that I think are worth keeping in mind:

  1. THE GREATER THE NUMBER OF LOWER FRAME CANDLES THAT TRANSPIRE DURING THE HIGHER FRAME’S PERIOD, THE MORE ACCURATELY THE HIGHER FRAME CANDLE REFLECTS IT’S PERIOD’S LOWER FRAME TRENDS.

  2. THEREFORE, BE CAREFUL ABOUT LAUNCHING A TRADE WHOSE TREND OPPOSES THE DIRECTION OF THE HIGHER FRAME CANDLE, ESPECIALLY AS THE HIGHER FRAME PERIOD APPROACHES COMPLETION.

You may have heard about not launching a trade whose trend opposes the TREND of the next highest time frame, but I do not recall hearing about being careful about a trade whose trend opposes the direction of the higher frame CANDLE.

To oppose the prevailing trend in any situation is like swimming upstream: Either you get swept backwards, exhaust yourself by swimming in one spot, or make little forward progress, depending upon how fast you swim relative to the speed of the current opposing you.

A test consisting of 12 simple comparisons would never be published in a math or science journal near Einstein’s Theory of Relativity - but I, for one, will bear the two principles in mind as I consider a trade.

Please do add helpful comments, insights, caveats, and test results to this thread.

Love y’all (I’m originally from the Deep South. South Brooklyn, that is.)
Norm

2

Hi Norm,
Have I understood you correctly here? You wrote:

But is this not one and the same thing? If you are watching the current weekly candle then it is forming from the same price stream that has been forming each of the four daily candles so far? If you look at the four daily candles as a group then it will have the same open, high, low and current price as the current weekly candle. In whatever way the price movement evolves during the week, starting on Monday (Sun night) it will be the same on both the weekly and the combined daily component sections of that week as it is gradually developing. In other words, you cannot see the direction on the current weekly until the dailies have already formed it?

You are looking at a historic view of the week on Thursday and, naturally, being the same price stream, the four dailies will reflect whatever is showing on that current week’s candle. But if you start with Monday, then the daily candle after the close on Mon will be identical to the current weekly candle so far. If Tues continues the same direction then you can say that both Mon and Tues were in the same direction as the current weekly. But if the Tues daily reverses the Mon trade and extends even further in the opposite driection then you can say 50% of the two trades were in the same direction as the current weekly. If Weds continues Tues’ move then 2/3rds of the three days are in the same direction as the current weekly?

It is the incremental dailies that are forming the current weekly, and not the other way round?

Or have I misunderstood what you are saying here?

3

Hi Manxx,

Thanks for getting back on it.

Yes, it’s true. One naturally flows from the other. I knew it intuitively, but it hit me like a ton of bricks when I inspected the twelve pairs visually. Perhaps my report will help others as much as my direct observation helped me.[quote=“Manxx, post:2, topic:109014”]

if you start with Monday, then the daily candle after the close on Mon will be identical to the current weekly candle so far.
[/quote]

Absolutely correct. I was going to add it, but you beat me to the punch.

You’re right.

As a result of your input, I’ll soften up on my dogmatic “moral of the story” in my post. Please check it out.

Thanks and take care,
Norm

1 Like
4

Hi Manxx,

I don’t know if you got a chance to check the edits to my post, as I suggested in my reply to you. The fact is, the more I reflected on what we both wrote, the clearer the whole picture got for me, so I’ve done a re-edit. Check out the whole section under THE MORAL OF THE STORY, if you like. I even toned down the post’s title.

Thanks again for your helpful input. That’s what these threads are all about.

Take care,
Norm

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5

Hi!
It is interesting to note that we have a timezone diff that puts us on almost opposites sides of the day! :smiley: Not good for conversation! :smiley:

I think your post reads a lot more realistically now.

Personally, I think most methods that involve keeping some kind of perspective on a reasonably related higher timeframe is beneficial. And I guess the intention with this one is to try and focus on the more immediate movements in the weekly rather than the “oil tanker” movement of a weekly trend, which inevitably lags.

However, I still think the weakness here is that you cannot trade on Mon-Weds what the current weekly candle will look like on Thurs.

During a strong trend, the mon start may well follow through to the end of the week and it would be very positive to only be trading in that same direction all week.

But during ranging or quiet markets, the evolving weekly candle ( which is still alive) may well swing from up to down every time the current price passes through the weekly open. Although on Thurs one could identify an overall bias for that week’s movement, it will no longer show any the swings that took place during Mon through Weds.

In other words, you are trading a daily movement based on a weekly candle that is constantly “repainting”. I am not saying there is no value here, only that there is a need for caution and awareness that the current weekly candle is alive and well until it dies on the Friday close.

The benefit of candles is that they smooth out all the noise within the period selected and reduce it to an open, high, low, and close. But by referring to a current candle there is the risk of being whipped by this internal fluctuating as the candle develops its final form.

I guess you can only develop and test how this works in practice by forward trading it on demo for a few weeks?

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6

Aloha Max,

Yes. Let me guess. If I’m wrong, it will only be the second time in my life, so here goes: You’re half-way around the world from Hawaii, and your name is Manxx. You’re a Manxman from the Isle of Man, correct?

Well, now that we’ve taken care of the important stuff, let’s get down to forex.

What I thought was a monumental discovery, for me, anyway, turned out to be merely an increased understanding of the relationship between lower and upper frame candles - nothing to be tossed in the trash, but nothing to be printed on the cover of Scientific American, either. Anyway, I’m glad that my results were posted, as well as your comments, as they may prove helpful to some. My examination of the higher frame candle in relation to the lower frame candles that make it up was like taking a microscope to something that could be intuited; but there’s nothing like seeing something with your own eyes. And your insights gave me a tremendous boost in thinking things through much further than I had. [quote=“Manxx, post:5, topic:109014”]
I still think the weakness here is that you cannot trade on Mon-Weds what the current weekly candle will look like on Thurs.
[/quote]

Yes, it’s obvious that the more lower frame candles that make up the higher frame candle, the more representative of the recent trend it is and the more valuable for trading decisions it is. It’s like the difference between a 14 SMA and a 2 SMA. Even among the commonly offered time periods on the charts, the 1-minute through the monthly, the greatest number of period candles found in the next higher candle is the H4 in relation to the daily: There are 6 H4s in a daily. If one were considering a trade on the H4 and would care to see a “summary” of the day’s H4s after the daily had completed, that would obviously be far more valuable than checking out two M30s on an H1. Of course, one could jump from say, an M15 to an H4 after the H4 had completed, and get a summary of 16 M15s, but I really don’t want to carry on this “thought experiment” (to quote Einstein) too much further. I think I’ve just about played it out to my satisfaction with the help of your on-the-spot and quick insights. [quote=“Manxx, post:5, topic:109014”]
But during ranging or quiet markets, the evolving weekly candle ( which is still alive) may well swing from up to down every time the current price passes through the weekly open.
[/quote]

Yup. Very true.

Thanks for dropping in for a visit. Please feel free to continue this thread, if you so choose, or drop in at another time.

Take care,
Norm

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7

Hi Norman!

[quote=“NormanA, post:6, topic:109014”]
Yes. Let me guess. If I’m wrong, it will only be the second time in my life, so here goes: You’re half-way around the world from Hawaii, and your name is Manxx. You’re a Manxman from the Isle of Man, correct? [/quote]

Well, 10/10 for logical analysis…but only 5/10 for accuracy, Im afraid! Yes, I am British by birth but I live in the Nordic country of the Midnight sun, Aurora Borealis and Santa Claus :smiley: My username is entirely random and has no meaning or relevance at all. Sorry to have misled you there!

I feel quite bad about this. I did not wish to trample over your discovery! In fact, it is not in vain at all - maybe just slightly askew on seeing the relationship between these two timeframes. In fact, there is some value in monitoring the weekly candle as you suggest because it is providing a “running commentary” on how the week is progessing and that can be of great value in appraising whether to hold positions or close or simply trade for shorter pieces intraday depending on whether the weekly development is strongly and consistently one-sided, or reversing, or simply flucuating aimlessly around its opening range. Either way, it is not in vain at all! :smiley:

I understand what you were trying to achieve here. The weekly does give a longer term view of what is the underlying trend but any TA analysis of it is also so long term and turns sooooooooo slowly that one has either fallen asleep, forgotten one even had a position open or maybe even died in the meantime! :smiley:

I have actually this summer started to focus on analysing the daily chart in a more tradeable way. I have no results from it yet, but if you like, I am happy to share some of the thoughts and results with you if you think it might catalyse your own developments in these longer timeframes?

You, too!

8

Iceland? Far North of Norway?

That Santa Claus gets everywhere, you know?

We’ve already worked out that you’re actually one of those cats without a tail - don’t disillusion us now.

9

yeah, it’s terrible how quickly people shut those lift doors without checking everyone’s completely inside :smiley:

But that is better than perpetually staring at screens in the dark and living off junk food :smiley: :

10

Aloha Manxx,

Thanks for sharing what you did. We all need to help each other come into balance on all sorts of matters, and I’m glad you shared what you did. Shall we all hide from correction or shrink from correcting? Of course, not. If we can’t help each other see what needs to be seen, then these forums are useless. [quote=“Manxx, post:7, topic:109014”]
The weekly does give a longer term view of what is the underlying trend but any TA analysis of it is also so long term and turns sooooooooo slowly that one has either fallen asleep, forgotten one even had a position open or maybe even died in the meantime!
[/quote]

You’re right about that! My weekly was looking good, but them went into a range. Can you imagine four, five or nore weekly candles before it breaks out of a range? I thought I might die first. And all the while not knowing which way it will go, and your trading capital tied up in the negative zone so you can’t lock in profits and use that capital for another trade? I think I’m cured of weeklies, at least for now.[quote=“Manxx, post:7, topic:109014”]
I have actually this summer started to focus on analysing the daily chart in a more tradeable way. I have no results from it yet, but if you like, I am happy to share some of the thoughts and results with you if you think it might catalyse your own developments in these longer timeframes?
[/quote]

Absolutely! At present, my psychological parameters are M15 to D1, mostly hovering around H4, but I am presently trying some stuff on the daily, and expect to continue doing so. Also, at present, I’m getting ready for massive demos of tradeline bounces modeled after Myronn Saremo’s system, which looks excellent: Advanced strategy #10 (Trend Line Trading Strategy) | Forex Strategies & Systems Revealed. I’m also trying some other stuff, but I think the trendline bounces look most promising, especially with the use of a trendline-price crossover alert that I just discovered. Anything you can think of that can help help me along - whatever system(s) you use - will be more than welcome. If you think what you have to share would be more on the personal side and not for public broadcasting, there must be a way via Babypips to communicate with me personally. At least there was with the old format. If you’d like my personal email address, go to my website, www.BibleStudyProject.org, and pull it off the bottom of the home page just above the PayPal button.

P.S. If you have any pull with Santa, tell him I could use a good retirement bundle - which is why I’m breaking my head over forex!

Thank you, and take care!
Norm!

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11

Hi Norman,

I really enjoyed reading your story! Very interesting! That’s quite a life you have lived! :slight_smile:

It seems you are involved in some very important work in your life right now and I wish you well with that.

I think one of the biggest decisions that any newcomer to retail forex trading has to decide, right from the start, is whether they are aiming at earning an income from trading, or building capital, or utilising existing capital.

Utilising existing capital is perhaps the easiest of these in that one can pick and choose when and where and how much to invest in positions and afford to sit with them for as long as seems sensible. The only serious criteria is recognising how much one is prepared to risk and can afford to lose!

Building up a capital base is also somewhat easier in that there is no pressure to perform according to preset deadlines or defined targets but can be extremely frustrating when there are periods when nothing seems to go right!

Attempting to earn a living, or supplementing a limited income is perhaps the hardest of all. The need to perform is extreme and there is a natural tendency towards short-term trading in order to create drawable income on a regular basis. The pressures and emotional swings in this category can be intense and it draws a huge amount of concentration and study. And it is eminently clear just from this site that most people looking to earn a living from retail forex trading do actually fail. There are few success stories here from previous Babypippers coming back to say how it all worked out so well for them - but there is a constant stream of Newbies who come here, post about their enthusiasm…and then disappear. Why that is, I really don’t know, but I can guess…

So it is necessary to be realistic about what one is looking for and what are the chances of achieving it - and whether one can afford to make all the other non-financial sacrifices such as time, stress and concentration which would otherwise be devoted to other things, albeit also non-financial - which might even be, perhaps, more important and rewarding areas of activity.

There is positive stress and there is negative stress. and recognising which is present in one’s trading development is a good way to conclude whether it is really the right field to be in, or not.

You are currently looking at a lot of things that interest you - let us know how you are getting on and how they work out…

12

Thank you, Manxx.

Not smart enough to figure out what category I fit into. What I can tell you is this: I’m way past the age of retirement, am still working, and have a small - read “small” - stash for trading live when my demos warrant it. Well, what the heck! I have $2500 set aside. I’m well aware of the power of compounding, and am hoping to do that with my investment. I have done plenty of studying in “all” aspects of forex, including the math, will continue to do so, and will be very careful with risk management. As my account grows, I hope to relieve my wife and myself of the burden of substitute teaching, which we can let go of gradually as we can accept or reject jobs on a daily basis. Lord willing, we’ll be able to completely retire and live off of forex withdrawals (I’m not talking about forex addiction!) based on good trading and financial management. Well, THAT is the category I fit into!

I’ve just shifted from a stage of intense study to a stage of massive demo trading - as much as I could pull off with my school schedule, which will begin in a couple of weeks, and without being too rushed and exhausted that I screw up, which I just did last night! After preaching above about not trading against the trend - you’ll never guess! And it was so obvious, right there on the chart I was trading! And I didn’t see it until I was well into the trade! What I’m planning on doing is typing out checklists a mile long that I hope I’ll have the patience and diligence to follow. There are so many factors! And I’m still learning which are significant and which I could let go of so I won’t be paralyzed waiting for “the perfect trade!” I’m also recording every trade, with commentary, on an Excel sheet, which I’ve just begin to gain some fluidity with, at least with the basics, which is fine for now. I’ve also made progress in understanding how to use Forex Tester 3. So as you see, I’m making an intensive effort. I hope one day to be in the set-it-and-forget-it league, so I can have a life without having my head stuck in my monitor. I’m not there yet when I have the time to monitor a trade - it’s not that I haven’t learned to accept losses, it’s mostly because as I study the progression of a trade I make observations, learn and come to conclusions. I have no doubt, though, that I can launch an H4 trade, for example, and then go to work. I’ve done it, and I didn’t bite my nails down to my elbows, so I’m coming along.

What kinds of trades am I practicing? Trend line bounces and a simple “winning trade” sent by FT3. According to their testing, 55 SMA (among many SMAs they’ve tested) on the daily EURUSD, traded by tossing a coin for buy and sell, with nothing more added, not even a TP, and opening, closing, and then opening a new trade at candle close and open, is supposed to bring good profits over the course of time. I’m trying it exactly as they say, except, because of my location, I’m doing it mid-candle to mid-candle every 24 hours; and am also trying 55 SMA on the daily EURUSD combined with price action and a couple of interventions that I think will help, especially letting winners run by locking in profits, and then comparing the two approaches. On the back burner are trading engulfing candles, pinbars, inside bars, etc. I know the value of learning one approach well, but I’d also like to be able to look at a chart and see a good setup, whichever variety it is, and trade it appropriately. My grandson is a commercial fisherman, and he pulls up whatever is out there, not waiting for one kind of fish to jump in his boat!

Well, there you have it. Any comments, shoot 'em over.

Take care, Manxx,
Norm

13

Hi Norman!

Well at least your enthusiasm and optimism are both well in place, as indeed is your industriousness :slight_smile:

But in addition to the classic optimist/pessimist distinction of whether the glass is half empty or half full, we traders also have a greater need for a third quality, realism or pragmatism: simply what can I actually expect to achieve with half a glass.

Whilst 2500 is ample to start trading on a live basis, it is still necessary to establish what one is eventually aiming for and whether it is realistically achievable. In your case, you appear to have (sensibly) divided your plan into two stages: a) an initial building up your capital base, and b) then earning a regularly drawable income from it whilst maintaining this capital base at least at a constant level.

If you have been doing the math then you will have already determined some kind of anticipated realistic rate of return on your 2500 based on your trading approach, R:R and success/failure rate. Naturally, we have to keep in mind that the 2500 is not really “capital” that we are “investing”. Rather, it is simply a deposit placed with the broker to guarantee possible losses arising from taking fictitious positions with sums far beyond what we actually possess in the hope that the change in exchange rate will go in our favour. It is not really capital in the true sense of investment capital, it is just our stack of chips on the table.

We just hope that we can develop a method that will overall consistently create more winnings than losses.

There are many ways of calculating a level of income with respect to a certain capital base, and there have been many threads here about it, all of which conclude that in order to possibly earn a reasonable full-time income from trading, one would require a very substantial capital sum.

But not everyone is looking for a complete normal “salary”, but maybe just some level of supplement to put some icing on an otherwise mundane income. In which case one could look at it in terms of how many good trades would be required, how big the positions should be and is it realistic with my capital. For example, (and this is only a very loose, of the top of my head, thought process, by way of logical planning).

If I am looking to trade on a 4H timeframe then I could loosely guessimate that, on average, I might see perhaps 10-12 quality trade signals per month? If I anticipate a success rate of maybe 60% then perhaps 6-9 trades may win against 4-5 losing trades? Therefore maybe a net of around 4 trades per month.

If I then overlay that with the R:R, then if it is greater than 1:1 up to, say, 1:2, my net equiv trades may be around 6-7 per month?

If, then, I have assessed that my likely target pips on a 4H trade is in the region of 50-100 pips, i.e. an average of 75 per trade? Then my estimated pip earnings per month could be around 500 per month?

Then I would have to calculate my actual earnings per pip according to my intended position size - or, alternatively, I can instead now jump ahead to my targetted income level and then work back to establish how big a position size I would have to always take in order to achieve that level of income.

Then I can compare that position size with my deposit “capital” and decide if it is reasonable risk or not.

This kind of thought process is always entirely hypothetical and results vary tremendously from month to month, but it gives an indication of the overall order of magnitude and what are the realistic expectations of risk versus reward. It also gives some kind of idea how long it might take to build an initial capital sum up to the level considered suitable for the position sizes required.

Once again, this is an area where there is no right or wrong solution and I am sure other people will have very different ideas on how to approach the math side. But one thing is surely certain - that some kind of math has to be performed in order to assess the realism of one’s ambitions, the timescales involved and the risks involved.

I don’t know if this helps or confuses, but clarity is often born from a state of confusion and chaos! :smiley:

14

Wow, Manxx, you really are the math head! What is your background? Do you trade for a living? Do you use your math at work? What kind of work do you do?

As far as my account amount goes: If I earn a consistent net profit, I’ll add a portion regularly from my work income, and there may be another source I can draw from, as well. What I’m truly counting on though, is good trading and good compounding.

Here’s a quote from Clint, from Honorary Member Q&A: Clint
…
[I]I would urge newbies to learn the power of COMPOUNDING modest, but consistent, daily profits — and, then, letting those profits grow exponentially to build wealth.

There are three elements here:
modest profits — don’t take huge risks swinging for the fences;

consistent profits — this means accurately following a trading method which has a high win-ratio; and

compound profits — let your profits accumulate in your account; and, as your account grows, increase the size of your trades in proportion to the size of your account.
If you can consistently AVERAGE a net profit of just 20 pips each day, you can earn an average 1% increase in the value of your account each day, while trading with no more than 5:1 actual leverage, and limiting your risk to less than 2% on each trade.

A steady 1% increase per day
= a little more than 5% per week (compounded over 5 trading days per week)

= a little more than 24% per month (22 trading days per month)

= almost 1,000% per year (240 trading days per year, allowing for vacations and holidays).
Where else can you legally make 1,000% per year on your initial capital, without taking extraordinary risks?
…
Pretty impressive for just 20 pips per trading day. I could easily see the 24% a month. 1,000% a year? I hope he’s correct, but I haven’t plugged the numbers into a formula to check. But 24% a month? Cowabonga! That’s something to shoot for!

I’m motivated to learn well enough to go live, and then max my trading out without forgetting about the rest of life!

Those are my intentions and goals.

Have a great day,
Norm

15

Not criticizing your vision at all, and hoping for your great success, but do you know what proportion of retail forex traders ever achieves 24% per month growth steadily?

Do you know what proportion ever achieves 5% per month?

Do you know what proportion ever achieves any steady monthly profit at all?

Do you know what proportion ever achieves profit by copying an unbacktested, unforward-tested “system” from a site like Forex Strategies Revealed where the people submitting their systems are other random, unknown, untested, unproven amateurs and there’s no editorial selection-process at all before they’re published there?

With respect, Norman, your current expectations are unreasonable ones.

You don’t know me at all, but you seem (very wisely) to have respect for Manxx. Ask him whether you think it’s reasonable to pin your hopes on that system and whether he thinks the growth you envisage is a reasonable expectation. And put your confidence in his reply, as I would.

I’m posting to say this because I hope you do well, but your current thoughts and plans are going to let you down.

1 Like
16

Not really, Norman, it was just a loose chain of logical deduction as an example of how one can relate position size with risk and expectations. It’s just a bit of a juggling process to find the right balance between acceptable (and survivable) risk and a reward that will make the risk worthwhile and achieve the desired objectives.

[quote=“LaughingCharlie, post:15, topic:109014”]
Not criticizing your vision at all, and hoping for your great success, but do you know what proportion of retail forex traders ever achieves 24% per month growth steadily?
Do you know what proportion ever achieves 5% per month?
Do you know what proportion ever achieves any steady monthly profit at all?
Do you know what proportion ever achieves profit by copying an unbacktested, unforward-tested “system” from a site like Forex Strategies Revealed where the people submitting their systems are other random, unknown, untested, unproven amateurs and there’s no editorial selection-process at all before they’re published there?
With respect, Norman, your current expectations are unreasonable ones.[/quote]
Yes, I do fully agree with LC here - concerning both the “Forex Strategies Revealed” strategy and the likelihood of achieving a consistent average 24% growth per month:

Forex Strategies Revealed “Trend Line Trading Strategy”

This strategy was posted there in 2008 and the thread continued for a little over a year. It is based on very sound principles of identifying trendlines and entering positions on reversals off these lines. It uses multiple timeframes and is easy to execute and to apply a sensible risk/reward control - all good stuff.

However, that is all it is as far as I can see. And its effectiveness relies on skilled recognition and application of trendlines and S/R levels. This is really just normal application of basic PA techniques. One can, of course, develop skills in this but I don’t see this as any more effective than any other PA-based method?

I have not read through the entire thread but I noticed one comment that does indicate there are tangible risks with this method:

“…in my trading business plan I have added a provision where I will stop trading if at any week losses exceed 20% of account equity”…"I will not trade any currency pair or closely correlated pair,especially the more volatile ones,for at least a week after 2 consecutive losses within a week. This will help you avoid revenge trading witch was also a factor in blowing up my demo account."

In addition, this particular method requires constant screen monitoring to catch the candle that creates the trade opportunity before placing the order:

“I place a sell stop order, at least 5pips below the LOW of the candle that touches or intersects the trendline…You must place your order when that candle closes.”

Personally, I do not hold out much hope for gaining consistent and regular profits from this type of mechanised approach to trade entry. I would personally prefer to evaluate each and every bounce individually. If it was really working well then that thread would probably still be going today some 9 years later? But, of course, I may well be totally wrong here! :smiley:

24% monthly growth

I am not a great fan of these kinds of projections because markets do not perform in the uniform, cyclical fashion that that would be necessary for this to be achieved on a regular basis.

Although 20 pips per day may sound easy, it is not quite so simple as it sounds. If the first trade of the day is stopped out then you will need a least two more trades to get your 20 pips - and that is only if your stoploss is also 20 pips. And if you are looking for 20 pips from an hourly or 4H chart then 20 pips as a stoploss is not much at all…and then there are always those days when just nothing goes right and you end up with 60 pips loss as the starting point for the next day’s trading?

Also, this is based on 20+ trading days per month. Personally, I think that is a lot! Many traders ignore Mondays totally and some also Fridays. Then there are national holidays, quiet days before data releases, etc. and then one’s own days when normal life obligations get in the way! Personally, I work my own trading plan on about only 10-12 selected trading days per month.

In addition, as with the strategy comments above, these trade opportunities for a possible 20 pip gain do not conveniently always line up at , say, 9 o’clock in the morning before going off to work for the day. They can, and do, turn up at almost any time and it is extremely stressful and tiring to sit around waiting for the right moment - and this doesn’t always fit well with other commitments. Although this can be mitigated by setting specific trading hours when trades are most likely to occur such as the first 2-3 hours of the London and/or NY sessions.

It is certainly possible to gain 20 pips on a particular day, but can one realistically (there’s that word again! :slight_smile: ) hope to gain it on average every single trading day? I doubt that somehow.

I am not any kind of authority on trader expectations or verified results but I get the impression that 3-5% annually is generally considered a good result?

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Most grateful for your thoughtful, detailed reply, Manxx! :slight_smile:

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Hi Guys,

Thank you for your assessments of realistic possibilities, but here’s the deal: I have nothing else to turn to at this point, so I’ll do the best I can with it.

I’m not trying to blow you guys off or stiff-arm further comments; I’m simply saying that I need to do what I can to make the best of it, and I will.

Norm

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You were the catalyst here, LC, thanks for your own input here, too! It is exactly this kind of mutual sharing and exploring of ideas, thoughts and experiences that surely should be of benefit to us all?

As we all know, we are all on the same side here just finding our way forward in a sea of grey, hoping to find the reality amongst the dreams! :smiley:

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We understand that Norman. And that is why we are trying to help expose the realities and the issues ahead. Surely it is better to approach this with eyes open rather than under any misconceptions?

I am sure you agree that you do not have much leeway for error here so is it not better to foresee and avoid some possible pitfalls rather than have to try and recover lost ground after any costly setbacks?

The aim is to be positive and realistic. Forex is cold, heartless and unforgiving, but rewards well those that respect it and approach it with professionalism and humility - and a fair dose of patience! :slight_smile: