I am so glad to see that you’ve decided to continue, Ingot. Your storytelling is truly mesmerizing.
I’ve downloaded the doc and will be following your strategy. I, too, am on Oanda with no weekly chart, but I have an MT4 demo, so I think I can work around that.
[B]Andy[/B]
You are most welcome to post as many charts as you need to demonstrate a point … and if you are able to put the templates into EA form that would also help quite a few of us. My skills do not extend to software writing - I struggled to post the Rainbow Palette Parameters … l:^)
My landing skills will be different from yours. (Landing skills = Entry / Exit)
I wasted so much time in the past trying to figure out how to get my entries right, when trading equities, that I realised there has to be a better way.
I try to major on getting the trends right first. Sometimes this means missing an entry at the “best point” but “best points” are usually more obvious in hindsight.
The first thing to “know” is this:
“Is there a trade setting up here or not?”
What I hope this thread can achieve, is to develop Landing Skills to suit the time-frame. By that I mean we should try to forget about previous concepts learned in shorter TF trading and DEVELOP NEW ways to optimise Landing points.
My own method is to look at TF from 4H through to Monthly.
I start briefly at Monthly and work backwards to Weekly, Daily, 4H. That is self-explanatory really - either you have a trend or you don’t. At that point you either turn off the computer and go for a game of golf or tennis, or flick to the next currency pair.
In my case I follow only the majors - issues of spread and liquidity are minimised, and you can really get to know the character of the pairs by being restrictive in focus. Further, it is important to be aware of FA issues such as Employment trends, Interest Rates and Inflation and Current A/C Balances and so on.
This will not affect your trading per se, but WILL give you a background reason to help in decision-making when you see the trends begin to flatten and turn. You need to know whether a Fundamental shift is occurring or not.
I know we are focusing on TA as traders generally, but keep in mind that the LONGER the TF we operate in, the MORE IMPORTANT FA becomes to our strategy.
As an example, if you are trading monthly charts (I don’t know George Soros, so I don’t know anyone who does this) you will NOT be looking at what the 1H chart is up to. In the context of longer TF such movement is just “noise”.
BUT the Monthly charts WILL be affected by economic data, and although sound knowledge in this area is not essential, on this scale such knowledge can be a definite advantage.
With patience Andy, you begin to let doubtful trades pass by - why?
Because your money becomes tied up and could be employed in a far more favourable setup, simply by having your cash ready for the GREAT setups when they occur. 24 hours is a long time in trading, but on the longer TF 3 or 4 days is a long time.
This method gives you that time … and that is what we want in trading - success without screen-gazing.
What is important is TIME in our lives. No use earning heaps of money if all your spare time is used up in making it.
Sorry for the long-winded post … that is an unfortunate feature of my writing - I assume people don’t know stuff, and I tend to overdo the yak-yak! Bit arrogant of me I know, so please just gloss over the boring bits … we’ll get there.
Hi Boca
Good to see you acknowledge that work is a big responsibility in your life.
Mine too … and family. As much as I would like to spend time trading and posting … I can not escape the responsibilities of life, and the primary priorities.
The charting package I use is MetaTrader 4 from Interbankfx. They tell you the demo expires in 30 days, but that is ONLY IF YOU LET IT LIE DORMANT.
If you are actively using the demo platform, it will roll along indefinitely until you stop using it. I know North Finance also offer a MT4 and a Google search will help you find more companies.
I would not deal with any company offshore, personally.
I call it Sovereign Risk.
In Australia we don’t have too much choice regarding Demo and trading live platforms. We have Sonray (Saxobank) and Forexyard, and a couple of others. Hopefully some Aussie readers can post the names of their brokers with demo’s plus good local live trading dealers. Australian Regulations are perhaps the tightest in the world, so it is perhaps safer for overseas (from Australia) to deal with an Australian company in the event of a dispute.
My point in mentioning Sovereign Risknis this:
In the event of a disputed call over whether the price actually touched a SL or TP etc it is far easier for a citizen in the country where the dealer is based, to obtain regulatory assistance in settling disputes. Further, when it comes to getting my money out of the Bahamas, or the Canary Islands, I don’t like my chances.
How can I go and knock on the door of a dealer 12000 miles away on the other side of the world who is declining to answer my correspondence? Even the Australian Government has its hands tied to an extent when it comes to outside jurisdictions.
“If you don’t deal at home … you’re ALONE!”
Different brokers who offer MT4 platforms for demo offer different numbers of pairs to trade. As well, some MT4 platforms only offer short-term TF.
I have used Oanda, Forexyard, and some of the charting attached to live trading platforms eg IG Markets, and for myself I prefer the MT4 platforms.
Just as an addit: If the TF you need (eg weekly or monthly) is not visible on the toolbar, there is a CLOCK icon on the toolbar which has these two extra TF’s available. Unfortunately you need to access them this way every time, because as far as I can see it is not possible to drag-and-drop these 2 TF’s to the standard toolbar for frequent use.
Other readers may offer helpful views on this too.
If you right click on one of the time frames on the toolbar and choose “Customize” from the drop down menu, you can add the ones that you don’t have. I have all the time frames on my toolbar for convenience.
Yes please post a template for this setup.
[QUOTE=droesparky;31662]Yes please post a template for this setup.[/QUOTE]
Heres the rainbow moving averages bit.
Ingot - if you could post the settings for the Stochs in the same way that you did for the MA’s I can add this and create an overall template. It looks like the stochs are just variations on x,3,3 but I need to know all the values for ‘x’, and which colours each are. These could be viewed on your chart on indicator properties. BIG THANKS !
Andy
[B]Droesparky and Andy[/B]
Have another look at POST #10 above, and click the link to
“Spuds Stochastic Thread Theory”
The owner of this Intellectual Property, Spudfyre, has given not only the values he uses, but a totally amazing insight into the way to use the resultant MTF image in determining entry and exit.
This gentleman deserves much more recognition than I am able to afford him in this humble way, and I hope he is acknowledged and rewarded for sharing that insight publicly in the interests of helping fellow traders.
I am unsure how this would construct on other than MT4 platforms, but this is how to do it: (one method - I hope you are able to write an EA for it Andy)
Firstly, open a window for the 5-3-3 Stochastic on any chart - Spudfyre uses the 1H chart, but the MTF Stochs will appear in ANY TF after is it saved as a template - not just the one in which it was constructed.
On the top tool-bar click the following in order:
Insert
Indicators
Oscillators
Stochastic Oscillator
Then a window opens with “Parameters” as the default.
The default settings are 5-3-3
Click “OK” and you now have a new window, with the 5-3-3 Stochastic visible. To make all of this easier to view, I zoom right in to about an 8 hour timeframe using the 1H bars.
[While thinking about this just now, I realised we do NOT need the signal line.
So I propose varying Spudfyre’s original parameters, for the benefit of this project, to 5-1-3. This will give the Stochastic the appearance of a single line, but dotted with the colours of both the MAIN line and the SIGNAL line.
To overcome this, simply colour BOTH lines the same colour. This can be done through experimentation in the “Colors” tab in the “Parameters” window. Read all the way through these instructions first though, because we will be setting colours according to a fairly structured plan.]
Then go to “Navigator” and make certain you are in the “Common” window and not the “Favorites” window. Just needed to mention that as it was a stumbling block for me when I first manually built this on my own MT4 platform. The “Common” tab should open as the default.
The rest is a piece of cake. But only if you get this next step right!
l:^)
BTW “Navigator” can be found under: “View” on the top toolbar if you had previously closed it out to obtain more screen real estate.
In “Navigator” expand the “Indicators” link (click on the “+”) and find (right near the bottom of the drop-down list) “Stochastic Oscillator”.
Left click and hold the mouse on the name (or the “f” symbol will do the same) and DRAG the icon (appears ghosted - dotted) into the first Stochastics window.
The "Parameters window should again open up instantly as you release the left mouse button. The only value that needs changing is the “%K” period.
The values are consecutive so once you have done this procedure a few times, each time going back to “Navigator” and dragging a new “Parameters” screen onto the build window, it becomes a simple matter to simply raise the “%K” value by one, keeping the “%D” period at “1” and “Slowing” value at “3” throughout.
Continue until all 18 stochastic %K lines from 6 to 24 are added to the one window … using 6,7,8,9,10,11,12,13,14,15,16,17,18,19,20,21,22,23,24 all in one indicator window.
Each stochastic is 6-1-3; 7-1-3; 8-1-3 and so on.
Spudfyre says:
“Colour 6 to 13 thin blue - these are our Lower Time Frame Stochastcis and will be called LTFS (Lower Time Frame Stochastics = SHORT TERM).”
He also recommends: “Colour 14 thick red - 14 plays an important role and you’ll probably see why I switched to 14,3,3 after you see this. This is our Base Stochastic and is called naturally the BS line. So when it’s done we can say, “That dang BS line messed me up!” with all honesty.”
Please use “14-1-3” and not “14-3-3” otherwise that signal line will appear and clutter the scene.
It would be good to note here that if using Spudfyre’s BS (Base Stochastic) Line, it might be worth experimenting with a third colour to make that 14-1-3 line stand out.
At least he recommends changing this particular line to a THICKER line (done through the “Colors” Tab, and selecting the third or fourth line from the far-right drop-down option box.)
Stochastics 14-to-24 are coloured RED, and represent the Higher Time Frame Stochastics = LONG TERM.
Provided I have left nothing out, the process should be fairly straightforward.
Please forgive my patronising approach to writing this stuff - I always aim for the newby in the group, who is not skilled with this stuff. I have many painful memories of struggling with instructions, and a lot of wasted time simply because I did not understand the jargon used. That’s why I tend to over-simplify rather than assume we are all on the same page.
[B]Andy[/B]
A big thanks mate for your offer to adapt this - try to post a couple of variations in colour if you have the time. It is something I have not experimented with, and I am certain the judicious use of colours would make the trading decisions much easier, as developing trends “pop” out of the page at you when the visuals are clear.
With best wishes
Ingot
here is my template for the system so far. thanks andyk
thanks ingot54
I included the candles on mine, mainly because they often give hints as to next direction of market.
Ingot54 RainBow - black.zip (1.55 KB)
Ingot,
Enclosed you will find two pics of the weekly GBPUSD chart for your review. I appreciate your hard work and time putting this thread together and look forward to learning from your experience and knowledge.
@ droesparky & andy
I used both of your templates. Thanks a bunch for your time setting up the indicators.
TimeFreedom
Aaahh! TimeFreedom
Brings tears t’ me eyes!
What great trends the Rainbows reveal.
You can clearly see the LONG TERM trends don’t miss a beat, but the SHORT TERM action is just NOISE!
If we TRULY want to track towards financial independence in trading, what better way than to ride along with a powerful trend.
Nothing wrong with trading the shorter Intermediate ups-and-downs if you have the skills, but NOW I think it is becoming clearer why weekly charts are so powerful.
Set - and forget!
I would also add my appreciation to you two guys - great contribution - thank you .
With best wishes
Ingot
Good stuff Droesparky - thanks for the MTF stoch addition - saves me some effort.
I like the candles as long as you are zoomed in enough. Panning back to view a larger timespan seems best without them. Good tweak.
Ingot
I can see the ‘fishnet’ pattern on stochs warning us to stay away. How do you trade them other than this. Red on top and tightly packed for a BUY yes ? But would you want to enter when everything is coming above 23.6 or might you enter when the stochs are much higher up. It seem spudfyre reckons the biggest price move (upwards) occurs when the stoch crosses above 80, not when it crosses above 20 so we wouldn’t be too late to enter a long trade if the red and blue lines had tightened up and were already quite high. Is this correct ?
Yes those Weekly charts clearly show the long term trend, and also looks like according to the stochastics that it is at a place where it could either head back up. Not sure yet but would be willing to take long trade set ups from here.
I have a bollinger squeeze indicator that looks like its close to the zero line, the place where its common to get a bounce. There is alway the chance that it could drop below that point.
NFP gave no real direction today so it will be up to things next week.
Also notice on the daily chart yesterdays candle made a nice little hammer. A possible reversal candle. ITs a ratther small one but its there take note of it, with stoch at the low its possible since we are in a long term uptrend for the long term trend to take over again.
Make note also that we have just broken some long term trend lines on the 4 hr chart and are at a long term daily trendline. maybe we will get some direction next week out of this.
This is an interesting picture, also add my thanks to all those that have put in the hard work to create this
OK people … time to stop theorising around and let’s see some real action with these charts.
I hope you log in frequently from now on because my approach will be to examine some good setups from the past and discuss them (takes two for a discussion, so you are welcome to submit a critique please).
The we will look at some live setups and establish entry and later, exit.
Now - I know I said earlier that I use only TWO indicators … and this is true, but we still have our training wheels on and (some of us) need all the help we can get as we pick up the strategy (I did at the start).
So I would like to introduce the Reversal Candle as a temporary “tool” we will use until we become skilled enough to select reversals using the Rainbow pattern with the MTF Stochastics alone.
If we do not learn to discard the candles crutch, we will never learn this strategy as a stand-alone trading approach, and we might just as well stick with conventional strategies.
Remember, it is well worth the effort - this will get us off our butts and away from the computer to participate in LIFE once again - the purpose of our involvement in trading in the first place - n’est ce pas?
Reversal candles - the ones I want to use - have LONG upper/or lower tails/shadows. (Let’s stick with “tails”)
In order to qualify as a “reversal” candle the body of the candle must be equal to or less than one third of the total candle length. So it follows that the LONGER the tail - the stronger the reversal signal. This candle is like other candles - NOT INFALLIBLE - but it does rate as a HIGH PROBABILITY of success, and that is why we are looking at it in particular.
The “Hammer” and/or the “Dragonfly Doji” are excellent Bottom Reversal patterns, and the “Shooting Star” and/or “Gravestone Doji” for Top Reversal patterns.
Google for “Reversal Candlestick Patterns” or go to leavittbrothers.com/education/candlestick_patterns/ or similar site and you can find some sense on candles there.
OK - enough digressing …
A quick scan (and I mean a quick visual scan) on this hot Australian Sunday afternoon/evening found the USDCAD has been a very profitable candidate recently. Below you can see the WEEKLY chart of this pair with some annotation. I have included the candles in the second view.
You can now see the value of confirmation using candles.
The previous charts posted showed the bottom reversal of the USDCAD.
But could we have gotten into this trade at a better entry … that is … an earlier time?
Of course - although we are basing the strategy on WEEKLY charts - we are not one-eyed about this - we are here to make money, and we MUST use ALL the tools at our disposal.
So it makes sense to look at adjacent (the next) TF on each side and for entry/exit even lower.
In the case of the USDCAD we could and should look at the DAILY TF as well as the 4H and even the 1H providing they each trend in the same direction that we intend to trade. But I do not go this far - simply because by the time an entry becomes apparent, it is too late to utilise the earlier TF.
Remember we are not sitting down staring at the screen, but checking in once a day (no rule about this - but if you trade this method, might as well have a life as well!) It is no use using hind-sight to say: “There is our entry” - the bird has flown.
Because we are trading WEEKLY charts (generally) we can just look for a dip and jump in, or just do it without the dip! The trend should carry you - even if we mess up on the entry. (There are better ways than this of course, but I just want to make the point that missing the “best” entry by 40 pips is not a disaster, when the end of the trade is +800 pips away!)
So - enough rambling … here are the DAILY charts of the same period of the USDCAD. What a beautiful setup it proved to be (looking backwards, remember).
Ok - We have seen WEEKLY and DAILY charts with MMA’s/MTF Stochastics and with/without candles.
Please give your FIRST impression. I am not interested in ego-stroking please.
It is important for you to register whether this is something you can trade … or there is still something (visually) missing.
We will get to the nuts-and-bolts of the entry/exit in due course. What we need to know right now is this: Do you see a setup or not?
Would it be easier if the view of the chart was a little more encompassing? ie a longer view of recent action. Personally I can view the entire chart, but the 600 x 600 size limitation actually chops off a lot of what I see and what YOU see as it is posted.
I will post a few charts now which are another step back, to check their appeal and appearance.
This has little to do with the discussion at this point (although it will be interesting later as we discuss stops).
Take a look at the chart below. It is the EURCHF of last Thursday at 2200 hrs.
The intriguing thing is that giant doji candle with the disproportionnate range.
The body of the candle is just 3 pips.
But the range is 64 pips.
Nothing unusual really about a doji … but the entire candle was completed on a ONE MINUTE chart, with just 33 contracts traded.
Now I don’t subscribe to the stop-hunting theories - that’s another debate!
But that one candle represents an inordinate amount of pain!
Consider what happened there. As the action rallied, it would have hit the stops of the covering shorts. At the same time, it would have triggered contingent orders for entries. As the trade corrected, it would have hit contingent stops placed as the orders were opened on the way up.
It’s only half the story …
On the way past the strating position, and further, it collects the stops from those who just went long, or who had long positions open already. Further on, as it travelled southwards, it took out the stops of the longs, and established contingent short positions, as well as placed contingent stops for them.
Suddenly, the trade reverses again … and finally comes to rest just 3 pips lower than its opening. As it does so, it forces shorts to cover once more, and may even have triggered a few more longs on the way.
Any trader with contingent buy/sell/SL/TP orders within 30 pips of the open price would have their orders executed. In short, this candle would have filled the coffers of the brokers, and most traders would have just seen their trades blink on/off the board in less than 60 seconds.
Voila - How to make a few hundred thousand dollars … without really trying (for brokers).
Conversely … how to lose a few thousand … ! (for traders).
By the way - I have not looked, but did this same candle appear on other platforms besides IBFX? Larger … ? Smaller … ?
We’ll be taking a very close look at stop loss placement and usage a little bit later.
Stay tuned … you’ve only just tasted the entree!
Just a foot note before I retire for the evening …
I DO use stops myself. So please do not think we are going to toss out all of your hard work deciding the best place to put your insurance stops.
Just remember we are using LONG TERM charts, so there is no need to have stops 20 or even 80 pips away from the entry, or even the current action.
It may take strong nerves to even consider this, if you have been a scalping-type trader in the past.
But believe me, you have to allow for a bit of breathing space if you ever want to know what it is like to reap those 800 pips per month.
And you can do it without screen gazing. While you take your kids fishing, skating, frisbee-ing, cycling, to the swings in the park, or go out for a lunch or coffee with your long-suffering spouse, the trade will be working FOR you.
In fact there are times when you really MUST NOT go near your computer, and just TRUST your strategy.
With best wishes
Ingot
Gee you have put a lot of work into this today Ingot and certainly given me something to think about. In addition you have indeed challenged a couple of my own biases regarding timeframes and stops. Could I trade this - not sure. On the CAD I would be looking to join the downtrend but thats just me used to the shorter TF that I use. Look forward to continuing to follow the story
