rgp, the trend on the daily chart is sideways/up-ish, and the trend on the weekly and monthly chart is up. You probably shouldn’t have gone short and “traded against the trend,” but good luck to you.
According to my chart the stochs are sideways but pointing downwards on the daily, weekly and monthly more sideways but still downward bias. Not sure what chart your looking at.
However I never trade EUR-JPY in real trading so it’s simply an experiment.
One problem I think I’d have to consider if trading this pair is the JPY cross roll over payments, which will probably vary depending on which company we all trade with.
Hi rgp
E/J
I tend to agree with cosgrove on that
I am looking at the U/C on the daily chart with the monthly/ weekly/ daily trending down.saw the big down candle close on the daily(17/12/ ) with stochs heading down I then switched to the H4 and I am waiting for the price to close below the last swing low (1.0014 )to go short with a stop just above the last swing high (14/12 ) on the daily.
Anybody got any thoughts on this
Edit sorry forgot my target which I find hard to do
maybe look at a Fib retrace to 09646 which is around the 50%
I’m talking about price. I’ve attached charts with thick yellow lines showing some semblence of uptrend. Ignore the stochastics when determining overall trend, no?
Yes, good call! Glad it’s only a practice account trade. I’m still a day trader in mindset, picking up tops and bottoms, trading both ways. I think I need to change mindset for this longer time frame. Cheers
Looking to go long on AUDUSD when the markets open back up. Thoughts? Think that 38.2 retracement line will be resistance? Think the intermediate downtrend is too strong?
Hope everyone had a wonderful holiday.
Hi Cosgrove - excellent picking there - it is exactly what I would be looking for in a setup.
I can not compare your chart with my own right now - Parallels Desktop on my Mac crashed and I did not have it backed up!
Duhh!
Looking at your DAILY chart I can see the reversal around 6th November 2007, which ushered in an Intermediate correction to the longer term uptrend.
I would also have taken this trade, had it appeared in similar presentation on a WEEKLY chart … but having stated that, there is absolutely nothing amiss with your using the exact method on daily charts. The only rider I would impose, is that you also had examined the WEEKLY chart too, to confirm trend in that TF too.
The Stochs are ideal on your chart though. Nicely turning up from that 23.6 line. All are moving in unison, and the faster stochs (ST ones) are pulling the LT ones up strongly.
For early clues on a weakening of the trend, keep an eye on those blue ST stochs. At the very least you should harvest a few nice pips with that entry, but be aware of how fickle daily charts can be - it will require daily monitoring.
We can not tell the market what it should do of course - there could be 300+ pips in this trade of yours (and if it breaks .9000 there could also be heaps more). But keep in mind the Randomness of markets aside from their trends. The trade could just as easily continue the correction down.
The Stochs should tell you when.
Congratulations on not only a clear reading of what the thread is about, but also on having the courage to calculate and take the risk.
Further comfort could be taken from those 4 candles with the lower tails all bouncing off the 50% fib lines (or near enough - they certainly clearly respected that support).
While the thread largely attempts to select good opportunities using just Rainbow and MTF Stochs, it is excellent to see you are also using initiative to boost chances of success.
Once a basic method is outlined and understood, traders can - and should - try to personalise the method to place their individual stamp on it. Without trying to patronise, it does me good to see you doing just that.
Weekly is attached to this post. We’re looking at trend only here, right? Ignoring stochs?
If we’re only looking at trend, which trendlines should we pay the most attention to? On this weekly, the lines start to go from “up” to “flat” at/around the 27 MA. From there until the 2MA, they are down, with the 2MA going up.
No problem! I’ve setup a blog to do just that: Choice not Chance
We’re exiting on fishnetting, correct? How much fishnetting? Is it possible to draw the line between “ok that’s fishnetting, exit” and “eh, not yet, wait another bar to see what happens” ? I guess here is where personalization comes in.
So that showed the 50% was strong support. Seeing as how support turns into resistance, and that being strong support: would it turn into strong resistance, or would that make it weak resistance?
Also, Ingot, how do you feel about trailing the stop by 200 pips or so? More personalization? I would hate to see my current +278 USDCAD trade reverse all the way and end up losing 200-250p when I could have trailed it to breakeven, +28, or +78.
I’ve been monitoring this thread religiously, as I feel it’s a great strategy. I’m looking forward to learning more.
In the meantime, here’s how I’ve been using it:
I’m trading the daily charts (currently GBP/USD only), placing my order at the open of the new daily candle.
I look at the rainbow (it truly is an easy visual aid) for the trend, then check to make sure the stochs line up, too. Then, I place my trade accordingly.
Now, I have also been checking the Forex Factory calendar to see what news might be coming out that day, paying attention to the major announcements and their “predictions”. However, my main decision is made from the rainbow and stochs.
I’m trading on the conservative side right now – and only in demo – to test the waters, so I use a 100 pip S/L and 150 T/P. If I don’t make my 150 pips one day, then I keep the trade open as long as the trend continues. If the trend changes, then I’ll close my position and open a new one.
So far, so good. Last week’s trades were all winners.
One thing I forget to do (thanks for the reminder, Ingot) is to also check the weekly and monthly charts. I’ll try to keep this in mind from now on.
This is very interesting for me. When I first started in Forex, I used to think that I had to follow a strategy to the letter. I guess that’s why most of them never worked for me – they didn’t fit my style and I wasn’t personalizing them.
Now, with this strategy, I’m trying to personalize it a little and experiment a bit, all the while learning more overall. Eventually, I’d love to progress to trading weekly charts. It’ll come.
Thanks for this thread, Ingot. I’m eagerly awaiting more of your wisdom.
And, thanks to all who are contributing here, as it makes us all think in different ways that we may not be accustomed to – yet.
Cosgrove - it just might be that you are hitting a nice jackpot here … maybe.
When you look at the weekly chart you do that to confirm trend, but you must not disregard the Stochastics.
As you can see from your WEEKLY chart on your post, the ST stochs were JUST about to turn upwards.
On the DAILY chart ALL of the stochs were already on their way.
So what can we deduce from that?
- That the reversal CAN be trusted with a higher probability of success BECAUSE we have TWO time-frames (TF is the abbreviation I use for those just joining here) which are pointing to the reversal of trend.
It is signaling to us that the INTERMEDIATE correction is over, and the LT trend - a RALLY, is resuming.
-
Because the stochs are very closely knit into Spudfyre’s “rope” it adds much more strength to the move.
-
Conversely, in the absence of “fishnetting” or criss-crossing of LT and ST stochs, there is nothing to fear about the trend slowing and moving sideways. There is only one thing this trend is wanting … to rally hard.
I am thinking that the thick yellow line (which represents the 14-3-3 stochastic) will NOT even reach the 23.6 line on the WEEKLY chart.
Why? (We MUST always ask “why” if we are to learn something)
Because the “rope” is so tight - it looks like it will drag the weekly stochs clean off their feet, forcing them to rally hard too.
Don’t you love this stuff - doesn’t it beat sitting there screen-gazing all day looking for a good setup to scalp 30 pips? (Couldn’t help that comment - my adrenalin pumps when I see a setup like Cosgrove is sharing with us).
All of the above stuff to illustrate the importance of NEVER ignoring the stochastics in ANY TF - if it is not a good setup - go fishing … and come back this afternoon, or tomorrow morning to actually discover a great setup like this one.
Benefit:
You have a great life (fishing is not so bad)
You get exercise
You have no stress
Your profits WILL come - in greater measure than EVER before
(Here insert your own lifestyle benefit!)
And always keep in mind, you do NOT have to be trading every day - just trade the good ones as they turn up - there is no need to force trades that are not there.
Next question: “We’re exiting on fishnetting…”
YES! … or exit shorts when the turnaround crosses the 23.6 from underneath, or exit longs when the turnaround crosses the 76.4 from above.
That is discretionary, but the guidelines have to be given to alert you to the fact that the trend may have run its course. Once you make an exit, I would hesitate to re-enter until ALL the correct factors realign once more.
Sometimes this seems like a hard rule (and it will be up to your judgement and experience to make that decision) because a trade may go on to add another 200 pips!
Ouch! But be content to take what you can and move ahead. Look around (amongst the majors) for another great setup - congratulate yourself for accepting the pips, and again, take a break and go fishing.
Once we relax as traders, nothing will break your confidence, or your common sense. Anxiety kills traders. Cut it out!
Regarding your question on Support/Resistance Cosgrove - I accept wholeheartedly that it is prudent to keep an eye on those. But be aware of the dangers of complicating a simple system. An edge is an edge … and while you must personalise this to suit your own risk profile, the danger is that we again bog down in indicators.
I developed this because I was fed up with 180 + indicators and so on that were being promoted to traders. I’d had enough and my life was spiralling out of sync with reality! I took a step back and thought: “What th’ …” That’s all I would comment about support/resistance. Good, but is it necessary in this strategy? If it helps - by all means observe it.
Regarding Stops:
If you look back at POST #38 you will see the kind of thing that happens. Read through the scenario regarding the triggering of contingent orders - entry/exit/stops and so on. Crazy. How much did THAT hurt traders? So yes - I would use a 150 to 200-pip stop.
Why? (there’s that little question again) …
… Because big moves SELDOM signal reversal of trend. They are the result of NEWS, and only highly skilled people whose lifestyle is geared to scalping-type trading (eg house-bound folks who rely on the intellectual stimulation to give them quality of life) would be able to do well from such volatility.
I have seen statistics that say that over the past umpteen years, only 35 news events have signaled trend reversals. That would be out of (proportionately … only a ball-park guess) around 3000 news-related events. If you go over these events, you will see a violent UP-swing followed by a rapid DOWN-swing, followed by resumption of the trend in the current direction.
If you have close stops … you are out of the trade … and the market goes on its merry way as if the news never happened.
If you make 6,000 + pips each year, it is not too painful to give back 200 a few times as insurance against a melt-down while you are out fishing … lol … but I don’t see this happening more than twice a year on average … who really knows - I have not seen it.
Keep in mind that stops should NEVER be used to get you out of a trade - it is preferential to CHOOSE to exit a trade. But the wide stop has its function too - to save you from the catastrophe that would befall you if a 9/11 event occurred. The market can reverse 2500 pips under such conditions.
Again I congratulate you Cosgrove - thank you heartily for your interest and participation. gets my enthusiasm really fired up.
You are actually using a great strategy there Tony - in fact this is one of the very best things to do.
I used to get emails from a trader who traded for one hour each day only. He had a specific strategy from which he refused to deviate.
His plan … make 15 pips every day, then go and play golf for the rest of the day.
His money management … play for $250 per pip!
I would not have referred to that strategy as “money management” but for him it certainly was a method he claimed worked for him.
So “How did he do it?”
It is both difficult and easy all at once.
This man would not trade anything except the EURUSD. In fact he knew its habits. he knew when it went into its cave; he knew when it was waking up; he knew when it was stretching and sniffing the air; and he knew when it was coming out of its cave fighting, growling, snarling spitting and scratching!
Could you guarantee to make 15 pips EVERY day?
If you knew when this animal eats, sleeps, stretches and roars you could.
And this is the GREAT benefit of trading JUST ONE pair.
You get to know it like your own nose.
Would you go for $250/pip$
If you had confidence in your strategy you certainly could do that. I admit I could not … just yet!
Now, with this little story out of the way … how free could your life become if you traded just ONE pair up or down or both?
We are not in the $250/pip league … at least most of us … but we are not far from 250 pips at $1/pip and it would not take much of an evolution to get up to $15/pip in a year.
Nice goal.
And Tony I have to say what you are doing is inspirational. You are taking the method and running with it in your own way - OK - you are walking the Daily and will soon run with the Weekly!
Personalisation of this strategy is what we should all aim for. In order to achieve this, it may be necessary to ask more questions, and run some ideas past the readers.
No one is laughing here … no one has rebuked anyone … and your trading future may well depend on your courage to expose your fears to the forum.
Do it.
Thanks for the encouragement. I’m generally a lurker, but I feel a tremendous sense of relief as I examine this strategy and have a strong desire to share it with others.
Up until now (I’ve only been involved in Forex for about a year), I’ve been extremely frustrated trying to find a strategy and trading style that I’m comfortable with. I’ve tried just about everything I could find, in all time frames, with results ranging from a few wins to regular losses. All on demos, of course, but the frustration was still there.
I found things changed for me when I changed my mindset and came to the realization that this is my trading style, my trading career, and my income. By that, I mean that I had to be comfortable with what I was using (both in time frame and strategy), and the whole thing had to fit my goals. So, I stopped thinking that I had to do what others did just because they were successful at it.
When I started out, I was focused on the money. Without going into my financial situation, let me just say that I approached Forex from a point of desperation, which only added to my frustration when I wasn’t comfortable with what I was trying.
So, I made a few changes, and wound up here in this thread:
-
I stopped trying to scalp. In fact, I stopped using any time frame lower than H4. Scalping moves too fast for me (I’m not ashamed to admit it), so I couldn’t make a success of it.
-
I stopped bouncing from “system” to “system” just because the one I was currently using didn’t have any signals that day.
-
I decided that, while I can handle H4, the Daily charts were much more comfortable for me. I had never considered the Weekly charts until this thread, but I’m heading in that direction (and looking forward to it).
-
I also decided that I didn’t want to have a bunch of indicators, S/R lines, Pivots, etc. on my chart. The whole thing was confusing me tremendously. This strategy is great, as there are really only two indicators: MA’s and Stochastics.
-
I am now trying to focus on the market and this strategy, rather than the money. I say “trying” because it truly is a different mindset for me, and some things are harder to change than others.
That last point has made a huge difference in my thinking, and my stress level. Yes, I have a weekly goal that’s in line with my financial situation, I’ve broken it down to a (loosely) daily goal, too, and I have it mapped out in Excel. But, now, with this strategy, I don’t get so frustrated if I don’t make the daily goal, as I know the weekly one will work out. Because I’m working with a longer time frame now (Daily instead of H4), I find trading less stressful and can actually see my weekly goal happening even though my daily goal isn’t reached sometimes.
Thanks, again, for starting this thread. I’m looking forward to learning more as you lead us all to a more successful – and less stressful – trading career.
So, enough about me, let’s trade the rainbow!
I’m long on EURUSD and AUDUSD as of tonight, and I’m still sitting on a short position with USDCAD which has me in the black 322p.
unfortunately (or fortunately given that it is the holidays and i shouldn’t be working!) my laptop has crashed and i’ve lost my fx demo account so cant check up on the current state of the charts that i have open trades in.
The good thing is that just by looking at the price i can see a healthy 800+ pip profit - this is a hell of a system you’ve devised Ingot (obviously i’m putting this down to beginner’s luck so a lot more testing to go)
One question i would ask you Ingot is, how much weight do you give to the “peaks” of the stochs which spudyfyre talks about? As you know, this is what he uses to identify the turing points of intermediate trends back to the longer term trends - do you use in the same way? ( i also think i entered too early - as the trades are currently going for me this is a good thing however maybe better to miss out on the very early pips in order to reduce the risk of a mistaken entry signal?)
Happy new year to you all and i hope you all have a pip positive 2008
I didn’t include prices of my open trades in my last post:
Short USDCAD at 1.0133 (+315, looks like it’s turning around)
Long EURUSD at 1.4485 (+224, huge moves the last two days)
Long AUDUSD at 0.8729 (breakeven after a retracement of yesterday’s gains, we’ll have to see what happens)
Short USDCHF at 1.1402 (+123, but looks like it bounced off of a fib support, hopefully it doesn’t reverse)
Grob, from what I can tell, I’d say you entered the trades after peaks on the 4h? It seems that you entered early if you were to trade by Ingot’s system, but I think if you were using the 4h charts and entering on peaks you did OK (except for cad, selling when it was in oversold on the 4h – would have gotten a sweet entry if you sold after the previous peak in overbought, which is what you are supposed to do if you’re trading by the peaks anyway I think).
Just have to be careful about the rope being in overbought/oversold zones, because in one of your trades (cad) you sold when the 4h was in oversold but daily was breaking 76.4, and in another (eur) you bought when the 4h was in oversold and daily was breaking INTO the 23.6 level.
I think these trades contradict each other in terms of a system, and that’s usually not a wise thing to do. As always, if I misinterpreted your trades, feel free to correct me, and post some charts when you get home from the office!
newtrend,
I can’t really seem to make out where the entries of those trades were in your screenshot. I don’t see any MA1/MA10 (price) crosses, nor do I see any entries related to the stochastics.
Also, are you trading 0.05 lots (0.1 lot = one mini lot), meaning each pip is 50 cents? I think the normal nomenclature is:
1 lot = $100000 (standard, $10/pip)
0.1 lot = $10000 (mini, $1/pip)
0.01 lot = $1000 (micro, $0.1/pip)
Unless you meant that a mini lot was to be taken as 1 lot = $10000, then 0.01 lots = $0.01/pip. It doesn’t really matter for the discussion, I just didn’t want you to be trying to say something that people were taking differently than you meant.
What do you make of this USDJPY setup? We’ve seen a lower low and lower high on the weekly chart, with all of the stochs turning down. On the daily, stochs have crossed down 76.4. The 4h stochs are oversold, and the last 4h bar on friday broke a previous support level around 112.72.
These make it seem like a valid trade to me, but I’m worried about the overall weekly and 4h trends. I guess I can sit this one out.
Think it’s time to exit this USDCAD short? Charts attached. I think I’ll move my stop up to breakeven (which would be 320p away). Is this fishnetting on the weekly that bad? It’s sort of in the direction of my trade – you can see a similar happening around the 2nd of Sept.
Good morning, Ingot, and fellow conspirators!
I am super new to FOREX. I’ve bought a few “strategies” and found them “interesting” and “informative”, but short on applicability to my intended once per day check on my building fortune. (Thank goodness for demo accounts!)
I found this thread a couple of days ago and have been busily trying to figure out how the forum works, and what all the buttons, terms, etc. mean and how to use them, and trying to wrap my arms around what appears to be a REALLY neat concept… Thank you, Ingot, et Al!!
I guess part of my confusion will be dispelled as the thread continues. Another part comes from my desire to break down the trade(s) into phases… Trend recognition, Setup, Entry trigger, and exit trigger(s), etc.
That having been said, I look forward to your trades, charts, and explanations as to “why” the trades were put on, and what should’ve been done, when the trade didn’t work out…
Thanks, again!
Millowena
Terry (I have paraphrased your post for brevity - hope you don’t mind that).
Thank you for your kind words … many of us identify with your journey. I am glad you recognised the need to make a change from what you were doing - the result doesn’t change until WE change.
And that’s something to continue to work on. Why does George Soros take his currency positions over YEARS … as does Bill Gates and Warren Buffett?
Well no one needs me to tell them:
- That’s where the money is
- They have other things to do in life except sniff around for every little pip.
Hi Grob … welcome to the thread. I was a bit discourteous earlier by not acknowledging your contribution, as well as the other folks who have added to the thread … thank you all.
I can only respond that if Spudfyre says to use these as potential turning points, then do it. Think of it this way … when the money leaves a trade, it leaves a footprint. Similarly when it enters a trade. These turning points, or “peaks” as Spudfyre called them, are those footprints.
I do use them … as alarm bells to watch for change in trend. But if I can not spend the time (which is mostly) I just close out the position. It is then behind me, and mentally i switch to the next opportunity.
I used to wish I had an electronic alarm that would ring when a trade was setting up. Well, this is an alarm bell that is visually ringing to warn of a change in the mood of the trend.
It does not necessarily mean the trend will end immediately, but in the majority of cases yes, it does.
A great way to look at these, is that they are the signals to have a rest from trading, and close your position.
Why?
Because:
- It will give you a mental break from having your money at risk
- You will definitely preserve any profits you have to this point
- You can cast around for ANOTHER currency pair which is just ready to run.
Imagine if you stick with a dicey trade, trying to wring another 25 pips out of it. Meanwhile, another pair sets up and runs, and by the time you notice it, it has run for 160 pips, and it is past that ideal entry point. Greed (under the euphemism of “efficiency” or “thrift”) can be costly.
There is no need to harvest pips in this way - be content with what you have … and move to the next good trade. These “peaks” are there not only to signal an entry and exit, but to encourage us to practice discipline. Time to ditch the poverty mentality (not you personally, Grob … this applies to all of us including me)
Will continue in next post.
Best wishes
Ingot