Jerome's Journal

[Jerome32]

You couldn’t be more right Juzahe!

Without a journal you forget even the
most critically important breakthroughs!
Which is unbelievable but true.

I won two trades today 62 pips and 70 pips.

I use EMA 5 as a sort of contextual guide.

Mainly, I start checking Majors and Crosses
on Daily only - looking at the Indicator window
only for VERY clear sign of upward or downward
direction.

I have various reversal indicators, but to avoid
clutter they each have their own template. When
the bottom window shows a strong signal, all
the upper indicators are quite reliable, even the
ones that repaint.

There is no need to have confluence, possibly
no need for any of them, but its good to have
the extra agreement.

I enter as price hits EMA 5.

No need to wait for close, as you can lose most
or all your profit as I set very modest TPs.
Usually the nearest BRN at around 60 pips on
the Daily.

If you have a very decisive confluence between
TDI and STR in bottom window the TP will be
hit if you don’t get greedy

When would I get out of a trade prematurely?

Thanks to Big E for the best trading advice -
if TDI starts to flatten out I exit before things
turn nasty. Usually they don’t but I would
rather break even or take a small loss
occasionally then take unnecessary risks.

that was Big E’s policy and it makes a lot of
sense. if you win most of the time you don’t
need to gamble or greedily hang on for
an extra 300 pips.

Yes that is very often available and would
be nice, but this is a very safe strategy - a
little and often.

[Jerome32]

As Juzahe reminds us - I need to catch up before
I start forgetting critical insights

Although this thread has been a bit of a merry go round
with no shortage of garish indies coming and going, actually
there has also been consistency

Starting with Engulfing patterns - they still feature prominently.

Divergence likewise is still very powerful.

Big E and his TDI strategy is still very central to what I’m
doing and I’m extremely grateful to him.

The only permanent addition to that is the STR confirmation
which is one of the most powerful indicators I’ve ever trialed

• and I’ve trialed a lot!

Basically the screenshot in my last post is almost as good
as it is likely to get

Its knowing how to use STR and TDI in combination.

This is truly a work in progress.

I have been working intensively over the last week,
with many sleepless nights.

The insights just come to mind, usually when you are
not trading and relaxing.

So this is the story so far - There are possibly three
variations to the system.

So let’s look at System 1, the basic ingredients -

1. Divergence
2. Sunflower Black Arrow alert
3. Engulfing Pattern -out and in of outer BB.
4. Stochastic Cross arrow.
5. Long Steep incline of STR
6. TDI crossing blue or yellow decisively ( weak in
   this example. ideally TDI should be parallel angle to
   STR )

So what happened to this trade? a very nice win, despite
ignoring Big E’s caution that when TDI flips over, things
are likely to turn nasty. In this case TDI decided to tow
the party line and follow up in parallel to STR.

I counted on it doing this because STR was very
compelling, along with all the other confluences, and also
TDI was moving up well until the flip.

So how do you read the flip? Big E would get out quick
with a view to getting in promptly on reverse flip.

That’s one approach but I think there could be a lot of
waste along with the extra spread cost etc, nevertheless
this is probably my major bugbear. Maybe it will just
get easier to read with experience, down to intuition so
to speak.

As we see in the next screenshot, TDI flipped back up
over yellow for a nice win

So let’s look at System 2 - and this is powerful, I could
do worse than just focus on this!

Very simple! Four wins from four set ups. One very long
Bullish move which should have all been in one highlight
box, but you get the gist of it.

The focus is on TDI crossing yellow decisively, at a good
angle as stipulated by Big E - but inviolably this must be
supported by a smooth and convincing STR, although
in this case it can be relatively shorter than the previous
system, but it must be smooth with no kinks in it
whatsover. Exactly as we see in the screenshot.

Again, what is a kink or a flip is discussed extensively
on Big E’s thread, but if you notice the third set up,
you might argue that the STR wasn’t as smooth as the
other three examples. But my view is that it isn’t a kink
or a flip - so by way of analogy -

Imagine on a highway, someone in front of you gradually
veers into another lane - not best practice but you are
all still moving in the same direction and invariably you
all arrive at your destination without mishap.

By contrast, imagine someone in front of you skids and
suddenly is positioned at right angles to the flow of traffic.

or imagine if someone skids and makes a sudden
180 degree turn and is now driving into oncoming traffic!

The first example in the motoring analogy is not likely to be
a game changer, but the second and third examples are
more likely to be ‘game over’!

The STR in the third set up neither flatlines or flips, but veers
a little, but still stays more or less on course.

In this system the Bollinger Bands are not relevant, any
confluence is coincidental.

This is a very powerful system - and simple, and very
mechanical - its either a set up or it isn’t.

Another very powerful variation, is wait for either TDI or STR
to cross blue ( which is very unusual to have a system where
the signal line of one indicator crosses the level of a different
indicator, nevertheless it works! - in fact it works so well you
can even use it on the H1 for Binary Options for a 90% return
on HighLow broker. A lesser return isn’t worth bothering about )

But the main thing, whichever one crosses blue, they must run
completely parallel, even merging as one line, and it must be supported
by Sunflower Black Arrow. I give a few examples, no cherry picking, so far
I can’t find any set ups that would have lost, not in hindsight. In real time
however things are not always quite so crystal clear, but still this is dynamite.

[Jerome32]

The confluence of these two indicators is a force to be
reckoned with.

[Jerome32]

My GU trade has moved up briskly but I’ve moved myTP to break even
because I’ve got a lucky feeling about it, and I don’t want to be rewarded
for acting on lucky feelings.

I’ve got two more samples of perfect crosses. Encouragingly. all
crosses in the screenshot made a profit, but the two I’ve arrowed
are what I should ideally be looking for.

Unlike shifted STR, TDI isn’t time shifted so you don’t know what
will happen to it after the cross.

Best guess is what it’s doing before the cross

So I want to see the two moving steeply and very closely
together before the cross to increase the likelihood of
this continuing after the cross.

and I want to see STR printing a very smooth and
straight course all the way to the next level, be that
yellow or blue.

I don’t know how scientific this is, but it would seem
to be the most optimized approach I can think of.

[Jerome32]

My GU trade is moving up well now, up 25 pips.

But I have opened a position on NZDCHF as it meets
all the criteria for set up.

Also I am not checking for any more set ups. If you
have a perfect set up that’s enough -

There is a very strong case for only opening one
position at a time.

But I am really trying to crack the potential kinks
in TDI and I believe shifted STR does give clues.

It doesn’t!! see next post

[Jerome32]

The first orange kink alert wasn’t obvious in the
screenshot above.

but I have edited to correct my view - there
is no such thing as a kink alert - except in
my imagination

In this regards STR repaints to give the
impression of future problems, when in
actual fact it only alerts you after the
problem occurs

not very helpful!

[Jerome32]

Regarding ‘kinks’ et al, this not something you can drill
down with mathematical precision.

Big E was a master trader because he was a master
at reading TDI.

He wasn’t necessarily a master at reading candlestick
patterns, as he chose to use Heiken Ashi so as not
to get stressed by the noise in the market.

I have noticed this amongst brilliant traders who keep
journals and screenshots, they see things in the
charts that almost no one else can see - they have
developed an intuition and they just see how the
market is unfolding.

For me, at the present time, it’s all about the
‘True Cross’ - I will abbreviate this to TC or
even tc.

TC is when TDI and STR cross over blue or yellow
in a very convincing and compelling way.

that isn’t a link btw, just coloured because it is the
most profound and significant line in this entire
thread.

So can I define more precisely what constitutes
convincing and compelling?

Not really. It has to do with angle, proximity of
the two, pre entry before the cross of blue or
yellow, and probably other factors too.

Perfectly straight lines probably did form
some kinks that quickly rectified themselves.

But if it looks like a TC from the outset it
probably will also end up a TC also.

TC is still what it’a all about

What about black arrows, sunflowers,
divergence and Harmonic patterns.

sunflowers are purely decorative, they
mark every high and low retrospectively,
but they make the black arrow stand out.
They actually serve no other purpose.

Harmonics and divergence are very valid
but they don’t especially help this system
as far as I can tell they are largely
irrelevant.

I will use an example to demonstrate this
regarding divergence

We have four beautiful trades where
divergence was either not present,
or was in the wrong place at the
wrong time.

This system is brilliant and simply not
helped by cluttering the chart up
with unnecessary indicators.

Harmonic patterns are similarly
unhelpful and potentially
misleading, as black arrow can
repaint, and harmonics definitely
repaint.

so if you want to confirm a repainting
signal does it make sense to use
another repainting signal?

But there are still a couple of indicators
I might like to re introduce.

Missed weekly pivots are definitely
significant, as price is often drawn
toward them, in other words, weekly
pivots are always hit eventually and
the market is usually seen to at least
make a notable attempt to move in their
direction.

so that can be a psychological benefit
as they have a statistical basis.

The other indi I played around with earlier
on this thread was the heat map,
again statistically valid, to show where
recent price likes to be.

I would only consider this for plotting
nearby exits, but we’ll see.

[Jerome32]

I have been playing around with the Market Profile
indicator and have noticed some spectacular
patterns that keep forming.

Firstly, when price moves right away from the
box and/or top of BB, it will always return
to the prominent nose of the histogram,
if there is one

so only trade prominent noses

My initial rules are, look for a prominent nose
and wait for price to move far away from
box area, look for a black arrow to appear
with confirmation from either divergence or
harmonic pattern

this should be near extreme of histogram
and or BB

Lower time frames repaint and highrer time frames
can take a lifetime to hit TP

[Jerome32]

Mt two TC open positions

[Jerome32]

plus a nice win last night on a new system
I’m trialing using tc’s, even wobbly ones,
and price bar indi.

Using BB as a guide, just move from
one level to the next - extremely
reliable, and works on lower time frames

[Jerome32]

Plus two more on M30

[Jerome32]

Actually both those low time frame trades
above went completely chaotic.

but something came out of it…

Look at the right side chart

not my trade, but what happened just
before that trade - a very long move
up.

Was there any clue that the move
would be extended? Possibly.

I need to do more testing on Daily
but two things to monitor

1. While the trade is in progress,
   does the angle of opposite blue
   deviate in your favour?

2. Similarly, does STR extend way
   past opposite blue?

Here is an example of what I mean

The highlighted boxes are typically
my conservative exit

but I would have taken 60 pips
when 800 might be available.

Of course this signal doesn’t
manifest until after I enter the
trade and if I don’t set a modest
TP, the trade might reverse.

so maybe open two positions, and
when first TP is hit I should be able
to see if blue angle signal has
appeared.

Like the ‘kink alert’ nonsense, this
might not be so obvious in real
time, and already I note it doesn’t
always work, so I don’t think it
should replace my current
conservative TP.

[Jerome32]

Ok, I tested it on strategy tester, and the
usual tc was perfect clear entry.

then upper blue AND bollinger clearly
upturned.

from this point tdi and str have little
relevance

you are simply following the smooth
trendline of upper bollinger and
upper blue

when both flatline price will reverse

still needs a lot of testing, but may
catch some really big moves

[Jerome32]

I will refer to this hypothesis as ‘blue angle’,
and I can say right at the outset it doesn’t
always work by any means.

it can work for entry but even when blue
rolls over signalling the end of the move,
upper bollinger is very likely to continue
it’s sharp and highly misleading angle.

but I did note something of interest, - we
might forego a trade because set up
was incomplete ie no black arrow, but
as we see in the example below, there
was a 600 pip move that started 16
days after black star and divergence
appeared.

we know divergence is often an early
warning of a reversal, it would seem
black arrow also may be.

In the sc below, we first have a 70
pip win. This is not subjective, the
set up, entry and exit were very clear.

It would have been wise to set a
conservative tp at nearby BRN,
for as wee see, price didn.t contiinue.

but note 16 days later what happened

no black arrow, no new divergence,
but we had a tc that extended way
beyond upper blue.

I believe this is key.

At this cross we enter after engulfing
pattern and exit at nearby BRN for 111 pips.

but the extended tc tells us to now watch and
wait.

and sure enough, if you note the black arrows
we see upper blue and upper bollinger change
angle noticably.

Altogether a 600 pip move.

We would have exited when upper blue
flatlined and tdi had already clearly crossed
back, and we also see a reversal candle
pattern as price is now moving down.

We would have got out for 450 pips
which isn’t bad.

However, as mentioned, it doesn’t
always work.

Bollinger outer band is good confluence
for entry but not reliable for exit

[Jerome32]

This next example suggest BB may be irrelevant.

We have a 2,200 pip move!

Enter in usual way, set up is clear, but rather than
have TP at near BRN, we note lower blue is
already angled down - so stay in

Now we ignore everything except wait for
lower blue to flatline or flip up and then
exit when TDI crosses yellow, which it does
for 1,200 pips!

So how could we have known to stay in for
the full 2,200 pips.

There was absolutely no way of knowing
this. not according to TC and blue angle
strategy at least

I am not trying to back fit everything
to make the strategy look better than it is

If we note, from 1,200 pips onwards blue line
doesn’t change at all

and nothing resembling another TC to signal
a re entry.

so we missed the extra 1,200 pips.

The market gives clues but it doesn’t
tell us everything unfortunately.

[Jerome32]

Its not all about 2,200 pip wins

immediately after that move a black
arrow appears with an over reaching TC
(OTC)

There was a very bullish momentum bar that
would have swallowed up most of our profit,
but if we had the presence of mind to enter on
H4 there was a clear engulfing pattern after
black arrow (BA)

Exit was crystal clear, blue was starting to flatten
with a clear reverse TC

time to get out for 320 pips.

Its true that blue flatlining at the time of cross
wasn’t clear, but the cross itself was compelling
reason to exit.

[Jerome32]

it seems the primary signal to look for is
OTC ( over reaching true cross, whether
blue is angling or not, it likely will do.

the advantage of OTC trades is that they
typically yield 200 - 1200 pips, whereas
a conservative TC targetting standard TP
typically yields 50 - 70 pips

Black Arrow and TC usually win

OTC with either black arrow and/or
divergence will usually go into profit
but may often end break even or even
a modest loss

OTC traders are far trickier and will
likely take a lot of practice.

Things are always so easy in hindsight

[Jerome32]

Having just read through some of Candlestickchick’s
journal I’m starting to wonder if I was dropped on
my head at birth

You can get so involved with your squiggly lines
and their ink blot interpretation, that you can
forget about common sense, no nonsense
signals.

I’ve not thought about trendlines for a while,
and whilst I’m not trading them…

what powerful confluence

the example below shows me clearly when
to exit, reverse TC, reverse candlestick pattern,
but look where it happens! at the retest of
trendline

not a coincidence

and what an example of how two traders can
look at the same chart and see very different
things

we see what we’re looking for - reticula activating
system I think its called

I should probably open my mind up more to
trendlines

[Jerome32]

a nice trade on H4

[Jerome32]

I have an open position on eurnzd which
printed a very nice cross. we also had
black arrow confirmation.

a realistic 50 pip TP it should have
won by now, but its reversing

of course its not a 100% winning strategy

but I’ve come across another strategy
freely available online which seems
remarkably accurate

It often agrees with TC set ups

but in this case it doesn’t!

The rules for the Laguerre indicators
are simple.

when the Laguerre RSI leaves the
top or bottom enter only when price
has crossed Laguerre MA

You will see in the screenshot a
good TC, and Laguerre isn’t
contradicting it

My guess is that it simply isn’t
quite ready.

So whilst my trade seems to be
reversing, it may be I just entered
prematurely.

We’ll see

If so, this could be a very valuable filter

( just to clarify, the blue arrows are showing
we entered before price crossed MA
and RSI was still clinging to top )