Jerome's Journal

[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 )

[Jerome32]

If I had to really sum up how to really
get the best from this system

Look for TDI and STR to cross in unison,
preferably with STR overreaching.

Recent black arrow confirmation.

enter only when RSI leaves top
or bottom and when price has
crossed over MA

you can ride the MA making well over
2,000 pips from the 3,000 pip move

[Jerome32]

I will be interested in monitoring this

when RSI starts to move up on weekly
there could be a big move

then go to daily to check price moved
across MA and look for possible
break of trendline
This usually the start of a new trend

[Jerome32]

The Laguerre filter is more or less just the central bollinger
so I have dispensed with that, although taking note
that cross of this level can be very significant.

Laguerre RSI is very powerful indicator despite not
corelating very well with my other indicators

but that can be a good thing

if you have six indicators always agreeing you might
as well delete five of them

for example. divergence and black arrow don’t always
appear together, so when they do I take special note

likewise str and tdi don’t always give a decisive entry
signal so when they do I take special note

Now we’re getting into some serious algebra here

dv + ba = set up 1
str + tdi = set up 2

so

su 1 + su 2 = su 3

therefore

su 3 + lg = su 4

set up is what I believe are prime set ups,
even though they may not often be big wins
they more or less always move 50 pips or so
in the indicated direction.

waiting for set up 4s means missing several
very big moves

but it also means avoiding losers most of the time.

so really its all down to what kind of trader you are

getting the really big wins is where the real
profit is providing you exercise good trade
management.

of course you can incorporate both approaches
with appropriate lot sizing. at the moment I just
want to see winners for psychological reasons,
to fully convince myself of the validity of my
system.

As regards the lg Laguerre RSI component of
set up 4, this really takes a great deal of practice
to read, but it’s not imaginary. an lg signal
in isolation can be highly ambiguous

for example - if the lg has hit the top that can
be a very good sign, as it probably means that
price is continuing up or it can mean market
is overbought and price is about to make
a big move down

in isolation that is not very helpful, but when su 3
is in place that tells us how to interpret lg and
we then have an su 4.

I give an example below of an su 4

In this case, its quite simple

we have divergence and black arrow (grey)
and everything else is clearly pointing up

we only had a 150 pip move followed by a 78%
retracement. price continued up fo rover 5,000 pips
but I would have set tp at nearest brn for a modest
72 pips which of course was a very safe bet.

the note of caution here is especially in connection
with str - it does arguably repaint so kinks in
hindsight might not have been apparent in
real time, nevertheless it is probably the
most powerful of all the indicators I’m
using

but again, not in isolation.

Really its all down to practice, how does su4 relate
to trendlines or significant s/r levels etc

where we have a perfect su4 on daily, as I am only
looking for a modest move to nearest brn it may
be more relevant to check trendlines and s/r on
H4.

and in the su4 below I note a bizzarre situation
whereby lg is crossing up ober blue and str
is crossing yellow - but these levels aren’t related
to lg or str!

so perhaps I might as well incorporate moon phases!

and actually that might be interesting

[Jerome32]

Here is why I will persevere with lg rsi
as a filter

we have a su3 which might have lost

and we note lg travelling decisively up
telling us no trade

by trading su4 's we avoid such situations

I don’t think anything much else is needed

[Jerome32]

LOSER!

Lost 90 pips and I’m quite glad of it

I’m not here to impress anyone but to learn from my mistakes

It clearly wasn’t a set up, not even a cross, let alone true
cross

Yes there was the classic three line convergence
which I believe is the most powerful signal of all

but it came way too late, and I entered right at the
end of the move

and to refer to my previous post, only after I lost
did I see that we had resistance at a very obvious
trendline!

not obvious to me evidently

and here’s the lesson - you can get so obsessed
with your pet system that you miss the most
basic things, like trendlines, major s/r, or entering
just before a major news event.

[Jerome32]

Let’s see how we get on with this one on Cable

We have the cross

str looking good although we entered a tad before
it begins the long incline up.

a modest tp

Laguerre is inconclusive here, even consolidating
if anything. Hopefully, it will follow the lead of
str

wait until we are absolutely sure?

that will prove I’m right, after the move may have
finished. but we have a true cross with black arrow
and divergence and the str clearly indicates a
bullish move is imminent

After the engulfing pattern, out and in of bollinger,
I would be very surprised if central bollinger isn’t hit

If we lose I would be inclined to pay heed to a previous
reversal mentor who cautions against trading in July
and especially august

but I also have ambivalence regarding Laguerre, I
think it can help avoid some losers and a lot of
true cross winners.

just keep monitoring

[Jerome32]

my ambivalence regarding Laguerre continues.

Its a great indicator but…

I just found a great looking set up where price
seems to be reversing at VBRN which acted as
resistance before

and we have black arrow and true cross.

but Laguerre is putting a damper on the proceedings

It really doesn’t seem to suit this system.

I’m wondering if it would better suit a trend following
system.

[Jerome32]

my eg trade is doing great, but I have closed cable
for just over breakeven.

tdi has kinked over (refer Big E system), but more
importantly Laguerre was consolidating (if indicators
can in fact consolidate )

but worse - gu was seeming to follow it’s correlating
eu which printed the same pattern and then went
into a tight range. eu also had true cross, divergence
and black arrow - but it just didn’t happen

no reason to think gu will fare better.

eg was a far superior setup. so just stick to the best
looking and avoid a potential loser

but lesson learnt. can’t be pig headed. if things
really look a bit gloomy just cut and run

and live to trade another day

[Jerome32]

EXITS

EG trade doing great

where to exit? I have arrowed possibilities:-

price will likely hit trendline and VBRN but
I am opting for central bollinger, less pips
but much safer bet.

[Jerome32]

as we see, tdi and str are saying the move has ended.
str is particularly disturbing.

I could jump out for 26 pip profit now, or hang on
for 51 pips.

If we look left it should be obvious we will meander
into central bollinger before too long.

I can’t be certain, everything is so clear in hindsight

anyone who thinks Forex is a licence to print money
should let me know what happy pill they’re taking

easy it isn’t!

but I will trust my gut and stay in for central bollinger

Laguerre has been above blue last 27 days! - and has just
hit the top. I believe it will now come down and cross
through upper blue

[Jerome32]

I trusted my ‘gut’ and won.

but that’s no basis for a system.

All the indicators I have been using are
great but I simply can’t use them all.

I used to have great success with trade zones
which are also visually great psychologically.

when price hits very top or bottom it always
reverses

what could possibly go wrong?

it may not be top or bottom as if price continues
the zone will extend ( repaint )

Similarly black arrow always signifies reversal
but they too can repaint.

However my hypothesis this:-

if you have very top or bottom of trade zone
with black arrow, supported by very long
and straight STR the zone and arrow
should be final

in which case you simply want to get in
as early as possible because there will be
some reversal of sorts

It may not be an extensive reversal, it may
only be 50 pips, so if you wait for confirmation
you could miss it.

is there a danger you could enter prematurely.

with a very decisive STR I would say no.

If you get in at the very top of a long STR
price invariably moves down.

but even a long STR can be over in one
candle so you need to get in early to ride
the move.

Its truly a delicate balance of reading the
indicators

A critically important point to note:-

you can have a perfect STR but it
must be positioned right!!

if it comes just before black arrow
it is now past and no longer valid -

it must still point to FUTURE price
movement.

Get this balance right and you shouldn’t
lose ( in theory obviously )

so what of TDI, Laguerre,Market Profile etc.

I am not fickle. You could possible combine
any of them with black arrow

but I think a long straight STR probably has
the edge over them.

Use all of them?

I have done that - you just tend to filter out
all possible set ups.

and missing so many winners can be
very disheartening.

I like the idea of looking for tops and bottoms
supported by black arrow and STR, but it
needs to be a very convincing STR