MA Position Trading System - Trading the Daily and 4h Time Frames With Filters

[Ingot54]

The market has been giving and taking for an hour, which is a relief after seeing the drawdown continued after this morning’s adjustments.

Thankfully we didn’t do too much wrong in those adjustments.

AUDJPY - so far the call has been working. We closed the short and went long. Still at minus 3 pips.
EURGBP - holding the fort has been ok for us, instead of selling into the whipsaw that this trade is in.
EURJPY - MACD is still losing momentum, and yet ADX and HA are still LONG fairly strongly. But Stoch_RSI which I call the “canary-in-the-coal-mine” indicator, is wobbling before it even rises to the 50 mid-line. This trade is still not out of the woods. The 4H says it is in trouble, but there will be no action until the candle closes tomorrow - them’s th’ rules!
GBPJPY - we were correct to shut this beast down this morning - it has done nothing today. Still floundering in whipsaw waters.
GBPUSD - same for Sterling, except we opted to keep it open and have been rewarded with … a recovery of the 16 pip loss and another + 18 pips in our favour … so far.

Forgot to post pip count on closed trades:
AUDJPY - Loss of 51 pips - now long
EURJPY - Loss of 34 pips - now long
GBPJPY - Loss of 67 pips.
Nett pip count since start of trading: MINUS 152 pips.

Have been looking for an alternative EXIT Indicator to remove the stress, but have still not found anything that comes near the HA colour-change thing, or the MA crosses, which is the topic we are enjoying.

Having said that, I have an out-of-print indicator called REX_Oscillator.

If you would like this, it can be downloaded here: FXCodeBase.COM: Forex Chart Indicators and Development • View topic - Rex oscillator
You will have to tweak the settings to suit your own style.
I’m not convinced it is any improvement on the HA candle colour change, but maybe you can wring some sense from it.

WARNING: It is an EXIT indicator - not meant for ENTRY.

EDIT: Added link to free Rex Oscillator download.
Anyone wanting to try some others, I found these during my search tonight too:
Schaff_Trend
Schaff_Cycle
I_XO_A_H (Amir)
Fisher_MBK
DEMA_RLH
NRTR_ATR
BuySellindicators
They can be downloaded here: Download forex indicators for free for MetaTrader 4 in MQL5 Code Base
You will need to search 57 pages of them, but all of them are in there.
It took 3 hrs to flip pages and look at examples of what each indicator can do (not all - just best candidates.)
Alternately you can message me and I will send the lot by email.

I am looking for suitable exit indicators and just checking visually I would suggest the Schaff_Cycle oscillator may be an excellent replacement for the CPU-hungry Stochastic_RSI.

[Sammyru]

Hi Ingot54, you do have a great system here. Please forgive me for my askng a question that maybe has already been asked but i just want to find out if trades can be opened on the four hour chart ONLY when there are clear cross overs on the moving averages and not when they are coming close together. When the the moving averages are coming close together there seems to be a lot of ranges on the four hour charts. This can be bad and frustrating. But if entries are ONLY made when there is a wide distance between the two moving averages i really think it will instantly make orders go into profit and then be a lot more stress free. Thank you very much.

[Ingot54]

Great question, Sammyru.

If you see the tight range on the Daily charts, it is guaranteed the range on the 4H charts will also be tight - more range, yes, but still almost impossible to enter and hold a profitable trade.

The SAME rules apply - wait until a candle closes with a CLEAR crossover.
Touching is not enough. We saw that in one of the charts above. The candle came close to crossing, “kissed” and then veered away.

Few people like to be disciplined - especially as we get older and independent, and believe we know enough to keep safe. But the markets go against this kind of personal security, because they are ruthless and do not owe you anything.

As much as I would like to see some nice trend begin to move price off its current flat base, it seems stuck.

For me it is very frustrating to be attempting a thread, when the market is saying: “No, I’m not going to let you show people anything.” So I just have to sit tight within the rules and take it. That, so far, just means we are going to take losses, and my job as the owner of my trading account, is to be a good manager, and keep those losses to minimal.

We HAVE to take signals if we want to be in trends when they appear. To not take those signals can mean we are left behind, with little chance of getting into a good trend when it shows up.

So just be firm with yourself and stick to the rules on the 4H.

The good news for you is that when a trend does start, you can be nearly one day ahead of the rest of us in pips, while we sit it out waiting for a confirmed entry.

The bad news is, you may also get hit with more whipsaws, as price stubbornly meanders up and down, before trending.

Just stick to the rules, and wait until the candle cross is confirmed by a 4H candle AFTER fully closing.

Frustrating right now, but safe too.

I imagine most traders - doesn’t matter which system they follow - would only be taking small scalps at the moment, and they will be keen to taste some winning trades too.

EDIT: I want to add here that the 2 and 10 Linear Weighted Moving Averages (LWMA) are far enough apart in their representations of price, that when they do cross, that cross is for a significant reason. It means the market has some degree of intention to trend. Right now there are market forces on the other side of trades, that are equally determined to stop that from developing.

Sometimes these trades are tied up with the settlement of Forex Options at EXPIRY, and if you can find out when these expire, you can also have an idea when a breakout is likely.

Hope that is useful - maybe someone reading this can enlighten us about Forex Options Expiry dates.
I found this: Hot to use the data about option expiration in Forex

[Ingot54]

I see what you are saying, Sammyru

My immediate thoughts are that in a choppy market such as this seems to be, by the time the MA’s widen and you then take an entry, much of the move has passed and because of the narrow trading range, the trade is just as likely to run against you, as make pips stress-free.

Traders have to be both optimists and pessimists - to make profits and conserve the account.

My approach is to attempt to prove that a trend is establishing, and enter early - as soon as the MA cross is confirmed. I know we will get knocked out of many trades, but when we get into a good trend, other pairs are also likely to begin trending. That’s when we get our pips back … + some great profits.

Some of these daily trades make 160 pips - even 300 and 500+ pips.

I’m not trying to change your way of trading - I think there are some good pips to be made in your approach too. But try to confirm the trend when you do enter and you should be ok for some profits.

[Ingot54]

Hardly worth changing the lineup at this point.
We have a 50:50 chance of making pips or losing more the way this chop is playing.

Closing trades just locks in losses, and most are not large at the moment.

If we close and get another signal to enter, that leads to the same result, so I feel it best we sit on our cards until we know it is time to fold.

If you look back at the EURJPY 4H chart, from 3rd October to 9th October, there was a frustrating period of chop there as well. Then came a breakout which - had we been around to take it - led to between 300 and 350 pips, depending on entry/exits. The breakout was on 10th October and it ran for almost 400 pips on 4H.
Entry was around 117.90 and the trade was stopped out 12 hrs into the new day at 120.96 for 306 pips as a realistic trade.

It is worth taking a look at the 4H TF when waiting for a crossover confirmation. If it seems imminent and likely, it may be worth looking for an entry there. Personally I like both TF - that’s why I included the 4H in the heading of the journal.

Right now I’d like to see the Daily strategy working for us first, before turning to the 4h - it will come.

Meanwhile, I know many of you are quite experienced - so don’t discard the 4H - it’s a lot more fun if you enjoy the thrill of the trade.

[dudebro]

Taking some notes to add to my book of wisdom. Thanks!

Few people like to be disciplined - especially as we get older and independent, and believe we know enough to keep safe. But the markets go against this kind of personal security, because they are ruthless and do not owe you anything.

So I just have to sit tight within the rules and take it. That, so far, just means we are going to take losses, and my job as the owner of my trading account, is to be a good manager, and keep those losses to minimal.

On futures, @bobmaininc mentioned the COT report that could provide some info on where weekly sentimen is likely to be.

Using Forex Futures to trade

ERE has it correct as far as charts are concerned. You are not really going to predict much on a futures chart that is not on a spot chart. Now one thing ere did not mention is you can use the futures market to get an general idea of market bis in spot forex. It is in the cot report released every Friday at 3:30 est. that report can be found on the cftc web site for free. It will tell you how many contracts big money is long or short or spread betting. The report has alot of information on it a…

[Sammyru]

Thank you very much Ingot54, you see the agressive approach you are sharing when you imply we enter even when the crossover has not widened is good in the sense that one can catch a trend early. But of what benefit is it to trade with stress? To trade with some kind of tension? We are looking for high probability trades. It does not pay to keep on making profits on smaller timeframes and then to lose them all together when a major move from the daily is triggered when Central banks make dovish or hawkish statements or release their forward guidance. It has happened severally and it will reoccur. One might be making profits but when the daily chart in consonance with the four hour charts start roaring, the smaller timeframe traders get hurt. I use to be hurt like that until i transitioned and thank God for that. So for me when the MAs are close to each other they imply that there is some level of uncertainty and we can just relax and wait for the higher probability setups when they widen apart by drilling down to four hour chart or even one hour ( i don’t fully rely on one hour except certain times) then entry can be made with ease and great results. Please exits too will depend on the Daily please when the faster MA begins to flatten.
Thank you very much Ingot54 …

[Sammyru]

Well said and well laid out Ingot54. However as you have said it is very necessary to combine the four hour chart for finding suitable entry and exit spots. I personally use the two daily and four hour timeframes in my strategy. it is a gold mine. Citing the same instance you gave us of 3rd to 8th of October this month for EURJPY, is worth commenting.

This is why i said aggressively relying on the crossover on the daily without them widening will lead to choppiness on the charts, four hour chart inclusive with its attendant psychological trauma especially when the trader in question does not know or apply the utility of Money Management by opening small volumes to protect their accounts.

Indeed and true to your proposition in this system the EURJPY rallied from after the 9th of October up to the 21st from where it has been ranging up till now waiting for the fundamentals to further confirm and give it impetus. The markets are in risk on mode as positive news has been coming from US and China trade talks on agreements almost reached for the first phase.

This is a great system that should be given consideration by traders but then this is my opinion. I would also like to add that if traders intend to scalp or day trade they should also be aware of these two timeframes, Daily and Four hour charts and keep abreast of Sentiment events. But for me i stick to the two and it has been working well for me.

Thank you.

[Ingot54]

Thank you very much Sammyru.
You have made me think very hard about your comments, and it looks to me that you have supplied a missing link for me.

There is no rule that says we have to capture every pip.
But there could be an unwritten rule that says the pips we do capture, should be safe ones.
In my quest to get into trends early, I may be damaging my account without realising it.
It is likely that the pips lost in choppy trading don’t need to be.
And we haven’t taken into account the psychological cost of frustration with a difficult market.

I will go over your approach a few times until it sinks in better, and I fully understand what you are saying.

I think all of us here can learn a lot from what you have said - very much appreciated.

Thank you again for your willingness to share.

[frandlost]

In my quest to get into trends early, I may be damaging my account without realising it.

This has been a big issue for me to overcome and accounted for staying in a trade that had gone against me resulting in tremendous losses. I would catch myself doing it by adjusting indicators to “catch every last pip”. It can’t be done. Now my goal is to get in after what “appears” to be a substantial confirmation. Which is still objective as you have consistently said you don’t know what the market will do.

I will spin a chart back and click through one candle at a time to see how my rules “play out” it has led me to remove certain MA types/indicators.

@Ingot54 great thread! tx for posting!

KC

[Ingot54]

I have to admit that this flat market is taking its toll on my enthusiasm.
Technically we are using an approach that has crashed and burned many times in many forums.
But the difference here is that we are attempting a more conservative approach, by using filters that operate in slightly different settings from each other.

The rationale to that approach, is that we will see the setups early enough to be alert, while being restrained by some of our filters NOT yet confirming.

This works well when markets are trending - and it works well to pick turning points in the markets eg the beginning of reversals, without attempting to pick tops and bottoms.

When looking at historical charts, it appears plain that reversals occur at exactly the positions we are looking to locate. So I think we got that right.

At the moment the whipsaws are hurting this strategy.
I can see the AUDJPY and the EURJPY are beginning to trend as we hoped, so we are doing fine there.

On the other end of the scale, the GBPUSD and EURUSD have followed those above two pairs, by rallying with them.
The MA crosses occurred exactly 3 days ago, confirmed 2 days ago.

I have allowed the GBPUSD and EURUSD ro run a bit, given the chop they have emerged from.
Not sure that was wise, because now we are on the wrong side of the GBPUSD and EURUSD.

In total we have at time of writing, nearly 100 pips drawdown, with the GBPUSD accounting for all of it on its own, and the other four pairs balancing to make a current position of zero gain or loss.

The other pair included above is the EURGPB, which is negative 20 pips as I write.

I will stay the course, despite the situation not being ideal.
To stick this out is not something I would do in live trading.
If live trading this, I would make a decision on tomorrow’s candle close. Right now we are almost half-way through the life of the current daily candle.

But in demo trading you can experiment by doing things you would not be able to tolerate using real money.
And in doing so, you learn a tremendous amount about the markets.

I hope no one is trading any of these pairs live, because the strategy is still developing, - thus the reason it is in the Journal thread.

So while I am disappointed - that’s natural and I accept disappointment - I am not ashamed to have bared this strategy to you all.
The markets do not care about disappointment and shame. Markets just require us to be humble.

In the end, I have no doubt that we can improve this approach to be a much better strategy if we don’t simply give up on it.

I think Sammyru located a major problem with the approach, and that is we got in too early to these developing trends.

It is nice to get in early on the trade if it is a winner. Yes. And by ‘early’ I mean at the first confirmation of the MA cross - the new candle that confirms it. However all we have demonstrated so far, is that in flat/choppy times, we really need more candles for trend confirmation.

Sammyru you also gave a strong hint that we would do better to enter the trades once the MA’s were wider apart. We are seeing that now in the AUDJPY - EURJPY - GBPUSD - EURUSD.

That’s not to say we should suddenly jump ship and join the two losing pairs.
But I agree that about now would have been an ideal time to get into these, rather than 2 days ago.

So I will stick to my words and allow these to run until they close the current candle tomorrow…
That means we may lose the GBPUSD to a stop loss.

But in days ahead, we can be more patient and wait until the MA’s are indeed wider than we have to this point.

This approach is certainly worth our persistence and coaxing.
Right now it is in the labour pains of birth.

[Ingot54]

This has been a big issue for me to overcome and accounted for staying in a trade that had gone against me resulting in tremendous losses. I would catch myself doing it by adjusting indicators to “catch every last pip”. It can’t be done. Now my goal is to get in after what “appears” to be a substantial confirmation. Which is still objective as you have consistently said you don’t know what the market will do.

Yes indeed, Frandlost - I have also blown up live accounts doing this. Thanks for sharing your experience.
If we are open about it, we will find ways to fix our trading problems together.
No place for ego in trading - we are not Larry Williams

[Ingot54]

Taking some notes to add to my book of wisdom. Thanks!

Thanks Dudebro - that’s encouraging to see you getting something from the thread.

[Dre_Trader]

Hi from Cairns, Ingot54…just been reading through this posting and appreciate your insight into developing a strategy that resonates with me…still trying to get this trading thing sorted…just when you think you’re onto it …boom…market gives you wake up call…Anyways, just thought I’d share an indi you may like to look at,Stochastic Momentum Index (SMI), I find it pretty accurate and it may be a good fit for this system…Cheers,Andre

[Ingot54]

[quote=“Dre_Trader, post:46, topic:250744, full:true”]
Hi from Cairns, Ingot54…just been reading through this posting and appreciate your insight into developing a strategy that resonates with me…still trying to get this trading thing sorted…just when you think you’re onto it …boom…market gives you wake up call…Anyways, just thought I’d share an indi you may like to look at,Stochastic Momentum Index (SMI), I find it pretty accurate and it may be a good fit for this system…Cheers, Andre [/quote]

Thanks Andre
Will take a look at it.

I like the Stochastic_RSI as mentioned, but it is too CPU-heavy and when I have it up on 8 pairs simultaneously, it makes the computer really hum. It can also cause charts to freeze for a minute or so while it loads all of the data necessary to operate.

Others as well as me have also found the Stoch_RSI does not appear on some charts sometimes, or it will appear on the 4H but not Daily, and vice versa.
Having said that, it is the best indicator of change of trend that I know of.
Since your indicator is also a Stochastic (Momentum Index) it is well worth trying out to see if it does the job.

Thank you again for this
Ivan

[Ingot54]

Being Friday and USD Employment numbers coming out tonight, it is unlikely we will be opening new trades today, unless trading the 4H TF.

AUDJPY: It did look like this pair would be kind to us when it was opened. Right now it is in a retracement-and-basing pattern, meaning it has pulled back below our entry, and is now in loss by 14 pips. However, a glance at the 4H shows a small pin bar, and the current 4H has gone nowhere since opening . The last 4H candle has now formed a doji, meaning no-one seems interested in driving this pair higher or lower right now.

The new 4H candle has just opened, so will watch with interest, to see how it bodes for our Daily trade. It is just possible - I mean about 60% likely in my view - that this pair may strike a base here and decide to rally once more. This would be in keeping with a choppy market, but this kind of conjecture requires a crystal ball, and we are not into predicting here.

AUDUSD: This is another pair which we left alone as the MA’s crossed. It is a pair from which about 50 pips might have been made had we entered, and possibly even more on the 4H TF. Since the 4H is currently flat-lining, we will move on. I do not see a trade here this side of Tuesday, unless you are keen on following action on the 4H.

EURCHF has crossed and confirmed a short trade. Monday and Tuesday should be interesting for the pair. ADX is baffling since it still registers as 57, with a strong rally bias, while the 4H ADX is at 41, with a strong retrace bias. The 4H is putting in long lower candle body wicks, which is not too inspiring for a short trade. This is one of those look-and-learn moments.

EURGBP: We are currently long this pair and as I write, about 37 pips in the red.
All appearances are flat right now. ADX is sideways-to-down. With no clear direction, we will allow the trade to ride for now, as MACD while under the mid-line, is still rising. HA candles are very small, signalling indecision in the market as well. The 4H chart is choppy - one-up-one-down, so no guidance from that quarter.

EURJPY: This pair was sold down during the London/New York sessions last night, and today during the current Sydney/Tokyo market, it has produced a base range of 11 pips over the past 8 hrs. It is now 54 pips to the red on our account. Since it seems to be forming some sort of base, we will just wait for now. To remain with it risks further drawdown (DD) but to close locks in that loss. Usual dilemma.

EURUSD: This is another pair which changed direction the day after we entered short. It is currently 48 pips in the red, and quite flat - noticeably on the 4H. Eill sta with it since indications are that it is unstable where it is, and ADX has run out of steam in the lower TF… MACD and Stoch_RSI indicate a retracement on 4H and flat on Daily. Hold.

GBPJPY: This is one of my favourite pairs to trade, but is subject to volatility and is not an easy one to manage. Every indicator except ADX is pointing to a sell, as is price. We still require one more day to confirm a short trade. Traders following the 4H should be already making some pips. ADX is concerning though, as it is indicating “hesitatingly sideways.”

GBPUSD: We are short and in the red to the tune of 110 pips. Daily candle indicators are telling us this pair is in a firm rally. However on 4H chart the ADX is strongly in favour of the rally, but it is alone there, as the rest of the indicators are pointing at the ground! A short on the 4H is not yet confirmed, and won’t be for 4 more hours (on my broker’s charts). We will hold on, since a possible downturn would be in our favour.

NZDUSD: Positive for a rally, but bumping up against resistance today. Since that is the case, and it is Friday, we will stand aside form this pair. 4H is flattening for the past 16 hours as well.

USDCAD: We have had a confirmed entry long here a day or two ago, but the ADX was too weak to support an entry. No advance on the impulse candle that caused the MA crossing, and today the range is just 10 pips - flat. No possibility of a trade on the 4H right now - chop.

USDCHF: The 5-day range is between 100 and 150 pips. Currently sitting close to recent support, and the 4H is flattening. ADX is strengthening, while still a little soft at 27. There is a chance this pair could continue to go south and break through support. As with all USD pairs today, much will depend on the news in about 11.5 hrs time. Nothing for us today - We’ll follow its progress next week.

USDJPY: I like the look of this pair right now. Seems poised to fall 100 pips or more. 4H ADX is down at 31.6. Daily is sideways. This is yet one more pair that is consolidating and flat, and could also be strongly affected by USD news results tonight. As much as I would like to short this now, I will stick to the rules and wait until the ADX is confirming the trend.

That is the summary as I see it.
I would be interested in the thoughts of others regarding this, as I am always keen to learn how others see the charts.

[Ingot54]

Will be examining the role of the ADX indicator I am using - the ToR 1.02.

It seems to be keeping us out of more trades right now than it allows us to enter.
Further, while I am using the ToR 1.02 on both my demo and live charts, there is quite a difference between the readings on both, and I put that down to the 1H time difference between the different brokers.

One would think that on the 1H both would be in complete agreement, despite there being a consistent pip difference of 1 to 2 pips .But no - even then there is a small difference in ADX readings. Settings in both are identical.

So I am constantly reviewing the benefits of the ToR 1.02.
“ToR” stands for “Trend or Reverse” and generally does a great job.
It could be just the choppy markets that is the issue, and this indicator is attempting to keep us out of trouble.

We will watch.

[aalcaraz]

Ingot54: thanks for sharing all your hard work, it shows you really enjoy trading and that is a very good motivation for the all of us. I notice that “pips” is one of your key measurements, and it would be very interesting if you could relate it to the ATR of the different pairs, since volatility is very different depending on the currencies. By using the “pips” by themselves you run the risk of loosing track of the “money” in the sense that you may target very aggressive or conservative SL/TP, that instead should be related to the ATR’s. Money Management is key, I also trade the D1 timeframes, and the way I decide which lot size I’m going to use is depending on the risk I want to take related to the ATR, which in a sense would be what we can expect from the market.
Thanks again for sharing and hope everybody is having an excellent week end…

[Qed]

Hello Ingot54, wondered where you went from IC … I dont know if you solved the problemm of overlaying HA candles on same chart . All you have to do is load HA the alter the colors in the indicator control pane . You have to alter colors in both “imputs” and “colors”

[Qed]

woops Apologies Ingot54 . misunderstood . thought you wanted HA overlayed …cheers Q