Newbies.... Stop being befuddled by charts

It absolutely baffles me why most traders are still relying on charts and price action to goading them into trading the wrong direction… when a Simple 20 Moving Average Slope (Colored) takes all the confusion out of a mass of candles…

Using the AUDUSD (1 Hour, UTC +10) pair as an example, which has been tumultuous over the last 4 - 5 days due to Political uncertainty, I have laid a Candlestick Chart and a SMA 20 next to each other to show the utter confusion that Candle Charts cause.

Does it repaint giving a perfect chart… NO…Can it generate false signals?.. Yes of course… use normal trade risk management to keep the losses small… and when it trends you get the Whole Sundae… A net 370 pips was available over the last 6 trading days with minimal drawdown (using 0.1 Lots or less). I suggest using it in conjunction with the SW Strategy as shown on Dennis’s thread… the results will be exceptional…

This is the same strategy that was used to generate the 25% in 7 days

And before the usual suspects jump in claiming this example is with dead charts… have a good look and realise the simplicity of the signals given… even try it for a few days on any of the more flowing pairs EURUSD, AUDUSD, EURGBP etc… etc…( NOT the USDCAD, GBPUSD ).

I have demonstrated this strategy at least 4 - 5 times on Babypips over the last 12 months… and I’m still reading about Analysis Paralysis with MA200’s (Great Indicator BTW), Stochastics etc…

It cannot be made any easier…

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How was the chop traded at the reversal at that top? Price crossed about 4 times?

Show us the actual trades, shouldn’t be hard

And before you get defensive, remember, you’re the one making the claims

If only it was that easy…

I did not trade this pair… I trade XAUUSD…

“A net 370 pips was available over the last 6 trading days with minimal drawdown (using 0.1 Lots or less)”

“How was the chop traded at the reversal at that top? Price crossed about 4 times?”

Think about that question… if you were using the SMA 20 Chart only… you didn’t see the chop… exactly the point of the strategy… You get a distorted outlook because of the Candle Chart…

If I did trade it I follow the price up with a manual trailing stop of 25ish pips (TF dependant), so if it spikes back I’m taken out with a profit and then wait for the next Trend confirmation…

Otherwise I wait for the color change or drop back to a lower TF to see what’s happening…

15 min TF (UTC +10) to show the accuracy… Note the times are highlighted on the bottom of each Chart as confirmation.

“And before you get defensive, remember, you’re the one making the claims…”

Any which way… I don’t care, use it or don’t use it… I’m not pushing your arm up your back and telling you to do anything…

Try it out on a Demo before rubbishing anything you see or hear…

P.S. Magic Trick… (Courtesy of Forex Factory)

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News for you, that is not the 20 SMA, it has some kind of smoothing

Chop Chop

News for me… really @ Snowman have a look at the image you have put up… price action is respecting the SMA 20…

If you turned off the confusing Line Chart, could you trade it successfully with risk management???

I’m using an MA20 Slope which can be converted to any of the MA’s available from Simple to VIDYA to Wells Wilder… Find a better MA Slope Indicator…

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Thanks for showing us the power of 20 SMA :+1:

Just out of curiosity - why do we rule out those two ?

Simple is always best! But yes, why not u/c or g/u?

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Hi @TalonD & @Falstaff , I have found over the last few months that with a 20 period and high pip movement / volatility synonymous with the GBPUSD / USDCAD, the Indicator tends to exaggerate the lag. So when price retraces quickly, it leaves the change of trend signal way behind and effectively takes you out of the trade with more regularity.

It’s a similar issue when I trade XAUUSD… but this pair once it starts to trend it moves farther and faster than most of the currency crosses so the returns are better as seen on Friday’s chart.

You can test shortening the period as well, this will just give to many false signals. You can try it on any of the pairs.

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Hi @Trendswithbenefits, When you took that screengrab, Did you colour the SMA to show the direction or could you set up ctrader to do that for you? I can’t seem to get it to do that… It will only do a single colour sma.

How do you get the 20 MS to change color in when the direction changes in MT?

Hey @St3veyB, I have PMed you the Indicator for Ctrader… Let me know how it goes…

Hey @donsls, @The_Snowman Here is a similar MA Slope Indicator for MT4… It’s FREE…

The one I use is one I coded for Ctrader so it won’t be of any use to you…

Cheers

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Thanks. I am going to try this out. Hopefully won`t re-paint.

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@donsls I’m not sure if this Indicator repaints or not… I very rarely use the old and clunky MT4/5 package.

If it does… as a work around… wait until the first or second period has closed for confirmation.

Also change the Purple and Yellow to Red and Lime… doesn’t hurt the brain so much processing market direction at a glance.

The Ctrader 3.0 Indicator has a neutral (wait) signal “math” coded in to stop the repainting…

@Trendswithbenefits36m Thanks again. If it works better (no repaint) with CTrader, I don’t mind installing that. After successfully demo trading, I started to trade live with price action and just got my account wiped out. Now looking for something that will work better for me.

@donsls No problem… just run the strategy on a Demo until you are comfortable with how the signal compares to a normal chart. You can use as low as 5 min but I suggest a minimum of 15 min Chart, (I use 1 hour) even run a sample on a 4 hour Chart.

Feel free to change MA Type and Periods to smooth the Indicator, this will also lessen the chance of false signals on some of the shorter TF’s

You have to learn to trust the Indicator… You will notice very quickly how candle driven price action is continually trying to shake you out of the trade while the Indicator holds the overall trend.

@St3veyB @donsls Above is different method of using the Indicator for trend following…

@St3veyB @donsls And another method of using the Indicator for trend following…

And before anyone throws their toys out of the pram… I’m not suggesting to buy (DON’T BUY) any education or software from these videos… just have a look at the strategy demonstrated in the videos…

I apologise if I am treading on anyone’s toes here but I just wanted to add my own confirmation that this method does have credibility.

I use what I guess you could call it a “poor man’s version” of this indicator and have done so for some time to indicate both the trend change and exit times. It is not the same as the indicators talked about above but is based on the same idea. It is a 20-period SMA ribbon and the crossover of the ribbon is the pre-emption of a change in slope and is same principle as the change in colour above. I have from time to time mentioned ribbons on various threads but since there is no interest in this approach on BP I always leave it off the charts I post.

Just to illustrate, here is the ribbon for the EU 1H chart for approx the last two weeks. It also works well with 4H charts. I am not suggesting this as a substitute - just a reflection in a similar approach. I still use the candles for selection of targets and stops and a core “mechanical setup” but this ribbon does, as said above, help to keep me in a trade and avoid being thrown out by maverick candles.

That’s all I wanted to add…

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Hi @anon46773462, The SMA Ribbon is effectively the same as the Slope Indicator… and is a good substitute for MT4/5.

Unfortunately for Ctrader users, the Graphics required to generate a Ribbon Indicator are not supported by the API. I haven’t seen a Ribbon type Indicator in TradingView either, so it may not have the Graphic API to support this either.

Maybe a TradingView (Great Platform BTW) user can update the thread on this.

Doesn’t Ctrader support Bill Williams Alligator?

If so, ribbons can be generated with it. Input the same period in the three lines and the shift as 0 and 1. The third line can be set as “no line” or if that is not possible then with the same shift as the 2nd line so that it superimposes.

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