What I have bee doing in my demo accout. Is to use it on the daily chart to get in. But, not to set my stops. Sice I had to change demo’s. Time expired, I got in some late. But, I am still $6,000 -$8,000 ahead.
Dale - firstly … let me encourage you to keep EVERYTHING together on one thread - this is important so that we can all stay together. The danger is that we will lose the work you have already done, or all end up following different threads and missing the main one.
It matters little what transpires during the journey … at the end it will be clear that we left no stone (or indicator) unturned in the quest.
I really like your original hypothesis … (remember your famous one-liner: “I’m so happy I could sh*t!”)
Well, the PSAR signal used over daily or weekly TF are great, and I hope we don’t move away from that. The evolution here is a result of trying to place the PSAR in its rightful environment … [B]TRENDING[/B]. We have to be careful that we don’t introduce too many other indicators out of a mercenary desire to jump into trades.
If that happened, the PSAR could be relegated to just another signal, instead of the main game in town. I have never felt at ease with stochastics, and rarely take much notice of RSI, but I have trading friends who do use them well.
I really do like the MACD, and I’ll explain …
MACD is unique because it is both a [B]LAGGING[/B] indicator and a [B]LEADING[/B] indicator, as well as a [B]MOMENTUM[/B] indicator. As such, I am hopeful that it will come up trumps as the ideal companion to accompany your PSAR in formulating the ideal system. Used correctly, I don’t think you need any other.
[B]One of the most important principles in Technical Analysis is that MOMENTUM peaks before PRICE.[/B] In other words, momentum provides a warning that decline/rally in the price may be imminent.
Just to rehash, for those who need to understand MACD a bit better …
The standard (or default) model for MACD is the 26-12-9 setting, but as I shall show later, other settings do have a useful place.
There are 2 lines formed in drawing the Moving Average Convergence Divergence Indicator. The first is the “main” line, formed by subtracting the 26-period EMA (Exponential Moving Average) from the 12-period EMA. After that line is constructed, a 9-period EMA of THAT line is overlaid on top of it, and we call that the “trigger” line or more commonly the “signal” line.
[B]The most important signal MACD can provide us is the CROSS of the ZERO line.[/B] Depending on the cross, the signal is bullish or bearish … no need to go further on that right here.
Gerald Appel who devised the MACD recommended the following setting be applied:
17-8-9 for BUYING
26-12-9 for SELLING, following a strong bullish run.
I am uncertain how to apply that, given we go long/short on currencies. I have the opinion that one will get us into position faster at the beginning of a move, while the other will assist exit at the completion of the move.
Using daily or weekly TF excludes much of the “noise” and should see the account build nicely with little stress. (Ka-Ching! … love that sound!)
MACD can be used with or without the histogram. The histogram is not essential, but is a strong visual aid or visual signal which becomes very useful when flicking through many charts to select trading candidates for the watchlist. It is good for traders to learn to do without the histogram initially, until they become adept at spotting the EMA cross-overs, and learn to spot the crosses at the zero line. After that, the histogram can be used to speed the process.
So … with that background, how does the MACD signal that the chart is TRENDING, and thus validate the PSAR signal? Remember it is a leading/lagging AND momentum indicator, so it will quickly point to trend reversals … the perfect partner for PSAR.
To check whether the currency is TRENDING see where MACD is in relation to the ZERO line. [B]If MACD is FLAT or stays close to the zero line, the market is RANGING, [/B]and you simply put that trade on the back-burner and move to the next chart. No use trying to force a trade if the indicators are warning to “wait”.
[B]However, and this is the biggie … IF the MAIN line crosses the SIGNAL line from below the zero line, it is a STRONG signal to go LONG.
If the MAIN line crosses the SIGNAL line from above the zero line, it is a very strong SHORT signal.
[/B]
[B]If the PSAR agrees, then we have ourselves a very juicy trade.
[/B]
We don’t need to be trading too many at a time - far better to load up on the successful trades, than spread the margin too thinly on multiple trades.
The reason I say that is because the higher liquidity pairs are the ones with the USD, plus the GBPJPY or EURJPY. There are usually about 8 currency pairs eligible. You might not get much action initially, but you should find that as you get established in this system, you will be more waiting for an exit signal than an entry signal.
And remember, it is in the exit that the money is made.
Hope that makes sense - and please add to, or correct where I may have erred.
hello every boday,
Dale i am with Igot to keep every thing in this thread.we already posting our knowledge here and i think that will mae it intresting more and more.
Well guys we do have lots of indicators now!! i don’t know but i feel if i am going to use the PSAR , MACD ,RSI,AND STOC.that will probebly end up with 1 trade a month. i know it will be the winner trade but also i feel we will lose good ones as well.
So fpr the PSAR and MACD i feel they r perfectly working together.i checked them and yes IGOT they r telling u when the market is going to be trending and when it doesn’t.if we r going to follow what IGOT is saying with the MACD and it’s realtion with PSAR.
I will try the MACD and the PSAR i think that will enough i hate to look to my charts while it has too much signals and indicators on it!! i feel bad for myself.
I don’t know but i feel that the market is not moving so fast today or even yesterday i hope that coz they r waiting for the US to anounce there intrest rate and then things will go normally after that.
Akram
hello guys,
Ok now i have to admit that i am either understand the book in a wrong way or i really undesrtanted in wrong way!!!
Well i am talking about the intrest rate
so when ever the intrest rate is less than what it is then the curency of this country is going to be droped and the vise vera.
Sorry if i did misslead any one of u guys.After today the doller went crazy down with all the currencies when the announce that the intrest rate is droped by 50 points.
Dale u r right i think i understand it wrong and we should mention it here clearly and loud so no one get confused like i did before!!
By the way Dale i followed what u said for the intrest rate although i wasn’t acutualy sure aboiut it but i went on selling the doller and i got some pips which has nothing to do with our strategy coz i have no vailed PSAR yet i was board for keeping my self away from the market for couple of days doing nothing coz of that but i am back with some gain not bad!!
I wonder when can we have a vaild signal this week is amlost gone!!
Regards,
Akram
ok Ingot
I checked the MACD again with the psar and u r 100% right if we will take our postion based on Psar when they show in an opp. direction and our MACD is crossed over (far than 0 up or down) this is a very profitbale trade.
What i did is that i am attaching 3 files
1- file to those who is using the MT4 as they don’t have the MACD indicator like 2 lines so this file if u download it, copy it and paste it into your indictor list u will be able to have it same like Dale’s Broker
2-is a file that when u download ,copy it and paste it into your Indicator list u will be able to use it as a sound entry when the MACD cross over. it will give u a beep some times the PSAR shows and the MACD don’t cross over yet so it will never give u a beep it can give u a beep when MACD cross over it can be after the PSAR dot appears in the opp. direction with in 2 or 3 days if the MACD is still away from the 0 it is still a vailed entry.
3-is a graf for GBP/USD from previous days that will tell u when to sell and when to buy based on Dales. PSAR and Ingot’s MACD
so basicly these files is going to do what Ingot was trying to tell us beside they will give u a beep once the MACD cross over all what u have to do is that u have to check for the PSAR (Dale’s system) if they r shown in the opp. direction then u open the trade based on the PSAR directon. some times MACD cross over after the formation of the dot with 3 days (3 bars) this is also a vailed entry.
Have a look on the charts it has like 4 vailed entry as shown .and all of them were a dam proffitable ones!!(wish i had them before!!)
These 2 files are for the traders who have the MT4 all what u have to do is that u have to download them unzipped them go offline with your trading software copy the files and past them under program files/MT4/Expert/indicator and then open your trading system go online click on insert/indicators/customs and then apply both of them into your charts and choose the 1 day time frame. then Bingo!!
Dale and Ingot have a look guys it is very intresting files and please guys give me your feedback. offcourse all of u r welcome to comment as well.
Regards,
Akram
signal demonoid.zip (4.05 KB)
iMACD.zip (1020 Bytes)
Thanks for input.
I am just wondering what parameters(numbers) do you use for these indicators.I don’t know if there is any post somewhere to tell me about that.
Thanks
Mike
Guys,
As for the chart i attached eariler GBP/USD and it has 3 trades profotable one from the period of 19 jun till 12 sep almost 2 month for one pair if we had this trade we would get 925 pips on this pais.just thought it is something intrested for u to know
Akram
Thanks for input.
I am just wondering what parameters(numbers) do you use for these indicators.I don’t know if there is any post somewhere to tell me about that.
Thanks
Mike
Hi Mike
I can not give too much help with those numbers.
I would imagine the RSI at a setting of 14 would be fine, given that we are dealing with the daily and weekly charts. I have not been using RSI because it is an oscillator the same as Stochastics (doubling the indicators and reducing the screen real estate for viewing the chart)… I found Stochastics to be more responsive.
As far as Stochastics go, I used it only with MACD, and looking back at some old charts I posted on TopStocks.com.au (Forex Trading threads) i used 2 different combinations as follows:
[B] MACD 14-3-3
Stochastic 5-11-3
MACD 7-11-3
Stochastic 8-4-4
_____________[/B]
I remember fiddling around with those for about half a day to get them to closely match the chart action. And both combinations work with Daily TF.
The difference between them is subtle, but it is in the response speed to price action change.
Hope that helps
Best wishes
Ingot
Guys,
As for the chart i attached eariler GBP/USD and it has 3 trades profotable one from the period of 19 jun till 12 sep almost 2 month for one pair if we had this trade we would get 925 pips on this pais.just thought it is something intrested for u to know
Cut it out Pip Huntter!
I am already feeling bad enough because we haven’t finished this off! (Just kidding mate!)
But this is exactly what Dale set out to do - to capture these really good pip moves, without staring at the screen all day.
Thanks to all the good input and hard work by you guys I think we are very close, and I think we actually have one of the very best systems I have ever had the privilege to experience.
I think when the polish goes on this system, I am going to nominate it for “Babypips System of the Year”. l:^))
Anyway guys - that is for the near future … just a little further to go now and we’ll have it spot on.
Thanks for your perseverence Pip Huntter, and of course Dale, and the other guys who have kept this thread alive. I am really grateful for the effort. Fantastic stuff.
Best wishes
Ingot (Already counting pips and money, and dreaming of that world trip!)
ok Ingot,
i will keep my mouth shut!!but i was trying to tell every body that what u posted eariler about the MACD is really very nice to use with the PSAR.
Dale u still there??!!
I guess u eaither are counting the pips u gained today or u r busy with the withdrowal u r managing to have through your broker!!!
Regrads,
Akram
Evening all,
Some great responses yet again and thanks to all for the contributions. I like your work on the MACD Ignot that will require more reading on my part.
At present, all of the above pairs are now showing profit, due to a dramatic turnaround overnight. I am playing with the idea of takeing some profits as there is a lot of money on the table right now. This requires further thought.
The GBP/USD position, which was in profit yesterday afternoon to the tune of 200 pips, I closed it manually today for a 40 pip loss. This was a mistake on my part as I should of closed it manually yestreday, as the fundamentals were all pointing to a GBP rally against the dollar with the Fed interest rate cut. Possibly, in the future, I may close positions based on fundamentals instead of waiting for the SAR to reverse. Again, more thought and study required. All opinions welcome.
Over and out for now.
Hi Guys
The chart below is based just on MACD and PSAR DAILY.
The current candle has not been completed and it is possible it could turn red before the day is closed out. That means the Blue Dot under the current green candle could flip to the top of the candle.
How would you manage this?
Would you wait until the current candle closes before entry?
The PSAR is setting up, and the MACD is proving we are in an uptrend.
Stochastic is above 80.
Bocajunior - I think there ARE “exceptional circumstances” where it is wise to take profits. You have identified one of them in my view. But we have to be careful this does not undermine the entire system.
It is always on the agenda that positions will reverse rapidly. I guess this is another area we can work on - building-in trading strategy to match the method. Things like locking in profits, trailing stops and so on. Keep this in the back of your mind … I think we are getting very close to helping Dale nail the method right down.
Next will be a trade management strategy customised to match a Position Trading method like this.
Good morning everyone,
Yup - I’m still here - I just had to go to one or two meetings yesterday and the day before (I’m trying to sell the ‘remnants’ of my previous business in the hopes of being able to give my accounts a SUBSTANTIAL boost so that I can increase my lot sizes to those only seen on TV or ‘dreamed about’ but I’m not too sure where this deal is going though - but - here’s to hoping - I just hope these people are not wasting my time).
Now - I REALLY hope that the above deal DOES go through - BECAUSE - with these ‘new rules’ in place - I cannot find ONE SINGLE VALID TRADE - so I’m REALLY hoping that IF AND WHEN I DO EVENTUALLY FIND A VALID TRADE - I can open an absolutely HUGE position and make up for all the trades that I’m NOT doing!!! OK - I know I’m making ‘light’ of this BUT it could very well become a problem because - no trades for the month - no income - bills to pay - therefore ‘dig in’ to your capital - and when you look again - no capital - no trading - no income - just ‘sh1t’!!! Get the picture!!!
Ingot54: thanks for that ‘superb’ post on MACD - and Akram - your input was great too.
I’ll tell you why I’ve been ‘put off’ MACD as it were: my biggest problem is the crossing i.e. what defines a MACD cross??? Is it when the lines have JUST touched and they ‘look’ like they are going to continue to cross??? Or what??? And if you wait for a ‘confirmed’ cross - what is a ‘confirmed’ cross??? How much of a ‘confirmed cross’ does there have to be showing before the cross is ‘confirmed’??? The point I’m trying to make is that in MY experience anyway too many times have I seen MACD ‘cross’ and not a day (or period) later it’s crossed back again and that’s been after a ‘confirmed’ cross not to mention the number of times the lines have ‘touched’ and ‘look’ like they’re going to ‘cross’ and then almost immediately start moving apart again!!! I’ll have another look at it (MACD) and ‘play around’ with those settings that Ingot54 gave us - maybe that will make all the difference.
Oh - Akram - thanks for posting those files for MT4. Just for ‘interest sake’ MT4 also has a ‘standard’ indicator called ‘OsMA’. It IS MACD (without the lines) i.e. when the oscillator crosses the zero line it’s happening at the same ‘time’ or ‘place’ as when a ‘normal’ MACD indicator’s lines are crossing i.e. when the OsMA oscillator ‘crosses’ over the zero line from ‘bottom up’ it’s the same as the ‘normal’ MACD lines crossing over each other in an upward direction below the zero line and when the OsMA oscillator ‘crosses’ over the zero line from ‘top down’ it’s the same as the ‘normal’ MACD lines crossing over each other in a downward direction above the zero line. Make sense? Check it out. The reason I mention this is that I know that there are others (like me) that don’t really like using ‘custom’ MT4 indicators i.e. indicators ‘written’ by others who may or may not know what they are doing. On the other hand - having said that - like I said in a previous post - even some of the ‘standard’ indicators (like the ‘proper’ calculation of the TR, ATR, RSI, etc. etc. seem to leave much to be desired). Anyway - as far as MACD / OsMA is concerned - I ‘prefer’ OsMA - because it goes a long way to taking any ‘doubt’ away that I may have as to what constitutes an actual MACD ‘cross’ if that makes sense i.e. if an OsMA line is formed above or below the zero line AFTER THE CLOSE OF THE CANDLESTICK OR BAR then MACD has DEFINITELY crossed (although - again - it’s no guarantee that it’s not going back again the next day)!!!
One other thing that I’ve never really got right in my mind is that by using MACD as a confirmation of a Parabolic SAR signal - are you not really ‘trading’ MACD and not Parabolic SAR? I mean - that’s actually a ‘strategy’ in itself is it not? Again - like any other indicator - if you really ‘get into’ the ‘inner workings’ of the indicator you’ll find that MACD generates MANY more signals than we are led to believe i.e. there are things like ‘MACD twin peaks’ for example.
Don’t get me wrong here by the way - MACD works for a lot of people - and - I want to try changing those default parameters as per Ingot54’s post - and let’s see what happens - because - I can tell you now - with all the ‘new rules’ that I posted - I’m not trading forex pairs because there are just no ‘valid’ entries based on those ‘new’ rules.
On the other hand (I’m really starting to sound like those idiots on TV i.e. they never take a ‘stand’ i.e. if THIS goes up then that’s why BUT if THIS goes down then that’s why and THIS could also go sideways IF … They make me sick) my ‘wishlist’ (Akram) is showing about 15 or 16 trades coming on as many pairs (and I have excluded potential ‘commdoll’ trades because I don’t see a Parabolic SAR reversal signal yet on Gold and Oil). On ALL of these 15 or 16 trades ‘coming’ both RSI and Stochastics are at their absolute limits and there SHOULD be a Parabolic SAR entry signal coming in a day or two. Like I said before - I am SURE hoping that these turn some profit before the end of the month. I’m also hoping that because I have been so ‘patient’ and ‘constrained’ and ‘disciplined (Ingot54)’ that it’s going to pay off and that whatever positions I DO open this time round ALL turn to profit AND STAY THERE i.e. I don’t see those AWFUL red figures ANYWHERE on my open positions list after waiting this long to trade a pair - unlike before where I’ve had a mixture or red and green and ‘hoped’ that the green would offset the red and then some!!!
Again - ON THE OTHER HAND - going through my ‘wishlist’ every day - it has ONCE AGAIN become VERY apparent - that had I NOT ‘bailed out early’ - most of those positions have still continued in the same direction and have not yet been stopped out so I’ve missed some HUGE profits by taking profit early and it’s caused an even bigger problem in the sense that you now have to wait ‘forever and a day’ to get back in again. Which - again - makes me wonder - if my ‘shotgun’ approach is INDEED a ‘workable solution’!!!
If the above post is confusing you - rest assured - it’s confusing me too!!!
My only ‘saving grace’ at the moment is Gold and the Indices!!!
Regards,
Dale.
Hey Ingot54:
Sorry - I must have been typing my last post while you were posting!!!
I just had a look at your chart.
(By the way - I could not have been more wrong about the Fed’s interest rate statement if I tried. Fortuanately I ‘stayed out’ of everthing - well forex anyway - because I would have been very wrong).
As far as your chart is concerned - I’m posting MY thoughts - for your comment. The idea here is to try and ‘prove’ or ‘disprove’ our ‘new rules’ so please don’t think I’m telling you that you are wrong and that what I think is right (God knows I’d be a 'multi-million dollar millionaire by now if that were the case).
I would not take that trade for two reasons:
1 - Stochastics is at (or over) a limit
2 - It’s a ‘commdoll’ i.e. I don’t think that Gold has much further to go before it reverses (or at very least ‘corrects’) and what’s going to happen then is that this particular pair is going to reverse as well BEFORE you’ve been given enough time for Parabolic SAR to ‘run its course’ so - in my opinion - if you’re going to rely on Parabolic SAR to ‘lock in your profits’ I don’t think it’s got enough time left to get that far if Gold is anything to go by.
Interestingly enough - I have noticed - that Stochastics is not ‘too bad’ an indicator i.e. it seems to react much faster than RSI, ADX (ADXR), MACD or anything else (including Parabolic SAR). Just an ‘observation’. Put it this way - at the risk of ‘shooting myself in the foot’ - I have even started to ‘consider’ the possibilty (and that’s all I’ve done so far is ‘consider’ the possibility) of opening a position based on Stochastics and (possibly) RSI and then using Parabolic SAR to ‘track’ the position thereafter.
Anyway - I’m going to attach one or two charts from my ‘wishlist’ - so you can see MY thinking as far as Parabolic SAR, RSI, Stochastics, and MACD ALL ON THE SAME CHART are concerned.
Please - some input!!!
Regards,
Dale.
And HERE is the reason I’m not ‘crazy’ about MT4’s Parabolic SAR ‘buy’ signal at the moment.
Comments welcome!!!
Regards,
Dale.
And HERE is why MACD gives ME the absolute ‘sh1ts’!!!
On the other hand - look where Stochastics was when Parabolic SAR was giving an entry (or stop and reverse) signal!!!
ON THE OTHER HAND - there was also a ‘magnificent’ trade when Stochastics and RSI were wrong and MACD was ‘on the money’!!!
MAN - I CAN’T TAKE THIS!!!
Regards,
Dale.
OK - well - don’t laugh - but I just discovered something ‘stupid’!!!
Take a look at the two attached charts.
Basically it solves my ‘problem’ as to what constitutes a MACD cross and what does not!!!
On the MACD ‘normal’ chart it ‘looks’ like MACD has either not crossed or is ‘undecided’. On the ‘expanded’ chart there can be not doubt about whether or not MACD has crossed or not!!!
Basically - it’s EXACTLY the same chart - I just ‘stretched’ the MACD display - and look at the difference in ‘meaning’!!!
My point - as per Ingot54 - MACD NOW looks viable to ME.
Something ‘silly’ but should be taken into account (these are Delta charts by the way).
That’s what I meant by ‘preferring’ the OsMA indicator on MT4 i.e. nothing ‘left to the imagination’ but when you’re looking at the MACD EMA’s - and you have this situation - well - you can see my where my ‘confusion’ comes into play!!!
Now this of course begs another question: should you / we not be looking at the VALUE of MACD and not the the ‘graphical representation’ of MACD??? In other words - once again - the ‘graphical representation’ is 'subject to interpretation ’ whereas ‘the numbers don’t lie’!!! I’m just not sure what ‘numbers’ we could / should be looking at!!!
Regards,
Dale.
I need to ask one question. For all those trading with PSAR, how do you set your stop losses or do you even set them? I’m asking because for the three positions that I have open
AUD/USD Long
EUR/GBP Long
GBP/USD Short
The AUD/USD has seen up to $35.00 profit although right now it’s at $32.20. The EUR/GBP is up to $12.00 and the GBP/USD keeps fluctuating between green & red. However, I do not have any stop losses on these positions and I’m wondering if this is a good idea… And I took them based only on PSAR.
P.S. I am demo trading 10 cent pips.
Hypechic,
The stop loss is set at the current postition of the SAR dot. So if your trade is going in the right direction, you will gradually lock in profits. The stop loss needs to be adjusted every day and moved to the latest dot position.
Cheers
Boca
Ignot54,
I was just looking at your AUD/USD chart that you posted. When comparing it with my Oanda chart, and a chart from MT4 North Finance, the MACD is very different even though the settings are the same.
Is this because of the different time zones for opening and closing candles I wonder? I wouldn’t of thought it would of made such a difference myslef.
Helo folks,
The combination between Macd and SAR it’s very good. I prefer to use Macd as a filter of the signals which generated by SAR. If MACD is above its signal line i ignor the sell signals of SAR, if the MACD is bellow its signal line I ignor the buy signals of SAR