The Most Profitable Trading Pattern You Will Ever Encounter

Sorry you misunderstood my question.
what i meant to say was if the eurjpy crossed in the 6th feb can i still enter 2,3,4 weeks after the cross or is it better to get a signal to enter nearer the cross.
Regards

Hi, nice way of handling failed pattern. It need strict discipline and a strong heart to hold on the fail trade while waiting for the opposite signal to exit. Nice, thanks for sharing.

Btw, once u exit the failed pattern trade (which end up with +ve pips). Do u enter again with Long EURCAD, since the buy pattern is a valid one?

No Marcramon it doesn’t really matter if the entry was soon after the ema cross or way after it (as long as the ema remain in the same direction.)
The stochastic is our entry tool. If we are buying, emas crossed upwards…we wait for stochastic to go oversold no matter how long it takes. The trade remains valid given the 20 ema remains above the 50.

[B]@Maxximuz:[/B] Of course you can Maxxi! I didn’t do it though at the time because I was involved with 12 trades already or something.

Personally I prefer to trade the pattern across the currencies rather than milk one or two pairs long or short. It is better money management this way. For example I said I shorted EURCAD. But I was also long GBPCAD. So when Canada announced interest rates and Canada collapsed, the money I lost in EURCAD was gained in the GBPCAD pair. It was a nice hedge in a way.

It’s interesting that you don’t consider your trade wrong and exit when it has gone against you 350 pips… How long have you been trading? You sound very confident… From my year of staring at charts it seems to me that typically big moves like that mean something fundamental has changed and you’d better be on the correct side or you’ll most likely get squashed. This strat is essentially “buy the dip, sell the rally,” yah? Buying an oversold stochastic on a 50% or 61.8% fib line is usually a good bet, but sometimes it does fall through, and I’m not sure how long one would have an account if they just held onto the trade on faith or trust of their system… Because then aren’t you saying you trust your system to always work? And that’s absolutely impossible. This is a game of probabilities, and when you’re wrong, you’re wrong, and it’s time to move onto the next trade… thanks

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Well what I’m saying that I found a pattern that can get in and out at the most accurate times. Buying a 50% retracement with stochastic works sometimes and sometimes doesn’t. But the pattern I saw works at all times with a trending market. You’re loss wouldn’t be big anyways in a ranging market. I already mentioned that the system’s success rate is around 75%. No trend following system has that. They are all 30% or so because they make small losses and big gains. All you have to do is see it for yourself.
As I said, I wasn’t holding a loser out of fear or hope. I was mechanically applying my exit signal. That trade was an example to me how exit strategy is just as important as the entry.

The other thing is I apply money management in two very important ways: First I set lower than usual lot sizes; this trade was 0.05 lots. Even with such a low lot size I consistently make $200 and $300 trades. Once my account grows so will my lot sizes and the cash I make.

The second important management technique, often overlooked, is I trade baskets of currencies simultaneously; So while I was long CAD against the EUR, I was short CAD against GBP. So what I lost in EURCAD was gained in GBPCAD and my total profits remained unchanged.

You really shared some important insights with your posts and I really appreciate it.

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Sounds like a ouija recipe.

But do you still enter on the second/third retracement after a cross. Let’s say you missed the signal the first time, can you wait another cycle of the stochastic end then enter?

No I move on

Once the cross happens and the stoch shows oversold/overbought do you wait for a fib retracement also 61.8 50.0 38.2 23.6 etc then enter.
Then wait for price to retrace lower than 127.2 before considering to exit etc etc
Currently in USDJPY long @ 118.497 after stoch reached oversold and fibs retraced to 38.2 currently trading above 61.8
Regards

Thanks very much for the helpful response! I need to study this method with a bit more focus as I couldn’t quite figure out how you were mechanically still following the rules of your system when the trade had gone against you 350 pips. I like the idea of trading on the 4h charts because there is more time to make thoughtful decisions it seems, but do you ever find that trades will dry up for a few days while you wait for a setup to appear? Just curious what is the longest you’ve had to wait to spot a trade that matches your criteria? Do you know of a list that keeps track of which pairs moves will have the opposite effect in a different pair, like your EUR/CAD GBP/CAD example? Just wondering how you keep track of all those pairs and what pairs they react to etc… thanks for the help, appreciate it!

I don’t consider anything other than what I told you. Exponential moving averages must crossover. Then I wait for stochastic to move to the other extreme. Then I enter when stochastic crosses from other extreme. Its really straight forward.

I only use fibonacci as an exit technique, nothing else.

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Well what I do is every four hours, I go through all the available instruments at my broker. Of course you can trade on the daily and look once a day, or on the weekly and look once a week, Or on the monthly and look once a month. Its really up to you how involved you wanna be in the market.

I move pairs that has a pattern close to completion near the top. Once the pattern has completed I calculate my lotsize and enter on the open of the next 4HR candle.

There is an average of three trades a week with this pattern on the 4 HR chart.

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Hey Philip.

Well, I got one. Take a look. GBP/NZD


Daily chart.
I’m taking advantage of the good news the Pound just came out with. I know I should probably wait till the close of today’s candle. But I figure I’ll get some momentum going. And after the beating the Pound took yesterday from them, this looks like a good time to get in.

Mike

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Yeah that’s a great one there. Just remember that your stoploss is all the way down to the low, so you should take a really small lot size for that one. Draw your fibs and check at the close of each day to see where you are at.

EDIT You really should wait to the open of tomorrow’s candle before entering Mike. Because sometimes the price will decline in the next hours and by the time today’s close comes, the stochastic would still have not crossed. Do you get what I’m saying? Just plan your position size and draw your fib levels and take the rest of the day off.


I was in the mood to trade a bit more today. I pulled out the 5 minute chart and traded this to the long side. You see the EMAs cross, and we wait for the retracement. This is another proof why Fibonacci mentors are unreliable. Anyone of them would tell you price will retrace to 382, 50 or 61.8. Here price retraced way more than that but my bias was still long. I entered at the close of the candle marked with the X. It was the lowest point in the retracement but unfortunately the spread was ridiculous. I got out of the trade after a close below the 75 level.

A quick 15 pips in 45 minutes, would have been 20+ if it weren’t for the spread:20:

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Hey Philip,

Thank you for sharing your system, I will be closely following it. But I’m a little confused with the Fibonacci levels you’re showing here and the levels you mentioned at the beginning of your thread. I’m a beginner, so I apologize if I’m not understanding something basic.

No that’s actually my bad. Because I discussed the extension levels and didn’t mention the retracement levels.

Extentsion levels are found beyond the 100 area, retracement ones are below the 100 area. I use 0, 25, 37.5, 50, 62.5, 75, 87.5, 100.

Now I don’t use fibonnacci as a prediction tool, its just a way to trail stops. I start trail stop when the stop is two levels above my entry; In the above example my entry was just above the 37.5 area. It passes the 50 level, I don’t put the stop yet (I use mental stops). Price passes past the 62.5 level, I still don’t place my stop loss. Its only when it closes above the 75 area that I place a stop at a close below 62.5 level. This is because 62.5 is two levels higher than my entry (37.5)

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Back to the longer-term trades. Here you see I’ve shorted USDCAD right at the top of the retracement for a gain of 77 pips so far in less than a day.
It sounds like a counter-trend trade but here the pattern clearly showed a down move is coming and I followed it. I have to say that the USDCAD long trade was a really good one (more than a 1000 pips). And given that this is the first 4hr bearish pattern that appears on USDCAD since October 2014, I felt it was worth taking.

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Fantastic thread keep up the good work !

Nice trade - I have been following this thread with great interest and bit the bullet and took a trade on the AUDJPY last night. Trade up 60 pips so far - pretty low stress way to trade.