I think you might have false settings then, because your quoted post isn’t clearly regarding the stochastic settings.
You need your stochastic window to be labeled with “Stochastic (14,3,1)”.
To get this, you need those settings:
%K-Period: 14
%D-Period: 3
Slowing: 1
Price field: High/Low
MA method: Simple
If you really set the %K-Period to 1, you would get some mess, but not the stochastics you are looking for.
Good morning, Philip. Thank you for your selfless contributions.
Unless I’m mistaken this USD/TRY trade became valid at 10:00 A.M. GMT on April 1, 2015. Enty is made at the close of the green candle, second from the right.
Are these the same Fibo calculation points you would use?
Low = 2.53965
High = 2.62443
@Philip
Now I’m a little bit confused about the fibs and have to ask, too.
Let’s do an example:
AUD/USD moves down to 0.94000; now it turns around, the MAs are crossing, indicating to look for a long entry.
Now the price moves up to 0.95000, reaching the overbought area;
Then, price retraces to 0.94500, entering the oversold area and the stochastics are crossing there, just for the example.
At this point, we would jump in and take a long trade. Therefor we are drawing our fibs and we are drawing them - in this case - from the high to the low. So we draw it from 0.95000 to 0.94000 [B]and not[/B] from our entry at 0.94500 to 0.94000 - am I right with that?
Is there a reason why you use the 1.272-Level, but not 2.272 and so on?
@itchyMojo
I think the trade was validated two bars before the one you mentioned, the next small bullish bar.
Philip, thank you for the clarification. I made a huge mistake here. On this Short example, I was taking the Fib 100% to be the entire Hi-Lo delta subtracted from the entry point of trade. Naturally, this was pushing BE unnecessarily way out there - much more than it should have been. Also, all my subsequent Fib extension levels were hinged off that.
2 steps forward, 1 step backward. Glad that jw1981 pointed out the trades and that you clarified this. It shouldn’t be very hard to make these changes - I’ll hopefully get to it tonight. After that, I will re-run Simulation against the 11 year, 7 Major CCY Pair data. We will certainly see an improvement in the statistics.
Hope you are not old enough to be in the heart attack zone 
Oh ****, are you still holding on to that position? feel bad for you man
Thatnks mate, I will try it. I really appreciate your effort.
You are using a Fib expansion tool there. I know a lot of people say its the same but I’m never been comfortable with it.
Grab the Fibonacci retracement tool. Connect the high all the way to the low, these will be your extensions 
You shouldn’t be confused, what you said is spot on. It is what I was detailing to Doug because he has to create extensions from scratch and doesn’t have it easy like us.
On the 127.2 level, We know there are three major extension levels: 127.2, 141.4 (not sure about this one) and 161.8. Of course 2 and 3 are important one, but no one deemed them worth because very few people had trading systems that would go that far.
So I found that my system could go as far as 5 at some points and so if I decided to use my 3 major levels as 1.272, 1.618 and 2.
I neglected 2.272, 3.272,…etc because I wanted to encourage traders for holding on to the winning trades. What I found from my experience is that price could close above 2.618, move and close back below 2.272 then go above 3 any ways and I would have lost plenty of pips.
So I decided to use the 1.272 area just to ensure a higher probability of positive pips return from trades. But as soon as a trade moves past that difficult period, it usually flew and so I found no reason to hold the trade back by using 2.272 and so. I wanted bigger gaps between the levels.
But I do welcome people challenging that notion and tell me “hey well using the 2.272 is more efficient because you will 75% of the pips you made originally in less the time.”
So until someone proves that to me I’m sticking with my current trail stops
Hey thanks man for sharing, btw how come I cannot see any position opened (no result whatsoever) when I backtested it on MT4’s own strategy tester? Pls help since I’ve never used an EA before
No worries. I apologize for not making it clear or detecting that issue earlier.
[QUOTE=“PhilipPirrip;692711”] You shouldn’t be confused, what you said is spot on. It is what I was detailing to Doug because he has to create extensions from scratch and doesn’t have it easy like us. On the 127.2 level, We know there are three major extension levels: 127.2, 141.4 (not sure about this one) and 161.8. Of course 2 and 3 are important one, but no one deemed them worth because very few people had trading systems that would go that far. So I found that my system could go as far as 5 at some points and so if I decided to use my 3 major levels as 1.272, 1.618 and 2. I neglected 2.272, 3.272,…etc because I wanted to encourage traders for holding on to the winning trades. What I found from my experience is that price could close above 2.618, move and close back below 2.272 then go above 3 any ways and I would have lost plenty of pips. So I decided to use the 1.272 area just to ensure a higher probability of positive pips return from trades. But as soon as a trade moves past that difficult period, it usually flew and so I found no reason to hold the trade back by using 2.272 and so. I wanted bigger gaps between the levels. But I do welcome people challenging that notion and tell me “hey well using the 2.272 is more efficient because you will 75% of the pips you made originally in less the time.” So until someone proves that to me I’m sticking with my current trail stops :)[/QUOTE]
The fib numbers don’t mean anything. They’re only a guide to where buyers and sellers are trading. Most pivots retrace 50%. Use that.
Look to the left and see what’s going on to help you understand what’s going on.
The reason I don’t lean on fibs is that they offer a false sense of security to my trade. I rather know what’s going on than what might be.
Plus, who wants all that $h|t on their screen?
Philip, this is a trade you’d let go, wouldn’t you?
Please note the arrow. Visually, it looks like the candle to the left of the arrow meets the qualifications.
However, the MA20 did not cross the MA50 there. It crossed on the following candle, the one with the arrow.
At that point the Stoch signal was 80.9932, but the Stoch itself was only 74.3287.
Therefore, this is not a trade to consider, correct?
Mmmm…I don’t think you read thia strategy. We don’t trade using Fibs at all.
Hi All,
Newbie from HK, really appreciate to Philip for sharing his nice trading strategy.
Is it just me or is there really no arrow visible in this picture?
AUD/NZD anybody have an opinion?
[QUOTE=“PhilipPirrip;692738”] Mmmm…I don’t think you read thia strategy. We don’t trade using Fibs at all.[/QUOTE]
Buy lower highs and sell higher lows?
As I’ve been mentioning since yesterday, the divergence aspect is what was missing from the puzzle. Those who bothered to read my posts, will find how AU/AJ shorts would have been avoided.
The reason why I think divergence is important because of the simple fact that this is a trend following system and divergences are part of the game.
Below is the chart which shows a ‘text book’ case of an ideal short entry. Just flip it over for longs.
What’s happening above (and you’ll soon understand why you would buy when stochs reaches OB levels) is the following:
Phil’s method tells you to short when stochs move from OB levels. You draw the fibs yada yada yada. All shown on chart.
So here is a simple way to check/filter your trade (call it confidence level)
a) Price makes a lower low
b) You see stochs making a higher low
c) price makes a lower high and stochs ‘could’ make a high
You tone down your trade size or don’t trade WHEN:
c) Price makes a lower high but stochs makes a Higher High
Below is an example of CADJPY short that meets the above criteria. Notice how the system now captures the trend perfectly.
You can now refer back to AU/AJ charts I posted earlier and with this info, you will understand why the trades failed.
AUDUSD: The first short trade played to the book. But then it failed (that’s price for you). But notice your short side entry was recovered quickly. Then there was the long set up. Price made higher high but stochs failed to make a higher high, which is perfect for the retracement, now when you look to the lows, you expect stochs to also make higher low, but it didn’t. ergo that was a trade to enter with caution.
Hope this helps and doesn’t end up confusing/complicating this method. Its just a simple way to track what price is doing and enter accordingly.
@PhillipPirrip, what is the correct settings for stoch on Mt4? I saw that you said in a way earlier post, D to 3 and K to 1 . Is that correct still? I am seeing people on this forum say it’s not so clarification would be good using mt4 platform settings you have.
@ToengToeng, the EA won’t make trades if you have the broker digits set wrong. Set 5 digit broker to true if you have 5 digit broker. Most brokers are these days. I am waiting on philippirrip for clarification before I go ahead and say 14,3,1.
