4 Hour Strategy (MACD)

EA will be very usefull for this system, when you cannot trade the right session, or maybye just Indicator for entry and exit....
Thx Phillip for the good work...

How to use the 1Hour to enter a forming 4Hour MACD signal beforehand

One more 1H-4H supporting signals

I was on travel all week so it was hard to keep up with things but I was able to bank a few pips either way. I was really pressed for time so posting anything would have been tough.

As far as trading at work is concerned..if you're in an open cubicle and want people to stay out of your business, are on the go all the time or provide a public service where you are constantly talking with people, work at a factory or utility department, this can be an issue with trading. You may not even be 'allowed' to do anything but work. If this is the case and depending on what time zone you live in, you still should have a few 4 hour candles throughout the day to trade from. If some of these are the early morning (according to your time zone) you can set the time alert in MT4 to wake you up a few minutes before those 4 candles and take all of maybe 10 minutes to see what is going on with the markets. Or, you can place more focus on re-entry techniques (a.k.a. trend continuations) to re-enter into an already established trend. Think about the singles up the middle; 10 to 20 pips or so per trade, and not the home runs that produce those three digit pip returns. One of the great things about FX is the leverage that you can trade with and pip values. We all know about this but sometimes it's good to 'know this again'. One pip can = 1 cent or $1, $5, $10....old news. If you don't have a lot of time to trade then look for re-entry areas to steal a few here and there. Don't abuse the leverage though, you'll blow your account. You may need to add a few tools like pivots or Fib #'s (still keep it to a minimum) but once you see the trend and recognize a pause for re-entry you'll be surprised at how many more trading opportunities there are. One of my 'friends' here on the Factory trades at a $150 per pip value and a few singles a week is all he looks for...there's room for everyone to trade Forex.

My situation: I 'sort of' have my own office and have the room, ability, time, whatever you want to call it, to trade while at work. I'm not allowed to use 'their' computers to trade but I can use the internet on a limited basis at will, "Just don't abuse it", that sort of thing. There are only two 4 hour candles that 'happen' at work so that takes minimal time to analyze. But, there can be several trend continuation patters that happen throughout that 8 hour work day, and I may straddle a few news events or trade breakouts from time to time. The tc's are my main focus though. Throughout the entire day I'll probably look at charts for no more than 20 minutes or so the time spent trading is minimal. We have all been told that in order to succeed you have to have the right tools for the job. These are the tools I now have.

Toshiba Satellite U200 with XP Pro, not Vista, this has to be configured from the Toshiba website, about $1300 USA.
Cingular broadband connect/Sierra Wireless 875 Aircard for a laptop broad-band connection, about $45 USA.
12" extension antenna that sits in the window frame to boost the signal strength to the wireless card, about $20 USA.
Cingular broadband connect unlimited service, about $80 per month USA.

Yup, $80 per month for the service. That is pricey but the pips pay for that if you know what I'm talking about. I basically had to make a stand and get serious about trading. There are too many opportunities that I was missing out on and had to do something about it. I did make several trades on 'their' computer and was very anxious about that but now the anxiety is gone and I'm free of whomever is 'watching' the keystrokes. If you have the ability to do this at work and are serious about using the FX market as producing a second or supplemental income, you must have the tools to make this work. Again, there were just too many opportunities that I was missing out on and had to do something about it. I thought about using a PDA for trading but the screen size is too small for me and you can't use custom indicators 'yet'. Either way, it's a full fledged PC with internet connection on the go.

Oh yeah, the other main reason for going mobile is so I can start giving pips4uandme the business about who made how many pips...

Fingers must rest now....

This might interest you and other fellow traders, Josh. I originally shared this chart with just a few traders a month ago and was going to post it on FF to demonstrate a new potential upside. I did not post it because 1). FF was affected by virus a month ago and I decided to stay away; 2). These numbers on the chart can make anyone superstitious and I did not want to spoil anyone's trade. Those whom I talked about it know what I mean.

There is a known TA concept of measured objective. All I wanted to show is that cable has made equal strides up in the recent past measured in (or almost) 666 pips each. Yes, cable reached last month (the worst month so far for greenback) 26-year high. How far did it reverse so far? 290 pips from the high within 13 days (another odd number), or 22 pips per day - come on, where is the bear power!? Maybe, it will wake up next week? I truly do not know. All I know is that TA has degree of probability of the event in future based on what we observed in the recent past. Of course, it sounds like an extreme to think of going long when we are at near 26-year high - I can hear you loud and clear. Has the market established a limit, though? Maybe, as a temporary tactic we should wait while the price is faded back again a little bit more? There is a risk on both sides and it is equal. There is nothing wrong with me being wrong - I'll just swallow the pill. All I'm keen to do is experiment with the price. Ok, part I is finished. Let's only look at this chart and I will publish a new one momentarily..

This is where price is today. You can notice easily that I have not moved a single pip that fat red bar. Sounds very peculiar, right? And a nice reason to go long yesterday from that point. Yes, yes, NFP news could have made it worse. But it did not. Good luck to your trading.

Yours, Tamkras.

I remember last year being uncomfortable trading cable in the 1.9000 level...thinking how much higher could it go...that it must be "overextended." Now, I have become comfortable with any price level as long as TA supports the run/decline. That is what we as trader's must do...not worry about "how expensive" the currency is, but be able to analyze its movements.

What do you think will happen this week if the BOE raises interest rates .50 bp instead of the expected .25? Bet we see a quick run of at least 145 pips! What do you think will happen if we see no interest rate increase? Maybe a quick unwinding of positions for 200 or more pips....either way...do you see cable retreating under 1.9000 anytime in the near future? The only way this could happen is if the Fed surprises us w/an interest rate increase at the next meeting...and even that would be a stretch.....

also, there are exotic option barriers that have been blocking cable's move up...but, from what I understand, a few are slated to expire this month. That means no more option defenses and cable could move upwards....

K...none of this really has any bearing on the 4 hour system....other than we should not be limited by what we think a currency can or cannot do. Also, I can't remember who it was....but in the early days of this thread....I posted a EurUsd comment about "why would you go long when the currency had bounced off the TL 4 times," (basically, I thought that the TL was too strong for the currency to significantly push through). The reply was "How many times must a currency touch a TL before it took off." (the quotes aren't exact wording, but basic gist of the original message). I loved this reply...& I think of it almost every trading day! Since that reply from the wise trader....EUR has moved over 400 pips! If the MACD signal is given , and your risk is small....why not go for the opportunity for a breakout move?

& Tam's prediction of the measured objective coincides w/my anaylis of cable too....granted mine is based on chart pattern from the daily(except I wanted price to recede a few hundred more pips first)....and yes, Tam shared this chart many weeks ago and I am very thankful to her for all her teachings and sharing of info!

Pips

PS...Palmer, I missed you while you were gone!! Glad to see you made it safely back from your wanderings!!!!

Yes, it's good to be home and glad to be back.

In my extremely humble and insignificant opinion:

As I stated before, I am no ekonomyst so I more or less let the charts tell me what to do. BUTT: thinking of the US in terms of interest rates and the greenback...Is oil still the king and ruler of the economy? In some areas of the US gas is already $4 per gallon with the average being $3 something. Now, if the average hits $4 per gallon, the average person like myself will no longer be able to spend extra cash on non-essentials such as going out to dinner, that new flatscreen 46" idiot box, vehicles, furniture...blah blah blah. Consumer spending goes down and the fed has no choice but to lower rates, weaken the greenback and to try and stimulate the economy. Now, I'm in the panhandle of Florida. On a good south wind I can hear the waves crashing on the beach, hurricane season starts June 1st. At the first sign of a tropical depression in the Gulf of Mexico the oil platforms will be evacuated and production will go down, price of oil goes up and is reflected in gas prices the next day. Along with that I believe there are no new oil refineries to be constructed and even if there were I'm sure these things take a few years to construct. Along with that there is the ever present threat of terrorism where the slightest hiccup causes oil/gas to rise again. And, here we go spending less money on non-essentials. BUTT, here's my dilemma. Why is it just the greenback getting hammered? Is is because the USA is so dependent on foreign oil not just to drive our Yank Tanks but to also run factories, machinery, and farming equipment while other nations are less dependent on oil (most of which have mass transit systems that people actually use) and don't have the grain-belts that we have?

Someone please enlighten me...

Yes, I know this is the thread for Phillip's MACD system, just had to get a plug in here...

Hey Palmer,

Nice post! I think the greenback is getting hammered b/c of the fear of stagflation. Other countries, like the UK and EUR are still showing "hot" economic numbers...but are starting to slow a wee bit. Interest rates are expected to be hiked still...while US is expected to stay as is or cut rates.

Maybe other countries are just use to higher oil prices? (the U.S. has always been cheap compared to other countries) & you are right, much more reliant on public transit. Also, about 3 weeks ago, Oil contracts started pricing in the "huricane" effect. Prediction of 7 Hurricanes this year....doesn't matter...the freaking oil companies are always looking for a reason to keep their profits increasing. (I live in California...we have refineries w/in 50 miles...and our gas is $3.50). First it was explained oil was expensive...so gas prices followed...but when oil futures came down $20/barrel...gas prices only fell .50 (after running up 1.25)....but, then refineries went off line for "maintenance" right before "heavy summer driving demand."...go figure...???

Also of note next week, US VP Cheney is heading to the mid-East and will make stops in Egypt, UAE, Jordan and Saudi Arabia. The last time Cheney went to the region at the end of February (Afghanistan and Pakistan) he managed to increase tensions between the US and Iran, triggering a jump in oil prices and likely contributing to the equity market wipe-out/carry-trade unwinding that took place at the end of February. Be prepared for similar tough talk from Cheney and likely back-and-forth saber-rattling between the US and Iran.

I've spent my career in retail (30+yrs) and though i've just recently begun looking at charts (2000 ish for stocks) i can state from recollection (nothing scientific) that 'generaly' prices begin to creep up before Memorial Day (last week in May) and will peak in the summer (tourists in their big RV rigs) and then begin to drop after Labor Day (in September when school begins again).

I think it has a lot to do with powers at be just wanting to squeeze all they can out of those whom they can. Today looking out in our parking lot (a Costco on the Oregon Coast in a tourist destination/historical area) there were many dozens of large Motorhomes, Travel Trailers and truck campers. And our gas is the cheapest on the coast at $3.25 gallon.

OK, now back to some backtesting on those MACD signals on those 4hr charts.

; ) Thom

Here are the results of my MACD Daily live Demo testing up to now. The GbpUsd trade of 10/04/2007 was closed way to early as you will noticed. Still have to work on the emotions to let it run. But it looks OK so far.

This is for those people that works during trading hours like myself to enter at end of day data.

WOW!!!Absolutely awesome trading,pips!Well done and keep it up!

Judging by your contributions to this thread, you are one methodical,disciplined trader. Thanks for the info.It just serves to add to all our confidence in this wonderful trading strategy.

Thanks for the results Phillip! I've been waiting for this, as the most active market hours are while I sleep...! (or rather, while I have NOT been sleeping, as it has been going recently hehe)

Hi Phillip,

I too am looking at the daily as living in Oz we sleep when most price action occurs. I would like you to look at my chart using a weekly MACD combined with a daily chart. Using the MACD as the trend and the the 8 and 21 EMA for price action.The results so far are very exciting. I add the daily MACD to my chart to help with the entry, then stay with the weekly MACD trend until it changes from say blue to first red bar. Burger KIng on FF has developed the MACD to enable the two time zones on the one chart. Good for 4hour and daily combined as well.Maybe this could be developed into something very exciting!!

Cheers

This is the indicator used

I am new at Metatrader, because I use a Bank plataform to do my real trades and use Metatrader to see charts.
I have to learn how to use it 100%.

I pasted it into my charts. I see that the first candle with new color predicts very good the price action. But I think the color changes when the day is off. Am I right? If yes, it is useless

Hi Phillip

Could you confirm what is meant by going with the trend? When the price is above the 89SMA does that mean that the trend is long, or is the trend denoted by whether the 89SMA slope is going up or down at the time of the particular price action?

After reading a great deal about this system, I've been trying it in realtime on a demo this week, and I've been getting slaughtered... I decided to take some time this weekend to run throught the various examples that Philip posted in his original PDF about the system. I've started to get better results, but there's one thing that I see as a point that I don't understand, regarding setting stop losses to limit risk.

I very much like Phil's guideline to set the stop outside the previous bar, as it makes sense to avoid any area that the price has traded to so recently. Also, Phil says he never uses a stop of more than 48 pips, so for the time being I've adopted that rule as well. The problem is that I keep coming across example trades in Phil's writings that don't seem to conform to these concepts.

For instance, in the August 2006 trading examples, the third and fourth trades indicated come on signals that are created by very long candles. It would not be possible to set a stop outside those candles without accepting more than 48 pips of risk. Accordingly, I passed them up, only to see that Phil took them, and they were good trades. So my question is: why would one take a trade with such a large stop required, or, if one sets a stop inside the previous candle, how does one determine where to set it, and what about those trades made them so attractive as to be worth the extra risk...

I particularly want to hear from Phil on this, but others' opinions would be welcome as well

Thx!!