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4 Hour Strategy (MACD)

  • #8,361
  • Nov 10, 2007 10:13am Nov 10, 2007 10:13am
Quoting JimDandy
Dont know why im having such a hard time wrapping my brain around this issue.........I dont understand something apparently..... I thought that the trend direction was determined by the 89 which is in a down trend..... So I thought that a Long order would be a countertrend trade. Not a trend continuation trade........ A long would definitely be in agreement with the Rythym...rule........Maybe its a rc....ryhthym continuation...LOL....... is the term trend continuation derived by the chart 89 trend continuation or by the macd bars continuing? ..........Ive got something learned wrong that i need to correct pronto............pipip........Good Weekend to alll. Jimdandy........

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  • #8,362
  • Nov 10, 2007 11:32am Nov 10, 2007 11:32am
Website updated...
  • #8,363
  • Nov 10, 2007 1:15pm Nov 10, 2007 1:15pm
Quoting Palmer
Nice trade with the 1hr, good eye.

I'm on travel next week until Thursday. Been slammed all week with that normal day job thing and haven't had much time the past few days to 'contribute', just too busy.....
Palmer:

Happy trails!! enjoy your time away....You will be missed!! Whose going to make the girlies giggle (you are sooooooo bad!). Seriously, enjoy your time away!
  • #8,364
  • Nov 10, 2007 1:21pm Nov 10, 2007 1:21pm
Quoting shauny
I will be starting my tour tomorrow and should be visiting places like temple of zeus, museum and such. Any greeks here can shed some light on places to go or shop?? lol..

Anyway, this is my take on EU and GU.

GU has broke thru 21ema, but its not confirmed yet that it wil continued its break and head down to the 89sma, there is still lots of indecision at this time from the price action. It might hit 21ema and move away to continue its uptrend. It has been trending so strongly and made new highs each time.

EU currently at 8ema, which has shown great support. It might move away and continue its uptrend.

In conclusion, till then the market show its cards, we sit tight and wait for it to happened. Not to forget today is a friday and the last day of the week. If you are going to made a trade, its up to individual if you want to hold the trade over the weekend or closed when the market ended. I wil wait and react according to whatever it comes to me.. Cheers!!
Hi Shauny!

Enjoy your trip to Greece (between you and Dion, I'm really super jealous). I am so impressed with how far you have developed as a trader over these many months! Keep up the great work!! I'm not one who likes to hold positions over the weekend -- especially this time of year (remember the huge gap that wiped out people's accounts last Thanksgiving? Oanda honored stops -- but they were one of the few. The market seems to be playing the same "pattern." We've had many gaps on opening lately...hmmm...I love this gig.

Enjoy Greece!!! We'll look forward to more market insight from you when you come home.

Safe travels,
Pips
  • #8,365
  • Edited 2:04pm Nov 10, 2007 1:49pm | Edited 2:04pm
Quoting JimDandy
Dont know why im having such a hard time wrapping my brain around this issue.........I dont understand something apparently..... I thought that the trend direction was determined by the 89 which is in a down trend..... So I thought that a Long order would be a countertrend trade. Not a trend continuation trade........ A long would definitely be in agreement with the Rythym...rule........Maybe its a rc....ryhthym continuation...LOL....... is the term trend continuation derived by the chart 89 trend continuation or by the macd bars continuing? ..........Ive got something learned wrong that i need to correct pronto............pipip........Good Weekend to alll. Jimdandy........
Hi JimDandy,

This may have been answered already, and if it has I appologize for the redundancy.

Ok....we seem to have confusion over symantics -- how we loosely discuss terms on the forum. TC (trend continuation) is a MACD signal...It is the bar that forms after what appeared to be a round top or round bottom forming. We are using it to talk about the short term trend in the context of only taking TC signals (this means we are watching a direction being chosen by the market and following it -- esentially following the tracks). The term isn't being used to talk about the "overall long-term trend" of the market -- instead, it is a method of not trying to choose tops or bottoms).

Remember, the MACD will give you great turnaround signals in a range bound environment -- the round tops and bottoms will signal turning points around support and resistance. But, in a strong trend, these signals will be false. Why? Because they will be consolidation periods (like we have recently seen on U/Cad, Cable, Swissy & E/U).

We also have a general rule, that when price is above the 89, the market is in a buying "mood," and when it is below the 89 it is in a selling "mood." So, your overall strategy is to go w/that direction in planning your trades. This will prove profitable over many trades -- but somewhere along the path, the trend will weaken and take a break, thus causing a loosing long/short (depending on the pair). Some traders have the philosophy of just continuing in the overall direction b/c they would rather only be wrong 1 or 2 times trading in the overall direction (towards the end of the run), then be wrong all the way through the trend (essentially trying to pick a top/bottom) -- this goes along w/the old saying "markets can stay irrational much longer than we can stay solvent." Other traders trade w/the general "mood" until signs of weakening start showing on the charts -- then venture a countertrend trade (signs are close below the 8/21 MA's for Cable and Fiber) -- close below support line, and a turn in the MACD. These can be very profitable trades -- and they can be risky. A set of criteria should be defined ahead of time for what happens as the trend is weakening/taking a breather -- and then each individual trader needs to determine if they will trade those signals or not (your backtesting will let you know if it suits you).

OK...I'm off topic -- and heading in a direction of market analysis and trade style -- so let me get back on topic. TC is short-term market direction, and yes, it sometimes is a counter-trend to the overall trend. If you are uncomfortable trading against the overall trend, then you must be extremely patient while the pair takes a breather and wait for a signal w/rhythm to indicate the pair is resuming it's original path or has established a new trend direction. Remember too, that very few pairs travel in a straight line for very long, if at all).

So...TC is a MACD signal (especially useful in strong trends) and not necessarily the long term market direction.

Hope this was helpful in clarifying.

Happy trading,
Pips

PS...just worked through & see Phillip posted a mp3 on it...sorry for my redundancy....but I'm not deleting post b/c it can act to reinforce what you just heard.
  • #8,366
  • Edited 2:08pm Nov 10, 2007 1:53pm | Edited 2:08pm
Quoting jcarrier
Hi all, does anyone feel that the gbp/jpy is too volatile to trade with this system? Any experience from those that trade this pair? Thank you...Joe
Depends on your risk levels. Go back and test and see how it fits your profile. Personally, I only like to trade G/J on short time frame, but it does follow the rhythm on the 4 hour very nicely when it is trending. Stops have to be extremely large (imho) to trade the pair on the 4 hour and you will have it swing wildly at certain times. Again, backtest and see if you like the system for the pair -- and if you can handle large stops, it may be perfect for you.

Happy trading,
Pips

PS. Hipster had a nice post on G/J...and I couldn't agree more w/the support resistance interaction! If you can't determine these levels well, don't trade the "beast," or as I call it...stay off the "heroin."

PPS...Hipster...sorry you aren't on the bus yet....may your visa get straightened out quickly so you can resume your trip!!
  • #8,367
  • Nov 10, 2007 2:16pm Nov 10, 2007 2:16pm
For those with difficulty understanding spoken English. See post 8349 for chart.
Attached File(s)
File Type: doc Phillip Nel Planning Your Trade Post 8349 Page 557 9Nov2007.doc   7 KB | 1,506 downloads
  • #8,368
  • Nov 10, 2007 2:22pm Nov 10, 2007 2:22pm
Thank You, Thank you, Thank You.......I think i have it now.......basically it boils down to the time frame that one considers as determining the "trend". Trend is a relative term i see now.......Just like a "long time" is a relative. Term it means somethimg much different to a 4 year old than to a 70 year old......Basically if boils down to this: if the price action has been going in the same direction for long enuf that the macd has changed from positve to negative or viceversa. And has made some bars on that side of zero and pulled back but then continues on ....it is a trend continuation......and in agreement with rythym continuation by the rules.........I appreciate it very much .......Thank you Phillip for the time you put into this.......once again I am amazed at the effort you put forth for us........And also you too pips for chiming in ......We on the thread are fortunate and appreciative of all the help...........Thank You, Thank You, Thank You,.......pipip.......Jimdandy...
  • #8,369
  • Nov 10, 2007 4:36pm Nov 10, 2007 4:36pm
  •  shauny
  • | Joined Jul 2007 | Status: Still learning and never gonna stop | 127 Posts
Quoting pips4uandme
Hi Shauny!

Enjoy your trip to Greece (between you and Dion, I'm really super jealous). I am so impressed with how far you have developed as a trader over these many months! Keep up the great work!! I'm not one who likes to hold positions over the weekend -- especially this time of year (remember the huge gap that wiped out people's accounts last Thanksgiving? Oanda honored stops -- but they were one of the few. The market seems to be playing the same "pattern." We've had many gaps on opening lately...hmmm...I love this gig.

Enjoy Greece!!! We'll look forward to more market insight from you when you come home.

Safe travels,
Pips
Hi pips!! glad to hear from you.. I'm still learning more about the market and myself. Need the seniors like you to guide us along . Don't be jealous pips, we can all enjoy ourselves when we made more pips!! haa.. Personally, I don't like to hold positions over the weekend too, its just not a thing for me, those gaps are crazy!! Oh man.. the weather is so nice over here, cooling!! Have a nice weekend!!
  • #8,370
  • Nov 10, 2007 9:13pm Nov 10, 2007 9:13pm
I’ve been trying to follow this thread. I admit I do like the method, but sometimes you guys can write in a completely different language than my simple mind can comprehend. But I have been watching the system on the GBP/USD and EUR/USD. This seems like I could be over simplifying things a bit, but I need to ask this question because I think I understand the 4H method and that to me, is scary!
Anyway, it looks like the 8 EMA and 21 EMA are support lines (at least right now anyway). Am I correct in assuming that if there is a good distance between the 8 and 21 EMA, and the rhythm is up, that these lines are good indicators of support? It appears at times that price breaks the 8 EMA and bounces off the 21 EMA…is this considered another level of support? On Friday, price broke through both lines and now appears ready for a cross of the EMA’s (8 crossing down). If when this happens is it safe to assume that the next level of support will be the 89 SMA? Looking at the 4h chart for GBP/USD this theory seems supported or am I looking at it wrong? Or could it find support somewhere else along the way? Knowing the dollar I would assume the latter! It seems that when the 8 EMA is on top, price moves up, when the 2 cross, and 8 is on the bottom price goes down? Am I looking at this properly? Or is it not this simple?? Because at first…I felt overwhelmed by this method, but I think I can see it now. Anyone?
  • #8,371
  • Nov 10, 2007 9:26pm Nov 10, 2007 9:26pm
I too used Vttrader and eventually you will lose most of your money no matter how good you are, the disconnects just happen to be mostly when you are trying to close open orders and they are in profit, watch for yourself and see..........switch brokers and platforms and make money

Quoting shauny
Hi, I can see that you are a fellow Vttrader user. Are you using a live account? Because I've experience serious disconnection on Vttrader live account and its getting annoying and irritating. It just lost is connectivity and relogin every now and then. It gets worse when its nearing news time. I just wonder if you have the problems as well?

We all have jobs and families to take care of, we do trades like after our work and it also depends what timezone you are in to trade which market. I'm fortunate to be in a timezone whereby I can trade the 3 major markets. Hmm, I'm still studying so plenty of time to trade and look at charts..

Anyway, welcome to the family!! There are lots of things to be learn and experiment with! Hope you will understand the system soon!! Pip well
Don't chase the market, Let the market come to you
  • #8,372
  • Nov 11, 2007 5:59am Nov 11, 2007 5:59am
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  • #8,373
  • Edited 8:51am Nov 11, 2007 8:14am | Edited 8:51am
Quoting Colostarr
I’ve been trying to follow this thread. I admit I do like the method, but sometimes you guys can write in a completely different language than my simple mind can comprehend. But I have been watching the system on the GBP/USD and EUR/USD. This seems like I could be over simplifying things a bit, but I need to ask this question because I think I understand the 4H method and that to me, is scary!
Anyway, it looks like the 8 EMA and 21 EMA are support lines (at least right now anyway). Am I correct in assuming that if there is a good distance between the 8 and 21 EMA, and the rhythm is up, that these lines are good indicators of support?
Generally speaking, when the price is above/below the 89 the trend is up/down. When price is hugging the 8ema, say upwards and closing above it, like it has been with the EURUSD, the uptrend is strong or Rhythm + 2. The 8ema acts as support but not necessarily in terms of long term support such as a daily support line. More like a current rhythm support. Your support line should be trendlines or channel lines, etc. The 8ema is more of a, "ok price is really trending well right now and I need to keep an eye on a possible pullback to the 21"

Now, price closes below the 8ema for the first time in several bars. Time to start thinking where the 21 is. If price pulls back to the 21, this may be setting up for a trend continuation entry, but you still must wait for confirmation.

It appears at times that price breaks the 8 EMA and bounces off the 21 EMA…is this considered another level of support?

Yes, because often times the price will approach the 21 and return to the upside and resume the trend. But, I wouldn't think of the 8/21 as a support 'line' but more of a support (or resistance in terms of a downtrend) "area".

On Friday, price broke through both lines and now appears ready for a cross of the EMA’s (8 crossing down). If when this happens is it safe to assume that the next level of support will be the 89 SMA?

When price closes below the 21 (see chart below, tan rectangle) price may then come back to the 21 which can now turn into a resistance area, and price can start trending down....to the 89 which is the next area to be on your watch list.


Looking at the 4h chart for GBP/USD this theory seems supported or am I looking at it wrong?

You are correctomundo.

Or could it find support somewhere else along the way? Knowing the dollar I would assume the latter! It seems that when the 8 EMA is on top, price moves up, when the 2 cross, and 8 is on the bottom price goes down? Am I looking at this properly? Or is it not this simple?? Because at first…I felt overwhelmed by this method, but I think I can see it now. Anyone?
You are getting there...But, don't think about taking trades when the moving averages cross. That is a totally different approach to the method. The 8/21 more or less are used as a gauge for the rhythm of the market. IF the ma's cross, so be it, but let the price action flow with those ma's before a trade is executed.
Attached Image
  • #8,374
  • Nov 11, 2007 8:16am Nov 11, 2007 8:16am
Quoting Tmac
I too used Vttrader and eventually you will lose most of your money no matter how good you are, the disconnects just happen to be mostly when you are trying to close open orders and they are in profit, watch for yourself and see..........switch brokers and platforms and make money

I used VT a few years ago and don't miss it one bit. Disconnects/server shutdowns when price is running with no 'phone help' during one of these episodes.
  • #8,375
  • Nov 11, 2007 8:24am Nov 11, 2007 8:24am
I used vttrader years ago and had a lot of problem with execution. BTW if anybody experienced problem with downloading the last Phillip tutorial, I can't download it.
  • #8,376
  • Nov 11, 2007 8:29am Nov 11, 2007 8:29am
Quoting ira
First, HipsterPipster - very good posts, thanks.
I completely agree with developing bad habbits on demo or paper, I think SL taken on demo hurts too, and when there are many of them it can kill your trading. It's like a snowball, you think you are learning by picking many trades but in the long run you end with bunch of losses and you don't know where you have been wrong. The real focus should be on patience and discipline, no matter what it is - live account, paper or demo. If you are disciplined on demo you will be discipline on real account and vise versa. So it's very important to have the right focus from the beginning.
As for the SL, again you are absolutely right, the trade must breath! SL must be put in place where you know excactly that this is it, you have been wrong.
My trading was very poor untill I have learned to be patient and to put SL in a right place. Looking back I can also add that I had a real breakout in my trading when I realized that I don't know the rules of the system. I mean I knew a lot, but then I decided to write the rules down, make it simple and follow them. When there are rules on paper like 1, 2 you know excactly when to pull the trigger and when to stay out. You also know if you weren't discipilined and you violated your rules.
Emotion is also a very important thing! Pips once told me that while trading you must have the same mindset as when you are doing backtesting and don't risk more than you are OK with giving up.

OK and some final thoughts on E/U. In the past I would most definitly loose money in the situation like this. Because I would not take TC as the price is at it's high and nobody knows how far it would go - scared. And I would take counter trend trades.
It's good that I am much wiser now and don't take counter trend trades, there are still no signs of weakening. But I'm still not taking TC - scared . So, I'm on the sidelines, practising patience. Hope one day will be able to take these TC. Good work for those who have taken them!
IRA, I like your post because it is very clear that you have stuggled and come out on top. For many of us it is hard to learn without actually experiencing the hurts and struggles, so bring them on. I commend you for learning from your mistakes. Now, will others take your experience to heart?
  • #8,377
  • Nov 11, 2007 8:52am Nov 11, 2007 8:52am
chart not posting...re-try
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  • #8,378
  • Nov 11, 2007 11:50am Nov 11, 2007 11:50am
  •  shauny
  • | Joined Jul 2007 | Status: Still learning and never gonna stop | 127 Posts
Quoting alexfot
I used vttrader years ago and had a lot of problem with execution. BTW if anybody experienced problem with downloading the last Phillip tutorial, I can't download it.

thought of transfering my funds to IBFX but need to do alot of work.. fill in the broker transfer form and blah blah blah...
  • #8,379
  • Nov 11, 2007 7:20pm Nov 11, 2007 7:20pm
Be the best at what you do!
Failure, is a wonderful teacher!
  • #8,380
  • Nov 11, 2007 9:04pm Nov 11, 2007 9:04pm
Thank you Palmer....your answers actually made sense to me.....I appreciate it!!
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