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4 Hour Strategy (MACD)

  • #761
  • Feb 15, 2007 5:15pm Feb 15, 2007 5:15pm
Do you guys remember in Phillip's strategy pdf the scale in version if stop is too big? Enter at opening, enter at 30% of previous bar and enter at 45% of previous bar. Wouldn't it be possible to use this method to obtain a better entry point if we see a directional bias but don't like the r:r? Lets say we get a short signal and wait for retracement then enter within the 4 hour period. Maybe we get the trade, maybe we don't, but it might be a good alternative to entering immediately with a poor sl. Any thoughts?

Maybe this just makes things more complicated right now?

Think I need sleep....
  • #762
  • Feb 15, 2007 5:21pm Feb 15, 2007 5:21pm
Phillip and all others in this site

Please pardon me for posting the next post as my response to 'pips4uandme'. It will be out of line with respect to 4hr method.

But, I promise I do not do it again after the nest posting. I feel compelled to let all be aware of the settled difference between Forex market and other markets. Hence the next posting.

Now I apologized for my bad behaviour, I am going to post it! Please read it.
Thanks
-Chandra.
  • #763
  • Feb 15, 2007 5:24pm Feb 15, 2007 5:24pm
Quoting pips4uandme
Hi Chandra,

The Forex market is a decentralized without 1 single institution controlling prices. Banks do compete for rates within the community resulting in the most competitive market.

Banks do communicate with one another regarding investor positions. Yes, they know where the stops are. London and Tokyo are notorious stop runners, and it is common practice for dealers to "clear the books." It is not a conspiracy against us, only a business practice. Dealers can move markets because they have huge amounts of money behind them. Yet, they must be prudent too...to move the market with your capital means you are risking lots of capital and a central bank may be on the other side....or a huge hedge fund.

You are right, we need to be smarter. We need to place stops outside of areas that are common and obvious. Sometimes we get hit...sometimes we don't. It is frustrating. Forex is the most mentally demanding thing you can do with your time. There is so much to learn. The most important thing to learn is to identify support and resistance. This is the basics to any system because it is how we identify risk and reward points. Don't get frustrated...just focus on one thing at a time and practice practice practice!! Take time and backtest.

You are doing a great job! Keep a positive attitude and keep perfecting your trading skills on step at a time!


Hi Pips4Uandme,
Thanks for your great insight and encouraging words. I will follow your advise.
One thing though. Even though the big guys (central banks) compete among themseleves, when it comes to your broker firm (or my broker firm ) it is dealing with ONLY ONE OR, MAY BE TWO BIG INSTITUTIONS. So, whatever the price offered to us through our broker is the price offered by these one or two big guys.
Suppose your broker is associated with only one big institution, then, obviously, that big institution has the monopoly over the all the small traders under that broker and that institution can dectate its one bid & ask prices and us, all the small traders, have to abide within that bid and ask price (decided by that particualr big institution). So, where is the free market?

Futures & commodities market and in stock market seem to be freer because, in those markets, those who want to buy and those who offer to sell both are the public mass and the brokers are just the window through which the trades go in an orderly fashion. In those markets, both the buyers and the sellers are the public (including the big institutions).

However, in the Forex market, the public like you and me cannot offer a price to buy (cannot offer a 'bid price' to be posted by our broker) or offer a price to sell (cannot offer an 'ask price' to be posted by our broker). we are just there to take the price offered by the big institution(s) associated with our broker. Here lies the real advantage to big institutions.
-Chandra
  • #764
  • Feb 15, 2007 5:30pm Feb 15, 2007 5:30pm
Quoting Phillip Nel
If you study the emotions around the turnarounds you will see their emotion as well as motion. Just look at the 4hour spinner that was formed with the previous candle. Haven't heard anybody talking about it. Could it be some emotion showing. The current candle will give there motion away I think. I took the trade on that emotion. Hope I am right
Phillip,
If you are talking about the 12:00-16:00 GMT candle as a spinner, YES, I SEE IT! but I see it now (23.28 GMThttp://www.forexfactory.com/images/icons/icon8.gif). Too bad eh!
-Chandra.
  • #765
  • Feb 15, 2007 5:37pm Feb 15, 2007 5:37pm
Quoting Phillip Nel
I don't really knows how they operate and how they do it. I just noticed that there is a tendency to do the same thing over and over again. Tails. I watch them with a magnifying glass.
Phillip,
I love your recognization of 'TAILS' and using them to your advantage. I want to do it myself too because, I think I have gained a feeling for those 'Tails" and the significance behid those.
Thanks again for taking us to second level of trading, Phillip.
-Chandra..
  • #766
  • Feb 15, 2007 5:44pm Feb 15, 2007 5:44pm
Quoting Chandra
Hi Pips4Uandme,
Thanks for your great insight and encouraging words. I will follow your advise.
One thing though. Even though the big guys (central banks) compete among themseleves, when it comes to your broker firm (or my broker firm ) it is dealing with ONLY ONE OR, MAY BE TWO BIG INSTITUTIONS. So, whatever the price offered to us through our broker is the price offered by these one or two big guys.
Suppose your broker is associated with only one big institution, then, obviously, that big institution has the monopoly over the all the small traders under that broker and that institution can dectate its one bid & ask prices and us, all the small traders, have to abide within that bid and ask price (decided by that particualr big institution). So, where is the free market?

Futures & commodities market and in stock market seem to be freer because, in those markets, those who want to buy and those who offer to sell both are the public mass and the brokers are just the window through which the trades go in an orderly fashion. In those markets, both the buyers and the sellers are the public (including the big institutions).

However, in the Forex market, the public like you and me cannot offer a price to buy (cannot offer a 'bid price' to be posted by our broker) or offer a price to sell (cannot offer an 'ask price' to be posted by our broker). we are just there to take the price offered by the big institution(s) associated with our broker. Here lies the real advantage to big institutions.
-Chandra
Hi Chandra,

I did not find your response disrespectful at all. (I know it is off topic and I appologize to for talking about this in the thread).

First of all central banks are the banks of the countries...like the Federal Reserve and BOE. Institutions stop hunting sometimes get caught in the cross hairs of the central banks (think intervention...think EUR capping).

I totally disagree w/you on stocks. Price is controlled and often manipulated by big brokerage houses. It has gotten a bit better with electronic trading, but houses such as Goldman's and Bear Stearns were notorious for going against client positions. Floor traders too have an advantage b/c they know when large orders are placed. Also, brokers, such as Bear Sterns add their own bid/ask premimums to stock sales/purchases.

You are right on about specific dealers, but we have a choice if we stay or find another who can offer a better price. Stocks go through a clearing house...The key being the A...they go through an exchange (not exchanges). I dare you to find a better price on a NYSE listed company on NASDAQ..it is impossible! (no disrespect intended).

& yes we may be the "little guys" without inside knowledge...but so was George Sorros (a "little guy w/a heck of a lot of money) and he broke the Bank of England!
  • #767
  • Feb 15, 2007 5:46pm Feb 15, 2007 5:46pm
Quoting Phillip Nel
The 8:00 to 12:00 candle gave a signal on the MACD. The candle was over 100 pips. If you went short there the safest stop was above that 100pip candle and then you had to make 100pips to get a 1:1 ratio. Not for me.

I never chase a candle that goes 100pips and give a MACD signal with that candle. I really dont think a deal is on.
I love your explinations! You never CONTRADICTED your statements becuase of your honesty.

Let me ask you one more thing which could be extension of the method.
Different from the othe markets, in Forex market you can hold a long and a short position of a pair simultaneously . How about taking advantage of this provision once you realize you made a wrong entry. For example, if feel you are wrong in your current long entry, take a short position and liquidate them at different times when each one becomes profitable on it own marits?
Thanks.
-Chandra
  • #768
  • Feb 15, 2007 5:57pm Feb 15, 2007 5:57pm
Quoting Chandra
I love your explinations! You never CONTRADICTED your statements becuase of your honesty.

Let me ask you one more thing which could be extension of the method.
Different from the othe markets, in Forex market you can hold a long and a short position of a pair simultaneously . How about taking advantage of this provision once you realize you made a wrong entry. For example, if feel you are wrong in your current long entry, take a short position and liquidate them at different times when each one becomes profitable on it own marits?
Thanks.
-Chandra
Hi Chandra,

That is such an interesting idea! Hedging one position against the other, but only liquidating with profit in each. The only problem might come in a big trending move if you close the winner and don't close the loser. Also, do you think that interest charges would eat up any profit? I've heard of people who do what you suggest, and make quite a good living (arbitage). I just don't quite get it...(how to assess potential risk, how to manage, etc.).

Think I need to stick w/something more clear cut. Like Phillip's 4 hr and 5 min systems. Have you tried backtesting the 5 min system? It's pretty amazing too and much simplier!
  • #769
  • Feb 15, 2007 6:23pm Feb 15, 2007 6:23pm
Pips4Uandme,
Great response from you for all my postings! Thank you.

I did go through all the postings in phillip's 5-min trading thread. I like it and once Phillip said it is for practising the decipline and the 4Hr. system has more Pip Power. In fact, he has incorporated the 5-min strategy in the 4-hr. strategy when he talked about counter trend trades.
Thanks for your interest in my views and in my postings.
-Chandra.
  • #770
  • Feb 15, 2007 6:42pm Feb 15, 2007 6:42pm
Quoting Chandra
Phillip,
Regarding posting of RP0029 (Posting #743).

May I ask you to disect each of his seven trades and comment? All of us will be benefitted from your explination.
Thank you. -Chandra

RP0029,
you have done a great job by posting it. Phillip's response will help the whole community here.
Thank you.
-Chandra.
PS: I wish you success in your trading.
Chandra,
Thanks for the words of encouragement. I would really appreciate it if Phillip would do what you suggest as well. We can all learn a lot from him.
  • #771
  • Feb 15, 2007 6:45pm Feb 15, 2007 6:45pm
USD/CHF Long entered at 00:05 GMT

1 Lot @ 1.2348
1 Lot @ 1.2349

SL: 1.2315
Move to BE at 1.2363 (res. and few pips < 8EMA)
Take profit on 1 lot at 1.2375 (between 8 & 21)
Profit target: 1.2382

r:r = 35:34 Good enough (reminds me of AJ in Poker, eek)

Reasons for trade:

Double bottom on last two candles
Bounce from support at 1.2330 (don't like that area was pierced)
MACD signal turn
OK r:r


Concerns:

support at 1.2335 pierced
resistance at 1.2363 (former support and tails on candles)
8 MA below 365 and pointing down -- would like to see a hook up
89 EMA pointing down

Keep fingers crossed : )
  • #772
  • Feb 15, 2007 7:07pm Feb 15, 2007 7:07pm
Quoting pips4uandme
USD/CHF Long entered at 00:05 GMT

1 Lot @ 1.2348
1 Lot @ 1.2349

SL: 1.2315
Move to BE at 1.2363 (res. and few pips < 8EMA)
Take profit on 1 lot at 1.2375 (between 8 & 21)
Profit target: 1.2382

r:r = 35:34 Good enough (reminds me of AJ in Poker, eek)

Reasons for trade:

Double bottom on last two candles
Bounce from support at 1.2330 (don't like that area was pierced)
MACD signal turn
OK r:r


Concerns:

support at 1.2335 pierced
resistance at 1.2363 (former support and tails on candles)
8 MA below 365 and pointing down -- would like to see a hook up
89 EMA pointing down

Keep fingers crossed : )
good trade
I tink the same with usd/jpy
last candle was hammer
If you count on hope in any trade ……. Get out of it
  • #773
  • Feb 15, 2007 7:09pm Feb 15, 2007 7:09pm
Hi again rp0029!

I was just looking at your trade #7 and had a thought. I noticed that the trend continuation signal valley was pretty sharp w/a pretty good upmove on the candle. Maybe this is a signal to wait for a pull back to the EMA before entering the long? Especially if the stop is too far away. Sometimes "right" trades just don't work out, maybe this was one of them. Phillip, did you notice in your testing anything about valleys w/trend continuation?

In an uptrend that hasn't been challenged in a long time, zoom out and draw trendlines from the original high. Daily charts might also help give you guidance. Fib extensions are another method -- just figure the extension from the last major move (last valley to peak).
  • #774
  • Edited 9:28pm Feb 15, 2007 7:39pm | Edited 9:28pm
one last thought (promise) for rp0029

MACD not always best indicator in a trend since it is an oscillator. Really need sleep now...see you in a few hours!

Mandoaddam:

Good luck with USD/JPY! That pair scares me
  • #775
  • Feb 15, 2007 9:36pm Feb 15, 2007 9:36pm
long USD/CAD @1.1640
1 lot TP @1.1670
1 lot - free ride
All S/L @1.1616
will see tomorrow how it turns out.
  • #776
  • Feb 15, 2007 9:37pm Feb 15, 2007 9:37pm
Can some one confirm the round bottom on the gj!
  • #777
  • Feb 15, 2007 9:51pm Feb 15, 2007 9:51pm
Quoting tamkras
long USD/CAD @1.1640
1 lot TP @1.1670
1 lot - free ride
All S/L @1.1616
will see tomorrow how it turns out.

I would watch that... you are trading against a trend and from the looks of it, it has not reached its bottom yet..

just my 2 pips
  • #778
  • Feb 15, 2007 10:06pm Feb 15, 2007 10:06pm
Quoting pipmy4x
Can some one confirm the round bottom on the gj!
Quick analysis, it looks good, not ideal
  • #779
  • Edited 11:56pm Feb 15, 2007 10:48pm | Edited 11:56pm
Question about the USD/Yen.

Is the 0400 (gmt+1) candle close showing an entry signal? Is the formation considered a double top?

Thanks for your help, I am still trying to get a good understanding of entry signals with this 4 hour strategy.

If it is a good long entry, how would you determine stops?
  • #780
  • Feb 16, 2007 1:41am Feb 16, 2007 1:41am
What are anybody take on the usd/chf. It is in a nice down trend but There is a double bottom forming?
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