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DislikedI am deeply sorry if this has been covered. I have gone thru as much of this forum as possible. That said...
Trending markets need trend-following indicators, such as moving averages, the MACD, and so forth. Trading-range markets, on the other hand, need oscillators, such as the RSI, stochastics, and so forth, which use overbought and oversold levels. So, identifying whether the market is range-bound or trending is extremely critical
Since stochastics are for range bound markets, has anyone tested using ADX as a filter to establish WHEN to use the stochastics? Apparently when declining from 30-20, ADX indicates consolidation or when less than 20 the market moves in small swings are best signals from stochastics.
Ignored
DislikedDuring the course of running the data analysis on TEB's idea I began to notice a pattern that may be interesting to study. I hope a few people will grab their computer screens and pencils and put this idea through it's paces because it looks unbelievable simple and seems to generate great trades and save you from bad ones.
This is for short period trading....you won't linger in too many trades too long with this. On the 30/1H you will average about 35 pips a trade that last about 3 candles.
Take any of these time frames:
5/15, 15/30, 30/1H, 1H/4H
Set a level line on your 5,3,3 stochastic at 61.8 and 38.2.
Your entry/exit is always with the smaller time frame.
The smaller time frame should be one step (one candle) ahead of the longer time frame for the cross or one step behind...or exactly the same. This is optional if you are conservative and a common pattern. However, you do not want the longer time frame ahead more than one step of the shorter time frame.
On a long, whenever both tf's cross or are above 61.8, buy long.
On a short, whenever both tf's cross or are below 38.2 buy short.
You can add greater risk if the longer time frame is "near" the cross in the direction of your trade. The longer tf should be across 50 level. This may prolong your trade and could add some risk.
If you don't have this correlation of the 2 time frames, you don't have a trade. This is your filter mechanism.
You can use this also as an entry point for any MTF trade method I have explained earlier. This will help you enter trades without much draw down. Use it as a tool or as a system.
Exits are a little more tricky if you use this as a system.
If the shorter time frame goes above 80 on a long or below 20 on a short, you definitely want to be out before it recrosses 80/20.
If you nab some pips within 3 candles on the shorter time frame, you may want to exit.
If the longer time frame is looking like it will go above 80 on a long or below 20 on a short you may want to ride it out.
If the trend is with your trade you may want to stick it out...use a trand channel.
You will quickly notice an average pip gain, you may want to TP that.
You need not worry what direction the long term trend is in for this method to work, it works regardless of long term trend direction.
If you like, think of this as a scalping method to be used on the pairs I mentioned.
I have measured about a 95% success rate with a 95% statistical confidence level through random sampling.....using 859 random samples out of 5,000 possible most recent trade opportunities. That's the historical data anyways. I measured GBPJPY, GBPUSD and EURUSD.
As a system this is a good method if you do not want to trade with much risk for quick pips. You do have to be disciplined, not greedy and just grab pips as they come.Ignored
DislikedHi Spud,
You posted this and the following post a while back but there does not seem to have been much response to this either here or on the chat room. Are you still keeping this idea as part of your arsenal or have you moved in favour of the harmonic stochs?
If is is possible I would love to see the results you did on the testing of this method. Please PM me if you wish.
Thanks,
G-ManIgnored
DislikedSpud,
The CAD this morning (London Session) was showing a good 80 drop short signal on the 15/30 and 1hour. The 4 hour however was trending up on Stoch with the 5,3,3 charging up at above 61.8 and the 14,3,3 was trending up but below 38.2. Given the 15,30 and hourly stoch harmony and the elasticity of the 4 hour stoch (even though both the 14 and 5 were trending up), could this have been a plausable short entry?Ignored
DislikedIn any 80/20 trade I want the 4H leading the way and being the first indicator of direction for the 1H and 30M to follow. So in this case with the 4H moving opposite to the 1H and 30M I wouldn't go short....at least not until the 4H is going short too.Ignored
Dislikedso you don't give any weight to elasticity on the 4hour. If not, when would you recognise it as a valid indicator?Ignored