ABCD - My way

MTF system based on AB=CD interactively traded on EurUsd.

the intent of this thread is to share the system i have been using lately and, in return, get some positive criticism and ideas.
This is more a tool than a complete system as some other knowledge will be needed (canlde patterns, simple VSA, Trendlines, etc). As a tool, this will not trade for u: u have to trade with it and there will always be room for decision.

i have seen other ABCD systems around. mine is based on the same principle but it has it's twists. basically the biggest difference is that i look at several TFs and also i am using close lines rather than candles (i will probably get to this subject later).

just a couple more things:

i am not making any promises on how often i am here.

als, opinions are very welcome but i'd like to have them from someone that already trades ABCD.

ok, now gets down to it!

it's all based on the following concept:

ABCD cycles tend to complete.

the idea is that when they complete a reversal is expected.

for instance, when a up ABCD completes, bears take over while bulls rest. the thing is the is a contrary move (counter-trend) as bulls are just resting and will probably take over again.

so how do we trade this. well, we can scalp the end of moves. you might think that it's not very logical to get in a trade expecting a small move and counter-trend. well, it depends on how sucessfull you can be.

another way to trade it (the one i am using) is to wait for 2 or 3 different timeframes to complete their cycles simultaneously and the odds of a reversal are higher and so will be the new move.

this is, of course, a system that is basically tryes to pick tops and bottoms. that is a fact, no use denying it. on the other hand we are not counter trending if we look for the completion of cycles on smaller timeframes that are against the trend of higher timeframes. that way we will be trading against the trend.

moving on!

an example of a GRRRREAT long trade to be taken when the EU fell to 1.432. that was currently 300 pips away and i only got 10 pips out of it LOL

i am not going to post all charts but basically what we had was a 15m pointing to 1.4350 and an hourly pointing to 1.4361.

but 30m was still pointing lower. 1.4322.

i was short at that time and exited on the close of the 15m. must admit i thought that the 30m wasn't going to complete (although we tend to, not all cycles do). and i sidelined. but when i saw a close below the 30m and a close above it i entered again. it was late here so i decided to close the trade and get my beauty sleep.

this is a good example and a recent one too.

now let's get into the math.

(forgot to post the chart on the last post. here it is)

the principle behind it is: the distance between A and B is equal to the distance between C and D.

so when we have A,B and C we can predict where we COULD take profit or enter for a reversal.

the math couldn't be simpler:

on an upmove:

D = C + (B - A)

on a down move:

D = C - (A - B)

so, that's how we get to the numbers.

the first detail that made difference for me was Hi and lows vs closes.

when i first started using the system i used highs and lows to calculate my abcd.

it worked too. the thing is that quite often we overtake the D so strong that it goes to our sl fast.

also i noticed that very often we got to the D went past it a bit and then we reversed.

so i decided to use another aproach. i only use a line graph (closes) and i only take a trade if we get past the D and then come back and close back.

this has shown me 2 things that happen very frequently: many times we get past D and then we see price trying to close back and failing. that is a sign of continuation of the move. it would be interesting here to discuss the validity of these patterns as continuation entries.

another thing i have seen (just last friday we saw that) is that many times we are just bellow a target but fail to close above it. until we do we must take into account in our decisions that that is an open target drawing the price to complete the cycle.

it is fundamental to notice a difference here: it's completely different to have a cycle that hasn't been reached from a target that had been touched but not closed past it. on the first case, until invalidated (we will talk about it later) that D is attracting price. on the second case, and although we didn't close above it, we did reach it and could reverse.

next i'll talk about invalidations.

cycles tend to complete but not always (it would be too easy LOL)

so, when do we know a cycle "is not working" anymore? let's call it invalidated.

i'll show it post by post with an image and a description.

here is the initial setup. bull cycle pointing up to D.

(instead of using the distance between A and B is equal to the distance between C and D, i use an equivalent: the distance between A and C is equal to the distance between B and D. visually it's easier for me: the distance between the lows is equal to the distance between the tops)

... price goes above C, stalls and starts to come down. it gets bellow C. that invalidates the previous predicted D.

but we are still above A. as long as we don't have a close bellow a we are going more likely up (dow theory).

(to be continued)

then price starts to climb again. we make a new calcultaion. the chart shows the new D.

price goes up and completes the cycle.

we now wait for a close below D to enter short.

and that's basically it.

tomorrow morning i will post the current cycles.

on smaller TFs sundays nights suck because the market as been open since wellington and my brokers are not so i can't seen what cycles were made. so tomorrow morning (in about 12 hours) i will start to post cycles here. till then

hapipipin

15m EU right now.

cycle complete. i used to short these setups. we touched target and came back some. now i don't. i will only take a short here if we close above D and then back down.

i still have a 15m and 30m bull cycle that completes at 1.4663 so i would be really happy to see a close above that level and then down. it's always safer to enter a trade when all targets are met so that none are left pulling the price against us. in this case i will be happy enough if i see at least a touch at 1.4663 and a D being closed above and after below (translating i will short if we go to 63, close above 54 and then close 15m below 54)

What is your win loss percentage?

so you can count in the end

looking at a glimpse at EU we still didn't reach 1.4663 so i guess i will be looking for cycles completing down to enter bull until we get to that number.

more details in a couple of hours when i get to the office

As your were writing the above post it did hit the 1.4663 and then fell a good 40 pips, now we will see what the next set up is going to be.................good call............yes I can count LOL

sorry to disagree but on my data feed we still didn't reach 1.4663... so it's still up there pulling price.

entering on closed cycles down is the best strategy still for me.

just entered a long based on a 5m cycle. i wasn't at the pc at the exact time but it went back a little and i got in. i will post the chart next.

here it is.

i took this one based on the 5m. we completed a cycle down, and came back up.

always we have to look at the other time frames to make decisions.

1h - cycles were complete at 1.455 so no info from them as we could retrace down but we are going up
30m - this is key for me. there is an incomplete cycle that finishes at 1.4663. still not even touched. we have been hoovering below the target. this means that we either complete and come back down or we break above and stay there continuing the upmove. i think the first is more lightly but won't let that bias my view of the market.

15m - series of invalidated cycles (ranging).

5m - we just saw that. while i write this we are almost completing the 5m cycle. i post a chart and my view about it next

here is the new cycle being formed.

so let's talk take profit now.

TP depends on various factors and is always a big decision. i'll explain my views as we are confronted with them.

right now, as i already said, we have an open target above us and past the D for this 5m cycle. the current D is 54, the 30m D is 63. so that area should be the pivot area for this trade.

i never know what is going to happen (if) we get to that area. we could turn back there on the completion of the cycle or we could break past it. when i am scalping against bigger TF cycles i always take profit at the end of the cycle. when i am with the bigger cycles i put SL at be when we reach that area and expect a break. (yes, i use sl at be very often).

continue later. gotta leave for a meeting.

1H and 15m, was still showing a downtrend, this is what I was seeing

Now I am seeing seeing this, your thoughts?

Good to see u looking into it.

had to leave for a while and came back to see my trade SLed at BE.

i put sl at be quite fast: i'd rather loose an opportunity than loose money.

still i am bull biased because we still have a target up to reach. so i'll keep looking for entries below us that will allows us to get into the main trend.

one thing to have in mind: incomplete cycles show us were are traveling the other way. that's what just happend on the 5m.

let's look at the new 15m and 5m on the next post.

Thats something I did not know, interesting analysis, we will keep a watch on that and see, maybe thats why I hit 2 or 3 good ones and then get stopped out becuse it is going back to complete a previous cycle.



one thing to have in mind: incomplete cycles show us were are traveling the other way. that's what just happend on the 5m.

let's look at the new 15m and 5m on the next post.[/quote]

Hi J,

you sold at D?

it seems it's going well for u but i wouldn't: it's true that complete cycles tell us we are traveling that way (down in this case). but it's the point where bears let go for a while. we did retrace some but bears were still in charge.

that could be easily seen on the line chart posted. we close past the D and never came back up! if we would come back up i would take that as a long entry but it didn't so i hold.

let's see if we get to the next D (in red). if we don't the red cycle is incomplete and i would long with a close above the Black D. if we get past the Red D, same drill. i wait for a close back above to long.