Gann High-Low System with Laguerre/Fisher/VSA/Sixths and others

This is just a system that came about through experimentation from random indicators I've collected through the years. Above all else: The Gann High Low indicator attached will make you money. This thread is dedicated to filtering that output.

See the attached charts for the blue line, that at first looks like a moving average. UNLIKE a simple (or exponential) MA this seems to completely crossover a candle bar at some point giving you a very clear signal.

1) When price crosses above the blue line = BUY (Close buy:The Gann line crossing back under the price candle for at least 1 confirmed bar.
OR I personally find the best success using a Sixth's pivot line as an exit. No hard and fast rule here.

When you demo trade this method for a few days and stick to 1=hr and 4-hr charts even if you are away from your computer for sometime, you can usually get out of a trade in plenty of time because this isn't scalping.

When price crosses below the blue line = SELL (Close Sell: Opposite of above)

Then: not in any order, all important):

2) Laguerre/Fisher: I overlap these. Key point for fisher is the 0 crossover point (or close to it). This usually indicates the trend is reversing. For Laguerre, look for price dropping below .75 to go short. Rising above .15 area is a safe time for longs.

3) VSA: To fully utilize VSA you'll need to do some research to understand the indicator properly I have posted several PDFs, suffice it to say you should see some sort of VSA event (churn bar, climax, markup) show up as either a red or green bar usually on the Better Volume indicator BEFORE OR JUST AS price action crosses the Gann line. Soon, I'll post more examples of how I'm using Andy's VSA Text Bar to help in finding reversals.

4) Squalou's stairstep breakout indicator. This is optional and not always needed. You can usually get a good move when price crosses over the Gann line within the box, you'll see that on some of my screenshots. But it's not required. VSA and candle formations are more important.(Optional)

5) Balance all of the above with s/r of the sixths indicator. This makes it easy to avoid dumb trades that are low r/r and in which you are putting yourself into a position of possibly fighting the market.

NOTICE: 3 and 4 are not always required for a good trade! In the beginning try to stick to them, but after a while you will get a feel for movements and you'll see additional opportunities sometimes in spite of their conditions not being present.

I USE TRAIL STOPS. HOWEVER YOU CAN SET A NEARBY PIVOT OR ANOTHER GANN LINE REVERSAL TO BE YOUR HARD STOP

We know it works well on EU, most yen crosses and metals. Try your favorite market and let us know!

So there you have it. Will post example trades so you can see how it works better throughout the next week.



Nice thing about overlaying Laguerre on Fisher, makes it more clear when Laguerre is maxed and fisher starts to taper towards zero. This is a powerful divergence and within the context of the above is another key thing I'm looking for.

Update 3/6/12 12:57 PM: Put all indis and templates into zip file all should be there.
Included VQ, not central part of system but I like to watch
it during down candle confirmation.

Updated: 3/13/2012: Uploaded a new VSA indicator I found, please download this separately as an addendum to the core indicators. This one appears as wingding symbols above or below the candle. I will mouseover on any relevant signals it gives.

Updated: 3/27/2012: Thanks to Andrew for this killer indicator which labels the candle with a text description of the VSA formation -> VSAc BAR TEXT SIGNALS.mq4 -> http://www.forexfactory.com/showthread.php?t=348254. Unreal, I will be posting some updated examples of how I'm using it soon.

The end.


Special note to ForexHard and the Stairstep Breakout thread: I am not in anyway trying to hijack "your" system. I am simply using this indicator as a tertiary component in my trading. Please do not interpret the use of it here as an attempt to copy your thread. So accept my way of trading as a unique form of self expression. For those wanting to learn more about the breakoutbox go see ForexHard's Stairstep breakout thread by all means. By the same token, I ask all members of the Stairstep breakout thread to not fill my thread with garbage. As mentioned, the indicator is a tertiary part of my trading

Ideal setup look at Feb 29th at 10:00 price within the box falls below Gann high low. I try to wait until 1 full candle forms under or below the Gann line before entering. By that time, its pretty unlikely to reverse, depending on the pair.
Anyway, at this time, we also see VSA spike volume bars indicating a possible momentum reversal. Best time to enter here.. then just watch if fall. ahhhh..

Here, we get a VSA churn bar during the rally which then clearly starts to fade. I've found on EU, this is still great to see a churn bar on a rally. This tells you to be patient and wait for the pullback instead of chasing this move higher. Get our wish when the next session starts and you get a new breakoutbox support area formed.

Laguerre starts to fall from .75 after the candles confirm their movement below the gann high low in the box. Great entry point for easy ride down.

Then at Feb 28 0:00 we get yet another session support formed and prices start to go higher after breaking the gann line.

And no reason you can't play lower TF's if you have the time resources. Got a feb 28th 4:30break higher that would have yielded some nice profit.

good info

Was focused on usdcad and missed this move late last week on EU.

Mar. 2 @ 4:00 you get your first confirmed candle below Gann line then its smooth sailing to 1.31865

Notice just before this time price was bullish and crossed above the Gann line higher. However, since Laguerre was already pretty high, this would absolutely not be the time to go long. So laguerre keeps you out of that occasional chop. It doesn't happen often these days, but you'll definateky need to filter this one way or another.

Here are a few more indicators you might add.

You're a few months late with your system. It would have been a big hit during the Christmas season.

billbs, why are you laughing of dirtybrown? What would you like that you made ​​fun of you? ... you're a bad guy!



dirtybrown congratulations ... The strategy works for you, that's the only thing important, you do not leave ... you'll get gold for sure! .... you will get success and you will get many pips!

the concepts are good ... volume, range ....

Thanks Porfirio. Some people can't handle anything more than a moving average and rsi. We don't want to make light of the mentally disadvantaged though, right? hahaha

For those familiar with Forexhard's thread on stairstep breakouts: I know he has in the past stated this should only be used on a 15 min chart. Not sure what the justification of this logic was since he never really backed it up. In my experience you can use on h4 or lower with default settings no problem.
You can tweak it 12 ways to Sunday, for me the defaults work great within my "indicator ecosystem" lol.

Bullshit. I never said any such thing. I have only said that the G/U M15 is my favorite pair and TF, nothing more.

All you have done here is take my very successful and profitable Stairstep system and polluted it with a handfull of lagging filters. It's like taking a champion race horse that's already winning 90% of it's races and adding 300lbs to it's back and then expecting nothing to change.

The Stairstep thread is now 8 months old with almost 500,000 views, and has a 5-star FF rating. We've had plenty of opportunity to add "filters" to the system -- but none are needed, so why bother.

EDIT: I entered this thread only because the OP has mentioned me and my original trading system by name. Since writing this message 10 hours ago the OP Dirtybrown has banned me. This means I can no longer post in this thread, or in any other thread that he starts, besides making this edit as I am doing now. In just the last 12 hours he has already added 3 more filters to this "system". Which means there really isn't a system at all. This is all just an excercise in ego for the OP, and threads like this one do not deserve the space they waste here at the FF.

The real Stairstep system is over here in case anyone wants to learn about a proven long term system with ZERO lagging indicators: http://www.forexfactory.com/showthread.php?t=302007

I can go back and find the threads that said as much, but I don't give a $hit.

Prove Laguerre/VSA are lagging indicators, I'd like to see that.

A huge problem for your system are the fake breakouts. Maybe this has been handled for somehow I haven't been on the thread in a while. The Gann line filters these false moves perfectly and address this huge flaw. Any potential breakouts need to be confirmed using a trend indicator, in my experience. Maybe you have another way now, and that's great.

Hi DB

You didn't post your "colorful" template

All settings are default?

cheers

EVERY MQL MT4 oscillating filter is lagging. If you don't know that, then you shouldn't be starting a teaching thread in the first place.

And VSA isn't reliable at the retail level. The ticks you see are NOT the actual Volume ticks the market is generating.

And I will pay you 10,000 for every post of mine where I said that Stairsteps only works on G/U M15.

Correct. As mentioned in the first post, all we are doing is filtering a trend indicator. the only other indi you have to add that I didn't post is a 50 period EMA, rsi, macd and stoch. I just leave it there for informational purposes. People like to get bent out of shape when they see too many indicators so I just posted the primary ones I use.

Ok thanks
cheers

You're entitled to your opinion on "every mt4 oscillator", you must have tried them all unsuccessfully. The only oscillators I seriously consider are Laguerre and Fisher. These work perfectly in combination on a 1 HR chart, I have made real money using these alone. So I don't want anymore blanket conclusions that are not backed up with examnples, please. And again, I use the breakoutbox as a component of my filtering and noting more.

On VSA, we're having a lively discussion on the yahoo metatrader's group with a number of traders becoming very profitable using VSA in metatrader. Just another blanket statement based only on your personal experience.

Here's 1hr Aussie. I would enter at the arrow I draw at the top when price dips below the Gann line within the box. Note that I do not wait for price to drop throuh the breakout box. If you play that game you will get faked out and lose money. Gann keeps us safe. An easy take profit target is either the yellow Sixths line or the dashed line. Either would work.

Here's a teaser for those not sure what VSA is all about, from the Cheat Sheet PDF I posted. The concepts teach you to be a contrarian. So many traders let their guard down (myself being one) when they see their trade go higher and higher into profit just to see it vanish if the absence of a trail stop.


Volume Analysis
VSA teaches that weakness comes in on up moves and strength comes in on down moves.

1. Bullish volume is increasing volume on up-moves and decreasing volume on downmoves.

2. Bearish volume is increasing volume on down-moves and decreasing volume on upmoves.

To Smart Money "accumulate means to buy as much of the stock as you can, without significantly putting the price up against your own buying, until there are few, or no more shares available at the price level you have been buying at. This buying usually takes place after a bear move has taken
place in the stock market as a whole...The lower prices now look attractive." [TW] This is a good time to incorporate Williams perspective on The Path of Least Resistance:

1. It takes an increase of buying (demand), on up-days or bars, to force the market up. The appearance of no Demand (low volume) on an up-move, shows little or no buying. Which means, if there is no trading going on in one direction, the path of least resistance is generally in the opposite direction.

2. It takes an increase of selling (supply), on down-days or bars , to force the market down. The appearance of no Supply (low volume) on a down-move shows little or no selling pressure. Which means, if there is no trading going on in one direction, the path of least resistance is generally in the opposite direction. VSA is the combination of analyzing volume to price spread in the context of the background which includes the general market and multiple time-frames. It is within the context of the background that volume shows it's weight in the final analysis: "It [volume] is often looked at for confirming evidence of price trend and price reversal patterns. For patterns such as triangles that are the product of a period of indecision or consolidation in stock price, volume is usually light during the formation of the pattern and increases on a breakout from the pattern. For any pattern or trendline penetration, a breakout with increasing volume is more an indication that prices will continue in the direction of the breakout than a breakout on low
volume."[site.redacted]


Market Forces of Supply and Demand
Markets move off of the imbalance of supply and demand. This is what VSA identifies so clearly on bachart: An imbalance of supply and the market has to fall; an imbalance of demand and the market has to rise. Here it's turned around to see how the market moves on No Demand or No Supply. There are two Low-Volume Tests SM uses, before turning a market, that are somewhat easy to spot. The first test here illustrates weakness before a bearish move, that is, weakness in an uptrend ("weakness appears on up bars," TW). This is called the No Demand Bar: a narrow spread UpBar with low volume that Closes in the lower half of the price-bar. The No Demand Bar shows there is very little activity from the SM. It is this "no demand" from SM that causes a market to reverse on the tops. The low volume shows that their participation is limited in the up move because they know the market is weak. Their campaign will include giving the move an extra nudge to clear any stops. In the end, triggering stops is a very profitable manouver for them. This is one of the times they will trade away from the true value of the market to cause
confusion - then panic, when the market turns.

Those traders who were anticipating the top and took short positions with stops in that area are forced to cover away from the true value then get them back at a lower price. At this time, the news is talking up the bull market day - if the reporters haven't done it on their own, there is always an
analyst (manipulating SM) calling in.

NOTE: When "wide spreads" are mentioned, this means the volume bar will be of a long length either red or green. As opposed to the actual spreads you pay when etnering a trade. It's not that kind of spread! Essentially Spread refers to price distribution of a given candle


To penetrate old resistance there might be a sudden wide spread down on high volume, punching
through, or a gap down [this is like jumping the hedge]. You may see a drift sideways, then amble
through the zone, or a snap move down through a gap. Why this should happen is always open to
discussion. The professionals in the markets are aware of resistance levels, not through some
complex theoretical analysis, but because they have the orders on their books and they can see both
sides of the market as the orders from around the world arrive. They will also see when it becomes
difficult to attract business at certain prices [no demand]. What we can be sure of is that resistance
to price movement is a reality whether upwards or downwards."

The Tests:
No Demand Bar
The first Test here illustrates weakness before a bearish move, that is, weakness in an uptrend
("weakness appears on up bars," TW). This is called the No Demand Bar: a narrow spread UpBar with
low volume that Closes in the lower half of the price-bar. If there is a NO DEMAND bar, it is an up bar that
has less volume that the two previous bars.
No Supply Bar
The No Supply Bar is another narrow spread DownBar with low volume that closes in the lower half. It
is used to find strength in a downtrend ("strength appears on down bars,” TW). Here we're looking to
establish the cause of certain price movements. The “cause” is quite simply the imbalance between
supply and demand in the market, which is created by the activity of SM or volume. The effect is a
change in price. Volume is the SM indicator. These low volume bars indicate SM is mostly inactive,
watching their tests for strength or weakness to unfold.
VSA teaches that strength comes in on down bars and weakness comes in on up bars.
Strength is buying (demand) and weakness is selling (supply).

There are two tactics that are used when a Trend is about to reverse: the Selling Climax and
Buying Climax.
An important point here is to know the tactics of retracements versus reversals? Retracements have:
a lack of volatility; small Spreads; and decreased Volume. Reversals, on the otherhand, have:
increased Volatility; large spreads; increasing volume. To see this on a chart simply draw arrows for
the stock movement and the volume. In retracements the arrows are in the same direction; in
reversals the arrows will be in opposite directions.
The Beginning of a Down Trend
Markets do not like very high volume on up bars because something big is happening. Either you
have seen a Buying Climax which will mark the end of a rising market. Or professional money is
prepared to buy stock from old locked in traders from the last previous high. This is not charity work
by the money men but absorption because they are still bullish and are anticipating even higher
prices. [TW]
A buying climax in an individual stock is usually easy to recognise. The stock has already been in a
bull move, but suddenly the price starts to rocket up. The news is good, in fact very good. The Herd
gets excited on all this activity and starts buying.
The Buying Climax
There are two types of buying climactic action seen in the indices with only one major distinction.
After a substantial bull move has already taken place, the market moves even higher on wide
spreads up. Good news, excitement, elation abounding. You observe the volume is Ultra-high. This
indicates that you may have seen a buying climax. [TW]
Those traders that have been waiting to buy start buying - afraid they will miss out on a bigger move
up. Even traders that already have positions, buy more. This gives the SM a chance to unload huge
amounts of their holdings in this stock, bought at lower levels, without moving the price down
against their own selling. After this Buying Climax they sell the stock short, knowing that there is no
support or demand at these high prices. This process guarantees huge profits.
Finding Strength in a DownTrend
One of the most powerful ways to find indicators of strength is testing for supply. They do this to see
if there is still any supply left. They do this by quickly lowering the price—if the price closes near the
top and has low volume it indicates that there is no supply. Another big sign of weakness is an
absorption volume bar. It indicates that the downtrend will soon stop and either reverse or range.
Yet another sign of strength is a reverse upthrust… t means the trend will usually reverse
immediately.

[VSA Quick Guide]
As can be seen in the chart below at first there is high volume to stop the trend - SM is overmatching
the new Demand of the late-comers with a high volume of Supply. The market could move
sideways while SM absorbs the remaining supply and runs tests. When SM is convinced there is no
supply left they will use an UpThrust Trap to lock-in the Herd. Their judgement is clouded by the
rapid mark-up with its accompanying good news, and the anticipation of even higher prices.
Climactic action is hall-marked by wide spreads up on very high volume, but the price does not
respond upwards. A good trader will now be looking to short the market or sell calls on any low
volume up-move (no demand). [TW]
The Beginning of an UpTrend
To create a major up trend you need to see the extremes of this process at work. This is known as a
Selling Climax and will mark the low point of the trend. The Selling Climax phenomenon occur
The Beginning of an UpTrend starts before the down trend ends. It is the last phase of the down
trend the herd has liquidated their long positions and possibly are taking short positions. The major
move to change the trend will come when SM unloads most of their holdings.
Finding Weakness in an UpTrend
The bar after the upthrust determines what to do—if the bar is a downbar and has high volume then
the trend is reversing and it might be time to close the buy and sell. And if the high of the bar is
near the low of the upthrust then that is also a sign of weakness in the uptrend. If the bar after the
upthrust is an upbar then the trend is not weakening. Another sign of weakness in the uptrend is
when the price has been moving up with high volume and then encounters a downbar downclosing
with high volume. Also watch out for No demand bars as they may be another sign of weakness.
Upbars with high volume with narrow spread and closing in the middle or low indicates is a possible
indicator of weakness as well – look at the later bars to confirm.[VSA Quick Guide]
The Selling Climax
The news will definitely be 'bad' This, together with the pain of previous falls will panic the herd into
selling. This will give professional money the opportunity to place substantial amounts of money into
the market at bargain prices. Ultra wide spreads down, with exceptionally high volume, usually
closing on or near the highs of the day. If the price action does not close on the highs but on the
lows and the next day is up closing on the high, this can be regarded as similar action. Add more
bullishness if the news is really bad. [TW]
The classic characteristics of a selling climax:
• Abnormally large volume
• Wide spreads
• An acceleration of the downtrend
In the chart above there is a Test for supply (2nd bar in red box), then only light volume and a
Spring Trap. This was the go-ahead for the rally to begin.
Back to Wyckoff: "Abnormally large and swift volume expansion marks a turning point."

UpThrust Trap
The first Trap illustrated comes during a Re-Distribution in the Mark-Down Phase in a downtrend.
SM has accumulated more supply and is ready to sell. The UpThrust Trap (aka: Bull Trap). This is
a wide spread UpBar with an increase in volume, punching up through a trend line.
Price has rallied into the Supply-Line Resistance. SM begins the UPThrust Trap and quickly buys
on higher volume causing a Spike in the price spread. Bulls jump in at the higher price level.
Then, just as quickly, SM sells. The Herd is trapped. The smarter ones will sell while the price is
falling, thereby, cutting their losses short; the dumber ones will hold longer hoping for a miracle
reversal to save them from their rapidly growing losses.
Spring Trap
The above chart shows the Spring Trap (aka: Bear Trap) as the reverse of the UPThrust Trap,
though less volume was needed for SM to achieve their goal. The herd's short sell triggers are hit
and they panic as price turns against them.