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LFX Trading Proverbs

  • #381
  • Edited 11:50am Jul 14, 2018 11:34am | Edited 11:50am
Quoting Zelias
Hi dk, Thanks for creating a wonderful thread here. I've followed some of your advice and managed to create satisfactory base for the first indicator. However, I'm struggling to find a second indicator/way that confirms the signals provided by the first. Would you be able to provide any tips or suggestions to get me in the right direction, please? Wishing you a nice weekend
You are welcome and I hope you understand the technique. Presumably you are using a moving average on your chart, so that is 1. Then you are probably using an oscillating indicator so you can track apexes, so that is 2. You can use any other oscillating indicator that can show similar, yet different, entries and exits. If they are the same, then you don't really need it, do you? lol. So, find another one that is close. Be aware that some will require different values for the periods because they have different math formulas. If you have a good period setting, you can even configure a MACD to do it, however I use a custom CCI and RSI. I have a MACD in my pocket though, in case mt4 is ever deleted and I cannot recreate my tools in mt5. I do not want to be too specific because I have found that everyone changes whatever I say or do anyway, so there is no point in sharing it. Also, I have no interest in creating competition for my entries and exits against anyone stubborn enough to leave it alone, lol. Finally I have different signals for ranges than trends, so I would probably have to write a book to explain it all. Hope this helps though. Having your own skin in the game will make it all more valuable and rewarding.
You cannot be extraordinary by being normal
  • #382
  • Jul 15, 2018 5:31pm Jul 15, 2018 5:31pm
Quoting dkrock
{quote} You are welcome and I hope you understand the technique. Presumably you are using a moving average on your chart, so that is 1. Then you are probably using an oscillating indicator so you can track apexes, so that is 2. You can use any other oscillating indicator that can show similar, yet different, entries and exits. If they are the same, then you don't really need it, do you? lol. So, find another one that is close. Be aware that some will require different values for the periods because they have different math formulas. If you have...
Hi dk and thanks for your answer - it's reassuring to know that it's another similar oscillator which could be used to confirm the first one. I'm doing exactly what you described with 2x MA's - one for the Trading TF and another for the Higher TF to minimise fakeouts when HTF is trending. Will give it a go with MACD as my confirmation indicator first, although I don't like the fact that it's difficult to measure apexes with it. In this case I guess I'll have to rely on the first indicator for that, or perhaps normalising the MACD could help improve its capability.

I'm very open-minded and would appreciate any specificity that could help on the journey to trading success. Am also extremely thankful for it and for what you've shared so far.

p.s.: I visited the other thread on my journey to find Equilibrium, but nothing beats doing the ground work yourself - hence, my only post in that thread.
  • #383
  • Jul 15, 2018 6:30pm Jul 15, 2018 6:30pm
Quoting Zelias
{quote} Hi dk and thanks for your answer
Nice to hear about your progress. As for the MACD, I meant use the settings you discovered for your MA, not 12/26/9, unless that is what you using. For instance, instead of 12, you might use 1, 2, or 3. You are looking for something to confirm the MA crossover. Instead of 26, use the MA you chose. Instead of 9, use the MA value or a factor of it, like 1/4, 1/2, 1, or maybe even 2 times the value of your MA; whatever fits your design. Also realize you can use more than one crossover line on an indicator, and even a Bollinger band if you chose. Note: Often the Bollinger band must be added to the indicator first, before the moving averages. The key is to align your crossover as a consistent signal near the majority of apexes. I learned that it is better to target a point after the apex to avoid a lot of whipsaw signals. If you do not like that design, you might also try the addends of your MA. For instance, if your MA is 50, then you could make your MACD 10 and 40, or 20 and 30, or 24 and 26. In this case, the value of the slow and fast would add up to equal the value of your MA. Also, consider using SMA instead of EMA, if your MACD formula allows it. Options, options, lol. As long as you know the technique, which it sounds like you do, then you can design multiple variations of achieving your signal. Good Luck.
You cannot be extraordinary by being normal
  • #384
  • Edited 4:30am Jul 16, 2018 3:53am | Edited 4:30am
Quoting dkrock
{quote} Nice to hear about your progress. As for the MACD, I meant use the settings you discovered for your MA, not 12/26/9, unless that is what you using. For instance, instead of 12, you might use 1, 2, or 3. You are looking for something to confirm the MA crossover. Instead of 26, use the MA you chose. Instead of 9, use the MA value or a factor of it, like 1/4, 1/2, 1, or maybe even 2 times the value of your MA; whatever fits your design. Also realize you can use more than one crossover line on an indicator, and even a Bollinger band if you chose....
Many thanks for the extra tips, dk. I had the general idea how to go about the MACD, but your answer gave me some further insight and options to explore. At this stage the formulas of the indis I use don't allow for SMA setting across all of them, so will need to stick to EMA for now. Thanks again and I might be in touch soon, if you don't mind.
  • #385
  • Jul 28, 2018 5:11am Jul 28, 2018 5:11am
Hi dk,

I seem to have missed your previous reply. In the notification I received on my email address I just saw the beginning of your message and can totally agree - it was a tough week (especially Wed-Fri) for me, even after switching to/trading off higher timeframes when I noticed the choppiness of the market. Could you PM me or repost your tips, if possible? No problems if you can't.

Enjoy your weekend!
  • #386
  • Edited 4:30am Jul 29, 2018 4:05am | Edited 4:30am
Yeah, I deleted it because most people do not trade like me, so the advice seems silly to give. I have fields set up around my indicators so I can see break outs from consolidation. If you do not use fields, then I was suggesting using an ADX to find dead spots that you can avoid being inside. I think Tuesday was the only really tricky one. The rest of the days seemed to give some signaled swings and were not mostly consolidating whipsaws.

Also, if you do trade like me, then you are really trading the higher time frame by using the lower one. When the market is somewhat flat, then I suggested using the higher time frame of your template to lower the number of signals. You know you are definitely in a range, so since you normally are trading the higher time frame range anyway, then just go to it and trade it. Not a big deal. If you traded through February, you can trade through now. Like I said back then, I went to the higher time frame and just muddled through it. Once the range increased, I dropped back down to the normal template.

So, by trading fields, or the ADX of the higher time frame of your template, you get less whipsaw and can probably make a little profit. Maybe not as much as you are used to, lol, but we were just making over 100 pips a day per pair, so dropping to 30 pips or so shouldn't be that much of a problem. Remember, it is just about following the math, not the money, and not your emotions. Take what the market gives, good or bad, and keep pushing on. I generally lower my risk in case I get taken out by a spike candle. Other than that, I just keep following the process, over and over and over.

On the other hand, if you cannot profit, then you can see you have some issues to repair. Like always though, when you are reviewing, target only the trades that would have been profitable and ignore the trash. You only make money on vertical movement. Make sure you have that signal first, then figure out how to depict between good signals and bad ones. It might take time. It took me years, but in the end, it is worth it. Better to know when to profit, but just as good is knowing when to sit out. You know? The Sweet Spots. Good Luck.

PS.
I am not sure if I ever made it clear or not, but my main objective for my trading technique was always to identify consolidation and either exit or jump over it. I have created templates that did each. By concentrating on identifying these areas, I naturally also looked for clues as to when they were over and I could safely enter the market again. That is why I use advanced techniques that I know I have never fully explained. It took me a long time to develop and fine tune this design and I am not really ready to make it publicly available. Occasionally now I might lose on a head fake spike, but overall the vast majority of my past losses used to come from getting stuck in consolidation. That is why I studied it so intensely. Not losing in those areas was more important than winning in the easy ones, lol. I got tired of giving my profits back. So, if this is a problem for you too, then perhaps you want to focus on how to identify consolidation zones and when they end too. Anyway, that is why my comments sound like they do. I hate consolidation areas, lol, and studying them is what made me successful. That is also why you repeatedly see me comment about ridiculous support/resistance lines. The banks convince you that is how to trade so they can manipulate you and steal your money when price approaches major ones. Those areas often become the whipsaw consolidation zones. They spike back and forth, activating pending orders, causing indecision and panic on market orders, and basically steal as much of your money as they can. I don't see any reason to trade like their robot, but unfortunately 95% of so of traders disagree with me. All good. It's their money. Again, I cannot say it enough, but you only make money when the market is moving vertically.
You cannot be extraordinary by being normal
  • #387
  • Edited 5:17am Jul 29, 2018 4:56am | Edited 5:17am
In the attached pic I am showing an example of what I mean about the ADX. I would not normally use it, but when my normal indicators are fluttering back and forth over each other, and it is hard to see when a real breakout occurs, this view aids in viewing the signals. Remember I am trading multiple pairs, so the easier it is on my eyes, the better, lol. I removed my oscillating indicators from the pic, so you just have to trust me on their signals, lol. Since I am on my higher time frame in a ranging market, I am using my range signals for alerts.

Trade 1. This is an abnormally late entry as the market has been open for awhile. You don't see how my other indicators signaled, but you see I got a range signal on the chart and the ADX shows going above the level line for a sell. According to my range signal the trade ended two candles earlier. The ADX shows it end one candle earlier, My Blue Line Fever did not agree, so since I was ahead in pips I rode it out a bit to see what would happen.

Trade 2. My Blue Line Fever remained in sell land. Since I know the market is ranging, I only want to take high probability trades because otherwise the move might be too weak to cover the spread and make profit before the reverse signal. If I had fallen for that late sell signal, the following spike candle would have taken the pips back. As you can see the ADX also shows a dead zone. My main indicators are showing buy but still in the sell zone. That is how I know the market sucks, lol, and not to trade yet. No trade.

Trade 3. I get a high probability signal from Blue Line Fever and a crossover on the ADX. It is one candle late, but better to be safe than sorry in an unstable environment. While Blue Line Fever showed an entry, my validating indicator to it did not show a "high probability" one until this candle in the picture. I wait to take the trend signal for entry, rather than the range one, to improve the probability since I was just in a crazy consolidation. When the range signal shows reverse, I exit. The market goes dead again, so I do not make another trade.

The swings are small and not what we are used to, but they are still there. If you try to do what I do, then you probably hate consolidation too. Hope this technique saves you some money. Good Luck.

Attached Image (click to enlarge)
Click to Enlarge Name: adx.png Size: 20 KB
You cannot be extraordinary by being normal
  • #388
  • Jul 29, 2018 5:59am Jul 29, 2018 5:59am
Hi dk,

Thank you so much for sharing this again and elaborating on it - it's highly appreciated!

I believe to get pretty well the ideas behind the concepts you've outlined and will definitely be looking into them, starting today.

I didn't trade using this method back in February, but will be sure to go back and study/backtest that period again, now more thoroughly and with different "eyes".

For the timebeing I'm using levels on the indicators only for the apexes and use those to take profits/get into the opposite trade when conditions are right. For consolidating areas I use a combination of: signal from the higher timeframe + pattern recognition (wedge, triangle, trendline) + key candle beyond point of no return. I still get faked out at times, but the risk is well defined and am working hard to improve on those (now having the ADX to try out). As you say, consolidation areas are the worst enemy for now

A few questions I've got on the ADX (as I've never used it thinking it's lagging too much), if you don't mind:
1) Is the ADX type the built in one or based on the Wilder's DMI?
2) Would you tailor the periods to your equilibrium MA (i.e. same. fraction, double)?
3) From your image and explanations I get it there are two potential setups to get ADX confirmation - A) the Main Line to cross above the 20 level & B) DMI+/- to cross above DMI-/+ and above 20 level. Is my understanding correct?

Sincerely
  • #389
  • Edited 9:28am Jul 29, 2018 6:33am | Edited 9:28am
I agree the ADX can be lagging. That is why I suggest using it with the design you already have. It might help you define trouble spots. You will have to tailor the settings to match your design. I use a normal ADX, not one modified by another trader. Those are tailored for whatever they are doing, not what I am doing. I made it mostly align to my proven signals, merely as a backup tool for consolidation. I normally do not use it, but as the market kept consolidating into another day, then another, I decided to use it to try to help target the field breakouts and when I could expect the market to be stuck inside the field. It came to me in a dream, so I thought I would check it out, lol. It seems to be handy under these conditions. Once the market starts swinging again, I probably won't use it, but who knows? Early in my trading day the market is quiet, but I know the signal for its end. However, if the ADX aids it, why not use it? Until it lies, I might give it a chance, lol.
You cannot be extraordinary by being normal
  • #390
  • Jul 29, 2018 7:55am Jul 29, 2018 7:55am
I matched the ADX up to normal swing trading and it is a little off from my signals, but not too bad. Not sure I will use it yet, but perhaps an alternative for someone else? If you have difficulty finding the end of swings and trends, it could be useful. It looks like it stutters a bit when the momentum slows, but remember it is trying to find dead areas too, lol.

Attached Image (click to enlarge)
Click to Enlarge Name: normal.png Size: 30 KB
You cannot be extraordinary by being normal
  • #391
  • Oct 21, 2018 6:16pm Oct 21, 2018 6:16pm
I have stumble upon your LFX thread regarding your use of indicators for your specific approach. My question is do you think you would be just as profitable today without using indicators and only using price action/chart patterns that you have learn to identify over your decade of trading. Or are the indicators paramount to your success? Curious to what you have to say.
  • #392
  • Edited 8:26am Oct 25, 2018 8:10am | Edited 8:26am
Quoting chartsndream
I have stumble upon your LFX thread regarding your use of indicators for your specific approach. My question is do you think you would be just as profitable today without using indicators and only using price action/chart patterns that you have learn to identify over your decade of trading. Or are the indicators paramount to your success? Curious to what you have to say.
Hello. From my understanding, price action is candlestick trading, so NO, it is of no use to me whatsoever. Also, I could be wrong, but I don't ever remember seeing a price action warrior have an exit plan. I think they just make up a profit target, based on nothing, and use a stop in case they are wrong. Since they aren't measuring anything, they have no idea what they are doing, so that is the only choice they have. If the trade goes well, they are simply out of it after they hit their target. If it goes well, then bad, I guess they let it ride to the stop. I don't really know. Not having an exit strategy means you are only trading with half ability. I prefer to limit guesses regarding my money. Again, I could be wrong, lol, because I see so many missing components when I look at price action discussions that I ignore them.

I used to work as a business consultant, compiling data into charts and equations to predict future demands, positive or negative. I use similar techniques to trade. Without a sample size sufficient to predict current market direction, I would definitely lose many trades due to head fakes, consolidation, weak reverses, and news spikes. If you want to do other things, it is all good. But, once you start risking your money, it becomes a matter of consistency. I can only make money on vertical movement, so there is no reason to trade any other pattern. If you are not measuring order flow against momentum, then I have no idea how you could find those areas. I simply measure averages against their apexes and apexes against their averages. It requires an indicator capable of measuring that range of movement on a consistent basis. Probability is based on the average of averages. Sports uses it. Casinos use it. Science uses it. Businesses use it. I use it. Without that data, you have no probability and are merely guessing. If you treat trading like a video game, then guess away, lol, but if you want to profit, I suggest using probability. There is no probability in a candlestick nor in a line connecting two highs/lows. If you trade like that, each trade you take is a guess, based on history, which is a closed trade, or on the current candle, which is not necessarily the market direction.

Hope that explanation is not too complicated. You can choose to trade however you want. I explored many techniques over the years, mostly to understand why the market did what it did at certain points. That is why banks tout support/resistance techniques so much, so they can know where you plan to enter and exit and then manipulate you emotionally to steal your money. I don't trade support/resistance. That is fake, projected price containment, based on dead trades. The current trade, the next trade, and all future trades, are all unique events, and the previous trades have nothing to do with them, yet 95% of traders, supposedly, trade the last trade all over again on the next trade, without any probability. So, no thank you. That is not how trading works. It is easier for me to average the buyers against the sellers and go with the flow. Good Luck to you with whatever you do, or think you do. I prefer probability.
You cannot be extraordinary by being normal
  • #393
  • Dec 29, 2018 1:41pm Dec 29, 2018 1:41pm
Quoting dkrock
It is easier for me to average the buyers against the sellers and go with the flow.
Great thread -- lots to think about.

When you mention buyers and sellers and "going with the flow" -- could you be a bit more specific. I'm not expecting the magic sauce -- but I could use some help getting pointed in the right direction. I develop (for personal use) and trade portfolios of EAs and continue to experiment with a variety of different indicators and combinations. Would you consider the "Money Flow" indicator a useful tool for monitoring the flow of buyers and sellers?

Thanks...
  • #394
  • Edited 11:19am Dec 30, 2018 10:50am | Edited 11:19am
Quoting robots4me
{quote} Great thread -- lots to think about. When you mention buyers and sellers and "going with the flow" -- could you be a bit more specific. I'm not expecting the magic sauce -- but I could use some help getting pointed in the right direction. I develop (for personal use) and trade portfolios of EAs and continue to experiment with a variety of different indicators and combinations. Would you consider the "Money Flow" indicator a useful tool for monitoring the flow of buyers and sellers? Thanks...
The whole thread discusses that, so trying to type all my posts into a new single post doesn't make much sense to me. Did I ever say "Money Flow" indicator? Not sure what that is. If I mentioned something like that previously, sorry, I don't remember doing that.

Price cycles. That means it has a high, a low, and a middle. If you determine an appropriate middle and then use an appropriate oscillating indicator to measure the high/low apex from the middle, then you have a chance to profit. People who draw lines are not using the prices in the middle. They are containing price movement by connecting highs and lows. Their strategy then becomes waiting for price to reach some line that connects historical trades and guessing if price will go through the line, or bounce from it. Since they have no middle value, they have no probability. The sample size of a line touch is "1". That is not a very big sample size to risk money. You are simply betting on heads or tails, black or red. That is why they lose. If you can see the apex of price across two time frames, then you simply trade the opposite direction, because price cycles. Many traders get "trend" fever, which leads to emotional trading as they try to ride out the dips. If they traded the range instead, the emotional aspect is limited and the profit potential increases.

If you are watching a basketball game, then you will notice they use a scoreboard to track how many points each team makes. Sometimes one team leads the entire game, while other times the lead switches back and forth. If you graphed it, you would end up with something similar to a trading graph. You can graph the two different values and compare them visually. That visual representation is how we see trading graphs. If you want to be a better trader, then it makes sense to understand graphing, which I think few people do. Since you cannot write an equation for the actual data points given during a trading period, then you have to create one of your own. If you are drawing lines connecting dead trades, or looking at the shape of a candle, or guessing what a news release will say, then you are not measuring price movement and obviously have no equation to determine future possible values.

My trading design was inspired by thinking about traveling down a river. You can travel in the middle, or go to either shore anytime you want. Meanwhile the river continues to flow in one direction. The river bends as it flows. So, the river has a constant movement that bends and you can also bend yourself within the path of the river. If the river is your primary route, and you can see the bends in it, then whether you go from shore to shore, or stick in the middle, you can also navigate the bends. Even if you completely turn around, the process is the same, but you are fighting the current. A trading graph works much the same way in that it constantly moves to the right. It has a primary direction, up or down, as well as swings within it (the bends). Meanwhile, world-wide traders make buying and selling decisions (travel to the shore). If only a few go to the shore, it is generally a wrong decision, or head fake. If the size of the group leaving the middle and going to the shore increases substantially, then you get consolidation because the group has stopped traveling. When the group is in the middle and navigates the bends, you get a swing. The task is to keep track of how many traders are in the middle, and how many are going to either shore. If you trade support/resistance, or price action, then you are only looking at one shore. If you are in the middle though, you can see both shores, as well as the upcoming bends. I created the middle and the shores and simply monitor traders as they navigate the river with me.
You cannot be extraordinary by being normal
  • #395
  • Edited 1:24pm Dec 30, 2018 1:08pm | Edited 1:24pm
Quoting dkrock
My trading design was inspired by thinking about traveling down a river.
Wonderful analogies -- tracking the basketball scoreboard and traveling down a river. I get it...

You did not mention "Money Flow" -- that's me trying to interpret something you said. You mentioned "flow of buyers and sellers" and the Money Flow indicator came to mind since it is the only indicator I know of with "flow" in its name. I guess what I'm curious about is given we only have tick data to work with (price, volume, timestamp) then how does one monitor buyers and sellers? The Money Flow indicator takes into account volume and price -- and that's why I asked.

I mean "monitoring the flow of buyers and sellers" is a great way to think about trading. But what data or tools do we have to do that? Since volume and momentum often times precedes price, then I was thinking along those lines. Back to your river analogy -- how do you see the bends before your boat crashes into the shore because it didn't make the turn in time?

Again -- thanks for your response and insights. Lots of food for thought...
  • #396
  • Dec 30, 2018 3:31pm Dec 30, 2018 3:31pm
Quoting Neio
The next thing I need to know is how to identify head fakes. Especially when coming out of consolidation. I think this indicator could be a good filter. Will try it out next week. {image} {file} I believe it identifies possible head fakes as follows: 1. Two consecutive ups, with the second high-close distance greater than the first one. 2. Vice versa for two consecutive downs. The arrows can probably be ignored during trends especially if you are riding it. I would use them to filter out entering reversals or coming out of consolidation. Anyway...
Hey Neio,
Just sharing that the indicator you shared, flipped up tell a very interesting story from a continuation/consolidation break perspective. Take a look and let me know what you think...
Attached Image (click to enlarge)
Click to Enlarge Name: Reversal Indicator as continuation pointer.png Size: 74 KB
Attached File(s)
File Type: mq4 Reversal Continuation Pattern.mq4   4 KB | 446 downloads
  • #397
  • Dec 31, 2018 7:31pm Dec 31, 2018 7:31pm
Quoting dkrock
Wall Street Trader Song
@dkrock -- I've been browsing through you older posts and came across Post #188. It made me smile and want to dance. Your posts are the best -- I'm learning and enjoying at the same time. How often does that happen?
  • #398
  • Feb 1, 2019 11:28am Feb 1, 2019 11:28am
Quoting carsten103
{quote} Thank you, thank you, thank you. I just increased my settings on my indicators to mimic higher tf's and the range increased dramatically (slowed indi's down). I'll play around and see which settings work the best with semafor.
Hi carsten, how did you achieve this. I cant seem to wrap my head around it. How do I increase my indicator settings to mimic higher time frame and increase range? I use a 12 SMA on a 5 minutes chart. Thank you
Market moves up or down
  • #399
  • Feb 2, 2019 12:49am Feb 2, 2019 12:49am
Quoting David0
{quote} Hi carsten, how did you achieve this. I cant seem to wrap my head around it. How do I increase my indicator settings to mimic higher time frame and increase range? I use a 12 SMA on a 5 minutes chart. Thank you
Hello. You can do it two different ways. There is not much difference between them, but some indicators are not coded to interpolate, so you get a better view by adjusting the period setting vs the time frame setting.

The first way then, would be to use a multiple time frame indicator and place it on the same chart. You really only need to measure two time frames. If you add a third, then your signal becomes the third time frame, which moves you away from the lower time frame signals.

The second way is to adjust the period settings against the time frame. If you are trading the 5M and want to get an idea of how it appears on the 15M chart, then multiply your period setting times 3. 5M x 3 = 15M. If you want to see the 30M, it is times 6. Just divide your two time frames into each other and use their multiple to increase the period setting.

So, if you want to see a 12 SMA for the 5M and 15M on the same chart, you can either use a moving average multiple time frame indicator to make a 5M and 15M SMA 12, or you can use SMA 12 and SMA 36. There is a slight difference, but it rarely affects decisions.

Here is an MTF moving average indicator. TrueTL specializes in multiple time frame indicators. Some are free, while others are for sale. I don't own the company nor am compensated by them. It is just one recommendation that I think is a bit superior to other versions. Hope that helps. Good Luck.

Attached File(s)
File Type: ex4 TrueTL MTF MA.ex4   48 KB | 616 downloads
You cannot be extraordinary by being normal
  • #400
  • Feb 2, 2019 1:13am Feb 2, 2019 1:13am
Quoting dkrock
{quote} Hello. You can do it two different ways. There is not much difference between them, but some indicators are not coded to interpolate, so you get a better view by adjusting the period setting vs the time frame setting. The first way then, would be to use a multiple time frame indicator and place it on the same chart. You really only need to measure two time frames. If you add a third, then your signal becomes the third time frame, which moves you away from the lower time frame signals. The second way is to adjust the period settings against...
Thank you Dkrock for stepping in to reply. I will try different settings with the attached indicator as soon as I return from work by Gods grace. I'll let you know what I find out and where I find difficulties. I'll probably upload a chart if need be so you can understand me better.
Thank you DK
Market moves up or down
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