StoGAPtic strategy

Hello.
I felt it is now time to share with you guys my StoGAPtic strategy (trying to be creative with the name here… don’t kill me if you do not like it…).
Writing down my StoGAPtic strategy and presenting it to other people forces me to carefully think it over, finalise it, and even remember it better. Also, and this is very important to me, I am sharing this so that others can test it, try it, critically review it, and hopefully perfect/improve it. I hope you agree.
Also, my hidden secret is that I actually want more and more people to use my strategy… because the more people think like me and act/buy like me, the more likely it becomes that price will move in my direction and more likely for me to make money , right?? I do not understand people who “hide” their strategies… Actually, I do… Assuming they are not stupid, they do not disclose their strategies because they know these strategies do not work in real trading and therefore they try to sell them to others. Anyway, let me not go into philosophical blahblah…

StoGAPtic basically stands for Stochastic Gap analysis since I am using and comparing several stochastic indicators in the same indicator window (I used to have 4 stoch lines but reduced them to 3 as I think these are enough). I am attaching my template and all the indicators that appear in it.
My theory behind StoGAPtic: The stochastic gives me an indication as to how extended (you may also call it overbought/oversold) the current price is over the chosen period. For most forex pairs and in most of the timeframes (especially H4, D1 and W1) the shortest period/cycle that can be identified is 5-7 candles. Thus:
- I am using Stochastic 5 period (Blue line) in order to see where the current close is versus this shortest identifiable cycle of 5-7 candles. Note that I am only using %K (I do not care about %D).
- Then I overlay Stochastic 25 period (5x5; Salmon line) as it would roughly correspond to the next higher timeframe; and Stochastic 125 period (5x5x5; YellowGreen line) which would correspond to the next higher timeframe.
Please see the examples in the image below.
IMPORTANT NOTE: I do not rely on the Stochastic gaps only. They should only be used in conjunction with trendlines/channels and S&R lines.

As with any strategy, this is not a flawless way of making your analysis. Trading and chart reading is and will remain an art. Continuation patterns are easier to identify and are more reliable with the StoGAPtic; I am still struggling myself with the reversals… I identify them too early and therefore often enter too early… cannot overcome the greed… As you know psychology is a major part in trading… This is why I put in BIG letters “Takes at least 2 candles” to remind myself that reversals (and even continuations) do not happen suddenly, especially on H4 and D1 charts.
When I look at the charts in the morning, I have to constantly remind myself that there are still at least 4-5 H4 candles until the end of the trading day; thus, should be patient and wait for the identified reversal until the next D1 candle.

I will be posting my analysis using this strategy in this thread; I hope others can do it too.

I would like to ask those of you who would like to respond to be polite and useful/constructive with your comments. I am offering you my learnings and knowledge and hope to get some of your knowledge, too. I do not consider very useful posting “entered long at… level” or “I exited with a profit of 20 pips”… I would really like to see my thread as source of market ideas, visions and predictions.
Thanks to all in advance for any contribution to the StoGAPtic strategy. And, please, do not use this strategy in real life trading unless you master it…

Garbage.

well... this is what I meant when I said please be polite and constructive with your comments. Maybe you could at least explain why you think it is garbage. I can learn something from it.

This is how I see EURUSD developing using StoGAPtic. Of course, predictions are pure inventions of the mind, it is better to be reactive rather than predictive... Using stoch gaps requires constant monitoring and reaction based on the moving stoch lines.
At the end of next week will revisit and see how this developed.

I really like the idea of this thread,i also use MTF for analysis and obviously higher time frame rules.So thanks for sharing ,I will participate in your project.

you are sharing one part of the strategy,and the sole puporse is to use other traders to contribute and improve your project,isnt it? Many traders do the same and when the product is ready they lock the product.

don't judge other traders if they don't share their strategy.may be they have their reasons and afterall it is a work for many hours and resources.I don't share my full strategy because free stuff is not valued and there are so many garbage traders here who are counter productive. but I do share my trading journal.

Yes, indeed. Many eyes see better than 2, and many brains think better than 1. Thank you in advance for any thoughts or advice you may have.

I agree, people are free to do whatever they like, they have their reasons... I still do not understand why would anybody hide a winning strategy-. Honestly.... Nobody can use your strategy against you.. Nobody can make money with your strategy at your expense (OK, maybe your broker can...). And, just to assure you, I have no product to lock, I want to make money trading, not selling products. If I stop posting here one day, it will be because I got tired.
The main reason actually to start this threat is to force discipline onto myself. I take decisions too quickly, not always thinking over the situation and I have been entering early into trades. To avoid that, I need more thorough analysis and PATIENCE. Posting on a public forum hopefully will help me with the discipline, will force me to do more thorough analysis, and eventually teach me some patience...
In any case, this is not a preparation for a product. I am not a businessman.

My expectations for AUDUSD. I am seeing a down trending week (Oct. 28 - Nov.1). Only on Oct. 28 and 29 we should see an up-move to the upper blue channel line (somewhere around 0.6850); this should close the stochGAP between the salmon and the green lines. Then the down trend should resume going through several trendlines to reach 0.6750 (if all these lines do not hold, of course). 0.6750 looks too low, however, there is a large stochGAP on W1 chart which I am expecting to be closed by a move to at least 0.6750.

AUDJPY: there is a large StoGAP on the weekly chart (snippet from it in the blue box). It needs to be closed with a weekly move down. Also, price has been UP for 3 consecutive weeks; time to go down for at least 1, maybe even 2 weeks. I think the price should stay within the blue down-sloping channel for the whole of next week (Oct. 28 - Nov. 1). Because of the large StoGAP between the salmon and green lines on H4, it is not excluded price to go through the upper channel for 1-2 candles, which will close the H4 StoGAP, and will then come back into the channel (the green arrows scenario forming a false breakout of the blue channel).

EURCAD looks really hopeless today (Oct. 27), however, I am not expecting it to go further down. The monthly StoGAP is quite large and waiting to be closed (see the embedded blue box). W1 has completed a 4-candle cycle with all the 3 stochs at extremes. Price is right now sitting on a long-term support line (the lowest magenta on the chart) which already had two recent fake breakouts (on D1). We may see a 3rd fake breakout on Oct. 28-29 which will confirm the up-move from here.
Price got out of the blue channel, however, I am expecting it to go back in again. The down-sloping red trendline additionally provides support. Since the green stoch has barely entered the < 20 zone, I am not expecting a swift move early in the week. Rather, my expectation is for the price to consolidate around the green zone on Oct. 28 and 29 with a high possibility to break the upper blue channel line maybe sometime on Oct. 30-31 with a strong move UP on Nov. 1 with a weekly close target (on Nov. 1) of around 1.4600.
Unfortunately,I have only 1 StoGAP on the monthly; no other gaps to analyze for the moment. They will start appearing during the week and will clarify the next moves. In any case, in 5 days we will know more .
Profitable trading everyone !

Attached Image (click to enlarge)

Maybe the target of 1.09 for the end of next week is too aggressive, however, I am seeing strength in CHF (all pairs) for the next couple of weeks. EURCHF is looking ready for a major move down. Both W1 (blue box) and D1 (green box) are showing a large StoGAP (magenta circle) and H4 has been consolidating at the top ready to start the sell off. The target of 1.09 could be a bit optimistic but is definitely realistic. Whether we reach it until Nov.1 or the week after… remains to be seen. I do not see much potential for this pair to go up any time in the next week (Oct. 28 - Nov. 1).
This also means that all the other CHF pairs will be strong and therefore I will be focusing mostly on CHF for my trades next week.

What a relief….!! I just finished throwing 95% of all the rubbish trading books I have collected over the years… I feel cleansed… Really… All these useless books presenting the same complicated harmonics, spirals, astro-cycles, pitchforks, Fibonacci retracements, triangles and broadening formations, Wolfe-wave targets, 1-2-3 (A-B-C) systems, etc., etc… you name it…. Pages and pages… hundreds of them… And surely, they have clever titles “Predicting…”, “Mastering…”, “Encyclopedia of…”, “How to recognise…”, ”Understanding the myths…”, “How to spot…”, “Secret method…”, “Secret science…”, “Secret code…”, “Precision Trading… ”, “Trade like a Pro”, “Your way to financial freedom…”, etc. etc.. And the amount of people who have used the name of Gann to sell their books is just staggering…
These people have nothing else to say… just repeating over and over and over again the same stuff that does not work… They must be paid by the big boys to confuse us all… My office feels much larger now without half of my bookshelves… Actually, all of these books belong to the series “Books for Dummies”… just having different covers. Sadly, I wasted so much time trying to “learn” from them… Not any more.
My first biggest disappointment were the candlestick patterns… Then came the Elliot Waves… then the harmonic patterns… plus other smaller disappointments like the fib ratios and pitchforks… Of course, they work some days… Anything would work at some point in time.. the question is does it work consistently ALL the TIME. I know, this is impossible… but then don’t make me pay for it. As many people in this forum have already said it previously, simple is gold, simple works, simple is easy and simple probably works better than all these complicated technics preached in the thousands of trading books.
Anyway, below is my main check-list of patterns I am going to consistently trade from now on. I mentioned in my first post that the stochastic gap strategy I am using is good for continuations but not reversals; so now I think (I hope) I came to a reliable way of identifying reversals, too. I have been entering and exiting too early; so now I will stick to the rules I have come up with and see how it goes.
Enjoy trading!!

As stated in the initial post of this thread, the stochastic GAP strategy works very well with continuation patterns but not so much with reversals. So, I kept exploring other patterns and came to the rules from previous post. They probably need a bit of explanation... I can explain best with an example.
I did a forecast on Oct. 27th for EURCHF saying it should start moving down. I was a day too early...



For a reversal to be confirmed, I am now looking for a Stoch.125 (green line) trend to be established ( as is now the case for EURCHF, see line on the stoch chart). This is not necessarily a divergence... it could be a divergence versus the price but this is not a must. The important thing is that the green stoch.125 line start moving down for a down-trend reversal to be confirmed. For swing trading, this should be observed on an H4 chartand the down move should continue for at least 2-3 days. For intraday-trading, this should be observed on M15 and then you could expect the move to continue for at least 2-3 H4 candles (ideal for a day trade)..
I am still seeing strength developing in CHF, whether it will indeed reach the target of 1.0900.... remains to be seen next week. I will keep monitoring the stochs.

Updating from my previous post, EURCAD did an explosive move UP... much more than my expectation.

Updating from my previous post on AUDJPY, I was too early with my prediction for a down move which started only today. I stated in my previous post "Because of the large StoGAP between the salmon and green lines on H4, it is not excluded price to go through the upper channel for 1-2 candles, which will close the H4 StoGAP...", however, it turned out it closed the stoch gap over 2 days, not 2 candles... I still think that target could be reached next week.

Some more theory, trying to explain more of how this works.
Below is the current NZD.USD D1 chart. You may want to study it in conjunction with W1 and H4 charts. For example, take the best entry points 2, 6 & 7 and go to H4 to see what happened then. Note that when a daily gap happens it cannot be closed the same day.... For any reversal on a daily chart we need the minimum of 2 candles (you may argue that a daily candle with a large wick can be also a reversal... but this should be confirmed by the lower H4 action).



Below is the H4 chart with more detailed action at Daily points 6 and 7.



So, what happens today (Nov. 1)? Reversal to the downside may happen if (and only if) the H1 TL at 0.6425 is broken to the downside and if we see a lower high on H4 Stoch.25 (as a minimum). Based on candle counting (the 5-7 cycles I mention in my first post), I think today will be more of an UP day. Too early for any down move.

I am seeing this as one of the best buys for this morning. Actually, all pairs versus JPY are going UP today. CHFJPY is even better to buy.

Finally bought EURJPY with a TP = 121.00. I saw strength in EURCHF, so decided EURJPY would be a better buy. Let's see where that brings me today :-)..

Why did I buy EURJPY this morning.
H4 (red box): Very large Stoch.5 and Stoch.25 gap confirming TL1 is strong. I expect now price to move UP to at least TL2 (my target price for this morning) but could easily be attracted by and reach TL3 by the end of the day.
H1: Higher lows on all Stoch lines which is a likely confirmation of a reversal on H1 in order to close the large H4 gap. Also, count the 5-7 candle cycles... we are just now completing a 2nd 5-7 cycle from the low. A new 5-7 H1 candle cycle is to start and should take us UP for the next 3-4 candles.



EDIT some minutes later: big boys are pushing price down to collect some stops but I do not trust them... Price should be moving up. Otherwise I should throw away my analysis :-)

https://charts.mql5.com/22/676/gold-...ns-private.png


Gold divergence....

Yes, indeed. Also look at the 5-7 cande cycles.