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  • #561
  • May 3, 2007 6:01am May 3, 2007 6:01am
Quoting bagovino
Spud,

Do you use this new 5min. scalp system on the eur/usd only?

B.
Have tried it on gu and eu only so far...i think any low spread pair would work.
  • #562
  • May 3, 2007 6:03am May 3, 2007 6:03am
Quoting skyline
Thx Spud & Slick for this new gems for us.
A little question : is still the stoch(5,3,3) on M5 chart ?

cheers,
Skyline
I use 5,3,3
  • #563
  • May 3, 2007 8:13am May 3, 2007 8:13am
Quoting Spudfyre
I use 5,3,3
Thx Spud
  • #564
  • May 3, 2007 1:45pm May 3, 2007 1:45pm
Interesting how EU H1 just re-crossed before M30, M15 or M5.
This takes you out, right?

FXS
  • #565
  • May 3, 2007 3:03pm May 3, 2007 3:03pm
[quote=Spudfyre;1431221]Quicker Pipping
--------------
Spud quote ".....How this works is to trade the 5M stoch in the direction the 15/30 stochs are pointing..given they are close to the beginning of their run long or short from 80 or 20 as per the 80/20 rules I have spoken at length of here in this thread....."

Attached Image (click to enlarge)
Click to Enlarge Name: picture.jpg Size: 57 KB


Spud I am not sure why you say that
8-9 times out of 10 the cross in the 20-80 zone
is better then the cross into the the 20 -80 3zone

I believe here on this chart it wins every time or is so closs its hard to tell
(both into the 20/80 or the true cross - you have to use the candle that follows of coarse)
& some of the win diff were really really big!!
wins runs make up for the loses

just a thought!!
TEB
  • #566
  • May 3, 2007 3:24pm May 3, 2007 3:24pm
[quote=TEB63;1432075]
Quoting Spudfyre
Quicker Pipping
--------------
Spud quote ".....How this works is to trade the 5M stoch in the direction the 15/30 stochs are pointing..given they are close to the beginning of their run long or short from 80 or 20 as per the 80/20 rules I have spoken at length of here in this thread....."

Attachment

Spud I am not sure why you say that
8-9 times out of 10 the cross in the 20-80 zone
is better then the cross into the the 20 -80 3zone

I believe here on this chart it wins every time or is so closs its hard to tell
(both into the 20/80 or the true cross - you have to use the candle that follows of coarse)
& some of the win diff were really really big!!
wins runs make up for the loses

just a thought!!
TEB
Actually, your diagram shows exactly what I am saying....what I am saying obviously didn't translate well when I wrote it.

Thanks for clearing that up and the pic.
  • #567
  • Edited 3:39pm May 3, 2007 3:29pm | Edited 3:39pm
[quote=Spudfyre;1432089]
Quoting TEB63

Actually, your diagram shows exactly what I am saying....what I am saying obviously didn't translate well when I wrote it.

Thanks for clearing that up and the pic.
so you are saying get out of town before it crosses back out of the 20-80 zone?
which I think you would be safe because you have 2 cover charts over you then
& I would do that ... but that is a more risky move - believe you still win well over 70%
but have a SL in place as in this zone- it can move fast againt you & far!


TEB
  • #568
  • May 3, 2007 3:43pm May 3, 2007 3:43pm
Measuring Stochastic Elasticity

Almost sounds like a physics class!?! Anyways, for about 2 years I have been trying to develop a way to measure the elasticity of a stochastic move. Elasticity being how much price moves when the stochastic moves. Mathematically you can measure it in a ratio between price move versus stochastic move...or in pips versus percentage.

Today I found something that visually provides an elasticity measurement.

This requires the 5 minute time frame, a 5,3,3 stochastic and a 14,3,3 stochastic. Using this tool will save you countless early entries and late exits.

Below is a diagram of a 5 min chart. Price, 5,3,3 stochastic and 14,3,3 stochastic. On the 5,3,3 the level lines are set at 20 and 80. On the 14,3,3 the levels are set at 90,50,10.

The large drop in price was from a news event. Notice how the 5,3,3 stoch gives 2 false moves crossing 80 down before the real move down. Now look at the 14,3,3 stoch and see that there is one less false move.

To use this tool, the 5,3,3 will always move first as it responds faster. The 14,3,3 will always follow. What you want to wait for is the 14,3,3 confirmation before entry...or you want both the 5,3,3 and 14,3,3 to be moving in the same direction together.

Hopefully someone wise can program a stochastic indicator with the 14,3,3 and 5,3,3 "K" lines that can overlay each other in MT4. Users of Tradestation seem to be able to do this.

There are more gems I will try to expalin as I learn them, but the underlying trait is that if the 5,3,3 moves and the 14,3,3 does not follow, it will be a weak price move.
Attached Image
  • #569
  • May 3, 2007 3:51pm May 3, 2007 3:51pm
So why call it an elasticity indicator? When you see a stochastic line move from 0 to 100...think of the top of the line attched to the 0 line by an elastic...as it goes up it will eventually snap back. The stochastic doesn't tell us how much the price will move....sometimes the price may even diverge and move opposite to the stochastic movement.

The comparison of the 5 minute 5,3,3 stochastic and the 14,3,3 stochastic movements tells us exactly when a strong price move exists.

The diagram below should explain it all. See how the 5,3,3 stoch make two large moves upwards but the 14,3,3 stochastic hardly moves up. When the big price move comes both the 5,3,3 and the 14,3,3 stochastic jump right up.
Attached Image
  • #570
  • May 3, 2007 3:52pm May 3, 2007 3:52pm
Quoting Spudfyre
Measuring Stochastic Elasticity

Almost sounds like a physics class!?! Anyways, for about 2 years I have been trying to develop a way to measure the elasticity of a stochastic move. Elasticity being how much price moves when the stochastic moves. Mathematically you can measure it in a ratio between price move versus stochastic move...or in pips versus percentage.

Today I found something that visually provides an elasticity measurement.

This requires the 5 minute time frame, a 5,3,3 stochastic and a 14,3,3 stochastic. Using this tool will save you countless early entries and late exits.

If you like get in when both are good & stay till the 14.3.3 crosses out
put a 50,6,6 stoch over it & it will cover the 14.3.3
& you will not get hit with the big "D"

Below is a diagram of a 5 min chart. Price, 5,3,3 stochastic and 14,3,3 stochastic. On the 5,3,3 the level lines are set at 20 and 80. On the 14,3,3 the levels are set at 90,50,10.

The large drop in price was from a news event. Notice how the 5,3,3 stoch gives 2 false moves crossing 80 down before the real move down. Now look at the 14,3,3 stoch and see that there is one less false move.

To use this tool, the 5,3,3 will always move first as it responds faster. The 14,3,3 will always follow. What you want to wait for is the 14,3,3 confirmation before entry...or you want both the 5,3,3 and 14,3,3 to be moving in the same direction together.

Hopefully someone wise can program a stochastic indicator with the 14,3,3 and 5,3,3 "K" lines that can overlay each other in MT4. Users of Tradestation seem to be able to do this.

There are more gems I will try to expalin as I learn them, but the underlying trait is that if the 5,3,3 moves and the 14,3,3 does not follow, it will be a weak price move.
But isn't a 14.3.3 on the 5 min chart a very strong 5.3.3 on the 15 min chart?
an Idea - If you get in when both are good & stay till the 14.3.3
crosses agaist you you will get some big wins
If you go one step more & add a 3rd stoch @ 56.6.6 stoch & use it to cover you-
you will not get the big "D"
So we are back to MTFT?!
TEB
  • #571
  • May 3, 2007 4:00pm May 3, 2007 4:00pm
Quoting Spudfyre
What you want to wait for is the 14,3,3 confirmation before entry...or you want both the 5,3,3 and 14,3,3 to be moving in the same direction together.
Howdy Spud!
Wonderful thread.

I'm waiting for fast stoch line to cross 50 before entering.
Does this basically give the confirmation you're looking for
or is it too slow?

Also a confession: I love the MFT platform but have changed TF's
to M15,M30,H1,H4,D1


FXS
  • #572
  • May 3, 2007 4:04pm May 3, 2007 4:04pm
Ok, so hopefully you can see how powerful elasticity is as a tool!

Now let's get complicated. The 5,3,3 is going to move faster than the 14,3,3 so the 5,3,3 always leads. As an example what do you interpret when the 5,3,3 moves from up from 20-80 then turns around and starts going down while the 14,3,3 has only moved from 20-50?

Ok, given we are in a long trade we would have the 15M and 30M stochastics moving up from 20. So the power is in the upward motion.

Back to the 5,3,3 stoch on the 5 min chart. Let's say it moves from 20-80 and then turns down to 75. Let us say at the same exact time the 14,3,3 moves from 20 to 50.
Now the 5,3,3 moves down more from 75 to 25 while the 14,3,3 moves up a little from 50 to 55. What to do?

We are in a long trade so the power is up. So, say the 5,3,3 still goes down and drops below 20 and then turns back up to 25. The 14,3,3 moves from 45 to 40. The 14,3,3 is not going to respond quickly to the 5,3,3 down move if it is a WEAK down move! The 14,3,3 is telling us this is simply the 5,3,3 stoch cycling and the move up is likely to be higher.

Which means in this case that the 5,3,3 will bounce back up and price with it.

If the 14,3,3 had followed the 5,3,3 down you would know that the price move down will be strong and may indicate a good time to get out of a trade and wait for the 14,3,3 and 5,3,3 to turn and come back up again.

This is best seen live during an active trade...so put the stochastic up on a 5 min chart and watch how the two stochastic work together to tell you exactly what the price moves will be.
  • #573
  • May 3, 2007 4:06pm May 3, 2007 4:06pm
Quoting FXSurfer
Howdy Spud!
Wonderful thread.

I'm waiting for fast stoch line to cross 50 before entering.
Does this basically give the confirmation you're looking for
or is it too slow?

Also a confession: I love the MFT platform but have changed TF's
to M15,M30,H1,H4,D1


FXS
Don't use 50 as a confirmation. Has to cross 20 or 80 (20 up; 80 down).
  • #574
  • May 3, 2007 4:31pm May 3, 2007 4:31pm
Quoting Spudfyre
Measuring Stochastic Elasticity

Hopefully someone wise can program a stochastic indicator with the 14,3,3 and 5,3,3 "K" lines that can overlay each other in MT4. Users of Tradestation seem to be able to do this.
Spud,

Do you mean show the 5,3,3, and 14,3,3 in the same window like below?

Thats quite simple in MT4.

G-Man
Attached Image (click to enlarge)
Click to Enlarge Name: Multi Stoch.jpg Size: 29 KB
  • #575
  • May 3, 2007 4:57pm May 3, 2007 4:57pm
Ok, there seems to be lots of confusion on the 80/20 rule here and in the live trading session so I will try to clarify.

See diagram below for reference.

The reason I suggest people not to enter a trade above the 80 line or below the 20 line is that there can be HUGE price movement here...good and bad. All the trouble you will ever face will almost always come from early entry before the stochastic passes the 80 going down or the 20 going up. It's a dream if it goes your way...but can kill you if it goes against you and you don't have enough margin to play with or patience to ride it out.

I suggest that because my purpose in writing all this is to make people winners at forex...slow winners...consistent winners...but winners. This is why I put in the 80/20 rule. Those that trade live with me have seen the results of breaking this rule....on their own and yes...I break it too. To my defense I break the rule with some insight into stochastics and price movement but when you see me in trouble...it came from breaking the 80/20 rule almost always.

Although MOST of the time the stochastic line goes up over 80 and down again...there are times when it bounces up and down above 80 making multiple peaks...this is where price can move way more than the stochastic shows because at stochastic levels above 80 and below 20, the stochastic is not moving in a linear fashion to price movements. That means, a small 1% stochastic movement above 80 might mean 20 pips..where below 80 the percentage move may have been 15% or more.

To compensate for this, is why I brought in the "escalator". You need not worry about what the stoch is doing above 80 on a long trade on the 15 min chart because you can go to the 30 min chart and see what is happening where the stochastic is still below 80.

To catch earlier moves simply use smaller time frames....if you want to try and gain more pips...add time frames....but longer time frames mean larger risk.

SO the basic 80/20 rule is this:

Enter a long trade only when at least two time frames (I suggest 3 to reduce risk) have come from BELOW the 20 line and risen above the 20 line and the candle is near closing or just closed (it does not have to do that in one candle). That means as an example it went from 7-10 and then 10-25 percent on the 5,3,3 stochastic...you buy at the 25 percent stochastic level on the longest of the 2-3 time frames you trade given that the earlier time frames you are using have already moved up from below 20.

If you want reduced risk....wait until the 4H time frame makes this move or is rising but still well below 80 as a confirmation of direction.

It is extremely important to pay attention to the fact the stochastic has previously passed the 20 and "peaked"...made a "v" of some fashion below 20 before you enter a long trade. If the stochastic comes down to 20 and bounces up...this is nowhere near as safe as the stochastic breaking below the 20 and coming back up.

The 80/20 rule will keep you safe....it may be tedious but you will win almost every single trade. It may be boring but you will win almost every single trade. It may not appear to often but you will win almost every single trade. It will not maximize pip gains but....well you get the idea.

If the 80/20 rule is still confusing to you or you want to be sure you have it right...I will be glad to walk it through with you on a live trade in a chat room. Just PM me here. Learn the 80/20 rule with stochastics and you will almost never lose a trade.
Attached Image
  • #576
  • May 3, 2007 5:02pm May 3, 2007 5:02pm
Quoting G-Man
Spud,

Do you mean show the 5,3,3, and 14,3,3 in the same window like below?

Thats quite simple in MT4.

G-Man
Ahh I meant overlayed on the price chart with price under it.
  • #577
  • May 3, 2007 5:16pm May 3, 2007 5:16pm
Quoting Spudfyre
Ahh I meant overlayed on the price chart with price under it.
mm Spud i'm thinking about it but as you know the Stoch goes from 0 to 100 value while the price don't. So , as far as I can see it's not possible to overlay it on price chart giving the same shape as in a separate window. Anyway you can overlay as G-Man said (and as I did in my setup) multiple stoch but in a separate window.
  • #578
  • May 3, 2007 6:20pm May 3, 2007 6:20pm
[3 May 2007]
Daily quota: 10 pips (failed)
Pip Bank: 39 pips

GBPUSD: 4 pips
GBPUSD: -20 pips
GBPJPY: 5 pips

Daily Total: -11 pips
Gran Total: 58 pips
  • #579
  • May 4, 2007 3:53am May 4, 2007 3:53am
Hi Spud,

Firstly many thanks for sharing this info with us. For a very new newbie like me it is a dream come true and an extremely generous act.
There is something in your post 575 which seems like a contradiction but is almost certainly my lack of understanding and I would be very grateful if you would explain it to me.
In one paragraph you say 'if you want to try and gain more pips - add time frames - but longer time frames mean larger risk'
In the next you say 'Enter a long trade only when at least two time frames {I suggest 3 to reduce the risk '

I suspect that this means that I should use the 1H as confirmation of the 15 and 30M but that I shouldn't necessarily stay with the 1H once the 30M has exhausted itself but I would be grateful if you would enlighten me.
  • #580
  • May 4, 2007 6:14am May 4, 2007 6:14am
Quoting bundubill
Hi Spud,

Firstly many thanks for sharing this info with us. For a very new newbie like me it is a dream come true and an extremely generous act.
There is something in your post 575 which seems like a contradiction but is almost certainly my lack of understanding and I would be very grateful if you would explain it to me.
In one paragraph you say 'if you want to try and gain more pips - add time frames - but longer time frames mean larger risk'
In the next you say 'Enter a long trade only when at least two time frames {I suggest 3 to reduce the risk '

I suspect that this means that I should use the 1H as confirmation of the 15 and 30M but that I shouldn't necessarily stay with the 1H once the 30M has exhausted itself but I would be grateful if you would enlighten me.
I suggest only using the 5,15,30,1H to use for entry/exit. Use the 4H or even day to know direction of market if you want to trade with past trend.

The problem with higher timeframe trading is you expose yourself to much larger draw downs as the market cycles....with small margin trading it can be deadly. 80/20 works on high time frames but you have to be prepared to ride out 100 pip plus drawdowns sometimes.
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