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4 Hour Strategy (MACD)

  • #4,501
  • May 17, 2007 2:16pm May 17, 2007 2:16pm
Quoting Phillip Nel
You have to master this.!!!!!!!!!!!!!!!!
Hi Phil

Tx for the information - to repeat and repeat such important information is essential and surely not a waste of time. And Tx for using my one of my favourite pairs when it comes to trending.

The more I listen to it and watch charts, the easier it is to see what you want us to see and not what we want to see. And that is where most of us went off track.
Willem Forex recipe for success = Patience, discipline & hard work.
  • #4,502
  • May 17, 2007 2:44pm May 17, 2007 2:44pm
Quoting Phillip Nel
You have to master this.!!!!!!!!!!!!!!!!
Thanks Phil! Little by little I'm grasping what you have been teaching us. I didn't take the counter trend in eur/usd today because I didn't feel comfortable with the RR ratio. Plus I remembered what you said that price tends to retrace towards the 21ema. However, I didn't take the short in eur/usd either because of RR ratio also. I was thinking the 1.35 support would hold. Anyway, I didn't lose any money today. Though I learned something today.

By the way, a few weeks ago I read on one forum that we should aim on one currency pair. Study it! Digest its fundamentals! Master its technicals! Be a specialist on it! Just as doctors have specialization, we should also have our specialization on our favorite currency. I have finally settled with eur/usd. I feel its more tamed than the gbp/usd. I'm only trading the eur/usd now. I promise to myself that I would study it! .... digest it!.... master it!

Thanks Phil!
  • #4,503
  • May 17, 2007 3:33pm May 17, 2007 3:33pm
Quoting RyanD
1. Price breaks through 89, it tends to go back to the 21 and then moves on.
a. if 200 SMA is in between, if price breaks 200SMA it goes back to
the 200SMA and then moves on
2. When the price moves above the 365EMA and back to the 21, it then
tends to move back away from the 21
3. At End of run: when price goes below 21EMA, the price tends to pull
back to the 21EMA & sometimes through the 21EMA and then goes back
to the 89EMA.
Hi Ryan

Attached my contribution on the price movement rules - the main focus point of this system.
Attached File(s)
File Type: doc 4h MACD price movement rules.doc   25 KB | 4,738 downloads
Willem Forex recipe for success = Patience, discipline & hard work.
  • #4,504
  • May 17, 2007 7:05pm May 17, 2007 7:05pm
As you guys know, I think I am not telling any new announcement, when NY Market time closes EURUSD Traders can go relax and wait another day.
See the chart and confirm what is happening during Asian time, "TOO BORING" a lot of small candles.
If you study all these candles, you can confirm that some of them can give to us some tails, about 10,15 rarely 25 PIPS, and it is one of this tails that I usually try to catch and for that I leave Limit Orders, but there is a danger in these limit orders, because sometimes even before Europe to open can be very volatile momentum, and if you are sleeping and can't be in front your computer can be very nasty if start to move away your position, because of that my gap it is always more than 30 pips.
I almost never have success to open a trade, but I try.

Another thing it is that there is always a high probability that when Japan starts to trade, watch what direction the price goes, and if you are a "Warrior" open a trade to that direction for a small gain of about 10 pips.
Go to Bed and "PRAY"
BEWARE ABOUT THIS ACTION!

But well, let's talk about the ending day, and has given to us a False RB, I have predicted that "I am not wizard" but that last candle coming from 21 and well inside my nasty Trendlines, told me "STOP"
I could Short the Trade right there, but I only do that when price cross 1.3500, and my trendline, and I did open a short at 1.3493.

See where the price are now, well around 2 trendlines, hum!! Nobody knows the direction for now!

Bye and GOOD NIGHT

MIKE
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  • #4,505
  • May 17, 2007 7:44pm May 17, 2007 7:44pm
Phillip:

Aside from the original pdf, post #4496 is one of the most important posts in this thread.

Print this chart out and put it under your pillow, frame it, eat it,....whatever. This it IT...period.
  • #4,506
  • May 17, 2007 9:19pm May 17, 2007 9:19pm
Wow! Phillip, your post 4496 is absolutely marvelous. It is really a great insight about all the important factors of your method.

Thank you so much again for your time and efforts to help us all

I listen to it again and again and just cannot stop to listen to it as it really making a lot of sense to me, especially after going through the thread.

Your just incredible! Very much appreciated again from the buttom of my heart

Very good trading day to all tomorrow

shreem
  • #4,507
  • May 17, 2007 10:03pm May 17, 2007 10:03pm
Round top on USDJPY anyone? Time for a short?
  • #4,508
  • May 17, 2007 11:25pm May 17, 2007 11:25pm
Hello to all and to Phillip. Phillip, I hope you dont mind me posting the transcript of your MP3 file about post 4496. As I love so much this audio file and the chart attach to it. I have taken the time to listen and re-listen again and again so that I could put all your wisdom words of all the audio file in a work document.

I dont know for others or you, but for me, having this very important file written and near me, it will help me to remember it everyday without fail.

So, here is the full transcript and there is also an attachment in word document of this transcript. Of course, this reading should go hand in hand with the chart that Phillip has given us with the audio file at post 4496:

"Right, I am going to run through the market motion one more time. I see a lot of people still doing counter trades, counter-trend trades against the trend. Like the one we discuss on the daily Wrapup about that Swissy coming back to the 21EMA.

This chart and this MP3, you got to have it in your heart, not in your head, in your heart. If you look at the purple rectangle on the chart, the price break through the 89SMA blue line. Point 1, 2, 3 and 4 are just there to let you know that you can establish your market breathing or channel or whatever you want to call it so that you can know in what or between which boundaries does the market moves.

But the main thing is to remember when the price break through the 89 SMA, up or down, it doesn’t matter, as it will come back to the 21 EMA which it did and then it went up to the red number 3 on the trend line, then it came back to that red circle 21 EMA.

All those red circles are all high probabilities trades. They are all of the 21 EMA because we are in an up-trend; except for 4, 5 and 6. 4 is from the 89 SMA as well as the 365 EMA. It gave a nice morning star there. It was highly oversold on the MACD, below the 45 line, horizontal line and that was a high probability trade. So, the market moves away from the 89 SMA, pull back to the 21 EMA, then it move away, pull back to the 21 EMA, moves away, pull back to the 21 EMA.

The only time you do counter-trades, counter-trend trades is when your Risk/Reward Ratio (R/R Ratio) down to the 21 EMA and your stop loss is 1 to 1. But remember, sometime, it only come back to the 8 EMA. You need to keep that in mind as it is a high risk trade unless, if you see just right of number red 3 on top, you will see a lot of bars finding resistance there. If you do a trade somewhere around there, you will be probably very safe to come down to the 21 EMA. That’s how you do it.

The blue circle on top is a counter-trend trade. If you look at the 2nd blue one, you will see that the price come below the 21 EMA and the rule says that; at the end of a run, if it will push below the 21 EMA, it tend to pull back to it, sometime it goes a bit through it and then it come down to the 89 SMA. It’s exactly what happens there.

If you look at the bottom window on the MACD, the pink circles 1, 2 and 3, look at that noise there. You cannot trade the MACD like that, you gone be killed, there is no way you can do it. You have to stick with the motion of the market, around the 21 EMA, around your support and resistance lines, that’s the way to do your deals and it is very important to know that. You have to stick to that, there is no other way you are going to survive by taking every signals.

I still hear people on skype and talking about MACD being busy forming a round top and then there is still a 2 or 3 hours to go. You cannot do that, I mean, you can do it but it is not the way your focus should be. Your focus should be around the price movement, where it is in relation to the moving averages, where it is in relation to your trend lines, where is the movement in relation to your support and resistance lines. That is the way your focus should be. That is: when the MACD gives the signal, all that homework as been done already.

If I am sitting there in front of a 4 hours candle, if I got time to sit there for 4 straight hours, I am analyzing the market. I go to a monthly chart and draw my trend lines, then I go to the weekly’s one, do some in between minor trend lines or support and resistance lines. Then I go to the daily and then go to the 4 hours. Eventually, up and down according to the motion and the rules: what do I anticipate this price is going to do? Is the current movement within the rules? Is it within the system or not? If it is not, I just close it and I walk away. I don’t even think of trading. I do rather 4 or 5 good trades a month then do 10 of which only 4 was good and come breakeven at the end of the day. So, it is not about taking every signals.

Also, another thing that I want to emphasize is not to jump around between 10 currencies. Because you can get a wrong one at currency number one, then you jump to currency number 3 and get another wrong one and then you jump to currency number 8 and get another wrong one, where if you stick at currency number 1, the next signal would have been a good one and maybe the one after that as well. So, instead of having 3 wrong ones in 3 different currencies, you could have 1 wrong and 2 right in the same currency.

So be very careful no to jump around according to MACD signals. You’ve got to look at each pace, motion in relation to the moving averages and in relation to your support and resistance lines. Then, look at market emotions as I said in that summary.

Number red 5, you will see there is a morning star, if you look at 6, there is also a morning star. If you look at number 4 there is also a morning star. That is how you determine the emotions of the market, there is emotions involved in those candles. They tell me that those things have got high probabilities of moving in the right direction. That’s how I do it.

Get your focus on the rules, write it down, make yourself a little copy of this chart and write on it or next to it and try to see and look where the market is satisfying this type of motion. That is where your high probabilities trades are because, then, the Tsunami is over, it means the playing ground is over, this thing got direction now, there is a certain motion, there is a certain rhythm in it and you are going to flow in that rhythm. When you go counter-trend trade, you know that you go against the rhythm and you got to make it very sure that there is enough pips available to do that in a Risk/Reward Ratio, it could be 1 to1 or better, then you take it on.

You got to get this in your heart otherwise you are not going to make it."


Hope it help everybody.

Wishing all a great trading day

Sincerly

Shreem
Attached File(s)
File Type: doc Crucial summary of Phillip 4H.doc   26 KB | 2,543 downloads
  • #4,509
  • May 17, 2007 11:30pm May 17, 2007 11:30pm
Quoting ~Shard~
Round top on USDJPY anyone? Time for a short?
Watch out for TC signal on 1hr chart.Wait for confirmation. Possible retracement back to 21EMA.
  • #4,510
  • May 17, 2007 11:33pm May 17, 2007 11:33pm
GOLFER and SHREEM, thanks for for your efforts w.r.t.MACD price movement rules,it's greatly appreciated. Of course Philip,as always, you're a real blessing to all of us.Thank you.
  • #4,511
  • May 17, 2007 11:37pm May 17, 2007 11:37pm
Quoting Doji Star
Watch out for TC signal on 1hr chart.Wait for confirmation. Possible retracement back to 21EMA.
Thanks for the advice. Would the same go for the round top of USDCHF as well then?
  • #4,512
  • May 17, 2007 11:56pm May 17, 2007 11:56pm
Quoting ~Shard~
Thanks for the advice. Would the same go for the round top of USDCHF as well then?
Yes, there charts are almost identical at the moment! Both look as though they'll retrace to 21EMA,only thing is ,what if they only go back to 8EMA and carry on?I think this is what Philip meant when he said the best MACD signal is the one where the MACD confirms a bounce off(in this case) the 21EMA.Like yesterday's hammer doji on the Swissy at 8:00 GMT+2.
  • #4,513
  • May 17, 2007 11:57pm May 17, 2007 11:57pm
Shard,b.t.w. this would also be a counter-trend trade ,should we take it. So we have to be careful.
  • #4,514
  • May 18, 2007 12:04am May 18, 2007 12:04am
Understood - thanks a lot for the insight, it's appreciated. I have been following this thread a fair bit but am still learning.

So basically, we should wait for clear direction wrt the 21MA then? If it bounces and continues up, it's probably a TC, but if it breaks it then its probably a good short candidate?
  • #4,515
  • May 18, 2007 12:20am May 18, 2007 12:20am
Yes.Yesterday's TC on Swissy was excellent example. If we had taken that trade, we'd probably still be in it,so we wouldn' have gone short now...I think.Don't get me wrong...if RR is good the trade is still on,but then your SL would probably be just above the hammers/dojis/tails,but,i.m.h.o. trade with the trend.Anyway, my weekend is going to be spent studying Philip's strategy,especially the latest post by Philip:RULES.Got to get it to sink in.
Would like to hear what the more experienced traders on this thread think about this...
  • #4,516
  • May 18, 2007 1:22am May 18, 2007 1:22am
Nice work Shreem. Thank's for transcription.If some else can transcribe MP3-s from L1 -L13 it will be great.
  • #4,517
  • May 18, 2007 3:19am May 18, 2007 3:19am
Hi Phillip
Thanks for your system and all the information you are giving us.
Can you please Explain what you analyze on weekly and daily charts?
Which indicators you use for analysis?
Thanks
  • #4,518
  • Edited 6:39am May 18, 2007 4:51am | Edited 6:39am
Hi Guys, once Again Many Thanks Phillip for all you have post here, I include in my trades a lot of your study.

See the last chart EURUSD, after bad GBP Retail sales, cable and EUR drop once again. Be careful at this days to CT USD, as you can see RB is forming and in my chart will close in 15 minutes, but see where is 21 and 200!!
Last times that Line 21 crosses 200 in downside movement EUR had very sharp drops?!?
Trading EURUSD with Phillip Study, it is not easy right now, so be careful.
Last night in Asian Market time, just happened what I was waited, the price comes down a little, but did not reach my Buy limit Order.
I did not trade until now Cable or EURUSD, I was waiting to see Cable at 1.9690's or EURUSD 1.3460's to go Long, but beware long trades.

BYE
MIKE
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  • #4,519
  • May 18, 2007 5:01am May 18, 2007 5:01am
Quoting Doji Star
Yes.Yesterday's TC on Swissy was excellent example. If we had taken that trade, we'd probably still be in it,so we wouldn' have gone short now...I think.Don't get me wrong...if RR is good the trade is still on,but then your SL would probably be just above the hammers/dojis/tails,but,i.m.h.o. trade with the trend.Anyway, my weekend is going to be spent studying Philip's strategy,especially the latest post by Philip:RULES.Got to get it to sink in.
Would like to hear what the more experienced traders on this thread think about this...
FYI I took the swissy short on an entry order last night. I missed my TP by 4 pips (1.2240) before it bounced. You are right I am still in it but may get stopped out. Reasons for entry include negative divergence on almost all charts and my RR was 45%. have to wait this one out to see if I get the run down towards 21.

Phillip, thank you again for the pearls of wisdom. I am getting the latest transcript tatooed to my forearm this weekend
  • #4,520
  • May 18, 2007 6:00am May 18, 2007 6:00am
Quoting Foricks
FYI I took the swissy short on an entry order last night. I missed my TP by 4 pips (1.2240) before it bounced. You are right I am still in it but may get stopped out. Reasons for entry include negative divergence on almost all charts and my RR was 45%. have to wait this one out to see if I get the run down towards 21.

Phillip, thank you again for the pearls of wisdom. I am getting the latest transcript tatooed to my forearm this weekend
Hi Foricks.
Things may still go in your favour because you traded with the trend. If it doesn't, you can console yourself with the fact that you did everything right!
Every system, even this one, has to have some losing trades,but our losing trades can't exceed our initial stops for RR,but I can virtually guarantee you that with this system the losing trades are far and few between.
Have a great weekend!
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