rocky reboot: revisiting rockypoint's renko HA with ema method

@TheJube , i know, open wasn't perfect, your tips are good. Second example is more precise.

I only ask that we all trade a system based on the rocky method. If this method is not for you, that is fine. But as much as I love each and everyone of my fellow FF travelers and wish success for all of us, please don't post your trades using other methods here in this thread.

Before I say anything, I want everyone here to know that each of us is free to develop his or her own rules for what constitutes a signal and when to enter and when to take profits and whether or not to trail a stop or instead take a fixed profit etc.

That means that if you trade an instrument where you feel the 20 ema's are better than the 8 ema's, and if you don't like using two sets of ema's because you want to have more trades rather than using a trend filter which will lessen the number of trades, then that too is fine.

I've done a lot of experimentation with the rocky method to come up with a set of tools that work for me. They work for me because I have spent a lot of time working with the rocky system and a lot of time watching the market and I haven't jumped from system to system to system. Anything I added, for example, the pivotal points of the previous day's and week's high and low and the open of the day I added to the rocky method, not instead of the rocky method. The rocky method is my base, my foundation, my methodological ... rock(y)

If you like this method and you feel it "speaks to you," then whatever changes you make to it, have at it, feel free to experiment, and have fun with it. I only urge that you to stick with it and furthermore, stick with no more than 1 to 3 instruments, forex pairs, etc. For example, my main instruments for most if not all the time I have been working with the rocky method have been the 6E (EURUSD), the 6B (GBPUSD, and the ES(US500 or SP500).

If this method speaks to you, and if you have been struggling to become consistently profitable for months or even years,and you've been jumping from system to system and method to method, stop right here.

Commit to giving this method at least six months of real concerted effort. I will tell you that it is easily the most consistently profitable method I have come across. My only problem has been the gray matter between my two ears. I am now comfortable with my approach to using rocky's method. That is why I have said my goals for this year are discipline, consistent profitability, and growing my trade size. My goeal is no longer to find a method that is profitable. I have found it with the rocky method and the amendments I have made to it that were are the direct result of my long hours of live market observation and tedious visual back testing.

So, having said all that, pelagiusz, as TheJube mentioned, my entry would have been a little different from your entry.

However, the most important thing you did is that you set up your charts, you were actively watching the market, and you took the trade. I presume you had a stop loss and a take profit order go in at the time you entered the trade or soon after. So while your entry was different from mine, you did every thing right you need to do in order to become consistently profitable with this or any other method.

But BEWARE: Please know that you did everything right, and my saying so has absolutely nothing to do with your trade, in this instance, being profitable. Had it been a loss, I'd be saying the same thing to you: You did everything right.

I annotated your chart and I believe that it is the same remarks that TheJube has also made.



Again, you did everything right in all the important aspects: You set up your chart to reflect your methodology, since you are using the 34 ema's too, you waited for your entry to at least be abpove the 34 ema's, thereby giving yourself a little better than even odds as the "wind was now at your back." You used a stop loss, presumably, and a fixed or trailing stop loss, presumably. So long as you do those things, you cannot help but to be profitable over the long run.

That means that not every trade is a profit. You will have losses.

Sometimes, you may lose 3 or 4 in a row. But you will, sometimes, win 5 or 6 in a row.

Keep doing what you're doing - we all look forward to your continued contributions here.

@vidvad thank you for your attencion.
I adapted the system to my knowledge. But I thought everything was okay. I haven't read the main thread, too much of it, but I've read your entire thread.
I am quite experienced, and I think like you, a few months or hundreds of transactions is the absolute minimum to think about making money.
I will be grateful if you refer me to the full system manual. So far this is trading demo account, so SL i have in my mind TP constans always 10pips.

Read my response again please if you think I was saying you did anything wrong. I said you did everything right.

100%! I see traders here at FF bouncing from thread to thread and system to system. This indicates to me that they are in still in the "Holy Grail" phase of becoming a trader. This is the phase where they look for a magical, never lose system and take no personal responsibility for learning the process of trading for consistent profitability. I am huge fan of the late Mark Douglas. I think every trader should own either The Disciplined Trader or Trading in the Zone. I have both.

There is no full system manual and, in many ways, my posts to this thread is as close as anything comes to such a "manual." I will in the coming weeks put together something that approximates such a manual. However, keep in mind that it will merely be a manual of how I trade this method. I am open and aware that differnt folks will trade it with slightly different strokes.


Using a demo account is fine, for sure.

My only caution to others less experienced who read you post is this: The habits you form while trading in demo will carry over to your trading in your live account. In my own personal opinion, it is never a good trading habit to have a position in the market without at the same time having a live stop loss to take you out automatically. This should be a must for anyone who wishes to make a consistent income that they can rely upon from trading.

A constant, fixed take profit is good. However, I would hope anyone following along here would not choose to have only a take prodfit in the market. I strongly feel that not having a live stop loss is opening the door to large losses and all kinds of trading errors, the most dangerous being the tendency to give in to the temptation to add to your losing position hoping that the market will eventually go enough in your favor to let you out at "break even."

This is tremendously dangerous, especially in foreign exhange where once price gets moving in one direction, it can move hundreds of of pips without much of a reaction.

More FF member accounts have been lost this way than through any other trading mistake or error.

As I said last week, I am on vacation this week. I am not taking trades, but I am trying to keep up with the markets and continue my own learning.

I don't have time now as the family is finally up and awake and ready to go to the beach. But I did want to share this chart now and later today I will post a bit more about it: I do use the pivotal points as areas where I will trade even if the ema bands are NOT yet set up vis a vis price in a traditional rocky template swet up. Today, price paused at the OPEN and at YESTERDAY's HIGH. One would have been a short entry, the other would have been a long continuation entry.

The price action of the renko HA is very clear to me. Is it clear to you too? This is most definitely worth studying and taking a screen pic or printing it out for your journal. Everyone should keep a personal trading journal, imo.

Looks good, I 'll check.

Best regards,
Renko

@Vidvad , ups , sorry , my englisch have still problems I needed a few years and i unerstand my problems with trading and what is realy iportant need for me.
could write a lot about it. I also know from experience that everyone has to climb mountains alone. A man in the beginning phase rarely listens to the wiser. And even more rarely does he understand. I will say this - it is said that 5% of people make money in this business. I think that a similar % of people reliably work on one methodology for more than half a year. I'm talking about back testing, customization and much more.
Today , during opening size 1lot, my profit is near 600. I will working next ! I have to be more patient because I open trade too fast.

yes, everythink is right for me. I show similar example US100. How many information we have with this method. Ok, I'll hold off on the screenshots. Nice holiday for you I waiting for next lessons .

The first and most noticeable "pattern" cue is that when price met resistance and paused at the OPEN, not only were there NOT two consecutive bear candles after the reversal doji, but also there was no failed retest of the high: Instead, price not only broke above the open a second time, but closed above the open, and then saw bull follow through higher.



Conversely, when price met resistance and paused at YESTERDAY's HIGH, there was a micro-double top (the reversal doiji high and then the high of the 2nd canlde after the reversal doji). Then two consecutive bear candle closes after that micro double top, which is a type of bear flag, and was also a lower high, would have been a short entry for me.



In my opinion, one of the key strengths of the renko with Heikin Ashi applied is that it seems to consistently excel at "highlighting" certain patterns of market behavior.

I am not able myself to get the same sort of feel from watching a time based chart. For example, the M15 yesterday would have probably had me get chopped short then long then short then too scared to do anything more when it met resistance at the OPEN. And by the time I'd have recognized a short opportunity when price met resistance at the high, the opportunity would have been higher risk with less potential for success:



So I use the M15 to keep an eye on the overall "structure" of the market. I essentially want to remain aware of where price is relative to the previous day's daily candle and the previous weekly candle.

The rocky template using renko bars with Heikin Ashi applied gives me the price action feel I need to enter the market and manage risk.

If I may make a suggestion to those following along, use the pivotal points and consider them to be as essential as the rocky template: They work together: If the candle action at a pivot indicates bulls are going to to bid price higher, then trust that most of the time, that is what is going to happen, no matter what the moving averages tell you. If you nonetheless stay short, have a stop loss, and at the very least, exit when a second bull trend bar closes after a reversal doji.

Reverse this process for shorts: If price is at a pivot, and the renko HA candle action indicates that sellers are going to offer the market lower and lower, then trust that most of the time, that is what is going to happen. If you decide to stay long anyway because the ema's are configured bullish, maintain a stop loss, and exit (or reverse) if price prints two consecutive close bear trend candles.

My approach to trading using the rocky template can be viewed like this:

1) When price is between pivotal points, I use price action + EMA's to dictate trade entries.

2.1) When price is at or very near a pivot, I use price action alone to dictate trade entries.

2.2) When price generates a reliable patern of behavior that indicates a reversal, I use price action alone to dictate entries.

An example of 2.2 actually has or is occurring today right now. Price has made 3 attempts to breakout and continue lower to test testerday's low as a pivotal point. Often times, if the market fails to push one way or the other 3 times, espeially if there is a noticeable symmetry involved among these attempts, price will try to reverse.


Even though the ema's are in a bearish configuration, I would be looking to enter if we get tw3o consecutive closed bull trend type candles which would creat a higher low.


This does not mean I view my approach as discretionary. Not by a longshot! I define both the price action set ups and entries, and the conditions under which those set ups maybe taken and those under which a set up is to be ignored and left not taken.

When I am executing this system close to flawlessly, I expect to win 60% of my trades.

With a 60% win rate, over the long term, defined as 1000 trades or more, you will have 100% odds of experiencing 5 losing trades in a row at some point during that 1000 trades. You have 98% odds of 6 losing trades in a row at some point, and an 81% chance of seven losing trades in a row. As Mark DOuglas once said, "I've met very few traders who after 3 losing trades in a row don't have a problem taking the next trade."

And this is one reason so many of us fail ever to become consistently profitable. We let the occasional adverse run during the normal course of the long run discourage us from our methodology and we abandon it in search of a "better" method.

Wow, really like your dedication and you are on the right path for executing 1,000 trades and getting win percentage that you expect. You got rid of oscillating indicators, that is a a very good step. The only friendly warning I have for you: I believe you are complicating your technique, therefore TMI, which at times turns into missing or late trades and therefore FOMO. After years of trading successfully, I came to realization that KISS does work. I will not point out the "complication" part, perhaps you will get to it on your own or not. Still, you are definitely "getting there".

Fair enough.

I have been trading live MA Channel technique for the last 2.5 years across few selected TFs and do have great profits of over 100% a year(8-10% a month on average), while keeping DD below 8 - 15%(15% was the highest ever DD) a month.

I believe these limitations below only bring extra confusion(TMI) when executing or missing a trade,

34 EMA,

any Pivotal Points(Previous Day/Week High/Low),

any patterns, except 1-2-3 and only because you have a decent place for Stop Loss under 2.

I also will encourage not to take late continuation trades, they will be damaging to account in the long run.

There are other "warnings", but I will not post any other of my ideas. I will read every post on this thread as I believe evolution is coming. Good Luck.

P.S. Rocky technique is very close to my technique, KISS. I also believe that Rocky never had a use for MACD and ADX, they were just visual indicators on his screen.

Driven I personally agree with some of what you say, but I also strongly believe people need to be comfortable in what they are doing, So while what some people do that I find unecessary, does not make that choice invalid. There are many ways to be successful as a trader.

That said I do in fact pay attention to the macd and adx. Adx I feel helps get me in trades that I will at least break even on and the the Macd for divergences
and getting out of trades.

GBPJPY and EURUSD today.
I see and confirm that acting in important places is easier. I'm just waiting to see what the price shows me. With these candles and the price structure, I am able to determine the likely momentum. After all, I made 11 trades today,overall profit, but a few trades was unnecessary. I understand your caution and discipline @Vidvad, playing two trades gives us relative peace of mind. It protects us from gambling, but maybe it also takes an extra chance? I have to set my rules ,I don't want to be a slave to the computer.

Not sure these screenshots are going to be as readable as last week's were because all I have with me is a laptop so much smaller screen I'm watching while away from home.

This is why I watch the pivotal points: Because I believe the institutions and market makers - the ones who have the power to move the market also watch and trade from them.

M15 look how price never closed below today's open or yesterday's low. That is sign of buying pressure.

On the rocky template, the reversal was actually a bull trend candle (no tail top and bottom which would be a reversal doji). That is sign of buying pressure. Entry for me would have been buy stop at 1.09235, and the profit target 1.0936. Stop loss I would have placed at 1.0919, which is one tick below the open of the bear pin bar and the open of that bull breakout candle on the M15.

This is one of those cases where the ema's do not matter at all. All that matters is price action and price NOT closing below those two pivotal points.

As I am typing this price has reached 1.0933, just one tick short of 10 pips. I would move my stop loss here to -1 tick, 1.0923.

I'm not here to make my rules be your rules too. As long as we are trading the rocky template, even with amendments and refinements, then we are in agreement in what matters to this thread from a methodology perspective.

I might suggest someone less experienced than you to focus on one market only, or to limit their trades to just 1 to 3 per day. But even then, those would be suggestions. I make rules for no one but me.

I like what you are showing us on your charts. Thanks for sharing!

This trade would have resulted in a +25 tick profit.

I, myself, would be done for the day if I were home and trading. I'd probably still watch the market until the close of my trading windows at 11:30 AM EDT/EST because I find the focused observation invaluable.

M15 and 5 Renko HA side by side, each showing the price activity from the Globex open through the time of this screen shot.

Suppose I were trading today, and rather than taking that long off of yesterday's low I had been delayed getting to my desk and missed that trade. What would I be doing now?

Since price in BETWEEN the pivotal points, I would rely upon price action + the ema's. EMA's are in bull alignment. So I'd be looking to buy the close of a second bull trend candle. This could mean waiting for the close and then entering with a market order, or I could enter a buy stop at 1.0941 which is the price that will cause the current candle to close and a new candle to be opened.

It is reasonable to expect price today will reach yesterday's high given the failed attempt to breakout below yesterday's low.

No sure thing, but it is a reasonable expectation.

Hi Vidvad…….thank for your continuation of Rockys thread. Your dedication and commitment to your rules is inspiring. Feel the addition of 34 ema is a great addition to help avoid poor entries. I really like your addition of strategic pivots and your gameplan of strategically building position size. Enjoy your vacation with the family