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4 Hour Strategy (MACD)

  • #4,641
  • May 23, 2007 12:51am May 23, 2007 12:51am
Quoting Phillip Nel
I took cable long last night20:00 my time with setting stoploss to BE very early(+12pips). Stoploss was hit with no loss. This morning 06:00 my time I took Cable long to first TP 21EMA and 2nd TP to 365EMA. MACD higher low with small candles.
Nice Job! (of course, you knew that all ready , but we don't usually high five your trades)....I saw this one setting up, but didn't have confidence in my stop...thought I might be "chasing" b/c I missed the bounce off the support line earlier....OK....I was really just scared and committed to swissie short.....(yup, I was just scared). Hope you get many many more pips this week!!!!!!!

Thanks again for everything you do for us on this forum!

Pips
  • #4,642
  • Edited 1:33am May 23, 2007 1:08am | Edited 1:33am
Quoting young_09
I have learnt all important points of this system but I am still confused about risk/reward. Can anybody summarize rules of determining risk/reward and stoploss/target?

Thanks
High Young,

Targets are your Trend lines, support/resistance lines, and MA's. Some traders use pivots and fib levels too.

Stops (this is different for every trader) are placed outside your support zones below previous candle lows for a long trade and above your resistance line, previous candles highs for a short. You need to practice placing stops by backtesting, because it really is key to a sucessful trade (I see a lot of trades stopped b/c the stop was in a target area and not outside of the range). You can wait for retracements in price before entering in order to get your stop w/in an acceptable level for your account size rather than entering and forcing your stop. If you miss a trade, that's OK too....It's better than setting a bad stop and losing money (think of Phillip's & JoshDance's (?)tag line...I'd rather be out of a good trade, than in a bad one). Also, keep in mind market rhythm and proximity to MA's when placing stop (if your support line is above the 365 by a few pips, you want to assume that price has a high probability of tagging the MA, so put your stop below that level).

When setting both your stops and TP's you should make sure you do your conversions from bid to ask (and vice versa) and add a few pips leeway so your areas are likely to hit (for take profit) or missed (for stops). Sometimes I think trader's forget that their charts are either bid or ask (depending on their preference) and forget to account for the spread. Remember to test so you can get a feel for how often your areas are successful. Lastly, consider scaling out of positions and moving stops to BE or partial profit w/in your trading plan. This one simple trading element can eliminate a few losing trades and protect your precious capital.

Before entering your trade, the R:R should be = or > 1. If it's not, you should pass on the trade.

Hope this info helped! Happy trading!!

Pips

p.s. YorkyJohnny...your welcome
  • #4,643
  • Edited 1:33am May 23, 2007 1:28am | Edited 1:33am
[quote=fxhermit;1448283]
Quoting tamkras

Although I do trade aggressively in the short term, I also love to scale in when a currency pair re-establishes it's major trend after a secondary trend correction (the old Dow Theory of buying when the market gives value).

At trend resumption points (and pullbacks from there on) I generally take on lot sizes in multiples of three (that can be micros, minis or full lots depending on your account size). The idea is to scale out of two of those multiples at take profit points creating a free play of the remainder. This is ideally repeated at pullbacks as the trend leg continues. By the time the trend matures, I love nothing better than to be sitting pretty on a hand full of free plays each stop loss protected at various amounts of profit. It also does'nt hurt to collect the carry trade interest along the way. To me this is one way of applying Trading methodology as a wealth building tool. It takes a bit of patience to wait for the market to come to you in this way but the reward is more than worth the wait.

Meanwhile, one can hone one's skills by taking advantage of Phillip"s valuable and classic trading education because ultimately that is how you will learn to recognize those times in the market as the sweet spots that they are. The moving averages in combination with the MACD as a timing indicator will help you to catch those trend legs. Market rythm is a wonderfull thing once you learn to recognize it. Sorry to be long winded, but just wanted to outline one of my approaches to trading and to illustrate that patience, in this world of instant gratification, can be a profitable virtue in this game.

P.S Nice to see this thread so vibrant and positive.
Hi FXHermit!!!

Did you get my vibe....I've been thinking of you lately! Wondering where your wise trading input had gone. & as always, your posts do not dissappoint! What wonderful insight. I learn so much from your posts and appreciate your approach to the markets.

A few weeks ago, I was talking to a trader off line, and pointed out, that someone who went long cable last year on 1 full lot would have been up around 250K (and this is w/out adding to the position during the sweet spots). The irony.....I was shut down....the trader wasn't interested in hearing how so much money could be made w/out overtrading!! Only wanted to hear how he could get in and make 20 pips today!!! Your post illustrates how we can amass positions overtime w/little risk that carry the biggest payouts for us traders by thinking about the big picture! (I think this becomes a natural progression overtime to traders....how to mix trading styles to maximize profits). Thank you so much!!

Pips
  • #4,644
  • May 23, 2007 1:45am May 23, 2007 1:45am
Morning guys

Im bit new to this method so please be patient. Im trying to understand the market movement according to the way Phillip described it. Im going to use the GBPUSD as reference. I've got a S&R line running through 1.9996, 1.9873 and 1.9757 as my high's and one running through 1.9893, 1.9761 and 1.9678 as my low's. The market is moving in a downward rythm atm, and the most probable thing next is that the price goes back down to the bottom trend line with a more or less round top as it looks to me. But should the price break through the top it would most likely travel way up to 1.9800 or even the 89 SMA.

Am i right with my assumption?
  • #4,645
  • May 23, 2007 3:19am May 23, 2007 3:19am
Looks like a text book RT formng on the GBPJPY. Resistance at the April17 - May 1 trend line holding strong.

- SL just above trend line at 240.50.
- TP first target 8ma at 240.10
- TP second target 21ma at 239.70

Counter trend trade - caution. Use 1 hr chart for confirmation.

Anyoe else?

John
  • #4,646
  • May 23, 2007 3:25am May 23, 2007 3:25am
Hi John,

I would agree with you, but it's still too early to tell as the candle just opened. Have to wait another 4 hours for the candle to close before making a decision on this one. Cheers!

Edited to add, it would also be unwise to take this one until after the BofE announcement in a few minutes to see how it affects the Pound.

Nancy
  • #4,647
  • May 23, 2007 6:19am May 23, 2007 6:19am
Quoting pips4uandme
Hi Tam,

I'm neutral for the short term trend. Price has been traveling down along bottom support on daily chart, but has closed back w/in a channel (downward). Long term, I'm bullish on cable, but I still think that we could see a retest of the 1.9500 ish level (price is still travelling in a longer term uptrend channel 1.9563 is a TL I've had for a long time on daily and 1.9518 is bottom of a channel (incidentally, it is a channel w/in a channel, w/the more conservative support at 1.9312). Personally, I like the 1.9550 support because of the proximity of two support lines. Summary, I think we see chop for a while but longterm, we revisit the 2.00 numbers.

Swissie has been a nice trade....I took it short at 1.2322 stop at 1.2342. Closed 3 lots this morning at 1.2282 for 40 pips. Have the last one riding w/stop at 1.2306 (may get hit, but protected a bit of profit). My guess is you have done the same, eh? . Other than that, I'm flat on other pairs...will have to see what the market shows us before I re-enter.

As always, I thank you for all your wise market analysis and trading illustrations! You have taught me so much....patience, discipline, courage and patterns!

Talk to you later,
Pips
Glad cable has proven to be loyal to 89 daily sma again as it did multiple times in the past. Daily doji sitting on 89 daily sma is not a Humpty-Dumpty. The price was coming into our hands slowly but we could mow our green lawns in the meantime rather than getting stuck to monitors.

Pips, I am still short usd/chf (with 1 lot closed at 21EMA) and opened a new short yesterday - eur/chf.
  • #4,648
  • Edited 6:34am May 23, 2007 6:29am | Edited 6:34am
First of all....I missed a beautiful long entry signal on pound 2 hours ago...and I'm fuming at myself....arrrr .....now i sit and wait for a signal to short (price has hit an upper resistance line on my chart, and is a few pips shy of 89 and about 80 away from another res. zone if this one gives way and price decides to go through 89 before retesting the 21....so I sit and watch....(I really am mad at myself for missing the signal at 2 AM PST.....

Oh well....always will be another great opportunity around the corner....

I wanted to ask if anyone noticed that cable hit the 89 on the daily chart a few days ago and just hit the 21!? Guess if I had really done my homework right, I would have hit the long trade day before yesterday w/a market order at the 89 (which was only a few pips below the flag support)...

So...Tam...if price closes today above the 21 on the daily, I'm bullish short term instead of neutral.....

and price just hit the 89 on 4 hour....and no opportunity to get into this run smartly.....guess I now wait to see what happens around the 200....

How funny...Tam and I thinking the same thing re:89 on daily...and writing our posts about the same time....hmmm...wasn't there when I started typing...

Hope someone out there caught the entry signal and is now up 80 pips!!!
  • #4,649
  • May 23, 2007 6:42am May 23, 2007 6:42am
Donna,

I did......LOL

Jim
  • #4,650
  • May 23, 2007 6:47am May 23, 2007 6:47am
Just blew by the 89 heading for the 1.9845 Res. from that lower high, then the 1.9871 which may be an I/T & Trendline I have there also just for G.P. along with the 200 SMA. We shall see how strong this move is.

Jim
  • #4,651
  • May 23, 2007 6:47am May 23, 2007 6:47am
Hey Pips. I missed that too although it was more due to my newness that being asleep. Its 12:42 pm here now and cable was 1.9824 a moment ago. I really wanted to long it this moning at 6-7am, but I didn't for some strange reason. I actaully went long on the EURUSD @ 1.3452 and then got stopped at 1.3430, it then ran all the way back up and the 4hr cable has a huge tail now and the MACD is giving a buy.....dammit! I went long again @ 1.3453 and it now looks to me going where my analysis said it would go.

So, what have I learnt..........the big boys taking it down on important news then running it back up to where it was.

Could you post your chart for cable long entry signal two hours ago? I would like to see if mine was the same and I should have gone long. I am at work so don't have my MT4 charts to post.

Good Luck

Neil
  • #4,652
  • May 23, 2007 6:52am May 23, 2007 6:52am
Up 125 pips, been in this one for awhile. Hoping to see at least 1.9958 before retrace, but pulled stops up tight. Past 1.9845 now and that 9871 is looming huge. Forgive me as I have had way too nuch caffiene this morning.

Jim
  • #4,653
  • May 23, 2007 6:54am May 23, 2007 6:54am
Quoting hard1head1
Just blew by the 89 heading for the 1.9845 Res. from that lower high, then the 1.9871 which may be an I/T & Trendline I have there also just for G.P. along with the 200 SMA. We shall see how strong this move is.

Jim
Jim, next I/T is 1.9923. The most recent one @ 1.9842 is taken.
  • #4,654
  • May 23, 2007 6:57am May 23, 2007 6:57am
Thanks Tam.

Jim
  • #4,655
  • May 23, 2007 7:00am May 23, 2007 7:00am
Tamara,

One of these days I will learn how you see those. I cant even find it after you give it to me, LOL.

Jim

Jim
  • #4,656
  • May 23, 2007 7:05am May 23, 2007 7:05am
Hi Pips ,
YOU are not alone on missing out on the cable run, but like u said there will be plenty more to come, What i wanted to ask u was ( without getting into the whole time zone thing), did u miss a signal on your hourly chart. I am ET. so on my 4 hour chart the long signal will close at 8:am but in my hourly chart there is a signal to go long at 5:am , your 2:am. Now 1 hour entry signal only go for TC and in the direction of 21 and 89 MA. So will this signal pass as TC since it bounced off teh ZERO.Since it was a news based signal i was not so confidant to take it and also bec i am still working on practicing the relation of 1 hour with 4 hour entry points. sorry guys for the long post but maybe it will help others understand in the same situation. Here is the 1 hour chart the arrow points out the entry point.
Thankyou and good luck with all your trades.
P.S any one with comments and suggestions is welcome to answer and help. THANKYOU ALL!!!!
Attached Image
TRADE WHAT YOU SEE... FOCUS ON SUCCESS
  • #4,657
  • May 23, 2007 7:10am May 23, 2007 7:10am
Quoting hard1head1
Tamara,

One of these days I will learn how you see those. I cant even find it after you give it to me, LOL.

Jim

Jim
This is my current short position of usd/chf. See price at 1.2330 which is the red bar. It goes all the way to the previous inside top. At this level there are 2 nice rejections recently. This short is up 60 pips. All my recent - 3 setups - cable long, swissie short and euro long are profitable.
Attached Image
  • #4,658
  • May 23, 2007 7:20am May 23, 2007 7:20am
Quoting hard1head1
Donna,

I did......LOL

Jim
Nice Job Jim! I'm jealous.... ...looks like you caught the whole move!!! Nicely done!!!!!

Also, I'm posting my charts for the entry question...I put thick pink lines for you to see IT Low's Tam referred you to. Hope it helps you see them.

Donna
  • #4,659
  • Edited 7:57am May 23, 2007 7:26am | Edited 7:57am
Quoting neilbuc
Hey Pips. I missed that too although it was more due to my newness that being asleep. Its 12:42 pm here now and cable was 1.9824 a moment ago. I really wanted to long it this moning at 6-7am, but I didn't for some strange reason. I actaully went long on the EURUSD @ 1.3452 and then got stopped at 1.3430, it then ran all the way back up and the 4hr cable has a huge tail now and the MACD is giving a buy.....dammit! I went long again @ 1.3453 and it now looks to me going where my analysis said it would go.

So, what have I learnt..........the big boys taking it down on important news then running it back up to where it was.

Could you post your chart for cable long entry signal two hours ago? I would like to see if mine was the same and I should have gone long. I am at work so don't have my MT4 charts to post.

Good Luck

Neil
Hi Neil,

Yeah, I know what you mean about wanting to go long...I did too but last time I jumped on a trade right before BOE minutes I got stung. So, I didn't take the long (which was sort of iffy anyway)....then, I fell asleep on the couch and missed the trade! Yikes!! Oh well...wasn't meant to be....

Here is a copy of my 4 hour chart (You guys cant see where my support and res. lines originate...so don't fret about how they are derived, please. Horizontal lines are inside top lows going way back in time. The thick pink lines are for Jim to see the IT Lows). In the next post I'll post the 1 hour chart that had the perfect 1 hour set-up for early entry.

In the meantime, no trades....exhibit patience and no chasing!

Happy day all!

Pips

Jim...oops, I see Tam referred you to the 1.9920ish level for IT L (I remembered wrong)...that is the two inverted hammers under the pink line at the red X
Attached Image (click to enlarge)
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  • #4,660
  • Edited 7:46am May 23, 2007 7:32am | Edited 7:46am
Bil2205 and Neil,

Here is the 1 hour chart...and Bil, yes I would take the zero bounce as an ultimate long signal indicating that the 4 hour will give the bounce at the close of the candle. When I take the signal so early (I still would have had 2 hours on my 4 hour candle before close, I monitor trade closely...but all elements were there for me...

Perfect setup of price moving through and away from 89 on hourly
Bullish engulfing candle w/stinger pointing down
Macd confirming momentum
and support areas had price close above (even on my 4 hour, price closed above the 1.9722 thick line...I liked that...

here's the 1 hour chart...compare it w/the 4 hour posted previously....

Happy trading all!

Pips
Attached Image (click to enlarge)
Click to Enlarge Name: Cable 0523071hour0500AM PST.gif Size: 15 KB
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