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Spud's MTF FIB Breakout System

  • #121
  • May 22, 2007 10:02pm May 22, 2007 10:02pm
Hi guys,

I am struggling with this chart posted by spud.
From what I can see: the price drops dramatically and retraces in the following bar. As the opening price (after the drop) is below the previous day low, and the stochs are both below the 23.6 mark, should this not dictate a short entry?
-I am looking at the chart in context of this thread (breakout system).
Am I missing the significance of the 2 x MA's?
If so please could someone enlighten me.
Regards
Paul.
  • #122
  • May 23, 2007 2:59am May 23, 2007 2:59am
Hi spud could you please tell me if we should wait for bar close to exit or exit if the stoch just goes above 23.6 or below 76.4 i understand that the safest way to enter is to wait for bar close.

With Many Thanks

David-T
  • #123
  • May 23, 2007 6:04am May 23, 2007 6:04am
Spud, I need to clear something up please. You mention in your basic techniques to exit at the 80 for long or 20 for short, levels. However, for the fib breakout you exit when price crosses back over 80 or 20.

Firstly, if there is opportunity for more pips when price crosses back over (after penetrating the area), why is the exit strategy different for the basic system compared with the fib breakout system?

Secondly, which line do we rely on for the exit, the 14,3,3 or the 5,3,3.

Many thanks for your hard work.
  • #124
  • May 23, 2007 7:45am May 23, 2007 7:45am
Quoting pjimmyinahouse
Hi guys,

I am struggling with this chart posted by spud.
From what I can see: the price drops dramatically and retraces in the following bar. As the opening price (after the drop) is below the previous day low, and the stochs are both below the 23.6 mark, should this not dictate a short entry?
-I am looking at the chart in context of this thread (breakout system).
Am I missing the significance of the 2 x MA's?
If so please could someone enlighten me.
Regards
Paul.
I've included a graphic that may clear up your question. Once we cross the 76.3 or 23.6 boundaries we are into a different world than the area between 23.6 and 76.3. So the rules change. My example was just showing one segment of trades but in the dip you would have applied the Fib Breakout rules when price closed below 0.
Attached Image
  • #125
  • May 23, 2007 7:49am May 23, 2007 7:49am
Quoting David-T
Hi spud could you please tell me if we should wait for bar close to exit or exit if the stoch just goes above 23.6 or below 76.4 i understand that the safest way to enter is to wait for bar close.

With Many Thanks

David-T
You can do both, but I suggest bar close. Bar close takes out any discretion.
Having said that, there are live circumstances that make discretionary trades obvious at the time and the more experience you are trading these methods the more obvious they become.

For "argument" sake or for lack of "arguments" I state using the close so there are no discretionary moves....especially when you back test.

I would estimate that by trading with discretion which is more prone to error and simply using the closes will make little difference to the bottom line in the long run.
  • #126
  • May 23, 2007 8:06am May 23, 2007 8:06am
Quoting Porkpie
Spud, I need to clear something up please. You mention in your basic techniques to exit at the 80 for long or 20 for short, levels. However, for the fib breakout you exit when price crosses back over 80 or 20.

Firstly, if there is opportunity for more pips when price crosses back over (after penetrating the area), why is the exit strategy different for the basic system compared with the fib breakout system?

Secondly, which line do we rely on for the exit, the 14,3,3 or the 5,3,3.

Many thanks for your hard work.
Your question is probably answered in post 124, but I'll address it just in case.

Stochastics do not function in the same way above 80 or below 20 as they do between the 20-80 area. This is because stochastics are extremely reluctant to hit 0 or 100....how many times do you see it? (almost never).
In otherwords, there is no reliable way to read stochastics above 80 or below 20...a move up or down in these extreme zones are full of divergences or fakes and have almost no visual relation to price moves.

However when the stochastics leave these extreme zones we are back into the "normal" world where stoch moves and price relate.

The 14,3,3 exit on the 1H crossing below 80 or above 20 is a "slow" average of the stochastic when it was in the extreme zones and therefore is our most reliable source as an exit signal when trading the fib breakout.

When trading between the 23.6 and 76.4 zone the best move is to "get out" of a normal trade as the time frames start hitting the extreme entry ranges of either 23.6 or 76.4.

The problem of the extreme range before price levels cross the 0 or 100 Fib and stochs are floating in the extreme zones is that the stochastics are extremely unstable. This means that just about anything can happen.

If you trade long, say from 23.6 (using the 80/20 rule) and then hit 76.4, you can either exit and wait for a Fib Breakout, use the Fib breakout exit rule when the 1H 14,3,3 recrosses 76.4 (and hope a breakout occurs inbetween), or exit and then re-enter when the breakout rules come into play.
  • #127
  • May 23, 2007 9:00am May 23, 2007 9:00am
Hi Spudfyre
Thank you again for the great system. I am following your instructions
and getting very good results
This question is for banzai
Please dont think this is a dumb question but what is the purpose of
the b-clock?
Senbanda
  • #128
  • May 23, 2007 9:32am May 23, 2007 9:32am
Spudfyre,

Can you show us yesterday's GBPJPY long trade and today's GBPUSD long trade to help us confirm these trades?

Thanks in advance,

TimeFreedom
  • #129
  • May 23, 2007 10:03am May 23, 2007 10:03am
Hi Spud,

I want to confirm if this is a valid entry from earlier today on the GY. Price closed above the 100 fib, and the 5.3.3 and 14.3.3 stochs were above the 76.4 level. If so and this is a valid entry, then we should be up 120ish pips since the 14.3.3 has yet to cross back down over the 76.4 level.

Thanks!
Attached Image (click to enlarge)
Click to Enlarge Name: mtffib.gif Size: 26 KB
  • #130
  • May 23, 2007 10:12am May 23, 2007 10:12am
Quoting banzai
Version 1.3: MTF (Multi Time Frame)

This time I go MTF. In addition, I added some dots if Stoch (14,3,3) crosses over 23.6% or 76.4%. Only Stoch (14,3,3). You can turn the dots drawing on or off. Attach is a template too.

http://img77.imageshack.us/img77/117...222007ary2.gif
When I load this templete I do not get the stoch panes, is there something more that I need to do? Thanks!
  • #131
  • May 23, 2007 10:58am May 23, 2007 10:58am
Quoting nitrofx
Hi Spud,

I want to confirm if this is a valid entry from earlier today on the GY. Price closed above the 100 fib, and the 5.3.3 and 14.3.3 stochs were above the 76.4 level. If so and this is a valid entry, then we should be up 120ish pips since the 14.3.3 has yet to cross back down over the 76.4 level.

Thanks!
Yes nitro, that was todays entry.

There was a discretionary entry yesterday that would still be in if you'd taken it.

G-Man
  • #132
  • May 23, 2007 11:27am May 23, 2007 11:27am
Quoting Spudfyre
You can do both, but I suggest bar close. Bar close takes out any discretion.
Having said that, there are live circumstances that make discretionary trades obvious at the time and the more experience you are trading these methods the more obvious they become.

For "argument" sake or for lack of "arguments" I state using the close so there are no discretionary moves....especially when you back test.

I would estimate that by trading with discretion which is more prone to error and simply using the closes will make little difference to the bottom line in the long run.
Hi Spudfyre thank you for the info it has helped.

David-T
  • #133
  • May 23, 2007 11:54am May 23, 2007 11:54am
Quoting senbanda
Hi Spudfyre
This question is for banzai
Please dont think this is a dumb question but what is the purpose of
the b-clock?
Senbanda
lol, I just copy the template in post #1. Follow the leader.
  • #134
  • May 23, 2007 12:09pm May 23, 2007 12:09pm
Quoting senbanda
Hi Spudfyre
Thank you again for the great system. I am following your instructions
and getting very good results
This question is for banzai
Please dont think this is a dumb question but what is the purpose of
the b-clock?
Senbanda
The b-clock just provides how much time is left until candle close....in this way you can live by the hour and time your coffee breaks etc. Purely for life functionality vs trading functionality.
  • #135
  • May 23, 2007 12:10pm May 23, 2007 12:10pm
Quoting nitrofx
Hi Spud,

I want to confirm if this is a valid entry from earlier today on the GY. Price closed above the 100 fib, and the 5.3.3 and 14.3.3 stochs were above the 76.4 level. If so and this is a valid entry, then we should be up 120ish pips since the 14.3.3 has yet to cross back down over the 76.4 level.

Thanks!
They don't come much more defined than that. GU did the same by the way a little later.
  • #136
  • May 23, 2007 12:15pm May 23, 2007 12:15pm
Yeah, it worked really well over the past couple of days. I've been watching how it works on the other currencies that tend to move well - EJ, GC, and GU.
Life is too short to have anything but delusional notions about yourself.
  • #137
  • May 23, 2007 1:41pm May 23, 2007 1:41pm
Sorry for this stupid question, but how do you get the charts to show two stoch windows (one for H1 time frame and one for M30 time frame)?

Thanks
  • #138
  • May 23, 2007 3:15pm May 23, 2007 3:15pm
Quoting Spudfyre
I've included a graphic that may clear up your question. Once we cross the 76.3 or 23.6 boundaries we are into a different world than the area between 23.6 and 76.3. So the rules change. My example was just showing one segment of trades but in the dip you would have applied the Fib Breakout rules when price closed below 0.

Thanks for the cool image Spud. But doesn't that confirm the short entry from post #111?

[IMG]file:///C:/WIP/MA2.jpg[/IMG]
Attached Image
  • #139
  • Edited 6:38pm May 23, 2007 5:02pm | Edited 6:38pm
Quoting pjimmyinahouse
Thanks for the cool image Spud. But doesn't that confirm the short entry from post #111?

[IMG]file:///C:/WIP/MA2.jpg[/IMG]
My apologies, I had thought I had put this in the Forum but I had answered in a PM.

Anyways, my scale ends at +200 and -100 for good reason, this is where I pretty much limit my trading as the number of times price exceeds these boundaries is quite rare.

Although this meets the criteria for signals, the fib break is well done before we get a signal to enter, so best to wait for the next one. In this example the break is almost at -76,4 before we get a signal, leaving little room for pip gains.
Attached Image
  • #140
  • Edited May 24, 2007 1:01am May 23, 2007 11:34pm | Edited May 24, 2007 1:01am
Spud, thanks so much for this system--I'm super excited about it and have been backtesting some today, and look forward to testing this in the coming weeks!

So from what I've gathered, we have two types of trades:

1) Breakout trade--when price breaks above 100 or below 0 on our fibs, and both stoch TFs (1H and 30M) confirm with > 76.4 for price above fib100, or < 23.6 for price below fib 0. Close trade when 1H 14,3,3 stoch crosses back into regular territory (< 76.4 for exiting a long trade, > 23.6 for exiting a short trade). Correct?

2) This is the one I'm unsure about--Fib/stoch harmony--when stochs are going in the same direction as price, at a similar fib level (for example, price goes from the 23.6 fib level up, and stochs are going up at the 23.6 fib level as well). I'm not really clear on this, but am I on the right track?

If the "80/20 rule" is what you took on Feb 9, then that seems to conflict with the standard breakout rule for crossing below the 23 stoch line... or am I confused? Also, I'm a little fuzzy on the "50 bounce" rule... I guess those are in your journal, and I'm headed there to check out the thread now. But if it's not, can you briefly describe what you mean?

One last thing--though you mentioned the 3 and 6 MAs, I haven't yet seen you use them--did I miss an example?
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