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Spud's MTF FIB Breakout System

  • #141
  • Edited 7:53am May 24, 2007 4:04am | Edited 7:53am
Hi guys
I'd like to share this little indicator that I created, it simply alert when price breaks the 0/100 Fibo lines and both stoch(5,3,3) and (14,3,3) for both M30 and H1 timeframe are above 76.4 or below 23.6.
Hope it could help your trading with MTF Spud's systems

http://www.divshare.com/download/724154-183
  • #142
  • May 24, 2007 6:47am May 24, 2007 6:47am
Quoting skyline
Hi guys
I'd like to share this little indicator that I created, it simply alert when price breaks the 0/100 Fibo lines and both stoch(5,3,3) and (14,3,3) for both M30 and H1 timeframe are above 76.4 or below 23.6.
Hope it could help your trading with MTF Spud's systems

http://www.divshare.com/download/722240-e77
Skyline,

Excellent. Nice simple alert indicator.

TimeFreedom
  • #143
  • May 24, 2007 7:01am May 24, 2007 7:01am
Quoting JoshDance
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?
I'll address this with more examples. For 80/20 rule, 50 rule and Escalator to Pips --you MUST read MTF Stochastic in my FF journal to have any idea of what it means. I will post charts here but not re-explain those rules here....these rules are more than well documented in the journal.

MA's are part of Harmonic Stochastics.
  • #144
  • May 24, 2007 7:04am May 24, 2007 7:04am
Looks like we have a SHORT setting up on USDCAD. 14.3.3 and 5.3.3 are both below 23.6% on H1 and M30. Now we wait for a bar/candle close below Fib level 0.

Note: We have news coming out shortly that could help with the breakout, but can also hurt the entry.

TimeFreedom
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  • #145
  • May 24, 2007 7:09am May 24, 2007 7:09am
Here is a chart from Aug 3, 2006 for a Fib breakout. Notice that the 1H and 30M stochastics are not above 76.4. However, a trained eye in stochastics would recognize this as a fairly reliable up pattern.
To filter, we can use the 4H chart and check those stochastics which are above 76.4. The longer the time frame the more influential the signal.
We can also look at the moving averages. Although they haven't crossed the 100 level on the price chart, they are very close.
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  • #146
  • May 24, 2007 7:12am May 24, 2007 7:12am
Here is Aug 4, 2006. Looks almost identical to August 3rd.
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  • #147
  • May 24, 2007 7:17am May 24, 2007 7:17am
Quoting skyline
Hi guys
I'd like to share this little indicator that I created, it simply alert when price breaks the 0/100 Fibo lines and both stoch(5,3,3) and (14,3,3) for both M30 and H1 timeframe are above 76.4 or below 23.6.
Hope it could help your trading with MTF Spud's systems

http://www.divshare.com/download/722240-e77
Skyline,

The indicator doesn't refresh.

TimeFreedom
  • #148
  • May 24, 2007 7:42am May 24, 2007 7:42am
Here is Aug 2, 2006. This is much more complicated and help show the use of multiple time frames in trading. Wait for the ducks to line up and you will have less failures.

The first trade (1) is a typical 80/20 rule opportunity except that in the 80/20 rule the 4H must be in agreement. In this casei t is not so there is no trade entry with the 80/20 rule.
There are also no Harmonic Stochastics with the MA's in the price with the Fib level...the MA's are high at 61.8 Fib level when the stochastics are crossing at 23.6.
So overall there is a lot going against the first trade to use the 80/20 rule.

The second trade adds more complexity. We have what appears a perfect Fib Breakout when price crosses 100 and the 1H and 30M stochastics are above 76.4. However the 4H stochastic is sagging below 76.4. Also, notice the MA's in the price never cross 100.

So here we had a choice. Go with the FIB Breakout rules and suffer a small lose when the 1H 14,3,3 stochastic crossed down below the 76.4 level....or use the 4H and/or MA's as an added filter.

The problem with too many filters is that we will miss many trades that are good. The statistics behind the Fib Breakout rules is that those rules will encounter less wins but the losses are small enough to have little effect on net pips. However, using the filters and having them confirm entries like on Aug 3 and 4th can offer us the opportunity to be a more efficient trader...perhaps when the added filters confirm entry we trade extra lot on that entry. Perhaps we just sit and wait for perfect entries if we can't stand losses.

Again as we practice we "see" more and recognize these patterns and they help us determine our best entries.

The rules as I lay them out are defined to provide simple trading strategies that statistically, if followed properly, should result in positive pips over the long run.

However, all these rules follow some very few and basic concepts that are based on MTF stochastics. MTF stochastics is based on core fundamentals of stochastics. All these fundamentals can be used together to signal and filter trades. Some of us will be artists with these tools and others can't hammer a nail straight...the more we practice with the tools the better we will be using them.
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  • #149
  • May 24, 2007 7:49am May 24, 2007 7:49am
GBP/CHF looking like a set-up coming...
Life is too short to have anything but delusional notions about yourself.
  • #150
  • May 24, 2007 7:53am May 24, 2007 7:53am
Here's a Harmonic Stochastics example.

Remember that the Fib scale on the price chart represents the stochastic scale in a stochastic indicator. The EMA 3 represents the 5,3,3 "%K" line and the EMA 6 represents the 14,3,3 "%K" line.

We can use Harmonic Stochastics when the "price stochastic" lines up with the "true" stochastic indicators.

You can see in the chart below, that as usual the "true" stochastic indicators lead the way of the "price" stochastic to give us an indication to trade a long from 23.6 to 76.4 (80/20 rule).

In this example after the stochastics broke through 76.4 we switch to the FIB Breakout rules. Choices are to stay in the trade at the breach of 76.4 or exit and re-enter as per the Fib breakout rules.

With Harmonic STochastics we are always looking for the "price" stochastics to line up with the "true" stochastics to make some pip music. This always trades in the range between 23.6 and 76.4 and follows the rules of MTF Stochastics as explained in my journal.
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  • #151
  • May 24, 2007 7:54am May 24, 2007 7:54am
Quoting TimeFreedom
Skyline,

The indicator doesn't refresh.

TimeFreedom

Ooops sorry
ok i fixed it

Download link : http://www.divshare.com/download/724154-183
  • #152
  • May 24, 2007 8:37am May 24, 2007 8:37am
Quoting skyline
Ooops sorry
ok i fixed it

Download link : http://www.divshare.com/download/724154-183
Perfect. Working as advertised.

TimeFreedom
  • #153
  • May 24, 2007 9:10am May 24, 2007 9:10am
Quoting Spudfyre
Here's a Harmonic Stochastics example.

Remember that the Fib scale on the price chart represents the stochastic scale in a stochastic indicator. The EMA 3 represents the 5,3,3 "%K" line and the EMA 6 represents the 14,3,3 "%K" line.

We can use Harmonic Stochastics when the "price stochastic" lines up with the "true" stochastic indicators.

You can see in the chart below, that as usual the "true" stochastic indicators lead the way of the "price" stochastic to give us an indication to trade a long from 23.6 to 76.4 (80/20 rule).

In this example after the stochastics broke through 76.4 we switch to the FIB Breakout rules. Choices are to stay in the trade at the breach of 76.4 or exit and re-enter as per the Fib breakout rules.

With Harmonic STochastics we are always looking for the "price" stochastics to line up with the "true" stochastics to make some pip music. This always trades in the range between 23.6 and 76.4 and follows the rules of MTF Stochastics as explained in my journal.
thank you for the explanation Spud. nice example.

one question here, according to the above example of Harmonic Stochastic, it means that 4 hOur Stoch will be totally ignored for confirmation?

am i right abt this spud?
  • #154
  • May 24, 2007 10:05am May 24, 2007 10:05am
Quoting sepak.orang
thank you for the explanation Spud. nice example.

one question here, according to the above example of Harmonic Stochastic, it means that 4 hOur Stoch will be totally ignored for confirmation?

am i right abt this spud?
I didn't chart it, but we could. The 4H was making indications of rising above 23.6.

In this case, say the 4H was at around 61.8-50 and coming down, I would probably question the entry. If the 4H was above 76.4 I'd enter without a doubt. If the 4H was rising anywhere between 23.6 and 76.4, I'd enter. With the 4H below 23.6 and rising...chances are pretty good still but I am then weighing statistics over the 4H and most times I'll go with statistics and grab the trade on the 1H and 30M with price data.
  • #155
  • May 24, 2007 5:15pm May 24, 2007 5:15pm
Quoting iya
For simonr and everybody interested, here's a collection of indicators, I found useful for chart setup:
- H1 candles in a M30 timeframe
- H1 stochs in a M30 timeframe
- Automatic Fibs
There is a problem with the MTF_Stochastic indicator. See the attached chart. The bottom stoch is a true 30M stoch on a 30M chart. This is what it should look like. The top stoch is from the posted indicator. See how different it is? That's because the author simply did a bar-for-bar mapping, and as you can tell, the top two rightmost periods of the faulty indicator match the single bottom rightmost period for the true indicator. So, I have coded the stoch in the middle, and it matches as closely as possible the true 30M stoch. There will be some deviations simply because the number of bars to plot the points is half of what it should be, so the line looks smoother than the true 30M stochs. This is the only way it can be unless you have two separate charts. It's not perfect, it will work for higher-to-lower TFs (like a 4HR chart with any lower TF), but it probably doesn't quite work for 1D-to-4HR charts, and it definitely does NOT work for lower-to-higher TFs. But I'll post it so people can have a correct indicator to work with.
Attached Image (click to enlarge)
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Attached File(s)
File Type: mq4 Stoch Overlay.mq4   3 KB | 884 downloads
  • #156
  • May 24, 2007 7:06pm May 24, 2007 7:06pm
Spud,

I notice you are using 76.4 as a fib level are you sure that's correct?
I thought the closest to 80 should be 78.6.

Also, thanks for this interesting system which I've applied to Amibroker.
  • #157
  • May 24, 2007 7:23pm May 24, 2007 7:23pm
Quoting ergon
Spud,

I notice you are using 76.4 as a fib level are you sure that's correct?
I thought the closest to 80 should be 78.6.

Also, thanks for this interesting system which I've applied to Amibroker.

For what it's worth 76.4 is the fib number I have been using for years also it is the invert of 23.6.
  • #158
  • May 24, 2007 7:54pm May 24, 2007 7:54pm
Quoting ergon
Spud,

I notice you are using 76.4 as a fib level are you sure that's correct?
I thought the closest to 80 should be 78.6.

Also, thanks for this interesting system which I've applied to Amibroker.
Well, actually 78.6 is not a fib number either. .236, .318, .618 are the actual fib numbers, and .5 and .786 are used anyway. But lots of traders use it. I'd say I've seen more traders use 78.6 versus 76.4, which is what matters. But they're pretty close either way.
  • #159
  • May 25, 2007 5:49am May 25, 2007 5:49am
Yes, your right. None of the the numbers you and I quoted are fib numbers. Fib numbers are actually integers. But we traders tend to use ratios of fib's although I don't think using the ratios is the best way of using fib values for determining a TP. I prefer to use the integer value. Sorry to have taken this thread off topic. I won't say any more about this.
  • #160
  • May 25, 2007 11:07am May 25, 2007 11:07am
Quoting ergon
Yes, your right. None of the the numbers you and I quoted are fib numbers. Fib numbers are actually integers. But we traders tend to use ratios of fib's although I don't think using the ratios is the best way of using fib values for determining a TP. I prefer to use the integer value. Sorry to have taken this thread off topic. I won't say any more about this.
Actually it was a good question so here's how we come to use 76.4 and 23.6:

The Fibonacci number sequence is:
{1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, 233, 377, 610, ... } It is the first number + the next number equals the 3rd number....so 233+377 = 610

Since stochastics are on a percentage range from 0-100, I wanted the Fibonacci numbers in the price chart to represent 0-100% as well. I also wanted to use a scale based on Fibonacci...because I love Fibonacci numbers.

So to get a percentage with Fibonacci numbers one must divide a group of numbers that derived the Fibonacci numbers....so 233+377 = 610 then 233/610=0.382 and 377/610 = 0.618. As you can see we will always get 100% this way...0.382+0.618 = 1 is the same in percentage as 233+377=610.

So to get 76.4 and 23.6 (which are Fibonacci percentages):
Take the sequence 144,233,377,610
144/610 = 0.236
and to get 76.4 take the sequence 89,144,233,377,610
(89+144+233)/610 = 0.764

There's more to it, without explaining how numbers converge the Fibonacci numbers always converge to (in percent);

23.6%, 38.2%, 50%, 61.8%, 76.4%
so
23.6%+76.4% =100%
38.2%+61.8%=100%
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