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MTF Stochastics

  • #761
  • May 25, 2007 1:36pm May 25, 2007 1:36pm
Quoting PiPr Pro
are the live trading sessions still being held?
if so, where?
Spud, answered my question here
http://forexfactory.com/showpost.php...&postcount=164
  • #762
  • May 26, 2007 11:17am May 26, 2007 11:17am
I am deeply sorry if this has been covered. I have gone thru as much of this forum as possible. That said...

Trending markets need trend-following indicators, such as moving averages, the MACD, and so forth. Trading-range markets, on the other hand, need oscillators, such as the RSI, stochastics, and so forth, which use overbought and oversold levels. So, identifying whether the market is range-bound or trending is extremely critical


Since stochastics are for range bound markets, has anyone tested using ADX as a filter to establish WHEN to use the stochastics? Apparently when declining from 30-20, ADX indicates consolidation or when less than 20 the market moves in small swings are best signals from stochastics.
  • #763
  • May 26, 2007 2:01pm May 26, 2007 2:01pm
Quoting elskid
I am deeply sorry if this has been covered. I have gone thru as much of this forum as possible. That said...

Trending markets need trend-following indicators, such as moving averages, the MACD, and so forth. Trading-range markets, on the other hand, need oscillators, such as the RSI, stochastics, and so forth, which use overbought and oversold levels. So, identifying whether the market is range-bound or trending is extremely critical


Since stochastics are for range bound markets, has anyone tested using ADX as a filter to establish WHEN to use the stochastics? Apparently when declining from 30-20, ADX indicates consolidation or when less than 20 the market moves in small swings are best signals from stochastics.



To read a trend with stochastics, I use the following method....

4H, 1H, 30M and 15M chart

Say the 4H stochastic is around 38.2 and headed up

If the 15M moves from the 20 level (23.6) to above 80 and falls again to 20 and the 4H still rises then we know we have a good up trend. Strength of trend inproves if this cycle follows for the 30M and 1H. This can also be applied using the day chart. The more lower time frame cycles we have that move between oversold and overbought while the longer term cycles move in one direction it is easy to tell the strength and direction of trend.
  • #764
  • May 27, 2007 11:50am May 27, 2007 11:50am
Just want to tell you what a great help youve been....ive tried several systems already but cant seem to make em work...

I know other people have been using those systems and they seem to get positive results (except me)...it gets really frustrating specially when youre a forex neophyte..

i guess its not just the system but the system must also match the trader

this MTF stoch of yours seemed to fit me like a glove

im comftable with it and am using it to trad euro/USD..will be following this thread and again much thanks man!
"it doesn't come any sharper than this!"
  • #765
  • Edited 5:17am May 28, 2007 5:03am | Edited 5:17am
GBPUSD short at 198.27
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  • #766
  • May 28, 2007 9:00am May 28, 2007 9:00am
Quoting Spudfyre
During the course of running the data analysis on TEB's idea I began to notice a pattern that may be interesting to study. I hope a few people will grab their computer screens and pencils and put this idea through it's paces because it looks unbelievable simple and seems to generate great trades and save you from bad ones.

This is for short period trading....you won't linger in too many trades too long with this. On the 30/1H you will average about 35 pips a trade that last about 3 candles.

Take any of these time frames:
5/15, 15/30, 30/1H, 1H/4H

Set a level line on your 5,3,3 stochastic at 61.8 and 38.2.

Your entry/exit is always with the smaller time frame.

The smaller time frame should be one step (one candle) ahead of the longer time frame for the cross or one step behind...or exactly the same. This is optional if you are conservative and a common pattern. However, you do not want the longer time frame ahead more than one step of the shorter time frame.

On a long, whenever both tf's cross or are above 61.8, buy long.
On a short, whenever both tf's cross or are below 38.2 buy short.

You can add greater risk if the longer time frame is "near" the cross in the direction of your trade. The longer tf should be across 50 level. This may prolong your trade and could add some risk.

If you don't have this correlation of the 2 time frames, you don't have a trade. This is your filter mechanism.

You can use this also as an entry point for any MTF trade method I have explained earlier. This will help you enter trades without much draw down. Use it as a tool or as a system.

Exits are a little more tricky if you use this as a system.
If the shorter time frame goes above 80 on a long or below 20 on a short, you definitely want to be out before it recrosses 80/20.
If you nab some pips within 3 candles on the shorter time frame, you may want to exit.
If the longer time frame is looking like it will go above 80 on a long or below 20 on a short you may want to ride it out.
If the trend is with your trade you may want to stick it out...use a trand channel.
You will quickly notice an average pip gain, you may want to TP that.

You need not worry what direction the long term trend is in for this method to work, it works regardless of long term trend direction.

If you like, think of this as a scalping method to be used on the pairs I mentioned.

I have measured about a 95% success rate with a 95% statistical confidence level through random sampling.....using 859 random samples out of 5,000 possible most recent trade opportunities. That's the historical data anyways. I measured GBPJPY, GBPUSD and EURUSD.

As a system this is a good method if you do not want to trade with much risk for quick pips. You do have to be disciplined, not greedy and just grab pips as they come.
Hi Spud,

You posted this and the following post a while back but there does not seem to have been much response to this either here or on the chat room. Are you still keeping this idea as part of your arsenal or have you moved in favour of the harmonic stochs?

If is is possible I would love to see the results you did on the testing of this method. Please PM me if you wish.

Thanks,

G-Man
  • #767
  • May 28, 2007 12:20pm May 28, 2007 12:20pm
Quoting G-Man
Hi Spud,

You posted this and the following post a while back but there does not seem to have been much response to this either here or on the chat room. Are you still keeping this idea as part of your arsenal or have you moved in favour of the harmonic stochs?

If is is possible I would love to see the results you did on the testing of this method. Please PM me if you wish.

Thanks,

G-Man
Still a work in progress. I am experimenting with it on scalp and with MTF Fib early entries.
  • #768
  • May 28, 2007 12:24pm May 28, 2007 12:24pm
7 Hours have passed on my GU trade and nothing spectacular is happening. The 4H still favours the trade so holding. The 1H has x23.6 stochastic for a 1H exit at -9 pips, I am sticking to 4H exit.

The 1H and 30M stochastics look like the may begin a down turn. There is a large amount of "elasticity" (the 5,3,3 and 14,3,3) have separated on the 1H stochastic which means there will be a move for those stochastics to come back together.
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  • #769
  • May 28, 2007 4:56pm May 28, 2007 4:56pm
Quoting Spudfyre
Still a work in progress. I am experimenting with it on scalp and with MTF Fib early entries.
Thanks Spud.

I await any further posts on this with eagerness.

If I feel like I can add anything in the meantime I'll let you know.

G-Man
  • #770
  • May 28, 2007 5:25pm May 28, 2007 5:25pm
Trading has been a slow day with the holidays. I'm still in my short GU trade as the 4H 14,3,3 stochastic has remained below 23.6.

The 4H Ma's are riding along the 0 line. So this trade keeps on going. Have seen some price action in the last few minutes...might grab a few pips before the Eur market opens.
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  • #771
  • May 29, 2007 2:19am May 29, 2007 2:19am
Spud,

The CAD this morning (London Session) was showing a good 80 drop short signal on the 15/30 and 1hour. The 4 hour however was trending up on Stoch with the 5,3,3 charging up at above 61.8 and the 14,3,3 was trending up but below 38.2. Given the 15,30 and hourly stoch harmony and the elasticity of the 4 hour stoch (even though both the 14 and 5 were trending up), could this have been a plausable short entry?
  • #772
  • May 29, 2007 3:45am May 29, 2007 3:45am
Does anyone have a simple stochastic indicator that will alert if the H1 14,3,3 crosses back over (long or short)?

So if in a long and H1 14,3,3 crosses back down over 76.4 you would receive an alert. It would be nice if this had the option to alert only on bar close or whenever it occurs. And if in a short and 14,3,3 crosses back above 23.6 you would receive an alert. If this indicator could be loaded onto the chart and either of these signals could be checked true or turned on then we could be alerted.
  • #773
  • May 29, 2007 4:54am May 29, 2007 4:54am
I exited my GU trade late last night at about 6:45 GMT. Although the 4H 14,3,3 stochastic had not crossed the 23.6 line, the 1H and 30M were indicating long and the 4H looked to be climbing. Best to let go of 13 pips than risk anymore.
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  • #774
  • May 29, 2007 4:59am May 29, 2007 4:59am
Quoting Porkpie
Spud,

The CAD this morning (London Session) was showing a good 80 drop short signal on the 15/30 and 1hour. The 4 hour however was trending up on Stoch with the 5,3,3 charging up at above 61.8 and the 14,3,3 was trending up but below 38.2. Given the 15,30 and hourly stoch harmony and the elasticity of the 4 hour stoch (even though both the 14 and 5 were trending up), could this have been a plausable short entry?
In any 80/20 trade I want the 4H leading the way and being the first indicator of direction for the 1H and 30M to follow. So in this case with the 4H moving opposite to the 1H and 30M I wouldn't go short....at least not until the 4H is going short too.
  • #775
  • May 29, 2007 8:55am May 29, 2007 8:55am
Quoting Spudfyre
In any 80/20 trade I want the 4H leading the way and being the first indicator of direction for the 1H and 30M to follow. So in this case with the 4H moving opposite to the 1H and 30M I wouldn't go short....at least not until the 4H is going short too.
so you don't give any weight to elasticity on the 4hour. If not, when would you recognise it as a valid indicator?
  • #776
  • May 29, 2007 10:58am May 29, 2007 10:58am
Quoting Porkpie
so you don't give any weight to elasticity on the 4hour. If not, when would you recognise it as a valid indicator?
It isn't the "elastic" part we have to worry about, it is where they converge that matters. Elasticity is predictive to a price move..when the stochs converge there is a price move. During the elasticity either the 5,3,3 will move to the 14,3,3, the 14,3,3, will move to the 5,3,3, or they will move together and converge. In this case we would want the 4H's to converge in the higher levels and make an indication of a move down to go short.

An interesting aspect of the EMA3/EMA6 is that they can help predict the direction of convergence. If you put these MA's on USDCAD 4H, you will see the MA's cross just before the big down move. More important is that the EMA 3 is under the EMA 6 - which usually means price going down. That would help point to the 5,3,3 converging to the 14,3,3.

The elasticity/convergence of the stochs is an extremely powerful indicator but we need to know the direction of convergence and then determine direction at convergence.
  • #777
  • May 30, 2007 10:00pm May 30, 2007 10:00pm
Due to time constraints I'm going to limit my time in the chat for now from 9 am to noon est Mon-Thurs. If you want to discuss trades or walk through trades using my systems, I'll be there to answer any questions.

www.tradingrooms.com room:MTF Traders
  • #778
  • Edited 3:31pm May 31, 2007 1:14pm | Edited 3:31pm
While in chat today, a trader (EMDA) suggested we look at the 39,3,3 stochastic in movement with the 14,3,3.

I played with a variety of basic rules and although my computer is slogging through reams of data, I thought I'd show you what I came up with so far in the preliminary study and how I would use it.

1H chart, only 2 stochastics 14,3,3 and 39,3,3 %K lines overlaid in one window.

Entry follows the 80/20 rule...however both stochs must cross 23.6 up (long) or must cross 76.4 down (short).
The exception is that where whipsaws occur around the 76.4 or 23.6 line we will enter a long if the stochastics cross down then back up the 76.4 level or vice versa at the 23.6 level....see the chart below.

These entries also become final exits. So this is really a short/long/short/long....type of trading.

I say "final" exits because this is where we must exit and enter a new trade. However, earlier exits are recommended when pips are maxing or when we have reached a target. In other words final exits are not necessarily the best exits. Most best exits will happen in the oversold or overbought range...watch for turns in stochastics and price.

Here's a chart of the system. Very simple and seems to work well.
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  • #779
  • May 31, 2007 1:47pm May 31, 2007 1:47pm
Below is GJ and EJ on 1H charts getting ready perhaps for a cross. I'll be entering these trades on the basis of the 1439 system. See what happens. Both trades will initiate when both stochs cross 76.4 and entry will be short.
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  • #780
  • May 31, 2007 2:13pm May 31, 2007 2:13pm
I entered UJ late but see price went higher than at entry so I figure it may be a good opportunity.
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