Fine tuning Questions for LT users of TD lines

Hi Guys- I like TD lines- but I'd say I trade about one in fifty that I see- basically only the ones with a nice crisp 45 degree defined trend proceeding it and only in the direction of the Daily... Here are some Qs Ive been thinking about, any input would be much appreciated...

1. If the most recent TD pivot to the left of your first TD pivot is not below (above) in an uptrend (downtrend) and so you use the next pivot ie the 3rd to the left - Do you notice any difference in the success rate of the trades?

1. If the breakout candle or even next candle after the breakout candle closes back behind the TD line- do you exit?

1. How do you treat spikes? ie if you have a lines drawn and then it gets spiked through- will you adjust your line a few candles later?

1. Which timeframe do you use to determine the trend? H4, D1 or W1?

1. Fractals seem to form before the completion of the second candle following it- do you wait or not?

1. Which have people found better a pivot with one or two surrounding candles?

Cheers,

-Jerry

Hi Jerry,

Personally, I do trade most of them

1. Not really.

1. No. I accept losses due to immediate opposite direction moves or initial stalling then going in opposite direction. the ones I try to avoid are where the price has partially gone my way and then stalled/ reversed at a certain level (usually a Fibo or a S/R line).

1. Yes.

1. H4. IMHO, it is a nice balance between higher time frames slippage and risked SL and lower timeframes noise.

1. I do wait.

1. Two surrounding candles.

I am testing this partial profit-taking technique where I don't aim for the full target profit goal (high/low-trend line intersection) but rather partially take profit at the next significant potential reversal level (38.2, 50 and 61.8 Fibos, major trend highs/ lows, longer (usually weekly) trend lines support/ resistance) then plan an entry order just above/ below this level in case the direction continued in my favor and so on.

Hi Majd,

Thanks for your response, they are beautiful trades when they just break and power out to the target but I have to say most of my winners have involved retacements very close to my stop. I mostly put it past the previous swing high not just behind the breakout candle- it's the only safe way.

I also agree with your TP policy- I do exactly the same- except I essentially put on two trades- I TP at the first R/S normally about 40/50 pips and then just put a 35/45 trailing stop on the other and let it run.


What i've noticed- is that most of the these trades end up being 'early entries' if you will. As I see it, this is because when there is a change of trend- the first sign is the break of the trendline, then the second is that there is either a failure swing or a double top/bottom the third is a lower low+high formed (in an uptrend). So in effect, most H4 mouteki breaks are trading off of the first piece of information regarding a change in trend and the retracement up to near the stop loss is the failure swing/double top happening.

My solution to this is not to take the first available TD line break in a change of trend, but rather the second. What I mean by this is, e.g. in an uptrend I will wait for a Lower Low to form then this will be my first TD point and my second will in fact be the third point to the left. Thus when this line breaks the downtrend is pretty much already happening and price never looks back- in theory

...So you understand where half my questions were coming from.

Don't get me wrong I'm not tryin to "tell you" anything- just saying it as I see it.

What do ya reckon? Agree/Disagree etc...


-Jerry

Hi Jerry,

Not at all. I believe we are all here to learn and share and I truly appreciate your input.

I agree with you on the "early entries" part and I try to accomodate that by carefully setting my SL points to take into consideration S/R lines and Fibos even if this means comprimising the Reward:Risk ratio as initially discussed by Mouteki forum (2:1 when TP<90 and 3:1 if above 90).

I also try to enhance the trades' success rate by avoiding to take expected breakout entries just below trend highs or just above trend lows but rather wait untill the high/ low is clearly broken and avoid counter longer trend lines (usually weekly) trades.

I am not sure if I understood your entry tactic: do you mean taking your first (right-wise) TD point to be the new low swing after the conventional TD line is broken in an up trend and then drawing your support line using this point and the conventional secone TD point (which is not the one directly to the left but rather the next one)? If so, does the enhancement in success rate make up for the lost pip potential should the trade is taken using the coventional TD line?

Cheers

Majd