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4 Hour Strategy (MACD)

  • #7,421
  • Edited 10:34am Oct 13, 2007 1:59am | Edited 10:34am
Quoting JimTatum
Phillip

Just want to make sure I did not miss any thing. The trade this morning was a trade based on your knowlege or feel for the rthym only. I did not see macd confermation. Is that correct. Or am I reading the charts incorectly?


Thanks for all your feed back

Jim
Partly it was experience but it was also a close below support that could indicate a move further on. I tought the rule that if price break supp/res then you wait for a pullback to the breakout level and then you enter when price moves away and go beyond the previuos low as per yesterdays trade. The pullback might be in one 4H candle thus not effecting the MACD at all. If the pullback is over 2-4 4H candles the MACD might show a TC.

Look at the 1H candles and you will see the pullback nicely as well as a TC on the 1H for yesterdays trade on GbpUsd

Phillip
  • #7,422
  • Oct 13, 2007 7:47am Oct 13, 2007 7:47am
Quoting pips4uandme
This is just a quick post to get us all thinking about what our goals are. I'm assuming most on this thread are not trend traders, and because of this we should be prepared to nibble the market -- Palmer referenced this a page or so back with his style -- It is also my style -- and looks like Phillip's too.

We have been taught by the old axiom's to let our profits run...cut losers quick, etc. We have the mistaken illusion that each trade should produce hundreds of pips. Think about your goals -- how long is your exposure to the market per trade? How many pips are reasonable? Nibbler's do very well too. I traded 3 days over the last 7 -- 2 E/U trades, 2 G/U trades and 1 G/J ( the G/J was closed with 28 pips profit after spread)and finished the 7 day period with 335 pips banked. All trades were "nibblers." Think about what you want and how you best can trade. Forget the "let profit run" axiom and think about ways to minimize your loss, maximize your gain and reduce your risk, while giving yourself the opportunity to be part of bigger moves should they occur. Most of us on this thread aren't trend traders, and we shouldn't be looking to bank +100's pips/lot.....Nothing is more painful than watching +90 go to -50! (yes, I have done this in the past and hated myself for days) ...besides our method of trading allows us to plan another trade to maximize bankable profits! Phillip, as always, is incredibly wise -- pips aren't real until they are banked (once they are banked they become cold hard cash to pay the bills with!).

Hope this sparked a few ideas and thoughts!

Pips
This is why it is important to trade multiple lots...

Per your money management rules, if you trade 1.0 single lot per trade, try trading 3 lots at 0.3 each or 1 at 0.4 and the other two at 0.3. The RapidFire scripts on the web page will execute all three of those at once. Anyway, manage those trades something like the following:

Your first profit target should be the moving average target or that area. When that is hit, exit 1 or 2 positions, move the other stops to b/e or use some of those banked pips to widen that stop but still be pip positive if that stop is hit. There is nothing set in stone telling you 'YOU MUST NOT TAKE A PROFIT BECAUSE'. It's your money. If price keeps running your way with the other lot(s) still open...bump that stop(s) up and let the market rhythm kick in. Let those remaining lots try to turn into those 100 pip moves. It's very hard to stay in a position over a number of weeks for a 200 or 400 pip run. But, if you enter on multiple positions one of those initial entries can turn into one of those home-runs, every once in a while not every time. I don't wait for price to hit the 21 or 89 or 200 EXACTLY. Price action is not perfect, although sometimes it is, so you have to give your targets some leeway. If I'm up 20, 30, or 40 pips in a trade and the moving average is still 10 pips away I'm more than likely already out of that position with the pips in the bank. I then let those remaining lot(s) 'try to get there'.
  • #7,423
  • Oct 13, 2007 8:37am Oct 13, 2007 8:37am
Hello Phil and all,
  • #7,424
  • Oct 13, 2007 8:48am Oct 13, 2007 8:48am
Hello Phil and all,

I have read your documents on your 4 hour system. This looks like a great system. I am eager to paper trade it.

I have been paper trading for about 2 years and I just put some real $$ into an account and was about to start live trading when I saw your post. This system looks like it might be better than what I have been trading.

You discussed market rhythm. I was wondering if there was a separate document on that subject or if that discussion is just contained in the postings to this thread. There are so many postings I haven't been able to find it.

Sorry for the first post. hit the mouse instead of the return button.

thanks
  • #7,425
  • Oct 13, 2007 9:32am Oct 13, 2007 9:32am
When i have time, i read a little of this amazing post.

And I like the doc versions of Phil´s mp3. Thanks for that!

I´m from Brazil and still learning english.
Ps: The Planning you Trade.PDF have 33.000 views!!! This is a record!!

Phil, fell free to answer or not this question, r u living of forex? (its your only work), how many profits per month % u r doing?

Good job, all of u people. Thanks!
  • #7,426
  • Oct 13, 2007 10:39am Oct 13, 2007 10:39am
Quoting Burg611
Hello Phil and all,

I have read your documents on your 4 hour system. This looks like a great system. I am eager to paper trade it.

I have been paper trading for about 2 years and I just put some real $$ into an account and was about to start live trading when I saw your post. This system looks like it might be better than what I have been trading.

You discussed market rhythm. I was wondering if there was a separate document on that subject or if that discussion is just contained in the postings to this thread. There are so many postings I haven't been able to find it.

Sorry for the first post. hit the mouse instead of the return button.

thanks

Hi

If you go to page 289-291 and from post 4335 you will find 13 Lessons which are a summary of the system. Study that and then work through the thread. Especially those about market rhythm as it is the heart of the system.
Phillip
  • #7,427
  • Oct 13, 2007 12:06pm Oct 13, 2007 12:06pm
Thanks Phillip,

I guess I am having trouble knowing when I should be looking at the 1 hr chart for entries. I thought you needed both the 4hour macd and the 1hr?
I guess some of the moves are just from experience.
  • #7,428
  • Oct 13, 2007 12:20pm Oct 13, 2007 12:20pm
Phillip

I do not know how to attach the chart to give example.
But my question is this. Does the current move up give the same signal that the prev gbp move down did.

It broke the prev. resistanse/support line. It closed above it. Then the next bar came back and closed on res/sup line now it is about to break the high of the last couple bars. Would this be an up move to watch for on Sunday?
Thanks for your answer.
  • #7,429
  • Oct 13, 2007 7:29pm Oct 13, 2007 7:29pm
Hi Jim Tatum!

This is regarding Cable -- look at the chart and see how it has been rangebound lately? Also, the area looks like a triple top....And the rhythm is a bit choppy....Ok...Friday's candles: Notice how price broke through the 89 and has pulled back to the 21 (which means that it has also crossed back through the 89)....along w/this motion, price has indeed closed back above a long term support line...and MACD indicates long (but motion/rhythm suggests short)....info is conflicted, right? We have enough info that could support a long or a short trade...so what do you do?

This is a good time to switch to the 1 hour chart and see how price behaves. It is also a great time to plan an either/or scenario. What would you want to see for a short trade to trigger? What would you want to see for a long trade to trigger? Personally, I favor a short play based on this chart -- but I will plan for both a long and a short b/c the market doesn't really care about my thoughts. I will watch the 1 hour chart for a TC down move to confirm (but will most likely wait until after London comes on line -- don't rush this trade on Sunday). The gravestone doji is an interesting candle too....but it is the last one given on Friday and thus may not mean anything other than squaring of position before the weekend. Had this set-up occurred on a day other than Friday, I would have risked a short based on the candles and rejection of previous IT area (my blue lines are IT).

OK...What I'm saying is Cable is not in perfect rhythm at the moment and signals are a bit conflicted, so the best course of action is to wait and see how it behaves and if the behaviour corresponds to a plan you have developed to trade, then you enter.
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  • #7,430
  • Oct 14, 2007 3:18am Oct 14, 2007 3:18am
  •  shauny
  • | Joined Jul 2007 | Status: Still learning and never gonna stop | 127 Posts
Hi.. I fully agreed with pips. The cable is right now unable to decide the direction yet. 4hr showing price has went above the 89, however it could be a TC move from the 8 and 21 area. It can either go up or come down. We gotta look carefully for more confirmation to know where this pair is heading.
  • #7,431
  • Oct 14, 2007 6:50am Oct 14, 2007 6:50am
hello Phillip
Your method is amazing

I use this... on demo

and I would already like to try on real (but I do not have the time sufficiently) :/



my respect
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  • #7,432
  • Oct 14, 2007 7:04am Oct 14, 2007 7:04am
Quoting POCk
hello Phillip
Your method is amazing

I use this... on demo

and I would already like to try on real (but I do not have the time sufficiently) :/



my respect
Hey man, i think you understood how to correctly analyse MACD signals but some of your trades are countertrend trades so i think phillip will tell you about market rhythm wich is heart of this system how i guess-) MACD is real indicator bu it is only INDICATOR!
  • #7,433
  • Oct 14, 2007 7:40am Oct 14, 2007 7:40am
Quoting giogio15
Hey man, i think you understood how to correctly analyse MACD signals but some of your trades are countertrend....

MACD is real indicator bu it is only INDICATOR!

thanks giogio15
like for me signal from macd must always be supported average EMA/SMA

"but some of your trades are countertrend"
write which ?
will taste answer why i made decisions this, not different



I something will learn maybe
  • #7,434
  • Oct 14, 2007 8:33am Oct 14, 2007 8:33am
Hi all,

Would like to ask some questions regarding backtesting.

I was backtesting GBP/USD using the MACD 4 hr system but found it really difficult. It feels really random and stop must be really large (some about 100 pips) in order to give the trade some space to breathe.

My question is,

when backtesting is done, what do you look out for? do you draw trendlines base on the current price and make analysis base on MACD 4hr to see whether trades can be executed?

Thanks
  • #7,435
  • Oct 14, 2007 11:22am Oct 14, 2007 11:22am
Quoting mikewong
Hi all,

Would like to ask some questions regarding backtesting.

I was backtesting GBP/USD using the MACD 4 hr system but found it really difficult. It feels really random and stop must be really large (some about 100 pips) in order to give the trade some space to breathe.

My question is,

when backtesting is done, what do you look out for? do you draw trendlines base on the current price and make analysis base on MACD 4hr to see whether trades can be executed?

Thanks
Mike,
I was wondering Gbp//Us or Gbp/Jpy?
Thanks
Failure, is a wonderful teacher!
  • #7,436
  • Oct 14, 2007 12:31pm Oct 14, 2007 12:31pm
hey mike,

was referring to the cable. i'm currently limiting myself to only 2 pairs being a newbie in forex trading. other one being eur/usd

mike
  • #7,437
  • Oct 14, 2007 1:03pm Oct 14, 2007 1:03pm
Quoting POCk
hello Phillip
Your method is amazing

I use this... on demo

and I would already like to try on real (but I do not have the time sufficiently) :/



my respect
Hi POCK

I see you have anice indicator which shows the time and nacd color at the top >> would you pls post over here so we can use it .. many thanks in advance

Ammar
  • #7,438
  • Oct 14, 2007 5:07pm Oct 14, 2007 5:07pm
Quoting mikewong
Hi all,

Would like to ask some questions regarding backtesting.

I was backtesting GBP/USD using the MACD 4 hr system but found it really difficult. It feels really random and stop must be really large (some about 100 pips) in order to give the trade some space to breathe.

My question is,

when backtesting is done, what do you look out for? do you draw trendlines base on the current price and make analysis base on MACD 4hr to see whether trades can be executed?

Thanks
What a great post! Love to see that you are taking the time to test!!!! Notice that you are finding GBP/USD really difficult to backtest -- which means you would find it really difficult to trade live right now. What you need to do is backtest exactly as you would trade live. This means draw your trendlines, support lines and any other tool(s) you use to trade live. Now, move forward 1 candle at a time. See where your entries would trigger -- write down your entry price, stop, and TP's, along with entry time. Next draw a horizontal line on your chart for your stop and one for your TP....keep going forward 1 candle at a time and manage your trade as if it were live. If your stop is hit, note -X pips or if your TP is hit +X along w/exit candle. Keep updating your chart as if you were sitting in front of it trading for the period of time.

Test at least 50 to 100 trades to start and get a feel for cable. Sometimes the candles are very large and the stops make certain trades unreasonable, sometimes you can plan to enter at a retrace of price -- test for yourself and see what you are comfortable and profitable with.

Great job again! Keep up the hard work necessary to become a profitable trader!!

Pips
  • #7,439
  • Oct 14, 2007 6:32pm Oct 14, 2007 6:32pm
Quoting mikewong
Hi all,

Would like to ask some questions regarding backtesting.

I was backtesting GBP/USD using the MACD 4 hr system but found it really difficult. It feels really random and stop must be really large (some about 100 pips) in order to give the trade some space to breathe.

My question is,

when backtesting is done, what do you look out for? do you draw trendlines base on the current price and make analysis base on MACD 4hr to see whether trades can be executed?

Thanks
The Cable can be a little wild...

On the website under the Tools link there are charts for the EURUSD for the 4hr and 1hr timeframe from the beginning of the year through the first week of October. It's a good exercise to print the charts out and look at the MACD formations and how price reacts to the moving averages. Yes, it's all after the fact but it's good to 'see' it....
  • #7,440
  • Oct 14, 2007 6:44pm Oct 14, 2007 6:44pm
Just an observation on the $Yen:

The weekly chart is right at the 50% retracement. Price has a tendency to linger at that area for a while before deciding which way to go.

The daily is looking like a Tc to the downside.

The 4hr is forming a Rt, albeit a 'weak' one below the .15 line, and had been in a channel for a while. Lingering perhaps? Some bearish divergence with the RSI.

Watching...
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