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4 Hour Strategy (MACD)

  • #7,741
  • Oct 27, 2007 12:27am Oct 27, 2007 12:27am
[quote=pips4uandme;1678572]Hi JimDandy!

I quoted your post b/c I want to reference your chart that you use for it (the 1 hour divergence setup)...Are you looking at bullish divergence with your line? If so, there is a serious problem with it that you need to correct. The starting point on the MACD absolutely has to line up with the candle you start your support/resistance line from. By eyeballing your chart, it doesn't appear to be divergent on this time frame and area.

Happy Pipping to you!
Pips[/quote


Same chart I posted earlier but lines drawn in less of a hurry. Still looks like divergence to me. But maybe not? Maybe i dont know what to look for and need to adjust my eyeballs............
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  • #7,742
  • Edited 5:40am Oct 27, 2007 5:24am | Edited 5:40am
Hello,

Just one thought came into my mind. Do you guys take into consideration the lenght of the signal candle and what`s the maximum size of the signal candle of the different currency pairs that is still valid. Of course R:R must be worth it, but do you have your own rule not to take the trade when the signal candle is more than certain amount of pips unique to each currency pair that you trade.

I know Phillip rule is not to take the trade when the signal candle is more than 50 pips (this rule is about EUR/USD, GBP/USD).

I think it`s not important to have such rule in order to make risk tolerable, couse you can always play with smaller volume (number of LOTs) and if R:R is still ok with big candle and you use smaller volume accourdingly then the risk to the whole account size is tolerable, but the point is that after a long signal candle we can pretty usually see the pullback. While the pullback is occuring (on 4H chart we see the next candle after closing the signal candle moving the other direction we would like to see it moving) we can switch to lower timeframes (1H and 30 min) and see the pullback more clearly and then moving away to the direction where the signal candle on 4H is indicating the price to move (of course in the case when the deal is going right). I have described the situation when the pullback is occuring while the next candle is forming after signal candle, but retracement could take more time and be visable on 4H chart (pullback could be several 4H candles before moving on thre direction signal candle is indicating).

Well... I have just a thought that it could be helpful to have a rule not to take the trade on when the signal candle is larger than the certain amount of pips (different to every currency pair). If the signal candle is larger than this amount that our rule says, then we could have rule there to take the trade on when we see retracement after the long signal candle(bigger than usual and too big to be regular trade). We can see the retracement more clearly switching to the lower timeframes. If there is no retracement after signal candle that`s bigger to fit in our regular signal candle size our rule could say sit tight and do nothing.

Now we can start thinking why not to use entering at retracement after every signal candle that`s big enough to have possibility to show up retracement. That`s not good idea couse there might not be retracement and we just miss the setup that we have waited and let to develop and patiently watched the market come to us and now just hoping to enter at retracement and couse doing that just letting the possibility to make money dissapear. Would you feel good after that eheh... the line must be somewhere. Of course when you have a rule to enter the trade after retracement every time and it really is part of your trading style and it works for you then why not to do it, but I guess it`s not effective tool to use couse you are doing a lot of analyzes and just seeing a lot of good setups walk away from you.

What I`m trying to say with this post at all is that if we take all the trades on, that are showed by the big signal candles (R:R must be OK of course) just lowering the volume and with that making risk tolerable to us, we must be aware of fact that we are going to wait probably much longer time than usually to see these trades develop and while doing it we should take into consideration the news that are coming out (there might be time enough before news release, but trade could need more time for developing) or weekend that`s right there after every 5 days (and if your rule is to close all the positions for weekends, these "big candle indicated trades" might be losers at this stage but might slowly continue developing in your direction.

There are lot of trades out there, and why to take these "long candle indicated trades" to be pain in your a..

The question is - where to draw the line ?

wow... the longest post I`ve ever written
sry. to tire you with my thoughts, but these thoughts are just spinning around my head and I don`t know the answer. Structured conscious energy is just shaping out.

viu
  • #7,743
  • Oct 27, 2007 8:47am Oct 27, 2007 8:47am
viu:

That's an excellent question. And I think the answer is 'trader discretion'. Yes, some of those signal bars can have a very long range and the stop would be just too big. But, you have to ask yourself and try to answer 'Why is the candle so long?'. If it was a news event there are a lot of times where the markets react for a while then return to the original direction. Or is the low/high of that candle approaching a major s/r area, trendline, or Fib#? How many pips away is the 21? Getting in on a retracement is a good way to make that stop more manageable but if price is retracing because one of those events mentioned above is 'starting' to happen, price can keep going with the original trend and your retracement entry can just urn into a loss, bit a smaller one. I'd say to look where the current price is in relation to those events. I've entered several times on retracements if there are no 'roadblocks' present but I tend to be a little more stingy with profit targets because of those long candles. A 50 pip stop is huge and isn't recommended but a retracement (limit) entry can reduce that. Sometimes price never comes back and that long candle does turn out to be a trend change and you start thinking that you missed the boat. A key element in this method is patience. There will be another signal but it might not happen for a few days or a week. What you don't want to do here is hunt for trades with other pairs. I follow only two pairs, the EURUSD and the $Yen and that's it. I just posted in another thread that I'm about 90% there about being 100% patient. I still do stupid things trading but I've almost got it all out of me about no more bonehead trades. Ya gotta "let the market come to you."

Now, who said that???? The Jedi Master himself I believe....
  • #7,744
  • Oct 27, 2007 11:45am Oct 27, 2007 11:45am
Quoting Palmer
viu:

That's an excellent question. And I think the answer is 'trader discretion'. Yes, some of those signal bars can have a very long range and the stop would be just too big. But, you have to ask yourself and try to answer 'Why is the candle so long?'. If it was a news event there are a lot of times where the markets react for a while then return to the original direction. Or is the low/high of that candle approaching a major s/r area, trendline, or Fib#? How many pips away is the 21? Getting in on a retracement is a good way to make that stop more manageable but if price is retracing because one of those events mentioned above is 'starting' to happen, price can keep going with the original trend and your retracement entry can just urn into a loss, bit a smaller one. I'd say to look where the current price is in relation to those events. I've entered several times on retracements if there are no 'roadblocks' present but I tend to be a little more stingy with profit targets because of those long candles. A 50 pip stop is huge and isn't recommended but a retracement (limit) entry can reduce that. Sometimes price never comes back and that long candle does turn out to be a trend change and you start thinking that you missed the boat. A key element in this method is patience. There will be another signal but it might not happen for a few days or a week. What you don't want to do here is hunt for trades with other pairs. I follow only two pairs, the EURUSD and the $Yen and that's it. I just posted in another thread that I'm about 90% there about being 100% patient. I still do stupid things trading but I've almost got it all out of me about no more bonehead trades. Ya gotta "let the market come to you."

Now, who said that???? The Jedi Master himself I believe....
Nice reply, Palmer!!

the bold words are now engraved on my tradestation! Every now and then, I don't know why, but I seem to absolutely make one or two of those (usally on a quick 10 piper).

Happy Saturday All! Last week was great...Next week should be WILD! Prepare your plans ahead of time and think about what types of trades you would like to see.
  • #7,745
  • Oct 27, 2007 12:42pm Oct 27, 2007 12:42pm
Hi
I am away for the weekend. Will only chat on Monday night. If I get the chance I will send signals on Monday 8:00,12:00 and 16:00.
Phillip
  • #7,746
  • Oct 27, 2007 12:47pm Oct 27, 2007 12:47pm
Hey pips! TradeStation aye? That brings back memories of EasyLanguage that was not so easy. Last week was goooood...wondering if things trended so well because of the lack of news to throw anything off. And next week WILL BE WILD I agree. Everyone, please check out next weeks calendar, could get crazy!!!

You veterans may be getting tired of hearing this but to the new faces....

If you check out the website there is some info that you may find helpful. There are two .pdf files of charts under the Tools link that has 4hr and 1hr charts from the beginning of the year through the first week of October with the method indicators for the EURUSD. It's a good exercise to print the charts out and make notes on them. Also, there's been a lot of talk about Tc's this week and there is a 1 hour entry link as well.

And, as usual, if you find any broken links or misspeled werds you can PM me here and pips4uandme will send you a pip flavored lollipop for finding them.....

Peace out dudes....
  • #7,747
  • Oct 27, 2007 6:06pm Oct 27, 2007 6:06pm
Shauny,

Thanks for the quick reply. That is truly helpful info and i certainly feel more confident in taking RT/RB trades. Much appreciated!

One more question for you or anyone else who can help: How significant of a support/resistance line is the 365 EMA when considering an ENTRY? Does it hold as much weight as the 89 and the 200 SMA's, or is it less reliable? I only ask because I've gotten burned a few times.

Thanks again

Brandon
  • #7,748
  • Oct 27, 2007 6:24pm Oct 27, 2007 6:24pm
Brandon:

I think that the further out you go from the 89/21/8 moving averages, the less significant the 365 becomes. I mean when price is in an uptrend the 365 is below everything most of the time. The only real time when the price is around the 365 is when price is ranging for a month or so. Then it can be used as a target area but price looks like it usually uses then 200 even then. I'm just answering this by looking at a chart. If someone else has a better answer please ring in. But, I'd say the 89 is the defining moving average because per the rules if price is above it's a bull and below it's a bear; simple as that.
  • #7,749
  • Oct 27, 2007 7:35pm Oct 27, 2007 7:35pm
[quote=JimDandy;1682861]
Quoting pips4uandme
Hi JimDandy!

I quoted your post b/c I want to reference your chart that you use for it (the 1 hour divergence setup)...Are you looking at bullish divergence with your line? If so, there is a serious problem with it that you need to correct. The starting point on the MACD absolutely has to line up with the candle you start your support/resistance line from. By eyeballing your chart, it doesn't appear to be divergent on this time frame and area.

Happy Pipping to you!
Pips[/quote


Same chart I posted earlier but lines drawn in less of a hurry. Still looks like divergence to me. But maybe not? Maybe i dont know what to look for and need to adjust my eyeballs............
Yes, where you have drawn your lines is divergent...but you changed your candle. If you kept the candle the same, it doesn't look divergent (the candle a few before). Looks like the open candle would have triggered a buy if you were playing solely on divergence. This is different than an earlier post I made b/c I realized your last candle is still open. Good job. Hope your trade played out as you wished.

Best,
Pips
  • #7,750
  • Oct 27, 2007 7:47pm Oct 27, 2007 7:47pm
Quoting Palmer
Hey pips! TradeStation aye? That brings back memories of EasyLanguage that was not so easy. Last week was goooood...wondering if things trended so well because of the lack of news to throw anything off. And next week WILL BE WILD I agree. Everyone, please check out next weeks calendar, could get crazy!!!

You veterans may be getting tired of hearing this but to the new faces....

If you check out the website there is some info that you may find helpful. There are two .pdf files of charts under the Tools link that has 4hr and 1hr charts from the beginning of the year through the first week of October with the method indicators for the EURUSD. It's a good exercise to print the charts out and make notes on them. Also, there's been a lot of talk about Tc's this week and there is a 1 hour entry link as well.

And, as usual, if you find any broken links or misspeled werds you can PM me here and pips4uandme will send you a pip flavored lollipop for finding them.....

Peace out dudes....
Yes, I think last week was easy "slow" trading where things kinda stayed in the groove or ranged before a packed news calander (FOMC and NFP).

Palmer has provided an incredible resource for study that puts everything in one place that is super easy to download and print (can't even imagine the amount of time it took to prepare!). It's a great study tool that can be used anywhere/anytime (if I had to catch public transit, I'd sure be carrying these materials with me for study)! I'll stop now....Hope you all profited last week and are prepared for some great trading next week! hmmmm....Peace out (LOL!) to y'all too!

Best,
Pips

PS...Phillip...Hope you have a great weekend trip!
  • #7,751
  • Oct 27, 2007 10:34pm Oct 27, 2007 10:34pm
  •  shauny
  • | Joined Jul 2007 | Status: Still learning and never gonna stop | 127 Posts
To Brandon,

I feel that 365ema is the not as important as 89/200 because these two MAs are the supportive ones in the system. However, many people has been wondering why do we need 365ema? A situation where palmer has mentioned (thanks palmer), when price starts to range or coming down rapidly, where it neglects all the supportive MAs 89/200, there's why the 365 will have a role to play.

For example, when price penetrates 89(bearish mood), and it continues rapidly to 200 and penetrate it again. 365 is there for you to consider your options for a support or resistance level. Because 365 is mostly below these two MAs or right in between. We all know now 365ema would be the last line of support and resistance, either for a turned around or breakthrough(TC). Most people know this. However, sometimes we encountered 365 is smacked right in between 89 and 200. To me, when this situation happens, I will ignore the 365 or merely used it as a target profit because 89 and 200 still have a larger weightage and priority compared to 365.

This is what I have observed and experienced. Hope this can help those people with dilema on 365ema.

PS: I have been burned by using the 365ema before but I also realized how 365 could be used to further enhance or ignored during different situations. but that's me!!
  • #7,752
  • Oct 28, 2007 2:37am Oct 28, 2007 2:37am
Thanks Palmer and Shauny. I think what I take from this is to not enter trades off the 365 as I would the 200/89 but to use it as a take profit. Would you guys agree with that?
  • #7,753
  • Oct 28, 2007 2:43am Oct 28, 2007 2:43am
  •  shauny
  • | Joined Jul 2007 | Status: Still learning and never gonna stop | 127 Posts
Quoting Brandon LG83
Thanks Palmer and Shauny. I think what I take from this is to not enter trades off the 365 as I would the 200/89 but to use it as a take profit. Would you guys agree with that?
I would say 365ema would be the last option to consider a trade if 200/89 is way off the price at that current situation. Other than that, using 365ema as target profit would be just as fine!!!

PS: I did not say 365ema is not useful, but its only useful when circumstances are right, for this case, there are no other MAs around it..
  • #7,754
  • Oct 28, 2007 8:59am Oct 28, 2007 8:59am
Quoting Brandon LG83
Thanks Palmer and Shauny. I think what I take from this is to not enter trades off the 365 as I would the 200/89 but to use it as a take profit. Would you guys agree with that?

Hi
I will only enter on 365 if it has proven to be supp/res level otherwise I use it when price has moved away from other MA's and TL's only as I possible profit target. It plays a much lesser role.
Phillip
  • #7,755
  • Oct 28, 2007 12:13pm Oct 28, 2007 12:13pm
A few more helpful tools...

The sessions indicator will let you highlight each session a different color. You enter the times of the Asian, London, and NY sessions and specify a color. When applied to a chart, a rectangular block is drawn from the high to the low of the range.

The period separator indicator just draws a horizontal line at the hour you specify. Double click on the color input to change the color to whatever you want. This is a good reference point to see where the new day begins. It does the same thing that I have done for the .pdf downloads for the 1hr and 4hr charts that are on the website for the EURUSD. If you have a different favorite pair that you follow, then you can apply this indicator to that chart. I can put this on the site with 'lucidlamp's' permission. I'm not sure who the author is of the sessions indicator so I'll just have a link back to this post for that one....


Enjoy...
Attached File(s)
File Type: mq4 Period Seperator.mq4   2 KB | 902 downloads
File Type: mq4 Sessions.mq4   8 KB | 751 downloads
  • #7,756
  • Oct 28, 2007 1:49pm Oct 28, 2007 1:49pm
Quoting Palmer
A few more helpful tools...

The sessions indicator will let you highlight each session a different color. You enter the times of the Asian, London, and NY sessions and specify a color. When applied to a chart, a rectangular block is drawn from the high to the low of the range.

The period separator indicator just draws a horizontal line at the hour you specify. Double click on the color input to change the color to whatever you want. This is a good reference point to see where the new day begins. It does the same thing that I have done for the .pdf downloads for the 1hr and 4hr charts that are on the website for the EURUSD. If you have a different favorite pair that you follow, then you can apply this indicator to that chart. I can put this on the site with 'lucidlamp's' permission. I'm not sure who the author is of the sessions indicator so I'll just have a link back to this post for that one....


Enjoy...
Hi Palmer

Tx for the indicator, very helpful for the 5min system. Especially the high and low indications (egdes of the colours).
Willem Forex recipe for success = Patience, discipline & hard work.
  • #7,757
  • Oct 28, 2007 2:23pm Oct 28, 2007 2:23pm
werd up!
  • #7,758
  • Oct 28, 2007 2:27pm Oct 28, 2007 2:27pm
I will say I CT traded for my living for several years off the 3min chart, it works well there. On the 4hr though the best % winning that I have seen is the TC pattern once it gets into rhythm and bounces off the 21, just keep taking them and make money, guess it's too easy for some to do they want to be "Excited". Well being excited to me is not managing a loosing trade. Go back and look at the TC patterns and they are only wrong 1 time, and that is at the end of a trend. Sure taking on a counter trend is sexy because you catch the bottom or top, but when your trying to catch it 2-3-4 times to get the top or bottom just remember I will be making money Also thanks to Phillip for showing this to me.
Keep taking CT trades, I need more money
  • #7,759
  • Oct 28, 2007 2:34pm Oct 28, 2007 2:34pm
Thank you Palmer for the reply to my post.

I think Palmer is absolutely right, it`s all about individual discretion, but why not to engrave this discretion into rules, because rules are there to keep us on the right track. Sometimes there is huge signal candle and there isn`t possibility to enter at retracement and it just continue going. Then we could think we missed the „train” and have to be patient to wait for another. But we still have to fight ourselves to be patient and not to think about the missed trade. We have to repeat saying PATIENCE ! PATIENCE ! PATIENCE ! If we don`t feel any emotions about missing trade like this then we probably don`t need such rule at all. But if we feel we have missed something then there are usually emotions involved.
But if we have a rule like this, after missing a „long candle indicated trade” that didn`t retrace we can just say – RULES and without any emotions wait for another setup.

Just some more thoughts,

viu
  • #7,760
  • Oct 28, 2007 3:29pm Oct 28, 2007 3:29pm
No patience = no pips. Ryanmcd brought up a very good point. The Tc signals are very high probability trades but you must wait for them to develop. I try to steal a few on the 1min and 5min as well. Still, I have to wait for things to line up there as well.
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