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The Art of Trading with MTF Stochastics

  • #181
  • Nov 5, 2007 9:03am Nov 5, 2007 9:03am
Good morning Guys,

Ya, I'm feeling better, thanks! Still have a good week or so before I'll be back to "normal" but I'm watching my charts this morning, geting back in the groove, and ready to trade if I can find a good setup.

So far, I'm watching six pairs, but don't see any inspiring stoch setups. Prices are moving against the longterm trend, and I see lots of long wicks, so I'll need a good solid setup to convince me to get in.

Regarding the rope, I've looked at this in the past but can't seem to wrap my little brain around it. I seem to prefer watching individual discrete lines rather than trying to identify patterns drawn from graphic images. Perhaps this is due to my general inexperience and my inability to identify the best time to enter and exit, so all the threads may be clouding my simple thoughts, and I suppose I would prefer to learn the basic fundamentals really well before I try to interpret ropes and threads. Nevertheless, I'll attempt to revisit during the week and will try to spend some quality time with it.

That said, I'm also watching one chart based on boxingislife's "bringing sexy back" stochastic system template, which is also based on MTF Stochastics, and seems to compliment Spud's system nicely. In fact, Spud had mentioned this system as something he followed and considered it worth looking into. It is quite simple to interpret and looks promising.

Good trading everyone!

Quoting moneda
Good morning,

Jeff, are you ready for some Fo..... Hope you are doing fine. This week we have friends visiting us from Colorado so over the weekend I have been reviewing the Thread method. I think I am going to base my entries on the 4hr and fine tune it with the lower time frames. At present we have some elasticity.... I am going for the rope!....hopefully not around my neck



Good luck to all!
Jeff Singer, K2KV
  • #182
  • Nov 5, 2007 10:45pm Nov 5, 2007 10:45pm
Hello Moneda,
I like your charts so much. Can you post your templates?
Thank you
Regards
  • #183
  • Nov 6, 2007 5:42am Nov 6, 2007 5:42am
Hello Moneda,
I like your charts so much. Can you post your templates?
Thank you

Sure Pluto,

Here it is:
Attached File(s)
File Type: tpl spud.240thread.tpl   45 KB | 628 downloads
Unus pro omnibus, omnes pro uno
  • #184
  • Nov 6, 2007 11:29am Nov 6, 2007 11:29am
Hello all,
Is anyone interested in chatting via Yahoo Messenger - we could set up a group for trading MTF stochastics, threads and maybe those bringing sexy back stoch setups. When we identify a very good setup we can post it here to keep this thread going. I'm thinking the group would be small...say 10 - 15 people. And the focus would be only for those using stochastics as the primary tool for trading. I work full time (for now) so for me it would be early mornings and evenings. Others might be able to trade during the day. Any interest?
CanuckCT
  • #185
  • Nov 6, 2007 11:49am Nov 6, 2007 11:49am
Hi Moneda,
thank you so much for the template. Can you also post the template from post 159? I hope that I am not too greedy.
May the pips be with you.
Regards
  • #186
  • Nov 6, 2007 11:50am Nov 6, 2007 11:50am
Hi Canuck,

Funny, I was just thinking the very same thing this morning!

I'm in -- Only thing is, I don't really know how efficient it will be with so many folks. But I'm definitely willing to find out.

We could do either text or audio. What do you think?

EDIT: I trade 9am to 12 noon EST and stay at the computer until 3:30 PM in case something interesting happens.

Quoting CanuckCT
Hello all,
Is anyone interested in chatting via Yahoo Messenger - we could set up a group for trading MTF stochastics, threads and maybe those bringing sexy back stoch setups. When we identify a very good setup we can post it here to keep this thread going. I'm thinking the group would be small...say 10 - 15 people. And the focus would be only for those using stochastics as the primary tool for trading. I work full time (for now) so for me it would be early mornings and evenings. Others might be able to trade during the day. Any interest?
CanuckCT
Jeff Singer, K2KV
  • #187
  • Nov 6, 2007 1:25pm Nov 6, 2007 1:25pm
Hello Jeff,

I've just created a yahooID as follows: [email protected]

I believe we can do either text or audio. Audio might be a bit much with many people.

We can try it.

CanuckCT



Quoting k2kv
Hi Canuck,

Funny, I was just thinking the very same thing this morning!

I'm in -- Only thing is, I don't really know how efficient it will be with so many folks. But I'm definitely willing to find out.

We could do either text or audio. What do you think?

EDIT: I trade 9am to 12 noon EST and stay at the computer until 3:30 PM in case something interesting happens.
  • #188
  • Nov 6, 2007 2:22pm Nov 6, 2007 2:22pm
I already have a yahoo ID -- k2kv!

But I don't have voice set up, only text IM. However, I may stop by Best Buy tomorrow to pick up a headset. And I don't pickup email at that address due to endless spam (I've had the same ID for many years).

I'll try to make contact, and we can take it from there...


Quoting CanuckCT
Hello Jeff,

I've just created a yahooID as follows: [email protected]

I believe we can do either text or audio. Audio might be a bit much with many people.

We can try it.

CanuckCT
Jeff Singer, K2KV
  • #189
  • Nov 7, 2007 6:08am Nov 7, 2007 6:08am
Quoting Pluto2
Hi Moneda,
thank you so much for the template. Can you also post the template from post 159? I hope that I am not too greedy.
May the pips be with you.
Regards
Pluto,

No problema.....Here it is:
Attached File(s)
File Type: tpl spud.srdc15.tpl   10 KB | 511 downloads
Unus pro omnibus, omnes pro uno
  • #190
  • Nov 7, 2007 9:57am Nov 7, 2007 9:57am
Hey guys,

I had followed Spud's original threads, back when they were active, and I had traded MTF stochs with fairly decent success a few months back. For some unknown reason, I then branched off into other techniques with mixed results.

When this thread started up, I thought it might be the right time to get back into the MTF stochs. I have posted a screenshot of my first return to MTF stochs.

As you can see from the picture, this is the GBP/JPY earlier this morning. I had seen the fall in price from the London open, and that price had come all the way down to the S3 pivot point. Then price had been trading sideways a bit, with the M15, M30, and H1 stochs all under 23.6. There was positive divergence on M15, M30, and H1. It was heading into 8:30 am EST, which is always a good time to be looking for a retracement of the move during the London session. A quick fib study suggested that 238.00 looked like a good target. It was close to a 50% retracement, a 61.8% retracement, a 38.2% retracement from a higher point, some pivot points, some prior lows, and it is a psychologically signifcant number (ends in .00).

I went long at 237.51 and set my take profit a little before 238.00. I exited eleven minutes later at 237.94 with +43 pips.

Price has pushed considerably beyond 238.00 now. I am just trying to be happy with my 43 pips.
Attached Image (click to enlarge)
Click to Enlarge Name: GBPJPY 07NOV2007.gif Size: 103 KB
  • #191
  • Nov 7, 2007 1:01pm Nov 7, 2007 1:01pm
Hello Moneda,
thank you for sharing your great templates. I have a problem with the template from post 159. When I load the template on to my charts, only the candle window will show. I am probably missing the indicator that you have used for your stoch. window.
Thanks for your help
Regards
  • #192
  • Nov 7, 2007 2:27pm Nov 7, 2007 2:27pm
Here is a trade I took using H4 and threads. Threads close together and moving above the 20...23.6 level. Waited to be sure they would clear in an orderly manner. + 80 so far, 55 locked.

And I have to confess I took a few bad setups today...thinking i had to trade. It's getting better though. This trade makes up for the smaller losses. 20pip stop for the stupid trades earlier today. Dope!

Cheers,
CanuckCT
Attached Image (click to enlarge)
Click to Enlarge Name: usdcad h4.gif Size: 24 KB
  • #193
  • Nov 7, 2007 3:29pm Nov 7, 2007 3:29pm
Hey Tommy,

Thanks for joining our thread, and for posting your chart. It's so nice to see you here!

At the risk of sounding like an idiot, can you please explain what you mean by, "...positive divergence on M15, M30, and H1?"

Hope you'll stay awhile...



Quoting Tommy_C
Hey guys,

I had followed Spud's original threads, back when they were active, and I had traded MTF stochs with fairly decent success a few months back. For some unknown reason, I then branched off into other techniques with mixed results.

When this thread started up, I thought it might be the right time to get back into the MTF stochs. I have posted a screenshot of my first return to MTF stochs.

As you can see from the picture, this is the GBP/JPY earlier this morning. I had seen the fall in price from the London open, and that price had come all the way down to the S3 pivot point. Then price had been trading sideways a bit, with the M15, M30, and H1 stochs all under 23.6. There was positive divergence on M15, M30, and H1. It was heading into 8:30 am EST, which is always a good time to be looking for a retracement of the move during the London session. A quick fib study suggested that 238.00 looked like a good target. It was close to a 50% retracement, a 61.8% retracement, a 38.2% retracement from a higher point, some pivot points, some prior lows, and it is a psychologically signifcant number (ends in .00).

I went long at 237.51 and set my take profit a little before 238.00. I exited eleven minutes later at 237.94 with +43 pips.

Price has pushed considerably beyond 238.00 now. I am just trying to be happy with my 43 pips.
Jeff Singer, K2KV
  • #194
  • Nov 7, 2007 3:41pm Nov 7, 2007 3:41pm
For those of you following boxingislife's terrific "sexy" stochastics system (he's a very funny guy), here is a perfect setup from earlier today.

20, 50 and 100 had all crossed their signals down, great spacing between them. Cross of 5's down after retrace into overbought is signal to go short. Was looking for that all morning, and the moment it finally set up, my phone rang; two long calls later and it was all over. Would have made up for my dismal loss on a less worthy setup earlier in the day.

Anyhow, I thought it was worth sharing. This is how it's supposed to look.
Attached Image (click to enlarge)
Click to Enlarge Name: 71107trade_eurusd.png Size: 60 KB
Jeff Singer, K2KV
  • #195
  • Nov 7, 2007 4:17pm Nov 7, 2007 4:17pm
Hi CanuckCT, Jeff and Moneda,

You guys are doing a great job! Keep the thread alive, I have been following this thread and been lazy



I think this sysem is simple and you follow it, you'll make pips.

Look at these trades just earlier, I did not take these trades, yes everything looks great in hindsight... as I typing I have closed a trade on demo, where the last bar is bearish on the far right of this picture, all stochs are pointing down (bit of a risk, I don't think I would have took this trade on live account) and closed 18 pips + spread, that would be enough for me for one day!



The key to this system, is watch one pair (2 pairs MAX - this is where and why I made mistakes, too many pairs and then forcing trades) and keep an eye on that pair, when you see the setup, take the trade, take the pips... log off and be done for the day!

I think mantra is the key:

# don't force a trade, it will go against you,
# if you miss a setup, get it out of your head and wait for the next setup
# dont watch too many pairs, mistakes will occur
# don't over trade, if you end up with negative pips, don't try and win them back, be done for the day and get ready for the fight the next day.

I am not an expirenced trader, but am learning, will take some time.

Anyway enough of me rambling... look at the setup below... it happens all day long, do a back test and you will see!

Regards,
Guess
Attached Image (click to enlarge)
Click to Enlarge Name: exmaple.GIF Size: 16 KB
  • #196
  • Edited 4:41pm Nov 7, 2007 4:30pm | Edited 4:41pm
I caught part of that move on the EUR/USD. Got in at 1.4653 and out at 1.4635 for +18. almost missed it. Was watching the CAD/USD. Looked like it was setting up for a sell, but took off straight up for about 150 pips. I wanted to get in but just couldn't do it. Stoch on the 15m was hovering around 80 and turned up instead of down. Glad I waited. There was no indication or announcement that sent it soaring, as it happened around 2 pm CST.

Correction, the CAD/USD is now up 400 pips for the day.
  • #197
  • Nov 7, 2007 7:53pm Nov 7, 2007 7:53pm
Hello PipAV8tor,

There should be more nice trades on this pair in the coming weeks...Canadian economy doing very well, surpluses everywhere, but the stonger the loonie the worse off re trade with US, our biggest trading partner. This is at I believe a 50 year low, or something like that, so it should provide some nice volatility in the coming weeks and it decides what to do now. Some are saying we are at a bottom and if that's true could be a nice bounce. I'm not so sure about that and don't care. Just want to see it moving and take a piece of it.

Cheers,

CanuckCT

Quoting PipAV8tor
I caught part of that move on the EUR/USD. Got in at 1.4653 and out at 1.4635 for +18. almost missed it. Was watching the CAD/USD. Looked like it was setting up for a sell, but took off straight up for about 150 pips. I wanted to get in but just couldn't do it. Stoch on the 15m was hovering around 80 and turned up instead of down. Glad I waited. There was no indication or announcement that sent it soaring, as it happened around 2 pm CST.

Correction, the CAD/USD is now up 400 pips for the day.
  • #198
  • Nov 7, 2007 8:01pm Nov 7, 2007 8:01pm
Hi Guess,

Thanks for joining us and for posting your charts!

Nice setups, especially trade #2. I don't know if I would have taken #1 or #3, though, since the M5 was hardly over 50 when it turned around. Much safer to have the M5 come down from overbought, above 76.4 (imho). When the stoch is in the middle like that it has room to move in either direction.

Good trading, and thanks for your kind words!

Quoting guess121
Hi CanuckCT, Jeff and Moneda,

You guys are doing a great job! Keep the thread alive, I have been following this thread and been lazy



I think this sysem is simple and you follow it, you'll make pips.

Look at these trades just earlier, I did not take these trades, yes everything looks great in hindsight... as I typing I have closed a trade on demo, where the last bar is bearish on the far right of this picture, all stochs are pointing down (bit of a risk, I don't think I would have took this trade on live account) and closed 18 pips + spread, that would be enough for me for one day!



The key to this system, is watch one pair (2 pairs MAX - this is where and why I made mistakes, too many pairs and then forcing trades) and keep an eye on that pair, when you see the setup, take the trade, take the pips... log off and be done for the day!

I think mantra is the key:

# don't force a trade, it will go against you,
# if you miss a setup, get it out of your head and wait for the next setup
# dont watch too many pairs, mistakes will occur
# don't over trade, if you end up with negative pips, don't try and win them back, be done for the day and get ready for the fight the next day.

I am not an expirenced trader, but am learning, will take some time.

Anyway enough of me rambling... look at the setup below... it happens all day long, do a back test and you will see!

Regards,
Guess
Jeff Singer, K2KV
  • #199
  • Nov 7, 2007 9:05pm Nov 7, 2007 9:05pm
Quoting k2kv
Hey Tommy,

Thanks for joining our thread, and for posting your chart. It's so nice to see you here!

At the risk of sounding like an idiot, can you please explain what you mean by, "...positive divergence on M15, M30, and H1?"

Hope you'll stay awhile...
Jeff,

Positive or Negative Divergence can be a very powerful signal, if you can learn to recognize it. Here is a very brief explanation: "Divergence" happens whenever price moves one direction, but the indicator moves in the opposite direction. For example: POSITIVE divergence happens whenever price makes lower lows, but the stochastics makes HIGHER lows. You can see this on the chart I posted. On the price chart there is a white arrow following the collapse of price during the London session. During the same time that the price was falling, the stochastics made higher lows. I placed a white arrow under the significant higher lows to highlight where the divergence took place. So that's what divergence is -- price may be moving down (ie making LOWER lows), but the stochastics are actually moving up (ie making HIGHER lows). This is an early warning signal that the trend is about to change. You can't trade off of it by itself, but it is one of the pieces of information that can help.

Going back to the trade I posted, it was a combination of 1) price falling dramatically during the London session, without any serious retracements; 2) price finding support at a pivot point; 3) price trading sideways shortly before 8:30 am EST; 4) positive divergence on M15 & M30 stochs (upon review, the H1 line did NOT have higher lows); 5)M15, M30, & H1 stochs all under 23.6, bunched together and starting to turn up. All of those pieces of information together gave me the confidence to trade, where no single one would have been sufficient on its own.

Negative divergence is just the opposite of positive divergence. In order to have negative divergence, price will be making HIGHER highs, while the stochastics will be making LOWER highs. Again, this is just an early warning to be prepared for a change in trend, but it cannot be traded until there is some other form of confirmation.

Additionally, whenever divergence is spotted, it doesn't mean that an uptrend will change to a downtrend, or that a downtrend is going to turn up. It could very well mean that the trend will change from either up or down to sideways (ie trendless). So, again, whenever you spot a divergence, whether it be positive or negative, there must always be some other kind of confirmation before a trade should be entered.

If you want to know more about positive and negative divergence, you should read Alexander Elder's fabulous book: Trading for a Living. It really explains divergences in tremendous detail. There are three different kinds of divergences: A, B, and C. Moreover, you can use almost any type of indicator for divergences: MACD, RSI, and Stochastics are probably the most widely used, however.

I really would recommend reading the book. Once you can learn to spot divergences, they will literally jump right off the screen at you, and can give you some really decent advance warning, so you can be ready to take advantage of the trend change at the very beginning.

Hope this helps.
  • #200
  • Nov 7, 2007 9:23pm Nov 7, 2007 9:23pm
Jeff,

I looked through the price action for the GBP/JPY for this week and I found two really good tradeable examples of negative divergence just within the last 24 hours. Take a look at the chart, and if you have anymore questions, I'll do my best to try to answer them.
Attached Image (click to enlarge)
Click to Enlarge Name: Negative Divergence Examples.gif Size: 111 KB
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