The Art of Trading with MTF Stochastics

Quoting k2kv

Disliked

Hi Moneda,

You have a good eye.

Sorry for the error -- it was the 5M that was oversold, not the 15M. The chart itself, however, is not incorrect, just the line definitions. Corrected, they should be 5-30-60-4H not 15-30-60-4H.

I had no trouble replicating the chart for (below) with just the 5M and 4H shown for clarity. Although best viewed on a 15M chart, when viewed in a 5M TF the MTF stoch lines move differently but still demonstrate the same endpoints. That is, except for the 5M which is accurate here since this is a 5M chart and the way I'm set up, my shortest TF line is always the current TF.

In other words, when I change the chart TF to 15M, the first (shortest stoch) line becomes the 15M stoch. When I change the TF to 60M, the first line becomes the 60M stoch, and so on.

My broker is GMT.

I have no explanation for why your chart differs from mine. The 5M clearly went into overbought; If I'm not mistaken, I was chatting with another trader at the time of the trade, and pretty sure he saw what I saw.

No smoke, no mirrors http://www.forexfactory.com/images/icons/icon10.gif

Hope that helps...

EDIT: Unfortunately, old habits die hard. I've mislabeled the 5m line on the chart below as 15M! It is, in fact, the 5M. It's past my bedtime!!

Ignored

Quoting Tommy_C

Disliked

Here's a trade I took at the London open tonight.

Looking at price action leading into the London open, I saw that price was making a double top formation, right at the 61.8% retracement level from the previous day's move. Moreover, that double top happened to be forming right at a significant level: 228.00. The M15, M30, and H1 stochs were all overbought, but the H4 was oversold. This looked like it could be setting up for a rubber band trade. Other signs that price would likely be heading down is that there was negative divergence forming on the M15 stoch.

I went short @ 227.73. My initial take profit was 150 pips down, but the subsequent price action made me nervous. There were some long lower wicks on the down candles. That made it seem like price was having a hard time falling. Additionally, the H4 stoch, while still oversold, was turning up.

Consequently, I decided to let discretion be the better part of valor and close out with +61.

Ignored

Quoting Tommy_C

Disliked

Here's a trade I took at the London open tonight.

Looking at price action leading into the London open, I saw that price was making a double top formation, right at the 61.8% retracement level from the previous day's move. Moreover, that double top happened to be forming right at a significant level: 228.00. The M15, M30, and H1 stochs were all overbought, but the H4 was oversold. This looked like it could be setting up for a rubber band trade. Other signs that price would likely be heading down is that there was negative divergence forming on the M15 stoch.

I went short @ 227.73. My initial take profit was 150 pips down, but the subsequent price action made me nervous. There were some long lower wicks on the down candles. That made it seem like price was having a hard time falling. Additionally, the H4 stoch, while still oversold, was turning up.

Consequently, I decided to let discretion be the better part of valor and close out with +61.

Ignored

Quoting k2kv

Disliked

Hi Tommy,

Very nicely done!

But if I'm not mistaken, I seem to recall from previous conversations that you're located in the US. How do you manage your time so that you're able to trade the London open? Are you up all night? Do you sleep during the day? Take naps? Set alerts? I'd love to trade that time period, too, but can't seem to figure out a workable (tolerable) plan.

This is a common problem for many of us who would like to trade the London open but are geographically disadvantaged.

Much appreciated...

Ignored

Quoting smikester

Disliked

I found this interesting pattern. I'm sure it's caused by scalpers like violins in an orchestra. I actually took two trades from it myself (small lots) just out of curiosity - 20 pip SL and 20 pip TP. Incidentally, I do not usually trade off the M1 M5 M30 H1 set, but use it to help entries. Similarly the digital readout at the bottom.

Ignored

Quoting Tommy_C

Disliked

Thanks Jeff and Moneda.

Jeff -- You are right. I am in the US. Texas, to be exact. So how do I manage to trade the London open, you ask? Well, I just don't get a tremendous amount of sleep during the week. That's really all there is to it. For example: last night I went to bed at about 10:40 pm, but woke up at 12:30 am to watch the market leading up to the London open. I then watched the market, monitoring my trade, until about 3:30 am when I finally went back to sleep...just to wake up at 6 am to go to work. That's about average for me: 3-4 hours a night from Sunday through Thursday nights. Needless to say, I REALLY look forward to the weekends. Sleeping in on Saturday and Sunday are just heaven.

I don't want to be so sleep deprived, it's just that the London session is the most volatile and active. It's the best time, really, to trade forex. The asian session isn't very predictable, and my job doesn't allow me to trade the New York session. Moreover, I have tried to trade from a long term perspective, off the H4 or D1 charts, but that doesn't suit my temperment. I am much more suited to short term trading. I don't like to watch my positions go against me much. I want to get in, get 30-50 quick pips and then get out.

I have dreamed of being a full-time trader my entire adult life. Nothing worth having ever comes easy, so sleep is what I sacrifice to pursue my dream and my freedom.

Ignored

Quoting smikester

Disliked

I found this interesting pattern. I'm sure it's caused by scalpers like violins in an orchestra. I actually took two trades from it myself (small lots) just out of curiosity - 20 pip SL and 20 pip TP. Incidentally, I do not usually trade off the M1 M5 M30 H1 set, but use it to help entries. Similarly the digital readout at the bottom.

Ignored

Quoting CanuckCT

Disliked

Hello smikester

I like your approach here...how about M5, M15 and H1 traded from the M5 chart. I'm liking this one for 10 to 15 pips with little heat.

Cheers,
CanuckCT

Ignored

Quoting k2kv

Disliked

I have no idea what you're doing

Ignored

Quoting marcin25

Disliked

HI.
I am Marcin from Poland,that is my first post.I would like to say that is very nice to see so many people here helping each other,that make me feel beetter.
I am sure we all can make big money with Spuds mtf method,we only need to wait for the best setups and be desciplined,chasing for 10n pips a day is very realistic and I ask you if you want to be profitable ,dont chase for big amount of pips,all you need is 10 pips a day and good managment with your levarage(pip value).
If you dont mind I will post from time to time my setups :enter setup and exit setups,the bad one and the worse one as well,so everybody can lern something.Thank you for Spud and for you to be such nice an helpfull.

that is my todays entry and exit with + 8.6 pip profit.

Ignored

Quoting smikester

Disliked

k2kv, my intended strategy is classic spudfyre mtf stochastics. Anything else is experimentation with very small lots. I am lucky in that work at home so that I can keep my eye on the charts.

I have a working knowledge of most forex principles but I am quite new to mtf stochastics. I found the clarity and confidence of spudfyre's ideas pleasing and when I flicked back through my charts it looked easy. The reality is something quite different, of course.

I need a notice above my workstation saying "IT WILL GO". Spudfyre's short dialogue on stop losses hints that even if we are in the right set up, the initial risk/reward ratio will appear to be wrong for that first 20 pips - at least on GPB/JPY. That's why I keep looking at smaller time frames for entries. I hate it when a trade goes 20 - 30 pips against me in the first 15 minutes and it can happen a lot. When I studied the smaller time frames I found it is possible to ameliorate this problem and keep my brain in good health!

When I read through your thread I was seeing people making the same mistakes, experiencing the same emotions as me and so that is why I'm here. To stop me spilling my coffee all over the mouse mat and stop me shouting at the screen - I am hoping you can all help me make it a bit easier.

Ignored