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The Art of Trading with MTF Stochastics

  • #321
  • Nov 16, 2007 9:19am Nov 16, 2007 9:19am
Hi Canuck,

I have no problem with requests for help with alerts or indicators, etc. However, it is my intention to keep the subsequent discussions as thin as possible, so as not to interfere with the core focus of this thread which is, of course, trading the MTF Stochs.

I want to maintain this thread in such a way that newcomers will not be impeded in their learning process, and I want to ensure that everyone interested in our core topic can easily move through the entire thread without being bogged down in endless discussions about ea's, alerts, and the like.

So, all I ask is that, once two (or more) parties decide to pursue the creation of an alert, etc., you please take further discussions off the board until you are ready to share your creations with others. You can accomplish this via PM, email and IM, or you can even open a new dialog at Spud's original thread where indicators seem to have overpowered the trading methodology (the main reason I began this thread).

Thanks very much for understanding...


Quoting CanuckCT
Is there someone here that con do a little programming...I'm looking for a MTF stochastic alert. It would work like this...
...

Maybe this is not the thread to do this...but I'm thinking it is.

Cheers,
CanuckCT
Jeff Singer, K2KV
  • #322
  • Nov 16, 2007 9:26am Nov 16, 2007 9:26am
Moneda,

Charts always look great after the fact. So I'll try to capture some live charts and encourage other to do the same. Here is a live chart of a trade I took for GJ on M15 with MTF spud indicators.

It's not perfect in live trading. My thoughts were the H1, H4 and D1 were all down and the M15 looked like it was starting to turn. I was probably a bit early on this trade as I sometime am. It's how I get burned sometimes. You could have waited for the M15 stoch to complete it's turn and still made some good pips.

The price had just bounced off S1 and looked like it was heading down. I had a 40 pip stop and my target was S2. It seemed to me that the risk reward was good and I went for it.

The M5 wasn't too revealing for an entry as the M1 had already turned down and the M5 was on it's way down. Ma5 starting to turn but not as much as you like to see. Because the M30 and H1 remained oversold like they did was also part of the reason I took the trade. This trade was over quickly.

This was a +60 pip trade.

Next time I have a bad trade I'll post it also and encourage other to do the same. We need to post a few more losing trade and have a discussion about that...hopefully not too many.

Cheers
CanuckCT

Quoting moneda
.


.I'm looking for a MTF stochastic alert. It would work like this...


Me 2 Canuck! ... It would make my life easier.

By the way your example was a beautiful set-up indeed. One thing I try to remember that the MTF stochs are continually changing until the candle closes so what one sees later on is not necessarily what you see during live action...

Keep those examples coming! Thank you
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  • #323
  • Nov 16, 2007 9:37am Nov 16, 2007 9:37am
Quoting k2kv
Hi Moneda,

I can't really claim much expertise regarding the "trader" part!

Actually, I am really enjoying the sexy trade setup. There seem to be more revealing setups and opportunities available, than there are with all of Spud's methods. That said, I watch for strong setups of both disciplines. I've spent lots of time becoming familiar with spud's methods and wouldn't let one knowingly pass just because I also embrace another. Of course, both systems utilize MTF Stochastics.

So perhaps I am a sexy polytradist?

Here's an example of perfect sexy trade I took this afternoon, after the London close. If you are familiar with the system, it is incredibly easy to spot a good setup. Note that in this chart I've implemented the close/close stoch settings suggested earlier today (see post #300) by boxingislife (the author of the system).

An easy 30+ pips, more if you stayed.

By the way, the second nearly identical setup would have also yielded nice profit, but the third apparent setup was not good (even though it would have given you a handsome profit), since the 20 had crossed back up over it's signal and -- as I understand it -- this would be considered a "no-trade." But, now that I've said that, the 20 stoch was still below the 20% level, so this might not have been an issue. Anyone care to comment on this?

Enjoy!


jeff

dont worry too much about the signal line on the 20 and 50. if its under 20 and crossed its signal line a bit then u can still take the trade as long as it stays under the 20 and it would be considered just a tad bit riskier than others and a possible trend change but should work just as fine. keep the stops in place or watch for sudden price changes. even if it fails it will 90% of the time give u a few pips or let u get out at breakeven before the trend changes.

ill post some examples tonight of some nice setups and ill give some tips

take care
  • #324
  • Nov 16, 2007 10:22am Nov 16, 2007 10:22am
Boxing...

Thanks so much for clarifying.

Really looking forward to your input!

Very much appreciated...

Quoting boxingislife
jeff

dont worry too much about the signal line on the 20 and 50. if its under 20 and crossed its signal line a bit then u can still take the trade as long as it stays under the 20 and it would be considered just a tad bit riskier than others and a possible trend change but should work just as fine. keep the stops in place or watch for sudden price changes. even if it fails it will 90% of the time give u a few pips or let u get out at breakeven before the trend changes.

ill post some examples tonight of some nice setups and ill give some tips

take care
Jeff Singer, K2KV
  • #325
  • Nov 16, 2007 10:44am Nov 16, 2007 10:44am
That is my trade on GJ which i made about 1 hour ago.(entry.exit)
What make me to enter: 1H,30M and 15M stoch crossed 80 line and all of them had good angle and all together pointing down.I didnt like that the 1H bar, although crossed 80 it wasnt closed,but looking at the position of 4H,at the bottom at 20line,and the position of Day stoch.,below 20 line,I decided it is safe enough to enter.
My drawdown was -42pips and I exited with +6.2 pips profit.
I have to admit I am not happy with this trade and I exited because of pure fear and I am lucky because now I would be -115 pips.
My conclusion is
1:I am not prepare to trade such volatile pairs as GJ
2:It was too early entry,I should wait for the close of 1H bar.

What you think about this trade
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  • #326
  • Nov 16, 2007 10:46am Nov 16, 2007 10:46am
at this moment it looks like that...
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  • #327
  • Edited 11:01am Nov 16, 2007 10:57am | Edited 11:01am
Marcin,

I think what you were missing in that trade was that you were watching a re-trace, for the most part. The pair had moved up through a previous resistance pt., which turned into support once it was crossed. If I remember correctly, support was at 225.85 or so. Had it broken back through that support, it was probably good to go back to 224 or lower, but the support(previous resistance) held and it bounced up. It tested that support for 3 or 4 15m candles before it bounced up. The move up was partly due (also) to some negative/flat news in the US, which makes the dollar weaker again today and the GBP stronger, by default. I hope that helps. I was watching it closely at that same time.

Update: Things may change now that the London session has just ended. Maybe 1 more good hour to trade before things start to consolidate.
  • #328
  • Nov 16, 2007 11:12am Nov 16, 2007 11:12am
PipAV8tor
You really helped me to understand that,my all attention was completely on stoch.behavior and I was sad because I was wondering why I didnt want to go down.Now I can see that suport,although I exited with profit I had to be more cautious next time,apreciate your comments.
  • #329
  • Nov 16, 2007 11:26am Nov 16, 2007 11:26am
Marcin & PipAV8tor,

Actually, the pivot was at 226.78.

It's a good strategy to play off the pivot bounce, but I don't like to play when price is hovering all around the pivot, floating above and below it. That tells me price can go either way, no matter what my indicators say. And remember, stochastics are trailing indicators. They follow price, not the other way around.

So, while stochs can identify a trend and in many cases foretell near price moves, prices drive stochs, not the other way around. They can change on a dime! That's one reason we always trade with stops in place.

Earlier this morning I also took a GJ trade on good stochs, but price action convinced me to get out with a +5 pip gain after a -23 drawdown. I'm glad I did, since price reversed considerably. Then, I took a really bad trade on EURJPY with much distraction (phone ringing, emails and IM all at once) and didn't see the pivot right in front of me. Can't even tell you why I did that! Took a hit for -34, and now the week has pretty much come to an end.

I love trading on stochastics. But, we always need to be aware of everything else that's going on.

Glad you got out with your skin intact!

Take care, have a nice weekend!

Quoting PipAV8tor
Marcin,

I think what you were missing in that trade was that you were watching a re-trace, for the most part. The pair had moved up through a previous resistance pt., which turned into support once it was crossed. If I remember correctly, support was at 225.85 or so. Had it broken back through that support, it was probably good to go back to 224 or lower, but the support(previous resistance) held and it bounced up. It tested that support for 3 or 4 15m candles before it bounced up. The move up was partly due (also) to some negative/flat news in the US, which makes the dollar weaker again today and the GBP stronger, by default. I hope that helps. I was watching it closely at that same time.

Update: Things may change now that the London session has just ended. Maybe 1 more good hour to trade before things start to consolidate.
Jeff Singer, K2KV
  • #330
  • Nov 16, 2007 11:43am Nov 16, 2007 11:43am
Quoting moneda
The smaller time frame should be one step (one candle) ahead of the longer time frame for the cross or one step behind...or exactly the same. This is optional if you are conservative and a common pattern. However, you do not want the longer time frame ahead more than one step of the shorter time frame.

On a long, whenever both tf's cross or are above 61.8, buy long.
On a short, whenever both tf's cross or are below 38.2 sell short.

I don't understand a thing.
If both tf's are above 61.8 i'll buy?
Or i'll buy if one tf is above 61.8 and the other one is crossing?
This cross should happen one step ahead/behind?
Check the below chart:
http://img251.imageshack.us/img251/897/stochspo1.th.jpg
http://img251.imageshack.us/img251/897/stochspo1.jpg

Black is 5 min stoch and red 15 min stoch.
The 5 min is crossing 61.8 level and 15 min is above it...is it a buy or not?


I love stochs
  • #331
  • Nov 16, 2007 11:50am Nov 16, 2007 11:50am
Jeff
I completely agree with you,Stochastic should be our basis in trading,but we cant forget about price action and overall condition of market.
It was good week for me,hope it was good for everybody.
See you Monday ,
thank you.
  • #332
  • Nov 16, 2007 11:55am Nov 16, 2007 11:55am
Jeff, I think the 225.85 I had was off of the day chart. I wish I had gotten in for the buy now. I also saw the resistance on the way back up at 226.75 or there about and thought it would stop there. Blew all the way through to 228. and some change. Could have taken a hundred or more, but the stochs did not indicate that sort of move. I am up 66 pips for this week and a total of 147 for the month!! No complaints, obviously. Time for a beer and once again, we have playoff football in Texas tonight. Go Vikings!


Quoting k2kv
Marcin & PipAV8tor,

Actually, the pivot was at 226.78.

It's a good strategy to play off the pivot bounce, but I don't like to play when price is hovering all around the pivot, floating above and below it. That tells me price can go either way, no matter what my indicators say. And remember, stochastics are trailing indicators. They follow price, not the other way around.

So, while stochs can identify a trend and in many cases foretell near price moves, prices drive stochs, not the other way around. They can change on a dime! That's one reason we always trade with stops in place.

Earlier this morning I also took a GJ trade on good stochs, but price action convinced me to get out with a +5 pip gain after a -23 drawdown. I'm glad I did, since price reversed considerably. Then, I took a really bad trade on EURJPY with much distraction (phone ringing, emails and IM all at once) and didn't see the pivot right in front of me. Can't even tell you why I did that! Took a hit for -34, and now the week has pretty much come to an end.

I love trading on stochastics. But, we always need to be aware of everything else that's going on.

Glad you got out with your skin intact!

Take care, have a nice weekend!
  • #333
  • Edited 2:21pm Nov 16, 2007 12:52pm | Edited 2:21pm
PipAV8tor

Could you or someone else give us a lesson on support and resistance. I've been watching this rather closely as I make by decisions on whether to take a trade, but my numbers always seem so different. How did you get 225.85 as a support #? Everyone seems to use different support and resistance numbers. My pivot is the same as Jeff at 226.78.

Is it the US close, london close, or something else that matters, and it is different for various pairs?

And how does one spot a retrace?

For this trade, price did just bounce off the pivot. On the other hand, H4 was on the move up and it you look at the candles chart...the trend looks up. I wasn't trading today but checked in right about this time (maybe a few minutes later) and was looking at a long on sexy setup and a bounce of the M15.

When the stochs dive back down and H4 is making any move up, got to be careful with the trade and take profits quickly. It's not easy is it!

Glad it ended with a positive trade.

Cheers,
CanuckCT

Quoting PipAV8tor
Marcin,

I think what you were missing in that trade was that you were watching a re-trace, for the most part. The pair had moved up through a previous resistance pt., which turned into support once it was crossed. If I remember correctly, support was at 225.85 or so. Had it broken back through that support, it was probably good to go back to 224 or lower, but the support(previous resistance) held and it bounced up. It tested that support for 3 or 4 15m candles before it bounced up. The move up was partly due (also) to some negative/flat news in the US, which makes the dollar weaker again today and the GBP stronger, by default. I hope that helps. I was watching it closely at that same time.

Update: Things may change now that the London session has just ended. Maybe 1 more good hour to trade before things start to consolidate.
  • #334
  • Nov 16, 2007 3:47pm Nov 16, 2007 3:47pm
I will go back and see if I can post some screen shots of what I was looking at. My trading platform has a pivot pt. tool that I plot on my 1 hr and my day chart. It "forecasts" some support and resistance info based on the daily pivot pt., which refreshes everyday at 5 pm my time (CST in the US). You have to look at both for confirmation. The one thing my tool does is also plot a mid-range number when the movement is say, between S1 and S2. That 225.85 may have been one of those middle numbers. If you throw any moving averages up to use with your stochastics, you will often see a 50,100, or 200 ma hanging out around one of the main or mid-range lines. Stochs are GREAT and one of my primary indicators, but I do have several other indicators that I reference, when I trade. Why would you just use a hammer and a screwdriver when you also have pliers and wrenches available? : I just try to stay on topic w/ the stochs for this thread. I have made buy and sell entires based 90% on the stochs lining up, but there are other opportunities to enter/exit that the stochs don't always show by themselves. Today's was a great example, as it looked like everything for the gbp/jpy was setup for a big sell off. I was almost in the trade, but looked at my other tools and I FORCED myself to wait 1 more 15m candle. I actually waited for 2 more , after I saw the 2nd rejection at 225.85. There were 3 rejections , the 15 m turned up and took the 30m with it and the buy was on. Fib lines are a great item to have on your chart, for reference. I don't totally understand why or how they work (it is almost magical) but they prove over and over again to be a great source of support/resistance lines and thus entry/exit pts. That's all I got for now.

Quoting CanuckCT
PipAV8tor

Could you or someone else give us a lesson on support and resistance. I've been watching this rather closely as I make by decisions on whether to take a trade, but my numbers always seem so different. How did you get 225.85 as a support #? Everyone seems to use different support and resistance numbers. My pivot is the same as Jeff at 226.78.

Is it the US close, london close, or something else that matters, and it is different for various pairs?

And how does one spot a retrace?

For this trade, price did just bounce off the pivot. On the other hand, H4 was on the move up and it you look at the candles chart...the trend looks up. I wasn't trading today but checked in right about this time (maybe a few minutes later) and was looking at a long on sexy setup and a bounce of the M15.

When the stochs dive back down and H4 is making any move up, got to be careful with the trade and take profits quickly. It's not easy is it!

Glad it ended with a positive trade.

Cheers,
CanuckCT
  • #335
  • Nov 16, 2007 6:50pm Nov 16, 2007 6:50pm
Fellas....

How's it?!?!?

Been out on the mash a little... (drinking) and thought that I would share some.

There are loads of trades that you could have been in and loads that you can keep out off.

If you are day trading, keep fibs (day fibs), that is where the support and resis is for the day, piv, R1, S1, etc. And also keep an eye on 1 hour, if you look, you will always see things bouce off and through this TF.

Guess
  • #336
  • Edited Nov 17, 2007 6:03am Nov 16, 2007 6:59pm | Edited Nov 17, 2007 6:03am
Quoting marcin25
That is my trade on GJ which i made about 1 hour ago.(entry.exit)
What make me to enter: 1H,30M and 15M stoch crossed 80 line and all of them had good angle and all together pointing down.I didnt like that the 1H bar, although crossed 80 it wasnt closed,but looking at the position of 4H,at the bottom at 20line,and the position of Day stoch.,below 20 line,I decided it is safe enough to enter.
My drawdown was -42pips and I exited with +6.2 pips profit.
I have to admit I am not happy with this trade and I exited because of pure fear and I am lucky because now I would be -115 pips.
My conclusion is
1:I am not prepare to trade such volatile pairs as GJ
2:It was too early entry,I should wait for the close of 1H bar.

What you think about this trade

Marcin,

You made 6 pips so it was a positive result. On that particular trade with the pound/yen fluctuations of up to 80 pips is not uncommon. If you are targeting 50+ pips then you are putting yourself in a position to experience those fluctuations. The 4hr was heading up out of the oversold area while price was going down. In a case like the one you faced I might have done the same thing but I prefer to trade the rubberband with the 15min and the higher time frames in the oversold area or near it.

Unus pro omnibus, omnes pro uno
  • #337
  • Nov 16, 2007 7:04pm Nov 16, 2007 7:04pm
Quoting Hakuna
I don't understand a thing.
If both tf's are above 61.8 i'll buy?
Or i'll buy if one tf is above 61.8 and the other one is crossing?
This cross should happen one step ahead/behind?
Check the below chart:
http://img251.imageshack.us/img251/897/stochspo1.th.jpg
http://img251.imageshack.us/img251/897/stochspo1.jpg

Black is 5 min stoch and red 15 min stoch.
The 5 min is crossing 61.8 level and 15 min is above it...is it a buy or not?


I love stochs

Hakuna,

Hmmm, I don't have any recollection of posting the above. I don't even use 5,3,3 Stochs. Can you help me find that quote of mine?
Unus pro omnibus, omnes pro uno
  • #338
  • Nov 17, 2007 10:33am Nov 17, 2007 10:33am
Quoting moneda
Hakuna,

Hmmm, I don't have any recollection of posting the above. I don't even use 5,3,3 Stochs. Can you help me find that quote of mine?
This is your post

http://www.forexfactory.com/showpost...&postcount=285

Don't look at 5,3,3 i'm just trying to understand if i can entry on a trade if the smaller tf crosses the 61,8 and the bigger tf is just above 61,8 or must cross both tf together the 61,8.
  • #339
  • Edited 6:33pm Nov 17, 2007 6:23pm | Edited 6:33pm
Quoting Hakuna
This is your post

http://www.forexfactory.com/showpost...&postcount=285

Don't look at 5,3,3 i'm just trying to understand if i can entry on a trade if the smaller tf crosses the 61,8 and the bigger tf is just above 61,8 or must cross both tf together the 61,8.
Hakuna,

After looking at the link above, I can tell you that the info comes from a post by Endroute that I copied to my post... Anyway, now that I understand the source.... Ok, according to Endroute:

On a long, whenever both tf's cross or are above 61.8, buy long.
On a short, whenever both tf's cross or are below 38.2 sell short.

So... I would say that they don't have to be cross together. They just need to be above 61.8. He also says in that post that as long as the bigger timeframe is above 50, you can still consider entering although a bit more risky. Keep in mind that this are very short term trades 5-10 pips. You also need to keep an eye on price action, support/resistance levels, etc.


Hope this helps.
Unus pro omnibus, omnes pro uno
  • #340
  • Nov 18, 2007 12:06pm Nov 18, 2007 12:06pm
Hello Guys...

This was late Friday, would not have really traded, but just as an example, people are asking questions about fibs... I didn't know this, but read this myself... if I am wrong... someone can correct me

Fibonacci levels to price charts, it is necessary to identify Swing Highs and Swing Lows.

A Swing High is a short term high bar with at least two lower highs on both the left and right of the high bar. A Swing

Low is a short term low bar with at least two higher lows on both the left and right of the low bar.

If you do not the meet the above are they valid swing highs and lows, can someone confirm this?

So here attached, take a look at the highs and lows, that's where you would draw your Fib line to and from and look where it meets the daliy pivot at 50% retracement... on the close where I have marked I would have taken trade and then drawn the fib retracement and I would have closed out there... hope this helps.



I am just following on from my ramblings from my previous post

Sorry if it sounds as if I am teaching how to suck eggs, I have made the many mistakes on taking trades too early, I am learning as well.

For me stochs is the best, you just have to learn and master them, which I am trying to do.

Thanks,
Guess
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