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The Art of Trading with MTF Stochastics

  • #381
  • Nov 25, 2007 5:33am Nov 25, 2007 5:33am
Hi Guys,

To all the ppl using the mtf stoch indicator succesfully, I would really appreciate your response to my dilema.

As an eg, on the 5m tf, you have the 15m, 30m, 1h, and 4h stochs. Now, at 10.05, the above stochs are all pointing down, showing an agreemen trade and are showing you where they will be when their respective times finish, ie the 15m in 10 mins, 30m in 25mins etc. You get the idea. But that is just an indication, and if price was to spike up and keep going up, come 10.15, the 15m could finish up pointing up way past the 5m stoch. Hope I have explained myself clearly. Now, when you look back at the chart, and if you mark an entry there, you would be told that the 15m stoch was pointing up, so it would not have been a valid entry, but you know that at the time it was a valid entry.

This is my dilema. Any suggestions and help would be most helpful.

Regards,
K.
  • #382
  • Nov 25, 2007 6:41am Nov 25, 2007 6:41am
Quoting CanuckCT
Hello Rochemb,

Perhaps I'll try something like that. Often my stop will be half way up the bar and it get's taken out.

One question....

You mention 5,3,3 on the H1 and H4 timefames...I've had a look at that using MTF stocks for H1, H4 and D and it looks very workable as well. So when you refer to the 5,3,3 reaching 80...do you mean 5,3,3 for the H1 stoch on H1 timeframe and/or H4 timeframe? Or something else....

Thanks so much for the idea on the stops. Right now I'm using a combination of trailing stop and pivots, S & R for stops and targets. It's working, but just trying to improve. Since I'm now trading less often, the setups seem better and often look like they could run. So exit strategy needs some attention.

Cheers,
CanuckCT
CanuckCT,

If I enter a trade on a H4 chart, I am refering to the 533 stoch reaching 80 on the H4 chart. If I enter on H1 chart, I am refering to the 533 stoch reaching 80 on the H1 chart. You bring up an interesting idea though. If you enter on the H1 chart, exit 1 lot based on H1 533 stoch and ride 1 lot with a trailing stop until H4 533 stoch hooks down. I haven't looked at this though.

Matt
  • #383
  • Nov 25, 2007 10:08am Nov 25, 2007 10:08am
Hi Kermut,

Assuming I understand your dilemma correctly, some trades simply go bad, no matter how valid your entry is. Stochs are great indicators, but they do not control price. Quite the contrary -- stochs follow price.

Once you have a valid entry signal and decide to enter the trade, there is no guarantee that stochs (or price) will continue in any direction. They often do continue to move in a certain pattern, of course, and that likelihood is the reason we trade them. However, if you enter a trade based on the appearance of mtf stochs at any given moment and they turn against you -- or move in a direction contrary to your expectations -- it may be time to exit your trade.

Note that your 5m stoch will change direction long before the 15m, not the other way around.

Other indicators may influence your decisions as well, such as S&R and pivot levels, MACD, RSI, etc. And, price may go your way once again, even after stochs initially turn against you. It's a tricky game, for sure.

Hope that helps a bit.


Quoting kermut
Hi Guys,

To all the ppl using the mtf stoch indicator succesfully, I would really appreciate your response to my dilema.

As an eg, on the 5m tf, you have the 15m, 30m, 1h, and 4h stochs. Now, at 10.05, the above stochs are all pointing down, showing an agreemen trade and are showing you where they will be when their respective times finish, ie the 15m in 10 mins, 30m in 25mins etc. You get the idea. But that is just an indication, and if price was to spike up and keep going up, come 10.15, the 15m could finish up pointing up way past the 5m stoch. Hope I have explained myself clearly. Now, when you look back at the chart, and if you mark an entry there, you would be told that the 15m stoch was pointing up, so it would not have been a valid entry, but you know that at the time it was a valid entry.

This is my dilema. Any suggestions and help would be most helpful.

Regards,
K.
Jeff Singer, K2KV
  • #384
  • Nov 25, 2007 12:33pm Nov 25, 2007 12:33pm
Hello rochemb,

Are you trading with just a 5,3,3 stoch?

And second, I have noticed that if MTF stochs are moving up together (H4 included), often you can ride the longer timeframe stoch up as well...in a trending market. I always try to look for M15 to H1 to H4. My problem is I get stopped out too early and then once I'm out I don't jump back in.

This leads me to another question....has anyone ever used an indicator like ADX to determine if the market is trending. I'm thinking that when ADX is above say 20, there is a better chance to ride the higher TF stochs as well. I've put ADX on my H1 chart only to assess this and maybe keep me in a trade longer. So my thinking is this...use stochs to enter the trade and use ADX and stochs to determine is market is trending and whether I might want to stay in the trade using a higher time frame. And use some multiple of ATR for H1 timeframe to determine stops.

Anyone care to comment on this?

Cheers,
CanuckCT

Quoting rochemb
CanuckCT,

If I enter a trade on a H4 chart, I am refering to the 533 stoch reaching 80 on the H4 chart. If I enter on H1 chart, I am refering to the 533 stoch reaching 80 on the H1 chart. You bring up an interesting idea though. If you enter on the H1 chart, exit 1 lot based on H1 533 stoch and ride 1 lot with a trailing stop until H4 533 stoch hooks down. I haven't looked at this though.

Matt
  • #385
  • Nov 25, 2007 12:40pm Nov 25, 2007 12:40pm
Hello Kermit,

I find that I consider where price is in relation to the daily pivot and S&R levels and always consider those levels when I enter a trade. If keeps me fram trading a few good setups but lots unsuccessful setups.

If you are using M15, M30, H1 and H4 stochs, it's usually a good idea to wait for the close of the M15 bar to assess the stoch direction, not at M5 intervals. Once you determine the setup is valid, open an M5 chart and look for entry based on either price action and perhaps the M5, M15, M30, H1 stoch combination. Don't worry about catching all of the move...you only want a piece of it. I've had some luck with that...but my current thinking is to back off and assess using H1 after the M15 TF indicates a good setup. But pivot and S&R seem most relevant in my decisions.

Cheers,
CanuckCT


Quoting kermut
Hi Guys,

To all the ppl using the mtf stoch indicator succesfully, I would really appreciate your response to my dilema.

As an eg, on the 5m tf, you have the 15m, 30m, 1h, and 4h stochs. Now, at 10.05, the above stochs are all pointing down, showing an agreemen trade and are showing you where they will be when their respective times finish, ie the 15m in 10 mins, 30m in 25mins etc. You get the idea. But that is just an indication, and if price was to spike up and keep going up, come 10.15, the 15m could finish up pointing up way past the 5m stoch. Hope I have explained myself clearly. Now, when you look back at the chart, and if you mark an entry there, you would be told that the 15m stoch was pointing up, so it would not have been a valid entry, but you know that at the time it was a valid entry.

This is my dilema. Any suggestions and help would be most helpful.

Regards,
K.
  • #386
  • Nov 25, 2007 1:54pm Nov 25, 2007 1:54pm
CanuckCT,

I am using 50-10-20, 20-10-20 and 5-3-3 on H4, H1 charts and try to trade in direction of longer term (daily) trend only. This approach definately limits trade opportunities but I can't watch charts enough during the day to use lower time frames and the higher time frame trades seem to have a high success rate if you can hang with them. I think disussing exit strategies is a great idea. The stochs nail the entry point pretty good but exits, as with all methods, are tough. Taking some profit with one lot and letting another lot ride seems to be best compromise of the many ideas out there. There will always be trades that continue on without you after being stopped out but I haven't seen a way to prevent that. Hopefully stochs present another entry on a pullback if that happens. Your idea of using the ADX is worth looking into.

Matt
  • #387
  • Nov 25, 2007 3:28pm Nov 25, 2007 3:28pm
Hi Canuck,

Good advice to both Rochemb and Kermit.

On the issue of additional indicators for filters, i.e., ADX, etc., many folks who follow stochastic methodologies also add RSI to their arsenal. I'll be using it this coming week to see how it performs for me.

Cheers...

Quoting CanuckCT
Hello rochemb,

Are you trading with just a 5,3,3 stoch?

And second, I have noticed that if MTF stochs are moving up together (H4 included), often you can ride the longer timeframe stoch up as well...in a trending market. I always try to look for M15 to H1 to H4. My problem is I get stopped out too early and then once I'm out I don't jump back in.

This leads me to another question....has anyone ever used an indicator like ADX to determine if the market is trending. I'm thinking that when ADX is above say 20, there is a better chance to ride the higher TF stochs as well. I've put ADX on my H1 chart only to assess this and maybe keep me in a trade longer. So my thinking is this...use stochs to enter the trade and use ADX and stochs to determine is market is trending and whether I might want to stay in the trade using a higher time frame. And use some multiple of ATR for H1 timeframe to determine stops.

Anyone care to comment on this?

Cheers,
CanuckCT
Jeff Singer, K2KV
  • #388
  • Nov 25, 2007 4:10pm Nov 25, 2007 4:10pm
Hello Rochemb,

I've been searching for an exit strategy and here is one that is promising. Add a 5SMA (I read the the 5SMA best reflect the price movement) to your chart based on the closing price. Then add the attached GannHi-Lo indicator - default setting of 10. It seems to provide an interesting way to trail a price. I'll be adding this to my charts to help with a visual for trailing my stop and exit strategy for this week and probably ADX...but I really don't like the clutter of too many indicators...that is what got me interested in stochs to begin with.

Cheers,
CanuckCT

Quoting rochemb
CanuckCT,

I am using 50-10-20, 20-10-20 and 5-3-3 on H4, H1 charts and try to trade in direction of longer term (daily) trend only. This approach definately limits trade opportunities but I can't watch charts enough during the day to use lower time frames and the higher time frame trades seem to have a high success rate if you can hang with them. I think disussing exit strategies is a great idea. The stochs nail the entry point pretty good but exits, as with all methods, are tough. Taking some profit with one lot and letting another lot ride seems to be best compromise of the many ideas out there. There will always be trades that continue on without you after being stopped out but I haven't seen a way to prevent that. Hopefully stochs present another entry on a pullback if that happens. Your idea of using the ADX is worth looking into.

Matt
Attached File(s)
File Type: ex4 ###Gann_HiLo_Activator_V2###.ex4   2 KB | 426 downloads
  • #389
  • Nov 26, 2007 3:43am Nov 26, 2007 3:43am
Look at this chart,it looks like good setup,nice elasticity trade with 15M snaping back to 4H/1H/30M being below 20 line.
I entered this AJ trade on Friday and lost 60 pips.I would be a winner at the end but due to my account size 2500$ I couldnt waited any more as I think risking more than 2% of account per trade is very risky.

Look at the second chart,it is about how my traded developed.At this moment I even added to my loosing position as I thought it is almost perfect setup,but it was my fault as I broke my rule ,never adding to loosing position,and when the sprice went against me I exited at -60pips,I wouldnt exited this trade if I had bigger account,because the 4h all the time was very flat and below 20 and 1H followed 15/30M very slowly so you could suspect that at the end all stoch will join 4h.
after I exited the priceimediately went south.it was painfull it went your way after exiting.
Look at the 3.chart.I would make nice profit.
Take your lesson from my loos.
My lesson is : never adding to loosing position,being aware what drawdown yor account can stand.
Attached Image(s) (click to enlarge)
Click to Enlarge Name: enter.gif Size: 19 KB
Click to Enlarge Name: 2.-16...adding.gif Size: 18 KB
Click to Enlarge Name: last.gif Size: 20 KB
  • #390
  • Nov 26, 2007 4:15am Nov 26, 2007 4:15am
Hello
As I remember from Spud's thread he suggested to observe the behaving of stochastics evrey day just to practice and not getting rusty.
Mayby you can help me as I am looking for some kind of program which can record the stochastics movement so at the end of the day you can watch how stochastic were moving all day long in just 1 or 2 hour,so yuo dond have to spend many hours before screen to practice.
I cant find in the thread what program he sugessted.
I would be very thankfull for help.
  • #391
  • Nov 26, 2007 5:29am Nov 26, 2007 5:29am
my today trade with +10 pips profit,very nice and clear setup of elasticity trade,its my favourite.
Look at the the 4h/1Hs stochs.they are very high at 90 line,1H flat and 4H pointing up a littile,it cant be better.
15M just crossed 50 line and togrther with 30 M pointing up very strongly with the bars being closed.
Safe and guick 10 pips.

I wonder if anybody feel like me,that I almost trade elasticity and rarely agreement trades when stochs lined up.I have never spoted clasical trade with all 4H/1H/30M/15M moving together in one direction.I can see very rarely this setups from time to time but at the moment of forming I just dont.
That is just my thought.
Attached Image(s) (click to enlarge)
Click to Enlarge Name: enter.gif Size: 18 KB
Click to Enlarge Name: exit+10.gif Size: 22 KB
  • #392
  • Nov 26, 2007 6:58am Nov 26, 2007 6:58am
Here is I trade I'm currently in...threads forming a wall and pointing down, spud M15, M30 and H1 all pointing down and somewhat of a sexy setup (although the 20 stoch is pointing up slightly).

My target is S1 or 1.4757. However, because the H4 stoch is not below 20 and is pointing up a bit, I'll be careful with close eye on the trade. Also seems to be support at 1.4785...so my target is 1.4805..just above the round number of 1.4800 and above S1. When I get to +20 I'll move stop to BE and then let it run or stop out. Currently +15.

Cheers,
CanuckCT
Attached Image (click to enlarge)
Click to Enlarge Name: eurusd h1.gif Size: 29 KB
  • #393
  • Nov 26, 2007 8:03am Nov 26, 2007 8:03am
I entered a sell on AUDJPY earlier today...sold at 94.17. Was up 18 pips and moved stop to BE because I couldn't watch it. This is against my own rules which say move to BE after trade is +20. Anyhow, I got stopped out for a BE trade which is ok, except that this trade would now be up 100 pips.
Cheers,
CanuckCT
  • #394
  • Nov 26, 2007 8:24am Nov 26, 2007 8:24am
Hi Marcin,

I would have exited this trade as soon as the M15 turned back up to the 50 level. Some trades go bad, no matter how good the setup, and there's no point staying in when the setup no longer looks good.

Watching price move in your direction after you've exited is something I am all too familiar with, as are many others I've spoken with. I feel for you. But it's part of the game, and over time you must learn to ignore it, and only be concerned with your own unique trade -- whether good or bad. Be confident in your exits, as price will cycle up and down all day long afterward, with little regard to your trading action.

It appears you had not set a specific stoploss when you entered the trade, either mentally or physically. Trading "on the fly" will surely kill your account before too long. You must find strong levels of support or resistance (or some other method) behind which you can hide your SL in a manner suitable to your account size and risk acceptance. If no such level exists when your otherwise great setup shows up, you should pass on the trade until a better/safer opportunity comes along.




Quoting marcin25
Look at this chart,it looks like good setup,nice elasticity trade with 15M snaping back to 4H/1H/30M being below 20 line.
I entered this AJ trade on Friday and lost 60 pips.I would be a winner at the end but due to my account size 2500$ I couldnt waited any more as I think risking more than 2% of account per trade is very risky.

Look at the second chart,it is about how my traded developed.At this moment I even added to my loosing position as I thought it is almost perfect setup,but it was my fault as I broke my rule ,never adding to loosing position,and when the sprice went against me I exited at -60pips,I wouldnt exited this trade if I had bigger account,because the 4h all the time was very flat and below 20 and 1H followed 15/30M very slowly so you could suspect that at the end all stoch will join 4h.
after I exited the priceimediately went south.it was painfull it went your way after exiting.
Look at the 3.chart.I would make nice profit.
Take your lesson from my loos.
My lesson is : never adding to loosing position,being aware what drawdown yor account can stand.
Jeff Singer, K2KV
  • #395
  • Nov 26, 2007 11:25am Nov 26, 2007 11:25am
Hi Jeff
It is true that spoting good entry it is easier that exiting at the right moment.My exit rules are based on stochastics behavior.I look how they moves with relation to each other and in relation to price.my initial stop is always 50 pips and later I adjust it depending on conditions.Spud gave us a good idea about exit strategy and I am trying to do the same.My stop SL is to protect my account not bad trades and it is rarely hit.I absolutely agree with Spud.
Of course nobody is perfect and this loosing trades shows clearely my lack of discipline.Sticking to the rules I supposed to exited when 15 crossed 50 line up and definitely when 1H/30M left oversold area,but I did not and that is why it was my first serious loos from 3 weeks.
  • #396
  • Nov 26, 2007 11:40am Nov 26, 2007 11:40am
my second trade today for +10 pips.
it is example of agreement trade,but it is faraway from classic setups.
The stochastics are quite messy,not tight,and that tells me that the up moves will be weak so I am aware I am chasing for 5-10 pips.
I exited when 15M stoch crossed 80 line and the price was aproaching pivot line.
Attached Image(s) (click to enlarge)
Click to Enlarge Name: enter.gif Size: 20 KB
Click to Enlarge Name: exit -10.potem.gif Size: 16 KB
  • #397
  • Nov 26, 2007 2:58pm Nov 26, 2007 2:58pm
that is my last trade today for +7.8 pips .
The 4H stoch position was not good but it was very flat so I decided that it is safe enough to grab some pips.I liked the daily stoch.which was well below 20 line and flat.
This trade would bring you over 100 pips and the price is still going down.
Attached Image(s) (click to enlarge)
Click to Enlarge Name: enter.gif Size: 14 KB
Click to Enlarge Name: exit +7.8.gif Size: 16 KB
  • #398
  • Nov 26, 2007 3:49pm Nov 26, 2007 3:49pm
I mentioned in an earlier post a trade for AUDJPY that I got stopped out of...I was up 18 pips then 15, and I moved my stop to BE thinking that this was enough room for the trade to work. When you are trying to do 3 things at once this is the kind of result you get....stopped out for a break even trade on what was an excellent setup.

My entry was a bit early...I should have waited for the price to close below R2 and then enter with a 40 to 50 pip stop. Would not have got stopped out...M15 and M30 proceed to oversold and H1 followed as did H4. And with pivot and S&R levels to help with exit points along the way this was a big trade for someone.

Then when it bounced off the pivot it created another good entry with all 4 stochs heading down together, expecially when H4 passes down thru the middle like that. This time S1 and S2 were the levels.

And the stochastic threads confirmed a steady move down and they were very orderly all day.

I can see it now...and didn't have the time to focus on it today...left wondering how I would have handled the trade.

I hope someone got some pips from AUDJPY today, it was a great setup and the pips were ripe for the taking.

Cheers,
CanuckCT
Attached Image(s) (click to enlarge)
Click to Enlarge Name: audjpy - perfect spud trade m15.gif Size: 19 KB
Click to Enlarge Name: audjpy - perfect spud trade h1.gif Size: 30 KB
  • #399
  • Nov 26, 2007 4:00pm Nov 26, 2007 4:00pm
Hi Canuck,

Looks like you'll have another shot at it in a few minutes.

Setting up nicely if you're sexy M15, still nice if you're a spud.

Price is now retracing a bit after tha long run down. Watch it fall again as it bounces back from the 21ema.

I may even take it myself, despite the time of day!

GL...

Quoting CanuckCT
I mentioned in an earlier post a trade for AUDJPY that I got stopped out of...I was up 18 pips then 15, and I moved my stop to BE thinking that this was enough room for the trade to work. When you are trying to do 3 things at once this is the kind of result you get....stopped out for a break even trade on what was an excellent setup.

My entry was a bit early...I should have waited for the price to close below R2 and then enter with a 40 to 50 pip stop. Would not have got stopped out...M15 and M30 proceed to oversold and H1 followed as did H4. And with pivot and S&R levels to help with exit points along the way this was a big trade for someone.

Then when it bounced off the pivot it created another good entry with all 4 stochs heading down together, expecially when H4 passes down thru the middle like that. This time S1 and S2 were the levels.

And the stochastic threads confirmed a steady move down and they were very orderly all day.

I can see it now...and didn't have the time to focus on it today...left wondering how I would have handled the trade.

I hope someone got some pips from AUDJPY today, it was a great setup and the pips were ripe for the taking.

Cheers,
CanuckCT
Jeff Singer, K2KV
  • #400
  • Nov 26, 2007 4:07pm Nov 26, 2007 4:07pm
Here's the chart -- All stochs down, 5 overbought and soon to turn down.

Be aware that a demark 9-bar has formed on the H1 chart, which is an indication that the downtrend energy may have dissipated.
Attached Image
Jeff Singer, K2KV
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