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The Art of Trading with MTF Stochastics

  • #501
  • Dec 4, 2007 10:13am Dec 4, 2007 10:13am
You can use 50 line as entry point,when 15M cross 50 line and the other stoch are in right place you enter
  • #502
  • Dec 4, 2007 10:29am Dec 4, 2007 10:29am
Hi marcin, I believe 50% line is point at which exit planning begins. Not entry. Stoch must turn from 76.4% or 23.6%. This is how I read Spud's writing on this matter. Please correct me if I read him incorrectly. Pippo
Vincit qui se vincit.
  • #503
  • Dec 4, 2007 10:37am Dec 4, 2007 10:37am
Well, I promised k2kv I would post a failure:

Attached Image


Fortunately this is for small lots but I had to move my SL. I am now wondering whether to stay with the trade or bail out...
Gone to a better place
  • #504
  • Dec 4, 2007 4:23pm Dec 4, 2007 4:23pm
Possible rubber band set up on GBPJPY daily chart:
Attached Image (click to enlarge)
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  • #505
  • Dec 4, 2007 4:25pm Dec 4, 2007 4:25pm
Pippo
when trading elasticity it is better when 15M go to overbought/oversold area and than cross 80/20 line to join the other stochastics which are at the other side together,but that happen rarely,more common pattern is that 15M alone or together with 30M is not going so far away from 4H/1H,so your entry point is when it cross 50line to join 1H/4H.If you look at my post you will see many example of mine trading in this way aiming for 5-15 pips.

If you read Spud he explain how to get 10 pips a day on g/J trading elasticity
So I repeat what he sugested:
We trade into the stochastic trend always.The trend is set by the 4Hand the 1H stochastic position.The 4H is above 76.4.The 1H is a bit more fickle depending on your patience.I like it upnear 76.4 and or above 76.4 but nothing wrong if it is rising and above 50 either.this is a feel thing but the higher it is and if it is rising so much the safer you will be.In other words we want 1H to be turning back to the 4 H or up with the 4H.The 30M is our trade signal.Whenever it rises below 50 or below 76.4and crosses either upwards we are in a long trade so long as our 4H and 1H are where they should be.you could easily trade the 15M and use the 1H and 30M or 4H and 1H or even the 4H 1H and 30M to trade "into".This is basically momentu, trading.
  • #506
  • Edited Dec 5, 2007 6:01am Dec 4, 2007 5:04pm | Edited Dec 5, 2007 6:01am
marcin, Thank you for your explanation. I am sure you have made a study of Spud's methods. I must do some re-reading and take some notes. I am glad you are doing well. Pippo
Vincit qui se vincit.
  • #507
  • Dec 4, 2007 5:36pm Dec 4, 2007 5:36pm
You must have made a lot of pips to get a name like Pippopotamus!
Gone to a better place
  • #508
  • Dec 4, 2007 7:41pm Dec 4, 2007 7:41pm
An extremely important observation.

Thanks, Moneda...

Quoting moneda
Pippo,

Yes...it is a beautiful sight... do not forget that what you see after the fact is not what one sees as the stoch is moving back and forth until the candle/bar closes.

Let us keep a watchful eye.

Jeff Singer, K2KV
  • #509
  • Dec 4, 2007 8:19pm Dec 4, 2007 8:19pm
Hi Marcin,

Thanks for sharing this information with us.

I have a printout from a sheet of Spud's entitled, "Stochastic Elasticity," which reads a bit differently from what you've quoted. Not much different, but in this particular example, he says that we are only trading the M15. As I've said before, his writing -- though sometimes brilliant -- often seemed slightly ambiguous and contradictory, so you can take this for what it's worth.

And I agree that it is very rare indeed for the M15 to end up ob/s before turning around, so I also trade the rubberband wherever it happens to occur, as long as the trend is strong.

Just remember that the rubberband setup generally indicates the end of a retracement. The lower TF stoch has fallen away from the longer TF H4 (the trend) due to price retracing away from the momentum of the trend. When price moves back into the trend, the M15 turns around and heads back up to the H4. As a result, I consider it a fairly safe trade.

The Bringing Back Sexy trade setup is also based on this retracement principle, and that is why it works so well -- both setups ask you to trade with the trend. The big difference here is that boxingislife (the author) uses shorter, faster-reacting stochs, so there is more action, with perhaps a bit less reliability as a result.

I believe that when a retracement occurs, it is generally expected that the deeper it is, the stronger will be the comeback. So if we follow that logic, it stands to reason that when the M15 falls deep into ob/s territory, its return to the trend will be stronger, safer and more profitable than if it just retraces to, say, the 50% level.

In the end, you pay your dollar and decide how you alone want to play.

Good trading!

Quoting marcin25
Pippo
when trading elasticity it is better when 15M go to overbought/oversold area and than cross 80/20 line to join the other stochastics which are at the other side together,but that happen rarely,more common pattern is that 15M alone or together with 30M is not going so far away from 4H/1H,so your entry point is when it cross 50line to join 1H/4H.If you look at my post you will see many example of mine trading in this way aiming for 5-15 pips.

If you read Spud he explain how to get 10 pips a day on g/J trading elasticity
So I repeat what he sugested:
We trade into the stochastic trend always.The trend is set by the 4Hand the 1H stochastic position.The 4H is above 76.4.The 1H is a bit more fickle depending on your patience.I like it upnear 76.4 and or above 76.4 but nothing wrong if it is rising and above 50 either.this is a feel thing but the higher it is and if it is rising so much the safer you will be.In other words we want 1H to be turning back to the 4 H or up with the 4H.The 30M is our trade signal.Whenever it rises below 50 or below 76.4and crosses either upwards we are in a long trade so long as our 4H and 1H are where they should be.you could easily trade the 15M and use the 1H and 30M or 4H and 1H or even the 4H 1H and 30M to trade "into".This is basically momentu, trading.
Jeff Singer, K2KV
  • #510
  • Dec 4, 2007 10:14pm Dec 4, 2007 10:14pm
Hi Marcin. Amazing observations man. I did find that more times than not that in elastic trades the 15 doesn't get to the ob/os for a premium setup. I do have one question though with regards to the 1 hour chart. If we have a chart with the 4hour being in extreme position, but the one hour has shifted drastically away, can you still in your opinion trade elasticity with the 15min being in the proper extreme as well. Sometimes i'm finding that the one hour is showing a totally different picture than the 4 hour extreme. Also, i found it very helpfull that other day you posting which currencies are almost setting up for a trade and which ones you took and not. Thank you so much for sharing what you know with regards to mtf stochastics.
  • #511
  • Dec 5, 2007 1:40am Dec 5, 2007 1:40am
"I believe that when a retracement occurs, it is generally expected that the deeper it is, the stronger will be the comeback. So if we follow that logic, it stands to reason that when the M15 falls deep into ob/s territory, its return to the trend will be stronger, safer and more profitable than if it just retraces to, say, the 50% leve"- yes ,that is true,simply because 15M have more space to move from 20 to 80 than from 50 to 80 so you can expect you will grab more pips,that is why when trading elasticity whit 15M crosing 50(not 20/80) we should be more picky choosing setups and pay more attention to position of other stochs,4H and 1H should be definitely above 80,below 20 but what I like even more they shoul be much higher then 20/80,i like them somewhere in 85,90 and pointing a litille up or at least very flat,not pointing down,and it would be nice to have 30 above80/below 20 but that for me is not neceasery,when it is below 80 and nicely ,clearly pointing up in the moment of 15M crossing 50 that is ok

Pippo:
One more time,1H dont need to be above 80 ,it can be just below but must be coming back to 4H at the moment of 15 crossing 20/50 .look at the position 5 with the chart,that is the feel thing.

look at my real example and consider position of stochasic

1. 15 croos 20 first chart
2. 15 cross 50 next 3 charts
3. 15/30 cross 50 next 1 chart
4.example of trading into 1H and 30M next 3 chart
with 4H has crossed 20 and nicely
pointin in direction of trade
5. That is for Pippo ,1H is not above
80 but I would trade it ,feel thing last chart


I am not an expert,I am starting to winning in forex so please dont take what I said for extremly sure,I just showing my trades and thoughts,which I thing are right
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  • #512
  • Dec 5, 2007 1:42am Dec 5, 2007 1:42am
..
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  • #513
  • Dec 5, 2007 1:56am Dec 5, 2007 1:56am
And I need to add ,I think trading this way is good and safe for 5-15 pips,sometimes the price go much further than that so it is up to you,you can even wait until 15M cross 80/20 and exit at the moment of 15M crossing back 80/20.I try to exit when having around 10 pips.
Spud sugestion ,as I remember , was to target 10 pips but he trade G/J and this is very volatile pair so please keep that in miond
  • #514
  • Dec 5, 2007 2:22am Dec 5, 2007 2:22am
Morning Marcin. Good examples shown. And I do take your point - not to be greedy - no way to tell if you are in a "perfect" set up with this method.

Looking to this morning, high volatility could give us a few good trades.
Gone to a better place
  • #515
  • Dec 5, 2007 2:24am Dec 5, 2007 2:24am
Quoting charlies
Possible rubber band set up on GBPJPY daily chart:
Now set up on lower timeframes this morning, took entry at 226.90 on break of 1 hour pin bar. Will look to hold part of this position to capitalise on daily set up.
Attached Image (click to enlarge)
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  • #516
  • Dec 5, 2007 3:07am Dec 5, 2007 3:07am
Quoting charlies
Now set up on lower timeframes this morning, took entry at 226.90 on break of 1 hour pin bar. Will look to hold part of this position to capitalise on daily set up.
.... and just over 1 hour later:
Attached Image (click to enlarge)
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  • #517
  • Dec 5, 2007 3:33am Dec 5, 2007 3:33am
Hi Charlies. A good trade. A brave trade. But when you took the trade the M30 and H1 were above 80? When you say lower time frames wre you looking at lower than M15? How much did the 1 hour pin bar influence you? Were you also looking at RSI's, eg daily and H4? Sorry for all the questions.
Gone to a better place
  • #518
  • Dec 5, 2007 3:47am Dec 5, 2007 3:47am
It would be nice to hear what make you to enter this trade,as Smikester said it wasnt good setup to enter when taking into acount stochastics position.
  • #519
  • Edited 6:03am Dec 5, 2007 3:50am | Edited 6:03am
marcin, Thanks for your explanations. How do you see Charlies last G/J trade?
Vincit qui se vincit.
  • #520
  • Dec 5, 2007 3:52am Dec 5, 2007 3:52am
Quoting smikester
Hi Charlies. A good trade. A brave trade. But when you took the trade the M30 and H1 were above 80? When you say lower time frames wre you looking at lower than M15? How much did the 1 hour pin bar influence you? Were you also looking at RSI's, eg daily and H4? Sorry for all the questions.
I look for the trade to set up on the stochastics (i.e. separation of the stochs), but look for price action to confirm the trade & for entry.

Daily stoch had set up as overbought against the weekly, so then looking for a short entry on the lower timeframes. This morning, the hourly down to 15 min were set up as overbought against the 4hr, so I then look for price action to confirm a short trade. The hourly PIN gave a clear entry. It was a little risky as news was due a few minutes later, but with such a clear set up, I decided to take it.

The trade is now at +200, but the initial target on the daily chart is at +500 so just have to see if it gets there before being stopped out.
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