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The Art of Trading with MTF Stochastics

  • #901
  • Jan 26, 2008 5:59pm Jan 26, 2008 5:59pm
Hi Pip,

Picking up 10-15 pips 6 times a day is a good thing, especially on GBPJPY.

But GBPJPY is so volatile and jittery, especially on the 5-min charts (I know, I've played there myself). Do you use the same setup for all of those trades and, if so, can you share with us your entry strategy, how you handle the drawdown, and how you make a swift and profitable exit?

Thanks!

Quoting PipAV8tor
Well fellow stoch lovers,
I will keep posting and I do believe that you go with "the one that brung ya", so I don't see myself changing any time soon. I like trading the 5 min, especially with the gbp/jpy and I am convinced you don't need anything other than the stoch's to do it. It is 10-15 pips (at least) every time I trade it and I can make that trade at least 6 times a day. why would I need anything else? Keep on Stochin'!!!!!
Jeff Singer, K2KV
  • #902
  • Jan 26, 2008 6:17pm Jan 26, 2008 6:17pm
Jeff,
I really do use a VERY simple setup. I use the 5,3,3 stoch and the 14,3,3 on the 5 min chart with the mac-d as confirmation. I trade the move of the 5,3,3 as it "bounces" between the 20/80 lines. I trade in the direction that the 14,3,3 is pointed on the 15 m chart. Never against. It always helps if the 1 hr and 4 hr agree, but not required. The strength of the move is gauged by the mac-d. Could be a 2-3 min trade or I might stay for 20-30 minutes and pick up 30-40 pips. The move of the 5,3,3 on the 5 min must have crossed either the 80 or the 20, in fact , you could use a 70/30 touch as a real trigger for a safer trade. The best scenario is for the 14,3,3 on the 15m to be in between the 80/20 and in the same direction. I am not sure that multiple stochs in the same window gives the same feel. I have 2 separate charts open and use them both. A 14,3,3 on the 5 does not equal a 14,3,3 on the 15 for a directional purpose. Very separate indicators, IMHO. Hope this helps.
P.S. It can be done in low volume times. Consolidation actually provides some very predictable moves, as price will bounce for several hours in the same range.
  • #903
  • Jan 26, 2008 8:17pm Jan 26, 2008 8:17pm
Quoting k2kv
Hi Jackt,

Very nice trading!

I like your approach to the single chart. Obviously all stochs were in your favor. I wonder if you wouldn't mind sharing your stoch settings with us.

Thanks!
Sure! the settings.
All stoch are set to close/close, linear weighted.

hr - 14,3,3, 23,3,3
hr - 20,10,10, 30,10,10, 50,10,10 (simulating 4h 5,3,3, 14,3,3, 23,3,3).

mtf stoch
daily - 5,3,3, 14,3,3, 23,3,3
weekly - 5,3,3, 14,3,3, 23,3,3

I modified the mtf stoch to coincide with the current price bar. It didn't work very well. Guess I'm no programmer
Attached File(s)
File Type: mq4 #MTF Stochastic_ks01.mq4   4 KB | 719 downloads
  • #904
  • Jan 27, 2008 4:26am Jan 27, 2008 4:26am
....and still trading MTF stochastics. I had a great week last week and will keep posting charts if people are interested.
  • #905
  • Jan 27, 2008 11:21am Jan 27, 2008 11:21am
Hey Pip.

Thanks for your explanation.

I agree about using separate windows for each stoch. In one of my setups, I have four separate windows, each for a different TF, each with only one stoch. Gives me much greater clarity, and I recommend others try the same to see if they like it better than a single window-for-all-stochs approach.

Your setup is very similar to Canuck's, except that he waits for the 533 to cross the 50 level, and also utilizes the absolute strength indicator (in addition to MACD) for confirmation. Often, that setup does not give an entry signal until the stoch has crossed into the 80-100 zone. I'll be on demo this week, so I'll try to compare success between the two approaches if I can.

I think trading M5 should be fairly easy. The biggest problem I've had is tolerating the jumpy price movements (noise), back and forth during a quick trade while hoping price will move in my favor. I scare easily and often exit before I've given my trade time to develop. I will be concentrating on resolving that issue this week.

Thanks!

Quoting PipAV8tor
Jeff,
I really do use a VERY simple setup. I use the 5,3,3 stoch and the 14,3,3 on the 5 min chart with the mac-d as confirmation. I trade the move of the 5,3,3 as it "bounces" between the 20/80 lines. I trade in the direction that the 14,3,3 is pointed on the 15 m chart. Never against. It always helps if the 1 hr and 4 hr agree, but not required. The strength of the move is gauged by the mac-d. Could be a 2-3 min trade or I might stay for 20-30 minutes and pick up 30-40 pips. The move of the 5,3,3 on the 5 min must have crossed either the 80 or the 20, in fact , you could use a 70/30 touch as a real trigger for a safer trade. The best scenario is for the 14,3,3 on the 15m to be in between the 80/20 and in the same direction. I am not sure that multiple stochs in the same window gives the same feel. I have 2 separate charts open and use them both. A 14,3,3 on the 5 does not equal a 14,3,3 on the 15 for a directional purpose. Very separate indicators, IMHO. Hope this helps.
P.S. It can be done in low volume times. Consolidation actually provides some very predictable moves, as price will bounce for several hours in the same range.
Jeff Singer, K2KV
  • #906
  • Jan 27, 2008 11:24am Jan 27, 2008 11:24am
Hi Jack,

Thanks for sharing your settings.

I'm curious as to why you use close/close, when most of us are using lo/hi. I use close/close in the boxingforlife sexy setup, but not for basic Spud MTFS.

Much appreciated...

Quoting jackt
Sure! the settings.
All stoch are set to close/close, linear weighted.

hr - 14,3,3, 23,3,3
hr - 20,10,10, 30,10,10, 50,10,10 (simulating 4h 5,3,3, 14,3,3, 23,3,3).

mtf stoch
daily - 5,3,3, 14,3,3, 23,3,3
weekly - 5,3,3, 14,3,3, 23,3,3

I modified the mtf stoch to coincide with the current price bar. It didn't work very well. Guess I'm no programmer
Jeff Singer, K2KV
  • #907
  • Jan 27, 2008 11:26am Jan 27, 2008 11:26am
Yes, please do.

We're not nearly done here

Thanks!

Quoting ocelot
....and still trading MTF stochastics. I had a great week last week and will keep posting charts if people are interested.
Jeff Singer, K2KV
  • #908
  • Jan 28, 2008 4:17am Jan 28, 2008 4:17am
Quoting k2kv
Hi Jack,

Thanks for sharing your settings.

I'm curious as to why you use close/close, when most of us are using lo/hi. I use close/close in the boxingforlife sexy setup, but not for basic Spud MTFS.

Much appreciated...
close/close give a bigger swing. more eye catching. often 14,3,3 pull back to 80/90/100 (20/10/0). i'm more comfortable with elasticity than rope.
  • #909
  • Jan 28, 2008 7:53am Jan 28, 2008 7:53am
my current trade...

price found support at 365sma (white), hr, 4hr stoch turning up.
Attached Image
  • #910
  • Jan 29, 2008 2:56am Jan 29, 2008 2:56am
Here was a short I took tonight, the 4hr looks like it's pointed up but when I took the trade the unclosed portion was actually pointing down. The 15m and 30m were already oversold but I liked the strong move down by the 1hr and as I said the unclosed 4hr was also pointing down. +80 pips. Rock.
Attached Image
  • #911
  • Jan 29, 2008 5:17am Jan 29, 2008 5:17am
Quoting ocelot
Here was a short I took tonight, the 4hr looks like it's pointed up but when I took the trade the unclosed portion was actually pointing down. The 15m and 30m were already oversold but I liked the strong move down by the 1hr and as I said the unclosed 4hr was also pointing down. +80 pips. Rock.

Ocelot,

Thanks for posting ur trade.

One thing that caught my eye was that u r using 9,3,3 for ur stochs. How did u arrive at that? I see so many ppl using different values for the stochs, it is becoming a bit hard to figure out which one is the best combinations.

Appreciate a bit of insight.

Regards,
K.
  • #912
  • Jan 29, 2008 7:58am Jan 29, 2008 7:58am
Ocelot & Jackt,

Nice trading guys!

Clearly good stochastics pointing the way.

Yes, I'm also wondering about the 9.3.3 settings...


Quoting ocelot
Here was a short I took tonight, the 4hr looks like it's pointed up but when I took the trade the unclosed portion was actually pointing down. The 15m and 30m were already oversold but I liked the strong move down by the 1hr and as I said the unclosed 4hr was also pointing down. +80 pips. Rock.
Jeff Singer, K2KV
  • #913
  • Jan 29, 2008 1:25pm Jan 29, 2008 1:25pm
Quoting kermut
Ocelot,

Thanks for posting ur trade.

One thing that caught my eye was that u r using 9,3,3 for ur stochs. How did u arrive at that? I see so many ppl using different values for the stochs, it is becoming a bit hard to figure out which one is the best combinations.

Appreciate a bit of insight.

Regards,
K.
9,3,3 - my favorite. Here's how I got there. I've tested and traded tons of systems, quite a few stochastic-based. A system I traded years ago used the 9,3,3 settings and I had developed a 'feeling' of how it behaved with certain currency pairs. A while back on Spud's thread there was some debate on whether to use 5,3,3 or 14,3,3. Having tested both I found myself not liking the noise the 5,3,3 on the 15m produced, neither did I like the fewer signals and lag of the 14,3,3 settings. Then I remembered my old system that used 9,3,3 (note that it's basically halfway between 5 and 14) and decided to test it out. For me it works well, I get less noise than on the 5 and more frequent signals than the 14.
  • #914
  • Jan 29, 2008 2:30pm Jan 29, 2008 2:30pm
Great thread,

I have two questions. For those of you who trade when all the stochs line up and enter for small amount of pips as spudfrye had mentioned in his thread ( when 20 pips lock 7, when 35 lock in 15etc.) what stoploss do you set. Cause I been giving it some thought but I would think an ex. 100 pip stoploss would wipe out a long winning streak with just one or two stoplosses getting hit. I just want to know how those that trade that way manage. And my second question is does everyone wait for the candle on the timeframe they are watching to close before entering or as soon as the stochs line up enter. Thank you.
  • #915
  • Jan 29, 2008 2:43pm Jan 29, 2008 2:43pm
Quoting nelson7
Great thread,

I have two questions. For those of you who trade when all the stochs line up and enter for small amount of pips as spudfrye had mentioned in his thread ( when 20 pips lock 7, when 35 lock in 15etc.) what stoploss do you set. Cause I been giving it some thought but I would think an ex. 100 pip stoploss would wipe out a long winning streak with just one or two stoplosses getting hit. I just want to know how those that trade that way manage. And my second question is does everyone wait for the candle on the timeframe they are watching to close before entering or as soon as the stochs line up enter. Thank you.
hi nelson,

I use a couple of different strategies for stop losses and profit targets. For stops, I like to put them above/below recent areas of support and resistance. For profit targets I go for either a set number of pips, a target of a recent high or low, or, in the case of GBPJPY in particular, a double zero level. My most recent trade posted above, is an example of where I targeted a double zero level. Despite these strategies though, I will still monitor my open trades and if the stochs start going against me, I'll get out, usually way before my stop loss is hit. Usually my risk/reward ratio is terrible, but, given how reliable this system is it doesn't really matter. It's good to start off going for small numbers of pips until you get a feeling for how the pair(s) you're trading moves. You could also try using the ATR to determine profit targets and stop losses. Another thing to keep in mind, you don't need to capture a whole move start to finish (in fact that's nearly impossible) but only a portion of the move. Small consistent profits will add up over time. If a pair moves 120 pips but you only capture 20, that's still +20 pips in the bank.

As for waiting for a candle to close, I sometimes do, and sometimes don't. I'm more apt to wait for a 15m to close than I am the 1hr, but it really gets back to 'feeling'. Once you've started developing a feeling for how a pair moves you'll get a sense as to whether you need to wait for a candle to close or not. Go back and read the posts about entering on pullbacks as it's somewhat related to this.
  • #916
  • Jan 29, 2008 2:54pm Jan 29, 2008 2:54pm
Thanks for replying so fast. I just thought that having a bad risk to reward, one stoploss being hit would wipe your profits off. ex. 5 wins 20 pips per win 1 loss 100 pips, back to even. What I have been doing is waiting for the close of the candle at support/ resistance and then entering looking at mtf stochastics but it seems to not let me see as great of a picture of stochastics as if you wait longer. For the stochs to take there shape. Do you wait for candles to close to enter.
  • #917
  • Jan 29, 2008 8:42pm Jan 29, 2008 8:42pm
Quoting ocelot
9,3,3 - my favorite. Here's how I got there. I've tested and traded tons of systems, quite a few stochastic-based. A system I traded years ago used the 9,3,3 settings and I had developed a 'feeling' of how it behaved with certain currency pairs. A while back on Spud's thread there was some debate on whether to use 5,3,3 or 14,3,3. Having tested both I found myself not liking the noise the 5,3,3 on the 15m produced, neither did I like the fewer signals and lag of the 14,3,3 settings. Then I remembered my old system that used 9,3,3 (note that it's basically halfway between 5 and 14) and decided to test it out. For me it works well, I get less noise than on the 5 and more frequent signals than the 14.
Hello ocelot,

Thanks for the 9,3,3 settings. It looks good on 1hr tf. Me too give up on 5,3,3. Just too much noise.
  • #918
  • Jan 29, 2008 11:16pm Jan 29, 2008 11:16pm
Quoting nelson7
Thanks for replying so fast. I just thought that having a bad risk to reward, one stoploss being hit would wipe your profits off. ex. 5 wins 20 pips per win 1 loss 100 pips, back to even. What I have been doing is waiting for the close of the candle at support/ resistance and then entering looking at mtf stochastics but it seems to not let me see as great of a picture of stochastics as if you wait longer. For the stochs to take there shape. Do you wait for candles to close to enter.
If you only ever traded for 20 pips yes, that could certainly happen. The other exit strategy I didn't mention in my last post, and that Spud talked about, was once a pair goes overbought/oversold, let the trade ride until it comes out of that overbought/oversold state. You can catch huge moves like that upwards of 200+ pips on volatile pairs like the GBPJPY. Get a few of those, and that should cover any big losses you might incur. I sometimes wait for candles to close to enter, it really depends on the position of the stochastics.
  • #919
  • Jan 29, 2008 11:55pm Jan 29, 2008 11:55pm
Not much movement tonight, but I squeezed +16 pips out of this one. The last thing I was waiting on here was for the 30m to turn down, all the other stochs were already pointing down. You can see the next candle after my entry was bullish and would have been a good place to enter on the pullback.
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  • #920
  • Jan 31, 2008 1:10am Jan 31, 2008 1:10am
Hi
I was hurt very badly yesterday.look at the chart GJ,it was nice long entry signal and after I entered the price wnet down very quickly.Now I susupect it was because of reduction of interest rate in USA ,but I didnt see any annoucement in the schedule.
How do you know such important news are coming?
thank you .
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