bringin sexy back - stochastics

See, I have just the opposite issue. Mine is trusting the stochs enough to get into the trade. Once I'm in, I follow the NoLagMA and MA crosses to time my exit. Of course the stochs play a major role in this but if I see the 5 turning back, I won't necessarily exit the trade unless I see price consolidation, the 20 turning or consolidating, etc.

DANFX: Would seriously recommend trading live as soon as poss. Even losing $5 makes you sit up and pay attention in a way that demo trading never does. I can't tell you how much more quickly i began learning my lessons when I switched from demo to live. Guess I was just a very ill-disciplined demo trader...

Also, if you're getting out early, check the strength of the higher time frames. If it all looks good, it might give you more confidence to stay in!

JDCompute: patience is a virtue that I don't have. I therefore make sure I have something important to do instead of looking at the screen all day and have <gasp> relegated trading to secondary importance. Every 5 mins or so I check for a set up, if there's nothing brewing I get on with my work (or whatever). For me, sitting in front of the screen is a string of impulsive losses waiting to happen! I'm just turning the corner on all this....

Codebreaker: Low/High and Exponential. I don't use the %D because the %K seems to "get there quicker" !!

FXGuy: Perfect setup?

1: I'm looking for strong angle and (perhaps) even separation on the slower stochs...

2: ...as the (5,3,3) cuts right back towards or even through them as the price retraces.

3: All three stochs in the next HIGHER time frame are pointing in the right direction (or look as if they are will point in the right direction once the price stops retracing)

4: The (5,3,3) in the next LOWEST time frame is probably in the opposite O/B or O/S area and will be turning around. Also the price in this time frame will probably be hitting the Bollinger Band.

All: I never got on with pivot lines, however 10EMA [Edit: did I say 10EMA??? I Meant 6 EMA] and 25EMA and Bollinger Bands on all time frames seems to give TOTALLY AWESOME support and resistance levels. It's an absolutely common occurence for price to halt at (for example) the 10 EMA on the daily chart = 25EMA on the 4Hour chart = Bollnger Band on the 1 Hour chart. When I see confluence like this, chances are the prices aint going anywhere for a while.

Also, chances are that prices WILL reach those lines, especially if there's agreement between multiple time frames. I'm still building my confidence on this one, but it's how I'd like to identify TP levels so I don't get out so quick.

PS: I just stepped out for few hours and you guys have written like 5 pages!!! Awesome.

Elchoco, thanks for that post. As long as you guys are interested in us going back and forth and learning from the guru himself (boxing), I'll do my best to keep this thread alive. If you think I'm posting now, just wait until I get finished being mentored by Boxing and really put this handgun down and pick up the "Uzi" and really start taking trades!!

Am I the only one using this on M5 timeframe?

By the way, last time I backtest this system it showed very humble results: around 40% Winning trades and lots of consecutive trades (+ 20). The numbers improved after adding an ADX filter but altough visually the system seems very good and I enjoy it very much, testing systematically it fails to delivery good returns.

Does anyone want to enumerate a set of rules to enter Long/Short so that we can test it?

Thanks,

Lugopt,

I have no experience in backtesting really. I only demo trade strategies and indicators as I can. I will say this that I've spent hours testing strategies and this one consistently proves profitable for me even when going live. I actually try my best to stick with the rules. I can say that if you do, you will find yourself on the winning side of the trade at least 90% of the time. I have completely decided to stick with this system and master it. I'm no longer going to jump from system to system looking for the holy grail. This is a great technique.

Hi Team

I concur with JD on his last post. I have spent a number of years (as an academic, not trading) looking at dozens of "systems" -- including many ultra-techincal DSP-based systems -- that try to capture market movement and have supervised many MSc projects in this area. While many show promise, almost none are consistent.

I have to say that this Stoch system is perhaps the first I have ever seen that shows consistent promise. Like JD, I have decided to focus exclusively on this one system and master it. In addition, I am tearing it apart mathematically to see what can optimised in back-testing and forward-trading.

No system can ever be perfect, but if JD's test results giving a roughly 90% win rate are correct, that is 1.65 standard deviations from the mean which in statistical terms is just stunning.

CB.

Would have to say that this system is still very discretional. Success or failure can be down to how confident the trader is in his position if the price goes against him for a bit.

Some of the best trades have come when i've set the thing going and then had to leave it running. It stops me fiddling, stops me thinking "I ought to take profit now because, look, it's retracing".

I think back testing this would be difficult unless entry and exit rules were made FAR more mechanical. Also, stochs change live. You can't look at a historic chart and think "Yep, I'd definitely have got in there". Depends whether you're a "wait for the candle to close" kind of person. I'm not.

I've looked at systems for over 4 years and refining sexy stochs is turning out to be the most reliable thing I have come across. Perhaps it's also the only one I've REALLY worked at to make it my own.

It's interesting how it ties in with other sytems, guessing the top and bottom is a fools game (or at least i feel like a fool when i try). I never know if we've hit the peak or not. A good Sexy stochs pattern just shows a strong move ALREADY UNDERWAY and then takes a retrace.

This is nothing more than the time-honoured "buy the dips" strategy, just it's so darn visual. You get a great heads-up when the 533 cuts back against the move, and handful of options on how to take the entry.

KUDOS TO US !! Go Team Sexy !!!

Right, goal for the day: Work out my projected earnings target for 2008 based on this system. I need something outrageous to aim for.

Ok, stochsters, here's a quick summary of my use of EMAs etc for defining turning points. This has increased the effectiveness of Sexy Stochs about 10000000% (approx). Hope it's of use to someone.

I add 6EMA, 20EMA and Bollinger band to every time frame.

Here's a series of pics of the action from yesterday on EUR-USD. What I'm looking for is price to hit either of these three indicators on multiple times at the same time!!!

First up is the WEEKLY chart (anyone using this???? haha) Price touches down on the 6EMA of the Weekly. At the same moment, price hits the 20EMA on the Daily chart, AND also touches the first BB of the 4 hour.

When I get confluence like that I can be pretty sure the price isn't going to break down further.

Lo and behold, the 4 hour gives a perfect Sexy Entry going long at exactly the same moment. MMMMMMMMMMmmmmmmmmmmmmmmmmmm.

I know the weekly chart is not on everyone's watch list but the same process occurs on all time frames. I just saw this one live on friday and thought it was cool.

Enjoy

[BTW: Anyone know how to add text between multiple pictures?]

I want to take a look at it! What settings do you use for BolingerBands?

Settings are fairly standard (I think)

BB1 SD 2 Period 20
BB2 SD 2.5 Period 20

I use the BANDS indicator so I can remove the central line from the chart.

The only reason I have two Bollinger Bands is that I played for a while with trying to enter contrarian trades on the 1 minute chart on exhastion spikes. I had about 5 bollinger Bands from 2.0 to 4.0. What a disaster.

I still keep the second one though as the separation of the bands do tell me something. (Although I don't know consciously what that is anymore. Momentum??) It would probably be fine with just one.

here is a multi time frame example of eurjpy

first of all check out the 4h chart. the gray highlighted area is where the 20 crossed its signal line upward and at the same time the 5 was already above 80. this indicates a strong uptrend.

next we look at the 1h and we see that the 20 is above 80 and the 5 pulled back and touched the 20 line. this is a perfect buy signal on the 1h which is also in sync with the 4h chart makes this trade high probability. no need to hesistate here. we see 4h 20 moving up the 5 above 80 right away we think uptrend then the 1h 20 is above 80 we also think uptrend we just wait for the 5 to cross upward and bam 100+ in a couple of hours.

next

the 4h 20 is above 80 and the 5 is pulling back (blue area). since this means uptrend, we wait for the 1h to tell us when to get in.
so the 4h is looking good.

next we look at the 1h. we see the 20 on the 1h trending down. this trend down is nothing but a pullback of the 5 stoch on the 4h. just like they say a pullback on the daily is a trend change on the lower timeframes. think of it that way.

so we wait for teh 20 to turn back up and we enter on the first signal we get off the 1h which is the area i highlighted in blue

take the time to digest this. it makes pips. trust me

Everyone must be on different timezones. I go to sleep and wake up and you guys are posting! Good to see you all up now Right now as I type this, it's 9:41AM CST on Saturday morning. Boxing's last post shows up as 9:03AM Saturday morning. Where is everyone at geographically?

Boxing!!! Excellent!! This is exactly what I've been waiting to get from you. A step by step approach on how it's done by the man himself! Awesome. I will spend a considerable amount of time digesting this post!

I´m in Germany which is GMT +2 now during the summer. So now its 17:34 here.
When i get up you go to bed .

For me would be easy to trade at london open if i didn´t have a dayjob.
I think this a very good trading time.

After reading that post from Boxing and going back through my charts for the week looking at different tf's, it's all becoming so crystal clear now. Once again, excellent post.

boxin,

Could you confirm your entries on your pic? I don't understand what your saying here.

Trade 1 - Grey Area

1. Cross overs and 533 overbought on 4Hr indicate uptrend.
2. 533 on 1 hour drops to O/S, so enter on the upturn.

Trade 2 - Blue Area

1. Pullback of 533 on 4 Hr, other stochs overbought.
2. Pullback of 533 on 1Hr, so enter on upturn

Neither of these seem to offer good entries. I must be seeing it wrong.

Cheers

I edited the picture to show where the 5 turned up and gave the buy signal. The 20 was already above 80. We were just waiting on confirmation from the 5 stoch.

and here for second signal. Heh! After the blue area, there was one more buy signal and then a sell signal after the trend changed. This is on the 1hr chart. It's crazy how incredibly visual this system is. Really, all we need is patience to make the pips using this thing. If we can just sit on our hands until the setup says "here I am", can you imagine how successful we'd be? Talk about trading being 30% system and 70% discipline. My main hang up is to feel like I have to always have a trade going and if I don't then I'm not a proficient trader.

You mean the (5,3,3) touched the (20,10,20) stochastic?? Or that it dropped to touch the 20% level on the stoch screen???

It's clear that there's often a huge amount of price movement when the stochs fool about together in the Over-bought or Over-sold zones. It's just really hard to trade them live. Firstly because I can't really see what they're doing and they turn around real quick and secondly because they can quite easily also signal a reversal. I've been burned sooooo many times in this zone. I've relegated this kind of move to the "your trading capital is in danger - do not enter" category.

The two moves you highlight seem to end up in price consolidation. Sure they move afterwards, but IMHO I think the probabilities for these trades are less favourable than other sexy stoch entries.

I still think I'm misunderstanding where boxin is entering these two trades. I'll take another look at the "bunching" pattern. Moonchild mentioned them early on in this thread, and I've watched a million of them reverse (as he expected). However I'm guess I'm happy not to try and pick the reversals and but to load up on what I consider to be higher probability retracements of existing trends

I'm totally with you 100% about the need for patience. The less I trade the more profitable my bottom line. So many people on this forum say the same thing. Trading is actually really boring. That's why I need something else to do insted of looking at the screen all the time. Haha, the week I had free from work and did nothing but trade I lost a fortune. Just couldn't resist the temptation of entering crap trades.

Ahh my bad on that last post. I see that boxing was talking about the bottom 20stoch line showing that the 5 went all the way to oversold and was now on its way up. So we would've gone long then. I guess my line was just another buy signal...would've been good for at least 20+ pips looks like though