Awesome Trading (New way to trade the 4h)

Hello, and welcome to my thread.

Recently, I have come up with a strategy that is almost all profit. In backtesting, I am at least 80% win to loss ratio, just because of the nature of the system. Here it is:

In this system, we are using heiken-ashi multi-time frame bars. Heiken-ashi, if you don't know, is a way of sort of averaging candles so that you stay in trends longer. In this system, we are using a smoothed version of these candles. That way, even though there are minor corrections, we still stay in the trade.

**IMPORTANT**- Trade the 4 hours. TRADE the 4 hours. Anything shorter will whipsaw you, anything longer won't give you 3 timeframes above. The 4h gives you, from the bottom to the top, 4h, daily, weekly, and monthly heiken ashi bars. Essentially, we are waiting for them all to line up in the same color. When this happens, we are going to have a strong trend that will correct itself even if you screw up some.

Now getting on to trading...

FIRST THINGS FIRST
IDENTIFY THE LONG TERM TREND. Do this by looking at the top two HAS squares at the particular moment you are trading. If they are in agreement, then you have a good long trend. For example, if you are looking to trade at a moment and then are both blue, then you should look long. If they are red, you look short. Example:
http://i303.photobucket.com/albums/n...man1990/11.gif

In that particular example, we are looking long.

STEP 2: FINDING AN ENTRY
Now, identifying the trend was easy. Seeing where to enter is just as easy. This is a purely look at it and trade system. What we are going to try to do is trade on pullbacks. The way we can do this is by trying to find when the 4h and daily are the opposite of the week and month:

http://i303.photobucket.com/albums/n...man1990/12.gif

See how both of the red's changed over while the blue's are still on top? That's what we are waiting for. Now we wait for the 4h to turn blue and then, ultimately, we enter when the daily turns blue. That's right, the third line. We enter on the third line change. Essentially, what we are doing is watching the big trend (see how it is an uptrend?), then waiting for a minor correction (the 4h AND the daily turning red), and then we enter after that correction is over (daily resumes the trend direction):

http://i303.photobucket.com/albums/n...man1990/13.gif


Remember, the long term MUST stay the same color as the short term change. I will post pictures of more successful trades.

looks cool what ind are you using? I like the strategy.

Hi, how long have you traded this way? Also, when is the best time to trade this system. What type of money management do you have. If it's the 4hr, you'll need a wide stop, as not to be stopped out continually. Are you going to give us some more great idea's that belong with this system?

Budgie

An example of a quick short trade for a win:

http://i303.photobucket.com/albums/n...man1990/14.gif

An example of two more winners:

http://i303.photobucket.com/albums/n...man1990/15.gif

Although it doesn't happen often, there are losses. We seek to minimize these:
http://i303.photobucket.com/albums/n...man1990/17.gif

nice man but what tool do you use for this?

These rules work great on GBP/JPY. This is the only pair I trade, because I figured out money management that worked. In theory, any pair could be, but this is what I do.

I open up 5 different parts:

Parts 1 and 2 - 50 pip TP, 100 pip SL

Part 3 - 100 pip TP, 100 pip SL

Parts 4 and 5 - 225 pip Trailing Stop, 100 pip SL initially, but when part 3 triggers, then move SL to Breakeven +1 (just +1)

If you ever have a trade running that the daily switches back against the trend after you entered (For example, blue to red on an uptrend entrance, red to blue on a downtrend), then get out there. I would be surprised if this happened without your SL triggering.

What happens, why does this work?!?

Possible outcomes:

1) -500 pips. Yah. -500. Work with me.
2) 50 pips hit, so +100. After this, rest go down to -100, and we get -200 pips
3) If we get to 100, then we are home free. We are at the two +50's for +100, and then we are at the +100 for part 3. ALSO, parts 4 and 5 are moved up to +1, so right now we are GUARANTEED +202 pips on a trade that gets to 100

But, what about the R:R ratio?!?! Oh noes!!! it's so high. Well, look again. With this system, I have had 2 -500 pip moves in the past 7 years. THE PAST 7 YEARS. It doesn't happen often, and when it does, we recover. The reason this system works is that after step 3, we are guaranteed profit. And chances are, if it is going up, it will keep going up. On typically half of the trades, I make 200-1000 more pips from parts 4 and 5 of the trade. Backtesting (before I started live trading), I was at +17,607 pips (counting the +8 spread) and at -1900 pips. That gives me a R:R of almost 9:1.

These signals don't come often, but when they do, they do. In the past 7 years, there have been 35 signals. 30 of those have been winners. 5 have been losers. 2 have been -500. 12 of them were above 500 pip moves if we follow the system. 1 of them was 1200, and one of them (biggest move in my life) was 2100 pips. I typically trade very strangely. I know I am going to get yelled at. But I trade risking 80% of my account every trade. That is, if it goes -500, I lose 80% of my account. Big woop. Trading this system mechanically, you still recover, and I have even found that 80% is the biggest margin for profit returns with a 6:1 win loss ratio. Try it out, risk less, that is fine. Going for 20% works great. The thing is, an 80% loss will never make you get a margin call. It will never blow your account. It will leave you with 20% of what you had before. Just stick to the system, and you will win.

Hey awesomeMan ... I like it... Kinda looks like an EA I have that doesn't trade worth a damn, but the concept rocks! Many times I've looked at that ea and thought, damn! if only I was pulling the trigger! Are you gonna share that cool indi with us?

Are posted. Please help me out with this system. I am open to suggestions and I would really like if we could work on an EA. Please let me know what you guys are up to.

Could you pls provide a template and indicators as well. TQ

I've been trading it for a little while now (about six months). And yah, just check out the money management. If you guys have ideas, I'm open to them. Thanks for helping out guys!

Hoooo...Don Steinitz method brought up here again. Awesome!!!
I got Don's EA, you want?

Regarding the Don Steinitz method, yah, send it over. I would love to check it out. Thanks!

Of course, we have the stops, but I have been considering this method:
http://i303.photobucket.com/albums/n...man1990/22.gif

You must be kidding, right?

At least you trade demo, or U$ 1 cent for pip and doing this instead of playing lotto.

Did you ever hear of Murphy Laws? It doesn't matter if happened 2 times in 7 years...will happen to you very soon if you trade allowing it.

Good luck. You will need a lot!

Pepe

Mr.Don method in FF, here you go...

http://www.forexfactory.com/showthread.php?t=21986

http://www.forexfactory.com/showthread.php?t=21899

http://www.forexfactory.com/showthread.php?t=12057


I guess these 3 threads gonna take a week plus to digest.... He is classic.
As for the Don's EA, too bad I can't send you cos I forgot it is hard coded with your trading account number, it's useless given to someone.

Hi awesomeman,

I like this a lot.

I think there's a lot to be said for multi-time frame systems.

I have used the mtf stochastic method before and find it quite effective, in escence all it is doing is stacking the odds in your favour.
I don't know if Ashi candles or stochs are better for showing trends but hey, i'll give it a go.

Don't know if i'll be using youre MM technique just at the mo' though, that would make me sweat.

There's nothing to say it's wrong, i was only reading last night a thread were somebody had the same aggresive strategy.

It all boils down to how much of a risk taker you are i think. Also how much money you are risking and what you can afford to loose.

I mean you could adjust the risk as your account grows, get it to a level that you can get decent returns and then think more along the lines of preservation rather than accumulation.

Maybe your risking so much because the trades on the H4 timeframe a too infrequent. I know you stress to use this timeframe, and i agree that there are more whipsaws the lower you go, but the massive upside is that you probably get as many trades in a week as you would in a year growing your account much quicker and there fore requireing less risk per trade.

Can i just ask, what is the "4 tf has bar2" indicator for, it seems to give multicoloured squares every now and again?

An alert for this indicator would be fantastic, customisable so that different combos of bars comming into line would trigger it.

Thats the one thing about the mtf stoch method that i didnt like - no alert - so you have to watch the screen all day long

I am determined to establish a scalping strategy to compliment longer term methods but not at the expense of square eyes!

I'll watch with interest and thanks for sharing.

Is this thread a joke -- you're claiming a new method? You should know Don Steinitz, you're using his indicators. This is Don's MTF HAS all over again. There are literally thousands of pages of posts here and at TSD about this method. And they all died long ago, which is why it looks new to newbies. And newsflash -- the threads died for a reason.

You beat me to it. But the drawcard always works. 200 to 2 zillion in 2 weeks.

I hope you're not compounding your winnings, because if you are then one loss will wipe out your account.