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4 Hour Strategy (MACD)

  • #17,401
  • Oct 10, 2008 4:50pm Oct 10, 2008 4:50pm
Quoting osyrius
Well, I did something incredibly stupid yesterday. I saw this amazing market rhythm, and a pattern which I - personally - found to be the most effective one with this method, bounce off zero.

A nice descending pair, beautiful resistance line achieved and bounced, no doubt in my mind.
Result: I put 25% of my capital at risk (micro-account) on this single trade.
And won.

The thing is, I think the concept of 'holy grail of forex systems' is stupid, because I believe the trader makes the system, not otherwise.
However, I think I did found my holy grail here. It's a system that suits my style (on time, risk, charting period, etc.), and grants me nearly 100% succesful trades.
If a trade is certain, like this one (well-defined res/sup., coherent wih other periods, no news on the way), I take it for zero chance of going wrong. Has worked so far.

Anyway, second time I'm just flattering you geniuses for presenting this to me, which has finally made me profitable on this god forsaken market - forex.

Thanks!
Renato
Glad it worked out for you but...there always seems to be a but. I think you already know about the consequences of risking this or that % per trade, just be careful. Look at the following EU chart....Nice rhythm down and then a pullback to the 21 and....no downmove. And again, and no downmove...and again and...you get the picture, until finally things break down. The setup is quite similar to the Aussie but this would have taken a few tries to get back to the downside. The 1hr formed an upchannel for several bars before breaking through again. Trying to think of the moral to all of this and I guess it's the same old same old, keep your risk % manageable to your account balance. Thanks for joining the thread and please stay with us. This is a good place to be....
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  • #17,402
  • Oct 10, 2008 5:05pm Oct 10, 2008 5:05pm
tj:

Are charts are a little different because of the server times but this is what I've got for the TC from a few candles before. The 4hr comes up to the 21 and the 1hr gave the early entry with the ADX cross. For your candle the 1hr was already hammering down. With those large 4hr candles off the 21 you can always take a shot and take the midway point of that large candle and try to get in with a limit order. If that candle was 250 pips long ( say 1.5000 to 1.4750) sell at 1.4875 and then use a stop of 30 or 40 pips at 1.4915 or so. You're not really chasing the market because you're actually putting some thought into the entry and a trading approach to getting in and not 'palying a slot machine'. I shy away from the large candles pretty much and just wait for the next opportunity...
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  • #17,403
  • Oct 10, 2008 8:52pm Oct 10, 2008 8:52pm
Palmer,

Thanks for your advice.
At stocks I kept my risk management at 2% loss each trade. If I reached 6% loss in a month I would stop trading until the end of the month and take a moment to breathe and think over and over about what was wrong (tip from Alexander Elder in "Come into my trading room", very nice book, recommend to all).
In forex it's been only a few weeks since I began stabilizing my mm to 5% loss / trade and 15% / month, it's the same time I stopped gambling and started profiting.

I have seen a few guys who thought they'd have to risk 20% at first, because they had low equity, and then as they increased their capital, should begin lowering the risk. I believe it's the opposite.

Thanks for the welcome. I do see this is a great place to learn.

Best regards,
Renato



Quoting Palmer
Glad it worked out for you but...there always seems to be a but. I think you already know about the consequences of risking this or that % per trade, just be careful. Look at the following EU chart....Nice rhythm down and then a pullback to the 21 and....no downmove. And again, and no downmove...and again and...you get the picture, until finally things break down. The setup is quite similar to the Aussie but this would have taken a few tries to get back to the downside. The 1hr formed an upchannel for several bars before breaking through again. Trying to think of the moral to all of this and I guess it's the same old same old, keep your risk % manageable to your account balance. Thanks for joining the thread and please stay with us. This is a good place to be....
Chasing Livermore...
  • #17,404
  • Oct 11, 2008 4:49am Oct 11, 2008 4:49am
Quoting Palmer
If you search the MetaTrader thread here on the FF I betcha something will show up....
Thanks.

Akeko
  • #17,405
  • Oct 11, 2008 4:58am Oct 11, 2008 4:58am
Did somebody actually make a pip here after all these posts on this gargantuan thread?

Sorry to sound cynical, but MACD is nothing more than the divergance of two moving averages.... so you are really trading MAs....

Okay, so now that I've stuck my foot in my mouth, how's everyone done after all the crazy volatility over the past 3 weeks?
  • #17,406
  • Oct 11, 2008 10:21am Oct 11, 2008 10:21am
Quoting tdion
Did somebody actually make a pip here after all these posts on this gargantuan thread?

Sorry to sound cynical, but MACD is nothing more than the divergance of two moving averages.... so you are really trading MAs....

Okay, so now that I've stuck my foot in my mouth, how's everyone done after all the crazy volatility over the past 3 weeks?

tdion:

The strategy is not based just on the MACD and is not set up trade the MACD. There are some patterns to recognize that the MACD forms to look for trend continuation entries along with the moving averages (8/21/89). More weight is given to the three moving averages vs. the MACD for entries though. Phillip has said this many times. The volatility has been crazy and my guess is that it will continue for a while. During periods such as these I look at a smaller timeframe to trade off off but use the method for the overall direction. Your words don't sound cynical at all but it does take some time to recognize that fact that the MACD is just another tool to go along with how the method works...


Time for football..gotta go...
  • #17,407
  • Oct 12, 2008 8:38am Oct 12, 2008 8:38am
Quoting Palmer
tdion:

The strategy is not based just on the MACD and is not set up trade the MACD. There are some patterns to recognize that the MACD forms to look for trend continuation entries along with the moving averages (8/21/89). More weight is given to the three moving averages vs. the MACD for entries though. Phillip has said this many times. The volatility has been crazy and my guess is that it will continue for a while. During periods such as these I look at a smaller timeframe to trade off off but use the method for the overall direction. Your words don't sound cynical at all but it does take some time to recognize that fact that the MACD is just another tool to go along with how the method works...


Time for football..gotta go...
Well said, Palmer...and I admire your patience in your reply.

Truth is, this thread wouldn't be as large as it is without people being successful with the strategy. I do think however that the name doesn't help. "4 Hour Strategy (MACD)" does suggest that the MACD plays the biggest part, when in fact it doesn't. To my mind this strategy is about price action with MACD as "the icing on the cake".
James The Beekeeper
  • #17,408
  • Edited 10:25am Oct 12, 2008 10:09am | Edited 10:25am
actually my trade improve alot after i joined in this thread not because of the MACD but because of learning the market motion emotion and rhytm in this thread
thx phillip,willem,palmer ...
palmer: i missed ur trades in M5
  • #17,409
  • Oct 12, 2008 10:35am Oct 12, 2008 10:35am
edeyj9999: When we copyrighted the method Phillip actually renamed the method 'The Market Rhythm 4 Hour Strategy' and took the MACD out of the title. This was done so people wouldn't put too much weight on the MACD for trading.

Hey bsh! I'm still 'working with' the 5 minute entries. Posting charts and commenting was just taking up too much time. I think I bid a final farewell to the 5min thread some time ago so I could put more emphasis in this thread. I wish I had more time for all of this. I still plan on 'working only a few hours a day' at some point...
  • #17,410
  • Oct 13, 2008 2:43am Oct 13, 2008 2:43am
I constantly amaze myself at a talent I seem to have of working out a set of scenarios....then just sitting there when one sets itself up and watching it sail past without jumping onboard. Incredible
Great example on the E/U today. Anticipation was a move off 21 and gap fill. H1 shows good support on the 89. This was confirmed by an evening star. And there I was...just watching...all the way down to my target at 1.3461!
Well if I didn't get it, I hope someone else was a bit more alert and convinced and made some good pips.
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  • #17,411
  • Oct 13, 2008 3:33am Oct 13, 2008 3:33am
Palmer:
I think its time to look at your 1 hour ADX entrymethod.

I have a question though, do you wait for the 4 hour candle to close before you take a trade based on 1 hour ADX?

I guess the 4 hour candle could, within 4 hours, go up to the 21, bounce back and then go up again and close above the 21. But in this case its a clear bounce on 21, fib and trendline. The risk is that ADX trigger before the 4 hour candle have closed and we would miss a good setup...

hmm so many questions
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  • #17,412
  • Oct 13, 2008 6:52am Oct 13, 2008 6:52am
A bit early 1H entery. alredy set to BR +5 pips ( I entered based on another strategy) But 4H method gave also the signal that should appears after 1H candle will be closed
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  • #17,413
  • Oct 13, 2008 7:27am Oct 13, 2008 7:27am
Quoting ekling
Palmer:
I think its time to look at your 1 hour ADX entrymethod.

I have a question though, do you wait for the 4 hour candle to close before you take a trade based on 1 hour ADX?

I guess the 4 hour candle could, within 4 hours, go up to the 21, bounce back and then go up again and close above the 21. But in this case its a clear bounce on 21, fib and trendline. The risk is that ADX trigger before the 4 hour candle have closed and we would miss a good setup...

hmm so many questions
ekling:

No, I don't wait for the 4hr to close before getting in early on the 1hr. If one of the four candles gives the ADX signal within the 4hr candle then I look for an entry. The markets look like they might do a full 180 degree turn this morning. Cable looking very strong. I've got it way above the 21 and more than likely going to close above it by a bunch. The vertical line on the 1hr char is where the 4hr first came back to the 21. The DM+ never turned down (crossed below the DM-) for an entry.
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  • #17,414
  • Oct 13, 2008 7:55am Oct 13, 2008 7:55am
Quoting Palmer
ekling:

No, I don't wait for the 4hr to close before getting in early on the 1hr. If one of the four candles gives the ADX signal within the 4hr candle then I look for an entry. The markets look like they might do a full 180 degree turn this morning. Cable looking very strong. I've got it way above the 21 and more than likely going to close above it by a bunch. The vertical line on the 1hr char is where the 4hr first came back to the 21. The DM+ never turned down (crossed below the DM-) for an entry.
Allright, thanks for clearing that out. you're right, the ADX didnt give a signal on the cable and I didnt get into the trade. However there was a similar setup on AUD/USD and on this pair the ADX did give a signal and i did enter. -25 pips currently but we'll see.
  • #17,415
  • Oct 13, 2008 10:36am Oct 13, 2008 10:36am
Quoting BenStevo
I constantly amaze myself at a talent I seem to have of working out a set of scenarios....then just sitting there when one sets itself up and watching it sail past without jumping onboard. Incredible
Great example on the E/U today. Anticipation was a move off 21 and gap fill. H1 shows good support on the 89. This was confirmed by an evening star. And there I was...just watching...all the way down to my target at 1.3461!
Well if I didn't get it, I hope someone else was a bit more alert and convinced and made some good pips.
Nice entry into the gap with 3 lower highs. Perfect entry. Did not completely filled the gap but 40pips was there for the taking.
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  • #17,416
  • Oct 13, 2008 10:57am Oct 13, 2008 10:57am
Quoting Phillip Nel
Nice entry into the gap with 3 lower highs. Perfect entry. Did not completely filled the gap but 40pips was there for the taking.
dear phillip
21 ema in smaangle was still above -1.do ignore this?
thx
  • #17,417
  • Oct 13, 2008 11:12am Oct 13, 2008 11:12am
ekling:

Checking up on you...

The Aussie gave a signal on the open and the 1hr (first vertical line) and gave up about 150 pips. The second signal on the 1hr (second vertical line) gave up about 35 pips (vertical red line). At least that is what my charts are showing. Hoping you bagged some of those and moved the remaining to at least b/e. I've never traded the Aussie so I'm not sure how it moves with the other pairs. Now, price is lingering around the 21 and the 1hr is channeling....
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  • #17,418
  • Oct 13, 2008 11:59am Oct 13, 2008 11:59am
Quoting bshadroo
dear phillip
21 ema in smaangle was still above -1.do ignore this?
thx

The aim was trading the gap and not the 5min system. If there was not 3 lower highs I would have waited for other confirmation but those 3 lower highs ws the go ahead.
  • #17,419
  • Oct 13, 2008 2:48pm Oct 13, 2008 2:48pm
Quoting Palmer
ekling:

Checking up on you...

The Aussie gave a signal on the open and the 1hr (first vertical line) and gave up about 150 pips. The second signal on the 1hr (second vertical line) gave up about 35 pips (vertical red line). At least that is what my charts are showing. Hoping you bagged some of those and moved the remaining to at least b/e. I've never traded the Aussie so I'm not sure how it moves with the other pairs. Now, price is lingering around the 21 and the 1hr is channeling....
The first one i didnt take because i was asleep. I did take the second one but ended up BE so no pips for me today
  • #17,420
  • Oct 13, 2008 2:55pm Oct 13, 2008 2:55pm
Folks,

I have been studying this strategy and Phillips 5 minute strategy during the past two months and I have been demo trading this month with some success.

If all goes well I would intend to go live in a modest fashion at the beginning of November. However, I have a question about the method of trading. I trade in the UK using a spreadbetting broker (i.e. I bet a specified number of £'s per pip) rather than using lots per MT4. I have been using MIGs MT4 trading platform to demo but have really been counting pips and manually calculating what I would have bet with profits/losses.

My broker does not use MT4 but I would like to continue to use it for analysis but I notice MIG have a 90 day limit. What do other people do in these circumstances?

Any help/advice is much appreciated.
James The Beekeeper
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