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Stochastic secrets

  • #181
  • Oct 12, 2008 11:19am Oct 12, 2008 11:19am
KudzuFX,

Went back to post 178 to look at the chart again. After the 2nd trade the 25 and 5 were at the bottom of the channel. I always exit when both hit the top or bottom of the channel and re-evaluate the trade using the steps I outlined above. Big E
  • #182
  • Oct 12, 2008 3:46pm Oct 12, 2008 3:46pm
Hey All…
Today I want to help you become a more successful trader. … using my ideas…if your interested? You’ve read the posts. Don’t know if you like them or hate them but here goes…

Have you read “you have to hear with your eyes/mind… what the market is showing/yelling at you?” OK, Just using the RSI (14), 5 ema/close Shift 3, Stoch 25,2,3, ,or the Stoch 5,3,3,… all are a system individually. Ya, I can hear the grumblings after that statement… Hang on.

Example: Do this for an hour each day if possible. First day put up a RSI (14) on your eur/usd chart, 5 Minute TF, add 50% line in red on your RSI. Now grab the line that separates the chart from the RSI and move it all the way up to the top until you can’t see the chart anymore. What a concept, eh. Now on your Demo account only, just trade the RSI Line by itself. After an hour check your results. HOW DID YOU DO? If not good, add the chart back in and observe how it moves in relation to the RSI… no trading, just observe. OK NOW CLOSE UP THE CHART LIKE ABOVE AND DO IT AGAIN. Pay close attention and learn.

Next day, use only the ema/close, Shift 3 and do the same drill as above. Just trade the chart this time with the EMA on it. BEST TO ENTER ON THE SECOND CANDLE after the candle crosses the EMA line. Remember to use the 5 minute chart. Practice reading the candles and the way the line moves. Practice until you get pretty good in winning trades.

Next day, use the Stoch 25,2,3 and trade it without the chart showing. Practice, practice, practice. 5 minute chart, same pair.

Next Day, use the Stoch 5,3,3 and do the same drill on the 5 minute chart as above. No Chart.

Last Day: Now put them all on your chart. Look at the 25,2,3 for set ups. Look at the 5,3,3 for possible entry/exits. When you think you have a trade coming up… you have 4 indicators to confirm or deny the upcoming trade. If they all line up…take the trade. If not, pass on the trade. After practicing you won't need all four to line up (risk tolerence).
When 5,3,3 tells you a sell or buy is available…. Look at your candles, ema line, 25,2,3 line, RSI line. Are they telling you to get out or stay the trade ? It doesn’t get much simpler than this.

QUIT BUYING STRATEGIES! If this doesn’t work for you… next best thing is to develop your own system. Use tid bits you have gathered over the months/years from reading forums. Keep them on one pad of paper so they don’t get lost. Write down the part you like and demo trade it… but test it, test it, test it. When you have enough parts, put it all together and demo trade until it fits. See the chart below: Big E
Attached Image (click to enlarge)
Click to Enlarge Name: 10-12-08 gif.gif Size: 29 KB
  • #183
  • Oct 12, 2008 4:06pm Oct 12, 2008 4:06pm
Trade #1 - All 4 confirm. +47 pips

#2 - Two out of 4 on entry confirm. Larger risk.
+77 pips.

#3 - 3 out of 4 confirm on entry. Larger Risk .
+92 pips.

#4 - 3 out of 4 confirm on entry. Higher Risk.
+25 pips.

It works for me and will for you too. Follow the guidelines on the post above to learn how. Big E
  • #184
  • Oct 12, 2008 4:40pm Oct 12, 2008 4:40pm
Eelfranz...excellent postings....have been looking at this for several hours now....so, let me ask you....where do you find yourself placing stop losses when you use the 5 min tf? Previous high, previous low? Somewhere in between???
  • #185
  • Oct 12, 2008 10:01pm Oct 12, 2008 10:01pm
Quoting eelfranz
Hey All…
Today I want to help you become a more successful trader. … using my ideas…if your interested? You’ve read the posts. Don’t know if you like them or hate them but here goes…

Have you read “you have to hear with your eyes/mind… what the market is showing/yelling at you?” OK, Just using the RSI (14), 5 ema/close Shift 3, Stoch 25,2,3, ,or the Stoch 5,3,3,… all are a system individually. Ya, I can hear the grumblings after that statement… Hang on.

Example: Do this for an hour each day if possible. First day put up a RSI (14) on your eur/usd chart, 5 Minute TF, add 50% line in red on your RSI. Now grab the line that separates the chart from the RSI and move it all the way up to the top until you can’t see the chart anymore. What a concept, eh. Now on your Demo account only, just trade the RSI Line by itself. After an hour check your results. HOW DID YOU DO? If not good, add the chart back in and observe how it moves in relation to the RSI… no trading, just observe. OK NOW CLOSE UP THE CHART LIKE ABOVE AND DO IT AGAIN. Pay close attention and learn.

Next day, use only the ema/close, Shift 3 and do the same drill as above. Just trade the chart this time with the EMA on it. BEST TO ENTER ON THE SECOND CANDLE after the candle crosses the EMA line. Remember to use the 5 minute chart. Practice reading the candles and the way the line moves. Practice until you get pretty good in winning trades.

Next day, use the Stoch 25,2,3 and trade it without the chart showing. Practice, practice, practice. 5 minute chart, same pair.

Next Day, use the Stoch 5,3,3 and do the same drill on the 5 minute chart as above. No Chart.

Last Day: Now put them all on your chart. Look at the 25,2,3 for set ups. Look at the 5,3,3 for possible entry/exits. When you think you have a trade coming up… you have 4 indicators to confirm or deny the upcoming trade. If they all line up…take the trade. If not, pass on the trade. After practicing you won't need all four to line up (risk tolerence).
When 5,3,3 tells you a sell or buy is available…. Look at your candles, ema line, 25,2,3 line, RSI line. Are they telling you to get out or stay the trade ? It doesn’t get much simpler than this.

QUIT BUYING STRATEGIES! If this doesn’t work for you… next best thing is to develop your own system. Use tid bits you have gathered over the months/years from reading forums. Keep them on one pad of paper so they don’t get lost. Write down the part you like and demo trade it… but test it, test it, test it. When you have enough parts, put it all together and demo trade until it fits. See the chart below: Big E

I had a good chuckle after I read your above post.

I did almost exactly what you recommended above (minus the RSI) earlier this weekend. I pushed my Stoch set up all the way to the top of the chart blocking out price. I went back to the middle of August. I traded forward just looking at my own multi-Stoch set up (mine is a little different than yours, though somewhat similar). To my amazement - one successful trade after another, just trading the multi-Stoch, not looking at price. It blew me away.

Then this evening I read your above post and it gave me confirmation that I am on the right track here.

Thanks to both Eel and Red for your insights. good stuff.
  • #186
  • Oct 13, 2008 2:26am Oct 13, 2008 2:26am
Hi all!

Viewing the activity on this thread - during the time I was a little busy and as a result, not being able to see when, what and who - and the fact that converged in a truly sharing of experience, couldn't make me more glad.

Big E, I've read your posts - good posts . By the way with this occasion I remembered that while I was finding myself in the time of building my strategy, I used to plot one indi on the tf and pretend that all the strategy is based only on that indi. It was good for me and for my students this method works very good. But I have to admit that trading only using a combination of indi and not looking at the chart, was not one of the ideas that came in my mind or that I imported; and this idea is good, because practically you have a mechanical system - basically I constructed my system in a very mechanical style - and a system like that it's the kind 90% safe. Plus, if you combine a mechanical style with the line based trading technique you have in your possession a 99% safe system (we do know that there is no perfect system ).

Let the good things continue

Green pips for all!
  • #187
  • Oct 13, 2008 11:05am Oct 13, 2008 11:05am
4x- Great question. You know, stop loss placement ideas are different for all traders. Personally I go back 2 candles and put mine at the top or bottom of the candle depending upon if it is a long or short trade. It's different for every trade. Why? Regardless of how many pips it is... I'm active in every trade and rarely take more than a 5-7 pip loss on any trade because I WILL EXIT manually at that point....5-7 pips. On a 5 minute chart the trade doesn't need a lot of room to breathe. I just use my bigger stop loss level (2 candles) just to protect me in case of a huge move against my position that I didn't see coming.... like a news release I had forgotten about.

When trading larger time frames I never used s/l's like 10,15,20,etc. Too many times they are like a target and big traders or who ever take them out. I'd rather use something like 13, 23, 32, etc. So many times when it came back on me I'd be saved by one or two pips by doing it that way.

This 5 minute set up really doesn't require a large s/l. However, look at the previous chart and the space between trade 3 and 4. Boom... large drop. Of course I don't have any overnight trades on the 5 minute TF but it would have saved me a bunch of lost pip's. I'd rather keep the pips in my piggy bank instead of the brokers... who is hoping I stay the trade and take the loss to help pay for his upcoming vacation.

99.95% of the time I exit manually. I CAN ALWAYS RE-ENTER IF THE TRADE CONTINUES IN THE ORIGINAL DIRECTION.... but only after I re-evaluate all the indicators again. 5 minute time frame offers lots of trades so each trade is not a big deal on a scale of life or death. I hope that answers your question.

Red & Ku... Thank you for the kind words. Bottom line is that this set up works and the Stochs are the anchor of it all. Thanks again.

BIG E
  • #188
  • Oct 13, 2008 12:32pm Oct 13, 2008 12:32pm
here is an idea for stoploss placement. As stochs reading are possible only after the price bar completes it cycle, look for the reaction bar (usually within the previous 5 bars), it can be an engulfing bar, inside bar or just a larger than normal price bar, place a stoploss 2 to 3 pips above/below that particular bar should do the trick.
  • #189
  • Oct 13, 2008 12:36pm Oct 13, 2008 12:36pm
Attached Image (click to enlarge)
Click to Enlarge Name: 4.JPG Size: 83 KB


The arrows indicated the bar i would use to place a stoploss.
  • #190
  • Oct 13, 2008 12:41pm Oct 13, 2008 12:41pm
Hey guys. I'd like to participate in this thread. Hey Kudzu! Good to see you still around man. Big E, thanks for your efforts. I have done exactly all that you've said when I was trying to find my way as well This system seems solid. Although I would like to know what is a "shift 3"? What is that used for?
  • #191
  • Oct 13, 2008 1:03pm Oct 13, 2008 1:03pm
Just took my first trade off of eurusd using this system for +15 pips. Things are turning down now and I'm waiting for the ride down
  • #192
  • Oct 13, 2008 1:14pm Oct 13, 2008 1:14pm
Big E. are you stochs set for high/low or close?
  • #193
  • Oct 13, 2008 2:11pm Oct 13, 2008 2:11pm
I'm liking this method already I've taken 10 trades this morning with 9 of them winners. The usdchf trade I took earlier didn't move for whatever reason. I think it's because it's late in the day. No problem though, I closed that one out at -3 pips loss. Attached is the usdjpy trade I took this morning as well.
Attached Image (click to enlarge)
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  • #194
  • Oct 13, 2008 2:19pm Oct 13, 2008 2:19pm
GOOD JOB !
  • #195
  • Oct 13, 2008 2:38pm Oct 13, 2008 2:38pm
Aiya,

Good post. When you have a large previous candle, only need to go to it for S/L level. I never let it get hit... it's only there for emergency purposes. I bail the trade if it comes back on me 5-7 pips. USUALLY STILL MAKE A PROFIT and covers my spread.

JD,

When you click on the Moving Average in your indicator selection, a box comes up. You enter 5. Just to the right of the 5 is another box that says Shift. Put 3 in there. I use the close setting. Hope that clears any confusion.

JD... WHEN YOU GET A LITTLE FREE TIME: do what Aiya did . Right click your chart. Left click the tab on top of the box that says Common. Uncheck Auto Scroll. Click Save. Now scroll back as far as you want and check out the trades you could have taken using these indicators as layed out. You will be amazed. Good trading!

Big E
  • #196
  • Oct 13, 2008 2:43pm Oct 13, 2008 2:43pm
JD,

Looking at the chart you posted... you could have entered two or three candles earlier. When the 5,3,3 crosses over going up. I use 5,3,3 for entry..... and exits sometimes but normally by visual exit. Big E
  • #197
  • Oct 13, 2008 3:10pm Oct 13, 2008 3:10pm
I was wondering about that I wanted to get in earlier but thought the rule was to wait until the second candle after crossing above the EMA up.

Quoting eelfranz
JD,

Looking at the chart you posted... you could have entered two or three candles earlier. When the 5,3,3 crosses over going up. I use 5,3,3 for entry..... and exits sometimes but normally by visual exit. Big E
  • #198
  • Oct 13, 2008 5:29pm Oct 13, 2008 5:29pm
JD,

I wait for the second candle if that is the only indicator I'm using to determine a trade. Otherwise when I'm using all 4 indicators I buy on the 5,3,3 when the line crosses. Look at RSI, is it going up or down.. that's important. 5 minute chart.

On the 1 minute chart only. Replace the 5,3,3 with a 30,4,1 and see what you think and let me know. Remember...1 minute chart. It reads a little different than the 5,3,3.

Just playin' with the numbers. Big E
Attached Image (click to enlarge)
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  • #199
  • Oct 13, 2008 5:31pm Oct 13, 2008 5:31pm
Big E., I live in Texas and typically trade ALL the sessions I get very little sleep during the week and I think this will make it so much worse because I've been doing this for an afternoon now and I'm already hooked!

Thanks for the clarification. I'm only trading the 5 min charts since that's new for me. I'm used to the 15m. The 5 is fast enough and yes, I'm using ALL four indicators until I become more proficient at this.
  • #200
  • Oct 13, 2008 5:33pm Oct 13, 2008 5:33pm
If I'm trading using all four indicators, I want to wait until RSI goes above 50 for a long with the 5,3,3 cross correct?

Quoting eelfranz
JD,

I wait for the second candle if that is the only indicator I'm using to determine a trade. Otherwise when I'm using all 4 indicators I buy on the 5,3,3 when the line crosses. Look at RSI, is it going up or down.. that's important. 5 minute chart.

On the 1 minute chart only. Replace the 5,3,3 with a 30,4,1 and see what you think and let me know. Remember...1 minute chart. It reads a little different than the 5,3,3.

Just playin' with the numbers. Big E
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