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Spud's Predictive MTF Stochastics

  • #201
  • Nov 5, 2008 6:02pm Nov 5, 2008 6:02pm
Quoting Spudfyre
I'll go more into the balls.
Thanks. Normally, visual things help me grasp concepts better but I've been looking at that chart with the balls for some hours and I still can't grasp it. I am in Dallas and on CST. I'm not sure where you are but is there any chance that you can call a few more live trades, at least two? If so, can you let us know what day it will be so that we can know and be ready?
  • #202
  • Nov 5, 2008 6:06pm Nov 5, 2008 6:06pm
Alright. Here is a potential trade setup. I see that price didn't move up with that previous long trigger but another long setup is in the making. Spud, do you pay much attention to pivot points? See the pivot point up there? that could mess up a really good trade.
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  • #203
  • Nov 5, 2008 6:06pm Nov 5, 2008 6:06pm
Quoting ayaz
I have a quick little question about the settings for the stochs.
I have been following your teachings for a long time now, and would like to understand the reasoning and/or effects of the settings changes. For example, at the beginning i believe you were using 5,3,3 then switched over to 14,3,3 and now im seeing 14,1,1 for the 5m. In some threads you were using several combinations of stoch settings. Can you teach us a little about what the change mean and how the stoch reacts differently?

Much appreciated!

The first number is the measure of %K over xx time periods....in this case we are measuring over 14 time periods. A 5,3,3 or 5,x,x measures over 5 time periods. Therefore, 14,x,x on the 5 minute covers 14x5 minutes and 14,x,x on the 30 minute covers 14 x 30 minutes. There are lots of adjustments that can be made...for instance we could sync the time frames so that they measure the same time frame, etc.

The second number is %D which is a moving average. It really doesn't matter what we put in %D, but usually I will say 14,3,3 or 14,1,3 just because it is easier to remember. I find %D very meaningless and simply confuses the issues when using stochastics over MTF.

The last number is called "slowing". It simply smoothes out the line. A 1 is considered a fast stochastic so it is more responsive and will appear with sharper spikes. We use 1 in the M5 to help us see the trigger easier...we get a nicer spike. A value of 3 is considered a "slow" stochastic and will be smoother. The smoothness is actually an average of the last "1" or "3" calculations.

Why I choose 14,1,1 here and 14,3,3 here is more from experience and what I'm trying to "see" in the movement. It paints your charts if you like with a smoother motion than say a 5,3,3. We don't need the jitter here as the trigger signals us and the MTF positions guide us.

Stochastics are a range measurement and %K is your position within the range. So an 80% stochastic puts you high in the range between the high and the low of the last 14 time frames (in 14,x,x).

From here it gets a bit more complicated. Because multiple stochastics over different time frames gives you price motion and direction. That as you can see by my threads is a huge topic.
  • #204
  • Nov 5, 2008 6:12pm Nov 5, 2008 6:12pm
Quoting jdcompute
Thanks. Normally, visual things help me grasp concepts better but I've been looking at that chart with the balls for some hours and I still can't grasp it. I am in Dallas and on CST. I'm not sure where you are but is there any chance that you can call a few more live trades, at least two? If so, can you let us know what day it will be so that we can know and be ready?
I think it is important I explain the balls more. Or at least the position of the stochastics relative to our trades.
I'm going to say no to the live trades at this time, because the last time I did that, that was all I did and people stopped trying to learn and simply wanted to follow.
Maybe later I'll do one or 2 to close some concepts, but for now I think I need to explain the concepts a bit more so that everyone can see what I see.
  • #205
  • Nov 5, 2008 6:20pm Nov 5, 2008 6:20pm
Quoting Spudfyre
I think it is important I explain the balls more. Or at least the position of the stochastics relative to our trades.
I'm going to say no to the live trades at this time, because the last time I did that, that was all I did and people stopped trying to learn and simply wanted to follow.
Maybe later I'll do one or 2 to close some concepts, but for now I think I need to explain the concepts a bit more so that everyone can see what I see.
I completely concur. Thanks for your contribution. I think it's much more vital to teach us to fish
  • #206
  • Nov 5, 2008 6:51pm Nov 5, 2008 6:51pm
I believe the balls will help you understand things a bit better. If I confuse anyone please let me know but I'll take us back to the basics and go over it in as great deal as possible.

The balls simply represent the position of the different stochastics relative to each other. I simply copy the balls to the M5 chart for clarity. They are not positioned in time, just where their %K is. So the H4 is on the left (brown), H1 is to the right of H4 (yellow), M30 purple, M15 blue and M5 our trigger red.

If you look at the individual stochastics I have put balls where they are..these are the balls I copied over to M5.

The arrows above the balls or below is their expected movement. I say expected because it is not 100%...it is typical and will happen most of the time. This is how I trade, I trade to what I expect the market will move by what the stochastics tell me.

So M5 is at our trigger point. Note that I can expect the red ball (the M5 stochastic to move down. It will move down because I expect the H4 and H1 to move down. I expect H4 to move down becuase H1 has been moving down and is going to.....????....going to BUILD our H4 stochastic down.

So why do I expect the red ball to fall. Because M15 and M30 (blue and purple balls) can't build H1 downwards where they are. The M15 and M30 balls have to go up first. They may only go up 20%..they may go up 80%..we don't know. What we do know is that for M15 and M30 to rise, M5 has to fall down to get a long trigger (best) or at least go down far enough to raise M15 and M30.

Now this may not happen all in 1 cycle. M5 may bounce down and up and you will see M15 and M30 rise slowly.

Now what is tricky here is that H1 has to rise for H4 to fall. So we have to be very aware a rise in price that will bring M15, M30 and H1 up. We will see it coming if we pay attention to our trigger, M15 and M30.

Right now in this ball position signals an extremely high probability for downward movement.
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  • #207
  • Nov 5, 2008 8:10pm Nov 5, 2008 8:10pm
Quoting Ronald Raygun
For the record, that set of gears is impossible to turn.
Yes but for demonstration purposes you know what I mean...

Smart arse!
Time hides Nothing
  • #208
  • Nov 5, 2008 8:23pm Nov 5, 2008 8:23pm
Here we can see exactly what we expected to happen. It was nice the M5 dropped all the way to the bottom. Do you see what happened to M15...it went up..ever so little but it did go up. I exaggerated it a bit with the ball so you can see it.

The stochastics are lined up where we now expect M5 to climb and bring M15 and maybe even M30 up before it falls again to again push H1 and H4 down.

There are 2 obvious problems here. They are the M15 and H4 in divergence. Notice how the M15 went up while price went down...only in the last candle did it turn down. H4 is still in divergence and this is not favourable to a long.

This is where you just exit and let things settle. This is why without MTF Stochastics you would wait to validate the M5 long trigger with an M15 rise. With MTF Stochastics there is a long setup, but with 2 time frames wanting to drop. It's messy and not clear.

Remember price builds the stochastic and that is why we expect M15 to go down more.
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  • #209
  • Nov 5, 2008 8:35pm Nov 5, 2008 8:35pm
Spud I am not near my computer right now but I cant wait to get home and study what you have written.
  • #210
  • Nov 5, 2008 8:45pm Nov 5, 2008 8:45pm
This is where we hit our first upwards M15 movement but as you can see our M5 long trigger is invalid. Which would mean we are in a short position.

You can see that again the M15 is in divergence with stochastic up and price down. So we know M15 is headed down. H4 is headed down without a doubt. M5 really doesn't matter...it may go up or down...I pegged it down. Since M15 is headed south I expect H1 to keep going and get below 20%.

Would I go short here in a trade? Probably not. I certainly would not go long. This isn't so much a bad short entry as it is not an ideal short entry. This is where you need to be picky about your trades and just watch.

If you were in a short trade, this is where you could decide to ride it down a little more.

Notice that from our previous chart we could have gone long or short and made PIPS. If we went short we would have done pretty good. Long, we'd likely lose a little but we'd probably have exited long before the big drop.
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  • #211
  • Nov 5, 2008 8:59pm Nov 5, 2008 8:59pm
So Spud in post #206 you didn't need to wait for the 15m stoch to turn down to go short?

If you did that it would have been too late

Looks like there could be a long shortly on the EUR. Waiting fo 15m and price to turn up. THen hopefully the 30m and 60m will follow?

They are all low and need to go up in order to meet the 4hr?

This looks a lot like the MTF Stoch rules I was just reading where the 4hr is high above 80 and the rest are under 20.
Time hides Nothing
  • #212
  • Nov 5, 2008 9:18pm Nov 5, 2008 9:18pm
Quoting CindyXXXX
So Spud in post #206 you didn't need to wait for the 15m stoch to turn down to go short?

If you did that it would have been too late

Looks like there could be a long shortly on the EUR. Waiting fo 15m and price to turn up. THen hopefully the 30m and 60m will follow?

They are all low and need to go up in order to meet the 4hr?

This looks a lot like the MTF Stoch rules I was just reading where the 4hr is high above 80 and the rest are under 20.
If you know your MTF you don't have to wait for the confirmation, trade at the trigger. If you want to trade just M5 and M15 you need to wait. If you want to be really safe...use both. Sometimes you have to use both.

Yes, you will miss some trades this way.

Yes, MTF Stochastics should be a big part of this if you want to increase your trading success. The triggers are the signals, M15 confirmation is safety.

Hopefully, I can get you thinking MTF
  • #213
  • Nov 5, 2008 9:19pm Nov 5, 2008 9:19pm
Quote
What we do know is that for M15 and M30 to rise, M5 has to fall down to get a long trigger (best) or at least go down far enough to raise M15 and M30.

Ok I think this sums is up
Time hides Nothing
  • #214
  • Nov 5, 2008 9:24pm Nov 5, 2008 9:24pm
Quoting Spudfyre
Hopefully, I can get you thinking MTF
For sure I really respect what you are doing here and the way you interpret the stochs over different TF's I want to learn as much as I can.

One thing though in the Escalator to pips Manual I was just reading you seem to use 5,3,3 as the setting - does it work the same way with the 14,3,3 settings?
Time hides Nothing
  • #215
  • Nov 5, 2008 9:27pm Nov 5, 2008 9:27pm
Quoting CindyXXXX
For sure I really respect what you are doing here and the way you interpret the stochs over different TF's I want to learn as much as I can.

One thing though in the Escalator to pips Manual I was just reading you seem to use 5,3,3 as the setting - does it work the same way with the 14,3,3 settings?
Yes. The difference is here we have the trigger using M5. Using the longer stochastics helps us stay in the trend a bit better.
  • #216
  • Nov 6, 2008 1:04am Nov 6, 2008 1:04am
MTF Clock..
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Attached File(s)
File Type: mq4 # OTCFX_b-clock modified V3.2-sw.mq4   9 KB | 452 downloads
  • #217
  • Nov 6, 2008 4:55am Nov 6, 2008 4:55am
Hi Spud!
Thank you for all your contribution in this thread

I`m doing some backtest to study PMTFS and recognised I need mechanical exit point for doing this effectively.
I used 3 kind of Exit condition that you wrote in this thread so far.
Please, correct me if there are wrong exit condition or more exit condition I should consider.

Exit Condition

Take Profit Exit
-Whenever I meet Opposite Trigger(2nd trigger seems best so far)

Must Exit
- When I meet Opposite Sinal - Must Exit
(If there is no Price down/up following trigger, it`s invald, right?)

- When I meet Same trigger as my trade, which is invalid signal-Must Exit
  • #218
  • Nov 6, 2008 4:56am Nov 6, 2008 4:56am
Hey Spud do you trade on NFP days?
Time hides Nothing
  • #219
  • Nov 6, 2008 5:19am Nov 6, 2008 5:19am
Quoting deepermind
Hi Spud!
Thank you for all your contribution in this thread

I`m doing some backtest to study PMTFS and recognised I need mechanical exit point for doing this effectively.
I used 3 kind of Exit condition that you wrote in this thread so far.
Please, correct me if there are wrong exit condition or more exit condition I should consider.

Exit Condition

Take Profit Exit
-Whenever I meet Opposite Trigger(2nd trigger seems best so far)

Must Exit
- When I meet Opposite Sinal - Must Exit
(If there is no Price down/up following trigger, it`s invald, right?)

- When I meet Same trigger as my trade, which is invalid signal-Must Exit
Correct in some ways. These are defined exit points. However, one has to consider PIP profit as an exit too. As well you have to look at what the MTF stochastics are doing....the easy one is if say the M15 satys pointed down in a short trade...do I ride that until it turns up?

I suggested the defined exit points as an alternative to make the trading black and white. To be more efficient in our trades and when back-testing you should explore the "fuzzier" exits.
  • #220
  • Nov 6, 2008 5:24am Nov 6, 2008 5:24am
Quoting CindyXXXX
Hey Spud do you trade on NFP days?
For clarity you mean Non-Farm Payroll days?
I trade regardless of news....because the stochastics move the same. Will you find a good trade on an NFP day? That depends on the day.
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