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Spud's Predictive MTF Stochastics

  • #221
  • Nov 6, 2008 5:45am Nov 6, 2008 5:45am
Quoting Spudfyre
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.
Yes I meant Non Farm Payroll thanks.
Time hides Nothing
  • #222
  • Nov 6, 2008 5:47am Nov 6, 2008 5:47am
As I was rushing trying to keep up to the trade yesterday showing the stochastic positions...I probably skipped some things. So, I'm going to go back a little.

Now, some are asking is this MTF STochastics and others are wondering why you need MTF Stochastics. Remember I called this thread "Predictive MTF Stochastics".

You can trade with just the M5 and M15...it is kind of like being deaf, looking through binoculars standing on railway tracks. You can see well in a narrow view but if you aren't looking down the tracks in the right direction that train is going to ruin your day.

Using MTF stochastics gives us a birds eye view of our surroundings.

If you like I have taken much of MTF Stochastics and added defined entry and exit points based on the M5 trigger. For the next while I'll show you how these work in tandem and I'll keep explaing the MTF stochastics in case you are not familiar with MTF Stochastics or Elevator to PIPS ...or how this all fits together.

In the chart below the arrows on the M5 chart are the trigger points. Notice by the arrows on the M15 and arrows on the M5 that we have no valid triggers. Also notice price is down on M5.

The MTF stochastics show us that everything is oversold but the H1 and H4.

Question is: "Does an invalid long = a valid short"?
By looking at our balls, we would expect M5 to rise and it does. We also expect H1 to fall and H4 to fall. In MTF Stochastics we would take H1 down until it cosses the 20% line.

By combining the triggers and MTF we simply stay out of this trade. This is by no means an ideal long trade to enter. It is a better short entry, but M5/M15 and even M30 could rise against us before they fall again. These small deviations are what stop loss you.

The invalid longs will tell you to keep your short trade and the MTF stochastics are telling you a long is close at hand. They condradict each other so sit out and let the market converge.

If you are a gambler...the only trade is short until the H1 crosses 20%.
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  • #223
  • Nov 6, 2008 6:07am Nov 6, 2008 6:07am
The logic behind Predictive Mutli-Time Frame Stochastics is to get in early on a trend. Ride the stochastics through the trade and exit when the trend turns against us...or when we'v emade our PIPS for the day.

This chart is almost the beginnings of a perfect Escalator Ride up. The only hinderence is our H4 which is expected to go down. However, we know that for H4 to go down, everything will have to go up first..and if H4 decides to turn and go up...we are with it.

So typical M5/M15 long entry set up where M5 long trigger has gone off, we have price up and M15 stochastic moves up.

The stochastic show us what we expect that M5-H1 will want to move up.

Notice that by waiting for the M5/M15 confirmation we are in a much better and safer place to make a long entry. Here is a perfect entry to target 10-20 PIPS long. The other alternative is to ride the M5 to the short trigger.

As the trade unfolds (no chart): Follow this to the first short trigger you will make about 6 PIPS, if you set your target to 10 or 20 PIPS you will hit either with a 10-15 PIP draw down. Watch the stochastics and valid triggers to stay out of trouble.
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  • #224
  • Nov 6, 2008 8:05am Nov 6, 2008 8:05am
5m/15m stochs moving up but price is not following. I see the 30m/1h are low. I'll wait on another valid long trigger before entering.
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  • #225
  • Nov 6, 2008 10:34am Nov 6, 2008 10:34am
Spud,

I just grabbed a little over +20 pips off this one. For some reason it's really hard for me to adjust to this style instead of the traditional MTF strategy that you started, which is the one that i've been following and VERY successfully I might add. I like this new PMTF though because it gets you in on the move earlier. I'll keep working at it.
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  • #226
  • Nov 6, 2008 10:58am Nov 6, 2008 10:58am
Looking at the chart I see that the 4hr is falling so the smaller tf's have been building shorts. The 5m is coming back up to pull the much oversold 15m up. So as Spud says, for the 4hr to fall, the lower tfs have to come back up again. I'm watching the triggers on the 5m but don't see any movement for the upside in the 15m. But I won't take any shorts because our "predictive" ability tells us that a move to the upside is imminent. Correct?
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  • #227
  • Nov 6, 2008 12:00pm Nov 6, 2008 12:00pm
Quoting Spudfyre
By looking at our balls, we would expect M5 to rise
TTFN Merlyn
  • #228
  • Nov 6, 2008 1:04pm Nov 6, 2008 1:04pm
Quoting sarah2002
i contacted some programmers asking for an indicator that calculates the difference between the last 2 closed stochastic bars
and cja...

I think it would be interesting to know also a (real price pips move) / (stoch value change)
  • #229
  • Nov 6, 2008 1:11pm Nov 6, 2008 1:11pm
Quoting Spudfyre
I designed the chart below to help depict where our M5,M15,M30,H1 and H4 stochastics should be in relation to each other on triggers....you should then see the movement build in the direction of our trade.
Each chart is independent, but they can also appear left to right or right to left through a serries of shorts or longs as price moves through a long period of time.
If you look at the Short Entries together in a series, notice how it looks like bubbles rising...first the M15, then the M30, then the H1 and then the H4. This is a continuous series of short trades (there are long trades inbetween).
Do you see how backwards it looks in a series? It is as if the Short Entries are moving the Stochastics...
it would be nice to set a TP and SP for each case...
  • #230
  • Nov 6, 2008 3:38pm Nov 6, 2008 3:38pm
Quoting Spudfyre
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...

ok thank you very much for the clarification. from what i understand, it really makes no difference what we put in the second number, since we dont display the D line anyways?
Just focus on the pips. The rest is insignificant.
  • #231
  • Nov 6, 2008 5:22pm Nov 6, 2008 5:22pm
Quoting Spudfyre
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.
Thank you for good advice Spud.

With some backtest, I can see many kind of set-up and exit strategy.
It helps me a lot to judge the situation.
I will keep your advice in mind and keep backtesting till I can get better awareness for PMTFS

Playing with Stos are like a surfing on the many different kind of waves
  • #232
  • Nov 6, 2008 8:09pm Nov 6, 2008 8:09pm
I missed the first long trigger and entry combo. Now I'm waiting on everything to re-position themselves.
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  • #233
  • Nov 7, 2008 12:12am Nov 7, 2008 12:12am
Sorry to back track here Spud but after reading through the thread again I'm a little confused about a couple of posts you made... The first one Post #181

Quote
Here we have confirmatin of our long trigger but now have a short trigger. However, here we can already see our short trigger will be invalid as our M15 and M30 still need to move up.

But on the next page post #206 you use the exact same example and chart pic but say..

Quote
Right now in this ball position signals an extremely high probability for downward movement

THe trade went short some 50+ pips so im thinking it was a valid short?

I understand the logic in the short trade but am confused as to why in post #186 you called this an invalid short signal

Cheers
Time hides Nothing
  • #234
  • Nov 7, 2008 12:56am Nov 7, 2008 12:56am
Quoting CindyXXXX
Sorry to back track here Spud but after reading through the thread again I'm a little confused about a couple of posts you made... The first one Post #181



But on the next page post #206 you use the exact same example and chart pic but say..



THe trade went short some 50+ pips so im thinking it was a valid short?

I understand the logic in the short trade but am confused as to why in post #186 you called this an invalid short signal

Cheers
My guess is that there was a time difference of more than 17 hrs between the screen shots. So the 5M stoch could had moved a few cycles up and down to the final line up in screen shot of post #206.
  • #235
  • Nov 7, 2008 1:36am Nov 7, 2008 1:36am
Quoting Harry123
My guess is that there was a time difference of more than 17 hrs between the screen shots. So the 5M stoch could had moved a few cycles up and down to the final line up in screen shot of post #206.
You're absolutly right I don't know how I missed that however my confusion remains because the stochs are in almost identical positions in both examples.

hmm
Time hides Nothing
  • #236
  • Nov 7, 2008 1:42am Nov 7, 2008 1:42am
Quoting CindyXXXX
You're absolutly right I don't know how I missed that however my confusion remains because the stochs are in almost identical positions in both examples.

hmm
OK now I am seeing perhaps in the short trade the 4hr had dropped below 80 and thus the 1hr was building it downwards - sm had to go down to pick up the 15 and 30 etc

Whereas in the invalid entry the 4hr was sitting above 80 with no indication of following the 1hr yet?
Time hides Nothing
  • #237
  • Nov 7, 2008 4:06am Nov 7, 2008 4:06am
pls spud i wish if you can give us at the end of the day daily analysis for the right and wrong signals we need to exercise our minds how to look at the chart and how to predict and i think that ll not happen without lots of cases and experiences during ranging market and trending market

thank you for all what you are doing in that thread i refresh it all the time waitng for your guides and explanations
  • #238
  • Nov 7, 2008 8:14am Nov 7, 2008 8:14am
Well, looks like we have a couple of big news items today so maybe we'll see some good volatility. Good trading guys!
  • #239
  • Nov 7, 2008 8:39am Nov 7, 2008 8:39am
Quoting Spudfyre
The logic behind Predictive Mutli-Time Frame Stochastics is to get in early on a trend. Ride the stochastics through the trade and exit when the trend turns against us...or when we'v emade our PIPS for the day.

This chart is almost the beginnings of a perfect Escalator Ride up. The only hinderence is our H4 which is expected to go down. However, we know that for H4 to go down, everything will have to go up first..and if H4 decides to turn and go up...we are with it.

So typical M5/M15 long entry set up where M5 long trigger has gone off, we have price up and M15 stochastic moves up.

The stochastic show us what we expect that M5-H1 will want to move up.

Notice that by waiting for the M5/M15...
Hello Spud,

This little tool might help visualize your balls in motion.
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Attached File(s)
File Type: ex4 STOCH_Bars_M#_v2.ex4   36 KB | 508 downloads
TTFN Merlyn
  • #240
  • Nov 8, 2008 4:51pm Nov 8, 2008 4:51pm
The chart below is an illustration of the mechanics behind mutli-time frame stochastics in a single chart.

This is the M5 chart with the M15 and M30 stochastics overlayed.

You will notice that price movements and trend changes (large and small) occur pretty much to where the stochastics cross each other. Seeing the crossovers like this is fairly easy...in real life it is a but more difficult because we would have to wait for our longer time frames to show us where the stochastic lines will go. In otherwords the crossovers suffer from lag.

We can overcome this lag by understanding the movement of the stochastics. From Escalator to PIPS, to elasticity, to the M5 trigger, etc....all of these systems are generated from the relationships shown on this chart.

For example, we can see how the M5 trigger develops in detecting the downward trend. Waiting for the M15 down movement helps confirm our downward move because it will likely lead to the M5 stochastic crossing both the M15 and M30 stochastic lines. Like wise we can expect M15 to cross the M30 stochastic line. Price direction is important to know because we know that the M30 stochastic must rise first before the H1 (not shown) will fall further. This is where the "predictive" nature of PMTFS comes from.

The stochastic balls link our stochastic lines. If you look past our M5 trigger on this chart you can see how the M30 balls rise above the M15 balls and then the M15 and M30 balls fall but in a parallel manner.

This forms the Escalator to PIPS where we follow the M15 and then the M30 down. Notice here how the M5 is below the M15. If we kept going we can see the M5 long trigger develop and as M5 rises then it crosses the M15 ....this chart runs out of space but a turn up by M15 confirms the long.

The advantage of using the M5 trigger is it gives us some range and definition. This is why combining it with MTF Stochastics is beneficial. We can go much much further than using the M5 trigger I explained in this thread to predict price movement. For example we could trigger trades by forecasting the crossover of the stochastics. We can also trade by knowing where the stochastics are in realtionshp to each other.

A few words of caution. This chart is hand plotted, and a MTF Stochastic indicator will not produce the same chart in real time bbecause of the time lags.

The good news is, we don't need a chart like this to trade. It is, I think, helpful to see trades in this format ...especially the trickier ones...and I will endeavor to produce a few of these for you. This kind of chart I believe gives you a full picture of what is happening.

What we can do is pluck the signals out of the data to make fairly good predictions of crossovers and other trade elements that make us have good, safe trades.
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