Spud's Predictive MTF Stochastics | Page 44 | Forex Factory

Options

Go to
Permalinks
Print Thread

Similar Threads

Spud's MTF FIB Breakout System 383 replies

MTF Stochastics 1,485 replies

MTF Stochastics into MTF Stoch Histogram 8 replies

Trading MTF STochastics Manual 13 replies

Journal related to: Spud's MTF Stochastics 178 replies

Attachments: Spud's Predictive MTF Stochastics
Exit Attachments

Spud's Predictive MTF Stochastics

  • #861
  • Nov 24, 2008 11:07am Nov 24, 2008 11:07am
Quoting forexweasel
Why not just take the 5/15 signals when at least the 30 is in your direction??? should be profitable, yes?
I try to backtest every single situation with as many different situation as I can see, even I`m sure that trade will be bad.
This kind of study gave me much confidence and understanding about Spud`s system.
Actually, I`m fairly new in forex market,and no live account yet.
So, I don`t know I`m doing right way or not.

Please correct me if something wrong in my way of study
  • #862
  • Nov 24, 2008 3:55pm Nov 24, 2008 3:55pm
Here's the project, I'm going to put together what I think are the most straightforward approaches to mutli-time frame stochastic trading, in the hopes that we can develop a single chart that will asses our risk of entry, trend, reversals and exit options.

Although the entire chart will probably look like a spagetti factory upon completion, the hope is that we can develop a single indicator that will provide perhaps a simple green/red light for the different MTFS elements like an Escalator to Pips.

How I will approach this is by introducing each combination of elements I think are the most worthwhile to use (and most reliable). Each combination can be used alone or we can use multiple combinations to help search for example, trends and trend reversals.

For each combination I will work to define specific entries and optional exits. There is no such thing as a single exit. We must decide if we are cautious traders looking for 20 PIPs a day or trend chasers trying to hit the 300 PIPer. Are we Snipers or Surfers? This is up to you as an individual. Certainly each exit has a signal and if we are creating an indicator to detect those signals than we will readily see when we have an exit.

Ok, I tend to get wordy so let's just move on and get started with what we have been talking about here for the past while.
  • #863
  • Nov 24, 2008 5:20pm Nov 24, 2008 5:20pm
Combination 1 - Crossovers

All Stochastics are %K Only.

M5 Chart
100,3,3 Stochastic as our Price Line
14,3,3 Stochastic as our Origin Line
levels at 76.4% and 23.6%

M5 Chart
14,1,1 stochastic only (hide price)
levels every 10%

M15 Chart
14,3,3 stochastic only (hide price)
levels every 10%

Theory:
Shorter time frame stochastics will cycle more between 0 to 100% than longer term stochastics. Play the 14,3,3 Origin line to lead the 100,3,3 Price line in movement direction when these lines are together or if the Origin Line is spread from the Price Line, that the Origin Line will return to the Price Line. Use the Price and Origin Lines when they have exhausted themselves at the upper and lower limits to minimize down draw. The M5 and M15 Stochastics crossovers are used as a high percentage confirmation of price movement in the direction we want. The levels are used to help protect against over markets or take adavantage of over markets.

Short Entry Options:
1. Origin line has crossed down below Price Line and 76.4% level. Price line must be above 76.4%. M5 must have crossed down below M15. M5 is below 80%. M5 and Origin Line must be pointed down, M15 and Price Line can be pointed in any direction, but better if either or both are pointed down as well.
2. Origin Line is below Price Line, Origin line crosses down below 76.4% and Price is above 76.4%. M5 has crossed down below M15. M5 is below 80%. M5 and Origin Line must be pointed down, M15 and Price Line can be pointed in any direction, but better if either or both are pointed down as well.
3. Price Line is below 23.6%. Origin Line was above 76.4% and has moved down across the 76.4% level. M5 must have crossed down below M15. M5 is below 80%. M5 and Origin Line must be pointed down, M15 and Price Line can be pointed in any direction, but better if either or both are pointed down as well.


Short Exit Options:
1. M5 reaching below 10%
2. Reverse cross of M5 crossing above M15 and M5 pointed up
3. Exit when the Origin price OR Price Line hit 61.8, 50, 38.2, 23.6 or 10% levels. The lower you go the more risk of reversal but more oppoortunity for gain. Use M5 and M15 crosses as your guides, but there may be several reverse crosses along the way. Whatch for direction change of Origin Line.
4. Exit at trageted PIP level..use small PIP levels (5-10) for entry #3 and larger PIP levels (10-30) for entry #1 and #2.

Stop Loss:
Hit or Miss. Use high of close of entry candle or previous entry candle as Stop or add 5-20 PIPS maximum to this. Never exceed 50 Pips. Bring Stop Loss down to break even on 5-10 PIP gain, chase at 50% of gains, never exceed 20 PIPS on the chase always leave yourself profit PIPS once they exceed 10 Pips.

Dangers and Strategies:
Over bought market can reverse against our entry early. Be extremely wary of reverse M5/M15 reverse crossovers until M5 hits below 20%, then M5 over sold is in our favour and look for M15 to go below 20...ride out M5 and even M15 if they are below 20 until they pop over 20. Picking the M5 to pop over 20 is much safer than waiting for M15. Dangers exist early on as you must give trade some room in stops. Don't be afraid to exit and re-enter with small PIP losses..odds are always in your favour that a move will come down and it is a matter of entering on each entry single until the right one takes off. Increase your lot size if you must to recover...just don't go crazy.

Long Entry and Exits are the exact opposite.

Charts show example of Short Entries:
Attached Image (click to enlarge)
Click to Enlarge Name: PIC0002.gif Size: 26 KB
Attached Images
  • #864
  • Edited 2:24am Nov 25, 2008 12:00am | Edited 2:24am
Quoting Spudfyre
Combination 1 - Crossovers

Short Entry Options:
1. Origin line has crossed down below Price Line and 76.4% level. Price line must be above 76.4%. M5 must have crossed down below M15. M5 is below 80%. M5 and Origin Line must be pointed down, M15 and Price Line can be pointed in any direction, but better if either or both are pointed down as well.
2. Origin Line is below Price Line, Origin line crosses down below 76.4% and Price is above 76.4%. M5 has crossed down below M15. M5 is below 80%. M5 and Origin Line must be pointed down, M15 and Price Line can be pointed in any direction, but better if either or both are pointed down as well.
3. Price Line is below 23.6%. Origin Line was above 76.4% and has moved down across the 76.4% level. M5 must have crossed down below M15. M5 is below 80%. M5 and Origin Line must be pointed down, M15 and Price Line can be pointed in any direction, but better if either or both are pointed down as well.

hi Spudfyre,

Thanks a lot for the start of the Spudfyre's PMTFStochasticsCombinedCrossTrading rules.I'm putting that into an automatic system (properly in a couple of hours).

just one observation at the moment:


Short Entry Options: isn't the 1 and 2 actually the same (at least from the point of enter rules). or do I have at the moment a brain indicator misconfiguration ;-) and can't see your point.


isn't the only difference that in 1. somewhere in the past the Origin line has crossed down below Price Line. which in 2. we just ignore - it might have happened or it never happened but we anyway enter a trade.

So basically I think 1. we can ignore and keep only a simplified - refined 2 and 3:

I will but my thought to it:

Don't need that: Origin Line is below Price Line it is implied by: (Origin line crosses down below 76.4% and Price Line is above 76.4%.)

1.
* Origin line just crosses down below 76.4% and Price Line is above 76.4%.
? when do we enter - only straight after it crossed down or also much later (then the cross would become unimportant and the only thing that matters for the Origin line would be below 76.4%)


* M5 has crossed down below M15.
? again the question - must this happening at the same Candle close as the Origin line just crosses down below 76.4%
? or is it only important that the M5 is below M15

M5 is below 80%.
? DO WE NEED THAT: as Origin Line (14,3,3) lags a bit behind the M5 l(14,1,1) and if I'm correct that the Origin line must just crosses down below 76.4% can we not assume that M5 is even lower than 76.4%
? But maybe it is still important not sure yet. In fast Movements maybe the M5 jumped above 80% - was just a thought
M5 and Origin Line must be pointed down, M15 and Price Line can be pointed in any direction, but better if either or both are pointed down as well.


2. Price Line is below 23.6%.
Origin Line was above 76.4% and has moved down across the 76.4% level.
? when do we enter - only straight after it crossed down or also much later
if only straight after we could use: Origin line just crosses down below 76.4% (which already implies that it was above)
M5 must have crossed down below M15.
? again the question - must this happening at the same Candle close as the Origin line just crosses down below 76.4%
? or is it only important that the M5 is below M15

 M5 is below 80%.
? DO WE NEED THAT: as Origin Line (14,3,3) lags a bit behind the M5 l(14,1,1) and if I'm correct that the Origin line must just crosses down below 76.4% can we not assume that M5 is even lower than 76.4%
? But maybe it is still important not sure yet. In fast Movements maybe the M5 jumped above 80% - was just a thought
M5 and Origin Line must be pointed down, M15 and Price Line can be pointed in any direction, but better if either or both are pointed down as well.





##########################################################################################

ACTUALLY if 'Origin line just crosses down below 76.4%' is important - as I suspect from your title (Combination 1 - Crossovers)


we could even simplify it into one rule:

PMTFStochasticsCombinedCrossTrading Short Entry Rule:

* Origin line just crosses down below 76.4% and Price Line is above 76.4% OR Price Line is below 23.6%.

* M5 has crossed down below M15.
? again the question - must this happening at the same Candle close as the Origin line just crosses down below 76.4% then it would be better: (M5 just crosses down below M15.)
? or is it only important that the M5 is below M15

M5 is below 80%.
? DO WE NEED THAT: as Origin Line (14,3,3) lags a bit behind the M5 l(14,1,1) and if I'm correct that the Origin line must just crosses down below 76.4% can we not assume that M5 is even lower than 76.4%
? But maybe it is still important not sure yet. In fast Movements maybe the M5 jumped above 80% - was just a thought

 M5 and Origin Line must be pointed down, M15 and Price Line can be pointed in any direction, but better if either or both are pointed down as well.
ADDITIONAL QUESTION: For Direction - do you think it is useful to have more then one Candle used for determinate the direction or would that just lag too much.


Like you, I personally think that most important is a very high success rate entry definition. (even though the exit time is important for the final profit loss - but as long as we have a successful entry we can always win by trailing a stop loss)

regards MJ

ps: the plain 5/15 cross indicator brought on the EUR/USD over night nearly 3 % ;-)
__Thanks__ MJ
  • #865
  • Nov 25, 2008 1:16am Nov 25, 2008 1:16am
Info for Spudfyre's Stochastic Setup OANDA.

Spudfyre uses most of the time only the %K Line. as on OANDA you can not simple hide the %D line you can use a setting like this:

Spudfyre: only %K (14,3,3 hide the %D line) -- OANDA: Full Stochastic (14,3,1) - this settings will have the %D line at the exact %K line so it does not disturb.


I did not find any ways to overlay two Stochastic with different settings - if anyone knows how (I'm talking about real overlays like Spudfyre's graphs shows) pleas let me know.

THANKS MJ
__Thanks__ MJ
  • #866
  • Edited 4:20am Nov 25, 2008 3:43am | Edited 4:20am
Hi all,
I tried to code latest Crossover method as per Spud's instructions (I hope).
I coded only entry method #1 & #2 , I didn't perform extensive test so please test and report possible issue.

Cheers,
Skyline
Attached File(s)
File Type: ex4 Crossover Stochs v1.ex4   8 KB | 529 downloads
File Type: mq4 Crossover Stochs v1.mq4   7 KB | 759 downloads
  • #867
  • Nov 25, 2008 4:15am Nov 25, 2008 4:15am
Quoting skyline
Hi all,
I tried to code latest Crossover method as per Spud's instructions (I hope).
I coded only entry method #1 & #2 , I didn't perform extensive test so please test and report possible issue.

Cheers,
Skyline
hi Skyline,

did you see a difference in method #1 & #2 ?

anyway want to share with you my approach to it:


PMTFStochasticsCombinedCrossTrading ENTRY RULES::

FOR ANY SHORT OR LONG Entry:

* Price Line is above 76.4% OR Price Line is below 23.6%.

SHORT ENTRY additional required validations:

* Origin Line just crosses down below 76.4%

* M5 just crossed down below M15.
? again the question - must this happening at the same Candle close as the Origin line just crosses down below 76.4%
? or is it only important that the M5 is below M15

M5 is below 80%. M5 and Origin Line must be pointed down, M15 and Price Line can be pointed in any direction, but better if either or both are pointed down as well.

LONG ENTRY additional required validations:

* Origin Line just crosses up above 23.6%.

* M5 just crossed up above M15.
? again the question - must this happening at the same Candle close as the Origin line just crosses up above 23.6%
? or is it only important that the M5 is above M15

M5 is above 20%. M5 and Origin Line must be pointed up, M15 and Price Line can be pointed in any direction, but better if either or both are pointed up as well.


# PROCEDURE

# Set a NewTrigger=True - check all required conditions - if one fails set NewTrigger=False
# Set a NewTriggerDirection= None - if point 2 NewTrigger=True - set the correct NewTriggerDirection
# check for NewTrigger and NewTriggerDirection confirmation for the rest of the required validations


# 1 CHECK Price Line (100,3,1 Stochastic on M5 Chart):
# Price Line is above 76.4% OR Price Line is below 23.6%.
# Plus get: Price Line Direction


# 2 CHECK Origin Line (14,3,1 Stochastic on M5 Chart):
# Origin Line just crosses down below 76.4% OR Origin Line just crosses up above 23.6%.
# Plus get: Origin Line Direction

# 3 CHECK M5 (14,1,1 Stochastic on M5 Chart) and M15 (14,3,1 Stochastic on M15 Chart):
# M5 is below 80% and M5 just crossed down below M15. OR M5 is above 20%. and M5 just crossed up above M15
# Plus get: Price Line M5 and M15

# 4 CHECK Directions:
# REQUIRED: M5 and Origin Line MUST point into the direction of a possible new trade
# OPTIONAL: M15 and Price Line SHOULD point into the direction of a possible new trade (maybe option for bigger Unit Size as this is a additional confirmation??)


MJ

PS: is there a way to see the code of this .ex4 files ?
__Thanks__ MJ
  • #868
  • Nov 25, 2008 4:23am Nov 25, 2008 4:23am
Quoting M_j
hi Skyline,

did you see a difference in method #1 & #2 ?

anyway want to share with you my approach to it:


MJ

PS: is there a way to see the code of this .ex4 files ?
Hi MJ,
I've updated previous post with mq4 file so that you can see the code list. I never coded api for oanda since from what I recall it's quite expensive to use them. I would suggest you if you want to automatize this trading system to use metatrader for this purpouse it's free.

Cheers,
Skyline
  • #869
  • Nov 25, 2008 4:51am Nov 25, 2008 4:51am
Thanks skyline,

very kind of you. - well I still will stick with my API for OANDA.

I never read an .mq4 file - so I'm not an expert. Based on the SHORT Entry

I give you some comments.

if (
OriginLine_previous > 76.4 && OriginLine_now < 76.4 &&
PriceLine_previous > 76.4 && PriceLine_now > 76.4 &&
Stoch_M5_now < Stoch_M15_now &&
Stoch_M5_now < 80 &&
Stoch_M5_previous > Stoch_M5_now &&
OriginLine_previous > OriginLine_now &&
PriceLine_previous > PriceLine_now &&
Stoch_M15_previous > Stoch_M15_now
)


Just a thought:

1. OriginLine_previous > 76.4 && OriginLine_now < 76.4 ---- what if the OriginLine_previous is exactly on the 76.4 and moves down: I would include that too.

2. PriceLine_previous > 76.4 && PriceLine_now > 76.4 ---- not sure if it is needed to check for the PriceLine_previous > 76.4 (could not read that out from Spudfyre's writting)

3. Stoch_M5_now < Stoch_M15_now ---- THIS is actually my main point what Spudfyre ment. As I read THERE MUST BE a crossing of M5 and M15 at the same Candle as the Crossing of Origin line crosses down below 76.4% - not just below.


4. PriceLine_previous > PriceLine_now ---- seems to be optional additional confirmation

5. Stoch_M15_previous > Stoch_M15_now ---- seems to be optional additional confirmation



One extra question: what is the reason you get the: _after variables as you seem not to use it later on: like double Stoch_M15_after


regards MJ
__Thanks__ MJ
  • #870
  • Nov 25, 2008 5:13am Nov 25, 2008 5:13am
This is the same for all Short Entries:

M5 must have crossed down below M15.
The crossover can happen at any time, but it must have happened and it still must be true at time of entry.

M5 is below 80%.
This must be true at time of entry. It doesn't matter if it is at 79.99999% or 1%.

M5 and Origin Line must be pointed down...
This must be true at time of entry. Down means from the horizontal. Does slope matter? Good variable to test?

M15 and Price Line can be pointed in any direction, but better if either or both are pointed down as well.
This is optional at point of entry, but it is a stronger trade if it is true or the trade becomes stronger if it becomes true after our entry.

Origin line has crossed down below 76.4% level. Price line must be above 76.4%.
The Origin Line must be true before or at point of entry. The Price line must remain above 76.4% at point of entry. Our M5/M15 rules must be true. (There is more risk to trade with the Price Line below 76.4% but technically you could still trade it. The lower the Price Line the more draw down is possible.)

Price Line is below 23.6%. Origin Line was above 76.4% and has moved down across the 76.4% level.
The Origin Line must be true before or at point of entry. The Price line must remain below 23.6% at point of entry. Our M5/M15 rules must be true. (Brain Indicator...I generally get worried in a trade where the Price Line crosses up above 23.6% in this trade....can be a good time to exit. We want 14,3,3 to fall to Price Line, we do not want Price Line to climb to 14,3,3)

-----------
M5 is below 80%.
? DO WE NEED THAT: as Origin Line (14,3,3) lags a bit behind the M5 l(14,1,1) and if I'm correct that the Origin line must just crosses down below 76.4% can we not assume that M5 is even lower than 76.4%
? But maybe it is still important not sure yet. In fast Movements maybe the M5 jumped above 80% - was just a thought.
Answer: M5 below 80% is to keep us out of overbought trouble. You can avoid it with extremely tight stops and either price goes straight down, or not. Keep re-entering until it goes down.

* Origin line just crosses down below 76.4% and Price Line is above 76.4%.
? when do we enter - only straight after it crossed down or also much later (then the cross would become unimportant and the only thing that matters for the Origin line would be below 76.4%)
Answer: M5/M15 must be true and Price Line/Origin Line must be true (as above). When both are true we enter.

* M5 has crossed down below M15.
? again the question - must this happening at the same Candle close as the Origin line just crosses down below 76.4%
? or is it only important that the M5 is below M15
Answer: It must be true at or before entry. M5 must remain below M15 to enter.

The Truth of Short Entry (all conditions must be met):
1. M5 must have crossed down and be below 80%. This must be true before or at entry but it must remain true at entry.
2. M5 must have crossed down and be below M15. This must be true before or at entry but it must remain true at entry.
3. M5 must be pointed down at time of entry.
3. Origin Line must have crossed down and be below 76.4% and Price Line must be above 76.4 % OR Price Line must be below 23.6%. In the case of Price Line below 23.6% we want as much spread as possible between the Origin Line and Price Line on entry....however there is no defined minimum spread. This must be true before or at entry but it must remain true at entry.
4. Origin Line must be pointed down on entry.

Bonus Strengths at Entry:
M15 and/or Price Line pointed down at entry.
  • #871
  • Nov 25, 2008 5:34am Nov 25, 2008 5:34am
Quoting M_j
1. OriginLine_previous > 76.4 && OriginLine_now < 76.4 ---- what if the OriginLine_previous is exactly on the 76.4 and moves down: I would include that too.
Yes you're right I'll add also the 76.4 value

Quoting M_j
2. PriceLine_previous > 76.4 && PriceLine_now > 76.4 ---- not sure if it is needed to check for the PriceLine_previous > 76.4 (could not read that out from Spudfyre's writting)
I'm not sure neither but looking at his example seems that we want PriceLine to be above 76.4 also for previous candles so I would leave this condition.

Quoting M_j
3. Stoch_M5_now < Stoch_M15_now ---- THIS is actually my main point what Spudfyre ment. As I read THERE MUST BE a crossing of M5 and M15 at the same Candle as the Crossing of Origin line crosses down below 76.4% - not just below.
When OriginLine crosses down we check for M5/M15 positions , so there's no need to know exactly when they crossed , as far as understand the important thing is that M5 is above M15 for a long (or below for a short) and pointing up.

Quoting M_j
4. PriceLine_previous > PriceLine_now ---- seems to be optional additional confirmation

5. Stoch_M15_previous > Stoch_M15_now ---- seems to be optional additional confirmation
Yes they are both optional but Spud said it's better if they agree, so for a defensive trading I turned them on.

Quoting M_j
One extra question: what is the reason you get the: _after variables as you seem not to use it later on: like double Stoch_M15_after
oh yes I forget to delete those variables, since i'm using the same template to code this kind of alerter indicator.


Cheers,
Skyline
  • #872
  • Nov 25, 2008 5:46am Nov 25, 2008 5:46am
* ayaz is patiently waiting for the next combination*
Just focus on the pips. The rest is insignificant.
  • #873
  • Nov 25, 2008 6:54am Nov 25, 2008 6:54am
Quoting ayaz
* ayaz is patiently waiting for the next combination*
Take the Porsche for a spin
  • #874
  • Nov 25, 2008 7:00am Nov 25, 2008 7:00am
Quoting Spudfyre
Take the Porsche for a spin
HAHA I wish! went to bed with a green lawn, woke up to pure whiteness here in Montreal! No porsche-ing for 6 months lol
Just focus on the pips. The rest is insignificant.
  • #875
  • Nov 25, 2008 10:15am Nov 25, 2008 10:15am
Spud,

Would it be possible to record a video using Camtasia Studio for your system with entry and exit examples and share it here for all to see? It is a free download for a limited time.

Thanks, PC
  • #876
  • Nov 25, 2008 10:46am Nov 25, 2008 10:46am
Quoting Pip Chaser
Spud,

Would it be possible to record a video using Camtasia Studio for your system with entry and exit examples and share it here for all to see? It is a free download for a limited time.

Thanks, PC
Would you settle for an animated GIF?
  • #877
  • Nov 25, 2008 6:31pm Nov 25, 2008 6:31pm
Combination 2 - The Over Market Filter

All Stochastics are %K Only.

M1 Chart
14,3,3 Stochastic
levels at 76.4% and 23.6%

Theory:
The M1 in an overbought market at entry will improve the reliability of a long trade with price in an oversold market. The M1 in an oversold market at entry will improve the reliability of a short trade with the price in an overbought market.
Trading for the reversal of price out of an overmarket condition offers the most opportunity for entering a trend at the earliest stage. However, entering reversal trades when price is in an overmarket condition can lead to many false entry conditions. As such a filter is required to eliminate as many false entries as possible without affecting good "real" entries.

How To Use the Filter In Short Reversal Trades.
The filter is used at entry of a reversal short trade.
A reversal short trade in this instance is considered any trade where our price is in an overbought market (above 76.4% or 80%).
When we enter the short trade our M1 indicator must be below 23.6% (or 20%) in an oversold market. It does not matter when the M1 entered, what direction it is pointing...it must just be in an oversold position.
This M1 level can be adjusted, but I do not recommend M1 being higher than 30%. Obviously the lower we set this filter the more trades it will filter and a level too low will filter out too many real trades.

Long Reversal Trade Usage is the opposite.
  • #878
  • Nov 25, 2008 6:53pm Nov 25, 2008 6:53pm
Quoting Spudfyre
Looking at Sarah's trade posted, the chart below is our indication of why things will go up at the trigger.
I've marked the stochastics as balls on the M5 Stochastic so you can see things a bit clearer. The H4 is on the left (brown) and the M5 is on the right (red). We know that H4 and H1 are moving down and for them to continue moving down M30, M15 and M5 must move up.
Hey Spud

I've noticed in your last few posts you've refered to the m1 or m5 for example being overbought at the time we go long is a good thing ...

Doesn't this contradict the above quoted post and pic where you say that in order for the higher timeframes to keep moving down the lower oversold timeframes must move up...

I understand both "theorys" but obviously confused as they seem to contradict each other

thanks
Attached Image
Time hides Nothing
  • #879
  • Nov 25, 2008 6:55pm Nov 25, 2008 6:55pm
2008.11.25 @ 23:20 (EST +7) Chart Time

The chart below illustrates how we use Combination 1 Crossovers with Combination 2 Filter.

The Crossover comes first at 23:20 and the dashed line on the price chart shows where we would normally get a short entry. The M5 and M15 stochastics are at this entry. I should mention that the M5 and M15 pictured here is a common sight for a short entry using Crossovers.

Our M1 at the Crossover entry is just above 23.6. Tempting to enter and you could enter but let's stick to the 23.6% rule. So we must wait to enter until the M1 crosses below 23.6. Notice by the solid line (where we enter short), how the delay has avoided 30 minutes of ranging while the market decides what it is going to do. We still get some draw down but see how much better timed our entry is to when price starts to take a dive.

We must remember that when we finally get the M1 signal that our M5 must still be below our M15 and that the M5 never crossed the M15 upwards.

Also notice we get our Crossover entry signal first and then use the M1 to fine tune our entry.
Attached Image (click to enlarge)
Click to Enlarge Name: PIC0004.gif Size: 74 KB
  • #880
  • Nov 25, 2008 7:08pm Nov 25, 2008 7:08pm
Quoting CindyXXXX
Hey Spud

I've noticed in your last few posts you've refered to the m1 or m5 for example being overbought at the time we go long is a good thing ...

Doesn't this contradict the above quoted post and pic where you say that in order for the higher timeframes to keep moving down the lower oversold timeframes must move up...

I understand both "theorys" but obviously confused as they seem to contradict each other

thanks

Actually the same thing. Notice on your chart the M5 and M15 are in an oversold position with the price in an oversold position. What is going to happen in the immediate is that M5 will rise first and much quicker than M15. In this case, we would wait for the M15/M30 crossover and enter when M5 is in the overbought territory.
If M1 was in your picture, we'd wait for M5/M15 to crossover and M1 to be in the overbought area to enter.
The net result is that M5,M15 and M30 would rise as diagramedby the balls.

If we had a Price Line, Origin Line....we'd likely see the Origin rise above 76.4% and the Price Line stay low. Then we'd see a short opportunity to trade the Origin Line down with an M5/M15 cross downwards..this would move the H1 and H4 down....then likely the cycle might repeat again or we might get in an oversold market and stay there until H1 and H4 fall all the way down to their lowest point and the Price Line starts to rise.
1 trader viewing now