Spud's Predictive MTF Stochastics

Spuds, thanks and take your time. Too much for me to digest at one time.

Is this a typo? It seems its should read "USE ONLY THE M5 TRADE TO DETERMINE RISK OF THE M5 ENTRY."

Sorry Spud, it seems quite important so I just want to make sure I understand it correctly.

No not a typo....it should read "use only the M15 Trade to determine risk of the M5 entry".

Remember the first example where the Origin Line and Price Line were above 76.4% and it met all our Combination rules? Well, in this second example the M5 price chart has the Price and Origin Line above 76.4%...the M15 price chart the Price line is climbing and above 23.6% and the Origin line is climbing towards 76.4%......at best this is telling us we have an elasticity trade happening on the M15...wehere the Origin Line will drop to meet the Price Line. As such M15 tells us there is greater risk in this trade than say the M15 price chart Origin/Price Lines were above 76.4%

I apologize if I am confusing you,as I should be adhering to to the strict rules....so that each trade is well defined and mechanical.

In my upcoming examples, I will break each trade down to Strict Rules, and Brain Indicator Rules. This way you can trade this very mechanically, or use information at hand to try and develop options in your trades. We can also compare which is working for us better.
Not to worry, the Brain Indicator rules do not drift far from our Strict Rules, they simply are looking at the status of our other time frames under the Combination rules to address those grey areas we come across.
If the Brain Indicator rules become confusing, simply ignore them and stick to the mechanical rules. After you trade this for a while and see the combinations, the Brain Indicators will be automatic as you will see this sytem falls into very defined patterns...and it is when these patterns break up that our trade is dead.


If you have been trading any of my stochastic systems, you have traded all this before....I'm just showing you ways to recognize the patterns from a different view and turn a reliable group of patterns into a mechanical system.

Do continue to keep pointing out anything that looks or reads confusing....it is the only way I know everyone is following what I'm doing here. If everyone would prefer I just stick to the mechanical trading for now, let me know...we can always work on the Brain Indicators later.

hi Spudfyre,

Hope you had a nice day out. I personally would prefer for the time being the 'strict rules - to the mechanical trading' - not only because I automatize it - but also to avoid confusion.


In live for most situations it is good to know 'FIRST' all strict rule
- most of the time later on they can be bend to some degrees.

well thats my opinion.


thanks MJ



ps: basically I automatized it so far as you presented it.
(small tweaks here and there -

*for instance I do not change time- frames (could not find any convincing arguments yet - even though it was a most excellent presentation)

for me the MOST important thing is the right entry.

Hi,

i have read the thread until the rope. I wanted to continue my reading but it seems that the rope is not a part of the system anymore. Is it right?

Hi spud,

I've been reading the thread from its beginning and I must say it helped me a lot in improving my trading skills.

Please share strict rules as well as your brain indicator because i think trading only mechanically doesn't perform very well in the long term. But it's only my opinion.

Anyway thanks for sharing your knowledge with us!

The rope is here in the Combinations, it's just not as obvious to see it. It was getting a little confusing for some and there is an entire separate threaad on the rope. Keep reading the Combinations section and the rope is being used (just not as a "rope").

Hello Spud,

I think that it's more important for you to continue your explanations in a way that you feel is logical to your thought processes, as you say, individuals can temporarily pass over anything that might cause information overload. I have no doubt that Cindy will be creating relevant PDFs for future reference for our mutual benefit. By the way, thanks for your efforts so far Cindy.

Ok, I've decided that we will continue to keep this simple and follow strict rules for trading so that this is as mechanical as problem....yes I need to come up with a better name rather than "strict rules"....work on that one later.

Ok, so the chart below is a very delayed entry due to the Origin line crossing early and then we must wait for the crossover and M5 falling below 80. And finally wait for the M1 filter. I've added my indicator template (it does not exist other than on my drawings) of lights to make this easy to see that we have an M5 entry. I've also added a "Risk" label ...it is a measure of the 5 combinations we can have, so all green lights is a 0% risk (it isn't really a 0% risk but dang the risk is low for a short entry)...vice versa all red lights is 100% risk.

Our exit rule will be simple...at 60% risk we exit on the time frame we are trading. This will occur as we search for continued true entry rules to follow as we move up the higher time frames.

One last rule....when we switch time frames we must close the current candle of that time frame and re-valuate at the close of each following candle. As long as our risk stays below 60% we stay in the trade.

Execution of the switch between time frames will be the most complicated part of this system. Understanding when we switch time frames, I will explain as thoroughly as possible.

We will always only trade one time frame at a time, progressively moving up time frames until we can go no futher and exit.

So this is our short entry...

Our entry was at 5:35 chart time which is actually at 5:40 candle close. So, since we entered and we have Risk 0% we switch to the M15 time frame. Once we fulfill all the entry requirements is when we switch time frames and close the new time frames candle.

Our first goal at the time frame switch is to assess our "now" position. So, we need to look at the close of the M15 at 5:45 (chart time of M15 is 5:30). This is the chart below. We can see we have a Risk 40% so we will stay in our short trade through the close of the next candle.

Let's review the time frame jump. On the previous post's chart we reached Risk 0% at 5:40 (5:35 chart time)..which is our short entry.
We now switch to the M15 chart...and close the current M15 candle at 5:45. We assess our risk to be Risk 40%.
So we must now go 1 full M15 candle to close and we stay short.

So the chart below is at the time frame switch to M15 and at close at 5:45

The next M15 candle close lowers us to Risk 20%. The only thing holding us back is the Price Line that is in "nowhere" land between 23.6 and 76.4. Our risk lowered because our M5 filter dropped below 23.6%.

Until we get Risk 0% we cannot move up to the next time frame. So we will be staying on this M15 time frame until either our Price Line falls below 23.6% or our Risk reaches 60%.

So this is where we are at close 6:00 (5:45 chart time).

Our Risk does not change until 6:45 (6:30 chart time). It has risen to Risk 40% since our M5 filter rose above 23.6%

We are still staying short.

Our Risk drops back to 20% with the M5 Filter dropping below 23.6 at 9:00 (8:45 chart time).
At no time since we have been trading M15 has anything changed in our signals except the M5 Filter. The M15 has stayed below the M30 stochastic, our Origin Line has remained below 76.4 our M15 stochastic has remained below 80.

We are still short and still on the M15 time frame. Here's the chart.

Our Origin Line drops below 23.6% and this results in a rise in Risk to 40%. The danger is a reversal up now and the hope is an oversold market.

This occurs at 9:30 (9:15 chart time). Here's the chart

Time to exit at 10:00 . Our risk hits 60% with the M5 filter crossing above the 23.6 level.

Our exit rule is when Risk 60% is hit.

29 PIPs from entry to exit
Maximum profit 54 PIPs
Maximum drawdown 11 PIPS

What I haven't mentioned or showed in the last trade is that we had a second M5 entry within this trade. This would have double our PIP gain.

We want to trade every M5 entry where Risk 0% exists. This is how we will consistenly know our trades and multiply our PIPs. I mention it for those that are getting the hang of this. This may consist of long entries within short trades and short entries within long trades....short entries in short trades and long entries in long trades. We just keep trading.

For now, I'll just break down each trade opportunity and not dive into covering multiple trades within trades simultaneously. However, as we go on you may see trade times overlap and this is what is happening in the overall picture.

[quote=Spudfyre;2384223]I've added my indicator template (it does not exist other than on my drawings) of lights to make this easy to see that we have an M5 entry. I've also added a "Risk" label ...it is a measure of the 5 combinations we can have, so all green lights is a 0% risk (it isn't really a 0% risk but dang the risk is low for a short entry)...vice versa all red lights is 100% risk.[quote]


love that dynamic risk calculator - nice one Spud

.

hi Spudfyre,

excellent presentation.


I had always understood to have a valid EntrySignal that at the very Candle of Origin Line Cross below 76,4 the other requirements have to occur too.

And a Late Entry is only postponed by the Filter M1.


The last explanation with that dynamic risk calculator clarified that - seems I misunderstood it before.

Thanks

MJ

hi M_J

is it possible to program an indicator which can show this like on spuds charts?

regardslodol