Spud's Predictive MTF Stochastics

I was going off of a M5 entry with the M5 crossing M15 and M1 in overbought.

thanks you all guys
cindy and meryln for all the ideas you gave me i ll practice it from now on you guys ve a simple way to explain the ideas
iam working now on a micro account with 5% of the account
i am trying to program myself to the system and emotion free trading
i enjoy that system spud teaching us
i beleive in stochastics

Suppose we are looking at the 15m chart.

One of our rules states that for a long, the Origin line must cross 23.6, while another states that m15 must be above 20.

But are they not the exact same thing? Origin line is 14,3,3 and so is the m15 line.

Why do they have different level requirements? And why are there 2 rules for what is essentially the same stoch?

Good point! As I had misunderstood what Spud said about the Stoch Settings this was not really a point for me before.

But now I thing you have a point and for me the important is the cross 23.6 and staying above that level 23.6. What does Spud say ?


2 options:

a. just keep it consistent over all TF-groups to avoid confusion(even as you said it makes not always sense) -- this is my preferred option.

b. treat the first TF-group as Entry TF-group differently and re-adjust for the other higher once a simplified Rule Set. But maybe with the Risk counting this might get for some more complicated.

just a thought MJ


Quite interesting: when one starts to try to define a system into rules what one comes up too ;-) it's just as fun as programming.

Even though they are the same stoch (if they are both 14,3,3)..there are some differences in their moves we are watching for...hence why I use them as separate indicators...

The Origin should cross from above to below 76.4
whereas the 14,3,3 needs to be below 80 and must cross the higher tf down

It probably seems redundant, but it is much easier to see it with 2 stoch charts. You can follow it all on the Origin Line, I'm just breaking it down for clarity.

If you use 14,1,1 you have to use 2 charts

OH SO RIGHT YOU ARE!!!!!!!

Good trade going here...4 out of 5 indicator green lights.

hi Spudfyre,

I want to sincerely thank you for your effort and willingness to share your thoughts with us.

Even though there are some questions still around, I personally thing I found in the whole threads of yours enough information, to implement over time my own version of a MTF Stochastic trading approach.
For me the time has come to play with different settings - to see how this applies to different market situations and currency pairs.

THANKS so much.


My sincere wish is, that through our questions and your preparation of sharing - your own thinking got more clearly and you reap at least some personal benefits in your trading.



Until now I was most impressed by your wonderful presentation - but to be honest I do not yet know if it holds true the testing.

Well, don't take this as critic I just want to say that I'm not just 'following blindly' http://www.forexfactory.com/images/icons/icon12.gif I need now for myself to prove that what you shared freely holds true (and best would be -- across market conditions and currencies)




I'm going to look forward to move on to the next topic like: your way of money management, UnitSizing and what else to come .....


http://www.forexfactory.com/images/icons/icon2.gif http://www.forexfactory.com/images/icons/icon2.gif http://www.forexfactory.com/images/icons/icon2.gif BIG THANK YOU !!!

MJ


Also Thanks to all others who contributed throughout this thread.

If you haven't noticed, this system is designed to trade off the peaks. One way to time your entries and look at the entire picture is to look to see if we are trading off a peak or not.

The advantage of trading off the peak is that it does allow you to keep a fairly tight stop loss and minimize.

If you look back at my balls you'll recognize this pattern over the time frames. The prelude to an off the peak short entry is that everything is in the M5 Group is maxing out at the top. Likewise with the M15 group and the M30 group..the 2 exceptions are the H1 and H4. Rememeber that our shorter time frames must fall first down to H1 and H4 before H1 and H4 can continue to climb.

The second chart shows our M5 Group entry..you can see how we come off the peak and how our M5 Group setsup to clear us out of the overbought market. When the downward move starts to near it's end you will see M5 and M15 start to put up the roadblocks (not shown).

You can attack these off the peak moves by putting your S/L at the high of the peak and setting your profit within the market range...i.e. if it is a tight range...keep the profits small. Put a second trade in to catch to play the trend and wait for the Risk to get to high.

i see that this system is so good for trend traders and scalping too
but my main problem now is how to manage the trade and the position of the take profit position if i close 50% of the lots at 10 pips profit and move the rest to breakeven sometimes price return back and hit it sometimes i take another 10 pips but the trend starts an esclator but i find myself out too early due to my stop positions espacialy when i move to the 30m combinaton i find the trade hard to control

pls spud we need you o talk about how to manage the trade to protect our gain in a ranging day and to run with the newborn trend

thanks

FOR ANYONE Interested!!

well - Spud stretched my brain quite a bit - properly the most complicate Bot I did until now. - still not finished but I think the most difficult parts I solved (more or less).http://www.forexfactory.com/images/icons/icon12.gif

To solve one of the problem: how to I know by a new start of the Computer if and which CrossOver had occurred -- well as I try to avoid writing to much into files/databases I solved it in looking back about 480 Candles of the FilterTimeFrame

Until now I just did it for the TF-group M5 ( I call it TimeFrameLevel1) this are about 8 hours.



A side product of it might be quite interesting: it shows for every minute the exact state of Risk over the 8 hours TF-group M5 ( I call it TimeFrameLevel1)

I just copied (by Hand) the relevant Log where we got RISK 0 for LONG Entries.

Well there are sure still some mistakes - but in the future I might do some statistic on it (like for how many minutes a Risk level 0 stays , How often it switches between 0 and 1 etc. - you got the idea).

For anyone interested I attached a txt file - best viewed without line wrapping.


MJ


like I said properly there are still bugs: well I checked the last one on the chars at it was OK. (your charts might be a bit different because of your broker)


PS: after the discussion about Stoch settings - I decided that I follow Spud's reasoning and experience: So M5 has(14,1,1) all others (14,3,3) For TF-group M5


PS: Later info: I found a copy past error on the M15 Stoch -- not sure if I had it already when I did that - maybe it was wrong: just thought mention it:

I'll discuss it tonight....I promise.

Nice work! Will give this a study. Nice to know I'm working your brain

MJ


PS: Later info: I found a copy past error on the M15 Stoch -- not sure if I had it already when I did that - maybe it was wrong: just thought mention it:

Hi
Thanks for Spud and his concept
Thanks for all contributors , specially MJ who showed a great patience in programming.
---------------------------------
Allow me to put a question about crossover, probably to facilitate the reading
as crossover is sometime very near to occur , or has occured in a tangent mode that did not aloow us to distinguish the crossing which leaves a doubt in our entry
--------------------------------
Is it possible to put the two curves of two different stochs on one chart using the facility of Stoch MTF, instead of using two charts where the two curves are far distant.

Rgds

Updated indicator see post http://www.forexfactory.com/showpost...postcount=1092

Hello Everyone!
I'm new to this Thread,
is little more than a week that I don't post on the forum, because I was trying to understand and to test the Spud method.
I must say that seems very interesting and I decided to try to make an indicator that follows the directions given by Spud.
My approach to coding is fairly recent, I have modified other indicators, I hope this goes well enough.
After three days of coding that is the result.
Well, the indicator shows the combinations of time frames, i have added also TF1.

The combinations are:
For up trend
Price line < 23.6 and Origin line > 23.6 green signal
price line > 76.4 Origin line and < 23.6 green signal
Stoch crossing: Stoch1> Stoch2 and Stoch1 > 20 green signal
Filter line > 76.4
For Down Trend:
Price line> 76.4 Origin line and < 76.4 signal red
price line < 23.6 and Origin line > 76.4 signal red
Stoch crossing: Stoch1 < Stoch2 and Stoch1 < 80 red signal
Line Filter < 23.6.


If there aren't these combinations the signal is neutral.

Try the indicator and tell me if it works well or if there are changes to be done, I have not had much time to try it, I just finished it.

Good Luck.

Lubo

Awesome, thanks Lubo! Will test it out.

thanks lubo

i will test

lodol

At this moment the first two bars, price and orign, give the same signal together, following the combinations described in my post above.
The other two bars are independent.
If you see the settings, you can set all values for each stochastic. In the filter, there is one more setting in which case that for TF M1, because we can not go to a lower TF, I set them according to my tests.
You can also put the indicator in the main window, setting chart_window = true, and then move it where you want by changing the values of x and y.

Thanks for your feedback.

Lubo

Ok, let's take a look at the overall picture of where we are and what we are trading. Between triggers, ropes and escalators it can be confusing.

The simple definition is we are trading the breakout from the over market. We are doing this to catch a new trend.

Complicate this and we are trading the oscillations within a trend that builds a trend or reverses a trend. In otherwords we are trading just about everything possible to trade. We even ride the overmarket when we are in a trade if we desire.

But let's keep this simple, as this is what we built the mechanical system to be.

Our best strategy is to trade off the peak of the price move. If you follow the mechanical system you can see this is what we are doing "most" of the time and we can certainly restrict our trades to seek peaks. Again, we can get very complicated chasing daily peaks, trading with trends, etc. but let's just play the off the peak trade.

The first chart identifies a standard M5 long entry with a Risk 0. If you back up a 2 candles from our long entry you can see the price peak and the stochastic peak. (If you recall the rope this is our peak).

The lowest point on this peak is our resistance line. As such I would set a stop at least 10 pips below our resistance line. This is NOT a pre-programed stop...this is a stop in your brain. There is no reason to tell our broker our true stop and get spiked out. Our set stop is set at between 50-100 pips this is our physical stop to protect our account from an emergency. The odds of actually hitting this stop are in the 99 percentile or better if you enter on an R0 with M5.

We use the 10 pip below our peak stop as something we use to exit if we cannot see any hope of our trade going our way...where our risk is too high (R60-R100).

In the trade we are using our time frames to assess our risk. We start with the M5 group to enter. We want the M15 group to take-over. In a perfect world this will happen quickly in M15 (1-2 M15 candles from entry). There is nothing wrong with riding M5 and observing risk, but we should always finish an M15 candle that looks like it "might" support our trade and have risk R0 to R40 risk. Obviously the same holds true for M30 and H1 groups. As long as we can justify our risk on a time frame we can stay in the trade. The higher the time frame we move up...the more we are trend trading.

There is no such thing as an early exit. If a trend is goint to continue you will get multiple entry signals and just keep trading them.

Your single objective in trading this sytem is to enter of the peak in the right direction. Imagine if you can do that 99/100 times and gain 5 pips a trade.

IT IS NOT HOW MANY PIPS YOU MAKE...IT IS ABOUT HOW MUCH YOUR PIPS ARE WORTH. Let me put it this way...if you enter a trade and you know you can't lose...how much money would you trade? As much as you can find! If you are entering a trade and have no confidence where it will go, how much will you trade? $1 a pip and as tight a stop as possible. What will win more and what will win you more?

You can easily make 20 pips a day on this system and if you follow it and are picky about your entry you will learn to do it with 100% confidence. Not only do we have signals, we have patterns and these patterns show up over and over on every good trade. You have to practice.

Anyways, ignore me if you wish and feed your ego on 200 pip trades...but ego doesn't make money in trading.

So back to the chart below. When we enter; the M5 group stays betwen R0 to R40 until the close of the second M15 candle where M15 takes over at R20 and M5 dies at R80. So the question is do you exit at M5 being R80 or do you stay at M15 R20? Are you positive pips? Is M5 showing signs for a short? Did we hit our mental stop? No. No. No. So go on to M15 and watch M5 for any reversal short entry. If your losing pips exit if you have an reversal signal, you hit your mental stop, or there is no hope of your trade continuing to support you.

The second chart is M15 and you can see we get in an up trend with M15. M5 and M15 settle on low risk levels for some time and this is easy to follow.

If you are going to trade to an exit indicator it is when M5 brings up a R0 for a short trade as shown on the M15. You have lots of pips so get out. Don't even bother using M30 Group. Take your pips and get out. If the long trend is going to continue you will get a new long signal...or trade the M5 short and use the M5 peak to set your stop on the short.
You can use any number of exit criteria....just remember the more pips you chase the more you risk.

Move your stop up? This is up to you and how you want to play. You can trade 2 lots...one for sniping and one for trending. This will likely keep your trend chasing loses to a minimum. I like to guarantee myself 5 pips a trade but not at the expense of getting to tight on my stop. I suggest at least a 15 pip spread..so up 20 set your mental stop at 5.

I snipe...I'd much rather trade 20 trades within a trend and make a pile of pips along the way than trade 1 trade and hope this is "the trend". I have no idea if I'll make 200 pips on this trade...but I know I when I enter I will make 5-20 pips almost all the time.

Summary:
Set your S/L 10 pips from the lowest low/highest high at the peak.
Enter with R0 on M5 and after (off) a peak
Try to upgrade to M15 but watch M5 for revesal signs
Exit on positive pips...don't get greedy take it in small trades and many steps rather than just 1 trade
Find your exit..pick pips, fib lines, revesral....just remember if you are chasing pips you raise your risk

Having problems? Post your charts, I'll help you.