Damonl Wave Trading

Updated 12/17/08

What You Will Need

1. TF - Works on any Time Frame, but I usually trade on the M15 chart however.
2. Pairs - Should work on any pairs, but I am a gbpjpy guy and so that is what I trade it
3. Indicators and Template
   1. Template
      Attached File(s)

      m15.tpl   15 KB | 434 downloads | Uploaded Dec 16, 2008 7:17am
      - Updated 12/16/08
   2. Slope Direction Line
   3. WoodieCCISuper
      Attached File(s)

      WoodieCCISuper.mq4   4 KB | 459 downloads | Uploaded Dec 17, 2008 6:14pm
   4. Bill Williams Alligator....I don't really use this in trading, but i have become fond of having it on my screen as a reference point. It is also good to watch price action around this indicator.
   5. Price action - you will need to know what a higher low and a lower high are based upon candlestick action, in relation to the wave change of the Slope Direction Line
   6. Bill Williams Gator Oscillator - I started using this for exit points and found it has a few nice re-entry points as well.
   7. MultiplePivotsV2 - I use Piovts, fib pivots, mid pivots and standard pivots

General Concept

Trading Continuation Waves using high/low of price action and the Slope Direction Line.

Using the "Slope Direction Line and Price Action" to determine trading direction

This line will have a few functions as far as we are concerned.

1. To determine when a new wave has formed. This is very simple. When the indicator closes "blue" it is either a continuation wave up or a retracement of a wave down. Many times a retracememt of a wave down actually becomes our first down leg reversal move which we missed using this system.
2. When the indicator closes in "red" it is either a continuation wave down or a retracement of a wave up. Many times a retracememt of a wave up actually becomes our first up leg reversal move which we missed using this system.
3. There are times when it will signal a "consilidation" wave, though by rule, these would also mean that trades would be taken.

Beginning your evaluation

The first thing that you must determine is whether you are looking for short trade or a long trade. You do this using the Slope Direction Line and the highs or lows of the last swing high or low.

Typical Short Trade Explanation

1. Have a Lower High forming
2. Slope Direction Line is or was Blue
3. CCI short crosses to the Downside
4. Gator Oscillator bar is NOT "Solid Red"
5. Enter 1 pip below the low of the set-up bar
6. Remove order if CCI crosses back against the trade direction
7. T/P is 1 pip above the bar when Gator Oscillator bar turns Solid Green
8. S/L is 1 pip above the bar when Gator Oscillator bar turns Solid Green

Typical Long Trade Explanation

1. Have a Higher Low forming
2. Slope Direction Line is or was Red
3. CCI short crosses to the Upside
4. Gator Oscillator bar is NOT "Solid Red"
5. Enter 1 pip above the high of the set-up bar
6. Remove order if CCI crosses back against the trade direction
7. T/P is 1 pip Below the bar when Gator Oscillator bar turns Solid Red
8. S/L is 1 pip Below the bar when Gator Oscillator bar turns Solid Red

Double Breakout and Go Short Trade Scenario

1. First you get a Higher High
2. Then you get a Lower Low
3. Then you get a Lower High
4. CCI crosses to the Downside
5. Gator Oscillator bar is NOT "Solid Red"
6. Enter 1 pip below the low of the set-up bar
7. Remove order if CCI crosses back against the trade direction
8. T/P is 1 pip Above the bar when Gator Oscillator bar turns Solid Red
9. S/L is 1 pip Above the bar when Gator Oscillator bar turns Solid Red
10. Trade Example can be seen on post #13

Goal of this System

My goal with streamlining this system will be to solely produce a method of trading that is based merely on price action alone. For now I will use these rules as a guide line for which to relate price action.

Updated 12/17/08.

Sorry I have not been around to get this thread moving along. I will try to get some updates in here this evening.

Please see post #1 for updates.



P.S. just closed a 50 pip trade using this system

What timeframe will you personally use this on?

Will it work in a ranging market?

thanks for sharing

Hey Rick,

Actually, I watch M15, but make trades based on all TF's once in a while. It seems that many times the signals on many TF's are the same and then I just trade one of them.

I think it will help more when I can get a t/p and t/s set for each t/f. Then I will most likely trade them all.

As for a ranging market, it all depends. If it is tightly ranging, most likely you will not even get a signal, however, if it is largely ranging like gbpjpy has been lately, then yes, it works just fine.

I will try to put more info into the 1st post now......

I entered this trade when the CCI lines crossed to the downside because we had that formation of a lower low and an assumed higher high.

This trade hit my take profit.

Please let me know if anything is not clear about this trade.

Here is an example of a special Long Trade Example that I took. It has a slightly different twist then the normal set-up, but indeed when this happens it is usually good for some nice pips.



What makes this a special set-up long trade?

1st, you have both a last swing high and a last swing low. Then you have both a lower high and a higher low which siganls that you are now in a ranging market. In this move we are playing on the fact that the 1st 2 breaks of this range are false. In this example however, the 2nd break, which was lower was the real break, but we are not concerned with that.

After your lower high and higher low, you then have a higher high and a lower low, which means that you would enter based on the CCI once this lower low has formed, the CCI has crossed and the has a red bar.

Thus giving you a nice trade.

This one missed my t/p, but hit my t/s for a few nice pips.

Here is your typical Long Trade. This trade as well missed my t/p by a few pips and hit my t/s. Too bad, because it would have definitely hit my t/p.

Please let me know if you have any questions about this trade

I am currently looking for a more effective way to set-up the t/p, t/s and s/l for this system, so if any have any suggestions, i would be up to taking a look at them.

Enjoy!

The long trade in the previous post never triggered, and then re-signaled long and did not trigger again, before turning into a short trade that is now open.



Hope that you are able to follow this....

I have made a few adjustments to the settings of the CCI and I have also added the Gator Oscillator to help in determining exit points as it adequately expresses when the moving averages are moving together or farther apart.

I will post these adjustments in the 1st thread....enjoy

No trades triggered at all today using the M15 TF.That is a good strategy...who could really trade this mess effectively?



We'll see what happens tonight....

Today we saw a very choppy market. Here is a picture of the 1st valid trading signal of the day. Using the Gator Oscillator as our exit point, I am currently still in this trade.

For a strategy that only gave me one signal, it sure was a good one .

It was the classic double breakout then directional move. We had both a higher high and a lower low, before the real move south....such predictable behavior. More times then not when you have a double breakout, the real move is just around the bend.

Enjoy!

I was studying your system because i wanted to get something out from it. something to learn from and add to my research on forex. I have downloaded your template but it seems some indicators are missing. Thanks and well done. Hope to learn more from you. Nerry.

Hey Nerry,

I have to leave in a few minutes. Please post which indicators are missing and I will correct that when I get home this evening.

Also, check template on IBFX because that is what I used to create the template. It could be broker differences.

Hi, Thanks for the reply. I think only woodieCCISuper. Thanks. Nerry.

Thanks for posting your trading method. Will give it a go and let you know how it turns out.

Hello...Here is a video that you should check out.

I have been getting these news letters for over a year now and they are very helpful in helping me understand the economy.

You will need to fill out your name and e-mail, but I swear to you that they give out so much free information you will find yourself reading everyone that comes into your inbox.

I hope you enjoy it. It is about deflation and how it effects you. The 2nd half is all about currency markets. I know that they talk about their paid services, but i think the information is invaluable and the free newsletters are phenominal

....http://webcast.streamlogics.com/audi...930239&Stage=2

I will put this indicator in the 1st post for you to download.

We really only had one trade that we were able to enter today based upon the rules that guideline this trading philosophy. Here is another chart of that trade.



So, I have clearly marked the Higher High and the Higher low. The downward arrow is our set-up bar where at the close we would have entered short 1 pip below the low of that bar. The "thumb's up" is how we would have managed our stop loss settings as the trade progressed based on the Gator Oscillator. When the Gator Oscillator is solid red, it means that the Alligator may be closing his lips and it is time to get out.

You can see where we got stoped out finally, right down near the bottom. However, i was out earlier because I needed to go to work.

Hope you all can see clearly why this was such a good trade.

No other trades were signalled throughout the day today.

Let's hope for another nice move again tonight

damonl