Dear Fellow 4X Followers and Friends:
The following technique was imparted to me by Michael Stewart and I have only just begun testing it with fairly satisfactory results. It was apparent from reviewing his real, personal account that he uses it with frequency himself.
Using the free Global Economic Calendar from Daily FX at www.dailyfx.com (click on the “Calendar” tab at top and when you get to that page, which is an American events calendar only, immediately to the left of that you will see the words "Global Economic Calendar," click on those and that will take you to the current economic calendar), you select the bolded events for the day, time and countries of interest to you. It is also highly probable that our own superb economic calendar will serve well for this function, and, indeed, it was for this very reason that I went looking for such a calendar and that is how I found my way to this website in the first place.
Using the 14 bar ATR plus or minus a few pips off the 15 minute, 30 minute or 1 hour charts, you set a straddle about five minutes before the scheduled event using a 60 pip limit and a 30 pip stop loss. If the chart moves in response to the news in either direction, one leg of your straddle will trigger. Unlike the NFP, which shows immediate, explosive movement a large majority of the time, these moves can take hours to culminate. The play is fully automated once you set your straddle, so all you have to do is check the chart some hours later. If the chart is in profit but hasn’t limited out within 24 hours, I think the better part of wisdom would be to close the trade and take your profit right there.
When the play works correctly, you bag a 60 pip winner with minimum effort and Mike said with pretty good consistency. The 4X is very sensitive to these scheduled news announcements and the Japanese Yen looks like it works very nicely for this play. I am sure some charts are better than others and some news events more probable than others to produce good results but only field experience will show that.
The major problem is not to set your straddle too tight. As you have no doubt observed yourself, frequently a big spike in both directions will follow a news announcement. Whether this is the professionals manipulating large amounts of money to take out improvidently placed stops and trigger improvidently placed straddle entries or even some broker shenanigans, I haven’t the foggiest. All I know is that the phenomenon is pretty consistent. If you set your straddle too tight, both legs will trigger and one leg will stop out with a 30 pip loss, and, if the other limits out, your profit on the play will be only 30 pips.
Mike uses the 14 bar ATR because he said it was his experience that banks and other big institutions favor that period for its calculation in order to set entry orders for their own automated reversal programs designed to hedge them against large losses. The default period on many charting programs for calculating the ATR is 7 bars, but all of them, I am sure, allow you to set your own period.
I recommend strongly you test any methodology in a demo first before risking real money. This is only prudent. And if you do field test it, I would appreciate any feedback you care to supply about your own experience and suggestions for optimizing the play.
Good Trading, all!
Respectfully submitted,
Yr. Fellow 4X Trader,
hiyo
STRADDLES ON NEWS
The following technique was imparted to me by Michael Stewart and I have only just begun testing it with fairly satisfactory results. It was apparent from reviewing his real, personal account that he uses it with frequency himself.
Using the free Global Economic Calendar from Daily FX at www.dailyfx.com (click on the “Calendar” tab at top and when you get to that page, which is an American events calendar only, immediately to the left of that you will see the words "Global Economic Calendar," click on those and that will take you to the current economic calendar), you select the bolded events for the day, time and countries of interest to you. It is also highly probable that our own superb economic calendar will serve well for this function, and, indeed, it was for this very reason that I went looking for such a calendar and that is how I found my way to this website in the first place.
Using the 14 bar ATR plus or minus a few pips off the 15 minute, 30 minute or 1 hour charts, you set a straddle about five minutes before the scheduled event using a 60 pip limit and a 30 pip stop loss. If the chart moves in response to the news in either direction, one leg of your straddle will trigger. Unlike the NFP, which shows immediate, explosive movement a large majority of the time, these moves can take hours to culminate. The play is fully automated once you set your straddle, so all you have to do is check the chart some hours later. If the chart is in profit but hasn’t limited out within 24 hours, I think the better part of wisdom would be to close the trade and take your profit right there.
When the play works correctly, you bag a 60 pip winner with minimum effort and Mike said with pretty good consistency. The 4X is very sensitive to these scheduled news announcements and the Japanese Yen looks like it works very nicely for this play. I am sure some charts are better than others and some news events more probable than others to produce good results but only field experience will show that.
The major problem is not to set your straddle too tight. As you have no doubt observed yourself, frequently a big spike in both directions will follow a news announcement. Whether this is the professionals manipulating large amounts of money to take out improvidently placed stops and trigger improvidently placed straddle entries or even some broker shenanigans, I haven’t the foggiest. All I know is that the phenomenon is pretty consistent. If you set your straddle too tight, both legs will trigger and one leg will stop out with a 30 pip loss, and, if the other limits out, your profit on the play will be only 30 pips.
Mike uses the 14 bar ATR because he said it was his experience that banks and other big institutions favor that period for its calculation in order to set entry orders for their own automated reversal programs designed to hedge them against large losses. The default period on many charting programs for calculating the ATR is 7 bars, but all of them, I am sure, allow you to set your own period.
I recommend strongly you test any methodology in a demo first before risking real money. This is only prudent. And if you do field test it, I would appreciate any feedback you care to supply about your own experience and suggestions for optimizing the play.
Good Trading, all!
Respectfully submitted,
Yr. Fellow 4X Trader,
hiyo
Nor is he related to Jimmy Stewart, Stewart Granger or any other well-known Stewarts (if there are any others), at least that I know of. I suppose he must be related to some Stewarts somewhere (if he wasn't adopted) and I know he has kids and I presume he is related to them. But when you come right on down to it, only his wife or a DNA technician would know that for sure...but maybe only the DNA technician would know it for sure. I believe there was a British Royal Dynasty by that name which produced at least two Kings of England, Charles I and Charles II. Charles I became the first King of England ever to be convicted of treason and he was beheaded and succeeded by a fellow named Oliver Cromwell, who didn't call himself a king, but only "Lord Protector." After Cromwell's death, Charles II, Charles I's son, was restored to the English throne. Since the Michael Stewart I referred to proclaims himself proudly a son of Ireland, I doubt he is related to the English Royal Stewarts...but who knows? Some of those olde English kings were in the habit of spreading their seed around pretty liberally, I understand. They wanted to be the Fathers of their Country in a quite literal sense! In any case, anything can happen, right? (Mark Douglas's First Fundamental Truth of Trading.)
