Simple PA And Stochastic System

INTRODUCTION:
Hello all! My name is JA$ON! Some of you know me for the wild scalping technique I developed using a variation of the Paulus COG (oan based) that generated over 800+ pips in a single month. After suffering some huge losses and continued exploration into scalping with that technique, believe it or not, there was nothing more I could do to recapture the glory it once had.

Since then I have been using a variation of the 3 Ducks system as my long term intraday technique. It has been great, but trades are few and far between using that system. For the last month or so, I've been scouring these boards to find a good scalping or short term trading technique that I can use in order to make money in between those trades. After little success, I started working my brain again. I am a firm believer in K.I.S.S. methods, and this is such a system. It's very simple and very basic.

With that taken into account, this is by no means a finished or polished system. This is a definite work in progress with taking 2 proven technical ideas and combining them. And to be clear, I am not the inventor or creator of this system. Someone may have done this exact method before, but I just didn't see it. If this has been done before, please feel free to post the thread!

My goal with this thread is for people to help EACH OTHER and see if we can develop this into a very profitable short term trading technique. Lets try not to add USELESS indicators or indicators that contradict the original plan. What I mean by USELESS is indicators that completely have nothing to do or do not pertain to the technique at hand. For example: No indicators based on a little box that changes colors, no random MAs (unless you think they have a specific addition to the strategy), and no lagging indicators (makes backtesting impossible, and live trading aggravating and annoying).

Here some very basic rules for this thread:
1. Always be respectful to others.
2. Don't post any useless indicators.
3. Work together. We are all here for the same reason. TO MAKE MONEY.


THE STRATEGY:

- Open a M5 chart of your favorite pair. I choose GU or EU.

- Attach the basic Stochastic 5-3-3 indi.

- Draw some basic s/r levels to give you an idea of where the price could possibly stop, and also for extra confirmation on entries.

- Familiarize yourself with "pinbars". (Candles that close having a long wick, with a very small body, signaling a reversal in price)

- Look closely for Higher Highs and Lower Lows. Make sure you are placing trades on pinbars that are in fact, Higher Highs, or Lower Lows.
FOR SELLS (SHORTS):

The stoch is our filter. Wait for it to be overbought (above 80). When it is overbought, look for a pinbar to form. This is our trigger. When a pinbar is formed, place a sell position and set your SL 3-5 pips above the pinbar. Your TP can either be set a strong resistance level, or wait for a buy signal to form to close out your position.

FOR BUYS (LONGS):

Do the opposite for shorts (stoch needs to be oversold, below 20).


Again this is a work in progress! Let me know what you think so far, and lets get the gears working!

PS: Start posting those volume or oversold/overbought indies, haha


PPS: Sorry for the crappy quality on the image file. I don't know how to compress the size, yet make it good quality. Plus I have multiple 26 inch monitors, so the screen size is HUGE lol.

The things I liked:
*Using the highlow as Stop Loss is a great idea, I use it too in my trades. Good.

The things I didn't like so much:
*WHY ON EARTH SHOULD YOU USE STOCHASTIC when you are already looking at support and resistance. Stochastic only shows you the location of price in relation to these levels. If you merely drew S&R levels and looked for pin bars you would have done much better.

If you want to compress a file, open it in photoshop, click on File -> Save for Web.

2 new trades tonight on gu


PS: on the "EXIT AND NEW ENTRY" paragraph, I mean to write, "made a new high"

i think u never did any backtest becoz if u did u shouldn't have open this thread.

Last year and this year is actually very good year for backtesting becoz there are major trend and major ranging market condition happening.

You will start to look for a new system once u finish backtesting

im not backtesting. this is all realtime.


i will not backtest with this. at most i will just visually look back and see what happens... but so far the results are excellent.

Backtest could potentially save you a lot of time before it's worth doing any forward test. There are so many market condition when you backtest and forward test need a few months to be able to get the feel of different market condition. Moreover, the current setting is not your final setting which means it could take a year or more to be able to trade live successfully. There are always good month and bad month for every trading system. You could forward demo test for a month and got 800 pips , so u decide to go live and later discover that the 800 pips month is actually the best month for the system and it will be a long time before smilar market condition comes back to give u 800 pips.

I think its a good system, wait for a pin bar to open trade. It's a good filter


___________________

stochastic secret

.

you are just using the 5 stoch for trend?
or trigger?

if the 1st I think you might have a hard time of it.

IB and OB are worthy adding to pin bars for trigger

cheers

teb

You don't need an indicator to see the trend silly You just need eye balls.

The stoch is our filter. For a buy: When it reaches the 20 or below, start watching for a new lower low pinbar to form, or pinbar near a previous support line. Then you enter.

It is up to the trader to determine if he wants to trade with or against the trend. I personally don't care, I keep a strong eye on PA and if I spot an inside bar or outside bar or strong strong reversal candle, I will usually won't close out of the position, especially if I'm in profit. But keep an eye on the stoch when your position is in fact open. If you spot a strong reversal candle but stoch is nowhere near the 80 line, you might wanna hold onto it... especially if your going with the trend.

Thanks for your thoughts Teb

seems to me the best trading opportunities arise on the gbpusd pair during the london session.

I made 130+ pips on this pair alone last session!

thx! will continue to update!

+112 pips on g/u last night!


this is awesome... risking 12 pips for 112! haha!


1:9 risk/reward hahaha excellent!

I trade a similar way you do on the 5 min as well, but I use stars/hammers and IBS. It works great I like what you are doing. Your right the pips are nice especially when on the 5 min very low risk and you can capture runners!

Ranger

Hey bro! Can you show me a chart of what you mean by stars/hammers and IBS?



I'm not familiar with those!

Thanks!

Ok will grab some charts, IB'S Inside bars and Star formation and hammers both candlestick formations, or I guess for stars( morning and evening stars) I should say doji formations, there are a few doji formations I use and short after it breaks the doji but I will show you in the next few posts.

Scoops, this is a doji formation I would trade that is short when the following bars breaks the doji. You can see the doji circled

Here is a shot of an inverted hammer I trade. I was looking to go long but once it broke the hammer I shorted. Thats just my way. You can look up alot of candlestick patterns on the net and then see if you can recognize them in real time and the practice playing them until you get a feel and see what they do a bunch times so you can recongize what type of market its trading so you know if you should go counter trend or with trend, or however you trade.

Here is a pic with some ib's and dojis. Its a 5 min chart. The yellow dot on the candle is my IB indicator just puts a dot on inside bars for me. So these are the signals I will look for when I am trading on the 5 min usually sometimes 15 but mostly 5 min. I try to keep the stochs in line but sometimes the signal I recognize and it breaks the opposite way I take it. My stops are very tight so , I like the 5 min and way to trade with low risk.

Hmmm very interesting, thanks!

I'm gonna keep learning about candle stick patterns. I do understand the "pinbar" though!

Does anyone have anything to add about this method?

And the last pic I have is some dojis on the gbp/usd 5 min

-9 and -18 pips tonight on 2 g/u trades


was tryin to buy, but it turned out to be wayyyy to bearish tonight


o well...



PS: still looking for another good filter/indy for this system to weed out some of the bad trades if possible. anyone got any ideas? would appreciate it greatly. thanks!