4 Hour Strategy (MACD)

Morning Guys,

Right last night I got a chance to put together the next video lesson which hopefully explains market rhythm and momentum. I have explained using examples when this system works well and when you have to be on your guard. I explain how to slightly change your trading approach depending on what market you are currently in.



As normal, please could you rate / comment / ask any questions.

Cheers WG

sell 0.2slot



the first slot get 29pips,set the other slot to BE...


the last slot was stopped out ,totally i get 0 pips....

SSQ, could you please explain to others why you have sold this as from your charts it clearly doesnt show any of the original 4 MACD system?!

Cheers WG

when i wake up at morning,the h4 chart as below.....

i think the price will move down to the channel's up line.....
the macd will be a RB,I GUESS.....
so i sold it,just as the time1300 do it ....
thank you WG

LMAO, try and stick to the topic, it's about Macd's, not stochs.

Hi SSQ. As you have experienced, countertrend trades are high risk and low probability which is why we don't encourage them here on this thread. Some people are good at it. For example, time1300 waits for the Asian session when it is quiet and pairs are retracing in order to countertrend back to the 8 EMA. I would also wait for an engulfing candle or a divergence pattern before countertrending. When you entered, it was in the middle of a rally upwards and is like running into a stampede. Even though it was towards the end, it hadn't finished yet. I hope that helps.

Hello Everyone,

There seems to be some chatter on counter trend trades and when and when not to take them.

I am sorry I don't have the program to record videos like Welshguy2000 so i can explain some of my trades and rules. I will try my best to explain it here for those interested.

To start of, let me say that Counter trend trades should not be part of your trading unless you are an experienced trader and have backtested and demo traded and have had a 80% success rate on your counter trend trades and then and only then should you incorporate it into your live trading. I myself studied the charts the price movement to find out when and where are the high probability trades. It was not till many months of testing that I incorporated counter trend trades into my trading. As many have suggested and I have emphasized this is that counter trend trades are risky and that is why I wanted to study when and how to defined a high probability counter trend trend. Even the riskiest move in life has a time of high probability so just like counter trend trades I found areas where I can find and have a high success rate when It comes to counter trend trades.

Phillip when he started this thread always emphazised the risk of counter trend trades and I couldn't agree more. Now I will talk about when I do my counter trend trades and let me start by saying that I do not take every counter trend trade. As mentioned in my previous posts, I might do 1 to 2 counter trend trades a month and there are times I do not do a counter trend trade for weeks. I just wait for the A+ setups.

there are two areas where I take counter trend trades. I will talk about one now and I will do another post tomorrow regarding the other one. My first one and one I took this week is when price has had such a strong move that there is a big gap created between price and the 8ema. This gap is also illustrated by the coloured indicator and the bars turn to a yellow colour. Now the size of the gap is more visual and based on your experience and back testing. This gap is usually created during the European and the US market and never never never ever do counter trend trades during the US and European sessions. these sessions are very volitile and when there is a run the market runs. So when there is a nice move in these two sessions, price tend to make a nice gap between the 8ema and price and price might run until about the close of the US markets when most traders close their stations. This is the time where most traders or day traders close their positions thus allowing price to slightly retrace back to the 8ema and to get ready for another wave in the european session open.
This is the time I usually take my counter trend trades. Around the close of the US session or after the close of the US session. My first chart shows the trade I made around 20:00H which is about an hour left to close of the US session where I entered short to make some pips to the 8ema. My entry was based on the 1H entry because you can see the 4H candle is not closed yet and I had entered pretty much at the end of the run. This again comes with some experience.
On the 1H timeframe as you can see on my chart, the MACD was making a round top, it is not the smoothest round top and you can see my entry after the close of that red candle (dotted blue line). Price went up after a few candles but MACD was making lower highs. Again experience with practice will allow you to let this trade run.

Profit Target:
As you can see my profit target was just above the 8ema on the 4H. I do not try to get a home run with counter trend trades as you are only in it for a few pips back to the 8ema. As you can see, by the time I could take the chart, my targets were pretty much acheived and after my profits were hit, price did go down to the 8ema before making another run to the upside.

So that is why I took that trade on and to me those are the high probability counter trend trades. I never trade during high volume sessions, I only do the counter trend trades after close of the US sessions and if all my criterias as I mentioned above are met.

I hope this can help and if you have any questions please do not hesistate to ask.

It is my first post here but I thought that I should say something regarding counter trades.

If we define as CT any trade which turns to EMA8 or EMA21 and we look at your H4 chart we clearly see that a lot of them were super winners or made it to breakeven if you changed the stop loss after 20 pips.

At least for EURUSD it is my humble opinion that the EMA8 has no meaning. Just take the last 20 signals, CT and TC which are not zigzags around the zero line, put a SL at the high/low of the last candle, move SL at BE after 20 pips and let your profits run.

Consider that you have done this in the last 6 months, when the market had no clear direction.

Thanks for sharing your experience, time1300

Greetings to all,
Last week I started live trading that system(with small amount of lots just to feel and test the trades).I made 7 trades - 4 winners and 3 losses. Therefore I will appreciate if some of you who uses that strategy share what is his success ratio (number of winners/losses). Of course I saw the amazing 100 trades made by Phil with only 10 losses , but I wonder if anyone else has made more than 60% success ratio (with a RR 1:1)?

Greetings to you, Intrerpro and welcome. It is great to hear that you have done such extensive testing and documented the results. Good results too. As you probably know, Welshguy2000 also has a high success rate like Phil around 80% on average.

I read almost everything that phillip specified at the 1st page, I did some backtesting as well, but I trade forex for 2 years , not professionally just as a hobby,more to say I am still learning, but I know that back testing is one thing and live trading with real money - something completly different. That's why I started live trading this system and will do for several months with small amount of money just to get the feeling for it, before investing seriously.
80% as a result is simply amazing if made with a 1:1 RR. I will be satisfied if I can mantain with this system at least 55% success ratio for about 100 trades a year. That will give me a 30% yearly profit.
I aslo noticed that during range market this system does give less tredable signlas - but there are some very good opportunities for CT deals, or I better say counter SL&RL deals, like the last opportunity on the calbe where we had sHs MACD setup and turn from the RL.

Has anyone made that deal on the cable?

Always remember that 3 trades from every 10 finish as breakeven. This will decrease your Win/Loss ratio considerably by taken a big chunk from the probable winnings.

Thank you very much time1300,
I really appreciate your time you give to us with this topic for counter trades. I will expect your next one as you said. We always has something to learn and you are one of the people here that help us a lot. I know you from almost 2 years and I have always read your posts.
Lets keep the thread alive and as close as it was started with the begiing from Phillip.
I see this thread is a little walk away with the initial meaning but I hope this to be just a moment. A lot of people has stopped to post and I hope the thread to continue in its original way.
Keep it that way friends.
I wish you many succesiful pips .
Thank you

Welcome Intrerpro, you will find this system to be of great learning no matter what other strategies you include within your trading. What this method will teach you is how to interpret the market and price action around certain moving averages and support and resistance lines. This method will give you a 80% success rate if and only if you take on the high probability trades. About ranging markets, you are correct that this method might not give you as much trading opportunities as it will in a trending market but that is where you can take on trades from the upper and lower channel (support and resistance lines) which we refer to as counter trend trades. if you have a well established channel lines, those are your high probability trades from the upper and lowers lines. One this to emphasize in any trading method is our habit of over trading. We have all been victims of this habit and with a business plan and discipline, one will slowly be able to conquer this habit.

Good luck

actually will like to ask, out of curiosity, anyone here has gone full time using this method? and how long does that take you? thanks

Hello everyone, Hope you all had a great week with positive pips. As promised I am going to walk you through another counter trend trade according to our rules that I take on when there are confluence of events. This example is actually a recent one that just took place for the USD/JPY. So lets start.

Before explaining the trade. Let us review the rules of our system and price movement around our moving averages. The rule states that when price closes above/below the 21ema when price has been in a trend, price tends to come back to the 21EMA before trying to make a run for the 89SMA and then it will either re-establish another trend or cross the 89sma a few times before making up its mind. In our example here, that is exactly what happened. In my trading I have the Daily chart up as well with my trend lines and I always start the day off by looking at the Daily charts and if I see someone establishing then I move to the 4H and then 1H and so forth. Lets look at our trade here closely:

On the Daily chart we have established a support line around the 94.50 price level which it tested twice and by the third time, it broke through. The RSI also had a rising support line which was tested 4 times before finally broke through on the 5th try. So now we have a nice strong bearish candle closing nicely below the 94.50 area. The downward move in the next few days created a gap between price and the 8ema and also tested the 91.70 price level three times making a triple bottom. MACD also making a round top. Now our rules states that the gap needs to be filled and price might test the support line which now might act as resistance so knowing that I now switch to the 4H time frame to look closer to price action.

4H Time Frame:
As you can see on the 4H chart, there are many things that happened.
1) That whole move that you see from the top to the bottom is where we have our Fibo lines set at. The whole move down also came in 5 waves for those that follow Elliot Wave theory ( I labeled the moves 1 - 5).
2)After the 5th wave, we have price go back to the 8ema and come back down again but not making new lows, but making a double bottom, again price went up to the 8ema and came down and again could not make a new low and made a triple bottom.
3)While price is making a triple bottom, MACD has a divergence in the making.
4)After the triple bottom, price moved up and closed above the 21EMA for the first time since the downward trend started.

We know that when price closes above the 21EMA after a nice trend, price tends to retest the 21ema before moving up to the 89SMA. So here is where I look for an entry for a target back up to the 89SMA.
After closing above 21EMA, the next 4 candles hovered around the 21EMA and the 5th candle gave a nice bullish candle moving away from the 21ema and also a MACD TC signal. That is where you can enter and for those that are more experienced can look into the 1H time frame to look for entry as well but we won't go into that because you must get the 4H rhythm to heart before going to lower time frame.

After entry, one can set their targets accordingly back up to the 89SMA. I have the 55moving average that act as my first target and the 89 for my second target. As you can see the 89sma is also sitting close to the 50% Fibo line. As you can see my first target to the 55 was hit and the second target came very close and as you can see it did not hit it the first time but price has hence came back to retest it here again. However I close my trade once price found resistance at the 50% Fibo line and it was all and all a great counter trend trade.

To conclude:
I analyze the trade as I just mentioned to you and that is what you should be doing before every trade and making a trading plan and when you don't have anything to make a plan with, then that is a good sign that it is not a trade you should take on. Remember counter trend trades are risky and one that should be taken only if you have the edge and there are confluence of events as I have showed in this example.
There are so many opportunities to enter into the market and you should not feel the need to enter CT trades if you are not comfortable with them. Backtest and see for yourself so your eyes can recognize them. Demo trade for at least 3 months and see your success rate and then and only then should you try to trade CT trades live.

if you have any questions feel free to ask me or Pm me.

Dean

Hi time,

This is sometimes very confusing for me. From your trade above.

It is a tc if according to the 4hour. however, from the daily perspective, it is a ct. Hmmm...Since the longer time frame has more weight. So it is overall a ct...is that right?

reg
jin

Hello Jinsen,

You are absolutely correct.......from the daily (longer time frame) I knew from the reasons mentioned in my post that price is going to fill the gap so when you switch to the 4H, you are anticipating a counter trade but the signal given off of the 21ema to go long is a TC on the MACD. This macd is just your entry trigger but your whole trade is a CT trade too the 89SMA according to our rules.