Jankone M5 thread

You don't need any education about it, just the indi.

Some mathematician did calculations and found out the outcomes of the formula would act as s/r in financial markets. Kind of like pivot points. People mostly scalp between those lines.

I'd prefer price based s/r instead of some calculation. The less traders use a certain indi/method/system, the less likely is the probability it would work. The more traders use it, the higher the likelyhood it would work.

Price based s/r is the most used by the traders with money, so my preference goes out to that.

Jigsaw,
no worries. lol
yes, we joke around from time to time.

about murrey math.... it serves as S/R.

u can check ns_karthik's Murrey Math/MM trading thread
&/or check this out (found within karthik's thread):
www.foretrade.com/MM_description.htm
i think this is the same content in this document found in Shamus' VSA thread (in the VSA thread we use MML/murrey math lines too)

MM is like the psych. levels (.00, .25, .50, .75) acumen, Islander & the others use.

S/R galore

Hey Jig,
I've been generally entering on the break (1 pip buffer) and stop opposite end of bar (1 pip buffer).

Initial thoughts on exit strategies? I'm testing these (all more or less mechanical):
- Full TP at 1.5R
- Full TP at 2R
- 1/2 off at 1R, 1/2 at 3R (no stop movement)

I also have a column for maximum move before being stopped out, and I think I'll add one for an exit at say 8R, or end of day.

Got a question for you Jig. I read that you take as many as 10+ trades a day on the 5min charts. Do you still do that? Do you still stick to 4:1 R:R (with entry on closeish)? And finally, do you still keep a fixed stop (e/u=10pips say)? That is something I should also explore...

These questions are more out of curiosity of course. I know I have to find my way of trading that works for me, and I've done that with all the strategies I'm trading.

Have a good one Jig,

Josh

I should add that I will be using either 0.25%-0.50%/trade with this strategy, and for the time being, only trading it with E/U. I see absolutely no point in trading a 5 minute chart on a pair with a spread over 1.5... my e/u spread is generally under 1 (oanda = 0.9, IB= 0.5 but has $5 round trip commission)...


Josh

josh, just want to point out that it's not a proxy pin imo.
take a look at the 2nd chart(extracted from pin document from J16 thread).

supreme, you definitely have a much bigger toolbox than mine head fake(no idea what) etc... i know WTB, but didn't use it like this.

looking at your chart, i can see why you would want to short it. but what i don't get is that why short it after A and not after the 2nd WTB. it seems to me it was too late to short after A, plus A is actually a bullish pin.

thanks DHH, I should have said 'almost' pinbar, meaning that for purposes of order flow, it can be treated the same as a pinbar.

Happy trading.

Josh

Hi Jigsaw,

Can you please expand on how you use the 21ema and the 50sma to determine the trend?

Hi Anthony,

Hope everything is well for you this evening, I had some charts made up a few days ago (Actually they were for kk007 [oi kk007 I made these up for you pinbars are REALLY good, but you just have to stick with it for a while!]) but they actually took longer than expected and I ended up going to bed because I knew I wouldn't be able to get up for the London open if I didn't lol.

But they are to do with the trend, and then I'll get around to how I personally define the trend relative to the 21ema and 50sma specifically after I talk about this.

The Initial thing is just the difference between

Trend vs. Countertrend.
"Is this a trend I see before me ?"

I used to take countertrend trades all the time, with divergence, with no divergence. But it's literally like trying to catch falling knives, I am not saying it't not profitable but it is just so much harder, I found that my results were being hampered by CT trades, and psychologically it was tough because there were just so many headfakes. If you stick to the trend, you are in the market less, lose less. And you can get better R:R.



Alright so this was the day when the EURUSD actually getting it's ass back in gear, as you can see the setups are already pointed out with the PA identifier so as I can't "cheat" (So to speak) Anything pointed out by the PA indicator will be fine for this face off.

Oh yeah I only have the identifiers pointing out pinbars, outside bars and DBLHC DBHLC.

This visual experiment assumes we take every single piece of PA with the trend as soon as we can.


With the Trend.
Oh yeah the trade management just for this example will be :

Stop losses - 2xATR14+spread
Take Profit - 4xATR14+spread
Move stops to breakeven at 2xATR14+spread.

Just as an example, that would work perfectly well and I have used it myself with success before. Now I am more of a 1:5RR man.


Countertrend.

I am not going to add up the difference, but the charts and outcomes speak for themselves. Every day, well lets say 75% of the days there is at least ONE good trend on the 5min/



I will go into a major rule for me with regards to trading with the trend -

I want to see price retracing back into the 21ema at an angle
THEN I want price action.



This here above entry was probably the best looking . . . Well no, it was the best entry of the day,

Nice uptrend
Price retraced and pulls back to the 21ema
Price action forms.

In my head I call them "ledges" I am looking for an angular ledge to form vs. the MA's . . .Hope I am explaining that ok lol. Heres some more



I took both of these on EURUSD the other day, I actually took a BE on the first one after it going so far in my favor lol



I hate people who always post only winners, when i reality we lose all the time. so heres a fine example of what I generally look for in terms of "anglecoming back", some nice PA. and it's a beautiful loss



And one more which is agood example, I can specifically remember this chart, (I was just looking for examples) This was NFP Friday last month, so the news came out and all and the EUR was hurtling down. I don't trade around news times at all but I have no problem trading afterwords, that being said I waited for this one to come back and retrace, form a ledge. Then got my PA and entered.

But I simply define the trend by :

If the 21ema is below the 50sma = downtrend
If the 21ema is above the 50sma = uptrend

Now this is important -

If the 21ema and 50sma are running through (piercing) the price action you are thinking of taking - then this is automatically a no trade and the market is too sideways to trade in.

Over time you also get used to seeing what angle the 21ema is coming down at relative to the price action, and what angle price seems to be forming a ledge against it. But thats an experience thing.



If I had to draw it this is what it would look like, where the green arrows are what price is doing.


My rules for this whole system are like this

1) Trade Management : I am a big RR Fan, I am looking now for usually 4R / 5R. However, this is a personal thing for me. I love many small loosers and then hitting the ball out of the park when the opportunity arises.
But again personal thing, if you want to do it different by all means do.. . . I reckon everybody should be looking at 1:2 though . . . . 2xATR14 + spread for a SL and 4xATR + Spread for a take profit like my trend vs. countertrend example is a good idea. Backtest it, it works.

2) Trend has to be established.

3) Price must pull back to the 21ema at an angle (Ledge forms)

4) Price action must occur

*) (At this time I will check the relative strength of the two currency's and check correlation - personal thing)

5) Price can never have both MA's running through it.

6) Price must ALWAYS close above/below (depending on the trend) the 21ema and must at all times trade away from the 21ema.

And thats basically it lol.

You know worthy additions to this would be price action must be pierced by support/resistance - trendline, round numbers. Fibs, pivot points, murray math. WHATEVER.

But on 5min I actually ignore it because I reckon this is a systems which gets its edge from the fact that markets trend, trends tend to perpetuate. Pick up any trading book -

Trade with the trend
Cut your losses, let winners run.

This system allows you to do both of these things.

I know other people have RSI and bollinger bands but I just like having as clean a chart as I can. Your own eyes can spot divergence as easy as it can be spotted on the RSI. Again it's easy to see when a "bollinger squeeze" is on by eyeballing the charts as well.

I literally only have the 21ema and 50sma.

Just a final thought on risk -

Actually this is kind of important, I recommend risk to be about .2 . . Maybe even lower of your account. 5Mins are hard to trade, you will get lots of opportunities during the week. Psychologically this is way better than risking 2% and having your account equity look like a yo-yo. Because you will lose loads, and I mean loads. And as well as that at one point or another you will have a string of losses, but the drawdown damage done to your account with .2% risk vs 2% risk will make all the difference in your ability to overcome the drawdown, stay positive and get back to an equity high.

At the end of the day, drawdown will always be more important than profits. And we always want compounding to be on our side.

And just another note on time -

I started trading the 5Mins as a Uni student where I would trade it whenever I could, but during the summer / other holidays etc it's basically been my full time job to trade. Trading as a full time job is boring as heck, as well as that its soul destroying, and you always need to be "switched on". I remember the first fortnight of 12+hour days At the end of eight hours my mind would be a total fog, like the feeling you get after intensive study. Just be aware of this, you will eventually get through it.

Thats probably the main reason why most people cant trade the 5mins, it's probably the most soul destroying and must . . grinding type of trading.

Nowadays I have no problem going from 6AM - 11PM (I have my main trading setup at home, then a webbook + mobile broadband and I also have a micro PC with Windows XP and HDSPA [I think thats it] so I can take Metatrader4 in my pocket])

Jig

Hey Josh bro,

I see about the buffer, I used to do it that way but the only problem was 1) was getting slipped awful bad and 2) sometimes it is just too tight, especially with the trend. Also I was having a hard time calculating %Risk in time to be honest lol.

Don't get me wrong you can avoid a lot of fakeouts with the buffer, but a part of me just does not think that the buffer actually makes much of a difference. Like if you take Daily PA a load of people will either have or have not got any orders on the otherside of a pinbar. But I digress, I guess it's a personal thing.

I love mechanical exit strategy's, trading is hard enough so at least I can automate one part (take myself out of the equation because I would only f*ck it up otherwise )

Yeah I used to actually watch around a load of pairs with this system at one stage lol, It will work with USDCAD, AUDCAD, it will work in all pairs if you can pay the spread and have a TP and SL accordingly. But it took up two 22inch screens on it's own and it became too hard to handle timewise. I probably take less trades now because I have become pickier / don't trade CT anymore. And the fact that I created a new intraday system, I don't want to get overexposed to any particular currency as the signals are the same a lot of the time.

Yeah always 1:4, now though it's 1:5 for most trades. Fixed stop - it depends, a lot of time for the sake of simplicity I actually still use a fixed stop. It's usually eu10 +spread, uj10+spread , EJ20+spread, GU20+spread.
Although sometimes I will just have a peep at the 14ATR which is really useful and that's a good judge if some space is needed.

Yeah Backtest the ATR related SL, you might like it. (assuming you have not already)

For sure backtest the higher R figures, also maybe test the 2bar stop (the Turtles Stop) and a the BAT volatility based stop, they are some pretty nice tools which also work on the essential principle of cutting losers short and letting winners run. To be honest I am sure you could cook up something from your own experience which makes entries as strict as possible, then if you slapped on one of these techniques you would end up with something awesome.

Take care bro, have a good weekend

Alright enough ranting for me in this thread for one night, I am out of here.

Regards,
Jig

3 minute chart would've been gold for that.


but, some of the best stuff to date in these last few posts, I'll echo the angle 'theory' if you will. Even better, if you can get a S/R nearby.

Now, those are"posts"!
Your trendline(ledge line) cut the price action bar many times, but I assume You enter on the close or the brake of the PA bar?
THX, NL

Ice!
Why do You say 3M charts? Than some can say 1M. After 30sec after 5s, 1tick...
Don t take it offensive , please, just curious what You are based this 3M opinion?
THX, NL

well because you are looking for pullbacks, the M5 is riding the rails the entire time, so dropping down to M3 will provide those.

Hey Thom,
i thought i was the only 1 doing the disco theme?
Seriously, i like the black-dodger blue(?)-red combo.
Thanks for the illustrative posts.

Happy weekend ALL
(Sunday 9.18am, Philippines)

Great Posts Jig! good information. I save this in my favourites... ,

BTW: About the pic in my profile, I'm the guy in the t-shirt lo

Quietly learning from this thread. Like this thread coz everyone is focusing on main system only.

I am interested to get the indi that attached to some screen shoot posted by IRA and ARTOV. It appeared on the upper left corner, telling the time left to bar end. To Ira, Artov, or anyone own the indi, mind to share?

Thank you.

Here you go, put both files in your experts/indicators map and just drag it on your chart.

Hi Jigsaw,

Thanks for the great post. It was very informative.