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Gbp testing on daily I4Bs.

  • #1
  • First Post: Aug 16, 2009 10:53pm Aug 16, 2009 10:53pm
This journal is for testing I4Bs on the daily Gbp/usd charts. This testing will be shown in yearly increments starting in 2005 to begin with and onward. In due time, I will show testing results dating back to 2000, however, I find it easier to do this in smaller steps than all at once. This journal is to file my findings on this technique.

Here is an overview chart with all the I4Bs that happened in 2005- there were 22 valid I4bs in 2005. I'll be working from there onwards. I'll be disecting these over time and showing how to maximise profit based on this strategy. The results through this are totally subjective to any person's trading, therefore my results only apply to ME....not you or anyone else. Due diligence on anyone's part will bring success.

If there is any problem with me doing this, please PM me.
Attached Image (click to enlarge)
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I dream, therefore I become.
  • #2
  • Aug 16, 2009 11:02pm Aug 16, 2009 11:02pm
The valid I4bs occuring in 2005 happen on the following dates.

1-10-2005
1-20-2005
1-31-2005
2-11-2005
2-17-2005
3-01-2005
3-10-2005
3-17-2005
3-24-2005
4-13-2005
5-23-2005
5-27-2005
6-20-2005
7-26-2005
8-23-2005
9-06-2005
9-13-2005
10-24-2005
11-17-2005
12-01-2005
12-16-2005
12-26-2005

Some turn great, some don't...therefore we test and look to ourselves for a better way to trade.
I dream, therefore I become.
  • #3
  • Aug 16, 2009 11:16pm Aug 16, 2009 11:16pm
Found this after a few visits to your profile page today...
how come this thread is not appearing in your "thread's list" yet? (it only shows your previous 27 threads, instead of '28')

Finally.....
  • #4
  • Edited 11:33pm Aug 16, 2009 11:21pm | Edited 11:33pm
The first I4B we'll be working on is the one occurring on 1-10-2005.

First, you'll see the daily viewpoint. This will show the first target of 1.8875 shown by the blue circled box at the previous highs just before the IB occurring.

Secondly, we're introducing the 4 hour chart to break this I4B down to show the consolidation it represents. The high is at 1.8796 and the low is at 1.8695.

After a close above the high of the consolidation, I would be looking to enter trades. The checkmarked bar did just that and broke above. Price then retraced to the very bottom of the congestion zone only to move back upwards.

I've found quite a bit that price retraces back into the consolidation in order to gain momentum after the first bar closing above.

After the retracement, it moved onward to the first goalpoint of 1.8875. The blue thumbs up shows where this happens.

The rest of the position would be closed at break even. I'll be looking at these as if I were entering two partials- one to the first take profit and the other being a runner after that first partial.

I'll be coming back to this trade again in the next post showing it's break to the low side which turns out to be profitable as well.
Attached Image(s) (click to enlarge)
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Click to Enlarge Name: first i four on one ten four hour viewpoint.gif Size: 14 KB
Click to Enlarge Name: first i four on one ten four hour viewpoint final.gif Size: 15 KB
I dream, therefore I become.
  • #5
  • Aug 16, 2009 11:25pm Aug 16, 2009 11:25pm
Quoting supremeChaos
Found this after a few visits to your profile page today...
how come this thread is not appearing in your "thread's list" yet? (it only shows your previous 27 threads, instead of '28')

Finally.....
I just set it up a minute ago my man.

In the meantime, I'd like to tell you how much respect I have for you. I read your profile page again today and saw your plans with your profits. I almost cried there to be honest. That's awesome. I wish there were more people in the world with goals such as yours. I almost made a thread on that to be honest.
I dream, therefore I become.
  • #6
  • Aug 16, 2009 11:27pm Aug 16, 2009 11:27pm
I'll be testing these I4Bs on BOTH the breaks high and low, even if one occurs a few days after the fact from the other. I've still found that to be profitable during my minimal testing so far. I'll show an example on this with our first tested IB from 1-10.
I dream, therefore I become.
  • #7
  • Aug 16, 2009 11:42pm Aug 16, 2009 11:42pm
Quoting mike w
I'll be testing these I4Bs on BOTH the breaks high and low, even if one occurs a few days after the fact from the other. I've still found that to be profitable during my minimal testing so far. I'll show an example on this with our first tested IB from 1-10.

I4B trade from 1-10 shown to the downside here. In order to find the first area of take profit on this one, you had to go way back and from there, you'll see that take profit area at - what else? - but a round number at 1.86.

You can then see where price finally closed below the low of consolidation noted by the checkmark. With that, trade on down to 1.86. 80 pip profit here to the first target. The rest would eventually get stopped at breakeven.
Attached Image(s) (click to enlarge)
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Click to Enlarge Name: looking for areas of interest on one ten ib success.gif Size: 19 KB
I dream, therefore I become.
  • #8
  • Aug 16, 2009 11:44pm Aug 16, 2009 11:44pm
Getting some sleep for the night. Hopefully, we can bust out about ten of these tomorrow. Have a good day/night, wherever you are ladies and gents.
I dream, therefore I become.
  • #9
  • Aug 17, 2009 12:50pm Aug 17, 2009 12:50pm
Quoting mike w
I just set it up a minute ago my man.

In the meantime, I'd like to tell you how much respect I have for you. I read your profile page again today and saw your plans with your profits. I almost cried there to be honest. That's awesome. I wish there were more people in the world with goals such as yours. I almost made a thread on that to be honest.
I see. so i think a thread must need at least 1 reply before it gets "listed" in a member's "thread list"

are u referring to this &/or this thread/s?
Thanks! yes, i feel the same way, i wish there are more people out there...
  • #10
  • Aug 17, 2009 1:02pm Aug 17, 2009 1:02pm
Quoting supremeChaos
I see. so i think a thread must need at least 1 reply before it gets "listed" in a member's "thread list"

are u referring to this &/or this thread/s?
Thanks! yes, i feel the same way, i wish there are more people out there...
No no, I meant I was thinking of making one about your profile page lol It hit me deep brother.

I'll be posting up testing later on tonight as I have some serious reading to do today. Probably around 11 or 12, I'll have up the next I4B to be tested.

This I4B occurred on 1-20-2005.
I dream, therefore I become.
  • #11
  • Aug 18, 2009 12:26am Aug 18, 2009 12:26am
Quote
No no, I meant I was thinking of making one about your profile page lol It hit me deep brother.

Really? thanks.... It means alot..
but i think it's not yet appropriate....
probably next time..... 80-100 yrs from now ---when i die!

Yes Sir, looking forward to your journal's expansion/breakout.
  • #12
  • Sep 2, 2009 6:49pm Sep 2, 2009 6:49pm
Hey Mike and Supreme!

I love contrarian views and ideas. Here is one from me on trading I4B's. I do not get many but when I do they are pretty sweet. When you look at a chart and find an I4B do you notice that there are many that have head fakes (false breaks)? I'll try to post a chart here on my next successful one but what I am comfortable doing is waiting for one side to break first and then placing my entry at the other end of the bar. If I have to watch it keep running without me I'm OK with that because I didn't incur a loss. I can't hep but notice that so many of these get engulfed by the next candle. I hope that this might contribute something to this thread. Thanks for starting it Mike!

K.I.S.S.
  • #13
  • Sep 2, 2009 6:57pm Sep 2, 2009 6:57pm
Here is a chart. I found one right away. USD/JPY. Price breaks the I4B and then you place your short order. If the price keeps heading up I'll close my short. In this example we see that a very anemic looking bullish bar is formed. I'll leave my short right where it is and the very next bar rewards me. I only use these set ups for small gains but I love the low risk!

K.I.S.S.
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  • #14
  • Sep 13, 2009 10:58am Sep 13, 2009 10:58am
Quoting KissFan
Hey Mike and Supreme!

I love contrarian views and ideas. Here is one from me on trading I4B's. I do not get many but when I do they are pretty sweet. When you look at a chart and find an I4B do you notice that there are many that have head fakes (false breaks)? I'll try to post a chart here on my next successful one but what I am comfortable doing is waiting for one side to break first and then placing my entry at the other end of the bar. If I have to watch it keep running without me I'm OK with that because I didn't incur a loss. I can't hep...
Yes sir. I notice the fake breaks all the time IF you are only looking at one time frame. Say you are trading on the daily and see a break, switch down to the four hour and you'll notice a LOT that it will show as a pin or or bearish/bullish bar after that initial break. I believe these bars break to one side in order to gain momentum to break through the other side.

If you think about it, that makes sense as the same amount of force exerted to push a door down that didn't work before won't work now. There needs to be more force acting on that door. More buyers or sellers are waiting at these "false" break points in order to gain the momentum for the push through. It's simple enough IMO to cause problems for a lot of people. lol

The reason I haven't been posting here or my journal is because my old computer crashed and I am being shipped a new one as I write this. I've tested the gbp/usd I4Bs now up until the present time and it is very promising when you look to the lower timeframes for a break and CLOSE above or below the consolidation area. The Euro is also pretty damn exciting as well and without as large of drawdowns which is fantastic.
I dream, therefore I become.
  • #15
  • Sep 13, 2009 3:43pm Sep 13, 2009 3:43pm
Quoting mike w
Yes sir. I notice the fake breaks all the time IF you are only looking at one time frame. Say you are trading on the daily and see a break, switch down to the four hour and you'll notice a LOT that it will show as a pin or or bearish/bullish bar after that initial break. I believe these bars break to one side in order to gain momentum to break through the other side.

If you think about it, that makes sense as the same amount of force exerted to push a door down that didn't work before won't work now. There needs to be more...
Mike- I plan on testing these more over the next few months. On October 9th I am signing a deal to sell my restoration company. I will have a one year consulting contract with the business that is buying me. I have to work for them 3 hrs a day (1pm-4pm central time). I'm free after October 9th to trade full time. I have some trading goals over the next year that I will need to acheive in order to justify doing this from now on. I think I'm ready but we shall see. I look forward to sharing more trading insights and ideas with you in the future. Take care buddy!

Roger
  • #16
  • Sep 15, 2009 3:15pm Sep 15, 2009 3:15pm
Exciting stuff Mike, and great to see you over on J16 chart thread.

Do you need some help testing these out. I am looking for a research project right now so I could do another pair alongside you?

I'm also a little fuzzy on your rules to prevent fakeouts.

As I understand, you have no trend bias or anything like that. You just wait for a close above or below the I4B, on the same timeframe as the IB, and then you take a trade from there. How do multiple timeframes factor into this? And do you perhaps look for a close not just outside the I4B but outside the mother candle?

By the way brother, I know I keep going on about this, but you were one of the first people to encourage me on here and you're the spirit of FF. There's always a bed and a beer waiting for you when you make it to London. I look forward to meeting you one day.

Aaron
  • #17
  • Sep 15, 2009 3:41pm Sep 15, 2009 3:41pm
Okay I just read a good chunk of your post history and I think I grasp the concept.

Basically, you take the daily I4B and drop down to the 4H where the consolidation will be clear. Box it off. Then wait for a close outside that consolidation, and a convincing one at that. Then take the trade, with your stop presumably beyond the other side of the consolidation box.

This means that your stop won't be on the other side of the IB but most likely on the other side of the bar preceding the IB, the "mother candle"

Your examples are exciting. This, along with Dale's 4H double IB theory, is something I want to test.

So what pair would help your project? I'll obviously test a ton of pairs for my own comfort zone but it's be good to start on one that you haven't covered so that we can work together on it. USDCHF? GBPJPY?
  • #18
  • Sep 15, 2009 5:29pm Sep 15, 2009 5:29pm
Okay I just read a good chunk of your post history and I think I grasp the concept.

Good stuff brother!

Basically, you take the daily I4B and drop down to the 4H where the consolidation will be clear. Box it off. Then wait for a close outside that consolidation, and a convincing one at that. Then take the trade, with your stop presumably beyond the other side of the consolidation box.

Yes sir! That's exactly how I trade it. If I see a break and CLOSE above/below the consolidation zone, I will then open positions with a stop at the other side of the consolidation box/IB.

Also, if I see a break and and that bar ends as a pin back into the consolidation or other bearish bar, I will trade it back to the other side of the consolidation and IF price allows, I will trade it to the other side. That eliminates a LOT of risk when possible.

This means that your stop won't be on the other side of the IB but most likely on the other side of the bar preceding the IB, the "mother candle"

No, my stop is on the other side of the IB from my entry point (always) - NOT the mother candle. Trading with the stop at the other side of the mother candle would very often make this strategy unworkable with the risk involved. It's all about keeping that risk down IMO.



Your examples are exciting. This, along with Dale's 4H double IB theory, is something I want to test.

I've also been testing Dale's doubles. (catchy name eh? lol) To me, it's a good 4 hour strategy, however it's just that so far to me- a 4 hour strategy. I'm not too favorable of the potential whipsaws that come from it. On the dailies, by the time you are ready to trade, the momentum is usually already in your favor. On the 4 hour, for a good bit of the time, it's still "catching up". I hope that's understandable.

So what pair would help your project? I'll obviously test a ton of pairs for my own comfort zone but it's be good to start on one that you haven't covered so that we can work together on it. USDCHF? GBPJPY?

First, I'm DAMN GLAD that you want to test for your own best interest. Testing is monumental to confidence in your trades. Confidence is monumental to trading profitably. I wish I would have been like you when I was a year deep in my trading.

So far, I've tested the gbp/usd, eur/usd, gbp/jpy, eur/jpy, usd/cad, and getting into the aud/usd.

I've also done lighter testing (2 or so years) if I see a daily I4B that just looks delicious and I want to take it on a pair that I haven't yet tested. It's fast and easy to skim through and see how each pair reacts.....annnnndddd....wait for it...wait for it...Ta-da! Most react the same. For instance, the other day I tested the gbp/cad over the past year and a half in about 3 hours time and that was enough for me to see how it would end up. That's nothing IMO.
I dream, therefore I become.
  • #19
  • Sep 15, 2009 5:36pm Sep 15, 2009 5:36pm
Quoting mike w
Okay I just read a good chunk of your post history and I think I grasp the concept.

Good stuff brother!

Basically, you take the daily I4B and drop down to the 4H where the consolidation will be clear. Box it off. Then wait for a close outside that consolidation, and a convincing one at that. Then take the trade, with your stop presumably beyond the other side of the consolidation box.
[b][u]
Yes sir!...
Thanks for the detailed reply Mike. I'm going to make this my next project.
It's simple and easy to do and doesn't need forextester. And the I4Bs are easy enough to identify on the daily.

What I really like about I4Bs, and it's something people rarely mention, is that there is no such thing as a "bad" I4B. Unlike pinbars where you're looking at the nose, the close etc etc. An I4B is just an I4B and I like the simplicity of that.

Do you pay any attention to location in your testing or taking of trades? I would imagine that with a good I4B played the way you play them, you don't need to worry too much about where the bar is. After all, the fact that it has formed at all is the most important thing, unlike a pinbar which can form when price is just pausing.

Thanks Mike.
  • #20
  • Sep 16, 2009 5:22am Sep 16, 2009 5:22am
Mike,

Quick question about the GBPCAD from yesterday. I see on the daily that it's a lovely I4B with a fakeout the following bar that doesn't close above the I4B. That shows a great push up to get the strength to drop lower. All very clear.

But on the 4H I see a couple of closes above the consolidation box. Overall on the daily we couldn't close above, but according to your method you look on the 4H for a close above the consolidation and surely that would have taken you long in this instance?

Thanks for the help.
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