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4 Hour Strategy (MACD)

  • #22,541
  • May 5, 2010 6:32am May 5, 2010 6:32am
Hi people,

After lurking behind the scene for some time, I decided to sign up an account to join in on the learning session here. Just started only 2 months ago and came across this interesting yet potent strategy.

My question for now is that I was examining the USDCHF and notice a really beautiful RT in the making and looking to short this in about 30mins time. However what is holding me back is the fact that i heard USDCHF is highly correlated with EURUSD. Currently EURUSD looks highly dangeorus to be longing and by shorting USDCHF I feel like i am going against what i understand about this correlation.

can any kind soul give me some advice about this view? i am highly interested to take in any advice from any one.

Thanks a lot in advance
  • #22,542
  • May 5, 2010 7:00am May 5, 2010 7:00am
Quoting falconite
Hi people,

After lurking behind the scene for some time, I decided to sign up an account to join in on the learning session here. Just started only 2 months ago and came across this interesting yet potent strategy.

My question for now is that I was examining the USDCHF and notice a really beautiful RT in the making and looking to short this in about 30mins time. However what is holding me back is the fact that i heard USDCHF is highly correlated with EURUSD. Currently EURUSD looks highly dangeorus to be longing and by shorting USDCHF I feel...
Hi falconite. Like you, I am a very new trader. In my opinion, wait for next candle to confirm. Exercise patience. The RT has not formed yet. Even so, using candlestick analysis, the bulls are still very much in control of the price in USDCHF. If you go short on USDCHF, it is a very high risk trade as you are trading against the trend. Hope other members will be able to cast more light.
  • #22,543
  • May 5, 2010 7:06am May 5, 2010 7:06am
Entered long on EJ as RB formed. First entry at 122.57. sl at 122.23 (previous candle low), tp at 122.98(8MA). Second entry at 122.73. sl at 122.57 (half B.E), tp at 12.3.37 (below 23.6% fibo) Comments?
  • #22,544
  • May 5, 2010 7:07am May 5, 2010 7:07am
Quoting AlwaysLearn
Hi falconite. Like you, I am a very new trader. In my opinion, wait for next candle to confirm. Exercise patience. The RT has not formed yet. Even so, using candlestick analysis, the bulls are still very much in control of the price in USDCHF. If you go short on USDCHF, it is a very high risk trade as you are trading against the trend. Hope other members will be able to cast more light.
I started off learning Forex with Philip Nel's strategy. OK - these round formations are quite common against the trend but if you look back they rarely offer much in the way of profit unless there is an actual trend change and I don't think we are expecting that soon. Also this particular MACD setting does exaggerate divergence so that is not as reliable either. (I haven't looked at the chart). What we are looking for is pull backs to support with a nice round turn in the direction of the major trend. These are relatively rare but they are what we seek. Let me know if you would like an example chart and I'll dig something out..
Gone to a better place
  • #22,545
  • May 5, 2010 7:07am May 5, 2010 7:07am
Thanks alwayslearn,

that was good advice from you and somehow towards the end of a 4hr bar the RT that i was expecting did not materialise nicely in the end.

But i will be looking closely at this as it is way beyond the 45 level on the macd and it's due for a retracement soon.

Just another question i would like to pose is that the start of the NY market coincide with the start of another 4hr bar. So is it dangerous to trade at that timing immediately just in case the US market can change a potentially RT/RB to a TC?

Thanks again
  • #22,546
  • May 5, 2010 7:15am May 5, 2010 7:15am
Quoting AlwaysLearn
Entered long on EJ as RB formed. First entry at 122.57. sl at 122.23 (previous candle low), tp at 122.98(8MA). Second entry at 122.73. sl at 122.57 (half B.E), tp at 12.3.37 (below 23.6% fibo) Comments?
2nd trade sl hit. Put in buy stop at 122.83, sl at 122.47, tp at 123.37.

Made a mistake with setting sl for 2nd trade. sl should be out of the current candle. -16 pips.
  • #22,547
  • May 5, 2010 7:34am May 5, 2010 7:34am
Quoting smikester
I started off learning Forex with Philip Nel's strategy. OK - these round formations are quite common against the trend but if you look back they rarely offer much in the way of profit unless there is an actual trend change and I don't think we are expecting that soon. Also this particular MACD setting does exaggerate divergence so that is not as reliable either. (I haven't looked at the chart). What we are looking for is pull backs to support with a nice round turn in the direction of the major trend. These are relatively rare but they are what...
I would love to see some of those examples. Whenever you have the time pls post some of those up for everyone to learn
In due time i will be posting my charts for opinions as well but warning, its going to be very very noobish so do not flame me when that time comes.
  • #22,548
  • May 5, 2010 7:36am May 5, 2010 7:36am
Quoting falconite
Thanks alwayslearn,

that was good advice from you and somehow towards the end of a 4hr bar the RT that i was expecting did not materialise nicely in the end.

But i will be looking closely at this as it is way beyond the 45 level on the macd and it's due for a retracement soon.

Just another question i would like to pose is that the start of the NY market coincide with the start of another 4hr bar. So is it dangerous to trade at that timing immediately just in case the US market can change a potentially RT/RB to a TC?

Thanks again
I am still relatively new to trading and I am sorry I don't know the answer to this question. However, I believe others will be able to enlighten us. USDCHF is now on a bull breakthrough and may take weeks for the bears to overcome the bulls. With the weakening euro, people may shelter in USD and thus the bull run for USD-based pairs. If USDCHF candle closes above the 1.1100, then it will be safer to wait. However, if it rebounds off, a short term short trade is possible with tp at 8MA. This is just my opinion. But if it is me, I will not enter a short until the RT is formed or at least a candlestick pattern showing trend reversal is formed.
  • #22,549
  • May 5, 2010 7:39am May 5, 2010 7:39am
Quoting AlwaysLearn
2nd trade sl hit. Put in buy stop at 122.83, sl at 122.47, tp at 123.37.

Made a mistake with setting sl for 2nd trade. sl should be out of the current candle. -16 pips.
!st trade sl hit. -34 pips. Total -50 pips. Cancelled the buy stop as well. Should have practiced what I preached and wait for another candle to confirm the RB instead of jumping in. Didn't want to wait as when the current candle closes, I will be sleeping. Important lesson for me today. Be patient and let the trade come to me, instead of chasing after it. It was also a high risk counter trend trade.
  • #22,550
  • May 5, 2010 7:44am May 5, 2010 7:44am
Quoting AlwaysLearn
!st trade sl hit. -34 pips. Total -50 pips. Cancelled the buy stop as well. Should have practiced what I preached and wait for another candle to confirm the RB instead of jumping in. Didn't want to wait as when the current candle closes, I will be sleeping. Important lesson for me today. Be patient and let the trade come to me, instead of chasing after it. It was also a high risk counter trend trade.
Do you know, I never trade counter trend, unless the actual direction of the trend is debatable. I just go and chop wood.
Gone to a better place
  • #22,551
  • May 5, 2010 7:46am May 5, 2010 7:46am
Quoting smikester
Do you know, I never trade counter trend, unless the actual direction of the trend is debatable. I just go and chop wood.
Now I know the danger of that. I entered the trade because I found out I missed the down trend and was impatient to get a trade in. Therefore, I was blind to my own advice and took a fall.

Furthur to reply falconite, USDCHF and EURUSD should be inversely related.
  • #22,552
  • May 5, 2010 7:57am May 5, 2010 7:57am
Quoting AlwaysLearn
Now I know the danger of that. I entered the trade because I found out I missed the down trend and was impatient to get a trade in. Therefore, I was blind to my own advice and took a fall.

Furthur to reply falconite, USDCHF and EURUSD should be inversely related.
yea i forgot to add in the word "inversely" thanks again
Sorry to hear about your trade but i am sure u will be back in shape in no time man.
  • #22,553
  • May 5, 2010 8:10am May 5, 2010 8:10am
Quoting AlwaysLearn
Now I know the danger of that. I entered the trade because I found out I missed the down trend and was impatient to get a trade in. Therefore, I was blind to my own advice and took a fall.

Furthur to reply falconite, USDCHF and EURUSD should be inversely related.
That was what happened to me last week. I missed out one trade and was impatient to wait for the next one. End up went into a wrong trade and emotionally got affected and did more trades and end up got burn very badly. Learn my lesson and try to be patient and wait for the opportunity to come. Its easiler to say than done but I am trying very hard.

EURUSD is scary... falling like no body business.
  • #22,554
  • May 5, 2010 8:13am May 5, 2010 8:13am
went short on gu at candle close

gu is currently breaking the range tl an moving away from 200sma. the price has confirmed his tc by finding resistance at 8ema. unfortunately the signal candle has come out very large but I risk this entry anyway.

the trade has enough space for the price to struggle around the lower range tl, however the worst case scenario would be a retrace to 200sma

short @1,5088
sl 1,5178

I will manage the trade as it gains momentum to the downside so I just have markers, no tp set

1.mark 1,5050 ... probably trade be when price hits
2.mark 1,5000 ... dont know yet, maybe partial profit?
3.mark 1,4960 .. definitely tp
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  • #22,555
  • May 5, 2010 8:33am May 5, 2010 8:33am
Quoting falconite
so do not flame me when that time comes.
I never flame people.

It's really easy for an experienced trader to post these examples after the fact but since you were trading USD CHF I chose the last good trade you could have taken on that pair. Just to show I can spot them before, read this and the time and see what the price did afterwards: http://www.forexfactory.com/showpost...ostcount=13850 Lucky? Yes, it worked out well. It doesn't always. Bear that in mind and close those. Anyway here goes.

Attached Image (click to enlarge)
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If you click on the image twice you will get a better view. This daily chart gives us the trend. We won't be taking shorts because it's going up and shorts are tricky. Forex will burn your fingers even when you're getting better.

Attached Image (click to enlarge)
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In this chart on the H4 I've marked support and resistance as cushions. It doesn't always happen to the pip, you see. The first two are resistance and the third is looking to use them as support. Also this coincides with the RB signal off MACD. It's not a perfect signal but the long bullish bar confirms it. When we see this we might think we missed the trade. Often enough those bullish bars retrace quite a lot before continuing. But we want to trade with the trend and we have a new bottom, or support level.

Attached Image (click to enlarge)
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How to trade it? My style is to take a long off the top of the bullish bar. I put it a few pips higher, because I want the price to pick up my trade with zero draw down. Nice! If you can get it. Unfortunately, it picks up the price and takes it down nearly 40 pips. Note the big round number 1.08 which is acting as support. Look at the candles around that area. They use 1.0810 as support and resistance. Assuming you stayed in the trade you would get the round top at 1.1 very big round number where you were considering a short. Instead of considering a short, get the stop loss up to the bar under 1.1

Look at the ATR for that trade, it was 41! The drawdown was approximately 40 pips! These analyses always amaze me. But you will always get a bigger pull back off a large candle like that and a realistic stop loss is usually 1.5 or even 2 or 3 times ATR(14). Another thing that amazes me is the time lag. I always want trades to give me profit instantly. That trade is now moving towards 3 days... It was in draw down for nearly 24 hours. But a glance at the chart shows it would have been a great trade. So: trade small lots. Have lots of patience.
Gone to a better place
  • #22,556
  • May 5, 2010 9:26am May 5, 2010 9:26am
Bravo, that explaination with the charts were as clear as daylight.

Thanks smikester for explaining the importance of always riding with the trend and the danger of taking every macd signal for it.

another 1.5 hours to go, lets see which pair will present itself with the best opportunity. I wonder if the US session has any more juice to spare.
  • #22,557
  • May 5, 2010 10:07am May 5, 2010 10:07am
Clearly you are on a different feed to me, my next H4 bar finishing in just under 3 hours. It would be good if you posted a chart of anything interesting. It's good to be back in this thread and to see Palmer and Ira who were around when I was...
Gone to a better place
  • #22,558
  • May 5, 2010 1:38pm May 5, 2010 1:38pm
Quoting smikester
Clearly you are on a different feed to me, my next H4 bar finishing in just under 3 hours. It would be good if you posted a chart of anything interesting. It's good to be back in this thread and to see Palmer and Ira who were around when I was...
Yes, it is really great to see all old friends here !

I was also taking a lot of RT/RB counter trend trades when I started trading this system, because they are too obvious. But I forgot the pain, I hate CT trades, but today jumped in one of them and immediately remembered all that pain))). I was clever and lucky enough to close it with +1, still don't understand what I was thinking about! Silly me!

Never trade CT's, it is like standing in front of the running train. It will never stop, it will just smash you. CT's may be taken when there are real signs that the trend is weakening.
  • #22,559
  • May 5, 2010 7:10pm May 5, 2010 7:10pm
EJ and EU still on bear trend.

One question to ask: Do you ever feel afraid to pull the trigger even after a clear signal is shown if you have experienced a series of losing trades?
  • #22,560
  • May 5, 2010 7:34pm May 5, 2010 7:34pm
Here's my trade for the day. Everyone knows we trending short with regard to the EUR/USD so I'm not going to show the daily. The only chart is the 1hr. Price consolidated in the blue rectangle (also notice the evening star at the end of the consolidation period). I was a little late on the entry but entered after price broke the consolidation period. I exited at the morning star on the bottom.
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