BMI - MacD Magic Monster

Hello fellow traders,

I am really wondering what is happen here in FF. Such a few people are interested in these thread. I am trading actively almost 3 years. This stuff from BMI improved my trading dramatically and changed my life, because I have now more free time for more pleasant things. And no losing days anymore for sure, even in the last days choppy nature of market (I am talking about Cable ). I remember threads like T101 and others. What a hype, thousands of people, thousands of posts and what? Difficult stuff, for sure. But the easiest things are not able to catch the deserved attention.

I am really very grateful BMI, thanks a lot for sharing your ideas.

Trade well, Vita

I`m new and i have a really small mini-account (lost more than 50%) and i want to try this. I hope that i`ll be able to understand and use this strategy properly, thank you !

BlueMental,

Thanks for posting this Indicator..... Did you post this updated version yet?
This indicator is very helpful. Thanks for the great work that has gone into it.

Bruce

hi can you help me. i cant make the bmi_curreny strength work. attached is my screenshot

Kesterpogz,

Check to see if the pairs that are used in the indicator are showing in you symbol window. If it is missing any, they you have to delete them in your indicator parameters tab.

Then it should work.

Bruce

Sorry brucech (and everyone else) I uploaded Currency Strength version 2 on the post with the pictures of it, but somehow it didn't get in there.

Doesn't matter really, because I updated Version 2.00 anyway.
1. There was a reduntant double reading of Arrays which ate a huge chunk of cpu power. That is now repaired.
2. If you drag the GBP strength value up, the GBP Graph width gets thick.
3. If you drag the number just a little bit down, it reverts that currencies graph to thin.
4. If you drag the strength number down a lot, it reverts all the currency strengths to thin.

I prefer to do things the easy way, as opposed to having to open the properties and individually alter things there each time.

BMI.

Hi Vita.

I shall tell you a little story that happened to me. A tourist was driving a Car, and he asked me if I could take a look at it for him. It had a strange problem. When driving up hill, it was fine, yet when driving downhill, the car would accelerate so much that he had to turn the engine off each time it happened to avoid having an accident.

I took a look at his carburettor, and I noticed that he had bought the car in Europe, and it had an added on feature that increases the acceleration for really cold days. Being in Africa, we do not experience cold days, so our cars do not have that feature.

After opening up the mechanism, I noticed that the little belt that does the job was stretched, and that was why his car was accelerating. Since the belt was stretched, it worked fine when accelerating the car, but it hit a stronger resistance when trying to decelerate, so it slipped. That was why his car was running away on downhills.

I told him that for 100 euro's I would make an adaption plate and remove the mechanism. He insisted that he wanted to replace the belt. After explaining to him that since we are in Africa, we do not stock the parts for that mechanism, and it would need to be imported from Europe. He stated things about 'warrenties on the car etc.' so he wanted a new belt.

After phoning the cars local agent, I was told (three days later) that the belt does not get sold separately, and one has to buy the entire mechanism for 1300 Euro's. The courier fee's was 300 Euro's.

I mentioned this to the guy who owned the car, who had been staying in a hotel while waiting for this info. He also could not drive anywhere while this was happening. The company would only courier the mechanism once they had received and confirmed payment, which took from 5 to 10 working days, and the courier would take another 5 to 10 days to reach it's destination.

Meaning he stood a good chance of being in the hotel for another 2 to 3 weeks.

He then finally agreed that rather than spend 1600 Euro's on the mechanism, and spend his entire holiday (which was 1 month in total he had planned for) in a hotel spending more Euro's there, that he would accept the original adaption plan.

I charged him 100 Euro's for the adaptation, and a further 200 Euro's for all my work related to sourcing and telephoning about the mechanism.

The whole procedure from when he first discussed it with me, to the completion of the job was 1 week.

If he had agreed to the adaption on day 1, he would have had his car running safely down hills the following day.

The point of this story is this. Many people like to think that the more bells and whistles something has, that the more effective it is. I prefer the Occam's Razor approach to life. If something is not needed or does not benefit the whole, then get rid of it!

One other thing to think of is this. You have been trading actively for almost 3 years, which gives you the benefit of knowing that less is often more. You have (just like me) tried the four thousand three hundred and sixty two thousand five hundred and sixty eight indicators and systems and methods.
So distill what you know into the least amount of working parts and build a solid rule based system on that.

Do yourself a favour, do NOT get enticed by the currency strength indicator. It has merits, but you have to remember 500 different things to get it to start being effective.

The Monster is simpler. After using it for a while, you find you don't even need to think, you just 'feel' the entries and exits.

I am glad you find it useful.

BMI.

Hi kesterprogz.

Just download the version 2.01 instead.

If it does not work, you must make sure that you type the pairs that your broker offers EXACTLY as they are written.

You must use Capital Letters GBPJPY or if your account is a micro account it might be GBPJPYm

BMI.

Hi FxDwarf

I would suggest that you first try it on backtesting, if you don't know how to I will show you how, just ask. After that try it on demo mode. Only once you are comfortable and profit consistantly in demo mode, only then start trading your micro account. It is actually more difficult to trade with a small capital of money than with a large amount, so it is a great way to learn Forex.

The second thing I would recomend is this. Once you are making consistant profit in your micro account, do NOT deposit more money. Build your micro account into a standard account. If you succeed, you will never deposit another cent into your account, only withdraw.

The key to profitable trading is not getting the huge gains. It is by reducing the losses. Set yourself a set of rules.

An example.
1. I will enter a short (sell) trade if the Price Action (PA) has crossed below GrandMa and GrandPa and it touches and bounces back below Grandma, and Daughter (Firebrick 47MA), GrandPa AND GrandMA are all pointing down
2. I will set a StopLoss at the last High before I opened the trade.
3. I will move my StopLoss to +2 pips as soon as I can.
3. I will close the trade if the PA climbs above Daughter (FireBrick 47MA)
4. I will close the trade if Daughter shows signs of turning upwards.

You will find your own rules because we all see things differently, your rules will not be exactly the same as mine. The important part is that you OBEY your rules. The very second you start hearing thoughts in your head of 'it has hit the close rule of 'xyz' BUT it looks like it will be profitable, is the same second you turn a profitable strategy into a losing strategy.

If you do NOT stick to your rules, then you are gambling. If you gamble, you can only lose in the long term.

BMI.

Hi BMI,

First of all congrats on your posts, I was first of all confused because it is not the typical thread with a cookbook recipe, (buy if x and y and z happens....), however your last post about how we should get on with this, (backtest, demo account, etc.) Clearly every one

I would like to ask you two questions that are still confusing me, apologies if you have already answer them:

1) How do you use the EMA(5) in the big MACD settings
2) Would be possible to list all the EMAs and names? I am a bit lost about the names of the family, i.e.

Grandpa: EMA500 (Indigo)
Grandma: EMA290 (Purple)
??? : EMA5 (Maroon)
Mother: EMA47 (Firebrick)
Daughter: EMA14 (Coral)
??? EMA2 (Golden)

Thank you

Hi again,

I have just notice during the last few hours how price reacted to EMA(47) (Mother?)

Below is a H4 chart of EURGBP, price is clearly rejected out of EMA47, it would seem it should continue down. Would be possible for you to take a look a this pair and tell us what you see?

Thank you

I decided to call
EMA 5 (Maroon) Cousin
EMA 2 (Golden) 2nd Cousin

I use them mostly to see (confirm) that they bounce off the other EMA's.

They are not really needed, but since they form the MacD (If you read the whole thread you will see how they appear on the MacD itself) and they help as a form of subconscious view of the MacD.

As far as a solid set of rules (if x do y) I am still working on clear enrety and exit points on the live edge. I see the entry and exit points because I look at the whole as a form of patterns. But each person has their own wants and needs.

For example, I am a more aggressive type of trader, so I prefer to wait until I see a trade form that I feel will give me a high possibility of getting 400 to 1000 pips trades.

I use the same bounce off SR's (the MA's and the RN's) on the small and big timeframes. But I spend most of my focus on the TickMonster. When it is zoomed out to full, and stretched wide across the screen, it shows enough to see a true trend change.

So I wait until I see that the trend has fully reversed. Let us say it was going up, then the GrandPa and GrandMa level out in the TickMonster, and then GrandMa crosses below GrandPa. I then wait to see Daughter come back up to touch (or try to) GrandMa then gets bounced back down. I confirm that there is a bounce off one or more (preferably more than one) on the D1, H4, M15 charts, then I enter with a high Balance to Lots traded ratio. (I usually use 40% of my capital)

I use a second TickMonster which is not zoomed out too much for the actual entry point. I watch the Small MacD EMA's on the 2nd TickMonster. (Mother, Daughter and 2nd Cousin). By doing this, it allows me a smaller risk of a high drawback.

For the SL I use the Last High on the M15 chart plus a buffer zone (varies depending on which pair you are trading.

Here is a useful link from James Lampert. This is 2 free videos and a text download as part of his promotion for his package.

http://freedomforexformula.com/private.html

BMI.

EurGbp is an excotic that loves up and down jumping.
If you look at the D1 chart (zoomed out) You will see that PA is just below GrandPa and is hitting but failing to break below 0.850

I would stay away from trading this pair until the RN of 0.850 is resolved. (Either PA bounces and heads north, or breaks through and heads South.)

The M15 chart patterns look show signs of heading North and South at the same time. (The PA and both cousins are above Mother, but Mother is restrained below GrandMa)

Trading this pair is a gamble. It can easily spike 300 pips in a day and jump back down to starting point.

I would not trade this pair at all unless I had absolutely clear and confirmed medium to long term trades in both GbpUsd and EurUsd that contradict each other. (One going up while the other goes down)

In simpler terms, EurGbp should have a sign for forex traders "Here Be Danger!!"

Finally, to predict.... I recon that PA will break below 0.850 and drop at least 500 pips, but I would not touch it with a ten foot pole.

Although, It is very similar to the GbpJpy layout. The maim difference is that I am totally unfamiliar with the EurGbp personality.

I will follow a bit further on EG and see if anything good pops up. GbpJpy is not clear to me either at the moment. I am not seeing any clear patterns for north or south. It is possible my headspace needs clearing, or the PA is in a state of flux. Both these pairs are excotics (EurGbp and GbpJpy) so since I am not clear I stay out.

BMI.

<EDIT>

http://img84.imageshack.us/img84/248...h4eurgbph4.png

Here are the two compaired (EurGbp and GbpJpy)

The blue numbers (89 in EurGbp and 503 in GbpJpy are the pip values above Bid of their resperctive lines.)

By looking at these two charts, would you say that the fact that PA touching Mother can be used as a clear indication of anything with EurGbp?

It is a minefield, and the pip movements is erratic and tiny in comparison with GbpJpy (or GbpUsd)

Here in the GbpJpy picture, there is a clear smooth pattern. It seems most likely that since PA and both cousins are above Mother and they failed to break below 130.000 ( a VERY strong Round Number) that they will probably go North at least to 135.000.

The scallop shape is in it's ending stage, but is not completely ended yet. It is also the first scallop in a long term down trend. The Price will most likely drop and bounce off 130.000 again before going North to visit the GrandParents.

If PA breaks below 130 and Mother gets below 130 as well, then we can expect a long term down trend.
I am happy to wait this one out and not trade til I see both cousins below Mother again. Then I will wait for PA (and the 2 cousins get bounced down off Mother for an entry signal. That means I might only scalp trade if at all for the next 20 to 30 4 hour Bars unless something major changed over the weekend.
</EDIT>

Hi Bluemental
Thank you for the wonderful thread.
I am setting up the charts right now to followtonight
Re; currency strength I saw an indicator in forex tsd called
"Complex" based on RSI I think. May be you have seen it
before. I do not know how to attach it to show you
anyway thank you again
Senbanda

Hi Senbanda.

I generally ignore (and never use) the Currency Strength Indicator. It has it's uses, but it is too (as named in the TSD post you mentioned) complex.

The amount of trials, tests and calculations to figure it all out are just plain too much work, and for the profits you receive in pips in return, I consider it not worth all the effort.

The thing is that it seldom ever happens that Long Term Trends of the individual Currencies, alter seperately (In other words diverge or converge) to be of any great value, so in truth it is a moot point.

I find it far easier to try to see the likelyhood of an emerging pattern, and if the PA goes according to my guessed pattern, then I enter a long term trade on that basis.

I am still testing all this on demo, and I am finding it quite solid so far, and on the intraday level, more often than not, I can comfortably gain 30 to 50 pips with a relatively low risk per day, which allows me to use a high percentage of my capital to trade.

The last few days have been relatively slack on the GbpJpy pair because she appears to be in the process of refersing trend into an uptrend.
There were Intraday trades available, but my 'eye' was not seeing anything I felt confident enough to trade.

So I chose to wait until I see some patterns I am confident with.

If you prefer the Currency Strength Stuff, then Go for it. It is just not a style/system I enjoy.

However, I do sometimes hit some rough patches by NOT paying enough attention to the fundamental side of Forex, and the Currency Strength Indicator is a nice indicator to see on a chart the Markets view of which Currencies are trending where.


Just as a Matter of interest everyone, I do not know if any of you checked up on Henry Liu, but he is going to be doing a FREE webinar of NFP and the preceding CAD Employment Change. He will be trading it live, and it will well be worth the watch.

It is hosted by TradeTheNews.com

He does not trade the spike trades, he trades after initial spke retrace similar to Felix Homogratus Method (from Forex Peace Army - or if you been in the game for a while from ForexBastards)

Give it a look at this link
http://www.henryliuforex.com/2008/le...s-friday-live/

or go directly to register for the webinar at this link
https://www1.gotomeeting.com/register/780231185

Enjoy.

Lets see how good the Monster is at News Predictions.

I am *NOT* suggesting that this guess will mean anything in regards to the NFP news, so please do NOT use this as a "He said" reason to trade.
It is nothing more than a guess, and I am only posting it before the News so *I* can see if it turns out to have any validity.

Assuming it DOES turn out to be correct (and that is a big if) then it would need to do the same several times, if not hundreds of times to be worth even thinking of using The Monster in this way.

I think you can clearly see that you have been warned to ignore this prediction!

Based on the fact that right now we are about 8 H4 bars prior to News time, and this picture shows PA has reached slightly above the 92.00 Round Number, as well as GrandPa and GrandMa, while Daughter is above Mother and the Siblings are heading North.

They are near the end of the upward Retrace (In the third Bounce), which appears to be the end of the first Mother Scallop. They have not conclusively broken above the GrandParents and the Round Number of 92.00 Which is a strong RN.

If we ignore the drastic drops that created the previous low as 'Panic Noise', then this low is NOT a Higher Low. It seems to me (pattern wise) to be a Lower Low. In this case also added to the fact that Daughter is in her third bounce, together with the end of the Mother Scallop, then it appears (in the same HH,LL configuration) that we are near the end of the Lower High.

The Cousin form is a bit confusing though to my eye. It has gone from Bounce to scallop and back to bounce without there being any reversal or retracement.

I think the Mother Scallop is going to hold form and end here and the second scallop will be starting.

I think the PA will break above GrandPa, GrandMa and RN to reach the 92.500 or possibly the 93.00 level, and will bounce back off there and reverse.

I also think that the form of the Cousin shape will be a Scallop, so my prediction for NFP will be a negative number causing UsdJpy to drop around 50 to 70 pips which will apear to be the trigger of a reversal.

The other two alternatives could be a weak positive reading with a small spike that reaches up to/above 93.00 but bounces back, or a the News is a no trigger event after which a 'natural' reverse will occur.

All in all I say that tomorrow the UsdJpy will be in the early stages of a 2 week down trend.


BMI.
http://img12.imageshack.us/img12/8937/nfpprediction.png

Hi BlueMental
Just read your posts
I have "Complex" on G/Y and it sort
of shows direction in lower TFs Just
an extra confirmation
I am following your method-trying to
understand. Will be watching NFP today
Thank you
senbanda

Hi senbanda.

If you say you are using "complex" on GY, then it is not the same as the Currency Strength Indicator. The way you describe it, it runs on pairs, while the currency strength indicator gives the strength i=of the individual currencies.

So using it to relate to GY, you need to view it in the following way.

The GY is a cross pair of GbpUsd and UsdJpy.
So you need to view the individual strengths of three currencies. Being The Great British Pound (GBP), The US Dollar (USD) and the Japanese Yen (JPY)

Let us say that GBP is 58, USD is 84, and JPY is 88, while their graphs show GBP dropping, while JPY and USD are rising, but JPY is rising at a greater pace than USD.

This means that Jpy is stronger here than USD (as is also shown by the 88 to 84 number)

If you only account for GBP and JPY, then it males sense, because if GBP is getting weaker than JPY, Then GbpJpy is dropping in value. But what happens when Jpy is rising while Usd is rising more?

This has a direct influence on the GbpUsd price, so it brings all sorts of calculations into play to be able to figure out the whole deal.

It is in essense a 'shades of gray' scenario. Also, with the strength indicator, it is difficult to see if and when the direction of the trends change in the real time side of the graph.

It is great as a hindsight tool. But in real time, there is no real way of knowing or even guessing if the trends will reverse or retrace. About the only thing that allows us to guess this is (as you can see on my initial v2 picture) the two horizontal trend lines I drew near the top and bottom of the chart.

In other words, since JPY and USD are both above 80%, they are likely to switch direction. While GBP is near the center (58%) and can go either up or down.

These are assumptions that are based on looking through the previous pathways of the individual currency strengths, and in truth are basically meaningless. There is no clear definitive pattern to allow us to have evemn a 0.5% better chance than simply tossing a coin and saying heads buy, tails sell.

It is a great indicator if you wish to spend time writing a thesis on how the various interactions between the individual currency strengths affect each other, and if you go deep enough into it, you might even get the Economic version of the Nobel Prize by doing all that study, but what good is it with regard to Forex Trading in the now?

The only time this chart assists in real time trading is if you are observing it, and GBP suddenly starts jumping up from 58 to 60 to 65, while simultaneously, USD starts dropping from 84 to 80 to 75.

Even when that is the case, do you enter a long trade? And if so, how big a change do you wait for in those figures that count as 'proof'?

Now if you look at the PA of the GbpJpy in the same picture, you can see that the cousins were below the Daughter from the beginning of the chart, and Mother is leveling out, while the 2 cousins are slightly above Daughter.

I have entered a long trade here, but I actually entered it too early. I still have no idea if the PA will break or even go up to touch Mother.
Mother has not turned, and the cousins are not yet above daughter (and preferably Daughter above Mother too).

It is far easier to see where in the scheme of things one is with the EMA's.

If I was in a short trade from somewhere near the beginning of the chart, I woul NOT have closed the trade where I entered the long position.
I would only close it after Daughter crosses above mother and the 2 cousins try to cross back down and get bounced above Daughter, which would be at the very least a 70 pip gain.

That is the same thing I should have waited for to enter the long position.
(When Daughter crosses Mother, that is when Mother turns.)

If you notice, at the end of the chart, you can see a small section of GrandMa. If Daughter crosses above Mother, and the Cousins can not break back below Daughter, then there is an 80% likelihood that the PA will reach at the very least halfway to touching GrandMa and possibly more.

So if one were to wait for the relevant signs to occur one should be able to enter a long position at line 1, and reach at least near line 2. That would be a 60 pip + profitable trade, with a very low risk of failure.

130 Pips possible in 5 hours. Since they are both low risk trades, then the Risk Reward Ratio can be adjusted to suit.

Assuming you usually trade with 2%, and if the risk is low you up your risk to 4%, that is double the profit.

I trade on medium risk at 40% on low risk at 70%.
In a short trade, (use the one I am not in), my first SL would be a few pips (in GbpJpy, a few pips is 15 or so) above the previous High, (Under the U in the EUR text), I would have put my 2nd SL just above the first retrace high (Underneath the CHF, 47 text), My next SL would be above the next retrace high, (Below the JPY 88 text) my third and most likely final SL would be above the next retrace high (exactly where my Long entry is). It would either have been hit now, or be perhaps 1 or 2 pips away from being triggered.

That is definately not a bad pip gain for 'scalping' om the M5 chart.

I am not saying that the "complex" indicator you speak of is bad. I am also not saying that the Currency Strength indicator is bad. I do not know the "complex" indicator, but as far as the Currency Strength Indicator is concerned, there is simply 'too much stuff' involved with it for it to have any value, and I personally do not get any confidence from having it on my chart.

BMI

<EDIT>
Ummm. I forgot one minor detail.....

Here it is

http://img193.imageshack.us/img193/2...ystrengths.png

</EDIT>

Here is my trades from Last week. The Broker Time is London.

Starting Balance was $426.06

Pips gained 544.6
Pips lost -43.1

Total Pips 501.5

$ gained 966.74
$ lost -92.93

Total $ 873.81

Balance increase from $426.06 to $1299.87 = 305% gain
Trade percentage of initial balance ($873.71/$426.06) = 205% gain

28 trades; 25 gain; 3 loss

BMI

Ummm. I have placed the html file on my Google Docs site, but I have no idea how to get it to show on the post. So I have zipped it as an attachment instead. If anyone can tell me how to do this I would appreciate it.

Here is the after NFP picture for Usd Jpy. The total drop from Scallop start which NFP triggerred was 170 Pips.

http://img529.imageshack.us/img529/1...enfpusdjpy.png

And here is the after NFP picture for GbpJpy. Pretty much the same shape formations with one small difference. The total drop from Scallop start which was triggerred by NFP was 509 Pips. (So you still consider a spread of 5 to 6 pips high?)

http://img692.imageshack.us/img692/1...enfpgbpjpy.png


BMI