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The Force 5min system

  • #3,061
  • Aug 8, 2010 4:02am Aug 8, 2010 4:02am
We use MACD 12, 26, 1 Why the 1 if he doesn’t mean anything?

In a lot of systems we see that the last number is a 9. When the MACD indicator indicates that the 26/26 line crosses the 9 line then we have a buy or sell signal. But we have a 1 in the force, why….. Because we look at PA for a buy or sell signal!
  • #3,062
  • Aug 8, 2010 9:50am Aug 8, 2010 9:50am
Quoting Forexmist
We use MACD 12, 26, 1 Why the 1 if he doesn’t mean anything?

In a lot of systems we see that the last number is a 9. When the MACD indicator indicates that the 26/26 line crosses the 9 line then we have a buy or sell signal. But we have a 1 in the force, why….. Because we look at PA for a buy or sell signal!
I don't know what FJ's intent was in this matter. Stochastis and MACD are both momentum indicators which is why you don't usually see them used together. However in the picture I have attached you see what each of the numbers represent and how they are used to make the indicator.

The MACD line is the difference between the 12 and 26 EMA's. Using a setting of 1 for the signal line eliminates the effect of it in the indicator. (It is impossible to have a "0" EMA). So as a result of this you have an enhanced histogram. The histogram now would only be the distance that seperates the 12 and 26 EMA's.

Also I believe he is not wanting to use the MACD as a signal of itself but to use it only as a conformation on a changing in momentum.

I don't know if this answers your question, if not let me know and I will put on my thinking cap.

Rufus :nerd:
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  • #3,063
  • Aug 8, 2010 10:33am Aug 8, 2010 10:33am
I think it’s right what you say Rufus. So my conclusion is that we are looking at de angle between the 12 en 26 EMA (MACD) as a confirmation that the trend is still going strong. Additionally we use in the force the angle between the 5 EMA open and 5 EMA close as a confirmation that the trend is going strong.

If you plot those lines on your chart (see below) then we have a tool that a lot of people use and that will give (maybe) a better representation. When the four EMA’s fen out and have a strong angle then we have a clear signal.

Greetzz
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  • #3,064
  • Aug 8, 2010 11:16am Aug 8, 2010 11:16am
Quoting Forexmist
I think it’s right what you say Rufus. So my conclusion is that we are looking at de angle between the 12 en 26 EMA (MACD) as a confirmation that the trend is still going strong. Additionally we use in the force the angle between the 5 EMA open and 5 EMA close as a confirmation that the trend is going strong.

If you plot those lines on your chart (see below) then we have a tool that a lot of people use and that will give (maybe) a better representation. When the four EMA’s fen out and have a strong angle then we have a clear signal.

Greetzz
You are right. It would be a tool that would be used similary. One thing I have noticed is that no matter what system people are using the profitable traders are entering and leaving the market at similar areas. They may vary a candle or two, but they are watching price action. Once the big money climbs on board we just tag along for the ride.

An indicator such as MACD or stochastics are laging. They try to give us an idea of what price action is doing. Some time ago I fell into the trap where I was focused so much on the indicator that I lost all price action. It had gotten to the point where I don't even know why I had a chart up.
I have since weaned myself from that. Now my focus is price action then the indicator may be used to validate my thinking for an entrance into the market. I never use the Stochastics or MACD to exit the market. I only use predetermined exits by a set pip amount occasionaly, but usually by approaching S/R.

I think one of the purposes of the indicators FJ was trying to do was to give traders an exact point to enter the market. Try to take away some of the subjectivness. A moving average cluster doesn't give you a spot to enter.

FJ had posted often that one of the purposes of the Force 5, was to teach price action. So I have learned to focus on price then once in a while look at the indicators for confirmation.

I have been rambling on here so If I have been a bit wordy please forgive me. Markets are not open yet. I don't get to start watching charts till Tokyo opens. And I am a Forex junky.

Rufus
Illegitimi non carborundum - Noli pati a scelestis opprimi.
  • #3,065
  • Aug 8, 2010 11:44am Aug 8, 2010 11:44am
Hey Rufus hold on, the markets are almost opening…..

Is it a very simplistic idea when I ssay that there are three types of PA: up-trend up, down-trend and a range. When you plot trend lines above a down-trend, below a uptrend and above and below a range you have a got a good visual of how PA behaves. If a trend line is broken you look at the candlesticks for conformation (and other PPA’s / pivot lines). That is the only good entry and exit there is (every indicator is a supplement of those ingredients). Or am I wrong?

Greetzzz
  • #3,066
  • Aug 8, 2010 2:51pm Aug 8, 2010 2:51pm
Quoting Forexmist
Hey Rufus hold on, the markets are almost opening…..

Is it a very simplistic idea when I ssay that there are three types of PA: up-trend up, down-trend and a range. When you plot trend lines above a down-trend, below a uptrend and above and below a range you have a got a good visual of how PA behaves. If a trend line is broken you look at the candlesticks for conformation (and other PPA’s / pivot lines). That is the only good entry and exit there is (every indicator is a supplement of those ingredients). Or am I wrong?

Greetzzz
Thats basicaly it in a nutshell. We just catch the turning points or ride the trend. The simpler we can keep it, the less confusion will enter our trading.

Rufus
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  • #3,067
  • Aug 9, 2010 1:39pm Aug 9, 2010 1:39pm
I am experimenting with fibonacci. How do you use fibs in your trading, how do we combine it with the force?
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  • #3,068
  • Aug 9, 2010 3:36pm Aug 9, 2010 3:36pm
Quoting Forexmist
I am experimenting with fibonacci. How do you use fibs in your trading, how do we combine it with the force?
I use fibs a lot. And yes they work well with the force. They will layout areas of resistance and can als give you targets. The link below is my trading journal where I use fibs all over the place. That will be some help. I even use fibonacci in construction work.

There are whole books written on Fibonacci. But again it is best to keep things simple.

Like I have said I am a Forex junkie but also a fibaholic.

Rufus

http://www.forexfactory.com/showpost...&postcount=306
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  • #3,069
  • Aug 10, 2010 1:58am Aug 10, 2010 1:58am
Yes Rufus I have read them. What do you think of today market? Shall the market reach 23.6 % fib and why?

My little remarks (why I think we will go up):
-The market is below the trend line on the 4 hour and 1 hour chart
-The market has support line 50 EMA on the H4
-The market has support line 200 SMA on the H1
  • #3,070
  • Aug 10, 2010 2:20am Aug 10, 2010 2:20am
Right now we wait. See where London takes it. I will only bee a seller

Rufus
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  • #3,071
  • Aug 10, 2010 2:26am Aug 10, 2010 2:26am
Be Bery Bery quiet........We're hunting pips
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  • #3,072
  • Aug 10, 2010 3:26am Aug 10, 2010 3:26am
waiting on waiting game.

Thanx Rufus
  • #3,073
  • Aug 10, 2010 3:47am Aug 10, 2010 3:47am
Get ready.....This might be it. When London has her way it will run.

Rufus
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  • #3,074
  • Aug 10, 2010 4:03am Aug 10, 2010 4:03am
It is 2:00 am.....do you know where your son is???

oh he is in front of the computer watching London duke it out
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  • #3,075
  • Aug 10, 2010 4:14am Aug 10, 2010 4:14am
Looks like London is having her way.. If it can break 3160 I think it will run.

Rufus
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  • #3,076
  • Aug 10, 2010 4:27am Aug 10, 2010 4:27am
Enjoy. I am going to bed soon. 2:30 am here

Rufus
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  • #3,077
  • Aug 10, 2010 4:31am Aug 10, 2010 4:31am
Quoting Rufus
Enjoy. I am going to bed soon. 2:30 am here

Rufus
great entry, i was distracted and i got in much lower .... hope i can find another good one today. have a good night.
Lorenzo
  • #3,078
  • Aug 10, 2010 5:13am Aug 10, 2010 5:13am
Lorbax, maybe there will be a new chance this day, let’s wait and watch…
  • #3,079
  • Aug 10, 2010 6:04am Aug 10, 2010 6:04am
Quoting Forexmist
Lorbax, maybe there will be a new chance this day, let’s wait and watch…
thanks. let's see with the 14.30 (GMT+2) news, they are not very important but you know, it's always a good excuse ...
Lorenzo
  • #3,080
  • Aug 10, 2010 6:20am Aug 10, 2010 6:20am
Quoting Forexmist
Yes Rufus I have read them. What do you think of today market? Shall the market reach 23.6 % fib and why?

My little remarks (why I think we will go up):
-The market is below the trend line on the 4 hour and 1 hour chart
-The market has support line 50 EMA on the H4
-The market has support line 200 SMA on the H1
Forexmist,

Awesome way to look at the market, now come up with a plan what you will do if that happens. think a lot of IF this happens THEN i will????????

Also plan what you want to do if the S/R and EMAs don't work and it goes through them. If that happens THEN I will?????????

this is trading strategically, thinking ahead with a plan so you are not just reacting by the seat of your pants, you know what you are going to do. This is what I do whenever I'm on the lower TFs. It also helps me not to get my mind stuck in the thought that the market will do this or that, i just go with the flow of it.

Just my 2 pips worth.
A woman drove me to drink, and I forgot to thank her
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