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Tunnel Vision. Independent Signals & Positioning Recommendations.

  • #61
  • Jan 31, 2006 10:50pm Jan 31, 2006 10:50pm
Quoting Claude
Bill
Quick question are you still doing some work on the one-hour tunnel. Or are you exclusively concentrating on the daily. For now.

Just asking, because the one-hour caught the Swiss franc rather well today.
Hi Claude,
I AM still working on the 1 Hour but find myself caught in the paradox of not knowing whether I should be Trading toward or away from the Tunnel. Visa Vi Daily {Toward} 1 Hour {away}

Bill
  • #62
  • Edited 11:18pm Jan 31, 2006 10:54pm | Edited 11:18pm
I understand that it took me awhile to really understand how importantit is to be going with the trend. This is why I like the tunnel on the one-hour, but now with the one day it seems more countertrend trending to catch tops and bottoms. Not that I'm not trying to do that is just sounds riskier.

Thanks for the quick response Bill
A truly wise man, always has more questions than answers.
  • #63
  • Jan 31, 2006 11:12pm Jan 31, 2006 11:12pm
Quoting Claude
I understand that it took me awhile to really understand how importantit is to be going with the trend. This is why I like the tunnel on the one-hour, but now with the one day it seems more countertrend trying to catch tops and bottoms. Not that I'm not trying to do that is just sounds riskier.

Thanks for the quick response Bill
I really like the 1 and 4 hr. You seem the first to write what i asked before and didn't get an answer (catching tops/bottoms, countertrend trading).

To those trading the daily system, .....is it indeed trying to catch tops and bottoms of the big trends? I know those who try to do it with divergence, and i believe it does have merit....but my past performance tells me to stay away the false entries ate me alive.

Want to learn as many seem to like it. Doesn't the false starts eat into profits a lot?

ALways want to learn....

thanks...

Jim
  • #64
  • Jan 31, 2006 11:19pm Jan 31, 2006 11:19pm
Quoting Claude
I understand that it took me awhile to really understand how importantit is to be going with the trend. This is why I like the tunnel on the one-hour, but now with the one day it seems more countertrend trying to catch tops and bottoms. Not that I'm not trying to do that is just sounds riskier.

Thanks for the quick response Bill
Hi Claude,
Anyone looking at the 1 Hour chart you posted should have no problem in understanding why you were long on the Swissy. But that's the part of the equation that I have not yet been able to resolve in my head. Take a look at the Daily attached to this post. From that chart, would you suggest a direction that I should be trading. I wouldn't. I would be screaming from the rafters "Patience Laddie" and yet you pulled 55 + 89 + 144 Profit on the 1 Hour. I suppose it calls into question the Buy/Sell HOLD theory. That being your profit is related to how long you stay in the market.

Bill
Attached Image
  • #65
  • Jan 31, 2006 11:31pm Jan 31, 2006 11:31pm
I can definitely see what you mean Bill. But have a look at the equity curve on the one our Swiss franc.I have yet to be able to produce such a curve on the day chart. I understand the human brain can do things that a computer-generated system can't, but I like coding putting things down and proving them. I'm still trying to code up the daily with a good equity curve will let you know what I come up with.
Attached Image
A truly wise man, always has more questions than answers.
  • #66
  • Jan 31, 2006 11:37pm Jan 31, 2006 11:37pm
Thanks Claude,
I'm sure that more people than just me would be interested to see that.

Bill
  • #67
  • Edited 10:33am Feb 1, 2006 12:22am | Edited 10:33am
Hi all, the last several posts caught my eye. During my entry into trading over the last year paying several thousand dollars for some excellent mentorship, i must say that "trading with the trend" IS my friend. That said, i don't think i've ever made a by-the-book-trade off the V4hr model.

When first reading through the model, what caught my eye was the magnatism of the FIBO levels. So i began placing them on 10 minute charts as i was trading off the short term charts at that point. I had the levels set up with a 55sma because i'd been using the 55sma for part of what i'd been taught anyway. Then i began taking trades from typical TA setups such as retracement bounces off the 78.6-86.0 levels or break outs to a 1.618 extension (talking swing A-B-C-D stuff) looking at the 1hr chart for direction. I've noted elsewhere that this would yield a fairly consistent 18-20 pips each trade day which i was happy with.

I have no doubt that the FIBO levels off a "Tunnel" can work their magic on shorter time frames, though i'm still a firm believer that it is easier to trade with the general trend than try to pick tops or bottoms.

That said, i use the FIBO levels as areas to take notice, and combine them with standard TA and typicaly only take trades in the direction of the overal trend looking at a larger time frame for that trend. I use the FLs accross many time frames, and am really trying to get away from the shorter ones (sub 1hr) and work off the 4hr, looking to the daily for direction. I'm spending the majority of my study time here in the VWB, and 4hr threads and also the James16Group's sections on price action and psychology. Lots to learn, but trading with the trend still makes more sense to this rookie in stead of trying to find the tops N bottoms.

But i'm willing to study and learn other methods if they are profitable.
  • #68
  • Feb 1, 2006 4:40am Feb 1, 2006 4:40am
Quoting Bemac
Hi Claude,
I AM still working on the 1 Hour but find myself caught in the paradox of not knowing whether I should be Trading toward or away from the Tunnel. Visa Vi Daily {Toward} 1 Hour {away}

Bill
Hi Scott, I don't want to presume but if you don't have the Vegas One hour Doc, I thought I'd attach it here for you.

On second read of above....just had the days first java! Looks like you have read it and are grappling with a tweak! If you don't mind I'll leave it here below for others.

This is a great thread....thanx for starting it!
HJ
Attached File(s)
File Type: doc THE 1HR TUNNEL METHOD.doc   84 KB | 479 downloads
HeavyJ -"Posterboy for Spellchecker!" "Will work for pips!"
  • #69
  • Feb 1, 2006 4:49am Feb 1, 2006 4:49am
Quoting accrete
Hi all, the last several posts caught my eye. During my entry into trading over the last year paying several thousand dollars for some excellent mentorship, i must say that "trading with the trend" IS my friend. That said, i don't think i've ever made a by-the-book-trade off the V4hr model.

When first reading through the model, what caught my eye was the magnatism of the FIBO levels. So i began placing them on 10 minute charts as i was trading off the short term charts at that point. I had the levels set up with a 55sma because i'd been using the 55sma for part of what i'd been taught anyway. Then i began taking trades from typical TA setups such as retracement bounces off the 78.6-86.0 levels or break outs to a 1.618 extension (talking swing A-B-C-D stuff) looking at the 1hr chart for direction. I've noted elsewhere that this would yield a fairly consistent 18-20 pips each trade day which i was happy with.

I have no doubt that the FIBO levels off a "Tunnel" can work their magic on shorter time frames, though i'm still a firm believer that it is easier to trade with the general trend than try to pick tops or bottoms.

That said, i use the FIBO levels as areas to take notice, and combine them with standard TA and typicaly only take trades in the direction of the overal trend looking at a larger time frame for that trend. I use the FLs accross many time frames, and am really trying to get away from the shorter ones (sub 1hr) and work off the 4hr, looking to the daily for direction. I'm spending the majority of my study time here in the VWB, and 4hr threads and also the James16Group's sections on price action and phycology. Lots to learn, but trading with the trend still makes more sense to this rookie in stead of trying to find the tops N bottoms.

But i'm willing to study and learn other methods if they are profitable.

Hi Accrete,

Guess you don't sleep either. All that rain on the roof would knock me out but I guess your immune by now

Good post! I have a lot invested in my 4hrT studies. I am convinced of thier profitability. The one thing that has been missing is the "confirmation" for the rather large corrective moves (counter weekly mommentum trend) which my rules make me sit out. I think the new Daily docs are custom made for this type strategy.

Any thoughts on this?

HJ
HeavyJ -"Posterboy for Spellchecker!" "Will work for pips!"
  • #70
  • Feb 1, 2006 10:00am Feb 1, 2006 10:00am
There is a saying that picking tops and bottoms is a fools game. But is it really?? When you look at any chart you can see a range that the currency has been trading in. Most of the time is spent in a range and the least is spent trending. So to capitalize on condition the markets spend most of the time in you need to determine a way to range trade with the least risk and greatest potential for profit. By the time an indicator based system gives a signal to enter price is most likely close to the middle. The middle of the range is where there is the least directional bias. More like a 50/50 chance it can go long or short so you would need a big stop loss to account for price fluctuations that happen in the middle. Now look at the ends of the range (Channel) and there is a greater chance it will return to the center rather than breakout. Who here has not been caught in a false breakout (fakeout). I believe that entering at the extremes of the channel toward the center gives the lowest risk and highest potential profit. Some stuff on channel trading http://www.trading-naked.com/Channels.htm

Just my 2 pips worth.
Forex Trading: The hardest way to make easy money.
  • #71
  • Feb 1, 2006 11:10am Feb 1, 2006 11:10am
Quoting HeavyJ
Hi Scott, I don't want to presume but if you don't have the Vegas One hour Doc, I thought I'd attach it here for you.

On second read of above....just had the days first java! Looks like you have read it and are grappling with a tweak! If you don't mind I'll leave it here below for others.

This is a great thread....thanx for starting it!
HJ
Hi J,

Hope you don't mind, I dldd 1 Hr Tunnel Doc and added it to Post #1.

btw. I'm not sure if you call me Scott because I am a Scot or if you think that's is my name? My name is actually William {as in Wallace} but everyone except my immediate family calls me Bill. :Smile:

Bill "Freedom"
  • #72
  • Feb 1, 2006 11:17am Feb 1, 2006 11:17am
Quoting Norbecker
There is a saying that picking tops and bottoms is a fools game. But is it really?? When you look at any chart you can see a range that the currency has been trading in. Most of the time is spent in a range and the least is spent trending. So to capitalize on condition the markets spend most of the time in you need to determine a way to range trade with the least risk and greatest potential for profit. By the time an indicator based system gives a signal to enter price is most likely close to the middle. The middle of the range is where there is the least directional bias. More like a 50/50 chance it can go long or short so you would need a big stop loss to account for price fluctuations that happen in the middle. Now look at the ends of the range (Channel) and there is a greater chance it will return to the center rather than breakout. Who here has not been caught in a false breakout (fakeout). I believe that entering at the extremes of the channel toward the center gives the lowest risk and highest potential profit. Some stuff on channel trading http://www.trading-naked.com/Channels.htm

Just my 2 pips worth.
Hi Norbecker,
Great information which, if I'm correct, sounds like you prefer a DTM style of trading as opposed to the 1 hour Tunnel style.

If you don't mind my asking? How do you determine that the Price is/getting ready to leave the extremes of the Channel and head back to the median?
  • #73
  • Edited 1:14pm Feb 1, 2006 1:03pm | Edited 1:14pm
My personal preferences aside I like to guesstimate levels of interest and resistance/support/trendlines because they offer clues to potential changes to the trend. How a trader approaches the placement of entries in relation to these key levels will allow them to be in positions that are optimal.

As an example: Let's say we've identified a trendline on a 4hr chart that has been established by two or three candles and then tested again after the price has traveled to the opposite end of the channel. Now the price is approaching it again as the ranging continues and we've got our eye on this trendline. A trader can use this trendline in many ways to look for entries. It's either a potential 'top' or 'bottom' depending on which side of the channel it is. I've used a TL test in many ways. Knowing that the price is on the way to test you can open a position on the approach anywhere from 25-30 pips away and wait to see if it breaks the TL. If it doesn't you can have your stoploss brought to break even of small gain at that point and be in great position if it breaks. Sometimes I've opened after it breaks knowing that support or resistance is far enough away that it will run at least 40-50 pips before it will possibly retrace allowing me to set my SL with gain or at BE. A TL test doesn't often result in a clean break on the first test. Typically it will break if it's going to on the second or third test. So sometimes I've opened a postion to catch the movement away from a test of a TL. If the price decides to test again I will already have my SL set for BE or small gain. I've found that TL that have been tested a third time and failed typically isn't breaking that group of tests.

How do I decide which is the best method? How the price approaches this TL. How far off is the S & R beyond the TL. How condensed the range has become by the test. Most importantly I look at overall trend and triangle shape. If the trend and triangle are saying the same thing, like it's pointing to a break I probably use the 'join the test' method giving myself at least 25-30 pips cushion. If trend and triangle are pointing away from this test I probably will use the 'off the test' method. Another consideration is the approach. If it's a quick approach with the short term(5,15min,60min charts) S&R far away from the TL, 25pips(a bit more for 60min) or more I usually suspect that it will take more than one test to break if it does indeed break. (note* A 4hr chart test in a candle usually consists of multiple tests when seeing it on a shorter chart.) When supports and TLs converge from different timecharts it can make that TL stronger and I like to play the 'off the test'.

When the price has been cozying up to the TL and has allowed shorter charts to group their supports close to the TL a move now has the support to make a strong break and has a higher probability of succeeding. If there are major supports on longer charts than the 4hr that are on the other side of this TL there is a higher probability of a break especially if it's trending towards it.

Now if there has been a break and we find price covering alot of ground in a short time I start looking for reversal points to close or capture a retrace. These points can be TL from a longer timeframe than the 4hr or more often they are supports on longer charts. EMAs are often really good levels to look for. If you have these EMAs spread out the price typically likes to ping pong between them for a bit. Or what I find happening often enough is a reach for one of these EMAs while the recent ranging tunnel(I use 14 and 20sma for this) on that chart is way back near the breakpoint/TL. I find the price will go make that EMA touch and then range back towards the break point while it waits for the SMA tunnel to catch up if it's going to keep much of the ground it covered.

A good example of that is the move yesterday on the cable. A 4hr TL break(at about 1.7750) a touch of the daily 200ema(1.7835), daily recent range tunnel is back (1.7725,1.7706)at the break, causes the consolidation to happen between the 200ema and the RR tunnel even as the pair remains to look extremely bullish. I would have expected more retrace with that setup but it still offered a great level to short from on a shorter term trade as the pair is still now ranging below 1.78 for the most part. It's also good to note that the price actually spiked to make a return touch on the leading SMA from that RR tunnel.

So trying to find tops or bottoms isn't as difficult as it seems when you have a deeper understanding and insight into the nature of price action as it interacts between supports and resistance from different timecharts. If you have no tech analysis to guide you it would be nearly impossible but time and time again I've succeeded in using TA to find levels to open positions very close to these tops and bottoms. There is so much more I can write about it but now my brain hurts.....I need a break...lol
  • #74
  • Feb 1, 2006 2:17pm Feb 1, 2006 2:17pm
Quoting Pipsta
...So trying to find tops or bottoms isn't as difficult as it seems when you have a deeper understanding and insight into the nature of price action as it interacts between supports and resistance from different timecharts...
And that is why they call you the "Pip Whisperer". ; - )

Great post Pipsta, thanks for the good insights. As you might have gathered from my post i'm just warming up to the idea of taking trades off "Tops" or "Bottoms" initiating a trade against what has been the "trend". I can clearly see that this level of confidence is where i'm heading, and i much enjoy taking my trades now looking at price action and traditional TA rather than say waiting for an MAcross.
  • #75
  • Feb 1, 2006 4:15pm Feb 1, 2006 4:15pm
Quoting accrete
And that is why they call you the "Pip Whisperer". ; - )

Great post Pipsta, thanks for the good insights. As you might have gathered from my post i'm just warming up to the idea of taking trades off "Tops" or "Bottoms" initiating a trade against what has been the "trend". I can clearly see that this level of confidence is where i'm heading, and i much enjoy taking my trades now looking at price action and traditional TA rather than say waiting for an MAcross.
Only after spending a year being a pip screamer! Then a year of pip mumbler.

Everyone loves to be a trend trader. Unfortunately once the trend has established itself and can be identified much of the best positioning has passed. Not too mention if the daily trend is one way, the weekly trend is another way the 4hr trend is a third way.....third way?...anyhoo, which one do you follow? The weekly trend often isn't as day to day effective. Daily trend looks like it should yeild good postioning day to day but if you ignore 4hr trend you could be stopped out of it or in the hole waiting for the longer trend to kick in. Ok, so you decide you're going to use the 4hr chart's trend and that's just when the daily trend seizes control of the price and whoops up on ya...So we should wait for all three to come together and be pointing the same way, right? Right! If you want to be able to trade more than once every couple of weeks a trader might become impatient waiting for the stars to align like that.

I do prefer to let the daily and 4hr trends come together for my ideal entries, it seems the least risky of the common possiblities. As we speak we have the daily chart(cable) looking like it might want to head long(as per slow stoch but it's neither overbought nor mature quite yet)sooner or later and the 4hr chart should be oversold and mature sometime in the next 8 hours. So I'm starting to look at the possiblity of a long trade when the synchonized trends from those two charts manifest itself especially with that pair looking bullish. I will wait on some other confirmation before doing anything.

Right now on the 4hr the hot tunnel, I've been borrowing Vegas's term for two MAs used as a tunnel type alignment(thanks Vegas!), the hot tunnel(5 & 7sma) on the 4hr has actually turned over and is southbound which gives me the reason to pause and wait. The reason I call it the hot tunnel is because a hot moving rate will normally stay leading this tunnel cutting across it is my first sign a move is weakening. The price is also sitting roughly where the 50ema(what I think of as the center of gravity) is at and is inside of the recent range tunnel(gotta think of a better name for it than that...that name just flat out sucks) which I use the 14 & 20sma for. So basically I would say that price is roaming around a pretty secure place and will need some fundamental pressure to get it moved out...when's the next news release? heh

It's funny you mention trying more price action signals instead of MAcross ones and the past couple of days I've been researching MAcross signals...lol. Just using what stuff I have on my charts already I've found that the 7sma crossing the 34sma has some intruiging prospects to it as once that cross is complete the rate seems to get juiced and makes a strong move in the direction of the cross(just looking at the 4hr chart so far with that). Those two right now are 11 pips apart and sinking with the 7sma obviously dropping faster almost crossing. I'm excited to see this cross happen and the implications of it. Of course that implication is contrary to my long thoughts...so I'm kinda wondering which is going to come through. Could it be a run short as per the negative cross till it hits somewhere south of satisfaction and then a reversal to begin the trek long in connection with the 4hr and daily charts turning up? I guess we'll find as next episode on 'as my stomach turns'....

I'm of the belief that there are many many many types of strategies that work it just takes a disciplined trader to find their preference and learn it well.
  • #76
  • Feb 1, 2006 5:04pm Feb 1, 2006 5:04pm
Quoting Bemac
Hi J,

Hope you don't mind, I dldd 1 Hr Tunnel Doc and added it to Post #1.

Not at all "Bill". I can send the 4hr Doc if you want it!

HJ
HeavyJ -"Posterboy for Spellchecker!" "Will work for pips!"
  • #77
  • Feb 1, 2006 5:18pm Feb 1, 2006 5:18pm
Quoting Pipsta
Only after spending a year being a pip screamer! Then a year of pip mumbler.

Everyone loves to be a trend trader. Unfortunately once the trend has established itself and can be identified much of the best positioning has passed. Not too mention if the daily trend is one way, the weekly trend is another way the 4hr trend is a third way.....third way?...anyhoo, which one do you follow?...

I do prefer to let the daily and 4hr trends come together for my ideal entries, it seems the least risky of the common possiblities...

I'm of the belief that there are many many many types of strategies that work it just takes a disciplined trader to find their preference and learn it well.
...

Last things first I guess. On your beliefs... many many types of strategies that work, disciplined Never a truer word spoken.

For All the mathematicians, [no examples given as I think the maticians will understand] have you ever done a relational comparison between The Avg Range of a Weekly Bar and then corelated that to the range of the Daily Bar incorporating Bullish/Bearish Day to determine if the Daily is showing potential Winds Of Change?
  • #78
  • Feb 1, 2006 5:25pm Feb 1, 2006 5:25pm
Quoting HeavyJ
Not at all "Bill". I can send the 4hr Doc if you want it!

HJ
Please do so J. I have it around here somwhere but if you have it handy, kick it on over. I will also place the .mql Models 1-4 in Post #1 then we should be good for a while. {at least till we agree on/or Vegas posts another revelation}

Hope you understand about the name thing. Some of my friends also call me 'Mac'. I'm getting too old to keep track and realize "Oh, He's talking to me !"
  • #79
  • Feb 1, 2006 6:54pm Feb 1, 2006 6:54pm
Quoting Bemac
...

Last things first I guess. On your beliefs... many many types of strategies that work, disciplined Never a truer word spoken.

For All the mathematicians, [no examples given as I think the maticians will understand] have you ever done a relational comparison between The Avg Range of a Weekly Bar and then corelated that to the range of the Daily Bar incorporating Bullish/Bearish Day to determine if the Daily is showing potential Winds Of Change?
A trader who was a mentor to me said something close to that sentiment when I was a newbie and I always remembered it. It allows me to keep an open mind when I'm evaluating strategies. Like how I've never been a MAcross style trader but the tunnel strategies Vegas has introduced has opened my eyes to the potential.

On your second question/comment....wha the fuh are you talking about? I read that like 8 times and I'm not sure I know what you're talking about....but I'm not much of a calculative strategist.
  • #80
  • Feb 1, 2006 7:29pm Feb 1, 2006 7:29pm
Quoting Bemac
Please do so J. I have it around here somwhere but if you have it handy, kick it on over. I will also place the .mql Models 1-4 in Post #1 then we should be good for a while. {at least till we agree on/or Vegas posts another revelation}

Hope you understand about the name thing. Some of my friends also call me 'Mac'. I'm getting too old to keep track and realize "Oh, He's talking to me !"

Here ya go Mac

You can move it from here.....I can't send it PM......Bonehead here!

HJ
Attached File(s)
File Type: doc 4Hr Mommentum Tunnel.doc   188 KB | 644 downloads
HeavyJ -"Posterboy for Spellchecker!" "Will work for pips!"
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