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Leading indicator & Scalping Method

  • #21
  • Nov 22, 2010 1:36pm Nov 22, 2010 1:36pm
Step by Step...

Here is a live trade.. where things went wrong and how I still made profit..

picture by picture (short trade)

Pic 1.) 5M stochastic is in oversold range..

2.) now 1M is also oversold and making lower highs, looks like a reverse

3.) on 10 seconds stochastic is over 50.. so I'm trailing the lows with a Sell order

4.) my sell order is filled.. waiting for 3 pips profit...

5. the 10 Sec stochastic is turning up.. and price is making higher highs I close the trade for 1.8 pips profit...

6. you can see I avoided the pull back...

7. I'm not lying heres the proof .. sell order 1.36040 close trade 1.6022

made 1.8 pips.. thats how I exit.. I would now take the next short trade setup if everything still meets the criteria from step one...

but I am posting to forum so I missed the trade (although the 5M and 1M turned up so there was not much of a short trade left

hope this helps...
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  • #22
  • Nov 22, 2010 2:04pm Nov 22, 2010 2:04pm
Most leading indi is nothing more then an oscillator or an momentum recognizing indi. There is no leading by them or they would need to know future.

Unfortunately they will give a lot of fakeouts. The nature of oscillators is to tell that a particular price movement is always followed by the same reversal. There are some good combination of leading indicators on FF that have been combined by MA as a lagging indi to smooth the lines and vice versa. They provide a better reaction to price movement even if you miss a couple of reversals.

This is the reason I don't use them, except parabolic sar since it has some interesting properties to be out of sinc where there is no trend - basically tells you when there is sure trend when you compare him to PA.
  • #23
  • Nov 22, 2010 2:54pm Nov 22, 2010 2:54pm
This system, whilst looking interesting at first, will unfortunately give a lot of false signals.
  • #24
  • Nov 22, 2010 3:18pm Nov 22, 2010 3:18pm
I haven't really had time to trade today either. Will be watching Asian.
  • #25
  • Nov 22, 2010 5:08pm Nov 22, 2010 5:08pm
Quoting Rikers
Most leading indi is nothing more then an oscillator or an momentum recognizing indi....
I still view the way I use these indicators with MTF to be a lead.. but I am not ignorant enough to not see how to view it as not being a leading indicator..

I like how you view the term leading indicator as "one that would show where price is going to go" that is probably a better term for what a leading indicator should do.. I think the way I use my indicator gives a lead to where momentum is going and currently truly is..

anyways I agree with most of what you are saying.. leading indicator may be misleading term.. but at the very least I think I have a good momentum scalp going on here if you prefer to view my method as such.

Thanks for your insight Rikers,
Ryan
  • #26
  • Nov 22, 2010 5:15pm Nov 22, 2010 5:15pm
Quoting qwertymyfx
This system, whilst looking interesting at first, will unfortunately give a lot of false signals.
qwertymyfx, this is not a system.. it is a method and one thats developing toward a system (hense why I posted to discussion and not systems..)

I would ask that you please provide some screenshots of misleading signals for 2 reasons...

1.)if you post some misleading signs I can improve on this method and..

2.)I personally have not gotten any misleading signs.. in fact almost every signal I got put pips in my direction and at worst it told me when to get out with small loss or a small profit ..which it did with post #21

The only reason I can guess why you would claim false signals is if you think I am trying to pick trend direction.. but the goal is to get high momentum at its current and upcoming maximum strength to capture easy pips...

Thanks for sharing.. but I would like to see a more evidence based post.. it will surly help everyone in the long run..

Ryan
  • #27
  • Nov 22, 2010 5:17pm Nov 22, 2010 5:17pm
Well I trade almost the same way, except, I use M1 and M15 side by side.

And stochastic is a rather bad indicator (because price is not normal distrtibuted and has to be normalised first), so I use RSI(4) and also +/-DI.
And my other essential thing is the good old Bollinger bands with small lag (10 periods).
I never need stop-loss, because the entries are too good. Also I do not look for a particular #pips; I exit when the indicators are at the opposit side or price hits a band.
  • #28
  • Nov 22, 2010 5:34pm Nov 22, 2010 5:34pm
Quoting m.m.m.
Well I trade almost the same way, except, I use M1 and M15 side by side.

And stochastic is a rather bad indicator (because price is not normal distrtibuted and has to be normalised first), so I use RSI(4) and also +/-DI.
And my other essential thing is the good old Bollinger bands with small lag (10 periods).
I never need stop-loss, because the entries are too good. Also I do not look for a particular #pips; I exit when the indicators are at the opposit side or price hits a band.
Great M.M.M.

I have messed with RSI but never was satisfied with it.. I would like to learn more about how you trade.. where do you place your entries in relation to RSI, BB, and +/-DI

finally I personally found ADX to be a big lag of most indicators and not the best one on short time frames.

I will surly look into RSI more..
Thanks,
Ryan
  • #29
  • Edited 6:19pm Nov 22, 2010 6:01pm | Edited 6:19pm
Quoting jmag
I haven't really had time to trade today either. Will be watching Asian.
Hey jmag, I will be joining you..

(long example)
I am also interested to know how this strategy would do if we just look for 5M and 1M signalling buy signals coming out of oversold.. and we scalp every time the 10 sec is below 50 and turning up.. and end our scalp session when ethier 5M or 1M stochostic failing or one reaches the overbought..

let me know your thoughts? it might be easier pips

I'm just curios if the way we traded before has any significant advantage over the idea I just presented?

Also.. when I trade the original method.. if price gets about 1-2 pips in my favor and on the 10sec chart has a low that I can lock in profit.. I will walk my stop loss up the lows until one gets hit.. then I can grab 8-10 pips of profit.. but I take my 3 pips if it suddenly jumps to it
  • #30
  • Nov 22, 2010 6:40pm Nov 22, 2010 6:40pm
but than again walking stoploss might just be break even in the end.. in this example it hit my 3 pip mark.. but I only got 2 since I started walking the stop.. maybe walking stop is just a bit to greedy?

but in the end I got 2.3 pips

image 1.) price failing to go higher on 5M and 5M is overbought... 1M stochastic turning down from overbought which mean 5M will follow (i'm walking my limit sell on the 10 Sec which you can kinda see...

image 2.) is of 10 Sec.. you can see price moved past 3 pips but my stop above the high got hit.. I hit my print screen button a little late.. its a bad pic, but my order got filled at the big red candle after 19:25:30 (I used a 1 pip leeway for order to get filled..)

you can see price never went against me.. right after pic 2 it jumped up and hit my stop that was at 1.36104
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  • #31
  • Nov 22, 2010 6:43pm Nov 22, 2010 6:43pm
The indicators may need a litte bit of 'tweaking'; with the RSI I found median price as input and a period of 4 the most valuable.
Set up like this, the relevant levels are 10/90.
Also I combine RSI and the DIs into one window and size it up, to see every detail of the movement, as it is quite important to me.
And there is one more thing I found important: sometimes or often, price may stay in overbought/oversold condition (or above/below the median) for a prolonged time; than as a reaction, typically next, market will seek to balance this condition by moving in equal parts to the opposit. Therefore imo it is important to not only look at the current state of an oscillator, but also at a somewhat longer period into its past development (to avoid a so called false signal).
As I have noticed that, looking at your charts (@newyear498), you seem to use quite a high zoom on the candles. I would rather zoom out, to see more of the 'whole picture' and more of the indicators, it's like more information.
But everyone must find his own way of course.
  • #32
  • Nov 22, 2010 6:57pm Nov 22, 2010 6:57pm
Quoting m.m.m.
The indicators may need a litte bit of 'tweaking'; with the RSI I found median price as input and a period of 4 the most valuable.
Set up like this, the relevant levels are 10/90.
Also I combine RSI and the DIs into one window and size it up, to see every detail of the movement, as it is quite important to me.
And there is one more thing I found important:...
darn oanda is going to interfere with using median price since they are still in the stone age.. maybe I should look for a free charting software to refer to for more gadgets.. but my overall hopes are to keep it simple and not get into all the crazy 100 of fancy indicators lol

and yeah I am always zooming like crazy.. I zoom out and in to see stuff.. but zoom In when I place limit buys (since you can just click screen on oanda)

but maybe RSI would be better if I could make those adjustments like you said..

Thanks!
  • #33
  • Nov 22, 2010 8:45pm Nov 22, 2010 8:45pm
Newyear, I'm definitely up on trying your 10 sec addition. I'm at the screen now but I'm distracted by Monday night football hoping my Broncs can pull out a win. I might trade a bit after or if not then US session.
  • #34
  • Edited 9:57pm Nov 22, 2010 9:30pm | Edited 9:57pm
Quoting m.m.m.
Well I trade almost the same way, except, I use M1 and M15 side by side.

And stochastic is a rather bad indicator (because price is not normal distrtibuted and has to be normalised first), so I use RSI(4) and also +/-DI.
And my other essential thing is the good old Bollinger bands with small lag (10 periods).
I never need stop-loss, because the entries are too good. Also I do not look for a particular #pips; I exit when the indicators are at the opposit side or price hits a band.
Hey MMM. You may be onto something here. I've been looking at variations of what you posted, and I think I'm likin' the reduced lag bollies quite well. Here's what I'm seeing;

Using only the 5m chart, Bollinger Bands [with 8 period, std dev. +2 settings], I think you can make pips.

• Once price gets above the 8 period centerline (C-L), it looks like you just stay in and ride it up until it comes back down thru the C-L.

• I do have 8-3-3 stochs on the charts, & 4 period rsi, but not sure if they'll be needed.

The 15m & 1m charts just seem to be a mess to me. Of course, I haven't seen your charts so I could be missing alot.

Some observations:
• Always mark s/r, pivots, fibs, etc., on ALL charts to help you to determine potential reversal areas!

• In most cases a wick penetration, of an outer band, signals a reversal.

• Price which is contained by the CL is reason to remain in a position.

• If you're in a longer run (at least 30 pips) you might want to wait for a candle closing below the CL to get out. Or you could get out as soon as the most recent closed candle is breached in the direction opposite of the trade.

• The GBP/JPY does not seem to like this 8 period bollinger band. Maybe another setting would work better on this pair. However, for now, the euro (2 pips) has a higher daily range than the GBP/JPY (Formerly referred to as "The Beast", now "The Wimp" weighing in at 5-7 pips)

• Here's a preliminary list of pairs that seem to work well with this BB config; EUR/USD, EUR/JPY, GBP/USD, USD/CHF. The Aussie pairs look pretty good also.

Looking forward to any and all input. If I'm being stupid, just say so. I've got no problem with taking abuse if I'm learning.

Here's a couple of screen shots:
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  • #35
  • Nov 22, 2010 9:36pm Nov 22, 2010 9:36pm
Wow, do I know how to color coordinate my charts, or What!

Disclaimer: ~ No Specific Religious Content Intended ~ DBW
  • #36
  • Nov 22, 2010 9:52pm Nov 22, 2010 9:52pm
Just found your thread.
These forms of trading have my interest, as I love scalping at every time of the day that I like.

Will read through it over the weekend, made it a habit NOT to mess with my charts during the trading week.

Keep up the good work.
  • #37
  • Nov 22, 2010 10:06pm Nov 22, 2010 10:06pm
Quoting diamonddbw
Hey MMM. You may be onto something here. I've been looking at variations of what you posted, and I think I'm likin' the reduced lag bollies quite well. Here's what I'm seeing;

Using only the 5m chart, Bollinger Bands [with 8 period, std dev. +2 settings], I think you can make pips.

• Once price gets above the 8 period centerline (C-L), it looks like you just stay in and ride it up until it comes back down thru the C-L.

• I do have 8-3-3 stochs on the charts, & 4 period rsi, but not sure if they'll be needed.

The 15m & 1m charts just...
diamonddbw,

Are you suggesting using just the bolinger bands.. following the 8 period is exact same as trading with a 8SMA

please confirm
  • #38
  • Nov 22, 2010 11:43pm Nov 22, 2010 11:43pm
I took a trade just now, and it went against me, but I got out with 1 pip as per your suggestion watching 10s chart. Thx and good job Ny. I will be playing this more tomorrow. 5/5 trades now.
  • #39
  • Nov 23, 2010 5:12am Nov 23, 2010 5:12am
Quoting newyear498
diamonddbw,

Are you suggesting using just the bolinger bands.. following the 8 period is exact same as trading with a 8SMA

please confirm
It does kinda sound that way. The bollies provide some boundaries. So I'm playing cop. If the car (candles) start weaving in and out of lanes, I pull it.

This is new to me also. Any other observations are welcome. Perhaps we can turn this into a work of art, or at least an atm machine.

Attached is a shot (5m) of e/j trade I just took.

• I opened with 2 positions (micros, hey I'm a cheap skate) on the 2nd candle beneath the bearish candle that dropped thru the CL and closed on the lower BB.

• Price had resis @ 113.40, so I was standing by to cancel should price start back up. Since this is a scalp, I look to cancel if price goes above my entry candle.

• The next s/r was @ 113.30. There was some hesitation there, but broke thru and moved nicely to the next support level @ about 113.15. During this move, I pulled off 16 pips on position 1, and moved my stop to BE +1 which was about 2 pips above resis @ 113.42.

• Now price moves back up to resis @ the .30 mark. It close above the CL just by a little, and kinda hung out there. When the 2nd 5m candle closed above the CL, I closed out the trade @ +12 on 2nd position.

Other screen shots are also e/j from yesterday showing 5m, 15m & one hour. This set up looks good all screens. This was an exceptional move. But the BB would have kept you in.

The final shot is an indicator that keeps me up to the minute on currency strengths, commodities, & indices around the world.
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  • #40
  • Nov 23, 2010 7:40am Nov 23, 2010 7:40am
Quoting jmag
I took a trade just now, and it went against me, but I got out with 1 pip as per your suggestion watching 10s chart. Thx and good job Ny. I will be playing this more tomorrow. 5/5 trades now.
I am leaning toward the fact that the original method is best used during a ranging situation.. I wish we could make it work better during a trending situation...

I know the stochastic is originally for range type stuff though so I have some concerns about its trend abilities

open to suggestions.. also open to more price action driven entries.. wouldn't it be awesome if we had a 3 MTF price action driven method? lol no lagging indicators in that situation
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