4x Made Hard 1.0

I like to use a period of 24 on the main channel because that covers a full day on the 1h, 2 days on 30 min, etc. But like I said before, it doesn't really matter. The period only determines the sample size. The sample size determines the variance, etc. Stats 101. On some of the screenshots there might be faint channels that are a period of 48 or so.

Everything tends to revert to the mean. Put a channel on the monthly on pound or euro and you can see price hugging the mean. Statistically, when that happens, price is in balance. with period of 24, that rarely happens on intraday, but has happend on the daily for some of those moves that seem to go forever.

I mostly watch the daily, 4h, and 1h charts for direction and the primary levels for entry/exit. I use the 1h and lower for setting the entry orders.
I rarely use market orders with this method.

With 8 charts on the screen, I can trade any style. Scalp, swing, or positional. I've left trades on for weeks while also doing smaller swings.

Once you get the hang of it, it's actually quite clear, absurd as that sounds . Where is price in relation to the channels and which direction are the channels. check against higher frames.

I forgot to add that the green line is the price line. red line is a 3 period ema. I just use that as a simple trigger for price to cross over. In my excel version, there was also a 3 period regression ma. I would only enter when price was above or below both the ma's. But I found myself using limit and stop orders more and more based off of the fractals.

The feint grey lines are the high and low. I've tried using bars and candles for candle patterns like doji etc. But price crossing through a very short ema is a pretty objective signal.

I also saw a cycle bottom on the 4h channel yesterday from the most recent swing lows and I couldn't keep temptation at bay, so I did a squaring on a range of time on a bar chart and it showed some interesting results as well.

I am lovin this thread, thanks and please keep it coming.

I don't trade the USDJPY, but there are signs to start looking long despite poor US dollar fundamentals. I think the key will be the rate change announcement next week.

The monthly chart is coming up off the bottom of the 48 month-1 deviation and has passed through the 24 month -2 deviation which was around the 55 period bollinger mean. I don't expect a massive rally, but perhaps 119.90 - 120.00 area? That's a long shot. So maybe the weekly will show some signs.

The weekly chart has price at the bollinger -2, coming up off of 24 week -2, and the 48 week -2. No where to look but up. The mean of the 48 week is at 119.90-120.00 area. Interesting. That is also the 24 week +2. That area is a little off of the 55 period bollinger mean, but it's close. So maybe not such a long shot after all.

The daily is showing a downward 24 day channel with price approaching the +1 as well as the 48 day +1. However, the last major low was a higher low with price also coming up off of the -2 downsloping bollinger. With the 48, 24, and bollingers all sloping downward, price doesn't have to do much to reach the mean or the +1 and reaching the +1 would be an excellent sell signal. However.....

The 4h is up for the last 24 periods and has been hugging the mean. Price is approaching the 48 period +2 and the bollinger +1.

So given the daily and the 4h approaching +1,+2 numbers, I think the dollar will drop. But with price ending up after today, the daily channels will shift either flat or even slightly upward. Then if price drops like I think it will, price will be coming up off of the bottom of a new shifted channel.

So the key with these charts where price drops to on the 4h and how much the daily channels shift after today's close.

http://img249.imageshack.us/img249/1...ep14uf9.th.gif

The std dev channel indicator I have doesn't plot into the future and my charts do not seem to look like yours...Are you using the std dev channel indicator that comes with MT4?

Also, there is an indicator called Standard Deviation but it plots in a window below price(where a RSI,etc. would plot)...Can this indicator be useful?

Thanks again for this thread...I have always been interested in using cycle analysis in my trading.

I don't trade the Aussie either, but there appears to be a dollar rally building.

The weeky shows price coming up from -2 on both the 24 and 48 week channels. Price is right at the mean of the 24 week.

The daily is at the bollinger mean and the top of the 24 day channel. Partly cloudy with a chance of a drop, but nothing concreate.

The 4h is on the mean of both 24 and 48 bar channels.

The key here is that the daily is at the top of its 24 day channel which is the same level as the weekly 24 week mean. The mean is usually were consolidation is expected and either then reversal or continuation to the other side of the channel. However, the lows are lower and highs are lower. The daily looks like the forming of a head and shoulder if you can ignore the channel lines. If I were to trade this pair, I"d wait until the daily channel turned down and wait for price to rebound to the top of the downard sloping channel. If there were signs that wasn't going to be a rebound, then I'd look for the same pattern on the 4h.

Go into the channel properties and set the "ray" setting. That will put them into the future. I also put up two instances per channel. One at 1 deviation and one at two deviations.

I don't have much experience with the std. dev oscillator indicator. If it's a slope, then it's useful, but would give the same info as eyeballing the slope of the channels. Otherwise, I suppose typical oscillator methods would apply.

Actually smjones, there's a big difference: while all these channels are built on standard deviation from some dynamic average calculation (using the last X bars), the bollinger/SMA channels are more mathematically sound because the standard deviation proofs are done on the MEAN, not the visual "median" or whatever you want to call regression lines. Regression channels are based on the well known least squares method in engineering, which allows you to plot a line from some correlated points on a graph, without needing an equation. It's like a visual best fit thing for your closing prices.

The big difference is that the normal "mean" is how the standard deviation argument is actually proven to be correct on a normal distribution (and you will see that forex prices are not even part of a single, let alone normal, distribution) while any other sort of average you use is not mathematically as sound. It's just not part of the theory. Having said that, it is nice to use a linear regression channel when the price is moving quickly without regard to the bollinger band, because then you are trying to fit the channels to a new mean from a new sample of numbers.

This probably doesn't make sense, but I hope you understand. In fact, the changing market sentiment/data set is why it is so hard to find the right number of bars to use with the std.dev calculation at all times. I use 50, and if you check my "trading manual" I've explained a little there.

Summary: let price action be your dessert, with this stuff as topping.

Best,
-A

Plutonite is absolutely correct on the channels. My original method was based on bollingers which I found visually to be too "rubbery" for 24 periods. I then moved to straight up regression bands. These worked out ok. But the problem with bands is that they are bands. They can fluctuate up an down in the sample period. Not that it mattes, because technicallly, the only number that matters to me is the current bar numbers. However, using a straight line to the 1st period from the current bar is a better visual indication of general direction.

My original version in excel was all about the numbers and not about the charts. All the channels on the chart shows is eye candy.

This system is actually all about price action between levels of support resistence. The std dev and bollingers just provide a different level of support/resistence that is determined mathmatically from past price behavour no different than the concepts of fibs or pivots. I can't replicate the "numbers" in mt4 at this time, so I'm stuck with a chart visual for the information. Another key factor that I haven't gone into a lot here is that the actual orders are set at the most previous peaks/valleys ie what are considered fratals. I replaced the arrow things with a straight line. Although, there are times when I will take a chance on using a limit order to get in if I think price might retrace to a deviation.

I also haven't mentioned the whole purpose of the method which is to define probable range. Knowing that price typically oscillates between the deviations, then the probably range of an average swing is known ahead of time.

Another element for determind probable range not added to the mt4 version in this thread and not shown in the excel version shot below is the way I measured the daily "fill". By figuring out the average amount of pips a particular pair moved in a day, I would keep track of how much of that daily range was "filled". That helped in knowing over time that the euro had moved from 69 pips a day a few years ago to over 100 pips a day average and back down to 90 or whatever. So knowing that it's possible to dial it in even further and get an actual number on what the highs/lows for the day might be and I was usually spot on +-5 pips.

Here is a screenshot of the Excel version. I accidently deleted my last copy before I realized that I had deleted the backup as well. 2 1/2 yeas of r&d down the tubes. *sigh* It was built on the VT api and had live data and live charts. But the CMS data feed sucked and there were brownouts constantly. The api is also a bit of a resource hog. If I ever get the itch, I think I can use the mt4 dde with an mt4 custom function to export price history.

http://img366.imageshack.us/my.php?i...ts102474se.gif

The meat and potatoes was just the numbers. The close, mean and deviations, pivots, and fibs. I would look for a confluence of numbers and those would usually be rock solid. ie +1 deviation was also a fib and a pivot, a fractal high/low, or the deviation or mean from a higher time frame,etc.

A later version included the 3 wavy line oscillator. But again, I designed that oscillator for the numbers.

I kept a journal at moneytec and mirrored it elitetrader. Once I was comfortable with the system I was killing it. Rarely lost a trade and got confident enough to really pile it on when the setups were there with great risk/reward entries. You can search for "4x made hard" at those places and see how the techniques were used. I went into a lot of detail documenting every facet of how I used the system. A lot of the screenies don't work anymore, though.

I found some screenshots that included the daily range stuff. It's at the bottom of the screenshots. These are fro 2005 and 2006.

Notice in the 1st one how the "aggr" number is 136. The GBPUSD back in summer of 95 was averaging 136 low to high per day. The conservative number is 80 pips which was the diff between open and close. So that means that price was retracing a lot in a 24 hr period. The moderate was the average between the aggressive and the conservative.

I would shoot for the conservative as my trade goal per day and almost always got it. Then raise stops and see if the aggressive hit.

That was the precursor to rest of the system. For a while I did nothing but trade off of that daily range section at the bottom hence the colors of red/green for buy/sell. So simple and nothing but price action. Actually, I would look at the pivot point levels for entry and then use the range section for the rest. But also notice how many numbers are highlighted green. I would know not to be looking anywhere but long.

The 2nd screen shot was my attempt to "clean up" the charts a bit. The idea was take the red/green crossovers at or beyond the +-1 deviations. The ma's didn't hug price and were based on regression which is why I liked them. If they had tracked closer to price they wouldn't have been a decent signal. So in essence, they weren't used as a typical ma. I wish I could remember how I designed those because they'd probably be easy to get into mt4. An ma crossover that works. go figure. I think the screenshot was to document an entry off of the 15 min. chart. a crossover at the top of a down channel is a home run. But also notice how the 4h is crossed over and the 1h is crossing over at the mean. I'd have to go back through trade records, but that was probably an add on trade. Again, notice how much red highlights there are. Short would be the only way to go on that day.

I found a hard drive from a pc I tore apart a few years ago and guess what I found on it. No, not porn. My excel system!

The first screen shot is the rates page. This is where I monitor the current rates for all of the pairs that VT offers. I also choose which pair to chart and monitor any system messages generated by the api.

http://img521.imageshack.us/img521/8...17Sep15.th.gif

The 2nd shot is the primary screen. On the left are the charts and channels. Price is green, red is a period 3 ema, yellow is a period 3 regression ma. The values for those trigger buy/sell/hold/wait signals on the right side of the page in the data. The feint gray lines are the high low. I like to see if price touches a channel line and see if there are wild swings going on. The red and green horizontal and sometimes angles lines are the high/low swings or fractals. I use those breakout enty levels. They also work well as stop placement levels.

http://img521.imageshack.us/img521/5...ep15rp9.th.gif


The oscillators are a trend detection oscillator I designed. It's very simple as well. The green is the fast line, yellow medium, and red is slow. I typically use the green crossing or getting rejected at 0 as a heads up and if the yellow crosses, a change in direction is on or things might be flattening out. If the red is crossed, direction is definitely changed. I could probably lose them all except for the 30 minute. It seems to work the best. This last screenshot is a screen that uses only the oscillators as charts and the rest is just the numbers.

http://img521.imageshack.us/img521/5...20Sep15.th.gif

The 3rd screen is the moving average crossover method where I would only look for crossovers at or beyond the +-1 deviations. There are no yellow status indications. Just red or green. As you can see, there is a crossover right now on the 1h. Time to short, eh? The aqua line is price.

http://img521.imageshack.us/img521/3...18Sep15.th.gif

The key to everything is the numbers on the right. There are sections for each time frame showing the values of the channels, the spread between the +-1 deviations and +-2 deviations, the fractal levels, and bollinger levels that aren't shown on the chart. There are also some AG forward shifted ma values.

It sounds like a lot of BS but once you watch it for a day or two and get current with what is going on price wise, it's easy to focus on the 20% that is relevant and ignore the other 80% that isn't. Plus, there will be certain numbers that show up all over the place. For example, on the 2nd chart, look at how often the range 1.3871-1.3877 shows up. Is it a coincidence that price closed at that level?

I also have a screen of candles and standard oscillators.. rsi, stoch, macd, and bollingers with bill williams alligator lines. The data for the bollingers and alligator lines are in the main data sections. I just didn't want to clutter up the charts anymore than they already are. But again, it's the numbers that matter. At the bottom of each chart are volume looking bars. Those aren't volume but the candle's high to low range and direction as indicated by color. The daily chart is a visual of the daily fill data described below. You can see that over the last 55 bars that the range has been getting shorter. Exhaustion?

http://img521.imageshack.us/img521/5...19Sep15.th.gif

And lastly, look at the bottom of the 2nd shot. The euro is only putting in an average of 88 pips high to low on a daily basis. The open to close average is only 46 pips. On Friday price filled 112% of the conservative range. 43 pips is the spread between the +-2 deviations on the 15 min. chart while the +-2 spread on the 1h chart is only 35 pips. Not a whole lot of range to be trading unless you're swing trading. But even then, the 4h spread of 65 pips +-1 deviaitons isn't a whole lot either.

If I had some free capital, I'd be looking for a price on the 1h to close below the red and yellow ema and/or the green oscillator to close below zero. All of the top row lights on the 1h data section would be red and that is as good a sell signal there has ever been. All of the probabilities would be in favor.

Also, look at the candle screen. Price is coming down off the daily +2, 4h +2, and 15m +1. It's at the mean on the 1h, but there is the famous bollinger squeeze going on there.

So that's how it all works. There are setups that I watch and as time goes on, I'll document what those are. Unfortunately, because of the multiframe nature of the system, it's impossible to go back into the past and replay how things panned out unless I take a lot of screenshots.

Here's a shot of the current guppie status. Not a lot of good tradeable info right now. Mixed signals all over. I'll be looking to get out of the shorts I have on right now. Some in profit. Some in the red.

But wow... look at the daily high to low range. 393 pips. That's a lot of pleasure or a lot of pain depending on which side you're on. 8-12 spread depending on your broker is nice bite as well.

The status is red for sell or stay short from the daily to 1h. Price is at the mean in a down channel on the 1h, so that's a good sign. Price is also coming through the mean on the daily.

http://img521.imageshack.us/img521/3...ep15jt4.th.gif

I'm heavily short pound from the top. My cycle analysis put 9/13 as the day and it's paid off nicely. Here are how things are playing statistically.
The chart below is red all over the place.

All channels are down except for the daily. Price is the the bottom of the 4h and at the mean on the 1h. A key number here is that the +1 1h is nearly the same as the mean on the 4h. So for price to go through the mean on the 4h, it would have to reach +2 levels on a downard 1h channel. Highly unlikely in my experience. On the other hand, because the channels are down, price doesn't have to do much to traverse them and that causes the channels to flatten out if the inactivity lasts for while. In that case, +2 on the 1h is more likely, but just provide another short opportunity.

The daily hight to low range is a healthy 147 pips. Friday put in 131.47% of that for a whopping 193 pips with only 7 pips of retrace. Until the euro gets up to at least 95 pips, I think I'll be sticking to the pound and the rare guppy trade. I do expect more retrace though.

I'll be looking at 2.0040 as the resistence line to short if broken. Also looking to short on a retrace to the 2.0225 area on a confirmed short signal off of the 15 min. chart.

http://img264.imageshack.us/img264/7...ep15og2.th.gif

I don't think I've ever looked at GBPCHF before, but it's setting up to be a home run short. For this pair, I'll start with the long term charts first.

Typically, price coming up off the bottom of an up channel is a grand slam pennent winning home run. Especially on the monthly chart. Buy with a little margin and buy every dip until the top of the channel is reached. On the monthly, that might come around once a year and is how fortunes are made.

However, in this case, the weekly chart is showing all of the reversal signs. The channel is flattened, the most recent is high is lower than the previous high and the most recent low is lower than the previous 4 or 5 lows.

Add to that the flattened daily and downward committed 4h and the overall reversal is on.

http://img264.imageshack.us/img264/6...ep15bk1.th.gif

Switching to the primary screen, it's time to add tactics to the short strategy. The high to low range is 191. Very healthy to make up for the higher spread.

http://img264.imageshack.us/img264/3...ep15fa6.th.gif

Price is below the mean on the 4h, and bottom of the 1h and 15 min. The daily is irrelevent because it's flat and is of no use until it pivots down. However, there is one key number off of that chart and it's 2.400. Look around and figure it out.

So in the mean time, I'm going to sit back and wait until price is at the top of all of the channels and then pour it on. 2.3760 is the breakout sell level from the long term chart. There will be closer short term breakouts on the smaller frames when things setup.

I can guarantee I've never looked at CHFJPY. But it is already in long term short mode off of the weekly with the price setting up for some nice shorts on the daily on down.

As with the last pair I looked at, price is coming up off the bottom of an up channel. But look at how deep the last low was. The weekly chart is in full blown short mode and price rising up in a down channel and nearly to the mean. The tell tale sign is the daily. It's at the top of an up channel. The 4h is up, but not making higher highs.

The typical price movement is a 1-2-3 pattern with price consolidating the 2 at the mean. If this is the case on the weekly, then the up channels on the daily represent the "2" and the retrace/consolidation. Therefore, it's time for the "3" leg and a short that could run for a few weeks.

Dropping to the main screen, Price is at the top of the downward 1h channel. Nothing to do but short the crap out of it. The 15 min window gives a nice breakout level of 96.75.

On the 4h, price was rejected at the mean and the last 3 highs were lower highs.

http://img443.imageshack.us/img443/5...ep16yu8.th.gif
http://img443.imageshack.us/img443/6...ep16mp8.th.gif

I closed most of my shorts on the GBPJPY with 100 pips or more per. Price is at the bottom of the 4h and 1h downward channels. I'm going to wait for a confirmed short signal off of the top of the 1h or if it turns up, the top of the 4h charts.

Short chfjpy at 96.87.
sell stop on gbpchfg at 2.3775
buy stop usdjpy 115.02

I updated to Office 2007 and now my excel app doesn't work. *sigh* I might go back to 2003 when I'm done with this class I need 2007 for.

Anywho, GBPJPY is in short mode since last week. Since I've been away, I missed the top, but picked up a nice move last night.

Weekly is coming off of the top of a down channel. That is a home run signal.

My triggers were the 4h and 1h with price coming off of the top their respective down channels.

A general rule of thumb I learned is to watch for 3 consecutive lows and then look to get out. A 4th low would mean a cycle inversion. Opposite applies to highs. On the 1h there are 3 distinctive consecutive lows so I'm trailing stops. I won't look to short until the 4h gets to the top of the channel again.

I think the overall trend will bottom out or pause at the 225 level.

Hi JR97,

I have been reading your posts after finding out about your trading techniques from Bemac... Love your work!! And love how price comes back to the mean! I just have a quick question regarding the std dev periods. For example if your using a std dev with a period of 24 or 48 on your daily do you move the anchor up 1 bar at the close of the candle/new day? Or do you leave the channels where they are?

Thanks JR97, am enjoying your threads.

Cheers

Jeff

Jeff, I programmed the channels to update on every bar close.

I haven't used this method in quite a while. In fact, I'm not even sure if I have my custom channels saved anywhere. But looking back, I really enjoyed developing and using the method. Maybe I'll revisit it in the next few months.