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Flag trading the trend

  • #4,241
  • May 5, 2011 8:03am May 5, 2011 8:03am
Quoting Ultimatus
You can see here in this screen shot, the two bars before the one I entered on are also +50 on the CCI but the Ret Setup did not pick them up (was not a green bar).
While the news is on and the central bank heads are talking I checked out both CCIs and they appear to be working in the area that you showed. I am not an expert in indicators so maybe others can help you. Ray
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  • #4,242
  • Edited 3:59pm May 5, 2011 8:14am | Edited 3:59pm
Quoting Rcwso
Ultimatus,

to be honest I stopped using the Ret Setup version....
You're right RCWO. Listen guys after many years of trading the FOREX and many years trading with Div i've learnt one thing--Keep It Simple Stupid (KISS).

Try and avoid the urge to add another indicator---the closer to PA you get, the more success and longevity you'll have as a trader.
Just use what Divergence uses.

Keep hopeful and drill the set-ups. Div and I have spent 1000s of hours at this and been through every which-way and every indicator.
He's a great guy and you are luckier than you know to have him as a mentor IMHO.

Gray.
  • #4,243
  • May 5, 2011 8:38am May 5, 2011 8:38am
Quoting gtrade
You're right RCWO. Listen guys after many years of trading the FOREX and many years trading with Div i've learnt one thing--Keep It Simple Stupid (KISS).

Try and avoid the urge to add another indicator---the closer to PA you get, the more success and longevity you'll have as a trader.
Just use what he uses.

Keep hopeful and drill the set-ups. Div and I have spent 1000s of hours at this and been through every which-way and every indicator.
He's a great guy and you are luckier than you know to have him as a mentor IMHO.

Gray.
Thanks for the words.

I am simply trying to make the point that with this indicator or any indicator you need to verify the rules and setups. No indicator is 100% accurate. If we could build perfect indicators and EAs we would all be millionaires. We would just turn them on and go golfing all day.

The indicator in question is a valid and good indicator. I stopped using it because I personally blindly trusted it and found that I missed setups because there were some valid bars that did not change color. That is my experience and my own fault. To take one more visual factor out of the game and make it more simple I stopped using it. Use it and verify like with anything.

And thank you for your time and effort into sharing as well. Great mentors are a very rare commodity.
  • #4,244
  • May 5, 2011 9:35am May 5, 2011 9:35am
Quoting Ultimatus
You can see here in this screen shot, the two bars before the one I entered on are also +50 on the CCI but the Ret Setup did not pick them up (was not a green bar).

so far i am happy,,and i check on it ,,and i c it in my case rather to check on 2.4 from MA....i guess u checked the distance magnified and sure , brokers vary...
mine was just fine,,2 greens,,and the first one was further then 2.4.
cheers
i ll keep checking
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  • #4,245
  • May 5, 2011 9:45am May 5, 2011 9:45am
Quoting Ultimatus
You can see here in this screen shot, the two bars before the one I entered on are also +50 on the CCI but the Ret Setup did not pick them up (was not a green bar).
Ok, got it...

Here's mine setup that looks a bit different.

There were a couple of versions of retracement finder. I'm using the modified one that shows histo green/red when bar exceeds -50/50 area (on close) ...and when it plays in the middle (-50;50) it is grey.


Cheers.

P.S. I comprehend the idea of using histo in a way that we need the indicator reading above 50 / below -50 on close when price closes above/below SMA. I've seen many times CCI skyrocked upto 100 then diving below 50 for longs - and that particular setup wouldn't count as the valid one. Those were the ones I missed.

EDIT: I am not showing a setup - just comparing the screens with Ultimatus'
Attached Image
  • #4,246
  • May 5, 2011 9:45am May 5, 2011 9:45am
Chaps,
I am a little confused as to when to stop taking trend trades.

Today for example I have seen divergence all over the place, and on a number of occasions i exited flag trades when divergence showed up and those particular trades would have gone on to become monster winners. Also I have not entered flag trades when i have noticed divergence only to watch those trades become wildly successful.

Looking at large trends i note that divergence is present around the trend, yet the trend continues.

Gray/Divergence, your thoughts would be most appreciated!

Many Thanks,

Pure
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  • #4,247
  • May 5, 2011 9:50am May 5, 2011 9:50am
Quoting PureSymmetry
Chaps,
I am a little confused as to when to stop taking trend trades.

Today for example I have seen divergence all over the place, and on a number of occasions i exited flag trades when divergence showed up and those particular trades would have gone on to become monster winners. Also I have not entered flag trades when i have noticed divergence only to watch those trades become wildly successful.

Looking at large trends i note that divergence is present around the trend, yet the trend continues.

Gray/Divergence, your thoughts would...

My guess is that strong news beats divergence
  • #4,248
  • May 5, 2011 10:51am May 5, 2011 10:51am
Quoting PureSymmetry
Chaps,
I am a little confused as to when to stop taking trend trades.

Today for example I have seen divergence all over the place, and on a number of occasions i exited flag trades when divergence showed up and those particular trades would have gone on to become monster winners. Also I have not entered flag trades when i have noticed divergence only to watch those trades become wildly successful.

Looking at large trends i note that divergence is present around the trend, yet the trend continues.

Gray/Divergence, your thoughts would be most...
I'll take a swing at this. The first two instances of divergence on your chart are when price action was flat. That's not really divergence, it's known as neutralization. When price goes sideways during quiet periods in the market oscillating indicators like MACD, etc., have a tendancy to "neutralize", or head back to a central or neutral position, so it's not indicating a divergence, just a settling down. Neither of those would've been retracement candidates anyway.

On the last one to the right, you're attempting to draw divergence on a one candle pullback. You might have been better off to extend your price trendline all the way to the last low on the chart.

Peter Bain of Forexmentor has excellent teaching on neutralization. I hope that's helpful.


Richard
  • #4,249
  • Edited May 6, 2011 8:57am May 5, 2011 10:14pm | Edited May 6, 2011 8:57am
VERSION 3 is the most current PDF for the Flag The Trend Trading as of Friday 6 May, 1340 GMT
VERSION 2 is the most current PDF for the Flat the Trend Trading 123 as of Friday 6 May, 1340 GMT

EDIT: 6 May Friday - I have posted VERSION 3 of the Flag the Trend Trading. The changes are as follows:
Uptrend picture replaced with downtrend picture-impact-NONE
Two typos: CCI < 50 changed to CCI <-50 on the downtrend picture and CCI > 50 changed to CCI <-50 on the downtrend rules page. Impact-could be significant if people did not understand the rules.

EDIT: 6 May Friday-I have posted VERSION 2 of the Flag the Trend Trading 123. The changes are as follows:
Two typos: CCI < 50 changed to CCI <-50 on the downtrend picture and CCI > 50 changed to CCI <-50 on the downtrend rules page. Impact-could be significant if people did not understand the rules.

Attached are two new PDFs. One is based on the "tweak" rules. One is basic information and rules for 123 setup trades. An additional PDF with a detail explanation of 123 trades is added (this was previously posted in this thread). The additional PDF does not cover Divergences rules or setups and was not written by me.

Disclaimer: I am not an expert in this system. I have been learning from day one like many of you. I have written these PDFs as well as the previous to help me understand and learn this system better. Both of the PDFs I have created follow the exact rules to Divergences systems. He as verified the rules and setups. The 2.4 pip rule is explained in both PDFs and is accurate and verified by Divergence. These PDFs do NOT cover every single situation or circumstance, especially with the 123 setups. It is still up to you as an individual to interpret the system, trade the system and manage your account. By following Divergence's rules in the PDFs you will have a higher probability of successful trades but no system is guaranteed 100% of the time. Again, these are the pure rules to the system. If you have tweaks or modifications to this system, please pass them through Divergence and don't disrupt the meaning/intent of this thread. This thread is intended to stay pure to the rules and guidelines Divergence has been so kind to share with all of us.

I hope the attached PDFs will be of value to others and help many to understand/learn the rules of this great system.

If there are any errors noted in the PDFs, please let me know and I will make the appropriate fixes.
Attached File(s)
File Type: pdf Flag the Trend Trading v3.pdf   950 KB | 3,000 downloads
File Type: pdf Flag the Trend Trading 123 V2.pdf   168 KB | 2,730 downloads
File Type: pdf 123 trading signal.pdf   1.1 MB | 1,598 downloads
  • #4,250
  • May 5, 2011 10:24pm May 5, 2011 10:24pm
Below is a trade I took this evening on the GU. It setup as a 123/123. It triggered and I was a winner out in about 25 minutes.

Issues anyone sees or questions?
Attached Image (click to enlarge)
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  • #4,251
  • May 5, 2011 11:51pm May 5, 2011 11:51pm
Great work RC!!!
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  • #4,252
  • May 6, 2011 3:02am May 6, 2011 3:02am
Brilliant. Thank you for your hard work and willing to help others. Great.
  • #4,253
  • May 6, 2011 4:53am May 6, 2011 4:53am
Very good work with the PDFs RC

Helped me a lot with the 123 rules esp with:
Set-up bar requirements

–

The LOW of the set-up bar (sub) must be within 2.4 pips of point 2 of the 123 OR it must take it out completely.

For some reason, I missed the "OR it must take it out completely." in my understanding.


Once again, many thanks for your hard work. Ray



  • #4,254
  • May 6, 2011 7:50am May 6, 2011 7:50am
Thanks RC!
  • #4,255
  • May 6, 2011 7:57am May 6, 2011 7:57am
Quoting Rcwso
Below is a trade I took this evening on the GU. It setup as a 123/123. It triggered and I was a winner out in about 25 minutes.

Issues anyone sees or questions?
Hi Rcwso,

Well done for spotting a good trade; you can retire just trading that pattern.

My analysis of that trade was it ticked most boxes but I would have liked it to pull back more on the 123 and not drift down.
The most successful trades of that set-up need to be taken as close to the top of the turn as possible as we can't be sure that they will unfold in a 5 wave in our direction.
Obviously, if you get that trade off a good resistance line and you see divergence in your favour then you are even more confident.

to take the trade past the initial opportunity on another pull-back I would need a significant prior low to be taken out and retested before I would enter.

Gray.
  • #4,256
  • May 6, 2011 8:01am May 6, 2011 8:01am
Nicely done, RC!
  • #4,257
  • May 6, 2011 8:14am May 6, 2011 8:14am
I re-posted the Flag the Trend Trading V2 PDF. There was an error in one of the pictures. I had posted an uptrend picture in the downtrend section. No Text or RULES have been changed. The corrected picture version is attached on the original post.

Vince, Thank you for catching the mistake and letting me know.

Again, nothing changed other than swapping an uptrend picture to a downtrend.
  • #4,258
  • May 6, 2011 8:15am May 6, 2011 8:15am
Quoting Rcwso
Attached are two new PDFs. One is based on the "tweak" rules. One is basic information and rules for 123 setup trades. An additional PDF with a detail explanation of 123 trades is added (this was previously posted in this thread). The additional PDF does not cover Divergences rules or setups and was not written by me.
Hi Rcwso

thanks for the updated PDF's - noticed 2 slight mistakes

Standard Flag Trading PDF - In the page of Down Trend Rules, it says the CCI must be > 50, this should be "CCI must be < -50"

123 Trading PDF - In the page of 123 setup in a Up Trend (ie. countertrend 123), it says CCI must be < 50, this should be "CCI must be < -50" (the negative sign was missing)

Of course anyone who has been following the thread should know that these are typos, but you never know.

Can you confirm that the SUB for a 123 can NEVER be also the point 3, I know in theory that the point 3 bar generally isn't, but if the point 3 bar has a high/low within 2.4 pips of point 2 and passes the CCI & SMA requirements - why couldn't it be classed as a SUB?

Regards, and again thanks
John
  • #4,259
  • May 6, 2011 8:17am May 6, 2011 8:17am
Quote
The LOW of the set-up bar (sub) must be within 2.4 pips of point 2 of the 123 OR it must take it out completely.

For some reason, I missed the "OR it must take it out completely." in my understanding.

Once again, many thanks for your hard work. Ray

Yes, that rule specifically was one of the ones I inquired with Divergence about. I had that question as well as a few others I have had discussions with on this forum. It helped to clear things up for myself. It also makes sense. Why wouldn't it be valid if it went completely through point 2. As a matter of fact, there are many traders that trade that exact setup, meaning that they wait for the break of point 2 to enter. Basically a fractal breakout trade. Regardless, we now have the rule and understanding how it plays in this awesome system.
  • #4,260
  • Edited 8:46am May 6, 2011 8:25am | Edited 8:46am
Quoting jmw1970
Hi Rcwso

Can you confirm that the SUB for a 123 can NEVER be also the...
The rule about sub in a 123 cannot be point 3 also is a direct quote from Divergence here on the thread. post # 3286 "point 2 can also be point 3 but never 3 & s u b." That is where I got it and so I listed it as an extra rule. I haven't seen too many cases where this is even an issue.
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