Stairstep trading using the SQ dynamic indicator

Good Evening.

I am still long the NZD/USD from this morning currently sitting on 70 pips ( trade #4 ) . The trade was taken long from a channel that formed with the trend. Please see earlier posts. Some of you may be wondering why I have not closed this trade yet. The answer is found on the 4hour chart also mentioned previously.


If you look back the pair has been in a pretty good range (channel) for about the last 30 days. This range is about 140 pips. So in following with my rule of logic this was my logic behind leaving this trade on and moving my stop so I lock in 30 pips.


1) If I run a fib from the current high to the low for today the 38 fib comes in at 8241 and my stop is just below that which is a technically sound area for a stop using traditional technical analysis.

2) There is former resitance now turned support also located in that area (red dotted line)

3) There is now an uptrend that has formed on the hourly chart so I am riding this one with my friend (the trend)

So I have 3 good reasons to possibly ride this one out. The most logical reason I have however is....

A bird in the hand is worth 2 in the bush. I currently have a profitable trade. The pair is attempting to break a 30 day range (channel). That channel is about 140 pips. Given the channel rules. Which are... the break of a channel is equal to that of its range, there is the possibilty that I can earn another 140 pips. So my target on this trade would be 140 pips. I am risking 40 pips. Thats a 3.5 to 1 risk reward.

Will it suck to give up 40 pips yes. It would also suck to close the trade reenter and lose 20, or 30 on my next trade since in the end I will enter another trade and most likely my risk would be just that. So all I really have done is enter another trade and I am risking 40 pips. There is also another consolidation zone forming on this pair.

The one big ax hanging over my head is the CYN data tonight which will greatly affect my trade but I am locked at 30 so I feel good about that.

Oh and North Korea just launched one so that could bring on a risk off mood but again I have 30 locked.

I hope that makes sense.

Stop now moved trailing with 38 fib. 45 locked will now move 10 for 10

Trade # 4 update

I am not feeling real good about that candle of death hanging there. Tighten stop to a trailing 30. so 70 locked.

So I was stopped out at 75 pips and ended up giving back about 25 of what could have gotten. No harm no foul still a good day and week.

I think I am going to call it a week as far as trading. I will try and post my ideas for this method later tonight or tommorow. I think most of you probably already know the way I m leaning however.

Thanks For all the support.

Week ending 4-13-2012

4 trades 3 wins 1 loss net pips gained 114

Biggest loser -23 ( counter trend trade)

Biggest winner 75 ( trend trade )

Thanks to the mods for once again cleaning up the thread. It does seem however that we are reaching more people over on the other side.

As they are now looking at 4 hour charts for information.

Ik nuff said on that

I have taken a long trade on the AUD/USD for a shot at breaking 1.0451 which has been a pivotal point in this pair for a pretty good time now. My out side target is 1.0500.

This trade set up very nicely and a pretty good example of why we cant just blindly buy and sell breaks of a "CZ"

If you look at the chart the break that was signaled as a short was selling right smack dab into the 38 fib on the retrace of teh current upwaard wave.

That trade would have resulted in a loss of about 30 pips using the rule originally stated " there are no false breakouts with this system only trades that hit your stop before your take profit"

If you employed the other rule of " we always have the pivot on the other side to look forward to" then you are now sitting in a trade down roughly 22 pips as I write with the dreaded candle of death hanging over your head. So 2 trades -51 pips so far. If that is not enough reason to simply work out so real rules I dont know what is.

Now for my trade

If you look at the chart you can see the things I referenced in the prior post.

If you look at the chart I waited for a bounce off that 38 fib and then for an uptrend to form. This was valid because I could draw a trendline with 3 points ( I only need 2) consecutively touching the line.

I went long as price reentered the CZ by the time price broke out I had 21 pips of profit if the rule hold true that a channel break will equal the distance then I have a possible 51 pips to be gained on this trade. I only really have to risk 26 if I set the stop below support at the 38 fib (again a technically sound area for stop placement in an uptrend)

So the trade was logical.

Now the contrarian view. Why didnt that same channel break rule apply for teh downward break. truth is i dont know and never will. It broke out but it also broke out into the 38 fib. My thoughts are this.

1) Price is trending upward and it was a steep upward reversal yesterday. These types of climbs have to pause ( see earlier posts and extracts from investopedia posted in this thread)

2) Price retraced on the news ( a great way to get a retrace by the way)

3) Calmer heads prevailed and it "consolidated " right around the 38 fib.

Maybe thats the reason I dont know again sounds logical to me. I am not trying to figure out the markets just trying to think before I pull the trigger.

My entry coincides with the 61 fib of this current move up thru the CZ and the trendline thus far has held. A break of that trendline and the 61 fib will be enough for me to get the heck out of dodge.

Ok so I am out for 5 pips on the trendline violation

Ok so I am now short on the breakout of teh CZ to the down side on the trendline violation

I forgot to put this line on didnt really notice it till now former support now resitance

Ok so I am out with 36 pips It ran its projected course and over shot. No reason to be greedy. Have a great weekend everyone


Week ending 4-13-2012

6 trades 5 wins 1 loss net pips gained 155

Biggest loser -23 ( counter trend trade)

Biggest winner 75 ( trend trade )

Currently short NZDUSD

Interesting charts for the EUR/USD. A break lower of the current CZ would send price to the 38.2 fib retrace of todays move higher which might present a good opportunity to get long the pair.

I will let you guys look at the charts to see what I am seeing

Hi calstar, I must say that going by your screenshots & trades, the strategy looks interesting.

However, as a newcomer I can't see anywhere to download the indicators or an explanation of how the strategy works - what the rules are for entry & exit etc. If I see promise in the system I'd like to write an EA for it but, call me lazy if you like - I really don't want to have to go looking through the old thread & trawling through it in order to make sense of this thread...

I second that. Im new to the system but I generally favor systems based on price action. This one looks promising, and I would like to get on board before there's hundreds of pages to read -- especially of fluff as in the case of the original thread (allegedly)

For the Indicator: Post #52 or; click on the paperclip at the top post (right hand edge of any page) and select hide images.
For the method see post #1; this is a work in progress as the OP feels the referenced thread lacks a clearly defined strategy.

TH

I was stopped out of the short for a 13 pip gain . Unfortunately didnt feel like sitting up all night and missed some good opps all around. For those that took a look the Eur trade refernced played out almost to the exact pip for a long entry off the 38.2

I will pst later today the strategy that I think we should trade this indicator with

As you can see here on the chart there was an original CZ of 30 pips at the asian open. A little research would have shown that a 30 pip run ( from the channel break ) would have sent price to the 38 fib. Once that down trend line was broken a long could have been taken.

Calstar, did you mention that you intend to look at incorporating S&D/S&R into the strategy? Here is why the Euro stalled this morning (no lagging indicators!).

Difficulty in breaking out above 1.31500 shown by Stevefx's HAPPS and THV4 Pivots.

TH

Firstly, thank you. Thank you for a system that is so simple yet so undeniably brilliant! I took my first trade today on the GBP/JPY for 60 pips.

Please also delete this post if it treads on any toes, I mention the sonicR system, but its not in any way shape or form meant to detract from the stairstep system. If anything, I just wanted to see any thoughts on it being used in conjuction with the dynamic indicator to help with exits.

I had a little play around last night to reduce the number of boxes on the pairs I'm using to 2.0 on the indicator, not going to ask if that's right or wrong as I've yet to really trawl through the thread but that's my fault.

I decided purely for information only to have a duplicate chart with the SonicR system on it. This was for trend analysis only but also to help with exit strategy.

I've also got a the pattern recognition master on my main charts to help reinforce my candlestick pattern knowledge.

I used the sonicR today to exit at 1.3018. The next candle was a shooting star and I got out basically at the end of the trend.

Once again, great system much appreciated!