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Swing trading with heiken ashi and stochs

  • #1,021
  • May 2, 2012 7:38am May 2, 2012 7:38am
Quoting Dildubai
That sounds like a great idea. If we can catch the swing tops and bottoms on dailys and then use hourly chart to fine tune the entry we can keep tight stops. And as you say the TGT could even be 100 pips plus.

Do give us a shout in case you need some help. Although we are still learning I am sure 2, 3 or 4 heads are better than one and we might stumble across a solution to a block you are facing.

Best regards

DD
TGT = target? I'm thinking 200 to 1000 pips on a good daily run.

I'll keep in touch and post lots of charts, the more positive input the better.
  • #1,022
  • May 2, 2012 7:41am May 2, 2012 7:41am
Quoting Dildubai
Someone on one of the threads said that the best way to learn is write your opinion so that others can try and find holes in it. that way you learn more because your opinion is challenged, forcing you to think deeper.DD
I too couldn't agree with this more. Years ago I wrote out my plan which is similar to this one and had my wife and son who have no clue about the markets go over it bar by bar. The exercise was invaluable and to this day some 15 years later, still one of the best things I've ever done.
  • #1,023
  • May 2, 2012 7:43am May 2, 2012 7:43am
Quoting Raggs
Anybody any thoughts on this??
I am short at 1.0315 having bounced off the 1.0350.
Should I have waited for 4H bar to close?
4H Stochs crossing but not in o/b territory
I don't think it's a bad trade. I'm not sure how important the close of a 4 hour candle actually is. If brokers have different times for the close of their 4 hour candles why should you allow your brokers server time define when you take trades? How do you know that is the optimum time to trade? My brokers 4 hour candle closes at 13.00, does that mean I should open a trade directly as NY opens and there is usually big USD news just about to come out? Wouldn't it be better to wait until 14.00 when the dust has settled and then take a directional view? This is part of why I'm considering the hourly charts.

Anyway, I'm short from 1.03471, a sneaky hourly short I didn't post, sorry. Actually sold it just under the 1.0350 resistance level with an 18 pip stop, looks like it should run into the hundreds on the daily.
  • #1,024
  • May 2, 2012 7:51am May 2, 2012 7:51am
Quoting Hugh Briss
...the new idea with momentum rather than trend...
I don't trade Forex but I thought I would throw something out there because it should work the same. For momentum one of the things I've done for years is take a stochastic and rather than base it off price, base it off a linear regression line. The result is that instead of looking at OB areas for shorts and OS areas for longs, the areas now indicate areas of strong momentum. While I'm not a fan of a lot of indicators it might be possible to add this to the current system and may provide additional confirmation of momentum. When I get the time I'll post some charts to show visually the effect of doing this.

I also use a modified Renko chart so it'll display differently than on a time-based chart but it may be worth a little discussion. Or, it may not work at all but I'll do some comparisons and post here. I just thought it might be something a few may try and find some value in.
  • #1,025
  • May 2, 2012 7:54am May 2, 2012 7:54am
Quoting Yogi3o3
I don't trade Forex but I thought I would throw something out there because it should work the same. For momentum one of the things I've done for years is take a stochastic and rather than base it off price, base it off a linear regression line. The result is that instead of looking at OB areas for shorts and OS areas for longs, the areas now indicate areas of strong momentum. While I'm not a fan of a lot of indicators it might be possible to add this to the current system and may provide additional confirmation of momentum. When I get the time...
Outstanding, I'd be really interested to see what you have.
  • #1,026
  • May 2, 2012 8:09am May 2, 2012 8:09am
Quoting Hugh Briss
The volatility on the previous candle would worry me but it definitely looks as though it could work out. I'd get to break even fairly quickly though to be on the safe side.
Ahhhh.... see, light go on all the time THANK you for pointing that out...

Got out with 12 pips so I wont cry -but I can not help but feel my energy's defiantly could have been better spent -
  • #1,027
  • May 2, 2012 8:13am May 2, 2012 8:13am
Quoting Raggs
Anybody any thoughts on this??
I am short at 1.0315 having bounced off the 1.0350.
Should I have waited for 4H bar to close?
4H Stochs crossing but not in o/b territory
Looks like price is sticking at Daily resistance @ 1.0307, if it breaks, next target will be 1.0275. Tighten your stop if you're concerned about a bounce to the upside.

By the way, Hi all like the look of this system. I'm also short on E/J at the moment although strictly a trade off the Daily chart.
  • #1,028
  • May 2, 2012 8:31am May 2, 2012 8:31am
This is a modified Renko chart (called BetterRenko) but I cannot imagine the results on a time-based chart would be so different that it couldn't be tweaked to get the same effect if needed.

This is just a quick and obvious example. The basic idea is that when the linear-based stochastic from the higher time frame is OB there's momentum and you trade the continuations of the stochastic (not terribly different than Hughs system) on the lower time frame chart. As with anything there are a lot of variations but that's the basic idea. For me, I will not go long off the lower time frame without the higher time frame stochastic being OB or short without it being OS.

Again, just something I've used for years and thought I'd throw it out there because it may compliment the system Hugh provided.

I almost forgot, while no setting will make or break something as the settings must agree with our own individual preferences, I use the following:

%K = 6, %D = 2, Smooth = 2 and base it off a 15 period linear regression line.
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  • #1,029
  • May 2, 2012 8:35am May 2, 2012 8:35am
Quoting drzeepfx
Ahhhh.... see, light go on all the time THANK you for pointing that out...

Got out with 12 pips so I wont cry -but I can not help but feel my energy's defiantly could have been better spent -
Keep trying, there's plenty of pips to be made.
  • #1,030
  • May 2, 2012 8:38am May 2, 2012 8:38am
Quoting simmo24
Looks like price is sticking at Daily resistance @ 1.0307, if it breaks, next target will be 1.0275. Tighten your stop if you're concerned about a bounce to the upside.

By the way, Hi all like the look of this system. I'm also short on E/J at the moment although strictly a trade off the Daily chart.
A really good point. Although I've got the round numbers marked those levels are obvious on audusd.
  • #1,031
  • May 2, 2012 8:39am May 2, 2012 8:39am
I look at the"Market" tab at the top of the page quite frequently. When I read that HB is thinking of 1H/D I looked at the following 3 prs (Market has 6H and not 4H - go figure) -
6H 60M
E/$ -37 +5
gbp/$ -34 -5
$/Y -20 -1
So the shorter TF reflects the Now and the daily will give a sense of direction. This would seem to be the way to go but I'm not expert with forex or this strategy so other input is most welcomed by me. thanks all, p.
  • #1,032
  • May 2, 2012 8:40am May 2, 2012 8:40am
Quoting Yogi3o3
This is a modified Renko chart (called BetterRenko) but I cannot imagine the results on a time-based chart would be so different that it couldn't be tweaked to get the same effect if needed.

This is just a quick and obvious example. The basic idea is that when the linear-based stochastic from the higher time frame is OB there's momentum and you trade the continuations of the stochastic (not terribly different than Hughs system) on the lower time frame chart. As with anything there are a lot of variations but that's the basic idea. For me, I will...
Thanks for posting, very interesting, I'll take a look and see if I can get indicators that will do something similar for forex.
  • #1,033
  • May 2, 2012 9:06am May 2, 2012 9:06am
I am short the $/Y based on the 4H TF. Looking at the D 50, 100, & 200 sma, they have been up since Mar. 22 but the HAs have been red (down) from that time on the D. Maybe 1H & 4H is better? Smaller period MAs? Don't know but hope this expands the discussion of best TFs.
  • #1,034
  • May 2, 2012 9:47am May 2, 2012 9:47am
Quoting piprac
second thoughts
It is what it is, work your plan!
  • #1,035
  • May 2, 2012 10:33am May 2, 2012 10:33am
Quoting piprac
I am short the $/Y based on the 4H TF. Looking at the D 50, 100, & 200 sma, they have been up since Mar. 22 but the HAs have been red (down) from that time on the D. Maybe 1H & 4H is better? Smaller period MAs? Don't know but hope this expands the discussion of best TFs.
I think your trade is okay. The daily stoch is kicking up a bit, but I'd say that is just an indication of the previous few bars. H1 and lower time frames show it's sitting on support around 80.10, but H4 indicates some momentum that should break through. Just convinced myself to take the trade at 80.15, looking for 50 pips.
Still learning - No guarantees...
  • #1,036
  • May 2, 2012 10:38am May 2, 2012 10:38am
HB, I haven't had time to really study the last few pages of comments that closely so might not be adding much value here, but Dildubai's AU trade and comments by Yogi & yourself continue to reinforce the advantage of having momentum on your side.

Your original setups with H4 pullbacks off a 100 period MA were not only trading with the trend, but were also trading with momentum. Anything that can help gauge momentum is therefore useful.

I'm still working with D1, H4 & H1 stochastics. The D1 generally indicates the overall trend, the H4 is more an indicator of momentum in the timeframe I'm working in, and the H1 (or lower) fine tunes the entry. S/R levels are and integral part, then comes the news wildcard (got to keep an eye on the calendar...).

This is turning into an interesting (and hopefully profitable) discussion.
Still learning - No guarantees...
  • #1,037
  • May 2, 2012 11:15pm May 2, 2012 11:15pm
Still in my audusd short. I entered just below resistance with a very tight stop. It pulled back to within about 8 or 9 pips of my entry last night but back to 40 or so pips up now. I'm holding this on the daily chart so hopefully this will have a way to run.
Attached Image(s) (click to enlarge)
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  • #1,038
  • May 2, 2012 11:31pm May 2, 2012 11:31pm
I think I have sorted out my strategy now. I love the original system and I still believe it works just fine on it's own but here's my idea for the best way to trade these mtf stochs.

First I look at the daily chart with no indicators but HA candles and stochs. I identify a smooth stoch cross and a HA change. I don't take into account anything else, no s/r, no trend, nothing but the stoch cross and candle change. The idea is that if the daily momentum has turned in one direction there is the potential for a good trend on the hourly chart and that is what we will trade with more precision.

Once you have a clear signal on the daily (look at the audusd chart above), then I go to the hourly chart. On the hourly chart I trade every nice clear stoch cross and ha change in the direction of the trade but, and this is one of the really important bits, I make sure that I am buying near support or selling near resistance (away from not into). I get to break even after 20 pips. I take two trades like this but I only take the second trade after the first is at break even and the second trade is a "free" trade as in if the price does reverse then I am not going to lose anything. Then I swith back to the daily chart and trail the stop losses down behind the top of the ha candle until the trades are stopped out hopefully a few hundred pips later.

The other option is to just trade every impulse move on the hourly chart, ie every clear stoch cross and ha change at s/r and trail the stop behind that banking what pips you can.

I like the idea of the first method but how frustrating will it be to go well into profit like I did yesterday and then see it stopped out? I think I may do a combination of the two and keep the first entry at break even and trail it on the daily chart and then trade every subsequent signal for a quick hourly trade.

So what we have ended up with is more or less the original system but with more attention to s/r and you only trade in the direction of the higher timeframe momentum. Well I'm happy with that. I'll see how it goes and post some results and charts as I go along.
  • #1,039
  • May 2, 2012 11:33pm May 2, 2012 11:33pm
Just sold audusd again at 1.02975 just below resistance. My stop losses for both trades now at 1.0320 so I will still make a small profit on both trades combined if I do get stopped. Hopefully there will be a nice push down now. Once this second trade goes 20 pips up I will move it to break even and move the first trade back up to break even as well so even if the second trade doesn't survive a pullback the first trade will be intact.
  • #1,040
  • May 3, 2012 5:53am May 3, 2012 5:53am
Second aud trade out at break even but looking to get back in on 5 min chart, looks like a pullback to test resistance.
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