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Swing trading with heiken ashi and stochs

  • #1,261
  • May 19, 2012 8:42pm May 19, 2012 8:42pm
I love this method for how simple it is and it has been a big success with me but you have to be aware of major support and resistance areas before you enter a trade.
  • #1,262
  • May 19, 2012 11:09pm May 19, 2012 11:09pm
Quoting Hugh Briss
I'm going to be keeping an eye on this closely over the next few weeks. If this sets up right it could be my next big trade. Only one concern is the negative swap paid on the pair but I won't be holding for more than a week or two maximum anyway.
Hugh, I had four shorts last Wed (Aust time) - 2 x AUDUSD and 2 x AUDJPY. On Thursday morning while I'm going work, there is a triple rollover charge that took about half my profit - slightly annoying as they were good trades!

The AUD has the highest official interest rate (currently 3.75%) so when selling against a currency that has a rate of close to zero, the cost can add up. Exact opposite of the carry trade that has often kept the Aussie up & probably will again. Particularly popular with Japanese housewives so I understand.

You know this, but perhaps some others are not so aware (like me who forgot last week...ended up closing these at a small profit out of frustration prior to the real move kicking in!).

I haven't checked but assume this is the same everywhere (with perhaps slightly different times).

Quote from the Go Markets web site:
http://www.gomarketsaus.com/what-is-...ollover-rates/
Spot Foreign Exchange Swaps and Rollover Rates

When trading in spot Foreign Exchange (Forex) and Metals, trades are settled two business days from the entry date. As trading through GO Markets does not involve physical delivery all trades left open at the end of a trading day (23:59:59 server time/07:59:59 AEST) will be rolled over to a new value date and as such will have exposure to a swap charge or credit.

It is important to note that for trades held open from a Wednesday to Thursday as per the server time, the value date is moved to Monday due to the weekend. This means the rollover at the close of Wednesday's trading will be three times the usual amount.
Still learning - No guarantees...
  • #1,263
  • May 19, 2012 11:11pm May 19, 2012 11:11pm
Quoting Acroix70
I love this method for how simple it is and it has been a big success with me but you have to be aware of major support and resistance areas before you enter a trade.
Very true.
Still learning - No guarantees...
  • #1,264
  • May 20, 2012 12:30am May 20, 2012 12:30am
Quoting Hugh Briss
I'm still trying to decide whether to wait for the signals in the direction of a daily trend or not. I'm guessing they would be excellent signals but you wouldn't get too many of them. Either way usdchf is an exact mirror of eurusd at the moment. Eurchf has been flatlining for weeks.
The EURCHF bounced after the SNB declared they would defend the 1.20000 level. It went up for a while then has gradually dropped back to 1.20000. Prehaps the SNB is defending this level again. If that is the case, then the CHF & the EUR may go down together!

Looking at the EURUSD, there could be a short term bounce, but I'd say the odds are this should go down in a big way soon with everything that is going on in Europe.

The USDCHF, as you said Hugh, is mirroring the EURUSD (at least to a degree). Despite the pullback on Friday, it could still head towards 0.96000 and if it breaks that, then continue up to ..wherever.... This would be consistant with the fall in the EUR.

Looks to me like the technicals are logically following the fundamentals at the moment.

Of course, that is pure speculation.

London open Monday might make it clearer.

Ozefex
Still learning - No guarantees...
  • #1,265
  • May 20, 2012 1:57am May 20, 2012 1:57am
Quoting Acroix70
I love this method for how simple it is and it has been a big success with me but you have to be aware of major support and resistance areas before you enter a trade.
It makes sense to draw the major daily s/r levels but don't get too hung up on the hourly levels, these are usually minor at best. The daily levels can give you an idea of where the price is going and where it shouldn't go for your trade to work. To be honest though these levels only hold or are even respected in any way 50% of the time so it makes more sense just to focus on the trend and the heiken ashi signals.

I'm going to spend some time on the simulator with some previous years data and see how many times a good daily signal occurs and how many times that leads to an extended run of heiken ashi candles (which in turn gives us a good hourly trend to trade). If I can find anything else that "predicts" a run of heiken ashi candles on the daily then I'll look into that too.
  • #1,266
  • May 20, 2012 1:59am May 20, 2012 1:59am
Quoting Ozefex
Hugh, I had four shorts last Wed (Aust time) - 2 x AUDUSD and 2 x AUDJPY. On Thursday morning while I'm going work, there is a triple rollover charge that took about half my profit - slightly annoying as they were good trades!

The AUD has the highest official interest rate (currently 3.75%) so when selling against a currency that has a rate of close to zero, the cost can add up. Exact opposite of the carry trade that has often kept the Aussie up & probably will again. Particularly popular with Japanese housewives so I understand.

You know this,...
Yep, don't forget the swap. Even though the interest rate differentials are relatively high carry traders will be taking profits on their huge long positions and this is part of why the aud and nzd has been dropping. It's probably also commodity related and the australasian economies are slowing a little anyway. Take a look at the weekly chart of audjpy and draw the 72 level. Long from there anyone?
  • #1,267
  • May 20, 2012 2:06am May 20, 2012 2:06am
Quoting Ozefex
Hugh, I had four shorts last Wed (Aust time) - 2 x AUDUSD and 2 x AUDJPY. On Thursday morning while I'm going work, there is a triple rollover charge that took about half my profit - slightly annoying as they were good trades!
Mind me asking how many pips total were on the four trades? I wanna get an idea of the size of swaps and it's impact on trading.
  • #1,268
  • May 20, 2012 2:08am May 20, 2012 2:08am
Quoting Ozefex
The EURCHF bounced after the SNB declared they would defend the 1.20000 level. It went up for a while then has gradually dropped back to 1.20000. Prehaps the SNB is defending this level again. If that is the case, then the CHF & the EUR may go down together!

Looking at the EURUSD, there could be a short term bounce, but I'd say the odds are this should go down in a big way soon with everything that is going on in Europe.

The USDCHF, as you said Hugh, is mirroring the EURUSD (at least to a degree). Despite the pullback on Friday, it could...
I think the SNB's policy of a floor at 1.20 could be part of what has been supporting the eur for so long. The CHF economy just isn't as weak as the eurozone so for eurchf to remain above 1.20 the SNB have to weaken the chf artificially. There's no doubt that traders have been supporting eurchf above 1.20 because as soon as it reaches that level there will be big enough buyers stepping in in anticipation of an intervention by the SNB. This buying on it's own is doing the SNB's job for them. I wouldn't rule out the idea that the SNB hasn't been intervening subtly along the way too though. Usually a central bank intervention looks like a spike to the moon but a subtle drip of euro buying and chf selling could be taking place and that on it's own will affect the price of eurusd as well. I'd forget all about usdchf and eurchf at the moment, you can't trade them technically because of the 1.20 floor and usdchf is being manipulated. Best just to concentrate on eurusd for now which although there is a strange effect on it, like the moons gravity on the earth, it is trading relatively technically and fundamentally as it should.
  • #1,269
  • May 20, 2012 2:13am May 20, 2012 2:13am
Quoting jeanlouie
Mind me asking how many pips total were on the four trades? I wanna get an idea of the size of swaps and it's impact on trading.
The pips won or lost makes no difference to the swap, it is calculated on the position size. Your broker should be able to provide you with a list of the current swap sizes for each pair. If not there is an indicator for mt4 around somewhere that tells you the swap level for the pair you are watching. I can't remember what it is called but search for "swap rate indicator" in the search bar above.
  • #1,270
  • May 20, 2012 5:17am May 20, 2012 5:17am
Quoting jeanlouie
Mind me asking how many pips total were on the four trades? I wanna get an idea of the size of swaps and it's impact on trading.
Go Markets do quote it in pips - you will see the table if you follow the link. Not sure how others quote it.

I had 3 (now I check) x 1.0 lot trades on AUDJPY & 2 x 1.0 lots on AUDUSD. Cost me AUD 52.51 for each AUDJPY lot and AUD 54.91 for each AUDUSD. So divide each by 3 to get the price (in AUD) / lot.

= -1.39438 pips for AUDJPY / lot
= -1.81413 pips for AUDUSD / lot

I've just opened a live account with GO Markets. Not sure if I can fund it this week but will see. Their spreads are reasonable and protection of funds as good as most (which is not good enough in my opinion - but I'll take it for the moment).
Still learning - No guarantees...
  • #1,271
  • May 20, 2012 5:25am May 20, 2012 5:25am
Hi Hugh

'Been following this thread for a little while now, this method really works for me.
I also enjoy your more easy going approach to using the indicators etc. a lot of methods seem way too pedantic to me.
Anyway, I use your system pretty much 'as is' on longer time frames but it also works well on the M5 and M15, for that I add a MA15 and the Forex Freedom bar to show trend on the longer TF's
The idea for the MA15 was from your thread on trading shorter TF with HA.
For shorter TF trades I take lowest/highest point plus spread for S/L.
On short trades which I 'nurse along' I take profit when it looks right or I get bored.
The Forex Freedom bar is a nice 'quick look' at longer time frame trends, green is up, red down, you can readily see in the screen grab how the EURUSD moved into a local uptrend on friday.

I shall follow on with interest, my favourite thread atm.
Attached Image (click to enlarge)
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File Type: mq4 MTF_Forex_Freedom_Bar.mq4   8 KB | 464 downloads
Don't ask me, I have no idea what's going on.
  • #1,272
  • May 20, 2012 6:12am May 20, 2012 6:12am
Quoting Gizzledonk
Hi Hugh

'Been following this thread for a little while now, this method really works for me.
I also enjoy your more easy going approach to using the indicators etc. a lot of methods seem way too pedantic to me.
Anyway, I use your system pretty much 'as is' on longer time frames but it also works well on the M5 and M15, for that I add a MA15 and the Forex Freedom bar to show trend on the longer TF's
The idea for the MA15 was from your thread on trading shorter TF with HA.
For shorter TF trades I take lowest/highest point plus spread for S/L.
On...
Nice, thanks for posting. I always say there are many different interpretations of the same system that would work. It's all about finding something that works for you and if the thread gave you some ideas then that's good. Keep posting charts and stuff as you go along.
  • #1,273
  • May 20, 2012 6:21am May 20, 2012 6:21am
I've been doing a lot of simulated trading. In 2011 on daily eurusd charts there were 7 valid signals according to the original rules. 4 of those signals went at least 300 pips meaning the hourly trend should have been good enough to bank 500 pips with add ons.

If you'd have traded the signals as they occured just on the daily chart you would have banked 550 pips. Let's assume a win rate of 33% winners, 33% break evens and 33% losers on the hourly charts and assume you took 5 trades on each signal before it either worked out or breached the 100 sma and invalidated the daily signal. That means that over the 7 signals you would have taken 35 trades, 11 of which would have lost you 30 pips.

There are a lot of assumptions here but this works out to 2000 pips banked in winning trades and 330 pips lost in losing trades. 1670 pips in one year from eurusd isn't too bad.

The trouble is that if you look at a daily chart of eurusd there are lots of runs of heiken ashi candles that would have led to really nice profitable trends on the hourly chart BUT were almost completely unpredictable.

Maybe it might be better to just use the 100 sma on the hourly chart to dictate the direction and add on to any good trends that develop. This way you will have more losses, a hell of a lot of break evens and a fair amount of massive profit bearing trends. Although it is a bit more hit and miss with the trade selection it does mean you will catch every major hourly trend and still not lose much when you lose. Just a thought.
  • #1,274
  • May 20, 2012 6:27am May 20, 2012 6:27am
Hi Hugh,

A Great Thread !!!

I have been trading the 4 hour method for a week and half, with fantastic results... for me anyway... I set trades around the London open and again after the London close - as I start work and finish work at these times. I set and forget.

Last weeks results - 366pips with 75% success rate - early days but promising...

Thanks for sharing...

Howard
Attached Image (click to enlarge)
Click to Enlarge Name: 4hrs trade results.jpg Size: 158 KB
  • #1,275
  • May 20, 2012 7:32am May 20, 2012 7:32am
Quoting Gizzledonk
Hi Hugh

'Been following this thread for a little while now, this method really works for me.
I also enjoy your more easy going approach to using the indicators etc. a lot of methods seem way too pedantic to me.
Anyway, I use your system pretty much 'as is' on longer time frames but it also works well on the M5 and M15, for that I add a MA15 and the Forex Freedom bar to show trend on the longer TF's
The idea for the MA15 was from your thread on trading shorter TF with HA.
For shorter TF trades I take lowest/highest point plus spread for S/L.
On...
@ Gizzledonk - Looks like you got some good trades there on the M15 chart. How would you describe your success & stress levels with this type of short term trading rather than say trading the H1 chart in the same direction?

I like the concept of using some indicators to watch the surrounding tf on the one chart, provided it doesn't get too complicated. That's why I've been using the mini stoch charts in D1, H4 & H1 fixed tf's plus another standard stoch for the tf I'm viewing. The indicator you are using is much the same concept.

@ Hugh - I know you'd commented that I watch too many tf's, but I like to know what's going on "around me" - I think it gives you a good overview whatever the tf you're centred on for trading. I also think there is validity in HHarrington's idea that long tf's start as short tf's - but not to the point that I would only look at the short tf's. I prefer to trade the H1 or H4 so I can set it up and take a break, not sit & watch the screen all day. Watched an interview with a trader last night who said they trade CHFJPY only using 1M charts for 10 hrs / day. Very good success rate, but not for me.
Still learning - No guarantees...
  • #1,276
  • May 20, 2012 8:21am May 20, 2012 8:21am
Quoting Hugh Briss
Take a look at the 25 levels on eurusd and audusd (most pairs in fact). Every 25 pips there seems to be some kind of reaction. Try using the quick draw indie attached. Only use it for lower timeframes though or it clutters everything up.
Thanks for that Hugh. I'm using "Sweet Spots GOLD" instead of Quickdraw for the 50 & 100 levels. I seem to be at a memory limit on my laptop as I can't add any more indicators - even another MA won't save. I assume thats because a couple have a lot of extra features that I'm not using - perhaps they take up memory anyway. Will have to look at that further when I get time & perhaps try to remove some unused code or otherwise see what is happening. You wouldn't want the 25 levels on the D1 or above as the 50's are already congested. Happy enough with what I'm work with at the moment, but can make incremental improvements when I have time.
Still learning - No guarantees...
  • #1,277
  • May 20, 2012 9:10am May 20, 2012 9:10am
Quoting Ozefex
@ Gizzledonk - Looks like you got some good trades there on the M15 chart. How would you describe your success & stress levels with this type of short term trading rather than say trading the H1 chart in the same direction?

.
Hi there Oz,

That was a particularly nice day! also 'coz I had little else running my MM said I could put a hefty chunk on each trade - the stop loss being single figure pips.
The stress is a lot greater I think but I kind of enjoy that sometimes and for a limited time.
If it looks like I'm not being successful I do something else, I've not been trading very long so I don't have a wide selection of tools or methods.
I still quite enjoy 'nursing' trades along, some might call that masochistic I suppose!
I'm definately not doing anything clever, just watching what's coming along and grabing a bit of it where I can.

good hunting!
Don't ask me, I have no idea what's going on.
  • #1,278
  • May 20, 2012 9:18am May 20, 2012 9:18am
Quoting hwo144
Hi Hugh,

A Great Thread !!!

I have been trading the 4 hour method for a week and half, with fantastic results... for me anyway... I set trades around the London open and again after the London close - as I start work and finish work at these times. I set and forget.

Last weeks results - 366pips with 75% success rate - early days but promising...

Thanks for sharing...

Howard
Good one! Keep it going.
  • #1,279
  • May 20, 2012 2:36pm May 20, 2012 2:36pm
Quoting hwo144
Hi Hugh,

...
Last weeks results - 366pips with 75% success rate - early days but promising...

Thanks for sharing...

Howard
Nice summary. Well done.
Still learning - No guarantees...
  • #1,280
  • May 20, 2012 3:21pm May 20, 2012 3:21pm
Ok, I don't think that changing the lookback period of the stochs will make that much difference but try 25,3,3 and see what you all think?

I think it looks really nice on the daily, slower to find the turns but smoother on the trends. Let's not lose sight of what we are attempting to do here. The aim is to find a nice smooth 1 hour trend and trade the s**t out of it. The smoothest trends do tend to develop after a nice clear stoch cross and ha change on the daily. I've been thrown a little by the idea that the countertrend (or just plain no trend) moves on the daily can lead to some stunning trades on the hourly chart but I'm slowly getting used to the idea. You're sometimes trading counter the daily trend but you are always trading with the hourly trend.

Have a play around and give me some feedback please. This thing can be improved.
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