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The perfect trading system

  • #821
  • Nov 8, 2012 1:24pm Nov 8, 2012 1:24pm
Quoting Articulate
Don555,

My view is that you do not take a trading decision simply based on RSI. There are other factors you need to consider first. In fact RSI is the least in order of importance. Let me use this opportunity to explain my view on trading decision making and the role of RSI in this process for the benefit of others.

[color=black][font=Verdana]Firstly you need to understand that FX trading is "Reverse Engineering". Secondly, you need the skill of deconstruction...

Thanks for the info Articulate
  • #822
  • Nov 8, 2012 1:32pm Nov 8, 2012 1:32pm
[IMG]2012-11-08_1839.jpg (110.4 KB)[/IMG]
Attached Image (click to enlarge)
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  • #823
  • Nov 8, 2012 1:41pm Nov 8, 2012 1:41pm
Member Since Jun 2009
http://images.forexfactory.net/misc/3kt.gif 469 Posts

The yellow lines is the 1000 pips, while the blue lines is 500 pips. The circle for GBPJPY is between 1300-1500 Ii.e. (130-133 area) . The weekly pin, which is resistance for now and it was responsible for the corrent retrace. The pair is on its way down and the support for now is at 125.

Your H4 support/resistance levels are fairly okay for short term trading, but H4 pins are more realiable for picking resistance/support for short term trading. If you are trading H4 chart, watch out for 125 or H4 pin for early sign of a retest or breakthrough of the resistance. Look at my weekly GBPJPY chart again for the areas I mentioned above.


H 4 Trading

Hello Articulate,

On your post # 735 you make mention of short term trading using H4 Pins. Please give me a current example of this on possibly the current GBP JPY chart.

Thank you.
  • #824
  • Nov 8, 2012 6:37pm Nov 8, 2012 6:37pm
Hi Articulate

Thanks for answering don555 question. After viewing your post I can clearly see how RSI can be of a benefit to me with my trading and I will be paying more attention to RSI.

I would like to share with you my 1000pip weekly cycle chart. Please disregard the candle from last week (the last small blue candle). My broker has been told that the weekly candle from last week is not correct and is missing well over 100 pips.

First I would like to discuss the previous 1000 pip cycle that I label in orange from 118.77 to 128.83. No one really knows when a cycle is going to start but one factor I use as my guide is after price has gone in one direction for 1000 pips I start looking in the other direction for either a retracement (500 pips) or a new 1000 pip cycle in the opposite direction. Also I do pay attention to pins on the weekly chart, but sometimes I have difficulty identifying them. The pin bar I have labeled in orange which was the end of the previous cycle gave additional support to my analysis that the cycle was completed.

Now the market gave a retrace after that run to as low as 124.74 (409 pips). Now I usually look for a retrace of 500 pips on this pair but if the market gives less I am ok with it if my trading method/system supports a lesser pullback. That being said I saw the current 1000 pip cycle starting at 124.74 and I entered long positions in the 125.80 area. I have closed most of those positions but I tend to always keep a small position open to not only journal the outcome of the 1000 pip cycle, but also because as a trader I pay more attention to the market and learn and understand price action better when I am actually in a trade.

I have a few questions for you and would appreciate a response.

(1) Did I view the pin bar correctly when I viewed it as the end of a 1000 pip cycle?

(2) As a trader what would you have done after the pin bar formed?

(3) Would you have viewed the pullback to 124.74 as any level of importance since it touched the 125.00 level or did I just get lucky with my last set of long trades?

(4) Is it possible that we have only just completed a 1000 pip long cycle labeled in green from 119.68 to 129.64 and the pin bar in orange was actually just for a pullback to complete the cycle in green?

(5) The blue candle in green where I have written on the chart high 129.64 do you view that candle as a pin bar?

I know I am asking you to answer these questions in hindsight after the market has made its moves but I believe your response will benefit me as a trader.

Thanks

Skillwill
Attached Image (click to enlarge)
Click to Enlarge Name: Weekly Chart GBPJPY Nov 08.png Size: 64 KB
The Will is Greater than the Skill
  • #825
  • Nov 9, 2012 2:11am Nov 9, 2012 2:11am
don555, i make simple rules for you. gbpusd,follow weekly direction sell only when rsi h4 in zona 60-70 and h1 70-82, but remember candle h4.

nzdusd,i am still waiting for weekly candle, if this month can't break 0.8350, perhaps long term for sell begin,
audusd,i am still waiting for weekly candle.JBU
  • #826
  • Edited 3:05am Nov 9, 2012 2:48am | Edited 3:05am
Quoting Articulate
Don555,

My view is that you do not take a trading decision simply based on RSI. There are other factors you need to consider first. In fact RSI is the least in order of importance. Let me use this opportunity to explain my view on trading decision making and the role of RSI in this process for the benefit of others.

[color=black][font=Verdana]Firstly you need to understand that FX trading is "Reverse Engineering". Secondly, you need the skill of deconstruction...

Hi Articulate
Can you tell me which candles on the weekly chart are the 2 sell signals starting from 8 weeks ago and which candles are the buy signals.

When you talk about pins what is your definition of a pin?
I dont think you mean pin-bars all of the time.
  • #827
  • Nov 9, 2012 2:49am Nov 9, 2012 2:49am
Quoting Articulate
The most profitable, least stressful and most sustainable trading strategy is medium and long-term trades. To be successful as a medium-term trader, what you need to understand fully is TIME. The four most important periods to understand are time to BUY, SELL, WAIT and TAKE PROFIT.

Trading long-term is only for those who have patience. It might take days or weeks to get signal but 1st class signals yield over 1000 pips and more. I will now illustrate when to bUY, SELL, WAIT and TAKE PROFIT (TP).

Sell - When the daily RSI is around 70 in the...
Hi Articulate

It is me once again with more questions. Since your last post on RSI I realized how ridiculous it was of me to not pay attention to RSI. When you showed me in your last post via charts how paying attention to the 70 and 30 zones (while giving consideration to other factors) I could not believe that had I used RSI as a guide it would have saved me alot of stress regarding taking profit. I use fib levels to take profit and if price does not hit the fib level, I remain patient. Sometimes my patience works in my favor, and other times it does not. That being said when I realized that I needed to read up on what you have posted on RSI, I decided to read the thread again from the very beginning because obviously I did not pay attention the first time. I reference your above post because a light bulb went off in my head when I read it.

Attached is my daily chart for GBP/JPY. You would note that I have highlighted in green when the RSI hit 70 as well as the candle associated with RSI hitting the 70 zone. In one of my previous posts I shared the strong trend line around 129.65. Now had I been paying attention to RSI and also what you shared on this thread I would have remembered when you said "Sell - When the daily RSI is around 70 in the region of major resistance." In hindsight that is what happened with this pair. Price hit major resistance at 129.65 and RSI was in the 70 zone.

Here are my questions.

(1) Price has done what it was suppose to do since hitting the 70 zone and is now below the 50 zone on the daily chart. Knowing that this pair has hit major resistance in the 129.65 area what are your thoughts on price being able to hit the 35 or less zone as noted in your post above?

(2) Do you consider this sell signal as a 1st class signal that can possibly yield 1000 pips as you stated in your post due to RSI hitting the 70 zone on the daily chart as well as hitting major resistance?

(3) Do you think this pair is consolidating or do you think the market has shown its hand and the direction of the market is now one that is heading down?

Just last week I thought this pair was consolidating for a breakout to the upside, but now I am questioning the consolidation. Maybe the US elections had a role to play in change of market direction, maybe not. Maybe the market has shown its hand and I just did not realize it until now.

When you know what to look for you find it. I do not believe in coincidences and I just do not believe that it is a coincidence that we may have just completed a 1000 pip cycle from 119.68 (120.00) to 129.64 (130.00) and that a sell signal just happened to be generated based on major resistance at 129.65 and daily RSI being in the 70 zone. I think the market has shown its hand.

So much to learn Articulate, of which I hope one day to absorb.

Thanks

Skillwill
Attached Image(s) (click to enlarge)
Click to Enlarge Name: Daily Chart GBPJPY (RSI).png Size: 52 KB
Click to Enlarge Name: GJ Weekly Chart.png Size: 61 KB
The Will is Greater than the Skill
  • #828
  • Nov 9, 2012 3:29am Nov 9, 2012 3:29am
Rafiki,

Read post #764 which I re-produced below, expecially the H4 chart and the concrete zone in the weekly chart. GBPJPY has not broken out of the concrete zone yet. The bullish move last two weeks failed as depicted by the pin on the weekly candle, it merely extended it to 129+. As I mentioned in my monthly update for GBPJPY, the pair is basically trapped between 125-130. To trade using H4 you need to read my post of 50PPAA and look out for H4 pins after a sustained move. Furthermore, when I analysed EURUSD recently, I explained how to trade a concrete zone. Look out for that post .

"As I mentioned earlier I will continue to post my monthly update and post in-between if there is something significant to discuss. What I want to discuss today is candle “Pins” in relation to price action. It is important to understand that Technical Analysis allows you to understand the past, while the Price Action tells you the future. Understanding pins is critical in being able to predict the future in FX. You should also understand Pin is a clear evidence/indication that a bullish/bearish movement has failed. Logically if a bullish move fails, the natural reaction is a bearish reversal. Conversely, if a bearish move fails, the natural reaction is bullish reversal.

In addition, the most important candle as far as retail traders are concerned is the weekly candle. The direction of the weekly candle is always clear, it can consolidate (concrete zone) along the way but its destination could never be in doubt. Now to pins, if you want to improve significantly your chances of success study and understand the weekly pins. In case of day traders, your best guide is to monitor H4 pins to know when to follow the trend or counter-trade within a trend. If a level is important, you will see at list a two 2 pins and up to 8/10 candles (i.e. at least 8 hours or 32 to 40 hours) to make a decisions."

Rafiki, pay attention to my monthly charts and updates which I usually post at the beginning of each month because all the important levels could be found on these charts. As for GBPJPY, it has consolidating between 124.72-128.81 (409 pips) since 125 was broken about 8 weeks ago.
Look at the attached charts to clearly see the current range and where to expect a breakout to the top and bottom."



Quoting Rafiki
Member Since Jun 2009
http://images.forexfactory.net/misc/3kt.gif 469 Posts

The yellow lines is the 1000 pips, while the blue lines is 500 pips. The circle for GBPJPY is between 1300-1500 Ii.e. (130-133 area) . The weekly pin, which is resistance for now and it was responsible for the corrent retrace. The pair is on its way down and the support for now is at 125.

Your H4 support/resistance levels are fairly okay...
  • #829
  • Nov 9, 2012 4:58am Nov 9, 2012 4:58am
Skillwill,

RSI is very useful, but you nee to pay attention to the sequence of events. Now to your questions:

(1) Price has done what it was suppose to do since hitting the 70 zone and is now below the 50 zone on the daily chart. Knowing that this pair has hit major resistance in the 129.65 area what are your thoughts on price being able to hit the 35 or less zone as noted in your post above?


Price is basically trapped between 125-130, the concrete zone I mentioned earlier. My view is that we are heading towards 125 Where price will not reached 125, a weekly pin indicate that. Before you consider RSI you need to consider the four components in my post on RSI first.

(2) Do you consider this sell signal as a 1st class signal that can possibly yield 1000 pips as you stated in your post due to RSI hitting the 70 zone on the daily chart as well as hitting major resistance?


GBPJPY 1st class signals are given after 1300-1500 pips. The sell signal is boderline 1st class signal. I would be more confortable with a signal around 133 and better still around 135 at a discount. Being a bordeline 1st class signal, my bias is sell based on the weekly pins around 129 until we get to 125 or another weekly pin before 125. I have some trades few trades running.

(3) Do you think this pair is consolidating or do you think the market has shown its hand and the direction of the market is now one that is heading down?


As far as I am concerned the pair is still consolidating until the weekly candles break out of 125-135. Read my analysis on how to trade a concrete zone when I analyse EURUSD recently.


I hope I have been able to answer your questions.

Quoting skillwill
Hi Articulate

It is me once again with more questions. Since your last post on RSI I realized how ridiculous it was of me to not pay attention to RSI. When you showed me in your last post via charts how paying attention to the 70 and 30 zones (while giving consideration to other factors) I could not believe that had I used RSI as a guide it would have saved me alot of stress regarding taking profit. I use fib levels to take profit and if price does not hit the fib level, I remain patient. Sometimes my patience works in my favor, and other times...
  • #830
  • Nov 9, 2012 5:18am Nov 9, 2012 5:18am
As part of drawing attention to what drives the market, I want to draw attention to my post on "Benefiting from the greed of the "big boy" which I reproduced below. 1000 pips is driven by GREED and FEAR. The current sell-off was initiated by FEAR but when the fear factors must have been removed GREED can push the bearish run to 1000 pips. Look at for the post to see the charts. If you understand the psychology of the market, you will be a better trader.



"Benefiting from the greed of “big boys” - 1000 pips trade set-ups

What I will share with you today is how to benefit from the greed of the “big boys” using the 1000 pips trade set-up. As I mentioned in my postings on the Mastercharts that the major resistance/support for GBPUSD and GBPJPY are encountered after every 1000 pips price movement. After every 1000 pips movement for these pairs, expect a pull back. A circle for GBPJPY is divided into two parts of 500 pips each, while that of the GBPUSD varies. In a generous trading environment, the GBPJPY could complete this circle within 2-3 weeks and between 4-8 weeks in most times. GBPUSD takes between 6-12 weeks to complete this circle as a result of its numerous pullbacks.

The “big boys” are greedy and they don’t let go until they get between 900-1000 pips even when there is no justification for such price movements. That is why you see 300 pips wicks on weekly candles. How do you benefit from their greed? This predictable circle of 1000 pips price movement gives a very useful signal that a medium/long term trader could utilise to trade this circle successful over and over again. You cannot predict his circles, but the weekly chart provides very useful and insightful signals. To trade these circles, this is what to do:

a) Wait for a weekly candle to print a new high or low
b) Draw a horizontal line or circle at the lowest or highest point i.e. the wick of the candle.
c) From the lowest or highest price on the weekly charts calculate 1000 pips and put a draw a box to identify the likely target areas.
d) If price has not moved far from these points (less than 100 pips) you can enter the trade if you are ready to wait for some few weeks.
e) If the price has moved far (300-400 pip) it is better to place a pending order at the point where the reversal is expected (900-1000).
f) Follow the ride and jump off if you make some sizeable pips.

Look at the weekly chart for GBPUSD and the 1000 pips movements indicated by the red and yellow boxes. On the GBPJPY chart the levels are shown by the price movement between two yellow line or two aqua lines. Based on this analysis the expected target for GBPUSD if the bearish run that was reversed at 1.57800 is completed is around 1.67800. The target for the GBPJPY is around 135.00.

I have mentioned it very times, success is only guaranteed only when a trade has “helicopter view” of the market. Remember, the important thing is to take only first class trades because it is your money that is on the line. If the opportunity is not right, forget it and look for better ones. There are always better opportunities in this market. The reason is simple - this market is driven by greed!
  • #831
  • Nov 9, 2012 5:20am Nov 9, 2012 5:20am
Quoting Mr.chia
don555, i make simple rules for you. gbpusd,follow weekly direction sell only when rsi h4 in zona 60-70 and h1 70-82, but remember candle h4.

nzdusd,i am still waiting for weekly candle, if this month can't break 0.8350, perhaps long term for sell begin,
audusd,i am still waiting for weekly candle.JBU

Mr chia it all seems to be a little bit simplistic.
1/ the weekly candle direction which is sell at the moment
2/the h4 candle to back it up in overbought position along with h1 candle in overbought position

It seems to me that I am totally reliant on the RSI after confirming the direction of the weekly
Stop loss 200 pips
Am I correct with my analysis?

Should I only trade Tuesday, Wednesday and Thursday.
  • #832
  • Edited 11:45am Nov 9, 2012 6:40am | Edited 11:45am
click on to enlarge

Attached Image (click to enlarge)
Click to Enlarge Name: 2012-11-09_1218.jpg Size: 120 KB


I would think after all this time since the thread started someone would be able to point me in the right direction.

All I can think of is, do I wait until the candle closes and see where it is on the masterchart levels if it has crossed the line and reversed is that telling me to take a counter-trend trade if the RSI is oversold.

Is the importance of all this information relying on not only the direction of the weekly candle but the direction of the RSI on the lower timeframes as well.
  • #833
  • Nov 9, 2012 7:20am Nov 9, 2012 7:20am
The weekly pins which touched the yellow line (Masterchart level) on 1.6300 are the sell signals and the pins which touched the yellow line around 1.5300 are the buy signals. If you pay attention to a weekly chart, you will see a lot of things.



Quoting don555
Hi Articulate
Can you tell me which candles on the weekly chart are the 2 sell signals starting from 8 weeks ago and which candles are the buy signals.

When you talk about pins what is your definition of a pin?
I dont think you mean pin-bars all of the time.
  • #834
  • Edited 12:08pm Nov 9, 2012 9:09am | Edited 12:08pm
Quoting Articulate
The weekly pins which touched the yellow line (Masterchart level) on 1.6300 are the sell signals and the pins which touched the yellow line around 1.5300 are the buy signals. If you pay attention to a weekly chart, you will see a lot of things.
I had misunderstood what time you were referring to.
Articulate I had thought that we had 2 sell signals in the last eight weeks but we have only had one on the 29th September. The one before that was on the 29th of April 2012
Neither of them are pin-bar candles on the weekly

I have asked before what are you talking about when you mention pins ! ?

I have just noticed from the above statement when Articulate says the weekly pins have touched the yellow line he means the tail of that candle.
So Articulate would I be right in saying the tails of the weekly candles and wherever they are is really important.
  • #835
  • Nov 9, 2012 9:28pm Nov 9, 2012 9:28pm
don555, my stop loss 100pips and 150pips,
AUDUSD ,weekly candle close below 1.0400, so zona 1.0400 still valid, 4candle weekly can't breakout that zona, for short term sell when rsi h4 above 60 and pin bar h4 .
NZDUSD,weekly candle close below 0.8250, so zona 0.8250 still valid,for short term sell when rsi h4 above 60 and pin bar h4 .GBU
  • #836
  • Nov 10, 2012 9:41am Nov 10, 2012 9:41am
By pins I mean the "tails" or the "wicks" of the weekly candle and most importantly if they are around the Masterchart levels or after the price has moved by about 1000 pips.

Quoting don555
I had misunderstood what time you were referring to.
Articulate I had thought that we had 2 sell signals in the last eight weeks but we have only had one on the 29th September. The one before that was on the 29th of April 2012
Neither of them are pin-bar candles on the weekly

I have asked before what are you talking about when you mention pins ! ?

So Articulate would I be right in saying the tails of the weekly candles and wherever they are is really important.
  • #837
  • Nov 10, 2012 6:26pm Nov 10, 2012 6:26pm
Quoting Articulate
By pins I mean the "tails" or the "wicks" of the weekly candle and most importantly if they are around the Masterchart levels or after the price has moved by about 1000 pips.


Thank you Articulate for clearing that up.

Everything now is coming together.

What you have created here is pure genius and your willingness to share it and help people to understand how it works can only be commended.
"The quality of this stuff should be taught in schools"

Any trader lucky enough to find this thread and decipher what it is all about should never have to worry where his or her next £1 $ etc. is coming from.
  • #838
  • Nov 12, 2012 8:44am Nov 12, 2012 8:44am
Quoting Mr.chia
don555, i make simple rules for you. gbpusd,follow weekly direction sell only when rsi h4 in zona 60-70 and h1 70-82, but remember candle h4.

nzdusd,i am still waiting for weekly candle, if this month can't break 0.8350, perhaps long term for sell begin,
audusd,i am still waiting for weekly candle.JBU

Mr Chia how often do trades come off using your simple rules.
  • #839
  • Nov 12, 2012 8:47am Nov 12, 2012 8:47am
don555,

I am glad that another trader is beginning to see trading fx from another perspective. By the time you fully understand my trading technique, you will realise that the best strategies could be quite simple and straight-forward. I must however warn that no matter how simple a strategy is, the graveyard of most FX traders is their inability to understand the "psychology of trading". Infact, apart from knowledge, psychology is the most critical factor in determining whether a trader will be successful or not.






Quoting don555
Thank you Articulate for clearing that up.

Everything now is coming together.

What you have created here is pure genius and your willingness to share it and help people to understand how it works can only be commended.
"The quality of this stuff should be taught in schools"

Any trader lucky enough to find this thread and decipher what it is all about should never have to worry where his or her next £1 $ etc. is coming from.
  • #840
  • Edited 11:53am Nov 12, 2012 9:36am | Edited 11:53am
Quoting don555
Mr Chia how often do trades come off using your simple rules.
I JUST WAIT , put my buy limit or sell limit , and take profit, my risk 3-4%, 2 position for one pairs.i don't remember how often ?i still have 3position gbpusd for long term,if gbpusd touch 1.5300, it's can add 30% my account. i just wait and trade for high probability .JBU
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