Swing trading with heiken ashi and stochs

That PDF gives one interpretation of the basic system. If you follow that to the letter you will do well. There are a number of different approaches you can use that incorporate the basic system pattern which is a smooth stoch cross and a smooth heiken ashi turn in the direction of the trend.

This is in the commercial section because a while ago I became a commercial member and ran my own site for a while. I asked to go back to being a normal member but they wouldn't let me because I am trading a small fund for a group of investors.

I don't have any solid performance figures for the system that I can give you to prove that this works but just let me say that the system I use for my fund is not a million miles away from this. Over the last few years I have been constantly working on various expert advisors, systems, etc. Out of everything I have done this is the basic system that I prefer. I have lots of expert advisors that can make 10% a year on eurusd daily charts but am still yet to find anything automated better than that.

Maybe I will start trading this on a small live or maybe a demo account and put a trade explorer here.

I should say that a bright green or red on the alert is for a buy or sell. After the first 4 hour candle the signal turns to a darker green or red just to remind you of the signals given on the last candle. This is because sometimes a stoch cross may be ok but the ha turn not be convincing and so you might want to wait until the next candle to see if it gives you more confirmation.

On the top part of the dashboard the slope of the weekly ma must be 10% or more in order for it to be valid to trade. If you use a different timeframe you may need to adjust this figure to make it more or less sensitive.

The pairs at the top display green or red if they are valid to trade. The slope must be more than 10%. If the slope is over 10% up and the price is above the 100 sma AND the stochs are lower than 66 (meaning the price is pulling back) then it will be highlighted green as a valid pair to watch (and give signals for). The opposite for red and sell trades.

Most of the detail is not so important, if you just follow the signals and remember not to take every signal then you will be fine. It is very important to remember though that not every signal will be a valid trade. On the bright side however, all of the best trades will be signalled.

I have just returned to this system after several months trying other things and not doing particularly well.

I re-adopted the original 4 hour system last month, kept it simple and earned around 700 points.

Have to say I have to agree with Hugh's various comments relating to the pursuit of perfection by the addition of numerous indicators in an attempt to filter out every losing trade. Been there, done that and as a result sat for weeks on end in a confusion and indecision.

I trade two strategies now. This one and a divergence based strategy. My charts only have stochastics and moving averages.

Looking forward to refining my money management on this, sticking with the game plan and not having my attention diverted by anything else.

V

Hello, thanks for posting. It's really good to hear you are making some nice gains with the system. It would be great if you could post some charts of some entries and exits. Also what stop loss/trailing/exit are you using?

I have been very busy trading for someone else for a while and so haven't been able to focus on my own trading much but this is my favourite out of all of my systems.

Here is an indicator that puts a trading checklist directly onto the chart. You can change the position using the x and y settings and also the fontsize and colour. Most of it is fairly straightforward but HL is a higher low, LH is a lower high, DB and DT is double top or bottom. The more you can tick off the better.

In terms of stops I tend to use 50 as default, but if there is a strong looking swing high/low or a significant level of support and resistance I might take more IF there seems to be no obvious barrier in terms of securing a 1:1 reward (I'm looking at barriers in the form of significant S&R and trendlines)

I adjust these stops/targets for the likes of EUR/GBP which tend not to show huge daily moves to around 40.

I started by taking a simple 50 point target. Lately I've been aiming to get in on any longer moves. My initial target is still 50 points but once I am beyond half-way I will move to break even. At the 50 target I cash in half my position and will trail the remainder manually by shifting the stop just behind the last candle.

The trailing can do well on some of the bigger moves, especially on the Yen pairs but it's a fact there are trades when I wished I'd just banked at 50 and walked away.

The only tweak I've made to my charts is the addition of a 55EMA and 21EMA. The 100 gives me my main clue in terms of trend direction but when I see good separation between the 100/55/21 it gives me a good idea to whether there is strength in a movement. Also, when the 100 and 55 start to moves towards each other it gives me advanced warning that a trend might be losing momentum. I have spent months looking at various things to help me decide the general trend...the stochs on higher time-frames, non-lag MA indicators and all sorts of toys, but the simple visual aid of moving averages is as good as any. I stay out if there's any doubt and I can lose out on some moves but it keeps me out losers and sideways moves.

I need some fine-tuning on target taking/trailing etc and need to come to some sort of decision as to the best way of handling trades which need to be left to run overnight. I like to give trades room to breathe but can wake up to some nasty surprises on AUD, JPY pairs.

I got out of the habit of taking a screen copy of every trade - a training course I went on said it was a good idea and it is - but I will probably get back into that routine.

Anyway, looking forward to keeping it simple...

There is nothing wrong with making additions to the system if they help you. I like to add round numbers sometimes to spot a good level to watch for a bounce.

Knowing when to trail and when to just take the money while it's there is difficult. I have had some fantastic trades when I have trailed behind the 100 sma until it was broken but I've also had a lot of break evens when trying to do that after having a substantial amount in profit.

I have learned a great deal from your threads. Thank-you.

No problem, glad you found them useful.

Here are some interesting charts. Cadchf daily has turned at the 100 sma. I've taken an entry on the hourly. If it doesn't survive I will try and get an entry tomorrow. If it does survive I will try to get another entry at the next swing high and trail the whole lot behind the 100 sma.

This is just demo for fun. I'm still busy with my other trading.

That's odd. The trade closed overnight and yet the price didn't touch the entry at break even? Maybe something to do with the spread or just a dodgy broker? Nevermind, I'll find a different demo broker.

It would have stopped out anyway. Waiting for the next signal. I'm watching gbpchf, audchf, cadchf, audusd, audsgd, chfjpy, gold and oil.

Hi HB, all,

entered on the following scenario, even tried to time it on 15 minutes. However, shortly after I entered a spike up killed the position and then continued south. (did not pay attention, there were farmroll figures).
http://img7.imageshack.us/img7/9581/53201331900pm.png

Bad luck on that one, important to watch the news. I had a go at a few trades today and have got chfjpy long and eurgbp short. I'm going to let them run and see where they get.

I will probably trade this demo until the end of the month and post the results then with trades, etc. I haven't always got time to take shots and post, etc.

Hi All...just joined the thread, have read most of the post, printed out the final version of rules, printed 7 pages of trade examples, still confused. .HELP!!! GBPUSD --daily closed on 5/3 straddling the 100 ma, 5/6 daily candle dead on 100 ma, 4 hr the current candle is over 200 pipc above 100 ma, 1 hr candle is about 36 pips above 100 ma..daily has a downward sloping 100 ma, the other two tf's have an upward slope,,which time frame has precedence??

First of all choose the timeframe that you want to take your trades on. If you have the time to watch hourly candles and take trades based on that then that is your primary trading timeframe. If you want to take trades on 4 hour charts then that is your primary trading timeframe. The timeframe you use for direction is the timeframe 2 steps up so if you trade hourly candles then you need to look at the daily. For 4 hour trading you need to watch the weekly. Don't even look at any other timeframes, it just confuses things.

Wait until you get a signal on the higher timeframe. The perfect pattern is a smoothly sloping 100 sma, a nice clean pullback to somewhere near it, a clear heiken ashi turn away from the 100 sma in the direction of the trend and a nice smooth stoch cross.

Then go to your lower timeframe. If the daily trend and signal was for a buy then when you drop down to the lower timeframe the price should be above the 100 sma. Now you can reasonably expect the lower timeframe to start trending in the direction of the daily and trade every pullback in that direction until the 100 sma is broken.

It won't work every time but when it doesn't you don't need to lose too much and when it does you will bank hundreds if not thousands of pips depending on how many add ons you get.

When I am trading this way these days I tend to just leave the stop somewhere behind the 100 sma and leave it there. I tend to use bigger stops, up to 100 pips on the hourly chart. The way I see it is that if the higher timeframe signal is correct then I will be able to bank a good gain and if it isn't then I will lose 100 pips. It's still huge risk reward with a very healthy probability in my favour.

Study the basic pattern, the 100 sma, the smooth pullback, the smooth turn. If you can get that right then you will be fine. It takes patience to wait for picture perfect setups but that is the best way to make money trading, only take the very best signals. Once you have mastered the basic pattern then you can start experimenting with more advanced entries like jumping on when the price is going sideways along support in an uptrend. The price tends to move away rapidly after a spell of consolidation along support or resistance. As you get more confident with your ability to pull money out of the market and relax with your losers then you can take the riskier entries without frying your head if you get one wrong.

If you are trading 4 hour charts you will only need to look through the weekly charts once a week on a Sunday night/Monday morning. There is either a weekly signal or there is not. I have looked through this week and nothing looks quite right on the weekly charts, no smooth pullbacks and turns. If you are trading daily charts then go through once a day and pick out the fresh turns and just concentrate on trading those for the day.

If you are watching a pair expecting a downtrend and the price starts trading above the 100 sma then just close the chart and forget about it, it has invalidated itself for the day, have a look tomorrow and see if it still looks valid on the daily. I find this way I can narrow down the number of charts I am looking at to just a few.

At the moment I am interested in being short eurusd. I am already short eurgbp and I am long chfjpy. Most jpy pairs look pretty good to trade long at the moment but nothing else is setting up.

The eurusd daily turn is not very smooth but it is finding major resistance at the 100 sma which suggests we could see a nice move down away from it. On the hourly chart I am waiting to see a clear push down and a smooth pullback.

Eurgbp is on the way down but found some support at the daily 100 sma and then continued. This is a good sign and hints to lower prices, worth following on the hourly. After a reasonably clear signal it has just gone a bit sideways but that's after nfp and a bank holiday so not too surprised.

Chfjpy was the first to turn on the daily. On the hourly I took a trade at support.

One of the best things you can do is to use one of the trading simulators available on this site and go through as many pairs as you can just spotting clear entries. Get the basic pattern in your head and learn to trade that correctly and then go more advanced later. You will find that if you just trade the pattern alone on one timeframe it will not be as reliable as using two timeframes.

Another interesting exercise is to go through a daily or weekly chart marking the valid signals whether they led to smooth moves after or not. Then go down to the corresponding lower timeframe (hourly for daily, 4 hour for weekly) and see what happened. What trades could you have taken, would you have lost money, would you have made money? Be honest with what you are seeing. It is very easy to spot things in hindsight.

Here is a eurusd daily chart with a signal marked. The second chart is the hourly. Could you have made money trading that?

As I have said before this doesn't always work, nothing in trading does, but when you only follow the best signals on the higher timeframe and trade it sensibly on the lower timeframe the times it does work will comfortably pay for the times it doesn't work which is what trading is all about at the end of the day.

Just taken this on eurusd.

Chfjpy stopped out for one small gain and one loss.

Just bought gbpjpy above 154.