SAR Method on 4hr Charts

Buff

Many thanks for the videos. They are really clear. Would appreciate the indicators that you offered.

Cheers.

Attached are the three custom indicators. The QQE and MACD dual signal is just a visual that makes it a lot easier to ID the cross on the two main indicators. And I have to thank one of our fellow members, Hanover, for that particular one. It has made my life easier. Cheers. Jim

I went through your latest video and it is really nice. As a matter of fact when I was moving the yellow lines I as thinking of doing something similar. This surely protects some of the pips gained which would have got lost in your original method. Yes being aggressive you also loose some in the process. But what I noticed was you loose less no of times than you gain.

Shifting from trading in lower time frames to a higher time frame has its own challenges. You need to change your entire mind set. It will take time to do so. Still working on Demo and getting used to not touching the computer for 4 / 8 hours. But I think it is better this way rather than baby sit the trade you are in

Venkatesh

Just another update...

Below is a screen shot just before this latest 4 hr candle update. I have moved the SAR down on this short to lock in about 250 pips. As can been seen by the additional trend lines. Price has moved right down to the gap created by the FOMC (NON-taper) event. It filled the gap but has not wanted to move lower. I triangle seems to be forming which, for me, is a disruption in trend.

Using that thought and the small little tail that came out on the last 4 hr candle I have moved my SAR to protect the position and possibly catch the next move up, which I anticipate will be even shorter.

This will be a good test for a ranging, yet narrowing market.

Hello Jim and everyone

I spent the week end doing a little homework and getting ready to do a thorough back test of this method for my own purposes. I want to find certain probabilities that may or may not be inherent in this method. My preliminary tests show that the probability of any given entry being successful, is between 58%-75%. This may seem a bit on the high side but is encouraging none the less.

My tests will be designed specifically to catch and ride any given trends for as long as possible. As such my discretion will usually err on the side of letting the trade run. To do this I have developed an algorithm to help me. It is attached here for your review. This is to be used at the close of each candle and evaluate the criteria on the most recently closed candle.

I hope that someone will find this useful. It is not quite as aggressive as the most recent video, but does employ some of those techniques to protect what I consider significant profits.

Thanks Venkatesh, glad to see that we are on the same page and also looking to reduce risk asap. Make sure you get back to the thread with your demo results. I'm always curious to see how others perform.

gspajon, the gold short panned out pretty well by the looks. Big profit on the way up and a decent profit on the way down (so far). Gold is making me look good! Judging by your above post, you really get into this testing. In a good way I might add. I have just printed out the algo sheet you produced, so now I'll have to sit down and study it. Love the thinking behind it and I'm sure others here will appreciate your efforts also. Good job.

I am also going to kick my old thread called 'SAR system based on QQE and MACD Platinum' back into life. It is not to be confused with this thread even though it has a a similar name. I have had a few EAs designed and built since my last posting on that thread, and now I am looking for ideas on how to either consolidate them or improve on them. So feel free to dive over there and add your comments. Cheers. Jim.

Dear Jim,
I am using bbstop which actually more or less mimics the movement of the SAR line. And a different version of QQE which has 3 lines. When the dark yellow line is in between the dotted blue and red lines, the market is consolidating else it is trending. I put your qqe macd indicator which also shows the arrows.

Hi Jim and everyone,

Jim, thanks for another informative video. I like the idea of removing risk as soon as possible, although it could turn into a double-edged sword sometimes, resulting in too many trades. Discretion is certainly key here... something I'm still learning.

My first trade on GJ closed at BE+3 (the green line @158.692 is my original entry). As it was a counter trend short, I moved the SAR as soon and as low as possible. Eventually, I moved the SL even lower to BE+3 (probably much too early), leaving the reverse buy order where it was. We're in a strong uptrend on GJ, and there is a chance that price might want to test the recent high around 160.00. In case it keeps falling instead, I'll be moving the lines and the buy stop along.

For now I'll keep my position size at 0.02, with the intention to close half at +200 pips. Trading the H4 is new to me, and I definitely need to practise how to let the price breathe on a larger scale.

Thanks rvenky and kosmo for pics of your charts and your thinking about your style of trading. Everyone to their own and good to see that you are owning it.

All I have given is a few ideas on how to trade using a system of horizontal lines. It is not perfect by any means, but it should give the average trader a slightly different way of looking at the markets and trading them without too much confusion. The initial basic system using all four lines and following the rules exactly, without any preconceived idea of trend etc, should be profitable in the long run, as I guarantee you that you will catch every major trend when it happens. It's what happens before this major trend that may throw some due to the possibility of several consecutive losses in a row.

I have also suggested ways of being a little more aggressive in your approach, either by slightly changing the rules regarding the use of the lines, or adding your own technical analysis, or even just using plain old discretion.

What I would suggest for those that aren't experienced traders, first stick with a purely mechanical plan. Make a set of rules based on this system, whether it is the original 4 lines rule or a hybrid of that and/or the use of indicators. Demo it and manually backtest it. See what fits your lifestyle, what fits around your work, family life etc. Trading is fun but you don't want to work all day, then come home and sit in front of the computer all night and ignore your significant other half or family. That's why I like the 4hr charts. There is nothing stopping you trading any timeframe you wish, including 5 min or daily, or anything in between. That's your call.

Write your trading plan down, refine it if you have to, but have it written down, and most importantly, stick to it. Give it a fair go. But if you have done the work either in demo mode or manually backtesting, then you should know whether it is going to work or not already. Accept your losses without emotion and take every trade that presents itself according to YOUR rules. There will be losses, and plenty of them, but at the end of the day, you just need to be profitable overall. If you are trading multiple pairs, keep records to see which pair is most suitable for your plan, and ditch those that are under performing. The old 80/20 rule. If you see a big profit on the table, take it. You can always reset the charts and start afresh.

Probably the most important thing is, have a written plan and stick to it. This creates habit and doesn't allow you to over think and second guess yourself. Then when you get a good feel for how it all works, then consider introducing discretion into your trading. Cheers. Jim

Hi Venky,

Can you share your version for QQE indicator and its setting

I am using a setting of 2 as the smoothing

Hi Buff,

Watched your 1st video explaining how to use this SAR method and find it it difficult to understand exactly the core of this strategy. All these manipulations with lines, too fast and your voice is hard for me to understand (english not my native). Could you please give in writing rules for entry/exits, description of SAR method for such persons as me who struggle to grasp your idea for trading this. I tried hard to watch and listen but still I cant have a clear picture. Thanks!

Hi Serge,

These are one of the best quality videos I have seen posted on Forex Factory. The quality is very good and the explanation is also very clear. May I suggest you start off with the videos on page 1. They are slightly slower than the last one. When you understand those you will have a basic grasp of the system which will help you in interpreting the new one.

I suspect that buff will find it difficult to explain the approach in writing easily . However, a couple of posts ago someone has posted an algorithm. Perhaps it might help if you read that.

Thanks,
Kash

Hi Buff,

This looks naturally right I must say. The videos are great! Your advice with regard to making it your own with risk tolerance and any addititional indicators is right on. I would describe this as aggressive support and resistance trading. I would think that price action traders would get along with this method very nicely. I for one will not be using indicators. I'll pick 5 pairs using 4 hr charts. Thank you Buff.

Hey Serge,
Sorry about the Aussie accent. All I could probably suggest is that you just watch all of the videos again. Maybe even take what has been written here on the thread and run it through a translator program if you haven't done so already. Kash is right about it being difficult to explain the system in words, hence the videos. They certainly make it easier to grasp the whole concept. I'll give it a go though.

Say we were in a long trade already (we have bought), so the red line which is your SAR (stop & reverse) is initially set at a low of a candle somewhere below your blue entry line. Every time there is a new higher high on one of the candles above the blue line, we put a yellow line at that high. There are only 4 yellow lines, so once we have them all on new highs and then there is a 5th new high, all we do is take the bottom yellow line and move it up leapfrogging the other yellow lines, and place it on that 5th new high. As long as price continues to move higher, we just keep on leapfrogging these yellow lines and hopefully move them all up as price continues to move in our favour.

To then move the red SAR line up and hopefully get it above the blue entry line to remove all risk from the trade, we are looking for a pullback where price comes back down a little breaking through the current bottom yellow line and then goes back into the uptrend and back above the bottom yellow line again. This should give an obvious bottom on an uptrend and a good place to move our red SAR level up to. So basically price would have stalled where there was no more leapfrogging of the yellow lines, for whatever reason, and may have been a bit of a pullback before the major trend resumed. This could happen several times, so you just keep on moving the red SAR line up to each of these pullback lows. Eventually the market will turn big time and you will lock in profit from the long trade and then already be a short trade once price goes back down through the red SAR line. Then it is the exact opposite for shorts. Hope that helps you out a bit.

Kash, thanks for helping me out. Not sure about your description of my videos though.

Mikeh3855, and thanks to you for your input. You are probably right about being support and resistance orientated. Like in my description to Serge, we need price to stall at some point to move SAR level. Obviously something causes pullbacks, whether it be pivots, round numbers, waiting for news, but more than likely major S & R levels. I look forward to hearing how it all goes for you.

Cheers. Jim

Superb across numerous pairs since Monday at h4.

Thanks Buff and all, now it is a more clear picture after i watched all the videos in this thread. Will try apply this method on demo first before going live. So far i like it very much - simple and profitable. Will see what comes. Thanks for your efforts, Buff, and waiting for your next videos and comments.

Many thanks for this great, simple yet looking powerful system Buff.I will be trying this out on a live micro acc ( hate demo's),nice clean charts.......thanks again!

Thanks guys, and good luck with your trading. Make sure you get back to us with any results or any modifications that help you achieve better results. I'm keen to see how everyone runs with this. Cheers. Jim

I'm short on CADJPY, and long on GBPAUD. Waiting for a break down on EURUSD to enter short. Here's a screen shot of my CADJPY entry.