Feeling A Little Creative | Something Old and New

History is being made today. I am actually going to open up two Work Threads on the same forum at exactly the same time. I don't think I've ever done that before in all these years. I have started multiple threads before, but not to do work. In my first thread, I am hopefully working to help some traders understand why it is important to create try and create unconventional indicators and how one might go about the process of thinking about integrating more than one. In this thread, I will simply make some long range trade calls predicated on an idea that I stumbled upon tonight.

The human mind works in mysterious ways. There I was working to solve one problem and ended up discovering what might be a different problem with a rather interesting solution. To make a long story short, I was doing some exploratory stuff on a 15 minute GBPUSD chart and it hit me. A funking Stoch Cocktail that I've had sitting on my desk for two solid months but never did anything about.

I'm not going to get into the stoch numbers right this minute, but I do want to start some trade tracking using what I guess I will call the: StochCocktail. And, why not!

Left side was last trade session and right side is the current trade session (7/29/2014) at 0615 UTC (corrected):
http://i61.tinypic.com/igb51y.jpg

Pair: GBPUSD
Entry Time = 0615 UTC
Trade = Long
Stop = None
Limit = Who knows. Just let it run.
Close Time = ?
Net/Net = ?

I am looking for that Cocktail white line to start climbing above the 50 level and hopefully cross the 70 level. I will not be looking at the GBPUSD chart on purpose.

1) I do not expect these to be the precision trades that I am typically known for producing.
2) I don't even know if this is going to work long term.
3) I have done absolutely no automated back-testing whatsoever on this idea yet.
4) I expect each trade to have difficult to stomach volatility.

But, here's the kicker...

5) I expect 99% trade success.

Yeah, I knew that would get your attention. Nobody can trade 99% anything, especially those weird people who believe in Technical Analysis. Ok, so if this blows up and I have already inoculated myself from ridicule. I am saying flat out that I do not know this will work.

So, why am I doing this. Back when I was steeped in finding new custom indicators that no one else on the planet had, I used to get this feeling on the back of my neck whenever I came up with something that I thought was going to be a hit. Well, I've got that feeling again. Well shall see how these turn out.

Trade duration will be Who Knows and Who Cares. However, I am expecting that 24-72 hours should do the trick in most cases. So, I guess that turns me into a Swing Trader for this experiment. Again, expect some Wild Volatility relative to the Trade Entry location at 0615 UTC (my chart time) and the point at which I call the exit.

I am going to have fun with it - you should too.

Look Mom! No Charts!

I was not kidding when I said, No Charts. I'm only using the Indicator Window for an entry signal. So, I don't have a price to give you. I will ALWAYS post the Entry Time, however. You can pick up the price from that time stamp. I will check the prices AFTER the exit and then tally the pip loss or pip gain.

99%. Can you believe that wishful thinking nonsense!

Buckle up.

DO NOT POST CHARTS OF THE TRADES IN THIS THREAD PLEASE!

That's the point. I do not want to see any prices right now. I don't want that to be my focus. Do not post any charts of GBPUSD inside this thread, or I will nuke you. Just wait until the exit and THEN you can post price charts.

Thank you for NOT posting any price charts of GBPUSD inside this thread until AFTER I call the Exit!

Ok, here we go. Let her rip.

Yes I can believe it Watching...

Alternative indicator window pic posted.

Entry time was wrong. Not GMT. Should be UTC. I will correct above. 0615 UTC corrected. Not 0915 GMT shown in pic.

Hi iDouble, aren't UTC and GMT one and the same?

Sometimes they are the same, for example in countries of North Africa (try Sahara for example). But in other cases there is difference between them. There is a formula expressing from through another..

Indicator Only Swing Update

http://i60.tinypic.com/5fm1vl.jpg

Unfortunately, I forgot that I was working on a GBPUSD B2i in the other thread. So, I've already SEEN the price! That spoils the psychological effect I was shooting for but that's ok. I'll continue to play along.

I'm still holding this Long. Draw is not too bad considering that I won't be existing this trade until the white line at least moves above Level 50. I am not a Swing Trader by any means, but I have reached that point in my trading career where I need to start thinking seriously about developing a system for long range position trades. There are many components from my existing day trading system that can be modified and used in a position trading system, but I have not developed anything with long range capacity yet - at least not to a level of standard that I would bother using in the markets.

I know a lot of long range traders like to add-on to their position at points like these, but I'm going to resist that temptation and wait for the white line to do its thing.

Basically, I'm just trading the white line to at least level 50 and hopefully level 70. Next time, I will put together an OS1 optimized for this 15 minute chart that I'm using, but I will skip that this time.

I messed that up when I was posting. The charts I'm looking at are 3 hours ahead of UTC. I did not convey that when I typed my correction, but UTC is based on atomic time and I believe includes Leap Seconds. So, it is supposed to be more accurate than GMT alone. At least I think that's how it works.

Good luck iDoubleStoch, but I am afraid it will not work. You will not achieve the 99% success rate you aim for.

The reason is because there is too much noise on a 15 minute chart, and to compensate for that, you must incorporate PRICE ACTION principles to trade the 15m chart successfully.

Perhaps it would work with a 4H time frame, but not 15m.

By the way... you know Stochastics is my favorite indicator

So, while I'm expecting 24-72 hours, I'm willing to wait it out. I'm on the cusp of needing a long range system to take positions in the market with, not day trade. The only time you need that kind of trading ability is when you have very large amounts of capital you don't want sitting around in U.S. Treasuries, or worse, Gold. Where is Gold, by the way - I have not looked at a Gold chart in eons. I know Gold ran to the moon in recent years, especially with the global meltdown underway.

I'll eventually need 7 - 12 trades per year. That's Swing to Position Trading. I'm getting ready for that world not to far from now. I can do a lot better than U.S. Notes and in a world where Putin, starts breaking out in a sweat because he thinks he might have been busted for shooting down civilian commercial aircraft, I don't want to play around with Gold - although some will say that is EXACTLY WHY you want to play around with Gold and $400 per ounce is a heck of a long way back to earth.

It is my job to figure out what on earth would cause Gold to drop back to near $400 during my lifetime. If I can come up with anything plausible, then I can't do Gold with my long range capital. Besides, all you need is a few pips each month with the right amount of leverage to beat any rise in PPI, CPI, COL or any games that OPEC wants to play next and something extra stupid like the invasion of Iran by the U.S., or a full scale NATO invasion of Russia - or something equally as dumb.

Only a One World Government will stop my plans - because at that point, there will be no currencies to off-set pair trading and thus no more FX. But, I don't see a one world government happening in my lifetime, so that means Major Currency Pairs will continue to be the vehicle of choice for me.

So, I'll just sit around the camp fire and wait on this one while NATO figures out what the heck it wants to do about Putin's attempt to revive the former USSR, causing me to question my choice about GOLD!

(don't get me started - )

It might be a 15 min chart but that is not a 15 min stoch. Guessing its a double smoothed H4 or Daily with a large K Period.

99%?
Drawdown will be interesting.

I'll grab some popcorn, lets sit back and watch the show...

Good luck.

Funny you should say that. I have some Orville popping right now.

Gold is currently at 1282.80, but I don't trade it either. However, I wanted to answer this question of yours based off my fundamental analysis (which I don't particularly care for), even though I have not looked at a gold chart in eons like yourself.

I don't know how old you are, but I will assume the correct answer is "NOTHING". Gold will not drop to $400 during your lifetime, or anywhere near that.

The reason is because there is too much chaos, tension, and fiscal naivete in the world. The US, specifically, is in a real crapshoot, and then you throw on the fact that China is trying to hoard all the world's gold (they have been doing so for years) to potentially create a gold-backed global reserve currency (just google the Renminbi)... Supply and demand... over the years... says prices are still going higher.

Here are some decent articles about the topic. I only skimmed them, but they seem alright:
http://www.gold-eagle.com/article/go...-looms-horizon

and

http://www.gold-eagle.com/article/go...t-yuanrenminbi

Thanks for the links.

The statement: "It is my job to figure out what on earth would cause Gold to go back to $400," does not mean that I believe Gold will go back to $400. That would be my job, if I thought stashing my capital in Gold for "safe keeping" was a good idea. And, that's not saying that I believe stashing large amounts of capital in Gold is a good idea.

The entire thought process is to come up with all available reasons for discontinuing my presence in the currency markets when I shift into Position Trading and move away from Day Trading, and to evaluate whether or not any of those reasons rise to such a level of great concern, that remaining in the currency market as a position trader would be the wrong thing to do.

In other words, I'm working the problem backwards by looking for justification for leaving currencies after switching to position trading. If I find none, then remaining in currencies remains the best long range capital preservation path (assuming my ability to maintain a fraction of the accuracy as a Position Trader, that I have experienced as a Day Trader).

So, once again: What on earth would cause Gold to go back to $400?

World peace! Is that even possible these days, LOL! (awe that's not really funny come to think of it - all the violence in the world is a real problem and it seems to be getting worse not better) But, on the other hand - it is kind of "funny" that it might take world peace to bring Gold back to those levels and everything else that goes along with world peace.

My job is to figure out the most extreme and the most implausible as a Position Trader. Position Trading is not Day Trading. There is a huge difference. Once you accumulate some wealth, you have to find a place to put it. That's is one of the problems with building capital - if you don't position it correctly, you could lose what you've worked so hard to build. Yet, another headache.

Having lots of money is not all its cracked up to be at certain levels. Put it in the wrong place and boom, you lose it.

- Real Estate? No. Not in this lifetime of Hyper Bubble Real Estate Markets.
- U.S. Corporate Bonds? Not just no, but heck no. We don't manufacture anything anymore and we are killing Middle Class Incomes & Jobs.
- U.S. Treasuries? Heck, with debt approaching an almost 1:1 relationship against GDP. Full "faith and credit" takes on a new meaning.
- Foreign Treasuries? Who? Which authority? Where? Which country? Many say China. They may be right.
- Commodities? That's starting to look a lot better than it did, but Position Trading for preservation of capital? Hmmmm.
- Metals? Silver, Platinum, Copper, etc. As industrialization increases, metals become more valuable. Could be a place to hang out.


- Currencies? Here is a pic of the past five (5) years of 1 Year B2i. Each one produced an annual position trade that contained at least 200 pips minimum and some much more. The current year (2014) is the only one that has yet to make its move. If all I need is a few hundred pips per year to stay ahead (using an appropriate amount of leverage), then currencies seem like a good place to be.

Annual GBPUSD B2i for Past Five (5) Years on Monthly Chart:
http://i62.tinypic.com/2rq2jkg.jpg

Oh, iDoubleStoch, boy would I love to have the problems you have. Having too much cash and not knowing what to do with it.

i have the exact opposite problem, too little cash, even though my trading is really starting to improve.

if you really don't know what to do with your cash, feel free to give some to me, and/or, I would trade your money gladly or even a small fraction of it.

if all you're looking for is 200 pips a year, that should be EASY, I mean PIECE OF CAKE! Look at my TEs if you don't believe me I make 200 pips a month trading only 1 currency pair very modestly. I will make you 200 pips in a month, not a year. One of my goals is to start trading other peoples money OPM and I know I can be very good at it regardless of your preferences for risk.

i have day traded before like you and it is not easy, it's a heck of a lot harder than swing or position trAding, so if u were a good profitable day trader the adjustment to longer term trading should be completely natural and even a breeze for you.

PS: I will try to respond more tomorrow but it's 6 am here and writing this from my phone!