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HAC & RAC - A Simple-Minded Approach

  • #81
  • Feb 4, 2016 3:10am Feb 4, 2016 3:10am
In my last example, it's obvious that this alone is not going to make a lot of money. That's why I use other TFs to find the real trend change. The smaller TFs will exhibit the same characteristics and give some warning that it's about to happen on the larger as well.

The two good H1 crosses that didn't produce any money also had terrible lower TF support. I highlighted those and circled them. The M15 on those crosses either had way too many bars between its cross and H1, or a bad cross in the form of the HA candle not touching the HAC.

Quality is important.
Attached Image (click to enlarge)
Click to Enlarge Name: No lower TF support area.PNG Size: 86 KB
  • #82
  • Feb 4, 2016 3:31am Feb 4, 2016 3:31am
I think what I'm going to do now is let other people ask specific questions and lead the conversation. That way I'll know if what I said so far is clear and allow people to play around with it for awhile. You've already seen some of the things I can get into with this, like:

1. Bad crosses and what they mean
2. Profit targets
3. Getting into running markets
4. Anticipating consolidation patterns
  • #83
  • Feb 4, 2016 4:10am Feb 4, 2016 4:10am
I couldn't resist putting this one up. Recall yesterday that the AUDUSD had a ways to go to hit a 3x target? Well M15 had the RSI slam down while the RAC was at the ceiling. Then M5 & M1 gave a picture perfect HAC & RAC cross. Anyway, I thought it was neat. It didn't quite make it to the pip yet, but it looks likely it will.
Attached Image (click to enlarge)
Click to Enlarge Name: AUDUSD M15 RSI Pop.PNG Size: 112 KB
  • #84
  • Feb 4, 2016 4:24am Feb 4, 2016 4:24am
AUDUSD - Thoughts....

As I think about this pair and what it's done over the past two weeks using this method, I find it unusual. I mean, three H4 trades, all hitting their 3x targets, all at different levels. On top of that, the D1 has had a HAC & RAC cross while all this is going on.

Now, I don't have a lot of experience analyzing this sort of thing (because it doesn't happen that often), but to my mind, it's almost like it's a very deliberate staging/buying campaign for a larger move. Maybe some of you out there, using your own methods, will determine the same thing. I really think this area will prove interesting.

Btw, the final 3x has been hit
Attached Image (click to enlarge)
Click to Enlarge Name: AUDUSD Final 3x.PNG Size: 47 KB
  • #85
  • Feb 4, 2016 4:29am Feb 4, 2016 4:29am
Good stuff Almutan, clean non cluttered charts, nice.
One question though, those lines, 0, 1.1, 2.1 etc, I get the feeling they are not fibs but profit targets, is it part of
an available indicator
"You know what needs to be addressed , completely completely reverse that".
  • #86
  • Feb 4, 2016 5:01am Feb 4, 2016 5:01am
Quoting Kmw
Good stuff Almutan, clean non cluttered charts, nice. One question though, those lines, 0, 1.1, 2.1 etc, I get the feeling they are not fibs but profit targets, is it part of an available indicator
Hi Kmw,

Yeah, I'm easily confused so I like to make do with fewer things. As for the PT levels, I reset the defaults for my fibs and adjusted the labels to say 1:1, 2:1, etc...

At heart, I'm a fib man myself so it was a decision to reset the defaults on them. But there is a fib expansion tool as well so there's really two tools that can be adjusted. One can be left for using fibs.
  • #87
  • Feb 4, 2016 5:05am Feb 4, 2016 5:05am
Bad Crosses

I found a great, recent example of bad crosses to take a look at. It really illustrates the importance of the RAC as a confirmation tool, especially when above 80 or below 20. This doesn't even factor in lower timeframes to make a determination.
Attached Image (click to enlarge)
Click to Enlarge Name: GBPUSD Bad HAC Crosses.PNG Size: 44 KB
  • #88
  • Feb 4, 2016 6:17am Feb 4, 2016 6:17am
me been trading it
Attached Image (click to enlarge)
Click to Enlarge Name: pips.png Size: 62 KB
"You know what needs to be addressed , completely completely reverse that".
  • #89
  • Edited 7:01am Feb 4, 2016 6:46am | Edited 7:01am
Quoting Kmw
me been trading it {image}
Nicely done my man!

Actually, I love those GBPAUD/NZD pairs. They're wild right now, eh? Anyway, you could, given the really volatile nature and number of pips, set yourself in the most probable direction, like going with the M15 or H1 and then wait for the M5 & M1 to form their setups.

[edit] But let's look at the PT levels for M5. I think you'll see you did the right thing. It went a bit further to a 4x level (or very close) but this is unusual. I'd say your instincts are pretty darn good
Attached Image (click to enlarge)
Click to Enlarge Name: GBPAUD-Trade1.PNG Size: 98 KB
  • #90
  • Feb 4, 2016 6:55am Feb 4, 2016 6:55am
After that last explanation I feel I understand much better, when I have time after work I will try to set it up and test for myself. Looking good.
  • #91
  • Feb 4, 2016 7:02am Feb 4, 2016 7:02am
Quoting Plague
After that last explanation I feel I understand much better, when I have time after work I will try to set it up and test for myself. Looking good.
I'm glad that was helpful
  • #92
  • Feb 4, 2016 8:08am Feb 4, 2016 8:08am
Since Kmw is watching the GBPAUD pair, I thought I'd offer some perspective on it.

First of all, both the GBPAUD & NZD pairs have been in a lot of consolidation and corrective moves for the last couple months, so naturally one would expect indecisive action and so on. Heavily trending markets will be much cleaner in the setups and make money quicker and with less risk.

Second, there are so many pips in those markets, who can resist?!

Ok, so let me show you what this method is showing on H4 & H1 now. In the pic below, I have two charts. The H1 & H4. On the H4, on the bottom, is a 3x PT area from a valid trade setup made on Dec 15th. Last week's low nearly hit it to the pip. This is a good argument for that low holding for awhile. Shortly afterward, there was a valid H4 trade setup. In this one, the RAC went above 20 just as the market penetrated the HAC. So far, so good.

However, when H1 penetrated the HAC with a valid setup, it was 14 bars (hours) earlier. Like I've said before, this will indicate choppiness and indecisive action, which is totally in keeping with the overall market structure. The fact that H1 hung around the HAC line before taking off is helpful though. Generally however, it's best if both components - the HAC & RAC, happen within a few periods of each time frame.

Ok, Now on the H1 chart, I marked the long setup in yellow. Note that it hit it's 2x PT and then triggered a valid sell. I've marked those PT levels in pink. However, the H4 trade to the long side is still active. The 3x on H1 is still above the low of last week, so it's possible that it will both meet that profit target AND continue on to flesh out the active H4 trade AND also fulfill the H1 trade that has yet to be invalidated.

Now, you might think that because the H4 price is now below the HAC that this is an H4 short. It is not. The RAC did not cross while the market was in contact with the HAC. Historically, when this occurs, the market tends to be sucked right back into the HAC.

This is a really, really complex situation and like all correcting/consolidating markets, is difficult to trade. Even so, it's not impossible.
Attached Image (click to enlarge)
Click to Enlarge Name: GBPAUD - Active H4.PNG Size: 97 KB
  • #93
  • Feb 4, 2016 8:44am Feb 4, 2016 8:44am
Quoting Almuten
{quote} Nicely done my man! Actually, I love those GBPAUD/NZD pairs. They're wild right now, eh? Anyway, you could, given the really volatile nature and number of pips, set yourself in the most probable direction, like going with the M15 or H1 and then wait for the M5 & M1 to form their setups. [edit] But let's look at the PT levels for M5. I think you'll see you did the right thing. It went a bit further to a 4x level (or very close) but this is unusual. I'd say your instincts are pretty darn good
Actually I'm liking your insights, that fake out above, your latest post, reading about your observations re HAC, RAC. gonna keep reading, but not now, sleepy time here , seeyas all tomorrow, gained a few more but out of the markets now
"You know what needs to be addressed , completely completely reverse that".
  • #94
  • Feb 4, 2016 9:17am Feb 4, 2016 9:17am
Well after I applied your template, which works beautifully, I wanted to get familiar with it and got carried away by 20/80 crossings.
If there is a strong cross from 20/80 after RAC being up/down there for a while, then entering on HAC cross seems to yield good results.

I am not saying that it will work, or that it is better, just that it jumped at me so hard that I need to investigate it

Also, what pairs are you watching? Having multiple time frames, I am not sure how to watch it properly, maybe on H4 and then simply confirming on H1 and M15 it is doable. Which timeframes and pair do you recommend?
  • #95
  • Feb 4, 2016 9:47am Feb 4, 2016 9:47am
Quoting Plague
Well after I applied your template, which works beautifully, I wanted to get familiar with it and got carried away by 20/80 crossings. If there is a strong cross from 20/80 after RAC being up/down there for a while, then entering on HAC cross seems to yield good results. I am not saying that it will work, or that it is better, just that it jumped at me so hard that I need to investigate it Also, what pairs are you watching? Having multiple time frames, I am not sure how to watch it properly, maybe on H4 and then simply confirming on H1 and M15...
Hi Plague,

Actually this is a very good observation you've made. This is very true indeed. But if you do trade in this way, you will find that the best setups will have lower TF support. They, too, will have generated signals shortly before...unless you're trading M1 of course

As for the pairs, I'm actively watching GBPUSD, AUDUSD, GBPJPY, USDJPY. I'm a little skiddish with the GBPAUD/NZD pairs, but I'm watching them anyway. Those are very challenging right now.

As to how to watch them, this is what I recommend:

1. Find the context using H4. Are there any active trades that are still valid and haven't hit their 3x profit targets? This is good to know. Most of the time something will be active in some way and there might be a continuation trade setup on a lower TF.

2. Watch the setups on H1 & H4. When they happen, check M15 to see how 'clean' it was or if even a valid setup occurred.

3. If you want, take the extra step of checking M15's relation to M5 for cleanliness and the same for M5 to M1. Now, all of that could be done well in advance of an H1 or H4 trade being triggered. You've got plenty of time to see it begin to set up and analyze how choppy it's likely to be and therefore, how loose your stop will have to be.

Hope this helps!
  • #96
  • Feb 4, 2016 9:54am Feb 4, 2016 9:54am
Quoting Almuten
... Hope this helps!
Thanks, I will look into H4-based method too. As a sidenote, I find NZDUSD to be pretty technical, maybe it will work too because of that?
  • #97
  • Feb 4, 2016 10:34am Feb 4, 2016 10:34am
Hi Almuten

More l tried to work with your template...still have technical issues...am l alone??

l though Apari MT4 was the problem then l installed it to OANDA same thing...

1) when changing TF...enormous lag...My computer is brand new...Not the cause...
2) when l right click on chart...cross is coming by default like a personal customization from you...Have to left click to remove it...Didn't find yet how to reverse that setting...
3) when l try to look back to study...l find on the way horizontal and vertical lines named crosshair lines...What for?
4) if l try to put just crosshair indi to a new chart trying to see what it does nothing happen

l thing something is wrong somewhere into tpl causing the lag...or maybie it is related to your customization...
Just wondering
Thanks

Forgot 1 more if l click on lines to delete it as usual nothing happenned...have to go through objet list box to remove it
  • #98
  • Feb 4, 2016 10:51am Feb 4, 2016 10:51am
Quoting ben.deschain
Hi Almuten More l tried to work with your template...still have technical issues...am l alone?? l though Apari MT4 was the problem then l installed it to OANDA same thing... 1) when changing TF...enormous lag...My computer is brand new...Not the cause... 2) when l right click on chart...cross is coming by default like a personal customization from you...Have to left click to remove it...Didn't find yet how to reverse that setting... 3) when l try to look back to study...l find on the way horizontal and vertical lines named crosshair lines...What...
Hi Ben,

Ok, what's happening could be coming from two different problems:

1. The Global Crosshair indicator. It's a bit cumbersome, but you don't need it. I just find it useful for backtesting, etc.. and getting to know the relationships between one TF and another. It you hit "Cntrl + i", the indy list will come up and you can either remove it or adjust it to completely turn off. Whenever you apply the template to a chart, it will be turned on though. The purpose of it is when you have multiple charts open, you can position the crosshairs on all of them by moving around on just one.

2. The calculations are a bit resource intense. I might see if FerruFX can shorten the calculation length, like limit the number of bars the calcs are done on and see if that can still maintain the integrity of the method as it was designed. If you have a lot of bars set up on your charts, the indys will take up a lot of CPU power. It's kind of one of the drawbacks, I'm afraid. I have an Intel 5820k processor with 32 gigs of ram and it lags a bit for me as well. I even overclocked it by 800mhz.

Let me know if this helps at all though.
  • #99
  • Feb 4, 2016 11:01am Feb 4, 2016 11:01am
Quoting Almuten
The first element is the indicator I call the "HAC." It's an acronym for "Hurst Average Composite." I learned that one could project profit targets using Hurst averages on tradingfives.com, so I thought I would incorporate that into my analysis, but as always, cycle length is an issue. What length to use? Well I decided that I would have a dynamically-adjusted cycle using John Ehler's formula. I have four moving averages involved here. The base one is the cycle period displaced forward by half its length. The other three are 1/3 the base, 1/2 the...
Hey Almuten,

first of all I want to thank you for sharing this system.

Before I get deeper in a system I would like to understand more about the indicators which are used. May I ask you to provide me a link or even a pdf-file with John Ehler's formula and his explanations? I already tried to google it but unfortunately I couldn't find any information.

Best regards !!!
  • #100
  • Feb 4, 2016 11:18am Feb 4, 2016 11:18am
Quoting Plague
{quote} Thanks, I will look into H4-based method too. As a sidenote, I find NZDUSD to be pretty technical, maybe it will work too because of that?
I'll look into that pair too. I haven't tested it out on that one, but like all pairs, it will have little quirks, I'm sure.
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