HAC & RAC - A Simple-Minded Approach

Almuten - Great thread !

question- How do you use the Global crosshairs, indi Not sure its working on my chart correctly.

Really enjoying your insights with this approach.

Well what do you mean then? Maybe I misunderstood something. If so, I apologize.

Well the template has it set up already. But how it works is that if you have a chart open with the GH on it and then you open another chart, say, of a lower time frame or even another currency pair, the chart with the GH on it, and you move the cursor, the other chart will have an orange set of crosshairs moving on it. So it takes at least two charts to be open to see how it works.

With this method I found it useful to see correlations from a setup on say, an M1 chart to one on M5, M15, etc...

Let me know if this doesn't make sense.

RAC - finer points

I wanted to say a few things about the RAC because while it's a confirmation oscillator, it also says something about the bias of the market, as well as whether or not the market is operating cyclically or in a trending mode.

Bear in mind that this oscillator utilizes a cyclical component and fractions and multiples of cycles. Those are converted into displaced moving averages and a moving average of the RSI (with a period length equal to the main cycle length) of those averages is what makes the oscillator. That's basically how it works. As I said earlier, it's a derivative of the RSIOMA oscillator (which you can look up on the internet). No secrets here.

When the RAC is above 80 or below 20 it represents strong (RSI) momentum of all 4 displaced moving averages. In the chart below, you can see how the MAs fan out when the RAC is at an extreme. In this example though, the MAs aren't auto-adjusted dynamically so they won't match the RAC perfectly, but you get the idea.

RAC - Finer Points Contd...

This oscillator is also a BIAS indicator. The 50 line shows whether or not the bias is up or down. If the shorter displaced MAs are above the longer ones, then the RAC will be > 50. If below, then < 50.

When the RAC is flat at the 50 line or banging around it first above, then below, this means the the MAs have all collected together, like in the NZDUSD chart below. The market won't move when like this.

Knowing this information has a lot to do with the quality of the trade, or the likelihood of it moving quickly. A meandering RAC near the 50 line can be looked at with some extra care. AGAIN, this is in a meandering situation, like in a consolidation pattern, etc... A good cross coming out of 20 is still a great potential long if it meets the other criteria and a cross below 80 is still a great short. If it stalls at 50 however...well be mindful of that. It's best to get a cross from an extreme and then keep on trucking through 50.

If it has been meandering near 50 but above it and crosses up, then the probability of the trade working is greater than if it crosses down, etc... These situations are going to happen plenty of times, so it's good to be mindful of.

This is just something to, once again, help establish context.

HAC - Finer points

Now that you guys have seen this stuff for a bit, I wanted to get into why I made this indicator the way I did and the reason for some other things. If there's some logic involved, it takes trading from the realm of following indicators blindly like a monkey into something more meaningful.

Granted, a monkey could do better than me at this, but...since I have a brain I like to use it. I sometimes forget that I like to use it, but really, I like to use it.

Anyway, consider the picture below. What is happening there? There are lots of direction changes, etc... In the midst of the chaos, there's an equilibrium, or tipping point. The HAC line is the average of all of those lines and thus, is the tipping point.



When the market crosses the HAC line, what it's doing is crossing that tipping point. Ah, but what made it? Aggregate Disagreement. There were people who thought one thing and people who thought another. Or, if you're more of a devious turn of mind, it's the place where the brokers and market makers gathered the hapless and prepared them for slaughter prior to taking it in the direction they always knew it would go.

At any rate, some goings on & back and forth was happening, whatever the real causes are.

The reason I'm telling you that the HAC line on one TF has to catch up to another one prior to a move being made is because until it does, there's no back and forth on that TF at all. It's not even in the neighborhood of the slaughterhouse yet, let alone in it. It has to be present. The more TFs that are in the neighborhood, the greater number of "unlikely" events will be made available. A trade worth taking isn't going to happen with just an M1 setting up. It's such a remote possibility it's not worth consideration.

This is also the reason that I strongly advise that there be very few periods from a trigger from one TF to the trigger on the next and so on. Why? Because the fewer periods there are in between, the more participants have gathered into one nice, neat little area. Once the direction proves one way or the other, well, it's like somebody shouting "Fire!" in a crowded movie theater. They'll be trampling each other to get through the doors.

I know, I'm being a bit dramatic but it's more fun this way

Blind monkey huh, I've seen a profile pic somewhere around of here of a monkey, dunno where . I reckon he follows those indicators a bit blindly sometimes. Gets dramatic for that monkey

Speaking of dramatics, I heard a yarn about a bunch of fleas wanted to get into acting, such a performance they put up when it was found they couldn't act, talk about drama

Thank You ALL

I wanted to thank everybody for looking at this with me. I can't begin to tell you how much it has helped to focus me and to help alleviate my fears of trading. Public humiliation is as fearful than losing money for a lot of people (at least me), so this is really good for me.

This isn't my first time at the rodeo when it comes to trading though. I did it professionally for five years trading S&P futures. I started out as a financial cripple. Before I got into this I made $15k a year industrial painting and sandblasting. It was a dangerous and grueling job. Naturally I wanted to find a more humane way of making a living, which is why I developed an interest in trading. Besides, I didn't like alcohol enough to keep working the job I was working (it's kind of a necessity after years of doing it). Anyway, I happened to find that the man who invented the stochastics indicator, George Lane, lived in a small farming community not far from me. It felt like fate, so I contacted him and he soon became my mentor.

I sat with that man every day from 6:00 am to market close for two years and learned quite a lot from him. (Did you know he was the one in possession of R.N. Elliot's work and gave it to Robert Prechter? Larry Williams also got his %R from him as well.) He also taught classes twice a month and I helped him with those. I found that I had an almost "Rain Man" ability to read price charts and would make accurate market calls constantly. Imagine my joy! Consequently, some of the students offered opportunities to trade for them and, having no real money of my own, I took them up on it. (One guy knew me for three days and gave me a $100k account to trade for him - crazy!) Most of them were pretty well-off and some were very wealthy. I had no other real opportunities for adventure and fortune, so I went with it.

I can't begin to tell you the eventual pressure that put me under though. I wasn't ready for it emotionally, but I left George and took the offer of a very wealthy and kind gentleman across country to trade for him. The man actually bought me a 4 bedroom house to live in, which wasn't the first offer of that kind to be made, but I felt better with him than others so I took him up on it. Can you imagine it though? There are people out there like that!

So there I was, far from my childhood home in the boonies, vulnerable and untested in the world of trading. Moreover, making or losing what was formerly a year's pay within the span of a few hours was so damned surreal at the time. I was fighting that. Anyway, the freedom and objectivity I first felt when I got into trading left me. No more Rain Man

To compensate, I simply worked harder...and I mean much harder, like my life depended on it - which it sort of did. I produced from 45% to 95% returns every year, but I'm telling you it took its toll in ways I can't describe. I was a wreck. All I wanted to do was get out of that situation and get into "normal" again.

But here's the thing...and some of you might have experienced this too; going from a world of limitless opportunity to virtual boredom and wage slavery, working for unimaginative, corporate reptiles who wouldn't know a sound risk to take or change to make if it bit them in the balls, is also maddening. Trading, that distant memory, still lingered - helped by the fact that I still spent 4-5 hours a day studying markets. (Hey, it gets in the blood!)

So here I am again, after having lost my umpteenth job after saving yet another organization millions of dollars (ungrateful wretches), attempting to trade again. At this point it's clear that there is nothing else I'm suited for. I think the psychological damage is nearly healed and I've forgiven myself for the most part. When I used to trade years ago there was so much anxiety that even now when I do it I associate it somehow, even though the money is in minuscule amounts at present.

Well that's my story. I've had a few PMs asking me about myself, etc... so here it is, in public view.

Onward and upward!

Nice post you wrote here ...

Wish you all the best with your thread and in your trading ahead!

That's good reading. Me, this is my second go at forex, lost $300 last time trading micro lots which isn't much but when I struggled to turn things around knew I had to stop for a while. This time I'm up around $300 still doing micros looking for consistency in my trading, not quite there yet but it's coming. My day job is also in the painting field, boring and feel like I'm getting to old for it. Just turned 58 a few days ago and really feel I have nothing to show for those years in the trade. Funny where the money goes . Was self employed up to a year ago but never seemed to get anywhere with that, was near bankrupt so quit and went working for another painter which has enabled me to clear most of the depts to the point I only have a few hundred outstanding on the credit card today, and a few more months on the vehicle payments. So close now. Onward and upward indeed but back to the day job on monday again for me, can't stop yet.

Thanks Ferru

Oh brother! Another painter that trades? What are the odds!? Must've been fate my friend. And you actually traded this already once. Painters unite!

This year, after losing my job yet again (I think it's the "Asperger's Curse of Employment", or "ACE"), I painted a few houses to earn some money for trading. I still have an airless sprayer and other tools (just in case). Anyway, while doing so, I often pondered my decision to leave the painting trade, whether or not it was worth the anxiety and pain, and would I have been happier overall and so on. I can't really know the answer to that I guess, but I did think about it quite often.

I know one thing that was difficult with the whole trading thing. It was getting used to the notion of the possibility of making ridiculous amounts of money so quickly. One has to change his entire concept of value. My father was a painting and sandblasting contractor, so "by the sweat of thy brow" was pretty much what I learned from early on. At this point though (I'm 51 now), I figure it's time for me. I've had about enough of suffering.

I've got $500 burning a hole in the pocket of my trading account, so we're in the same boat. If I lose it, I won't be able to replace it very quickly. But you know, I once read something that Richard Dennis said (my old mentor used to have him as a runner in the pits of Chicago), it went something like "I'd put more faith in somebody that started with a small account than someone with millions." The idea being that the smaller account guy would be more attentive and develop better skills. I don't know if that's true, but it makes sense.

TIME: The only thing of real value

As I get older I realize more and more that everything has a time value to it. Ever think about that? I do all the time. And what's really funny is that nobody even knows what it is! How crazy is that? We all must be f*cking nuts!

Anyway, since my objective with the whole system was to make money, and time being a major factor in that endeavor, I wanted to make the most expeditious use of time that I could. This is why I worked at something that had an immediate result. Waiting for a profit to materialize not only ties up capital, but it's psychologically draining - especially if even a small loss is involved while you wait. God knows (or at least I do) it impairs judgment.

I've been through that hell before...not going there again!

Well....I am also a Painter and decorator, like wise getting to old ( 60 ).
Same position as both of you .

Gidday Calstock, fellow aussie huh, eastern states. I'm over on the other side

Gidday Mate, yeah Gold Coast, Queensland...here

What you said about the wave structures aligning themselves cannot be understated. As when they do align themselves they can be extremely powerful. I often refer to a setup in Tradingview for that very same concept.

Hmm....yet another painter? There must be something in the air!

Anyway, yes, I can understand the feeling of getting too old. Heck, even when I was 32 I realized I wouldn't last, especially doing industrial work. Only the small, wiry guys can do that crap into their sixties. It just beats up the body too much. And any painting, really, is like that. Other trades get to "think" and "ponder" about what their doing, like electricians, for example. But painters? If you're a painter and you're not moving and busting your ass, then you're not working.

Sure a lot of traders were painters in another live ...

Thanks for posting your indis and template - however, I loaded the template and in comparing with some of the screen shots you have put up, I don't understand which one is the HAC. Can you maybe put up a screen shot with labels of the lines? I only see red and green lines on the main chart; in the second indicator window is the RAC along with thin red line for RSI.