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HAC & RAC - A Simple-Minded Approach

  • #161
  • Edited 8:14am Feb 9, 2016 7:48am | Edited 8:14am
Quoting dokopy
Can you please show a complete trade? In the graph, including the SL and PT.
Sure dokopy.

In the pic below there are two charts. The one on the left is H1. The trade was triggered with a nice clean cross while the price action was still in the HAC. Stop loss would be placed beneath the low.

A few hours later, an H4 trade was triggered, only this time the cross was of a different type. It crossed above 20 as the HAC was being penetrated by the price.

When trades trigger in rapid succession like this, it makes them particularly strong, especially when the RAC is just coming out of 20 for longs and down from 80 for shorts. Also (I didn't show this), if you check when M15 had a trigger, you'd see that it happened just before the H1 triggered. When M15 triggered, M5 had just triggered, etc...

Initial stops are always beneath the prior high or low. They do not have to be hit, but it's wise, I think, to calculate the risk in this way. If the trade isn't going to work out (this is especially true when you're playing higher TFs like H1 & H4), an M15-M1 series will set up the other way and you should close the original trade and reverse. That way you can make some money after taking a small loss on your original position.

Trades are officially closed when:

1. They have hit a 3x level
2. They have their stops taken out

Until one of those events occurs, the trade is still considered active and will have an influence on the overall market action. Moreover, multiple trades can be active. Even trades going the opposite way can be active (which happens in consolidating markets - like in the GBPAUD lately).

As far as profit targets go, as in the example below, the swing low to the HAC line is where you draw the "collective risk" area (see a prior post #74 for this explanation). I set my fibs in even increments - 1:1, 2:1, 3:1 and so on because that's how human beings think when it comes to taking profits. They do this collectively.

3x, especially on an H4 chart, is where I consider the trade to be ended. It's rare that it goes further than that. On H1, the PT can hit 4x (see second pic). Oftentimes, the 4x on H1 is equal to the 3x on H4 (as in this example).

Does this help?
Attached Image(s) (click to enlarge)
Click to Enlarge Name: GBPJPY 2-9a.PNG Size: 110 KB
Click to Enlarge Name: GBPJPY 2-9b.PNG Size: 107 KB
  • #162
  • Feb 9, 2016 12:23pm Feb 9, 2016 12:23pm
Well thank you. As I see it: The H1 is input invalid because RAC is higher than 20. PT 3x would not work. H4 on the input OK. PT 1x, 2x, 3x, 4x is easy to find in the history. I have to decide after accession.
Please excuse the bad English via Google Translate.
  • #163
  • Feb 9, 2016 1:09pm Feb 9, 2016 1:09pm
For me it is also invalid input H4. The first candle is wrong RAC. The second candle is wrong HAC.
Attached Image (click to enlarge)
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Please excuse the bad English via Google Translate.
  • #164
  • Feb 9, 2016 1:13pm Feb 9, 2016 1:13pm
Quoting dokopy
Well thank you. As I see it: The H1 is input invalid because RAC is higher than 20. PT 3x would not work. H4 on the input OK. PT 1x, 2x, 3x, 4x is easy to find in the history. I have to decide after accession.
Hi dokopy,

Can you please explain what you mean a little bit more? Maybe I'm misunderstanding something and I didn't want to comment on something you didn't mean. What are your observations and thinking on this?
  • #165
  • Feb 9, 2016 1:28pm Feb 9, 2016 1:28pm
Quoting dokopy
For me it is also invalid input H4. The first candle is wrong RAC. The second candle is wrong HAC. {image}
I think I understand you now since you sent that pic. Here's what mine looked like up close. Maybe it's just a slight difference in brokers, etc... I don't really know. Anyway, at the time of the cross, the HAC on mine was 166.556.

But look, in all reality, that HAC line, going from one bar to the next, is oftentimes going to have an angle to it. In that case, you have to eyeball it anyway. Will it make a difference? Sure. It will be a few pips off now and then. I've been putting these lines on for the last, I dunno, six months for 8-12 hours a day testing this stuff, so most likely I'll be able to give it the right amount of "Kentucky windage" when needed.

But here's a tip. Watch the way the market acts when it hits the 1x, 2x lines and so on. If it seems to overshoot them a bit or under shoot them before reversing and making reactions, well, then try to draw the lines a little different if it matters to you. I like them to be as accurate as possible because I think it's a great piece of information to have.

Did I address what concerned you dokopy?
Attached Image (click to enlarge)
Click to Enlarge Name: GBPJPY 2-9c.PNG Size: 48 KB
  • #166
  • Feb 9, 2016 1:35pm Feb 9, 2016 1:35pm
Invalid input H1 is your first picture.
Please excuse the bad English via Google Translate.
  • #167
  • Feb 9, 2016 1:37pm Feb 9, 2016 1:37pm
I think I just figured out why I'm so tired. At first I thought it was because I've been up since yesterday. Geez, even with a simplified system, trading is hard when so many pairs look like this today:
Attached Image (click to enlarge)
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  • #168
  • Feb 9, 2016 2:25pm Feb 9, 2016 2:25pm
Quoting Almuten
RAC - "Green Shorty" Version Ok I know everyone out there won't have a powerful enough of a computer to be running lots of instances of these indicators and you don't want to have to keep switching TFs to verify this or that. Anyway, I have something that might help you out if this method really interests you. Though I'm reluctant, I will share this. In my opinion it won't have the same probabilities as a multiple TF setup, but if you're hell-bent on using just one chart, then you might as well lower your risk in the bargain. Plus, I guess it will...
Thanks for this GreenShorty. Here a "quick&dirty" trade on GJ M1:
Attached Image (click to enlarge)
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I exited way too early - as always - and missed another 120 pips instead of just rolling down along the cloud...
  • #169
  • Edited 8:15pm Feb 9, 2016 7:37pm | Edited 8:15pm
Quoting Go5
{quote} Thanks for this GreenShorty. Here a "quick&dirty" trade on GJ M1: {image} I exited way too early - as always - and missed another 120 pips instead of just rolling down along the cloud...
Nice one! And congrats!

I don't know if you want to mess with this, but in my research I tried a lot of things from many different methods. Since you like Ichimoku, try using the RAC as a means of a cloud-break confirmation. This works really well, especially if you lengthen the RAC multiplier to 2.00. When the RSI of it pops up, it's a good indication that the cloud will be at least partially penetrated.

Like anything else, it works best if the market isn't too choppy.
Attached Image (click to enlarge)
Click to Enlarge Name: ICHIMOKU.PNG Size: 53 KB
  • #170
  • Feb 9, 2016 9:09pm Feb 9, 2016 9:09pm
  •  FerruFx
  • Joined May 2007 | Status: MT4/MT5 EAs/Indicators/Alerts coder | 6,542 Posts | Online Now
Quoting Almuten
{quote} Like anything else, it works best if the market isn't too choppy. {image}
If well managed with tight stops, choppy market is by far covered by the trend trades.
MT4/MT5 EAs/Indicators/Alerts coder
  • #171
  • Feb 10, 2016 4:00am Feb 10, 2016 4:00am
Almuten

My friend could you assist in connecting continuously-moving cross-hair orange if possible please explain how to do this,
or do better HACnRAC -Shorty .tpl Template without this feature.
Thanks in advance vvFish
Attached Image (click to enlarge)
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Only the price on the chart can show the entrance to the deal...
  • #172
  • Feb 10, 2016 6:48am Feb 10, 2016 6:48am
GLOBAL CROSSHAIRS - the "pesky orange line"

If you want to turn off the orange crosshairs, just open it up and make the first selection false. Or remove it altogether. It's not a requirement of the method/system anyway. It's only there to help verify a trade during backtesting/learning the system.

Trades going forward in time, if you're watching them set up in real time, can be checked for 'tightness' between TFs without the use of the crosshairs. Again, I just thought it would be more convenient for learning purposes, as I certainly found them useful.

Thanks goes to vvFish for bringing it up

As suggested, I have here two templates with no crosshairs on them.
Attached Image (click to enlarge)
Click to Enlarge Name: Crosshairs.PNG Size: 62 KB
Attached File(s)
File Type: tpl HACnRAC - No Crosshair.tpl   3 KB | 273 downloads
File Type: tpl HACnRAC -Shorty - no Crosshair.tpl   3 KB | 340 downloads
  • #173
  • Feb 10, 2016 7:45am Feb 10, 2016 7:45am
Quoting Almuten
GLOBAL CROSSHAIRS - the "pesky orange line" If you want to turn off the orange crosshairs, just open it up and make the first selection false. Or remove it altogether. It's not a requirement of the method/system anyway. It's only there to help verify a trade during backtesting/learning the system. Trades going forward in time, if you're watching them set up in real time, can be checked for 'tightness' between TFs without the use of the crosshairs. Again, I just thought it would be more convenient for learning purposes, as I certainly found them...
Thank you.
Only the price on the chart can show the entrance to the deal...
  • #174
  • Feb 10, 2016 8:16am Feb 10, 2016 8:16am
GBPUSD

Here's two active H1 trades going on with this pair right now. Remember that all the H4 trades to the long side have been fulfilled...unless it does a rare thing and go to an H4 4x level. This we can't know for sure. Anyway, when the market hit the 1x level on the H1 short, it bounced off of it and set up an H1 long. Checking the lower TFs, this trade was actually really clean. Not many bars between H1 & M15 or between M15 & M5, etc...

But see how it bounced from the 1x level on the long side? so far, this current PB isn't setting up an M15-M1 short. It did set up an M5-M1, which isn't very strong. It will likely make a new high today at least.

[edit] I just noticed that the RAC is at 95 on M15 and price is nearly touching the HAC line. I think this is the makings of a real bounce up, but we'll see.

H4 has a PB setup with the RSI, as the RAC is > 80

D1 RAC is not near to crossing 20 so I wouldn't expect anything major.
Attached Image (click to enlarge)
Click to Enlarge Name: GBPUSD 2-10a.PNG Size: 129 KB
  • #175
  • Feb 10, 2016 8:37am Feb 10, 2016 8:37am
Quoting Almuten
GBPUSD Here's two active H1 trades going on with this pair right now. Remember that all the H4 trades to the long side have been fulfilled...unless it does a rare thing and go to an H4 4x level. This we can't know for sure. Anyway, when the market hit the 1x level on the H1 short, it bounced off of it and set up an H1 long. Checking the lower TFs, this trade was actually really clean. Not many bars between H1 & M15 or between M15 & M5, etc... But see how it bounced from the 1x level on the long side? so far, this current PB isn't setting up an M15-M1...
If there is a bounce up, then it will likely happen when the green HAC on M5 catches up to the red on M1. When they're in the same place, it will be more likely then.

Also, notice that M15 is set up for a PB.
Attached Image (click to enlarge)
Click to Enlarge Name: GBPUSD 2-10b.PNG Size: 110 KB
  • #176
  • Edited 9:08am Feb 10, 2016 8:57am | Edited 9:08am
Quoting Almuten
{quote} If there is a bounce up, then it will likely happen when the green HAC on M5 catches up to the red on M1. When they're in the same place, it will be more likely then. Also, notice that M15 is set up for a PB. {image}
I'm not sure why I like these complex situations. I guess I find them fascinating, plus it tests the robustness of various theories. Anyway, I wanted to point out that the M5 portion of this setup was 'late' in the RAC crossing, which also generally points to a reversal of the setup. And it is currently resting on its 1x level. That level is also the equilibrium point for the H1 long that was set up earlier - or is a few pips shy of it.
Attached Image (click to enlarge)
Click to Enlarge Name: GBPUSD 2-10c.PNG Size: 36 KB
  • #177
  • Feb 10, 2016 10:23am Feb 10, 2016 10:23am
Exceptions to the rules? ... there's a logical reason. Opinions wanted, please

Earlier today I starting to write a post with regard as to when one might disregard certain rules or at least diminish their importance. After watching the Yen pairs fall out of the sky - USDJPY in particular, I spent the past 5 days or so considering why this might be the case when on the USDJPY the HAC & RAC were, 'officially' not well synchronized enough. I even said I wanted to stay away from them for that reason.

Anyway, in the process of writing my post I noticed GBPUSD in the process of setting up a PB trade, so I got onto that one with the intention of resuming my revised theory as to when one might 'relax' certain rules. Well now seems as good a time as any to resume my original intent.

Recall that I generally want to know the 'context' of the market. In particular, I want to know if there are any active H4 trades; meaning ones that have not hit a 3x profit target or that have not been invalidated by having their stops taken out. Well last week GBPUSD, AUDUSD, USDJPY & USDJPY had all of their 3x H4 profit targets hit to the long side and these were even called and plotted in advance. There wasn't a single 3x level left on any of them. Consequently, an M15-M1 setup is enough to trigger an avalanche, which in the case of the Yen pairs especially, was the case.

Now, how often are we in such a condition? Not that often, really. Generally there are going to be active H4 trades happening throughout, which will provide a certain amount of tension that prevails and thus, will be reflected in the 'normal' operation of the indicators and the relationships between TFs. When that tension is gone, when the interested parties in one direction are no longer present, can we always expect things to act the same? I'm not so sure it's reasonable. I'd like to relax my dogmatism a little in light of this logic.

Take a look at the H1 & H4 charts of the USDJPY. Both had the HAC crossed when the RAC was nowhere near to crossing 80. As you've all seen by now, this relationship is important. But in this case, the market overruled the relationship on both TFs. The M15-M1 setup was fine - excellent even (if you care to find it). However, on those TFs, there were active (but poor quality) M15 trades happening to the long side. There was 'tension' on that time frame, but not on the longer ones.
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  • #178
  • Feb 10, 2016 10:51am Feb 10, 2016 10:51am
Quoting FerruFx
{quote} If well managed with tight stops, choppy market is by far covered by the trend trades.
I agree FerruFx. I don't think I have the skill or objectivity to deal with chop yet, but I know a lot of people are really good at it.
  • #179
  • Edited 11:53am Feb 10, 2016 11:22am | Edited 11:53am
GBPUSD - Reason for sharp recent PB

Generally there are multiple TFs that are showing 'x levels' in the same places - often to the very pip. I like to point these out because it's good information. Anyway, M15 showed a 3x target in the same place as did a 1x level for the H1 that triggered around the same time. Kinda spooky the way these things work out isn't it?

Anyway, the smaller TFs generally support the higher in this way. For the H1 long to resume (provided it doesn't fail - recall my post with regard to H4 3x profit levels being taken out), an M15 ought to set up and give it some juice. An M5 will likely not do it.
Attached Image (click to enlarge)
Click to Enlarge Name: GBPUSD 2-10d.PNG Size: 110 KB
  • #180
  • Feb 10, 2016 12:23pm Feb 10, 2016 12:23pm
GBPUSD Why stop beating a dead horse?

Ok, if I was to relax my hard & fast rules that requires a RAC cross under the conditions that there be no active H4 trades in the opposite direction, then the GBPUSD would officially have an H4 short in progress right now just because it crossed the HAC line. Moreover, the 1x on it would be near the lows on the D1 chart - about 58 pips away from it. This is a pretty sensible target.

On the chart below I marked the x level for our hypothetical H4 trade as well as the failure point for the current H1 long. It's just something to keep an eye on because between that failure point and the 1x target for a short, there are about 200 pips. Granted, by then there ought to be a better quality H4 set up because this thing isn't following the same pattern as the Yen pairs. Those just blew past the HAC without any concern for the RAC and kept on truckin'. This one is up to something devious
Attached Image (click to enlarge)
Click to Enlarge Name: GBPUSD - Hypothetical H4 Short.PNG Size: 58 KB
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