Advanced TST

If you aren't familiar with Triple Screen Trading, it is a basic technical trend following strategy involving three timeframes:

- Wait for a trend to develop on the highest timeframe.
- Drop to the second timefame and wait for a pullback against that trend.
- Drop to the lowest timeframe and enter when price turns back in the direction of the larger trend.


This is a fundamental analysis-based variation of Triple Screen Trading.

The setup ... I don't start looking for a trade until these three conditions are met:

1. The weekly chart is indicating that a trend is in place.
2. The daily chart shows a pullback against that trend
3. The fundamental reason for the weekly trend is still there, meaning the trend is likely to continue.

Only when these three things are in place, I drop to the 4H charts and enter if/when price breaks back in the direction of the weekly trend.


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Fundamental analysis can be intimidating and overwhelming if you try to do it all yourself. There is a massive amount of information coming from every country every day ... economic data, trade conditions, local and international political concerns, changing fiscal policies etc ... it's far too much for any one trader to analyze and use. Luckily we have teams of highly educated economists in each country, absorbing all this information, analyzing it for us, and boiling it all down into simple summaries we can use. They are called central banks .... and while they aren't perfect, following the direction they provide will put us on the correct side of all of that information more often than not. If you don't trust central banks, or if you buy into the conspiracy theories about them, just try to do all that work yourself. I dare you.

In the commodity markets, COT data serves a similar purpose. COT positioning represents teams of the sharpest minds in the business, who spend their days absorbing and analyzing every available piece of information about every tradeable commodity. Trading in the same direction as them should put us, more often than not, on the correct side of that mass of information.

I think it's pretty cool that these two tools are available to us as traders. When you think about how much information is being collected on our behalf, analyzed and condensed into such an easy and useful format, by teams of people much smarter and more experienced than ourselves, it seems silly not to take advantage of it.

I've simplified things here ... there is a lot of nuance and discretion involved in my analysis which I'll get into later but my basic FA rules are:

- Only buy a currency if the central bank is hawkish/becoming hawkish.
- Only sell a currency if the central bank is dovish/becoming dovish.
- Only buy stock indices if all major central banks are simultaneously dovish.
- Only sell stock indices if all major central banks are simultaneously hawkish.
- Only buy a commodity if COT shows large speculators are buying.
- Only sell a commodity if COT show large speculators are selling.

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I only trade Weekly/Daily/4H charts .... if you want to use different timeframes, please do it somewhere else. If you are combining FA with TA, one of the most important things is that the different components of your strategy are unfolding over the same time period. This sounds obvious, but it took me a long time to figure out and master this basic idea. If you think you have a handle on the fundamentals, the first question to ask yourself is how often do the fundamentals change? If you are trading reactions to intraday news releases the fundamentals are changing several times a day, so you need a technical system which gets you in and out of the market (on average) in a few hours.

Since I am trading longer term themes such as central bank sentiment, which maybe change once or twice a month, I try to get in and out of the market (on average) in a few weeks .... so lower timeframes simply don't work with this strategy.

First example - copper.

Weekly chart is clearly showing a long term downtrend:




Daily chart has pulled back, to the 50 & 20 EMAs:




But COT shows large speculators still selling, making the downtrend more likely than not to continue.

From there I drop to the 4H and look for a series of inside bars, or sideways consolidation pattern.

I place an entry order at the bottom of that range, and S/L at the top of it:




So my order only gets filled if price breaks out of its range in the direction of the weekly trend.

Anyone looking for a no bullshit discretionary strategy/ trading model and wants to learn from someone who knows how to trade the markets successfully over a long period of time, pay close attention to numb and his thread..

How do I know this.. I've traded the same accounts as numbnuts and know exactly what he's capable of...

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Hey numb, you kept this quiet.. don't share to many secrets ..lol..

Subscribed..

subscribed. Very nice thread!

Promising. Subscribed.

100% agreed.

Subscribed too.

Cheers Ja ..... as you know i have done OK for the last two or three years, but gave a lot of money back in the first two months of this year. After going over all my trades with a fine tooth comb trying to find where I had gone wrong, I walked away from the market for a little while .... only when I stepped back and looked at the big picture I realized I shouldn't have been trading currencies at all during that period. I was still trying to buy USD and GBP since their economies were the strongest of the majors, although the Fed and BOE were clearly backpedaling from their previous hawkish positions.

That is where I have been lacking IMO, having the discipline to recognize when conditions aren't suitable to trade and sitting on the sidelines for weeks on end waiting patiently for the markets to come back. I have been guilty of trying to force trades according to my own timetable instead of adjusting my tempo to fit what the markets are doing.

Hence the reason for me starting this thread. If anyone trades this with me they will profit, but that obviously isn't why I am sharing it ... like almost everyone who shares their strategies, my reasons are selfish. If a few smart traders join in and trade this strategy alongside each other, I am hoping it will help keep me focused and able to identify those times when trades simply aren't there.

I think the big secret to trading, is that there is no big secret. There is just a handful of simple, commonsense rules which have been around forever and keep getting repeated over and over:

Don't bet against central banks and big players.
Trade with the trend.
Buy dips, sell rallies.
Be patient, wait for the best trade setups.
Get out of losing trades fast.


Trading this strategy automatically puts you on the right side of all those rules, every time .... they are all baked into it, and it doesn't actually consist of much else. I think this is the simplest possible strategy which encapsulates all of those rules without being diluted by a bunch of other crap which may or may not work.

Wheat is clearly trending lower on the weekly chart:




The daily chart shows a pullback, to a level of recent resistance:




But COT shows that the big players are still in sell mode:




Now on the 4H chart I see some inside bars (consolidation pattern) starting to form:




I'm placing a sell order at 4.69 (bottom of the consolidation range)
Stoploss at 4.755 (just above the top of the range)
Exit at 4.57, above major recent support

Nice move. Great method here. Logic prevails.

Having COT as an FA backup to your TA appears to be a very nice addition:-)

Thanks C. The biggest problem with technical trend following is that when price starts moving against the trend you never know if you are looking at a short term correction or a reversal of the trend ...... but if you are aware of the fundamentals driving the trend you have a pretty big clue

Thanks for sharing numbnuts,i am subscribed.

Hello numbnuts!
I am very excited to see you hold a thread in trading system section.
I start learning fundamental analysis by reading some of the blogs that you recommended in your other thread every day.
Hope I can learn more about your trading method.
Thank you very much.

Copper and wheat both broke out of their ranges to the upside, rather than the downside, so I cancelled the sell orders.

German Bund (DE10YBEUR) has been trending higher on the weekly chart:



On the daily chart, price has pulled back to the 50-day ema, which it has respected before:


But ECB is still printing money, indicating more strength in the Bund.


Now the 4H chart is showing some sideways consolidation, indicating weakness in the pullback:



I'm placing a buy order at 164.8, S/L at 164.1, TP at 165.9.

Ja, agree with you 100%.
And you're just being modest, as you're rather good at this game yourself.

Just curious, numb, which MT4 br0ker has those commodities, bunds, etc charts available?

Thanks,
David

I second that H. Cheers to all you guys. :-)

I'm using Oanda ...

Coming from you guys that's quite an honour..thanks... Though you never feel that your good, I always feel like a student who needs to try harder.. lol..

Hope everyone is having a good Week