Trading Made Simple

hi
In case some one drops by to check the stream (or did). it is cancelled for tonight
sorry about very late notice

Eurcad from Oct-Dec 2016 on 4h chart, simply looking st green line and stochastic:
52 trades, with 39 profit (75%), 8 loss if small pips (no SL) and 5 equal (less than a couple of pips difference)

Look at from May 2016 until end Oct 2016. What do you see?

I was never afraid of the simplicity of this 5-Method.
The thing that made me afraid was the aggressive way Big E traded back then and the high risk he took in risking 15% to 30% of his account deposit per trade.
His aggressive entry on reversals using the APB/HA candles -candle#1 and candle #2 is far too risky for most inexperience traders. Risking 15% to 30% without any use of Position Sizing can lead to huge losses.
Not using hard Stop Loss is another very risky and dangerous way to trade.
You need to know the man and his lifestyle to understand why he traded the way he did. You simply cannot try to trade like him when you are trading with your hard earned money which come from your full time day jobs.

The 5-Method is a very simple and elegant trend following methodology and you need to forward test this method in live market conditions to learn how to trade.
Back-testing by scrolling back to history charts only teach you certain things but in doing forward testing will let the market teach you much more about trading.

The Ups and Downs of Backtesting.

Couldn't agree more Emmanuel - if you get the Psychology and MM right, even a 50:50 system with 1:3 RRR will provide more than adequately. As you say - back testing doesn't give exactly what is needed as formation can't be seen in backtesting...RHS of screen STICKING to plan is the only way to test/validate a system...........once the Psyche and MM are sorted ( IMHO btw :/)

Thanks,
I understand your point

I did backtest from May to September 2016 included. This is the result:
80% positive trades
14% negative trades (max negative pips 40, never trigged SL, average negative pips 10)
6% equal trades.



it is amazing how three factors in combination (green line crossing red with inclination, HA bar color and shape, stochastic orientation and inclination) are highly predictive of market moves. In particular, even a very small green line crossing, accompanied by the congruent HA bar color and shape and congruent stochastic, can intercept very early big moves, with only minimal loss in case of false breakout. The risk/reward ratio is clear in favour of reward.
The backtest was on EurAud 4h chart.

infact I took a diary of my trading during the last month applying TMS according to BigE. The balance was positive but it could have been much more positive if I had folllow his system without deviation. In numerous occasions I checked the trade inbetween 4 h, sometimes exiting before the end of the 4h. I not always checked the trade at the end of the 4h chart or, if I did it, I did not follow exactly the simple rules.
So, the final cinckusion so far is:
follow BigE's simple rules and, on the medium-long run, you will be always in profit. Introduce some modifications to them and your risk/reward ratio will worsen.

I think Emmanuel wanted you to look at the period mentioned on the Ecad as on the weekly chart it was in consolidation over that period.

Backtest on euraud on daily chart from May to January 2017 included, with BigE's strategy:
80% positive
10% negative
10% equal

Backtest on BigE's strategy, on Brent, 1D chart, May-January 2017:

26 trades,
88% positive
11% negative (max loss 80 pips)
1% equal

I think it's very risky, shorting while price keeps making HH and HL, noted.
Thanks Mokuro

Bachtest of BigE's strategy with USDCAD on 1D chart from May to January included:

78% positive
16% negative
5% equal

Much more pips if opening trade in reversal, when green line merges with red line and stochastic gives a clear signals. It seems the stochastic has the power to identify reversal earlier then green price line.

Sanbernardin
If possible please post those trades that coursed the 16% negative.

BigE used stoch only for direction. He also stated that stoch is worthless above 80 / below 20
If you start to use stoch like you indicate then it will be like trading the Craig Harris Stochastic Method.
It seems the stochastic has the power to identify reversal earlier then green price line - your observation is 100% correct.
Ask myself why did BigE used stoch only for direction when stoch give such early warnings.

Answer:
What I look for if I'm on the chart to exit:
If the wick on the top candle has withdrawn 5+ pips I exit.
Is the last candle weak... no momentum to speak of... I exit
If the green line is starting to go flat or hooking over.

When green starts to behave like that then you will know a reversal is on the way. Look / compare stoch and green. Stoch is still thinking what to do when green has already done it.

The Stochastics become useless when the price trend is strong. When the Stochastics is above OverBought OB level and below OverSold OS level, the TDI still give you some trade opportunities.

make your trading decision based on the following importance :
1) The price action at support/resistance.

2) TDI

3) Stochastics is optional, only to see if it is in the same direction as the TDI. If the Stochastics is above OB or below OS, ignore that. Rely on 1) above and 2) for confirmation.

4) Price / TDI Divergence (optional, use this only when you see a burst in strong trend followed by a clear reversal then a correction/price pull back, and continuation)

Keep It Simple, do not overwhelmed yourself with too many price bars / candlesticks patterns, and chart patterns, etc.

Too much time is being spent on TDI and Stochastics,
Too little time time on Price Action and Support/Resistance.
And no time spend on Money Management, Risk Management for entries and exits, When and How to Let Profits Run.
You need to find your WINNING EDGE and the TDI is not in the winning edge equation.

I agree...

its very true new traders dont care about the price they trade the indicator instead.

Emm what are you implying by this: "TDI is not in the winning edge equation"

It will take to long to post every reference to TDI by BigE so here is the most used one:
18 – 261
Don't contact Dean Malone about the TDI. The way he uses it for his method is 180 degrees
from how we use it... you need to learn how to use it our way...
The TDI is the heart of our method. <----- Who does not understand this
It tells you when to enter and where to exit any trades... <---------- or this one
so review previous posts and learn it good.
HA Candles are important because it makes your trading way less stressful... use them.
Stoch's is nothing but confirmation. If Stoch's & the TDI give different signals... lights flash
off and on warning me to take a closer look before entering.. and usually I look for another
trade.
5 ema... shows direction currently... only wanting to enter on candle 1 or two. If there is a
reversal do I have a TDI signal to enter... if not and all looks strong then enter on candle 2...
use some discretion... practice on Demo... take some chances and see if yor head computer was
right... it's free.
Now after 74.858 posts and a couple of years later you make such a statement.

From BigE's first post #1 right up to his last post was and still is the TDI cross.
Trading Made Simple is about TDI and how to trade it.
Every post of BigE is about TDI cross and how to trade it.

ensale
To what do you agree to?
Please give a detail post why you agree with emm post with reason for every point so that the newbies and myself may learn.

executivefx
why should they care about the price?
what about the price should they care ?
Again executivefx give newbies and myself some guidance so that we can learn

Why are the three of you posting junk remarks without statementing it with fact's.
Not facts that you suck out of your thumb or from some book you read or webpage. If you do response to this post do it with what BigE has posted. (sample in this post)

Emm what are you implying by this: "TDI is not in the winning edge equation"

Onceupon a time I was a "blind" follower of this thread and some of it's core principles....

For any trader, indi's are just tools and should be used and interpreted as simple tools, like a screw driver and nothing more...
NO!!!! TDI as intrinsic indicator IS NOT the wining edge!!!! Get this very very well in your head, atherwise will pass years until you manage to change something in your "trading", and eventually produce some money in your account... Eventually u will get lucky few times, but all the profit you will get from any markets you will give it back due to lack of basic knowledge and understanding about financial markets:
- price and price action, where is current price in respect to last trading level starting from long term to small TF; (BTW Price Action is not what some morons do, meaning looking for some candle signals at some levels, or some graphical/chart patterns, price action means understanding if a level come in as acceptance or rejection, and other concepts like this. Q? would u still open buy position in close vicinity of a level that was rejected 2 times? Me I'll sell that level until it will prove me wrong!)
- WHERE IS LIQUIDITY IN THE MARKET? WITHOUT LIQUIDITY NO TRANSACTION COULD BE REALIZED; WHERE POSSIBLY COULD BE THE SL ORDERS OF YOUR COUNTER PARTY ( TRADING IS A 0 SUM GAME!!!, IN ORDER FOR U TO WIN SOMEONE WILL HAVE TO LOSE);
- what is the current trend AKA .. are the real big players still investing in that direction, it could be sustained the move in that direction, this kind of question!!!
-RISK AND RISK MANAGEMENT! and again MORE RISK! RISK! RISK! RISK! RISK! RISK! RISK!.... did u ever spent time to understand what this mean?! U invest a certain amount of money in order to obtain some benefits! If u invest 10$ to gain 1$ profit (BTW this is the analogy for SL placing, and if u use a 100pip SL for a 50pip potential gain...) ... I don't know, but this is stupid investing... this translate in FROM WHERE U BUY AND SALE INTO A FINANCIAL MARKET, ANY MARKET... Focus in buying cheap (low levels) and selling high! So much can be told here...
- Basic knowledge about market fundamentals, u don't need an MBA, but knowledge about INFLATION, RATES, YELDTS %,BONDS, Money flows, why things happen in a certain way... a few market interconnection, WTF! we live in a GLOBALIZED age, do u think that what happen something in South Africa will not affect markets in EU or US or Australia..( just an example..)
- Try to understand the COT (Commitment of traders) this will give the overall big picture...if in the next weeks a certain currency will be sustained by the Institution, and will be "strong" or is going in a revers way, big traders pulling out positions, losing interest. (As a trading idea... based on info like this is logic that at the next level, or any close important level u will expect a reaction that would make sense!)

If u are trading stop, stop and invest time and energy in aspects described as above (and those are just very very few things! )... Develop something based on sound understanding not blind Indi crosses...!

If u buy at a bottom level, and u are stopped out,evaluate and understand what is happening at that LEVEL, u either fall in a trap = STOP RUN! price manipulated intentionally lower for big volumes to be matched, in order for price to continue higher (this is the situation were most of traders just sit and cry after the lost position, when they should search for opportunities to go back in the trade in the long direction, after the first sign that the initial long trade was a good call = knowing and understanding price action!) or u simply situate yourself at a wrong position, u are literally at the end of the road (end of swing) and should turn in the opposite direction, u should either reduce risk or simply close the position and open trades in the other way! THIS IS HOW SIMPLE IT IS.... No cry, no pain, no remorse...

If u want to develop a good "technical" side, u better invest some money in a good back testing software, and play with it (instead of spending time with video games!) http://www.forextester.com/

Keep in mind, in no institution from Deutsche Bank to GS an JP Morgan, no trader enter the market based on some blind "so called signal" from a stupid stochastic or RSI, MACD or TDI...
Not a Institution level trader SPEND TIME WITH indi's based on equation and mathematics from old price (OK! they develop mathematical and statistic models! but they use a wide range of VALUE BASED INDICATION and VOLUME!! ), this is not leading indication, and future price don't give a shit about indicators action and crosses... Real Pro Trades base their trading on finding VALUE...where is the value in that market, does a higher price bring value, or that product is overvalued and suddenly everyone pulling out their money, and in this way u end up with a nice sell....

If u are truly passionate search for "education"... actual education not retail level, atherwise all your life will look for divergences and crosses, and will ask why your position end up in a lose; I'll tell u why! because u probably bought the top or sell the bottom, this is why.. u where the last sucker that smart money need it to unload their position!

All of these I discover in time and came with experience!... and where in all of these come this simple indi called TDI, which BTW I get rid of it.

Good luck, and Good Trading!