My trading strat.......

[jason0181]

I have just read through this thread, and the setup is similar to something that I have been looking into. Trying to get 10 points, and a tight stop loss is going to be tricky on many of the markets at the moment, so I have been looking at forex markets. With a 1 hour chart on GBDUSD, the signals are very clear, and the trades last for a few days. If we look at the last two that could have been placed.

11/09/08 Long - Entry 17503. This would have closed on 15/09/08 at 18045 Profit 550 pips.

I have gone short now, on the same signal
Potential for this one.

15/09/08 Short - Entry 18110 - Currently at 200 pip profit and rising.

I have not been able to back test this fully, but looking at the charts it does give strong signals. I need to work out the stop loss point, but have a good idea (just need more testing).

As these trades can run over night, I feel it may be best to run trailing stop losses just in case there is a large reversal.

Other pairs work better on smaller time scales, and will need to test more of these.

If anyone thinks that this may be of use, I will work on getting the 'rules' defined and publishing them.

 

[cupid-stunt]

Hi all! I'm new here so please be gentle with me!

I was very interested to read the original strategy posted and Jason's final reply above and although I'm a bit late as the last post was a while ago, I hope you can answer some questions:

Ceydababy's original post talks about the MACD and SAR turning green for a long trade. I use Metatrader where as far as I can see neither of these indicators have an option for alternate colours for up or down momentum. Given also that I'm colour blind and have to keep colours out of the equation as much as possible, it's something I'd like to avoid. So to clarify, where MACD histogram bars are above 0 and SAR is above the price action this, by your method would be green yeah?

I have by no means back tested the method fully and must also confess to not having read a lot of the posts on this thread yet. But I did have a cursory look at AUSUSD today with this system im mind and noticed that by the time the 2nd MACD histogram bar was 'green' most of the moment had gone from the move. Have you also noticed this or is it just a minor issue?

Jason, this is directed at you now: I looked at the trades you made on 11th and 15th Sept on GBPUSD and couldn't see where your entry was as on neither day on a 1 hour chart is there a MACD crossover. This therefore suggests I've got the total wrong end of the stick here and would be grateful if you could explain further your entry method. I'd also be interested in what stop loss you had in place for those 2 trades as I suspect 10 points will not be enough!

And finally, for Ceydababy: are you still using this method and how are you getting on?

Have fun all

Andy

 

[jason0181]

Cupid

I set my stop loss at the SAR, so is way more than 10 pips, often 100+ Due to the nature of some pairs, this is required so you dont get a spike early on.

My entry was once the MACD has crossed over, histogram changed from negative to posive, and the SAR momentum changed. The problem with this system is that is will pick up the trend once it has started, and sometime miss a large portion of the trend. You can run this in many timescales, but this is best when watching very closely intraday. I would suggest waiting until a reversal patten has formed and try to catch it as soon as it happens. This has worked for me twice in the past few days on GBPAUD, and achived 500+ pips in less than an hour.

Hopefully you will be able to see from the picture the entry points I used for the GBPUSD trade. With the 1 hour candles, I try to enter long or short based on the trend over the previous week. This is just waiting for a pull back to a trend line. This is very basic, and probably not the best way to use TA on forex, but has worked for me.

Hope that helps.

Jason

 

[cupid-stunt]

Cupid

I set my stop loss at the SAR, so is way more than 10 pips, often 100+ Due to the nature of some pairs, this is required so you dont get a spike early on.

My entry was once the MACD has crossed over, histogram changed from negative to posive, and the SAR momentum changed. The problem with this system is that is will pick up the trend once it has started, and sometime miss a large portion of the trend. You can run this in many timescales, but this is best when watching very closely intraday. I would suggest waiting until a reversal patten has formed and try to catch it as soon as it happens. This has worked for me twice in the past few days on GBPAUD, and achived 500+ pips in less than an hour.

Hopefully you will be able to see from the picture the entry points I used for the GBPUSD trade. With the 1 hour candles, I try to enter long or short based on the trend over the previous week. This is just waiting for a pull back to a trend line. This is very basic, and probably not the best way to use TA on forex, but has worked for me.

Hope that helps.

Jason

Many thanks Jason, your explanation along with your chart has cleared up my queries. Or perhaps raised some more!

Take a look at my screen shot (Don't worry, this isn't how I usually have my charts, I just wanted to highlight the 11th Sept.) Compare MACD for your chart against mine - we have a completely different pattern from the same inputs: (12,26,9 on a 1 hour chart). Do you see how with your chart there is a clear entry signal on MACD while on yours there isn't?

Strange don't you think?

Andy

 

[jason0181]

I am no expert with metatrader, but it I do know that some charts take feeds from different locations, and some may be delayed. I am using the charting package with IG index. I know it is not the best, but works for me, and my level of trading. Also with their MACD, the show the line, and signal line. I prefer this view and it is easy to see when they cross. I then confirm with Histogram, and SAR.

 

[cupid-stunt]

I use IG Index too but haven't got on with their charts very well in the past. On a simple system like this though it might be worth looking at having both charts running.

Yours seems like a good longer term stategy but I'm more interested in day trading - I look for 18 points in the day by scalping, which usually involves between 3 and 5 trades. Once I've got those 18 points I then try to find somthing that I can trail the stop for and let run a little bit longer.

I've taken a look back at today's price action for AUSUSD on a 1 minute chart as Ceydababy suggests from midnight to 9pm and have found 24 trading opportunities where if you had a 10 point stop and a 10 point limit order, 14 would have won and 10 stopped out. There were also 3 trades I could tell that would have bagged 100+ points with a trail stop of a mere 10 points. Not too shabby.

There is often a temptation to keep adding indicators to a chart and over complicate things and so I like any system that keeps it simple!

 

[ceydababy]

I use IG Index too but haven't got on with their charts very well in the past. On a simple system like this though it might be worth looking at having both charts running.

Yours seems like a good longer term stategy but I'm more interested in day trading - I look for 18 points in the day by scalping, which usually involves between 3 and 5 trades. Once I've got those 18 points I then try to find somthing that I can trail the stop for and let run a little bit longer.

I've taken a look back at today's price action for AUSUSD on a 1 minute chart as Ceydababy suggests from midnight to 9pm and have found 24 trading opportunities where if you had a 10 point stop and a 10 point limit order, 14 would have won and 10 stopped out. There were also 3 trades I could tell that would have bagged 100+ points with a trail stop of a mere 10 points. Not too shabby.

There is often a temptation to keep adding indicators to a chart and over complicate things and so I like any system that keeps it simple!

Hi Guys,

If I were you I would look at the MACD listed but trade it using divergence instead (hint hint)

The hit rate will increase dramatically.

CB

 

[cupid-stunt]

Sorry CB, I'm really thick. Can you elaborate please?

 

[jason0181]

Ceydababy

I have been looking into divergence, but am not that confident about changing systems at the moment. I know where you are coming from, and will keep testing things out.

Cupid
I used the same system yesterday for small intraday moves, and sometimes you pick up some big ones. I have been using pivot points to show levels of support and resistance, and trading around these on a 5 min chart. I managed to pick up 900+ pips in one move on GBDAUD last night. The spread is wider than most at 15 pips, but the movement has been huge over the past week. I am going to stick to the major pairs this week, and not get distracted with too many small swings. Have tried it, and was too stressful, and ended up losing discipline, risking too much, and losing lots. If you can get the timing, and entry correct, being in for a position most of the day (for me), is much easier and more rewarding.

 

[cupid-stunt]

Ceydababy

I have been looking into divergence, but am not that confident about changing systems at the moment. I know where you are coming from, and will keep testing things out.

Cupid
I used the same system yesterday for small intraday moves, and sometimes you pick up some big ones. I have been using pivot points to show levels of support and resistance, and trading around these on a 5 min chart. I managed to pick up 900+ pips in one move on GBDAUD last night. The spread is wider than most at 15 pips, but the movement has been huge over the past week. I am going to stick to the major pairs this week, and not get distracted with too many small swings. Have tried it, and was too stressful, and ended up losing discipline, risking too much, and losing lots. If you can get the timing, and entry correct, being in for a position most of the day (for me), is much easier and more rewarding.

900+ points is impressive Jason. I assume you have several charts open at once looking for the opportunity yeah? Can you lay out your entry, exit and stop loss stategies for me?

I think that the 1 minute chart is too fast and can often give false signals so I switched to 5 mins last night and there was a lot less noise.

Re. diveragence, you don't need to change your systems to look out for it: On the MACD histogram, where the bars are posting higher highs but the price action is posting lower highs, that is bearish divergence, and vice versa. There's a bit more to it than that but you already have the tools in place!

 

[jason0181]

5 min charts is the way to go for me. I also check what the momentum has been like on the 1 hour chart over the previous month.

My entry is typically when the MACD crosses over, and the SAR also confirms the trend. I like to get a very high MACD which also corresponds to the RSI being above 70. The higher the better, and then get in, as it starts to fall. I try and place my stop loss at the SAR as soon as the trend has turned to give it enough space to move. It may take several days to get the correct setup, but for me it is worth the wait, as there is a lot less stress, and time required in front of the PC. Ideally I would like to just wait for the 1 hour charts to give the signals, but these often happen at times when I am asleep.

What I found useful was using the backtest feature of IG's charting package, and entering the criteria for long and short purely based on MACD cross over. By changing the time scales it will show how the equity curve grows or shrinks, and can give an excellent idea of how to trade each pair.

 

[shehanb]

I am going to share my trading strat with you all. I have been using this for a number of months and the results are pretty consistent. Simplicity is the key here. If anyone has any comments, other than "this system is SH*T" not that I have a problem with that because I do just fine with it...However, this kind of criticism doesn't really get us to far in maybe improving upon the basics that I have in place so far. So if you think it's crap STOP READING, if you like it, have a question or think you can see an improvement please feel free to contribute !!.

I am trading AUD/USD (2 point spread) and FTSE CASH (1 point spread) with this system. I have briefly looked at other markets and it works on all that I looked at.

You need:

MACD set at 12/34/9

Parabolic SAR NORMAL SETTING

SMA 50 period

RULES....BASED ON 1 MIN TIME FRAME....USING FTSE CASH AS AN EXAMPLE....

ENTRY CRITERIA

1. When MACD Histogram Turns Green wait for the second Histogram bar to turn green for confirmation, if SAR is also Green go LONG
2. When MACD Histogram Turns Red wait for the second histogram bar to turn Red for confirmation, If SAR is Also Red Go Short

The caveat to the above is if the Parabolic SAR and Histo switch colours at the same time this is also a safe entry point.

STOPS

1. Dependent on Market, I normally set a hard stop of 10 points but will cut if the SAR or histogram turn against me. On a FTSE 1 min chart with a 1 point spread (courtesy of capital spreads) losses are very limited

EXITS

This is the trickier part, and one I am struggling with a little and in my opinion comes down to how well you can read market conditions. I have a few exit strats that I am using.

1. If the SAR or MACD Histo change colour (eg. Red goes to green or green goes to red)
2. If I hit a fixed point target (zen is 10) then I would look to get out
3. At a significant point of Resistance/Support
4. At the 50 SMA Level

Periods to AVOID....

1. Because MACD is a lagging indicator, sharp moves (spikes) can skew the indicators and knock them out of sync. This is more often a problem on the smaller time frames. If the indicators go out of sync it is imperitave that you wait until they line back up again. By this I mean when the system signals short it isn't signalling a short at the bottom of the market. You obviously don't get the first move once it is back in sync but you can carry on and away with the rest of them.

When following this system it is imperitave that you don't second guess and you HAVE to wait for confirmation. When I have lost the majority of losses come where I haven't waited for confirmation and have tried to get in for the deadly "few extra points"

I am finding on a 1min FTSE almost every signal gives out at least 5 points....apart from when the system is not in sync.

Let me know what you think guys.....

Hi,

I am a commodity trader. I like your simple trading strategy. But i would like to add few opinions.

For me I'd like to use simple statistical indicators such as standard deviation channels than MACD. One thing I think SD is less lagging and I can have all my information in one chart. Btw what is the price chart you are using. I use candlesticks (heikin ashi) which it self i believe good indicators combining with common chart patterns. I also like para SAR. it is an accurate indicator. Ofcourse u need MAs any way to picture the market.

I would like to hear more thts on this

cheers.

 

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