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walterw

Walter`s First Forex Research (various ideas)

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Hello Everyone, its been some weeks since a forex bug byte me... since doing the "flip" thread I had a very nice interaction from Don showing me some flips on forex.. since then I got more interested in trading forex from here to some time... (maybe a semester ahead)..

 

I did trade forex some years ago but with No success at all, I think it wasnt the right time as I needed to grow more technically and specially in actitudes toward trading... so considering forex again its a great thrill for me ¡¡¡

 

Why forex ? Why bothering trading forex and not futures from forex ?

 

In terms of futures I already have it clear with Russell or YM... its a diferent bussiness... you can aim on futures 30k monthly trading ER or YM if you get to master ES wich its not easy for the regular trader you can make more than that.. but I dont think you can make 2 millon on a monthly basis scalping ES ( correct me if I am wrong )..

 

Now forex its a market that trades almost 2 trillion daily and there is no maximum trading volume regulations for retail traders... so here you can open your brain and start thinking big... even if you become a fat boy you can not move this market alone... so that means that even a scalper can think big here...

 

So the edge I find in forex is volume... I can aim millons... so that said, I will not come to trade forex for some cents, but for some millons...

 

Its this guy crazy ? maybe yes... my wife thought I was crazy with my expectations on the futures markets some years ago... today she has a complete diferent concept of me: She still thinks I am crazy but with clear tangible results... so with this same insane thinking I will aproach forex trading... (want to join the challenge ? I already welcome you )

 

Since my diet with Tradestation (droped indicators programing) I came also to the conclusion that a software and super fantastic indicators will not make you a better trader... obviously having a nice charting program with some decent indicators that can show you the way of your trading "concepts" are welcome...

 

So for forex I came across with what Don is using and Metatrader 4 its my first shot here... I did browse their custom indicators forums and they have just about all you need in terms of indicators to build some nice decent strategy..

So from here on I will be using MT4 for this research ( the nice thing its that its free and has access to world class indicators)... All indictors that I will use for my research will be posted here on this thread as on our indicator forum...

 

I will not be trading live until January 2008, so all posts will be paper traded, I am thinking in using EFX for such purpose, I dont know if their demo expires or not.. but I like their ECN type platform where there is no dealing desk I have been enlighted on this issue by Don and Notouch on this thread http://www.traderslaboratory.com/forums/f30/forex-question-1842.html where I think EFX has a very diferent way of dealing...

 

I would like to have as much interaction posible, so please feel free to interact... I know many things on this first thread will look stupid and with very small aparent development, but the idea its not to show how much I know... but to interact and think alloud in public to develop great trading ideas...

 

This first thread will be a poupurry of ideas... after that maybe we will start new threads of specific aproaches finded here...

 

I hope this open research challenge will help me as other traders to get into that sweet destination... if in a couple of years we get there, I challenge you to meet at Tokyo together with Soul at the Park Hyatt Tokyo Tokyo Hotel in Japan - Park Hyatt Tokyo to celebrate our success ¡¡

 

I will enter into my first ideas on next post... cheers Walter.

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  Don4 said:
Walter,glad to see you finally made it. To answer one of your questions efx demo does not expire but they do reset at the 15th of every month. Here is a link where one of the efx reps will answer questions if you have any EFX Group - Introduction - Page 53 @ Forex Factory. This should be a very interesting thread:D

 

 

Thanks Don, I will be reading that thread closely, it might have all the information I need to expand about EFX... So far at this point I will start throwing some raw ideas.... cheers Walter.

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Ok, let me start with some key factors here about my type of aproach I will be looking for...

 

I am by definition some sort of scalper... or very short term daytrader... I dont stay to much inside a trade, I like to make it quick, IF there is momentum I might stay inside for longer... otherwise I prefer to make severall good small trades... so what I will present here its not very valuable information for the long term trader... I hope it will be usefull for the short term trader...

 

I have one method I use to start developing a trading strategy, and that is: How much money I aim for an X period of time.. (day / week), so I can meassure my expectations from what my money motivation is in relation to what my technique can really make me trade on the market...

 

My very first mentor thought me this: " dont ask the market what he cant give you, but be prepared to take what he is willing to give you"

 

My derivation here is this: what he is willing to give me, is it in a "real" proportion to what my $ expectations are ?

 

I am aiming more than what I can make ? will I be forcing the market to give me what I want... or will I take everyday a little chunk that will at the end of the journey become a mountain ...

 

So thats my filosofy : "give me every day a little chunk"...

 

For the sake of simplicity I decided to follow only one forex pair... and that one will be the USD/JPY..

 

Also at this point I will only be looking at one time frame: 1 min.

 

My Daily target will be 5pips after comisions... sounds little uhuuu ? well its not... at this very aparent slow pace in three years you can be making millons...

 

So my target its to finish every and other day with a total net (after comisions) of 5 pips... The market can give me more?, I leave money on the table ? I dont care, its not my bussiness, my real bussiness its closing every trading day with my 5 f#$%d pips (period).

 

Forex trades 24 hours and that can be triky, we all know that the real trades happen at the time the markets are having their best, so in terms of time I copy this post form other forum :

 

The three major market centers for forex are Asia (Tokyo), Europe (London) and North America (New York).

 

• 8:00pm EST, the Asian market opens (although New Zealand and Australia open about 1 hr earlier).

• 2:00am EST, the European market opens.

• 3:00am EST, London, the most active center for forex, opens.

• 8:00am EST, the North American market becomes active.

 

 

The most liquidity and turnover occurs when London and New York overlap, which occurs between 8:00am and 12:00pm EST. The least liquid period occurs when London finishes and before Asia opens.

 

 

So from 3:00 am to 12:00 pm est could be a nice time to trade... also should we research how USD/JPY does at 8:00pm est...

 

So here I will apreciatte inputs from those who are more familiar on this time issue..

 

All this being said I will start throwing some raw ideas on next posts... cheers Walter.

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So the obvious very first Idea comes arround a new breed of "flip" trade for forex... that would be a very first idea... there are more to come..

 

I am working with some interesting indicators here... on the price pane I have 2 Hull moving averages one is 25 and the other is 200... nice smooth gentle averages, they have a lot to talk by themself... they talk about trend as they talk about dynamic S&R levels... they talk about entry and exits crosses with the bars.... they talk about momentum... an so on...

 

On the indicator pane I have a Jurik Rsi ¡¡ RSX 8... ahahahahaaaaa... this is a NICE indicator indeed... why? smooth at the same time leads... clear and straight forward reading... an many other advantages he has...

 

So I attach this first chart showing our classic flip but more adapted to forex and with a more easy reading going on... cheers Walter.

5aa70ddf74306_forexnewflip.thumb.png.df6ea3476717d5f668fed690e6a66f70.png

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This other chart is earlier... Entry happens at 44 minutes since london session started, you can see a very good time of the day to build up momentum... that trade was good for 15 pips... cheers Walter.

5aa70ddf787ae_forexnewflip2.thumb.png.3465cbc5069eb6c23a888fa8a108e1cc.png

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Ok walter, been sitting here digesting what you have so far. Just wondering since you are only shooting for a small number of pips each day, wouldnt there be less risk to having a trade go against you during non volital times.(eventhough thats no garantee) If your only going after a small piece everyday you would have to be right a very high % of the time.And will you be placing stops when you open a trade?

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  Don4 said:
Ok walter, been sitting here digesting what you have so far. Just wondering since you are only shooting for a small number of pips each day, wouldnt there be less risk to having a trade go against you during non volital times.(eventhough thats no garantee) If your only going after a small piece everyday you would have to be right a very high % of the time.And will you be placing stops when you open a trade?

 

 

Ok, I have to make something clear here, dont want to get misunderstood...

 

The RRR of the overall sistem should be a minimum of 1:1.5 now, when I say I want to make 5 pips per day, sometimes that means I probably made +25 -20 on a hard day....ok ? or made +10 -5 on a medium day... or made +5 right away on an easy day...

 

So I dont say I am going for 5 pips on a trade... I am saying I go for 5 pips in the universe of this entire day... be it the easy or the hard way...

 

I dont know if you can grasp the concept... but it is concept that once you understand it you will feel very light on the pressure you have for your targets...

 

IF there is momentum I will stay inside even +30 pips... absolutely, but the fact that just about everyday there are movements of 30 pips will not make my trading plan aim to make 30 pips per day, because that would be unrealistic...

 

Having very small targets for the day its a nice way to be more selective about wich trades you take... if you aim too much you will most probably overtrade in the anxiety of getting your super daily target...

 

So daily targets its NOT sinounimos of trade target... cheers Walter.

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Ok, lets go nuts with a second Idea here...

 

and this is a very classic trade no brainer, but can make a consistent disciplined trader a succesfull one... thats with the "trend trade" the interesting diference here relies on the fact that the Hull large average can work as a terrific Dynamic S&R level...

 

The secuence would be like this :

 

1rst Small hull crosses large hull and travels

2nd Pull to the large hull with test

3rd Rejection (bounce) from the large hull ( here timing can also be done with RSX oscillator )

 

Simple but powerfull strategy... goes with the trend very easy to spot... cheers Walter.

5aa70ddf9969b_classictrendtrade.thumb.png.8f3b434bd1c831f0833fba6e04e1df63.png

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Excellent stuff Walter

 

I'm looking forward to this thread as I've never really got into forex as I have with futures. I'll follow along with you on the USDJPY pair and see if I can interact somewhere down the line.

 

I like the idea of 5 pips a day, but not a 5 pip target, because it means you can keep some runners going and not just cut them off at 5 pips. It also takes the pressure off as well, not having a big mountain to climb every day. However it could also go back to the arguement of just when to stop on any given day.

 

Cheers

 

Blu-Ray

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Thanks for your support guys ¡¡ I know this will be a nice journey ahead, lots to interact and to grow, I am very excited with this... I envisage great results thru this model of collaboration...

 

I now attach an image that looks like an icon... it is a great morfology that its present in the market over and over and over and over and over and over again... ok ? should we find a name for it...

icon.thumb.png.72bc88dc627002ff3209fa2644a62545.png

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Here I attach the indicators I am using, they are all free and published on open forums specialized in mt4 ... The Hull averages where done by Igor from forex-tsd forum, he has some nice aproach with this averages but I think his timing method lags too much... any way the hull average its been posted by him... the RSX is posted in the same forum by the administrator...

 

So far inputs go like this : Megatrend (large hull) 200

Signal line (small hull ) 25

JRSX (RSX) 8

 

If indicators dont work please tell me , cheers Walter.

Indicators.zipFetching info...

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Let me describe what the icon means...

 

1rst a crossing of the small hull to the large hull... it sugest a change in trend direction ( the stronger, the better)...

 

2nd the pullback to the Dynamic S&R created by the large hull... here we come to an area aproximately it doesnt have to be exact... where this dynamic level will make a great job of S&R...

 

3rd the bounce or rejection of this dynamic S&R area for a continuation... (our bussiness).. here comes (I believe) a great key called timing, it cant lag too much... it cant wait for so much confirmation, at the same time you need clear rules... would RSX make the job here???.... thats my first hipothesis here...

 

cheers Walter.

5aa70ddfa4a3c_iconcomponents.thumb.png.7ecea58d6a363a24d3db46042d33393d.png

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  Don4 said:
Indiacators work fine walter.

 

 

great ¡¡ ... this indicators some years ago you had to pay a couple hundred dollars for them... mt4 has made them available to the public... amazing ¡¡

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Now as this research on the first day of existance its evolving, let me now show how would the icon morfology look in a 5 min chart... with the same indicators and inputs...

 

it certainly is more robust and in terms of future dealing of RRR could have certain advantages...

 

Also we have a 1/5th scale in 1 minute where we can go after "very specific timing" rules...

 

:):);):rolleyes:;):)chatterbox:):) trading can be as dificult or hard as you want to make it...

5aa70ddfbedb9_5min1.thumb.png.25cdfb3aafbee85e984f45f58d1c7305.png

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For example, let me show you a "very specific timing" example done on 1 min from this "Icon" setup (I start to like that name... The "Icon" Trade ) on 5 min.... there are 3 trades marked on the 5 min chart... look on the 1 min chart how I adapt the hull averages from 5 min to be exatly the same on 1 min... with this inputs: large hull 1000, small hull 125...

 

now the same RSX 8 did a nice job making a "very specific timing"... I also add a new cool indicator here to experiment with... its a CCI smothed by a T3 average inputs 14/5... he crosses 100 levels giving superb entries...

 

It seems like the market got to that large hull and say uuups... I have to turn here.... well for today I will stop this insane process...tomorrow will be another day... I think that in 6 months from here I will be profitable doing this... cheers Walter.

5aa70ddfc402a_5min1b.thumb.png.61fb45eac007faae8feb9ffe5f6d8818.png

5aa70ddfc8dda_veryspecificwacoguy.thumb.png.fef77ce19a9c6c459f57ef6fbcbb562f.png

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  Blu-Ray said:
For anyone following along with Tradestation, here is the ELD for the Hull Moving Average, however I can't seem to get hold of the RSX indicator.

 

Probably because it's a proprietary indicator, that's why :)

 

Here's more info from Jurik Research about the RSX indicator:

 

RSX

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Walter, i havent been following the usd/jpy this morning but i have been watching the gbp/usd and there was some very nice signals this morning!

 

 

 

attachment.php?attachmentid=1777&stc=1&d=1182262238

5aa70ddfd6818_gbpusd.thumb.gif.93bd45d18ed5429391ed494758f816c2.gif

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