Optiontimer's Project

[PWP 10]

Hi Optiontimer,

 

I hope all is well with you. Again - Thank you creating this project. Here's an update on my Gbp/Chf trade and my actions to date:

 

- I entered trade based on 7-5 daily candle 1.3474 Sell Order Stop at swing High 1.3700 The 7-4 candle would have been a much better candle to enter on - not sure if it had hooked or not...

 

- Once up 125 pips moved stop to BE - Was stopped out

 

- Reentered with same criteria as above - decided not to move stop if trade was executed - it was - at one point I was -103 pips but left trade on - now +40 pips - leaving stop at 1.3700 for time being...

 

My dilema - To move stop to BE once in profit will reduce some of the losses if the trend is not truly continuing - but will also limit catching all moves - OR take the losses if the trend has not truly continued and stick to plan. There are many times where my trade would be entered but then I would be stopped out for -150 pips or so.

 

I'm leaning toward moving stop to BE after +50 pips - If I get stopped at breakeven then I could reenter on next hook in trend direction.

 

Also - I'm still trying to figure out how to take profits. If I take them too soon then I may miss the long trend I'm trying to take advantage of... I'm leaning towards taking half off at 2:1 ratio and letting remaining run with a trailing stop over the prior days high...

 

Thanks again - Any comments or advice from others is greatly appreciated!

 

- Peter (PWP)

[optiontimer 10]

...I would just like to discuss the rational behind the sell coffee alert. Looking at the weekly and monthly continuous charts for coffee it looks to be in a strong bull market and selling would seem to break that strong tenant "the trend is your friend ".

 

I got my chart info from here:

 

Coffee Monthly Commodity Futures Price Chart

 

Hi Russell,

 

Commodities in general have been in bull market mode since 1998-2000. This system is defining the major trend based upon the relation of the 21 day EMA to the 65 day EMA. During the course of a multiple year bull market, there may or may not be counter-trend moves that themselves are trend tradable.

 

Oil, for example, has been in bull mode since it bottomed around $10/barrel in the late nineties. It was a very nice short trade after the July 2008 top through December 2008.

 

For this system, weekly and monthly continuation charts should be used for long term support and resistance cues, and not for trading signals.

 

For example, here is my monthly coffee continuation chart:

 

 

 

This chart goes back 30 years farther than the one you posted. As you can see, coffee has traded into an area where it has seen selling before. You can also see that all tremendous coffee bull markets end the same way - in a colossal collapse. I am not trying to pick a top here - far from it.

 

Yes, the trend is your friend. But it is at its most friendly, for me, when trading it from the perspective of the daily bar chart. By the time the monthly registers a change from down to up to down again, you may have missed some of the best risk to reward opportunities of the new market trend.

 

My advice would be this: Use Monthly for support and resistance and historical context and perspective. But use either the daily or the weekly as the basis for your trading decisions. I prefer the daily, and this system is designed around the daily bar chart.

 

One other piece of advice - either use your system or don't trade at all. If your system is based on a daily bar chart and it issues a sell signal, then do not go looking for other information outside of your system either to confirm or undermine your system's trading signal. Read the section in Kroll entitled "Speculator's Laments." I am sure he touches upon this very subject there when he talks of various trader's who purchased a computerized trading system, only to disregard the system's rules and signals, or to apply those rules haphazardly.

 

The only reason, for me, not to take a trade signaled by this system is that the risk required by the stop loss at time of entry is too large for the size of the account. Thus far, that has been the case in the trades signaled since last week in Gold, EuroFX, Japanese Yen, Crude Oil, and Coffee. This system will produce signals with more favorable risk to reward ratios. We simply require patience.

Edited July 9, 2011 by optiontimer

[optiontimer 10]

...My dilemma ... take the losses if the trend has not truly continued and stick to plan.

 

I read your post several times trying to figure out what it is you might need to hear, and after a bit of thinking, everything fell away except for what remains above - your dilema is you'd rather avoid the pain of loss than the thrill of the big win. I assume from your "stick to plan" phraseology that you at least think you have a plan. You either do or you don't, and if you do, stick to it unless or until you determine it to be a bad plan, and if you don't, then you need to develop one.

 

As far as taking profits, if your plan is to take two to five day swing trades, then you could use a simple time stop, for example, "I will trail a stop below a three day low, and if still in the trade, I will close the position MOC day eight (or day five or day seven or day three - it is up to you)."

 

Or, you could use a trailing stop, trailing beneath the most recent three day low (or two day or prior day or five day low - again that is up to you).

 

Or, you could exit MOC when it becomes apparent the the stochRSI has moved from one extreme to the opposite. For example, if you enter a short trade with the major trend when overbought stochRSI turns down, then exit MOC when stochRSI looks to close the day at an extreme oversold reading.

 

Here's an update on my Gbp/Chf trade and my actions to date:

 

- I entered trade based on 7-5 daily candle 1.3474 Sell Order Stop at swing High 1.3700 The 7-4 candle would have been a much better candle to enter on - not sure if it had hooked or not...

 

I see that too. On my Oanda chart, it turned down slightly on 7/4, but my CSI daily chart the stochRSI did not turn down until 7/5. The important thing for you will be to pick a data set to trade from and stick with it - don't start comparing the indicator values across platforms. Use either data from the broker your are using, if you are using a bucket shop, or from a trusted source, such as CSI.

 

...Once up 125 pips moved stop to BE - Was stopped out

 

- Reentered with same criteria as above...I'm leaning toward moving stop to BE after +50 pips - If I get stopped at breakeven then I could reenter on next hook in trend direction.

 

When trading foreign currencies and trying to hit for +500, +1000, +3000 pips, those 50-125 pip fluctuations are mere noise. Go back to the top of this response: Your dilemma is that you need a plan. The character of that plan will be reflected by your character as a trader and by what you want to get out of the market.

 

Start there: What do you want to get out of the market, Peter? Once you answer that, assuming you have been honest with yourself, you will be ready to develop a trading plan to get it, whatever "it" is.

 

I would also ask yourself if you'd be happy trailing a down trend such as the GBPCHF has been in for many many months with a series of breakeven trades and nothing to show for your correct analysis? Have you read the Kroll document that MadMarketScientist added to the first post of this thread? Kroll discusses this phenomenon as well - the retail speculator who early in a big move is right on the direction of that next big move who nonetheless ends with a net loss. He also quotes Livermore, I believe, where, if I may paraphrase, he says "the market is full of early bulls and early bears who make little in spite of being right."

 

What do you want to get out of the market, Peter?

 

I hope this helps,

 

-optiontimer

[SIUYA 11]

For this system, weekly and monthly continuation charts should be used for long term support and resistance cues, and not for trading signals.

.............................

 

My advice would be this: Use Monthly for support and resistance and historical context and perspective. But use either the daily or the weekly as the basis for your trading decisions. I prefer the daily, and this system is designed around the daily bar chart.

 

One other piece of advice - either use your system or don't trade at all. If your system is based on a daily bar chart and it issues a sell signal, then do not go looking for other information outside of your system either to confirm or undermine your system's trading signal.

 

Very very sound advice - particularly when it comes to commodities and equities.

As you have to roll futures contracts and there is a backwardation and contango issue there are various ways to produce a continuous chart - will it be continuous, will it be back adjusted and how.........hence there will be various charts that can be produced from the same data.....each with different price levels of support and resistance.

(eg; is the support level for a December contract the same price level as the previous June contract even though there has been a couple of rolls in between with a premium for each roll.)

 

Then there is the additional issues of is this an inflation adjusted commodity chart or an equity index or stock that has the dividends adjusted for it.

The point is there are many questions and variations possible.....

 

Take optiontimers advice and stick with what you are sticking with otherwise you will just confuse the issue.

[Ingot54 13]

Hi Folks

 

Following along very closely, and indeed I have three open positions - all short:

GBPUSD from 1.6046

GBPCHF from 1.3681

USDCHF from 0.8491

 

While wanting to remain in theses trends, I am also wary of fundamental reversals, and am wondering if anyone has discovered a mechanism that works for them, that they'd like to share, that provides a reasonable exit.

 

I have no issues with leaving pips on the table at the end of a trade - that's the nature of trading well. But I am also mindful that it is still ok to exit and re-enter if the termination was taken prematurely.

 

My question is aimed at avoiding premature exits, but also finding "correct" exits, if indeed such a beast exists.

 

Thanks in advance for ideas and replies. I am still soaking up what Kroll has to say about these, and as he is the backs-stop authority here, I will be tending to place a lot of weight on his recommendation, and of course OptionTimer's experience and thoughts on it too.

 

By the way, I am currently stalking the USDCAD as a possible short.

 

The WEEKLY is in a beautiful downtrend, and it seems the DAILY will signal that it is conforming to that trend again soon. I did actually hold a short over the past 8 hours, once reaching +31 pips, but I closed it at break-even this morning, because it is simply not ready.

 

Here are the charts of USDCAD Weekly AND Daily for your perusal.

 

Kind regards

 

Ingot

 

PS - Am I being too cautious by waiting for the extra parameters to align ... such as the weekly trend? (I know the weekly can not turn short before the daily does.)

 

Regardless of the weekly, I would probably still enter this short from the daily as usual IF ... if the StochasticRSI does signal an entry. I would use a stop of about 120 pips, which is 1.5 x daily ATR.

 

Thoughts?

[optiontimer 10]

Hi Folks

 

Following along very closely, and indeed I have three open positions - all short:

GBPUSD from 1.6046

GBPCHF from 1.3681

USDCHF from 0.8491

 

While wanting to remain in theses trends, I am also wary of fundamental reversals, and am wondering if anyone has discovered a mechanism that works for them, that they'd like to share, that provides a reasonable exit...

 

Nice trading, Ingot - how do these open profits compare to what you had been accustomed to achieving?

 

As for the stop/exit question, the correct answer here is a question - "What do you want to get out of the markets?"

 

The initial stop for this system should always be above the highest high immediately preceding the entry.

 

If you want small, quick profits, then a trailing stop above the previous day's high, a three day high, or simply an oversold reading on a closing basis could be the signal to get out.

 

If you want somewhat larger profits, albeit with a lower win %, then trail a stop above the 21 EMA. You will see more losses, and what might appear to be good profits will evaporate into small wins (hopefully) smaller losses.

 

If you want to play for Kroll-like profits, then use a stop above the 65 ema, perhaps exiting manually on a close above the 65 ema.

 

Any of these should be accompanied by a plan to re-enter should the trend resume.

 

But you have to decide what you want.

 

As for looking at the weekly chart, I reiterate my prior point - weekly and monthly charts should be used, but they should be used for long-term support and resistance only. Do not apply the system we are using for the daily time frame to the weekly time frame unless you are planning on trading that time frame. That would be a valid strategy. But it is only valid if that is your strategy. As you are using it, you are flirting with disaster.

 

You are right now executing a classic, widespread mistake that accounts for failure than is recognized by the trading community - you are "mixing time frames." Do this at your own peril. Trade your system. By all means use long term support and resistance to locate potential areas where your trend may end. Tighten stops, perhaps take partial profits at those levels. But do not confer any importance on an indicator reading based on any time frame other than you own.

 

Stick to your plan. If you do not yet have a plan, develop one.

 

-optiontimer

Edited July 12, 2011 by optiontimer

[optiontimer 10]

Since 20110708, I have been experiencing technical difficulties that have culminated in the need to replace my charting computer. A replacement has been ordered and is on its way. I hope to resume monitoring and posting charts within the week. While it will only take about an hour to download my software and the complete price history database, but it takes hours to rebuild my portfolios, templates, etc., and these hours will be spread over several days at best.

 

Thank you,

 

-optiontimer

[Trendup_ 10]

I sympathise, having few TCP connection problems myself and probably have to get it fixed.

[sspremj 10]

Hi Ingot54,

 

Could you please post your stochrsi indicator for the mt4 platform.

 

Thanks and regards,

Prem

[Ingot54 13]

Hi Ingot54,

 

Could you please post your stochrsi indicator for the mt4 platform.

 

Thanks and regards,

Prem

Hi sspremj

 

I sent you a private message with two links on this forum where you can simply click on it and download it.

 

Here are those links::

 

http://www.traderslaboratory.com/for...project-2.html post #22

 

http://www.traderslaboratory.com/for...tml#post123211 post #19.

 

I am attaching it here for you as well.

Kind regards

 

Ingot

Stochastic_rsi_forex-instruments.mq4

[Avarice 10]

Guys there's something about U.S. trading hours that I find utterly confusing.

 

Most of the contracts OT selected in the introductory posts trade (almost) 24 hrs per day. The proposed strategy is -- at least if I understood correctly -- an EOD strategy. My question is, how do you apply it to a contract that's traded 24/7? At what time of day do you look at your charts and say "Aha there's my setup, I'll put up an entry order for the next session" ?

 

Do you guys use your own, personal timeframe? If yes, when does "your" day end? Do you sync with the pit-traded contract's RTH? Do you consider "your" day at an end when volume drops? Or do you actually wait for eCBOT's daily maintenance break and cram all your work into these 45 mins?

 

What do you make of contracts that trade in the pit AND electronically (take ZC - Corn, for example)? Do you still trade the electronic contract even if the pit's open?

 

I live in Europe and I I'm not overly familiar with the intricate details of U.S. futures, so please be gentle And sorry for the slight off-topicness!

[Ingot54 13]

Guys there's something about U.S. trading hours that I find utterly confusing.

 

The proposed strategy is ... an EOD strategy. My question is, how do you apply it to a contract that's traded 24/7? At what time of day do you look at your charts and say "Aha there's my setup, I'll put up an entry order for the next session" ?

Hi Avarice - I'd like to say I enjoy your questions and input.

 

I am wondering if you are concerned about entering at the EOD change because of fear of excessive draw-down? If so, then set your fears aside and relax. Here is what I do:

 

In the past 10 trading days, I have entered at the opening of the candle immediately the previous one ends. The reason is that if the StochasticRSI indicator does not move in our required direction, then It is not a trade for me. There is nothing else to do - you can not "will" a trade into existence - it is there or it isn't - and you have scores of charts to go through to find one that is setting up nicely.

 

Here are my opening trades and the maximum drawdown from opening. I am using demo, so I have not included the spread - just the opening price to maximum DD:

 

USDCHF - 11 pips - still open - +300 pips .......... (opened 4th July)

GBPCHF - 15 pips - still open - +596 pips .......... (opened 4th July)

GBPUSD - 13 pips - closed + 136 pips ............... (opened 5th July)

USDCAD - 9 pips - still open - + 53 pips ............. (opened 13th July)

NZDUSD - 25 pips - still open - + 196 pips ......... (opened 13th July)

AUDUSD - 51 pips - still open - +28 pips ............ (opened 13th July)

 

Many of these trades have swung back against me, but are still legitimately within the trend, so I have not taken profits yet. At one point I had 1544 pips (incl the GBPUSD I closed) and now there are 1309 pips profit. This is the most pips I have made in a fortnight ever, and the first time I have had a trade run to more than 600 pips ... and still open!

 

I present these numbers from my demo a/c to show that when that StochasticRSI triggers, then you simply ACT on that signal. The draw-down I have showed you means that draw-down is a non-issue. The dates in brackets are the dates the trades were opened, Australian dateline. We are GMT +10 here, so those daily candles / bars close / open at 10am our time.

 

I don't hang around to "see what they will do" - the entry is either there or it isn't ... and I turn off my computer. I have a look in the evening - and that's about it. This gets me my life back - the reason I entered trading in the first place. There is nothing to tweak, no fibs to measure, no other indicators or charts - just me, the 21 / 65 ema, the StochRSI and the Daily chart.

Do you guys use your own, personal timeframe? If yes, when does "your" day end? Do you sync with the pit-traded contract's RTH? Do you consider "your" day at an end when volume drops? Or do you actually wait for eCBOT's daily maintenance break and cram all your work into these 45 mins?

 

What do you make of contracts that trade in the pit AND electronically (take ZC - Corn, for example)? Do you still trade the electronic contract even if the pit's open?

 

I live in Europe ...

These things are foreign to me - I guess all I want is a simple method and I never have to concern myself again with news, economics, technical analysis or waves, zigzags, multi-level charting, data, slippage, spreads or anything else. I KNOW what this strategy can do, and I place my confidence quietly in that.

 

If you are an impatient person, or impulsive, then simply follow the rules, and continue to ask questions.

 

I sincerely hope you stick with this. I have a friend who is a committed scalper and loves it. But after looking at this strategy he is convinced of its awesome potential too.

 

Do not worry about asking questions - I have some too (posts to follow), but I suspect I will have a ot of my questions answered in the Stanley Kroll .pdf posted in the very beginning of this thread at post #1.

 

Kind regards

 

Ingot

 

PS - It must be difficult in your time-zone to trade the same EOD candle - my platform (forex.com MT4) is based on GMT zero. I do not recommend forex.com as a live broker. Nor do I discourage dealing with them - I chose their platform based on the EOD bar closing at zero hrs GMT which is the NYSE close? I use MT4 only for their brilliant flexibility in charting, not for live trading.

[Ingot54 13]

Here is our system. I would think it should need very little tweaking. I have tried to make it easy and clear to follow. Please, if you have questions, and if anything seems unclear to you, let me know here. As I said in the previous poll threads, I have two goals with this project - 1) Not to lose too much, and 2) to keep it simple, very, very simple.

 

When the 21 EMA is above the 65 EMA, we do not want to be short, and we may be looking for a long entry signal. Only oversold readings of the stochRSI are relevant, and they are relevant if and only if price has retraced back to a level between the EMA's or even slightly below. A long entry is signaled when stochRSI has turned up on a closing basis, and entry is made the next day if price makes a higher high than the prior day.

 

When the 21 EMA is below the 65 EMA, we do not want to be long, and we may be looking for a short entry. Only overbought readings of the stochRSI are relevant, and they are relevant if and only if price has retraced back to a level between the EMA's or even slightly above. A short entry is signaled when stochRSI has turned down on a closing basis, and entry is made the next day if price makes a lower low than the prior day.

 

I am open to comments & questions at anytime.

 

Thank You,

 

-optiontimer[/size]

I was going to post a chart or two with a question about exits, and was reading through the thread from the first post, to see if much has been covered about exits.

 

I didn't get far before I realised I have been very fortunate with my entries! So here is the situation, and I'll put the exit questions on the back burner for now.

 

It is clear from my previous post (above) that I have been breaking the entry rules inadvertently, and getting away with it. While this has been paying off these past 2 weeks, the market may not always be so kind, and could lead to whipsaw activity that may be very costly over time.

 

I have quoted the basic rules from OptionTimer's post #8, and I see I have been prematurely entering my trades. I have been entering trades when the StochRSI turned up / down at the beginning of a new daily candle, while keeping true to all the other rules. Foolish of me not to have gotten that right. In fact the way I read it, the StochRSI should be turned up at the END of the closing candle.

 

Secondly, the entry is still not triggered unless price makes a higher high / lower low than the previous days high / low.

 

This makes a very big hole in the number of pips I had in my pip-basket, but when corrected, it makes those pips very much safer than the quick pips I was able to make by jumping in one day early.

 

It was unintended and thus serendipitous, but in the future I will need to make these entries more carefully.

 

In the mean time I will be reading more of Kroll, to see what he has to say about trade management and exits, because I am being faced with some of these issues as swings occur. I have already closed the GBPUSD I entered on 5th July, and did so by setting a SL before leaving the computer on 12th July - 5 trading days from the opening of that position.

 

So far this strategy is not difficult, and while losses are never far away, it is far easier to make decisions trading Daily charts than it can be trading intra-day activity.

 

Thanks OptionTimer for you generosity in sharing this strategy.

 

Kind regards

 

Ingot

[optiontimer 10]

...I didn't get far before I realised I have been very fortunate with my entries! ...I see I have been prematurely entering my trades. I have been entering trades when the StochRSI turned up / down at the beginning of a new daily candle, while keeping true to all the other rules. Foolish of me not to have gotten that right. In fact the way I read it, the StochRSI should be turned up at the END of the closing candle.

 

I do not see anything wrong with your entry approach so long as it is done consistently and without second guessing. Whta matters most is that you are adhering to the structure of the system - you are trading with the main trend and against minor reactions against that trend. Your way is working for you, and you seem comfortable and relaxed with it. I urge you to continue as you have. If you find something that works for Ingot, then optiontimer be damned!

 

Yes, losses will happen, and they will sometimes occur in bunches. Your consistent, disciplined application will give you the ptience you need to control and trade through the inevitable draw downs.

 

-optiontimer

[optiontimer 10]

Guys there's something about U.S. trading hours that I find utterly confusing.

 

Most of the contracts OT selected in the introductory posts trade (almost) 24 hrs per day. The proposed strategy is -- at least if I understood correctly -- an EOD strategy. My question is, how do you apply it to a contract that's traded 24/7? At what time of day do you look at your charts and say "Aha there's my setup, I'll put up an entry order for the next session" ?

 

Do you guys use your own, personal timeframe? If yes, when does "your" day end? Do you sync with the pit-traded contract's RTH? Do you consider "your" day at an end when volume drops? Or do you actually wait for eCBOT's daily maintenance break and cram all your work into these 45 mins?

 

What do you make of contracts that trade in the pit AND electronically (take ZC - Corn, for example)? Do you still trade the electronic contract even if the pit's open?

 

I live in Europe and I I'm not overly familiar with the intricate details of U.S. futures, so please be gentle And sorry for the slight off-topicness!

 

Are you using a charting software that require you do input trading session open & close? If so, try to find a broker with charts where this work is already done for you.

 

For CSIdata, I use the floor & electronic combined, but I almost always trade the electronic contract only unless there is more liquidity in the pit (a rarity these days).

 

I usually look at my charts in the evening after 7PM NYC time.

 

For what its worth, I really doubt that a slightly different close time will effect the system much if at all. When in doubt, use 5PM-5PM NYC for foreign exchange cash markets and use globex open/close for all others.

 

-optiontimer

[optiontimer 10]

... but when corrected, it makes those pips very much safer than the quick pips I was able to make by jumping in one day early...

 

I would agree with this - the more conservative entry I suggested should have a better winning percentage. However, the initial stop loss required will often be significantly greater than that required by your entry mechanism.

 

Your entries have thus far had a very impressive average max adverse excursion form entry. My entries will be prone to taking a bit more heat than you have had to withstand so far.

 

-optiontimer

[Ingot54 13]

I do not see anything wrong with your entry approach so long as it is done consistently and without second guessing. Whta matters most is that you are adhering to the structure of the system - you are trading with the main trend and against minor reactions against that trend. Your way is working for you, and you seem comfortable and relaxed with it. I urge you to continue as you have. If you find something that works for Ingot, then optiontimer be damned!

 

Yes, losses will happen, and they will sometimes occur in bunches. Your consistent, disciplined application will give you the patience you need to control and trade through the inevitable draw downs.

 

-optiontimer

Thank you OT for giving me confidence in that area. I may just continue as I have been now, because yes, it has been going well for me. But at the same time, I have been keeping a watchful eye on draw-down, to nip the early entries in the bud if necessary if and when they do run the opposite way.

 

I would rather take 10 losses in a row that cost me 30 or 50 pips each, than miss the good moves that nett 600 pips a few times a month. Now that situation may be hypothetical, but one has to be realistic about trading, to the extent that losses are very much a part of winning. If traders could only learn to take their losses early (it took me quite a few years to get a grip on that) then they would also be ready to let good trades run to their potential.

 

For now I remain very much a student. Kroll has so much to teach us and if there was ever a text that "should" be taught in trading school, Stanley Kroll would have to be in the top three or four essential prerequisites before enrolling.

 

I look forward eagerly to learning more about trading - I have just begun.

 

Thank you.

 

Ingot

[optiontimer 10]

...Here are my opening trades and the maximum drawdown from opening. I am using demo, so I have not included the spread - just the opening price to maximum DD:

 

USDCHF - 11 pips - still open - +300 pips .......... (opened 4th July)

GBPCHF - 15 pips - still open - +596 pips .......... (opened 4th July)

GBPUSD - 13 pips - closed + 136 pips ............... (opened 5th July)

USDCAD - 9 pips - still open - + 53 pips ............. (opened 13th July)

NZDUSD - 25 pips - still open - + 196 pips ......... (opened 13th July)

AUDUSD - 51 pips - still open - +28 pips ............ (opened 13th July)

 

Many of these trades have swung back against me, but are still legitimately within the trend, so I have not taken profits yet. At one point I had 1544 pips (incl the GBPUSD I closed) and now there are 1309 pips profit. This is the most pips I have made in a fortnight ever, and the first time I have had a trade run to more than 600 pips ... and still open!

 

Those are awesome results, Ingot! Now, can you do it with real money?

 

I don't hang around to "see what they will do" - the entry is either there or it isn't ... and I turn off my computer. I have a look in the evening - and that's about it. This gets me my life back - the reason I entered trading in the first place. There is nothing to tweak, no fibs to measure, no other indicators or charts - just me, the 21 / 65 ema, the StochRSI and the Daily chart... a simple method and I never have to concern myself again with news, economics, technical analysis or waves, zigzags, multi-level charting, data, slippage, spreads or anything else. I KNOW what this strategy can do, and I place my confidence quietly in that.

 

That too is awesome - and it is exactly what I was hoping to help others accomplish with this thread. I am very happy for you, and I hope there are others out there who are coming around to this perspective also.

 

So far this strategy is not difficult, and while losses are never far away, it is far easier to make decisions trading Daily charts than it can be trading intra-day activity.

 

Thanks OptionTimer for your generosity in sharing this strategy.

 

Kroll had put this strategy out in the public domain many many years ago. It worked then, it works now, and it will work many many years in the future. The markets, for all the talk of high frequency trading, market profile, buzzword, buzzword, buzzword, have not changed in how they behave on a day to day basis. The only real variable in whether or not this system works for any particular trader is the ability of that particular individual to exercise the discipline and patience required to apply this system and abide by it consistently.

 

-optiontimer

[optiontimer 10]

... Here's an update on my Gbp/Chf trade and my actions to date:

 

... Was stopped out ... Reentered with same criteria as above - decided not to move stop if trade was executed - it was - at one point I was -103 pips but left trade on - now +40 pips - leaving stop at 1.3700 for time being...

 

- Peter (PWP)

 

Hi Peter,

 

Would you be able to update us on the status of your re-entry GBPCHF short?

 

Thank You,

 

optiontimer

[optiontimer 10]

...Gold, which was a long entry stopped for a loss last week is signaling a re-entry long for tomorrow (per our entry rules, of course).

 

Here is Gold:

 

 

Gold of course did triger an active long position, but risk parameters prevented me from taking this trade. However, we can certainly follow its progress on paper. Here is the current chart:

 

 

The area outlined in red is the first long entry signal posted to this thread, which ended in a loss of aprox. $12-$18 depending upon your entry criteria. The area outlined in blue is the result of the ren-entry long signal quoted above, and it is currently sitting on an open profit of approx. $70 +/- $3, again depending upon your entry criteria.

 

-optiontimer

[optiontimer 10]

I have two points to address quickly:

 

1) I am still awaiting the arrival of my new computer, so my ability to update the charts is still extremely truncated. I have been able to restore a minimal functionality on my charting computer. It has been quite laborious, and as a result, I will focus primarily on metals and money charts until my new computer is built and delivered. If some other market develops price action of immediate interest, and I notice it, I will do my best to cover it here. But again, until I am fully functional, I will mostly limit chart reviews to the metals and foreign exchange markets, both futures and cash.

 

2) With respect to the stochasticRSI, and the difficulties some have expressed in locating a usable script for their own particular charting software, I have elected to continue with that indicator. However, for those with no access to the stochRSI, I have decided also to follow this system using an 8 period stochastic. (See the above posted Gold chart). You should set the %k to 8, and the set the smoothing functions to 1 (8%K, 1, 1).

 

I will cover this decision more in a subsequent post, with charts. That post will occur later today or tomorrow, as it too an interminably long time just to get my computer to function enough to grab some relevant screen captures.

 

Thank You,

 

optiontimer

[optiontimer 10]

Here are two charts, each with the original stochRSI and the newly added stochastic. I have placed circles upon those areas where a signal would have resulted and likely have been filled.

 

The first chart is of the September 2011 Australian Dollar futures contract. This market is uptrending based upon out EMA criteria, but price action has proven to be far from uptrending. The trend has been largely sideways, with a bias to the down side as lower lows & lower highs have been the pattern since the April highs. This is a difficult market to time long entries with reasonable stops, as after each entry, the market has managed to work itself lower. This situation will have to be addressed. We would not want to make nine consecutive losing trades in one market. With proper position sizing, we could survive it, but it would no doubt take quite a psychological toll:

 

 

The second chart is of the Swiss Franc futures. This market is also in an uptrend based upon our EMA criteria, and it has been a very easy market to trade using our system, no matter whether you choose to trade the stochRSI or the stochastic system.

 

 

What is important to note here is that both of these indicators will more or less yield similar results over time based purely on technical signals. As with anything, you must be consistent. Do not use one to confirm the other. Do not use one this week and another next week. If you have already been gaining a degree of experience, comfort, and expertise with the stochRSI, do not suddenly switch tot he stochastics.

 

Here is a zoomed-in view of recent price action on the USDCAD cash market. You can see how very similar these two indicators will behave.

 

 

-optiontimer

[optiontimer 10]

I have received a couple of panicked communications about the stochastic/stochRSI.

 

Do not get hung up on which indicator to use.

 

The indicators are really of little importance. They are little more than "training wheels."

 

I purposely put the indicator choice out to poll because I want to show how unimportant their selection was.

 

I wanted to use common, readily available, free in the public domain indicators, because there is no need to buy some "special" indicator from someone. There is no "better mousetrap" out there, no matter what the many pitchmen and shills try to make us believe.

 

We are learning to trade a strategy, and the indicators merely are helping us to train ourselves to see how to deploy that strategy on the price field.

 

That strategy is that of Stanley Kroll: We want to trade in the direction of the major trend and against the minor trend.

 

Here are two views of the same chart of the last intermediate bull swing in the EURUSD basis cash - the bottom view should be familiar to us by now - it shows the EURUSD with the 21 EMA, the 65 EMA, and the 7stochRSI. I have circled those signals, one short in red, the others long in blue, which would have been indicated by the systme as I have outlined it here.

 

On the top chart, I have shed the indicators we are using, and drew some simple S/R lines.

 

Study this picture - it tells the future.

 

The indicators are not important. You only think I am teaching to read indicators. I am not - if you are following along, you are learning to read price action, whether you like it or not. You may find that you never feel comfortable trading this system without the indicators, and that is fine. But you must come to accept that it is the strategy that is important here. The indicators are simply giving us a mechanical and visual means of keeping on target, i.e. sticking to the strategy.

 

So relax, take a deep breath, settle into your favorite easy chair and just enjoy the strategy. You will find it a pleasant one no matter which indicator(s) you choose, or even if you choose to use none at all.

 

Thank You,

 

optiontimer

[SIUYA 11]

The indicators are not important. You only think I am teaching to read indicators. I am not - if you are following along, you are learning to read price action, whether you like it or not. You may find that you never feel comfortable trading this system without the indicators, and that is fine. But you must come to accept that it is the strategy that is important here. The indicators are simply giving us a mechanical and visual means of keeping on target, i.e. sticking to the strategy.

 

Good point often overlooked - a good test for this is that often many indicators will give you trades at similar price levels - regardless of the indicator, and often this search for the perfect set of indicators (the holy grail) causes traders to loose focus of the strategy in search of the perfect way to implement that strategy.

Too often the easy access to computers, programs and instant access to data is more harmful than helpful.

[Ingot54 13]

Good point often overlooked - a good test for this is that often many indicators will give you trades at similar price levels - regardless of the indicator, and often this search for the perfect set of indicators (the holy grail) causes traders to lose focus of the strategy in search of the perfect way to implement that strategy.

Too often the easy access to computers, programs and instant access to data is more harmful than helpful.

Agree with the idea in principle, Siuya, that several indicators can be interchanged/swapped because they are telling us the same things. I have about 5 "favourite" indicators that have kept me from finding the level of trading success I would like :rofl:

 

But as a visual kind of concrete thinker, I NEED indicators to interpret what I am seeing. And it is possible that many traders are the same - it is no use talking to them about price action versus lagging indicators and so on as if they are the issue. What is essential to you, may be secondary to me and probably vice versa.

 

What we are seeing in this thread is ONE way that works in an unambiguous way (to use OptionTimers words), and for me it works very well, and I hope it does for many others who are having difficulties.

 

It may be - and I hope - that the time will come when I may dispense with indicators, or at least not notice them as much as I currently seem to. But they are certainly no burden, and if to some they are the HG, then there is nothing wrong with that.

 

I agree with what you seem to be saying though, that a constant search from method to method is always going to end in frustration. There is no perfect method. There are only "methods" ... and it is for each one of us to find one that sits well with us, and master it.

 

That is the key ... MASTER the strategy.

 

The methods of Stanley Kroll have stood the test of the past 30 or 40 years - and in reality much longer - but he was able to get it on paper in his book. Thankfully OptionTimer was able to teach us this method, bringing awareness that trading need not be complicated nor stressful.

 

I urge anyone who is feeling frustrated or "damaged" through their trading situation, to download that book from the first post in this thread, and read it, read it, read it.