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Catching the Wind

stovedude

Active member
Here is a strategy I've been working on for awhile. I have most of the EA built for it. I just have a few last things to work out to make it one of the best systems. As you know, there is no Holy Grail. I for one acknowledge that. As some here may know, I have presented this strategy here before (I hear some moaning out there), but it lacked a few crucial elements. I have since found most of the missing pieces, and I am bringing it forth again to see if we can perfect it once and for all. Of course, there will be an EA for it, but it will not be shared on the forum itself. Rather, it will be through PM and email for active participating members here (this is of course to thwart those hungry marketers we all know and love so well:D).
I will first present an indicator I have worked on for awhile. It seems to capture market rhythm very well if you first learn how to use it. It is probably as close to PA as you can get in an indicator. It rests on the edge between leading and lagging, so it has the best of both worlds. Now the main problem with any indicator is determining the period setting, because who knows what period works best at any given moment? Also, another secret I will divulge to everybody (not that I have many) is that all TF's work together as one entity, and I for one would love to figure out how to combine the time element into one magic formula, but that is for the future for now...:rolleyes:
I have named this thread "Catching the Wind", because we are attempting something that people claim can't be done. And, with all the problems with various systems out there, this one just might be something to consider. We will basically be trying to trade like our good old ZigZag indy. Now at first, all the lines and channels will give you headaches, so keep some aspirin handy as we delve into this, and keep in mind that upper TF channels will move and actually repel from price, but this is not much of a problem. I won't be able to explain all of it in one post, so it will take several, and hopefully it will be clear enough for everybody. Please ask questions and give suggestions as we go along. It will actually be a fairly simple strategy when it finally clicks in your mind, but also note that some improvements may be needed. One of the main problems I see is determining when to end trades, because MT4 doesn't have any TF's larger than monthly, so I propose ending the trades with the monthly channel, and starting over. You will see that these channels actually do not span the full length of the TF candle, and that price may hit a certain TF channel several times within that same candle, and hopefully we can take advantage of that. What we are looking for is the various TF channels to line up together for confirmation, as well as overall trend determination for each TF. I will explain more in the next post...
 

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bonnie1234

Active member
One of the main problems I see is determining when to end trades, because MT4 doesn't have any TF's larger than monthly, so I propose ending the trades with the monthly channel, and starting over.

I am intrigued as to how this could work with zigzag. I have used Monthly / Weekly Support and Resistance since I started trading to determine if we are due a reversal or not, but very difficult to predict the outcome or when it will actually happen...

As far as exit strategies I can offer the ones that I go by:

Major Daily support / resistance (Moving Stops up or down to the next Minor Support / Resistance).

Fibonacci extensions on a Daily basis can provide a good exit point

Not sure how this thread will go ...so will give SD a chance to guide us for now...:D

I have attached your template followed by mine with the added indys for visualization. All are added below if you use them or not...
 

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stovedude

Active member
Thanks. Although this is slightly related to S/R levels, it actually doesn't require that type of analysis at this point. Everything will be according to the indy lines and their corresponding TF's. I am thinking about making another indicator to replace this one that can automatically change TF's according to the rules, as well as a dashboard of TF arrows to show trend, but let's just define the basics first and go from there. If you attach the templates to their corresponding TF chart, you will see series of channel lines for the current TF and all the upper TF's. I have colored each differently, but you can change the colors as you desire. These are basic MA's that are calculated on the highs and lows of each TF. However, the MA period is set at 2, which of course is super fast (for a reason). With this setting, it is difficult to use only one channel, so we will be using all of the channels together.
Here are the other settings for the indicator. Do not change the Price1 and Price2 parameters. They are essential. The MA Method is the Linear Weighted method, which seems to work best, but if you find better settings, please says so. The ShowPrevMedian and ShowCurrMedian options will print the TF candle medians, which will be important as you will see soon. These define the current trend. The Refresh option will add repainting to the lines, which is natural for MTF indys. I implemented this recently, just to see where lines were before they moved. If set to False, this indy will then be non-repainting:D.
Here is the basics: if you look at the E/U m1 chart (my favorite), you can see as price reverses, it will not only touch an important group of channels, but it will also line up the channels very close together. We will basically use one of these points as an example in the next post. I have to do another job today, and will be back later to attach a chart.
 

saambasp

Member
hi stovedude,
catching the wind is capture the trend,i think you are trying for best exit for an open order.by looking all time frames we try to determine good entry and possible good exit.
in my openioun normally eurusd moves 2000pips range and the others different.in the world no one can buy at exact low and exact high.
so our entry action[buy/sell] should based on higher time frames.and our entry point based on lower time frames.although iam still trying to understand how the different mtf channel lines identify the exit and possible good exit,my first reaction is=entry point based on lower tome frame and entry action based on higher time frames.
adding:
sma[50] high
sma [50]low

 

stovedude

Active member
Here is the first lesson. What we are seeing here is the E/U m1 chart with all the different TF's. At the reversal point, price came down and hit the Daily Low (lime green) line. Also, all of the lower TF's met here as well. Only the weekly and monthly are missing, but they are resting just below not very far. Now 2 of the key players are the 15m and 30m channels. When these come close together, things can happen. Sometimes the different channels can be separated by one to 3 pips, but it is still a valid signal. What we are then waiting for is the reversal. With some practice, you can enter on the m1, but the m5 is safer of course. The reversal is triggered when the orange m5 dotted line (which is the previous 5m candle median) goes below the orange m5 center dashed channel line. Price also needs to be above this line and may dip down momentarily, but as long as the dotted line stays below the center m5, you will hold out with a few pips of DD (better than most systems). SL will be of course the swing low minus spread and minus a couple pips, but that can be your discretion.
Now because we are on the m5, we will be looking for the m5 orange channel (or price) to hit the m15 (white) next, and as you can see it does several minutes later. It bounces off the m5 channel high (which is normal) and retraces. Also, the dotted line goes above the center, but a very important thing happens before this: the m15 (white) dotted line nows moves under the m15 center line, signaling the start of the m15 up trend, so we change to the m15 now, looking for it to hit the m30 (light green) channel high. Now before we continue, I do want to say that all these lines will move and be repelled by price continually, so be aware of that. The dotted lines may not be over or under until after prices moves more, but you will need to take the signals as they come (that is why we need the EA for this, because we can't monitor this stuff continually). Ok, going on... We are waiting for the m15-m30 touch, but as they touch, the m30 (light green) dotted line moves down below the m30 center, signaling the start of the m30 takeover. Now we will follow the m30 to the h1 (purple) touch, which happens on the next pic. Now keep in mind that we have entered in around 1.3758 (7 pips above the low). Now this is one of the more questionable entries compared to other ones that we will visit later. Other entries can be exactly on the pip as we will see.
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stovedude

Active member
Ok, continuing on. We can see price making its way upward, looking for the h1 (purple) channel. We still are in the m30 trend, with the light green dotted m30 line below the m30 center. Suddenly, the H1 purple dotted line drops down below the h1 purple center, so now we are in the H1 up trend. Now we have 2 choices, continue on to the H4 or TP when we hit the top H1 channel, where we can exit when the m1 or m5 channel signals the downtrend (m1 or m5 dotted line moves up above their centers). If we choose the first option, we will endure a long H1 downtrend, all the way to the Daily channel low again (1 pip above our entry), but no actual DD. The second option is better, to close the trade and open a short and ride the new trend down, using the same rules, except with the dotted lines going above centers to continue trend.
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stovedude

Active member
Ok, now price moved down with m1,m5,m15,m30, & h1 all confirming downtrends as we went. So to make a long story short, we hit the H4 yellow channel low, and it was already a down trend from before (you can't see it on this chart though), so it confirmed down also. Finally, we hit the Daily low again. Now we are presented with a big decision, and this one still needs to be fully finalized in my mind. Since the Daily is pointing down, do we try for the weekly now? If you zoom out, you can see the weekly pointing up, monthly is pointing up, and the Daily channel was already broken at the beginning of our session. Because only price hit the channel and not the other lower TF channels, we can safely assume that it will reverse. Here is one area where we can trade at the exact touch, although we can't expect it to do that very often. In all actuality, the H4 low was also broken before our first trade, and after we hit the D1 the first time, the H4 was canceled out anyway, so really it had no bearing on the final trade, so basically we should have been looking for the H1 to hit the H4 (or at least price to break or touch both), and that would have ended the trade. Hitting the D1 was just a bonus this time, but no confirmation of downtrend anymore. Next our price reversed and if we didn't enter on the D1 touch, we can wait for the m1 or m5 dotted line reversal again. Now this carries us up and up with the H4 reversing up, but the D1 is still pointing down. At market close, we are 8 pips from hitting the D1 high. Now another interesting thing we see with these channels is when a channel high is going down or a channel low is going up. It is very difficult for price to break the exact channel line (it may move a little though, but not much). With the D1 coming down, and the D1 (lime green) dotted line having lost its momentum, (moving closer to the center, but still down), we can expect a touch of the D1, a possible retrace, and if the D1 dotted line moves down, it should make its way up to the monthly channel above, which is also pointing up. However, weekly has lost some steam as well, and will most likely flip its dotted line over at the start of next week, so we might be looking at a large down trend soon. I will stop here and let some digestion set in. There are still a couple things we need to iron out: 1) when exactly to look for the next trend continuation and when to stop, 2) what to do when we get to the monthly and have no more TF's to go for.
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saambasp

Member
hi sd,
if you use this for pictires ,it is very easy follow by us.
image shock domain not working

 

stovedude

Active member
I've been toying with the idea of making customizable TF inputs to help with the fixed TF period obstacle. I'll try to do that soon.
 

stovedude

Active member
Yes, all true MTF indicators will repaint, but this is not much of a problem once you get the hang of the strategy. If you set the Refresh to true, it will repaint, but look a little cleaner. The main thing is waiting for lines to come close together, along with knowing the longer trend as well. I also made this indicator, which cleans up things a bit, but you will need to use the median lines as before to determine the max TF to use with this one. You only need to install one instance of this indicator. I will make a companion indicator for trend determination tomorrow, or maybe I will incorporate all of it into one. Perhaps I will make it change automatically for each new trend continuation, or maybe just finish the EA, which can be used as a manual signal only as well as automated.

BTW, looks like price hit exactly the monthly red channel today and reversed. I think there is some merit in this strategy.
 

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stovedude

Active member
Here is the companion indy for the last channel indy. I will try to work up the final rules this weekend. I studied it some more this week, and discovered some more interesting details that seems to work pretty darn good for determining the best reversal points.
 

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stovedude

Active member
I'm discovering more and more interesting things about this strategy. I'm also finding that we need other TF's that are not readily available in MT4. However, you can access them through the offline charts with the help of the standard period_converter script in MT4. This will be done through my software automatically soon anyway. This strategy is extremely accurate and is catching the exact market rhythm. I'm working on modifying the last indicator to tell us which TF price will bounce off of exactly.
On a side note, I discovered another interesting idea that I want to throw at you to see if anybody else sees what I'm seeing. If you open a m1 chart (let's stick with E/U), and scan back into history from the present bid price to find the exact same price and mark that candle with a vertical line or something. Now, count how many candles back from the current one (perhaps count the current open one as well) and divide that number in half (rounding down - or maybe up - we will need to decide that soon) and put another vertical line there. Now, find the median price of the left half of the center by adding the high (which will be the current price, not the high of the marked candle) to the lowest low of that half and divide by 2. Now, find the median price of the right half from the center line, using the same method. If the median price of the left is higher than the right, price should be or will soon be coming down, and if it is lower than the right, price should be or will soon be going up. Of course, there might need be some tweaking here and there, but this is something that hit me this weekend. In essence, it combines the elusive S/R and fibonacci methods that we all know to be the most important elements in trading. It seems to be a fantastic leading (very leading - it will alert you several candles before the turn) indicator (I will build it this week) for overbought/oversold conditions. The only problem I see with this is the weekend gaps do throw it off. Even by counting the missing minutes during the weekend may not help. I think the problem lies in the fact that price does actually move during the weekend, because it doesn't wait for brokers to activate platforms. Currency exchange still continues, but we just can't see it move. We will need to account for this on manual trading. For an EA, we can just close all trades for the weekend. I hope somebody will help me out on this. I realize that the channel method is a little complex (but also very wonderful if automatized), but this one should be within everybody's grasp.
 

stovedude

Active member
When I get some free time, I will finish this thing. I think it will be unbelievable. As soon as I have something tangible for everybody to try, I'll post some stuff. I built an indicator to do what I described in my previous post, but I need to modify it a little. The only obstacle I need to address is that I need custom TF's, like H2,H8,D2,D3,etc..., but that shouldn't be too hard. Just need some time to work on it. Selling tops and buying bottoms is the goal. The idea is that you can't find tops and bottoms on only one TF, you must use all TF's, checking trend on each. I have found an excellent way to determine trend on each TF. We start with M1 and work our way up as each TF trend kicks in. Also, with my TF channels, I can determine how far to stop when the upper TF doesn't budge. Excellent system. I was hoping other people would join in so we could iron out any kinks. The only kinks I have found is the super small range periods that could throw off an EA, but the SL is so super tight, it shouldn't matter too much for a small loss once in awhile.
 

lerxst

Member
Wanted to provide some feedback as have been using Stovedude's indicator MTF MA Channel as support and resistance points trading. This is just one variation of the many uses for this wonderful indicator as I haven't tried the other ones yet.

I'm using the indicators settings for daily, weekly and month on a 4hr timeframe as this suits my style and you don't need to check it all the time. What you will notice is that once the price hits one of these levels, and makes a strong reversal, such as bullish or bearish engulfing candles, or is ob/os territory per a CCI or stochastics, then the chances of a winning trade are very high. The most useful thing to me is having these channels that provide support and resistance points for you to take profits on. Whatever technique you use for entry, the levels give you a good take profit point because chances are that these s/r points of higher timeframes will be obeyed more times than not. Maybe using it as support / resistance wasn't how it was originally set to, but it's one way of using it that works. Feel free to try out any system that you use and combined it with these levels for take profit and stops.
 

stovedude

Active member
That's the kind of feedback I was hoping for. I have since improved the indicator as a fibonacci channel. It also will show median values, which shows the trend on each TF. Unfortunately it adds more lines to the process. The correct use of these channels requires checking the trend on each TF. As higher TF's change trend to agree with the lower, you can switch to that TF. Also, if price breaks through a higher TF previous median, it will almost assuredly touch that TF's channel line, even though it shows the opposite trend. There are so many aspects to this strategy. It's hard to explain all of them, but all are necessary to find tops and bottoms.
 
S

savio004

Hi

Hi

Hi Ronald,

Savio here! You are the man we can hope to trade forex successfully.. You give us hope.. please do you best.. I am with you on this.. I know you can do it.. waiting for the EA..

Warm Regards!
 

grood

Member
This seems really interesting, and makes absolutely sense to me.

Some time ago I was looking into S/R using ATR_Levels.mq4 indicator (got the idea from some guy selling his "secret" reversal levels for $$$$$).

If you put this on a M15, H1 or so chart, you get the daily reversal levels. Especially when there is a double top/bottom, price seems to respect the lines. Probably this could help to further improve the strategy.
 

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vladv

Member
grood,can you post some screenshots with your trades,as well?Anyway,thanks for sharing the ATR indicator!
 

stovedude

Active member
This strategy seems to be so incredibly accurate in picking exact tops and bottoms, much like ZigZag, only without the lag and repaint. However, it must be done correctly and quickly, as price tends to move a little faster than the manual calculating process. I will try to finish an indicator and EA with the concepts involved. I have found that the available TF's for MT4 are not enough, because price can reverse on other TF's, so I have made some indicators that do not use other TF's. Instead, they can calculate any TF period on the chart. This was quite an improvement. The one indicator I do like the most seems to be more difficult for me to interpret and I may use it later when I figure it out. The other indy is perfect in every aspect except one: it needs a starting reference point for other TF's. For example: all TF's are calculated from the same starting time as the Daily (0:00). However, if we have something like a TF of 23, it doesn't divide into anything very well. I am able to calculate it anyway the same as the rest of the TF's, but the channel lines and calculations can become a little offset compared to a TF of 24. Therefore, one must be careful in analyzing the next TF to make sure it conforms. I will try to explain this a little more in my next post, along with the indicators.
 

stovedude

Active member
Here are 2 indicators I'm working with. The first one is a mod of the original from before to include fibonacci. However, it is TF locked to only the ones available in MT4. The second indicator can transcend that problem and allow any TF. The basics of the strategy is to study and analyze lower TF's (this is the Length setting), starting at any major reversal and working you way to the next reversal. On different chart TF's, this will produce different reversal points of course. I use it on E/U M1 (a noisy choice of course) and it seems to work good. You can start with a Length of 1 and work your way up. What you are looking for is the single dotted line (which is called the Prev Median line if you hover your mouse over it). This will be your most important line, and when it crosses the double dotted line (which is called the Curr Median), it means that TF has changed trend. If the Prev Median is above, the trend is down (because the current faster median has passed below the previous slower median) and vice versa. Now if the trend is up, price will hit the upper channel and, if down, it will hit the lower channel line (by hitting I mean it can come within 1 pip on M1 and still be valid), and I have yet to see it waiver from this rule as long as you pay attention. What I mean is: if price has already hit it when you were not paying attention, you would be in error expecting it to hit again.
But, it isn't just that easy, because the next higher Length can signal a trend reverse somewhere along the way, so you will need to monitor this one as well. Now if it still hasn't changed and still is indicating the opposite trend (if the 2 median values are exactly the same, it is valid for the change also), price will hit that channel anyway, due to one steadfast rule: if price crosses that Length's Prev Median dotted line, it will very possible reverse on that TF channel. And here is another steadfast rule: until that Length changes its trend to match the lower ones, you will not check any more higher Length channels. Just because it did cross another higher Length dotted line, it doesn't mean anything, because it can indeed cross many different medians of all sorts of Lengths in its course. The only one you need to be concerned with is only the highest one that hasn't changed trend yet, as long as price has crossed its previous median line.
This presents a manual problem of course. Usually price moves fast near these reversal points, and the Length can increase dramatically by sometimes 1000's as price reverses back into a previous trend. If you look at E/U, it is working its way up to last year's high, which, on an M1 chart, can be something around 200,000 minutes back of market time, which presents another problem with automation. If we go that far back, we will need to make sure we have that many bars in our chart and enough CPU and memory to manage everything, so a higher TF chart might be needed.
Anyway, I believe this could very well be the answer to the old trend vs. range problem. This strategy treats all movements as trends and catches even the smallest reversals (beware of spread of course).
SL is extremely low (somewhere around 5-10 pips above/below the swing high/low on M1), TP will depend on your chart TF as well, and can just be the final reversal signal (you can safely use Length 5 trend change or even Length 1 for more aggressive, or use your fav CCI or stoch). TS will of course be difficult to determine on a noisy chart. You may find that final trend can continue for hours and days and weeks, so you might want to limit yourself to a certain number of pips, or keep watch on the lower Lengths to exit your trade. You can very easily enter again, starting the process over on a smaller reversal. You can also increase the Length by 15 increments on a M1 chart without too much trouble I believe.
Overall, I think this might be too overwhelming for manual, but it might help for some people to try it on demo and study it for awhile to see if there's anything to improve. Like I said before, the first indy has limited TF abilities, and sometimes price will reverse without hitting the next TF, just because it chose something in between. I like to put several instances of the 2nd indy on a M1 chart with all different colors. That way, I can see how they all interact with each other. It can give you a headache though.
 

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stovedude

Active member
Just as an update. I have the EA working now. I'm just fine-tuning the logic some more and killing a couple bugs. One thing I noticed over the weekend is that some extremely simple calculations inside the EA were completely wrong, especially near the reversal points (by simple I mean getting the high and low of the current candle). This has me wondering about our lovely brokers and how they manipulate the data. Sometimes I believe there are two different sets of data being sent to our platforms, one we can see and one we can't (at least not through automation). Very strange indeed. However, today it's working fine, so go figure....
 
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