10.4 A Complete System

[nanningbob]

First and most important lesson about indicator trading. Fundamentals and surprise news stories cannot be seen or predicted by an indicator. In other words these things cannot be seen or foretold. Take your lumps and move on. More and more indicators will never change this. Just walk away from the pair until it settles down and then wait for the next trade signal.

[Wiggy1965]

OK here is a good example from this week. It's a H4 chart of the NzdUsd. Best of all, it's a total by the book 10.4 trade.

At the beginning of the week, the pair was moving up to the 240 and RSI(2) moved very high. By the second half of Monday it was flat at about 99.

You can see that after the three white bars, there is a red bar that breaks down below the 240. The AO is still green, but I think it's clear that based on the discussion yesterday, that many people would see that as an appropriate signal to go short.

From my perspective, there is still a note of caution because the RSI(2) is still at 99.

And so, I would get in on the next bar. If I was watching the chart, I could imagine I would have gotten in during the bar (which I did) as I saw the RSI(2) moving down. But even if I waited to the end of the bar and gotten in, I would have still netted 100 pips.

In my case it was 140.

Does that make sense?

cmeade2

Which way are you thinking. I have already made a bunch of money on the way down, but that was against the rules. And I got out because it seemed kind of tired. Again, if you want to go long, I think you need to wait for some movement in the RSI(2).

cmeade - when you say 'wait for some movement in the RSI', what exactly are you talking about and how are you using it? Are the trades you're making very short term.

cmeade, It all makes sense, however not sure why you are trading a pair that is ranging above and below the 240ma for the last two week when there are so many other 10.4 trade setup that are cleaner....

If i have to try and convince myself the trade is there, then it's not....

Wiggy

[nanningbob]

No matter how far below a line you place your pending order 5, 10 , 15 etc. Price movement will always give you peeker trades. Those are trades where price goes just far enough below the line to enter the trade and go back up again. So learn to live with them. However, if you place your trade off of a previous high or low that is one way of doing it. I would like to point out thought that if you place your trade 5 pips below a line you are giving up 5 pips on every successful trade you do. If you do 10, 15 etc etc. it will multiply and build the amount you will not be gaining over time. In exchange how many trades will you avoid entering by making this bigger and bigger? Do the math, How many trades do they really end up hitting your SL? Dont get so caught up with a handful of losing trades or DD that you overdo it and end up giving away more by putting your entrances to far away from the line. See the gray area below. No matter where you put your entrance it was going to be hit. If price had gone against you, which it didnt in this example, you also added extra pips to your loss. So if you place your entrances to far from the lines you lose both ways. You lose on every entrance that is successful by giving up pips and you add pips to the few that do end up losers. How does that compare to the handful of trades you are trying to avoid???

[Fourxxxx]

I have been surprised by the GBP this week. GBP lost its top rating for the first time in history and I was expecting it to drop significantly this week. It did its gap at the beginning of the week which I expected but then has climbed back which is the surprise. We will see how this goes but it looks like the European currencies will take front page for a while possibly all spring. JPY will reenter again sometime in April so that is going to be one wild month.


Spent a couple of days in Shenzhen and Hong Kong resting before getting home. I will try to read through the last couple of days. I see there was a debate about entrances again. I will post a couple of trade shots trying to show you that there are just some things you cannot control.

Is it simply a case of buy on rumour and sell on fact. (or vise versa in this case) GBP has been weakening for a while and ratings drop has probably been factored in already.

[nanningbob]

Here is how it works. I am using the sto5 with this computer because it is having some RAM issues. Anyway STO 5 is flat on top and price action is below the 240.
NOTICE I AM NOT MENTIONING THE AO INDICATOR!!!!!!!!!!!
So I start setting my pending trades. As price keeps going against me to the next line I add pending trades #2-5. If price keeps moving up back across the 240 line I will cancel the trades. If gbp drops which is what I am expecting I can have as many as 3-4 levels going depending how far it goes. It is Thursday and price could go anytime in the next 4-36 hours.

STO5/RSI2 is going down, doesnt mean I am ending my trades, it means price will probably finally go in my direction. You will also see a thin yellow line. It is a 20MA, when price crosses the 20MA on a 4H chart that usually means price is change direction. When a open and close of a candle is below the 20MA then the AO will change color but many times that is too late for a good trade.

SO I DO NOT USE THE AO FOR ENTERING TRADES.

If you want to add a filter to your trading put a 20MA on your screen and put pending orders below it so you dont place your pending orders too early and get a peaker trade. I will try to get to other posts later today. Time to go to school for a meeting with a parent.

One more thing when price is below the 240 and sto5 or rsi2 are topping the screen AND the AO is above the 0 line like it is now. If price goes down it will do it with some force. So that is how I use the AO, possible strength of the move, not for when and where I enter.

[nanningbob]

Looks like the best trades being set up are sells on gbp and eur pairs and buys on USD pairs.

[fx800]

The Kiwi is finally starting to gather strength. So, are GBPNZD and EURNZD finally resuming the downward trend or will they bounce back up again ??

[fx800]

The Aussie is also rising. GBPAUD SHORT triggered.

[rebyte2]

GBPNZD pending trade about to be triggered.

Further pendings await their turn.

[cmeade2]

Could be a good trade. Let's hope so.

The Aussie is also rising. GBPAUD SHORT triggered.