Hi JamesJames Roscoe » Wed Jul 06, 2016 8:11 pm wrote:
Hi bob. A quick question on the large arrows. If they appear without an alert, would you consider that actionable, or something to be ignored?
I have been watching the indicator for a couple of weeks and I understand what it is doing, but I was just wondering what your trade sequence would be in such a case.
Please allow me to wade into your thoughts with my two cents worth
HGI is such a versatile indicator I am willing to bet there are as many "methods" for using it successfully as there are users.
Therein lies the challenge. How do you use HGI for its maximum contribution to your trading ?
I don't propose or suggest what I am about to write is the only or indeed best way to do it, but I have taken much from other users on this great site and modified their methods to come up with what works for me. Thanks to all those people.
If this can serve as a template, shell or starting point for others then I would be immensely gratified.
First off, I think, determine what type of trader you are. Even tho a signal is a signal, swing / position traders will use HGI slightly differently to shorter term traders in practice.
Let me explain.
Swing/Position Trading
I find my least stressful and most profitable trades come from a longer term holding time frame.
When I trade D1 thru to MN timeframes I will use HGI in a method documented elsewhere
See it here http://www.stevehopwoodforex.com/phpBB3 ... =88&t=4720
This method of using HGI does not rely on HGI signals (and hence market conditions) being absolutely bang up to date as in valid right NOW. We can afford to be a fair few bars off the pace and still make good trades. If the tenor of the market is congruent to the recent signals i.e if we have sell rads and/or sell trend arrows at the top of the 6th grid that is better than a 50/50 chance the sell trade is good. So we go short and then manage the trade.
Alternatively, if we have buy rads and/or buy trend arrows at the bottom of the 6ths grid then again we have a better than coin flip chance that the long trade is good. So we buy and manage the trade.
I will look for D1, W1 and MN trades at the appropriate start of time frame
Trade management for long term trades
Like Nanningbob teaches I try to trade so that if it's a wipe out day I can trade again tomorrow. That means my lot size is very conservative relative to my account size. Because of this conservatism I do not use hard stops in my trading methods. Nor do I use TP (After all I don't know how long a ride I am going on
)At trade input time, I set a mental stop level as well as a TS distance.
My trade exit policy for D1, W1, and MN trades is as follows
D1 - Exit on the occurrence of mental SL being hit, TS being hit or on Friday at close of my trading day
W1 and MN - Exit on the occurrence of mental SL being hit, TS being hit or at end of month at close of my trading day
On these long term trades I do not act immediately on contra HGI signals.
I have found on these time frames if my entry was well made contra HGI signals are rare because we are moving with a longer term trend, which is based on long term economic activity and not short term news. If a contra signal does arise it is often caused by a short term fundamental like NFP so I often ride it out unless it gets to my mental SL which is quite a long distance away.
Intra Day Trading
I spend a lot of time in front of my screen and sometimes waiting for D1, W1 and MN trades to do anything is like watching paint dry on a cold wet day. So I enjoy a little of the quicker moving stuff too.
This is where HGImatrix and HGI come to the rescue. HGIMatrix can be viewed here http://www.stevehopwoodforex.com/phpBB3 ... =88&t=3973
==> Edit Start
When I wrote this post, the indi http://www.stevehopwoodforex.com/phpBB3 ... =27&t=4815 had not been completed. However it is now a key tool for quick trades on intraday TF's.
==> End Edit
In this method, I set up the matrix so that it displays all major pairs for timeframes H1 and H4.
Being intra day I like the HGI signals to be more current than in the longer term style of trading above.
On the matrix I look for signals as follows:
If the currency pair is trending up (symbol green in colour) then I look for signals on the H1 and H4 timeframes in a buy direction. I look for the blue wavy to be the lower signal in the cell and the buy trend arrow or rad arrow to be above it.
If the currency pair is trending down (symbol red in colour) then I look for signals on the H1 and H4 timeframes in a sell direction. I look for the blue wavy to be the higher signal in the cell and the sell trend arrow or rad arrow to be below it.
For signal validity, I also ensure the arrows in the H1 cell are no more than 4 bars old and a maximum of 2 bars old in the H4 cell.
4 bars old on H1 is half a working day and 2 bars old on H4 is a full working day. These measures are accurate enough for me. The reason being if good buy / sell market conditions existed a half to full working day previously, then unless some major fundamental has arisen I am happy to take the trade and manage it.
If the matrix stacks up, I will look at the chart and only take the trade if the price action is within the "middle zone" of the 6ths grid and not at the end zones.
For these trades, I do not have a SL or TP but my TS is much closer to the price action than on the long term trades. The idea is I am in for quick harvest of pips to satisfy my adrenaline need.
Trade management for intra day trades
My H1 and H4 trades close out on the occurrence of mental SL or TS or at 11:00 - 12:00GMT (3hrs after London open) and again at 16:00 - 17:00GMT (3 hrs after NY open).
On these short term trades I do not second guess HGI. If a contra signal appears and my trade is in loss I close it out. If it is in profit, I watch it for a while and close it out before it gets to zero. Sometimes it gets second wind and we are good to carry on until we hit one of the exit points I wrote above.
I have not written about how I incorporate HGI with CSS which you can read about here http://www.stevehopwoodforex.com/phpBB3 ... =88&t=4735
but CSS gives me further confluence so that not only am I trading with the trend, but also with relative currency strength.
Finally, I do have a trading plan in which I specify how many trades of each type I can take so my account and portfolio management do not run out of control. I use HGI within the constraints of my plan.
I appreciate and thank everyone involved in creating this HGI indicator.
Charles